J Sainsbury plc was founded in 1869 and at present day it operates a total of 890 stores comprising 547 supermarkets and 343 convenience stores all over UK. It jointly owns Sainsbury’s Bank with Lloyds Banking Group and has two property joint ventures with Land Securities Group PLC and The British Land Company PLC.
The Sainsbury’s brand is built upon a heritage of providing customers with healthy, safe, fresh and tasty food. Quality and fair prices go hand-in-hand with a responsible approach to business. Sainsbury’s stores have a particular emphasis on fresh foods and it continuously strives to innovate and improve products in line according to customer needs.
It serves over 19 million customers a week and has a market share of over 16 per cent. Sainsbury’s large store offers about 30,000 products and complementary non-food products services.
TRENDS AND ISSUES:
Competition Market.
Rising Unemployment.
Addition of internet preference and new stores required.
Changing consumers’ awareness
Decent awareness of products
(Mintel 2008)
(Euro monitors 2007)
PEST ANALYSIS:
Political:
Corporation tax is essential for every business. In the UK, VAT increased up to 2.5% and for that reason customers or consumers have to pay more to purchase VAT related product. Sainsbury’s hundreds of products currently on promotion instore and online will also be exempt from any price increases as a result of the 2.5% VAT increase. (Sainbury 2010)
So Sainsbury’s have to pay a large amount of corporation tax every financial year. From the corporation tax government can earn a lump sum amount. (ProQuest 2009)
Economical:
The rapidly increasing global food crisis have lead to increased food prices all over the world impacting greatly on the margins of the organizations leading to increased cost to consumers. Due to recession, the condition of super market industry is very bad and Sainsbury’s are no exception from that. Furthermore, the rising fuel costs have created more negative implications right throughout the supply chain of Sainsbury’s.
Social:
Due to Globalization every organization is trying to reduce the use of non recyclable items. Sainsbury’s are planning to plant more than 2 million trees within the next five years. At present UK Government is also putting more emphasis to consume organic food. This plantation strategy might help to increase the number of organic products in a yearly basis.
(J-Sainsbury 2010)
Technological:
The Internet accounts for 8% of global advertising spend and is growing rapidly one of the greatest downsides of supermarket shopping are the queuing system. Self checkout machines, employed by Asda and Tesco, are proving positive results especially for customers who have to queue up for very few items. Furthermore, self checkout machines could help in Sainsbury’s opening stores for 24 hours which might help boost sales.
Porter’s 5 Forces analysis:
Competitive rivalry:
Sainsbury’s has a market share of 14.9% in 2007, which is steadily increasing since its restructuring programme that started in 2004 (Annual Report 2007). This is a positive trend but it lags well behind the market leader Tesco, showing that there is considerable distance to cover.
Tesco, Asda, and Morrison’s are the three big supermarket chains in the UK retail sector. All of them have a different competitive advantage over their competitors. Sainsbury’s reach in the convenience stores makes it have a larger customer reach.
Threat of entry:
Barriers to entry are extremely high in the food retail market due variety of factors.
Firstly, organized retail is amongst the most sophisticated sectors within the UK and needs a lot of investment, along with significant brand development, which takes years to establish (Doyle 2002).
Secondly, retail is also at an advanced stage within the UK and most of the western world, which means there is less scope for new entrants to establish themselves.
Local knowledge is extremely crucial within the food retail sector, something that is difficult for foreign firms to replicate. This is corroborated by the presence of few global supermarkets in UK.
Threats of substitute Products:
The retail market is always trying to converge and assimilate new innovations with respect to food products or alternative businesses, to make shopping an extremely pleasurable experience. This makes them extremely difficult to substitute
The only major threat of substitute is an internal industry threat whereby one supermarket can lap up the business of other supermarkets.
