A Marketing Case Study: Morrisons

Morrisons was founded over 100 years ago, as a stall in Bradford market. It has been a family business for most of the time since. Under Sir Ken Morrisons 55-year leadership, until he retired in 2008, the company grew steadily ‘from market stall to superstore.’ With over 450 stores, it is now the UK’s fourth largest food retailer. Amongst the large supermarkets, several features make Morrison’s stand out and differentiate it from competitors. Morrison’s is the UK’s fourth largest food retailer by sales with an annual turnover in excess of £15bn. It has 425 stores across Britain, ranging in size from 10,000 to 40,000 square feet. Over 10m customers visit its stores each week served by over 134,000 employees.

1.2: Marketing:

“Marketing is the process by which a firm profitably translates customer needs into revenue.”

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Mark Burgess – Managing Partner, Blue Focus Marketing

1.3: Morrison’s Vision:

“Different and Better than Ever”

‘Different and Better than Ever’ captures the key initiatives that will help reinforce what makes Morrison’s different from others, and to seize the opportunities that will ensure continual growth and great results.

1.4: Business Objectives of Morrison’s:

Strengthening brand: Having a strong brand can be a real point of difference, that’s why Morrison’s have set out to give customers an own brand range worth switching supermarkets for.

Increasing our efficiency: Morrison’s is upgrading core IT systems through the Evolve initiative, a major six year programme of work. This will unlock efficiency savings and give the solid platform it needs to grow the existing business.

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Capturing growth: The convenience sector is a significant opportunity for Morrison’s and growing at twice the rate of the rest of the UK retail market. Morrison’s entered this market in 2011/12 with its first M local stores.

1.5: External factors influencing marketing in Morrison’s:

The external factors influencing marketing in Morrison’s are:

Political:

A very large political factor is healthier foods as the nation becomes more health conscious. Morrison saw a void which they had filled of making healthy food accessible for everyone by charging reasonable prices. In their CSR strategy they say that they ‘take good care of their shoppers, colleagues and communities’ by offering good quality wholesome foods such as fresh fish, meat and vegetable products at very competitive price (Morrisons, CSR Report, 2009). This is a part of their vision to be the Food Specialist for Everyone (Morrison’s, 2009).

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Economical:

Economic factors which had affected the Company in the past were, firstly, the price inflation of basic commodities back in 2008, which had an impact on the prices of some of the Companies basic ranges (Morrisons, 2009). Increased unemployment and rising taxes caused the Morrison’s to react by launching over 21,000 price cuts.

Social:

Moving onto social factors, one factor, which is loosely tied in with economic factors, were their consumer trends and buying habits. Another social factor which Morrison’s addressed was catering to the Vegetarian community in the UK by introducing purely “Veg food”.

Technological:

Technological factors include business interruption IT recovery procedures by investing in a remote IT Disaster Recovery site, should any data be lost in any of the stores whilst operating. Furthermore the company also invested in a whole new transport fleet that produced lower carbon emissions, achieved better fuel efficiency and produced less noise pollution. They have also revamped their own in-house manufacturing and packaging technologies.

Legal:

Legal/regulatory factors which have affected the Company are that Morrison’s operate under a strict set of regulations such as Health and Safety, Food Hygiene, Handling of Hazardous Materials and Chemicals, Data Protection and rules of the Stock Exchange. These regulations concern the microenvironment and so affect the ‘transformation’ component of the system (Morrison’s, 2009).

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Environmental:

With environmental factors, Morrison’s have identified key components to achieve their overall Corporate and Social Responsibility objectives; these are Society, Environment and Business. Morrison’s gave away free reusable carrier bags to urge customers to stop using their old carrier bags with the aim to reducing their waste. They’ve also reduced their Carbon Footprint by sourcing and generating renewable energy. Society objectives are to provide products to preserve the health, well-being and the lifestyles of their customers and by taking care as they go about their daily business (Morrison’s, 2009).

1.6: Use of marketing to achieve business objectives:

Objectives set out what the business is trying to achieve. Objectives can be set at two levels:

(1) Corporate level

These are objectives that concern the business or organisation as a whole. Examples of “corporate objectives might include:

•Aim for a return on investment of at least 15%

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• Aim to achieve an operating profit of over £10 million on sales of at least £100 million

• Aim to increase earnings per share by at least 10% every year for the foreseeable future

(2) Functional level

At functional level there are operational objectives for marketing activities. Examples of functional marketing objectives” might include:

• Aim to build customer database of at least 250,000 households within the next 12 months.

