Product Development – This is the name given to s growth strategy where businesses aim to introduce new products to existing markets. This would require Sainsbury’s to develop modified products to make them appeal to existing markets as well as thinking up totally unique products.
Diversification – This is the growth strategy where a business introduces new products to a new market. This can be a more risky strategy as it means moving into an unfamiliar market with new products. For Sainsbury’s to be able to adopt this strategy it must have a clear idea of what it wishes to gain and an honest assessment of risks.
PEST Analysis
PEST Analysis is an extremely useful technique that Sainsbury’s can use to identify aspects that may affect Sainsbury’s and also highlight ways in which they can improve their level of success.
PEST stands for:
Political – Political issues that may affect Sainsbury’s may first be due to relations. If Sainsbury’s has bad relations with other countries then this may make it difficult for Sainsbury’s to be able to do business with them due to this. Also as the UK is part of the EU all the countries that are a part of the EU are available for trade, making it possible for Sainsbury’s to take advantage of this and sell famous or popular dishes from these countries.
Economical – The economic factors that can affect Sainsbury’s are things such as the credit crunch. At the moment as we are currently in a credit crunch this is a big issue to consider. This can benefit but also be a disadvantage for Sainsbury’s. It can benefit Sainsbury’s as Sainsbury’s can take advantage of this and put offers on for its customers who are struggling more by this. Also, Sainsbury’s themselves may be effected by this as the price for selling and such as decreased so Sainsbury’s may find that they are not making as much as usual, also they may need to spend more than usual to be able to keep the same amount of stock and keep the business running. Knowing this Sainsbury’s need to take all the measures available to improve the performance of the business.
Social – Sainsbury’s can improve their business socially by looking into all the different cultures that have settled in the UK. Catering to the needs of other cultural groups could improve the performance of the business and also make the business more socially recognised.
Technological – Technical resources could improve the performance of the business dramatically including self service checkouts being introduced into the business mean customers can serve and pay for their own shopping. Also ensuring the best security software is used can increase the safety of both customers and the business as the buildings and property will be safely stored and also the customer’s personal details will also be safe.
Looking at the above we can see that Sainsbury’s have many things that can be considered which could improve the performance of the business as a whole. To expand on what Sainsbury’s have already learnt about the business and learn more about the products performance Sainsbury’s could conduct a product life cycle.
Product Life Cycle
A product life cycle could be another method available for Sainsbury’s to use and this will evaluate every products activity. It will let us know how well a product is performing and what stage of the cycle it is at. This is a good method when it comes to identifying when a product is no longer worth providing.
Sainsbury’s taste the difference range.
The above product life cycle shows that Sainsbury’s taste the different range is currently just meeting the mature stage. Though the product life cycle identifies the stage the range is at within the business it does not show us this compared to the market as a whole, so we have no idea how well the product is doing compared to our competitors similar ranges. It also does not mention how much time it has taken to get to this stage in the market as well as this no number of sales has been shown, so though it looks like sales are doing well compared to the market as a whole this may be very small. It also doesn’t show how much money the business is making and the cost of running the business.
I believe all the above techniques are very good at helping to make marketing decisions as it shows us what point the business/product is at and suggests how to improve the business as a whole or improve the individual products performance.
As a whole Sainsbury’s is performing quite well. It has many more strengths and opportunities than weaknesses and threats and also has a wide product range. Sainsbury’s ‘taste the difference’ range is also at a mature level. Improvements could be made by having lower priced products for those who have been affected more than others by the credit crunch. Also Sainsbury’s could have more stores located closer to family homes, this may convince people to use Sainsbury’s more as at the moment Sainsbury’s stores are mostly located away from busy areas.
Though Sainsbury’s has many methods above there are still more methods available to help Sainsbury’s become more aware of ways of improving their business.
Boston Matrix
This gives a useful way of looking at opportunities available to a business. It also shows what segments of the business are in a good position and which are not. That way a business can decide on the most appropriate investment strategies for the business.
The Boston Matrix is split into four sections:
STARS
- High Market Share
- High Market Growth
These products tend to generate high amounts of income. These products also have a high increasing share in the market.
CASH COWS
- High Market Share
- Low Market Growth
These products tend to generate more than is invested in them. But they have a low growth market.
DOGS
- Low Market Share
- Low Market Growth
These products do not generate cash for the company, they tend to absorb it. They require large amounts of money to support them.
