University of Northampton: Sainsbury's Global Marketing Report

This investigative report examines Sainsbury's global market expansion strategies, focusing on internationalization motives, market selection, and market entry methods, particularly joint ventures. It analyzes the company's decision to expand globally, driven by factors like brand building, economi...Read More

INVESTIGATIVE REPORT

Executive summary
The above report includes expansion of the Sainsbury to the global marketplace. Which is
to be done by company for stabilizing their brand among the market and diversifying the risk for
company. The company will be expanding to the global market with the help of joint venture so
that they can establish their business their. They can use the communication strategies in which
the e-mail marketing and social media marketing used by company for further growth and
development of company and thus they can retain in market.

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Internationalization is primarily the process through which firms take their products at the
international platform and then advertises them for gaining the market share. Sainsbury is the
renowned chain in supermarkets established in 1869 by John Sainsbury and headquartered in
London, U.K.
This report gives a brief about internationalization motives, comparison of international
market, method of market entry and marketing strategies.
MAIN BODY
Company overview
Sainsbury is basically one of the renowned and well-known organization in the chain of
the supermarkets. It was established in the year 1869 by John Sainsbury. It has its headquarter in
London, U.K. It covers a range of products and have wide range of product line like Sainsbury
Banks, Sainsbury fuel, Sainsbury supermarket etc.
Motives and triggers
Internationalization is basically the methodology and the process which the organizations
use for producing products ans services in order to meet the needs of the consumers residing in
varying countries. There are large number of barrier which has enabled Sainsbury to expand in
the new market (Brouthers, Geisser and Rothlauf, 2016).
Building brand
This is one of the most important triggering factors which have stimulated the company
to expand its business in new direction and thus enter the new market. When Sainsbury initially
established its business in UK, then it gained a huge popularity die to high quality products and
services. It was able to attract more and more customers due to its innovative ideas and creativity
thus company decided to take its brand across the wide geographies and thus expand their brand
in other market. Thus, flourishing the brand was one of the factor which compelled Sainsbury to
extend their products along with its company in new markets (Eriksson and et.al.,2015).
Economies of scale
This is the another most significant motivating factor which has allowed Sainsbury to
entice the customer of new market by taking its product across world. The main reason behind
internationalization was to achieve the economies of scale. This helps the company as it enables
them to economize their transport along with the distribution network. Besides, through

achieving the economies of scale, Sainsbury is also able to produce and manufacture the
products and services at much cheaper cost in some of the countries. This is due to the reason
that in some counties the component costs, supplier availability, flexibility, wages etc. are
available at low cost (Cavusgil and Knight, 2015). Thus, this is the triggering factors which has
allowed Sainsbury to expand in wider geographies. This allowed them to become low cost
producer and thus produce the high volume of products.
Risk diversification
This is the another remarkable reason due to which Sainsbury has decided to expand their
operations and supply chain in different countries. This is the main motive behind their
expansion. They were willing to take and diversify the risk for their company which allowed
them to assess the various opportunities of different markets. The company is more likely to
prevent having all the eggs within one basket due to which they become highly immune for the
changing trend among consumers. This eventually helps them to become rigid and less
influenced by some external factors which affects the behaviour of consumers like climate. Thus,
this was the triggering factor which acted as momentum and allowed it to diversify in wider
geographies (Knight and Liesch, 2016).
Marketing budget
Jan-19 Feb-19
Budget Actual Budget Actual
Market research 60 40 60 90
Social media
advertising
40 36 40 50
Recruitment 8300 9100 8300 9100
Hardware 150 150 150 150
Total $8500 $9326 $8550 $9390
Thus, it seems that company is really performing well as shown by the figures and have a
great market share.
The company has a high level of engagement in wide variety of social media websites
like Facebook, twitter. This forms the fist basis through which Sainsbury promote its products.

