The Strategic Marketing Management Of Tesco Marketing Essay
Changing scenario of marketing is exerting pressure and challenges to the retailer companies, in-spite of their competitive position in the market. Marketing plan is the reviving step for the company to give new direction to their business. Tesco Plc is the largest British retailer and operating well in the retail industry. Tesco plc is a global general merchandising and grocery retailer. It is the biggest UK based retailer in terms of its global sales and domestic market share. It was established in 1919 by Jack Cohen. UK stores of Tesco are 2. Marketing Plan divided into six formats that are Tesco Extra, Tesco Superstars, Tesco Metro, Tesco Express, One Stop and Tesco Homeplus. Tesco plc is the third major global retailer according to the revenue after Wal-Mart and France's Carrefour. On the basis of profitability, it is the second largest, after Carrefour. Initially, the company specialized in drink and food business; afterwards, it expanded into segments like consumer electronics, clothing, telecoms, financial services, health, home and car insurance, dental plans. Other areas in which the company is dealing are CDs, music downloads, retailing and renting DVDs, software and Internet services. Tesco is operating well into its segmented divisions all over the world, but there is a need to have a competitive marketing plan, in order to reap out the benefits offered by the existing opportunities of global market. (Marketing Plan for TESCO, n.d.).
Situation analysis is an integral part of a marketing plan, as it mentions organizational strategies, customers, marketing effectiveness, porter’s five forces, SWOT analysis and marketing effectiveness. For situation analysis, FEPSOS approach will be applied in which functions, environment, productivity, systems, organization and strategy will be discussed. These are as follow:
Functions: TESCO operates in diverse areas that are profitable. It operates a grocery home shopping service and provides telecommunications, consumer goods and financial services online. It also provides internet based DVD’s on rental basis to the consumers that is a profitable area for its business. It also deals in the area of home phones, mobile phones and VoIP business. The company also executes its activities in the banking sector, as it has a joint venture with the bank of Scotland in the ratio of 50:50 partnerships. (Marketing Plan for TESCO, n.d.).
Environment: The firm operates in a competitive marketing environment. The macro and micro environment both are favorable for the company operations. These are as follow:
Micro environment: Micro environment consists of different factors that have a direct or indirect influence over the company’s operations and determine the company viability in long run. (Marketing Plan for TESCO, n.d.).
These are as described:
Customers: The Corporation provides its products and services mainly to the people of U.K. A part from this, it offers its products & services to the customers of various countries like U.S, China, Thailand, France, Hungary, Poland, South Korea, Scotland, Indonesia, Czech Republic, Republic of Ireland, Malaysia and Japan.
Suppliers: There are various suppliers of the firm throughout the world.
Employees: The company employees 444, 000 people in its different branches and divisions.
Competitors: Retail companies like Wal-Mart, Carrefour, J Sainsbury and ASDA are the competitors of Tesco plc.
Media: The firm uses online channels as the media sources for the marketing of its products & services. (Marketing Plan for TESCO, n.d.).
Macro environment: Macro environment consists of various factors, which also have a direct or indirect influence over the business. These are as follow:
Political and legal factors: The country has Conservative and Unionist Party in dominance. There is liberal Democratic Party that leads the UK government. Legal foundations for economy are developed in the country that reflects the potency of UK in terms of its legal structure. (Marketing Plan for TESCO, n.d.).
Social and cultural factors: In the entire UK, British culture is followed by the residents.
There are various ethnic groups residing over here and it is favorable for the company. People in UK are more interested in the culture and literature. There is no official language in UK, but mainly English language is spoken by the denizens. People in UK have different taste & penchant for diverse products & services, which again is profitable for the different segments of the company. (Marketing Plan for TESCO, n.d.).
Economical factors: UK has sound economic stability, which enables it to take the advantage of numerous opportunities, but it must take care of the potential risks. Two major issues are associated with the business growth are foreign exchange and mounting overseas costs. UK is recognized by the presence of formalized foreign exchange policy. Pound Sterling is the currency of UK that owns the highest value in the world. Economic conditions of UK are also favorable for the company operations. (Marketing Plan for TESCO, n.d.).
Technological factors: UK is identified for its strong IT that denotes its technological advancement. The nation has taken many strategic initiatives to make the technology updated according to the trends taking place, across the globe like the e-governance program. This factor of macro environment is also constructive for the company’s business. (Marketing Plan for TESCO, n.d.).
Productivity: Productivity of the firm can be observed through its market position that is third in terms of revenues and second in term of profitability in the retail industry. (Marketing Plan for TESCO, n.d.).
