Macro environment and The marketing mix used by Sainsbury

Macro Environment:

“The major external and uncontrollable factors that influence organisations decision making and affects its performance and Strategies” is called Macro Environment. Macro Environment can be studied through different analysis, there are several but mainly used are PESTLE analysis and SWOT analysis.
Sainsbury’s Overview:
Sainsbury’s was established by John James and Mary Ann in the year 1869 as a small dairy shop. In very short time the store became popular for selling good and quality products at very low prices, and as a result further store branches followed over time. Also as a result of its popularity and huge market this group floated on the London Stock Exchange in the year 1973.
Sainsbury is the Great Britain based food retailer with business interests in monetary services. The group comprises Sainsbury’s supermarkets, convenience stores, an online based home delivery service and Sainsbury’s Bank whose head-office is in Holborn, London. The manpower is about 151,000. J Sainsbury plc consists of Sainsbury's – 509 supermarkets and 276 stores – and Sainsbury's Bank.
A large Sainsbury's store offers around thirty thousand goods and an increasing number of stores also offer various non-food goods and services. 165 stores also manage an online home delivery service.
Macro Environmental Factors:
PESTEL Analysis:
PESTEL analysis is simple and used widely to understand the big picture of Political, Economical, Social-cultural, Technological, Environmental and Legal. This process is used for future forecast. There are many factors which are affecting the macro environment that will affect the decision making of the managers. Tax changes, new lays, political related trades, barriers, government policy etc...

PESTEL analysis (macro-environment) of Sainsbury’s
The management decision making of any company or organisation depends on many macro environmental factors. These involve Tax changes, new lays, political related trades, barriers, government policy etc... It is necessary to study them in detail so that management can take a better decision in managing future aspects. And to study these in detail PESTEL analysis is used.
Sainsbury’s is a well known organisation which is having a large customer base and large capital base.
PESTEL forces of Sainsbury‘s:
Political forces- European union extensions , Euro Zone, Globalize business, taxation rules and policies
Economic forces- Changing rates of interest, exchange rates, national GDP and Income, inflation, Job market and unemployment, Share Market
Social forces- Population based on age, different view to work, income classification and distributions, Community works.
Technological forces- Invention, modern and new product innovation and improvements , class of technological obsolescence
Legal forces- Law for Competitors, monitoring health and safety, employment based law.
Environmental forces- Global warming, environmental issues, green house effect, animal welfare,

Political forces: Political forces are referred to policies that are related to government such as the degree of intervention in the economic scale. What product and services does the mentioning country want to provide? What extent does it depend in subsidising organizations? Sainsbury’s is forced by these factors.
Economic forces: The economic changes of any government have impact on local business. These include interest rates, taxation charges, economic growth, inflation and exchange rates. So business influenced by the economical factors has impact nationally as well as globally. Sainsbury’s is automatically gripped by those forces.
Social forces: (Argenti, 1974) It is very important for any business to understand the values and the culture of the society even before starting the business. Changes in social trends can impact on the demand for a firm’s products and the availability of individuals to work. This may also includes the tastes, habits, dislikes, customs, traditions, demographics etc… Sainsbury does totally follow these factors. It is operating effective charities, sponsoring games, arranging social activities, raising fund for Animal welfare, and many more.
Technological forces: New technologies create new products and new processes are created by modern technology. (Galbraith, 1967) Technology is “The systematic application of scientific or other organised knowledge to practical tasks”. Online shopping, bar coding and computer aided design are all improvements to the way we do business as a result of better technology. These developments can benefit consumers as well as organisations providing the products. Internet shopping, bar coding and computer proofed designs are all upgrading to the way .Sainsbury’s do to run their business as a result of better technology. Sainsbury’s is now using the self service counter.
Environmental forces: Environmental forces include the changing of weather and climate. Changes in temperature can impact on many industries including farming, leisure and tourism and insurance as well. With major climate changes occurring due to global warming and with better environmental awareness this external forces is becoming an important issue for Sainsbury’s to consider.
Legal forces: Sainsbury’s is in the boundaries of legal forces locally, nationally, globally. These are very close to the legal enforcements in which firms operate. The introduction of discrimination of age and disability discrimination, legislation , Show ID, etc.
SWOT Analysis:
SWOT analysis is done on internal and external environment one of the most important strategic planning process. The environmental factors in the organisation are divided into Internal and External factors. Internal factors are further classified as Strengths or Weakness and the external factors are further classified into Opportunities or Threats. Such an analysis of the strategic environment is referred to as SWOT analysis. SWOT analysis provides all the information that is required to match the organisations capabilities to the competitive environment in which it runs. How SWOT analysis fits into environmental scanning is shown as
SWOT Analysis Framework

