Introduction to marketing communication
In modern era, marketing communication play a very important role in overall success of a business. Further it can be defined as the process in which organization try to communicate with their customer and other people in marketing in order to understand their need and demand. In addition to this, it also plays a significant role in developing healthy relation between business and its customer. This report is based on Sainsbury which is a UK based third largest chain of supermarket. Further it highlights outline of company and its current position in market. Other than this, the report also reflects one of the problem of company and its major implications on the business activity.
Outline of company
Sainsbury was founded in the year 1869 by John James Sainsbury with a small shop and later it became largest grocery retailer of London in the year 1922. Further at present the company holds 16.9% of UK's supermarket. It has witnessed various ups and downs since it was founded such as when in the year 1922 one of its long time CEO got retired and the management style was changed (Sainbury, 2015). The company started to reject loyalty cards and was moving more towards non-food retailing business. As a result of this, the company witnessed a drop in its sales and profitability. Further it bounced back in the year 1998 and relaunched many of its products.
Current position in market
At present Sainsbury is the third largest chain of supermarket and has more than 570 stores all around UK. At present its online shoeing services covers more than 90% of the total population of the country. The company is facing major competition from businesses like Asda, Tesco and WM Morrison supermarkets. In terms of current market position it can be stated that a there has been continues drop in its market share, sales and profitability (Kenning, Plassmann and Ahlert, 2007). It is not able to understand the need and demand of people in market and the degree of its customer loyalty is also declining at a very fast pace. On the other hand, the market share of Asda is increasing as it is focusing on enhancing the degree of its customer satisfaction by developing better relationship with them. The company is loosing its market share from 16.5% to 16.4%. In the year 2015, the brand has witnessed 3% increase in its current sales as compared to previous year (Balance sheet, 2015). The total retail sales was £23,921m. The total assets of Sainsbury has decreased rom £16540m to £16537m in the year 2015.
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Situation analysis of the market:
Analysis of external and internal environment of company
Internal factors of company are some of the factors which exist within a business organization. It has been identified that the management style of Sainsbury is effective and the employee are also having high low morale. On the other hand, after doing external environmental analysis it has been identified that Sainsbury is getting affected by the changing taste and preference of customers in the market and from the policy of competitors and supplier (Layton, 2011). It has been observed that the growth of company has lower down along with sales and profitability. The company is required to make some changes in its internal strategies and plans in order to maintain its current market share. Other than this, after analysing the internal environment, the company can identify its weakness and threats and can take corrective measures to overcome them.
Review Of The Market Using Suitable Models
Steeple analysis (External environmental analysis )
The situation analysis of Sainsbury using Steeple model is provided below as:
Social factors- These are some cultural and demographic variable which affects the sales and profitability of businesses. It has been observed that the overall sales of Sainsbury is getting affected by the changing taste and preference of people in market. other than this, it is also getting affected by factors such as increase in population and age distribution (Albaum and Tse, 2011).
Technological factors- The technological factors determines the level of technological up-gradation and use of modern tools and machines. It has been observed that Sainsbury has always seeks for implementing modern machines and new technology to lower down the cost and deliver high quality of products and services to customers.
Economic factors- These are the factors which are associated purchasing power of customer and overall economic environment of a country. It has been observed that UK economy is improving at a very good pace and thus, it has helped the company to grow and expand its operations.
Environmental factors- It explains what kind of effect that the operations of business have on environment. It has been observed that Sainsbury has always taken care of the environment under which it operates (Benett, 2012). Further it always looks for delivering those products and services which creates less harm to environment.
Political factors- Every company get affected by the political environment and conditions of a country. The consumer and government debts are very high in UK and it has directly affected the overall performance of Sainsbury.
Legal factors- Legal factors deals with some of the legal rules and norms which imposed by the government on businesses and organizations. Sainsbury always takes care health and safety of its employees and has always followed the norms, regulations and provision established by various legal authorities and government.
