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Customer Relationship Management a strategy of Sainsbury’s:
A critical study
Research Background / Context
J Sainsbury plc is the parent company of Sainsbury’s Supermarkets Ltd, commonly known as Sainsbury’s, a chain of supermarket in the United Kingdom. J Sainsbury plc is a leading UK food retailer with interests in financial services. It consists of Sainsbury's Supermarkets, Sainsbury's Local, Bells Stores, Jacksons Stores and JB Beaumont, Sainsbury's Online and Sainsbury's Bank. It employs 148,000 people. The group has an estate worth about ₤ 8.6 billion (March 2007).
Sainsbury’s objective is simple; to serve customers well and thereby provide shareholders with good, sustainable financial returns. Sainsbury’s aim to ensure all colleagues have opportunities to develop their abilities and are rewarded for their contribution to the success of the business. Sainsbury’s policy is to work with all of our suppliers fairly, recognising the mutual benefit of satisfying customers' needs. Sainsbury’s also aim to fulfil there responsibilities to the communities and environments in which we operate.
Sainsbury's stands for great products at fair prices. The Group continually improves and develops its product ranges and is committed to giving customers an ever improving shopping experience. A large Sainsbury's Supermarket offers around 30,000 products - 50% of these are Sainsbury's own brand including fresh produce. In addition to a wide range of quality food and grocery products, many stores offer a range of complimentary non-food products & services. Sainsbury's serves over 16 million customers a week at the end of March 2007 had 788 stores throughout the UK. Nearly 60% of our stores are in centre or edge-of-centre locations, many of these built on previously redundant sites.
(Source: http://www.j-sainsbury.co.uk/index.asp?pageid=12)
Sainsbury’s Background
Sansbury’s was established as a partnership in 1869 when John James Sainsbury and his wife Mary Ann opened a store at 173 Drury Lane in Holborn, London. In 1922 .
Sainsbury was incorporated as a private company. The first self-service brance opened in Croydon in 1950. in 1973 the company was floted as J Sainsbury plc in what was at the time the largest ever flotation on the London Stock Exchange; the company rewarded the smaller bids for share in order to creat as many shareholders as possible. Today the family retains at least 14% of shares.
In 1975, Sainsbury’s launched the “ainsbury’s SavaCentre” hypermarket format as a joint venture with Bhs. This was the first attempt to launch supermarkets with a large non-food range in the UK. Savacentre became a wholly owned Sainsbury’s subsidiary in 1989. As the hyper market format became more mainstream, with rivals such as ASDA and Tesco launching ever-larger stores, it was decided that a separate brand was no longer needed and the stores were converted to the regular Sainsbury’s superstore format in 1999. This is in direct contrast to firms Tesco and ASDA, which have been rapidly expanding their Tesco Extra and ASDA Wal-Mart Supercentre hypermarket formats in recent years.
For much of the 20th century Sainsbury’s was the market leader in UK supermarket sector, but in 1995 it lost its place as the UK’s largest grocer to Tesco and in 2003 was pushed into third by ASDA. The company’s fortunes have improved since the launch of a recovery programme by CEO Justine King in 2004, with it reporting its 12th consecutive quarter of sales growth in January 2008. despite predictions that Sainsbury’s would regain second position, Taylor Nelson Sofres data released in January 2008 shows Asda’s share as 16.7% compared to Sainsbury’s at 16.4%.
(Source: http://www.j-sainsbury.co.uk/index.asp?pageid=188)
Rational for the Chosen Topic
I have proposed to research this topic due to my work experience with Sainsbury’s. As a staff of this esteem organization it gives me a vast exposure how supermarket formulate their strategy keeping Customer Relationship Management (CRM), Marketing Strategy, Competition Threats and Sales Promotion Strategy. During the tenure of my service with Sainsbury’s, I notice the tremendous competition and growth whether low season or peak season, and evaluation system to assess the performance of most competition carriers like ASDA, Tesco etc.
