Comparative analysis of Marketing Communications strategies and mix for the supermarkets in the UK

1.0 Introduction: This report is a comparative analysis of the marketing communications strategies and mix for the supermarkets in the UK. The report will take three supermarkets into consideration namely, Tesco, Asda and Sainsburys. 2.0 Market Overview: The grocery market of the UK was accounted for 133.3bn for the calendar year 2007, where groceries account for 12.8% of household spending. Supermarkets have a sales area of about 3000 sq ft to 25000 sq ft where they sell a broad range of groceries and also non-food items. The UK supermarkets are accounted for about a 97.9bn in size (IGD Research 2007). Tesco was the largest grocery retailing company in year 2007 with a market share of 32.5% of the grocery market (Snapshots, 2008), whereas, Asda had 15.6% and Sainsburys had 16.8% as seen below in figure 2.0 and table 2.0 (Snapshots, 2008). However July 2008 showed a few alterations in the previous market share figures (Figure 2.1), where Tesco, yet leading, lost 1.2% of its market share to 31.1% and Asda overtook Sainsburys by gaining a 1.3% to 16.9% making it the second largest grocery retailer in the UK. This has left Sainsburys behind as it lost its market share by 0.9% to 15.9% (Thompson, 2008). Figure 2.0
Market Share:July 2008

Others , 35.90%

Tesco , 31.30%

Tesco Asda Sainsburys Others

Sainsburys, 15.90%

Asda , 16.90%

3.0 Literature Review: Supermarkets are entities that strive to achieve their targeted markets and certainly want to take the lead in terms of achieving the largest market share. Marketing communications plays an important role as a management process through which an organisation engages with its various audiences (Fill, 2005, p7), it is one of the key methods used by supermarkets to be competitive in the grocery retail industry. However this management process involves one of the 4 Ps of the marketing mix that is Promotion. The marketing communications mix involves six main promotional tools, namely advertising, sales promotion, direct marketing, personal selling, public relations and sponsorship (Fill, 2005, p8). Since the supermarkets considered in this report are Tesco, Asda and Sainsburys, this section will show a review on the literature of the marketing communications mix and strategies used by the supermarket industry to fight the competitive battle. 3.1 The Marketing Communications Mix: The Supermarket Industry a) Advertising: This non-personal tool of promotion (Rowley, 1998) is used by supermarkets to communicate with mass audiences with the help of several forms of media. They use mediums such as newspapers and magazines which are traditional forms of advertising media and exist as pull-type in nature, as the message is transferred by consumers free-will. This form allows them to engage with their audience by involving them at a high-level. Whereas the concentration of engagement with use of forms like Television (TV) and radio is lower compare to newspapers and magazines, as the nature of this form being push-type. Here the message transfer is not by the freewill of the audience as the advertisements appear while the audience is watching the television or listening to the radio. Since the internet and mobile communications have emerged as a new medium for advertising. Supermarkets are using this medium as it enables a bi-directional and individual connection to audiences. The strategic reason that supermarkets use this promotional tool is to build product image and stimulate direct purchase (Park, Shenoy and Salvendy, 2008).

b) Sales Promotion: UK supermarkets use this promotional tool, which consists of diverse short- term techniques to induce customer awareness, as their goal is to influence the target audience to buy their products. It is a strong tool in engaging the customer to make impulse purchases in the short-term retailing market (Hsu, Tsai and Chiang, 2009). Especially UK supermarkets, concentrate towards value increasing and value adding promotions. The former involves coupons and price discounts by enlarge and the latter involves premiums, prizes/contests, point

