SWOT Analysis of Tesco Express
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Published: Wed, 07 Feb 2018
The organisation which we have taken for the study is Tesco Express the sub brand of Tesco Plc. In our study we are going to identify, describe and evaluate the following management area of Tesco Plc, where we will be involving Marketing Principles to give proper management report on the basis of below strategies:
- The Organisation Orientation
- The competitive advantage of the organisation
- The Impact, positive and negative of the organisation’s Marketing Mix
- Management report of Tesco Express- Strength, weakness and improvements that will help to maintain competitive advantage in near future
Origin of Tesco
Tesco Plc the leading Britain retailer among the top three retailers in the world. They are operating 3700 stores among the world and they have employed around 470,000 employees. They are operating in 14 countries and they are UK, Republic of Ireland, India, China, Japan, Czech Republic, Hungary, Malaysia, Poland, Slovakia, South Korea, Thailand, Turkey, and USA. Tesco Plc was started by Jack Cohen in 1919 and the name Tesco was first appeared in the shop in Edgware in 1929 since the company has grown they were implementing their innovation in different business.
Jack Cohen founded Tesco and his first day profit was Â£1 among his Â£4 sales on selling a grocery from the stall in East London. In the year 1924 the first in-house brand of Tesco has launched and they named that product as Tesco Tea. The names come from the initial of TE Stockwell, who was a partner in the tea supplies and the CO from Jack Cohen’s Surname. In the year 1932 Tesco stores limited have changed to Tesco private Limited Company.
Tesco the brand which have changed their way they do business so fundamentally in each and every part of its company. Because of this change they have done in to business which also includes the loyalty management. For that they have taken a different expertise among the world as the earliest and that they have that named as Clubcard. Tesco joined with DunnHumby and created a Clubcard to tracks the buying behaviour of their 13 million customers, through recording and tracking consumption data from shopping bills. Tesco and DunnHumby have jointly built, maintain and mine a rich customer database with information derived from all customer touch points. Using this customer database, Tesco’s marketing department is then able to manage changes in either individual or general consumption patterns and adapt their marketing strategies accordingly.
Clubcard is a reflection of the attributes of the business and its commitment: a strong team ethic, a commitment to serving customers, and most of all, top-to-bottom retailer’s pragmatism. Tesco made customer loyalty marketing work, when every other British supermarket loyalty programme in the late 1990s failed, faltered or never got started.
Every year since 1995, headlines have proclaimed the death of loyalty scheme, usually enthusiastically supported by other retailers whose loyalty schemes are distant memories. Yet Clubcard is never questioned as a strategic priority by the management. Instead, Tesco has responded to the critics by measurably building sales through Clubcard, using the relevant knowledge it creates to improve the way it runs its business.
The Organisation Orientation:
Definition – An approach to business that centres its activities on satisfying the needs and wants of its customers.
The production department when starts to manufacture the product, it focuses on the promotion, distribution, pricing etc.
How Tesco implemented its Market orientation: It overall beats the competition in producing the best quality product to the end users with great customer satisfaction as mentioned below.
- Plan and goal setting
- Managerial and interpersonal skills
Flexibility – Tesco Express is widely opened across the cities in UK and gives options to many consumers to shop easily. In total there are around 150 shops which is great benefit to the consumers. They have introduced online trading where customers can place an order and buy it without any hindrance. Self billing has been bought up to avoid queues, saves time and energy, people can use the self bill system and pay by themselves and also introduced Club cards in which they can measure sales and improve accordingly by collecting database.
Plan and goal setting – Every organisation has its own plans and works only with the setting right goals at right time. Plans are to maximise sales and profits, maintains No 1 retail store in UK. Targets competitors and remains as a market leader, provides goods/services that are cheap and affordable to public. Business plans and modules are followed to achieve respective goal. Each objective has deadlines to meet so they have to meet their set objective within the stipulated period of time.
Ex- Point of sale is an important merchandising activity to remind, people to stock up, just in case, a different product in categories has been brought together under Barbecue Theme, and a sale tends to increase. With the exceptions of meat, Tesco Express has brought all its barbecue products together under one category in store in order to promote sales and profits.
Managerial and interpersonal skills-
Still not yet completed
Marketing: Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably. (C.I.M, 2001)
In this cut throat competition, Tesco innovates and re-innovates the new product as per the marketing environment in comparison with its fellow competitors. Healthy competition gives the best outcome of the product like price and quality. The main aim is to maximize customer’s value as a source of competitive advantage.
