Identify Marketing Opportunities for Woolworths

Woolworths’s group limited is an Australian retailer that was established in 1924 as a bargain
store in Sydney. The group of companies operates supermarket and grocery stores, take away
liquor stores, hotel and gaming services among others that are distributed across Australia
and New Zealand. The company is also the largest in Australia by revenues and also among
the world largest retailers. For this paper, focus will be on the retail supermarkets and grocery
stores in Australia and New Zealand.
Market Share and Competitor Analysis
The main competitors of Woolworths are Cole group, Aldi supermarket, the Independent
Grocers of Australia (IGA) and many other small supermarket outlets. As of March 2020,
Woolworths had the largest market share with 32.9% of all sales followed by Cole group with
a market share of 26.6%, Aldi with a markets share of 12.4%, IGA with a market share of
7.3%, other small supermarkets had a share of 9.1% and the fresh food stores had a market
share of 11.8% as shown below (Morgan).

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In the ecommerce sales, Woolworths dominates the market with a market share of
60.1% while Cole group comes in second with a market share of 33% leaving only 7% to be
shared by the other competitors. Despite the dominant market share, competition in the online
business is set to intensify and Woolworths might lose some market shares. For instance, in
the year 2019-2020, Woolworths grew its online presence by only 3% while its closest rival,
Cole group, grew its online presence by 7%. Data evidence also points that other retailers are
growing at a higher rate compared to Woolworths as shown by the market penetration
statistics below.

From the graph above Woolworths grew its overall market by 3.6% in the period
2018-2019, while others such as Aldi grew its market by 8%. The other small supermarkets
are also encroaching the market since they expanded their market presence by 20.8% in the
same period. This indicates that there is a growing demand and increasing competition in the
retail industry.
According to Roy Morgan research, the shopping trend after COVID-19 in Australia
will significantly shift to online and ecommerce shopping. Currently online retail business

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account for only 3% of supermarket sales and therefore there is a huge growth potential yet to
be exploited. The Roy Morgan research also notes that there is no loyalty in the retail
business in Australia. Therefore, to increase the growth rate and maintain a loyal customer
base, Woolworths should invest more in the ecommerce marketing or start to mass produce
some of the small household items such as detergents so that it can save costs and position
itself as a low cost leader in the market.
Potential New Market
According to the Roy Morgan research, many consumers are likely to shift their purchasing
habits to online shopping due to the convenience that it offers. The online shopping currently
accounts for only 3% of all sales in the country which is a very small percentage. This means
that the ecommerce and online market segment is underutilized and as such Woolworths can
explores this market by utilizing the correct marketing strategy. The possible marketing
strategies that the company can use include Market penetration, product development, market
development, and diversification.

Market Penetration

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Market penetration strategies does not require the company to develop new products or
services or even moving to new market segments. Instead, Woolworths should use the
existing products and services to grow its market shares. To successfully exploit this strategy,
the company can lower the costs of goods and services and also increase the marketing
efforts so as to lure more clients to the online platforms. This method has the lowest market
risk.
Market Development
Market development involves introducing the existing products and services to a new market
segment. The new markets that the company can explore are the rural cities and towns with
adequate internet connectivity and good road networks. Many of the residents of the interior
towns are discouraged by the high delivery fee charged on online goods hence the low
penetration of ecommerce. Therefore, to develop new markets, Woolworths can offer free
deliveries or lower the costs of shipping while also ensuring timely deliveries to ensure
customer loyalty. This would be a risky strategy since the new market might not fully
embrace the ecommerce leading to low volumes of sales and hence losses.
Product Development
Product development involves creating a new product for the existing market. In this strategy,
Woolworths can create a new product that is required most by consumers and sell it through
the online platform only. For instance, the company can develop small household products
such as new detergents, soaps, among others that are fast selling. However, such a strategy
would be a high risk for the company since the new products may fail to pick or the
consumers could prefer substitutes.
Diversification

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Diversification involves creating a new product for a new market. This strategy requires a lot
of market research to identify the products that will attract sales in a new market. However,
this strategy is very risky due to market uncertainties and therefore Woolworths should not
explore this option.
Marketing Opportunity
Woolworths is experiencing increased competition from its closest competitors, Coles and
Aldi in terms of growth capacity. In 2018-2019, Aldi supermarkets grew by 7% while
Woolworth’s market expanded by only 3%. Also, in the online business, Cole grew its
market share by 7% while Woolworths grew by again 3%. Considering that the companies
operate under the same external and economic environment, then it can be said that
Woolworths is not doing enough to grow its market.
However, the ecommerce trading is still unexploited and the company can invest in
this opportunity by introducing cheap products and also lowering the shipping fees to entice
customers. Secondly, to grow its market in the brick and mortar shops as well as the online
business, the company should consider manufacturing small home products such as
detergents, soaps and toiletries and sell them at a low price to grab attention of buyers. The
best marketing strategy to use in this two opportunities is through the social media
advertising through the paid and unpaid adverts.
Effects of Marketing Opportunities
By offering products at a cheap price on the online platform and also providing low delivery
costs and immediate deliveries, Woolworths can increase its market share in the ecommerce
sector to more than 70%. The company has a high financial ability that it can utilize to offer
cheap products by purchasing in bulk from suppliers. Also, by manufacturing their own
products, the company will increase the sales volume by approximately more than 5%. When

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people visit the online platform or the store for the cheap branded products, they will be
enticed to check other products hence these strategy will increase the sales volume and
consequently grow the market share for the company.
Demand Forecasting
Assuming that Woolworth’s starts to mass produce and sell a new line of shower gels, the
following would be the projected demand for the product.

NO (X) MONTH
2
UNITS OF SALE
(Y)

X^2 XY Y^2
1 jan 4800 1 4800 23040000
2 feb 5300 4 10600 28090000
3 march 4000 9 12000 16000000
4 april 6200 16 24800 38440000
5 may 7500 25 37500 56250000
6 june 9700 36 58200 94090000
∑=21 ∑=37500 ∑=91 ∑=147900 ∑=255910000
mean 3.5 6250

131250 73.5
Ssxy 16650 SSxx 17.5

b = SSxy/SSxx = 16650/17.5= 951.43
a = 6250-951.43(3.5) = 2920
Then the demand model Y=a + bX will be
Y=2920 + 951.43(X)

The model shows that as the time progresses, the demand for the product will continue to rise
provided the price remains constant and therefore the profitability will also increase with
time.

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Innovative Options
For the ecommerce opportunity, the company should utilize the search engine optimization
methods to increase traffic to the online website and therefore boost online sales. For the case
of manufacturing its own brand, the company can utilize social media marketing through paid
advertisement and also through strategic shop displays to show the price discounts offered in
the product.

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Works Cited

Morgan, Roy. “Looking Beyond The Panic-Buying, Australia’s Big Supermarket Story Is
Aldi’s Growing Market Share”. Roy Morgan, 2020,
http://www.roymorgan.com/findings/8336-fresh-food-and-grocery-report-december-