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Tesco Marketing Strategies and Activities

Abstract

The study focuses the marketing strategies adopt by the TESCO and its comparison with other manufacturing, business and non-profit organizations. It also looks into linkages between the operations at these organizations and their marketing strategy. It shows that in current ever-changing and challenging market companies with different background have to adopt different marketing strategy to get the advantage over competitors. These companies and organizations have to link their operations with that marketing strategy so that they could meet with the maximum customer satisfaction. TESCO has a competitive advantage over its rivals in retail market as its adopting diverse strategies in operation as well as in marketing. TESCO is utilizing modern technology effectively.

1 Introduction

Marketing is a way to introduce your product to your targeted customers in any market. Today’s business world demands every business to adopt a workable marketing strategy so that they could achieve competitive advantages over their rivals and could generate higher sales and profits successfully. There are different ways adopted by all the companies to maximize their reach in markets. This marketing strategy should be aggressive and effective. In this assignment we are going to study the approaches adopted by the TESCO which is one of leading retailer in United Kingdom. We will also study the difference of approaches adopted by TESCO comparing to the other manufacturing companies, service and non-profit organizations. The assignment will answer following four questions parted into three tasks, which are given below:-

Task 1 (A)

Understand and critically appraise the importance of marketing within the development of business plans and strategies at Tesco plc.

Task 1 (B)

In the report you must also evaluate and analyse the processes of market development in the dynamic retail business environment in which the company (TESCO) operates.

Task 2

Critically evaluate, appraise and analyse the place of information systems and new technologies in developing business and marketing strategies and planning at Tesco plc.

Task 3

Evaluate and analyse the linkages between marketing and operations in manufacturing, service and not-for-profit organisations to compare how these organisations undertake marketing.

The focus of this study will be to understand the concept of marketing in general with focusing on the strategy and activities adopted by the TESCO. It will also help us in understanding the differences of marketing strategies adopted by different kinds of business and organizations like manufacturing, services and non-profits.

1.1 Background

Founder of TESCO Jack Cohen, has started this business when he started to sell groceries in East London in 1919. The first day's profit was 1 Pound. The business could lead him to sell his first product in his own brand name of Tesco in 1924. This name has come from the two first letters of TE Stockwell, and Co from surname of Jack. In those early days, Jack Cohen had a partner in firm of tea as a supplier, TE Stockwell. In 1929, Cohen could open his first store in Burnt Oak, Edgware in north of London. Tesco has become plc in 1932. A specified land has been bought in north of London at Angel Road, Edmonton for building a new headquarters and warehouse in 1934. (www.tescocorporate.com)

Annual sales on Tesco touched landmark of one billion Pound in the year 1979. It exceeded to two billion Pound in the year of 1982. Same year for first time Tesco put some computerize checkouts in its stores. In the year 1985, Tesco became the first grocery retailer which started emphasizing on nutritional value of its brand products through an initiative named as ‘Healthy Eating'. In 1991 it became the biggest independent petrol retail seller in Britain. Next year it launched more new products and services which included Tesco Organic range, computers for schools and 'Every little Helps'.

Tesco has expanded its market on year, 1988 and 1999. Tesco improved customer service through lunching 'Customer Champions' policy in stores; it became leader in organic retailer for the UK market. Tesco went to South Korea, Thailand and Taiwan. But later Tesco exited the Taiwanese market and it shifted to Czech Republic in 2005. Adopting the diversification strategy, a store under name of 'Tesco Homeplus' was launched in 2005. In 2009 club cards re-lunched in the UK with a big investment of 150.

Figure 1 shows Tesco around the world

Website Tesco.com is the world's most active online supermarket and in year 2009 the group had sales of more than £577 million, with increase of 29% on year 2008. Tesco online widely operates with over 270 stores around the UK, covering 96% of the online retail market. Estimated more than one million households nationwide using the online service, the company has a strong platform to further develop this revenue stream. Anon (2004)

1.2 What is marketing?

Marketing is the systematic approach of selling goods, adopted by any business and not for-profit organization with a specific message. It always attempts to raise the organization ability to generate profits, whether these are financial (profits and donations) or electoral.

