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 Introduction

The discussion will involve the significant comparison the UK’s leading retailers Sainsbury’s and Tesco. This will entail outlining the marketing and business strategy, of the key firms in UK. In addition, the vital factors for the success of the organizations are discussed. The advantages and disadvantages of Sainsbury’s and Tesco’s of the businesses are also tackled. Moreover, the paper will analyze the two organizations in terms of perception and size. This is in regard to the expansion of the two firms over the years and discernment on how Sainsbury’s and Tesco are professed by their customers and other stakeholders. The discussion will compare the two organization’s market growth, market share, and financial turnover. This will involve the outlining of the broad performance of Sainsbury’s and Tesco. This is in terms of how the two companies are performing and how they have developed over the years with services and products that they provide for their customers.

Tesco Company has the leading market share of about 31.6% (Croucher, 2012). Through this market share, the firm is controlling an outsized segment of the retail market. In addition, the company also runs a 50% of the grocery marketplace. On the other hand, Sainsbury’s has about 22% of the market share (Croucher, 2012). The firm also sells an enormous product variety. Further, Tesco Company buys in colossal volume and sells the products cheap.  On the other hand, Sainsbury’s buys only products with fashionable names and they also brand their own products (Needham, 2009). The firms have the superstores that have marvelous influence in their locality. Tesco organization has the principal achievement that has enabled the firm to obtain virtually 1/3 of the retail market (Randall, 2011). However, Sainsbury does not have the same supremacy of land acquisition as Tesco.

The Tesco business has also achieved the level of accomplishment they have because of their selling. The company has developed Everywhere-place and Everything-products that are overseas and national. In addition, everyone- people the company advocates for makes them, target all people as their consumers and customers. The strategy that Tesco has employed has made Sainsbury’s have a hard time in the market. Therefore, the Sainsbury’s firm has had a rough time in keeping up with Tesco which is retail gigantic (Randall, 2011). Tesco attracts their customers from all forms and classes of life. This is different from Sainsbury’s that have developed a strategy of attracting the middle class as their clients. The companies’ thus have developed their services and products with the populace in mind and have their products with middle class prices (Gill, 2011). On the other hand, Tesco Company marketing strategy is all about reducing their services and products prices to magnetize their consumers and clients. Sainsbury’s organization business and marketing strategy is about the superiority of their leading products which is food. This is the product that Sainsbury’s offers their consumers at exceptional value. Tesco business is leading in the clothing retail as their outstanding product (Zentes, 2011).

Tesco firm’s main purpose is to continue being a market leader. The company plans to realize and attain this objective using more of the similar triumphant formula that they have been using since the company’s inception. The formula involves aggressive growth, focus on modernization, and low prices (Thompson, 2001). On the other hand, Sainsbury’s main objectives are to augment their sales and convalesce on their position as a leading business in the region and market (Needham, 2009). The business revitalization plan for the company involves setting out a stratagem that embraces price cuts, sustained prominence on quality, and advertising blitz.

Both companies in terms of competitive strategy aim to be market leaders. This is instead of being niche marketers or market followers (Fabnomics, 2011). The volume bazaar groceries retailers’ nucleus products are shops. These facilities offer regulars access to a broad choice of non-durable food harvest. This is by the increase of sales of non-food products. Although the companies sell uncontaminated substantial goods, the retailers do have a service ingredient. This is because the clientele have contact with their workforce. This is every on every occasion that the consumers shop at a supermarket (Hall, 2009). Conversely, the service component is resultant and is not measured in any of the accessible market analyses. The brand of Tesco stands for “price, convenience and value for money” (Hall, 2009). The achievement of the brand can be manifested by Tesco’s outsized boost in the market share. This has been the case for over the precedent five years. Nevertheless, the company market share is also under risk as there is a counterattack against the market supremacy that is gathering steam (Fabnomics, 2011).

