TITLE

MORRISON’S STRATEGIC MARKETING AND

COMPETITIVE ADVANTAGE
COURSE
PRE-SESSIONAL BUSINESS ENGLISH
SUBMITTED TO
EMMA MURPHY
SUBMITTED BY
CLOVIS DJOUMESSI JIOFACK
ENROLEMENT NUMBER: 1270889
SUBMISSION DATE
29/11/2010

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 CONTENTS PAGES

I- INTRODUCTION

II- MAIN AREAS OF BUSINESS

III- GENERAL OVERVIEW OF:

1- Strategic marketing
a- Segmentation
b- Positioning
c- Targeting
2- Competitive advantage

IV- How does Morrison gain competitive advantage

through strategic marketing?

V- CONCLUSION

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 I. INTRODUCTION
The objective is of this assignment is to examine how Morrison uses different

marketing strategies to be successful in the highly competitive UK market. In order to

achieve success in their business companies have to develop different methods and

techniques to be successful in highly competitive market. In this case, Marketing

appears as one of these elements. It is a concept more used by companies in many

perspectives for example products promotion, improving profit and increasing

satisfaction customers. My assignment focuses on studies of strategic marketing

used by different companies to cope with the competition and for this reason I have

chosen to study competitive advantage in relation to Morrison.

So there are some questions that we need to ask if we are to better analyse a

company, such as what is the strategic marketing? What is the competitive

advantage? And how does Morrison gain competitive advantage through strategic

marketing? This assignment covers some aspects of marketing such as

segmentation, targeting and positioning used by Morrison. It will be prepared based

upon the information collected from different books written on the topic and internet

resources. Moreover, different websites will provide information about Morrison. The

focus here is on presentation of facts as discovered. I divide this assignment in three

parts; firstly, I will start by the Morrison’s main areas of business. Secondly, I will talk

about a general overview of strategic marketing and competitive advantage, and

thirdly, I will show how Morrison gains competitive advantage through strategic

marketing to be successful in the competitive UK market.

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 II. MAIN AREAS OF BUSINESS

Created by William Morrison in 1899, Morrison supermarket is one of UK’s

leading supermarkets engaged in providing a broad range of goods including

branded and own label products. The company, along with its subsidiaries, offers a

wide range of products, which include grocery, fish and meat, bakery items, alcoholic

and non-alcoholic beverage, pharmaceuticals, and dairy based products. So

following the takeover of Safeway, Morrison claims to have a strong geographic

spread right across the UK, providing the opportunity to give shoppers everywhere

the benefit of high quality products at low prices and a strong offer across all fresh

foods. So according to the Morrison’s annual report (2010), the good first half

performance was also built on the diversity of the company’s product offering,

Morrison offers a wide range of food and non-food uses has a wide selection of

shoppers something which larger chains such as Sainsbury and other have been

slow to appreciate.

Ever since the start of its business, Morrison Supermarkets has always been

a sales-oriented business entity. Morrison gives premium value to their clients

because it believes that this is the key towards increased sales and maximization of

operations. Morrison Supermarkets claims to be governed by an effective

management group which helps in maintaining the delivery of quality services for all

its customers, (Ivythesis.typepad i, 2010.)

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 III. STRATEGIC MARKETING

Satisfying customers is a central tenet of the marketing concept, but it is not

enough to guarantee success. In the whole, marketing is at the core of business.

Outperforming the competition requires solid marketing knowledge and precise

marketing decision making, an organisation’s positioning, and the positioning of its

products and services depend on the formulation and implementation of intelligent

and well-informed strategic marketing plans. So marketing can be defined as the

process by which companies create customer interest in goods or services. It

generates the strategy that underlies sales techniques, business communication,

and business developments.

Moreover, all organisations operates in a dynamic marketplace, where the

competition, consumers, technology and market forces constantly redefine the way

organisations operate. So to be competitive means that organisations need to

continuously adjust and adapt their customer approach to meet changing needs and

expectations. In this case, Strategic marketing is the reflection and analysis of the

environment, technology, markets and consumers, it defines objectives and

describes the way you are going to satisfy customer in your chosen markets.

