Southampton Solent University School of Communication and Writing Faculty of Creative Industry and Society

AUTHOR: Q79761992

TUTOR: Dr. Catherine Sweet

DATE: Tuesday 20 December 2011

CORPORATE

COMMUNICATIONS

2

Abstract

“How does Sainsbury’s promote its profitability with other stakeholder groups without

damaging its reputation?”

The core contents of the essay are to identify and interpret Sainsbury’s stakeholder needs,

as well as the company’s understanding and use of communication channels. The essay

identifies that Sainsbury’s is successful as communicating Investor Relations information

such as profitability to its stakeholders, however it is evident that the company does this on

a “Need to know” basis so that reputation can be controlled and managed more effectively.

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Contents Page

Abstract 2

Introduction 4

About Sainsbury’s 4

Purpose of Essay 4

Terms of Reference 5

Stakeholders 6

Sainsbury’s Stakeholders 6

Figure 1-Level of Interest in Sainsbury’s Financial Performance 7

Key Messages 8

Corporate Social Responsibility 8

Communication Channels 12

FIGURE 2- Process of Planning Communication Programmes 12

FIGURE 3- Screenshot of Sainsbury’s Facebook Page 14

FIGURE 4- J Sainsbury PLC website 15

Conclusion 17

References 18

Bibliography 20

APPENDIX 1- Generic Stakeholder Map 21

APPENDIX 2- Sainsbury’s Stakeholder Map 22

APPENDIX 3- Case Study 23

APPENDIX 4- Debate Answers 24

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Introduction

About Sainsbury’s

J. Sainsbury is the parent company of Sainsbury's Supermarkets Ltd, otherwise referred to

as ‘Sainsbury’s. It is the third largest chain of supermarkets in the United Kingdom.

“Ever since we opened our first store in 1869, being a responsible retailer has been

at the heart of the way we do things. Whether it's helping our customers eat a

healthy balanced diet, working closely with our suppliers and farmers, reducing the

impact on the environment, playing an active role in the communities we serve, or

making Sainsbury's a great place to work, being a responsible retailer is part of our

heritage”. (Sainsbury’s 2011)

Purpose of Essay

The purpose of this essay is to identify how Sainsbury’s promote its profitability with other

stakeholder groups without damaging its reputation. The communication channels used

by Sainsbury’s about Investor Relations information, such as growth and performance to

each different stakeholder are also to be investigated, to identify how successfully key

messages are being identified.

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Terms of Reference

To identify how Sainsbury’s communicates performance information to other

Stakeholder groups.

To critically examine the communication channels used to reach different

Stakeholders, and the “Key messages” being communicated.

To establish how well Sainsbury’s communicates its information to Stakeholders

considering their needs and influences.

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Stakeholders

Stakeholders are commonly described as being anybody who has an interest in a business or

organisation. Stakeholder theorists Grunig & Repper (1992) cited in Tench & Yeomans (2009

pp. 231) identify that there are interchangeable meanings to the word stakeholder. They

argue the difference as “People are stakeholders because they are in a category affected by

decisions of an organisation or if their decision affects the organisation”. The theory goes on

to describe that there are two different types of stakeholders who can be categorised by

being ‘Active’ or ‘Passive’. For example, employees and the community may be passive as

they have little interest in the company and what is going on. They go on further to describe

that Active stakeholders are ultimately the ‘Publics’ as they are more aware and are often

prepared to take action.

Sainsbury’s Stakeholder’s

Sainsbury’s have a number of stakeholders, these generically include:

Community

Investors

Customers

Suppliers

Media

Public Affairs/Government

(See Appendix 2 for in depth Stakeholder map).

From an Investor Relations point of view, it is evident that not every stakeholder within the

financial performance of the company, as they would for example the latest promotions. To

identify the level of interest each stakeholder group has in investor relations information,

the diagram below categorises each stakeholder group into advisory and participatory roles.

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FIGURE 1- Level of Interest in Sainsbury’s Financial Performance

Low High

Minimal Effort Keep Informed

Low Customers

Community

Media

Keep Satisfied Key Players

High Suppliers

Investors

Public Affairs/Government

It is important to recognise that the correlation between stakeholder placements within the

diagram is based upon the level of interest in Sainsbury’s financial performance. Therefore,

if the diagram was looking at level of interest in promotions, the end result would be very

different.

