1.0 IntroductionIn the assignment brief we were required to nominate two aspects of marketing and two aspects of operations involved in the product of our choice in this case ready made meals prepared by Sainsburys. The report is split into four sections; segmentation, sales promotion, capacity management, and quality control.
Each section gives an explanation of the concept followed by how Sainsburys carry the concepts out for the product.The first concept looked at is segmentation in this section the different methods of segmentation are introduced and explained. The target segment for the product is identified and then I have specified certain ways in which the marketers for the product go about finding the segment of people they are after. Sales promotion was the next concept examined; again methods of using it as a marketing tool were looked at and then compared against the way sales promotion work for this product. In the third stage capacity management is defined and then possible plans for capacity management are looked at. The plan for this particular product is identified and explained while the rest of the section looks at techniques used to implement the chosen plan.
Finally Quality control concludes the report with a look at what quality is, what it costs, and how you implement it into your operations. Then the steps this product goes through in the quality control process are highlighted and analyzed. Throughout the report it is shown how links with the different aspects affect each other in the way the product is made and marketed.
1.1 The ProductSainsburys Be good to your self ready made mealsThe be good to your self ready made meals are a selection of low fat meals that are ready to eat within 5 minutes of being in the microwave. The selection includes spaghetti Bolognese, Lasagna, chicken dishes, and a variety of other options; they range in price from £1.99 to £3.
99. As the assignment states to focus on one product I will be investigating the range of meals as one product. Within the range of products the strategy to make and sell it is the same, the choice in meals is there just to give the customer a choice just as the customer of a car garage is given the choice of colour of a car. The difference in price just represents the fact some of the ingredients are more expensive for example chicken is more expensive than mince.My main research into the product has come through interviews with sainsburys employees. Most notably Fallowfield store manager Dave Cocker, Heather Callan marketing manager for ready-made meals, and Michael Jones Head of operations for ready made meals. Together they gave me an insight into the marketing objectives for the product, how the operations were conducted and how it would be sold.
In each section on a marketing or operations concept there will be a section on how they relate to the product based on the information I have gathered.2.0 SegmentationIs serving the needs of one or two groups of people better than trying to appeal to the market as a whole (Brassington and Pettitt, 2003). This is a marketing technique used by firms to break the market down into segments, which have groups of customers with similar characteristics.
This leads to a firm targeting an appropriate marketing mix, which can be put into place to meet the needs and wants of a certain group of people. According to Solomon et al (2002) segmentation is only applicable when the following 5 criteria are met.* Consumers must be similar to each other within the segment on product needs, and consumers in other segments should have alternate needs.* Important differences amongst segments should be identifiable.* The segment is large enough to be profitable* Consumers in that segment can be reached by an appropriate marketing mix* Your marketing mix brings a desired response from consumers targetedIn this investigation the market I am investigating is a consumer market as sainsburys ready-made meals are sold to consumers. The consumer market is huge so to target the right customers various methods of segmentation will need to be looked at and some implemented to help a firm achieve the best sales possible. There is no right or wrong way to segment a market so for a firm to carry out the segmentation process effectively it should seek different methods of segmenting which should be combined to come up with the right formula for success (Lancaster et al, 1993).
For segmentation to be successful the firm should undertake some form of market research to reinforce their theories on which market to target. In the next part of the report I will introduce some of the main segmentation methods.2.1 Segmentation methodsA common method to use for small firms is Geographical segmentation this sorts customers into the bracket of their location. Small firms tend to use this method, as there resources will only allow them to sell in the local area. Larger firms also use this method though as it can be easier to split their organization into smaller operating units (Brassington and Pettitt, 2003).
