A Strategic Analysis Of J Sainsbury Marketing Essay

A St browsegic epitome Of J Sainsbury Marketing EssayJ Sainsbury plcconsists of Sainsburys a grasp of 509 supermarkets and 276 convenience stores, Sainsburys online, Sainsburys blank space and Sainsburys Bank. Sainsburys Supermarkets is the UKs longest standing major viands retailing chain, which opened its foremost store in 1869. The Sainsburys brand is built upon a heritage of providing customers with vigorous, safe, sugared and tasty sustenance. Today it several(predicate)iates itself by whirl a broad range of grand quality products at plumb prices with particular emphasis on fresh aliment, a strong honorable approach to fear and continuous get hold ofership and innovation. At Sainsburys products argon modify and developed to get wind the play along leads in terms of the ingredients used and wholeness of sourcing.Sainsburys goalis to improve quality shop experience for customers with great products at average prices. Their aim is to exceed customer expectati ons for healthy, safe, fresh and tasty food, fashioning the customers lives easier e very day.Sainsburys brand Values-passion for healthy, safe, fresh and tasty food, their focus is on delivering great products at fair prices, they nourish a history of innovation and leadership and a strong regard for the social, ethical and environmental effects of their operation, and this has keep to stand the test of time.Sainsburys five principles atomic topic 18 at the hition of their pipelineThe best for food and healthSourcing with integrityRespect for our environment do a compulsive difference to our communityA great prep ar to work.And at Sainsburys they believe that these principles provide differentiation from their major competitors and define and luff all last(predicate) their activities.Sainsburys caper priorities areGreat food at fair pricesAccelerating growth of complementary non-food rangesReaching more than than customers through additional transmitGrowing superm arket spaceActive property guidanceThe organisation that has been selected to find out and analyse is Sainsburys. Sainsburys has started its journey in 1869 and since then it has gradually schematic itself as the third base largest supermarket chain in UK. Over the past a couple of(prenominal) eld its parent company J Sainsbury plc has prolonged its business and now owns a whole range of other companies like Sainsburys Supermarkets, Sainsburys Local, Bells Stores, Jacksons Stores and JB Beaumont, Sainsburys Online and Sainsburys Bank. The attach figures of Sainsburys global sales and purchasing operations contri fur in that locations to a signifi standt rise in the business competence and productivity. However, this report bequeath be examining Sainsburys status in the retail industriousness, explaining the role of interaction within the macro and micro environment, drawing up a detailed militant good of the organisation and the strategies that influence the business pol icies to survive in the competitive market.depth psychology of Financial data rude Profit Margin (GPM)- Due to the intense competition in the supermarket industry margins are generally low. See the following table for comparators which shows relatively scurvy margins for Sainsbury even compared to other retailers CompanyIndustryROAProfit Margin label SpencerRetailer and Financial service4.43%3.91%J SainsburyRetailer and Financial Services5.60%3.61%ThorntonsRetailer of Chocolates etc8.43%6.45%NextRetailer of C attracterhing26.14%13.82%Dixons GroupRetailer of electronic and so onGoods19.78%14.41%Yates GroupRetailer of sustenance9.13%13.34%Safe itineraryRetailer of Food7.24%4.14%MorrisonsRetailer of Food12.93%5.87%TescoRetailer of Food and Household Goods9.99%5.72%Strategic analytic thinking of Sainsbury PLC using Porters 5-Force postureSWOT AnalysisASWOT Analysisis a strategical planning dent used to evaluate theStrengths, Weaknesses, Opportunities,andThreatsof an organizatio n. With the answer of this SWOT epitome we will be able to find out the positives and negatives of Sainsburys.StrengthsSainsburys has had thirteen hearty quarters of growth showing real turnaround in its business. eventide for 2007 it has shown an attach of 7% in turn all over and a huge 450% join on in profit after tax (Annual proclaim 2007).It has an extremely study leadership team.Sainsburys seems to be very well placed on unripened and environmental issues due to its various recent initiatives, like buying fair-trade bananas (economist.com 2008 online). what is more its uphold in closing down gang master has had a positive effect on the public in general. It has a positive consumer brand and its liked by both green activists and consumers.It is unrivaled supermarket chain that has a clear celebrity endorsing products, leading to increased sales. With Jamie Oliver, it has been simple for Sainsburys to see uplifts in sales of specific ingredients that have been featu red in ad campaigns. The supermarket had to order nine tons the equivalent of two classs impart of nutmeg to meet demand when it appeared in one of Jamie Olivers ads.WeaknessThe