Strategic Plan for Woolworths/Macro Wholefoods
existing customers as virtually all Australian regularly shop at either Woolworths or Coles.
This strategy can then be run in conjunction with Woolworths’ existing organic specialty stores, thereby migrating our product offering north on the strategic group map, by expanding the size of our bubble rather than shifting it as shown in the Figure 3.
This will act to enhance and enrich the quality of our ‘Fresh Food People’ by educating benefits of choosing organic products and creating value. It also provides evidence of a commitment to providing even higher quality, fresh, and natural products with everyday value while supporting local organic farms that keep the environment pure and clean.
By adopting such a strategy, it is our view that Woolworths’ organic operations, including Macro Wholefoods and Woolworths’ Organics can be well positioned to capitalize on the expected growth in the market, as demonstrated by the trends discussed above. It is our view that this should also allow us to avoid cannibalizing existing sales as much as possible, given the higher markets available in organic foods.
6 Proposed strategies: Business-level strategy
In order to make the vision a reality, Woolworths must adopt modified business-level strategies including differentiation, diversification and organizational structure strategies.
6.1 Focused differentiation strategy towards Differentiation strategy
At the moment, Macro follows focused differentiation strategy, which is applied to the specific wholefoods in a selected retail foods market segment. Macro seeks to provide high perceived value justifying a price premium to its targeted market. In a highly competitive market where food retailers are facing difficulties promising and convincing customers that their products differ from other competitors in the market, Macro is able to attract different types of customers.
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Strategic Plan for Woolworths/Macro Wholefoods
However, growth through a focused differentiation strategy can lead to some important issues which
must be considered.
To sustain its growth rate at a later stage, Macro will need to make a choice between a focused
strategy and broad differentiation across the market.
Both strategies have their advantages and disadvantages, which are summarized below:
Focused Differentiation Vs Differentiation Strategy
Focused Differentiation Strategy
Advantages |
Most suitable for new ventures. |
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Helps to better define product features and to offer a better perceived value to a |
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definite market segment. |
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Allows fast growth in a focused way in a specific market, which later can be expanded |
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and explored. |
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Does not negatively influence existing sales of Woolworths. |
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Disadvantages |
Could lead to a limited expansion of organization and negatively affect future |
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development and growth. |
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There is a strong need to monitor and keep watch on market situation as it can change |
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any time with change in external environmental factors. |
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Difference between segments can be eroded and open organization to much wider |
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competition. |
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Differentiation Strategy |
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Advantages |
As long as the company satisfies the differentiated needs of loyal customers, it can |
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access a much wider customer base than focused differentiation strategy. |
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Through meaningful differentiation, companies develop products that are considered |
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unique. |
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By satisfying customer preferences in ways that no competitor can, companies also |
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are able to charge higher prices |
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Disadvantages |
It is difficult for organization to compete in different markets with different needs and |
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people tests. |
Potential entrants may overcome (or surpass) the uniqueness of existing products or provide similarly differentiated products at a lower price to increase customer value.
Without brand loyalty, customers may switch to product substitutes.
Will decrease Woolworths’ customer base by cannibalizing existing sales.
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