of purchase display, demonstration and loyalty cards. (Gilbert and Jackaria, 2002) Their strategy in using this tool is to encourage repeat purchases and reinforce brand image. c) Direct Marketing: This promotional tool is used by supermarkets to build and retain customers by contacting them without the use of an intermediary (Jobber, 2007, p593) They can develop new and retain existing customers, as this tool is more personal in nature compare to advertising and sales promotion. The reason for personalisation is because it allows targeting each group separately with tailored messages. This characteristic further allows this tool to reach a mass audience similar to that by using television (Roche, 2005). Supermarkets use several methods to engage with their target market, such as, direct mail, direct response advertising, catalogue marketing, mobile marketing, and electronic media (Jobber, 2007). However, electronic media- the internet and email, is becoming the preferred method in direct marketing, the way of transactions between companies and customers is changing (Ozuem, Howell and Lancaster, 2008). d) Personal Selling : This is a tool in marketing communications that is rarely used by supermarkets. Since this is a tool that involves sales personnel who communicate with customers in the target market. This involves a two-way communication, where they commute sales of a product, face-to-face with customers (Hsu, Tsai and Chiang, 2009). However research shows that since post-war Britain, the format of supermarkets has been self-service retailing (Alexander, 2008). However, there may be an incidence of a customer asking the present staff for a product on a shelf, which does show a hint of this promotional tool. e) Public Relations and Sponsorship: This promotional tool is used by supermarkets to determine, develop, encourage and sustain relations with their target audience (Kitchen, 1996) They get involved in activities such as sponsorship (Fill, 2005, p22) which are inclined towards the well fare of the community. Activities concerned about improving the environment, funding charitable institutions help improve the companies good will, brand image and customer loyalty (Hsu, Tsai and Chiang, 2009). The medium used to communicate is through third-party media, such as magazines, newspapers or news programmes

 According to Kitchen (1996), firms use this communications tool as it allows for product publicity. This in turn compliments towards supporting other promotional tools used by the company. 4.0 Discussion and Analysis The three supermarkets of the UK - Tesco, Asda and Sainsburys form a large part of the UK supermarket industry. They are entities which are fighting the competitive battle in order to gain a competitive advantage over one another and are striving to achieve the largest market share. However it is known from the previous section that Supermarkets use the marketing communications mix and strategies as one of the methods to compete. This section will consider commenting on the marketing communications mix, strategies and tactics used by the three supermarkets based on primary research in order to check if their communications mix and strategies tally with that of ones shown in the literature review. a) Advertising: Fig 4.a
Preference of Advertisements
50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 50%

33.33%

16.70%

Out of 30 Respondents

Tesco

Asda Companies

Sainsbury's

Tescos advertising was more appealing as 50% ((Fig 4.a) of the respondents who were in between the age group of 15 23, than of Asda and Sainsburys where most of them viewed them on television. Apart from the questionnaire handed to the respondents, the researchers viewing of the entitys advertisements on TV supports their response. This is because their advertisements concentrate on products which are mostly targeted to the youth for example, the latest music and game releases. They take enough time to convey the message which grasps the attention of the viewer and persuades him/her to watch the complete advertisement. This is important in the case of

TV advertisements as firstly they appear unexpectedly and secondly they are swift due the constraint of time.

Where as Sainsburys appealed to 33.33% of the respondents of which the older people that is, from ages 29 62 found the advertisements more appealing than Tesco and Asda. This is evident as after viewing the advertisements personally the researcher found that the supermarket focuses more on advertisements that concentrate on offers related to food, drink and mothers of toddlers. They are mostly shorter than Tescos but are specific in conveying promotions. However Asdas advertisements appealed to only 5 respondents that are 16.70% (Fig 4.a). This is probably true as the supermarket focuses on advertisements which compare Asda with other supermarkets, for example their prices. This does convey that Asda is cheaper, but however due to the consistency of such advertisements the audience might often ignore the message. This shows that by using mostly push form of media (Television) Tesco and Sainsburys have been more successful to engage its audience, than Asda. b) Sales Promotion: In the course of the researchers observation of the three supermarkets, it was noticed that all the three are competing very closely towards offering promotions on homogeneous products especially through price discounts. However apart from the promotions on branded and own-labelled alcohol where Asda promotes it for the cheapest compare to Tesco and Sainsburys it was noticed that this was not the case where other products are concerned, that is food and non-food items. The researcher observed that Tesco offered more promotions where food and non-food items were concerned than Sainsburys and Asda, for example there is a wide range of chocolates which are promoted for half price compare to Sainsburys and Asda. This point is further supported by the respondents views where 15 out of 30 felt that Tesco promotions were preferred over the other two supermarkets. However apart from price-cuts, the loyalty card programme also plays an important role, where Tesco was chosen by 20 out of 30 respondents. This may be the case as whenever the researcher purchased at Tesco he was always asked for his Tesco Club-Card for the points, which shows a strategic approach in strengthening the brand image and always relating the name ClubCard with Tesco. Where as Sainsburys is a member of a loyalty programme-Nectar, used by many retailers. This shows a lack of individual identity of the loyalty programme which is one of the ways in promoting Sainsburys brand image. In the case of Asda, the supermarket does not offer a loyalty card programme. c) Direct Marketing:

