A Proposal to Strengthen Sainsbury's Organic Product Offering

Sainsbury's, a leading retailer of organic foods and a competitor to Tesco, is suggested to invest in new organic drinks. This product can be sold in the existing market, but it needs promotion. Introducing organic drinks can attract low-income customers, as it is more affordable for them. The UK food authorities have also discounted supermarkets to stock organic products, providing an opportunity for Sainsbury's to come up with organic drink. With a strong investment in marketing and new product development, Sainsbury's can provide customers with ideas for organic recipes, embracing innovation in the changing retail landscape.

Marketing

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
SWOT Analysis...............................................................................................................................1
PESTEL analysis.............................................................................................................................2
Porters five forces analysis..............................................................................................................3
Internal Audit...................................................................................................................................3
Market share.....................................................................................................................................4
Profits...............................................................................................................................................5
Cost..................................................................................................................................................6
Customers Profile.............................................................................................................................6
Effectiveness of marketing mix.......................................................................................................7
SMART objectives...........................................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

Index of Tables
Table 1: Sales revenue of Sainsbury................................................................................................5
Table 2: Profit earned by Sainsbury.................................................................................................6
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Illustration Index
Illustration 1: Market share of Sainsbury.........................................................................................7
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INTRODUCTION
Marketing can be defined as a management process in which the organizational services
and goods reaches the ultimate customers. In this process mainly four process are involved
which are product: in this the product is selected, identifies and developed. Next step is
determining the price of the product. Third step the distribution channel, it is the source through
which the product reaches the ultimate customer. Final stage is promotional strategies, it is the
most important step which helps in increasing the sales. Present report is about understand the
position of marketing management in the Sainsbury company. Sainsbury is one of the biggest
food retail in the United Kingdom (Joseph and Eshun, 2009). It was subsidised in 1869 by John
James and Mary Ann Sainsbury, working large number of stores, including supermarkets and
convenience stores. It also has its own bank and owns brand with exceptional advertising.
Sainsbury offers variety of fresh food products and services at fair prices.
This report covers the external audit which includes market environment with the help of
PESTLA, SWOT and competitor environment with the help of porters five forces. Further, it
covers internal audit which including sales, market share, profits, costs, customers profile,
effectiveness of the marketing mix. Lastly, it also covers developing a smart marketing objective
and new product idea.
SWOT Analysis
SWOT analysis is very helpful in knowing the over all performance of a firm or
individuals. It is a structured planning method which is helpful in evaluating opportunities,
weaknesses, strengths and threats. Further, this will be helpful in analysing the market
environment. Following is the SWOT of Sainsbury company:
Strengths: Sainsbury in one of the main retailers in UK, with large number of employees
working in part and full-time. Sainsbury offers large and differenced range of products and
services to its customers. The customers can find almost all they need and the products also have
good quality at affordable price (Czinkota and Ronkainen, 2012). They focus on providing
fulfilling all kind of products and services requested by their customers.
They have good and trained customer service which are very polite and helpful, they try all the
time meet and exceed customer expectations and create customers trust and loyalty. To prove
that they won the Training Initiative of the Year Award at the Retail Industry Awards with their
programme to improve operational outcomes and customer experience (Kambil, 2008).
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They keep their store clean and well organised, it allows customers to find whatever they need
easily, without wasting time. It also has solid brand name with own-brand products which make
customer believe in its products and services. They sell over 1900 own-brand products and
focused on quality, provenance and sustainability which make them different from its
competitors (Nieuwenhuizen and Koch, 2007).
They are also recognised as a great place to work, as they provide continues training to their
employees so that they could over come there drawbacks and work effectively and efficiently.
Weaknesses: Sainsbury is the only leading food retailer based on United Kingdom. This
situation shows that the firm is not focusing on expanding their business internationally. It is
very difficult to find employees who would support the firm in achieving their goals and
objectives. Sainsbury fail in providing their customers regarding the new schemes or offers
provided by the firm (Sheth, 2011).
