1.

Introduction
This report presents on Coles marketing issue and situation analysis. The main
issue of Coles marketing is the non-creative marketing strategy that could not
make Coles outstanding from other supermarkets, especially Woolworth. With the
high competiveness, only low price strategy (the current strategy with DOWN
DOWN promotion) could not win the customers. As a result, the new marketing
strategies are introduced and linked to the marketing goal for the next 12
months. The main goal is to increase the market share to 33%, which is more 2%
than previous year. The market target and position was discussed and analysed
(section 3). The market strategies based on target position analysis is presented
in section 4. The proposed marketing strategies are new and innovative to
handle the multi-channels retailing service. Eventually, the link between the
strategy and the market plan is discussed in section 5.

2. Marketing Objective
1.1 Coles marketing issue
Coles is on the of the largest supermarket chains in Australia with 31% market
share in the financial year 2012 (Connell, 2012). The core marketing strategy
focuses on the customers want and need. Coles lunched the low price strategy
to satisfy the customers (i.e. down-down promotion since 2010 (Ross,2012)),
however, the quality of goods remain at high bar and freshness (i.e Baked
Today, Sold Today promotion (King, 2013)). With these two factors, Coles
strategy is to balance between price and quality to establish the best
supermarket in Australia.
It should be noted that Coles was not the biggest market share in Australia, but
the Woolworth does with 41.1% market share (Connell, 2012) in the financial
year 2012. One of the main issues of Coles is the similar marketing strategies to
other supermarkets, especially Woolworths. Nowadays, the supermarket business
is high competitive and the similar marketing strategy could not make the
business win. For example, Woolworths has cooperated with Caltex for gas
station convenience and Coles has cooperated with Shell applied the same
strategy. Coles has focused in the fresh production in bakery, butcher, and deli
sections (Greeblat et. al 2010 & Mcllwraith et. al 2010) but Woolworth has

advantage in the freshness of foods because of own logistics department and

central warehouses. Cheap price strategy was the same between Coles and
Woolworth. As a result, there is no difference between Coles and Woolworth in
terms of the consumers perspective. Only advantaged location becomes the
critical point of the one who can win in business at the present. It showed that
Coles has lack of innovation in the unique marketing strategy invention.
Since a smartphone technology was introduced in the real world, an e-Commerce
was very attractive for supermarket business and other retail business.
Moreover, Australia e-Commerce market is growing fast in the past few years
(Solomon et al. 2012). Both Coles and Woolworth have implemented the
shopping online shop in their website. They also use the social media, like
Facebook and Twitter, to establish the customer relationship and advertising their
special event or deal. Again, e-Commerce became competitive as well as the
offline shopping between Coles and Woolworths. With these similarities, it is very
important that Coles must rethink its current marketing strategies and modified
them to be unique, innovative, different from Woolworth, and motivating the
customer.

1.2 Market Objective

The principle of customer behaviour is essential to create the new model of
marketing by considering mental model of the customers and building the link
between online shopping and offline retailing. Even though the new marketing
strategy is quite high risk, but if it successes, Coles also has high opportunity to
win Woolworths in the future if the new marketing strategy is totally different and
more attractive.
To take the closer look of the principle of buyer behaviour in supermarket
business can be described in three dimensions include as following diagram
(figure 1):

Figure 1. Three dimension of shopping behaviour

Figure 2. Coles online shopping page (www. Colesonline.com.au, acquired on July

23, 2013)
At the present, Coles offer three ways to shopping (figure1 and figure2),
including shopping at Coles, shopping online via Colesonline website , and order
online and pick up at the closest Coles branch. It should be noted that Coles has
mostly developed the marketing strategies in the store, and ignored to improve
the marketing strategy for other dimensions. The Coles market strategy is
currently implemented as following:

Low prices : Down Down promotion (Ross,2012) and $10 family meal
Coles loyalty : FlyBuys card (Ross,2012)
Environmental friendly shopping : soft plastic food packing, local

community support (Wesfarms 2012)

Product freshness : Baked Today, Sold Today promotion (King, 2013)
Network expansion: Close Express at Shell gas stations, spend over 30$

get 4 cent off per litre at shell gas station.

Feedback strategy : Tell coles get $5 off (Coles, 2013)

Even though these marketing strategies were successful, but there were no
different between Coles and Woolworth market strategy. Therefore, the creative
marketing strategy is essential for this situation. Personally, the new market plan
should be focused in the following dimensions:

Multi-channel retaining strategy

Brand recognition
Improved customer services
Not only low price, but the occasional price strategy
Impression shopping at Coles

In next 12 months, the marketing goal and objective includes:

Develop the promotion for combination between POS and e-Commerce

that has a minimum of 5,000 transactions a day using this service.
Improve the e-commerce service (www.colesonline.com.au) and released
advertising in variety of channels, such as newspaper, social media,
outdoor banner, TV, and so on.
Develop the brand recognition strategy into the new market segment
Improved the customer service and increase the customer satisfaction.
The number of customer complaints reduced 50%.
Increase market share to be 33%.

