Porters Five Forces Model On Asda Marketing Essay

ASDA a well recognized name by each and every person in United Kingdom and one of the biggest and leading British supermarket chain. In 1965 group of farmers from Yorkshire formed Asda and was mainly based in North Britain. In 1949 Associated Dairies and Farm stores limited founded Asda Stores limited in Leeds. Asda got its name when Asquith chain of three supermarkets got merged with Associates Dairies. Asda name is an abbreviation of Asquith (AS) and Dairies (DA). In North of England mainly the Asda stores were based but in 1989 they flourish their business by buying large format stores of Gateway Superstore which is one of the rivals for £ 705 million. In 1999 Asda became subsidiary of the American retail giant known as Wal-Mart, one of the world largest retailer. The takeover of Asda by Wal-Mart laid an great impact on the Britain retail market as the competition arises and other companies has to keep their eyes open and react to it in a good way and also hit the London stock exchange market in a big way.

Archie Norman, who was the chairman of the Asda from 1996 to 1999 he, replicated all stores of Asda on the basis of Wal-Mart, US largest retail giant. Asda has 270 stores in whole England, Wales and Scotland and they work with 2800 suppliers and employ 1, 50,000 colleagues in order to give their customers the best services and provide the products at the most lowest price than its competitors. Asda stores are looked as a “stores of community” which play a positive role in each and every consumer.

SOURCE: www.asda.co.uk

Asda is a private subsidiary in retail industry founded in Leeds, West Yorkshire, England in 1965. The parent company is Wal-Mart. There are lot of Asda Divisions like Asda Direct which includes electrical,outdoor,toys,baby shop, DIY and motor, sport and leisure and jewellery and gifts then there are more Asda shops CDs, DVD’s , gifts , Asda Mobile and there is George clothing section then they also have grocery section which has special offers on grocery items and then there are financial services also offered by Asda like credit cards, pet insurance , home insurance, life insurance, travel insurance and also breakdown cover.

ASDA MISSION AND VISION

For each and every company in which ever sector it is the mission and vision of that company are two very important and critical terms which gives company a stand in the market and differentiates it from others.

Mission statement of the company states that:

WHAT IS OUR BUSINESS

Vision statement of the company states that:

WHAT WE WANT TO BECOME

WHERE WE ARE hese products and more for only WHERE WE WANT TO GO £1

SOURCE: www.asda.co.uk

Asda mission statement is

To be the UK’s best value retailer exceeding customer needs. Always

The company strategies are based on its mission and vision which help the company to achieve the goals and objectives effectively and efficiently. The mission statement of Asda states that Asda want to become the best value retailer and customer’s satisfaction is very important for their organization and gives the customers the best and satisfies their needs to the fullest. In order to have a good future ahead the organization should wok to achieve its vision and mission. One of the missions of Asda is to become UK no. 1 in non food in 5 years.

SOURCE: http://wiki.answers.com.

STRATEGIC MANAGEMENT

Strategic Management can be defined as the art & science of formulating, implementing & evaluating cross-functional decisions that enable an organization to achieve its objectives.

Source: http://www.scribd.com.

Asda has also laid down so many strategies, goals, objectives and aims in order to become the market leader and can serve their customer well in the best possible way and satisfying their needs efficiently. Some of the strategies implemented by Asda have provided the organization with good results and they were able to achieve the desired goals and can make profits for the organization. Asda mission is to become UK ‘s biggest retailer and has the maximum market share for which Asda is changing and implementing new and different strategies in order to beat the competition and achieve its mission . The retail industry Inuk is no doubt highly competitive and there are so many risk taking factors are involved in it.

FEW OF THE STRATEGIES ADOPTED BY ASDA:

STRATEGY ONE http://upload.wikimedia.org/wikipedia/commons/thumb/5/5a/SmartPrice_Logo.png/220px-SmartPrice_Logo.png

Asda smart price logo , Asda farm stores brand launch Smart price brand in which Asda offers its customers with the products that are being offered by the Asda at a low price. In Asda the old value products are being replaced by Smart price option which is a good marketing strategy in order to capture a large market share. In Asda stores the lowest price option in a product category are Smart price products and there is only a few pence difference between the products. The smart price label was only restricted to food category only but now it has expanded to most of the product range that Asda offers to its customers including clothing and furnishings.

