Tesco And Sainsburys In Uk Marketing Essay

Supermarket Business Enterprise refers to a structure that is large and complex. It involves a series of mechanisms namely a chain of retail outlets or stores, a number of transportation systems, customers that are grouped in the local areas, various suppliers who are under contract and a collective of warehouse distribution centers. A supermarket exists in an environment which is competitive wherein the supermarket acts as an intermediary between the customers that are involved and the supplier companies. It involves a wide range of assembling of the suppliers who supply the good , and then further on giving them or distributing them to the retail stores. The retail stores, then, provide it to the customers for sale.

Tesco PLC (LSE: TSCO) is a British multinational general merchandise and the grocery retailer that has its headquarters in Chestnut, United Kingdom. Tesco was founded by Jack Cohen in the year 1919. The Key people in Tesco are Sir Richard Broadbent ( Chairman) and Philip Clarke (Group Chief Executive). The Tesco name first appeared in 1924, after Cohen purchased a shipment of tea from T. E. Stockwell and combined those initials with the first two letters of his surname and the first Tesco store opened in 1929 in Burnt Oak, Middlesex. His business expanded rapidly, and by 1939 he had over 100 Tesco stores across the country. Originally a UK-focused grocery retailer, since the early 1990s Tesco has increasingly diversified geographically and into areas such as the retailing of books, clothing, electronics, furniture, petrol and software; financial services; telecoms and internet services; DVD rental; and music downloads. The 1990s saw Tesco reposition itself, from its perception as a down market “pile ’em high, sell ’em cheap” retailer, to one which appeals across a wide social group, from its Tesco Value to its Tesco Finest ranges. This was successful, and saw the chain grow from 500 stores in the mid 1990s to 2,500 stores fifteen years later. Tesco is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index. It had a market capitalization of approximately £24.4 billion as of 15 January 2012, the 15th-largest of any company with a primary listing on the London Stock Exchange. Tesco has stores not only in UK but also in China, Hungary, Czech Republic, Republic of Ireland, Japan, Malaysia, Poland, Slovakia, South Korea, Thailand, Turkey and United States.

Sainsbury’s supermarket Ltd, which is commonly known as sainbury’s , was founded in 1869. It was founded by John James Sainsbury , along with his wife Mary Ann Sainsbury. The name of its parent company is J Sainsbury Plc. The growth occurred rapidly during the Victorian era. Its headquarters is in Holborn Circus,City Of London, United Kingdom. It is the third largest chain of supermarkets in United Kingdom. The key people in Sainsbury’s are David Tyler (Chairman) and Justin King (Chief Executive). The founding Sainsbury family still retains approximately 15% of J Sainsbury plc shares (as of May 2008), through various trusts. The family reduced their stake from 35% in 2005. The largest Sainsbury family shareholders are Lord Sainsbury of Turville with 5.83% and Lord Sainsbury of Preston Candover, who controls just under 3% of the company, and benefits from 1.6% of the equity included in the above. The largest overall shareholder is the investment vehicle of the Qatari royal family who now hold 26.145% of the company. It is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index.

THE 4 P’S OF MARKETING

Marketing, in a layman’s language, refers to putting the correct or right product in the correct place, at the correct price, at the correct time. The four P’s put altogether are called the Marketing Mix. The marketing mix is nothing but a tool of marketing. Marketing mix is vitally important for any company as it explains the various choices and decisions that need to be taken by the managers and other authorities of an organization when they are to introduce or bring in a product into the market. The marketing mix basically comprises the following :

PRICE

PLACE OR POSITIONING

PROMOTION

PRODUCT

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The 4 P’s will now be described in brief :

PRODUCT – The services that can be availed and the tangible products are included in this. A company needs to produce commodities that are required by the customers. It is made to satisfy the wants and the needs of the consumers. Before making a product some attributes need to be ascertained – what are the expectations the customer has from the commodity, where and how does the consumer plan on using the commodity, how should it be made, what should be its attributes according to the needs, how should it be branded, how should it be differentiated from its (if any) homogeneous products, etc. certain decision to be made in product are quality, safety, packaging, warranty, services, functionality.

