This report has been prepared for SAINSBURY’S. It is about the theoretical and practical issues of strategic marketing planning for SAINSBURY’S. It examines the market of SAINSBURY’S and applies recognized theoretical models. It covers five following points:
Suitable marketing planning process for Sainsbury’s.
Explaining and justifying the activities taking place at each stage
Explanation of tool and techniques relevant to Sainsbury’s planning process
Performing a marketing audit for Sainsbury’s by external and internal analysis.
Evaluating possible marketing responses to the companies’ situation and making recommendation for it.
J Sainsbury plc was founded in 1869 and today operates a total of 890 stores comprising 547 supermarkets and 343 convenience stores. 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 food and we strive to innovate continuously and improve products in line with our customer needs. Sainsbury’s now serve over 19 million customers a week and have a market share of over 16 per cent. And has employed 150,000 colleagues.
2. Strategic marketing Planning Process:
The marketing planning is beneficial for the organisation in various ways. It is connected with the bases of any marketing plans and provides systematic way to get things done. It provides a list of different tools which should be taken into consideration while developing strategy.
Some benefits of Marketing Planning process are it helps in picking a right market, sell the right products, manage the business, get smarter about market, motivation, understand what marketing works and what doesn’t, spend budget more efficiently and effectively, targeting their marketing customers, focus on achieving specific goals, monitor competition , choose the best tactics and in thinking long term.
There are quiet some planning process suggested in past for example p r smith’s SOSTAC marketing planning process, Ansoff 1977, Greenley 1994 etc. The marketing planning process of Malcolm McDonald (1984) has been selected for the company SAINSBURY’S in this report.
2.1 Marketing planning process by Macdonald:
According to Macdonald M,
“Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitability”
A marketing plan is a written statement of the marketing goals of a company. It includes a report of the products, targets of sale, market shares and profits, promotional and marketing strategies, pricing policies etc. with defined specification of timescales, individual responsibilities etc. (Maskil,1988).
2.2 MARKETING PLANNING PROCESS BY MALCOLM MACDONALD:
Table 1: The Marketing Planning Process
Mission of the company is identified (it’s not always money).Board establishes a long-term vision for the company. This entails communicating a memorable statement easily understood by employees and other key stakeholders.
Quantitative measures have been taking at this stage. Company sets marketing and business objectives. It deals with profit, product, size of labour force and other corporate objectives like social responsibility, corporate image etc.
Elaborates where we are today and where we have to begin some cases what we need to do. A marketing audit helps the company to evaluate its external and internal factors that affected its marketing performance. Give details on internal and external audit.
Commonly It is about products and services and aware the company about strengths, weaknesses, opportunities and threats.
It mostly depends on marketing audit… As there are detailed key factors of success about which assumptions have to be made before the planning process goes ahead.
Marketing objectives and strategies
It is a part of corporate objectives; it comes in money terms and about sales. They are concerned with 7 Ps and are SMART.
estimate expected results
At this stage, company takes all previous stages into consideration and estimates expected results. feasibilty of plan in terms of market share , costs,profits etc.
Identify alternative plans and mixes
After estimating the results, if necessary the company considers alternative plans. And decided is it program worth running for?
At this stage company estimates expected cost on launching new program and make budget for future expenditures.
1st Year detailed implementation
In the last stage, company develops first year tactical plan, detail of all the tasks which need to be done in order to achieve the targets and run the program smoothly.
2.3 Benefits at each stage:
As MacDonald’s marketing planning process has 10 stages so here are the advantages at each stage
Mission statement is useful to check the mission of the organization it can become the source of motivation for the staff, stakeholders and funders to achieve the long term vision.
Corporate objective describes objectives of the company related to business world and helps to account the previous objectives if any. It also helps the company to undertake decisions like short or long term planning.
Marketing audit provides clear overview of market the organization is in. it can refer and Assist Company to refine its business practices and improve its productivity and profitability.
