A trust-based consumer decision-making - Myassignmenthelp.Com

Question: Discuss about the A trust-based consumer decision-making. Answer: Introduction The present report is explores the market for Coles, second largest retail organization. It examines the primary market of the organization and the nature of competition in the industry. It examines the role of consumer behavior in the purchase decision making of the companies. Company Coles Supermarket is an Australian retail market and consumer service chain. The company has headquarters in Melbourne and the parent company of the organization is Wesfarmers. Coles was founded in 1914 in Collingwood, Melbourne. It has more than 100,000 employees and considered as the second largest supermarket chain in Australia. The biggest rival of the company is Woolworths, along with which it holds 80% of the net supermarket share of the country (Coles, 2017). Product/Service Coles is operational in a number of sectors in the retail industry. It sells groceries and household consumables in different supermarkets in Australia and New Zealand. The company also sells liquor through the retail stores. It also sells petrol and other petroleum products through its retail stores. Coles also provide financial services to the customers and there are several hotels, which operate under the same name (IBIS, 2017). Coles is a retail organization, which sells retail products at its stores. It also has an online store through which the customers can buy product from online mediums. It also provides online home delivery services. Coles also has seven private label brands which the company is planning to consolidate into the major brand (Khan, 2011). In addition to it, the company also has a private clothing brand. Coles provide a mid-price product range, which means that the product is designed to match the branded products of the organization. In the category of gourmet foods, the company can be considered as the producer of high quality food and is considered as the provider of high quality products at expensive rates. Consumer Coles supermarket is spread all across Australia and New Zealand. The retail stores of the company are spread all across the country. However, for this report, the target market of Box hill community is taken. It is a primary suburb of Melbourne, Australia situated in the East of the major business district of Melbourne. It is known as City of Whitehorse and the local government is also recognized with the same name. The estimated resident population of the area is 8,926 people and the usual resident population is 8,446 (id Community, 2017). Box Hill is popular for its multicultural diversity with a significant population of Chinese born as well as Indians. According to the recent statistics, aboriginal and Torres Strait Islander are 16 in number, and the Australian citizens are 6,353 in number (id Community, 2017). The population with permanent or temporary employment is 3,921 in number and there are approximately 180 overseas visitors in the country (id Community, 2017). The charac teristics and the preference of Chinese origin customers are different which are needed to be addressed in the retail stores of the company (IBIS, 2017). Industry Analysis and Market Trends All across the globe, there has been a significant shift in the business operations of retail companies, which are also observed in the Australian companies. In a global perspective, several changes have been realized such as customer attraction towards the specialty stores and expectations of more personal retail experience. The customers are looking for retail stores with personality and expectations of retail experience (Brady, Cravens, Maister, Peter, Thompson, Walker, 2007). The brick and mortar retail stores are becoming less fashionable for the customers and they are attracted towards online retail stores. As a result, several retail organizations are consolidating their stores, real estate, and employees to enhance their overall profitability. The success of the organization relies on its internationals reach, use of different retail platforms, accessibility and the speed of operations (Brei, Vieira Matos, 2014). Another significant trend of the retail industry is the thriving e-commerce sector. With time, the number of people going to the physical stores is becoming less and as a result of which the number of physical stores has also declined. In the present times, it is important that the retailers use multi-channels to thrive and enter into foreign markets. PESTLE Analysis The PESTLE analysis as conducted in the appendix shows that the retail industry is influenced by a number of external factors. The political conditions of Australia are quite stable which is beneficial for the retail companies. Moreover, the government has developed regulations to reduce the duopoly of Woolworths and Wesfarmers in the retail industry. The economic growth of the country also affects the performance of the organization. If the economy is growing at a fast pace, the company will benefit from the high sales. In another case, there will be a higher unemployment rate of the country and the overall sales will be declined. The retail industry is also influenced by the political stability of the country. It includes the foreign investors and the trading partners of the location. The political conditions in Australia are stable which is ideal for the retail companies such as Coles (Rowsell, 2016). Economic profile of Australia Australia is a vibrant economy and has abundance of natural resources and a well-functioning legal system. It is an open economy and skilled workforce is available in the country. The tax rate in the country is 45% and the flat corporate tax is 30%. The regulatory environment of Australia is transparent and the labor market is supported by the employment code (Heritage, 2017). The financial performance is also influenced by these factors as it results in reduces sales. The financial growth of the company is stable. Although a recession hit the Australian economy