Tesco's strategy is very clear, with the growth as target from four areas - the core UK business of grocery, non-foods, international retailing services and expansion other services such as financial, the dotcom and telecommunication.

2 Task 1 (A)

Understand and critically appraise the importance of marketing within the development of business plans and strategies at Tesco plc.

2.1 TESCO’s Marketing Strategy

The marketing strategy involves analyzing the market, and determining which product to offer and the exact what range of the customers to be suited, considerations relating to fashion, seasons ,sizing, as well as the appropriateness. Tesco decide that there will be a specific ‘core’ European range of environmentally friendly products which are exported throughout the Europe, while there would be another range for local customers. However before any decisions are made about marketing strategy, a detailed market research is undertaken to test the concept of the new range, the pricing, attitudes towards Tesco, the new Alliance with partners, purchasing habits of the customers.

TESCO adopts campaigns for marketing the business, such a campaign would consisting of

TV and radio advertising at regular intervals.

Advertisements in news papers and magazines.

The alliance partner making press releases and sharing about their ventures on their national and regional media benefits Tesco.

Company benefits in creating thousands of new jobs.

The introduction of an environmentally friendly of products.

Billboard campaigns.

Internet advertisement.

Direct marketing to known customers (Club cards)

Tesco has a successful history since years of its start. Today, Tesco Plc is a successful retailer in the United Kingdom. Tesco has put some series of practical marketing strategies. According to Ansoff matrix strategy, Tesco could develop its markets and products in the UK market, and ultimately with diversification strategy has got in front of other rivals. Ansoff, I. (1989), by applying these different strategies, Tesco successfully got its competitive advantages over it other rivals. In the UK, the groceries market has been among the major businesses. Now Tesco is also securing the large market shares in this ever-changing global retailer market.

Figure - 2 shows that the strategies might be applied by Tesco regarding to Ansoff matrix and vertical integration has been successful.

2.2 Task 1 (B)

In the report you must also evaluate and analyse the processes of market development in the dynamic retail business environment in which the company (TESCO) operates.

TESCO has a very successful business history on its record, today it is most successful retailer in the United Kingdom. The position of Tesco among other rivals in UK shows that company successfully applied its designed marketing strategies. As a growing retailer, TESCO could easily take over from its other rivals and could be on a distinctive advantage over the top hundred profitable businesses in UK. Tesco has applied some series of experiential marketing ways. Market incursion, Product improvement, Market progress and Diversification are the strategies through Tesco have put influence and it is remaining on top in the market. By applying effective strategies, Tesco has successfully got its competitive advantage among other retailers.

2.2.1 Market Penetration strategy

In order to achieve success, Tesco has a three way strategy. First, Tesco always takes customers from other competitors like ASDA, Sainsbury's, Morison and Somerfield, etc. Second, by providing the quality product and higher level of services, Tesco could attract and keep more customers, where these Tesco's customers feel that Tesco is the best service provider. This situation makes the distinction among Tesco and other competitors. Third, attracting to more non-users of products and services to some business, by using of advertising and promotion or other marketing strategies, these would be capable policies (Ansoff, 1989, Lynch, 2003). According to Lynch, Marketing Penetration strategy is very important for Tesco because retaining existing customers is cheaper than attracting new one. (Lynch, 2003).

For example, Tesco's international expansion strategy has responded to meet the maximum needs of customers. it is sensitive to local expectations in other countries, by entering into joint ventures with local partners, such as Samsung Group in South Korea (Samsung-Tesco Home plus), and Charoen Pokphand in Thailand (Tesco Lotus), appointing a very high proportion of local personnel to management positions. (Tesco Preliminary Results 2006)

Tesco is accessing to the lowest cost materials for supply and efficient production to influence the retail market. By recognition of low cost supplier, it is a privilege for Tesco to offer goods and services to its customers benefitting at cheaper prices in the town. Tesco Having good experience of dealing with larger size and diversity of the customers and customers' satisfaction that is necessary for Tesco as a retailer to retain it in the market. TESCO successfully has created its Brand loyalty.

