ECO600 Economics and Finance for Business
A research report on Australia’s supermarkets and grocery industry
An investigation on market structure, growth, pricing and nonpricing strategies
This assignment covers the topics of market structure (Week 5) and the growth and pricing strategies of businesses (Week 6).
Write a report entitled, ‘The competition between Australia’s major grocery retailers and their pricing strategies’.
The report should have the format of an academic report. There should be a title page (containing the title of your report, word count, your name and student number). There should be an abstract (a summary of what your report is about and its key findings in no more than 250 words). Next come the introduction, body, a conclusion sections, followed by a references section (which will contain details of the sources of secondary data that you refer to).
The word limit for your report is strictly 2,500 words. Keep it brief because brevity is beautiful (read this). Brevity also means you know what you are talking about. As Albert Einstein remarked, “If you can’t explain it simply, you don’t understand it well enough”. Take note: the word count applies only to the introduction and body of your report; the title page, abstract and references section are not counted.
The contents of this document
The second page tells you how to collect your data and structure your report.
The third page provides you with the questions that you will answer.
The fourth page touches on referencing, plagiarism and conduct during the site visit.
The fifth page is a guide on how to compare, analyse and evaluate in your report: how to (i) compare the pricing and non-pricing strategies between ALDI and Coles; (ii) evaluate the competition in the grocery retail industry in Australia; and (iii) analyse the growth strategies used by the major grocery retailers.
How to use primary and secondary data to write the report
In producing your report, use both primary and secondary data. Primary data are information collected from first-hand observation. Secondary data are information those already collected by others that are found in news reports (you are likely to refer to this heavily), other reputable websites, government reports, industry publications, books, journal papers and working papers. These sources should be credible. Certain blog articles and information written by users of social media may not be credible sources of information. Avoid these.
In Week 7, you will gather primary data about how companies price and promote their products during a site visit to the outlets of two major Australian grocery retailers, Coles and ALDI. You may use secondary data (from other sources) to support your primary data. Gather primary data about
1. pricing strategy (psychological pricing, price skimming, product-line pricing etc.)
2. non-pricing strategies (packaging, advertising, how the store is run, opening hours, warranties, network effects, product bundling etc.)
For the first part of your report, therefore, identify these strategies. Analyse how a grocery retailer uses them and why. At the supermarkets you visit, you may like to record (with photographs and/or in writing, in a notebook) evidence of the varieties of these strategies that are used. You may use your photographs to stress a point you are making. Give your photos a caption. Do not use photos or pictures that are irrelevant or do not say anything meaningful.
For the second part of your report, search for and use secondary data to put into context the findings from your primary data. You are essentially doing a literature review. Write about
1. the competition (market structure) in the supermarkets/grocery industry in Australia
2. the major retailers’ strategies for growing their businesses
The above constitute the body of your report. Begin with a brief introduction section that outlines what the report will be about and what it will cover. End the report with a conclusion section that highlights your key findings and address the ‘so what’ question (e.g., what your findings indicate about the industry, or interesting future trends or issues that you foresee).
To support the analysis you present in your report, to condense the data you have, or to make your report interesting, you may use figures and tables that contain statistics, or informative illustrations. If you are using such tables and figures from secondary sources, do not just cut and paste: select and use the relevant information within a table of your own creation and cite the source you used.
Keep them in mind while carrying out your research for primary data and for secondary data. They help you keep your writing focused.
Questions that relate to your research involving primary data:
A. Analyse the pricing and non-pricing strategies used by ALDI and Coles
1. What kind of pricing strategies are the grocery retailers using against each other, against other producers (‘supermarket’ brands vs. other brands), and how are they using them? Why? Compare between these two retailers.
2. What kind of non-pricing strategies are they using? Are there differences in the quantities offered, in the branding, or are similar goods packaged differently with different brand names or labels? What other non-price strategies are used? Why?
Questions that relate to your research involving secondary data:
A. Describe and evaluate the state of competition in Australia’s grocery market
1. Who are currently the main players in this market (Coles, ALDI, Woolworths, IGA)? What kind of market structure is it? Can you provide a review (an interesting story that provides an up-to-date overview) of the competition in this industry? What is the drama unfolding in this industry?
