Analysis of marketing mix for J. Sainsbury’s Plc
- With interests in financial services, J Sainsbury plc is a leading UK food retailer. Sainsbury's Supermarkets, Sainsbury's Local, Bells Stores, Jacksons Stores and JB Beaumont, Sainsbury's Online and Sainsbury's Bank are consistent of J Sainsbury’s. The decision of expanding into convenience stores is discussed further within a Porters 5 forces analysis. Their objective is to serve customers well and thereby provide shareholders with good, sustainable financial returns. They aim to ensure all colleagues have opportunities to develop their abilities and are rewarded for their contribution to the success of the business.
- Conduct a situation reviews to advice J. Sainsbury’s Plc. how these are likely to affect their competitive advantages and their brand.
- Analyze retail market and provide a range of marketing strategy options then explain how it can be used by J. Sainsbury’s Plc. to achieve competitive advantages and long term growth.
- Analyze the current marketing environment for J. Sainsbury’s Plc. and recommend how the marketing mix elements may be developed to contribute to enhance their goals and values.
Strength: - Sainsbury’s is showing real turnaround in its business by thirteen straight quarters of growth.
- Even for 2008 Sainsbury’s has exposed raise in revenue and profit after tax as well.
- The Chief Executive Justin King acceptance great honour for his work in J. Sainsbury’s and it has tremendously knowledgeable management team.
- Sainsbury’s seems to be very well placed on green and environmental issues due to its various recent initiatives, like buying fair-trade bananas.
- It has a positive customer product and it is liked by both green activists and customers.
- It is one supermarket chain that has a clear celebrity endorsing products, leading to increased sales.
- The occupation offer by the Qataris private impartiality last year can have some implications as public are gravitating towards British companies and the vision of Sainsbury’s being governed by a foreign firm can lead to consumers switching loyalties. Contrasting Tesco’s development plan, Sainsbury’s is not nearby in market other than the UK. This can direct to problem particularly if there is some trouble within food trading in the UK or if there wants to be sources of extra escalation.
Opportunities: - Sainsbury’s substitute trade presents a great chance for future development. Its funds in assets and an aim of £40 million revenue through its bank look like a good strategy to track. Online sales are an enormous opportunity as well, since online boundaries are higher and reserves are not huge.
Threats: - there requirements to be nonstop serious investment in ecological and green issues without instant benefits. The problem libels in maintaining a balance, for example, Bio-fuel is significant tool to limit worldwide emissions and its use affects Sainsbury’s supply chain straight, and so Sainsbury’s should support it. However, a burst in bio-fuels has made hard skin dearer affecting its prices within the UK and making Sainsbury’s clients tolerate the force. It operations are subject to a broad range of narrow requirements particularly in relation to setting up, rivalry and environmental issues, service, pensions and tax laws and in terms of system over the group’s goods and forces.
There is cut-throat competition in U.K.’s retail market. The name like Tesco, Asda, Morrison, and Waitrose are the biggest competitors of J. Sainsbury Plc in UK, so if it has to cover and retain the good brand name with the old and customers, it has followed some competitive advantage points. Sainsbury has to follow some strategy to develop its brand.
Strategy: - Strategy is what organisation does to achieve their objectives. Strategy planning is process of defining objectives and strategic management is what people does to develop the good image in the egos of market and the consumer as well.
Competitive advantage: - It is very basic word. A position a firm occupies against its competitors. According to Michael porter, the three methods for creating a sustainable competitive advantage are through:
- Cost Leadership: - It occurs when a firm delivers the same services as its competitors but at lower cost;
- Differentiation: - This advantage occurs when a firm delivers greater services for the same price of its competitors. They are collectively known as positional advantages because they denote the firm’s position in its industry as a leader in either supervisor services or cost.
- Focus: - It is related with MARKET NICHE, in which it covers almost all the customers for the particular products.
The primary factors of competitive advantage are innovation, reputation, and relationship. It occurs when any organisation acquires or develops an attribute or combination of attributes that allows it to outperform its competitors. The study of such advantage has attracted profound research interest due to contemporary issues regarding superior performance levels of firms in the present competitive market conditions. A firm said to have a competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential player.
