CVM Sainsbury 2023572 PDF

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2023572

Master’s Programme Assignment Cover Sheet Submitted By: 2023572 Date Sent: 25th January 2021. Module Title: Customer Value Management Module Code: IB9FW0 Date/Year of Module: 2020-21 Submission Deadline: 25th January 2021 Word Count: 2463 Number of Pages: 19 Question: PART A Questions (1500 words) Q 1) Reflecting on what you have learnt in the Customer Value Management module, please describe and perform a critical analysis of the key aspects of Sainsbury’s marketing strategy and tactics in its attempts to provide customer value in this fastmoving situation. Your analysis should include key aspects related to its target market and positioning, value proposition, mix of services and products that constitute its offer, marketing communications strategy, pricing, and channels it uses to deliver value.

Q 2) Based on your evaluation of its marketing strategy, present your recommendations and any suggestions you may have whereby Sainsbury can improve on the value it delivers to its customers, both in the context of the immediate situation described above, as well as the longer term.

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PART B Questions (1000 words) Q 3) Drawing upon your knowledge of Operations management, please articulate the underlying reasons for the challenges to Sainsbury’s and assess the extent to which these were common to all food retailers or specific to Sainsbury’s. Evaluate how well Sainsbury’s were able to adjust to the new operations management challenges. Please be sure to draw upon the full range of Operations management concepts that you could apply in this situation and support your answer with appropriate rationale and evidence.

Q 4) Based on your analysis of its operations challenges in this instance, present your recommendations and any suggestions you may have whereby Sainsbury can improve on its operations performance, and what it might learn from this situation which could provide enhanced customer value now and in the longer-term.

“I declare that this work is entirely my own in accordance with the University's Regulation 11 and the WBS guidelines on plagiarism and collusion. All external references and sources are clearly acknowledged and identified within the contents. No substantial part(s) of the work submitted here has also been submitted by me in other assessments for accredited courses of study, and I acknowledge that if this has been done it may result in me being reported for self-plagiarism and an appropriate reduction in marks may be made when marking this piece of work.”

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2023572 TABLE OF CONTENTS TABLE OF FIGURES ........................................................................................................... 4 1.

INTRODUCTION ........................................................................................................... 5

2.

MARKETING STARTEGY (Q1)..................................................................................... 6 2.1 Market Segmentation .................................................................................................. 6 2.2 Market Targeting ......................................................................................................... 7 2.3 Market Positioning ....................................................................................................... 7

3.

MARKETING COMMUNICATION STRATEGY (Q1) ..................................................... 8

4.

MARKET MIX(4P) (Q1) ................................................................................................. 9 4.1 Product ...................................................................................................................... 10 4.2 Price .......................................................................................................................... 10 4.3 Place ......................................................................................................................... 10 4.4 Promotion .................................................................................................................. 11

5.

MARKETING RECOMMENDATIONS (Q2) ................................................................. 11

6.

OPERATIONAL CHALLENGES (Q3) ......................................................................... 12

7.

OPERATIONAL RECOMMENDATIONS (Q4)............................................................. 14

8.

APPENDIX 8.1 Reference List................................................................................................................................................... 16

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2023572 TABLE OF FIGURES Figure 1: Customer Confidence Trend…………….....……….…………………………………..05 Figure 2: Sainsbury Multi-Brand…………...……………………………………………...……….06 Figure 3: Market Segmentation Factors…………………………………………………………..06 Figure 4: Sainsbury Market Segmentation……………………………………………………… 07 Figure 5: Sainsbury COVID Timeline……………………………………………………………...07 Figure 6: Sainsbury’s Perceptual Map…………………………………………………………….08 Figure 7: Marketing Communication………………………………………………………………08 Figure 8: Marketing Mix Framework……………………………………………………………….09 Figure 9: Sainsbury Store Count…………………………………………………………………..10 Figure 10: Volume-Variety Matrix……………………………………………………………….....12 Figure 11: Accenture Survey……………………………………………………………………….13 Figure 12: 4R Framework…………………………………………………………………………..14 Figure 13: Mckinsey Survey…………………………………………………………………….….15