Strengths:
Organisations strengths are its resources and capabilities that can be used as a basis for developing Competitive advantage.
Examples:
• Patents.
• Brand names.
• Good will among customers.
• Cost advantage from proprietary know-how.
• Favourable access to distribution networks.
Weakness:
The absence or lack of certain strengths is viewed as weakness.
Examples:
• Lack of patent protection.
• Weak brand name.
• Poor reputation among customers.
• Lack of access to the best natural resources.
In some cases weakness is also a strength and vice versa of the company. For example if a company has large manufacturing capacity it is considered a strength and also a weakness if the large investment in manufacturing capacity prevents the company from reacting quickly to the changes in strategic environment.
Opportunities:
This relates to the external environmental analysis. This reveals the opportunities for the firm to grow its profits.
Examples:
• Arrival of new technologies.
• Loosening of regulations.
• Removal of international trade barriers and
• An unfulfilled customer need.
Threats:
Not only opportunities a company or organisation also possess some threats that occurs because of external environment.
Example:
• Shifts in consumer tastes away from the firms products.
• Emergence of substitute products.
• New regulations and
• Increased trade barriers.
SWOT Matrix:
To develop strategies that take into account SWOT profile, a matrix is designed with these factors also known as TOWS Matrix
Strengths Weaknesses
Opportunities S-O strategies W-O strategies
Threats S-T strategies W-T strategies

SWOT / TOWS Matrix.
• S-O Strategies This is the best stage where both strengths and opportunities lies. This is good fit to company’s strengths.
• W-O Strategies In this stage it overcome weakness to pursue opportunities.
• S-T Strategies this is used to reduce its threats using firms strengths.
• W-T Strategies this strategy is used for preparing a defensive plan to prevent the firm’s weakness from making it highly susceptible to external strengths.


SWOT Analysis of Sainsbury’s:

Strengths:
• This is a very strong company with huge traders who are interested and trust worthy to the company. Also it had 509 supermarkets and 276 stores, thus became a Established trader.
• To develop in business every company has to depend on customers. It is said that ‘Customer is God’, as a popular and reputed company Sainsbury’s followed the saying and won its customers trust and developed a good customer base.
• Had a huge chain of Supermarkets with 509 supermarkets, 276 stores and a bank.
• Also it had large volumes of stock so it helps in reducing the cost.
Weakness:
• Having huge staff make them pay more.
• Having 509 supermarkets and 276 stores it is having high maintenance cost.
• Because of heavy stocks if product is failed huge stock will be leftover.
Treats:
• As UK is having many supermarkets there is always heavy completion among ASDA, WALMART, TESCO etc...
• Having many discount offers company may lose profits on certain products.
Opportunities:
• Having good volumes it is planning for new activities.
• It is a huge success in United Kingdom and now planning to expand into Eastern Europe.
• Also had large customer base and there is scope for huge employment.
Macro environment and its importance in making future Decision Making:
Macro Environment provides information about the environment which can guide strategic direction and helps in making decision making (Saxby, C.L, et al 2002). A successful strategy should result in “a favourable position in an industry” – “Competitive advantage” (Porter, M.E, 2004). Sustainable competitive advantage is achieved by generating or possessing resources that are inimitable, are valued by customer and can be used effectively (Fahy, J. and Smithee, A, 1999). These classifiable capabilities characterize the organisation from the competition and lead to the ability which can provide a competitive advantage in the market. These distinctive capabilities of the company will provide a competitive advantage in the market. Environmental scanning helps the organisation in providing information about the strengths and weakness of competitors and consumer behaviour and helps in preparing marketing strategies to leverage these resources and apply appropriately.
(Saxby et al, 2002) Saxby highlighted the importance of regular scanning due to the dynamic nature of the modern business environment. This is very important because even very minute differences in the environment such as cultural changes, legislative can be the difference between becoming the market leader and insolvency. It is also very important to notice that the environmental changes on one company will be different to that of other company. A threat for one company can be an opportunity for another, environmental scanning helps in observing these threats or opportunities and act on them.



The marketing mix used by Sainsbury to gain its competitive advantage in its chosen sector -

Sainsbury supermarkets follow the mission of being the customer’s first choice by its service and quality. It delivers and maintains an outstanding quality and good service through the method working simpler, faster and together. The marketing mix generally is based on the four P’s which generally known as price, place, product and promotion.
The Marketing Mix -
In terms of customer service, loyalty and detected price competitiveness, the city criticized Sainsbury’s for allowing Tesco in getting a head in the market in early 1996. Sainsbury’s was also criminated for not promoting itself up to its standards and also running the same type of initiatives which was running by Tesco. So the Sainsbury has failed to promote its products and services. Hence it improved a mission and adjusted in a fast growing market. In the process to reconstruct its mission, company has changed its marketing strategy and sold successfully the home based products in the chain of UK market and its business in Egypt. This changes the company to focus on food retailing and related activities. To gain the competitive advantage in its chosen sector the following marketing mix has been used. (Product, promotion, price and place)

