Market Management

Question : Discuss about the Market Managment ? Answer : Introduction The current report revolves the marketing strategies of the organizations that run the operation in a large market. The report prepares a situation analysis for the organization Coles, Australia. The report focuses on the planning process and analyzes the environments where Coles is currently running its operation. Coles is one of the popular retail stores with headquarter in Melbourne, Australia. The firm has gained popularity due to its increasing variety of services and large customer base. The marketing success of the firm relies on the implementation of innovative strategies that help the firm to gain competitive advantages. The firm is famous for its high quality of grocery products that highly embraced by Australians (Johnson, Ringham Jurd, 2013). The report starts with providing an in-depth situation analysis that includes both external and internal environment. In order to analyze the strength and weakness, both SWOT/TWOS analysis have been conducted.Situation Analysis External Analysis In this particular section, the attractiveness or the profitability of the Australian super market industry has been discussed to identify the current scenario of the market. Industry analysis- Porters five forces- Threats of the substitutes- It is observed that threats of substitutes is high as the retail organization Coles deals with many indirect competitors involving the convenience stores , specialized grocery stores and famers market. According to the evidences, these indirect competitors could be viable substitutes for Coles and bring sever challenge in the coming days (Wilkinson 2013). Bargaining power of supply- The bargaining power of the suppliers seems to be low in the retail industry. It is observed that Coles and its large competitors cover the large section of the market. As put forward by Johnson, Ringham and Jurd (2013), many local Australian producers have constrained selection of the intermediaries to select. Therefore, it can be mentioned that Coles and Woolworths are the large purchaser in the market resulting to low bargaining power. Bargaining power of the buyers-The bargaining power of the customers is medium in the retail sector of Australia. With the contribution of federal government and ACCC to decrease the impact of the competition obstacles, the new competition acquires the market, which increases the consumer choice (Li et al., 2013). Threats of New Entrants- The treat of new entrants is very low and the impact is expected to be unchanged for long. As Australian retail, market is one of the expensive markets. The entrants have to make a large investment to get into the market. It is evident that when a market is acquired cover two large retail giants, new the entrants may require years to stabilize their position in the market. Industry rivalry- The industry rivalry is high as the number of major players in the market is low. In addition, the lack of perceivable differentiation because of the generic nature of the services as well as the product offered is the reason behind the high competition. Market analysis- The regulation that has large impact on the competition in Australian industry is the Competition and Consumer Act 2010. The organizations in the retail industry have experienced a large growth in 2015 as the consequence of the wealth effect. As put forward by Sharma and Lambert (2013), a strong housing market is sustained by the low interest rates as well as household credit increase motivated the consumers to spend as the perceived values of the assets increased. The industry has experienced 4.1% growth and revenue gained $105 billion (Koumparoulis, 2013). The Australian retail industry is observed to be remaining under significant pressure from the consumer-based forces that includes increasingly diverse customer segments and the growth of the digital generation as well as the continuous journey of customers. Competitor analysis- The current market scenario of Australian retail industry indicates that the Coles and Woolworths cover almost 80% of the market; thus, the Woolworths is considered to be the major competitors in terms of sales, customers, market acquisitions and revenue growth (Boztepe, 2016). The other competitors are such as Franklins, Aldi, Specialty and other market. Figure 1: Competitor analysis (Source: Sharma Lambert, 2013) Porters generic strategies- Cost leadership-Hence, as the market acquisition strategy, the major competitors such as Woolworths sets out to become the low cost producer in its industry. It is also observed that the sources of cost advantages are varied and relies on the structure of the industry. As the market share of Woolworths is higher due to its nature of being low producer, Coles find it difficult and exploit all sources of the cost advantages if the organization wants to achieve as well as sustain over the cost leadership (Glanz, Bader Iyer, 2012). Differentiation- While applying this strategy, the firm needs to become unique in its industry based on some particular dimensions that are valued by the customers (Smither, Houston McIntire, 2016). Hence, the large competitor Woolworths implemented the strategy of product variation, where the introduced beef products based on the demand of the customers. This variation of the product is unique is as no retail organization in Australia has implemented this strategy Focus- The generic strategy of focus relies on the choice of narrow competitive scope within the industry. Thus, in order to gain the cost advantages from the retail market and to compete with Woolworths, Coles is relied on the lean management, in which it has the full control on the supply chain network. The firm gains the control over the waste materials to gain the cost advantages. Customer analysis Who The major buyers of Coles are the people that reside in the urban areas. A large percentage of the customers of Coles belong to large Australian cities. What There is a high demand for grocery products such as vegetarian items, milk, meat, drinks, fruits and clothes. Where A large percentage of the customers prefer to go the stores rather than buying online product. The people who belong to the city areas such as the Sydney and Melbourne that are most populate. When The grocery items are usually purchased on weekly basis Why They prefer to buy the grocery items from the retail stores as the stores have large varieties of product in front of their eyes. They do not have to look for any products while roaming around the outlet. In addition, as the deals and offers are offered along with the products, they customers have the opportunity to gain cost benefits. How As discussed above, an increasing number of the customers prefer the outlets. However, as Coles has