Tesco’s Marketing Concept
Meets customer needs, wants and preferences more effectively and more closely than competitors Asda, Sainsbury & WM Morrison supermarket. The basic philosophies of the organisation are production and sales, it integrates the various activities like production, selling, distribution promotion, advertisement and human resource management in a profitable way for the service of the customers.
Production: Focuses on the goods where quality matters and profit is gained on the volume of sales. Quality should be maintained in all the stages of production
Tesco the company which are offering more than 100 products under their own brand Tesco. Comparatively they are quality oriented and price oriented. These products are mainly targeted their customer daily needs. They are following exact market economics to market their products.
Sales: Even Tesco has its own products in Tesco express also they sell products from different brands too. While comparing with other products Tesco products is more cost effective and with high quality. Tesco Express is one of emerging sub brand in the UK is offering the customer to minimise their shopping time. New innovation has been brought in the form of advanced technology for the customers to generate and pay their own receipts by them.
Goals have been divided into 3 different sets-
Once it sets up the plan with the right objective, the next strategy is to maximise sales with customer satisfaction. Let us take through with 3 different sets of goals.
The organisation recognises the market movements of its competitors in order to maintain good mindset in people’s mind.
It strives hard to satisfy customers needs, preferences and taste which is very big task.
The last and foremost goal is carried out in the internal management to increase productivity with great coordination among staff members who works as a team.
Let us concentrate on planning aspects with involving planning strategies as discussed below.
Marketing Planning: Marketing Planning: Turning strategies into implementable action and it is a detailed written statement where each and everyone in the organisation must follow the principles and guidelines and act accordingly.
Planning is decide in advance what to do and what not to do, planning plays a vital role in the supermarket division as it deals with FMCG products, in day today’s business the sales increases rapidly when everything goes according to plan.
Internal and External Environment Key Aspects-
Position of Tesco when compared to other companies.
Where are we now?
Significant improvement has shown in identical market in UK
How did we get there?
They got there simply because of good performance which was solid.
Where are we heading and where do we want to be?
Tesco express has strived to achieve the highest standards to ensure the long-term access to quality products and maintain their position as the UK’s number 1 supermarket. Tesco’s aim is to keep customers happy, to achieve high profit margins, to motivate workers, expand its marketing strategies, and support economic issues and to be friendly towards the environment. Tesco aims to cover every conceivable part of the consumer base with management controls.
How might we get there?
It has good marketing mix strategies and implements successfully. By doing so it has reached heights by giving services to consumers. Tesco Express should make als
Which way is best?
Are we on course?
How can we ensure arrival?
– Choice criteria & Screening
Once marketing planning is carried out successfully the next step is to concentrate on marketing audit. It can be analysed with the inclusion of Strengths Weakness Opportunities Threats (SWOT). Once the major part is carried out successfully with all the research analysis and data’s, it gives us the strategic position.
The overall evaluation of a company’s strengths, weakness, opportunity and threats is called as SWOT analysis. It is a way of monitoring the external and internal marketing environment.
Good marketing is the art of finding, developing and profiting from these opportunities. A marketing opportunity is an area of buyer need and interest that a company has a high profitably of profitably satisfying’. There are three main sources of market opportunities are.
The first is to supply something that is short supply. This requires little marketing talent, as the need is obvious.
The second is to supply an existing product or service in a new or superior way.
The last method often leads to a very new product or service by offering lower price with good quality.
To evaluate opportunities companies can use Market Opportunity Analysis (MOA) to determine their attractiveness and profitably of asking questions such as
Can we focus the target markets and reach them with cost-effective method and trade markets?
Can we deliver the benefits better than any actual or potential competitors?
Will the financial rate of return meet or exceed our required threshold for investment?
Does our company possess or have access to the critical capabilities and resources we need to deliver the customer benefits?
Can we articulate the benefits convincingly to a defined target market?
Based on the above Kotler’s theory we will be giving out SWOT analysis data.
- A wider range of products including fresh and healthy food are available.
- Tesco express has added around 800 new product lines last year.
- Stores have increased by over 35% since 2000. Quality of products is sold.
- All classes of people can afford to buy.
- It has strong Market Leadership.
- Strong and good brand image.
- Range of stores is limited in Tesco Express and price is not as good as main stores.
- Inventory turnover is weak.
- Does not respond queries in time.
- It mainly concentrates and depends only in UK and Europe.
- Turnover is poor.