 This promotional tool is used by all three supermarkets; however 17 out of 30 respondents answered that Tesco keeps contact with them personally about new offers and other activities through email and post. Where as 8 people said Asda does and only 5 people said Sainsburys does through the same. The results also showed that even though all the three supermarkets kept in contact with the respondents, Tesco kept an appropriate balance between post and email. This shows that the supermarket is using traditional and modern forms of communicating with their audience. Where as Asda used more email than post to keep in contact with the 8 respondents, the same was in the case of Sainsburys for the 5 respondents. The reason for Tescos strong after sales relationship with the customer clearly correlates to its Club-Card, as loyalty cards are another source to store the customers address and buying behaviour. As mentioned earlier that direct marketing can play a role in transaction between customer and company by using the internet, this is true as 17 out of 30 respondents have used the supermarkets websites and the remaining have not. However even in this case Asda and Sainsburys were overtaken by Tesco as 9 respondents used the supermarkets website for shopping their grocery, where 3 used Asdas and 5 used Sainsburys. d)

Bibliography http://www.igd.com/index.asp?id=1&fid=1&sid=7&tid=26&cid=94 Wednesday 5th November 2008, 6:40 pm UK supermarkets 92.9bn http://academic.mintel.com/sinatra/oxygen_academic/search_results/show&/display/i d=400492/display/id=400492/display/id=400782#hit1 Tuesday 4th November 2008, 3:00 pm http://www.tescoplc.com/plc/about_us/tesco_story/# Tuesday 11 Nov. 08, 12:12pm Jack Cohen http://www.about-asda.com/inside-asda/our-history.asp Tuesday 11 November 2008, 6:01 pm

http://search.bcg.com/search? q=Tesco+UK+2008&btnG.x=0&btnG.y=0&btnG=Search&entqr=0& output=xml_no_dtd&sort=date:D:L:d1&client=bcgsite&ud=1&spell =1&oe=UTF-8&ie=UTF8&proxystylesheet=bcgsite&site=bcgsite&filter=0 the multichannel imperative. Tuesday 12 November 2008, 12:40 pm

Where Is the New Stuff? http://web.ebscohost.com/ehost/pdf?vid=1&hid=7&sid=d82c212a603a-4d7e-aa11-7b43c88f934a%40SRCSM2 Saturday, 29 November 2008, 23:54pm You are missing the point. By DON E. SCHULTZ. http://web.ebscohost.com/ehost/pdf?vid=22&hid=9&sid=9250e34ad95a-42d6-99a1-26c990372807%40sessionmgr9 Sunday 30 Nov. 08, 00:17hrs
Ignoring the issue simply isn't an option any more

http://web.ebscohost.com/ehost/pdf?vid=1&hid=15&sid=13d6717772c4-4647-8fcf-75383b90806a%40SRCSM2 Saturday, 29 November 2008

Asda overtakes Sainsbury's to become No 2 online grocer BYLINE: James Thompson

http://www.lexisnexis.com/uk/nexis/auth/checkbrowser.do? t=1227991486548&bhcp=1 Saturday, 29 November 2008

Customer Experience or Communication?

http://web.ebscohost.com/ehost/pdf?vid=1&hid=17&sid=dc1e85f2fdec-44f7-b26a-f02af36f7139%40SRCSM1 Sunday, 30 November 2008

FMCG needs direct marketing
Richard Roche. Marketing. London: Oct 12, 2005. pg. 30, 1 pgs

http://proquest.umi.com/pqdweb? index=4&did=921401301&SrchMode=1&sid=1&Fmt=3&VInst=PRO D&VType=PQD&RQT=309&VName=PQD&TS=1228342680&clientId =29708 Wednesday, 3 December 2008, 22:24 hrs