It is why some authors like Philip Kotler (2001), Michael Porter (1985) think that the

essence of the marketing concept is the idea of placing customer needs at the centre

of the organization’s decision- making. At the heart of the marketing concept is a

process of segmentation, targeting, and promotion (STP) this starts with trying to

understand the market by segmenting it.

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 a. Segmentation:

According to the da-group web site (da-groupi, 2010) market segmentation can be

defined as the process of breaking down the total market for a product or service into

distinct sub-groups or segments where each segment may conceivably represent a

separate target market to be reached with a distinctive marketing mix. So

segmentation research can help marketers to determine which kinds of customers

exist, and who are potentially favourable to buy the new product. It can be also

simply summarised as dividing a market by a set of pre-determined criteria. Truly

understanding the needs of potential and actual customers in a market, allows a

company to segment only the lines of needs, needs which can serve, from those

which cannot. The concept is to segment along only using variables that having

meaning in that context of the company and where the market is operating in, not to

just jump feet first and use the tried and trusted geo-demographics .

b. Targeting :

According to Andrew Whalley Strategic marketing (2010: 76) Targeting marketing

can be defined as the identification the way people want to view the product of the

market segments that are identified as being the most likely purchasers of a

company’s products. It is done for many reasons such to create marketing

opportunities firstly, it can be illusionary in terms of the way people want to view the

product (for example happy, aloof, silly, or moody).secondly market and product

appeals through manipulation of the marketing mix can be more delicately tuned to

the needs of the potential customer, and thirdly it helps each company to be

concentrated on the market segments which offer the greatest potential for the

company to achieve its goals.

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 C. positioning:

After segmentation and market targeting, the next important step in developing an

effective marketing strategy is product positioning. It refers to the way in which an

organisation sets itself apart in the market and how its products and services are

perceived by the target market as a whole. According to Ries and Trout (1981), a

positioning result in the image you want to draw in the mind of your customers, the

picture you want him or her to visualize of you what you offer, in relation to the

market situation, and any competition you may have. Positioning is about the

communication of the overall value position such that it creates and maintains this

clearly to customers, thus creating a distinctive and ideally unique, place in the

market for the organisation. To be effective, the basic value proposition offered by an

organisation must be something that is relevant to the target market, it must be

differentiated from the competition and it must be sustainable and communicated

clearly to that market. This aspect fits more closely with differentiation as a generic

strategic option and this in part helps to explain the proliferation of brands, products

and services.

PRODUCT PRICE

Premium Premium

basic Low price

POSITIONING
Durable value
Implementing by chosen
PROMOTION image and appeal to chosen DISTRIBUTION
segment
Prestige intensive

fun Selective
Source: adapted by W Andrew, strategic marketing
Powerful Figure 1: positioning and its main elements
Executive

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This figure shows that the concept of positioning has two dimensions: firstly what the

organisation wishes to achieve (how it wants to be viewed by consumers) this will

involve deciding where the organisation wants to compete and how it sets about

competing. Secondly, what consumers actually believe about a particular product or

service? In this case there are three major concepts which can be use such as:

Functional positions (solve problem, provide benefits to customers, and get

favourable perception by investors and lenders) and, symbolic positioning (self-

image, ego identification, and affective fulfilment) then, experimental positions

(provide sensory stimulation, provide cognitive stimulation).

So briefly before an organisation establishes successful positions in the marketplace

four key considerations are important; clarity, consistency, credibility and

competitiveness according to Jobber, 1995 – the 4c positioning framework, firstly the

Clarity (the positioning idea must be clear with regard to both the target market and

the basis of competitive advantage.),secondly, there is the Consistency ( in order to

break through the ” noise” level of competing message, a consistent message and

image is necessary) and thirdly, comes the credibility the company have to make

goods products of better quality so that customers will fell in confidence and finally,

Competitiveness (any successful market position is depend on having a distinctive

value proposition which is not being offered by the completion.)