in 2008, the retail industry has remained stabilized. The retail shopping experience should be in-line with the affordability of the customers (Chernev, 2007). The location is also significant in the choice of the customers. The shopping experience of the customers should be supported by the use of technology and efficient management of inventory. A service oriented architecture should be designed which supports the supply of different items in the retail outlets. The retail sector should identify the upcoming changes in technology and adapt accordingly. Self-service check out is another option which can enhance the consumer experience with the technology (Cravens Piercy, 2013). Regarding legal requirements, food licensing is a requirement in the retail industry and new retail outlets require permission from the countrys regulations. Coles has been participating in recycling activities, sourcing the food from ethnically sound practices and becoming a socially responsible business enterprise (Treadwell, 2017). Competitors Analysis In the recent times, several small-scale and foreign companies (Aldi) have surfaced in the retail industry. It has increased the competition and several big players are facing the impact of the entry of these small players. In the last few years, the market share of Coles has increased for better. Woolworth profits have declined over the years, especially, because of its unprofitable business. There are also several issues with the branding, advertising, and promotional techniques of the organization. Both the major players of the industry, Woolworths and Wesfarmers have adopted strategies related to price deflation, cost reduction, and reducing the overall cost to the organization. The recent trend shows that there are highly competitive market conditions and the consumers to remain attracted towards low-cost retailers. The companies are also focusing on increasing the supply chain productivity by reducing the overall cost to the organization. Woolworths is reducing its expenditure on different business activities such as marketing and property acquisition and procurement. Wesfarmers is also conducting similar measures to cut the operational cost to the organization (The Conversation, 2017). The profit margins are significantly low in the retail industry; therefore, such kind of competition can further decline them. Segmentation Analysis Major market segments The market segmentation is a crucial part in the development of the marketing strategy of an organization. It is important to define different market segments and develop the marketing strategy accordingly. The segmentation of the market is beneficial to identify the needs and the preferences of the target market and design an appropriate marketing strategy. In this regard, the market segmentation of the consumer market of Coles has been conducted (Lehmann Winer, 2008). The company has a major retail store in Box Hill where the majority is Mandarin community. The target market of the companies can be categorized on the basis of several different factors such as geographic, demographic, psychographic and behavioral segmentation. As per geographic factors, the market can be differentiated according to address, location, climate, and region. On the basis of demographic factors, the customer market can be divided as per the gender, age, wages and career. The psychographic segmentation d ivided the customer target market according to the attitude, value, religion, and the lifestyle of the customers. As per the behavioral segmentation, the market segment of the organization is divided as per the attitude, value and the degree of loyalty of the customers. Different market segments of the community are: Educated Professionals: In the recent years, the number of educated professionals has increased in Box Hill. It is due to the increased importance of education for occupation. These educated professionals rely on supermarket shopping, as they want to shop different household products from a dingle store. The number of people in Box Hill with Bachelor or high degree is 3,593, which is about 50% of the total population of the community. There has been a sudden increase of 15% from the next census (City of Whitehorse, 2017). Ethnicity: As per the 2011 statistics, the largest community of the Non-English speakers is Mandarin speakers. The population ratio of these people is about 9,934 whereas the Cantonese community has the population of 6,272 in Box hill (id Community, 2017). Therefore, the retail stores in this community should provide the product as per the choice and preference of this community. Household Income: The household income is another major factor in dividing the population. As per the Australian Consensus of Population 2011, the population can be divided into four groups, namely, lowest group, medium group, medium highest group, and highest group. The lowest group has a proportion of 22%, medium lowest has the proportion of 20%, medium highest has the proportion of 27% and the highest group has a proportion of 29% of total population (id Community, 2017). The statistics shows that the people of Box hills are prosperous and can buy costly or luxurious products (id Community, 2017). Primary and secondary markets The target markets refer to breaking the markets in different segments, which can be used to concentrate the marketing efforts of the organization. In target market, the organization triers to identify the markets whose needs are closely align with the product or the service offering of the organization. It can be used to increase the sales and increasing the success of the business. The target marketing increases the efficiency and the productivity of the organization. The target marketing enhances the marketing efforts of the organization. The company can strategize and focus its marketing efforts, which include promotion, pricing, and distribution of the products. The primary target market of the organization has been identified as: Working professionals (18-30 years, both male and