Marketing consequences of merging Sainsbury's and ASDA

Walmart proposes to sell ASDA to Sainsbury's, creating a UK retailing giant that would increase efficiencies--and possibly intensify the supermarket price wars.

Sainsbury's would manage the new entity, with Walmart as a shareholder and partner.

One marketing consequence is the ability for the combined company to pay less for goods and services purchased in larger volume. This will, in turn, reduce costs and therefore allow for lower prices--a key element in this competitive industry.

So far, Sainsbury's says it will slash prices by 10% and will not be closing any stores after the merger is complete. UK regulators may require the sale of some stores to rivals, which would be another marketing consequence of the deal. The marketing environment for all UK retailers could change as a result.

Finally, how will consumers react? Will the merger change consumer behaviour? We'll have to wait and see.

Earth Day Marketing 2018

Today is Earth Day, a day to focus on sustainability and protecting our ecological environment.

This is the 48th year of Earth Day celebrations, and the theme this year is education and action to eliminate 'plastic pollution'. Here is a small sampling of Earth Day marketing efforts:

• Google is raising awareness with its special Google Doodle, celebrating Dr. Jane Goodall and her work.
• Brother, which makes printers and toner cartridges, is promoting the 3Rs: reduce, reuse and recycle.
• The National Space Centre is promoting Earth Day with special events exploring the science of our environment. 
• H&M continues its clothing recycling project, encouraging consumers to drop off unwanted apparel at its stores, for sorting and donation.

Happy Earth Day 2018!

Grocery retailers battle for UK market share

Aldi and Lidl, both based in Germany, have been steadily capturing market share in UK grocery retailing. Recent numbers show that Aldi has increased its market share from 3.9% at the start of 2014 to 7.3% at the start of 2018. Lidl, meanwhile, grew market share from 3.1% in early 2014 to 5.3% in early 2018.

From the perspective of traditional UK supermarkets like Tesco and Waitrose, the battle for market share has another challenge: pressure on profit margins. Aldi and Lidl are deep-discount grocers with no-frills stores. Not so for Tesco and Waitrose, which are full-service grocers. To be sure consumers can see the value in shopping at a full-service store, price promotions are often highlighted--and that cuts into margins.

In fact, price is a key element in consumers' perceptions of a store. Not long ago, Aldi overtook Waitrose as the favourite supermarket of UK consumers who were asked about satisfaction. Affordable prices would naturally be important to satisfaction.

Meanwhile, UK supermarkets will continue to face pressure from the deep discounters as Aldi and Lidl both plan to expand their store networks. At the same time, traditional supermarkets are slowing their store openings to maintain cost control. Will online grocery shopping be the competitive edge for traditional supermarkets? Possibly, as a growing number of UK shoppers try or continue buying food and household products without going into a store. Consumer behaviour is changing, and grocery retailers are learning to adapt so they can compete more effectively.

Celebrities, influencers and brand marketing

David Beckham is a fan of scotch whisky...and if you're a David Beckham fan, you can buy Haig Club scotch and drink the brand that is his. Literally. Beckham partnered with Diageo to create Haig Club as a whisky with personality, modeled on the whisky preferred by his Dad. Not surprisingly, Beckham also stars in marketing for his brand. 

Beckham is one of a growing number of celebrities deeply involved in marketing their favourite products. Some invest money in products they like and use--such as Rihanna's investment in Vita Coca, one of today's up-and-coming coconut water products. Rihanna also has a beauty brand, Fenty Beauty by Rihanna, which is growing quickly.

Michelle Keegan, star of Our Girl, has her own celebrity-branded line of clothing with Very. Supermodel Gigi Hadid has a beauty product line with Maybelline, #GIGIxMAYBELLINE, which is heavily promoted during London Fashion Week. And of course, all these celebrities use social media and in-person appearances to market the brands they prefer.

Not every social media star who attracts followers and influences customer attitudes and behaviour is an actor or performer. The London fashion brand Kitri recently paid fashion blogger/Instagram influencer Charlotte Groeneveld to promote a green dress for summer. A month after Groeneveld posted an Instagram pic of herself in the dress, Kitri sold 200 units in less than an hour. Kitri now has a waiting list for this dress, demand is so strong. 

The marketing lesson: Know your influencers, know who they influence and know how they influence.

Happy 9th Blogiversary (Not April Fool)

My first blog post was on 3 April 2009. As shown above, the most popular post (by far) is Yes, competitors are stakeholders written more than 5 years ago and updated several times more recently.

Unquestionably, competitors are truly stakeholders of any marketing organisation, from the smallest single-person operation to multinational giants. Remember, stakeholder is defined as 'a group or individual that has an interest in or can potentially affect the marketer's performance and activities'. Surely competitors qualify because they have the ability to begin or escalate price wars, influence market share and marketing trends, influence customers and suppliers and so on.

An academic paper found six good reasons to include competitors as stakeholders. McKinsey has noted that organisations must try to anticipate competitors' strategies so they can plan ahead to deflect challenges.

At times, a marketer may want to collaborate with competitors on issues of mutual interest, such as industry standards or sustainability projects. Not on pricing--such collusion is illegal in most nations--but on larger issues that affect many stakeholders, including the public.