Strategic And Marketing Options For Sainsbury’s: Internal Consultant’s Report

Background Information on Sainsbury’s

The business environment is highly competitive and any business operating in this dynamic environment needs to ensure that it is able to successfully form strategies which will go a long way in assisting the firm to achieve its strategic goals. If a business is not able to perform well, then it needs to revise its strategies. Marketing forms one of the key aspects of any business enterprise and the company needs to ensure that it has a designated marketing plan in place which will assist the firm to achieve its long term goals and objectives (About.sainsburys.co.uk. 2018). For this reason, assessing the internal capabilities of the organization is important as it helps in understanding of the different resource capabilities and the capacity of the business which can then go a long way in assisting the organization to form a plan which will match its needs and requirements.

Sainsbury`s is one the largest supermarket chains in the United Kingdom  which owns more than 16.9% shares in the sector in UK. The company was found in 1869 by James Sainsbury in London. The company faced intense competition from Tesco when it overtook the company to become the largest supermarket in the United Kingdom (Simon, Fischbach and Schoder 2014). The company came into the third position when Asda took the second one but it regained its second position in the year 2014 (Darmawan, Putra and Wiguna 2014). The company has its headquarters in London and the organization plans to merge the operations with Asda so as to ensure that it attains success in future.

In the assessment 1, the external environment of the company was assessed and it was understood that there exists a large variety of factors which have an impact on the business of the company. Hence, it is the primary purpose of the given report to analyse whether the internal capabilities of the company are sufficient enough to deal with the external demands and how can a business make use of sufficient resources to gain a competitive edge. Following a structured format, the report will highlight the internal analysis of Sainsbury’s and outline the recommendations in the form of approaches which the company can follow successfully in order to gain success in the long run.

Sainsbury`s was a leading supermarket store back in the 1900s, however due to its inability to match up with the competition from giants like Tesco and the rise of several small retailers, it was unable to sustain this position. The competitive positioning of any company is very crucial because the competitor pays a huge role in the market which has an influence on the marketing programs and strategies of different companies (Rothaermel 2015). The company made a commendable come back after the 2007 recession as it decided to revamp its strategy and repositioned itself as a supermarket for selling good quality good but at affordable and fair prices. This way the company was able to change the perception of the customers who started getting attracted to it again (Morschett, Schramm-Klein and Zentes 2015). Following a low price and low quality strategy, the company functioned differently from the competitors who indulged themselves in constant price wars and various price drive tactics. However, it can be stated that the primary breakthrough of the company came in the year 2011, where the horse meat scandal strengthened the position as it was declared as the only market present in the United Kingdom, whose meat products were declared free from the meat mixing and this compelled the customers to purchase their products from Sainsbury. This helped them to regain a second position with 17.5% market share. At present the only competition faced by the company in the United Kingdom is Tesco brand.

Internal Analysis of Sainsbury’s Using VRIO Framework

In the previous assessment, the external environment analysis was primarily focused on as the company needs to be aware of the different factors which exist in its external environment to form a viable strategy, however, it needs to be understood that the internal environment analysis has a major role to play as well because it assists in helping the company to understand its own capabilities and realise where the company is lagging and in which aspects does the company need to improve (Wheelen et al. 2017). The given section will be using the VRIO Analysis tool to understand the Resource and Capability Competence of the Sainsbury Company.

The VRIO Analysis is an analysis framework which is used to understand the strategic scheme of the organization. Before any organization tends to form its marketing or strategic plan, it needs to understand the internal strength. Hence, this will assist in processing relevant results which will then assist in achieving competitive advantage (Zott and Amit 2013). The VRIO is an initialism for the four different questions and frameworks which are analysed about a resource or a capability in order to determine the competitive potential of the firm. It comprises of four domains relating to the question of Value, Rarity, Imitability and the Organization.

The Question of Value is primarily concerned with the fact whether the firm comprises of the ability to exploit an opportunity or to neutralise a threat which is looming in the external environment of the firm with its existing tools.

The Question of Rarity tends to look out for the capability possessed by the firm and their uniqueness in nature (Michael, Storey and Thomas 2017). The question of imitability concerns over the fact whether the resources as held by the firm possess the ability to be copied or developed. Lastly, the question of Organization explores whether the firm is ready and prepared to make use of the resource or capture value in the long run of the organization.