As mentioned earlier, Grunig & Repper (1992) theory on stakeholders and publics is evident

within the diagram, by the ‘POWER’. Those who are aware and active, which in this case

would be investors and Public Affairs would become Sainsbury’s ‘Publics’ as these groups

are prepared to take action, unlike those who scored low on the power tab. For examples,

the community may become an active public if for example they disagreed with store

planning and took action against this; however, their little interest in the company’s

financial performance makes them passive.

LEVEL OF INTEREST

PO

WER

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Key Messages

Corporate Social Responsibility

Freeman and Velamuri’s research on Company Stakeholder Responsibility (2005 pp.4-5)

identifies that Corporate Social Responsibility (CSR) is dated, and that Company Stakeholder

Responsibility is a new and stronger interpretation of CSR. They argue that “The main goal

of CSR is to create value for key stakeholders and fulfil our responsibilities to them. And

―Responsibility‖ implies that we cannot separate business from ethic”

The theory signifies the importance of stakeholder relationships and ultimately concludes

that by taking every stakeholder into consideration, it slows businesses such as Sainsbury’s

to work as a group or a team, in which the shared values are to increase performance.

Therefore, knowing the needs and influences of each stakeholder allow key messages to be

conducted so that communication can be done as a group, as well as meeting individual

needs.

The case study about Sainsbury’s large increase in turnover between 1990-2010, which can

be found in Appendix 3, provides the opportunity to identify how Sainsbury’s used/could

use key messages to communicate performance to each stakeholder group.

Customers

As is evident from ‘Figure 1’, the customers have both a low power and a low interest in

Sainsbury’s financial performance. As a passive stakeholder, it is evident that no key

message was or should have been prepared them as they do not want to know about the

increase in profit, and any messages provided to them about it would be unnecessary as it is

likely that they would simply be dismissed. If Investor Relations information were to be

communicated to the customers, a key message could be:

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“Sainsbury’s are able to continue with competitive pricing within the current economic

climate due to the increase in turnover over the year”.

The key message is communicated with positive implications to the consumers, particularly

the economic information as this is a hot-topic which people care about more over the past

few years. Furthermore, providing a high level of Customer Relationship Management, as

they are being kept informed.

Community

Similarly to customers, the community are a passive stakeholder. The community as a group

commonly seek to improve on the quality of working life. Therefore some community

related partnerships which Sainsbury’s have include ‘Drink Aware’ and ‘The Salvation Army’.

Sainsbury’s have a number of partnerships to keep special interest groups happy; therefore,

it is evident that the key message to the community in regard to the increase in Sainsbury’s

performance is:

“Sainsbury’s made a high turnover between 1990-2010, but they also give a lot away to

improve on community life, for example, donations to charities such as ‘WWF’ and the

constant growth in earth friendly partnerships“.

Although the Community has a low interest in the company’s financial performance, they

have a high interest in the issues and causes which can be helped by this financial growth.

Media

There are a number of different Medias accommodated with Sainsbury’s therefore the

message would need to be altered for each one. For example, investor magazines and the

website would stress how well the company has done, however, the key message for media

which reaches the public and community must communicate a more strategic message:

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“Sainsbury’s has done well in its turnover, this will enable the company to keep

progressing into the future, allowing them to continue with satisfying consumer needs

and meeting business values”

The media has a high level of interest in the financial performance of companies, commonly

more interest in loss than profitability and comparisons to similar businesses such as Tesco

or Asda. It is important that the media are kept informed so that the profitability of

Sainsbury’s is not portrayed as a negative, demonising the organisation in a time where the

economy is suffering, making them vulnerable to customers choosing to shop at competitor

stores instead.

Suppliers

It is important that suppliers are kept satisfied as they do have small interest in the financial

performance of Sainsbury’s as if Sainsbury’s were to be losing money, they may choose to

stop supplying for them. A key message to suppliers such as farmers could be:

“In the current economic climate Sainsbury’s profits are doing well meaning that supplier

jobs are safe”

Suppliers own needs of business are to be met and communicated efficiently. By using a key

message such as the one above, it calms any worries the supplier may have of the company

failing, and the supplier losing business. However, it is important that the mass of the

profitability is not over-sold as suppliers may expect Sainsbury’s to pay more for supplies.

