Competitive Analysis of UK Supermarkets and Customer Relationship

This report provides an analysis of the competitive landscape within the UK supermarket industry, focusing on key players like Tesco, Sainsbury's, and Morrisons. It examines the market share dynamics, the rise of smaller competitors, and the impact on independent retailers. The report delves into customer portfolio analysis, emphasizing the importance of understanding customer needs to allocate resources effectively. It explores customer intimacy, highlighting the value of personalized services and building long-term customer relationships. Furthermore, it discusses network development (SCOPE) and value proposition development as crucial strategies for enhancing customer relationships and gaining a competitive edge. The report also provides recommendations for Morrisons, suggesting ways to strengthen its loyalty programs, distribution chains, and customer-focused approaches to thrive in the competitive market. The report concludes by emphasizing the significance of efficient customer relationship strategies for acquiring and retaining customers in the evolving UK supermarket sector.

Assignment
1. Short Introduction on UK supermarket competitiveness and Introduction on Customer Value
Chain
The supermarkets in UK is an oligopolistic market, where few competitors compete with each
other for the market share in the market. However, growth of other supermarket chains is
slowly mushrooming up in the UK market and stealing the market share of giants such as Tesco
and Sainsbury.
There are other supermarket chains opening up in UK market and have started price war
resulting in decline of bottom lines of these supermarket giants. As a result of which the
supermarket giants have lowered the price of products available in their stores to attract variety
of customers to their respective stores.
A figure here from 2014 stats briefly describes the market shares of supermarket giants and
small players in the market such as Morrisons.
As can be seen from the pie chart Tesco leads the supermarket market with 29 % followed by
Sainsbury with 16 % hold on market shares. Morrisons holds 11 % and is slowly grasping the
market share through its strategic initiatives. The rise in Supermarkets have resulted in decline
of Independent retailers. A study
from 2015 IGD Research and William
Reed Business Media study highlights
that in span of ten years number of
independent retailers have fallen
from earlier 35, 000 to 18, 500
(Economics online, 2017).
These are good signs for the
supermarkets growth and their
strategy to win over consumer
mindset. However, with inflow of
smaller players in the market, the
industry has become highly
competitive in nature. This will lead to
decline of oligopoly status of few
giants in the supermarkets market space (Pettinger, T., 2014).

2. Customer Portfolio Analysis
Customer portfolio analysis is a concept where the marketing managers analyse the relationship
between the suppliers of goods and services and their customers. Customer portfolio analysis is
long term and forward thinking analysis where deep analysis of the customer is carried out in
order to re allocate the sparse resources in order to suit the customers needs, wants and
desires. Customer portfolio analysis is approach to understand the customer so well that the
best services are offered to the customers in alignment with the presence of competitors selling
the same line of goods and services to the customers. This way of analysis helps in analyzing the
root cause behind customer behavior and use of set of strategies to acquire new customers and
retain older customers. Customer Portfolio analysis is one of the ways customer relationships
are managed in order to boost the profitability of the business and gain sppedy growth in garb
of fierce competition from the competitors. Cost is considered as one of the variable which
decides particular customer relationship with the company and its goods or services. Customer
portfolio analysis is required to develop further customer relationship strategies in order to
build the brand of company in customers mindset directly. Marketing is battle of mindsets and
here customer portfolio analysis helps in winning the strategic steps and position to win the race
against the competitors (Ford, 1997 & Kotler, et al., 1996).
The new loyalty card would help greatly in developing a good customer portfolio Analysis. With
the help of new loyalty card Morrison would gather important customer data and specially data
of those customers who are loyal to Morrison’s. The data would also will gathered through form
filling regarding customer preferences and there choice for improving the overall business of
Morrison in this hyper competitive supermarket business.
3. Customer Intimacy
Customer Intimacy is defined as continuously customizing and personalizing the goods and
services in accordance with the customers demands on time to time basis. Its part of one of the
three core values developed in 1990’s in order to redefine the way company’s shall do business
in the newer customer oriented markets.
Customer Intimacy is part of The values discipline model which was strategically developed by
Michael Treacy and Fred Wiersema.
Together they helped redefine the strategic management in order to win the customers
mindset.
The companies which could adapt customer intimacy in their product or service portfolio will
gain competitive advantages on the companies which failed to adapt the customized approach.
The more the products and services are customized to the needs of the customers better the
intimacy the company would have with the particular customer. This would lead to long term
relationship between the suppliers and customers and would bring the company in such a form

that it would be hard for competitors to snatch the market share from the companies customer
portfolio( Treacy, M & Wiersema, F, 1993 & Customer Intimacy, 2017).
The new loyalty card would be one step ahead towards building customer intimacy for
Morrison’s. This new loyalty card would help in building closer relationships with customers for
Morrison. The new loyalty card would be great step towards building ever closer ties with
customers and would further strengthen the relationship between Morrison and their
customers.