System: The company system is also effective that is up to the mark and effective to face the challenges posed by the increasing globalization. Personal site of Tesco, Tesco.com is the leading Internet delivery service in Britain. The company stores have electronic shelf edge labeling all across the store, self service pre-packaged products, self scanning tills, coffee shop on mezzanine floor and trading of fresh products. (Marketing Plan for TESCO, n.d.).
Strategy: Tesco adopts effective marketing strategies to attain its stated objectives that are viable for the long run success of its business. With the help of these strategies, the company competes in the global market and has attained the top position in the retail industry. (Marketing Plan for TESCO, n.d.).
Organization: The Company is organized in a viable manner that is responsible for its leading position in the retail industry. (Marketing Plan for TESCO, n.d.).
Mckinsey’s model of the 7Ss like strategy, staff, shared values; structure, skills, system and style
These are as described:
Staff: Well- skilled staff will be hired, who have diverse knowledge of marketing concepts for the marketing plan.
Shared values: People who have integrity, honesty and fair attitude will be hired for the marketing plan.
Structure: Formal and competent structure will be followed for the marketing plan.
Skills: People, who have competency to carry out the marketing plan successfully, will be hired.
System: E-marketing will be adopted to generate awareness about the fair-trade product for which the marketing plan has been developed.
Style: Participative style will be followed for the execution of marketing plan activities. (Marketing Plan for TESCO, n.d.).
Porter’s five forces model
Industry competitiveness for Tesco plc is as follow:
Threat of new entrants: Threat of new entrants is low in retailing industry due to higher level of barriers. New entrants like the low price discounters are posing some challenges to the company that is a major issue of concern. (Marketing Plan for TESCO, n.d.).
Rivalry among the existing players: Rivalry among the existing players in retailing industry is significant due to the price cutting strategies. Competitors like Wal-Mart, Carrefour, J Sainsbury, ASDA, and K-Mart are also posing challenges to the operations of the company. (Marketing Plan for TESCO, n.d.).
Threat of substitute products: There are various substitute products available in the market, so the threat of substitute products is also higher. (Marketing Plan for TESCO, n.d.).
Bargaining power of suppliers: There are many retailers in the industry that need suppliers for their operations. So, bargaining power of suppliers is also low. This is also a important issue of concern for Tesco plc. (Marketing Plan for TESCO, n.d.).
Bargaining power of buyers: Bargaining power of buyers is not high in this industry that is profitable for the company. (Marketing Plan for TESCO, n.d.).
SWOT analysis is a crucial part of a marketing plan, as it determines the company’s strength, opportunity, weakness and threats that are important for its future.
Tesco's strengths in grocery retail allow it to compete easily with companies like Sainsbury, ASDA, and Marks & Spencer. This has lead to its brand name and financial power becoming strengths. Consequently many more stores being built at home and overseas, heading to geographical strength. The introduction of Tesco Express and Tesco metro show led to strength in flexibility. (SWOT analysis of Tesco, n.d.).
The amount of fossil fuel used in its transport network is very high. With increasing oil prices, Tesco requires to be more conscious on transport costs. Moreover, limitation comes from Tesco's dependence on the UK grocery market. Hence, it is increasing its foreign outlets and selling other goods. (SWOT analysis of Tesco, n.d.).
Opportunities for Tesco, is in the online aspect. Tesco has previously had many online successes, having turned the Amazon peril into an opportunity by selling books at lower prices. Tesco’s chief difficulty in trailing possible opportunities is deciding exactly which ones to trail. (SWOT analysis of Tesco, n.d.).
A fluctuation in the stock market and tax increases is a major threat to TESCO. Most companies agonize about taxes, and have an intention of decreasing the tax burden. Perhaps the prevalent threat is innovation by other supermarkets, including Asda, Sainsbury, Morrison, and Waitrose. (SWOT analysis of Tesco, n.d.).
Mission of the company: To develop value added products for the customers, in order to earn their long term loyalty. (Marketing Plan for TESCO, n.d.).
Objectives: TESCO’s objective is to achieve a considerable share in the market; it is indispensable for Tesco plc to have some efficient objectives that are focused mainly on SMART pattern (specific, measurable, attainable, reliable target). Corporate and marketing objectives for the firm should be both customer and business oriented that is promising from the business point of view. These are as follow:
These are some detailed objectives that are intended to cover as a principal part of this marketing plan. After the achievement of these objectives, it would be easy for the company to capitalize many opportunities that are present in retail industry. (Marketing Plan for TESCO, n.d.).
Marketing Strategy (STP)
Segmentation, targeting and positioning are the three marketing strategies that should be used by the TESCO to promote its fair-trade products rigorously, in order to increase its sales. (Marketing Plan for TESCO, n.d.).
