Market Analysis: Sainsbury’s Supermarket Buying Patterns And Promotion Policies

Research Objectives

The assignment will be focusing considering the market of Sainsbury’s Supermarket which is considered to be one of the largest supermarkets operating in UK. The business model of Sainsbury is focused on serving the customers to its best potential and provide the best quality of products and services to its potential customers. The aim of the research is to identify the buying patterns of the customers (Neuman 2013). Potential promotion policies adopted by supermarkets and satisfaction level of the customers and analyze the same. The results which are obtained from the research can be used for taking crucial decisions in relation to supermarket’s policies. Both primary and secondary sources of data will be collected and analyzed. The data collection will be done for the following areas such as Customer’s buying patterns, promotion efforts of the supermarkets, satisfaction level of the customers. The data which is collected from the primary and secondary data will be used by the management of Sainsbury’s Supermarket to take effective decisions which can be customer oriented. Primary sources of data refer to the data which is collected from primary sources such as first-hand information, questionnaire, checklist and other similar sources. Whereas secondary sources of data can be obtained from published journals, newspaper, articles and other similar sources.

The data which is collected from primary sources will done with the help of questionnaires which will be based on the following parameters which are customer’s satisfaction level, different promotional activities which the business engages in and the buying patterns of the customers from such supermarkets. As per the case provided, Sainsbury’s Supermarket faces tough competition from supermarkets like ASDA, Tesco, Morrison. The data which is collected from the public can be useful for the business to understand the buying patterns of the consumers and also their buying habits. In addition to this the management of Sainsbury’s can also analyze the strengths of the competitors and market strategy as well.

In order to effectively collect data from the customers, the research team has adopted the method of distribution of questionnaires in which the responses of each of the customers can be recorded. The feedbacks of the customers are on the basis on which the various decisions relating to the market are to be taken. The questionnaire method is a very useful technique which can help the supermarket in determining the taste and preference pattern of the customers and what are the products which are preferred by customers. The plan of the management is to distribute the questionnaires to the customers as they leave the market place and also send online questionnaire to potential customers in order to have a wide coverage and more market related data. On the basis of data collected by the use of such questionnaire method, the management of the company will be then applying quantitative techniques like measurement of variations, sampling techniques and similar other techniques.

Data Collection Methods

In order to have access to secondary data for the supermarkets, the research team will be reviewing various journals, articles and even the websites of the company will be review for useful information. The research team will also be analyzing the financial statements of the supermarkets of ASDA, Morrisons, Tesco for the purpose of collection of secondary data. The research team will also be analyzing the market conditions and the growth trends which are achieved by the rival companies.

Survey Methodology can be defined as the method in which individuals are questioned to gather information on the research. It is basically used in Sampling techniques when a population is selected on which the sample tests are to be conducted and data collected. The technique of Survey methodology can be used for collection of both qualitative data and quantitative data. The data which is collected through qualitative means are generally collected by applying methods as interviews, mail, telephone survey whereas quantitative data is collected by applying sampling techniques and also by studying the market trends (Taylor, Bogdan and DeVault 2015).

In order to collect qualitative data for rival supermarkets, the research team uses interview surveys and questionnaire techniques (Ho 2014). The questionnaires techniques facilitate the research team to receive feedbacks from the customers which are important source of data. The use of questionnaires has certain advantage which is that it covers a wide area and the data collection process requires less time. In case of quantitative data collection, the research team plans to use sampling techniques where a group of individual responses which is known as population are considered (Rossi, Wright and Anderson 2013). The data is collected which is collected signifies different groups of individuals such as homemakers, working class people, students. The data which is collected using the qualitative and quantitative methods are then used for analysis for research purposes on the basis of which decisions are to be taken (Marshall et al. 2013).

The questionnaires are distributed among the customers who will be providing feedbacks on the basis of data analysis is to done for the rival supermarkets (Neuman and Robson 2014). The various questions which are included in the questionnaire are given below:

1. What is your Gender?
2. Male
3. Female

1. In which age group do you fall in?
2. 16 years to 24 years
3. 25 years to 34 years
4. 35 years to 44 years
5. Above 44 years

1. How often do you visit the supermarket?
2. Most times
3. Sometimes
4. Rarely
5. Never

1. How much do you spend in supermarket?
2. £ 50
3. £ 50 to £ 100
4. £100 to £ 200
5. £ 200 and more.

1. Which products do you often buy when you visit a supermarket?
2. Food items
3. Garments
4. Home ware
5. Café
6. Others

