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.

Maltesers, Braille and shrinkflation

A new poster ad for Maltesers, made by Mars, is entirely in Braille--quite a novelty and a way of recognising a portion of the population that can't access traditional advertising.

Model Maltesers were used to spell out, in Braille, this message at one London bus shelter: 'Caught a really fast bus once, turns out it was a fire engine'.

Maltesers has a long-running ad theme #LookontheLightSide and this bus-shelter ad is part of the inclusiveness campaign as well as celebrating World Braille Day. More than 1.5 million people like the Maltesers Facebook page, where this photo was posted.

Meanwhile, Mars is reacting to higher commodities costs by shrinking some of its products. Malteser 'sharing' packages will contain 15% less than today but sell for today's price.

What Mars has done by reducing the contents of the Malteser package is part of a trend dubbed 'shrinkflation'. Mars competitor Mondelez recently changed the shape of its Toblerone chocolate so it contains less chocolate but sells for the same price as before, to avoid increasing the retail price.

Other chocolate marketers are also deciding between reducing the amount of product and raising the price. Because so many consumers are so price sensitive, shrinking the product may be more acceptable to buyers than increasing prices...for now.

Product pricing and Brexit

Unilever and Tesco skirmished briefly about pricing this week.

As a result of Brexit, the value of the pound sterling has slumped, and Unilever is trying to increase the price of some products by an average of about 10% to compensate for the slump.

Inventory on Tesco's store shelves dwindled as the grocery giant fought Unilever over pricing. Media coverage of the battle raised the possibility that Tesco's shoppers might be unable to find beloved brands like Marmite and Ben & Jerry's.

Tesco resisted Unilever's price increase by emphasising its role as championing low prices on behalf of consumers. Unilever explained that its supply costs are increasing, profits are going to be affected and therefore product pricing must be adjusted.

After a 24-hour standoff, Tesco and Unilever announced that the dispute had been resolved and shelves would be full of the brands shoppers want.

Expect more announcements about wholesale pricing as other producers seek to counteract the slump of sterling by increasing prices, if possible.