Sainsbury's Expansion in Indonesia: SOSTAC Model Application Report

This report provides a detailed analysis of Sainsbury's marketing strategy, focusing on its potential expansion into Indonesia. It utilizes the SOSTAC model, a framework encompassing Situation analysis (including PESTLE analysis), Objectives, Strategy (including STP – Segmentation, Targeting, and Positioning), Tactics, Action, and Control. The report examines Sainsbury's current market position, its objectives for expansion, and its proposed strategies, including product and price tactics. The analysis considers the effectiveness of Sainsbury's current SOSTAC strategy, evaluating its segmentation, targeting, and positioning approaches. Furthermore, the report explores the actions required for successful expansion and the importance of control mechanisms to monitor progress and make necessary adjustments. Overall, the report offers a comprehensive overview of Sainsbury's marketing approach and its application to a specific international market.

Principals and
Practice of
Marketing

INTRODUCTION
Marketing can be defined as the process which starts with the idea generation of an
product or service and ends with the satisfaction of the customers. The idea of the products or
service aims at satisfying the needs and demands of the customers. Principles of Marketing can
be defined as the activities or tasks which are related in the process of transferring the goods
from the seller to the buyer (Horner and Swarbrooke, 2012). The company chosen for the
completion of this assignment is Sainsbury which is the largest supermarket chain in UK and
was founded in the year 1869 by John James. The company provides various kinds of products
and services to their customers such as home and beauty care products, food products and many
luxury beauty products. The following assignment will make its focus on the application of
SOSTAC Model on Sainsbury Company, as the company will spread their business operations in
another country which is Indonesia.
MAIN BODY
SOSTAC Model of Marketing
The following model is one of the most well regarded models of marketing. It was
propounded by PR Smith in the year 1990. This Model focuses on six aspects of marketing
which are named as Situation, Objective, Strategy, Tactics, Action and Control (Allyson Dooley,
Jones and Iverson, 2012). In order to expand the business of Sainsbury Company in Indonesia,
the following analysis has been used which is discussed as under:
Situation Analysis:
The following analysis has been used in order to know about the impact of internal as
well as the external environment on the working of an organisation or industry. So in order to
know about the impact of external environment on the working of Sainsbury in Indonesia, the
use of PESTLE Analysis will be done.
PESTLE Analysis:
The following analysis is used in order to know about the impact of external environment
on the working of an organisation. So in order to know about the impact of external environment
on Sainsbury, the discussion is provided as under:
 Political Factors: It includes those factors which impacts upon the working of an
organisation due to the factors such as political stability, instability, governmental
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policies, employment laws, labour laws and many more. The financial condition of the
country is not stable which could create negative impact on the working of the company
in this country (Alserhan, 2017). It is so because the company will not have regular
sources of income and could occur loss in its operations.
 Economical Factors: These are those factors which impacts upon the working of an
organisation due to changes in the growth rates, inflation, deflation, disposable income of
the people of a country, interest rates and many more (Armstrong and et. al., 2014).
Indonesia is counted in one among the developing economies of the world and this also
can be considered as the country which might help a business organisation in expanding
its business in a right full manner. Emerging market will definitely help business
company to start engineering high returns on the investments that they have made under
the same. Social factors: this is being considered as another crucial factor of external environment,
wishes mainly connected with society. Under the social factor their many elements
related to human beings like believes, perceptions and their values might impact upon
working of a business organisation. Regarding this, Sainsbury’s needs to understand the
gap among their own products and what public is asking for. This could be understood
with very good example of China, where it will be required for Sainsbury to enter the
market with considering all the requirements that public of this Nation is having. Ethics
and cultural diversity will affect the social relations, as they contribute a major role in
development of company in Indonesia. Technological factor : Another vital most factor within the external business
environment which mainly impacts upon profit margins, and helps a company in
expanding its business (Baker, 2016). Considering the technological factor it can be said
that Any organisation like Sainsbury could communicate with customers directly e or
they can provide all the information related to products or services that they are offering
to the customers with the help of websites and other sources which are connected with
technology. Away with this company can also start online business as well which will
directly improvise there customer base in a fast moving sense across the borders like
Indonesia or other business Nations that are having the emerging markets.
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 Environmental factor : These are the known characteristics present in the environment
which effects the growth, survival and operations of an organisation. Organisations
impacts environment either in direct or indirect way. In the context of Sainsbury, there is
environmental issue of water scarcity and pollution is prevailing in Indonesia,
thereforeSainsbury can take some initiative that effectively manages waste, packaging
and recycling.
 Legislative factors : These are the various policies which have direct impact on the
organisational performance. In context of Sainsbury in Indonesia, it can adapt new tax by
modifying its products compiled according to the legislative requirements.
