GBMT4001 - ASDA's Marketing Strategy: Analysis and Recommendations

This report provides a detailed analysis of ASDA's marketing strategies within the UK retail sector. It begins with an introduction to ASDA, highlighting its market position and unique selling points. The report then delves into an internal and external environmental analysis using SWOT and PESTLE ...Read More

Course/level: L4 BA Business
Management
Module: Marketing
Fundame
ntals Code: GBMT4001

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Internal and external environment analysis.................................................................................1
Segmentation, targeting and positioning.....................................................................................3
Implementation of marketing mix of ASDA...............................................................................4
CONCLUSION................................................................................................................................5
RECOMMENDATIONS.................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
The UK retail industry is a major contributor in the country’s overall economy and the gross
domestic output and involves cutthroat competition as many major players regularly compete in
this sector and try to offset one another using various means such as operational superiority and
marketing. Among the major players of this sector are company names such as Tesco, Sainsbury,
Morrison’s, ALDI and ASDA which is a wholly owned subsidiary of Walmart and is a company
which is well known for its focus on innovative technology and developing stellar marketing
tactics to supplement its retail operations which has now been sold to the Issa brothers (Walmart
completes sale of Asda, 2022). ASDA is a British supermarket chain headquartered in Leeds,
England and the company was initially setup in 1949 when the Asquith family merged their
business with Associated dairies company in Yorkshire (Deepak, and Jeyakumar, 2019). The
company currently has a market share of 14.5% in the country’s retail industry sector which is
quite an astounding achievement and the company’s main USP behind this success is its focus on
customer convenience through use of advanced technologies and providing high quality products
at an affordable price compared to rivals such as Tesco (Fredman, 2022). The major difference
between ASDA and its competitors is the firm focusing on cheaper goods as it is more budget
friendly compared to Tesco, the industry leader of the market segment but the firm lacks in
providing exclusive benefits to entice customers which Tesco does through its club card
schemes. This report will analyse the business operations of ASDA using tools such as SWOT
and PESTLE analysis and will highlight the firms marketing operations along with providing
justified recommendations for the same.
MAIN BODY
Internal and external environment analysis
In order to better understand the way in which a business concern conducts their day to day
operations in their target market and the way in which the happenings in their surroundings
affects their viability and efficiency, it is necessary to use tools of strategic management to
analyse both internal and external environments (Fengyi, 2021). SWOT analysis is one of the
most extensively used models for studying the internal business environment as it helps identify
the various strengths, weaknesses of the business along with potential opportunities and threats
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to remain wary of. This model has been applied on ASDA underneath to highlight the strong
points and potential areas of improvement for the company.
Strengths
 The supermarket chain provides an
extensive range of high quality
products catering to a wide range of
customers
 The retail chain consist of a broad
distribution capacity network which is
quite efficiently
Weaknesses
 The firm is suffering from increased
levels of debt which hampers
production capability
 ASDA has been caught in many legal
controversies hampering its brand
image (Asda workers win key appeal in
equal pay fight, 2022).
Opportunities
 The firm should look to expand in
lucrative retail markets globally such as
China and India
 The company should look into
integration of advanced technologies as
virtual reality and Internet of Things
(IoT)
Threats
 The company is suffering through
constant disruptions owing to the
COVID-19 pandemic and the growing
political instability of UK is a major
concern (Britain's Asda sales fall 9.2%
in first quarter, 2022).
 The company has come under legal fire
many times and has a tendency to
Along with the SWOT analysis, it is also very important to highlight the external
environmental happenings using tools such as PESTLE analysis which is another popular
strategic tool which divides the external environment into separate layers for the ease of analysis.
This model has also been applied below in the context of ASDA to better understand the way it
is getting affected by its external developments.
 Political – In order for businesses to success in their target market, it is important for the
existence of political stability and for there to be a positive outlook of the government
towards businesses. ASDA has been enjoying smooth business in UK for a while but the
advent of Brexit has strained the company’s operations and supply chains. The company
is still struggling despite the new trade laws between UK and EU bringing about a much
needed ray of hope (LahtinenDietrich and Rundle-Thiele, 2020).
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 Economical – In order to manage its day to day business operations in UK, the company
should take care of many factors such as the pay level, cost of credit, level of disposable
income along with the level of inflation in the current economy (Alanzi, 2018). ASDA
also needs to be careful in planning out its future operations due to the losses amounting
due to the constant economic lockdowns since 2020 due to the advent of COVID-19
pandemic.