lately started the online selling. Table 1: Customer analysis (Source: Burda Teuteberg, 2013) Macro environment Political Environment-It is evident that Coles is one of the popular retail stores in retail industry of Australia meeting the needs of the customers by establishing different retail stores. The political condition is often seen to be shaping the business environment offering the growth opportunities to the firm (Koumparoulis, 2013). As Coles is running the business in a market, which is largely stable; thereby the risk of business loss is not high. Figure 2: PESTLE analysis (Source: Connellb McManus, 2016) Economical factor- The economical factors such as recession and higher employment has a strong effect on the financial performance of the business. However, Australia is financially stable, the Coles has increasing market opportunities. Social factor- The Coles had identified the significance of the customers experience as the aspect of their sales as well as profitability. The firm has introduced advanced means of fulfilling the requirements of the customers (Glanz, Bader Iyer, 2012) Technological factors-When it comes to the technological factors, the advanced technologies that improve the shopping experience of consumers form a main area of the focus as well as retail organizations. Legal factor-It is observed that taxation policies as well as recruitment management are the part of the regulations developed by the federal government is the fundamental legal framework affecting the business. Environmental factor-Coles has been and participating the activities hat been investing its resource in decreasing the carbon footprint of the company and reducing the wastage of natural resources like water. Operational analysis 4ps marketing mix of Coles Product-The firm gains the popularity for its grocery products such as meat, fruit, Coles brands, diary, deli, bakeries and many more (WesFarmers.com, 2016). Price-The firms use skimming pricing strategies for all of its product and services. This means it launches a new product in the market; they use the premium pricing strategies, when the competitors start bringing the same products, Coles decrease the prices of that product. Figure 3:4ps marketing (Source: Cameron et al., 2013) Promotion-The retail store use attractive pricing with additional offers and deals such as 40% discount on certain number of purchase and loyalty points. Place- The firm runs all its outlets in the urban areas or the large cities of the country where the population is comparatively high. Financial analysis Particulars FY 2014 FY 2015 Earnings before interest and Tax 2,689 2,440 Statutory Loss After Tax 68.46% 64.58% Return on Invested Capital 8.61% 7.74% Positive Operating Cash Flow 3,226 3,791 Total cash position -1,240 -687 Velocity Frequent Flyer revenue 8.45% 11.09% Table 2: Financial analysis (Source: WesFarmers.com, 2016) Financial analysis is considered to measure the performance efficiency of the organization, which is determined by financial ratio of the profitability, financial position, liquidity and gearing information. Considering the financial information of Coles by measuring earnings before interest and tax reflected negative balance during 2014, which was low in 2015. It can be said the company improved its performance and the amount of loss declined in the subsequent year 2015 approximately by $200 million. However, cash fund of the organization reflected increased balance in the year 2015 as still it is in deficit, which company need to recover and it also reflects the organization is solvent and efficient in managing the resources to meet the current obligations. Additionally, return on invested capital also reflected decreased rate during the financial year 2015 by 7.74%, which is monitored 8.61% in the financial year 2014 representing the efficiency in optimum utilization of capital f unds as well as facing difficulties in terms of providing reasonable returns to the investors (WesFarmers.com, 2016). However, on the other hand, the organization has been efficient in utilizing the cost and resources to generate higher revenue and maximum profitability. As per the entire study, it is observed that Coles limited in one of the subsidiary company of Wesfarmers, which is affected due to uncertain market scenario, but company is having better financial support from their parent company, so there is possibility of growth in future. Product analysis The organization has large varieties of the products to satisfy the needs of large markets. The Coles introduced different vegetable products, grocery items such as eggs, rice, wheat, meat, dairy products, drinks, bakery items and many more. Baby products Dermatologically tested, Safe for sensitive skin, Fragrance free products Bakery Rustic Roll, Baked Clabatta, Baked Fruit and many more Dairy Friendly milks, Green pastures, Milk Table 3: Product analysis (Source: Burda Teuteberg, 2013) SWOT/TOWS Likelihood Impact Score STRENGTHS S1. Huge market share 8 S2. Attractive pricing strategies with the frequent price cuts and promotional offers on regular basis 7 S3. Impressive online order as well as delivery pickup service 6 WEAKNESSES W1. Negative publicity revolves around the negotiation with Australian suppliers that hurt the public sentiment 8 W2. Flaws in the products and services such as the habit of keeping the eggs in the shelves instead of cold store 7 OPPORTUNITIES O1. Seizing the control of the supply chain to manage the production and increase profits 7 8 56 O2. The geographical expansion could help the firm to expand the operation 8 9 72 THREATS T1. Intense competition in the supermarket space leading to the food price could plummet to low margins 7 8 56 T2. Customers have the confusion among the different generic brands 6 7 42 T3. The retail sector in Australia has been developing as competitors get into the dynamic business models 7 8 56 Table 4: SWOT analysis (Source: Hipp Roussell, 2013) TOWS analysis STRENGTHS WEAKNESSES OPPORTUNITIES SO S1,S3/O2: Using both online and outlet selling can expand their market share along with the geographical expansion WO W1/O2: Coles can counter the negative publicity with the help of business expansion strategies W2/O1: By controlling the supply chain Coles can handle the product and service flaws THREATS ST S2/T1: Coles can use attractive pricing strategies with frequent price and promotional offers so that the new competitors will not be able to capture the market, as they have to develop a low pricing strategy at the beginning WT W1/T2: Intense competition and negative publicity can lower the profit margins, which Coles can manage by business expansion W2/T3: Product and service flaws can deter Coles development in the retail sector. 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