- Planning to open retail environment in Euro zone.
- Tesco Express has been bought up in density area to satisfy customer’s requirement with ease.
- Opportunities in India and other international markets and also they have got private labelling schemes.
- Intense cut throat competition…
- High interest rates in UK.
- Labour wages are increasingly at a higher rate.
- Difficult conditions in International markets.
Competitive advantage of the organisation
Jack Welch, former CEO of GE says,’ If you don’t have competitive advantage, don’t compete’. (Jobber 2007:773)
In the face of global competition and cut throat competition, there are many competitors are growing day by day and the rule of survival for the fittest comes into picture. Companies are forced to survive by increasing the production and sales at a better rate. With today’s technology changing day by day oragnisation has to put the best foot forward to stay and compete. As a result they gain enormous experience to handle different sets of consumers and their buying habits Marketing is all about to generate transactions and to generate relationships.
No organisation stands alone in the market without competitors; the company cannot develop its products by developing the product range and its features but also faces the competitive environment of the market. The factors which analyses the changing economic environment in the trading community and reacts accordingly. The competitors also influences various factors such as success or failure of a business in any market conditions, this is why it is important to consider systematically a number of aspects of competitive behaviour.
Competitive analysis is a systematic approaching in understanding the key factors of the planning strategy in terms of objectives, resource allocation and implementation through the marketing mix. A good understanding of these factors reveals the organisation to be in a stronger arena in building and sustaining foundations for the firm to hold its position to maintain the reputation in the longer run.
Once an organisation finds with whom it is competiting and which category of the competition of the emerging market. When competitors are identified, the probability of forming them into clusters, depending on focus and strategy. The outcome of the identified clusters identifies strong and weak competitors in each group which can be considered as the strategic opportunities defined.
These are the number of different characteristic that can be used for identifying strategic segments, which in turn provides a useful framework for evolving opportunities in business environment that leads to an order of implementing organisational behaviour techniques of competitors data that relies on financial performance of the segments served in marketing strategies.
The arch rival of Tesco express is Costcutter
The arch rival of Tesco express is Costcutter because they are the one who have similar marketing policies to overcome its rival. Tesco Express is spread all over the United Kingdom with in and around 1000 outlets but Costcutter is with 1600 outlets. Comparatively Tesco express and Costcutter got the same logic of attracting their customers to sell best quality with reasonable price . However when we analyse the competitive advantage of Tesco to overcome its fellow competitors with new innovation called Auto billing and paying system but Costcutter lacks with that facilities. opening as wel as closing times varies with Costcutter as it is opened 24 hours open and Tesco express opens from 6am in the morning and closes 10pm in the night. So all we can say is that they are the perfect competitors with having leads and falls with each other in different facts.
Tesco express is using different segmentations to make the Tesco express successful among their competitors and their segmentations are geographic, usage and loyalty;
On geographic segmentation they categorise their shops according to the market. They mostly were concentrating on the region where they can have the more people who are be the bread and butter consumer that means people who wants to buy one or two products at that specific period of time. There’s a brand familiarity that you don’t always get from a local store and the concept is familiar through use of the superstore predecessor. On usage segmentation being an express the range are limited and choice or very little and the price is bit higher than its own Tesco extra.
On the loyalty segmentation they have just rock the concept called Clubcard’. They have track the customers with the card and it make them to analyse to find the exact need of customer and they serving them according to their needs.
Every business has its goals/objectives and works on directions set by the management. No firms can succeed without objectives and tagline of Tesco is, Every little Helps’. This tagline has created a realistic statement which is motivating and creates intent in the organisation. The realistic purpose is to provide focus and direction through the conduct of the business.
Specific Measurable Accurate Realistic Time bound (SMART).
SMART comes into picture once SWOT analysis is completed.
Tesco’s Marketing Objectives
- The main aim is to retain customer satisfaction and maintain number 1 Retail Company in the UK.
- To maximise sales and profit
- To provide reasonable price to the consumers.
- Marketing environment and its influences.
- It has been divided into 2 different categories based on 4p’s.
- Micro Environment
- Macro Environment
Micro Environment has been divided into 4 divisions namely
Macro Environment has been divided into 5 divisions namely
A) Socio Cultural Environment – Factors affecting demographic structure of the population, lifestyles, attitudes, cultures, issues of public and private concerns, tastes and demands.
B) Technological Environment – Creates new product opportunities and improve production.
C) Economic Environment – It determines demand and supply chain.
