Marketing Strategy for Metcash Limited

Introduction

The report primarily focuses on the marketing strategy of Metcash Limited to give a reader an overview of the growth dynamics of the company. Recently, several strategic issues and managerial problems have been identified in marketing strategy of Metcash Limited that have drawn the attention of the entire management to devise new marketing strategies that can help the company to resolve the problems to continue its expansion and future growth to achieve a competitive edge in the marketplace. This report is written to provide Metcash Limited marketing strategy with the required strategic solutions using multiple frameworks and tools.

External Environmental Analysis

PESTLE Analysis is the most popular strategic tool that is used by many organizations when conducting an external environmental analysis. This framework typically focuses on political, economic, social, technological, legal, and environmental factors that can impact the macro environment of the business (Zalengera, E.Blanchard, & C.Eames, 2014).

Political factors

Political Stability

Metcash Limited operates in a politically stable environment, which means that it provides the company with more friendly and stable business growth opportunities (Christodoulou & Cullinane, 2019). However, since Metcash Limited operates in multiple countries, there are high chances of various political tensions that can cause instability in market growth trends for Metcash Limited. This can limit the company's growth opportunities.

Pressure Groups

Moreover, it is important for Metcash Limited to analyze and monitor the activities of pressure groups. Metcash Limited can create a close collaboration with these groups to achieve long-term goals.

Corruption and Changing Policies

Metcash Limited must keep a close check on the changes in any government policies because they can directly impact the performance of the business. The operations of Metcash Limited are its different countries can become unpredictable if there is a high level of corruption and weak enforcement of the law (Achinas, Horjus, & Achinas, 2019).

Trade and Taxes

The profitability of a company is directly influenced if there are high taxes in a country. Metcash Limited should look into the taxation policies in each country before further expanding its operations (Eierle, Hartlieb, & C. Hay, 2022). Similarly, if there are high trade restrictions, it can get difficult for Metcash Limited to import and export its products, impacting the relationships with trade partners.

Economic factors

GDP, Employment, and Exchange Rates

The long-term growth strategies of Metcash Limited are majorly determined by the GDP growth of the economy. The purchasing power of consumers significantly increases with a high GDP. High unemployment in an economy shows that Metcash Limited can benefit from surplus labor with low-cost wages. Furthermore, Metcash Limited should monitor interest rates as it can affect the borrowing ability. With that being said, if there is a high fluctuation in currency, the profitability of Metcash Limited can also be influenced (Sadeghi, 2020).

Labor Market

It is important for Metcash Limited to make appropriate predictions regarding the labor market conditions in a specific economy (Sadeghi, 2020). This can help the company to hire a more talented workforce that can improve the performance of the company.

Industry lifecycle stage

Metcash Limited should consider expanding its operations in growing economies to benefit from growth opportunities. It can be challenging for Metcash Limited to enter a mature industry at a growing stage (Villamarín & Pinzon, 2017).

Social factors

Demographics

Metcash Limited should study the changing patterns of demographics, such as socio-economic variables, the aging population, and trends in migration (Barbara & Cortis, 2017). This can help the company to identify the right segment to target with a high potential for growth opportunities.

Cultural norms

Every country and society has a distinctive culture with different norms and values. It is important for Metcash Limited to study and identify social class stratification.

E-commerce

There has been a significant shift in online shopping. Metcash Limited needs to adopt necessary changes considering the growing use of social media networking sites and mobile phones to increase its revenue and overall profitability (Villamarín & Pinzon, 2017).

Technological factors

Technological innovations

On-going technological innovations should be considered carefully by Metcash Limited so that it can stay ahead of the competitive market. Metcash Limited should continue working on introducing major technological transformations to achieve a competitive advantage (Rastogi & TRIVEDI, 2016).

Social Media Marketing

The collaboration with consumers has been growing rapidly because of the development of communication technologies (Rastogi & TRIVEDI, 2016). Metcash Limited can take it as a great opportunity where can use innovative strategies to expand its customer base.

Environmental factors

Waste Management

Metcash Limited should implement the latest technological tools to minimize environmental pollution. Waste management is now getting popular and has been considered a major business norm (Igliński, Iglińska, & Cichosz, 2016).

Climatic Conditions and Eco-friendly products

Climatic conditions can influence the efficiency of Metcash Limited. The cost of a company's operations can be increased if there are extreme weather conditions. Similarly, there has been an increasing demand for eco-friendly products. Metcash Limited should work towards adopting more sustainable business practices to gain customer trust (Barkauskas, Barkauskienė, & Jasinskas, 2015).

