Marketing Strategy of Sainsbury’s
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Published: Wed, 09 May 2018
The aim of this report is to provide an in-depth marketing analysis linked with the UK supermarket segment. The core idea here would be to develop an integrated research by highlighting one of the supermarkets and then developing core recommendations to improve the business presence in the market. It is important to highlight that the primary focus of the research is linked with the establishment of a more viable marketing strategy for ‘big 4’ supermarkets in the region. The report initially starts off with the development of a path to highlight the current supermarket situation in the market. The main focus here is to highlight the current market shares and the overall trends in the industry. This is followed by the choice of a single supermarket out of the big four. An analysis on that particular firm from the current market situation is conducted. This moves into the development of a marketing recommendation for the business. The main idea here is to develop a viable marketing strategy in order to improve the overall market visibility of the firm.
UK Supermarket Industry
The aim of this section is to highlight the current landscape of the UK supermarket industry. Butler (2015) states that the UK supermarket industry is one of the most competitive areas of the country. There are a total of 4 key supermarkets in the region, namely Tesco, Asda, Sainsbury’s and Morrsions. The Economist (2015) highlights that together these four supermarkets have over 60% of the total market share and hence are fairly visible in the market. However, over the past 5-10 years a slow yet strategic shift has happened. The UK supermarket industry has seen an influx in discounted supermarkets such as Lidl and Aldi. This has had a direct impact on the consumer buying pattern and hence seen a direct shift on the current big 4 from a market development and share point of view. Butler (2015) states that the development of discounted firms are impacting the overall landscape of the market by in fluxing a shift in market share. Hence, from a big 4 point of view.
The focus of this report is based on Sainsbury’s as an organisation. Sainsbury’s currently has 16% of the market share and reported a revenue of GBP 23billion in 2014 (Sainsbury Annual Report, 2014). The organisation, since its inception has seen rapid development in its market share growth. However, Butler (2015) states that Sainsbury’s over the past decade has had a decline in its overall sales, with 2011 being one of the lowest revenue generation months for the business. This is clearly a sign of the firm losing traction in the market and therefore an indication that the organisation needs to revamp is current marketing strategy.
After establishing that as a firm Sainsbury’s needs to have a more visible approach to market its presence it is important to critically analyse the organisation’s current marketing strategy. A marketing audit is a comprehensive, logical process which allows a firm to develop an understating of where it lacks and servers as a mean to improve its market position (Ashill et al, 2003). To analyse, four key areas were analysed, segmentation, targeting, positioning and promotional marketing strategy.
- Segmentation is defined as one of the most important elements linked with market development (Varadarajan, 2010). The core notion of Sainsbury’s point of view involves both geographical and behavioural segmentation. The organisations uses the UK region as the primary geographical segment, on a behavioural side the firm aims to push itself as a mid-tier brand. The idea here is to capture market share based on the concept of best value for money.
- Targeting from a marketing point of view defines how an organisation portrays or highlights itself in the market (Pehrsson, 2004). Sainsbury as a firm uses segmentation based on behaviour which further trickle down to the organisation’s targeting strategy.
- Positioning defines how an organisation is perceived in the market. The core driving force here is normally how an organisation positions itself from a pricing point of view (Sainsbury Annual Report, 2014). Sainsbury as an organisation aims to target a more quality centric market and hence the pricing strategy of the firm ranges between medium and high end of the market (Banerjee and Dholkia, 2012). The firm uses this positioning strategy to highlight how it creates value for its consumers.
- Promotion: Promotional strategy is lined with the development of a process that allows an organisation to connect with its audience (Doyle and Stern, 2006). Sainsbury’s, as it stands uses a traditional marketing approach using television, radio and billboards to promote its products (Sainsbury Annual Report, 2014).
Keeping this in context, it is important to indicate the development of a viable marketing strategy for the business. However, core limitations in the organisation’s current strategy are tied to its positioning strategy as well as how it promotes its products. The overall limitation is a liner positioning strategy that is almost always impacted by discount stores and their ability to under-cut the firm’s offering (Butler, 2015). This is a clear limitation from Sainsbury’s end as it allows the discount based organisations to take over the market share of the organisation and hence limits the overall position as well as the growth or the organisation. Furthermore, as highlighted in the audit, Sainsbury’s as an organisation uses a traditional promotional approach which has limited impact on the market development of the organisation. Research conducted by Bernhardt et al (2012) state that organisations operating at a large or small-scale need to develop a forward facing approach to promotional activities, which means that the use of social media forms a critically important component of market growth. This aspect which is missing from the organisation’s current strategy, therefore needs to be revamped and is discussed in the recommendations section.
