Strategic Marketing for Sainsbury: Market Entry Options and Market Segmentation

This report explores the strategic marketing concepts used by Sainsbury, the second largest supermarket chain in the UK, for market entry and market segmentation. It discusses the market entry options, such as strategic alliances, mergers, and foreign direct investment, and evaluates the target market of Sainsbury. The report also covers the importance of market segmentation and how it helps in personalizing marketing strategies. The characteristics of market segmentation, such as age, lifestyles, and gender, are discussed as well.

STRATEGIC MARKETING

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................3
INTRODUCTION...........................................................................................................................4
PESTLE...........................................................................................................................................4
MARKET ENTRY OPTIONS:.......................................................................................................7
Concepts of market segmentation and targeting, critical evaluations of target market of
Sainsbury .....................................................................................................................................8
Porter's generic strategy can use by company to gain competitive advantage..........................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

EXECUTIVE SUMMARY
Strategic marketing related to the term used by the business in respect of differentiating
their business with the other competitors business through examining its internal and external
working environment. This report based upon the Sainsbury company which is one of the
second largest chain of supermarket in UK and carrying the business at larger scale. They are
planning to expand the business in India in respect of bringing new and creative ideas to retain
the customer needs and preferences for longer way. It is also mentioned in this report about the
view point of external analysis of India in context of retail sector. This can be conducted through
undertaking the PESTLE analysis and also its opportunities and threats are examined through
various perspective. In this the mode which is relating to merger and acquisition are undertaken
to expand the business in India. It also carries various usefulness and positive aspect in selecting
this market entry mode. Sainsbury used cost leadership strategy that help them to gain
competitive advantages.

INTRODUCTION
Strategic marketing refers to the terms which is used by the business in respect of
differentiating their business with the other competitors business. The main reason of choosing
their strategies is to examine the strength and weakness of the business or examining the external
factors which results in affecting the working of the business to promote the business at larger
level. By this aspect, it results in providing the valuable products to the customers. Present report
is based upon the Sainsbury company which is founded in 1869 by John James Sainsbury. In
UK, they carried to be the second largest chain of supermarket dealing in wider range of
products or services.
In this report, the matters will cover the aspects relating to PESTLE as Sainsbury is
planning to expand the business in India. It also includes the modes of market entry regarding
expanding the business through different modes. It further covers the market segment and porter
generic strategy to examine the competitors in the market regarding promoting the same products
or services.
PESTLE
It refers to the macro factors which is examined in respect of identifying the working of
the external environment and its impact upon business. It includes the following aspects such as:
1) Political: The external factor which affecting the working of the country in India is relating to
the government polices or changes in taxes rate. As government of India is imposing the strict
government norms regarding imposing taxes in the import and export of the products. Through
this manner, the impact raised regarding changes in taxation rate of importing the products in
India (PESTLE Analysis of The Retail Industry, 2020). In case of Sainsbury, they are planning to
expand the business in India through dealing in importing and exporting the products. Through
choosing the entry mode, it helps through dealing with the joint venture business.
Thus, in such case the opportunities which they gained is relating to the facing less
competitors in market. As if the taxation policies is higher, it restricts the company to enter into
the India in respect of expanding the business. Thus, Sainsbury adapts this opportunity in respect
of working under the set norms designed by the government (Zhao and Dou, 2019). But in case
of threat, the issues is faced regarding imposing strict norms of government on particular
products which they restrict to not import in India. The factors which they can deal is through
undertaking the merging procedure in respect of strategic alliances, in which they merge the

business with other business for particular time period. As the reason behind that India want to
generate their own economy, thus they imposed restriction in respect of importing such products
in their own country.
2) Economic Factor: In this factor, the impact arise through changes in price of the products
which results in facing impact in sustaining the business in market for longer way. In India, the
impact raised regarding fluctuation in prices of the products which is dealing by the supermarket.
In case of Sainsbury, the impact is raised regarding facing inflation rate in respect of preferring
the particular products or services (Kaur and Alexander, 2017). The opportunities which is faced
through these aspects is that if the prices of the products is less, lot of consumer preferring their
products (Mehra, 2017). Thus, resulting in earning higher growth in the business and sustaining
their position in market for longer way. The threat which is raised in this business is that if the
prices of the products is higher, it restricts the company to retain the customer interest. As the
preferences of the customer in India is to select such products which is of low pricing and better
quality products.
3) Social: The social impact upon business results in causing the deep impact relating to
profitability and sustainability in market. As changes in customer taste and preferences and also
cultural differences resulting in causing deep impact upon the business. In India, the type of food
which is not preferred by the person is relating to the high sugar containing products. In case of
Sainsbury, the impact is raised regarding variation in culture of the people (Sinha and et.al.,
2019). As the people of India mainly prefer such products which is sold by their own community
and thus this is one of the major threat which is faced by Sainsbury regarding attracting the
customer needs towards preferring their company products. Sainsbury also had to undertake this
step in respect of selling less sugar and calories related products.
The opportunities which they gained is relating to fulfilling the customer taste and
preferences which they demanded regarding choosing the particular products. As customer
mainly prefer the products which is hygienic and prepared from organic ingredients (Greer,
2018). Thus, in such case Sainsbury carries the opportunities to attract the customer needs
through providing the accurate products or services.
4) Technological: In India, the major impact on technology is raised through the supply chain or
customer services or sales strategy which is used by the company during promoting their
business through online platform. The impact is raised in respect of promoting the business