Another method of segmentation is demographics this tells you all about the customer you are aiming at. “Demographics are statistics that measure observable aspects of a population, such as birth rate, age distribution or income.” (Solomon et al, 2002, pg9). Knowing the demographics of a population allows the marketer to know how big the market is and were to find it. A good example of this is when the marketer knows the age profile of the target market then advertisements can be made in appropriate areas such as a magazine for under 35’s if that is your market (Brassington and Pettitt, 2003).If you combine the last two methods you get geodemographics this analyses people and were they live. Combining the two can be very useful for a company as it allows a firm to know were best to advertise and in what areas their product service is needed.
This cannot be done using just one of the previous methods alone.The last of the four methods is psychographics, which is hard to define as it involves variables that you cannot see such as attitudes, beliefs and opinions. These cannot be measured and you cannot just see them by looking at a person. What the marketer is trying to do with this sort of study is to get a feeling of what sort of lifestyle a certain consumer needs.2.
2 Segmentation for the ProductThe main details of how sainsburys choose their customer segment for the be good to your self ready meals was supplied in an interview with Heather Callan (Marketing Manager for ready made meals). On the basis of what she says the (be good to your self) range of ready meals has criteria for customers they want to target and various methods of finding these customers who they want to target.For this particular product Sainsburys have adopted a post modernist theory in defining their market. The notion of post modernism is that in today’s world we live in an environment were choice is in abundance and we are subject to many different marketing messages, the main one being that we should follow a healthy lifestyle in order to look and feel good.
They also looked at the socio-cultural environment and come to the conclusion that there is a concern for looking good and a need to be socially accepted amongst groups of people. With the (be good to your self) ready meals you are getting a good meal low in fat so it fits with the concept of healthy eating. From the research sainsburys did with this product they thought the market segment was large enough to be profitable and implemented it. The segment this product is aimed at according to Mrs. Callan is young people in an active social environment who do not have excess amounts of time for cooking themselves.
For putting the segmentation process for this product in to practice sainsburys use the same sort of methods as they would on any other product. One of the most popular ways of gaining information on customers is through the use of nectar card data. The forms customers have to fill in are quite detailed and will give sainsburys the geographic, psycho graphic, and demographic information on a customer. This then enables marketers to target people who fall into the target market segment for a certain product. TNS data is also used which is a customer panel of consumers who test the food in this situation sainsburys see what customers like the ready meals and then look at what category of people they fall into in terms off demographics, and geographics. A third type of information used is Nielson data, which is basically a sales data base, which monitors sales patterns.
This will give the company an idea of how well their segmentation policies are working for this particular meal and would also be useful for knowing when sales promotions should be put into place for the product. In the ready made meals department there are also separate research projects undertaken using any sort of data or reports they can find which may indicate how to choose the correct market segment.3.
0 Sales PromotionDefined by the institute of sales promotion as “a range of tactical marketing techniques designed within a strategic marketing framework to add value to a product or service in order to achieve specific sales and marketing objectives.” (Brassington and Pettitt, 2003, pg653). What this means is that sales promotion is a tool to be used with other marketing activities like advertising and personal selling to bring the end result of a product service becoming more attractive to the consumer due to its add on value. Marketing objectives firms may have include promoting themselves through a particular promotion or raising awareness of a brand they own. As part of a strategy sales promotion is the final step in luring a customer to buy. Advertising can go along way to selling products but the final purchase by a customer is determined by sales promotion (Lancaster et al, 1993).
This is illustrated in situations were you go out to buy a well known established product widely advertised but then you spot a similar product offering two for the price of one, which in many cases sways the buyer.3.1 Sales Promotions MethodsOutlined in Brassington and pettitt (2003) are four different sales promotion methods, which summarize the way most organizations, go about their sales promotions. The first is money based promotions, using this method the price of the product/service is reduced or coupons are made available for reduction in price or in some cases totally free. This is one of the quickest ways of implementing a promotion and also one of the most appealing to the customer as they are paying less. This method should not be used to often as customers will think its promotional price is its real value and may change their perception of the product/service and associate it with lower quality. (Gupta and Cooper, 1992).