Legal factors

Employee protection laws

It is important for Metcash Limited to follow the health and safety laws for its employees that are issued by the authorities to ensure the safety of its labor.

Consumer laws

Metcash Limited should protect its customer data to ensure their security and privacy concerns. Moreover, it should set the right price with the right product quality (Igliński, Iglińska, & Cichosz, 2016).

Porter's Five Forces

Metcash Limited can use Porter's Five Forces to analyze the competitive landscape of the industry. The strategic planners of Metcash Limited can use this framework to make effective decisions.

Threat of New Entrants

Metcash Limited operates in an industry where it is difficult to achieve economies of scale, making it difficult for new entrants to enter the industry (Yunna & Yisheng, 2014). There is a strong product differentiation with high capital requirements. Moreover, it is difficult to establish a distribution network easily in this industry. Thus, Metcash Limited has a weak threat of new entrants.

Bargaining Power of Suppliers

There are more suppliers in the industry of Metcash Limited. This shows that there is less control over prices. Organizations like Metcash Limited can easily switch to other suppliers because of less differentiation in products. This makes the bargaining power of suppliers a weak force in Metcash Limited's industry (H. Th. Bruijl, 2018).

Bargaining Power of Buyers

The industry in which Metcash Limited operates has many suppliers as companies to buyers. This means that buyers have fewer options and do not have control over prices (H. Th. Bruijl, 2018). The high product differentiation shows that there are few alternative products for buyers, and there is a high switching cost. This makes the bargaining power of buyers a weak force in the industry.

Threat of Substitute Products and Services

Metcash Limited operates in an industry that offers very few substitutes to its customers. The substitutes that are available are expensive because of their high quality (Zhao, Zuo, & Wu, 2016). However, companies like Metcash Limited sell their products at a lower prices. This clearly shows that buyers may feel reluctant when switching to other substitutes.

Rivalry Among Existing Firms

Metcash Limited operates in a less competitive industry. The already established companies have a large market share, meaning that any move by the existing companies will be noticed. Moreover, Metcash Limited has to take several competitive actions to become a market leader, as the industry is likely to grow rapidly in the coming years (Aithal, 2020).

SWOT Analysis

Metcash Limited can make use of SWOT analysis to effectively analyze the company's internal strengths, weaknesses, external opportunities, and threats.

Strengths

Strong distribution network

Metcash Limited operates in various countries and has multiple outlets that help the company to deliver its products quickly to its customers. This shows that Metcash Limited has a strong distribution network (Benzaghta, Elwalda, & Mousa, 2021).

Financial position

Metcash Limited has established itself as a strong financial company over the past few years. It has generated enough profits that can be used to finance any future expenditure (Basset & Mohamed, 2018).

Automation

Metcash Limited has adopted the latest and innovative technology in its business operations, which has allowed the company to reduce its production costs (Benzaghta, Elwalda, & Mousa, 2021).

Social media presence

Metcash Limited has been successful in establishing itself as a strong brand on social media platforms that, includes Facebook, Twitter, and Instagram. This increases customer engagement (Basset & Mohamed, 2018).

Weaknesses

High rent costs

Metcash Limited has its manufacturing plants on rented properties. This increases the company's overall costs, and a significant portion of Metcash Limited's profits go into paying the rent (Comino & Ferretti, 2016).

Research and Development

Metcash Limited has not been able to conduct effective and in-depth market research regarding new markets and products (Comino & Ferretti, 2016). Customer trends are always evolving, and it is important for Metcash Limited to take immediate action in conducting its research.

Centralized Power

There has been a centralized decision-making process in Metcash Limited. This means that employees have to consult their managers before taking any decision themselves. This slow down the decision-making process. and employees feel demotivated. Thus, impacting the operations of Metcash Limited (Comino & Ferretti, 2016).

Opportunities

Presence of Internet

Metcash Limited has a great opportunity of expanding its business by using the internet. Since there has been a growing trend in online shopping Metcash Limited can boost its sales by expanding its online stores (Yan, Xia, & X.H.Bao, 2015). Additionally, social media platforms can be updated constantly to engage customers with all the new products introduced by Metcash Limited.

