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Table of contents
Table of contents
1
Executive Summary
2
Introduction
3
Background
3
Swot Analysis
4
Segmentation, Targeting & Positioning Analysis
5
Marketing Mix Analysis
7
CSR / Ethics
9
Financial / Pricing Analysis
10
Recommendations
12
New Marketing Strategy
12
Conclusion
12
References
Executive Summary
This study presents a market analysis of a multinational retail corporation
Metcash Limited, Australia, Australia. Metcash runs large discount superstores
and warehouses all across Australia. In order to address this business analysis,
report presents the environmental analysis followed by 4Ps of marketing. The
report also discusses the financial situation of the company.
Introduction
In the modern corporate world, competition has become not only intense but quite
intricate as well. The challenge is not only external but internal as well as companies
need to be mindful of their activities all the time and need to monitor them. The perfect
execution of a marketing strategy becomes possible when the companies are aware of
their strengths and weaknesses. It is inevitable to meet failure in a business
environment every once in a while but is important to learn from the weaknesses and
devise such a strategy to move ahead that the failures are never repeated. This paper
Background
Metcash Limited is a company operating in Australia and is currently among the top 25
companies in the ASX200. Much of its income is generated from the sales of groceries,
liquor and tobacco products. The company has continued to grow over the years and
make its mark in the retail business. As of 2015, the Company employed 6300 people
in Australia. The Company has a vast operation which is reported in a consolidated
form. The operations can be divided into the following:
This report is focused on the marketing and distribution of food and grocery as this
segment forms a chunk of the Companys operations.
manner;
The passing over of added value to the stakeholders of the Company;
To conduct the operations in a responsible manner and be personally
To grow the Companys market and add value which shall be passed over to
the stakeholders;
To gain excellence in distribution and merchandising;
consumer satisfaction;
To create a productive and congenial work environment.
SWOT Analysis
This report discusses SWOT Analysis of Metcash foods &groceries.
Metcash deals in
Weakness
Opportunity
Threats
Competitors
Geographic segmentation: Since the customer base of the Company hails from
almost parts of the Company, it is quite difficult to segment the market on the
basis of geography.
Demographic segmentation: The Company also targets all the customers
regardless of their age, gender, religion, occupation or ethnicity. Hence,
the beginning of the month where salaried customers shop for the whole month.
Cultural & Social segmentation: Such segmentation would be inconsistent in
the context of this company since it targets all sorts of customers.
Targeting
The market for groceries is always going to commercially viable because these items
are necessities of life. These products cannot be avoided and their utility is so deeply
etched into the minds of the customers that they can never go without them. This is
why the Companys focus is likely to continue with this segment and make sure that the
customers get the best products and satisfaction. The occasional segment stands out
as a segment to be targeted because it focusses on that time of the month when the
salaried customers like to shop. They want to shop for low price and high quality
products and they want to be able to trust the products blindly. The Company has to
build this trust through effective marketing and advertising about the quality of its
products so that the people know of its efforts.
Positioning
As a supplier of high quality groceries, the Company can look to expand its operations
further and supply goods to various independent grocery stores. Since the grocery
stores also look to be contain more variety than mere groceries, Metcash must exploit
this opportunity and keep on supplying other products as well. Further, it has to take
account of its own retail and wholesale operation as well. Hence, the products are
positioned on all levels i.e. retail; wholesale and distribution brands.
remarkable as there are easily accessible retail outlets all over the country. These
stores are open 24/7, 7 days a week hence achieving great consumer satisfaction.
Price
Since Metcash is not the only entity of its sort in the country, it has to take certain
measures to keep the customers attracted to their outlets. One such measure is
competitive prices. The Company has to make sure that the customers are able to get
the products at reasonable prices. Since the prices of most groceries usually hover
around a similar range, the market tends to bend towards perfect competition. In such
a market, the Company would look towards maintaining a price level that is identical to
the competitors. It also becomes difficult to lower prices in such an environment. But in
cases where it can lower its prices i.e. products where the brand is owned by the
Company, the prices have to be lowered to attract as much customers as possible.
Such tactics also build an image into the minds of the customers that the prices of the
Company are low for all products. This would help in grabbing more market share.
Promotion
The lower prices strategy can also be used as a great promotional too as it is bound to
attract customers from all social circles. The Company is operating in an industry where
there are certain competitors who have a great foothold and market share. But the
Company has also historically been frugal in investing in advertisement. While the
competitors usually spend about 2.1% of their budget on advertising, Metcash only
spends 1%. It is recommended that the retailer advertise in about 13 circulars per year.
Currently, the Company has invested a lot of resources on social media campaigns. The
advertising includes circulars, newspaper ads, website publicity, commercials, yellow
pages, mass mailers and electronics newsletters.
CSR / Ethics
Corporate Social Responsibility (CSR) has gained a great deal of significance over the
last few years and corporations all around the world have also increased the degree of
care in this regard. For a company to be sustainable, it has to be wary of the impact it
has on its environment and the society. Profitability is essential but it must not come at
the cost of environmental or social harm. The customers also take a lot of interest in
the way the products are produced and marketed. CSR also has an impact on the
competition in the retail market. Not only do the supermarkets require to behave
ethically but they also need their employees to be ethically and environmentally
responsible. CSR is defined as the continuing commitment by businesses to behave
ethically and contribute to economic development while improving the quality of life of
the workforce and their families as well as of the local community and society at large
(Holmes et al., 2000).