D) Political and legal Environment – Rules, laws and regulations are operated as per the Government bodies. Ex: Smoking in public places
E) Ecological Environment -Factors such as global warming, pollution, recycling, packaging etc.
Macro environment with Tesco’s principles
Socio Cultural Environment – Brassington and Pettitt has given definition regarding Demographic, where he briefly explains that it is the study of the measurable aspects of population structures and profiles including factors such as age , size, gender, race, occupation and location.
Tesco express has widely opened across and also outside UK to satisfy customer needs and preferences. Where in it represents strengths and weakness. There are wide range of products to satisfy all ages and all classes of people. It broadens tastes and demands according to people’s lifestyle and their expectations. If it does not satisfy’s then customers can lose interest and faith.
When an organisation uses more and more different techniques then flexibility comes into picture. Tesco express operates paperless transactions. It brings out new innovation strategies to market the product as per the existing environment. The recent one which it has introduced new way of billing system call, Till , where customers can pick, pack and invoice themselves.. This new system has given new dimensions to the customers to save an extra time. Market research is carried out on a regular basis where an organisation collects information with the respect to the customer focus
In this Economic environment 2 key words which handles the whole market is demand and supply. When there is a demand in the market supply increases automatically, this will have a huge impact in the business environment. They concentrate on the factors affecting economic business and monitor them in order to overcome.
Political and legal Environment-
Each and every organisation concentrates on the government laws, rules and regulations. Tesco Express follows strict rules and regulations and gives out warning signals to the customers. It also gives smoking free environment.
Ex- Smoking is prohibited
It aims to set up a greenery environment in the form of waste, packaging, recycling, and also cutting carrier bag use. It converts waste into an energy source and reduces the amount of waste going to landfill by over a third and works on waste targets scheme which are reviewed and reported every week. We have taken examples of 2 like packaging and recycling. If we take packaging with the product name called Eggs. Packaging helps to protect and preserve food for longer duration and promotes the product to reach the customers in the best condition.
Recycling facilities are available in all our markets except China and Turkey. Tesco’s future plans are to implement recycling facilities even in respective countries as mentioned to have a global impact in the marketing environment. In UK we have 600 recycling centres of our larger stores. Last year we helped customers to recycle approximately 200,000 tonnes.
The identification of groups of individuals or organisations with similar characteristics that have significant implications for the determination of marketing strategy. (Jobber 2004)
Segments can be defined on the basis of Tesco principles. ?
Customer Satisfaction- customers can be pleased all the time because all the products are available under one proof so chances of pleasing them will be on higher note. They don’t target individuals indeed they target on the whole. Customers have variety of products to choose and satisfy their preferences.
Ex- Products are sold to all age groups with reasonable price and with most importantly good quality
Methods of Segmentation
Geographic – It targets customers as per the location, country and also takes into consideration whether it is Rural and Urban. Before it opens any new branches, it undergoes market survey based on the customer’s potential within the respective location. It also makes sure that for which county products are produced, plans for the available resources so that can be used up to the fuller extent, different sets of people has different taste and preferences according to their lifestyle.
Ex China and UK. In China people have different lifestyle as compared to UK.
Demographic – Once it does sets up the business by creating a layout of the geographic successfully, now the next part is to introduce product based on the marketing analysis which includes people age, sex, race, income, occupation, socio-economic status. It collects complete database and then goes forward. Surveys are conducted at regular intervals with the interest of not losing customers focus and interest. This reduces the negative impact on the organisation.
Geo-Demographic – Geo- Demographic is nothing but the combination of geographic and demographic. Organisation works on the purchasing behaviours of the people. Once it gathers the available date by doing research in first and second stage and then works as per the prescribed plan. Postcode systems can assist agencies in the new business development, customer profile and identification.
Psychographic – Tesco divides the market on the basis of life style and personality of the consumers. It targets people of all ages with their requirements. From grocery, eatables to liquor.
Types of Target Marketing
Need to include on the basis of Tesco’s target marketing with the inclusion of 4 p’s.
Undifferentiated and differentiated marketing.
Let us talk about the Positioning of Tesco.
In earlier days Tesco did not have the brand name but when sales started picking up and demand was on higher side, it did not compromise quality in order to reduce price and it is very convenient to the customers to purchase products as quality of products are available. Once customers got an idea how good Tesco is then Tesco gained its brand name.
With the brand name Tesco started to experiment the products with greater profits and then it is managing the customers with great customer loyalty.