SWOT analysis, a company can monitor their strengths and use it to overcome their weaknesses, further more it helps to determine opportunities for the organization in present or future and provides brief information about.
Marketing objectives and strategies helps is back bone of marketing planning process. In this section future strategies can be made and objectives can be set taking in to consideration of previous four steps, it also helps to pick the right market and to sell the right products.
Estimate expected result is based on the info provided in above steps ,organization predicts expected results .in short company checks is there any worth doing this stuff or not .
Alternative plans and mixes. The organization also considers alternative plans, i.e. if this strategy will not work what we will do then. And considers plans which can be better than the chosen one.
Budget gives the estimate of expenditures organization should expect to spend. Assists the company to spend their budget more efficiently and effectively.
1st year detailed plan. The last stage helps the company to get ready into action and provides company the info about what should be done or what is necessary to make this plan run for 1st year
Table 2: Activities and Justifications of steps in the MPP
Mission statement provides motivation for the stakeholders as well as employees. It shows the destination of the company or where it wants to be. It Makes general people to understand company’s priorities.
Building framework for future growth.
In order to move in a right direction there must be some objectives. Company decides where it should be in three years or in near future time and sets its goals. It Helps to form a plan about the profit and loss.
Arrange consultants for internal and external audit
Performing research for external and internal environment
Collecting quantitative and qualitative data
To clarify the company’s current position on the basis of external and internal information, and to understand market competition.
Building SWOT analysis team
Gather all the data from audit
Put them in strengths, weaknesses, opportunities and threats form
It helps to identify the weak and strong points, Provides knowledge about the business and trends in the market
Internal meeting with in the organization among different departments.
There has to be assumptions in order to take any program further. It warns you what could happen wrong and provides time to think about them.
Marketing objectives and strategies
CEO and board of directors set objectives and strategies for future.
It shows and Motivates the employees and shows the clear vision to avoid any confusion.
Estimate expected results and identify alternative plans and mixes
Meetings of higher authorities
Project managers opinion
It is crucial as company should have any back up plan if actual plan doesn’t work.
Board meeting with finance department.
It helps to estimate and prepare expected expenditures.
1st Year detailed implementation plan
This acts as guideline document for first year and provides each and every department what needs to be done first.
3. New Strategic Options:
There are some strategies which company can use for its future development; three of them are as follows:
Market penetration strategy
Market development strategy
3.1 Global development:
Table 3: Global development
As Sainsbury is UK based company and proved its strength in Uk, it will be a great strategy to move its chain to developing countries like India.
Developing countries are the perfect option for globalization. Countries like India or china have emerging markets most preferably India is in one of the top three countries which attract investors.
Outcome for this strategy will be Sainsbury will then be known internationally. As it will be in emerging market it can develop more itself. Furthermore Sainsbury will provide jobs to local people which will increase company good reputation in these countries.
It helps in becoming a quick dominant in the area.
It cheaper to launch a product in this market.
New market so risk of loss.
Needs more resources and funding.
Marketing penetration strategy:
Sainsbury’s can us this strategy to increase their market share. This strategy is often used by companies to attract customers from the other competitors and increase their sales volume, as Sainsbury is having tough competition in uk so this strategy will really work out.
According to this strategy, SAINSBURY’S can develop its products and markets in the UK market. Sainsbury can have a good market share and attract more people to invest in Sainsbury.
Increase the market share.
It can flexibility expand its operations in different directions.
It will increase the profit margin.
Needs extra money to invest
It can result in tight budget schedule
risk of becoming out of budget
Needs to open new stores.
3.3 Market development:
It’s a strategy in which company decides to sell the same product but in different market. It is advisable to Sainsbury to adapt a strategy in which it will increase to number of stores in different parts of the country and most preferabouly where it has no stores or less stores like Ireland or Scotland
Outcome for this will be Sainsbury will be working more effectively all across the uk increasing their sales value and customer services. Moreover it will be helpful in developing people confidence on Sainsbury as they will fin Sainsbury store wherever they will go.
