Source: Google Images
Source: Google Images

Earlier this week, I decided to stop off at Sainsbury’s on my way home from school. It had been a while since I last visited there, with my regular shopping now done at Lidl.

I proceeded to the diary aisle, to purchase almond milk. The price was £1.70 but there was an offer of 3 for £3. I was torn. There was no longer any way that I could buy just 1. It was economically unfeasible. I had to buy all 3.

Yes, I did end up spending more that I planned to once again but thinking about it now, Sainsbury’s realised how their customers think. That is, they considered the theory behind customer buying decisions. Customers make decisions using different choice criteria: economic, technical, social or personal (Jobber, 2010).

With the decline in the worldwide economy, greater emphasis is placed on cost. This is evident as the majority of consumers are now choosing low cost supermarkets like Lidl and Aldi. It is therefore apparent that the main choice criterion is economic, with focus on low price and value for money. Therefore, the only way to capture price sensitive customers is through meeting these two criteria. This is exactly what Sainsbury’s did. Both Tesco and Sainsbury’s offer the same brand of Almond milk but the difference was found in the unbeatable value for money.

Furthermore, Sainsbury’s offered more variety of what I actually wanted. This too added value for money. On the other hand, Tesco also offered a large variety but due to falling sales, recently had to amend this; the variety offered left shoppers with a lot to choose but nothing to choose. Don’t get me wrong. I’m a Tesco girl but only one brand of chicken sausages in a Tesco superstore? No.

On a serious note, these differences between the two large supermarkets made me wonder about the recent loss in Tesco’s market share (Wood and Butler, 2015). Sainsbury’s was indeed making more of an effort to attract very price sensitive market whereas smaller grocers like Lidl and Aldi had prices that were too low for the giants to match. Tesco was one of the last choices for the price conscientious.

Similarly, the other major players in the UK supermarket industry have considered the market’s needs and hold smaller, more tailored stock whereas Tesco was known to stock over 90, 000 products in its stores (Wood and Butler, 2015). This was in effect over four times as much as other stores. According to Wood and Butler (2015), this made shopping at Tesco a “painful” experience for consumers. This is linked to the marketing oriented approach theory which is based on evaluating what consumers want and utilising it as a key driver for product offering (Jobber, 2010). A clear example of this is the Tesco Express near my student accommodation. This store is housed next to two large student accommodations, holding thousands of students, as well as a large gated community and gym. Therefore, it would be essential to not only to stock a lot of ready done food, but keep general stock high to take advantage of the available demand and meet customers’ needs. However, this is not the case and students, such as myself, have now switched to Lidl for their shopping needs.

By these comparisons, it is easy to see the key factors that drive competitive advantage. It is all about managing customer needs and creating value for money – more value than other competitors (Jobber, 2010).  In essence, competitive advantage for Tesco or any other supermarket is based on the question “Why should customers choose one supermarket over the other? The only way to develop sustainable competitive advantage is to provide consumers with the answer to that question.

It is also clear that by utilising theoretical principles, companies can find their own competitive advantage. All of this was found just by visiting the supermarket. What more can you find? Does your experience differ? Comment below and let me know.

References:

Jobber, D. 2010. Principles and Practice of Marketing.6th ed. Berkshire: McGraw-Hill Education

Wood, Z. and Butler, S. 2015. Tesco cuts range by 30% to simplify shopping. The Guardian,[online] Available at: < http://www.theguardian.com/business/2015/jan/30/tesco-cuts-range-products> [Accessed at 02 May 2015].

Advertisements