How Does ASDA Maintain a Competitive Advantage?
How Does ASDA Maintain a Competitive Advantage?
For my coursework I have chosen to analyze how the supermarket ASDA builds and maintains a competitive advantage against its competitors. ASDA is owned by Wal-Mart its parent company that allows ASDA to maintain cheap prices by Wal-Marts massive bulk buying power that has made it such a success in America. I have chosen ASDA because it is the closest business to my house making communication each between ASDA and myself efficient and with relative ease.
Wal-Mart is also one of the fasting growing supermarket chains in the country, and is reducing the market share of it's competitors. This makes ASDA ideal for analysing how ASDA maintains it's competitive advantage, as it is currently very successful.
Competitive advantage in relation to ASDA is it's ability to build and maintain a distinctive edge, through its reputation, innovation, and through its relationship with it's suppliers. ASDA operates in a highly competitive market with many rivals such as Tesco's and Somerfield, so to make a profit and attract customers it must be different to, and better than it's competitors.
So maintaining an competitive advantage is important because if ASDA did not then its profits would fall, as customers would go to other more dynamic supermarkets. This is why ASDA continually advertises, promotes, and minimizes its prices in order to keep and attract customers away from a crowded market.
I will analyze how ASDA maintains a competitive advantage by assessing it through questionnaires, secondary research such as magazines, and annual reports and through observations that I have made at ASDA and comparative stores such as Aldi. I will then present the information in a clear and concise way, and evaluate ASDA's competitive techniques, against that of it's competitors, finishing with a conclusion, and summary of the main points.
ASDA's mission statement tells me much about the aims and goals of the company and in what way ASDA tries to focus it's ideas and new developments which is important for ASDA as it not only defines ASDA's purpose but defines ASDA's entire work ethos and strategy which is at the heart of ASDA's competitive advantage. ASDA's mission statement is as follows:
'To be Britain's best value fresh food and clothing superstore, by satisfying the weekly shopping needs of ordinary working people and their families who demand value.'
ASDA also emphasizes the need to:
- The need to keep low prices and increase quality
- Reduce waste to a minimum
- Listen to the needs and wants of the consumer
- Strive for better results and a good all round service
ASDA's mission statement reveals that ASDA's main concern is providing economical goods for a broad consumer base this is important as to maintain a competitive advantage ASDA must carefully identify its target consumer group, and cater for their needs in this case those with lower incomes, unlike another company like Marks and Spencer's who focus on quality, although ASDA maintains that it's products are of good quality, they are certainly not premium goods.
ASDA is owned by Wal Mart which is one of the largest ...
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- Strive for better results and a good all round service
ASDA's mission statement reveals that ASDA's main concern is providing economical goods for a broad consumer base this is important as to maintain a competitive advantage ASDA must carefully identify its target consumer group, and cater for their needs in this case those with lower incomes, unlike another company like Marks and Spencer's who focus on quality, although ASDA maintains that it's products are of good quality, they are certainly not premium goods.
ASDA is owned by Wal Mart which is one of the largest supermarket chains in America. This gives ASDA the ability to offer it's goods at cheaper prices than it's competitors and match the quality and offers of the major supermarket while still making more profit that it's rivals due to the large economies of scale involved in bulk buying by Wal Mart. A simple price comparison of generic goods can demonstrate ASDA's competitive edge over rival supermarkets in price. I chose Tesco's because it is the largest Supermarket in the UK at this time.
ASDA Price
Tesco Price
Good
£0.19
£0.19
Economy Bread
£0.49
£0.49
Heinz Beans
£0.39
£0.49
00 Bin Liners
£2.39
£2.40
Tampax
£0.99
£1.29
Own brand 60 Multivitamins and Iron
£1.19
£1.19
Double Bar of Galaxy
£0.39
£0.29
6 Jam Tarts
£1.39
£1.49
Heinze Cheese Supreme
£0.08
£0.10
00 Safety Matches
This is a major advantage to it's competitors as they can out compete it's British rivals however there are those who who dislike foreign companies and prefer to buy British, so this is a mixed blessing for ASDA it does not seem to be a major factor as ASDA has worked hard at promoting the fact that it 'buys locally to support the local economy' and 'supports British farmers giving them fair prices' which has helped ASDA's impact a great deal and has attracted customers.
ASDA, like it's competitors has many schemes and programs operating to make extra money and give a feeling of 'added value' value to the consumer. This is one of the many vital ways in which ASDA gains a Unique Selling Point, in this saturated market. An example of this is ASDA's drive in Movie which was held at the Wisbech branch of ASDA a few month's ago.
This allowed customers on a Sunday Evening to go and watch a movie in their car park for a minimal price and in the process sell goods like hot dogs. It was a big success and ASDA plans to hold another in the near future. This allowed ASDA to make money out of it's empty car park through holding this event. ASDA also managed to gain much promotion out of the event as their was advertisements and free giveaways. Most importantly though it helped ASDA's public image which is invaluable to ASDA as people are more likely to shop in a store that is seen as good and innovative than stale and boring.
The introduction of the internet has also been important to ASDA in maintaining a competitive advantage a spokesperson for ASDA said ' people who may struggle to use the internet (e.g. Disabled, infirm etc.) can now do so via the internet. By offering this service we maintain our standing as one of Bretons top retailers!'