The company has its number of pages on Facebook and one official page. Besides this, it remains
active on Instagram, twitter, google which helps them to know the market trends and customer
needs.
Currently the company have more than 186900 employees who are located at different
outlets and in different countries (Knight and Liesch, 2016). Due to its great brand name and
image, this number is rapidly increasing and in the year 2018, the employees increased to more
than 20%. Apart from this, the turnover number of the company in food distribution is £55917,
banks is £57,493 and in various other sector is between £64,223 to £72865. This figure has
reduced in the year 2017 due to the wide publicity by the company and change in organizational
policies and procedures. It is currently decreasing at rapid rate.
Three main issues which the company is facing are
Intense rivalry- Due to the presence of wide range of supermarkets like TESCO, Asda and their
better image, Sainsbury is continuously facing the fierce competition of attracting customers and
managing its employees (Dodgson, 2018).
Innovation- Consumers are now more technology-oriented and thus wants innovation creativity
in each and ever product. This is one of the strategic issue which company is facing as they need
to continuously find ways to bring innovation in their products that will fulfil expectation of
consumers.
Brexit uncertainty- This is the important strategic issue which Sainsbury is facing. Since the
emergence of Brexit, there has been a lot of uncertainty in terms of government, cash-flow, legal
regulation which is affecting the company. It is becoming complicated for the company to
manage this uncertainty and alter their operations.
Market selection
Global marketing model
Porter five model
This is basically the model which helps organization to evaluate various competitive
forces that will impact it while expanding in global economies. This is one of the most important
global marketing model which assist the organizations for evaluating the strength and weakness
of different markets (Cavusgil and Knight, 2015).
Ansoff matrix

This is the framework which helps organizations top assess and analyse the various risk
which are present within the market of foreign countries in order to diversify. This is another
significant global marketing model and thus enables the organizations to devise various
strategies for the growth in future.
United States Egypt
The political stability in US is highly stable
due to high tax rate and low level of
corruption. In US, the fiscal policy is such that
it helps the organization in free trade and
import and export (Dodgson, 2018).
The political condition of Egypt are not stable
and it has been reported that Egypt is considers
a one of the country where corruption rate is
high. The government in Egypt tend to change
over time and is not stable.
As per the report of 2018, the employment rate
in US has taken a drastic turn and has
increased from 32.1% to more than 64.2%.
Besides this, due to high cash-flow in the
country economic conditions of US are stable.
The GDP rate of Egypt as recorded in 2017 has
declined to a great extent due to which the
economy of the country has fallen down to
around 21.6%. Along with this, the due to high
interest rates the organizations in Egypt are not
well-established (Eriksson and et.al.,2015).
The disposable income in US of the consumers
are high due to great employment rate and thus
they are willing to spend on luxury items.
Besides this, due to high population of
youngsters they are more oriented towards
high consumer goods (Knight and Liesch,
2016).
Due to employments rate in Egypt, there are
more of the backwards class individuals in
Egypt due to which they spend on luxury items
and consumer goods are not that much. Thus,
they remain confined to their small homes and
does not invest high amount.
Evaluation
Sainsbury chose the market of US due to various factors which in favour of their
operations like high employment rate, high GDP, political stability etc. These all factors goes a
long way in successfully operation within the country thus due to these, Company decided to
enter in US market. For example- High GDP means low interest rates thus it will help the
company to take loans from banks and other financial institutions at much low rate. Thus,

considering these favourable factors company decided to enter US market. On the other hand,
even though Egypt is not as politically stable like US but the spending pattern of the consumers
in Egypt is stable enough and thus they spend a huge amount on luxury items like food items.
This has compelled the company to expand its operations in Egypt (Cavusgil and Knight, 2015).
Market entry method
In order to establish the position in market, the organizations makes use of various
market entry methods which helps them to successfully explore the different international
market.
Joint ventures
This is the another mode of entry which helps the organizations to enter the market
successfully and thus attain the competitive advantage. Joint venture is basically the kind of
partnership which mainly involves the building of the third independent company. In this, two
organizations primarily agrees to cooperate and perform together and build a third company. In
the year 2014, Sainsbury diversified its business within US and thus entered the joint venture
with Belgian retailer in order to set their outlets by the name Homebase and supply chain in
united kingdom. Thus, this is the another mode of entry which the company used for entering in
to the market of US and explore its pros and cons. The risk as well as the profit which this joint
ventures incur are shared equally by the two organizations and therefore helps them to increase
their revenue and profitability ratio. Besides this, Sainsbury also joined hands with various other
firms in US like British home stores to diversify their business (Brouthers, Geisser and Rothlauf,
2016).
Justification
The Joint venture method used by Sainsbury was one prove to be one of the mode
advantageous factor for the organization as it helped the to increase their revenue ratio. As Joint
venture generally include working of two firms to establish the new firm thus double the power
to perform. In the year 2010, Sainsbury in order to participate within the hypermarket sector of
United states came into the joint venture with British home stores and thus formed SavaCentre.
Thus, this joint venture helped the company to perform their function more effectively and thus
made their entry easier (Maitland and Sammartino, 2015). This joint venture eventually
increased the sale of Sainsbury from 32.4% to more than 62.8%. In the year 2016, the revenue of
Savacenter raised from £1208m to roughly £1322m and this also impacted the revenue of