Resource/ Capability/ Competence	Valuable	Rare	Imitability	Organized to capture	Competitive disadvantage, parity or superiority
Tangible- Physical Stores	Yes	No	Easy to imitate	Yes	Advantage
Inventory	Yes	No	Easy to imitate	Neutral	Parity
Store Brand Products	Yes	Yes	A bit difficult to imitate	Yes	Advantage
Transportation Fleet	Yes	Yes	Easy to imitate	Neutral	Parity
Intangible- Brand name	Yes	Yes	Hard to imitate	Yes	Superiority
Low cost operations	Yes	Yes	Hard to imitate	Yes	Superiority
Customer Experience	Yes	No	A bit difficult to imitate	Yes	Advantage
Staff Usage	Yes	Yes	Hard to imitate	Yes	Advantage
Capabilities- Low costs	Yes	Yes	Hard to imitate	Yes	Advantage
Environmental Policy	Yes	No	A bit difficult to imitate	Yes	Advantage
Inventory Management	Yes	Yes	Hard to imitate	Yes	Advantage
The firm`s distinctive competence	The company, Sainsbury`s is a leader in providing low cost but quality products to the consumers. The company was a leading retailer back in 1900s but faced intention competition earlier. Its experience and ethical business is what keeps the company in a good position in the perception of the different customers (Meyer, Neck and Meeks 2017). The stores are run effectively and it is difficult to imitate their unique stocking and models. Their environmental policies are unique and hence, the brand image remains strong.

Hence, from the given analysis, it can be stated that the primary advantages of the company are given as follows:

• Unique Ethicality- After the horseshoe scandal which took place, it was proven that the company has unique ethicality which helps the firm to maintain its image and brand name in the eyes of the customers (Morschett, Schramm-Klein and Zentes 2015).
• Low cost high quality- The low cost high quality aspect also goes a long way in helping the budgeted consumers to shop efficiently from the given stores.

The marketing mix can be described as a useful tool and strategy which is helpful in understanding the different offers as made by the organization in front of the different consumers. The marketing mix of a company comprises of 7Ps which are essentially a crucial part of the marketing strategy of a company. The Ps of the company are as follows:

Product

Price

Place

Promotion

Physical Evidence

People

Process (Hubbard, Rice and Galvin 2014).

Sainsbury is highly associated with lifestyle and retail industry dealing in the retail segment. The company is a public limited company of the British origin and was found in 1869. The company is a subsidiary of the J Sainsbury Plc and since the month of February in 2018, the largest shareholder of the company is Qatar Investment Authority which holds around 22% of the shares (Williamson et al. 2013). The main rivals of the company are Tesco, Morrison’s and Asda. The description of the products have been given as follows:

Marketing Recommendations for Sainsbury’s

The product can be described as the tangible good or services as given to the customers in exchange of money. The company Sainsbury`s has a chain of supermarkets with more than 30000 product lines and it comprises of more than 20% owned labelled goods (Gereffi and Fernandez-Stark 2016). The different products as available with the company are as follows:

Fruits and vegetables- fresh fruits, salads and vegetables, frozen options, prepared salads and fruits, fresh ingredients, herbs, carb alternatives and organic options.

Fish and meat- They offer different varieties of food like cook items, seafood and fish, turkey, pork, cooked meal along with ham and chicken.

Chilled-It provides chilled kosher, meat free products, soups, olives and antipasti, salads and dips, fresh sauces, pizza, garlic bread and ready meals (Wright, Paroutis and Blettner 2013).

Dairy- It provides dairy products as well like cheese, eggs, milks, desserts, custard and dough.

Bakery- The bakery session provides muffins, birthday cakes, tarts, pitas, wraps, bread and bagels.

Beer, wine and spirits (Steinbach et al. 2017).

Health and Beauty- Relating to hair care, make up and body care

Baby- Like meals, toys, accessories and nappies.

Household- Like cleaning products, laundry and household essentials.

The place aspect of the Marketing mix also forms an essential part as it states the location of operations. The company started its operations in London during the year 1922 and became the largest grocery retailer in the Kingdom (Hill, Jones and Schilling 2014). The company has 608 supermarkets and 806 convenience shops as of 2018 and it has a clear dominance in areas like Wolverhampton, Enfield, Dartford and Torquay.

The shops which are Supermarkets tend to have various self-service kiosks, checkouts and several counters (Lasserre 2017). The company has an online portal as well for shopping which makes shopping easier.