Technological Innovations

Technology is constantly evolving, and Metcash Limited can benefit from it by implementing the technology in its various departments. Manufacturing process can be completed automated, which can eventually help Metcash Limited to reduce its costs (Taghavifard, Mahdiraji, & Alibakhshi, 2018).

Globalization

The continuous increase in globalization has allowed Metcash Limited to expand its business operations across borders. It has the opportunity of entering new markets (Yan, Xia, & X.H.Bao, 2015).

Threats

New Entrants

Recently, many companies are entering the industry in which Metcash Limited operates. This means that there are chances of increased competition. This poses a threat to Metcash Limited as it has to put more effort into gaining market share (Taghavifard, Mahdiraji, & Alibakhshi, 2018).

Fluctuations in exchange rates

The exchange rates are highly subjected to fluctuations that negatively impact the sales of Metcash Limited. Metcash Limited needs to study the changing fluctuations to keep up with its profitability (Vlados & Chatzinikolaou, 2019).

Consumer trends

The consumer trends are constantly changing, that causes changes in their demands. This puts pressure on companies like Metcash Limited, who have to continuously meet their consumer demands. Moreover, there is a significant threat from substitute products because consumers tend to switch to these companies (Vlados & Chatzinikolaou, 2019).

Marketing Mix

Product

Metcash Limited operates in a wider range of products. Each of the products has its further product lines that are sold under the Metcash Limited. This means that customers can benefit from a large variety of products. Metcash Limited sells highly differentiated products with higher quality that, gives it a competitive edge (Khan, 2014).

Price

Metcash Limited follows a competitive pricing strategy. The company also takes into account all its costs before setting its prices (Londhe, 2014). Currently, Metcash Limited is using a product bundle pricing strategy where customers get bundled products at lower prices.

Place

Metcash Limited has adopted various distribution channels to reach its customers. The company sells its products through its website directly (Thabit & Raewf, 2018). Apart from this, it also distributes its products to wholesalers, who then further sell it to small retailers. Metcash Limited has its own retail stores where it sells its products directly to consumers.

Promotion

Metcash Limited uses traditional and modern promotional techniques. TV ads are used to reach a larger audience. Metcash Limited also advertises on social media sites such as Facebook, Instagram, and Twitter. Events are sponsored by the company. Moreover, Metcash Limited participates in several exhibitions (Londhe, 2014).

VRIO Analysis

Valuable

Metcash Limited engages in corporate social responsibility activities. This has allowed the company to establish a strong brand image. Since, Metcash Limited has a well-established distribution network, the products are reached to consumers in a timely manner. Metcash Limited has been able to introduce innovation in its various departments, which has lowered its costs (Ariyani & Daryanto, 2018).

Rare

Metcash Limited operates in multiple countries. This means that its global presence is a rare factor. It works towards an organizational culture that encourages teamwork, and creativity among employees (Ariyani & Daryanto, 2018). Metcash Limited is also able to adapt to different societies, and cultures due to its exposure to various locations.

Inimitable

The products produced by Metcash Limited are of a high quality. Customers make repetitive purchases, and thus it is an inimitable source. (Miethlich & G. Oldenburg, 2019). Metcash Limited has a significant placement of its stores that gives an easy access to its customers. Additionally, the company has been using a competitive pricing strategy because it has been able to achieve economies of scale, thus lower production costs.

Organization

Metcash Limited, over the years, has successfully gained a financial strength. Metcash Limited can make use of these finances to invest in major acquisitions that give it more growth opportunities. The advancements in technology have allowed Metcash Limited to manage its operations more effectively. Distribution channels are another resource for Metcash Limited. The supply chain is very efficient, resulting in more revenue (Miethlich & G. Oldenburg, 2019).

Value Chain Analysis

Primary Activities

Metcash Limited is involved in primary activities such as the production of goods and then selling them to the target audience.

Inbound Logistics

Metcash Limited should ensure to have a strong relationship with its suppliers to avoid any inconvenience in receiving, storing, and distributing the product. This will help Metcash Limited to have a more effective transformation of a product (Ariwibowo & Saputro, 2021).

Operations

Operations involves manufacturing as well as services. Metcash Limited should conduct an in-depth analysis of its operational activities to remain ahead of its competitors (M.El-Sayed, W.Dickson, & O.El-Naggar, 2015). This will increase the productivity of the company, and more profits can be generated.

Outbound Logistics

It is important for Metcash Limited to analyze, and optimize its outbound logistics so that it is able to achieve the long-term corporate goals. Managing outbound activities properly reduces the chance of late deliveries (M.El-Sayed, W.Dickson, & O.El-Naggar, 2015).