Public Affairs

Sainsbury’s has a legal requirement to communicate growth and profitability as they are a

FTSE 100 company, therefore, the key message is simply generated by accurate company

statistics, so no real key message is required.

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Investors

It is obvious that investors are key players with an extremely high interest in the profitability

of the company, consisting of a number of shareholders. It is a lot easier to communicate

the positive message of Sainsbury’s incredible increase on turnover, than it would be if the

company had made a loss. The key message could be:

“It has been a successful decade for Sainsbury’s in terms of both growth and turnover

profitability with an increase in overall turnover from £6.9 billion to £21.4 billion between

1990 and 2010”.

Investors understand the figures and statistics, therefore, is a useful tool in communicating

growth and profitability. Investors care about making a profit, therefore, the key message is

easy to manufacture as long as the statistical values are being put across. Investors have a

high influence on the company as if they feel it is not performing to a high standard, they

may pull out, ultimately creating a further loss for the company. Therefore, the key message

must generate interest and demonstrate how their needs are being met.

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Communication Channels

Cornellisen (2011 pp. 108) identifies an up to date framework model for communication

programmes. The model for effective communication has been recreated below:

FIGURE 2- Process of Planning Communication Programmes

1 • Strategic Intent

2 • Define Communication Objectives

3 • Identify & Prioritize Target Audiences

4 • Identify Themed Messages

5 • Develop Message Styles

6 • Develop a Media Strategy

7 • Prepare the Budget

VISION REPUTATION

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STEP ONE: Strategic Intent

Cornellisen (2011) identifies the strategic intent as how the company wants to be seen, and

how they are currently being viewed. In terms of Sainsbury’s, the overall strategic intent is

to inform stakeholders that there has been amazing growth between 1990-2010 consisting

of an increase in overall turnover from £6.9bn to 321.4bn. Furthermore, Sainsbury’s wants

to let everybody know that they are doing well in the current economic climate and that

they are remaining a strong contender among competitors.

STEP TWO: Define Communication Objectives

The generic communication objectives for each stakeholder are:

Customers- Sainsbury’s is doing well so good value can continue to be expected.

Community- By Sainsbury’s becoming more profitable, more effort and funding can be put

into helping the community.

Media- Sainsbury’s is competing well with competitors in terms of profitability.

Suppliers- Supplier jobs are safe for the time being.

Public Affairs- Sainsbury’s is profitable.

Investors- Sainsbury’s has had an extremely high turnover over the past decade in a

challenging climate.

STEP THREE: Identify & Prioritize Target Audiences

Stakeholders and publics have previously been identified in Figure 1. In the circumstance of

Sainsbury’s investor relations information, the communication priorities are Investors,

closely followed by Public Affairs as this is legally required, next the media so that they are

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informed early to ensure that there are no mixed messages about the company’s progress.

Finally, suppliers, customers and communities are those who are not primarily important for

this type of information to be communicated to, however are addressed anyway.

STEP FOUR & FIVE: Identify Themed Messages & Message Styles

The core message to be communicated is that Sainsbury’s did well within their turnover of

profit between 1990-2010. (Please see ‘KEY MESSAGES’ for themed stakeholder messages).

STEP SIX: Develop a Media Strategy

Media is both a stakeholder and the best communication tool around. Sainsbury’s use a

variety of different communication channels to reach different stakeholders. Below are

some communication channels (Not just media):

Customers & Community- Advertising, In Store Leaflets, Door Leaflets, Brochures, Blogs,

Sainsbury’s Website, Social Media, In-Store Magazine.

FIGURE 3- Screenshot of Sainsbury’s Facebook Page

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As is evident from the communication channels above, financial performance is commonly

not available to community and customers as it is for the other stakeholders as they do not

seek out the information. From Figure 3 it is apparent that Sainsbury’s do not post any

company financial information or statistics on their social media, instead, they use it as a

communication tool to introduce and sell new products. This identifies that there is minimal

need for Sainsbury’s to initiate communicating the financial information to communities and

customers as they are not interested and it does not fit in with the communication culture

already in place.

Media- Press Release, Press Pack, Email, Telephone, J Sainsbury’s PLC website.

Suppliers- Email, Telephone, J Sainsbury’s PLC website.

Public Affairs- Annual Report (Government Relations).

Investors- Analyst Briefings, Banks, Stockbrokers, Stock markets, Auditors, Annual Report,

Interim Results, Finance Report, J Sainsbury’s PLC website.