PRICE – The correct pricing is one where the price is reasonable enough to attract the consumers and high enough to cover the producing costs. Price is what the consumer is willing to pay for a service or a commodity. Penetration, creaming and cost plus pricing are the most commonly used pricing strategies. The customer’s perceived value of the commodity needs to be taken into consideration when setting the price. Discounts, seasonal pricing, cash discounts, volume discounts, price discrimination and flexibility are some of the factors that need to be considered while setting the price.

PLACE -The place or positioning refers to the area where the store can be set up. The factors that need to be considered before doing that are – a. The place needs to be affordable for the company that needs to set up the store. b. The store should be in a place that is easily accessible to the consumer. c. The location should not only be suitable for the consumer but for the supplier also as material or product needs to be transferred to those places. It also includes making decisions like what distribution channels to use, where should the warehousing be done, which channel members need to be involved, transportation, distribution centers, order processing and inventory management. Certain strategies that are normally used in positioning are selective distribution, intensive distribution, exclusive distribution and franchising.

PROMOTION -The last P stands for promotion. A commodity has better selling value if it is promoted. Promotion looks after making people aware of the product or service in question. Market and Cost are the two main considerations in promotion. It involves all the methods of communication that are or may be used by the marketer in providing information about the product or service to the people. The goal of promotion is to gain a positive response from the consumers and to gain customers. Certain strategies that are used in promotion are promotional strategies i.e. push, pull etc, sales promotions, public relations, personal selling, sales force, advertising. Advertising includes any form of paid communication like radio, internet, TV, cinema commercials, print media and billboards. Public relation includes exhibitions, seminars, trade fairs, events, conferences, sponsorship deals, press releases etc. It includes any form of communication that is not directly paid for. Informal communication ( word of mouth ) is also a very strong method of promotion.

The four P’s of Tesco and Sainsbury’s were compared and a SWOT analysis was made based on the observation, the previous information and also by observing the primary data gained.

PRODUCT

TESCO : Fresh food and groceries, technology and gaming, home electrical, home and garden, DIY and car, toys, sports and leisure, baby and toddler, gifts and jewellery, entertainment and books, health and beauty, clothing (womenswear, menswear, kidswear), bank (mortgages, credit cards, loans,car – home -life – pet insurance,compare insurance-money)

SAINSBURY’S : Food and drinks, home and garden, appliances, technology, entertainment, toy and nursery, sports and leisure, finance ( covers all insurances like car, life, pet, home, travel)as well as credit cards and loans, clothing includes menswear, womenswear and kidswear ,home electrical , DIY and car

After looking at the product and services lines of both Tesco and Sainsbury’s, it was observed that they have the similar product and services line and sell almost the same of everything, which is why they are neck to neck in the competition market. The difference that was found was that the availability in the Range of products was found to be more in Sainsbury’s. The other difference was that the products were available more easily in Tesco.

POSITION

TESCO :

The number of stores Tesco has are 2975 (as at April 2012) .

SAINSBURY’S :

The number of stores Sainsbury’s has are 1012 (as at March 2012) .

This proved that the accessibility is more for Tesco than for Sainsbury’s as the outlets of Tesco are more and thus convenient for the consumer. The consumers thought the accessibility is more inside Tesco of the products and the positioning of space is more inside Sainsbury’s.

PROMOTION

TESCO and SAINSBURY’S : People heard about Tesco through other people and less through advertisements. Tesco’s sales personnel were preferred over Sainsbury’s which meant that Tesco was promoting their store well in terms of consumer welcoming and Sainsbury’s was chosen as the more attractive one. Overall people said Sainsbury’s had better promotional activities.

TESCO

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SAINSBURY’S

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PRICE

The ABRU STEPSTOOL LADDER (IN DIY AND CAR CARE) in Tesco is for £24.83 and the same ladder in Sainsbury’s is for £39.99. Thus the difference in the cost comes to £15.16 for the exact same commodity of the exact same brand.

A Hi-Viz Vest (IN SPORTS AND LEISURE) is for £5.00 in Tesco and the same vest is for £9.00 in Sainsbury’s. The difference between the price range is £4.00.