3. Target Market and Positioning

3.1 Target Market
Since 2008, Coles has growing the number of customer gradually and currently
hold 31% market share. The Coles managers over 2,200 strip malls, including
Coles, Coles Express, First Choice Liquor, Liquor Land, Spirit Hotel, Vintage
Cellars, and Bilo. The revenue performance was $16.9 billion in 2008 to $34.1
billion in 2012 (Connell,2012). In 2012, the performance increased 16.3%
compares to the last year. In the recent years, the working generation prefer to
shop online so that Coles developed the channel of shopping to support this
customer segment, the Colesonline.com.au (Deloitte, 2012). Moreover, the
customers prefer the honest food, fresh, and high quality but affordable
(Simon2012). The future trend of Coles is to develop the multi-channel retailing
services and higher product quality, service and value (Wesfarmers 2012). Coles
has a plan to refurbish the 400 stores across notions wide, extend 10 shops,
close 11 shops, and open 19 new shops (Harper 2012).

The market target of Coles can be categorised into four main segments. The old
generation who love to shop at Coles and non-prefer the technology. New
generation segment is prefer to shop online and want to try the new thing.
Working generation is prefer the most convenient way to buy the products and
not concern much about its price if they satisfy. The young generation segment
has no money to shop much, but it the good segment target that Coles can build
the brand recognition. In table 1, the link between the segment and the proposed
market strategy is presented.

Table 1. Suggested Target Markets and the link of proposed market strategy
Segment

Priority

Age
s

Middle

5067

New generation

Middle

2540

Working
generation

High

3550

low

1025

Old generation

Young generation

Focus
Old-fashion
shopping
strategy
Price concern
Occasional
concern
New
technology
concern
Convenient
concern
Product quality
concern
Price concern

Available in
campus
Brand
repeatable

Proposed Market
strategies
Freshness-to-prices
strategy
occasional price
strategy
low price
e-Commerce
Pick-up-Today strategy
low price
Pick-up-Today strategy
(combination POS and
e-Commerce)
e-Commerce
occasional price
strategy
Freshness-to-prices
strategy
Brand recognition :
Coles-on-Campus
Community support

3.2 Positioning
As the main position for Coles is the low price, it was successful and potentially
improved the number of customers. In figure 3 presented the comparison the
percentage of customer who shops at Coles and Woolworth. Since March 2010
after Down Down promotion released, Coles performance has improved and
higher than Woolworth (44.6% for Coles and 42.7% Woolworth at March 2013).
There is the high opportunity for e-Commerce market, and Coles has not fully
developed in this target group. In figure 4 shows the new position of Coles in
terms of multi-channel marketing strategy. Coles should pay attention to other
market channel, especially the e-Commerce, and the combination of eCommerce and retailing as collect at the store. It should be noted there are no
interesting marketing campaign for these channel at all.

Figure 3. Low price association with the supermarket where main grocery buyers
shop (source Roy Morgan Single Source (Australia), April 2003 to March 2013, 12
months average n=8425. Base: Main Grocery Buyers 14+)

Moreover, the new position of Coles in the product quality & freshness and price.
I recommended Coles to adjust the price based on the product freshness and
honestly notice the customer about the product. The customer then can feel that
they pay more they get more. The price should be set and balance between price
and the product quality, especially the fresh food. At the moment, the discount
for the food can grab high attention of customer, but it does not provide the

honest feeling that can gain the customer loyalty eventually. It can be called that
freshness-to-prices strategy.

Figure 4. Perceptual Map: e-Commerce and Price focus

Figure 5. Perceptual Map: Product Quality & Freshness and price focus

4. Marketing Mix Strategies

The marketing mix tool is applied to analyse the target value and the new
marketing plan (Borden, 1964 and Solomon et al, 2012). The marketing mix is
categorized in product & price strategy, promotion strategy, and distribute
strategy. The marketing strategies are described for each aspects as well as the
name of the marketing plan. The current strategies remain in the store; for
example, spend over $30 get 4c/L discount, FlyBuys points, Down Down
promotion, and etc. The additional marketing strategies are provided in this
section that they can support Coles to achieve the market aims for the next 12
months.
4.1

Product and price strategies

As the current Down Down promotion is used in store, Coles is considered as one
of the cheapest supermarket in Australia and grabbed a big attention from
customers. Coles realised that only cheap promotion cannot win the customer
mind, the product quality and freshness is another factor, which plays the key
role for customer decision-making. To balance between the product quality and
freshness to the price, I introduce the new product and price strategy, namely
freshness-to-prices strategy. I suggested that Coles should put the freshness
indicator label together with the price.

