Marketing Strategy for Sainsburys - Essay Example

MARKETING STRATEGY FOR SAINSBURY by + Table of Contents MARKETING STRATEGY FOR SAINSBURY’S 2 Introduction 3 External Audit for Sainsbury’s 3 SWOT Analysis of Salisbury’s 5 Fundamentals Areas of Marketing Objectives 6 Marketing Strategies 7 Marketing Mix 7 Reference 7 MARKETING STRATEGY FOR SAINSBURY’S Introduction Sainsbury’s is a chain of supermarkets in the U.K. it is mainly focused on the sale of groceries. The supermarket was established in the year 1869 in Central London. It is the third largest grocery chain in the U.K after Tesco and Asda. It is indicated that Asda outdid Sainsbury’s in large after it acquired Netto. The U.K has recently registered a change in the shopping habits of the groceries consumers. Many of the consumers are now preferring online shopping and discounted chains as opposed to supermarkets. It is for this reason that this paper is going to give a report to the Board of Sainsbury’s on the marketing position that Sainsbury’s should adopt over the next three years. External Audit for Sainsbury’s A research conducted by the City analysts has predicted that Sainsbury’s is likely to register a decline in its grocery sales by 2.5% for the preceding three months. This is with the exclusion of fuel. This is going to be a big setback for Salisbury’s given that it has, for the last decade, registered only an increase in the sale of its groceries. Salisbury’s used to record all these profits until the consumers in the U.K changed their shopping habits. This was also due to the emergence of Aldi and Lidl which are discount chains. It is also noted that the prices of food fall considerably. With these changes in the markets, the big four supermarket chains in the U.K, Salisbury’s Tesco, Asda and Morrisons, have lost their market share was almost a fifth in the previous two months. Despite the fall in the market share, Morrisons is however indicated by the latest Kantar sales figures to be growing. This is unlike the other three chains of supermarkets. James Anstead, who is an analyst at Barclays, has predicted that predicted that the sales in like-for-like products for Salisbury’s are likely to drop by 25%. This is due to the coming on board of the discount chains which have offered immense competition to the supermarkets. It is indicated also that the brand of Aldi is more worth than that of Tesco. Tesco having reported a similar decline as Salisbury’s, it therefore means that the brand of Aldi is also more worth than that of Salisbury. It is predicted that in the next five years, the sales for the supermarkets are going to drop as the discounters and online shopping double their sales. The increase in sales for online shopping and the discounters is estimated at 92.9% and 82.2% respectively. This is unlike the supermarkets whose sales are expected to drop by 2.9% until the end of the year 2020. The increase in the sales of discounted chains and online shopping is largely attributed to the switch to new formats of shopping for groceries by the consumers. According to a research conducted by Kantar, it is indicated that Sainsbury’s currently holds a market share of 16.5%. The shares of Sainsbury in the market have declined by 20% over the preceding two months. Despite the easy accessibility that consumers have to the Salisbury’s chain of supermarkets, this has still not helped the supermarket to register an increase in the sales. The large network that Salisbury’s have has also not done a significant improvement in the profits of the supermarket over the last few months. This has seen the investors of Salisbury’s resign themselves. Investors always want to invest their money in ventures that will give them good returns and not profits. This percentage decrease in the share market of Salisbury will definitely lead to financial losses for both the supermarket as well as the investors. This therefore gives a perfect explanation as to why the investors are resigning. Generally the share of the market for the big four supermarkets in the U.K has fallen to 34.7% from 40.4%. This is despite the predicted rise in the sale of groceries by 13% between the periods beginning April 2015 to April 2020. The discount chains such as Aldi and Lidl have however doubled their market share to 11.6% from 7.2%. That means that one pound in every nine pounds spent by the British shoppers on groceries by the year 2020 will be accounted to this discount chains. The online shopping is predicted to increase its market share from 5% to 8.6%. This is due to the fast growing awareness of the online marketing. From this audit analysis, it is clear that the external environment is posing threats to Salisbury’s. These threats arise from the growing competition that the discount chains and the online shopping are posing to Salisbury’s. Deflation of food price and the changing consumer habits