Product –
In February 1999 Sainsbury has announced its new corporate identity in order to become the UKs first choice for food to the consumers. In 1999 the company has come up with a new word which states the taste and life of the people “Making Life Taste Better”. This word indicates more than a campaign; it brings the real change at Sainsbury’s. The company mainly focused on its quality of food and developing the new products which is healthier to the customers. They not only maintain the quality in company’s fresh foods but they provide different verities of Breads, fruits, ready meals and reduced fat milk. Sainsbury launched Taste the deference range in the year 2000. This is the biggest food brand launch in the UK history. It has more than 350 variety range of foods which was grown or produced by taking extra time to protect its natural taste and flavor of the product. At the beginning of January 2001 Sainsbury super markets has announced the biodegradable packaging made from potatoes. At all the stores of Sainsbury the labeled fruits were sold in organic trays. Right now the Sainsbury has developed more than 600 organic lines which has developed to the range of best sellers of foods and produce the categories and a major growth in groceries, bakery, frozen foods etc. The super markets has launched a product in 2001 Blue carrot Calf- which is known for the clear labeling of children products which mentions the clear details of the items. The Sainsbury super markets come out with a new program every year and continuously concentrate on development of its products. A team who are experts in food industry provides the company with a special control of the product quality.

Price –
The term Price is a raw component of the marketing mix for Sainsbury’s. These days Sainsbury is offering, outstanding value for money to the customers in UK. The aim of the company is to lead the quality and should stand as the top in terms for the customers all through the market. In other terms it is keen on maintaining the leadership and develops the market share. The key term for price is value for money and the mission mentions the competitive cost. In grocery market could compete on price or service which are mutually same. Due to the poor performance of profits by Sainsbury in 1996, the share price has consequently fallen down and which moved to a low price platform. If we go through the other side the thing is that consumers may become smarter. If the price has been reduced it is not easy to get back to the previous level without disaffecting the customers. This is not good for the business. Hence the price cutting will affect the store, that it is used for the short term price gain where as its long term effect would gain less positive. Sainsbury realized its price war in the market and implemented a new strategy “value for money”. It invests a lot in developing the quality and productivity what it delivers and the effectiveness of its activity in order to reduce the overall cost. Here it has a purpose of implementing the strategy for gaining the trust and value from the costumers and maintain its leadership.

Promotion –
Sainsbury always takes the advantage of its promotion to build up its strong brand and image among the customers. The group mainly concentrates on its own brand rather than the other brands which they sell in the stores to create the greater wealth can be created by its overall retail brand. Sainsbury uses the media for its promotion where as TV, radio and advertising in cinemas to develop the corporate image. Sales promotions, merchandising and packing are also the key essentials for the promotion of the Sainsbury. In the part of its promotion Sainsbury has launched “Nectar Card” which can be said as a main weapon for its promotion. This card can be taken by its customers at free of cost and they can get discount points by using it in the store at the time of shopping. The customers are keen to use this card and many of the other retailers are using the same type of promotion by issuing the cards to give away the free points for their money, where as these points can be used as a automatic discounts or 50% of their bill or other third party vouchers. This was issued in 1996 and today Sainsbury is having more customers who use the card and the same card can be used for other type of payments to earn points. To promote the image of the super market, Sainsbury uses to operate the responsibilities to the communities and environment. The store staff uses the named T-shirts of the supermarket in an attractive design to defer as a worker to serve the people at all the time.



Place –
Place is one of the terms of the marketing mix and this term is also important for a business. We already know that Sainsbury is the business organization which prefers to be the first choice for its customers by providing value added service in quality and by doing the work easy fast and simpler. As per the Sainsbury portfolio it is having 872 stores across the UK where as 335 convenience and 837 super markets. Different formats of stores have been developed across the country according to the needs and satisfaction of the customers and area. To satisfy the needs and satisfaction of the customers some stores have been opened 24 hours a day and some works more time on Fridays. The organization is creating a large chain of retail stores in deferent locations which it is aiming to create a world class distribution of groceries and work more effectively. The Sainsbury is maintaining a healthy sector of information online to its customers where we can find a large number of varieties online. Customers can order online or by phone where they can track the order by sitting in home. It is maintaining a large sector of online marketing and good communication with the customers.

Conclusion-
Here we can see that Sainsbury always use the market mix to develop and implement its strategies by using the market mix. It satisfies the customers by improving the strategies which meet the needs of the customer. It always research on the market to know the interest of a customer who is able to buy its products. It continues to implement the market segmentation to develop its business strategies which shows the development of a business. Sainsbury use the market segmentation to display large variety of products and sell to deferent groups and to achieve large amount of sales overall. It offers a large number of products in a convenient location and opens the store for long hours. It also encourages the customers by easy cash options through debit card and credit card. It also offers the cash back facility to the customers on their purchases.






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