Analyzing the Macro Environment of Coles

Discuss About The Business Models Relationship With Marketing.

Coles Supermarkets Australia Pty Ltd is one of the major supermarket retail and consumer services chains and its headquarter is located in Melbourne, Australia. It is owned by the parent company known as Wesfarmers.  The company has over 100,000 employees and operates more than 800 supermarkets all over Australia. The company holds a huge marketing share of the Australian market and has competitors like Woolworths, Aldi, etc. The company has managed an online website where the products and services can be accessed online and it provides ease for the customers to make purchases too. The managing director of the company is John Durkan and the operating income of the company is A$ 1.9 billion and revenue of over A$ 33.00 billion (Coles.com.au, 2018). Being one of the major retail supermarket chains in Australia, the company has managed to market its products and services properly to fulfill the needs and requirements of the customers as well as delivered good quality products and services to keep them satisfied, safe and healthy.

The external environmental analysis is conducted by conducting the macro and micro environment analysis by using the PESTLE analysis tool and Porter’s five forces model respectively (Kotler, 2015).

The macro environment is related to the economy and includes various aspects of gross domestic product, information about the rate of inflation, employment, and monetary and fiscal policy along with spending of the consumer in different market segments.

Macro environment analysis is the analysis of external market conditions and it can help in understanding the influences of political, economic, social and technological factors associated with the business (Vitouladiti, 2014).

The Government rules and regulations are against the duopolistic market nature of Australia, because of which, it has become important for Coles to make sure that the political matters are considered to keep good relationships with the Government and other regulatory bodies (Armstrong et al., 2015). This has not only created ease in establishing business, but also has allowed for better delivery of products and services to the customers. The political factors have created various implications on Coles such as better management of business through the consideration of monetary and fiscal policies, inflate rate and rate of interest too. Free trade agreement with China influenced the management of international business too.

Lower spending by the Australian customers can affect the business profit level. (Miquel-Romero, Caplliure-Giner & Adame-Sánchez, 2014). The economic factors often created in lower spending by consumers and they have often switched on to some other brand products for saving a lot of costs. Thus, Coles focused on increasing the private label offerings for remaining competitive in the market and stayed ahead in the competition based on the convenient choices made by the customers.The increased disposable income in Australia also improved the level of growth for the supermarket chain.It also helped the company to maintain a good market share.

Analyzing the Micro Environment of Coles

The company provided educational facilities to the poor for creating a healthier and better society where people could live in and make their own purchasing decisions. The Australian wine is famous overseas and is considered as fashionable worldwide, which can increase the sales. On the other hand, water and non-alcoholic products are considered as much more healthy, due to which people may get influenced not to purchase liquor products from Coles, rather make choices for other healthy products (Weinstein & Pohlman, 2015).

The online website helped the customers to access the different products and services properly and the payments were done securely online (Vitouladiti, 2014). With the technological advancements, the online grocery shopping experience of Coles has been improved, which also created ease in making customers has influenced to become loyal customers. The various uses of wine products and better utilization of water helped in preserving the positive image of the Brand. The extensive use of marketing concepts further contributed to the enhancement in product quality for Coles, Australia.

The Australian Government introduced various laws, rules and regulations to ensure that the companies, while managing the business operations, create lesser impact on the environment. The utilization of sustainable products and services along with the eco-friendly supermarkets helped in maintaining the environmental standards too, which contributed to the maintained of ecological balance in nature too. The increased control on water conservation could reduce availability of water during irrigation, which might even result in lower production of liquor products in the market and the same might happen for Coles in Australia.

Lega There had been focus on stopping drink driving and even on the effects of alcoholism within the society, due to which health awareness campaigns were promoted as well. The liquor market of the company could thereby experience gradual downfall and this could reduce the sales revenue too (Coombes & Nicholson, 2013). The opportunities of the company included the private label strategy, growth opportunity in the national liquor market along with the insurance and finance sector opportunities too. The new market scanning would create more scopes for the company to analyze the needs of customers and deliver products and services accordingly. (Martín-de Castro, 2015).

