Sainsbury's the Supermarket - Essay Example

Sainsbury's the Supermarket Introduction Sainsbury Supermarkets Ltd is the second largest supermarket chain in the UK with its market share standing at almost seventeen percent. This supermarket chain store operates under the umbrella of J Sainsbury plc whose head office is in London City. The year of establishment of this venture was in 1869 by John James and Mary Anne Sainsbury and its growth became evident in the Victorian era with it being the pioneers of self-service retailing in the UK. Other than dealing with supermarket chains, this business venture also has investment interests in the banking and property markets. The business began as a family owned venture, but later changed ownership in 2011 to include shareholders such as Qatar investment Authority who are currently the majority shareholders for this supermarket chain. Despite the challenge they experienced by Tesco who beat them to be the market leader in 1995 and demotion by Asda to be in the third place in 2003, the store rose again to be second largest supermarket in 2013 thrashing Asda. With this, this essay will develop the supermarket’s profile within its target market using the demographic, behavioral, psychographic, and geographic factors. Further, the essay will delve into a well-researched PEST analysis with emphasis on the relevant variables that would have an impact on the Sainsbury chain of supermarkets. Lastly, the essay will give recommendations to the store’s marketing mix based on the PEST results in tandem with the needs and wants of its target market with the aim of increasing its competitive advantage. 1. Profile for Sainsbury Stores Summary Sainsbury Supermarkets is one of the established by J Sainsbury Plc and it is the third largest significant supermarket chain in Britain because of its 16.3 share presence in the market. The majority shares belong to the royal family of Qatar who hold up to twenty six percent of the overall shares in the supermarket chain. Presently, the supermarket store has a listing on the stock market in London and is a part of the FTSE 100 Index 1. Businesses operated by Sainsbury The parent Company J Sainsbury plc operates five hundred and eighty three supermarket stores, five hundred and twenty three convenience stores, and the Sainsbury bank entities. Employees As per the standing data, Sainsbury offers employment to at least one hundred and fifty seven thousand people as of the 2013 obtained data. Geographical area of operation The supermarket stores mainly has establishments in the United Kingdom meaning that it does not have stores in other nations. Sainsbury revenue: The annual profit recorded by the company in 2013 stood at 788,000,000 Pounds pre tax and the total sales excluding VAT was at 25,632 pounds. Basic annual share earnings for Sainsbury supermarkets The full year dividend per share earnings for 2013 was at 16.7 per share making the basic share earnings to be at 30.7p. Management team The stores head or Chairman is Mr. Tyler David while the Chief Executive Officer is Mr. King Justin 2. Mr. Rogers John is the acting Chief Financial Officer for the supermarkets where the three operate from the head office in London. Location of the Sainsbury head office The physical location of J Sainsbury Plc is at 33 Holborn in London at ECIN 2HT. Environmental impact assessment Ideally, Sainsbury impacts the environment through the energy usage at their facilities, food packaging wastes, and through the transport and distribution aspects of the company. The carbon footprint by the supermarkets amounts to 60% with the contribution being by the lighting, refrigeration, and lighting systems used by the store. Environmental compliance The supermarket conforms to the ideal requirements and practices making eighteen of its deposits to receive ISO 14001 certification. Customer basis for Sainsbury On a weekly basis, Sainsbury supermarket serves at least eighteen million customers in which the store also operates an online shopping store and delivery service. The customer experience offered by the store is a great one making the it be the leading food retailing dealer in the UK with its accelerated non- food range offers. The supermarket also has growing space available for the exhibition of products making it to attract more customers because of their quest for offering variety to its target market. The target market As per the needs of the UK population, Sainsbury has also established investments in clothing, banking, and insurance making the parent company to offer a variety of services as compared its competitors. The recent global recession witnessed across the trading establishments did not have any significant impact on the store as the company still maintained to make profits because of its already existing brand name and market command. Overall, the market share presence for Sainsbury has been on a downward trend with its luxury shopper opting for its competitor Waitrose while the budget consumers have shifted to Aldi Supermarket Company. 