Table of Contents
- Introduction
- External Audit for Sainsbury’s
- SWOT Analysis of Salisbury’s
- Fundamentals Areas of Marketing Objectives
- Marketing Strategies
- Marketing Mix
- Reference
Introduction
Sainsbury’s is a supermarket chain in the UK. It focuses mainly on grocery sales. The supermarket was founded in central London in the year 1869. Behind Tesco and Asda, it is the third-largest supermarket chain in the UK. It is reported that after it acquired Netto, Asda outdid Sainsbury’s in large. The UK recently registered a change in grocery consumers’ shopping habits. Most customers now prefer shopping online, and discount chains as opposed to supermarkets. For this reason, this paper will 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
Research conducted by the City analysts has predicted that Sainsbury’s is likely to decline its grocery sales by 2.5% for three months. This is with the exclusion of fuel. It will be a massive 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 UK changed their shopping habits. This was also due to the emergence of Aldi and Lidl, which are discount chains. It’s also noted 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, an analyst at Barclays, has 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 also indicated that the brand of Aldi is more worth than that of Tesco. Tesco has reported a similar decline as Salisbury’s, which means that the brand of Aldi is also more worthy than that of Salisbury. It is predicted that in the next five years, the sales for the supermarkets will 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 mostly attributed to the switch to new formats of shopping for groceries by consumers.
According to 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 Salisbury’s chain of supermarkets, this has still not helped the supermarket to register an increase in sales. The extensive network that Salisbury has also not made 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 still want to invest in ventures that will give them good returns and not profits. This percentage decrease in the share market of Salisbury will 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 market share of the big four supermarkets in the UK has fallen to 34.7% from 40.4%. This is despite the predicted rise in the sale of groceries by 13% between April 2015 and April 2020.
However, the discount chains, such as Aldi and Lidl, 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 for these discount chains. Online shopping is predicted to increase its market share from 5% to 8.6%. This is due to the fast-growing awareness of 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 online shopping are raising to Salisbury’s. Deflation of food prices and the changing consumer habits are equal threats to the profitability of Salisbury’s. A significant decline in 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 team offers excellent service to the customers through their skills and expertise. This has seen Salisbury’s being a leader in the increase in grocery sales compared to the other retailers. This excellent service has made Salisbury remain popular among its various customers. Customer loyalty has also been gained as Salisbury sells fresh, healthy and nutritious groceries to its customers. Salisbury does not compromise on the quality of the products that its deliveries. It offers the right quality products while not compromising at reasonable prices. It has been noted that the customers look for real value in products, which is why Salisbury does not compromise on quality. Salisbury equally does not compromise on its benefits despite the falling sales that it is experiencing. They have continued to increase their donations to sport relief. Salisbury has developed closer links to the farmers. It has been able to deliver the groceries from the field to the stores within 48 hours. This attracts more customers who desire fresh groceries. With these numerous strengths, it is hard to establish the weaknesses facing Salisbury’s.
Nonetheless, the fact that it is considering focusing on other businesses is clothing can be seen as a weakness. This is because it is likely to divert from its primary objective of selling groceries. A conflict of interest can also be developed in management.
The opportunities that Salisbury 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 new traditional British varieties of groceries that will gain consumers’ appreciation. Salisbury is faced with two significant threats. First, it is the increasing growth of discount chains and online shopping that accord its competition for its customers, as discussed above. The other danger is the market survey conducted by Kantar. This survey has underestimated the figures, as Salisbury’s argues. Salisbury’s is likely to lose most of the investors that it has if the numbers are understated.
Fundamentals Areas of Marketing Objectives
From the SWOT analysis above, this could 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 game will enable a firm to estimate the profits that it is likely to make with the existing internal as well as external competition. The firm’s market share will determine the number of investors that the firm is expected to get. Lastly, 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. The second is to increase its market share. The 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 take a pricing strategy. This is because a pricing strategy will 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.