More sale because of high number of outlets
More profit margins
Better market share.
Local shops are threats as they are against Sainsbury.
4. External marketing environment and marketing audit:
4.1 External audit:
MARKET SHARES OF UK SUPERMARKETS 2009
Source: supermarket.co.uk, 2009
This pie chart shows that SAINSBURY’S has the third largest market share in UK that is 16.3% as comparable to the rest of the supermarkets.
TABLE 6 SALES OF PACKAGED FOOD BY CATEGORY VOLUME: 2008-2010
Frozen processed food
Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources, 2010
TABLE 7PESTEL ANALYSES
The PESTEL analyses the dynamic external environment.
10 further countries in European union promote trade between western and eastern European countries (BBC, 2009). This has offered SAINSBURY’S a platform to expand its retail network.
Increasing of VAT will affect prices and profit margins.
The Government legislation for employment encourages retailers to provide work to different people ranging from flexible lower paid to highly paid. This gives Sainsbury’s a competitive advantage as it produces reliable employees
Unemployment can harm the business.
Sainsbury’s opening new store in places where unemployment in high rate. These factors are largely outside the control of company. The slowdown in the food market of UK can adversely affect SAINSBURY’S because it is highly dependent on it.
Ready to go items have more demand than traditional stuff.
The consumers are becoming more health conscious
Payment by cheques and cash at the checkout was first made feasible by SAINSBURY’S.
In store cash machines
Self checkout systems
The new technologies benefits both customers and the Company like customer satisfaction rises because goods are readily available, services can become more modified and shopping more convenient.
People are becoming more environment conscious these days.
Recycling is common proactive.
Reduce carbon footprints is basic aim.
Saving energy is desirable.
Sainsbury is doing work in all these aspects and satisfying their customers by proper channel.
There has been an increase in VAT by the government and it can affect the non-food sectors of SAINSBURY’S, such as clothing.
Sainsbury’s has issues with local super markets and they are protesting against it.
PORTER’S FIVE FORCES
Porter proposed a model for the business enviromentthat pictured industries and firms are being influenced by five forces.
BARRIERS TO ENTRY:
There are many small shops and supermarkets which are really a competitor for sainsburys.There is always a threat of new entrants in grocery retail business. However, due to major brands that have already captured the food retail market like SAINSBURY’S, Sainsbury’s, Asda, etc. new entrants have to produce something of low price and high quality.
UK based suppliers have no choice other than selling their stuff to supermarkets. The relationship of sellers can have impacts in compelling the strategic freedom of an organisation.
The bargaining power of buyers is fairly high. As the buyers can easily switch from one brand to another because they are attract toward high quality product at low price.
Competition is very high among supermarkets in UK over prices. Every penny counts in development of product. There is a high degree of extreme competition in the food and grocery retail industry. It is due to the price cutting strategies. So the strategies of the competitors in the field of retailing are another factor to guide the future strategies of the SAINSBURY’S.
THREATS OF SUBSITUTES:
Low price and good quality items are not really a threat for Sainsbury as Sainsbury is doing well in these respects.
4.2 Internal audit:
Table 8 SAINSBURY’S Market Data in UK
Source: (Sainsbury’splc, 2009)
BOSTON CONSULTING GROUP MATRIX:
It is a portfolio planning model. It helps to understand a frequently made strategy mistake.
The Boston matrix categorizes products in terms of their revenue and growth potential to the organization. It differentiates the product in the following four categories:
Question Marks: These are products which have a high market growth rate but a low market share. The company can choose an aggressive promotion strategy for such products to increase their market share.
Stars: These are products with a high growth rate and a high market share. These are the major revenue generators for the organization.
Dogs: These are products which fall under low market growth rate and low market share. The companies generally invest marketing and promotional activities in such products (if the product has high growth potential) to increase the market share.
