Sainsbury’s began when John James and his wife Mary Ann Sainsbury opened a small diary shop in 1869. Today, after Tesco and ASDA, Sainsbury’s is the third largest name amonsgt the supermarket chains in the United Kingdom (Simon Wright, Diane McCrea, Sainsbury’s, 2007). Sainsbury’s is not just involved in grocery retailing, but also in banking and property dealings.
Business Overview
Sainsbury’s, a large supermarket chain in the United Kingdom with its head quarter at Holborn, employs around 151,000 people. Sainsbury’s food retailing division serves about 16 million customers a week (Madslien, 2004). Sainsbury’s started off in 1869 with its first store and it now has 788 stores out of which there are under 300 convenience stores and the rest are supermarkets. Sainsbury’s differentiates itself by providing quality food at reasonable prices. Its focus is on healthy, organic, safe and tasty food (Simon Wright, Diane McCrea, Sainsbury’s, 2007). In fact it is also developing its non-food category. Sainsbury’s offers around 30,000 products. It also offers online order placement and delivery service.
Sainsbury’s is continuously looking into enhancing its spread by opening up more stores, offering services online, and through its banking service. The banking service by Sainsbury’s offers products including savings accounts, car, home and travel insurance, credit cards, visa cards, personal loans and so on (Madslien, 2004).
Market Research
Sainsbury’s is looking into expanding its portfolio and entering untapped geographical areas. Its focus is on providing quality products at fair rates. After a slow down of performance till 2004, Sainsbury’s market share of the total grocery market increased to 15.9% in 2005. The increase in popularity was a result of the fact that Sainsbury’s addressed its distribution and pricing issues (Mesure, 2005).
Sainsbury’s organic market share has continued to be greater than its commercial market share. For instance, during 2006, Sainsbury’s organic market share was approximately 31% as opposed to its commercial market share which was around 15% (Simon Wright, Diane McCrea, Sainsbury’s, 2007). Sainsbury’s considers the interests of its customers, employers, suppliers and investors. Hence it gives importance to all its stakeholders. Even though Sainsbury’s comes after Tesco and ASDA where market share is concerned, it is still a very strong name and remains high in terms of brand recall. This is because customers of Sainsbury’s experience value for money by shopping at the latter’s outlets (Heller, 2005).
After the slowdown of performance in 2004, Sainsbury’s wanted to revamp the image of its own-brand products since the latter represent the strength and persona of a company. This change required segmentation of the market to serve its customers in a more personalized way. This was a successful move and lead to an increase in Sainsbury clientele (Simon Wright, Diane McCrea, Sainsbury’s, 2007).
Sainsbury’s is a customer centered company. It constantly keeps in touch with customer needs in order to make them loyal to Sainsbury’s. This is one of its success factors (Simon Wright, Diane McCrea, Sainsbury’s, 2007).
Competitor Analysis
The three major competitors of Sainsbury’s supermarkets are Tesco, ASDA and Safeway. As far as the banking division of Sainsbury’s is concerned, its competitors include Marks and Spencers, Tesco, commercial banks, Halifax and Abbey National mortgages.
Description of Competitor’s Products
Tesco is the largest supermarket chain in the United Kingdom. In 2008, it was ranked the fourth largest supermarket chain globally. Tesco offers a wide variety of products including consumer items, electronics, clothes, and services regarding insurance, finance and the internet. ASDA, the second largest supermarket chain in the United Kingdom, became a subsidiary of Wal-Mart, which is the largest global retailer. ASDA competes mainly on price and sells products like toys, clothes, food and other consumer items. Safeway is yet another large retail chain in the United Kingdom dealing in similar products and services.
The Ways in which Sainsbury’s fights the Competition
Sainsbury differentiates itself by offering a wide range of products at reasonable prices. Its focus is on high quality, organic and fresh food. It assures its customers that there is never a compromise on quality. Moreover its emphasis is on ethical business practices and competitiveness. Sainsbury keeps in touch with the needs of its customers and aims to serve them better through greater accessibility and convenient ways of shopping.