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2023572 1. INTRODUCTION

“Lockdown”. A word started with outbreak of COVID -19 in March 2020 when entire world shook. Government had immense responsibility in protecting their people more than anything. So, was implemented lockdown in the UK where only essential services and health care workers could run business. Here, at that moment, started fear in people not being able to meet basic needs and did panic buying, resulted in dipping out shelves and stockpiling. Consumer confidence levels reached rock bottom with the inception of pandemic (Figure 1). If this was not it, a second wave coupled with Brexit uncertainty, dragged the business further down.

Figure 1: Customer Confidence Trend Coming to second half of pandemic, consumers started accepting living in new normal, with social distancing measures and frequent sanitizations. Although it was difficult for consumers to adjust to this change, UK supermarket industry was one of the most active during lockdown and had to undergo huge risks with their employees and stores to make shopping experience for customers safe. To being with, in line with government social distance guidelines, retail industry had to come up with urgent solutions to make offline shopping trips safer, render its digital infrastructure better for online shopping, and not lose market share. Sainsbury is one of Britain’s favorite supermarket for customers, along with being one of top 4 retail market in UK. Their core strategy to customers is to help customers live well for less. The brand promotes itself as a mid – level trademark, also providing sustainable products to their customers. They have stores located all over Britain (2400), with also providing unbeatable online services to their customers.

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2023572 They have multi-channel, multi-brand business model, allowing their consumers to buy everything under one shelter. Argos was taken over by Sainsbury in 2018, they provide financial services with Sainsbury Bank.

Figure 2: Sainsbury Mutli - Brand

PART A 2. MARKET STARTEGY (Q1)

2.1 Segmentation Calorine Tynan (Tynan, 2010) in her book states that market segmentation would require both management methodology and segmentation before any analysis can commence. She mentions that the segmentation model has a dependent and independent variable, wherein this subdivision depends on multiple factors like, nature of demand, type of product and many more.

Figure 3: Market Segmentation Factors [self]

Following same pattern of distribution of all retail stores, Sainsbury also had segmented its market geographically, dividing into rural and urban, with 54% crowd in rural and town area. Digging down segmentation further, under demographics, Sainsbury has made middle – high income range customers as their targets. A notable thing is that a large group of middle – aged customers prefer Sainsbury than younger generation also, family size more than two. Sainsbury uses UK as main geographical segment and attempts to push themselves as an affordable brand and on behavioral side of the business. Works on belief of best value for money, the idea here is to gain market share.

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Figure 4: Sainsbury Market Segmentation

2.2 Targeting Market targeting focusses on achieving potential attractiveness of each market segment. Simon Roberts, CEO of Sainsbury mentions he wants to see Sainsbury as Britain’s favorite supermarket and with focusing on food as their heritage lies there (Vizard, 2020). Consequently, serving people of Britain becomes their target segment. During COVID pandemic, their focus shifted to serve any customer with utmost importance and launched campaign “Feed the Nation” with increased access to services like “Click and Collect”, home and online deliveries. By doing so, they shift focus to serve all types of customers majorly vulnerable, elderly people to ease the shopping experience. This helped them in increasing their customer base and product variety.

Figure 5: Sainsbury COVID Timeline

2.3 Positioning Live well for less is a commitment Sainsbury has promised, indicating they are affordable brand for every customer. Jotting a perceptual map for Sainsbury (Figure 6), it is observed that this store is preferred by mid – high range income and middle-aged customers. However, with market share sweepers like Aldi, Lidl they had to promote as a quality enforced, high end brand. Because they focus on segmented market, pricing strategy aims 7

2023572 to toggle between mid to high end. With Covid on table, they performed cost focus as a strategy and reduce prices with Price Lock campaign, diverting focus from differentiation strategy (Hawthorne, 2020).