Marketing and Sales

Metcash Limited should use various marketing and sales techniques to differentiate its products from its competitors. Metcash Limited can adopt marketing and sales activities such as promotional activities, advertising, and building strong relationships with suppliers and customers (Ariwibowo & Saputro, 2021).

Services

In terms of services, Metcash Limited must ensure that it provides its customers with the pre-sale and post-sale services (Jaligot, C.Wilson, & R.Cheeseman, 2016). The post-sale service typically falls into the promotional activities of a company. Metcash Limited can thus develop its customer loyalty.

Secondary Activities

Firm infrastructure

A strong infrastructure of a firm can enable Metcash Limited to optimize the entire value chain of the company. Moreover, by controlling the infrastructure activities, Metcash Limited can be in a better position to get a strong foothold in the competitive marketplace (Darmawan & Wiguna, 2014).

Human Resource Management

Metcash Limited should place its major focus on analyzing the different aspects of HR, such as recruitment, selection, training, and performance evaluation of employees (Darmawan & Wiguna, 2014). Metcash Limited can reduce its costs by identifying and analyzing the costs associated with hiring and training.

Procurement

Procurement is an important element in the Metcash Limited's value chain. It is important for the company to assess its overall procurement activities so that the inbound, outbound, and operational activities can be optimized (Kumar & P. V., 2016).

Ansoff's Matrix

Metcash Limited can implement Ansoff's Matrix to make decisions regarding its business growth. This framework includes four different strategic choices that can be selected by Metcash Limited.

Market Penetration

Production capacity

Metcash Limited can increase its overall production capacity. This will allow the company to reach more wider audience in an existing market. Metcash Limited can also benefit from the reduced costs by expanding its production capacity. Thus, Metcash Limited can attract more customers using competitive pricing (Madsen, 2017).

Marketing Investment

Metcash Limited can penetrate the market by investing more in marketing and sales activities. This will help the company to engage with its customer more effectively, leading to more potential customers (Dawes, 2020).

Distribution Channels

Innovative and unique distribution channels can be explored by Metcash Limited. This will enable the company to reach new segments and groups of customers (Dawes, 2020). In addition to this, Metcash Limited can penetrate the market by improving its supply chain, giving more accessibility to customers.

Joint Ventures/Acquisitions

Metcash Limited can enter into joint ventures or can take over other leading companies of the market. This will give Metcash Limited more market share.

Market Development

Research & Development

Metcash Limited should keep on investing in its R&D department, so it is able to identify the changing trends of the market. This will help Metcash Limited to target the right market at the right time (Mukangai & Murigi, 2021).

Expanding Regionally

Metcash Limited can enter in a new market by expanding its operations regionally. This includes considering different cities of the country. Metcash Limited must consider any cultural differences when entering a new market (Mukangai & Murigi, 2021).

New Segments

New segments of the current market can be explored (Mukangai & Murigi, 2021). Metcash Limited can add new features and product uses to its existing products that satisfies the needs of a different customer segment.

Product Development

Modifications

Metcash Limited can modify the existing product by improving its features to enhance the product offerings.

Launching additional products

Metcash Limited should invest in its R&D department so it can come up with new and innovative products that attracts and fulfill the needs of the target audience. This will boost the sales of Metcash Limited and will increase profitability (Khajezadeh, Niasar, & Asli, 2019).

Diversification

Vertical Integration

Metcash Limited can consider vertical integration. This will allow Metcash Limited to develop and launch new products that are similar to its existing product category (Khajezadeh, Niasar, & Asli, 2019).

Horizontal Integration

Metcash Limited can diversify its business operation using horizontal integration. This means that the new products and services of Metcash Limited will not be related to its current products (Dhir & Dhir, 2015).

A new business diversification

Entering into a completely new business can be considered by Metcash Limited. The organization can work towards starting a new business that can give a company more growth prospects in the future (Dhir & Dhir, 2015). Metcash Limited can conglomerate with the help of mergers and acquisitions.

Conclusion

To conclude, it could be said that Metcash Limited can resolve its current managerial and strategic problems by focusing on its existing products. The company can adopt more attractive marketing strategies that can help Metcash Limited to boost its revenue and profitability. It is recommended to focus on maintaining strong supplier relationships. Moreover, it is also advised to focus on more innovative products so Metcash Limited can remain competitive in the market.

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