Ethical factors- These are the factors which are related to sale of organic food items and ethical treatment of animal which affects the overall operations of businesses. It can be stated that Sainsbury has always taken care of the ethical aspects and has never used any kind of unethical means to sale its products and services (Bradly, 2014). In addition to this, it has always respected the social values of the country in which it operates.
The Mckinesy 7's model(Internal environmental analysis )
The Mckinesy 7's model can be also used to carry out the situational analysis of Sainsbury. Further the analysis has been provided below as:
Strategy- It can be defined as the overall action plan which businesses develop in order to achieve competitive advantage. At present the strategy of Sainsbury can be termed as ineffective as the company is losing its market share and people are preferring the products and services which are offered by other market players.
Structure- It defines the way in which the organization has been structured and also highlights who is going to report to whom. In Sainsbury the structure has been well defined as employee of know his reporting authority (Brassington and Pettit, 2010).
System- It can be defined as the daily activities and operation of the staff members. The system of Sainsbury is very effective as it is well controlled by its employees and monitored at regular intervals.
Shared values- Sainsbury has developed shared values by integrating its corporate culture with work ethics.
Style- It can be defined as the leadership style which has been implemented by organization. Sainsbury has adopted a participative style of leadership in which every employee is encourage to put their views and opinions in the decision making process of the company. Further, it has created satisfaction among employees and has increased their productivity.
Staff- The employees of Sainsbury are highly skilled and are capable to carry out their task in best possible manner.
Skills- Workers of the brand are well equipped with skills such as change management time management and communication.
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Problem of Sainsbury
One of the major identified problem of the company is that its customer relationship management strategy is very ineffective. In modern era, it is very difficult for businesses to survive in this stage of intense competition (Madsen and Pedersen, 2013.). Further they always seeks for attaining competitive advantage by retaining their customers. The current position of Sainsbury in market highlights that the market share of the brand is decreasing day by day and it is not able to hold and retain its customers. Businesses are well aware of the fact that it is very easy to retain old customer then to attract new ones (Jobber and Fahy, 2006). The ineffective customer relationship management of Sainsbury has become one of its major problem. This issue has resulted in decreasing the overall degree of customer satisfaction. While operating in the industry which is highly intense, every company is required to take care of the fact that its customers are one of the most valuable assets. On the other side of this, attracting new customers is always difficult for organizations as compared to retaining the old ones. Sainsbury is not able to determine effective ways through which it can manage better relationship with all its customers. In addition to this, ineffective CRM has also impacted the entire operations and activities of the brand. This has also resulted in decline of market share and profitability of Sainsbury.
Implications for the business
Sainsbury is one of the most popular and renowned chain of supermarket in UK which provides various products and services to people in market (Schoppe, 2012). It has been identified that the customer relationship management of the company is very ineffective. The company is required to address and overcome this problem in order to survive in long run. The competition among retailer in supermarket is increasing day by day and thus, the company is required to retain its existing customer. If the problem is not solved then it may happen that Sainsbury can even move out of the market as people are finding competitors’ products and services more satisfactory. Other than this, there are various ways using which the company can make its customer relationship management effective (Salaimeh, 2008).
One of the best way to take feedback and reviews form customers regarding their experience and satisfaction level after using the products and service of the company. Further customer can be asked to provide their opinion regarding what changes they want in existing products. Thus, using such strategy the company will be able to develop trust and healthy relation with its customers. Further the effective CRM will not only help in retaining old customer but will also assist in attracting new people. Therefore, the company is required to improve its customer relationship management so that it can increase its present market share . On the other side of this, it can be stated that the with the use of CRM techniques the company will be able to gain high degree of satisfaction in terms of customers. After implementation, the company will become more customer centric. This means that all the operations and activities will be directed towards one particular goals which is accomplishment of high degree of customer satisfaction. In addition to this Sainsbury will be able to retain its all customers easily and will also enhance the degree of customer loyalty. In the present scenario, customer loyalty has become very essential for the growth and success of organizations. It directly encourages customers to repeat purchase which is very beneficial in getting competitive advantage.
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