Implementing Woolworths Marketing Mix
Task: Choose a reputed 'service providing company' of your preference. It is suggested that you choose the same company you had worked for assessment task 1. In this assessment task, you will develop a services marketing case on how culture shaped the service providing company's marketing mix elements.
Your case should include the following key features.
- Background: Provide some key facts about the company/industry and its current sales, market share and/or growth potential. Provide citations, where applicable.
- Culture's effect on service operation: Identify and discuss some key issues of cultural challenges that the company had faced earlier and their effects on company's service offering and marketing mix (4P) elements. Provide citations, where applicable.
- Strategies implemented to overcome the challenges: Identify the 4P strategies that the service providing company had implemented to overcome the cultural challenges. Explain with relevant theories you have studied in this unit.
- Lessons learnt: Reflect and explain what you and/or other relevant company in the same industry can learn from this case. Make specific suggestions with some bullet-points.
- Present the report in a professional manner, including expression, grammar and sentence, style, format, title page, table of contents, citations and references etc. Provide at least 10 references, including relevant journal articles, books, and authentic Web sources.
Background of the Organization
Woolworths is a one of the finest and renowned supermarket and grocery store which started from Australia. The brand follows Woolworths marketing mix strategy and is offering its services currently in Australia & New Zealand. Woolworths was founded by 5 entrepreneurs in the early 19th century in the year 1924 and ever since the company has been on a pedestal of growth. Starting from 1 store in 1924 to over 3000 stores in 2020, the retail chain employees over 200,000 people and serves 29 million customers across its brand every single week. The company made whopping revenue of over A$ 39.568 Billion in 2019, and most of its sales were dominated by people from all the section of society. The company posted a profit of A$ 2.97, which was 56% Higher than 2017 (Muchiri, 2020). Woolworths in Australia and New Zealand is seen as an epitome of supermarket when it comes to buying fresh products. The aim of the company since its inception has been to offer premium services to its customers at an affordable price tag. The recently launched slogan “Fresh Food People” is an embodiment of the fact that the company has pledged to provide fresh food to customers at reasonable prices. Over the years the group has transitioned from just being in retail sector to now foraying into the financial and insurance services in Australia
The New Concept Store
A couple of years back; Woolworths after a lot of independent research and gazing through the US, UK & Hong Kong Market launched what is today called as “New Concept Store”. The main highlight or the striking point of this new concept store is that it offers superior quality product which includes poke bowls, sushi bars, kitchen hot meals, additionally the store also has curated food menu for the city workers (Duncan, 2018). The new concept store is launched in the costliest retail strip of Sydney and is quickly getting noticed by the city dwellers. The new concept store is created to provide the people with great quality product and an amazing shopping experience. People earlier used to visit the supermarket once a week, but with this New Concept Store, people can come in anytime, eat shop and experience the new style of shopping (Woolworths Group, 2020)
Culture has a big impact on the service operation of any organization, within the purview of the report such cultural issues and challenges would be identified which the company faced earlier and impacted Woolworths marketing mix. After the analysis of the challenge, the report would also highlight the Woolworths marketing mix strategies implemented to overcome the challenges using relevant theory to the literature. Towards the end, a small reflection will be made on my learning from this case study along with a couple of recommendation for the companies operating in the similar space.
Culture Effect on Service Operations
Culture is one of the most fundamental determinants of a person’s need, wants and desires. There has been a lot of research demonstrating the close correlation culture, sub-culture and social classes have over the buying behavior of the modern day consumer. With the evolution of technology, a lot has changed around us, whether it is the eating and nutritional habits of people, their dressing sense, their purchase behavior, their shopping patterns, frequency and everything has evolved in the present era. This Woolworths marketing mix change is attributed to technology, globalization and liberalization and the companies who quickly adapted to these changes earned themselves a fortune, while other who missed had to close their companies.(Azimi, Claver, Suzuki & Pascal, 2020).
