Online Shopping In Woolworths Marketing Essay

Woolworths is a leader in market grocery sales with serving up 10 million customers per week (Woolworth, 2007). In the mid 1980s, Woolworths was viewed as one of the biggest food retailers in Australia, and by 2001 it gained 38 percent of the national grocery market (Peter, 2007). As a result, Woolworths had now become the leader in market grocery sales with serving up 10 million customers per week (Woolworths annual report, 2009). The marketing strategy focusing on greater convenience, quality, range and lower prices is winning strong customer acceptance, according to the retail group’s chief executive officer Michael Gerard Luscombe (Woolworths annual report, 2009).­­­­­­ The “Everyday Money” credit card was launched in 2009. The focus remains on building a sustainable business by continually improving the customer offer rewarding customers with lower prices, better value, quality, range, freshness, service and convenience (Woolworths annual report, 2009).

2. Website marketing strategies (Prabhu)

Woolworths has launched many significant marketing strategies to deal with threats and has impressed its image upon customers, and to some extent it has satisfied requirements of customers on product diversification, quality and prices. Specially, one of the most outstanding marketing strategies of Woolworths is used to be the e-commerce instrument via its website. Among its products on the website, the emphasis of grocery items is considered as one of the strongest aspects of Woolworths as compared with its competitors such as Coles or Aldi in order to ensure the image of “The fresh food for people”. Moreover, by doing so, customers can better understand values of products which Woolworths is providing. These values are superior convenience, on-time delivery, website security and exchange or return policies.

3. LITERATURE REVIEW (Annie, Anh, Pop, Prabhu)

3.1. Success and failure of pure-play organizations: Webvan versus Peapod, a comparative analysis (Annie)

This journal compares the success and failure reasons of two online grocery retailers, Webvan and Peapod, in terms of management, logistics and marketing strategies.

Though these two e-grocery firms were both home-delivery-service based, they were very different in managing the market and customer relations. Webvan was aggressive in expanding the market across the entire nation which resulting in an increase in the existing debt while Peapod decided to stay east of the Mississippi River and was financially sufficient to support their markets. Webvan also made a mistake in competing itself with delivery business such as FedEx and UPS through expensive re-branding while customers viewed them as a brand on grocery bags.

Similarly, Webvan was ambitious to develop its warehouses, delivery system and technology. In comparison, though Peapod’s was ineffective at the beginning, it was carefully test the market, step by step to improve on its weakness, and finally developed a suitable system for its business while Webvan threw a great fortune on the technology without testing the market and over-evaluated market demand. Webvan made its breakeven impossible to reach and none of the faculties operated at full capacity.

Because the significant expenses spent on the rapid growth of technologies and facilities, Webvan finally “failed due to lack of flexibility in meeting customer service demands”. On the other hand, Peapod’s appropriately estimate their ability, and slowly grew by appreciating and learning its interaction with the customer. They also recognised the niche market they initially could attract – time-savers, shoppers who want save time in purchasing groceries, rather than attract more -traditional online shoppers. In summary, Peapod was successful because it had been trying to enhance its customer relations while Webvan was distracted by many other reasons.

3.2. Why consumers hesitate to shop online – An experimental choice analysis of grocery shopping and the role of delivery fees (Anh)

This research is concerned about the effects of four factors: costs, convenience, enjoyment and perceived risk impacting on customers’ inclination to shop online for groceries. The results of this research indicate that these factors all influence online shopping of customers. Among of them, the situational factor (delivery charge) of costs is not an important factor, and the cost factor has a negative impact on the online channel shopping.

According to the research, time to travel has a greater impact on the relative preference to shop online or in-store than the delivery fee. Thus, in this sense, attempts for marketing campaigns for online groceries is likely to emphasize the communication on the time savings gained rather than on delivery charges.

Moreover, according to the result of the research, other factors: convenience and enjoyment have also influences on decisions of online or in-store shopping channels, so in order to enhance the online shopping channel preferences of customers, marketing programmes of the company should also put emphasis on these factors.

The results of effects of these factors also imply that the advertising campaigns for online shopping should focus on convenience and enjoyment of shopping rather than perceived risk because personal information of customers: credit card information and personal data can be disclosed when they use online services. This means that information about convenience of customers should be emphasized in all advertising programmes. They can be convenient information for customers to shop from anywhere at any time and to save time of visiting t o the retail store (Burrow, 2009).

3.3. Influencing the online consumer’s behavior: the Web experience (Pop)

The research addresses one of the fundamental issues of e-marketing: how to attract and win over the consumer in internet marketplace. The research analyses the factors affecting the online consumer’s behaviour and examines how can influence the outcome of the virtual interaction and buying process by focusing their marketing efforts on elements shaping the customer’s Web experience.

It is pointed out that online shopping experience is more complicated than physical shopping experience. According to the research, the Web experience embraces elements including searching, browsing, finding, selecting, comparing and evaluating information as well as interacting and transacting with the company’s website. The online customer’s impression and actions are influenced by design, events, emotions, atmosphere and other elements experienced during interaction with a given website. These elements play crucial roles to increase or retain online customers and affect the final outcome of the online interaction.

Under Web experience, there are several elements that are factors affecting online customer’s perceptions and purchasing behaviours. Trust elements are one of the crucial psychological factors. The statistic obtained from the journal showed that transaction security and customer data safety are the top principal concerns of online customers purchasing products or services online. According to Harris Interactive (2001) around 70 per cent of the US Web users are seriously concerned about the safety of their personal information, transaction security and misuse of private consumer data. Subjects like hacking, fraud; spam and online scams frequently make headlines, raising security concerns and mistrust.