The product mix of Tesco business comprises of a massive mixture of non-food and food items. This can be indicated by an example of, a typical Superstore that holds about 40,000 product lines (Kreutzer, 2008). The food lines in this scenario are represented by about 25,000 product lines. In addition, there is a mounting weight on the own-brand food products. This has spanned to around 1,600 product lines by 2005 (Croucher, 2012). The vital non-food segment comprises of the home entertainment, clothing, gardening, books and stationary, gifts and seasonal goods, toys and outdoor equipment and household goods and electrical (Gill, 2011). On the other hand, brand habitually stood for “vast superiority at reasonable prices.” The brand of Sainsbury’s is principally connected to food. Nevertheless, the higher-priced representation of Sainsbury’s products and services has made it gradually more for the company to be incapable of competing with the other low-price competitors. Sainsbury’s is currently trying to modify their brand image. The organization has changed their brand to ‘universal appeal’ that promises sustained high quality, abundantly stocked shelves, and lower prices (Hall, 2009).

Sainsbury’s just like Tesco have a product mix that comprises of an enormous diversity of non-food and food items. The distinction between the two companies product mix is that Sainsbury’s have constantly been principally a food retailer. The company, in addition, has been slower to spotlight the beneficial non-food items. Concerning the food products, the organization’s key focus has been on their own-brand lines (Thompson, 2011). The company offers about 11 visibly segmented own brands. These products and services comprise of about over 3,200 lines (Needham, 2009). These lines envelop the whole good-better-best continuum. The company was the original chief food retailer to initiate their own-brand lines. This was done with healthy ingestion focal point. The products included the one for aversion fatalities. The prospect development of the non-food items is going to be focused on the core general merchandise, home and clothing. Sainsbury’s, in addition, unlike Tesco, operates a variety of stores under diverse brand names. The main ones are JB Beaumont and Jacksons Stores. The strategy has made the company reduce their reliance on one brand name. This has given the business an advantage that it can mislay, by their strategy, to rebrand the products in future (Fabnomics, 2011).

Positioning in the mentioned market is fundamentally based on the price. However, there are other companies in the food retail business that accentuate on quality (Gill, 2011). The Tesco business has productively positioned the company by value for money and use of low prices. The company is likely to continue to use the same strategy over the coming years. Sainsbury’s has forever been the main up-market company for the large players. The company positioned itself using the quality of their services and products. However, the company has also changed their positioning to price-based. This was done in 2005 (Croucher, 2012). All the same, Sainsbury’s prominence on quality has continued. This has been aided by their intelligent marketing association headed by the superstar chef Jamie Oliver. The celebrity’s campaign for fit school dinners has recognized him as a promoter for high-quality foodstuff (Fabnomics, 2011).

The two companies aim at the mass market. However, Sainsbury’s firm has constantly been having an up-market bias. In addition, the company continues to magnetize more ABC1 customers more than their competitors (Thompson, 2011). Nonetheless, this can change in case the price-cutting strategy of the company that they have employed succeeds. Tesco, on the other hand, attracts consumers from the socioeconomic sector. However, this strategy has done less well with the E’s and chiefly has done well with Abs segment of the customers (Gill, 2011). The Sainsbury’s firm appeals further to the grown-up shoppers. This happens as the company’s store sizes are smaller. On the other hand, Tesco Company has an approximately widespread appeal. However, the business does less well with the 15-19 year olds and the 65+ segment. The company appeals to the women vaguely more than the products demand by men (Croucher, 2012). Tesco firm has developed their market share. This has been done by their multi-format stratagem. The strategy involves a four noticeably clear store formats that target faintly diverse segments of the market. Two of multi formats are superior store formats that have various non-food items. These store formats target principal shoppers. The other two are minor shops target the secondary shoppers (Fernie, 2005).