Figure 6. Example of freshness-to-price strategy and freshness indicator label

with the price tag.

This will provide more information to the customer in terms of the product
freshness (see Figure 6). The price will be dropped if the product does not fresh.
On the other hand, the price is bit high but affordable if the products are fresh.
To be honest with the customer would be potential benefit for long term period.
The customer will experience that Coles provides the freshness and reasonable
price to the customer, Coles never takes advantage to customer. In the long run,
the Coles reputation will be increased and target segment will be extended into
the high-class customers who consider only the product quality.
The new generation customers prefer to buy goods online nowadays. Therefore,
Coles should pay attention in development of e-Commerce program. The new
design and using the high technology in development of e-Commence
application becomes essential. The easiest way customer can buy the products
means the customers tend to use the e-Commerce application more. The design
is another factor that can attract the customers to shop online. The
advertisement is very important to introduce the e-Commerce website to
customers. The e-Commerce in supermarket still has room for develop and can
increase the large number of customers in the future.
4.2

Distribution Strategies

As consider the principle of product distribution, there are three basic ways
including in-store, e-Commence, and collect goods at the nearest store. In my
investigation the current Coles distribution, only small advertising and market
strategy development were focused in the e-Commerce and collect goods at the
nearest store channels. Coles should pay attention more in these distribution
channels.
Moreover, Coles can use the benefit of e-Commence to extend the products. For
example, Coles offer the other product category available only online shopping.
Once the customer orders online, Coles deliveries it to the designated Coles store
for free within the next day. After that, the customers can go and pick-up goods
by tomorrow or using the mobile software for tracking the delivery. With this
strategy, Coles is able to extend the product range into other type of product,
not just for the food, drink, cosmetic, and basic stuffs. I name this strategy as
Pick-up-tomorrow.

Figure 7. Three simple steps for Pick-up-Tomorrow strategy.

Figure 8. Coles on-Campus strategy

Another channel that Coles should consider is to capture the young generation
target segment. It should be noted that it is very hard to find supermarket in the
campus. If Coles can deal with the university or school to set up the small Coles
supermarket, Coles can build the brand recognition and it will be benefit for the
future. Students will recognise Coles band that can influence them to shop at
Coles after they graduate.
4.3

Promotion Strategies

The promotion strategies should connect with other market strategies and
support them to achieve the market goal. There are four main market strategies
that I stated in the previous section. Table 2 presents the link between promotion
and market strategy.
Moreover, the customer service in-store should be developed to impress the
customer services. The main Coles Company should establish the training
program for employees. The knowledge and know-how for training came from
the Coles experience and customer experience, how to deal with the difficult
customers, and how to solve the problem quickly. The program can extend the
quality of customer service in-store and reduce the large number of customer
complaints. That means Coles will gain reputation and the fresh customers tend
to visit Coles with the word-of-mouth marketing.

Table 2. The link of promotion to market strategy for Coles supermarket

Market strategy
Freshness-to-price
strategy

Promotion
- Price will be dropped if the product
freshness is less.
- $10 off for first register and purchase

Online shopping

- X2 Flybuys points earning

- To be first to know the new promotion, big
discount, clear stock, or etc.
- Provide $8c/L gas discount at Shell for every
transaction with more than 50$ spending

Pick-Up-Tomorrow
- Free delivery to the designated Coles store
from the central warehouse
Coles-on-Campus

- 5% product discount for students

5. Links between Marketing Plan Elements

In this report, the market strategy for each aspect in marketing mix tool (section
4) is described. However, the link between the marketing plan and the marketing
strategy should be connected. The strategies result to achieve the marketing
plan. In the next step, the marketing strategy implementation procedure should
be considered to make sure that the Coles staffs understand the new marketing
policy and use it in the correct way (Solomon et al, 2012). In figure 9, the link
between the marketing goals and marketing strategies is presented as the
diagram.

Figure 9. The link between marketing plan & goals and the marketing strategies.

6. Conclusion
This report is the analysis of marketing situation of Coles supermarket and the
recommendation of marketing strategy based on its analysis. Coles is the second
largest market share in supermarket business in Australia with hold 31% market
share by end of 2012. The current Coles market strategies are common and have
no different from the main competitor, Woolworth. As the result, Coles has faced
the difficult time at the present.
However, there are some target segment seem to be ignored from the current
marketing strategies, for example, young generation. I introduced five marketing
strategies, including freshness-to-prices strategy to show the company loyalty to
customer, better e-Commence system for new generation shopping online, Pickup-Tomorrow strategy to extend the product range and reduced the local stock
issue, Coles-on-Campus; the small supermarket at the university or school to
build the brand recognition and reputation for community, and the training
program for better customer services. The next step, Coles should consider the

procedure of strategies implementation and risk analysis of the strategies

outcomes.

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