takeover bid by the Qataris Private equity firm last year female genitals have about implications as people are gravitating towards British companies and the prospect of Sainsburys being governed by a unknown firm can lead to consumers switching loyalties.Unlike Tescos expansion plan (economist.com online 2008), Sainsburys is not perplex in markets other than the UK. This can lead to trouble especially if there is near problem within food retailing in the UK or if there postulate to be a source of purposeless growth.OpportunitiesSainsburys secondary business states a great opportunity for future growth. Its enthronizations in property and a goal of 40 one thousand million profit through its aver seem like a good strategy to pursue.Online sales are a great opportunity as well, since online m argins are spiriteder and investments are not huge.ThreatsThere needs to be continuous heavy investment in environmental and green issues without immediate eudaimonias. The problem lies in maintaining a brace e.g. Bio-fuel is an important machine to curb global emissions and its use affects Sainsburys skid chain directly, so Sainsburys should support it. However, a spurt in bio-fuels has do corn dearer (in interdependent.co.uk online 2008) affecting its prices within the UK and making Sainsburys consumers bear the brunt.Sainsburys operations are subject to a broad spectrum of regulatory requirements particularly in parity to planning, competition and environmental issues, employment, pensions and tax laws and in terms of regulations over the groups products and services.Thisconcludesthat with the help of this SWOT analysis Sainsbury would now know where they stand. This will as well as give up them work on their opportunities, weaknesses and threats and build up on their s trengths giving them a cutting edge.Macro-EnvironmentAt this present phenomenon the nature of the retail industry is changing its image dramatically and the importance to survive with the competitors and remain as a leading company in the market has reached its highest peak. However, there are some issues which may have some impacts on the business. Political factorsAt present the changing trend of globalised business could be a challenge as well as an opportunity for the Sainsburys be lawsuit they would have to compete against new forces from all over the military personnel to maintain best quality of the products and services they offer. guest may get a negative impression because of the investigation spillage on price fixing as Sainsburys is listed in the top intravenous feeding retailers in UK (Rigby 2008).The UK Government is to reduce corporation tax rates from 30% to 28%, which will help Sainsbury, to save large amount of bills (HM Treasury 2008). Economical factorsT he rising food prices because of global food crisis may have impacts on the business of Sainsburys as it will definitely increase their purchasing and production cost (economist.com 2008). And eventually it will increase the boilersuit price of the products in the super marketSupply chain of Sainsburys may get affected with the rising cost of fuel which may lead to an general increase in prices.The credit crunch will cut the purchasing military unit of the consumers as they would have slight money to devolve on luxury products. Therefore, automatically it is going to decrease profit margins for Sainsburys. On the other hand Sainsburys conks financial services company with HBOS (Annual Report 2007) and alike a bank. However, both of are directed affected due to recession.As the competition in the market is really high other hulky competitors like ASDA ,TESCO ,MORRISON ,LIDL , ALDI are cutting down their product prices and giving lot of incentives to customer which may bound Sa insburys to drop their prices to survive in the market. (Annual Report 2008)SOCIAL FACTORSSainsburys may introduce new recipes to cook easy and healthy food because now a days consumers tend to eat fresh food and seem to be more health conscious.According to the health department the obesity rate in UK is increasing (department of health 2008). And because of that agreement the UK government has emphasised on healthy eating (eatwell.gov.uk 2008) which gives Sainsburys to an opportunity to render more healthy foods at a cheaper price to match the on-going trend.TechnologicalIt is predicted that by 2011 the online retail sales in Europe will hit approximately 263 Billion Euro because of the rapid increase of cyberspace shopping in which the shoppers in UK may accounting for more than a third of all revenue.Sainsburys can take the advantage of utilizing internet as an advertising media as 8% of the global advertising is spent on the internet and the percentage is increasing day by day (The Economist, 2007).It will be very cost effective and help the company to globalize very easily.Self checkout machines may increase customer loyalty as they dont have to wait in long queues sometimes for very a few(prenominal) products. It saves their time and increase comfort bandage shopping. It can also be very cost effective as it will require less worker to work and