Global Marketing and Sales Assignment Sample 2023
Introduction
This paper aims to conduct an audit on Sainsbury UK regarding its potential expansion in the Asian market. Though many Asian countries show opportunities, the prospect of entrance into do India will be scrutinized for weighing the benefits in favor of expansion.
This study will also be helpful for companies in similar industry interested to enter India for gaining an insight into the micro and macro analysis of the market conditions and prospects in India to assess the possibility of a geographical expansion.
India has a fast growing GDP rate and huge domestic demand as well. It is a fast growing emergent market. Although there are many restraints for companies to enter the Indian market, there is also high potential for economic development which makes India an ideal destination for expansion as well as lucrative profit opportunities.
Investing in India seems to be the current trend across many industries. Tesco and Walmart have already invested in the Indian market for quite some time. This report will focus on the potential risks as well as recommendations on strategies for entrance and survival into the Indian market.
Company Profile
Sainsbury’s is one of the most popular supermarket retailer in the United Kingdom. It has secured the third position in the market and has approximately 1428 stores across the country. It has shown steady growth despite Brexit. Food and grocery are the chief retailing products but it also focuses on high quality brands as well its own brand which accounts for about 40% sales.
Marketing Audit Conduct
The marketing audit conduct will provide the guidance for understanding and assessing the factors, both internal and external, in order to scrutinize the entrance into the Indian market. The analysis of macro and micro environment will provide an in depth insight of the investment environment.
Macro environment Analysis
The following sectors were focused on for the macro environment analysis of Sainsbury’s entrance in the Indian market:
Political factor
Political and legal factors conform to the government policies in terms of goods, services, economy and political decisions made with regards to vital areas of business, workforce and infrastructure.
The political situation of India is stable despise the red tape government nature of Asian countries. It has federal public democracy which comprises of political stability in business environment and efficient government policies.
Throughout the years India has effectively reduced political interference in the management of business enterprises leading to an improved productivity and efficiency in business.
Besides, privatization has been carried out in India in several stages such as de-reservation, disinvestment and deregulation. Despite of all these there are laws and restrictions still in place for foreign investment but India is still welcoming to such investments.
The legalities will be time consuming but once it gets approved the target clientele is readily welcoming. However a proper analysis of other factors will justify the entrance of Sainsbury’s in the Indian market.
Economic factor
Economic factors dictate the context of business and trade as well as the sakes and profits. The various economic factors are discussed as follows-
Economic Reform: India has moved towards a more efficient industrial policy since 1991. The number of industries that fall under compulsory licensing has been reduced to 6 by the government followed by liberalized policy towards foreign capital investment and the set up of FIPB ( Foreign Investment Capital Board) to promote and channel foreign investment in India (Ahuja et Al., 2006).
Taxation Policy
India has a very well structured taxation policy. There are some tax policies that businesses must abide by such as central sales tax, corporate income tax, dividend tax, state VAT, Excise duty etc. The Indian taxation system is favorable to expansion.
Inflation
This leads to a price surge and so new pricing might have necessary as well as change in business costs. Inflation rate in India varies from 9% to 9.5 % which renders a likelihood of redistribution of income (Trading Economics, 2012).
Rate of Interest
Increase in the rate of interests will make expansion and investment not so feasible, maybe even suspend such attempts. Besides, consumers will be less attracted in making a purchase as interest increase will affect them too. Such conditions are dangerous to expansion.
Legal Factors
Legal factors directly influence the business environment. The legal environment in India has undergone significant changes which is beneficial to the operational environment. India has rules and regulations in place especially after 1992 which strengthens export import relationship and procedures. The foreign trade act has created provision for further development as well as collaborative routes foreign trade and central government.
Socio Cultural Factor
The socio cultural condition in India is very inviting for foreign entries. The Indian retail market is lucrative because of the size of population and growth prospects. The immaturity of the markets in various regions gives a competitive advantage in the retail sector. Retail market in India holds the position of the fifth largest destination worldwide as well as the third most attractive emergent market in the retail industry for investment.
Another aspect is that the labor cost is very low and the general people in India are medium to highly skilled in English. Even low level workforce have some knowledge of English. Lastly, the socio cultural context of India is very volatile when it comes to caste and religion and so Sainsbury’s has to be extra careful with any and all campaigns.
Micro Environment Analysis
For the micro environment analysis, two factors fall under this umbrella- Customers and Competitors that need to be analyzed for assessing an expansion in the Indian market.
