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3.4 J Sainsbury Sainsbury Achieved Total Sales In 2005 Of £16.36bill. And ...



3.4 J Sainsbury
Sainsbury achieved total sales in 2005 of £16.36bill. and profits after tax of £65m. This compared with slightly lower sales in the previous year and a significantly larger profit then of £404m. Sainsbury appears to be struggling. It has suffered from severe price competition from Asda and Tesco and also failed to implement effectively a new logistics system, which resulted in severe out-of-stock problems which alienated customers.
The company has 727 stores in all, 465 of which are supermarkets and 262 are the smaller convenience stores. It employs 153,000 people.
Sainsbury is currently undergoing a change programme entitled Making Sainsbury's Great Again 2007/8. Some elements of this programme are very relevant to its positioning in the market. In line with Barwise and Meehan's thinking on generic category benefits Sainsbury wish to restore the universal appeal of the brand. This comprises four elements:
be all inclusive (appeal to all segments of the market)
have a clear product hierarchy: GOOD, BETTER, BEST (not assuming that certain segments go for a defined quality of product but that all customers chop and change).
invest in price and quality (£400m in 2006)
scale to succeed (ensure that there is sufficient overall demand in the chosen products/markets to get costs down to a manageable level)
This all translates into a customer proposition which their annual report describes as follows:
great food/fair prices
market leaders in quality and innovation
complementary non-food
straightforward formats: supermarkets, convenience and Sainsbury's to You(on-line)
bank
Sainsbury advertising focuses on two messages:
we have reduced price on 4000 lines
Try something new today
The former has clear universal appeal and aims to enable Sainsbury to compete on price with Asda and Tesco. The former appears to be focused more on higher income categories (the Self-indulgents and Comfortable and Contenteds mentioned in 2.3.

4.Conclusions and final thoughts
In a 1994 article on segmentation in the retail sector the following statement is made:
any strategic option depends on clear positioning against competitors and customer groups (and the ) approach of integrating competitive analysis with market segmentation is a necessary first step to achieving a better understanding of the retailing environment and formulating effective marketing strategiessupermarket retailers must attract customers from different and often incompatible market segments.
This statement still appears to have validity to-day. All three supermarkets mentioned in this paper wish to attract customers from the higher income AB socio-economic category by offering them better service, high quality and tasty foods, organic foods and a clean and welcoming atmosphere.

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