A case study of Sainsbury’s in entering into USA market

Executive summary

As a senior marketing consultant in Ashanti Marketing Solutions (AMS) Limited, it is essential to support the client for developing good marketing strategic planning for sustaining in the market and expanding the business successfully. The company Sainsbury’s aims at expanding their business in USA, which have strong customer base with high demand for the products and services. The organisation is able to run their business sustainably and it would be beneficial for the firm to develop good marketing strategic planning for gaining high market share in the global retail market as a whole. The report is effective to propose good marketing expansion strategy through which Sainsbury’s would be able to expand their business across the international markets and meet the strategic aim. As a marketing consultant, it would be a great opportunity to analyse internal and external market analysis for Sainsbury’s and propose the market entry options for the firm. The market segmentation and targeting as well as porters generic strategy would also be implemented in order to propose the best strategy of market expansion. As per the findings, the firm must focus on product diversification strategy and direct export market entry tactic to establish the company in USA.

Introduction

As a senior marketing consultant in Ashanti Marketing Solutions (AMS) Limited, it is possible to explore the marketing strategic planning to support the clients. This report provides a scope to analyse the internal and external market of the company that will aim to expand their business across the international market. The marketing strategic planning and the market entry tactics must be evaluated in order to propose the best plan for the firm to sustain in the market and enter into new international country in future. The company Sainsbury’s is a famous retail chain of the UK will aim to expand their business in one international country so that it would be possible for them to gain high competitive advantage and increase their international market presence. The aim of the study is to develop good market entry options and conduct market segmentation and targeting, so that the consultants can propose good planning to the business for entering into new international market. On the other hand, the marketing strategy would be proposed further for the company Sainsbury’s through Porter’s generic strategy.

Sainsbury’s is the second largest supermarket chain in the UK with 16% market share. The major products of the firm are hyper market, super market, forecourt shop and convenience store where the company is successful to expand their business across the UK through 1428 shops. The revenue in the last year was £28.993 billion (Sainsbury’s, 2021a). The brand mainly focuses on running their operations in the UK, but in the recent era of globalisation, it would be great strategic option for the company to enter into USA market in order to increase global presence and retain more clients to sustain in the industry in near future (Sainsbury’s, 2021b).

PESTEL analysis

For conducting external market research, PESTEL analysis is effective which includes the factors such as political, economic and social, as well as technological, legal and environmental.

Political environment of the USA is stable with common law and government intervention. The USA economy is mixed economy with freedom to access the market and the government intervention (Ruiz-Real et al., 2019). The international brand is able to enter into the USA and follow the rules and legislations to develop their business firm. Due to Brexit and this pandemic situation, the market condition is not good, but the government is efficient to manage the transactions of goods and services successfully and support the entrepreneurs for running their business.

The economic stability with high Gross Domestic product and National income further influence the entrepreneurs to run their business sustainably. The purchasing power parity of the customers in the country is high where the clients may afford the goods and services as per their needs and preferences. Due to this pandemic era, the employment rate is being deteriorated but it would be increased in near future with stable market condition.

Social development with 99.9% literacy rate is also influential for the organisations to establish their business in the USA and expand their operations across the country. The customer’s base is strong with huge population, and the clients are updated with latest news and information through accessing different technology and social media (Ruiz-Real et al., 2019).

Technological infrastructure and business innovation through integrated computerised system are also helpful for the multinational corporation to expand their business in the USA. The retail industry is also innovative with e-commerce activities and Information Technology infrastructure, including Enterprise Resource planning system, ICT and GPS.

Legal structure is strong with strict rules and legislation compliance, where the firms must follow all the rules to sustain in the market (Li et al., 2019). The organisation must follow employment rules for fair human resource management, Data Protection Act as well as health and safety of the workers at the workplace so that the business operations can be run efficiently.

Environmental protection further helps the firms to provide green environmental footprint and utilise renewable energy resources for running their operations.

As per the internal analysis, SWOT analysis for Sainsbury’s can be conducted were, it is possible to identify he strengths and weaknesses of the company as well as explore the upcoming market opportunities and threats while Sainsbury’s will expand their business in USA.