The similar trend has been seen across the supermarket or the retail chains. Shoppers buying behavior, their likes, preferences, dislikes everything has changed. They are now looking for a new and real immersive experience at the outlet. The Australian culture has seen this evolution coming from the US, UK & the Hong Kong markets, which ultimately led Woolworths to change its “Service Product Concept” to better suit the needs of the customers and bring innovation into its stores as a competitive advantage. Some of the cultural challenges identified at Woolworths marketing mix are:
- Shopper visiting the stores once a week- It has been observed that shoppers usually visited Woolworths just once a week. Now, a closer look at this frequency implies that in a month the shopper would be dropping to the store just 4 times, that too if he is a brand loyalist. Else, the shopper can easily go out to other supermarkets or the places that are offering some discounts or running some holiday/weekday/weekend sales or anything. This definitely hurts the revenue and profitability of Woolworths (Patel, Trivedi & Yagnik, 2020).
- Lack of Innovation and Differentiation leads to Customer Dissonance- Dissonance in marketing can be understood as a conflict within a customer, which leads to either taking his money to some other place to make a purchase or feel sad after making the purchase. Lack of Innovation and Differentiation can also be seen as one of the factors for customer dissonance. Woolworths marketing mix hasn’t been innovating for a long time, which was impacting its revenue and profits, additionally huge discounts from big retailers, online shopping and others are some other factors of reducing revenue for the business, thus impacting its value proposition (Narang, 2020)
- Shift in consumers shopping behavior- Ikea was one of the early stores to come up with the concept of mixing food while shopping for furniture and other offerings at the store. IKEA offered plethora of varieties of food stations along the way customer travel in the stores. This was a huge innovation done by IKEA and if the research is to be believed, IKEA in some of the countries make more money by selling food than by furniture. The problem with Woolworths was that it wasn’t offering anything which was unique to the brand, its product was hygienic, high quality, affordable price, but still the secret sauce of gluing the customer was missing the entire time. At the same times, when these customers visit other countries, they get easily influenced by seeing the culture, as that of US, UK & Hong Kong besides others, which leads to change in their shopping behavior. The customers are now looking for a one stop go for their shopping needs intermixed with some good food experience (Mantur & Borgaon, 2020).
7P of Marketing Mix (4P for the Product & 3P’s for the Service Offering)
The Woolworths marketing mix determines its marketing strategy; the model earlier had just 4P’s. It was only after the Services gained paramount important 3P’s were added to the matrix to provide the model a more comprehensive understanding of the surrounding and for the business better information to carve out a marketing strategy. Let’s have a quick look at the earlier 7P model which was impacted by the culture.
Product: The supermarket giant provides large variety of grocery product, fresh farm products, fruits, vegetables, food for pets, processed foods and other such items required in day to day life. The store also has collection of DVD, Stationary, and Magazine etc. which adds to the diversity of the store (Woolworths, 2020
Price: The Woolworths marketing mix follows a slightly unique and a different pricing strategy. While on one hand it has a premium pricing strategy especially for its Fresh farm products, on the other hand it has moderate to neutral pricing for other products. Woolworths is perceived as a brand which provides premium products and reasonable pricing.
Place: Woolworths has over 3000 stores which are located across Australia & NZ in every nook and corner. The store can be located on a filling station, in a mall or wherever there is a good footfall of customers (Woolworths, 2020)
Promotion: The Company uses a mix of traditional and contemporary marketing tools for promotions. An intermix of TV commercial, pamphlets, Social media, floorwalkers and others are some of its promotional methods.
People: Woolworths marketing mix contributes to the employment index of NZ & Australia as it employees over 300,000 thousand people in its stores. These people are seen as the ones responsible for the success of Woolworths as they have been the ones guiding customers to buy the right product (Woolworths, 2020).