ASDA's use of the internet is definitely proved useful, although in a survey I conducted only 1 in 10 used this service it was conducted in Wisbech where this service is not available ASDA maintains that it's internet site has 'many users' and is 'growing in popularity all the time.'
Tesco's and a few other supermarkets offer a similar service, but ASDA was one of the market leaders, and offers it at the lowest cost rate than other competitors, attracting customers away from more expensive websites.
ASDA also offers other banking and useful services such as Pet Insurance and ASDA calltime which have proved most popular with ASDA and other supermarkets such as Sainsbury's. Although ASDA was one of the companies that pioneered this other companies such as Somerfield have followed suit proving that it is indeed popular and gave ASDA a competitive advantage while other companies had to reactively start their own up.
The internet is also a cost efficient and effective way of advertising which ASDA utilizes on it's website to make money, and to show it's promotions online, which was an advantage which some supermarkets were slow to utilize like the Co-operative Supermarket Chain Rainbow.
One of the main ways in which businesses maintain a competitive edge is through extensive market research and 'continually studying the needs of our customers and change to suit that need.'
To carefully identify those who are potential or existing customers is vital to ensure a competitive advantage will be long lasting and targeted at the correct consumer group for maximum effect. ASDA carries out many surveys on:
) Customer Care
2) Price Comparison
3) Product Development
4) Advertising Campaigns
5) Consumer Issues
ASDA does other surveys but as far as competitive advantage is concerned these are the most important ones. 'By Utilizing various market research techniques ASDA can meet the demands of a dynamic market' and continually stay one step ahead of the competition.
Innovation is also important, market research is important, as well as customer feedback, but ASDA also has a highly trained teams of market analysts and development teams that come up with new ideas, such as the recently introduced ASDA delivery service, they also spot changing trends in the market and adapt the company to meet those demands.
ASDA also concentrates on providing a high level of customer care and satisfaction, each store has a greeter that helps people and provides a friendly a secure atmosphere from entering the store. Each greeter is trained in customer care, and there are incentives for the greeters with extra money and prestige with voluntary extra training, as they can become a 'golden greeter.'
The 'no quibble' refund scheme and other innovations such as 'bag carriers' help to exceed customers expectations, and attract business. This innovation in customer care also helps ASDA's reputation as it is seen as a caring and CO-operative supermarket, where large companies are perceived as being heartless and uncooperative, although other supermarkets do offer a similar service I have not seen it so widely displayed than at ASDA.
In a survey I conducted 6/10 chose to go to ASDA because of it's location. It is an important factor in business to chose your location carefully ASDA carry out extensive like any other supermarket to determine to best place to build a new store, so getting highly trained analysts is vital, although they cost a great deal of money a good team will ultimately lead to greater profits so companies will often pay dearly for this commodity.
ASDA recently went through a dramatic change in it's management structure when it was acquired by the American company Wal- Mart, these were designed to increase efficiency within ASDA and maximise profits for the business with the least cost, and provide a higher level of customer service. The entire architecture of ASDA had been overhauled allowing the ASDA to not only provide a better service but adapt more easily to the demands of it's customers therefore gaining a crucial competitive advantage over rival supermarkets.
ASDA also implements local and national schemes to build, maintain, and improve it's reputation within the community this kind of ethical business often attracts customers, for example the ASDA store in Wisbech supports local community projects most recently sponsoring the local Queen's school in it's christmas show which helped to raise money for the school this gives ASDA extra promotion at a comparatively low cost and helps ASDA's public image.
Tesco however also does this, and so does Sainsbury's however not all supermarkets do this for example Alidi does not. There does seem to be a battle between the local supermarkets to assist the local community suggesting that although many supermarkets are doing this, they are obviously still very lucrative!
All the promotions and innovations that ASDA does contributes to the Added Value of the products people purchase which is a necessity for ASDA to maintain it's competitive advantage. By creating added value, the consumer feels that the goods they are purchasing are worth more than the cost of the composite materials that were used to manufacture the goods that were produced.
This enables ASDA to make a profit on the goods it sells, and the greater the added value perceived by the consumer the greater the revenue. The 'special relationship' with ASDA's 'suppliers' allows ASDA to get the most quality at the lowest cost due to their 'bulk buying techniques.' ASDA's highly promoted 'rollback' actually means that prices on selected goods actually go down, similar schemes have been used by ASDA's competitors such as Sainsbury's and Tesco, but Sainsbury's could not compete and had to discontinue while Tesco still operates their scheme, ASDA was the first, and 'continually strives to out compete' it's 'competitors.'
This is used in conjunction with other marketing 'gimmicks' such as 'linksaves' where you 'buy one get one free' which have proved very successful for all the supermarkets who use it and helps to get rid of excess stock, or stock that is not selling well.
Like most businesses ASDA has to rely on it's ability to continually innovate, build up and maintain a reputation, and forge new and better relationships with it's customers and suppliers for it to have a competitive advantage. ASDA does all three of these and well as is it one of the top retailers in this country and is also one of the fastest expanding, showing that ASDA is indeed successful, due to it's low prices and high levels of customer care, ASDA is one most innovative supermarket chains, and is always developing better ideas, and giving the consumer what it wants, by doing this it maintains a competitive edge and although other companies are doing the same and copying from each other, by continually striving for better quality and lower prices it will continue to attract customers, and therefore maintain it's main and hard to copy competitive edge.
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