female): The working professionals are the main target market of the organization. These are the educated, working professionals in which the household has more than one earning member. The number of working women in these households are high in number. These people have little time and want to shop from a single shop to save time. They are also attracted towards discounts and concessions. Coles is a discount retailer. The core competency of the organization is offering products at a low cost. Nevertheless, the quality of the product is maintained (Mooradian, Matzler Ring, 2014). Therefore, it is a primary market of the organization. The company has adopted several strategies such as using coupons, loyalty bonuses, and discounts to attract these customers. Mandarin Community (Women: age group: 18-45): The Mandarin community is the Chinese ethnic community, which have their own specific taste, needs, and preferences. The oriental food, oriental clothing, and household needs are quite different from the Australian choice and preference. The company serves and offers consumer products as per the choice of this ethnic community. Level of Involvement and Decision making These consumers are important in the functioning and the sales of the organization. The level of involvement of these communities is high. Therefore, the decision-making of the organization is dependent upon the characteristics and the preference of the primary and the secondary consumer segments. They have a significant role in the decision masking of the organization. The decision making of the organization is dependent upon the characteristics of the primary and the secondary market. The company sells the products according to the choice of the consumers. The degree of consumer involvement is dependent upon the degree of relevance to the customers. A consumer makes a decision after several deliberations. There are some consumer decisions, which require high degree of involvement from the consumers. In such cases, consumers make lots of queries before taking the final decision. It is high involvement purchase and usually involves high level of risk. The involvement of consumers is medium in retail purchases (Kim, Ferrin, Rao, 2008). Perceptual Map The perceptual map is the technique used by the marketing executives to identify the perception of the potential customers in the company. The relative position of the company is shown in comparison to the competing organizations. The company is compared in terms of product, product line or the brand. The perceptual map is important in identifying the potential customers of the organization. If a business organization is trying to expand its business, the perceptual pap is critical in identifying the overall efficiency of the expansion strategy. The perceptual map can be used to identify the target market segments, differentiating the clusters of business and identifying the corresponding attributes of different market segments. Perceptual map is used to identify the market potential of new products and services. There is quite a difference between what a business presume it can offer and what the consumers presume that the business can offer (Brady, Cravens, Maister, Peter, Thompson , Walker, 2007). There are several reasons such as miscommunication, lack of knowledge, and the impact of social media. The perceptual map of Coles has been developed in this project. According to the findings of the report, Coles offer products at low cost and high quality. The core competency of the organization is that it sells the product at low cost. However, the quality of the product is maintained. It can be identified why the company is identified as a low-cost and high-quality product. It is a consumer perception as the company sells the product at low cost. It sells its own personal brand products. These products are directly obtained from the suppliers; therefore, the cost of the product is low. However, with the help of various quality analysis measures, it maintains the quality of the products. Competitive Analysis SWOT of Coles Strengths Providing high quality at low cost Offering products in different categories Strong advertising capabilities High level of online order and delivery services Weaknesses Operating on lower margins Negative publicity surrounding unfair negotiation with suppliers Opportunity Increase in market share and improving supply chain of the organization Geographic expansion to different areas Threats Intense competition Low profit margins SWOT analysis of Woolworths (a major competitor) Strengths One of the oldest company in Australian retail market Renowned brand Weaknesses Negligible global presence No specific core competency Opportunity Promoting the brand through advertising Seeking growth through strategic acquisitions Threat Economic recession Competition from international players It can be identified that SWOT analysis of competitor and Coles that the Coles supermarket has certain core competencies. It sells low-cost products at high price. It has adapted to the market changes and technical developments. It has strong advertising capabilities which has resulted in large market share. Conclusion It can be concluded that the marketing activities have a crucial role in the overall marketing strategy of the organization. Coles is the second largest supermarket chain in Australia and New Zealand. The company has several retail stores in Australia and New Zealand. The core competency of the organization is offering low cost products at high quality range. For the report, the Box Hill community has been selected. The proportion of Mandarin population is high in the population of Box Hill community. Moreover, the educated and the young professionals are also high in number. The total count of the population is approximately 8000. The target market of Coles is selected as educated professionals and the Mandarin community. They have a high proportion in the population and can drive the sales of the organization. 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