How Sainsbury Enters the Asian Market - Assignment Example

INTERNATIONAL MARKETING PLAN International promotion plan: Sainsbury entering the Asian market (India) Introduction Hide contends to the reality that, Sainsbury has been among the emerging shopping outlets in the UK over a few decades now. This has made the company to command a reasonable market share in the domestic market thereby making the company to consider spreading its wings to other geographical locations and foreign markets more generally to Asian markets and India in particular. This international promotion paper will be organized into different subtopics such as, the introduction, the executive summary, product mix, SWOT analysis, market entry modes, marketing strategy among other sub-headings. Executive summary This study paper is an international promotion plan aimed at helping Sainsbury Inc to venture into the Indian market. In order to penetrate into new markets as well as create more awareness on its product mix, Sainsbury hopes that; by venturing into the Indian market the company is able to penetrate into the new markets segments within the Asian region thereby increasing its market share translating to more sales volumes (Van Zee, 2009). Marketing Objectives and aims The Asian market more particularly the Indian market has over the last two decades shown increasing growth and national GDP growth rates. In addition, the market has a huge economic development rate making the country to be considered an ideal investment destination for most multinational companies. The major threat reported in the Indian market is the punitive commercial regulations which pose a huge economic risk to investors (Wood, 2013). Westwood (2013) concurs the reality that; Sainsbury Inc is expecting to report after tax profits of five million yens by the year 2015 upon penetrating into the Indian market. In addition, the researcher intends to analyze the strategies and the financial sustainability that Sainsbury would get by entering the Indian market. Thereafter provide recommendations on whether the Sainsbury should or should not venture into the Indian markets. Sainsbury’s marketing mix In order to achieve its short-range and short-range mission and objectives, Sainsbury has adopted a marketing mix effectiveness plan which is commonly referred to as the 4P’s; the marketing mix is discussed further beneath.   Product According to Moriarity, Mitchell and Well (2010) the company adopted a corporate slogan titled “transforming tastes and making them better” with a sole purpose of enhancing and improving the range of products offered without compromising on quality. Consequently, the company emphasizes on innovation and creativity in developing and designing new products to its clients. Moriarity, Mitchell and Well (2010) further argue that; the quality of the products that the company has always offered to the market has always remained fresh and exotic. For instance, the company launched fat milk in 2000 which later become the biggest food brands in the United Kingdom based on its unchanged natural flavor. In addition, (Westwood, 2013) emphasizes that the company has also introduced other products such as organic fruits that were sold and other products in the dairy products such as blue parrot food supplement for children. The company has always emphasized on customer satisfactions and that has been the driving force behind frequent product improvement and innovations.  Price  In the contemporary business environment, price and quality are the main determinants of consumption. Sainsbury has recognized this by affirming the importance of producing high quality products at reasonable prices. In order to develop and regain a substantial portion of the market, the company has emphasized on providing value for money to all clients (Moriarity, Mitchell and Well, 2010). Therefore, the company charges relatively low prices to customers ensure this happens, the company ensures that it reduces its operational overhead costs without impacting its profit margins. In addition, different pricing strategies such as; price cutting and price reduction promotions would be used for attracting new customers and to boost short-range revenue streams (Westwood, 2013).  Promotion  Sainsbury relies on promotion and advertisement to create more product awareness which eventually translates to more market share and increased revenue streams. Awareness creation and promotion is usually conducted through the media such as; cinema, television and radio (above the line promotion strategies) On the same breath, the company has also adopted below the line promotion which involves the use of unique packaging, direct mails, sales representatives and promotions to reach its new and loyal customers. For instance, in 1999 the company introduced a reward card targeting customers; the card would enable clients get points which they would later redeem in exchange for other services (Van Zee, 2009) Place  Place as a marketing mix entails distributing products to the right place and time. The mission of Sainsbury which is stated in the mission statement is to become the leading distributor of quality products, offer clients value for their money and provide attention and other needs to clients, in a cost effective manner in a faster, simpler and convenient manner (Moriarity, Mitchell and Well, 2010). To ensure this objective is achieved, the company has opened up different outlets such as over 60 stores, over 270 supermarkets in over 119 towns and cities worldwide. Conversely, the company operates most of its stores on a 24 hour basis in order to provide the clients with the necessary convenience. Consequently, the company has adopted a home shopping approach where clients can transact online using e-commerce sites at the expediency of their homes. All these product mixes are clear indicators of the efforts that the company has put in place to gain a substantial market share over rival companies (Moriarity, Mitchell and Well, 2010). Wood (2013) contends to the authenticity that, place as a marketing mix ensures that the clients do not travel over a long distance in order to buy the different product mixes provided by the company. Therefore, the company will open different shopping outlets and online transacting portals with the objective of providing clients with convenience. Target Markets From the onset of this research paper, it is apparent that Sainsbury will target the Indian market. Different product promotion and advertising strategies will be used to penetrate this market segment. Two types of advertising will be used, which are the above the line and below the line promotion approaches. Sainsbury major competitors would include Tesco and Wall-mart (Moriarity, Mitchell and Well, 2010). Market entry modes that should be adopted According to Wood (2013) there are several international market entry modes that Sainsbury can adopt to penetrate into new markets. Some of these entry modes include; mixed and joint venture, a joint venture is a market entry approach where the government takes part in business ownership. Joint venture is the ideal market entry that Sainsbury should adopt when entering into the Indian market. The choice of this market entry mode is based on the merits and demerits shown below. Merits of joint ventures Joint ownership would enable the company to reduce its capital investment in the business because the government usually takes a higher percentage (51%) compared to the investor who pays (49%). Adoption of this approach translated to decentralization of risks since the business is protected from government interferences. In addition, Sainsbury would benefit through sharing expertise, reputation, knowledge and existing systems. For instance, through joint ventures Sainsbury has the ability of sharing marketing expertise and knowledge with relevant government departments that can help them handle such issues. Demerits of joint ventures The major shortcoming of joint venture include, Sainsbury facing the threat of losing control over technology and technological use, making them unable to engage in strategies that are global in nature translating to conflicts in organizational and government goals and needs. For instance, the huge restrictive Indian laws concerning retailers only permit Sainsbury to form alliances with other companies in order to undertake operations that are wholesale in nature (Westwood, 2013).  Promotion strategy The dynamic factors in the environment that are usually social-cultural and economic in nature require that Sainsbury should adopt a promotion strategy. The role of the promotion strategy is to enable the company to overcome its threats hence maximize on market opportunities. High product quality is the main factor that makes Sainsbury products stands out among competitor products; therefore, the company should continue producing goods that meet the right standards. Moreover, social-cultural factors and belief also influence the productivity of any business in India, for instance, most of the consumers in India are Hindus who do not eat beef or pork since they are vegetarians. The structure of the population also influence the promotion strategy adopted. For instance, a huge portion of the Indian population is made up of young people. Therefore, Sainsbury should be cognizant of these factors when selecting an ideal promotion strategy (Hide, 2010). SWOT Analysis This section of the entire research paper will highlight the different opportunities or threats and strengths or weaknesses that the company is expecting to get through venturing into the Indian market. Strengths Other rival companies and shopping malls that operate in the Indian market have always reported increased revenues from one fiscal period to the other. Therefore, the company strongly believes that the revenue streams are good indicators of the productivity and financial sustainability of the Indian market (Van zee, 2009). Weaknesses - The Company has no strong financial muscle compared to rival companies which would imply that the company would not win financial competitions that will be started by rival companies (Hide, 2010) Opportunity - The current market trends where most consumers have shown upswing consumption patterns in luxury and extravagant items under the convenience of one building provides a good opportunity to be ventured into (Westwood, 2013). Conversely, the high population which is always increasing over the years presents another indicator of the available market for the company’s product mix. Threats - Sainsbury faces three major threats when entering the Indian market. One, potential entry of rival companies joining the market – this will increase the level of competition and therefore, increase market segmentation which would eventually lead to reduced market share. Two, the unpredictability of rivals that operate in the market – rival companies such as wall-mart that operate in the Indian market are unpredictable in terms of the strategy that they would adopt to counter Sainsbury ability to attract into certain market segments or niches (Hide, 2010). Conclusion and recommendations According to Hide (2010) in the contemporary operating environment which is not only competitive but also dynamic, organizations have realized that creating an international business proposal or plan before venturing into international markets is important. This is because lack or poor market penetration is linked to lack of a good marketing plan. policy makers and researchers alike allude to the reality that, most section in the marketing plan and the international marketing plan are closely related except that, in the international marketing plan the objective subsection includes the goals of marketing or penetration and creating brand awareness among other subsections. Based on the literature reviewed it is apparent that Sainsbury is expected to face a number of challenges such as; high inflation rates, corruption unstable government policies, unpredictability of high inflation rates, unresolved disputes with relation to FDI among other issues. However, the market entry approaches and the appropriate application of the marketing mix would ensure that the company can overcome these challenges (Westwood, 2013). To sum it all, the following recommendations should be taken into consideration in order to yield maximum benefits to all parties in the joint venture agreement. 1. The Indian national government should deregulate foreign retails investors such as Tesco thereby allowing them to set business outlets nationally. 2. The British commission through its offices in India has always advised the Indian government to lift some of its harsh restrictions in virtually all sectors such as banking, insurance, professional services to mention a few. 3. It would be ideal for Sainsbury to start operating as a supplier while laying the foundation of becoming a supermarket with the lapse of time (Moriarty, Mitchell and Well, 2010). REFERENCES Hide, D. (2010). Embodied techniques. Automatic Press/VIP. Moriarty, S., Mitchell, N., & Wells, W. (2009). Advertising: Principles and Practices. Upper Saddle, New Jersey: Pearson Education, Canada, Ltd. Van Zee, A. (2009). The promotion and marketing of oxycontin: commercial triumph, public health tragedy. Journal Information, 99(2). Westwood, J. (2013). How to write a marketing plan. Koran Page Publishers. Wood, M. B. (2013). The marketing plan handbook. Pearson Prentice Hall. Read More