 Social – To survive in the competitive retail sector of UK, companies like ASDA have to
carefully study and evaluate the social factors which drive businesses forward such as
celebrity endorsements and social media trends (Grishko and Et. Al., 2020). ASDA also
needs to study the social factors in its external environment to come up with new product
lines as the company has started to focus on vegan and green food options to cater to the
growing trend of vegetarianism among the consumer segments of UK.
 Technological – The firm is well known for the various amounts of advanced technology
it regularly introduces to the UK’s retail sector such as contactless and digital shopping
utilities to gain a bigger customer base. In order to expand its operations, the firm will
need to focus on upscaling its digital infrastructure to enable retail deliveries all over UK
(Capuder and Et. Al., 2020). Legal – There are many rules and regulations which business have to comply with in
order to remain afloat in their respective industries and ASDA is no different in this
regard. The firm has to follow all employment related legislation which means fair pay
and no cases of unfair dismissals. ASDA has to be very vigilant in this regard as there
have been many instances in the past where the company has broken rules such as it
getting fined 300,000 pounds in 2017 for food safety breaches (Asda fined £300,000 after
dead mice and flies found at delivery depo, 2022) Environmental – The modern business environment has been quite devastating towards
the natural resources and surroundings and this has made it compulsory for companies to
be friendlier towards the environment (Frue, 2017). ASDA has to prove that it is a very
environmentally sound company and it does so with the help of carbon emission controls
and use of sustainable supply chains and it is doing so by undertaking sustainable
developments recently (Asda launches 'greener price' promise and sustainability store,
2022).
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Segmentation, targeting and positioning
ASDA is an extremely big retailer which deals in numerous product lines and has been a
major part of the UK retail sector since past few decades and this has been done through proper
means of market segmentation which is the process of dividing the broad target market on the
basis of various demographical factors (Yuwei, 2021). ASDA tends to segment its target market
on the basis of various factors such as financial services, clothing and electronics.
Targeting is also a major function of business operation in which specific sectors of the
target audience are catered to using marketing and sales promotion tactics to penetrate the market
effectively (McDougal and Et. Al., 2021). ASDA mainly targets the current middles aged people
along with millennials which often struggle with money and require their goods to be of good
quality with cheap rates which ASDA specializes in. The main target market consists of all UK
families with now focus being diverted to youth with vegan and green food products.
Positioning is also a vital step from companies to market their product to the intended
audience in a specific manner to build the company’s brand image and market strength in the
intended manner to generate more loyal customers and repeated sales. ASDA positions itself as a
“people’s champion” as it focuses on providing its customers with everyday low price (EDLP)
and it has doubled down on its cheap price policy to counter discounters such as ALDI and Lidl
in recent years (Rust, 2020).
Implementation of marketing mix of ASDA
Marketing mix refers to a set of marketing tools which are used by companies to develop
marketing and promotional campaigns for the desired product line to ensure its success in the
market (Mintz and Et. Al.,, 2021). ASDA implements these tools have been listed herein.
 Product – In order to properly compete in this market segment and make a powerful
brand statement, ASDA trades in various separate product lines such as grocery items,
ready-made and packaged foods, toddler items and recently it has also entered into the
segment of dealing in mobiles creating a diverse brand portfolio (Purohit, Paul and
Mishra, 2021).
 Price – One of the major principles on top of which the marketing philosophy of the
brand is built is offering of quality goods as cheaply as possible (Kim and Kim, 2018).
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The firm puts out major discounts and price slashing on all it product lines in a bid to
outdo its competition
 Place – The advent of IT technologies and social media has made it so that successful
retailers have to maintain a strong digital presence apart from physical outlets and ASDA
has been successful in maintaining social media handles with decent traffic of public to
boot. The firm uses integrated marketing communications campaigns to market new
product lines which is a major reason behind its success (v Brierley, 2022)
 Promotion – To gain as much exposure in public domain as possible, ASDA utilizes
both modern and traditional forms of media promotion which involves use of social
media along with TV’s and newspapers (Maslova and Kulchitskya, 2017). The firm has
also come up with major discounts and schemes such as the ASDA corporate gift cards to
entice people from coming back to their stores for repeated sales
CONCLUSION
The above report went into detail regarding the various marketing activities of retail sector
companies which they undertake to keep their day to day business operations as streamlined and
efficient as possible. The report discussed the impact of the company’s internal and external
environment on its policy making and USP generation using tools such as SWOT and PESTLE
analysis. The various concepts of retail marketing were also discussed such as the way in which
companies use the STP model along with implementation of marketing mix and it was concluded
form this report that in order to become successful in retail sector, companies must look towards
global expansion and becoming leaner in terms of operations.
