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Woolies to overhaul advertising strategy to keep up with Coles

Woolworths is set to completely overhaul its marketing and advertising, in a bid to overtake arch rival Coles.

Recent studies have shown Coles is winning the supermarket wars, in part due to its ‘prices are down’ campaign, as well as aligning itself with hugely successful reality cooking programs Masterchef and My Kitchen Rules.

Woolworths met Coles’ advertising idea with their ‘price knock down,’ but have not had the same success in recent times, and are in the process of finding a new creative advertising agency, which would mean a move away from M&CSaatchi, who have held the account since 2002 and were the powerful force behind ‘The Fresh Food People,’ slogan.

Each year Woolworths spends $170 million on advertising, $150 million of which is included in the M&CSaatchi’s contract covering print, television, radio, catalogues and internet advertising.

The company’s new chief executive, Grant O’Brien, is expected to make the announcement confirming a change in marketing strategy and spending this week.

O’Brien told The Financial Review that for the first time since he took over the role in April, he will be focusing on earnings before interest and tax growth.

“One of the important things for driving a business like Woolworths is to have the right ambition and I think high single digit and better than that EBIT growth is the right ambition for the company.”

Many industry experts have criticised Woolworths’s marketing strategy, accusing the retail giant of being reactive instead of proactive and lacking innovation.

“I can understand that,” O’Brien told The Financial Review.

The focus on fresh food in Woolworths’ advertising has contributed to making it seem more expensive and with the financial strain on Australians getting worse all the time, Coles’ message of keeping prices down has seen more success.

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