From the research, it illustrates that Web experience framework can be useful to identify issues when designing and building their online firm or evaluating existing online venture.

3.4. eCommerce: a critical review (Prabhu)

This research mainly focuses on the general view of eCommerce among other traditional methods like buying from a conventional store. The results of this research found out that eCommerce plays a significant role in today’s retail shopping. Advantages like reduction of product handling cost, convenience, queue-less purchasing and payment. On the other hand, this research also talks about the disadvantages like limitation of delivery services in remote areas and limited access in rural areas.

Reynolds (2000) argued that e-commerce offers potential opportunities in the conventional retail businesses. Information technology has played an important role in affecting the scale and nature of retailing. The increasing acceptance of e-mail as a means of interpe­­rsonal communication signifies real direct marketing opportunities. E-commerce increases the product variety whilst cut down the implementation cost. More sophisticated intermediaries use software applications to track user behaviour and store user preferences, in order to make relevant recommendations to customers. E-commerce reduces the price of product by reducing the product handling cost.

Alba et al. (1997) were amongst the earliest to suggest that the Internet presented consumers unparalleled opportunities to locate and compare product offerings. The nature of consumer behaviour, attitudes to pricing and brand are unclear in electronic markets (Reynolds, 2000). E-commerce services may become an issue for those who live in deprived urban environments, in rural areas or whose homes are not compatible with unattended delivery technology.

4. Justification (Annie)

Several academic researches have shown that e-commerce has gradually become the mainstream of many businesses. It surely will become more important for Woolworths ever since. There are many studies compare the differences of traditional business and e-business, and some studies provide the keys to a successful e-commerce business, but little focus in the grocery industry. Below are the reasons why an updated marketing research needs to be carried out in order to help Woolworths to become the leader in grocery shopping online:

In e-business, many corporations fail, for example Webvan, not because of their late entry to the online market but because they are not able to deliver standard or increase customer satisfaction. To fulfil customers’ satisfaction, it is primary to understand who the target audience is and their needs. “Many evidence indicate that many online firms still do not completely understand the needs and behavior of the online consumer”. As customer satisfaction is the key to gain return customers (Constantinides, 2004), the research will locate the main users of e-grocery and uncover what they want, need and care.

Despite there are some similarities between shopping online and traditional consumer behaviour, there is still a big gap between them. Like traditional business, some of the influencing elements are uncontrollable while others are controllable. This marketing research will help marketers at Woolworths understand the main factors influencing online consumer behaviour, especially those under the marketing control.

Customer trust and return are built on customers’ web experiences. The web experiences are primarily via corporate official website. For Woolworths, this marketing research results will include the appropriate website elements for in order to create better web experiences.

The above are the key factors which can help Woolworths avoid risks and lost in inappropriate marketing strategies. Moreover, by understanding the most updated factors influencing customer satisfaction, we will able to lower product unit cost with more efficient delivery system, and hope in this way that we can create a greater margin at 15% or more for each product sold.

5. OBJECTIVES (Annie)

According to Dann & Dann (2004), marketing objectives are referred to building the key foundation for the oganisation’s marketing direction and sketching out what the marketing plan is supposed to obtain within a certain period of time. Woolworths has well-known reputation and brand in grocery industry. The purpose of this marketing research is to find out the factors of customer satisfaction in order to maintain Woolworths leading position in e-grocery by keeping certain return customers.

6. HYPOTHESES (Annie, Anh, Pop, Prabhu)

H1: Customer satisfaction is the survival key of e-grocers.

The basic business of e-grocers is to provide service to customers and therefore customer satisfaction is what they rely on for survival.

H2: Timesavers are the main market for e-grocers.

There are two main groups of consumers in traditional grocery business – bargain hunters and timesavers. The latter group is traditional supermarkets are losing, and therefore turn to online service o bring back those market.

H3: Delivery people are the face of the company.

Every interaction with the customer is crucial because it creates and maintains the business reputation and brand. Delivery people are one of the most direct platform customers encounter interaction experience.

H4: Layout, route and convenience can increase new online users for Woolworths and retain the existing online users.

The online shopping experience is more complicated than the physical shopping experience. The online customers are influenced by design, emotions, layout, and convenience during interaction with a given website.

H5: Transaction security and customer privacy increase online customer trust for Woolworths.

The online transaction security and fulfilment process much more essential than product prices or company background. The online users are seriously concerned about the safety of their personal information, transaction security and misuse of private consumer data.

H6: Online brand equity can increase the number of customer.

The consumer concerns of knowing the product’s brand name is important in decision to by online and loyal with the site they are satisfied.

H7: Travel cost such as petrol or parking fees are an clearly expense that consumers will dislike.

The consumers concern of travel time is important in decision to go the physical store

H8: Delivery charge does not have a great impact on the decision for shopping online.

Promoting online grocery shopping should focus on communicating time saving gained by shopping online than on lowering delivery charges

7. Questionnaire (Annie, Anh, Pop, Prabhu)

All the questions are designed in the 5-point Likert scale in order to minimize the communication error and maximize customer responses.

Q.1: Are you satisfied with the online website of Woolworths?

Q.2: Whether Woolworth website offers variety of products?

Q.3: Are you satisfied with the Woolworth website promotion when compared with conventional centre?

Q.4: whether online shopping increases your convenience?