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 1- Competitive advantage:

A competitive advantage is an advantage over competitors gained by offering

consumers greater value, either by means of lower prices or by providing greater

benefits and service that justifies higher prices. Competitive advantage grows out of

value a firm is able to create for its buyers that exceeds the firm’s cost of creating it.

So value is what buyers are willing to pay, and superior value stems from offering

lower prices than competitors for equivalent benefits or providing unique benefits that

more than offset a higher price. According to the two influential books, competitive

advantage (1985) and competitive strategy (180), written by Michael Porter, growth

and diversification alone do not guarantee a company long-term success, he argued

that success comes from having a sustainable competitive advantage, which derives

from the value a company creates, in excess of its production cost, and passes on to

its customers. He underlined five competitive forces that could be adapted in order to

gain competitive advantage such as rivalry among existing firms, the threat of new

entrants, the threat of substitutes, and the bargaining power of both buyers and

suppliers.

Furthermore, inter-firm rivalry affects prices, advertising and sales budgets. So the

threat of entrant in the new market competitors in an industry limits the prices a

company can charge, and often results in expensive investment designed as a

deterrent. The power of large buyers such as retail chains, and the possibility of

consumers switching to cheaper substitute products, both limit prices. Powerful

suppliers determine the cost raw materials. Successful firms are the one which

sustain their competitive advantage by making sure they retain their value, and it

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isn’t industry rivals, new entrants, or lower prices, or appropriated by powerful buyers

or suppliers. As we can see in this picture below source adapted from Porter M E

(1998) Competitive Strategy, New York free press: 4

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 Rivalry determinants
Entry barriers
Industry growth fixed or
Economies of scale
storage, cost value added
Proprietary product
differences brand identity Intermittent overcapacity
NEW
Switching costs ENTRANTS Product differences

Capital requirements Brand identity

Access to distribution Threat of Switching costs

Absolute cost advantages
New entrant Concentration and balance
Proprietary learning curve
Informal complexity
Access to necessary inputs
Diversity of competitors
Proprietary low -cost

Bargaining power suppliers bargaining power of buyers

Industry
competitors
Suppliers
Buyers

Intensity or
rivalry
Threat of

Substitutes
Determinants of supplier power
Determinants of buyer
Differentiation of inputs power

Switching cost of suppliers and Bargaining price

firms the industry Substitutes
Leverage sensitivity
Supplier concentration
Buyer price/ total
Importance of volume to
supplier Determinants of Concentration purchase
substitution threat
Cost relative to total purchase in Buyer volume brand identity
the industry Relative price
Cost relative quality/
Impact of inputs on cost or Performance of substitutes perform to firm
differentiation
Switching costs
Switching cost
Threat of forward integration Buyer propensity to
relative to the threat of substitute
background integration by firms

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 IV. HOW DOES MORRISON GAIN COMPETITIVE ADVANTAGE
THROUGH STRATEGIC MARKETING

UK grocery market continues to be affected by the difficult current economic climate.

According to the Financial Times (August 2009) Consumer trends have stabilised

compared to the prior year when behaviours changed to adapt to rising food inflation

and constraints on disposable income. Morrison is today considered as the UK’s

fourth largest food retailer with almost 403 stores according to the Morrison’s annual

report (2010i).

1- Morrison’s strategic marketing

Its business is mainly food and grocery, for Morrison, mostly of the fresh food that it

sells through its own manufacturing facilities and it tries to give to customers close

control over provenance and quality, and it also has more people preparing more

food in store than any other retailer. With competitive prices in the market Morrison

develop some strategic in order to be successful in highly competitive market. So

according to the Morrison’s annual report 2009, its vision is to be “the food specialist

for everyone” its strategy is developed around three distinct brand values: fresh,

value and service, having these three brand values gives us the flexibility to react to

market changes and consumer trends.

a- Fresh: vertical integration in the supply chain, Morrison aims to offer more

freshly prepared food than any other retailer. That’s because it has more staff

preparing food than any other supermarket. It is also vertically integrated by

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 having their own factories, production facilities and distribution network. With

these facilities it can get food to their stores faster so that it’s always fresher.

b- Value: keeping costs low to ensure that its prices are competitive, great value

across their range. Value is the key to their vision and it is especially

important in the current market conditions. Morrison offer quality and

freshness at a price people like. And their famous promotional offers always

save its customers money. It doesn’t just offer value on a few items; their

prices are great value across the ranges.

c- Service: ensuring the right product is always available, great selling and

service for its customers. By having its own distribution network, it can ensure

that the right products are always available for its customers. With its

commitment to great selling and service it aims to get it right for our

customers every time.