2. Objective
In order to gain success and Organisation basically develops objectives that helps in reaching to
the desired place with the help of attaining goals.Basically an objective is being considered as
the process or the plan through which change can be brought in by Sainsbury, which might
help in attaining both short and long term goals (Burns, Bush and Sinha, 2014). In present time,
Sainsbury consist with arrange of objectives which are relying upon the company’s employees
and resources that they are having the candidate to be utilised within the specified time frame.
One of the vital most objective that company has developed is given underneath :
 To enhance the customer experience regarding quality of products and services that are
offered by Sainsbury.Basically, why organisation has developed this objective is to to
our customers high quality range products with the effective customer service true
charging consumers with share prices in Indonesia.
3. Strategy
Strategy can be defined as the the plan of the procedure through which an organisation can
attain desired position in specified time frame achieving goals and objectives (Christopher and
Peck, 2012). In present context Sainsbury has used STP model strategy which will help in
Business expansion among Indonesia considering a diverse role. With the help of this type of
strategy, company like Sainsbury could easily reposition itself within the current law it may also
help the company in expanding business among different nations as well. STP strategy has been
understood in a detail manner underneath: Segmentation : this is considered as a process which helps a company in dividing the
market among different range of sections of segments considering the customer needs
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and requirements.With the help of this marketer of Sainsbury could easily develop
strategies regarding the target markets based on different range of segments.Segmenting
can be done into four different ways like demographic,Geographic, psychographic and
behavioural. present context, Sainsbury segments its customers depending upon the
demographic segmentation. Here, organisation is targeted both women and man with the
age from 16 to 65. Targeting : this is another crucial section of STP model where a breakdownis basically
being done of a larger market. This might help a business organisation like Sainsbury to
offer customers Sainsbury focus to develop a target market which is both value and
quality conscious. The main focus of the organisation should be necessarily on the
development of wide target audience which is linked directly to the range of products
offered. Positioning : It refers to the ways in which image or identity of brand could be
established in order to attract customer segment. Position is a way through which a
company can outshine and give good competition in the market. Sainsbury has positioned
itself at the mid-tier of the market (Corrigan, 2011). The idea behind it was to introduce
a product which can compete in market from pricing point of view which would allow
the organisation to develop its market presence.
On the other hand some of the tactics which has been undertaken by Sainsbury given
underneath: Product Tactics : product tactics basically stage related to the products and services
which are being offered by a business organisation. If it is talked about Sainsbury then
this type of tactic or the strategy is being considered as an integral part for this
organisation because it is dealing in clothing and a different range of other sectors as well
and this is being applied at the time when sales of a product starts declining.. within the
Sainsbury, through selling range of products consideringcost cutting approach in order
to to sell its products and services with high quality. Price Tactics :pricing related to a product can make or Break an organisation because it
is been found that hire rates of a product might lead company to face decline in their
customer base. on the other hand, if the rates will be lower then company will not what
makes profit as per the requirements as per the desired rates.Therefore, at the time of
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adopting this type of Statics it is much required for Sainsbury to focus on different range
of aspects in order to give competition to its rivals. For the same, Sainsbury has decided
to who adopt price skimming strategy that will help them in in making a unique brand
name weather in the market in which it is performing.
With the help of all of the above strategies and tactics, it can easily be said that she is very Can
grab a good position in near future from the existing one.
6. Actions:
This is been considered as we approach which can be taken as the responsibility or duty of an
individual who is performing within a business organisation (Ennew, Waite and Waite, 2013).
Since, Sainsbury is looking forward to expand its business in Indonesia it is the responsibility
of individuals that company has hired to perform well so that the enlargement of the business
can be done with ease. On the other hand, It is the responsibility of Sainsbury as well to Hire
new employees as per the requirements so that they could bring innovation as well within the
organisation at the time of expanding business in Indonesia.
7. Control : just after when a plan gets executed this is the phase which basically comes in
front where the project manager of a company e basically looks forward to what they
have achieved and what are the places in which the plan is lacking in order to reach to the
desired outcome.
TASK 2
Effectiveness of retailers current SOSTAC strategy
Strategy: It precise the operation, imagination and direction of an organisation. Strategy used by
Sainsbury is STP which is the most ordinarily applied marketing model in practice (Gbadamosi,
2013).
Segmentation: dividing buyers and the consumers depending upon their taste, desirous,
needs, wants and other things can easily help a business organisation like Sainsbury to reach to
another level dividing then among small groups. It is been found that everyone has been already
working in most of the countries in today’s business world where it has used two different
segmentation processes. The first one is psychographic segmentation and the other one is
demographic.
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Targeting: if it is talked about targeting then Sainsbury basically target the family
regarding their production services when a change comes it is found that company majorly e
faces issues regarding the alterations for modifying the small segments which has been
developed by the company. Under this consequence, targeting plays a crucial role which helps
company in dividing customers with different range of products and services as per their needs.
Positioning: Yet another crucial factor of the element within the STP model which helps
the organisation imposition meaning different range of products and services considering the
similar approach which their offspring to the customers similarly (Gbadamosi, 2013). It is been
found that a good position of a product helps in enhancing the sales. Sainsbury positioning in the
UK gave it a competitive advantage s compared to other supermarket available as it has many
outlets there this lead to increase in market share as well as also improves the customer service.