(Blythe 2006)
. (ProQuest 2010)
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Power of Supplier:
Supplier power is usually more complicated as it is difficult to categorise it. It can be argued that if supermarkets do not sell their products consumers will shift loyalties, making suppliers very powerful. However, if the products of big companies do not reach supermarkets, their sales volumes will be affected hugely. The relationship might change depending on the situation of the big branded supplier, for example, when sales of Cadbury’s dairy milk increased through the successful Gorilla ad campaign
(Wiggins and Urry 2007)
(Kotler 2006)
Buyer Power:
Buyer power is high in this industry simply due to the presence of so many competitors selling the same products. It is only differentiated in price and consumer loyalty and increasingly on green credentials. Moreover, the switching costs are low for consumers.
As the economy goes further towards recession consumers’ needs are likely to be given more weight, increasing their power considerably.
(Blythe 2006)
(O’Doherty 2008)
Weaknesses
Sales decreasing in the UK
No good invention
Strengths
Great Quality
Value
Service
Choice
Sainsbury’s SWOT Analysis
Threats
Carryingcost is increasing
Increasing basic rate of wages in UK
Competitors are capturing their market
Global recession
Opportunities
Competitive price strategy
Opportunity of online shopping
Growing up potential market
(Sainsbury 2010)
(Cobra 2010)
Market Segmentation:
One core aspect of Sainsbury’s activities is its focus on customer/market segmentation. Sainsbury’s divide their customer base into 10 separate segments. Customer intelligence is gathered through analysis of Nectar Card (formerly Reward Card) purchases. The things that made Sainsbury’s one of Britain’s best retailers, great food at fair prices and wonderful services, are as important to customers today as they ever were. Sainsbury’s have a great network of stores in excellent locations, and even through the recent troubles Sainsbury’s customer numbers were constant at about 14 million a week.
(J-Sainsbury 2010)
Marketing Objective:
The business of Sainsbury is now focused very much on their Supermarkets and Bank following the sale and development during the year.
The three key priorities such as decrease environmental impact of products reduce CO2 and misuse was developed in1988. These are based on environmental impact and considered the most important for the business. (Mintel 2007)
To manage the significant environmental outcome which they have direct control and try to find to influence their suppliers and customers who can reduce the impact of their organization has on the environment.
(ProQuest 2010)
Marketing Strategy:
Marketing strategy allows an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage According to Kotler (2005), “Marketing strategy is the marketing logic by which the business unit hopes to achieve its marketing objective. It shows how strategies for target markets and positioning build upon the firm’s differential advantages.”Marketing strategy of Sainsbury’s is planned to acquire people from treadmill and into more adventurous eating. Below the band line ‘Try Something New Today’ is launched in 2005.
(Data Monitor 2009)
Corporate Objective:
Great food at fair prices
Accelerating the growth of complementary non-food ranges and services
Reaching more customers through additional channels
Growing supermarket space
Active property management
Evolution of Marketing Mix:
According to Kotler (2005)”Marketing is the social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.”
Marketing mix is a shape of permutation which makes marketing. These components are advertising, quality, promotion offer, coverage etc. It is really important to analysis the target market. According to McCarthy (1960), these merged tools are classified as product, price, promotion and place which is well-known as 4Ps.
To make the marketing mix, business has to gather the subsequent condition:
The product has to have the correct component – for example, it has to look high-quality quality and work well.
The Price must be acceptable. Customers want to purchase numbers of product to make a healthy profit.
The products have to be in the correct place and correct time. They are wanted is an essential operation to make sure that products arrive when and where.
The target group needs to be prepared aware of the existence and availability of the product through promotion. Successful promotions assist a firm to increase costs over a better output.
Product:
According to Kotler (2005), “Product means the totally of goods and service that the company offers the target market.”
Core Product:
According to Kotlar (2006), ‘the most basic level is the core product, which address the question of what is the customer really buying?’ Core products or flagship products are a company’s products which are most directly related to their core competencies. These products are then integrated into a variety of end products, either by the company holding the core product or by a second company to which the core product is sold to, and the end products are sold to users. Sainsbury’s provides lots of consumer product but Grocery, Fresh food and Fresh Vegetable are core products of Sainsbury’s because customers really like to buy these products.