Research Question
Essentially, this research proposed the examination of one basic question; How successful of Sainsbury’s strategy of customer relationship management. Prior to obtaining the answer for research question, it raises additional questions such as; how Sainsbury’s have described its target customers, how Sainsbury’s strategy differs from its competitors. Finally how Sainsbury’s has carved a niche for itself in UK’s supermarket industry.
Research Objective
As a summary of the above, the research objectives are enlisted below;
1. The aim of the research is to critically evaluate customer relationship management a strategy of Sainsbury’s.
2. How Sainsbury’s marketing strategy differ from conventional strategy market.
3. To explore different organization using the strategy of customer relationship management, there products range and impact on over all result.
4. To identify the overall performance of the Sainsbury’s, with respect to customer satisfaction, profitability, product span and distribution penetration.
5. To understand why Sainsbury’s had gain popularity.
Literature Review
The literature explores the existing knowledge n the topic of evolution of Sainsbury’s customer relationship management. Here we will discuss the concept of customer relationship management (CRM). The review of literature is important so s to develop a through understanding of the subject and to analyze the academic literature and its applicability to the research.
Customer Relationship Management (CRM) is a customer centric business strategy with the goal of maximizing profitability, revenue, and customer satisfaction. According to Philip Kotler (2003) the aim of Customer Relationship Management (CRM) is to produce high customer equity. Customer equity is the total of the discounted lifetime values of all of the firm’s customers. Rust, Zeithamal, and Lemon distinguish three drivers of customer equity; value equity, brand equity, and relationship equity.
Value equity is the customer’s objective assessment of the utility of an offering based on perceptions of its benefits relative to its costs.
Brand equity is the customer’s subjective and intangible assessment of the brand, above and beyond its objectively perceived value.
Relationship equity is the customer’s tendency to stick with the brand, above and beyond objective and subjective assessments of its worth.
This formulation integrates value management, brand management, and relationship management within a customer centered focus. Companies can decide which driver(s) to strengthen for the best payoff.
The best relationship marketing going on today is driven by technology. Dell Computer could not customize computer ordering for global corporate customers without advance in Web technology. Companies are using technology to foster continuous contact between company and customer. Here some techniques which is used by a company to build customer value;
1) Ameritrade: the discount brokerage service Ameritrade provides detailed information to its customers, which helps to create a strong bond.
2) Adding Financial Benefits: two financial benefits that companies can offer are frequency programs and club marketing program. Frequency programs (FPs) are designed to provide rewards to customers who buy frequently and in substantial amount. Club Membership Programs have created by many companies to bond customers closer to the company.
3) Adding Social Benefits & 4) Adding Structural Ties.
Sainsbury’s follows some vital strategies to improve customer relationship such as;
Nectar Card: It’s a loyalty card, which benefits the customer by giving points on basis of purchase. Not only that Nectar wishes on customers’ birthday and anniversary. On a certain amount of points, company arranges gifts, tour, product discounts, which shows the emotional attachment with Sainsbury’s and their customers.
Sainsbury’s Bank: In 1997 Sainsbury’s Bank was established- a joint venture between J Sainsbury plc. and the Bank of Scotland (now HBOS). Service offered include car, life, home, pet and travel insurance as well as health cover, loans, credit cards, savings accounts and ISAs.
Sainsbury’s Credit Card: Its combination of credit and nectar card which allows to get points on each and every purchase.
Online Purchase and Free Delivery: Customers don’t need to come to the store, they can purchase the product from their home by online and phone.
Methodology
The nature of this proposed research is exploratory, rather than explanatory, as not much literature has been publicized on the issue of property market in U.K. As such, the research will adopt a ground theory approach developed by Glaser and Strauss (1967). According to them, ground theory is the discovery of theory form data and that is systematically obtained from research. The theory developed is derived from data and then illustrated by the characteristics examples of the data. In other word, the theory is inductively derived from the study of the phenomenon it represents (Strauss and Corbin, 1997).