There is intense competition between the top retail chains in the United Kingdom. In the past, the few supermarket chains dominated the market. However today there is a lot of focus on fast moving consumer goods due to which competition has increased. The faster a company responds to changes in the market, the more successful it is (Heller, 2005). In 2005, Sainsbury’s share of the market was 15.9% which was catching up to the 16.6% market share of ASDA. For the first time in ten years, Sainsbury’s was growing faster than ASDA (Lowery, 2005). Tesco’s market share was 11.4% despite the fact that it is the largest of the three. These figures suggest that Sainsbury’s was competing well with its rivals by addressing the issues of price and availability (Mesure, 2005). Sainsbury’s has been efficient at satisfying customer complaints and motivating staff to perform well. Moreover, Sainsbury has reduced prices to below the industry average of many items in its stores, while maintaining quality at an all time high (Farndon, 2005).
Market Strategy
A marketing strategy is a plan through which a company accomplishes its goals using scarce resources in order to achieve a competitive edge. A successful marketing strategy is one in which the consumer is at the centre and the firm revolves around it. Consumer quality needs must be investigated through thorough research and then designed into the products.
Product
A product is a bundle of benefits. In short it is anything that can be offered for sale. Sainsbury’s managers want it to be the customers’ first choice for food items. Sainsbury’s focuses on excellent service and delivery at a fair price. More important than the products being sold is the brand names of the companies. Consumers are more loyal to the brand that offers them an enriching shopping experience. In food items especially, the number of years spent in the market as an established company, is vital as it is a main factor influencing customer food choices. The management of Sainsbury’s has banked on this opportunity by offering own-brand products. Sainsbury’s banking division offers personal loans, savings account and credit cards service. Its insurance service includes car, home, travel, landlord, life and pet insurance, as well as a child trust fund.
The reason why Sainsbury’s remains behind Tesco is that it has been complacent in terms of matching the aggressive competition put forward by the latter. However, being a huge retailer, it does offer a wide range of products. Sainsbury’s engages in food retailing and financial services (Madslien, 2004). Amongst the Sainsbury’s products are ready to cook meals, washing powder, wet wipes, toilet roll, tea, milk, diapers, diaper rash cream, shampoo and insurance.
Price
Price is a main competing factor amongst supermarket chains. Since a decade, Tesco has had the lead in terms of market share mainly because its products are priced lower than that of Sainsbury’s. While Sainsbury’s management was focusing on products, Tesco and ASDA were winning on price.
Even though Sainsbury’s managers have reduced the prices of many of their items in order to improve sales and compete, the firm continues to offer products that are relatively expensive in return for higher quality (Finch, 2003). A fall in prices may lower the dividend paid out and this might cause resentment amongst the Sainsbury’s shareholders. Despite the reduction in prices, Sainsbury’s pricing strategy is mainly promotion based, that is, it frequently offers discounts and sales to maintain sales and customer interest.
Place
Distribution is one of the main determinants of the frequency of customer purchase. Therefore it is very important to have widespread distribution in order to gain market share. Sainsbury’s engages in mass market distribution. It has 788 stores including convenience stores and supermarkets, and it has plans to expand further (Madslien, 2004). It also takes orders for delivery online.
Promotion
Sainsbury’s management places a lot of emphasis on promotion. In fact, promotion dominates its pricing strategy most of the time. The managers of Sainsbury’s believe that frequent sales and discounts will ensure that customers keep coming to the stores. The new Sainsbury slogan “Try something new today” is a catchy line that is meant to entice consumers to be adventurous in their purchases. Part of Sainsbury’s promotional campaign includes donating sporting equipment to schools (Finch, 2005).
Another scheme by the managers of Sainsbury’s was launched at the time when there was a growing concern regarding child obesity. It involved rewarding customers who bought fresh food with a £5 voucher. Moreover, customers were to be given one voucher on every £10 worth of shopping (Finch, 2005). These promotional campaigns not only increased sales but also enhanced Sainsbury’s image as a company encouraging a healthy lifestyle.
Sainsbury’s promotion is not just on-site. In fact in 2003, Sainsbury’s managers made an alliance with Virgin Radio for promotion, which has become a regular way of communicating its offers to consumers. It advertisements on the television are widespread and are supported by those in the newspapers. Sponsorship of popular television programs has also been effective. However, the cost of television commercials is quite high. The Sainsbury’s website is another important medium for promotion.