Morrison’s strategy will enable the business to continue sustainable, long term

growth. It builds on their strengths, and is in tune with its customers’ needs for

excellent value and their increasing focus on the provenance, quality and freshness

of the food they buy. In order to deliver its strategy, Morrison has previously outlined

the building blocks that need to be put in place, and their plans to do this were

incorporated in the Optimisation Plan that has now completed.

2- Morrison’s segmentation ,targeting and positioning :

According to the Financial Times (February2010) a detailed strategic marketing

analysis of Morrison reveals the supermarket retailing industry has become highly

competitive in the U.K and unlike other developed regions in the world, still shows

potential of growth opportunities. However it is also vital to acknowledge that

opportunities are available for only industrial players who are willing to provide high

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value for customers at competitive prices. From being a regional player, Morrison

has arrived at a major crossroads by acquiring Safeway supermarkets and it has

come to challenge the major national and global competitors.

Despite the current economic environment, consumers are still interested in

where their food comes from. Health, quality and provenance remain important

factors in food choice. Although the market environment remains difficult for the

consumer, they claim to continue to provide value and a unique fresh offer with great

service.

a- Segmentation and targeting of Morrison:

Customer segments of a super market chain like Morrison could be analysed

clearly from a 'lifestyle perspective'. The whole of the U.K market has to be

considered because Morrison has a clear plan of embracing the whole market.

Further it would be appropriate to consider the total population, irrespective of

social class, income and other factors because a major super market chain will

be able to approach all types of customers. The U.K customers are divided into 6

lifestyle segments according to the bookrags web site, bookragsi, (2010) there is

firstly, the traditionalist (18% of the population): Is influenced by the culture,

socio-economic history and situation of the regions/country. Morrison was able to

cater to the needs of this segment in Northern England. However the company

will have problems with appealing to the traditionalists of the other parts of U.K

because it might be perceived as alien to them.

Secondly, the homebody (14% of the population): Is. Less preoccupied with

economic security than the traditionalist, the homebody needs to feel in touch

with the social environment. Morrison has successfully targeted this segment up

to now because of the homely environment it provides and however in the future

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 the company will be finding it difficult to meet their requirements in the newly

expanded areas.

Thirdly, the homebody (14% of the population): Is driven by a strong attachment

to his or her roots and childhood environment. Less preoccupied with economic

security than the traditionalist, the homebody needs to feel in touch with the social

environment. Morrison has successfully targeted this segment up to now because of

the homely environment it provides and however in the future the company will be

finding it difficult to meet their requirements in the newly expanded areas.

Furthermore, the striver (15% of the population): Holds the attitudes, beliefs and

values that underlie the dynamics of social change. This segment has always been

attracted by the novelty of Morrison but it will be a necessity to continuously innovate

and change to meet the needs of this segment.

Last but not least is the trendsetter (13% of the population): Favours non-

hierarchical social structures and enjoys spontaneity rather formal procedures. This

segment of customers fancies changes and are highly difficult to retain, according to

the bookrags website (bookragsi, 2010).

3- Morrison’s competitive advantage:

In the U.K supermarket industry there is very high competition and therefore

customers easily switch to a competitor if they are not satisfied with the service

provision they receive. As a result, Morrison is compelled to ensure optimum

satisfaction in order to retain customers. The supermarket retailing industry is a

highly competitive. However, it is dominated by only 4 major players. They are

Tesco, Asda, Sainsbury’s and Morrison. Morrison is going to improve its position to

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fourth by taking over Safeways. Amongst the other three competitors Tesco is in the

forefront followed by Asda (owned by U.S retail giant Wal-Mart). These two possess

great threats to Morrison due to their sizes, financial strengths and cost efficiencies.