Opportunities: Growth opportunities in non-food and services. Sainsbury’s clothing, general
merchandise and financial services business are lucrative. Another opportunity that Sainsbury’s
can use, is in online shopping. They can do more investment in their online platform to increase
the customer shopping experience, improve availability and also increase loyalty. All the firm
concentrate in expanding their so that they could reach out customer's easily.
Threats: The Sainsbury has many competitors like ASDA and Tesco. These firms adopt
different strategies in order to attract customers. Competition is a big threat. For this reason, it is
essential to create long term relationship with its customers to avoid lose them to its competitors.
Sainsbury’s price of products and services which they provide are higher than its competitors
which may cause in inverse effect on the customers (Kotler and Armstrong, 2010).
PESTEL analysis
It is a tool which is helpful in monitoring and analysing external environment factors
which affects the business. Following is the PESTEL done for Sainsbury:
Political factor: As mentioned before Sainsbury is one of the biggest retailers established in the
UK. For that reason, all Sainsbury’s performance is extremely influenced by political factors of
the country.
Economic factor: Rapid increase in global food crisis has increased in prices of the food all over
the world. This has resulted in rising the purchase cost of the product.
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Social factors: In recent times there has been a huge emphasis on healthy eating by the
government. This has resulted in shifting of customers to healthier food. In one sense it is an
opportunity for Sainsbury to create healthier food in low price (Hollensen, 2015).
Technological factor: Use of internet has been increasing rapidly. Sainsbury should focus on
using internet as a source of selling their product or services. It is very important for the firm to
adopt new technology as it helps in attracting more and more customers.
Environmental factors: Impact of ethical issues like ethical management of animals and selling
organic food. Affects the business of Sainsbury. It is sensitive issue as firm has to maintaining
balance public stand and environment and without loosing their customers.
Legal factor: All the countries have strict laws which has to be followed by the organizations.
Further, there are many labelling and packaging policies which has to be followed by Sainsbury
(De Mooij, 2013).
Porters five forces analysis
This is a tool which helps in determining the competitive environment of the
organization. It includes five forces which affects the firm, which are as follows:
Barriers to enter: In order to enter the market the competition is very high in respect with food
retail. There are many small scale sectors which adapts different types of strategies in order to
attract customers.
Threats of substitutes: It is low as food is a necessity for customers which any how has to be
fulfilled.
Buyers power: Power of buyer is high as there are many competitors which sell similar products.
Suppliers power: It is high as it can not be categorised in different groups.
Threats of potential new entrance: New entrance is limited in the supermarket. It is very
difficult to enter in the market easily.
Internal Audit
The over all performance of the Sainsbury good competitively to its competitors. In accordance
with the annual report of the organization it is clear that they are not doing well when compared
to the least years sales. The firm needs to work hard in improving their sales. According to the
annual report it was found the following details:
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Table 1: Sales revenue of Sainsbury
Year Revenue(Sales in Millions)
2011 21102
2012 22294
2013 23303
2014 23949
2015 23775
According to the sales given above it is clear that over all the firm is going on well but this year
Sainsbury's sales has come down. It is mainly due to lack in promotional activities. The firm
needs to work hard in adopting new strategies which would help them in attracting more and
more customers. Form 2011 to 2014, the growth of the Sainsbury has been remarkable. They
have been competing effectively in order to attract customers. In the year the sales reduced by
174 million which is alarming situation for the firm. They need to understand the problems
which they are facing and accordingly they need to adopt strategies which will help in increasing
the sales (Hollensen, 2015).
Market share
According to the market share Sainsbury stands third as Tesco has the maximum share it
is followed by ASDA. Market share of Sainsbury is comparatively low form Tesco and ASDA.
