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.

Product lifecycle sustainability

Simply put, product lifecycle sustainability refers to having sustainability 'built into' every phase of the product lifecycle, from the original product concept to raw materials to production, distribution, consumption and eventual disposal. Above is the award-winning Boots product sustainability cycle, showing how the company takes ecological factors into consideration throughout the lifecycle of the product.

Tech products represent a special sustainability challenge because of concerns over rare earth metals used in their manufacture. Europe and individual countries have regulations requiring special recycling for electronics products. Apple has its own recycling programme; some PC makers participate in group recycling efforts that comply with EU regulations.

Another issue is understanding the ecological impact of a product. Stonyfield Farm, which markets yoghurts, is taking a high-tech approach here by using software to measure the carbon footprint across every phase of the lifecycle. This becomes the basis for goals to reduce carbon emissions.

Walmart, along with other consumer products companies, has been working on a sustainability index that will show the ecological impact of products. The retailer is also urging PC manufacturers to set their systems to 'sleep' more quickly, which will save energy.

As more stakeholders inquire about product lifecycle sustainability, more marketers are likely to invest time and money in this issue.

Walmart and ethics

Traditionally, Walmart has been known for its high ethical standards, not allowing outside companies to buy even a cup of coffee for merchandise buyers, to avoid any influence or conflict of interest.

Asda, like all Walmart companies, has an ethics code governing internal activities and also standards that apply to smaller and local suppliers as well as to international suppliers.

Now reports of a major bribery scandal involving Walmart's Mexican division are raising questions about the company's commitment to ethical actions. The corporate board of directors has authorised an investigation of allegations that its Walmart de Mexico chain paid bribes to expedite permits for new stores throughout Mexico, violating not only the firm's ethical code but also U.S. laws forbidding such illegal payments. U.S. officials are also examining the evidence to determine what happened. Were bribes paid to pave the way for expansion, higher turnover and increased market share in Mexico?