All in all it is clear that while Sainsbury’s is a well-known firm that operates on a large scale, the overall marketing strategy for the business is limited and hence the organisation being impacted significantly due to these marketing limitations.
While the previous section highlights the overall positioning of Sainsbury’s from a market point of view, it is now important to highlight core recommendations based on the initial audit conducted. In order to develop a viable marketing and business development strategy, it is important to develop a re-vamped marketing mix and then indicate a core promotional strategy based on this marketing mix. Three key areas of revamping segmentation, targeting and positioning is discussed below which lead to the development of a new marketing mix.
|Segmentation||It is recommended that Sainsbury’s uses its current geographical positions to further enhance its market sustainability. The idea would be to continue to use a geographical segmentation approach with focus on geographical specific deals based on the concentration of buyers. This would allow the organisation to develop a bespoke formula to develop a segmentation strategy that improves business position in the market.|
|Targeting||Sainsbury’s needs to develop targeted tiers linked with its products. The main focus here would be to develop a target market that is not just quality but also value conscious. With a re-vamped product linked and improved positioning the main focus of the organisation needs to be on the development of a wide target audience linked directly to the variety of the products being offered by the firm.|
|Positioning||As discussed in the previous section, Sainsbury’s has positioned itself at the mid-tier of the market. The idea, based on the audit would be to introduce products that are able to compete with the lower end of the market from a pricing point of view. This would allow the organisation to develop a market presence which moves to penetrate the discounted market segment.|
The new STP strategy allows the firm to develop a more diverse role. This is critical from a development as well as an execution point of view as it would allow the organisation to re-position itself based on the current market demand and hence challenge the overall approach undertaken by the discounted supermarkets segment. Keeping the above in context, the following discussion highlights a re-vamped marketing mix for the firm. Kotler and Keller (2012) state that a viable marketing mix allows an organisation to improve its marketing strategy and therefore increases the level of sustainability for the organisation.
- Product: An integral part of any firm, product defines an organisation and is therefore linked with the core offering of the brand. Sainsbury’s being a supermarket offers a wide range of products. However, keeping the new segmentation and positioning strategy in context, the firm needs to develop a new product line of its top sellers. The idea would be to use a cost conscious approach with products that are of a higher quality than the discount stores. This would enable the firm to have a product line which can compete directly with the discount market segment.
- Price: The current pricing model needs to be improved if the firm wants to compete with the discount stores. The idea here would be the use of a pricing strategy that is diverse and hence spreads from low to the higher end of the market. This would allow the organisation to improve its current market position and hence develop a wider audience spectrum.
- Place: The current approach of the firm is applicable here which is the use of physical stores as the primary location for the business. It is recommended that this approach is continued however emphasis on temporary pop-up stores which promote and sell the new cost centric product line need to be introduced. This along with an emphasis on online shopping needs to be injected into the business.
- Promotion: The promotional strategy of the business is discussed in the following section. However, the organisation needs to develop a footprint in non-traditional promotions in order again positive market share for the business.
The re-vamped marketing mix would allow the organisation to have a much stronger position in the market and therefore improve the position of the firm from a developmental point of view.
An integral part of any marketing strategy is linked with how well a firm promotes itself in the market. Keeping the current strategy of Sainsbury’s under consideration, the idea here would be to develop a new promotional strategy which would improve the overall visibility of the organisation, key points of this strategy are discussed below:
- Pull Approach: As it stands the organisation using a push based promotional strategy. Pull promotional approach allows firm’s to engage their target audience (Hooley et al, 2012). This is something that needs to be adapted by Sainsbury’s in order to develop a viable footprint in the market. While traditional marketing is effective, Sainsbury’s needs to move into the non-traditional form of marketing promotions these are further detailed below.
- Non-traditional Marketing: The idea here would be the use of social media channels such as Facebook and Twitter in order to develop a direct link with the target audience. This would allow the organisation to engage its target audience and enhance the organisation’s current footprint in the market.
- Comparative Adverts: Sainsbury’s needs to provide direct quality centric analysis of its products with the discounted stores. This would help consumers realise the value offering of Sainsbury from a product point of view.
Overall, a combination of a new marketing mix long with the use of a viable approach to promotions would improve the firm’s position in the market.
The discussion above highlights the importance and relevance of developing a market centric strategy. It is clear from the analysis that the UK supermarket industry is very competitive. Although it is currently dominated by the big 4 of the market, the current approach is not sustainable. The analysis highlighted that Sainsbury as an organisation use a limited marketing approach which has allowed discount stores to gain market traction. Keeping the discussion in context, a new marketing direction was proposed. The idea here would be to widen the pricing spectrum and launch a product line that directly targets the discount store offerings. This along with the use of a promotional strategy that is more effective in the current environment was proposed.
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