In line with the market share, Sainsbury’s has followed a comparable multi-format tactic developed by Tesco. Sainsbury’s employed the strategy till last year. The company now focuses on the two formats for their brand, which is strongest as part of their revitalization arrangement. The policy involves targeting the undersized expediency stores that draw secondary shoppers, and also the customary supermarkets that magnetize the crucial shoppers. The company is also rebranding their other remaining stores so as to fit in the novel strategy (Fabnomics, 2011). The customers in the groceries retail market are separated into secondary and primary shoppers. The primary shoppers mostly do their grocery shopping weekly for their households. On the other hand, the secondary shoppers purchase fewer, ‘top-up’ products at diverse shops. These shops are different from the shops that primary shoppers do their weekly food shopping (Needham, 2009). There are more differences that made by socioeconomic segment. These include the gender and age. However, these groups are derivative as everybody desires to procure food. The nationwide groceries retailers are not segmented as this can be risky for the economy of the country (Piercy, 2012). The food retail market requires market penetration for their success (Kreutzer, 2008). The penetration can be obtained by the low prices. However, the groceries retail commerce is faced with a race to the bottom problem (Gill, 2011). This is due to the market leader’s competition on price. This is what Tesco and Sainsbury’s have been practicing over the years. The effect is steady price depreciation of the food products (Hall, 2009). Nonetheless, there have been fluctuations, in the prices of fresh produce (Gill, 2011).

There are several varied pricing models that the UK food retailers use. These include the high-low pricing, ‘link saves’ and ‘buy-one-get-one-free.’ The strategies involve customers buying one product and are given another product at discounted level or free of charge. Most customers, however, favor the ‘everyday low pricing’ system (Hall, 2009). The low price scheme that Tesco has developed has been exceptionally flourishing. This is expected to continue, and it will put price stress on their competitors for some time ahead. The company believes that their decidedly competent supply chain can make the firm pass the low supermarket prices their expediency store sector segment and this will also bring down prices to the sector (Browne, 2001). In 2005, Sainsbury’s initiated a price-cutting plan. The policy made the firm’s profits to level. However, over the years, the plan has generated improved sales. In addition, the strategy saw a slender growth in the market share. The company’s management team has defended the approach energetically, and they intend to persist in using the method (Fernie, 2005). The food retailers mostly use in-store sales promotions and advertising as their chief promotional tools. In addition, direct marketing and little amounts of public relations are also used.

Tesco has used TV adverts mostly in their promotions. This is an ultimate for a company that is a market leader. The company’s objective is to strengthen their brand and the brand values. The company launched a campaign, in 2004, titled ‘Every Little Helps.’ This was received warmly by the consumers (Gill, 2011). The promotion stressed that Tesco was still the modest retailer, wholly-focused firm that valued their clients. The PR actions of Tesco included their corporate social responsibility (CSR) website plus a bombardment of press releases (Croucher, 2012). The firm also used email to increase their online sales. Sainsbury’s employed the use of a more varied mix of advertisement. This involved the TV adverts, and also print, which included direct mail and radio. The company spent about £10 million so as to refurbish their image (Hall, 2009). The most outstanding campaign was the ‘Try Something New Today’ advert that started, in September 2005 (Gill, 2011).

In conclusion, the customers indicate that expediency is their key aspect in deciding the location for their food shopping. This is the avenue that Tesco has exploited. The company has a resourceful supply chain and has been able, to, constantly, keep their shelf stocked.  On the other hand, Sainsbury’s failed because of lack of investment in their supply chain mechanization, in 2000 (Thompson, 2001). In addition, the incapacity of the company to maintain their shelves stocked appropriately resulted to the firm’s market share loss. The company has now developed a recovery strategy to address the problem. This was done, in November 2005, and the company reported a decrease of out-of-stock items by 75% (Fernie, 2005). The firm now uses and operates on two dissimilar store formats that have varied product mixes. The primary shoppers are targeted by the conventional supermarket format; while, the secondary shoppers, are targeted by the local format of the company (Fabnomics, 2011).

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