Coles Supermarkets Marketing Plan - Target Market and Positioning - Case Study Example

Coles Supermarkets Marketing Plan Table of Contents Introduction 2 Target Market and Positioning 4 Market Segmentation Best Practices 4 Segmentation approaches 4 Geographic segmentation 5 Behavioural segmentation 5 Segmentation by occasions 5 Overall approach to an appropriate marketing mix 5 Promotional strategies 6 Place & distribution strategy 6 Pricing Strategy 7 Links between Marketing Plan Elements 7 Conclusion 9 References 10 Introduction A review of Coles Supermarket’s financial report shows that the retail store has experienced a steady growth rate over the years, enabling it to gain a large market share of the Australian retail market (Condon, 2013). At present, the company owns 26 percent of the market share, which the group attributed to its major strengths and ability to capitalize on opportunities such as strategic pricing, large customer base, and customer loyalty. In all, we placed emphasis on how the company has been able to maintain its profitability amid intense competition in the Australian retail market in an effort to propose an appropriate marketing plan. The company’s recent full year report shows it made a profit of $28.1 billion from 741 supermarkets, representing an average of 5.5 percent year-on-year profit increase. It is in my view imperative that Coles adopts strategic pricing and product differential to increase its profitability and to gain market share. The company faces stiff competition from Woolworths, which controls 54 percent of the market share (Ghodeswar, 2008). Marketing Objectives In my view, Coles objectives over the next 12 months are straightforward and are intended to ensure that the retailer runs in a profitable and ethical manner, strengthens relationships with customer, investors and suppliers, drive sales and promotes the supermarket brand. In sum, the retail store should seek to: In the financial objective, to achieve a forecasted profit over and the 5.5 percent incremental annual profit. Achieve profitability levels that are satisfactory for reinvestment and that can ensure equitable returns to investors and shareholders. To achieve market dominance by giving highest premium services. Provide personalized service to customers through e-retailing Strengthen relationships with its investors. Strengthen the retail store’s position in the retail market industry. Provide customer satisfaction within each of its 741 chain stores with regards to high standards, better facilities and customized product sales at fair price. Ensure management of the hotel through human resource policies that encourage and offer incentives to the individuals and team achievements through training and personal development. Create working environment where the staff can experience a real sense of job involvement. Market retail store through the use of effective marketing strategies. Incorporate efficient commercial practice and ethical standards in managing customers, the suppliers and its investors. Comply with Australian statutory legislation and the local authorities. Target Market and Positioning Market Segmentation Best Practices In segmenting the market, I had to go through two processes. First, I had to name the broad product markets. Second, I had to segment the market to identify the target market. During this process, I realized that a segmentation can fail when only one or two demographic characterized are used to segment a mass market, such as one that Coles is engaged in. This is since customer needs and buyer behaviour cannot fit appropriately into one or two demographic characteristics (Fuller, Hanlan and Wilde, 2005). The variable for segmenting the market were selected based on their usefulness in forecasting customer response and sales, since an effective target marketing is aimed at appealing to the common features that individuals share within a specific segment (Baker, 1998). Segmentation approaches The group was led by the strong conviction that by developing a marketing strategy, it would help identify a target market for Coles as well as develop a marketing mix that would appeal to potential customers. After doing independent research, I was convinced that the decisions analysis of demographic, psychographic and behavioural segmentation approaches would be crucial in order to position Coles’ products and services to the target market (Porter, 1996). Geographic segmentation I opine that Coles can segment its market through geographic segmentation. Here, a geo-cluster approach is used to combine geographic and demographic data to create an accurate customer profile. With respect to region, Coles should use aggressive marketing to market gumboots, warm clothes and raincoats and umbrellas in rainy and cold regions, and summer wear in hot regions. Behavioural segmentation I note that through this approach, Coles can segment its customers based on their attitudes, knowledge and response to retail services. This may also include understanding certain features that customers use to distinguish between product offerings by retail stores. This is also based on what the customers buy, including their status, brand, past and future use and preferred supplier (Ghodeswar, 2008). Segmentation by occasions This approach relies on special customer demands for special occasions. For instance, Coles can intensify marketing for certain products that are mostly used during specific occasions. For instance, products related to Christmas should be marketed exclusively during the period leading to Christmas (Baker, 1998). Overall approach to an appropriate marketing mix Over the next 12 months, Coles objective should aim at implementing a strategic marketing plan that will lead the company to the tactical marketing portion of conducting business. Based on Swot analysis of Coles current situation, it is in my view critical that Coles should have a competent strategy that would enable it to sustain its strengths, cut on its weaknesses, capitalize on the available opportunities and manage the threats that currently face its operation (Porter, 1996). Some achievable options that in my