Thus after comparing the prices of certain commodities of certain departments of both the supermarkets we can infer that Tesco has more affordable pricing in comparison with Sainsbury’s. The SWOT analysis done on the basis of the given information is as follows:

SWOT ANALYSIS

TESCO:

STRENGTHS :

Its easily available to customers as it has a large number of stores.

Conveniently placed stores for customers as they are large in number and thus are easily found at any given location.

New Weekly schemes are attractive as they draw consumers towards them as the scheme may change soon and the consumers assume they may not get a better scheme.

More is priced less with combinations of more commodities bought together in less price than individually which promotes buying.

Has schemes for products in every range which a consumer finds appealing.

Has strong loyalty gained customers as they find it easily accessible and thus they stick to the brand.

The price is very consumer oriented and the prices are set in a manner that makes it easily affordable for the consumers.

WEAKNESS :

Does not have elongated schemes as they are based more on the frequent changes of schemes.

Needs a more explored range of products as they donot have a lot of options for a certain type of product at times.

Does not have enough customer loyalty promotions.

Has small store outlets area wise in most of the areas so the consumers don’t find it spacious enough.

Don’t have enough promotional techniques.

OPPORTUNITIES :

Can look at more than per moment schemes and can increase the schemes to more time extensions.

Should enhance their payment counters in a manner that the time taken for billing and payment is less.

Be attentive of loyal customers to increase customer base as there is a lot of competition.

Increase their range of products as customers prefer having more to choose from.

Come up with a different line of products altogether such that they increase their market share and also so that more customers are built.

Can enhance the online shopping and the promotions in it.

THREATS :

Other competitors like Waitrose , Marks and Spencers have wider range of products, even if the prices may be different. But since more range is attractive it becomes a threat

Fast building customer base of the other competitors.

Price comparing supermarkets as everyone is now making the prices affordable for the consumers, the consumers have a lot more stores and brands to choose from.

Products on a timeline or with an expiry date if not purchased will land up costing the company more as they will be reprocessed.

SAINSBURY’S

STRENGTHS :

Has enormous variety and wide range of products in the stores .

Has customer loyalty promotions which are attractive to the consumers.

Has wide timeline of promotions on products which may have bring out a positive reaction from the consumers.

Easy payment modes since it is more spacious and provides easy billing and payment time to the consumers.

Promotion schemes are preferred by the consumers as they make them in a very attractive manner.

Has more attractive methods of arranging the commodities which attracts a customer to the store

WEAKNESS :

Needs weekly schemes for people buying for short time as that adds to the competiton.

Build more stores as people majorly look for convenience of the location of a supermarket when they want to purchase things.

Need to increase sales personnel as personal touch is important and that is one of the major factors that lead to consumer loyalty

Needs to keep the price comparison in check as the upcoming supermarkets are price challenging in terms of “for the consumer”.

Donot have enough discount offers and schemes as it should have in comparison to a lot of supermarkets.

OPPORTUNITIES :

Can take customer base easily from Waitrose and Marks and Spencers as they are similar in terms of spaciousness and store make and in some products even price related.

Should take out short time period schemes as it already has wide range of products.

Should induce lowering of prices as then it will be more affordable that Waitrose and Marks and Spencers and also will be competitive enough with Tesco.

THREATS :

Products with an expiry not sold can add to cost majorly as they will be reprocessed.

With other heterogeneous supermarkets arising, there is less scope of lowering the prices without affecting the market share.

Tesco having more stores than Sainsbury’s,it is at a better trusted level , which is necessary for Sainsbury’s

CHAPTER 2: LITERATURE REVIEW

“Digging for Tesco’s green label credentials”, publication- Information World Review, issue no – 237 . Published July 1,2007.