2. Are there (or have there been) emerging competitors or recent entrants in this market? How might they be different? How are they able to enter the market? What makes it easy or difficult to enter this market? Evaluate.
B. Analyse the growth strategies used by the major retailers (Coles, ALDI, Woolworths and IGA)
1. What kind of growth strategies have the major grocery retailers used to expand their market share, company size or their profits? What actions have they taken to grow their businesses, to reduce costs or to reach out better to existing or new consumers? Investigate and contrast.
For a guide on how to reference the news reports, news reports and Internet articles, books or journal articles that you would be referring to and citing in your report, please see the ICMS Style Guide in addition to the Internet links provided earlier.
Alternatively, follow the referencing and formatting guidelines that your lecturer will provide you. Keep your referencing style consistent. Keep the reference section in alphabetical order.
Properly paraphrase and cite the sources you use in your report and avoid plagiarism. The penalties for plagiarism are severe and could include an automatic fail. Learn here about how to properly paraphrase and avoid plagiarism.
Follow the guide your lecturer provides you. Make your report look polished. Sloppy work reflects means poor preparation and planning.
Conduct during the site visit
Arrive at the designated location 15 minutes before the site visit begins for a briefing. Do not be late. After the excursion, there will be 15 minutes of debriefing.
Follow the lecturer or anyone from your class appointed as the ‘tour guide’ when going to the supermarkets.
While walking through the supermarkets, please:
(i) spread out to different aisles— don’t have more than 5 students per aisle
(ii) be courteous to customers and supermarket staff— do not block their way
(iii) move away from shelves to let others have access to it once you’ve recorded your data or stand back
(iv) know that there is no need to rush: we will have an hour to explore each supermarket
After 30-40 minutes at the first supermarket, reconvene at the same designated location. Wait for the lecturer there. Then follow the lecturer or the appointed ‘tour guide’ to take you to the next supermarket.
After 30-40 minutes at the second supermarket, we will regroup at a second designated area for debriefing before going home.
Analyse by comparing
This is what you will be doing with your primary data on the pricing and non-pricing strategies of ALDI and Coles. You will also do this when you investigate the growth strategies used by the major grocery retailers in Australia through a literature review (by examining secondary data).
Analysing by comparing (‘comparative analysis’) is what you do when you compare two or more things. It may be about two similar things that have crucial differences. You might want to point out these differences. You may also like to point out interesting or surprising features that these two things have, despite their differences.
You are required to make an argument. You may describe the two things you are analysing, but the essence of your paper is about making meaningful arguments about how they compare (or are similar). Thus, do not only describe; strive to make arguments about how the two compare. This involves analysing and drawing conclusions.
Analysing means to take apart, examine, and draw connections. You organise, categorise, differentiate, relate, compare, contrast, distinguish, examine, interrelate, question.
Examples of questions that require you to compare and analyse:
1. Compare and illustrate the difference in the arguments of Herman Daly and Bjorn Lomborg
2. Analyse each statement to decide whether it is real news or ‘fake news’
3. Identify the differences between Coles and ALDI when it comes to pricing and non-pricing strategies. What is the evidence for what you suggest? Why do you think they use the strategies that they use?
4. Analyse to determine whether both ALDI and Coles are using psychological pricing of one type or another
5. How are the growth strategies between Coles, ALDI, Woolworths and IGA different (or similar)? Why is Coles using one strategy but Woolworths another?
This is what you will do when you investigate the state of competition in the grocery retail industry by reviewing the literature about it (news, government reports etc.).
Evaluate means to justify a stand or decision. You assess, interpret, make judgements, weigh, value, and critique or argue.
Examples of questions that require you to evaluate:
1. Assess whether this is a perfectly competitive market, or an oligopoly which is very competitive or an oligopoly that is characterised by collusion. Why do you say that?
2. What conclusions can you make about this situation you are analysing, and why?
3. What are the ramifications (impact or consequences) of the situation you see?