This notion can be linked with the operation of quality and control as the quality of a product/service needs to be good after the sales promotion has finished so customers will buy it at its original price.Method two is promoting through product-based sales which gives the customer a product for free either in a sample or as part of a deal like buy 1 get 1 free. A sample could be delivered to your door, given to you at a food store, or in a magazine.
This is a good method of getting a new product established in its market and as a bonus you may deprive your competitors of one week’s sales as they are likely to use a free gift instead of buying from a competitor (Lancaster et al, 1993). The advantage of a buy one get one free offer or a certain per cent extra free can cost a manufacturer very little especially if buying in bulk (using economies of scale). This gives Customers a perception of added value to the product (Adcock et al, 2001).The 3rd method of promotion is to offer the consumer a gift, entry to prize draw or a merchandised based loyalty scheme. Offering a free gift or a chance of winning a prize is designed to gain the attention of a customer to make a spontaneous buy. A good example of loyalty schemes are supermarket points cards which reward with money off after spending a certain amount.The last way highlighted was point of sales displays.
This can be used in combinations with the other methods as it is putting the product in a place in the store were it may appeal to the customer. This could be placing special offers at the entry to a store so customers will see at as they enter and possibly be induced in the store to buy other goods.3.2 Sales Promotion for the ProductAgain in this section I was given information by Heather Callan. For this particular product all the methods highlighted in the last section are used.Money based promotions used on the (be good to yourself) ready meals are some times lowered but generally not more than by 20 per cent. They use this type of technique when sales are lower generally in holiday periods i.
e. Christmas as the young target market return home to their wider families and eat home cooked meals. Displaying offers like this also helps to keep capacity on an even keel and therefore easier to manage. Prices tend not to be cut too much as they do not want to lower the perception of quality of the product and sales normally only drop during short periods so the need to keep the price of the product low is not needed. The idea sainsburys have is the same as Slack et al (2001) as he says one of the most common market beliefs is there is a relationship between price and quality.In the use of product based sales promotions buy one get one free deals are not used on this product as they believe it effects their sales off lower price ready meals.
As sainsburys believe they have given the customer the perception that the (be good to your self range) is of higher quality due to this range being more expensive and being lower in fat. They think if the offer on this product is to tempting sales in the lower price category will drop substantially. They do how ever sometimes offer larger packets for the same price if sales need boosting.Offering a gift with this product is strongly linked with sainsburys segmentation policy of targeting people who are concerned with the way they look. For a free gift the product will have a coupon on it offering a free days trial at a nationwide gym that sainsburys have come to an agreement with. So as well as making the product more desirable because the customer is getting something free, the product is linking itself with a healthy lifestyle and keeping in shape which will appeal to their target segment.The final step sainsburys take in promoting sales in this product is the placement of the ready meal.
First off all the product is placed in a practical position, which is easy for the customer to find so it is grouped with other ready meals. Within the ready meals section the (be good to yourself) range of ready meals has its own section clearly advertised to make it stand out. The placing of the product is not just practical though as it is situated next to the pre-packed meats section so it is giving the customer the opportunity to choose a ready meal (most of the meals contain meat) with meat already cooked or the option of uncooked meat which needs cooking and prepared with other ingredients to make a meal. When the target consumer comes down this aisle of the supermarket they will choose the ready meal, as the target consumer is somebody who cannot cook or who does not have time too.
4.0 Capacity ManagementBefore defining capacity management the meaning of capacity of an operation needs to be introduced which according to Slack et al (2001,pg338) is “capacity of an operation is the maximum level of value added activity over a period of time that the process can achieve under normal operating conditions.” So the notion of capacity management is to get your operating system at the right capacity to meet demand and keep it functioning in that way. “Capacity management is concerned with the matching of the capacity of the operating system and the demand placed upon the system.” (Wild, 1995, pg180). This area is key in operations as it can determine factors in your business such as cost and quality of the product/service, speed of response to customer demand and how flexible your operations are.