Customers
The population of India is 1,380,004,385 as of 2020 with a yearly change of O.99% and ranking the second in the world (Worldometer, 2020). About 600 million young people amounting to “more than half of India’s population are under 25 years old; no other country has more young people”(Jack, 2018).
Such a percentage of young people means more educative decisions by target customers to switch to Sainsbury’s boosting customer conversion. The demographics also guarantee more tolerance to change and new system as well as acceptance.
With the right marketing customer acquisition will be easy because supermarkets are very popular as they offer a one stop destination for necessary shopping and young people prefer the hassle free option as opposed to local markets where haggling is must.
Moderate to high income aged people can also acquired but the poor section of people will never set foot within the store. Poverty is high in India but due to high economical disparity among people the right client base is available for customer acquisition.
Competitor Analysis
The local retail market in India is primitive, underdeveloped but high competition by big brands. There are Big Bazar, Spencer’s, D Mart, Star Bazaar, Hypercity, Reliance Fresh, Spar, More Retail, family stores and a number of other brands which occupy the major portion of domestic market. Competition will be as high as in UK.
However, most of the grocery shopping by the common people in India occur through unrecognized sector mainly comprising of small stores called kiranas. “There are over 12 million small stores amounting to 90% share of the market which is predicted to reach $810 billion by 2020″(Indianretailer, 2020).
Recommendations
The biggest competition will be posed by small retailers rather than big ones. However, big cities offer potential for high profit such as Mumbai and Delhi. Bengaluru would be the perfect testing ground due to diverse demographics, tech savvy customers and large white collar workforce as well as 10% expats. Besides choosing the perfect location, Sainsbury’s has to invest on food manufacture and infrastructure so as to minimize spoilage and maximize quality.
The brands owned by Sainsbury will be the key in differentiating from other competitors provided that an educated location and population are targeted. Despite of the opportunities, in light of the pandemic entrance into India will be close to impossible as the Indian government is very vigilant about local business and thus it can be scrutinized for the future.
Conclusions
Based on the macro and micro environmental analysis, the disadvantages pose a threat and Sainsbury’s cannot fulfill all the challenges timely. Despite the fast growing economy and huge market size, there are elements such as political and legal mostly that will affect investment.
Besides, India lacks good infrastructure, long term inflation, high level of corruption and unstable government policies along with issues regarding government regulations on FDI. An example of lack of infrastructure would be refrigeration for preserving produces and lack of modern transportation logistics management.
Moreover, the competition from local markets and big brands are high. Also, joint venture is the only mode of entry possible right now but not devoid of disadvantages due to restrictive commercial laws.
Thus, it’s best for Sainsbury’s to not make any direct investment in India right now. However, entrance into India in terms of operating in the form of a supplier business could be analyzed and actualized as this approach offers profitability in the supermarket scene of the biggest demographic.
Reference and Bibliography
Ahuja, I.S. & Khamba, J.S. (2008). ‘Total productive maintenance: Literature review and directions’, International Journal of Quality & Reliability Management. 25(7) pp. 709-756. doi :10.1108/02656710810890890.
2. C.C.R.H. (2020). ‘Top 8 Biggest Retail Chain of Hypermarkets in India’, Central Consumer Resource for Helpful Information, viewed 9th Aug, 2020, < https://ccrhindia.org/hypermarkets-in-india/>
3. Indianretailer (2020).’ How Indian grocery business is becoming big?’, Indianretailer, viewed 9th Aug, 2020, < https://www.indianretailer.com/article/sector-watch/food-and-grocery/How-Indian-grocery-business-is-becoming-big.a6147/>.
4. Jack, I. (2018). ‘India has 600 million young people – and they’re set to change our world’, The Guardian, viewed 9th Aug, 2020, < https://www.theguardian.com/commentisfree/2018/jan/13/india-600-million-young-people-world-cities-internet>.
5. Pratap, A. (2017). ‘Retail Industry PESTEL Analysis’, Notesmatic, viewed 9th Aug, 2020, < https://notesmatic.com/retail-industry-pestel-analysis/>.
- Trading Economics (2020). ‘India Inflation Rate’, Trading Economics, viewed 9th Aug, 2020, < https://tradingeconomics.com/india/inflation-cpi>
- Worldmeter (2020). ‘India Demographics’, Worldmeter, viewed 9th Aug, 2020, < https://www.worldometers.info/demographics/india-demographics/>.
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