2. PEST analysis for Sainsbury supermarket Using the market share percentage as an indicator, Sainsbury still commands a high market positioning despite the fact that it continues to experience stiff completion from rival supermarket stores. In this regard, Sainsbury has to revaluate its market strategy through various factors if the store is to improve on its future performances. In essence, analyzing Sainsbury from the PEST angle would mean examining the possible implications that the price imposed on its products would ruin the relations that it shares with its customers. For instance, Sainsbury received complains a while back concerning price fixing allegations that possibly influenced customer to shift to its rival stores. PEST analysis refers to the analyzing of a company’s political, environmental, social, and technological factors in order to influence and the achievement of a stable market. Therefore, Sainsbury continues to operate in a very competitive environment as their rival supermarkets are also opening stores in many regions across the UK and beyond. One of the stores that give Sainsbury constant competition is Tesco in which the retail chain has establishments in the UK and in various countries across the European continent 3. In essence, this can one of the disadvantages that Sainsbury has as it only relies on the KU market for its continued operations as compared to other stores involved in the same trading. Over the years, there has also been in an increase in the fuel prices that have also had an influence on the food prices and Sainsbury has been on the receiving end of this global challenge. In turn, the fuel prices have increased the operational costs for Sainsbury and this has had a direct impact on the customer spending hence presenting a possible reduction on the net sales for the supermarket chain. However, the technological aspect in this analysis appears to be in favor of Sainsbury as it has capitalized on the various innovations to increase its sales by a slightly high margin such as online advertising on social sites 4. In addition, Sainsbury also uses the online shopping tool that increases consumer purchasing that is convenient and meets the needs of the consumers. The implication of this is that Sainsbury has adopted the technology aspects that are in tandem with the mass market in relation to access and shopping convenience. Pest analysis table Political The possible price fixing allegations Globalization pressures Legal challenges that could present financial burdens such especially on the Sainsbury Bank arm of operations Environmental factors Operates in a highly competitive market Fuel and food prices increase Opportunities of expanding to other nations other than operating in the UK alone Sainsbury intent to reduce its carbon print Social Operates in the UK solely Reducing on operational costs in order to stabilize its product prices Technological factors Online shopping facilities for its customers Internet advertising that Sainsbury has not fully exploited Internet enabled paying systems Therefore, dealing with these factors would be of benefit to Sainsbury because it would help the company to improve on its areas of weaknesses and capitalize on its areas of strength hence influencing the supermarket chain to retain or expand its market presence. In many cases the challenges that an organization may have tend to be opportunities in disguise depending on the approach that one would take in relation to these issues. Further, Sainsbury should also change its target market to include a wider area rather than fixing its operation in the UK as way of spreading risks and profit generation. The implication of this is that Sainsbury should consider the opportunities that are likely to attract immense return on investments rather than fail to take the opportunity or risk, which may end up being of benefit to the company. 3. Recommended changes to the Marketing mix of Sainsbury supermarkets to increase its competitive advantage in line with the needs of its target market In order for recommendations to be relevant, it is vital to discuss the marketing mix concept in relation to the environmental factors that concern Sainsbury supermarkets. Ideally, the marketing mix is a widely used business approach that denotes the 4Ps of marketing that are product, place, price, and promotional strategies. The 4Ps of marketing are a necessity to any business that intends to grow in the future or in the presence in terms of market presence and profit generation levels. In many cases, the marketing mix requires the combining of the four critical factors in order for a business enterprise to achieve results and to increase customer satisfaction. The ingredients of marketing mix and the ways in which Sainsbury may use them to its advantage i. Product Arguably, product is the basic and most vital element in the marketing mix that in many times may have a correlation with services offered by an organization. In essence, products or services are the physical items that a trader may have on offer whose intention to receive monetary compensation in return. The services or products on offer by trader have to meet the quality standards, have after sales service options, or the packaging requirements that may exist globally or within a nation 5. In relation to Sainsbury, the supermarket chain upholds the objective that it has to present the best food options to its market through the delivery of quality with efficiency and speed. By maintaining the quality and safety standards for the products that Sainsbury sells, it would give them competitive edge over their rivals whose priorities might not be the same as those of this supermarket store. Therefore, the products and services offered by Sainsbury should be able to influence trust to its market with the cost of attaining them being competitive, but attainable. In addition, products sold by Sainsbury should also be