Managing capacity takes 3 logical steps, 1st off aggregate demand and capacity is measured, then alternative capacity plans are identified, and then the most appropriate capacity plan is chosen (Slack et al, 2001). Aggregate demand can often be effecting by sales promotions. As sales promotions try to increase demand, the capacity of operations will have to be able to cope with the extra demand placed upon their system meaning the 2 concepts have quite an important link between them.
4.1 Capacity constraints4.2 Capacity PlansAccording to Slack et al (2001) there are 3 different capacity plans the 1st of which is the Level capacity plan. This is a plan were activity levels are the same even when demand varies. This is not a great plan for service industries or firms who produce perishable goods as left over stock is kept for periods of higher demand. The contradiction of this plan is the chase demand plan. This way demand is met by capacity so waste is avoided and customer demand is met. Firms who employ this strategy usually cannot store goods or are a service firm.
Methods used to employ this plan include using part-time staff and varying their hours, sub-contracting and paying over-time when demand is high. The 3rd plan is to manage demand. This is were managers try to change demand to fit capacity. Marketers are left in charge of changing demand while operations managers make the necessary changes to capacity. An example of this would be discounts on coats by a clothes store in the summer to try and raise demand at a time when people do not generally buy coats.
4.3 Capacity Management for the ProductHead of operations for ready meals Michael Jones gave me an insight into the capacity management issues for the product. For the (be good to your self) ready meals the capacity plan used is along the lines of the chase demand plan. The main reason for doing this is the ready meal is a perishable good and only has about 10 days from finished production till it goes off and becomes unfit for consumption. Also demand for this product stays fairly stable all year round apart from holiday periods were sales drop. So it makes sense to use this method as the need for staff and other resources should not fluctuate that much. This is no problem for sainsburys if there is fluctuations staff wise as in the factory were the (be good to your self range) are made other ranges of ready meals are made so staff can easily switch operations at times of high demand. Sainsburys also have alternative suppliers who can supply the same high standard ingredients if they are needed.
To make sure for a smooth running of the capacity plan there is day to day contact with Sainsburys sales department who using data such as Neilson data (previously mentioned) can detect changes in sales patterns for the ready meal and then pass them on to the factory were operations can be altered so the process of producing the meals encounters minimum capacity problems.Some of the techniques mentioned by Mr. Jones for operating capacity management included time and motion studies and MRP (material resource planning). Time and motion studies find out how long particular jobs take under normal conditions so the time for the overall operation can be given as accurate an estimate possible as how long it will take to produce a certain amount of meals. This allows maximum capacity to be established as you will know how many products can be produced in a day, week, month, e.t.c.
MRP is “is deciding the volume and timing of materials flow in dependant demand conditions.” (Slack et al, 2001, pg448). This is a totally different operation from capacity but plays a vital part in getting capacity management correct. This is were sales details and good contacts with suppliers comes in. Having the correct details on sales then lets the MRP planners organize staff, ingredients and cooking equipment ready so capacity runs smoothly.
MRP is particularly important at times of sales promotions as demand should become a lot higher if the marketers do their job properly, and if demand is high capacity will be stretched needing more resources to be fed into the operation.5.0 Quality ControlQuality is defined in many ways but in a product or service sense quality is generally thought of as being quality if it satisfies the customer.
“Quality is the degree to which a set of inherent characteristics fulfils requirements.” (Naylor, 2002, pg489). So quality control is making sure the procedure is put in place to gain the quality needed. “Quality planning and control is concerned with the systems and procedures which govern the quality of the products and services supplied by the operation.” (Slack et al, 2001, pg553). Quality control has an important link to the segmentation process, as when segmenting a market you need to know your target customers perception of quality so you can mould your product/service to their requirements. There is also a link with capacity issues as the efficiency of a system can be effected by the quality of the components in it. If components in your system are not conforming to your expectations then they are poor quality and will lower the capacity of your system.