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• Aim to achieve a market share of 10%.

• Aim to achieve 75% customer awareness of the brand in all target markets.

1.7: Elements of the marketing process in Morrison’s:

The basic task of marketing is the delivery of a total offer to the consumer in such a manner that, the offer fulfils the needs of the consumer and is beneficial to the consumer. All the organisational goals, including profits are achieved in the process.

The four elements constitute the marketing mix are:

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1. Product

2. Place (Distribution)

3. Price

4. Promotion

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Jerome Mc Carthy, the well-known American Professor of marketing who described the marketing mix in terms of the four P’s classifying the variables under four heads, each beginning with the alphabet ‘P’.

Product:

Morrison’s first priority is the product. It focuses on its quality, design, features, models, style, appearance, size, packaging and warranty.

Place:

Location of outlets, warehouse and physical distribution are chosen according to the areas and people living in that area. For example, East London has major Muslim community so halal food will sell a lot.

Price:

Pricing policies, levels of prices, levels of margins, discounts and rebates are all fixed before according to the purchasing power of customers.

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Promotion:

Quality of sales force, cost level, level of motivation, advertising, sales promotional efforts, display, contests, trade promotions , publicity and public relations all help in promotion of Morrison’s.

Section 2:

2.1: Positioning of Morrison’s in the market:

1. Tesco

Tesco is a UK based international grocery and general merchandising retail chain. It was founded in 1919 in London. It is the largest British retailer and the 3rd largest global retailer based on revenue (2nd based on profit). Tesco group sales were £59.4 billion ($95.1 billion) in 2008 which was an 11.1% increase on the previous year.

2. ASDA

ASDA is the 2nd largest supermarket chain in UK with 15.2% market share. ASDA Stores Limited was founded as Associated Dairies & Farm Stores Limited in 1949 in Leeds, and became a subsidiary of the American retail giant Wal-Mart which is the world’s largest retailer in 1999. ASDA still has retained a very British feel in-store and a distinct identity separate from its parent company.

3. Sainsbury’s

Sainsbury’s is the No. 3 supermarket chain in the UK with 14.30% market share. It was founded in 1869 by John James Sainsbury and his wife Mary Ann (née Staples), in London, England. It has strong market position in London and the South East. In 2007, Sainsbury’s identified five main areas for growth. These were: “great food at great prices”, increasing number of complimentary food ranges, reaching more customers through additional channels, e.g. home delivery, growing supermarket space and active property management.

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4. Morrison’s

Morrison’s is the fourth largest supermarket chain in the UK with 10.4% market share. It is originally founded by William Morrison in 1899, and started out as an egg and butter stall in Rawson Market, Bradford, England. The Morrison family currently still owns around 15.5% shares of the company.

Until 2004, Morrison’s store locations were primarily focused in the north of England, but with the takeover of Safeway in that year, the company now has a total of 417 superstores across the UK.

Although the company claims that its strategy more focuses on offering unbeatable customer service and a pleasant shopping environment, it still competes on price, special offers and multi-save promotions. Another point which makes Morrison’s stand out is its “market street” feature with its current strap-line is “Fresh Choice for you”.

5. Waitrose

Waitrose is the 7th largest supermarket chain in the UK with 3.5% market share. It is the food division of the British leading department store chain and worker co-operative the John Lewis Partnership. As of November 2009, Waitrose has 221 branches across the United Kingdom, and most of them are based in the south of the UK.

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Gain report – UK Supermarket Chain Profiles released on 11/13/2009

2.2: Morrison’s main market segments:

Morrison is UK’s fourth largest supermarket chain and is primarily engaged in the operation and management of a chain of supermarkets across the UK. The purpose of market segmentation is to leverage scarce resources; in other words, to ensure that the elements of the marketing mix, price, distribution, products and promotion, are designed to meet particular needs of different customer groups.

Product:

Variations, models and sizes of the product are needed to satisfy the various target customers. In order to launch new own label products, packaging and labelling information should best serve consumers and attract them to purchase the product.

Price:

Morrison’s should set price of a new product according to the target area. They must know about the cost that people are willing to pay.

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Promotion:

In order to achieve a successful advertising campaign, the company need to know which would be the best media format for reaching the target market. For example, neon sign boards, leaflets etc.