The research proposes the use of methodological triangulation concept developed by Denzin (1978) to overcome the potential bias and susceptible of using one particular method of data collection. The original term “triangulation” refers to a surveying / nautical process in wich two points (and their angles) are used to determine the unknown distance of a third points (and their angles) are used to determine the unknown distance of a third point (Tashakkori and Teddli, 1998).
The combination of data collection method of in-depth interview, semi-structured interview and participant observation will be used in proposed research. An in-depth interview or unstructured interview is an informal type of interview aimed to explore in depth a general area such as property market in U.K. The interview will be conducted without any predetermined list of questions, although a clear ideal area to explore need to be established prior to the interview. In such data collection method, interviewee is given the opportunity to talk freely about trade promotions, the behaviour and belief with regards to the topic area (Saunders, Lewis and Yhornhill, 2003). This phenomenon is sometime known as the informant interview as it is the interviewee perception that guides the conduct of the interviewer (Robson, 2002).
Participant observation is where “the researcher attempts to participate fully in the lives and activities of subjects and thus becomes a member of their group, organisation or community. This enables the researcher to share their experience by not merely observing what is happening but also feeling it” (Gill and Johnson, 1997). Even thought participant observation has been used much less in management and business, it can indeed be a very valuable tool especially when the research is adopting triangulation approach (Saunders, Lewis and Thronhill, 2003)
Data Collection Methods
The research proposes the commencement of in-dept interview with the Assistant Manager of propertyfinder.com to obtain an in-dept exploration of the trade promotion activities in a broad context. The interview(s) will be conducted by telephone in which the whole conversation will be tape-recorded. Given the disadvantages of conducting interview through telephone, the lack of personal contract trust establishment will be compensated by the speed of data collection and lower costs associated with long distance access.
The interview(s) is estimated to last between fifteen minutes to half hour, a schedule of question will be prepared in advance to ensure the clear idea of areas to be covered in the conversations. However, the interview will not adhere to the schedule of questions strictly considering the nature of informant interview discussed earlier.
Data Analysis
This research proposed to use a combination of qualitative and quantitative data analysis approach. Data obtained through in –dept interviews and participant observation will be analysed using the set procedure from grounded theory approach of open coding, axial coding and selective coding (Strauss and Corbin, 1998). Grounded theory approach is considered as structured and systematic. The advantage of the approach is that data analysis can be conducted in a less formalised and proceduralised manner while maintaining a systematic and rigorous approach to arrive at a theory (Saunders, Lewis and Thornhill, 2003).
Timescale
Activity Feb Mar Apr
W/K commencing W3 W4 W1 W2 W3 W4 W1 W2 W3 W4
Read literature * *
Finalize objective * *
Read methodology
Literature * *
Proposal * *
Devise research strategy and method * *
Draft research strategy and method * *
Develop schedule of question for interviews * *
In-depth interview with Sainsbury’s key informants * * *
Observation – participation in Sainsbury’s market workshops * *
Gather data * * *
Analyze Data * * *
Draft findings chapter * *
Update literature read *
Complete remaining chapters * *
Draft to Supervisor for feedback *
Revise draft and print *
Submission *
Bibliography
1. D. K. Bhattacharyya, Research Methodology, First Edition, Excel Books, New Delhi, 2003
2. Donald H. McBurney, Research Methods, Fifth Edition, Thomson Wadsworth, Singapore, 2003
3. Harper W. Boyd, Ralph Westfall and Stanley F. Stasch, Marketing Research Text and Cases, Seventh Edition, Richard D. Irwin Inc, USA, 2004
4. Philip Kotler, Marketing Management, Eleventh Edition, Prentice Hall, New Jersey, 2003
5. Jonathan Groucutt, Foundations of Marketing, Palgrave Mcmillan, ew York, 2005
Research Background / Context
J Sainsbury plc is the parent company of Sainsbury’s Supermarkets Ltd, commonly known as Sainsbury’s, a chain of supermarket in the United Kingdom. J Sainsbury plc is a leading UK food retailer with interests in financial services. It consists of Sainsbury's Supermarkets, Sainsbury's Local, Bells Stores, Jacksons Stores and JB Beaumont, Sainsbury's Online and Sainsbury's Bank. It employs 148,000 people. The group has an estate worth about ₤ 8.6 billion (March 2007).