5.1 Costs of QualityQuality will cost you in two ways, which are the cost of installing quality into your operations and the cost of non-conformance to quality. The cost of installing quality all depends on what sort of industry you are in, but in general the most efficient and cost effective resources put into your system will come at the most expense. The cost of non -conformance will result in at least one of the following; dissatisfaction of customer, inefficiency costs i.
e. energy waste, or not being able to meet customer demand. If these situations arise it will give you a very poor perception from the customer viewpoint, on the other hand if quality is improved there are obvious rewards according to Wild (1995). He says that improved quality increases demand allowing a firm to charge higher prices for what they offer.5.2 Types of Quality ControlOutlined in Naylor (2002) are three steps for controlling the quality of a firms goods and services.
The first control is the feed forward method; this measures the components going into production against design specification. The next step is to make sure the operation runs smoothly i.e. remove defects to machinery.
This stage is known as the concurrent stage. The final step is the feedback stage in which finished products are inspected also at this stage complaints are looked into and returned products examined. Another type of control employed is only dealing with proven suppliers or those known to provide a satisfactory service.
This can be judged on issues such as acceptable items received previously, cost of goods, and dependability of getting right amount of goods and on time (Naylor, 2002).5.3 Quality control for the productAll the information supplied in this section is based on an interview with Michael Jones head of ready meal operations at Sainsburys. At Sainsbury’s they employ a strict quality policy on their be good to your self ready meals as they do with all the companies products. The steps took to control quality in this product are much the same as the steps outlined in the previous section.The first step taken too ensure quality is being able to trace back ingredients to suppliers and then the source i.e.
farm. This is done through the use of batch codes on every sort of ingredient supplied to them. The difference in quality between the be good to your self range and the standard range of ready made meals is ingredients need to be fit for making the meal lower in fat as this is advertised on the product to entice the customer. This means ingredients such as meat need to be leaner than they would be in a standard ready meal.
So it is important to be able to trace back to the source so ingredients can be checked to be suitable.The next stage in quality control is process control, which is equivalent to the concurrent stage described before. At this stage there is inspection of work in progress, which is basically mixing the ingredients together, and cooking them in a way were the product looks presentable and also has the right amount of ingredients in each product.
Still at this stage meals are tested against control charts, which state the exact specification for each product. The control charts state controls such as weight of the product, levels of fat, and percentage of each ingredient put into the product. Cooking utensils and ovens are checked every month to ensure 1st safety of food and then quality, which for example could be effected by faulty ovens cooking the food at the wrong heat. This all helps to eliminate errors and save money in the long run as the operation of making the meals to specification are rarely effected due to these quality procedures put in place.Finally the output stage or the feedback stage as referred to before were the product is tested against attribute sheets by a panel of chosen customers. The attributes tested for the be good to yourself range The feedback from these customers allow sainsburys to know if the batch of ready meals is suitable for sale. At this point there are also staff available to investigate faulty products, which have been sent back. They will investigate the allegation made against the product and then identify the problem in the operation to make sure quality is not effected again.
Batch codes can again be useful in this situation, as you may need to go back to the ingredients to identify the root of the problem.6.0 ConclusionAs a general conclusion for this report I have found that for the product looked at, the marketing and operational activities I have investigated seem to be of the same approach as what academics would tell you. I believe this, as all the theories of the concepts I put forward match what sainsburys were doing in practice.
For example all the methods of sales marketing mentioned in the book were used on the product.The most interesting finding of the investigation for me was the importance of the inter-links between concepts. The most important links in my opinion were between sales promotions and capacity management.
This is due to the fact that if there is not a strong link between the two areas then operations will either be overstretched with too much demand or under used with too little demand. There is also an important link involving segmentation and quality control for this product. As sainsburys are trying to give this brand a perception of high quality, quality control needs to operate correctly so this perception is realized.On the whole sainsburys are very clued up on academic theory and realize the importance of interlinking marketing and operations activities to come up with a product, which suits customer needs.
Due to their knowledge and depth of research in all areas I am not surprised at the successes of this product or any other they bring out.