The price of the products also tend to form a crucial aspect of the goods being sold and have a crucial involvement in the marketing strategy of the firm. At the end of 2017, Sainsbury`s had stated its revenues to be 26.224 billion and this had only been possible because it targeted families, households both online as well as offline.

The company uses a different pricing strategy for different products and hence this ensures that the company is able to retent the customers and maintain the different services and quality. The company has used a price discrimination policy with respect to the positioning of the product (Frynas and Mellahi 2015).  Very often the company also tends to employ a competitive pricing policy which goes a long way in helping the brand to fight against competition. Local sourcing helps the company to gain the market.

The Promotion aspect of the Marketing Mix tends to talk about the promotional mix as adopted by the organization in order to achieve long term success. The company has used a mix of strategies in this aspect and has applied ATL strategies in order to market the products. Various advertisement campaigns in sources like the newspapers, radios, television and billboards have been built by the company in order to build a brand name. Sales promotion along with promotional strategies are used to promote marketing.

Strategic Recommendations for Sainsbury’s

The company makes use of various reward programs as well as card clubs in order to see to it that the customers who have been acquired new into the organization remain with the store for a long period of time (Kasemsap 2014).

The company has more than 500 super market stores and 800 convenience stores around the United Kingdom. This helps the company to cover a large number of towns and cities in order to see to it that new market is kept uncaptured (Wood, Wrigley and Coe 2016). In addition to this, the company has an online presence as well which helps the customers to order online.

Sainsbury’s has an employee workforce which comprises of more than 25000 workers. These workers work together for the welfare of the organization and the company provides adequate training to these employees in order to make them competent with the competitors and to be able to provide excellence services to the set of customers.

The systems and processes as used by the organization comprise the process aspect. Sainsbury`s is continuously committed towards making the processes sustainable to incorporate company goals and objectives.

Conclusion:

Therefore, from the given analysis it can be stated that the Sainsbury`s supermarket has been performing considerably well in the last few years in order to bring its older positing back into existence. The company has taken every step and initiative in order to ensure that it is able to compete successfully with the giant supermarket Tesco (Johnson 2016). The report analysed the current strategic positioning o the company and it could be stated that after following the ethical frameworks and coming out clean in the horse meat scandal, the scenario worked as  a turning point for the company and helped It to regain its second position (Harrison and John 2013). The second half of the report, discussed about the internal capabilities using VRIO analysis which reflected that the main strength of the company lies in providing low cost but quality products to the different consumers which made it unique (Trigeorgis and Reuer 2017). The Marketing mix if the company has also been discussed which presented a stronger image about the company.

The next section of the report will be discussing certain recommendations as given for the marketing aspect of the company and they will be evaluated accordingly.

Improvement and innovation can be successfully described as the key to success in the long run. Hence, for this it is very crucial for the organization to continuously improve its strategies and to be able to ensure that the firm adopts new marketing strategies in order to be able to improve the operations of the internal frameworks. Hence, in the given section, certain recommendations will be provided for the company the adoption of which can assist in improving the strategic positioning. In the next section, these recommendations shall be evaluated using the SAF framework.  

After facing intense competition from retail giants like the Tesco organization and from small competitors like ASDA, the company focused its strategies and operations into the low cost and optimum quality products in order to provide the different customers with cheap goods to meet their budgetary requirements. This strategy went a long way in helping the company to regain the second spot following the economic recession and the instability of the financial stability of the people (Hahn 2013). However, the trends have been changing considerably, and people these days prefer to have access to higher quality products and goods at even higher prices. This is because the different customers have become highly health conscious which enables them to use products which are premium in nature. Hence, with respect to this, Sainsbury`s can make use of its capabilities and resources to provide a range of premium stores to the customers which will be quite different from its usual stores. These stores will be storing just premium and organic brands which will concentrate on providing the best to the customers.

Conclusion

The second recommendation which can be made to the Sainsbury`s retail store is that it needs to retain the current pricing strategy which is being used by it. The company currently operates on a competitive pricing strategy whereby the company tends to set prices in accordance with the competitors which helps it to retain the position (Eden and Ackermann 2013). Furthermore, it also sets different pricing strategies for the different products, which serves it well. Hence, with respect to the pricing of the products and the techniques as followed by the organization, it can be recommended that the current strategy is applicable and should be kept stable.