ones that the target market perceives them to be needs meaning that their plans should be customer oriented in order to increase faster sales. ii. Place In this second ingredient of the marketing mix, it involves the communication of product availability and distribution that is acts as the decisive factor to possible consumers. In many cases, place denotes the sales and distribution points in which a target may access the products with ease in order to satisfy their needs or wants. Using this as a basis, Sainsbury should strive to bring their services and the products that they sell closer to their target markets by establishing more distribution points that would influence fast access by their target market. Further, Sainsbury may also use this factor as an opportunity to explore untapped markets across the European market after conducting surveys on the ways in which customers would relate to them and the needs of its targeted population. In so doing, Sainsbury would be at a better position to reach a wider market, which is highly likely to attract profitable returns and market competitiveness. Therefore, Sainsbury should look to establish more supermarket stores across untapped markets rather than putting up stores in areas that would facilitate competition with their own supermarket chains in the same locality. iii. Price Ideally, the price ingredient in the mix is another vital component of the marketing mix as it allows traders to attach prices to their products and maintaining the competitive edge. In essence, price should remain competitive, but still it should ensure that a trader also makes profit without exploiting its target market 6. A trader may choose the price of products to be high or low, but arriving at the right amount to charge becomes the challenging part. Essentially, Sainsbury should include pricing aspects such as developing policies related to product discounts, credit, and allowances. Presently, Sainsbury does not have any policies that allow or regulate the pricing aspects that have the potential of customer loyalty and attracting new target markets. However, Sainsbury should ensure that the price aspects that it arrives at factors in the operational costs and the intended profits to prevent the company from generating losses while trying to maintain its market share. Subsequently, placing the price of the products or too low while striving to be competitive might make Sainsbury to lose its market presence hence reducing the chances of achieving its organizational objectives. In this regard, this supermarket chain should ensure that they apply pricing strategies that are realistic while edging out their rivals in the market. iv. Promotion In the marketing mix, promotional strategy is the last and most significant element, which entails the communication of the attributes that a product may have that influence it to stand out from other products in the same category. The communication might include the benefits attached to using the products mentioned in the promotion or seeking services from the business entity in question. Subsequently, Sainsbury might invoke the use of promotional strategies such as advertising, public relations, online marketing, or personal selling to make itself known to the population that might not be aware of its existence. Sainsbury may also use this tool in the areas that it may seek to cast out new markets across Europe in its stores expansion process. On the contrary, Sainsbury relies on the image that it has built for itself over the years to its advantage because this has influenced trust from its target market. Further, the supermarket should also venture more into internet advertising as this technology tool is revolutionizing the marketing world 7. In addition, they might also celebrities to market their brand to their target market as this would help in building their popularity and credibility to their target markets. According to market research findings, companies that seek to achieve organizational growth and increase market share use advertising options to remind their consumers of their existence in the market. Therefore, Sainsbury should not rely on the image and reputation that it has built for years, but should also explore other options of retaining their market presence in the UK and beyond. In so doing, Sainsbury would be able to revaluate its position in the UK market and ascertain where it should be in the next few years if they intend to be successful in their ventures. In the end, Sainsbury would be the market leader in terms of product and service delivery as their approach would have its prime aim on satisfying the needs of its customers rather than focusing on making profit as might be the case for its competitors. Bibliography BAKER, M. J., and SAREN, M. Marketing Theory: A Student Text. (London: Sage Publishing Press, 2010). CURTIS, Tony. Marketing in Practice 2007-2008. (London: Routledge Press, 2007). DOOLE, I, and LOWE, R. Strategic Marketing Decisions in Global Markets. (London: Thomson Learning Press, 2005.) FARHAD, A., and KARAMI, A. Strategic Management in Small and Medium Enterprises. (London: Thomson, 2003). GRANGER, Glenn. Raindancing: Why Rational Beats Ritual. (Kibworth Beauchamp: Matador, 2013). HEINELT, H. Sustainability, Innovation and Participatory Governance: A Cross-National Study of the EU Eco-Management and Audit Scheme.( Aldershot: Ashgate Press, 2003). WAELDE, C. G. T. et al. 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