Competitive advantage identifies five factors that determine the nature and degree of competition in an industry.
- Barraging power of the buyers;
- Threat of substitutes;
- Barraging power of the suppliers;
- Rivalry among existing competitors;
- Threat of new competitors.
1. Market-Penetration Strategy
3. Product-Development Strategy
2. Market-Development Strategy
4. (Diversification Strategy)
- Market Penetration Strategy: -
- In this strategy option Sainsbury’s can encourage the customers to buy more products through attractive schemes like buy one and get another one for half price.
- In this strategy Sainsbury’s can attract the customers of Tesco, Asda, and Marks and Spencer by price check option. If you find a product at lower price than Sainsbury’s at any other its competitors than Sainsbury’s will sell that product to you at same price of its competitors.
- In this option of strategy Sainsbury’s can attract the customers who are not buying from supermarkets through the advertisement of cheaper price.
- Market Development Strategy: -
- Sainsbury’s can expand its market to new market such as Europe.
- Through this strategy company can acquire other distribution channels to perform better.
- Sainsbury’s is expanding its stores which covers most of the local market.
- Product Development Strategy: -
- In this strategy option Sainsbury’s can add new features like improvement in packing and labelling.
- Backward Integration: - In this option Sainsbury’s can acquiring or partnering with one or more of its suppliers. For example, Sainsbury’s is selling fresh fruits so if it acquire the company which is supplying fresh fruit than it can expand its business and it will help to sell the fresh fruits at lower price than its competitors, so basically it can do more profit.
- Forward integration: - Through this option Sainsbury’s can acquires one or more of its distributors, such as we cannot find Sainsbury’s own products in any other local shop so if it gives the distribution ship to local shops then it can sell its own products more and indirectly it will help to gain more market shares of retail industry and it will be one kind of advertisement.
- Horizontal Integration: - By this option Sainsbury’s can acquire its competitor such as Aldi, very small food retail chain, if Sainsbury’s acquire or do partnership with Aldi then it will have more outlets and market shares.
- It makes sense when good opportunities are found outside the present business.
Sainsbury’s has already diversified its business from retail sector to finance sector but it has very few branches of finance so if it will open more branches of finance then it can get more customers and get more profit as well.
- Concentric Strategy: -
Concentric strategy means new products with technological or marketing synergies with the current product line.
Sainsbury’s selling bread and recently it’s introduced its basic bread which has same quality but price is lower.
- Horizontal Strategy: -
Horizontal strategy means new products that would appeal to current customers.
Sainsbury’s recently launched new cream eggs same as Cadbury cream egg and for the promotion of this product it is giving the cream egg for free to current customers.
- Conglomerate Strategy: -
It means new products that have no relation to the current technology or market.
Sainsbury’s is selling the readymade garments and accessories of its own brand TU where as its any other competitors don’t deal with garments and accessories of its own brand.
Strategy is a social practice existent in a wide variety of different organizations, influencing either directly or indirectly, a large number of organizational members. The overall strategy of J. Sainsbury’s Plc. is to mapping the way to overcoming channel conflict. The J. Sainsbury’s Plc. should follow the below mentioned strategy.
Creating strategic value by balancing risk and opportunities: -
No risk-No reward? The old mantra of business seems to have lost its meaning: cut-throat competition, every emerging markets and a general loss of trust in economic stability has late many corporations to tread overly carefully. In the last of couple of years risk management tools and methodology from the financial service sector have been more and more transferred in to everyday business.
Extending product life cycle stages: -
If Plc. strategy is extended into a proper manner than only Sainsbury can go further in to the market. The strategy should be the clear. They should concentrate on the maturity stage as it is the most important time for any product. The other advantages are its useful for the proper calculation of the demand of the product.
End of life – Retiring a product: -
Outdated software can turn into a monster, how do you discontinue a product that is no longer profitable? And how do you know that its time?
The above mentioned questions are too important to retire the product from the future lose from that product. By following this strategy the company can invest such amount at other places.
Factors of how it becomes more competitive?
There are several primary points to become more competitive are as under.