1. What are the promotional activities which the supermarkets are engaged in?
2. Nector Card
3. Voucher
4. Discount
5. Free goods
6. Active kids Vouchers
7. Point of Purchase Display

1. Are you loyal to the supermarket brand from where you purchase products?
2. No
3. Yes

1. What are the other factors of supermarkets which affect the customer satisfaction?
2. Shopping Environment.
3. Security Facilities
4. Opening Hours.
5. Parking
6. Self-Checkout
7. What are the factors of a product which increases the satisfaction level of the customers?
8. Product Display
9. Product Category
10. Price of the Product
11. Product Quality
12. Total

The data which is collected from the primary and secondary sources are then analyzed with the use of sampling techniques and also with the statistical methods like mean, median, mode. The research team will be applying statistical data as well secondary data to draw conclusions from the research conducted. Primary data are often tailor made for the research and the same is collected as much as possible (Merriam and Tisdell 2015).

Analysis Techniques

The areas where the research team will be putting more focus while focusing on data collection are discussed below:

1. Buying Patterns of Customers: This is an important area where the researcher will be looking to put more emphasis as customers buying habits can tell the management a lot of crucial things which the management can work on for further improving the services provided by the supermarkets(Singh, Katiyar and Verma 2014). The buying habits of the customers reveals to the supermarkets the taste and preference patterns of the customers. In addition to this, the research will reveal to the supermarket which commodity is mostly in demand and which age group of individuals go for what kind of products in the supermarket. Such information will be very helpful for the supermarket to plan for providing maximum satisfaction to the consumers (Rishika et al. 2013). For example, kids will be purchasing more of chocolates, chips, fast food items, while homemakers might be purchasing daily ration for kitchen and beverages. This shows difference in buying patterns for different age group of individuals.
2. Promotion Activities of the Business: The promotional activities of the business is an important aspect which allows the research team to analyze the different promotion activities which are implemented by the rival supermarkets like ASDA, Tesco and Morrisons. The promotional activities of the supermarkets are an important area for data collection as effective promotional activities of the business will help in gaining competitive advantage. The promotional activities which are carried out by the competitors are loyalty programs, smart pricing, event sales programs. In addition to this the supermarkets use traditional methods of promotion such as advertisement in newspaper, lucky draws.
3. Satisfaction level of the Customers: The supermarket business exists to serve the customers effectively and ensure that the customers are satisfied with the services which are provided by the supermarkets(Kumar, Dalla Pozza and Ganesh 2013). Moreover, it is one of the major factors that influences the decisions of the customers.  The satisfaction level which a customer derives from a supermarket can be measured by the quality of services which is provided by the supermarket. Supermarkets like ASDA, Morrisons and Tesco are known to have branded products therefore there is no doubt about the quality of the products which are offered to the customers (Hill and Brierley 2017).

In addition to this the research team will be analyzing the data by using statistical techniques which involves measure of variances, standard deviations, and sampling techniques. The analysis will be on the basis of calculated mean, median and mode of the data available. The mean of any data suggests the average number of that element. The statistical data is a part of quantitative analysis of data which is also used in decision making process.

The primary data which is collected by the research team with the help of the questionnaire are shown on the basis of percentage of sample and frequency. The sample which is selected is the basis on which the primary data analysis is conducted. The primary data shows that out of responses from 15 people in a questionnaire, 8 of the them are male and 7 are female. The next question in the questionnaire shows that in between the age group of 25 to 34 who visit the supermarkets often as the frequency is high in such a category as per the sample. In addition to this, the frequency of visits in case of the same is maximum at most times as 7 out of 15 responses is of the same view. The average spending of the customers as per the sample is highest in the case of £100-£200. This is the amount which as per the sample an average customer spends in supermarket while purchasing goods. The buying patterns of the sample suggest that most of the consumers purchase food products from supermarkets which is around 66.67 as per the sample. The promotional activities of the business suggest that the supermarkets normally provide free goods as a means of promotion in the business, however as per the sample majority of the customers are not loyal to the supermarkets. The other services which is provided by the customers for extra benefits and satisfaction which includes parking facilities which provides maximum satisfaction as per the sample. As per the sample, the attributes of the product which provides maximum satisfaction is the price and quality of the product.