Metcash Ltd is greatly wary of its CSR and maintains high standards of ethical business
practices. With the increasing popularity of the company, owing to its low prices and
quality products, Metcash Ltd is aware of the responsibility that falls on it as a
corporation. It takes extra care in making sure that the products are sourced
responsibly, retain nutrition, and do not have harmful effects on the environment in
their production. The Company also takes into account its own workplace environment
and makes sure that there is no discrimination at any level. The Companys diversity
policy is very clear about how it recruits its employees and also outlines the Companys
continued efforts in removing all barriers to diversity within the corporation.
10
Source: ASX
The above graph shows a comparison between Metcash Ltd and two of its major
competitors. For Metcash Ltd, the gap between the earnings multiple which it trades on
and the share price growth has been widened more than the competitors. The gap is so
wide that it makes Metcash potentially undervalued currently even though it seems to
have gained a path towards recovery.
11
2014
2013
2012
2011
2010
2009
13,39
2
406.7
57.2
250.1
12,977
460.4
61.6
12,501.10
451.2
67.6
12,364.00
438
66.3
11,517.40
401.2
49.3
10,974
371.3
49.8
280.7
262.5
256.2
244.9
225.9
206
90
241.4
227.6
202.5
16,254.20
1,335.10
1,442.80
1,377.60
1,279.40
(9.5)
(28.1)
19.7
12.5
13.0
33.2
42.6
36.7
35.5
33.5
880,704,78
6
859,742,60
7
771,345,86
4
770,441,43
2
7,689,853,64
4
767,676,470
765,644,03
1
765,178,86
5
764,888,36
3
764,843,88
0
24
11.7
31.5
29.7
26.5
32.6
34.1
33.4
32
29.5
28.0
28.0
27.0
26.0
24.0
5,794.00
5,166.00
5,638.00
5,773.00
5,358.00
169.2
28.3
18.5
It can be seen from the above table that the Company has increased its sales
progressively from the year 2009. The major reason has been its involvement in ecommerce and e-marketing. The advertisement on a large scale has had a positive
impact on the sales of the company. Such efforts, if continued with more intensity,
would create a path towards excellence for the Company in the long run.
12
Recommendations
Metcash Ltd has started to dabble in e-commerce but it seems that it needs to immerse
itself more. Its involvement in the online shopping industry helped it in recovering its
performance and be profitable in the past. But currently its involvement is still
inadequate and it is greatly missing out on excellent opportunities. Making use of
special shopping day sprees like Black Friday does not benefit the Company in the
same way as they do its competitors. Therefore, the involvement in e-commerce needs
to be increased.
The Company also needs to invest more in advertising and in getting its name out there
in the real sense. By real sense it is indicated that the Company shows itself as a
provider of high quality products at low prices and is as good, and even better, than its
competitors. A timid approach would harm the company while a pro-active and a hands
on approach would reap the Company great benefits.
The Company needs to expand more and increase its scale of operation in order to
make greater use of the economies of scale that are attached with a bigger operation.
The opportunities of expansion outside Australia must be exploited as soon as possible
so that the Company has similar amount of time available to build its goodwill abroad
as do its competitors.
13
in the yet unexplored markets. This would also have trickledown effect on the Companys
popularity in Australia.
Conclusion
Metcash Ltd.s recent dip owes mostly to its own dismal performance. It has been a bit
complacent and also a little out of touch with how modern markets are operating. The
only concern for the Company right seems to be the recurrent price war with its major
competitors and concerns. But it has to be vary of the fact that price wars are not the
sole determinants of victors in the markets of today. It has to stay updated with modern
commercial practices and the tastes in which customers indulge. Financing through debt
bearing instruments is another area where the Company needs to indulge more.
Metcash, in respect to these strategic options is already in the process of developing new
initiatives by reducing its debts and focusing on quality, service and value. Metcash is on
the forefront of innovation by taking advantage of further store renewal opportunities,
supply chain transformation and a strategic approach to improved operational
efficiencies and continued fund reinvestment in price.
14
References
Annual Report 2015, Metcash Ltd. Retrieved 13 Jan 2016 from http://www.metcash.com/wpcontent/uploads/2015-June-15-Metcash-Limited-FY2015-Results.pdf
RAPS Retail Industry Environmental Scan, 2014. http://rapstc.com.au/wp-content/uploads/2011/12/RetailEnvironmental-Scan-2014.pdf (Accessed Jan 2016)
ABS (Australian Bureau of Statistics), 2014e, Counts of Australian Businesses, Including Entries and Exits,
June 2009 to June 2013, April, Canberra.
Deloitte , 2013b, Global Powers of Retailing 2013: Retail Beyond, January, Sydney.
Newell, R. G., Jaffe, A. B., & Stavins, R. N. (2006). The effects of economic and policy incentives on carbon
mitigation technologies. Energy Economics,28(5), 563-578.