Porter’s five forces model is used to assess the present position of the Australian retail industry and determine ways by which the performance conditions can be influenced.( Kolios & Read 2013)

The bargaining power of the purchasers in Australia is quite high because of the presence of multiple supermarkets and retail chains that can deliver products to meet the needs of the customers. The customers have wide range of options to choose from the various supermarkets all over Australia and thus the bargaining power has also become higher. With the low cost private offerings by other companies, the customers have often switched on to some other products, because of which, Coles may face difficulty in creating loyal customers. But being a reputed and large company, Coles Supermarket experiences moderate bargaining power of the buyers as most of the customers are quite satisfied with the products and prices set for those.( Martín-de Castro 2015)

Internal Environment Analysis of Coles

From the analysis of the data and information, it was found that the retail industry in Australia is highly concentrated as well as presence of so many big players have concentrated the market share largely too (Möller & Parvinen, 2015). Thus, the bargaining power of the suppliers is moderate and with enough supplies delivered to the company, Coles has management to develop wide variety of products and services to fulfill he needs and requirements of the customers.

With the rise of new entrants in the market, the Australian retail industry is very less affected. It is because Coles Supermarket has already possessed a string brand image and reputation, which makes it difficult for the other small companies to sustain in the marketplace. Thus, the threat of new entrants is low for Coles Supermarket, Australia (Coles.com.au, 2018).

The consumption of retail based products is high and so there are very less numbers of substitutes that are available in other companies and not in Coles Supermarket, Australia. Coles, being one of the largest retail supermarket chain holds almost every kinds of products and services that can be accessible to the customers and thus the threat of substitute products is low as well (Navarro-García, Arenas-Gaitán & Rondán-Cataluña, 2014).

The threat of competitors in the market is moderate. It is because Coles Supermarket has a huge market share and thus the other competitors sometimes felt difficulties to compete with the company such as Woolworths, Wesfarmers, etc. Consumers sometimes change to some other company products because of the price differences, though Coles Supermarket has set the right prices for the products to influence the buying behaviors of the consumers largely. The Australian retail market has evolved and it has allowed many competitors to enter the business and created new ideas as well. Coles has a good market share and being one of the major companies specified in the liquor market to stay ahead of its competitors too. Thus, it could be concluded that the threat of competitive rivalries is moderate for Cols Supermarket, Australia (Bennett & Chorley, 2015).

The resources obtained for conducting the internal environment analysis are profitability achieved by Coles, product quality brand associations, relative cost of the product, performances of the employees and even the product portfolio analysis. The capabilities include the identification of strategic strengths, weaknesses, limitations along with the uncertainties that may be faced. 

The internal environment analysis is done to analyze the strengths, weaknesses, opportunities and threats faced by the company. The major strengths of the company that have allowed the company to gain sustainable competitive advantage include strong Brand image and reputation for Coles Supermarket, huge market share of the domestic liquor and food market, extensive and innovative advertising and promotional strategies along with attractive pricing strategies. The company manages a website that has helped the customers to make orders online and get the products ordered delivered at their doorsteps with ease (Bickel & Friedrich, 2013).

Conclusion

The patriotic slogans like “Proudly Australian since 1914” has also influenced the price conscious customers and influenced their buying behaviors too. The major competencies of Coles Supermarket, Australia are pricing strategies, distribution of products and services in wider market segments, product and price differentiation, fragmentation of customers and the best quality customers’ services provided have also helped in maintaining stable relationships between the business and its customers. (Kolios & Read, 2013).

The attractive pricing strategies helped in cutting the prices and delivered promotional offers to influence the buying behaviors of the customers (Boons et al., 2013). The successful promotional campaigns also helped in attracting major suppliers, which further helped in introducing different level of genetic brands that could be able to cater the needs and requirements of the customers (Huang et al., 2015). The online website where the customers could access the products and services and place orders online was quite effective as well.

The main factors that have helped Coles to gain competitive advantage are proper pricing strategies, quality of products and services and delivery time along with the product innovation techniques too. One of the core competencies could be the legacy investment for protecting the stores and provide convenience to the customers during the maintenance of online shopping. The customers found it easy to purchase the products and services and could get the products at a much lesser price, then delivered at their doorsteps. This not only saved a lot of time and effort, but also created a positive mindset among them, which favored the influencing of the consumer buying behaviors (E. Dobbs, 2014).