Physical Evidence: Physical evidence is related to the ambience of the place where the services are generated, tidiness of the store, resources wearing company’s uniform, badges on the dresses, items segregated and kept properly in shelves are some of the examples of physical evidence.
Process: The process at Woolworths marketing mix is designed to satisfy the customers at every touch point of their interaction with the brand. Some of the processes are quick billing, lesser waiting time, easy feedback system, supportive staff and others.
Now, this is the 7P of Woolworths marketing mix for the Product-Service. This 7P is during the time when the organizations was facing culture challenges as discussed above. In the next section, a new 7P, Woolworths marketing mix will be derived for the New Concept Store.
Strategies to Improve the Cultural Challenges
It has been proven in the earlier section that culture influences the shopping behavior or the buyer behavior. The cultural challenges identified in the last section were the building blocks for the new strategy implementation at Woolworths. Let us dive straight into the Woolworths marketing mix of the new concept store and learn how the brand not only confronted the cultural challenges but came up with a formidable strategy to boost its business revenue.
What is the impact of Woolworths marketing mix (New Concept Store)?
We have already learnt by now that the Woolworths marketing mix or the 7P’s helps to attain the marketing objectives in the given target market. The study and understanding of 7P’s (Product, Price, Place, Promotion, Physical Evidence, Process & People) would help the readers to identify the Woolworths marketing mix strategy adopted to shake up the cultural challenges.
Product: As mentioned earlier, Woolworths was selling grocery items, stationary, fresh farm and other related products before the launch of its new concept store. The Product Service offering of the company changed drastically after the introduction of this new store. Some of the salient product feature includes:
- New Concept Store comes with a Café & Kitchen
- The new concept store has a sushi bar, poke bowls and kitchen serving hot meals. Additionally, the store also serves curated meals for office workers in the city.
- Fine ecosystem of Shopping and eating.
- Sandwich press and in Store Barista
Thus, now the New Concept Store boosts of an experience which involves both shopping and eating. Consumers can even make fresh products from the live kitchen at the New Concept Store, which most definitely gives Woolworths a competitive edge (Carroll, 2019)
Price: As mentioned earlier in this Woolworths marketing mix study, Woolworths is known as a brand which offers premium and good quality products at a reasonable price tag. However, with this new store, the pricing strategy of the company has changed a little bit. The store which open with a low profile is slowly starting to get attention of the consumers. Some of the items such as the Vegemite, Corn Flakes, Instant Coffee, Free range eggs are slightly expensive than the other suburban supermarkets. Now this pricing can be justified keeping in mind the convenience people are getting at the store. It is like a person enters a store and has everything he needs there and he just pays a little premium for the service. The Purchasing power parity of the middle class segment in Australia is on an increasing trend, thus the pricing strategy would not adversely impact Woolworths (Govender, 2019)
Place: The first ever New Concept Store by Woolworths or the mini supermarket in Sydney is located in the 7th most expensive retail strip at Pitt Street Mall. The store is on the likes of Hong Kong Market and the store is inspired from those in the US & UK. The company has plans to open at least 100 of such stores in uptown market. Another advantage of the place here is that it lies in the heart of city where there are hundreds and thousands of city workers and other consumers at any given point in time. The new concept store being opened in the 7th most expensive retail strip in the world at Sydney is again an indication of the seriousness of Woolworths marketing mix to gain a competitive edge using the drivers of innovation and differentiation. The place is fully equipped with charging station for the consumers and the facility of ordering online is also available (Pulker, Scott & Pollard, 2019)
Promotion: The store was opened with less of fanfare quietly in Sydney. However, the word of mouth is getting in the market; also the organic traffic is growing in the store with each passing day. The company has also started promoting the new concept store on social media and looking at the customer review it sure seems that the store will be a runway hit. Some of the customers are also calling the store “High Concept Store” due to its innovative thinking in terms of cost reduction, no packaging cost & 3 times shopping in a day.