Distribution:

Morrison’s is not currently offering online shopping. Store layout, signs and display formats all influence consumer cognition.

2.3: Benefits of segmentation:

The purpose of market segmentation is to provide selected offerings for selected groups of people, most of the time. This process allows organizations to focus on specific customers’ needs, in the most efficient and effective way. The market segmentation concept is related to product differentiation. If you aim at different market segments, you might adapt different variations of your offering to satisfy those segments, and equally if you adapt different versions of your offering, this may appeal to different market segments.

An example in the area of fashion retailing might be if you adapt your clothing range so that your skirts are more colourful, use lighter fabrics, and a very short hemline, for instance, this styling is more likely to appeal more to younger women. If alternatively, you decide to target older women, then you might need to change the styling of your skirts to suit them by using darker, heavier fabrics, with a longer hemline.

2.4: Distribution of products at Morrison’s:

Morrison’s stocks have over thousands of lines which sold as their “Own Brand” goods. These include:

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M Savers: An economy brand which sells items ranging from Food and Drink to toiletries, etc.

M Kitchen: A range which comprises fresh Sauces, Soups and Ready Meals to cater for many different types of customers.

NuMe: A healthy eating range which consists of 315 new chilled, frozen and ambient products.

WM Morrison: A high end range which sells Food and Drink amongst other products at higher prices.

Distribution:

In 2005 Morrison’s purchased part of the collapsed Rathbones Bakeries operation for £15.5 million which make Rathbones and Morrison’s bread.

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In 2007, Morrison’s opened a new Distribution Centre in Swindon and announced that it had bought a new site on Junction 23 of the M5 in Bridgwater in Somerset, for redevelopment as a fresh produce packing facility.

In 2011 Morrison’s opened a new 767,500 sq/foot distribution centre in Bridgwater as part of the £11 million redevelopment project. This project also created 1,200 new jobs.

2.5: Pricing strategies:

Morrison’s says its focus on fresh food and keen pricing strategy helped attract a record number of customers and boost like for sales 2.4% during the third quarter. Total sales excluding fuel increased 4.6% and the supermarket says it attracted 450,000 more customers each week compared to last year, which helped sales grow ahead of the market. During the period Morrison’s launched its M Kitchen label ready meals range, the first part of the overhaul of its entire own-label offer, and claims that it helped boost ready meal sales by 60%. Morrison’s currently holds an 11.8% share of the grocery market, according to the latest Kantar figures. It outperformed the rest of the major supermarkets with 5.5% growth during October, ahead of the 4.6% market growth.

2.6: Promotional strategy:

This strategy of Morrison’s range of fresh foods is superior compared to its competitors, who primarily rely on packaged foods. This strategy provided some uniqueness to Morrison from its competitors and provided it with good market share in a short time. The store provides a range of low-priced and special offer fresh food products, through its branded and own label products.

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In addition, Morrison also offers a range of hot food; ready to eat pies, over 30 different varieties of ready to eat salad; cakes and British and continental foods; traditional wines, spirits and ales; quality fruit and vegetables; and fresh flowers, shrubs and plants. Morrison’s is to focus its promotional activity on targeted coupons based on shoppers’ purchases, as CEO Dalton Philips slams the “nuts” level of vouchering and coupons in the UK.

2.7: Impacts of technology on marketing activities:

Product

The Internet is changing the product and services availability. With the use of technology Morrison’s started making its own labelled better quality products affordable at lower prices.

Price

Using computer systems reduce the time and effort. Online shopping offers the same services at lower price. On-line payment makes it more convenient to clients/customers and can make cash collection quicker and cheaper for suppliers – again increasing the possibility of price reductions.

Place

The developments in the power of databases means that direct marketing is really coming to the fore allowing new segments to be more easily identified and allowing segments-of-one to be profitably targeted. The Internet also allows reaching a much wider geographical spread than was previously possible.

Promotion

In just about every sphere of promotion – advertising, direct marketing, personal selling, public relations, web sites, personalisation and interactivity are making fundamental changes to the way marketing works. For example: electronic posters, information kiosks, banner advertisements, electronic presentations, on-line directory entries etc.

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Section 3:

Marketing plan for ready meals:

Morrison’s is going to launch ready meals with the finest quality ingredients. On the Menu is a range of salads and fruit dense desserts, 1 min microwave burgers, pasta and macronies with seasoning sauces. Developed by professional chefs and approved by dieticians, the single serve hand prepared portions are a complete meal for one with meat and vegetables, providing 1 of 5 a day, designed to deliver high protein, lower fat and maximum nutritional value within a smaller format for better health and to reduce malnourishment.