Sainsbury’s objective is simple; to serve customers well and thereby provide shareholders with good, sustainable financial returns. Sainsbury’s aim to ensure all colleagues have opportunities to develop their abilities and are rewarded for their contribution to the success of the business. Sainsbury’s policy is to work with all of our suppliers fairly, recognising the mutual benefit of satisfying customers' needs. Sainsbury’s also aim to fulfil there responsibilities to the communities and environments in which we operate.
Sainsbury's stands for great products at fair prices. The Group continually improves and develops its product ranges and is committed to giving customers an ever improving shopping experience. A large Sainsbury's Supermarket offers around 30,000 products - 50% of these are Sainsbury's own brand including fresh produce. In addition to a wide range of quality food and grocery products, many stores offer a range of complimentary non-food products & services. Sainsbury's serves over 16 million customers a week at the end of March 2007 had 788 stores throughout the UK. Nearly 60% of our stores are in centre or edge-of-centre locations, many of these built on previously redundant sites.
(Source: http://www.j-sainsbury.co.uk/index.asp?pageid=12)
Sainsbury’s Background
Sansbury’s was established as a partnership in 1869 when John James Sainsbury and his wife Mary Ann opened a store at 173 Drury Lane in Holborn, London. In 1922 .
Sainsbury was incorporated as a private company. The first self-service brance opened in Croydon in 1950. in 1973 the company was floted as J Sainsbury plc in what was at the time the largest ever flotation on the London Stock Exchange; the company rewarded the smaller bids for share in order to creat as many shareholders as possible. Today the family retains at least 14% of shares.
In 1975, Sainsbury’s launched the “ainsbury’s SavaCentre” hypermarket format as a joint venture with Bhs. This was the first attempt to launch supermarkets with a large non-food range in the UK. Savacentre became a wholly owned Sainsbury’s subsidiary in 1989. As the hyper market format became more mainstream, with rivals such as ASDA and Tesco launching ever-larger stores, it was decided that a separate brand was no longer needed and the stores were converted to the regular Sainsbury’s superstore format in 1999. This is in direct contrast to firms Tesco and ASDA, which have been rapidly expanding their Tesco Extra and ASDA Wal-Mart Supercentre hypermarket formats in recent years.
For much of the 20th century Sainsbury’s was the market leader in UK supermarket sector, but in 1995 it lost its place as the UK’s largest grocer to Tesco and in 2003 was pushed into third by ASDA. The company’s fortunes have improved since the launch of a recovery programme by CEO Justine King in 2004, with it reporting its 12th consecutive quarter of sales growth in January 2008. despite predictions that Sainsbury’s would regain second position, Taylor Nelson Sofres data released in January 2008 shows Asda’s share as 16.7% compared to Sainsbury’s at 16.4%.
(Source: http://www.j-sainsbury.co.uk/index.asp?pageid=188)
Rational for the Chosen Topic
I have proposed to research this topic due to my work experience with Sainsbury’s. As a staff of this esteem organization it gives me a vast exposure how supermarket formulate their strategy keeping Customer Relationship Management (CRM), Marketing Strategy, Competition Threats and Sales Promotion Strategy. During the tenure of my service with Sainsbury’s, I notice the tremendous competition and growth whether low season or peak season, and evaluation system to assess the performance of most competition carriers like ASDA, Tesco etc.
