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Dominance of Coles and Woolworths in Retail Sector

Oligopoly market structure (Sahil Chand 19006710) 

-Oligopoly is a market that is shared between a few firms, it is said to be highly concentrated. Although only a few firms dominate, it is possible that many small firms may also operate in the market.

-Advertising to convey positive feelings and emotions associated with an experience. A simple way to achieve this in advertising is to feature people telling their own stories as seen in the new Coles advert launched 

- The competition and barriers to entry within the Oligopoly Market Structure that was chosen was probably the most important factor that influenced our choice of Woolworths, due to the heavy competition between Woolworths and Coles and the high barriers of entry that both firms have set along with the implication that come along with the barriers.

Oligopoly, the major firms operating within it constantly monitor the behaviour and actions of other rival firms, leading to great deals of competition existing with the industry. An example of such competition could be major firm’s price-cutting to drive out smaller firms attempting to enter the market, but then eventually landing themselves within a price-cutting war with a rival firm due to the competition that exists between them and the aim of getting the lowest prices to attract the most customers. 

Price strategies (Sahil Chand 19006710)

Coles:

High low pricing strategy: Flybuys rewards, Shell fuel discount, Discounts ranging from 20% to 50%. High-Low Pricing strategy is an important strategic choice retailers face that affects their price image and has significant long-term implications for profitability and local market structure (Ellickson, Misra and Nair 2012). Everyday low price: Down Down Campaign this campaign gave the brand more creative freedom to market and break away from consumers’ perceived association between the weekly cycle of products on special and wild price swings.

Woolworths:

High low pricing strategy: Woolworths Rewards Scheme, Caltex fuel Discount, Focus on deeper price cuts on key brands. Everyday low price: Cheap Cheap Campaign, Always at Woolworths.

Woolworths, it uses a low-pricing strategy, specifically the Everyday Low Price (EDLP) strategy. Due to reported declining sales of Woolworths, started a new campaign “Always at Woolworths,” which implies “low prices, always” (Mitchell 2015).

Woolworths’ ‘Cheap Cheap’ marketing campaign was a poor copy of Coles’ successful ‘Down Down’ campaign. The UBS Survey suggests that customers prefer to think they are buying ‘value’ rather than ‘cheap’ products as inferred by the campaign negatively influencing consumer willingness to buy.

There is some evidence that consumers base their store-selection decision on attributes unrelated to market prices such as location, cleanliness, service or product variety (Richards and Hamilton 2005). Woolworths falls behind Coles in several key measures including on-shelf availability, overall store presentation and staff.

Non-price strategies (Sahil Chand 19006710)

Coles:

Coles service quality in store staff, calibre store presentation, quality of fresh food.

Coles social programs program supports schools, clubs, groups and charities through fundraisers, raffles and charity partners across Australia through financial contributions, fundraising, food donations and disaster relief.

Connecting with the community Coles have partnered with Uncle Toby’s for their Sports for Schools campaign. Their advertisements feature an array of young, fit, attractive and successful athletes linking the athletic success with the purchase of products from Coles. Coles' new approach is subtler, selling themselves through aspirational stories and employing classic advertising techniques.

Woolworths:

Woolworths service quality of self-checkout service quality, customer satisfaction, and loyalty.

Woolworths social programs free Fruit for Kids, Earn and Learn, S.T.A.N.D., White Ribbon and programs with our food rescue partners such as OzHarvest and Foodbank.

Connecting with the community Woolworths new campaign features athletes and their connection with fresh food, positions the company, once again, as “Australia’s Fresh Food People”.

Conclusion (Sugethan Baladevan, 18972740)

Recommendation (Sugethan Baladevan, 18972740)

Coles has a better market campaign than Woolworths. Coles is falling behind on-shelf availability, overall store presentation and staff. Woolworths low price strategy is more successful than Coles high price strategy. Coles non-pricing strategy involves connecting with the community they have partnered with uncle Toby’s for their sports for school campaign and for Woolworths they have new campaign featuring athletes and their connection with fresh food. Woolworths high low pricing strategy involves Woolworth’s reward scheme, Caltex’s fuel discount and they focus on deeper price cuts on key brands helps Woolworths gain more customers and customer loyalty. I recommend Woolworths because they have a better pricing strategy through high low pricing strategies and low-price strategy than Coles, also Woolworths non-price strategy connecting with the community campaign is better as they campaign positions Woolworths as Australia’s fresh food people.    


Answer

DOMINANCE OF COLES AND WOOLWORTHS


Dominance of Coles and Woolworths 

As far as the retail sector in Australia is concerned, it can be clearly reviewed that the retail sector is led by Coles and Woolworths. In the opinion of Keith (2012), a large percentage of market shares of the Australian retail sector is gained by Coles and Woolworths and that is why there is huge dominance of the two companies in the sector. The greatest competitor of the companies is Aldi, however, in terms of major setback and competition, Coles and Woolworths lead the race. As stated by Knox (2015), as far as the retail stores of the two companies are concerned, there are more than 2000 stores owned by the two companies which is much more when compared to the other companies in the Australian retail sector. Therefore, it can be stated in this context that the more prevalence of stores is always convenient for the customers in terms of their accessibility. Thus, it has helped in the gaining of adequate number of customers as well in each of the corners of the country. As studied by Keith (2012), the petrol stations owned by the two companies are more than 100 which is evidently more than any of the retail companies in Australia. 

As commented by Roberts and Toleman (2007), the dominance of any company and its success depends hugely on the employee base and their proficiency. Thus, in the current scenario, it has been evident that the employee base in each of the companies amounts to 40,000 which is increasing in a gradual rate. The huge employee base contributes to the better productivity of the company, thereby, leading to a betterment of products and services of a company. Moreover, the better customer service has led to the gaining of a majority of the customers in the market. According to Knox (2015), the huge customer base of the two companies had led to the dominance of the two companies in the sector.

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