Sainsbury where its net operating profit increased from £1017 to more than £1839m. The biggest
advantage which Sainsbury get from this mode of entry is that it helped them to attain the
economies of scale. This joint venture assisted them to scale up their capacity because there were
contribution of the two organizations. Besides this, it also helped the company to attain
competitive advantage by utilizing the strength of two firms.
Market strategies
In order to ensure a high success within international in market and to establish its
position in the international market, Sainsbury incorporated a mixture of offline as well as online
communication mix that helped them to attract the customers.
E-mail marketing
This is one of the highly proven marketing strategy which the organizations used in order
to sustain their loyal customers and attracting the new customers. Sainsbury while expanding in
various countries used E-mail marketing for targeting the customers. For example- When
Sainsbury diversified in countries with its bank then in order to make the customers aware of its
presence and to entice them, company designed a special marketing team which was focussed
towards marketing the services of banks (Santangelo and Meyer, 2017). This team was
responsible for sending the personalized message and e-mails to the target customer regarding
various services provided by the Sainsbury bank. Thus, this helped them to attract the potential
customers by sending innovative messages. The E-mail marketing increased the sale of company
from around 32.1% to nearly 56.3% and also enlarged the customer base to around 82.5%. As e-
mails were broadcasted on large platform this also increased the number of suppliers of
Sainsbury to more than 1200 across the whole world. The main advantage of this marketing
strategy is that it allowed the company to design their own messages according to the
information which they want to incorporate in them.
Social media
This is considered as one of the highly powerful tool which helps the organizations to
establish their position by fulfilling the needs and demands of customers. Thus, when Sainsbury
expanded its product line and operations in different countries then it utilized the power of social
media where it started posted its success story, boosted its productivity through google and thus
approached the customers through their products. Through social media, the company was able
to approach the customers through their innovative products and services. Thus, this helped

Sainsbury to flourish their business across wide geographies. The use of social media ultimately
increased the number of visitors on their website from around 32.1% to more than 51.5%.
Besides this, the conversion rate also increased to more than 36965. The main advantage of this
communication mix which has helped Sainsbury is that it covers a wide range of audience as
more and more people are now engaged in using different kinds of social media websites
(Maitland and Sammartino, 2015).
Word-of-mouth
This is the another communication mix which the organizations use in order to enhance
their position in market. This has the most powerful impact on people and thus influences
towards that brand or company. Sainsbury in order to successfully establish its position in the
market, used word-of mouth as the tool for making the customers aware of its presence. As the
company already had a good name in the market and taking advantage of this, company
successfully entered into the countries where people who were aware of products told other
people about its quality products. The main advantage of this communication mix is that people
tend to believe other people and thus get influenced by their positive as well as negative
comments easily (Santangelo and Meyer, 2017).
Illustration 1: Marketing mix
(Source: What is marketing communication mix, 2019)

CONCLUSION
It has been summarized that in order to expand internationally, there are various motives
which stimulates the organizations for expanding their operations. Besides this, before entering
any foreign market organizations are required to analyse the market of that particular country
and decide the various modes of entry which will help them in successfully setting the units.
After the analysis, organization decides the communication mix through which they will
successfully approach the customers.

REFERENCES
Books & Journals
Brouthers, K.D., Geisser, K.D. and Rothlauf, F., 2016. Explaining the internationalization of
ibusiness firms. Journal of International Business Studies.47(5). pp.513-534.
Cavusgil, S.T. and Knight, G., 2015. The born global firm: An entrepreneurial and capabilities
perspective on early and rapid internationalization. Journal of International Business
Studies.46(1). pp.3-16.
Dodgson, M., 2018. Technological collaboration in industry: strategy, policy and
internationalization in innovation. Routledge.
Eriksson, K and et.al.,2015. Experiential knowledge and cost in the internationalization process.
In Knowledge, Networks and Power (pp. 41-63). Palgrave Macmillan, London.
Knight, G.A. and Liesch, P.W., 2016. Internationalization: From incremental to born global.
Journal of World Business.51(1). pp.93-102.
Maitland, E. and Sammartino, A., 2015. Managerial cognition and internationalization. Journal
of International Business Studies.46(7). pp.733-760.
Santangelo, G.D. and Meyer, K.E., 2017. Internationalization as an evolutionary process.
Journal of International Business Studies.48(9). pp.1114-1130.
Online
What is marketing communication mix. 2019. [Online] Available through:
<https://smallbusiness.chron.com/marketing-communication-mix-63541.html>