SOURCE :http://www.internetmarketing-dictionary.com/SEO.html

STRATEGY TWO PRICE GUARANTEE OFFER

In the retail industry each of the supermarket claims to be the cheapest as a promotional strategy but now Asda launched the price guarantee offer for its customers in which Asda will pay back the amount with a pence extra if it fails to claim the cheapest all around supermarket. Asda employees has teamed up and launched mysupermarket.co.uk where consumers shopping from Asda can type their receipt and can easily compare their difference in prices with Tesco, Sainsbury and Morrison’s and if Asda fails to be the cheapest then consumers will get a printable voucher and plus a pence and voucher can be redeemed at Asda stores.

STRATEGY THREE http://www.asdafinance.com/images/banner-foot-asdaDirect.gif

Asda as its new innovation launched ASDA DIRECT as their online shopping network where customers can buy online a huge variety of products with just one click. 93% of UK population is covered by Asda by the home shopping services of groceries. Asda direct the online shopping service include everything which a customer want from George clothing, electrical, furniture, home, outdoors, toys, baby, jewelry, sports and fitness, technology, and gifts and the best part is the customers get special offers on it will shopping online . Asda direct is one of the good strategy taken up by Asda which laid a good impact on the customers, make their work easier, saves their time and money and they get the best services which satisfy their needs . Asda is working further on it to include more and more number items in this category which a customer can shop online.

SOURCE :http://www.internetmarketing-dictionary.com/SEO.html

STARTEGY FOUR CUSTOMER FEEDBACK

For each organization customers play an important role as they give business to the firm, profits and recognition. Asda main aim is to keep their customers happy by providing them with the best services and giving them the maximum satisfaction the company could offer. Asda do rely on customers feedback there are feedback forms available at the stores and also online feedback are taken from the customers in order to improve and understand what actually the customers are expecting from the company, how things should be done, whether they like the innovations or not, whether they are satisfied with the services or not, whether they are satisfied with the environment or not, what improvements Asda should do in order to gain customer trust and goodwill for the company and see where the organization is lacking and further changes need to be made.

SOURCE :http://www.internetmarketing-dictionary.com/SEO.html

PORTERS FIVE FORCES MODEL ON ASDA

In 1979 Michael porter of Harvard business school develop a Michael Porter Five Forces Model which states that any industry is influenced by 5 forces mention in the model .The model explains the relationship between potential competitors , competitors within the industry, suppliers and buyers. The porters model help to define the current strong competitive position of the company and strength of company position which it wants in the future.

Asda the second largest super market chain in UK faces a neck to neck competition from its rivals within the industry and also outside the industry.

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http://student.dcu.ie/~slejhad2/pics/porter.jpg

INDUSTRY ANALYSIS: PORTERS FIVE FORCES

COMPETITIVE RIVALRY: The retail industry in UK is highly competitive as there are so many players involved which gives a very tough competition to the existing players and the new entrant’s also. Asda has main competition with Tesco, Morrison, and Sainsbury each of these are working to differentiate itself from others in order to become the market leader and capture a large market share. The different marketers of these organizations are launching new strategies different from others in order to beat the competition. Each and every organization present in the retail industry differentiates itself from others by product differentiation, different strategies, lower priced products, different offers and schemes, attracting promotional activities and satisfying the customers in the best and most efficient manner so that the customers don’t switch to the rivals and be brand loyal to the organization only.

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THREAT OF NEW ENTRANTS: Tesco, Asda, Sainsbury and Morrison’s are the major players in the retail industry in UK and have a large market share which already gives a tough competition to the new entrants. In order to enter in the retail industry a huge capital investment is required, market knowledge and local business knowledge is required which overall is a difficult job to do and in order to survive as a new entrant one already has a tough competition with the market leaders and it is difficult to compete with them who already are market leaders and has experience and has capture a large market share and trust of the customers.

POWER OF BUYERS: Customers are the integral part of every business. Customers or the buyers in retail industry while purchasing goods from different supermarket stores use their buying power decision from which supermarket they should buy goods from, which provide them with the best services and which gives them maximum satisfaction. Asda provide their customers with low priced products, good quality, variety of products, good customer services for which the buyer uses it power in shop from Asda in order to satisfy their needs.

POWER OF SUPPLIERS: Every organization should have a fruitful relationship with the suppliers in order to survive and beat the competition. The retailer should have suppliers supporting them in order to have the goods on time and can have the demand and supply cycle working for the consumers. Asda has more than 500 suppliers working for them which is providing different goods to Asda and then making it possible to satisfy the customers’ demands at Asda stores. The supplier has the power whether to provide the goods to the retailer or not and they can switch to the rivals if an better price is given to them.