through digital technology by using the mode of advertising or any social media platform. Indian
people are attracted though creative and innovative advertisement concept and thus its attracts
the foreign investors to adapt such technology to retain the customer interest in longer way. In
case of Sainsbury, they can adapt the use of technology through reaching to large number of
customer and promoting their products or services (Ortega and Okechukwu, 2017). By these
aspects, they can easily attract new customer by offering discount or offer on particular products
or additional discount on purchasing the products from company official sites.
The opportunities which they gained through this perspective is that they can track new
customer towards the business by proving the accurate products or timely delivery of services.
The threat which is raised through these aspects is that if they promote their business online, they
are sharing the company links and marketing tactics to their competitors (Todorov and Akbar,
2018). Through this manner, they face tough competition in market and also the competitors are
using the same marketing tactics to attract the customer interest towards the business.
5) Legal: It is necessary in the business, that every company works under the legal norms and
instruction which is guided to them by the government of India. The factors are relating to the
labour laws or health and safety laws and thus, this is mainly imposed in respect of securing the
right of the employees at work place (Mezzanatto-McNair, 2019). In case of Sainsbury, it is
necessary for them to work under the set laws and thus if they not adapt such laws, it results in
facing lack of employment at work place. The legal issues which they are facing is relating to the
safety of products or products liability. The challenges which occurs through these aspects is
relating to paying compensation if default raised in respect of not providing the accurate
products.
The opportunities which is gained to Sainsbury is that, they can attract the people towards
the business through working under the set norms and also protecting the employees interest, if
they are working in hazardous places (Ivy, 2019). The threats are raised regarding chances of
misusing the policies by employees. As they take the advantages of such polices by harming
themselves and raising compensation from the company.
6) Environmental: In this, the impact mainly raised through the packaging or renewable
resources or changes in weather condition. As the climatic condition of India is pleasant but in
respect of storing the goods, it requires high equipment. Thus, in case of Sainsbury, The issues
raised regarding changes in weather condition on which the products are not properly delivered

within the set time limit. The changes also occurs in respect of preferring the eco friendly
products.
Thus, opportunity is gained through dealing in products which is eco friendly
(Nendukanni, 2017). The threat is raised in respect of not retaining the customer for longer time,
if goods are not delivered within the set time period. Sainsbury can overcome this threat in
respect of paying compensation to the person if the goods are not delivered within the set time
period.
MARKET ENTRY OPTIONS:
In respect of examining the three modes which is used by business in respect of entering
into market is relating to:
Strategic alliances: In this business, the agreement is made between the parties regarding
forming the business to set the common goal which they had to achieved within the particular
time period (Lindsay, Rod and Ashill, 2017). Once the common goal is accomplished, the
business is dismissed. In this, the owner of the business work as individual and carry the
equivalent risk as compared to the other company owner. The strength of choosing this business
is relating to expanding and building the customer bases in faster way. It also helps in getting
profits in respect of cooperation with the foreign company to enhances their business growth.
The limitation arises in respect of carrying more costly procedure. The right of using the power
is limited.
Mergers: It refers to the consolidation of two or more companies to form the single company. In
this the company merged their business with the other company in respect of taking over its
assets and liabilities. In this, the company which is merged with the another company or who is
powerful to take over the assets of the company is liable to be the owner who manages the
merged company (Mergers and Acquisitions, 2020). The reason behind choosing this mode is
that, it diversifies the risk into various segment and thus track the new market segment through
promoting the innovative marketing strategies.
Foreign direct investment: In this, the business mainly invests into the another company which
is located outside the country in respect of acquiring the business assets. In respect of choosing
the horizontal FDI, it results in carrying the same activities which is carried in their home
country. The reason of choosing this business is having direct controlling and managing the
business of the foreign company (Munjal, 2019). This mode is useful in case of globalization as