A promotional action plan is a plan needed to achieve a target. For example, Sainsbury’s managers wanted to improve sales. They introduced the voucher scheme mentioned earlier. This was a promotional tool to achieve the final target.
In terms of target market, Sainsbury’s management does not target specific customers and ignore the rest since it does not believe in discrimination. However Sainsbury’s management keeps a record of all its customers so that it can track their buying habits and trends. This enables it to cater to them in a more customized manner and predict their behavior. People shop at Sainsbury’s because of its retail store accessibility, pricing, variety, quality standards and association with healthy food. Besides that, Sainsbury’s has the smaller stores for those who want to buy a few products as well as large ones for those who want to do their groceries. Facilities such as having a car park are another reason why people may prefer to shop at Sainsbury’s. There are fewer long queues at the counters and the sales staff is helpful and friendly Kingdom (Simon Wright, Diane McCrea, Sainsbury’s, 2007).
Proposed Marketing and Promotional Plan
In a market that has such strong and big players, Sainsbury’s management should always be on the guard. The retail store business in the United Kingdom is a very competitive market. In today’s world where all firms are looking to cut costs in order to pass them on as reduced prices to consumers, managers of Sainsbury’s must focus on lower prices as well. One way of doing this would be to lessen the expenditure on television commercials. Signboards are a relatively inexpensive promotional tool. Better still are those small hoardings that are up on numerous poles along main roads. They are the best source of giving a constant reminder to the customer. Below-the-line promotion can be helpful and affordable. Pamphlets and brochures can be sent by post or email to customers.
Donating sports equipment to schools was a good promotional tactic used by Sainsbury’s managers. The latter could further exploit schools as a source of promotion. Fairs or competitions could be organized for school children (and for adults) in which Sainsbury’s products and their quality could be highlighted.
The key to success is for Sainsbury’s staff to deal with customer complaints effectively so that they do not repeat themselves. One issue that people have with large supermarkets is that they have to wait in long queues at the cash counters. Sainsbury’s could provide them with entertainment such as setting up television sets near the counter that can be viewed by anyone standing in a line. The television could be playing the latest promotional offers at Sainsbury’s. This would not only enhance promotion, but it would also reduce the frustration experienced by many customers who despise waiting.
Action Plan
As a manager of Sainsbury, I would continue to keep quality my top priority, accompanied by affordable prices. If any of the items in my store are priced noticeably higher than those of competitors’, I would highlight their superior quality to the customer.
Customers today are very health conscious. The fact that my store focuses on organic, fresh and healthy food could be an advantage for me. Some customers are even willing to pay a premium for healthy, high quality goods. I would work on the décor of the stores by placing health and nutrition facts for the customers. For instance, above the green tea shelf, I would place the advantages drinking green tea every day such as a healthier heart and reduced fat accumulation on the body. This sort of a move would require adequate and accurate research about many products offered by my store. Hence implementing it would take around six months.
Another action plan I would have as a manager would be to have articles published about Sainsbury’s in a popular magazine, preferably on a forth nightly basis. These articles too could stress on the health aspect as well as introduce new products to the customers. Magazines have high circulation and are read by all sorts of people. They are an effective and cheap form of promotion.
One way of introducing new products is to give them for free to customers who shop over a certain predetermined amount of money. This can initially prove to be expensive, but it is an effective way of making people try a new product that they may otherwise not purchase.
Conclusion
Sainsbury’s is a big brand name in the grocery industry. However it is met with intense competition. In the rapidly changing environment of today, firms must continuously respond to market trends if they want to survive. It is important to always be ahead of one’s competitors, in terms of price, product, promotion, sales staff, distribution, product quality and so on. To accomplish this, one must ask themselves: What is it that they have that I do not have? Today, shopping is not just about purchasing goods: It is more than that. Shopping is an experience. People often prefer to go to supermarkets that have relaxing music, perhaps a small cafe, friendly staff and a good ambiance. Moreover, due to the hectic routines people have today, they would rather go to one store that offers everything, rather than to several different stores to purchase all that is on their list.
Hence although Sainsbury’s is a well-known name in the United Kingdom, there is always the necessity of continuous improvement in order to thrive and gain a greater share of the market.
Bibliography
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