Figure 6: Sainsbury’s Perceptual Map

3. MARKETING COMMUNICATION STARTEGY (Q1)

The marketing communications strategy is the approach used by a corporation in different forms of communication to meet their target market. This involves message, platform, and target. Integrated Marketing Communication is created to maintain a consistent brand experience to a consumer. The following diagram depicts a process to reach a communication strategy.

Figure 7: Marketing Communication [self]

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2023572 Sainsbury chose a mix strategy of online advertising, campaigns, and direct marketing. They used multiple social platforms, magazines, TV advertisements to attract their customers, for example, Sainsbury Twitter account has 583.2 followers with their cynical tweets, store information keeping their customers in loop. It is crucial to note that Sainsbury promotes as a brand with great moral values, which is shown by repaying government business relief rates of £440 million, as they were allowed for trading during pandemic, (Nilsson, 2020). Although these strategies were to attract customers, with inception of pandemic they were forced to alter strategies. Though governments recognized supermarkets, as essential requirements, food sectors had extra burden to reach their customers, letting them know it is safe for shopping, sanitizing their supermarkets. With this launched campaign called “Feed the Nation”. They have increased number of click and collect services, recruited more employees to serve instore social distancing shopping, (Sainsbury, 2020). This also added for additional logistic support from Deliveroo and Uber Eats for delivery services, (Nott, 2020).

4. MARKET MIX (Q1)

These are marketing factors used by a company for advertising products. These 4 P’s are limited in overall market setting by independent and dependent variables, and they interact strongly with one another. It is used in understanding what consumers want from a company and how to meet their needs (Hague, 2019).

Figure 8: Marketing Mix Framework

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2023572 4.1 Products: Sainsbury offers wide variety of products and services along with over 15,000 self-productions. Along with offering grocery essentials (Fresh Bakery, Frozen Meat, Diary, Beauty and Health Products) their collaboration with Argos, they also offer clothing, general merchandise, entertainment. This acquisition had helped them in reaching to more customers (BBC, 2018). Prior to pandemic, customers focused on purchasing products with good quality, brand value but pandemic swept through time, their behavior altered in buying essential, organic, and long-lasting items. Hence, this should be a vital modification to be adopted.

4.2 Price: Objective of Sainsbury always stayed offering products at great value to customers, in alignment to their pricing policies. However, with pandemic, they were forced to reduce prices to compete with budget friendly grocers. This would be an obvious implication as during pandemic household incomes were reduced drastically. They have aligned this to go beyond cost saving plans and seek partnerships as mentioned by Simon Roberts in Interim Report 2020.

4.3 Place: As a retailer, they chose to stay close to their customers, with having over 1400 stores across UK. Opening few more stores during pandemic shows Sainsbury making a mark as a customer convenience brand (Figure 7). They used, home delivery, click and collect, online shopping as their major distribution channels, with priority slots to Social, NHS workers. Very recently a delivery idea of chop chop was initiated for providing one-hour deliveries in 14 cities. With increasing demand for online shopping, they will have to keep cope up with IT Infrastructure.

Figure 9: Sainsbury Store Count (Statsita)

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2023572 4.4 Promotions: Sainsbury used variety of channels to reach their customers, like TV, Newspaper, digital platforms. Presenting celebrity endorsements (like David Bechkam, Daniel Sturridge) attracts customers and boosts value. Creative promotions like Price Lockdown adverts on websites, which offers on groceries were implemented during lockdowns.

