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“Marketing is the social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others”. -Kotler.
“Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably.” -The Chartered Institute of Marketing (CIM).
“Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals.” -American Marketing Association.
The first definition tells that nowadays marketing is not just advertising and selling rather than the term satisfying customer needs must be present in marketing concepts. Because if the marketer fails to understand customer needs then they will not be able to get money from the customers. Now the concept of marketing is vast, many things should be involved in marketing, such as superior value, prices, distributes and promotes the product and service effectively.
The second definition indicates that marketers should understand the needs of individual customer through research, which is by applying different scientific techniques and tools the marketer, should collect data from the customer and then they should process the data into information and form the information they should take decision what exactly the customer wants from a particular manufacturer.
The third definition tells that marketing is an approach of achieving something. That is in order to sells product to customers a company should follow good market approach.
For this assignment I have chosen two companies in the similar field and they are Tesco and Asda.
Tesco PLC is a UK based supermarket chain. It is the leading British retailer, both by global sales and domestic market share, and the fourth largest retailer in the world behind Wal-Mart of the USA, Carrefour of France, and The Home Depot of the USA. Tesco PLC is listed on the LSE, with ticker symbol TSCO and has a Level 1 OTC American Depositary Receipt (ADR) Programme in the USA, with ticker TSCDY. In 2005 Tesco announces annual profits of £2 billion. In 2006 Tesco said it was on track to open a record number of foreign stores this year.
Tesco has a long term strategy for growth, based on four key parts: growth in the Core UK business, expand by growing internationally, be as strong in non-food as in food and to follow customers into new retailing services. Tesco had branched into numerous nations: Czech Republic 1996, Hungary 1994 Poland 1995, Rep. of Ireland 1997, Slovakia 1996 , Turkey 2003 , China 2004, Japan 2003 , Malaysia 2001 , South Korea 1999 , Taiwan 2000 , Thailand 1998
Tesco started life as a 1 man business in London's East End. Tesco was founded by Jack Cohen, son of a Polish Jewish tailor. He sold groceries in markets of the East End from 1919. The Tesco brand first appeared in 1924. The name derived after Jack Cohen bought a large shipment of tea of T.E. Stock well, formerly Messrs Torring and Stockwell of Mincing Lane, he made new labels by using the first 3 letters of a supplier's name and the first 2 letters of his surname forming the word "TESCO". There is a wide misconception that the name is an abbreviation of the name of Jack Cohen's wife, Tessa Cohen, becoming TESCO, this is wrong as Jack was never married to a Tessa.
ASDA is the second largest supermarket chain in the United Kingdom, it offers food, and clothing and general merchandise and it is the subsidiary of the largest retail company the Wal-Mart. (, 2006)
According to (2006) the company was established in the year 1965 when the Associated Dairies and the supermarket chain of the Asquith brothers merged. The ASDA Stores Ltd. is bound to offer the shoppers prices of the products that are permanently low. I9n the year 1999 ASDA became the subsidiary of the Wal-Mart company of the United States. The ASDA Stores Ltd. has a food pledge that was launched in the year 2002 which aims to reduce fat, salt and sugar levels in all of the food products of ASDA, at the same time, providing the consumers the nutritional information. The company also obtains 90% of the fresh food from British farmers. And aside from the products of the British farmers, ASDA also source local products such as biscuits and ice-creams. The food brands of ASDA include: Smartprice, ASDA Brand, Good For You!, Organic, Extra Special and Great Stuff. Aside from food, the ASDA Stores Ltd. also expanded to Specialty Areas such as pharmacies, opticians, jewellery and photo departments. Apart from the products offered, ASDA also boasts of great service, most of the ASDA stores have restaurants and café, baby changing facilities, pet shops and it also offers trolley for the young, old and disabled. The organization also has its website so that people can buy their groceries online. The main goals and objectives of ASDA includes the following: the company is committed in decreasing the carbon emissions by 80,000 tonnes in the year 2007, and the company have already done this by moving the freights to rail in which it decreased the number of road miles travelled by the fleet and the development of a £20 m import centre and the company is currently converting the entire fleet in order to use bio diesel.
Similarities between Tesco and Asda:
Both Tesco and Asda are retail oriented company. Their product line is also same.