Following chart will help in understanding the market share of the Sainsbury:
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From the above chart it is clear that the market share of Sainsbury is 13% and ASDA is also
13%. This shows that the both firms have close fight in order to increase the market share. The
market share of Tesco is 24%, from this it can be said that they have adopted different strategies
which helps them in attracting customers. The main reason that Tesco has higher market share is
just because they focus on expanding their business. When compared with Sainsbury, they do not
focus on expansion of their business. There are huge opportunities that if they expand their
business globally then they can increase their market share (Haley and Haley, 2006). In addition
to this, they need to come up with new strategies or ides which would help in competing
effectively and in increasing their sales.
Profits
Form the annual report of Sainsbury it is found that from 2011 to 2014 the firm was going on
well but in the year 2015 the firm faced loss of 116 million. Below given are the profit earned by
Sainsbury from 2011 to 2015:
Table 2: Profit earned by Sainsbury
Year Profit(in Millions)
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Illustration 1: Market share of Sainsbury
(Source: The battle for market share in UK supermarkets, 2014)

2011 640
2012 598
2013 614
2014 716
2015 -166
From the above give file it has been found that this year the firm has competitively done very
poor. As the according to the annual report of the firm has a loss of 116 million. In previous
years the firm has been doing well. In the year 2011 to 2014 the firm has been growing and was
getting profit but it was only this year that it faced loss. This happened due to increase in
operating income. The firm should focus on providing quality services so that customers can be
attracted. It is very important for the firm to focus on adopting strategies which would help them
in attracting customers (Marren, 2007).
Cost
From the annual report of Sainsbury it was found that the firm cost on yearly basis has increased.
The firm should focus on reducing the cost. Below given are the cost which the firm uncured for
2011 to 2015:
Year Cost(In Millions)
2011 19942
2012 21083
2013 22026
2014 22562
2015 22567
For the given data it is clear that the cost of the firm is increasing yearly. In the year 2011 the
cost uncured by Sainsbury was 19942 and it has increased to 22,567 in the year 2015.
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Customers Profile
Sainsbury provides many ranges of products and services like they provide food,
clothing, general merchandise and financial services to its customers. In all aspects they focus on
attracting all types of customer's. The has provided products and services to customers who
would be preferred by all types of customers. In order to attract customers it is very essential for
the firm to understand the needs and wants of the customers. In this context the firm conducts
research and surveys which are helpful in knowing the requirements of the customers. In
addition to this, it is also helpful in knowing the improvements or areas where the firm lacks by
knowing the these areas appropriate step can be taken in order to satisfy the customers. The main
aim of Sainsbury is to provide quality services to their customers (Hartley and Claycomb, 2013).
Further, government focus on having organic food, in this context the firm focus on providing
organic food to its customers. In the clothing sector they have focused on all the ages. The have
been providing customers clothing in accordance with the change in trends and preferences of
the customers.
Effectiveness of marketing mix
Marketing mix are tools which are very important for the marketing. It is always crucial
when it is determined with the product or services which the firm offers. It is mainly associated
with 4ps which are product, price, place and promotion. Following are the effectiveness of the
marketing mix:
Helpful in allocation of resources: As all the firm needs resources in order to provide products
and services to customer's. In order to develop the product and services resources are very
important. In this context, marketing mix is very helpful in allocating resource in such a way that
the firm can use it effectively and efficiently (Muchiri, 2013).
Helpful in allocating responsibilities: One of the main challenging job is team work and for this
the marketing mix is helpful in allocating responsibilities and in coordinating which help in
performing the task effectively.
Helpful in facilitating communication process: In each business there are internal organizations
which are like frame work in relation to the top to bottom. Marketing mix are helpful in
providing effective communication to the employees who work effectively.
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Determining price: It is very helpful in determining the price of the product or services as the
firm will be able to know the actual cost incurred in developing the product or services and
accordingly they can charge on the product or services given by the product (Oltra and Flor,
2010).