if company is planning to expand the business into different countries or investing their money in
different country. Thus, through these aspects they are planning to choose this mode in respect of
taking control over the companies though investing money and taking it's majorly shares.
In the case of Sainsbury, they mainly choose the merger mode to enter in India, as
through this manner, they already invest in pre established business which resulting in investing
less in promoting the business in market. The another positive point which they gained through
the mode of merger is that customer is already retained with that business (Blackburne and
Buckley, 2019). Thus, Sainsbury had to apply less tactics in respect of retaining the customer
interest towards the business for longer way. The government support is also committed with the
Sainsbury company if they are helping the business to deal with their products or also selling
their products in the Sainsbury retail stores. Thus, from above perspective, it is stated that merger
is one of the best mode which is suitable for Sainsbury in respect of merging their business with
the existing market (Puthusserry, Khan and Rodgers, 2018). Through this manner, they gain
more advantages in market and sustain their position for longer time period.
Concepts of market segmentation and targeting, critical evaluations of target market of Sainsbury
Market segmentation is defined as the procedure of dividing a market of potential
consumers, segments or unit of people, based on varied characteristics (Hassan and Craft, 2015).
It created composed of clients who can respond similarly to marketing plans and who are traits
such as needs, locations, and interests. It is one of the most essential components for company as
it makes easier for Sainsbury to personalize their marketing strategies while opening business in
India. By arranging their firm's target market into segmented groups, more than targeting each
potential consumer individually, organization can be more effective with their money, time and
other assets than when they were targeting people on an individual level. By grouping similar
customers together permits firm to target specific people in a cost-effective manner. Market
segmentation is beneficial in term of reducing risk of ineffective and unsuccessful marketing
campaign. It is one of the best concepts considered by firm while entering into new nation. It
helps in positioning and targeting their products, cater a platform for better two-way
communication between organizations and buyers. Market segmentation provides source for
maintaining and preserving good as well as effective relationships (Gunjal, 2019). The
characteristics of market segmentation includes age, lifestyles and gender. The most common
examples of this method includes demographic, behavioural, and psycho graphic. Sainsbury can

used demographic segmentation strategy to target market. The advantages of this segmentation
variable is that it help to build long-lasting relationship with consumers and improve quality of
products or services. On the other side, it includes risk that business rivals can try to utilize same
marketing methods to take away consumers.
Market targeting is referred to the process of selecting specific target market from
whole market, it is consisted of unit or groups of consumers to whom Sainsbury wants to satisfy
or for whom goods is produced, promotion efforts are made, prices is set and distribution
network is prepared in systematic manner. All these things will be done with he helps of
effective marketing plan by conducting market research, which help to identify competitors
pricing structure and needs of consumers. Market targeting is consisted of two steps such
evaluating market segments and choosing market segments (Quinn and Dibb, 2018). It is quite
beneficial in context of Sainsbury as it helps to cater an in-depth comprehension of competition,
permits them to better appreciated of what clients need, enables them to produce much better
marketing plans and gives insights into competitive benefits & how this can be the best applied.
This procedure makes it easier for company to reach people in an systematic, authentic and more
meaningful way. For targeting and segmentation of market, organization had to use different
types of strategies available for them which is beneficial and effective in term of increasing
consumers base within new marketplace. Proper market segmentation and targeting can facilitate
target consumer satisfaction, with the help of adopting this concept in business organization can
gain many benefits (Brotspies and Weinstein, 2019). Without choosing the best targeting and
segmentation strategy, marketers would not be able to sustain for longer with new place and
unable to gain attention of new clients as well.
How to target consumers-
While selecting their target consumers in India, Sainsbury have to make a choice of
whether they are going to be centred on one or more segments of they are going to provide to the
mass market. The choice that firm make at this phase will identify their target marketing
strategies. By selecting the best generic market targeting strategies firm target its consumers
effectively and efficiently. Company can chose multi-segment targeting strategy to target its
clients in India (Dibb and Simkin, 2016). It is an alternative kind of positioning used to mark
different segments at same time with varied goods. With this strategy company can conduct
research of new market, divide potential people into team based on common sets of features.