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THREAT OF SUBSTITUTE PRODUCTS: In the grocery market there are same products offered by different supermarkets what differentiates one from the other is price, quality, services and the brand so for a single product there are so many substitutes available in the market. In the other context we can also look at the increasing competition from the convenience stores and off license shops which act as a substitute to Asda if a consumer want to purchase few things give is also giving a tough completion to them.

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PESTLE ANALYSIS FOR ASDA

POLITICAL FACTORS: The political factors are related to the change in the government policies which could affect the working of the business operations in a company. The government decide what goods and services should be produced an in what quantities and which of the firm should be subsidized. Asda is also affected by any change in the government policies, might be a change in the employment law, change in the taxation policies and change in trade policies for which an organization has to react in a positive way.

ECONOMIC FACTORS: The economic factors are concerned with the change in the interest rates, inflation in the country, economic growth, exchange rates and stage of the business cycle. Asda is also affected if the interest rate goes high, if there is inflation for which a high salary has to be paid to the employees; if the currency becomes strong then the exporting price also rises. These are the factors which cannot be controlled but they affect the company.

SOCIAL FACTORS: The social factors which include change in the mind set of the society their beliefs, the change in the lifestyle of the people does affect the organization as now people has become more health conscious for which organization has to work and provide more healthy products to the customers. Asda has also come up with new products which are healthy and they are providing the customers with more and more healthy products.

TECHNOLOGICAL FACTORS: The technological factors help an organization to provide its customers with the best and most efficient services. The new technology adoption by the organization which involve huge investment but at the same time reduces other cost also. Asda has come up the online shopping initiative which is new technology advancement and there are various others high tech equipments used to reduce the cost and the time.

Legal factors: The legal factors affect the organization functioning. In UK there have been a lot of legal changes being done which affects the organizational functioning. Any change in the legal factors are made which would directly affect the firms cost and the demand and also change in the employment law, consumer law, competition law and health and safety legislation laid impact on the organization .

ENVIRONMENTAL FACTORS: An organization works in a particular environment and it also has the responsibility to protect the environment. Asda has also taken steps to protect the environment by reducing the wastages, using the recycled paper, creating awareness in order to protect the environment by taking it as a corporate social responsibility of the organization.

Source: www.corporatewatch.org.uk

COMPETITORS

The main competitors of Asda in the retail market are:

Tesco

Sainsbury

Morrison’s

Waitrose

FINANCIAL ANALYSIS

Asda total household income is 694 pounds, net income is 558 pounds after deducting the taxes which is 136 pounds per week. 396 pounds is the cost of living which is deducted from the net income gives the average family spending power which is 162 pounds per week. Asda Q1 sales fall 0.3% first time in the four years as same as of the rivals Sainsbury and Morrison’s but the profit grew more than the sales and they have also invested 12 million in order to improve the billing timings, better services and less queue hassles. Asda grocery share also fall down from 17% to 16.9% in order to hit the retail market hard Asda has come up with the everyday low price strategy and price guarantee deal for its customers.

Source: your.asda.com/media-centre

CONCLUSION AND RECOMENDATIONS

Analysis : There was a great achievement for Asda that it has acquire no. 2 position in the retail market and has overtake Sainsbury thereby decreasing the competition . Asda has been able to achieve this by providing the customers with specialized products, good promotional schemes, low priced products, satisfying the customers need in the best possible way and making competitive advantage for its products and the organization. Asda has to work hard to sustain this position at the same time had to put more and more efforts to be No. 1 and leaving Tesco behind which is the market leader at present. Asda is coming up with new strategies and marketing campaigns and promotions, offers which are being liked by the customers and they are able to gain the customer trust back and which would help them to increase the market share and give a tough competition to Tesco.

Asda has claimed to become country biggest non food retailer with in 5 years is a mission that Asda has set and they are working hard to achieve this by implementing new strategies , opening new stores, promotions, offers, low priced products, reaching the customers in the best possible way and satisfying them . In order to increase the market share Asda has launched Asda direct the online shopping experience for the customers in which the customers go online and they shop products and services. There are different offers available for different products and there is a great variety of range for the products which a customer can choose from at special prices. This was a good action taken by Asda in order to increase sales and its market share and beat the competition with Tesco.