Research Report Marketing Business - Coles and the Fresh Bread Scandal

[pic 1][pic 2]

Table of Contents

Introduction        3

Views on the Issue        4

Original Case        5

Critical Review of Case        6

Conclusion        7

References        8

Introduction

This report is aiming to analyse different views on why should consumers be protected from business activities and what are the risks of ignoring consumer rights. Research was done through various sources to present the different views; an original case study was created to show the actions taken by a business in this case it was “Coles and the Fresh Bread Scandal”, the supermarket was selling bread partially made in Ireland and finished baked in Australia to consumers and Fresh Baked. A critical review of the case is done to further discuss and analyse it and concluding that it is important that consumers are protected and their rights not ignored as an important part of the BSG triangle especially the as stakeholders in the society sector.

Views on the Issue

Consumers are main stakeholders of society, who in turn are the main target of business for selling their products, in the BSG triangle it is up to Government to protect society through its stakeholders such as ACCC which look after consumers and ensures that business do not take advantage of consumers. In Australia, the supermarket industry is dominated by what is referred to as the duopoly between Coles and Woolworths, although IGA and ALDI a late entrant into the industry has taken a good size of the market share. Consumers need transparency to make choices and decide what they should purchase, it is important that business do not take advantage of the faith that consumers place in them.  Vijayalakshmi and Madegowda (2014, pp. 437-438) stated that society has been the centre for businesses to fulfil their primary objective of earning profit.

Businesses are a great deal responsible in ensuring that consumers(Society) is not taken advantage off. Never has there been more the case that consumers hold a lot more power than in today’s Global practice in the market place. Business tend to act and interpret the laws as best they fit their business needs, redefining or giving new interpretations to concepts like “Fresh” or “Baked”.

The Article of 'Consumer Protection Legislations and Ethics of Business Community in Market Place', Journal of Commerce & Management Thought, 5, 3, pp. 433-445. Vijayalakshmi and Madegowda views are that the market economy has brought novelty in the global market while at the same time deceptions have become more common practice by businesses to make profit. The Articles views that consumers are been taken advantage of in several ways, something that is not new and that in turn has lead consumers to be more savy and more vocal about such activities.  The article also states that it is with consumer protection laws enacted by the government that it will ensure that business do the right thing and act ethically. It is important in the BSG triangle model that consumers(Society) are looked after as a main stakeholder of the Capital Market to keep it going.

The Article “Woolworths: Are the glory Days over? By Nathan Bell (2014, pp. 6) views are on Coles main archrival Woolworths, even though Coles has had several hot issues with consumers and it is still pulling in higher than expected numbers and still is doing things that it should not with Fresh Spring Apples stored the previous Autumn. The article gives a breakdown of the financial growth that the supermarket has had and the different areas of growth as well as its competition and its future forecast of its earnings where it will be positioned.

A media Release from the ACCC “Federal Court finds Coles’ Freshly Baked’ and Baked Today’ marketing claims misleading”. The article is a clear view of what happens to businesses when they deceive, falsely make claims that takes advantage of consumers, as a result the ACCC took Coles to Federal court, setting precedence that such actions will not be tolerated and that there are consequences that business must answer too and be held accountable.

 The BSG triangle has a delicate balance that must be maintained in today’s capitalistic global market where all stakeholders are important and the consumers are essentially more vulnerable via all the different business via local or foreign in their ever need to obtain profit.  

Original Case

“Coles and the Fresh Bread Scandal”

Australian Supermarket Industry fight for increase market lead between Coles and Woolworths, which both take account for around 74% of the total market share, late entrant Aldi holds around 14%. With Aldi gaining market share, it has been clear that both supermarkets will go to great lengths to regain, increase their lead. The discount wars, discount fuels have been attempt by one and always matched by the other.

Coles became undone by the words Fresh Baked, it was first brought to the attention of the ACCC by former Victorian Premier Jeff Kennett, after buying loaf of bread and reading the packaging it clearly showed the label that the bread was made in Ireland, which lead to the former Premier to wonder how can bread made in Ireland be Freshly Baked.

The ACCC began an investigation into the Fresh Bake, which uncovered that Coles was importing from Ireland what they refer to as Par Baked the bread was cooked from the inside and after frozen and packaged for transport to Australia where it was finished off been baked on the outside for that crusty feel. The products would at times have been prepared 6months in advance and Freshly Baked at the different Coles Supermarkets around Australia.

Coles argues that it was still Freshly Baked just that part of the process was started previously for logistic purposes, to avoid bringing in flour into the different stores and not having to clean up afterwards. The bread was still cooked instore daily and to them it that was Fresh Baked.

The ACCC took Coles to the Federal Court as it felt that it had mislead/deceived consumers with their ‘Baked Today’, ‘Sold Today’ and ‘Freshly Baked In-Store’ claims by Coles for using their par-baked bread which not only affected consumers but also small businesses (bakeries) that try and compete with their Freshly made Bread like Bakers Delight. The supermarket had for 3 years promoted its bread as “Freshly Baked in Store”. The Federal Court ordered the supermarket to pay $2.5 million plus the costs to the ACCC.