opinion could serve these objectives include: Promotional strategies Coles should establish more innovative customer loyalty programs such as introduction of loyalty cards to ensure the company maintains its customer base as much as it consolidates it. This is achievable in a 12-month period. The company should increase communication with its customers through the Internet and in person. The company should also develop an email listing of its customers and start direct mailing. The company’s promotional strategy also seeks to distinguish the product from those of its competitors (Civic Technologies 2009). Place & distribution strategy Coles should also use primary distribution channels such as direct e-commerce channel to complement its retail channel, which will complement each other, with retail being the predominant means of learning the new differential features of its products and services. The company should address strategic feedback mechanisms, such as a customer help desk or a review microsite on its website that enables its customers to express their reviews of Coles. This will enable it address customer concerns to tailor its goods and services to the customer needs (Porter, 1996). Product Differentiation Coles should aim at distinguishing itself in the industry using innovative products and services. Coles will have to integrate e-retailing to expand their sales. Additionally, it will have to put the entire customer experience-from browsing products to placing orders to paying for purchases - on the Internet (Tracy, 2000). Pricing Strategy Coles should continue to focus its pricing with competition in mind. Coles should set competitively low prices for its products. The company should also focus on attaining the goals of offsetting low prices by selling large quantities of products. Links between Marketing Plan Elements In my view, there is a link between the elements of marketing plan. The segments relevant to Coles’ offering include geographical, behaviour and occasion segments. Of specific interest is segment by behaviour that links to the proposed competitive strategies or low pricing and product differentiation. The significance of this link is that it will determine realization of the company’s objectives of increase in sales output and revenues. The retail store will have to fine-tune the strategic marketing tools -- such as place, promotion, product, and price -- to realize product differentiation and competitive pricing. Concerning differentiated points of value, I believe that for each of the segments, the top differentiators include distribution options, pricing and time value (Assael and Marvin, 1976). The strategies are in line with the differentiators, since the company will have to use competitive pricing, introduce online deliveries and ensure product or service differentiation through faster and reliable customer service at the 741 stores. Regarding communication and positioning by segment, it is also linked to other elements of the marketing plan. For instance, it related to the objectives of increasing market share from 26 percent. After a review of the segmentation approaches, it was therefore critical that I establish a link between marketing strategy plan as a technique of targeting certain customer types, segmenting markets and working to position the company strategically in the market. Four basic forms of market opportunities were in my view central towards this process. These included market development, market penetration, diversification and product development (Demand Metric, 2013). Figure 1: Forms of market opportunities for Coles (Demand Metric, 2013). Market Penetration signifies an attempt to increase sale of Cole’s products and services in its current market. They key strategies relevant for this objective include attraction of customers directly and aggressive marketing. Market Development comprises the attempts to increase Coles’ sales through sale of products in new market frontiers. The key strategies here include expansion into international markets outside of Australia, advertisement outside its usual geographic base to promote online retailing. Product Development comprises offering improved retail services to customers. A key strategy is listening to customer reviews to tailor the services to their needs. Diversification implies opening a new line of business with new products to mitigate risks in the Australian market such as inflations. Conclusion In sum, it is clear that Coles has to improve its quality of services to enable product differential and engage in competitive pricing to increase its market share. The marketing plan seeks to enable the company to realize these objectives to achieve a forecasted profit over and the 5.5 percent incremental annual profit, to achieve profitability levels that are satisfactory for reinvestment and that can ensure equitable returns to investors and shareholders and to boost market dominance by giving highest premium services. References Assael, H. & Marvin, R. (1976). "Approaches to Market Segmentation Analysis." Journal of Marketing 40(4): 67-76 Baker, M. J. (1998). Marketing: Managerial Foundations. New york: Macmillan Education AU,. Civic Technologies (2009). Using Market Segmentation for Better Customer Service and More Effective Strategic Planning, A White Paper for Public and Academic Libraries. Retrieved Condon, J (2013). Strong Coles result underpins Wesfarmers' financial year. Beef Central. Retrieved: Demand Metric (2013). Target Market Selection Segmentation and Positioning. Retrieved from Demand Metric website: Fuller, D., Hanlan, J. & Wilde, S. (2005). "'Market segmentation approaches: do they benefit destination marketers?', Center for Enterprise Development and Research Occasional Paper, no. 4, Southern Cross University, Coffs Harbour, NSW. Ghodeswar, B. (2008). "Building brand identity in competitive markets: a conceptual model." Journal of Product & Brand Management, 17( 1): 4–12 Porter, M. (1996). “What is Strategy?” Harvard Business Review, November-December: 61-78 Tracy, B. (2000). The 100 Absolutely Unbreakable Laws of Business Success. Berrett: Koehler Publishers. Read More