can be in operated 24 minute shops which will boost up the sales figure.RFID (Radio Frequency Identification Device) is a new technology yet to be popular but can play vital role in supply chain management fort the company. It can benefit big companies like Sainsburys to save their semiprecious time as it requires less inventory and offers more efficiency. (Directions magazine 2008)environmental factorsEnvironmental factors are one of the key issues these days. Every company has to ensure that they contribute in reducing carbon footprint and to increase muscularity efficiency (Bream 2008) which instru ment big companies like Sainsburys would have to invest more money to sort out Green issues.With the growing ethical issues such(prenominal) as addressing organic foods and treating animals in a good way may have impacts on the business of Sainsburys because they would have to retain their customers and balance their pricing after maintain all the environmental issues.Legal factorsSainsburys would have to develop its packaging and labelling policies to meet all the implications of LAW on food and drinks. Which will add extra cost to their overall budget.As Sainsburys operate a bank and is involved with financial services they would have to be more concerned about the legal issues and risks involved with their business.Porters 5 Forces agonistical rivalry-The retail market is enormously competitive with a very crowd market. Now, as more and more companies are toilsome to get into non food sectors it further intensifies the competition.Sainsburys has a market share of 14.9% in 2007 , steadily increasing since its restructuring programme that started in 2004 (Annual Report 2007). This is a positive trend but it lags well behind the runaway market leader Tesco, showing that there is considerable distance to cover.Tesco, Asda, and Morrisons are the other three big supermarket manacles in the UK retail sector. All of them have a different competitive advantage over their competitors. Sainsburys reach in the convenience stores makes it have a larger customer reach.Banks and building societies compete with Sainsbury bank but it is not a core business for Sainsburys.Barriers for entry-Barriers to entry are extremely high in the food retail market due to a number of factors. Firstly, formd retail is amongst the most sophisticated sectors within the UK and needs a lot of investment, along with significant brand development, which takes years to establish. Secondly, retail is also at an advanced stage within the UK and most of the western world, which means there is l ittle scope for new entrants to establish themselves.Local association is extremely crucial within the food retail sector, something that is difficult for foreign firms to replicate. This is corroborated by the figurehead of few global supermarkets within UK.Threats of Substitutes-The threat of substitutes in the food retail industry is a low one entirely because consumers view it as a necessity, especially in the developed world and increasingly in the emerging markets.The retail market is always trying to converge and assimilate new innovations with respect to food products or alternative businesses, to make shopping an extremely pleasurable experience. This makes them extremely difficult to substitute.The and major threat of substitute is an internal industry threat whereby one supermarket can lap up the business of other supermarkets.buyer power-Buyer power is high in this industry simply due to the presence of so many competitors selling the same products. It is only diffe rentiated in price and consumer loyalty and increasingly on green credentials. Moreover, the switching be are low for consumers.As the economy goes further towards recession consumers needs are likely to be given more weight, increasing their power considerably.provider power-Supplier power is usually more complicated as it is difficult to categorise it. It is safe to call it a mutually dependent relationship as suppliers are in itself huge companies, like PG, Unilever, Cadbury etc. with huge brand appeal. It can be argued that if supermarkets do not sell their products consumers will shift loyalties, making suppliers very powerful. However, if the products of big companies do not reach supermarkets, their sales volumes will be affected hugely. The relationship strength change depending on the situation of the big branded supplier, for example, when sales of Cadburys dairy farm milk increased through the successful Gorilla ad campaign.Supplier power of smaller suppliers will not be considerable because of their sales volumes on dependence on these supermarkets.Competitive advantageSainsburys has got some competitive advantage which made its business so successful all over UK and established the 3rdfood retail chain in linked Kingdom. The competitive advantages are discussed below16 million customers visiting every weekMore concerned with the environmental issues such as green house effect , reducing fuel emission , providing 15 million reusable bags , 8 million car stickers and fridge magnets to remind and aid people to use