STRATEGIC MARKETING MANAGEMENT

UNIT 17

ASSIGNMENT 1

MARKETING CONSULTANT

AKHTAR ABBAS SAYED

ST 2797

MARKETING STRATEGY

J SAINSBURY PLC.

TASK 1

Sainsbury plc is the parent company of Sainsbury's Supermarkets Ltd, commonly known as Sainsbury's (also Sainsbury and JS); it is the third largest chain of super market in the UK. In 1869 by john James Sainsbury and his wife Mary Ann established Sainsbury, in London, and grew rapidly during the Victorian era. It grew to become the largest grocery retailer in 1922, pioneered self-service retailing in the UK, and its heyday was during the 1980s. As a result of being complacent during the 1990s, Tesco became the market leader in 1995, and ASDA became the second-largest in 2003, demoting Sainsbury's into third place due to which they have to be in competition with them.

J Sainsbury plc consists of a chain of 509 supermarkets and 276 convenience stores – and Sainsbury's Bank

Business priorities

In May 2007 five areas of focus were identified to take Sainsbury's from recovery to growth:

Great food at fair prices: To build on and stretch the lead in food. By sharing customers' passion for healthy, safe, fresh and tasty food, Sainsbury's will continue to innovate and provide leadership in delivering quality products at fair prices, sourced with integrity.

Accelerating the growth of complementary non-food ranges: To continue to develop and accelerate the development of non-food ranges following the same principles of quality, value and innovation and to provide a broader shopping experience for customers.

Reaching more customers through additional channels: To extend the reach of the Sainsbury's brand by opening new convenience stores, developing the online home delivery operation and growing Sainsbury's Bank.

Growing supermarket space: To expand the company's store estate, actively seeking and developing a pipeline of new stores and extending the largely underdeveloped store portfolio to provide an even better food offer while also growing space for non-food ranges.

Active property management: The ownership of property assets provides operational flexibility and the exploitation of potential development opportunities will maximize value.

Situational Analysis of Sainsbury’s:

According to professor Malcom Mcdonalds situational analysis has been a primary function of marketing planning process of the company. it involves the environmental and SWOT analysis as well as the existing marketing plan and any other information that can be gathered about the company and its brands. A review of the company’s objectives matched with the strategic and performance metrics completes the analysis.

STRENGTHS

Save-As-You-Earn scheme for staff offers chance for company shares to be bought at a 20% discount.

Sainsbury's name has been used in developing the company's own-brand products. This approach has been applied to other product lines, such as economy goods and organic products.

New management provides fresh ideas and a strengthened strategy.

WEAKNESSES

The company's share price stood at nearly 450p per share in 1999 but yesterday closed at 289p - a sign of just how far the company has fallen.

Declining Reputation Sales fell in the 12 weeks to the 1st January 2005 by 1.2% compared to a year

ago, the fall in sales slowed in the three weeks to Christmas, falling by only 0.4%.

OPPORTUNITY

Staff on the shop floor are one thing, but all the staff behind the scenes are essential - buyers, administrators, systems designers, finance workers and so on all are part of the whole team that must work together to make things operate smoothly and efficiently

Further scope for the Internet to be used as a home shopping tool within the next decade, whilst also the addition of interactive television could be explored

THREATS

The general perception that Sainsbury's is more expensive than its major rivals Tesco and Asda.

Tesco manage to seemingly continue to push sales and profits ever higher, year upon year gaining market share.

6 M for MANAGEMENT

Marketing audits, 6M includes Men, Material, Money, Market, Mack-up, and Machinery. This technique I had used to make strategic marketing plan of Sainsbury.

Man Money Market Machine

Man: Sainsbury’s has fully trained and skilled workers to provide better customer satisfaction. Sainsbury’s workers are work with the fully dress code and with good cultural environment

Money: Finance is not a problem for the Sainsbury’s. Sainsbury’s is financially strong to face the market situation.

Market: Mack-up means management structure of the company. In Sainsbury’s management meeting lower level manager are also involve to take decision about the structure of the company. It’s been noticed that managers in Sainsbury are changing every now and then which is effects the organization. Management should live for long time so that his ideas can reach at maturity point.

Machinery: Sainsbury’s recently started the self check put machine for the better customer service and also reduce the cost of the manpower, they also have to upgrade the technology with the changing time

Porter’s 5 forces model (1985)

Although this is an old model, it can still be applicable for the present time.

Michael Porter (1985) in his Harvard Business Review publication ‘How competitive forces shape strategy’ 1990 , provides a framework that models an industry as being influenced by five forces. For the strategic business manager at J Sainsbury seeking to develop an edge over rival firms, this model can be used to better understand the industry context in which they operate.

TASK 2

MARKETING STRATEGY TO ACHIEVE COMPETITIVE ADVANTAGES –

Sainsbury's aims to consumer's first choice for food, delivering products of outstanding quality and great service at a competitive cost through working ‘faster, simpler and together’. Sainsbury’s is looking for profit growth through a balance of strong sales growth, further reductions in the cost base, and continuing margin improvements. There are many techniques for achieve competitive advantages and long term growth. These techniques are as under:

PORTERS GENERIC STRATEGY BOSTON CONSULTING GROUP (BCG) MATRIX ANSOFF MATRIX

PORTERS GENERIC STATEGY –

He has described a category scheme consisting of three general types of strategies that are commonly used by businesses to achieve and maintain competitive advantages. These three generic strategies are defined along two dimensions:

Strategic scope - it is a demand-side dimension and looks at the size and composition of the market you intend to target.

Strategic strength. As a supply-side dimension and looks at the strength or core competence of the firm. In particular he identified two competencies that he felt were most important: product differentiation and product cost affiance.