This type of data is collected from secondary sources like journals, articles and similar other secondary sources (Hewson and Stewart 2016). The secondary data of the rival supermarkets are collected from the financial statements of the supermarkets. The research team will also be able to note the performance of the supermarkets as per the financial statements prepared by the supermarkets. The financial statements display various financial indicators on the basis of which the performance of the company is to be analyzed. Gross profit and total revenue earned by the business is one of the financial indicators of the business. Besides this, the market price of the share is also regarded as financial indicators for the business. The researcher can also get access to secondary data from the official website of the company (McDaniel and Gates 2013). The secondary data which deals with the financial performance of the rival supermarket business is taken on the basis of the following:

1. Market Shares: The market share price of the company is one of the financial indicators for measuring the performance of the company. The market share price of the supermarkets can be obtained from the official website of the supermarkets and also from stock exchanges websites where the shares of such supermarkets are listed(Rego, Morgan and Fornell 2013). The market share price of any company constantly changes and the closing balance on the last date of the financial year is to be considered. The market shares of supermarkets can be used by the research team to compare between the performance of the supermarkets and also analyze the same.
2. Gross Profit Ratio: The profitability ratios of the company represent the ability of the companies to earn profits. The gross profits which is earned by the companies are considered to be important indicators which can reveal a firm’s performance financially(Delen, Kuzey and Uyar 2013). The gross profit is one of the basis on which potential investors decide whether to invest in the company or not.
3. Total Revenues: The total revenues earned by a business show the capability of the business to sell their respective products in the market. In many cases as the total revenue of the company increases so does the profitability of the business. In the supermarket industry there exists tough competition between the leading brands for the purpose market dominance and maximization of sales of the supermarket.

Primary Data Analysis

The secondary data which is collected from the financial statements of the three rival supermarket which is part of the same industry are Sainsbury’s are ASDA, Morrisons and Tesco. The information regarding the gross profits of the supermarkets, market shares and sales revenue of the supermarkets are given in the table below:

In case of the company, the gross profit ratio for different supermarkets in a period of five years have fluctuated immensely. The fluctuation of the gross profit ratio for all the four supermarkets are shown in a table and graph form below:

The above chart clearly shows that the gross profit margin of Sainsbury is quite low as compared to ASDA and even Tesco. This would suggest that ASDA and Tesco have better sales and earns more revenue therefore its profits are higher. However, Tesco has suffered heavy losses in the year 2016 and out of the league of the other supermarkets. The supermarket which has been constantly performing well is ASDA. This shows that Sainsbury need to improve the sales structure of the business and also ensure that the operations of the business are carried out smoothly.

The revenues earned by the super markets reveal a similar result as the gross profit ratio revealed that the sales of the business in ASDA and Tesco are very much higher than the sales in Sainsbury’s and Morrison. This is the main reason due to which there has been a reduction in the gross profits of both the companies. However, it can be seen from the graph above that the revenue of Tesco falls drastically in 2016 and the supermarket is earning losses.

The market share price of the supermarkets depicts that the market prices are fluctuating. In this case it is seen that the market price of the shares of ASDA is lowest as compared to other supermarket’s share prices. The market price of Sainsbury’s is highest as compared to other markets. This suggests the brand reputation of the supermarkets.

As per the collection of primary and secondary data and analysis of the market conditions of supermarkets, it is clear that Sainsbury’s Supermarket is facing intense competition but on the plus side the company has a positive brand reputation in the market which is suggested by the market share price. The data also shows there are certain weakness in the operations which affect the gross profit and the overall profitability of the business (Brakewood and Poldrack 2013). However, this is true for the sample of customers which was selected for the research, which may be different if broader basis of sampling is to be considered.

The recommendations which can be given to Sainsbury’s Supermarket are given below:

1. The supermarket should develop an organisational structure which focuses on the customer satisfaction and overall of level of services in order to increase the sales of the business.
2. The range of products which the supermarket is currently offering must be increased. As per the research the customers always prefer when the range of products which are offered by the supermarkets are on the higher side. The products should be such that they are competitive with the rival supermarkets.
3. The promotional activities of the supermarkets need to be increased in order to increase the competitiveness of the supermarket with other supermarkets (Zhurkina, Ukhanova and Nikishin 2015).
4. The supermarket must analyse the buying pattern of the consumers and collect feedback about which products would the consumers would like in the supermarket.

Conclusion

Thus, from the above analysis of the data it can be said that Sainsbury needs to improve the operations and also the sales structure of the business in order to stay competitive in the market. The research shows that the supermarket business is highly competitive and thereby each supermarket is adopting strategies to gain competitive advantage. The research recognizes buying patterns of buyers, satisfaction level of customers and the range of products and sale services which the supermarket is offering.

In addition to this, the supermarket need to develop a strategy which can improve the business of the Supermarket in the face of such tough competition. The business can engage in promotional activities which can benefit the business which may involve lucky draw, gift vouchers, tv advertisements.

Reference

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