4. Network development (SCOPE)
Network development is the need of hour for any business to remain in the business for long
durations. Networking with known industry players, distributors and suppliers and other players
is needed to run the business profitably. Networking with right people at right time and right
place helps to boost the company profit margins and also helps in meeting customer demands
appropriately. Supplier of goods at right time helps in serving the customers at right time in
order to win the competitive edge in the market. If the company fails to serve the customers at
right time and right place the customers won’t take much time to switch to competitors.
Network development is one of the core strategies in customer relationship management and
helps to broaden the scope of the company in face of fierce competition.
SCOPE is defined as Situation, Core competencies, Obstacles, Prospects, and Expectations.
SCOPE helps in best situation analysis (SCOPE – A Situation Analysis, 2017).
Therefore the SCOPE analysis is very much needed in order to win over the market share and
customer confidence in order to boost the profit margins for a company. Scope analysis helps in
navigating the business at right time and right pace (SCOPE, 2017).
The new loyalty card would help in developing network of loyal customers and based on huge
data collected through this process the Morrison could gel its customer service and product
service to build brand to next higher level.
5. Value proposition development
Value proposition development is required to carryout deep analysis of not only the customers
but of business as a whole. A particular value proposition would primarily focus on , Is the
problem unworkable ??, Is fixing the problem unavoidable ??, Is the problem urgent ??, Is the
problem underserved?? (Skok, M., 2013)
The primary function of value proposition development is to develop question atmosphere so
that loopholes in the function could be understood and resolved appropriately in order to
remain ahead of the competition.
Value proposition development helps in making correct decisions and deciding whether the
problem is worth solving or not.
A good value proposition helps in saving lot of quality time and saves lot of precious business
hours.

Loyalty card would help in developing better value proposition for Morrison and would further
help in understanding the consumer behavior through accurate analysis of data gathered
through this process.
6. Managing the relationship
Managing the relationship with the customers is beneficial for the company in todays highly
competitive times. Customer intimacy and customer relationship management are both ways in
order to manage the customer relationship profitably for the business to grow and prosper in
future times.
Since, competition has become fierce, its high time that customer focused approach is brought
within the strategic management principles of the company. Times would be no far where a
company without managing its customers could stand in the business for future times.
Managing customers at right time should become priority for the growth and prosper in future
times (Managing customers, 2017).
The new loyalty card would help in customized and personalized management of customers and
would help in developing better service protocols and products to meet the requirements of
delighted customers.
7. Recommendations

The following figure explains the value chain very expressively. For Morrisons loyalty card, it
needs to strengthen the distribution chain and win confidence of distributors in order to make
the loyalty card profitable strategic decision.
Its high time that Morrisons should strengthen its customer intimacy and loyalty programs in
order to boost the profits from this program. Time has come and strategic decisions needs to be
put into actions in order to really gains return on investments from this step.
8. Conclusion
UK supermarkets have become highly competitive in nature. Customers attention span has
decreased and now more and more companies are fighting for the same set of customers. The

strategic decision at this point of time is to develop efficient customer relationship strategies in
order to acquire new customers and retain the older customers. Its high time that strategies
shall be put to practice in order to gain competitive edge in the market.
An efficient CRM plan if put to practice would help in gaining long term benefits from these
initiatives and bring the competition down and win over the market share and remain ahead in
the market place.
References
1. Economics Online. (2017). Supermarkets. Available at:
http://www.economicsonline.co.uk/Business_economics/Supermarkets.html (Accessed on:
28.04.2017)
2. Pettinger, T. (2014). The battle for market share in UK supermarkets. Available at:
http://www.economicshelp.org/blog/11947/economics/market-share-in-uk-supermarkets/
(Accessed on: 28.04.2017)
3. Ford, D. (Ed.) (1997), Understanding Business Markets, 2nd ed., The Dryden Press, Hinsdale,
IL.
4. Kotler, P., Armstrong, G., Saunders, J. and Wong, V. (1996), Principles of Marketing,
Prentice-Hall, London.
5. Customer Intimacy. (2017). Available at:
https://www.mindtools.com/pages/article/customer-intimacy.htm (Accessed on:
28.04.2017)
6. Treacy, M & Wiersema, F. (1993). Customer intimacy and other value disciplines. Available
at: https://hbr.org/1993/01/customer-intimacy-and-other-value-disciplines (Accessed on:
28.04.2017)
7. Scope. (2017). Available at: http://www.investopedia.com/terms/s/scope.asp (Accessed on:
28.04.2017)
8. SCOPE – A Situation Analysis. (2017). Available at: http://get2growth.com/scope-planning-
model/ (Accessed on: 28.04.2017)
9. Skok, M. (2013). 4 steps to building a compelling value proposition. Available at:
https://www.forbes.com/sites/michaelskok/2013/06/14/4-steps-to-building-a-compelling-
value-proposition/#4ec707c46958 (Accessed on: 28.04.2017)
10. Gronsund, T. (2011). 7 proven templates for writing Value proposition that work. Available
at: http://torgronsund.com/2011/11/29/7-proven-templates-for-creating-value-
propositions-that-work/ (Accessed on: 28.04.2017)
11. Managing customers. (2017). Available at:
http://www.failteireland.ie/FailteIreland/media/WebsiteStructure/Documents/

2_Develop_Your_Business/1_StartGrow_Your_Business/Managing-Customer-Relationships-
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