To examine how companys use competitive advantage, an individual company must first be analysed to see how they use competitive advantage (A1). I will look at the aspects of competitive advantage that relate to this single business organisation. These aspects will then be put in the order of what most relates to this business.
I have decided to use “Sainsburys” as my primary case study as it is a large company that must keep the interest of customers and has to keep an advantage over companies it is in competition with. I will also be able to obtain resources and evidence from this company. Sainsburys is a popular chain of supermarkets. It is involved in both the secondary and tertiary sector (A2). It is within both sectors as it has involvement in the manufacturing of goods but also provides and service.
Sainsburys achieves competitive advantage from using marketing strategies.
Sainsburys uses Marketing (A3) as a form of competitive advantage, using advertising as a main type of marketing. Advertising makes the customer more aware of the company and keeps it in mind. The company can then use this advertising to promote particular products. The latest form of marketing for Sainsburys is using a famous chef “Jamie Oliver” to promote Sainsburys own brand products (Page 2 of appendix). This will give some customers confidence to buy the products as it is used by a “famous” person.
They use Innovation (A4) to try to keep the customer interested in the company by introducing new products onto the market and adapting ones they already sell to meet the needs of the customers. These days people are very health conscious so Sainsburys had introduced it’s own brand of low fat food, the “Be good to yourself” range. This was set up to give those who want to eat the healthier food products a chance to buy it at the store where they can buy all their other weekly goods.
Sainsburys also has an “Economy” brand. This includes most products such as frozen food, fresh food, toiletries ect. This enables people on lower incomes or wish to spend less on products to do so. The Economy range is a lower quality so allows the products to have a low cost of selling. The company weekly issues deals on products such as “Buy one get one free” as a way of enticing purchasers into the store. Even though this deal will make a loss in price, overall the company might gain as this customer may spend more in the shop at that point in time then return in the future.
As Sainsburys expands, it provides more for its customers. Even down to trolleys that provide for 2 babies where as compared to five years ago this was not a common sight in supermarkets and trolleys only catered for one baby. They are trying to become more environmentally aware and so is now using biodegradable packaging on it’s vegetables and fruit, the first UK retailer to do so. Sainsburys no longer uses any GM (Genetically modified) products or ingredients in any of the “Sainsburys” brand food. Sainsburys has made the effort to recognizing people have allergies. The packaging is labeled well to show that the product contains e.g. nuts. (See appendix page 3)
To achieve this innovation, Market research (A5) must be carried out so the needs of the consumer can be met. This market research involves obtaining information about their competition in the market e.g. price variations and new products. Market research also has a lot to do with the general public, getting their views on what can change within the company. The company must identify trends and changes within the market and how this can help with what products are sold and for how much. This can be done through questionnaires taken my members of the general public, customers of Sainsburys and potential customers.
Price is a large factor in competitive advantage as this is what attracts customers to use the store. The price must be low enough so customers will buy it but the price must also make the company profit. Market research plays a role in this as prices need to be analysed for each product and if another company is selling at a much lower price Sainsburys can lower it’s price for this particular product.
Every company has to deal with employees to get maximum output from
them. Sainsburys does this by an increase in pay on employees that have either been working for a long time or have been working hard, bonuses and staff discounts. This will then maintain the running in each store as more people will get through the tills quicker, shelves re-stocked and generally there would be more help.
Market research is the most significant form of competitive advantage, as after all if they do not sell what is wanted by the customers, the business would not make any money. They then need to advertise the products that they sell and making the public aware of the shop and how it provides for their needs. Recognizing the public’s needs give a company the most competitive advantage.