Understanding the product or services: Among this the most important thing is that it is helpful
in knowing the need and wants of the customers and accordingly the firm will be able to bring
out product or services which will be helpful in satisfying the customers.
SMART objectives
In order to set the direction, it is being required by firm that it must frame its objective with the
help of smart approach. SMART (Specific, measurable, attainable, realistic and time bound etc)
objective has been framed with respect to the new product which is being sold by the company
such as Sainsbury. The detailed explanation about the same is depicted in below:
 To increase the awareness about the new drink among respective targeted customers.
 To raise the sale of drink by 20% till the year 2017.
 To increase the market share of firm by 30% with the help of this new drink (Marren,
2012).
These three are being regarded as the major objective of Sainsbury. Here, the first
objective of firm can be achieved if firm will take help from number of promotional techniques.
Here, with the help of different promotional means large number of customers can be attracted
by the firm. Thus, through this way second and third objective of firm can also be met (Kourdi,
2010). Overall, it can be said that these all given aims are interrelated and interconnected with
each other. Here, by achieving these all given aim, firm can develop distinct image of its brand in
the mind of its buyers.
New product idea for Salisbury
For a retailing organization, new product development is a key to capture the market
share and attain a competitive image among rivals. Sainsbury is a leading retain giant of United
Kingdom and the mentioned company has to come up with a new product to grab the attention of
customers and to increase revenues and profits. The organization can move towards introducing
Organic Drink in the UK market (Lusch and Vargo, 2014). The rationale behind suggesting
organic drinks as a new product for company is the significant raise in the market of organic
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food and drink products. Recently, the market is raised by 4% in terms of customers spending on
organic food. As per the data, sale of organic products in the UK is increased to £1.86 billion in
2014 as the customers are demanding more for organic product in the supermarkets (Organic
market shows improved growth amidst tumbling food prices, 2015). While seeing the remarkable
growth in last year, the company is suggested to invest in organization food segment.
However, in UK market there are less suppliers of organic drinks and there is a high
demand among young people of UK. Organic health drinks are in demand and are the most
popular organic purchases. The company can enter in the market with a organic drink that is
more focused for youngster and athletics. These people are more focused towards healthier and
environmentally-friendlier products hence, they can be easily attracted towards this new product
(Murphy, 2010). However, it has been witnessed that Sainsbury is already involved in organic
food market still some efforts are need to boost the sale in such market. The new organic drink
can be a solution for company to increase customer base of Salisbury (Hansen and Smith, 2006).
At present in UK market, Tesco is the leading retailer of organic foods and is seen to be the
biggest competitor of Sainsbury. To beat the market competition and to improve the sale of food
section the Salisbury is suggested to invest in new organic drink. This product can be sold in the
existing market, however company has to promote this product. It can be said that the
introduction of organic drink is more affordable for low incomes, hence, the organization can
attract the customers (Ireland, Hoskisson and Hitt, 2011). Recently, in UK the food authorities
have discounted supermarkets to stock organic products. There are menu opportunities for
Sainsbury to come up with organic drink as the demand from customers side is increased but this
demand is not yet fed through into increased organic production in the UK (Organic market
shows improved growth amidst tumbling food prices, 2015). Sainsbury can introduce a new
product Organic Drink in the market. The company can invest in organic sector strongly in
marketing and new product development along with this the customers can be provided with
ideas for organic recipe. The introduction of organic drink will embrace innovation in a changing
retail landscape and will be helpful for the growth of Sainsbury (Jun, and Park, 2013).
CONCLUSION
From this report it can be articulated that the internal and external analysis is very essential for
the firm. It helps in know the areas which that can focus in order to maintaining their growth and
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in maintaining good relationship with their customer and their employees. In this context, SWOT
analysis is very helpful in knowing the opportunities, strength, threat and weaknesses. In addition
to this, PESTEL analysis is helpful in knowing the external factors which affects the business.
Further, SMART analysis is helpful in knowing the products or the changes more clearly.
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