Marketing mix:
It can be referred to as the combination of actions which a company takes with a view to
promote its products in market place. It is considered as one of the most significant marketing
tools because it aids in improving the overall business conduct. In this regard, the 4Ps of
marketing mix are briefly described below:-
Product: This can be referred to as the items manufactured by organisation in order to
satisfy the needs and demands of customers. Sainsbury’s operate in the form of supermarket as
well as local convenience store, thereby offering over 30,000 products inclusive of a wide variety
of goods such as fish and meat, fruits and vegetables, chilled products, Dairy items, bakery, beer,
wine, health and beauty products (Kotler and Armstrong, 2013).
Place: It can be referred to as the location of products through which they are easily
made accessible to customers. Sainsbury’s is headquartered within London, United Kingdom and
has 598 supermarkets as well as 714 convenience stores. This entity also has its online portal for
the purpose of internet shopping whereby customers can give orders for the products they like
via online channel. The company also offers free home delivery of its products to its loyal
customers.
Price: This can be referred to as the amount which customers have to incur for
purchasing the product. Sainsbury’s offers a wide range of products with diverse set of price for
different products. It maintains quality of products and services and in this regard, the pricing
strategy is based upon the value for money. It does not operate upon the strategy of price cutting,
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rather, it makes use of price discrimination. Grocery rates are relatively lower in contrast to other
companies as this directly impacts upon the product brought from the local market. Further, it
offers a range of products within the kids section at affordable prices when compared to other
business organisations.
Promotion: It is yet another crucial element of marketing mix which is essential for an
organisation to be able to do marketing of its goods and services. Promotion allows customers to
get more knowledge about the features of the products. Sainsbury’s promotes its products by
way of radio, television, newspaper in order to build a favourable brand image in the minds of
people. Also, product information is uploaded on official website of company (Kotler and et. al.,
2014). Further, Sainsbury’s has launched 'Nectar reward card' with an aim to increase the sales of
entity and also allowing the customers to earn reward points on every purchase made within the
store. This reward card also aids the enterprise to build a strong customer base.
TASK 3
Current marketing strategy used by the supermarket in the UK, and evaluated in task two, could
be implemented in the international market you chose in task one?
Marketing strategy tends to play a crucial role in the success of an organisation. Without
an effective marketing strategy, entity is not able to create awareness among customers about its
products (Lilien, Rangaswamy and De Bruyn, 2013). STP model is being used by Sainsbury to
identity its target market and target audience. In segmentation, it segments the population of a
country on the basis of social and psychological factors that strive to aid the organisation in
carrying out business expansion. Within targeting, the central emphasis is upon the family units
and within positioning, its focus is upon United Kingdom with a view to gain competitive
advantage. In the modern and hyper competitive era, company has to adopt a number of
strategies to compete with the rivals present in the market place. In this regard, the international
market taken is India. In India, segmentation of the market will be done on the basis of income
levels of people as it is not a developed country as United Kingdom. Here, targeting is done to
both high class and middle class people of society owing to the fact that usually, people
belonging to lower class prefer to purchase the products from retail market as there are many
local markets which offer the products at cheap rate. In order to attain success, the
aforementioned strategies are followed across the organisational premises of Sainsbury’s:-
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Diversification: Sainsbury’s diversify its products from one to another as this plays a
significant role in business growth. Diversification is an effective strategy that has been working
in the favour of company for a long period of time.
Awareness: It is a crucial aspect for the organisation to enhance the knowledge about
products. As Sainsbury’s is heavily investing within a lot of products belonging to different
sectors, it is imperative for the enterprise to give knowledge about its products as only after that,
customers become aware and maximum profits can be accomplished.
Customer Acquisition: Post the creation of awareness in the mindset of customers about
the goods, people tends to begin trusting the entity which in turn makes them loyal towards the
company.
Digital marketing: This is one of the most effective strategies often used by the
company. By implementing this strategy in India, customers are able to see the review of the
product online and get proper information for the same (Shaw, 2016). This can be the positive
aspect for the organisation.
Brand positioning: Sainsbury’s is regarded as one of the leading brands within United
Kingdom and this entity is successful there owing to the trust placed by people of UK in the
products offered by company. In order to facilitate business expansion within India, the company
has to take assistance of marketing strategies in order to adequately and suitably position the
brand among the customers (Yeshin, 2012). With the aid of a favourable brand name, the entity
will target the middle class and high class groups.
CONCLUSION
As per the information discussed in the above report, it has been concluded that SOSTAC
model is an effective tool with the aid of which an organisation can easily facilitate its expansion
within the new country. The strategies used in domestic country vary from that being used in
host country and thus a proper evaluation of business environment and market of new country is
necessary for the organisation to gain a strategic edge over rivals present in market place.
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