Sainsbury’s possess lesser degree of threat due its current financial problems and

inefficient operations, bookragsi, 2010).

First of all, there is a threat of New Entrants due to the lucrative nature of the

U.K industry, the threat of new entrants is high. Large European players, especially

French and German, are contemplating entering the U.K market. Already German

super market chains such as Lidl have opened up retail stores in major British cities.

In addition, major North American super market chains might also enter in order to

weaken U.K players and thereby tackle potential threats in home markets, bookragsi,

2010.

Then, comes the threat of Substitutes which could be viewed as various

individual groceries, off licence, specialist outlets and franchised store chains such

as Londis, Budgens, Cost-cutters, etc. At the moment, the threats are subdued.

However the concept of smaller franchised store chains are gathering in popularity

and could become a considerable threat in the future.

Furthermore, about bargaining power of Buyers, the buyers are customers of

Morrison. Their bargaining power is very high due to the availability of several

alternatives. If the buyers are not satisfied, they will easily switch options and the

switching costs are very low. In addition, due to the hyped information awareness the

customers have full details about demand and actual market prices.

Finally, according to the Bookrags website (2010), Morrison has up to now

been not threatened by the bargaining power of suppliers greatly. This is partly due

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to its policy in house sourcing of major proportion of its products. However with its

market expansion, especially in terms geography has necessitated the search for

new suppliers. Therefore, future bargaining power of suppliers is highly

unpredictable. Conversely, Morrison will be able to use its economies of scale

advantage to subdue the suppliers, bookragsi, (2010)

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 V- CONCLUSION:

Since Morrison competes within the U.K industry and has not branched out

internationally, my analysis has been limited to the U.K environmental implications.

However on the occasions, where a Global perspective is required it has been

analysed so. The comprehensive analysis presented above provides the foundation

for the development of future strategies of Morrison. It should keep a regular eye on

consumer trends, and develop programmes where it could talk to customers about

their shopping trip and how they feel about grocery shopping in the broader context

of their personal circumstances. It should also make good use of market data to

understand what it will need to do to improve their business for customers

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 BIBLIOGRAPHY

BOOKS:

Jobber, D. principles and practice of marketing –sixth edition (2010). Mc- Graw-

education, Maindenhead place

Porter M, Competitive Strategy: Techniques for Analyzing Industries and

Competitors, (1980). The free press edtion1980, a division of Simon and Schuler

Inc. 1230 Avenue of the Americas New York, NY 10020

Porter M, Competitive Advantage: Creating and Sustaining Superior

Performance, (1985)  the free press edtion1980, a division of Simon and Schuler

Inc. 1230 Avenue of the Americas New York, NY 10020

Philip K, ON MARKETING how to create, win and dominate markets, published in

Great Britain by Simon and Schuster UK Ltd 2001 A CBS Company

Whalley, A. Strategic Marketing, Andrew Whalley and Ventus publishing APS

2010

World Wide Web Documents

1- BookRags Morrison’s analysis summary (2010) [online].available from:

http://www.bookrags.com/essay-2005/2/25/7497/65475 (last accessed 21stoctober

2010)

2- Coursework4you - Segmentation targeting and positioning papers4you

(2010) [online]. Available from:

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http://www.coursework4you.co.uk/essays-and-dissertations/marketing/segmentation-

targeting-and-positioning/segmentationtargetingandpositioning.php (last accessed 13th

October 2010)

3- Morrison annual report 2010

http://www.morrisons.co.uk/corporate/investors/Financial-Reports/(last accessed 4th

November 2010) http://www.morrisons.co.uk/Global/Images/Corporate/Annual

%20Report/Morrisons_AnRep10.pdf ( last accessed 16th November 2010)

4- Morrisons i – Offers – Morrisons (2010) [online].Available from:

http://www.morrisons.co.uk/Offers1/ (last accessed 08th November 2010)

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