These are as follow:
Segmentation strategy: Segmentation strategy plays a vital role in the success or failure of the company. Mass, local and niche all market segments should be addressed in the marketing plan to boost the sale of fair-trade products by increasing customer satisfaction in an effectual manner. To increase the customer value, consumer behavior will be observed before the division in which their taste & preferences, attitude and buying behavior will be measured. (Marketing Plan for TESCO, n.d.).
Targeting strategy: Targeting strategy in marketing plan also determines the business viability. Target market for the marketing plan should involve all those people, who have preferences for fair-trade products like children, youngsters and middle age people. Company should observe the customer needs, in order to target them in a well planned manner. The firm should analyze their preferences & taste for fair-trade products. Consumer behavior should be well analyzed before the launching of the targeting strategy. (Marketing Plan for TESCO, n.d.).
Positioning strategy: Market positioning of the selected products play a crucial role in the marketing plan. Fair-trade product should be positioned in the city center marketplace at the stores of Tesco. Fair-trade product is for the youngsters and middle aged people of U.K and other intended countries. To fulfill the rising demand of the target customers for the fair-trade products, the product will be positioned in a persuasive manner. By intimating the innovative design and value added quality of Fair-trade, this product will be positioned in customers’ mind. This brand competes with the fair-trade products offered by Wal-Mart. For this, company should go for some innovative modes, in order to capture the attention of the consumers towards the fair-trade products. (Marketing Plan for TESCO, n.d.).
It is clear that market penetration is the best and fitting strategy that should be focused by Tesco plc as it has to increase its dominance in the present market with present product.
Generic strategies: Business strategies, corporate strategies and functional strategies play a critical role in the marketing plan of the company. These are stated as:
Business strategies: TESCO should align all its business related practices, in order to increase the sale of fair-trade products.
Corporate strategy: TESCO should develop effective policies to attain the planned goals. For this, it should set a specific timeline.
Functional strategy: Company should allocate responsibility to its highly competent employees according to their expertise. Also, it should provide resources for the product delivery in a successful manner. (Marketing Plan for TESCO, n.d.).
Marketing integration mix
It consist of mainly seven segments, there are suggested strategies for each marketing mix of Tesco. These are as described:
Product: TESCO should provide value added faire trade products, in order to maximize its customer base.
Price: TESCO should provide the fair-trade products at lower rate in comparison to its customers. It is essential to provide the products at value added price, so as to lure the attention of the customers.
Place: Fair-trade products offered by TESCO are gaining popularity, so it should place them in city center marketplaces at a huge level.
Promotion: TESCO should adopt aggressive promotional strategies, in order to boost its sales in next 12 months. Moreover, it should adopt online, print, broadcast channels for the promotional campaigns. TESCO should create a slogan or logo to draw the customers towards the fair-trade products.
People: TESCO should hire well trained and skilled people, in order to deliver the fair-trade products to the customers in an effective manner. TESCO should provide training to its people to make them competent enough to use new technology in an effective manner.
Process: For placing the fair-trade product aggressively and effectively, TESCO should adopt the B2C marketing approach. It also must develop tailor-made systems, in order to design the process more easy for the customers and employees to communicate for the delivery of fair-trade products.
Physical evidence: TESCO should improve availability of the fair-trade products to the customers by placing them in city center stores located in U.K. (Marketing Plan for TESCO, n.d.).
Evaluation & control
Evaluation and control aspect of the marketing plan plays a crucial role in the successful execution of the planned marketing activities that are aimed to increase the sales of fair-trade products, in order to fight with the low discounters. (Marketing Plan for TESCO, n.d.).
If the plan fails, the firm will pursue market development instead of market penetration suggested in the Ansoff matrix of marketing strategy. Company will develop new strategies for the market development, in order to explore new areas for the trading of fair-trade products in a triumphant manner. The contingency plan of the company will be 10% of the marketing plan. The corporation will change its marketing strategy, so as to shift the focus from market penetration to market development for the long run profitability and attainment of the stated corporate objectives. (Marketing Plan for TESCO, n.d.).
From the above discussion, it can be incurred that strategic marketing management plays a vital role in the success or failure of the company business. The marketing plan involves different activities that are intended to increase the profit from some new policies or practices. Strategic management forms a critical part of a marketing plan. Company should also create segmentation, targeting and positioning strategies according to the demand of marketing plan. It is necessary for the firm to formulate a groundbreaking contingency plan that in future acts as a backbone for the company. (Marketing Plan for TESCO, n.d.).
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