These characteristics pinpoint similar professions, level, lifestyles, income, perception,
geographic groups and aspirations. While target more than one segment, firm can practice multi-
segment targeting. Along with targeting strategies to target market, organization also use market
segmentation strategy which is also beneficial for their sales and revenue. By adopting
demographic and psychographic segmentation strategy firm effectively target consumers and
start serving them in effective manner. With demographic strategy Sainsbury identified the age,
income, family situations and education level of consumers before offering products because it
helps when firm efforts to mark clients available in market. It is beneficial for company to do so
because they can set prices, provide quality and create marketing context accordingly.
Furthermore, with the help of using psychographic segmentation strategy Sainsbury also get
many benefits as they can target people in systematic way (Brown and et.al., 2019). By this
approach company can focus on personality traits and lifestyles of people and determine their
preferences which help them to offer products according to it. In order to position the products
of company to selected target market in India, firms had to set attractive pricing structure that
gain attention of consumers and make an high position.
Target consumers with justification-
The potential target market of Sainsbury in India is women, specially mother because
they take decision for purchasing groceries and other things. Mother or house wife purchase food
items for their family and other members in house, they focus on quality and quantity of products
then take decision for buying it or not. Firm should use this strategy because it also help to
achieve set objectives of business.
Porter's generic strategy can use by company to gain competitive advantage
Cost leadership-
This is the first porter’s generic strategy, that Sainsbury can use to gain competitive
benefits while start operating their business in India. With this strategy, organization can set out
to become low cost process in retail industry. The method of cost advantage is several and
depend on structure of sector. It includes pursuit of economies scale, preferential access to raw
materials, proprietary technology and other factors. A low-cost producer can exploit and find all
sources of cost benefits. Cost leadership strategy reduces significant of consumer feedback, on
the other hand it, it caters better profit for team and business as it focused on creating low cost
operations within sector (Su, Guo and Sun, 2017).

Cost focus-
Cost focus strategy is another porter’s generic plan, it needed competing based on price
to target a niche market (Pretorius, 2018). When company follow this strategy, it is not essential
charge lowest prices in sector. It charges low prices relative to other companies that compete
within target market. Cost focus strategy is quite beneficial in term of building strong and longer
relationship with target consumers. With the help of using this strategy company can improve
their pricing structure for business. With Cost focus strategy firm seeks as lower cots benefits in
just one number of market segments. On the other hand, this strategy can limit the future growth
and success of business.
Figure 1Porter's Generic Strategy
(Source: Michael Porter’s five Generic Strategies, 2019)
Differentiation-
In this strategy a company seeks to be different in their sector along some dimensions
that are broadly valued by consumers. It chose one or more qualities that number of customers in
retail sector perceives as essential and uniquely positions itself to meet those demands. It is one
of the best strategies that Sainsbury can takes to develop a different goods or services that target

market will find better than in way distinctive from services or products offered by its
competitors. When firm used this strategy, they can target much wider market and set goals to
achieve competitive advantages through differentiation across entire of its sector, it defined as
the advantage of this strategy. Along with benefits, differentiation strategy bring disadvantages,
with this approach revenue increases are not guaranteed.
Differentiation Focus-
With this strategy, an organization aims to differentiate within just one of target market
segments. The special consumers need of segment mean that there are chances to cater products
or services that are clearly unique from competitors who may be targeting a wide team of
consumers. It is considered as classic niche marketing strategy, which make firms able to
established themselves in niche market segment using this method. With the help of using this
strategy companies can achieve high prices than un-differentiated goods through specialist
experience ways to add value for consumers.
From above analysis it has been analysed that cost leadership is one of the best strategies
for Sainsbury. Many challenges consist with this approach such as it cause financial cuts in
critical areas that harm and put negative impact on business. Its link with value discipline
concept as it used to differentiate products and its costs. This method is used because it helps to
increase the level of productivity, capacity of resource utilization and effective use of technology
in production procedures. With the help of this strategy, company can get better profits and gain
competitive advantages by offering quality products.
CONCLUSION
From the above study, the report concludes the discussion relating to marketing strategy
which is useful for the business in attracting the customer interest towards the company. In this
report, the discussion is related to the Sainsbury who is planning to expand the business in India.
In respect of understanding the matter related to external analysis, it can be explained through
political, social, economic, legal and environment. It is also discussed that merger is one of the
best modes which is used by the Sainsbury in respect of entering into new market. In this report,
the matter are discussed relating to the market segmentation and targeting the particular area to
attract them through the innovative concept and strategies. At last the report is concluded with
the matters relating to undertaking the porter generic strategies that help to gain competitive
benefits

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