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J Sainsbury

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Jay Jay Merrall-Wyre

on 14 March 2014

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Transcript of J Sainsbury

Strategic Marketing Report
Porter's Five Forces Analysis
1. Threat of Substitution - Low
In the grocery market significantly low for food items and medium for non-food
The eventual substitutes - the convenience stores which Sainsbury's aims to annihilate by opening 50-100 convenience shops every year
The online rises the competition standards
2. Industry rivalry - High
The Big Four account 66.6% of the market
3. Threat of Potential entrants - Moderate
Limited as the established firms have cost advantages unavailable to the new entrants
Rise of online players such as amazon.com for grocery retail can be considered a potential entrant on the market
4.Supplier Power - Moderate
- Cost incurred from switching between suppliers is low. (Tom, 2013) therefore companies such as Sainsbury’s can easily switch.
- To reach 75% of the UK grocery market, suppliers must work with one of the UK’s four biggest supermarkets – ASDA, Morrisons, Sainsbury’s or Tesco. Suppliers have little bargaining power, so the supermarkets effectively dictate the terms of business. (Fair Trade Tool Kit, 2007)
Vertical integration - Farming

Head to Head Competitor Analysis
Sainsbury's seen to be better quality within the 'Big 4'
Horsemeat Scandal
Rise in Aldi and Lidl
Keeping up-to-date with Online Shopping
Supporting Paralympic Games
Moving into Convenience Sector
PESTLE Analysis
Political Factors

J Sainsbury
McKinsey Seven S Matrix
Strategy - Growth Space
Systems - Mobile Scan & Go
Structure - Banking
Skills - Allowing staff to gain qualifications
Style - Celebrity Endorsements
Staff - Record Bonuses
Shared Values - Highest Quality Food

Value Chain
Primary Activities
SWOT Analysis
“Market segmentation concerns the subdivision of markets. It is overt recognition that consumers are not homogenous, and several demand schedules may operate in the same market” (Oliver, 1990)
Organisation and industry overview
Strategic Position Analysis
Strategic Option A
Strategic Position and Action Evaluation Matrix
Strategic Option C
Option A – Market penetration strategy designed to increase the conversion rate of customers signing up for Sainsbury’s Energy to 20 per cent within two years
Net Present Value Analysis
Option A – A Continued market penetration strategy of the convenience sector. We propose continued growth of 20% within the next two years, with a relative disregard for pricing wars
Chosen Strategic Option Justification
Maintenance of the clothing strategy redesign of the brand "Tu" in terms of product and market positioning enabling effective market growth.
Strategic Option B
Competitive differentiation advantage Matrix
Porter's Five Forces Analysis
5.Buyer’s bargaining power - High
The technology facilitates their switching between brands always focusing on the low prices
Buyers have the option of a variety of different products when it comes to purchasing goods.
The price comparison campaigns have an influence on the degree of buyer’s bargaining power.
The degree of government intervention
Global factors as the political stability
Consumer high debts
Changes in corporation tax
Increase of minimum wage
Economical Factors
The recession influenced the consumer habits change
The continuous expansion within the online market and convenience sector improve the market stability
Fuel prices
Social Factors
Strategic Characterisation matrix
Consumer lifestyle reflection
UK's aging population
The availability hours have adapted to the people's lack of time
PESTLE Analysis
Technological factors
The growth of the economy is closely linked with the technology development
Online shopping has been succesfully implemented
Self checkout machines contributing to the people's lack of time
The use of radio frequency identification devices helps the managing of the company's logistics
Legal Factors
Operating withing the local, national and global legal boundaries
The rigorous laws on food and drinks are affecting Sainsbury's regarding labeling and packaging
Environmental Factors
The global warming affecting the agriculture and consequently the company's suppliers.
The sustainable approach of the company
-Sainsbury’s consumers:

• Profile - geographical, demographical and the socio-economic factors that differentiate with consumer brand preference.
• Psychological – consumer’s lifestyle, personality, attitudes or perceptions that could dictate why a consumers chooses to shop at Sainsbury’s
• Behavioral – considering purchasing behavior, technology adotion, ethical predispositions regarding brand.