Philosophy of entire marketing mix hinges with good positioning and failed to do so creates unsound positioning.
More and variety of Products
Weekend offers and Festive offers
Keys to successful positioning are based on competitiveness, successful positioning, creditability and consistency.
Repositioning of product
Takes place when positioning of products declines.
Change in customer tastes and preferences.
New competitors enters the market
An Effective marketing mix
Tesco compromises on price and does not compromises on quality
More demand and more supply.
The Impact, positive and negative of the Tesco Express marketing mix
Marketing mix is divided into 7p’s but let us concentrate on 4 p’s which as follows.
We will critically discus 4 p’s in the following stages.
Promotion – Promotion is generally referred as awareness created towards the introduction of new product and also the availability of the existing product by means of selling activities and advertising. The main aim of promotion is to spread awareness of the products, uses and benefits. It helps the organisation to position their products in the market to reach customers. The effective tool of promotion of Tesco Express is in the form of television and email adverts, message should be clear and simple so that it can reach the targeted audience by creating a desired response. There are different types of promotions such as advertising, personal selling, public relations and sales promotions.
One of the Tesco’s key strategies in the promotional activity is, Clubcard’ loyalty scheme where it has been a huge success and in turn their market share has been increased. This change has led them to be a market leader. They were giving best and competitive prices to the market, products like fresh vegetables, fish, chicken , mutton, beef and all sorts of necessary day to day needs which were outsourced from the farmers , fish, mongers , butchers directly. They have opened number of convenience stores in every possible place and therefore have a good appeal to a huge number of customers in the market environment.
Therefore had a very huge response when they had introduced the club card plus debit card scheme. They not only target higher classes of people but also different classes of people. Introduction of Tesco finest and also budgeted version called Tesco value which is having very huge impact in all the classes of the people. Now it shows how they promote their market to reach different classes of people.
It can be defined as any paid form of non-personal promotion transmitted through a mass medium. The sponsor should be clearly identified and the advertisement may relate to an organisation, a product or a service. The key difference, therefore, between advertising and other forms of promotion is that it is impersonal and communicates with large numbers of people through paid media channels. (Ref 1)
Each and every organisation will advertise for the products produced, Tesco has always gives ads saying that they sell cheapest product in the whole of UK and it is one of the cheapest selling supermarket, where they claim that the price of the products is at least a penny less than their competiting firm in the advertisement featuring Prunella scales and Jane Horrocks comparing bills between Tesco and other stores. Stringent rules has to be followed when it is giving comparative advertising as per UK governments rule and abides the body for advertising standards, the Committee of Advertising Practice as listed in the rules and regulations act.
They also have different advertisement taglines called, Every little helps’,’ We sell for less’, 1 billion pounds off’, is you’re nearest the dearest’, Low prices every day because we sell 10000 everyday’. There have been many advertisement campaigns stating that their products are cheaper to their direct competitors.
Personal selling and sales force-
According to fill (2002, p. 16), personal selling can be defined as:
An interpersonal communication tool which involves face to face activities under taken by individuals, often representing an organisation, in order to inform, persuade or remind an individual or group to take appropriate action, as required by the sponsor’s representative’. (Ref 2)
Tesco has been occupied in all the field of business with a brooder marketing strategy; as far as personal selling is concerned they do not need, since they vastly deal with day today products. The only personal selling that they follow is online shopping which is not related to this category of marketing.
According to the institute of sales promotion, sales promotion is:
According to the institute of sales promotion, sales promotion is:
The store offers a wide range of promotional offers in various times, if they open a store they would give away vouchers having a 2 pound discount on every six pounds spent for every passerby, club card members, computer tokens for schools. Below are the examples of New Year sales promotion.
Examples of the New Year promotions offers include:
- Danepak Maple Cure Back Bacon 220g, was Â£3.00, now Â£1.50
- Extra Large Pineapple, was Â£3.00, now Â£1.50
- Baking Potatoes 2.5kg, was Â£1.92, now Â£1
- Dolmio Original Bolognese Pasta Sauce 750g, was Â£2.12, now Â£1.06
- Princes Tuna Chunks In Brine 4X185g, was Â£5.39, now Â£2.69
- Maryland Choc Chip & Hazelnut Cookies 150g, was 86p, now 43p.
- Kellogg’s Special K Oats and Honey 425g, was Â£2.87, now Â£1.40
- New Covent Garden Plum Tomato & Sweet Basil Soup 600g, was Â£1.97, now 98
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