Research Question
Essentially, this research proposed the examination of one basic question; How successful of Sainsbury’s strategy of customer relationship management. Prior to obtaining the answer for research question, it raises additional questions such as; how Sainsbury’s have described its target customers, how Sainsbury’s strategy differs from its competitors. Finally how Sainsbury’s has carved a niche for itself in UK’s supermarket industry.
Research Objective
As a summary of the above, the research objectives are enlisted below;
1. The aim of the research is to critically evaluate customer relationship management a strategy of Sainsbury’s.
2. How Sainsbury’s marketing strategy differ from conventional strategy market.
3. To explore different organization using the strategy of customer relationship management, there products range and impact on over all result.
4. To identify the overall performance of the Sainsbury’s, with respect to customer satisfaction, profitability, product span and distribution penetration.
5. To understand why Sainsbury’s had gain popularity.
Literature Review
The literature explores the existing knowledge n the topic of evolution of Sainsbury’s customer relationship management. Here we will discuss the concept of customer relationship management (CRM). The review of literature is important so s to develop a through understanding of the subject and to analyze the academic literature and its applicability to the research.
Customer Relationship Management (CRM) is a customer centric business strategy with the goal of maximizing profitability, revenue, and customer satisfaction. According to Philip Kotler (2003) the aim of Customer Relationship Management (CRM) is to produce high customer equity. Customer equity is the total of the discounted lifetime values of all of the firm’s customers. Rust, Zeithamal, and Lemon distinguish three drivers of customer equity; value equity, brand equity, and relationship equity.
Value equity is the customer’s objective assessment of the utility of an offering based on perceptions of its benefits relative to its costs.
Brand equity is the customer’s subjective and intangible assessment of the brand, above and beyond its objectively perceived value.
Relationship equity is the customer’s tendency to stick with the brand, above and beyond objective and subjective assessments of its worth.
This formulation integrates value management, brand management, and relationship management within a customer centered focus. Companies can decide which driver(s) to strengthen for the best payoff.
The best relationship marketing going on today is driven by technology. Dell Computer could not customize computer ordering for global corporate customers without advance in Web technology. Companies are using technology to foster continuous contact between company and customer. Here some techniques which is used by a company to build customer value;
1) Ameritrade: the discount brokerage service Ameritrade provides detailed information to its customers, which helps to create a strong bond.
2) Adding Financial Benefits: two financial benefits that companies can offer are frequency programs and club marketing program. Frequency programs (FPs) are designed to provide rewards to customers who buy frequently and in substantial amount. Club Membership Programs have created by many companies to bond customers closer to the company.
3) Adding Social Benefits & 4) Adding Structural Ties.
Sainsbury’s follows some vital strategies to improve customer relationship such as;
Nectar Card: It’s a loyalty card, which benefits the customer by giving points on basis of purchase. Not only that Nectar wishes on customers’ birthday and anniversary. On a certain amount of points, company arranges gifts, tour, product discounts, which shows the emotional attachment with Sainsbury’s and their customers.
Sainsbury’s Bank: In 1997 Sainsbury’s Bank was established- a joint venture between J Sainsbury plc. and the Bank of Scotland (now HBOS). Service offered include car, life, home, pet and travel insurance as well as health cover, loans, credit cards, savings accounts and ISAs.
Sainsbury’s Credit Card: Its combination of credit and nectar card which allows to get points on each and every purchase.
Online Purchase and Free Delivery: Customers don’t need to come to the store, they can purchase the product from their home by online and phone.
Methodology
The nature of this proposed research is exploratory, rather than explanatory, as not much literature has been publicized on the issue of property market in U.K. As such, the research will adopt a ground theory approach developed by Glaser and Strauss (1967). According to them, ground theory is the discovery of theory form data and that is systematically obtained from research. The theory developed is derived from data and then illustrated by the characteristics examples of the data. In other word, the theory is inductively derived from the study of the phenomenon it represents (Strauss and Corbin, 1997).