5. MARKETING RECOMMENDATIONS (Q2)

It is well understood that Sainsbury had strong grounds, and diverse strategies allowing them to offer value to their customers. Even though uncalled for events took place, they were able to stand making profits. Sainsbury’s prompt management decisions had a crucial impact in them uplifting profits. They carefully took clever strategic decisions, analyzed requirements, altered their campaign initiatives. Pandemic is a shock to industry and re- strategizing is their ultimatum to mark their place. They could also consider the below mentioned factors in reorganizing to ensure utmost value to customers,

1. Online Delivery: With online sales boomed up 87% last year (COVID-19), customer behavior is shifting towards e – shopping for a long-lasting time, they would have to consider making their digital model stronger, (Stewart, 2020) like implementing new cookie plans for retargeting (Wheaton, 2020), geocaching (displaying advertisements in websites). To help with this, they would need to develop IT Infrastructure to not dishearten customer experience and match strong competitor like Tesco.

2. Voice for regional and sustainable: Consumer concerns on hygiene have led them to become more precautious while in COVID season, local suppliers have benefited from customers hunting for fresh produce and encouraging local businesses (Deloitte, 2020). Therefore, prioritizing local business should be immediate short-term goal.

3. Market Visibility: As a supermarket industry, traditionally Sainsbury has low visibility, high volume, and high demand. Following government guidelines, they are putting many efforts in making customer shopping safe. With help of their communication models, they should bring to customers notice the efforts they are performing. By doing so, they would gain trust of their customers.

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2023572 PART B

6. OPERATIONAL CHALLENGES (Q3)

Sainsbury being one of top 3 store chosen by customers, indicates that they are being able to sell products and provide services efficiently. With this said, their operations management is working closely for gaining profits. Inorder to understand the efficiency of Sainsbury operations structure and figure out their design issues, it is essential to recognize their supply chain management. Sainsbury like every other retail store, uses a hybrid of both push and pull supply chain system, but very recently their more focus towards, pull model defining the customer demand. This showed a positive impact on their entire chain operation (Brown, 2021). Sainsbury operates in a very lean fashion, with long term, trustworthy suppliers, placing stores at convenient locations for customers, collectively providing best experience for their customers. With design agenda to choose from, Sainsbury positioned products in a process layout, improving efficiency by arranging products according to their function. Two major challenges were faced by retail industry. Firstly, pre COVID, layout was arranged in such a fashion that, all types of customers can shop according to their leisure. For example, “Food to Go” (bakery and fresh products) are placed closer to checkouts, dedicating more space for cloth shopping, moving different isles to walls for leisure shopping. The aiels were arranged to increase free movement of customers both ways. They used ideas like having faster checkout options for rushing customers, everyday essentials (egg, milk, bread) were placed at long distance from one another encouraging customers to walk throughout the store, (Davis, 2019). Each of these characteristics have been intended to improve operating performance and put more money spending by shoppers.

Figure 10: Volume – Variety Matrix

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With the inception of COVID, none of the layouts mentioned above would pass the criteria, as it didn’t allow for any extreme hygiene or social distancing measures. Rather these layouts increased interaction with requirement of walking longer distances. This issue wasn’t faced by Sainsbury alone but with all other supermarkets as none of them had any COVID caution required facilities. According to the survey done by Accenture, consumers chose limiting food waste and shopping more health consciously as their top priority (Figure 11). Forced to follow government guidelines for safety and maintaining limited staff, these issues were faced in the storehouses also. With lack of time as they had made the business running, all the supermarkets, collaboratively pursued temporary options like implementation sanitization counters, faster checkout options, shield covering for each checkout counter, posters to remind customers to maintain social distancing norms. Asda, a competitor of Sainsbury had come up with innovative ideas of automation of store count, virtual queuing app, protective anti-microbial coating on frequent touch points, (Banks, 2020). This indicates that in keeping their shops healthy for shoppers, every major supermarket had faced the very same challenges.

Figure 11: Accenture Survey

Second problem faced was Supply Chain disruption. Supermarket industry chain undergoes multiple stages before reaching customer. Their business model had Luminate a supply chain platform for streamline their inventory management, (Berthaiume, 2020), which got disrupted after COVID. This o...