Tesco operates as Internet system provider (ISP), it’s now in mobile phone and home phone business, and Volp businesses. Tesco in joint venture with O2 could build up diversification in telecommunication and it could increase it businesses in voice over internet with Freshtel Australia. It developing a success slogan of

The right message

To the right audience

At the right time

2.2.2 Marketing and Sales

Loyalty programs for example Tesco Clubcard are available through information technology advances that discourage the customers from switching over to their rivals. Tesco also has introduced a ‘Greener Living Scheme’ to give consumers guidance on environmental issues, like how to reduce food waste and food carbon marks when one is preparing meals.

2.2.3 Services

Tesco has been adopting a dual policy of cost leadership and diversification, which led to importance placed over the customer service.  Drawing upon this dual strategy is exhibited through the development of self-service kiosks, financial services, focused direct marketing and promotions. The relative analysis of the value created by the big four supermarket chains, i.e., Tesco, Asda, Sainsbury’s and Morrisons has been provided. (Keynote (2010),

3 Task 2

Critically evaluate, appraise and analyse the place of information systems and new technologies in developing business and marketing strategies and planning at Tesco plc.

3.1 Place of Information system and Technologies

Information system is modern day business tool which helps businesses to communicate internally and externally with effectiveness. It also includes the use of current advanced technologies. Any business which gets starts these days required to adopt proper and effective information systems that connects not only the all internal parts of business but connects business with its markets. The use of new technologies gives a company advantage over its rivals. The main question always remains for managers how they effectively utilize existing information systems and technologies.

According to its website, Tesco maintains business relationships with approximately 2,000 own-brand primary suppliers from less than a hundred countries. (www.tescocorporate.com)The current achievement of Tesco could be supportive of their claim that Tesco logistics management strategy always helps to gain its competitive advantage. Tesco respects to the UK Government's statutory Supplier Code of Practice, and it holds strict execution on moral trading and commercial policies, and other conducts of ethical trading like training to all commercial staff.

Superior effectiveness of the computer-controlled logistics schemes is seen in Tesco (Fernie and McKinnon 2003). its e-tailing is a key marketing and sales activity, placing grocery order over the website that operate in highly automated central warehouses and automated logistics is more competent as to judge against with other groceries in the market. Tesco looking for strengthen its relationship with suppliers and to increase market share based on the characteristics of services (e.g., intangibility, heterogeneity, simultaneity, and perish ability). (Thompson and Strickland 2003) Various Marketing and Communication Means Adopted by TESCO to build this relationship more effective and profit based. These means included following methods of communication:-

Mail

Television

Radio/Digital Radio

Website 

Email

Telephone

On floors at stores TESCO effectively get benefits from modern technology from security purposes like alarm systems, mechanical doors, self scanning machines for customers (which saves their time from being into large lines for payments) towards other advanced like CCTV. There is swift transporting system within stores to supply from warehouse at store.

In a swiftly shifting business environment with high pressure from its competitors Tesco have adopted new expansion strategies and diversified the present order to sustain its market position as leader in retailing market. In light of the above analysis, it can easily be concluded that Tesco is holding its leadership position successfully within the highly unstable retail market, where all companies are required to follow both cost leadership and diversification strategies. Tesco successfully has been able to realize both with the help of a lean and agile supply chain management, effective marketing strategy along with the better use of information technology and new developed systems.

4 Task 3

Evaluate and analyse the linkages between marketing and operations in manufacturing, service and not-for-profit organisations to compare how these organisations undertake marketing.