- In relation to the behavioral and psychological aspects, Sainsbury’s adapted to the complexity of each segment and categorized its customers into three different groups:

Quality orientated which includes categories such as time poor/cash rich; health conscious, foodies and organics
Price orientated customers divided into traditional, lads & lasses and economy.
Family orientated, segmented into new family, typical family and less affluent family

Option A – A Continued market penetration strategy of the convenience sector. We propose continued growth of 20% within the next two years, with a relative disregard for pricing wars
Option B – Continue market penetration within the clothing/merchandise sector of operations aiming for non-food competitive advantage with a retail revenue target of £1.2 billion within the next year.
Option C – An innovative market penetration strategy designed to utilise the company’s online presence achieving online orders of 250,000 per week within a one year period.
Online Shopping
20x20 Sustainability Plan
Nectar Cards

3% growth based on market average
7% initial growth due to progressive developments in convenience sector
Net Present Value analysis
Option B – Continue market penetration within the clothing/merchandise sector of operations aiming for non-food competitive advantage with a retail revenue target of £1.2 billion within the next year.
4% initial growth due to market penetration necessary.
Net Present Value Analysis
Option C – An innovative market penetration strategy designed to utilise the company’s online presence achieving online orders of 250,000 per week within a one year period.
10% growth achieved by 2016 after successive market penetration
Strategy Limitations
Option B – Continue market penetration specifically within the clothing sector of operations aiming for non-food competitive advantage with a retail revenue target of £1.2 billion within the next year.
The "Zara" inspired design template combined with the celebrity sponsorship endorsement of the brand enables a shift in terms of target market promoting a successful differentiation advantage.
Proposed Strategy
(J Sainsbury's- Sales (including VAT) and space, 2012), (Rao, 2014), (Kantar, 2012), (Winning, 2013), (Ruddick, 2013), (Somerville, 2014), (Thesing, 2014), (Wood, 2012), (Ruddick, 2014), (Thompson, 2012), (Askew, 2013), (Walker, 2013).
(Doyle, 2008), (Mercer, Supermarkets: More Than Just Food Retailing, 2013)
(Mercer, Online Grocery Retailing, 2013)

A successful integration of James Brown's (head of clothing) motto regarding the brand "not supermarket fashion", can enable a unified, consistent message alleviating any uncertainty in terms of the "Tu" re-launch.
With previous success seen through supermarket brands such as "George" and "F&F carrying weaker brand connotations in terms of quality, targeting price fixated market, Sainsbury's could revitalise this sector with a multi-channel "fastfashion" approach
Net Debts
Justin King Departure
British Branding with Foreign Ownership
Opening Stores in China
Alternative Business
Decrease in Labour
Cheaper Alternatives
Price Increase
Possible Increase in Minimum Age

(McKinsey 7S Model…2011

Inbound Logistics - 4 Forms of Transport
Outbound Logistics - Delivery Methods
Secondary Activities
Human Resource Management - All Staff Equal
Technology Development - Self-Service Tills
Option A – Market development strategy into the banking sector aiming to reach the 6th consecutive year of profit growth
Option B: Increase market penetration for fresh food focusing on fresh fish, devoting supermarket space in 100 stores to have a fresh fish counter in one year.
Option C: Market penetration strategy designed to grow online orders by 30% per annum.
Option B – Fully enter the pharmacy market through diversification in order to extend the in-store pharmacies within at least half of the existing stores
Option C: Through market development, open 5 stores in a high street devoted only to non-grocery products in a year time period
(Butler, 2012).
Multi-platform communications campaign based on brand awareness and reposition into the"Fastfashion" market transition.
Female specific campaign using brand face "Gok Wan" demonstrating the versatility of the clothing range using "mix and match" with other brands, possibly comparing similar "branded" products to demonstrate the design and quality attributes worthy of "high street" reputation.
The proposed strategy contradicts James Brown's perceived persistence to take the brand online.
(Neilan, 2013)
Highly saturated market in terms of "Fastfashion" retailers with market success stories such as "Zara", "H&M" and "Asos".
The design template acting as the company's initial differentiation advantage within the supermarket clothing sector could be easily imitated by close competitors placing a reliance on perceived augmented product benefits.
Reliance on time based completion of both in-store and digital redesign
Net Present Value
Market penetration strategy designed to grow online orders by 30% per annum
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Doyle 2008
(Doyle 2008)
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