Its main objective is to reduce obesity in UK and awareness to switch from fast food to ready meals. All products are compliant with Care Home Food guidelines and British Heart Foundation and Cancer Research recommendations. The range is going to be launched soon into major stores of Morrison’s across UK .

Product:

Morrisons new product range includes ready meals. For example, pasta: just buy, open and eat. 2 minutes instant meals cook in microwave ovens. These meals offer healthy eating, great choice, ease of access, and a reduction in time to prepare the meals. These product benefits would entice the new customer to Morrisons.

Price:

The price of a product will depend on the cost of the materials required to make it, the amount of profit desired, other objectives of the business will be considered, the price competitors charge, the price customers are willing to pay. Bearing all these factors in mind Morrisons’ “field to fork” strategy will benefit its pricing position by cutting many ‘middle man’ costs.

Place:

Products should be conveniently available in the local area for customers to buy at all major stores of Morrison’s. This has been facilitated by the numerous takeovers undertaken by Morrisons and its continual store roll-out.

Promotion:

The aims of promotion are to raise awareness about nutritional diet, encourage sales, create or change a brand image, maintain market share. Its effective own-brand advertisement campaign in key areas and prime-time slots has allowed it to promote its products.

Micro environmental factors:

The company itself (including departments).

The first force is the company itself and the role it plays in the microenvironment. This includes all departments of the business ranging from head office strategies to in-store ideas. This could be deemed the internal environment.

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Suppliers.

It depends upon suppliers that what quality of vegetables, fruits, and other ingredients are provided. They must follow “value delivery system”. However, due to Morrisons ever growing buying power, they are able to dictate what quality they receive. If this fails they are always able to add the respective supply chain to their own factories.

Marketing channel firms.

It is important for Morrison’s to promote, sell, and distribute ready meals by proper advertising. The campaign must include the major channels from T.V and radio advertisement to online marketing. If they will not be properly advertised, people will not buy them and it will result in a loss.

Customer markets.

Morrison’s must consider the customer purchasing power while setting the prices of all ready meals. Meals should be of enough variety that everyone could buy and enjoy.

Competitors.

Every company faces a wide range of competitors. No single competitive strategy is best for all companies. Morrison’s should keep in mind its competitors like Sainsbury and Marks & Spencer etc.

Macro environmental factors:

Demographic.

Demography is the study of human populations in terms of size, density, location, age, sex, race, occupation, and other statistics. Morrison’s must think about all these factors. For example, kids cannot eat spicy food; some people will be diabetic or allergic to nuts etc.

Economic.

The economic environment includes those factors that affect consumer purchasing power and spending patterns. Recent recession pressures have led many consumers to tighten their belts. However Morrisons has responded well by keeping prices low and cutting prices on over 20,000 products.

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Natural.

The natural environment involves natural resources that are needed as inputs by Morrison’s or that are affected by marketing activities. During the past two decades environmental concerns have steadily grown and it has become the self interest of any organisation to be as green friendly as possible.

Technological.

The technological environment includes forces that create new technologies, creating new product and market opportunities.

Political.

The political environment includes laws, government agencies, and pressure groups that influence and limit various organizations and individuals in a given society. Recently a new VAT has been introduced on hot takeaway foods cooled in a controlled environment. Morrisons would have to take this into consideration.

Conclusion:

For marketing in Morrison’s, all organisations need to focus on their visions, objectives, marketing mixes and segmentations according to set rules, regulations, culture, belief and values in a targeted area to compete successfully. Morrisons aims to be the best supermarket for fresh foods to give it an advantage over its competitors. This is achieved through its unique ‘field to fork’ integrated approach which allows it to control its own supply chain to ensure that food is fresh and of the highest quality. Morrisons trains colleagues through customer service initiatives such as ‘HOT’ to become experts who can offer customers the best possible level of service. Training and development programmes create an environment where colleagues are able to deliver exceptional customer service. Morrisons aims to train colleagues who are motivated and proud of whom they work for, supported by management that understands and values its people. This helps everyone feel part of the family, upholding the family values and traditions of a family-focused business. This naturally results in the most powerful human marketing tool which is word of mouth. The more Morrisons do to promote quality in its products the more confidence its staff can have to hold and carry the Morrisons marketing campaign.

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