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ECO600 Economics and Finance for Business ICMS A research report on Australia’s supermarkets and grocery industry An investigation on market structure, growth, pricing and nonpricing strategies...

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ECO600 Economics and Finance for Business ICMS A research report on Australia’s supermarkets and grocery industry An investigation on market structure, growth, pricing and nonpricing strategies General instructions 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. The questions 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. Referencing 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. Plagiarism 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. Style 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? Evaluating 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? 4
Answered Same Day May 18, 2020 ECO600 ICMS (International College of Management Sydney)


Soma answered on May 21 2020
140 Votes
The Title of the Report: The Competition between Australia’s major grocery retailers and their pricing strategies
Student ID number:
Word count: 2557
Executive summary
Supermarket industry in Australia is characterized by oligopoly market structure. Several key industries in Australia operate in oligopoly market structure. Previously the supermarket industry was duopoly where Coles and Woolworth have the dominating market share. They combinedly constitute 70-80% of the market share. But the market structure of Australian supermarket has transformed from duopoly to oligopoly after the gradual presence of Aldi, Costco and some other grocery chains. The potential competition between these new discounted stores are substantially high- both Coles and Woolworth are struggling to maintain their market share. Thee competition among the grocery stores are so intense that it affects revenue and the market shar of the existing ones. The key rivals frequently engage in price war in oligopoly market. The supermarket industries also provide key focus on non-price competition.
The supermarket industry is highly concentrated. Traditional Cole and Woolworth combinedly constitute 70-80% market share. They have exercised abusive market power for long. Their dirty tricks and price war has significantly affected the farmers and other players in the supply chain. Since Coles and Woolworth were the two dominating players in the market, the super market industry was defined by duopoly market structure. But overtime, some foreign discounted stores have entered in the market and established their strong presence with the help of both pricing and non-pricing strategies. The duopoly market structure has now converted from duopoly to oligopoly.
The main aim of this report is to examine and analyse the characteristics of recent market structure of Australian supermarket. With the help of economic theories and concepts, and empirical evidence and recent available data this report gains a deep insight on the potential consequence of oligopoly behaviour in Australian supermarket industry. The report begins with the Pricing and non-pricing strategies pursued by new entrants Aldi as well as the existing ones. In the subsequent sections of the report, the pricing and non – pricing strategies of the key rivals are discussed in details. Oligopoly is found to be the cu
ent competitive market structure of retail grocery sector in Australia. This section explains how Aldi’s continuous expansion changes the market structure and transforms to oligopoly from traditional duopoly. In Section 5, growth strategies are discussed in details. The key findings, and uncertain future outlook of the Australian industry is discussed in the concluding section.
II. Pricing and non-pricing strategies observed at ALDI and Coles [500 words]
German discounted supermarket chain Aldi has launched Australia in 2001. But Aldi’s strong gradual presence and steady expansion overtime have changed the competitive landscape of supermarket industry. Aldi’s relies on the business model in attracting the lower income profile consumers who buys the basic grocery items. Aldi has made steady expansion of its network in Western Australia and South Australia – the supermarket chain has more than 500 stores across the country. Moreover, Aldi sells a wider range of sea food items at their stores. The impressive sales growth of Aldi has shaken the market power of Coles and Woolworth that they have enjoyed for long - they are now struggling to maintain their market share. (Lucio, 2018)
Due to Aldi’s unstoppable growth and steady expansion, Australian supermarket does no longer remain duopoly. Aldi is expected to continue its expansion across the country as it has cu
ently opened up 32 new stores almost in every state. While Coles and Woolworth are investing on their online shopping website, Aldi, in contrast would not prefer to go for this strategy. The key focus of this new entrant is to offer high quality good at cheaper price and provide the best possible in store experience. (Burgess, 2018)
Retail giants in the grocery sector strongly emphasize on non-price stagey thus move beyond price competition improve overall customer experience. They are now weighing focus on quality and freshness of fruits and vegetables, more appealing and wider range in the stores shelves and more importantly on greater innovation. Coles still heavily relied on reactive pricing strategy but they are a desperate need to move beyond price competition.
Product quality, sales strategy and tactics, staff morale and culture are also found to be comparatively low in Coles. Coles should make heavy investment in term of operating expenditure and capital expenditure. But cu
ent evidence suggests that Coles is eventually shifting their strategy from Woolworth and moving closer towards Aldi Australian law is appeared to be inadequate to deal with abusive market power.
III.. Pricing and non-pricing strategies: a comparison and discussion [700 words]
I.    Pricing Strategy:
Coles has shown relatively weak performance in 2016-2017 and according to IBISWorld report forecast the weak performance is expected to continue in 2017-2018. Coles is facing huge competitive pressure from its long-standing rival Woolworth and the new rival ALDI. Price war is very frequent and common as the players in supermarket industry is battling to retain their market share. Woolworth group has observed a gradual...

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