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Hi, need to submit a 2750 words essay on the topic Marketing Management.Download file to see previous pages This paper provides an overview of the crisis encountered by Sainsbury's and aims to assess
Hi, need to submit a 2750 words essay on the topic Marketing Management.Download file to see previous pages
This paper provides an overview of the crisis encountered by Sainsbury's and aims to assess the company's recovery plan. Furthermore, this paper analyses the firm's internal and external environment through the use of analytical tools such as the PEST and SWOT methods of analysis. In view of the results of the industry analysis, this paper also recommends some strategic options that the company may undertake in order to facilitate its full recovery.
Sainsbury's chain of supermarket was once the market leader in the UK supermarket sector. However, it currently occupies the third place, behind its major competitors Tesco and ASDA. The firm has been struggling to keep hold of its market share since the mid-1990s. With this, the company posted dramatically declining profit margins (Wikipedia 2005). Indicative of Sainsbury's lackluster performance, the firm's pretax profit as at end-March 2005 plunged by almost 98% year-on-year, from 610 million in 2004 to only 15 million (Profits collapse at Sainsbury's 2005). To note, it would have generated a negative bottom-line if not for the extraordinary gain on the disposal of its subsidiary in the United States (Wikipedia 2005).
According to recently appointed Chief Executive Justin King, the bleak financial result is attributed to Sainsbury's diminishing competitive edge. He cited that in the past years, as the company's competitors have substantially improved, Sainsbury's failed to keep up. (Madslien 2005)
In view of the much needed improvement in the company's operations and marketing strategy, King spearheaded a 400-million recovery program. The proposed program covers a three-year period and aims to enhance Sainsbury's marketing strategy (Profits collapse at Sainsbury's 2005).
To start off, King launched a direct mail campaign to about a million customers as part of its business review. This is undertaken in order for the company to be aware of customers' expectations as well as identify the critical areas for improvement. The result of this campaign was consistent with the contention of retail analysts that Sainsbury's has severe problem ensuring stock availability. (Wikipedia 2005)
This perceived weakness as revealed by the business review is immediately communicated to all store managers. Aside from this, the outcome was also announced publicly and was generally well received by the market and the media. With this, King pushed through with the recovery scheme by laying off about 750 headquarter staff and recruiting around 3,000 shop floor staff to ensure quality customer service and efficient replenishment of stocks.
Since the firm's main problem is keeping shelves fully stocked, Sainsbury's management activated two distribution centres to enhance logistics and address issues on stock availability (Wikipedia 2005). It was also reported that Sainsbury's opted to end its ten-year contract with Accenture. After the system in place was deemed ineffective, the firm decided to bring its IT infrastructure back in house over the upcoming months (Ranger 2005).
Apart from this, Sainsbury's also announced the halving of the fund allocated for dividends. This is because the firm's earnings would be plowed back to finance the recovery program.