- Identify the “new” core competencies;
- Indentify the ways to obtain, maintain and extend core competencies;
- Differentiation: - core competencies a firm should extend in order to acquire the greatest value for its customers and most sustainable competitive advantage.
In above mentioned three factors differentiation performs the best part for each and every organisation to remain in the competition. It should provide the same product with low prices and in an attractive manner, so that consumer will flick to buy the particular brand.
The important factors are as under.
Brand: - Brand development relates directly to the sales and marketing groups with the firm. The skill sets required include advertising and managing customer expectations. It is extremely important because it clearly shows how the firm interacts with the customers.
Product: - Product development is the responsibility of marketing, sales, and the IT groups in the firm. These products need to be flexible, support mass customization and leverage multiple distribution channels. The product value to the customer is based on aligning appropriate features to meet the needs of the individual customer.
PESTEL analysis stands for “Political, Economical, Social, Technological, Environmental, and Legal analysis” and at the same time it describes a frame work of universal environmental factors used in the environmental scanning component of strategic management. It is consider being extra analysis when conducting a strategic analysis or doing market research and also it provides a certain overview of the different macro environmental factors that the company has to take in to consideration. It is useful to carry out the survey regarding market growth of desires, business position, potential, and direction of operation.
Now I would like to discuss how these factors affect the J. Sainsbury’s Plc.
- Political Factors: - In political factors the areas like tax restrictions and tariffs are included. In the political factors, it also includes the goods which government want to provide and the goods government does not want provide. In Sainsbury, as it said they provide internet shopping facility. The figure of online shopping is 147 stores. It affects the political factors as it has to cover the tariff values, the tax figures, and the time period. In Sainsbury there are some other factors included in political factors which are as under,
- Ecological issues;
- Current legislation;
- Future legislation;
- European internal legislation etc.
- Economical factors: - In this factor it includes economic growth, interest rates, exchange rates, and the inflation rate. As Sainsbury is performing its operation in retail market, it has to face some specific problem of inflation rate. If the inflation rate is too high or too low then they have to follow such strategies which help them to come out of these serious problems before it affects them very bad. The major implication of these factors on Sainsbury is how it is operate and how it is making the appropriate decisions at the right time.
There are some more factors includes in the economic factors which also affects the working condition of J. Sainsbury’s Plc., which are as follow:
- Home economy situation;
- Overseas economies and trends;
- Taxation specific to products;
- Market and trade cycles;
- Specific industry factors.
- Social factors: - It includes the aspects of culture and also health consciousness, population growth rate, age distribution etc. As Sainsbury sales all types of products, it has to concentrate on this factors. It should take care about every age group, as they need different products for their own utility. If they can give satisfaction to the customers from the beginning than only they can appeal to the more consumers. Some time the trends in social factors affect the demand for a company’s own products and how the company operates. For example, an ageing population may imply a smaller and less willing workforce.
The factors included in social factors are as under:
- Lifestyle trends;
- Media views;
- Fashion and role models;
- Major event and influences;
- Ethical issues.
- Technological factors: - This factor includes ecological and environmental aspects such as R & D activity, automation, technology incentives, and the rate of technological change. They can determine barriers to entry, minimum efficient production level and influence outsourcing decisions. There are some more factors includes in this area are as under:
- Competing technology development;
- Research funding;
- Replacement technology;
- Maturity of technology;
- Innovation potential;
- Global communication etc.
- Environmental factors: - Many western companies have been involved in reducing carbon footprint or pollution and increasing energy efficiency. This is not just pollution related issue anymore and the companies have to prove that they are trying to reduce their crash on the environment. It means Sainsbury’s will have to invest more in environmental issues. Other important ethical issues effect Sainsbury’s on various levels, such as sale of organic products, encourage customers to reuse their plastic bags with rewards and the ethical treatment of animals. This issue is very sensitive and they will have to balance their community rise on environment without losing customers due to prices increase.
Legal factors: - As we know the laws on food and drinks are very strict so Sainsbury’s will have to implement new and more packaging and labelling policies to fulfil these requirement, which will create more financial burden on the company. Because of interest in financial service of Sainsbury’s there is ever more legal inspections in the operations of Sainsbury’s bank it means bank has more responsibility regarding legal fulfilment and other threat measures.