Cash Cows: These are products which have high market shares in matured markets where the market growth is negligible. These products also serve as major revenue generators.
Swot analysis is a crucial part of a marketing plan, as it determines the strength, weaknesses, opportunities and threats of a company which are important for its future. There are as follows:
Sainsbury’s has a strong brand image
It’s increasing market share in food retail as well as in non-food retail.
Strong position in domestic market.
It has an established customer retaining strategy with the help of its loyalty scheme called ‘SAINSBURY’S club card’
Its products are cheaper and affordable.
Diversified business across the world.
Using steering wheel as a balance scorecard to manage business.
Providing fresh and healthy food.
Although international business is growing, still it is highly dependent on UK market share.
Due to his huge investment in space for new stores, SAINSBURY’S has little cash for any other tasks.
The popularity of Sainsbury’s.com is growing rapidly has provided an opportunity to the company to attract customers.
Company focusing on global expansion will strengthen its global market position.
Customers of UK are demanding for the private labelled products that are opportunity for the company to increase its customer’s base
Low price supermarket discounting stores can be a threat to the companies. Therefore SAINSBURY’S introducing new discounts packages to fight back competitors.
The decrease in income and the increase in unemployment have affected the buying behaviour of customers which has badly impacted the company’s sales.
This SWOT analysis has given a clear idea of the powers Sainsbury’s has and how it can utilize them. On the other, this data can be helpful in determining its future strategies
It is a matrix that focused on the firm’s present and potential products and markets. It provides four different growth strategies for SAINSBURY’S.
Mobile broad band
Club card re-launched
New market segment
Diversifying its market in a new way
Source: (Sainsburysplc, 2010)
Analyse how the organisation could respond to the changes
4.3 How non-marketing departments should adapt over the period of three years:
Three main non marketing departments which can influence marketing department a lot are
Finance department: Finance department is one of the key departments to consider before carrying out any project. It estimates budget for company’s operation and other departments work according to the given budget in liaison with finance department.
HR department: Main task of HR department is to select best suitable staff for the company. So it involves recruitment, selection, and training and employees salary. Department should try select those people who have experience or knowledge of the products and industry.
Sales department: Sales department will be working closely with the marketing department. Both the departments will be responsible to increase company’s sales volume. Sales department sets the platform for company’s growth in future so it’s a crucial department.
Here is three year plan of theses departments how they should behave?
Initial recruitment process. Select most able staff that is enthusiastic towards their work Provide proper training to the new employees.
Motivate employees to improve performance.
Commencement of new performance appraisal scheme for the employees, it will improve their performance.
Carry out manpower forecasting for the future period.
Develop a well trained staff in the company
Develop management development programmes for the managers.
Arrange some training and workshops to improve customer service skills.
Organize a customer feedback form.
Examine and evaluate all the costs, taxes, competitor’s performance, inflation rate, Exchange rate, profit margin and if essential discuss other departments to inject changes.
Evaluating first year performance generate budget for 2nd year
Help in setting corporate objectives for new year.
Help in next year’s sales forecasting with the help of financial data.
Declare current year’s budget with the help of last year’s financial audit.
Examine performance for last years
Provide with necessary funding required for 3rd year…
Help in increasing sales by using different suitable techniques.
Provide better customer services.
Improve customer service.
Attract customers by giving special offers, Try to increase market share as much as they can.
Set sales targets.
According to the last two years sales set some sales targets for the employees.
Try to achieve desired targets by working in a team and helping each other.
Try to increase customer services standards.
5. Conclusion and Recommendation:
SAINSBURY’S is one of the largest retailers in UK. To implement its long term strategies like to become an international retailer in next three years, it can use globalization strategy which can further lead to market development strategy.
It can use new ways of advertising too increase their sales further more customer services plays a vital part in development of company, so here by it is recommended that Sainsbury should go for globalization strategy and to improve customer services.
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