Physical Evidence: The first thing a person seen on entering the store is a sight which is completely different from the conventional Woolworths store. On entering the person sees a Café, where one can enjoy the breakfast, and then as the day further progresses people can find lunch and when they are heading home they can have the dinner at the store as well. The curated meal or bowls are kept right there where the customers can see them and are a hit amongst the working class population. Beautiful indoor seating is one of the bests in Sydney and the phone charging stations gives consumers a feeling of home. There is also a beautiful kitchen which adds to the beauty and mystery of the store (Bailey, 2020).
Process: The process at this new concept store is fairly simple and it has more to do with DIY. The numbers of employees in the store are lesser than one sees in the conventional Woolworths store. Another important highlight which says a lot about the company’s process is the shorter queues and people can check out at a much faster pace. Customers also have an option of online shopping, so while they enjoy their food they can also order products online. This is a major breakthrough and the customers are literally excited about this process. Another highlight of the Woolworths marketing mix process is that the store is not collecting any Packaging charges, which implies customer save some money (Brown, 2020)
People: The People are fewer in the stores but are helpful in guiding the first time buyers at the stores. The employees or the people can be seen wearing the brands uniform with the badge and the cap.
Towards the end, it can be said that New Concept Store is arguably the innovation in the right direction. Coles, a competitor of Woolworths has also planned to open up such stores on the similar model, implying the first movers advantage to Woolworths marketing mix when it comes to coming up with a store where people can enjoy best and hygienic quality food with hassle free and seamless shopping experience(Sinclair, 2020).
Lessons Learnt & Recommendation
I am absolutely thrilled with this New Concept Store launched by Woolworths. There is no denying about the times are changing, ad it is changing for the good, hence in the changing times, the company which is customer obsessed and is continuously thinking what can be done to make the lives of the customer simpler, takes the major pie off the market. Some of the major learning from the case of Woolworths marketing mix which can also be applied by other companies operating in the similar space is:
Technological Innovation & Differentiation
At the blink of an eye we see technology changing which leads to innovation, inspiring differentiation. Woolworths case study on the new store is the preamble of its vision which is towards sustainable solution for all. Intermixing food with shopping looks simpler concept on the outside, but is really tough to execute. But, the company made sure that it has to tackle every possible challenge in its way and pave the path for technological innovation. It is this innovation which showed double digit profit jump for the supermarket brand. At the same time, in the industry which works in a red ocean strategy, this move of Woolworths marketing mix can be seen as the one in which it is working towards a blue ocean strategy (Duncan, 2018).
Being Customer Obsessed
Jeff Bezos, CEO & Founder of Amazon is the best example of being customer obsessed and not being obsessed with the competition. Woolworths has more or less applied the same Woolworths marketing mix strategy and identified the challenges people have been facing while shopping in the day to day life and how this problem can be solved. The new concept store would have been a reality if the company would not be obsessing about its most important stakeholders its customers and observing their changing purchase behavior.
Research holds the key to Success
It is mentioned in the section earlier as well that the Woolworths marketing mix could conceptualize and open its store after doing extensive research on the buyers shopping behavior, study of the market in US, Hong Kong and the UK. It is only after the successful completion of this study company could come up with the store. This brings to my third learning, primary and secondary research both are important for the growth of business, hadn’t been the research conducted, I really am not sure what would have been the outcome. Hence, it is very important to delve into a deep research study on the consumer, their buying behavior, their pain points, touch points and also a research on the similar demographic markets.
Focus on the Experience
According to the Woolworths marketing mix, the new concept store has everything which provides the customers with an immersive experience. May it be the look of the store, the comfortable seating, and live kitchen in the store or even the mobile charging station? All these physical evidence are pivotal for the customers and provides customers with an experience they never had. This brings me to my 4th and one of the most important learnings from this case study, if we focus on delivering customer experience, we sure can guarantee the success of any project. Customer is king, holds valid at any given point in time.
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