Actual product:
Actual product has many attribute but five characteristics are the main characteristics, which are quality of the product, feature of the product, style of the product, packing and brand name of the item.
Product variety: Sainsbury’s have lots of different products. Products are groceries, food and drink, kitchen appliances, electronic appliances, toys and games for the kids, sport and leisure appliances. (Sainsbury 2010)
Quality: Sainsbury has different types of food range like Sainsbury’s kids; Sainsbury’s taste the different, Sainsbury’s basic, Sainsbury’s organic etc. Sainsbury has re-launched their ‘be good to yourself’ range in January 2010 with over 60 new lines in the range. (Euro Monitor 2010)
Design/Styling: Sainsbury’s offers different types of testy and healthy food and different types of new latest design for their customers such as kitchen accessories, electronic appliances, toys and games.
Brand Features: Sainsbury also offers a range of well-known products and their own brand.
Augmented Product:
This product based on around the core products and actual products. Augmented product always provides supplementary consumer benefits and services. When any new product comes in the market then customers always like to watch that what the main benefit to satisfy their needs is.
Advantages of Customer service: Sainsbury’s consists of additional service that support the customers need including assistance and offering training through the online or telephone. (Mintel 2009)
Warranties & Returns: Sainsbury gives the warranties and returns. It is depend upon the products that how many days’ customers will get warranties.
Price:
Competitive Pricing: At this time all supermarkets are in the competition. Sainsbury always offer to customers for their great products at fair price. Sainsbury has different types of food ranges.
Sainsbury’s basics products, offer a variety of over 700 low price food and grocery items from different shapes and size. Sainsbury’s basic are still Sainsbury’s quality and value.
Sainsbury offer 75 products for the Kids. Sainsbury’s Kids food range takes low price for the kids which are fresh and healthy for the kids. (Sainsbury’s 2010)
Place:
“Place includes the company activities that make the product available to target consumers.” (Kotlar 2005). The place of marketing mix is very essential to explain how and where product is being sold. Customers always try to find a place, where they can go easily to purchase their goods.
Main Mission Outlet:
Sainsbury’s has different types of store format for their customers. Sainsbury’s have 275 stores which are organized as a Main Mission outlets. This means they concentrate on providing for the weekly family shop.
Main plus Outlet:
Sainsbury’s 64 stores are in the Main plus outlets. These main plus are the especially big super markets and Main plus also known as a hypermarkets. They occupy in excess of 45000 square feet area and focus on a wider range of food products as well as more non-food items.
Mixed Mission Outlet:
Without the other stores Sainsbury’s have 124 stores which are known as a Mixed Mission outlets. (ProQuest)
Home delivery service: Online home delivery is the great service and facility of Sainsbury’s. In the busy world, customers are unable to give time to go to the shops. So customers like to purchase through online. Online home delivery gives lots of facility, such as customer can chose different types of product and can purchase through debit and credit cards.
Promotion:
Sainsbury’s is promoting their stores in different way to make popularity for their customer.
Sales Promotion:
‘Sales promotion includes a wide variety of promotion tools designed to stimulate earlier or stronger market response’ (Kotlar 2005). The sales promotion can be direct as ‘Push Strategy’ and ‘Pull Strategy’.
‘Push’ strategy encouraging the channel to stock the product.
Through the marketing channel, ‘pull’ strategy encouraging getting consumer to pull the product from manufacturer.