This journal article talks about Tesco being one of the most powerful supermarkets present. It shares information about Tesco holding a 31.2% share of the national grocery bill, and the fact that it rapidly becoming an increasing global power in the retail sector. This article basically focuses on the plans of carbon labeling all the products of Tesco’s. This was done to be able to influence consumer habits as almost all the products that are used in our daily lives have carbon footprint. It involves the product part of the marketing mix as it involves the delivery of the commodity to the buyer or consumer. This study showed that the Chairman came up with this idea but realized that it will not be as easily done as expected so he changed his technique of marketing and sponsored the Oxford University Centre in helping them obtain all the information that was required to carbon label the products (approximate seventy thousand products stocked) at the Tesco store. They faced a lot of challenges even in that. After their effort, it was proved that even though carbon labeling was insufficient or scarce, the consumers felt the need and wanted carbon labeling. Thus through this we understood that Tesco marketed carbon labeling hugely as they thought it would be beneficial for them and also they wanted to reduce the impact they have on the environment.

“Research and Markets: J Sainsbury plc Company Profile”, publication- M2 Presswire, Published on February 19th,2003

This article basically involved the marketing strategies that the company adopts and the crucial and vital information that is needed about the company. It included SWOT analysis of all the factors i.e. internal and external that affect Sainsbury’s, revenue lines, strategies. The article spoke about the strategies that Sainsbury’s implements and what all steps it takes to attract the consumers. It spoke about its online shopping site and how to order on it, by clicking on what, basic detailing and how it’s easy and thus involves good marketing and method of working. It analyzed that their marketing techniques are acceptable by the consumers as study showed that it is good to buy from Sainsbury’s since they understand consumers, they keep themselves updated on the other supermarket’s or other competitor’s current situations market wise, qualifies the needs of the suppliers and consumers in terms of services, pricing etc.

“Marketing Research Contemporary Themes and Trends”, Author-Mohammadreza Haji-Basri, publication-Interdisciplinary Journal of Contemporary Research in Business, Published on September 2012, issue no-5

Marketing discipline and contemporary research themes was the main focus of this article. It used the contemporary research themes published in other journals to do its study to be able to research the current direction of the marketing methods and the marketing trends. It said that earlier certain disciplines like easy accessibility, simplicity and relevance were downplayed but now with the change in the ways of thinking these factors are being the importance they deserve as they have a huge hand in successful marketing. The analysis was that planning, consumer behavior, market strategy, management and pricing, and new product development were the most talked about or famous themes of research as examined from the papers of the past years and other observations. It was observed that these were the factors that needed to be given importance to and the marketing in terms of price, promotion, place and product needs to be done keeping these factors majorly into account for better fulfillment of the consumer’s need and company benefits.

CHAPTER 3: RESEARCH METHODOLOGY

PURPOSE OF THE STUDY

Tesco and Sainsbury’s are very successful supermarkets in U.K. A comparative analysis was done of these two retailers by using both primary and secondary data to be able to judge how the companies are faring in the 4 P’s of marketing or the marketing mix. This meant that comparison was made to see what are the similarities and differences between the pricing, the promotions, products and positioning of Tesco and Sainsbury’s. SWOT analysis was also made based on the information gathered so that the goods and the places where improvement needs to be made could be easily found out.

RESEARCH DESIGN

The study is a descriptive study. For the purpose of the present study, a related sample of population is selected from the student age based people around Birkbeck University and Mansion house. The sample was selected by using an answer card and a questionnaire. Information was also collected through secondary data.

DATA COLLECTION

The data which was collected for the purpose of this study was primary data and secondary data. The primary data was collected directly from the respondents in the form of a questionnaire that was prepared for the same. The questionnaire for this survey was structured. The secondary data was found through the earlier studies and also through the observation that was made by going to the various Tesco and Sainsbury’s stores and also extensively viewing their online shopping sites.

INSTRUMENTS USED

This study was carried out through a set of self-administered questionnaires. The questions were necessary to ensure the reliability of the information. The questions were simple to understand and were close ended. It should be seen that parties are not biased or prejudiced and are mentally sound. A sample questionnaire is attached in Appendix.

PARTICIPANTS

The participants were the people who were available and ready to help answer the questions in the survey at the Birkbeck University and also the student or people who stay at the Mansion house in Chelsea, U.K. the participants were basically chosen of the student age group.