FIGURE 4- J Sainsbury PLC website

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Figure 4 demonstrates that the J Sainsbury PLC website is the ultimate communication tool

used by the company when communicating Investor Relations information to the primarily

high financial interest stakeholders. The website and information is available to the

community and customers if they seek it out.

STEP SEVEN: Prepare the Budget

This final step is more suitable for campaigns rather than simple communication

programmes, therefore, is not relevant for this essay.

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Conclusion

A trend which has become evident within both the theories and the research into

Sainsbury’s communication channels is that, stakeholders & Publics can be categorised into

Primary & Secondary Audiences. Those who have more importance to the key message

being communicated are primary, as in most cases has the largest impact on them, whilst

the secondary audiences are those who often only know what is going on if they seek the

information out. This is particularly apparent in Sainsbury’s case as the financial

performance stated in the case study (Appendix 3), and similar financial information is not

communicated directly to them. However, this may be a positive for Sainsbury’s as if the

customers and community are not aware of Sainsbury’s financial gain; Sainsbury’s cannot be

demonised for it. Therefore, a key concept found within this essay is that Sainsbury’s

promote its profitability with other stakeholder groups on a “Need to know” basis, so that

the company reputation can be managed effectively.

In conclusion, Sainsbury’s communicate their Investor Relations information well to “Active”

stakeholders, whilst most similar financial information is made available to other

Stakeholders rather than directly communicated to them.

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References

- CORNELLISEN, J., 2011. Corporate Communication- A Guide to Theory and Practice.

3rd ed. London: SAGE Publications Ltd, pp. 108

- ENERGY BUSINESS DAILY, 2011. Smart Grid Enters Retail Giant Sainsbury’s [online]

[viewed 18 December 2011]

Available From: http://energybusinessdaily.com/energy-efficiency/smart-grid-

enters-retail-giant-sainsbury/

- FACEBOOK, 2011. Sainsbury’s [online] [viewed 18 December 2011]

Available From:

http://www.facebook.com/MiniBirch/posts/10150458151259333?notif_t=feed_com

ment#!/sainsburys

- FREEMAN, RE., SR, VELAMURI, 2008. A New Approach to CSR: Company Stakeholder

Responsibility. Social Science Research Network. [online] [viewed 18 December

2011].

Available From:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1186223

- J SAINSBURY PLC, 2011. Home [online] [viewed 17 December 2011].

Available From: http://www.j-sainsbury.co.uk/home/

- SAINSBURY’S, 2011. About Us [online] [viewed 17 December 2011].

Available From: http://www2.sainsburys.co.uk/aboutus/about_us_default.htm

- SAINSBURY’S, 2011. Corporate Responsibility [online] [viewed 17 December 2011].

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Available From:

http://www2.sainsburys.co.uk/aboutus/policies/policies.htm?WT.svl=2&WT.seg_1=

nav_secondary

- SAINSBURY’S, 2011. Home [online] [viewed 17 December 2011].

Available From: http://www.sainsburys.co.uk/sol/index.jsp

- TENCH, R., L. YEOMANS, 2009. Exploring Public Relations. 2nd ed. Edinburgh: Pearson

Education Limited. pp. 231

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Bibliography

- J SAINSBURY PLC, 2011. Journal [online] [viewed 17 December 2011].

Available From: http://www.j-sainsbury.co.uk/responsibility/case-

studies/2011/journal/

- J SAINSBURY PLC, 2011. Responsibility [online] [viewed 17 December 2011].

Available From: http://www.j-sainsbury.co.uk/responsibility/organisations-we-engage-

with/

- SAINSBURY’S, 2011. Little Ones- Baby & Toddlers Club [online] [viewed 17 December

2011].

Available From:

http://www3.sainsburys.co.uk/littleones/component/search/?searchword=sainsburys&orde

ring=&searchphrase=all

- SAINSBURY’S, 2011. Sainsbury’s Magazine [online] [viewed 17 December 2011].