4.1 linkages between marketing and operations

In organizations and businesses, when a new manager starts its business plan or operational plan for the first time he wonders about: What is the real aim? What am I going to achieve? What is my marketing strategy? He can answer all these questions according to the nature of company or organization. He focuses the aims and targets through a working plan and supports that plan with an effective workable marking strategy that makes the organization or company very prominent in the market.The main objective of marketing is to bring development in the business or services and to get the attention of beneficiaries or consumers. Various businesses and organizations adopt different marketing techniques according to their needs.

For example if we see a tight linkage between marketing and manufacturing it tells that a manufacturing company always looks for the value-added opportunities. It ensures with the aim of the right manufacturing capabilities are existing to meet up the requirements of customers. It also focuses that near- and long-term demands has been put in to the formation of manufacturing plans, inventory strategies and material handlings. Essentially manufacturing strategy should be aligned with marketing strategy. It should be developed in manner that improves the viable capability of the organization. In addition simple inter-functional co-ordination, manufacturing and marketing strategy decisions must be united and linked to the company strategy. In their empirical study of new firms, conclude that the synergy between marketing and manufacturing strategy decisions is more closely related to business success than either marketing or manufacturing decisions alone.

In businesses or 'non-profit' organizations share holder progress is not the main purpose, return on investment is less of an adding resource in business planning, however a vital necessity. Here return on investment is not primary motive of the business. Instead the main motive of enterprise may be some other purpose. Thus, the main difference between marketing products or services is that there is much more personal contact required when marketing a service as compared with marketing products. Marketing services may require meeting the customer in a face-to-face basis, or it may mean contacting prospective customers over the telephone.

For all those firms which always emphasize product qualities those are not taking serious about the significant correlations with the marketing strategy. While firms which emphasized cutback in costs, they always focus on improving the sales. Firms which put greater emphasis on the product design effort those emphasize three marketing strategy factors: a change in the product line improves sales effort, and helps in new market development. This relationship seems rational, as the focus on product design and its development will lead to opportunity in new markets or for new customers.

All those activities which affect the flow of goods and services from producers or service deliverer to the users or consumers are part of marketing. While in advanced industrial economies like UK, marketing strategies play a main role in formatting corporate policy. Once concerned with rising sales through marketing and other promotional techniques, corporate or organization marketing departments these days focus on product development, credit policies, distribution, customer support, and internal communications. Different organizations or business adopt different methods for marketing and connect the marketing and operations to maximise their output. The aim is same to get maximum attention from customers or beneficiaries.

5 Conclusion

There are more than six billion humans who are living in this global market which is always inviting business and organizations to sell their product, services or make them benefited from some social and developmental work. It is estimated that there are 900 million PCs worldwide. 44% of UK adults use SMS text messaging on a daily basis, compared with 36% who use the Internet. 63% of Americans are not willing to lend their phone and there are 1.3 billion Internet users, 1.5 billion TV households, 3.3 billion mobile subscribers, Average time to report a lost wallet 26 hours and average time to report a lost mobile, 68 minutes. That shows the competition and challenges for companies to adopt workable marketing strategy for companies and organizations.

Tesco is quite able to recognize technological changes and infrastructure particularly on its e-tailing business. Aside from Tesco’s use of internet as major technological infrastructure, changes are to be anticipated or the management should be able to deal with the rapid changes in technologies. Tesco is required to improve technological infrastructures through innovations to increase efficiency as well as quality of the products and services. All in all, Tesco’s senior executives who think about how to establish and sustain competitive advantage using logistics strategy should consider how to tailor their own logistics. To do so, they will need a sound understanding of the fundamental principles of good logistics as well as exploring new logistics capabilities. A strategic model to enable Tesco to obtain its objectives and to sustain competitive advantages in the markets. In USA Tesco cannot enter to this market and compete with the strongest retailer such as Wal-Mart. Wal-Mart has completely covered all the United State markets and there are not any chances for other rivals to enter to the market.

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