RECOMMENDATIONS
On the basis of the internal and external environmental analysis conducted in this report
along with the extensive research undertaken, the following recommendations have been listed
for ASDA to become more profitable and sustainable in the long run in UK’s retail industry.
 Despite the cost leadership based market strategy being very successful, ASDA should
look into building its own brands and product labels to distinguish itself further from the
market competition
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 ASDA should look into entering new and lucrative retail market sectors such as green
products, fresh and ready-made foods along with gluten free and dairy free product
options
 In order to become more profitable and expand its business operations, ASDA should
look to expand globally as many markets such as China and India have massive retail
demand and rank highly on the ease of business index
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REFERENCES
Books and Journals:
Alanzi, S., 2018. PESTLE Analysis. Project Management.
Capuder, T. and Et. Al., 2020. Review of challenges and assessment of electric vehicles
integration policy goals: Integrated risk analysis approach. International journal of
electrical power & energy systems, 119, p.105894.
Deepak, R.K.A. and Jeyakumar, S., 2019. Marketing management. Educreation Publishing.
Fengyi, Z., 2021. The Analysis of Asda-Sainsbury’s Merger/Acquisition. Journal of Finance
Research, 5(1), pp.1-6.
Frue, K., 2017. The Quick Guide to PESTEL Analysis. PESTLE Analysis.
Grishko, V. and Et. Al., 2020, June. Features of Strategic Analysis of Externals Factors of the
Building Organization: Methodological Aspect. In International Conference BUILDING
INNOVATIONS (pp. 651-660). Springer, Cham.
Kim, M.S. and Kim, J., 2018. Linking marketing mix elements to passion-driven behavior
toward a brand: Evidence from the foodservice industry. International Journal of
Contemporary Hospitality Management, 30(10), pp.3040-3058.
Lahtinen, V., Dietrich, T. and Rundle-Thiele, S., 2020. Long live the marketing mix. Testing the
effectiveness of the commercial marketing mix in a social marketing context. Journal of
Social Marketing.
McDougal, E.R. and Et. Al., 2021. Telling the tale: Applying a strategic brand storytelling
process for STP planning. Journal of Strategic Marketing, pp.1-21.
Mintz, O. and Et. Al.,, 2021. The right metrics for marketing-mix decisions. International Journal
of Research in Marketing, 38(1), pp.32-49.
Ndofirepi, E., Farinloye, T. and Mogaji, E., 2020. Marketing mix in a heterogenous higher
education market: A case of Africa. In Understanding the higher education market in
Africa (pp. 241-262). Routledge.
Purohit, S., Paul, J. and Mishra, R., 2021. Rethinking the bottom of the pyramid: Towards a new
marketing mix. Journal of Retailing and Consumer Services, 58, p.102275.
Rust, R.T., 2020. Outside-in marketing: Why, when and how?. Industrial Marketing
Management, 89, pp.102-104.
v Brierley, A., 2022. Inching Forward: Preliminary Victory for Equal Value at Tesco and Asda.
Industrial Law Journal, 51(1).
Yuwei, Y., 2021. Development of the marketing strategy of the commercial company.
Maslova, E.V. and Kulchitskya, E.V., 2017. Application of the" personnel-marketing mix"
model in the human resource management. (pp. 232-234).
Fredman, S., 2022. Inching Forward: Preliminary Victory for Equal Value at Tesco and Asda.
Industrial Law Journal, 51(1), pp.166-173.
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Online referencing
Britain's Asda sales fall 9.2% in first quarter, 2022 [online] available through <
https://retail.economictimes.indiatimes.com/news/food-entertainment/grocery/britains-
asda-sales-fall-9-2-in-first-quarter/91834078>
Asda workers win key appeal in equal pay fight, 2022 [online] available through
https://www.bbc.com/news/business-56534988
Asda launches 'greener price' promise and sustainability store, 2022 [online] available through
https://www.theguardian.com/business/2020/oct/20/asda-launches-greener-price-
promise-and-sustainability-store
Asda fined £300,000 after dead mice and flies found at delivery depo, 2022 [online] available
through https://www.theguardian.com/business/2017/mar/06/asda-fined-300000-after-
dead-mice-flies-found-delivery-depot
Walmart completes sale of Asda, 2022 [online] available through
https://chainstoreage.com/walmart-completes-sale-asda
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