are equally threats to the profitability of Salisbury’s. A significant decline on the profitability of Salisbury’s is the negative impact that these external factors have on Salisbury’s business strategy and corporate objectives. SWOT Analysis of Salisbury’s Salisbury’s chain of supermarkets has numerous strengths. First and foremost, it has trained its entire staff in various bakery and food colleges. This ensures that the staff offers excellent services to the customers through the use of their skills and expertise. This has seen Salisbury’s being a leader in the increase in the sales of groceries as compared to the other retailers. This excellent service has made Salisbury to remain popular among its various customers. The customer loyalty has also been gained as Salisbury sells fresh, healthy and nutritious groceries to its customers. Salisbury’s does not compromise on the quality of the products that it deliveries. It offers good quality products while not compromising on good prices. It has been noted that the customers look for real value in products and this is the reason as to why Salisbury’s does not compromise on quality. Salisbury equally does not compromise on its values despite the falling sales that it is experiencing. They have continued to increase their donations to sport relief. Salisbury’s has developed closer links to the farmers. It has been able to deliver the groceries from the field to the stores within a span of 48 hours. This attracts more customers who desire fresh groceries. With this numerous strengths, it is hard to establish the weaknesses facing Salisbury’s. Nonetheless, the fact that it is considering to focus on other businesses are clothing can be seen as a weaknesses. This is because it is likely to divert from its main objective of selling groceries. A conflict of interest can also be developed in the management. The opportunities that Salisbury’s has are the expected growth of its size by 6.3%. This is according to the research done by the well-known industrial research body, IGD. Salisbury’s equally has the opportunity to increase its customer base through the use of campaigns such as the recently concluded campaign of “Live Well for Less”. They also have the opportunity to introduce novel traditional British varieties of groceries that will gain the appreciation of the consumers. Salisbury is faced with two major threats. First, it is the increasing growth of discount chains and online shopping that accord it competition for its customers as discussed above. The other threat is the market survey conducted by Kantar. This survey has underestimated the figures as Salisbury’s argues. If the figures are underestimated, then Salisbury’s is likely to lose most of the investors that it has. Fundamentals Areas of Marketing Objectives From the above SWOT analysis, it can be concluded that the four fundamental areas within which marketing objectives may be defined are competition, market share, number of investors and marketing research. The competition will enable a firm to estimate the profits that it is likely to make with the existing internal as well as external competition. The market share of the firm will determine the number of investors that the firm is likely to get. Lastly, a market research will help the firm to determine the locations in which its customer base is likely to be higher (Brassington & Pettitt, 2006). The four SMART marketing objectives that the company can pursue in order of priority are first to achieve a high level of the loyalty and satisfaction of its customers in at least 70% of its target market. Second is to increase its market share. Third is to surpass the market share of its competitors. Lastly, it is to increase its profit margin by at least 37% yearly. Marketing Strategies The various types of marketing strategies that Salisbury’s would adopt are a product strategy and a pricing strategy. The company will adopt a pricing strategy. This is because a pricing strategy will enable it to enable it to differentiate itself from the other chains of groceries. If its prices are a bit lower, then it will attract a good number of customers and as such keep up with the competition (Brassington & Pettitt, 2006). Marketing Mix Below is a table showing four planned marketing actions/marketing mix as identified from the pricing strategy. These actions help to differentiate the products of Salisbury’s. The Every Day Low Price (EDLP) can be applied to all groceries while the promotional price is for specific groceries. The hybrid is a mixture of EDLP and PROMO. The sale pricing is similar to PROMO Strategy Off balance sheet Mean Standard development Minimum Maximum SALE 19388 0.44 0.57 0 1 EDLP 19488 0.38 0.55 0 1 HYBRID 19488 0.48 0.58 0 1 PROMO 19388 0.44 0.57 0 1 Reference Brassington, F. & Pettitt, S. (2006). Principles of Marketing. FT/Prentice-Hall. Read More