Available From: http://www2.sainsburys.co.uk/food/sainsburysmagazine/current_issue

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STAKEHOLDERS

COMMUNITY

INVESTORS

GOVERNMENT/ PUBLIC AFFAIRS

MEDIA

SUPPLIERS

CUSTOMER

APPENDIX 1

LEVEL ONE

Generic Stakeholder Map:

Shareholders

Brokers

Regulators

Company News

Bankers

Institutional

Investors

Private

Investors

Partnerships

Trade Press

Financial Media

Consumer

Press

News

New Media

(Blogs &

Forums)

Local, National

& International

Press

Advertising

Promotions

Brand Image

Complaint

Handling

Trade Press

Call Centre

Management

Marketing

Materials

Local

Government

Special Interest

Groups

Local Media

Relations

Transport,

Waste, etc.

Charities &

Sponsorship

Customer

Relations

Raw Materials

Transport &

Logistics

Downstream

Manufacturers

Equipment

Services

Trade

Associations

Politicians

Government

Departments

Industry

Groups

CSR

Regulators

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APPENDIX 2

LEVEL TWO

Sainsbury’s Stakeholders:

International Suppliers

Farmers

Growers

Fair-trade

Food Standards Agency

FareShare

SAINSBURY'S STAKEHOLDERS

COMMUNITY

Relations

INVESTOR Relations

GOVERNMENT/ PUBLIC AFFAIRS

Relations

MEDIA

Relations

SUPPLIERS

Relations

CUSTOMER

Relations

Shareholders

Qatari royal

Family

Employees

Board of

Directors

Facebook, Twitter,

YouTube

Sainsbury’s Little Ones-

Blog

Men Media- Blog

Independent

Guardian

Just Food- Blog

Employee Magazine

Sainsbury’s Finance

Website

Global Media Vault

Regular Customers (18-50 demographic)

Irregular Customers (young teens/competitor shoppers)

Sainsbury’s Magazine

Website/in-store returns & complaints

Which?- Trade Press

Business in the Community

Comic Relief

Drink Aware

WWF

Greenpeace

Green Alliance

Friends of Earth

Salvation Army

Politicians

Government

Departments

Industry

Groups

CSR

Regulators

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APPENDIX 3

Sainsbury’s Case Study:

Smart Grid Enters Retail Giant Sainsbury

April 1st, 2011 by EBR_EBdaily

Think about shopping in London, and the name Sainsbury’s will come automatically to one’s

mind! Sainsbury’s is the second largest chain of supermarkets in the United Kingdom,

holding a 16.6% share of the country’s market. Attesting to its amazing growth is its increase

in overall turnover from £6.9 billion to £21.4 billion between 1990 and 2010.

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APPENDIX 4

Sainsbury’s responses to debate questions:

“All Publicity is Good Publicity”

Sainsbury’s believe that all publicity is good publicity because if the company is not being

talked about, it may as well not exist. Also, from an Investor Relations point of view, all

publicity can be viewed as FREE advertising. For example, when competitor Tesco do their

“Price Comparison” adverts on the television, although Tesco is saying that a few of their

products are cheaper than Sainsbury’s, the name “Sainsbury’s” is still being put out there

increasing the company’s reputation. Sainsbury’s recognise that some publicity can be

damaging, however, it is how issues are overcome which often makes companies more

popular and profitable in the future.

“What the public thinks does not always matter”

As a company relying on customer sales, Sainsbury’s believes that what the customer thinks

DOES in fact always matter. As an integrated group with stakeholders, each stakeholder has

the combined mind-set that without the customers there would be no company and

therefore, no profit. Furthermore, decisions being made within the company, even financial

decisions are always carried out with the customer, and customer needs in mind.

“You don’t always have to tell the truth to the press”

Sainsbury’s believe that if you lie to the press, you are ultimately providing them with the

opportunity to make the story negative, and ultimately demonise the company. Within the

21st century, the media has various tools to find out information which companies may want

keep private. Sainsbury’s believe that with the knowledge that the press have the freedom

to find out this information; more focus should be put on telling the truth so that the

company has even some control over what is going to be said. Long term benefits are that

media are a useful tool and relationship to have; therefore by Sainsbury’s always telling the

truth good relationships can be built.

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“Shareholders are more important than customers”

Customers are a driving force for Sainsbury’s, without the customer no profit is able to be

made. Sainsbury’s recognises that shareholders are important, particularly for the initial

funding of the company, however, by initiating a positive working relationship with

shareholders, the understanding that customers are the most important aspect after the

start up can be effectively communicated to create a mutual understanding. In addition,

there is no use in setting up a company if after the immediate vision; there are no

customers and no profits.