PROBLEM CHILD
- High Market Growth
- Low Market Share
These products tend to consume resources without generating much in return. As you attempt to increase market share they absorb most money.
An Example of the Layout of the Boston Matrix
- Market Growth shows the level of potential in the market
- Market Share shows the level of possible scales available from the market
Looking at the Boston Matrix I can see that Sainsbury’s taste the difference range have a high market share and are on a mature level from customers. Due to this I would place the taste the difference range are Cash Cows.
Task 2
As a large organisation it is important for Sainsbury’s to try their very best to keep customers interested in products they sell. By using different marketing techniques Sainsbury’s manages to increase demand for products it sells. A method Sainsbury’s could use to help identify different markets could be Market Segmentation. This is where the market is split up into several segments allowing a business to focus on achieving smaller goals. Once Sainsbury’s identifies the segments in the market it will be able to match relevant promotional and marketing techniques to each segment.
There are several techniques Sainsbury’s uses to sell their ‘taste the difference’ product range which I will now discuss.
First of all Sainsbury’s use ‘Psychological Pricing’ (e.g. Sainsbury’s coleslaw, taste the difference £0.98) this makes the customer mind believe they are getting a good offer as it is less than £1 but in actual fact they are only saving 2p. This strategy convinces customers to purchase more products.
Another marketing technique Sainsbury’s use is ‘Special Offers’ offering discounts such as ‘33%’ make the customer more likely to buy a product. Also offering two of a particular product for a cheaper price (e.g. Sainsbury’s chocolate ginger cookies, taste the difference £1.16 or 2 for £2.00) this is only a saving of 32p but as it is a save money offer it appeals to customers.
Branding is yet another marketing technique used by Sainsbury’s. It is recognised that brands are one of the most influencing factors when it comes to buying decisions and customer choice. Sainsbury’s have recognised this and have come up with a strategy to split their own brand of product into separate segments, offering normal Sainsbury’s branded products for those who have being effected more than others by the credit crunch. As well as their own “taste the difference” range for customers who would rather pay a little more money for a better quality product. Sainsbury’s manage to gain more customers by placing these products next to other similar products which are of a different brand. Doing such can make a person differ from their usual choice of brand and choose a Sainsbury’s option. The continuous reminder of the quality of the ‘taste the difference’ range may make customers choose to buy the Sainsbury’s ‘taste the difference’ range. This is because many people have high standards when it comes to food quality.
Another marketing technique Sainsbury’s use is Jamie Oliver. Sainsbury’s use Jamie as a marketing method by having him promote their foods and show how dramatic yet healthy meals can be made at low costs from Sainsbury’s products. Also as Jamie is a famous chef it may encourage people to try out Sainsbury’s foods as having someone this famous looks very good for the business.
Finally, Sainsbury’s make good use of the internet as a marketing technique. They offer and online service to the public which also provides a delivery service. Offering free delivery on orders over £100. This may persuade customers who do not have time to go shopping to shop online with Sainsbury’s.
I believe this range is aimed at customers who have quality as their prime concern from food. These people are usually willing to pay a little extra for a better quality food product. As there are more than 350 foods in the range it meets many customers’ wants. It includes: breads, ready meals, fruit and vegetables, cheese, meat and grocery items. Sainsbury’s also has several competitors offering the same sort of service to their customers. One of these is Morrisons, who offer ‘The Best’ range. For Sainsbury’s to remain more valued by customers it must continuously monitor competitors such as Morrisons to ensure their products are of higher quality and better prices.
Sainsbury’s could improve their level of custom by developing their marketing strategy further. They could offer more products at ‘save cost’ prices. They could also begin to put save money vouchers on packaging of products to convince customers to buy products. Another method Sainsbury’s could use could be buy something get something half price (e.g. buy pasta sauce get pasta half price). As we are currently in a credit crunch offers such as these will appeal to customers. Also Sainsbury’s could offer a service of catering for foods which could attract people from other cultures. (e.g. introducing Halaal meat could gain much custom from Halaal food eating members of the public) catering to other cultures could gain much more custom and interest for Sainsbury’s. Another way Sainsbury’s could improve their level of custom could be to open more stores in locations close to family homes. This would mean that individuals or families that do not have means of transport can also visit the store. This could build up the level of interest for Sainsbury’s dramatically if stores are opened in the correct location(s).