The Sainsbury`s company has a large number of opportunities available to it which will help the company to increase the market share and the consumer base. An expansion strategy can be recommended to the company whereby the company can reach out to different countries other than its current territory which is based in the United Kingdom (Kalkan and Bozkurt 2013). The emerging countries like China, Russia, India, Brazil and Turkey possess extensive potential and can provide great opportunity to Sainsbury’s for growth in the supermarket industry. Expanding in these countries will provide the company with enormous profits. The different strategies which can be popularly used by the company may vary in nature, however, the company can make extensive use of a joint venture strategy (Team 2013). This will provide assistance along with expertise to meet with the intense competition which exists in these sectors.

Another recommendation which can be made to the company relates to the innovation in the store design. With the advent of technology, the dynamics of the business have also changed considerably. This means that business is now all about providing exceptional services to the customers who need to be delighted by the exceptional offerings being made by the organizations. Hence, an improvement in the store design and the use of technology to align the different products strategically shall help Sainsbury`s (Grant 2016). The company needs to make shopping a convenient option for the different consumers and this is only possible in case the company is able to successfully improve the store design. The use of trail lights, unique displays and automated machines in the stores shall assist the company in providing a competitive edge which shall then serve as a unique selling point for Sainsbury.

Virtual reality can be described as the future of all business enterprises. The concept has become extremely popular in the retail and shopping sector which assists the customers to experience the aspects of the stores using virtual reality stores and they can get into a totally different dimension using this. Hence, in order to stay ahead of its customers, the organization may choose to invest in two or three virtual reality stores in the United Kingdom so that the customers can experience a new concept which will help the company in remaining attracted towards the chosen organization (Meyer, Neck  and Meeks 2017). Furthermore, this will also help the organization in increasing the market share in the long run.

References

Although there are various strategic options available to the organization, the company needs to ensure that it avails to the ones which best suits their requirements. This is because, the company cannot adopt all the opportunities as available to them due to resource and financial limitations. Hence, the different strategies which will be selected need to be chosen based on a criteria. For this purpose, the Johnson, Scholes and Whittington criteria and framework should be used which suggests that the Suitability, Feasibility and Accessibility of the strategy needs to be assessed (Karadag 2015). The framework is deemed to be a considerable model in assessing the varied options for any company.

The suitability aspects tends to look out for suitability of the option in achieving the long term objective of the company. An option should be suiting the vision and objectives of the company and this is largely based on the strengths of the organization.

The accessibility aspect measures the returns, risks and stakeholders reactions of a particular strategy. It gives an idea about whether the chosen strategy for implementation will be good for the firm or not.

Lastly the feasibility aspect will be looking out for the resources and capabilities of the firm to implement the strategy.

The SAF Mode for the different strategic recommendations as made have been given as follows:

Recommended Strategy	Suitability	Acceptability	Feasibility
An entrance into the premium products line	The primary mission of the company is to satisfy the different consumers present and thus, this strategy is in line with it.	The segment is new and hence, the different customers may be interested which makes the recommended strategy acceptable to the stakeholders.	The organization has a good brand name and resources to begin this new extension (Grant 2016).
Maintain current pricing strategy	The current pricing strategy is already being maintained which then fulfils the primary objective of the company.	Accepted by the stakeholders (Ginter, Duncan and Swayne 2018)	The company has the required expertise to function in the given domain.
Expansion into emerging markets	As the mission of the company lies in expanding its horizons and increasing a greater market share, the company can go with this option.	The option has a large variety of risks involved like Political, social, technological and legal, the benefits associated in case of success are numerous and hence might be accepted by the stakeholders (Vogel and Güttel 2013).	The company is the second largest retail store in the United Kingdom and has ample resource as well as expertise to expand the operations and make the strategy successful.
Innovations in store design	The given strategic option does not fulfil the need of the organization (Gereffi and Fernandez-Stark 2016).	The given strategic option although risky can prove to be a good option.	Although the company has adequate resources, it lacks the right expertise and this option dos not look feasible.
Entrance into virtual reality	This option is not in alignment with the objective of the firm.	The given strategic option may face restriction and resistant from the stakeholders as the concept needs massive investment.	Although the company has adequate resources, it lacks the right expertise and this option dos not look feasible.

Hence, it can be stated that there are two strategic options which may be adopted which are the Premium products line extension and the expansion into the new markets. The company has the presence of adequate success actors required for the two strategies as available and thus, they can make considerable use of their capabilities and resources to achieve success. The use of monitoring tools and indicators can also be made like increased market share, increased conversion rate, increased sales and others to analyse the success.

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