The research proposes the use of methodological triangulation concept developed by Denzin (1978) to overcome the potential bias and susceptible of using one particular method of data collection. The original term “triangulation” refers to a surveying / nautical process in wich two points (and their angles) are used to determine the unknown distance of a third points (and their angles) are used to determine the unknown distance of a third point (Tashakkori and Teddli, 1998).
The combination of data collection method of in-depth interview, semi-structured interview and participant observation will be used in proposed research. An in-depth interview or unstructured interview is an informal type of interview aimed to explore in depth a general area such as property market in U.K. The interview will be conducted without any predetermined list of questions, although a clear ideal area to explore need to be established prior to the interview. In such data collection method, interviewee is given the opportunity to talk freely about trade promotions, the behaviour and belief with regards to the topic area (Saunders, Lewis and Yhornhill, 2003). This phenomenon is sometime known as the informant interview as it is the interviewee perception that guides the conduct of the interviewer (Robson, 2002).
Participant observation is where “the researcher attempts to participate fully in the lives and activities of subjects and thus becomes a member of their group, organisation or community. This enables the researcher to share their experience by not merely observing what is happening but also feeling it” (Gill and Johnson, 1997). Even thought participant observation has been used much less in management and business, it can indeed be a very valuable tool especially when the research is adopting triangulation approach (Saunders, Lewis and Thronhill, 2003)
Data Collection Methods
The research proposes the commencement of in-dept interview with the Assistant Manager of propertyfinder.com to obtain an in-dept exploration of the trade promotion activities in a broad context. The interview(s) will be conducted by telephone in which the whole conversation will be tape-recorded. Given the disadvantages of conducting interview through telephone, the lack of personal contract trust establishment will be compensated by the speed of data collection and lower costs associated with long distance access.
The interview(s) is estimated to last between fifteen minutes to half hour, a schedule of question will be prepared in advance to ensure the clear idea of areas to be covered in the conversations. However, the interview will not adhere to the schedule of questions strictly considering the nature of informant interview discussed earlier.
Data Analysis
This research proposed to use a combination of qualitative and quantitative data analysis approach. Data obtained through in –dept interviews and participant observation will be analysed using the set procedure from grounded theory approach of open coding, axial coding and selective coding (Strauss and Corbin, 1998). Grounded theory approach is considered as structured and systematic. The advantage of the approach is that data analysis can be conducted in a less formalised and proceduralised manner while maintaining a systematic and rigorous approach to arrive at a theory (Saunders, Lewis and Thornhill, 2003).
Timescale
Activity Feb Mar Apr
W/K commencing W3 W4 W1 W2 W3 W4 W1 W2 W3 W4
Read literature * *
Finalize objective * *
Read methodology
Literature * *
Proposal * *
Devise research strategy and method * *
Draft research strategy and method * *
Develop schedule of question for interviews * *
In-depth interview with Sainsbury’s key informants * * *
Observation – participation in Sainsbury’s market workshops * *
Gather data * * *
Analyze Data * * *
Draft findings chapter * *
Update literature read *
Complete remaining chapters * *
Draft to Supervisor for feedback *
Revise draft and print *
Submission *
Bibliography
1. D. K. Bhattacharyya, Research Methodology, First Edition, Excel Books, New Delhi, 2003
2. Donald H. McBurney, Research Methods, Fifth Edition, Thomson Wadsworth, Singapore, 2003
3. Harper W. Boyd, Ralph Westfall and Stanley F. Stasch, Marketing Research Text and Cases, Seventh Edition, Richard D. Irwin Inc, USA, 2004
4. Philip Kotler, Marketing Management, Eleventh Edition, Prentice Hall, New Jersey, 2003
5. Jonathan Groucutt, Foundations of Marketing, Palgrave Mcmillan, ew York, 2005