DATA ANALYSIS

For this project, the analysis was done with the use of bar diagrams and tables. All the data that was collected, i.e. the sample of 50 people and the questionnaires that they filled was transferred into theses tables and bar diagrams for the analysis. My analysis was done using the excel sheet.

CHAPTER 4: DATA ANALYSIS AND FINDINGS

The objective of the present research was to compare the promotions, products, positioning, prices and customer satisfaction experience offered by Tesco and Sainsbury’s in U.K. For the purpose of the research survey was conducted and answers were collected from the students or people around Birkbeck University and Mansion house. Data was collected from 50 respondents. The data was analyzed using the excel sheet. The results of the analysis are presented below.

TABLE A: Demographic Profile – Gender

Gender

Percentage of respondents

Male

21%

Female

29%

Out of the 50 respondents, 21 were male and 29 were female.

Q1) Based on all your experiences (ambience, products, salespeople, billing, pricing etc.) please let me know which would be your preferred supermarket?

This shows that out of 50 respondents, 27 people preferred Tesco and 23 people chose Sainsbury’s for its overall experience.

Q2) Which supermarket would you will visit again if you decide to buy anything that is usually available in this store?

29 respondents are likely to visit Tesco again to buy any product or avail any service and 21 people would be likely to visit Sainsbury’s for the purchase of a product or availing or a service.

Q3) How did you get to know about Tesco ?

Out of the number of respondents, 22 of them got to know about Tesco through word of mouth, 3 through T.V. , 9 people through internet, 2 through newspaper, 6 through pamphlets and 8 correspondents got to know through others.

Q4) How did you get to know about Sainsbury’s ?

19 people out of the 50 respondents got to know about Sainsbury’s through word of mouth, 5 people through the source of T.V. , 11 through internet, 6 through newspaper, 5 and 4 through pamphlets and others respectively.

Q5) Which store would you prefer, on the basis of the following attributes?

A – Attractiveness of display

Out of the 50 people who answered the questionnaire, 19 people would prefer Tesco on the basis of attractiveness of display and 31 people would prefer Sainsbury’s for the same.

B – Ease of accessing the merchandise inside the store ?

29 people thought that it was easier to access merchandise inside the Tesco stores and 21 people said they preferred Sainbury’s for the ease of accessing the merchandise inside the store.

C – Spaciousness of the store ?

Out of the 50 respondents, 18 said Tesco was spacious enough and 32 people preferred Sainsbury’s and said it was more spacious according to them.

D – Convenience of the location of the store ?

According to 33 respondents Tesco was conveniently located for them to visit and 17 people said Sainsbury’s was at a convenient location for them.

E – Convenient and faster paying time ?

The billing and paying time was faster and convenient for 19 people in Tesco and the same convenience was at Sainsbury’s for 31 people out of the total 50 respondents.

F – Which store’s salespeople do you think were more courteous and helpful during your visit ?

The sales personnel of Tesco were preferred by 26 people for their service and 24 people thought the service and courtesy level was better for them in Sainsbury’s.

Q6) What would be your choice for the following ?

A – Availability of the product or service you were looking for?

30 people chose Tesco and said that there was availability of the product or service they were looking for and 20 people chose Sainsbury’s for the same availability

B – Price range you wanted?

35 people, out of 50 said that they chose the price range of Tesco and 15 people chose Sainsbury’s for its price range.

C – Availability of the latest products and services?

22 was the number of people out of 50 that chose Tesco for the availability of latest products and services and 28 was the number for Sainsbury’s for the same.

D – Which discount offers suited you better?

34 respondents seem to prefer the discount offers made in Tesco and 16 people like the discount offers made in Sainsbury’s.

E – Which store’s schemes were you content with?

The schemes in Tesco were preferred by 32 people and the schemes of Sainsbury’s were preferred by 18 people.

Q7) Which would be your choice for Online shopping out of the two supermarkets?

Out of the 50 respondents, 19 would prefer the online shopping from Tesco and 31 would prefer the online shopping and delivery of Sainsbury’s.

LIMITATIONS

Every study has some limitations in terms of time, cost, human error and so on. Best efforts have been made to collect the past and current data regarding the company.