In the case of Coles, there are various weaknesses being identified in terms of their tangible assets. One of the major tangible weaknesses for them is the distance between their distribution center and their stores. Thus, the cost and time incurred in the transportation process is more for Coles compared to their competitors. The more time and cost is invested in the logistic of the goods, the more ineffective will be their entire supply chain management. In the time of the seasonal demand, Coles are facing the issues of quickly transporting the goods from their distribution center to their stores. Another tangible weakness identified is the products of Coles. This is due to the reason that price point of the products of Coles is relatively higher than that of their competitors. This is limiting the number of target customers for them.

One of the major intangible weaknesses for Coles in terms of the brand competitiveness is the lack of differentiation in the market. This is due to the reason that the business approach of Coles is similar to that of their competitors and there is less space for the customers to differentiate between them. Though the customer goodwill for Coles is favorable and positive, but due to the cheaper offerings from their competitors, customer goodwill of them is not converting in to sales volume. One of the major intangible weaknesses for Coles in terms of their strategic alliances is the partnership with Shell. Coles and Shell are having strategic alliance where Coles are having their convenience stores in the gas stations of Shell. However, it is having limited benefits for Coles. This is mainly due to the reason that the concept of spending more time in the convenience stores have got matched with the less time spent in the gas stations. Thus, this can be considered as one of their weaknesses.

The internal resources were assessed by evaluating the profitability achieved by the company along with sales revenue achieved and product quality brand associations. The relative cost of the new products introduced and employee capability are also evaluated. At Coles, the workers are dedicated towards the vision and achievement of goals and objectives, which has also helped in maintaining a stable product portfolio analysis. The capabilities are seen in the form of company’s strengths like bigger market share and its huge share of domestic food and liquor. The weaknesses were faced due to the competition given by Aldi and Woolworths within the Australian supermarket.

Due to lack of clear, presentable and distinctive communication, customers were somewhat confused to make choices from the different generic level brands (Porter & Heppelmann, 2014). Many of the consumers even opted for the small retail companies and with the evolvement in Australian food and liquor market, the competitors were also introducing new game changing models and ideas to promote growth and sustainability. There were other green environmental issues too, which was the cause of manufacturing and production processes of the super market chains in Australia. It was necessary for Coles to manage fossil fuel power without emissions of high amount of carbon and use renewable sources of energy, though the company was less concerned about those.

• Coles need to manage the political matters properly and ensure abiding by the rules and regulations of the Government and regulatory bodies to ensure proper functioning. With proper relationship between the Government and its employees, the competition policy was removed, which has created convenience in establishing business successfully.
• It is recommended to keep the prices of products and services lower to compete with the competitors and ensure that the customers are kept influenced to make purchases from Coles Supermarket, Australia.
• In order to obtain good quality raw materials and resources, it is recommended for Coles Supermarket to pay the suppliers properly for keeping good relationships with them.
• With the advancement of technology nowadays, Coles is recommended to adopt greener technologies and manage sustainable measures to create lesser impact on the environment as well as facilitate the production of environment friendly products and services for the customers.
• The company should also control the supply chain activities and enable geographic expansion to reach new market segments globally and generate more revenue in business.

Conclusion

The report was prepared to conduct the strategic analysis of the organization named Coles Supermarket in Australia. In this assignment, discussions were made regarding the external environment analysis considering both the macro environment and micro environment analysis. The company delivered good quality products and services for catering to the needs and preferences of the customers in the different market segments. The macro environment analysis was done with the use of PESTLE analysis to determine the political, economic, social, technological, legal and environmental factors that contributed to the business management while the micro environment analysis had been done with the utilization of Porter’s five forces model. The internal analysis determined the strong areas of the organization such as impressive marketing strategies, string brand image along with other opportunities too. Lastly, few recommendations to overcome the issues faced by the company were presented to derive a good conclusion in the end.

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