He originally ranked each of the three dimensions (level of differentiation, relative product cost, and scope of target market) as either low, medium, or high, and juxtaposed them in a three dimensional matrix. That is, the category scheme was displayed as a 3 by 3 by 3 cubes. But most of the 27 combinations were not viable.

Porter's Generic Strategies for Sainsbury -In his 1980 classic Competitive Strategy: Techniques for Analyzing Industries and Competitors, Porter simplifies the scheme by reducing it down to the three best strategies.

They are cost leadership, differentiation, Market segmentation (or focus).

Market segmentation is narrow in scope while both cost leadership and differentiation are relatively broad in market scope.

BOSTON CONSULTING GROUP (BCG) MATRIX

BCG Matrix was developed in the early 70’s by the Boston Consulting Group. The BCG matrix can be used by J Sainsbury to determine what priorities should be given in the product portfolio of their business unit. To ensure long-term value creation, Sainsbury should have a portfolio of products that contain both high growth products in need of cash inputs and low growth products that can generate a lot of cash. There are two dimensions of the BCG, market share and market growth. The BCG Matrix graphically portrays differences among divisions (stars, cash cow, question marks and dogs) in terms of relative market share position and industry growth rate.

Stars – high growth high market. Cash cow – low growth, high market. Question mark – high growth, low share market. Dog – low growth, low share market.

The Ansoff Matrix

The well known tool of Ansoff matrix was published first in the Harvard Business Review (Ansoff, 1957). It was consequently published in Ansoff’s book on ‘Corporate Strategy’ in 1965 (Kippenberger, 1988).

Ansoff (1968) argued that marketing objectives can only ever be about products and markets and that products and markets are either existing or new. This means that, according to Ansoff, marketing objectives should always be expressed in terms of existing or new products or markets, or a combination of all four factors. Ansoff’s matrix offers strategic choices to achieve the objectives. . According to Macmillan et al (2000), “choice and strategic choice refer to the process of selecting one option for implementation.” The four main categories for selection is usually expressed diagrammatically as follows:

PRODUCT OR SERVICE

Existing New

Market Penetration: In this section J Sainsbury can further market their existing products to their existing customers. This will mean an increase in their revenue for

Market Penetration Product Development

Market Development Diversification

Source: www.learnmarketing.net

example, by promoting the product through promotional incentives, buy one get one free offers, PR, advertising and repositioning the brand. In this phase the products are not altered and they do not seek any new customers.

Market Development: Here they can market their existing product range in a new market. This means that the product remains the same, but it is marketed to a new audience. Exporting or marketing in an entirely new region can also be done.

Product Development: this will involve a new product or service marketed to their existing customers. The goal is to develop and innovate new products offerings to replace existing ones. For example by changing the packaging and introducing newer flavours or taste. The updated products are then marketed to their existing customers.

Diversification: at this stage a completely new product is marketed to an entirely new customer group .this could either be related or unrelated. For example J Sainsbury, once only a food retail shop can diversify into providing financial services, like banking, insurances, travel and the like to its customers. They can also shift to selling non food products like clothing, computers TV’s and many more. Currently, The first ever GPs surgery to be located in a supermarket is being piloted at Sainsbury's Heaton Park, Manchester.  The trial has been developed by the Heywood, Middleton & Rochdale Primary Care Trust (HMRPCT) and is designed to give patients convenient access to GP services in the evenings and at weekends. The HMRPCT will provide the GP services and Sainsbury's will provide the convenient and easy to access location. The trial will run for six months initially, after which an evaluation of its success will be carried out.

Ansoff’s matrix is one of the frameworks which J Sainsbury can use for deciding upon its strategies for growth.

TASK 3

ANALYSING THE CURRENT MARKETING SITUATION –

POLITICAL ECONOMICAL SOCIAL TECNOLOGICAL LEGAL ENVIRONMENTAL

PESTLE Analysis

The Marketing Mix Element

The Marketing mix is an imperative concept in modern marketing and academically it is referred to as the set of controllable tools that the firm blends to produce the response it wants in the target market, so it consists of everything the firm can do to influence the demand for its product (Kotler and Armstrong, 2004)

The marketing mix element may be developed to contribute to enhance J Sainsbury’s goals and values by taking into account the set of key interrelated entities which have to be set in conjunction with one another. Which are Product, Pricing, Place and Promotion . It is important to realise that marketing mix strategy of any company can have one major function, that is, strategic communication of the organisation with its customers (Proctor, 2000). It can further be argued that the marketing mix provides multiple paths as such communication can be achieved either in spoken form and written communications (advertising, selling, etc.) or in more symbolic forms of communication (the image conveyed in the quality of the product, its price and the type of distribution outlet chosen.

Conclusion

To survive in such a competitive market place, J Sainsbury must continue to build a strong brand in order to create a strong differentiation in the market, attract customers with a credible value proposition and to constantly engage customers in ways that would endear them to the brand and to the company. This can help improve their market share especially during periods of recession when lower priced private brands are sought by consumers. And thereby achieve competitive advantages and long-term growth.

References

Porter, M. E. (1985), Competitive Advantage, The Free Press, New York. Kotler P, Armstrong G; Principles of Marketing, 10th Edition, Pearson Prentice Hall,2004 Boston Consulting Group (BCG) 1970

Ansoff, I. (1965) Corporate Strategy, McGraw-Hill, London

Websites

http://www.jsainsburys.co.uk

http://www.j-sainsbury.co.uk

http://www.igd.com

http://www.12manage.com

http://www.quichmba.com

http://www.marketingteacher.com