The sample, being fifty, may have been too small in forming the perceptions and results.

The period of study was limited

It was difficult to obtain data as some people were reluctant to give out information or time

The result of analysis made in the study depends fully on the accuracy; reliability of information given by the respondents

Much of the information collected depended on the respondents level of understanding the questions properly

The secondary data that was collected may or may not be perfectly relevant

CHAPTER 5: CONCLUSIONS AND RECOMMENDATIONS

CONCLUSION

Through SWOT analysis and the survey, we have been able to understand the marketing mix of both Tesco and Sainsbury’s. Tesco and Sainsbury’s are both currently doing extremely well in the market in U.K. they are neck to neck in competition since they are homogeneous supermarkets and have made good name for themselves. Out of the 50 respondents, 21 were male and 29 were female. After observing and taking a look at the analysis, the conclusion is that the differences in the preferences of people between Tesco and Sainsbury’s isn’t much. People prefer Tesco over Sainsbury’s by 4% in their overall experience of the supermarkets. 29 people are likely to visit Tesco again which is 8% higher than Sainsbury’s which is at 21. The promotions are better of Sainsbury’s as 31 people out of 50 heard about it through promotional means like advertisements on T.V, newspaper, internet etc whereas the number for the same for Tesco was 28. People prefer Sainsbury’s for its attractiveness of display by 12%, whereas they prefer Tesco for the ease of accessing the merchandise in the store by 8%. 32 people concluded that Sainsbury’s was more spacious that Tesco, out of the total of 50 people, which meant that only 18 people thought that Tesco was more spacious. As expected, 33 people out of 50 preferred Tesco for its convenient location and 17 people preferred Sainsbury’s. people chose Sainsbury’s for convenient and faster billing and paying time by 12%. Behavior of the sales personnel was preferred and appreciated more in Tesco as 26 people voted for them and 24 voted for Sainsbury’s, out of 50. Products were found to be easily available in Tesco than in Sainsbury’s by 20%. The price range or the products and services was majorly preferred of Tesco as 35 people chose Tesco and 15 chose Sainsbury’s out of 50 which got the difference level of 20%. 28 people said that the new products were easily available in Sainsbury’s and 22 people chose Tesco for the same. The discount offers and schemes were found to be better in Tesco by 18% and 14% respectively as compared to Sainsbury’s. people chose Sainsbury’s over Tesco for online shopping by 12%.

RECOMMENDATION

As per the observation and the results of the analysis, there are several recommendations and suggestions that can be made for both Tesco and Sainsbury’s. Even though they are both successful supermarkets, there is always room for improvement and more success as sky is the limit for everything. For Tesco the recommendations that can be made are:

Tesco should build schemes that are elongated in terms of expiry dates.

They should try expanding their range of products.

They should gain more consumers by making more customer loyalty promotions.

Should try making their outlets more spacious.

Billing time and payment time reduction techniques should be made.

Come up with a different line of products so as to move ahead in competition.

Should increase their promotions or advertisement strategies so that people get to know about them from things like internet and T.V more.

Have better attractive display methods.

For Sainsbury’s the following recommendations can be made:

Sainsbury’s should build more stores at convenient locations for the people.

Weekly schemes or everyday schemes should be experimented with as a promotional strategy.

Better training of the sales personnel needs to be done.

Price should be affordable for the consumer and there should not be a major % difference between Sainsbury’s and any other supermarket’s price of the same product.

The discounts offers should be increased by a lot such that a consumer is attracted towards the products or services and he/she thinks that the person is receiving their money’s worth.

Should come up with more schemes at the stores to be able to compete with other supermarkets for their products.

REFERENCES

http://www.lovemoney.com

http://en.wikipedia.org/wiki/Tesco

http://en.wikipedia.org/wiki/Sainsbury%27s

http://udini.proquest.com/read/doc:50b2a78b66c018e9a476b0f1/

http://udini.proquest.com/read/doc:50b29df366c018e9a476b067/

http://udini.proquest.com/read/doc:50b2963766c018e9a476b004/