environmental friendly resources.Performing social accountability while working with Comic Relief to raise money and help poor neighbourhood.22% market share makes them one the power key player after Tesco in the British retail industry.They have established a brand image and are considered to have the supermarket power which is Locations.Sainsburys market strategy is to attract the middle class consumers with an affordable cost whil e maintaining particularly quality of the food they simultaneously.They are promoting a new separate name Active Kids to help school kids and teachers to overcall child obesity.http//www.bitc.org.uk/resources/case_studies/afe_1343.html)Sainsbury is the first super store to start One Hour Delivery one-armed bandit extraneous of London. In addition if the y fail to do so on time customers will be paid 10 future(a) time they do online shopping.(http//www.sourcewire.com/releases/rel_display.php?relid=19562hiliteSainsburys bank loans ranked 13 out of 16 in the Ciao top list as The Best lend Lendershttp//www.ciao.co.uk/Sainsburys_Bank_Loans__6914648)Developing customer service is a key advantage for Sainsbury. They discovered their highly skilled employees focus on their duties rather than Customers. So thusly , they changed the strategies and focused more to improve customer service to get extra advantage.The adoption of RFID has brought new competitive advantage as only few compan ies has the privilege to use this innovative technology.Making Sainsburys store more ready to hand(predicate) for its customer while keeping in mind about some facts such as geographical aspects, ever changing lifestyles, and Government restrictions. trim cost , giving incentives and introducing constant innovative products is a core advantage over competitors.Sainsbury manufacturers their own products and has their own brands which helps them to produce products in a spate quantity at a cheaper price.The company has a unique core competency which is they promote value by providing good quality products at a competitive price.Vertical integration in between buyers and suppliers has managed to organise and run a healthy supply chain system for the company which may help them to expand their business in future..Limitations inter-related with the gadfly AnalysisIn analyzing the macro-environment, it is important to identify the critical factors that might have affect on the business . A number methods of have been developed so far. PEST analysis happens to be one of the key tools to determine those factors in a various way.Kotler (1998) claims that PEST analysis is a useful strategic tool for understanding market growth or decline, business position, potential and thrill for operations. The utilization of PEST analysis could be considered effective for the corporate benefit and strategic developments of the company. Although everything has its own Pros and Cons , PEST analysis as a tool is not unlikely to them.It can be said that Pest Analysis are sometimes through on simple assumptions which may not even exist in real. The reason behind may be the facts we take into account while doing a PEST for any company. It may not be considered on specific area or may be they less possibility to happen reality. It is also considered that PEST analysis doesnt really emphasise on critical factors and it one of the major lacking(p) of this method is it only covers externa l issues without concerning the internal environment of the company and position of competitors in the industry. Another disadvantage for PEST would be it is not done on a regular basis as the rules and regulations, currency rate , variables , foreign investment and economic figures etc .change quite often. Indeed to make it more realistic and practical it is important to gather information and obtain different perspectives based on individual point of view which is going to increase cost thus, results as a limitation for this vastly used tool.The latest position of the company in the market is quite strong though with the booming recession and business expansion of other competitors may cause some difficulties in future.Sainsburys being one of the largest supermarket company in UK should repair some standards to achieve outstanding performance as a overall company. Moreover, Sainsbury should introduce some new business policies to expand its business outside of UK and explore the new markets like China, India , USA, Australia.ConclusionFrom this investigation it can be seen through the various analyses methods used Marketing Audit, Porters 5 Forces and SWOT, that Sainsburys is an iconic British food brand, well loved by its consumers and importantly profits, have modify tremendously. Although it has shown steady growth it is important for Sainsburys to go the next level by challenging Tesco, a competitor identified in the Porters 5 forces analysis, any by thinking of international expansion or on price. This in conjunction with its increasing property portfolio and alternate businesses should help in go on the strong growth path, as well as tiding over threats (SWOT) in its external environment.