Market-Entry options

There are several market entry options, through which the company Sainsbury’s can expand their business in the USA, and the major market entry strategies include direct export, licensing, merger and acquisition as well as foreign direct investment, franchising, joint venture and partnership business (Mohr and Batsakis, 2018). Sainsbury’s is a famous retail chain in the UK and it is financially stable to export their products and services to enter into new international market. The brand must focus on licensing to follow the USA rules and legislative compliance for establishing the retail shop at the market. Additionally, direct exporting would be developed by strengthening their supply chain and distribution network in the USA, so that it would be possible to meet the strategic aim of expanding their business in the new international market. Licensing is giving legal rights to in-market parties to utilise the company name and also follow the intellectual property rights and copyright for their products and services (Mohr and Batsakis, 2018). Sainsbury’s also focuses on direct exporting so that the products and services can be available at the store from where the customers would make effective purchase decision as per their needs and preferences. The products are exported directly to the USA in order to run their operations. In future, the company would be able to establish their production firm in the USA as they also have the licensing to run the operation sustainably in the new international market.

Market Segmentation

Market segmentation and targeting is effective for providing clear overview about the customers in the new market. It is beneficial for the consultant to make the market understandable for the client where Sainsbury’s is able to expand their business by targeting the right consumers, where the purchasing intension is high. The market segmentation can be conducted on the basis of demographic, income status, occupation, personal choice and preferences, age and gender. The company will target the middle aged group along with old age person in the USA, as there is high demand for the grocery items and other necessities (Watson IV et al., 2018). The people in urban and rural areas will be targeted where both male and female members are there to come and make effective purchase decision for the quality products of Sainsbury’s. As per the demographic background, the customers from diverse culture will be targeted and also the company will retain the clients, who have the intension of buoying quality products at affordable price. As per occupation, the customers who are engaged in educational field, employees and business entrepreneurs are targeted so that they can afford the products and make effective decision to buy the basket of goods and services as per their personal needs. The middle and high income groups are also targeted while entering into the USA retail chain.

Porter’s generic strategy

The Porter’s generic strategy is effective to identify the strategic tactics through the firm is able to gain competitive advantage in the new market (Lauer, 2019). The company Sainsbury’s must enter into USA market as the company established their business only in the UK. As per the Porter’s generic strategy, the major strategies that the brand must implement are cost leadership and product differentiation (Islami, Mustafa and Latkovikj, 2020).

Sainsbury’s must implement product differentiation strategy in order to target diverse customer groups. The major product range would be grocery products, health and beauty products and clothing, where the customers purchase intension would be high in these three segments. Sainsbury’s must aim to expand their business through promoting the health and beauty products, as after COVID 19 era, the demand for the health related products in increasing day by day. Additionally, the demand for the grocery products is also rising along with the clothing and accessories. Cost leadership is also necessary to be implemented to provide the best quality products at affordable price for strengthening their customer’s base in the new international market, USA (Lauer, 2019).

Conclusion

Sainsbury’s is hereby capable of expanding their business operations in a new international market USA and gain competitive advantage by implementing the product differentiation and cost leadership strategy. It would be beneficial for the business to focus on licensing the firm for running the business ethically and retaining the customers by successful targeting and positioning the brand. By store expansion and direct exporting, Sainsbury’s would be able to establish the business in USA and deliver the best quality products at affordable price.

Reference List

Islami, X., Mustafa, N. and Latkovikj, M.T., 2020. Linking Porter’s generic strategies to firm performance. Future Business Journal, 6(1), pp.1-15.

Lauer, T., 2019. Generic Strategies, Outpacing and Blue Ocean-Discussing the Validity of Three Strategic Management Theories Using Case Studies from Airlines and Grocery Retail. Theory, Methodology, Practice, 15(1), p.57.

Li, G., Zhang, X., Chiu, S.M., Liu, M. and Sethi, S.P., 2019. Online market entry and channel sharing strategy with direct selling diseconomies in the sharing economy era. International Journal of Production Economics, 218, pp.135-147.

Mohr, A. and Batsakis, G., 2018. Firm resources, cultural distance and simultaneous international expansion in the retail sector. International Business Review, 27(1), pp.113-124.

Ruiz-Real, J.L., Uribe-Toril, J., Gázquez-Abad, J.C. and de Pablo Valenciano, J., 2019. Sustainability and retail: analysis of global research. Sustainability, 11(1), p.14.

Sainsbury’s, 2021a. Corporate governance. [Online] Available at: https://www.about.sainsburys.co.uk/about-us/corporate-governance [Accessed on 22 October 2021].

Sainsbury’s, 2021b. Our business strategy. [Online] Available at: https://www.about.sainsburys.co.uk/about-us/our-business-strategy [Accessed on 22 October 2021].

Watson IV, G.F., Weaven, S., Perkins, H., Sardana, D. and Palmatier, R.W., 2018. International market entry strategies: Relational, digital, and hybrid approaches. Journal of International Marketing, 26(1), pp.30-60.

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