Sainsbury’s is making popularity through the sales promotion. Sainsbury’s ‘schoolbags’ promotion is an example of a promotion that achieved business objective along with the environmental and social ones. (Mintel 2008)
Advertising: Advertising is one of the promotion tools of marketing mix. In the marketing, the role of media or advertisement is very significant and its can create a demand for a product.Sainsbury has launched a new advertising promotion for summer 2010. The campaign featuring celebrity chef Jamie Oliver, plans to help Brits make their summer holiday’s taste grate and to get them excited about garden parties and barbecues and lush summer evenings. (Mintel 2010)
Sainsbury’s use seamlessly integrated online and offline communication to promote ‘Sainsbury’s To You’ home delivery services. A consistent communication was used to encourage reliable offer of £5 off the customer’s first time online purchase through offline and online advertisement. (Kotlar 2005)
Brand Awareness: The most important super market chain Sainsbury’s brand is shaped to provide testy, fresh and safe foods for their customer. ProQuest 2010)
Nectar at Sainsbury: Sainsbury offers double Nectar point for their customer. For this nectar card, customer can get discount. If customer spend £1 instore, can earn 2 Nectar point each purchase and 1 Nectar point for 1 liter of fuel purchase from Sainsbury’s fuel station. (Sainsbury’s 2010)
Summer Special: Sainsbury’s always try to give offer promotion for their customer. They give some promotional offer to attract the customers for any special occasion such as summer special. (Sainsbury 2010)
Instore Hot Offer: Every week Sainsbury’s provide plenty of great offers in-store across a wide range of products from fresh food to household essentials.
Sainsbury’s Active Kids: Sainsbury launched Active kids to decrease levels of obesity in children and young adults through the exercise. Parents have to collect the voucher of Active kids from Sainsbury’s in-store which gives more confidence to children and parents to be more active and eat healthy.
Online/website Bargains: Facility of online purchase is very popular to all customers. Generally they like to buy products from home. Sainsbury’s has facility of online shopping. So customer can select any item with price, features, availability and date of delivery. (Sainsbury 2010)
Changes in Marketing Mix:
When any company or organizations face lots of problem to increase their sales and profit, then they need to watch on their marketing mix and also they need to look their current problem along with sales and profit to improve their share market. Sainsbury’s also having some problem in their marketing mix. They have to give an effort to overcome the problem with applying new rules and strategy. According to marketing mix of Sainsbury, they have to change some rule by applying some new strategies. Such as:
Focus on retail market in UK:
Sainsbury can give the focus on their own product in the UK retail market for their customer, to give guarantee, value, quality and service. Sainsbury wants to restructure the relation with their core customer.
Need more plan for food:
Sainsbury’s is trying to take back their missing confident of customer’s query about excellent and reliable price tag. If Sainsbury will generate an innovative price strategy which is supplementary whet then Sainsbury will get more confidence to satisfy their customers.
Stores restructure Programme:
Sainsbury’s can focus on core grocery market but also in the growing non food sector. Sainsbury needs to up to date their old store and renewals through the latest system. This store up to date program will assist to save cost and also time. They have to change the total decoration of their old store to put successful element and stock
Need more new store:
Sainsbury’s aim is to increase its total sales area to around 2 million square meters, divide between grocery and non food ranges (including superstores, supermarket and hypermarkets) and 100 convenience stores. Sainsbury’s also takes some decision to build more stores out of its heartland in the South of England and areas where it is under represented such as Northern Ireland, Wales and Scotland. Sainsbury’s decides to extend an additional 75 stores and refurbish 190 outlets. (ProQuest 2010)
More close to customers:
Sainsbury’s need to more close to customer through operating 24 hours open store. Also Sainsbury’s is controlling few 24 hours shop but to come closer to their customers, they have to extend their time, such as 24 hours shops.
Price Cutting:
Price cutting is the diminution of retail prices to a level low enough to get rid of competition. If Sainsbury’s wants more customers, so Sainsbury has to cut their cost evaluating with the other companies.
CONCLUSION:
Sainsbury is one of the biggest supermarket in UK for sure but according to recent financial crisis in all over world snatched its brand positioning while Tesco, ASDA, Waitrose are also down grading their sales performance in this recent years. Certain things like employment, tax rates, VAT, corporation taxes take major part to analyze the financial analysis of the company. But Sainsbury’s market condition is Good. While we looked in the marketing mix, Sainsbury’s have great potentiality to capture the wide market if they will change their some strategy.
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