Now I would like to discuss about the J. Sainsbury’s 4-P’s marketing strategy.
4-P’s stands for
First we discuss about product and then price and then place and then promotion.
Product: - As we know that there are many competitors of Sainsbury in U.K. such as Tesco, Asda, Morrison and Marks and Spencer. Tesco is the market leader with 30% for retail food market in U.K. and Sainsbury is second biggest supermarket with 18% of retail market. It remains same as last year in this credit-crunch as well just because of its different types of marketing strategy for different products. For example, Sainsbury is selling its own products as well like Sainsbury’s basic, Sainsbury’s be good to yourself, Sainsbury’s organic (SO), and Sainsbury’s taste the difference. Sainsbury is selling basic yogurt which has 0% fat at £0.49 where as Tesco and Morrison selling its own yogurt which has 2% fat at £0.79, so basically the people who are health conscious they prefer to buy some particular products from Sainsbury’s and the people who go to Sainsbury will buy every product which they need for daily use because its human mind-set that they will not go to another store to buy different products if they get at one store and at same price.
Price: - Sainsbury has different strategy to show that they are selling their products at lowest prices in the retail market. Here I am sharing my personal experience; Sainsbury is comparing its prices with Tesco because it is the market leader so Sainsbury is showing two different prices for one product. They put the price of Tesco on one label with heading “Price Check” and on another label they put their own price which is lower than the price of Tesco or same.
So when customers go to Sainsbury they don’t need to remember the price of Tesco because they can show the price of Tesco for some particular products, but Tesco is not following this strategy so customers think that Tesco is selling same products at more price than the Sainsbury’s.
Place: - Place means place of Sainsbury’s and place of product in Sainsbury’s. It is serving 18 million people with 290 convenience stores and 502 supermarkets where customers can find over 30,000 products. If we go anywhere in London we can find the Sainsbury’s convenience store within 10 minutes walk, so in other way we can say that our basic things which we are using every day we can get in 10 minutes just because of Sainsbury’s. Now we will discuss about the place of product in Sainsbury’s. Sainsbury’s tries to show its all products in such a particular way, so customers do not face any problem to find some particular products. For example we buy milk every day but when we go to buy the milk we can find it in the back of the store any every Sainsbury’s store. They should put it in the front of the stores so customers can easily find it but no they put it in back of the stores because when we go to buy milk we have to go through whole store and we can see that which products are available in Sainsbury’s. Same strategy applies for bread, yogurt, and butter as well.
Where as if we jump in any stores in central London we can find sandwiches, fruit-bowl, cold-drinks, and small juices in the front of the stores because these products are for specially lunch-time and we know that from 12:00 in afternoon to 02:00 p.m. is lunch-time and during this time every food shop is very busy either it is Eat coffee shop or it is Tesco or it is Sainsbury’s, so during this time the management of Sainsbury’s does want to fill very busy, because if they are busy then customers have to wait longer for check-outs. This is the only reason to display these all stuff in the front of the stores, so customers can come and they can leave as early as possible. These are two complete different strategies for different products.
- This is the very important factor for any product in any business, without advertisement how customers could know that you are selling this product at this price. Sainsbury’s has variety of advertisement for variety of products, such as in the retail food market of U.K. Sainsbury’s had first introduced a meal-deal for £3.99 in which we can get one sandwich or baguette from selected line and one small juice or cold-drinks from selected products and small pack of crisp or fruit-bowl. After that Tesco and Marks and Spencer apply this strategy at the same price and for same products so Sainsbury’s reduce its price to £3.29 in 2008 so other competitors have to reduce their prices. This process goes on and on and now the price of meal-deal is only £2.00 which is very cheap comparative to quality of the Sainsbury’s products. The people who are working 09:00 to 05:00 they can afford £3.99 or £3.29 but students cannot afford it but now for £2.00 it is a great deal and students can afford it, so this is the how Sainsbury’s promote their products and indirectly customers are getting more stuff with good quality only at Sainsbury’s.