Contrast between Tesco and Asdsa:
The main characteristic of the marketing oriented organization is that they are intended to live closer to the customers and ahead of their competitors. The reason is that the basic aim of these organizations is to attract the customers. There are four major characteristics which define the marketing oriented organizations including shared values, organization, strategy and stakeholders. Firstly, all decisions of these companies consider the customers first and they share the common value of superior quality of products. Secondly, their organizational structure has very few layers and their policies are not very difficult. Thirdly, the strategy of a market oriented organization is long term, flexible and participative. Finally, they consider the expectations of the stakeholders before making any important decision.
It also provides online services through its subsidiary, Tesco.com. The UK is the company's largest market operating under four banners: Extra, Superstore, Metro and Express. Tesco sells approximately 40,000 food products in its superstores, as well as clothing and other non-food lines. The company's own-label products are at three levels, value, normal and finest. Own brand accounts for approximately 50% of sales. As well as convenience produce, many stores have gas stations. The company has become one of Britain's largest petrol independent retailers. Other retailing services offered in the UK include Tesco Personal Finance and Tesco.com. Tesco Personal Finance. The company has operations in the rest of Europe, including the Republic of Ireland, Hungary, Poland, Czech Republic and Slovakia. Tesco also operates stores in Asia, including Thailand, South Korea, Malaysia and Taiwan. Its products and services include:
A stakeholder can be an individual, group or an organisation that is affected by the actions and decisions of the business. There are two types of stakeholder, the internal stakeholder; are individuals or groups within the organisations like directors and employees while the external stakeholders are individuals or groups outside of the organisation such as the customers and the suppliers. The key internal stakeholders of ASDA are its directors, managers and most especially their employees. The key external stakeholders of ASDA are its customers, suppliers and shareholders. Each of these stakeholders has its own interest in which can be directly by the changes and decisions of ASDA.
The organisatinal structure for Tescos is referred to as a devolved or decentralised struture, in other words it is relatively flat.
What this means is that power is devolved 'down the line' and people at the lower end of the (overall) scale of power can make decisions about what happens within the store.
So Tesco's provide the framework and the blueprint for pricing, layout, staff terms etc, but others can operate flexibly to a certain degree within that structure.
Proponents of this style of management feel that this enables people who are close to the shop floor and close to the customers, to be able to make decisions and influence power, so that the customer is satisfied.
However, some critics of Tesco argue that this does not operate well in practice and in particular some of their buyers push farmers particularly within the third world so hard that they are effectively forced to live in poverty.
ASDA is a hierarchical structure because it has a lot of layers and also a lot of people reporting into more than one person before that information get to the boss. What is a Hierarchical structure? A hierarchical structure has many levels. Each level is controlled by one person. A hierarchical company tends to be a very big company just like ASDA is. In a hierarchical instructions are generally passed down from one person to another until it gets to the bottom of the hierarchical structure. If there was a problem in a hierarchical structure it would move up through the structure again from one person to another until it gets to where it is supported to be. Strengths of a Hierarchical structure In a hierarchical structure there is a close control of workers.
Tesco has a well-established and consistent strategy for growth, which has allowed us to strengthen our core UK business and drive expansion into new markets.
The rationale for the strategy is to broaden the scope of the business to enable it to deliver strong sustainable long-term growth by following the customer into large expanding markets at home - such as financial services, non-food and telecoms - and new markets abroad, initially in Central Europe and Asia, and more recently in the United States.
The strategy to diversify the business was laid down in 1997 and has been the foundation of Tesco's success in recent years. The new businesses which have been created and developed over the last 12 years as part of this strategy now have scale, they are competitive and profitable - in fact we are now market leader in many of our markets outside the UK.
The Group has continued to make good progress with this strategy, which has five elements, reflecting our four established areas of focus, and also Tesco's long-term commitments on community and environment. Importantly, the momentum which it has given the business has allowed the Group to continue to grow well through the economic downturn.
Asda was formed in 1965 by a group of farmers from Yorkshire, and its activities are still mainly based in the north of Britain. It expanded south in the seventies and eighties, in 1989 buying rival chain Gateway's superstores for £705m. This move overstretched the company and it found itself in deep trouble trying to sell too many different products. It came close to going bust and had to raise money from shareholders in both 1991 and 1993.
In 1991 Archie Norman was recruited from Kingfisher as the new chief executive, and Asda returned to its roots as a food retailer, standing out from the crowd by being significantly cheaper than its three large rivals. This was achieved through concentrating on prices instead of loyalty schemes.
Marketing concept of Tesco and Asda:
Tesco's marketing strategy has been based around a database strategy driving a huge direct marketing campaign. There customer base (as recorded by the details provided by the hugely successful Club Card Scheme) almost exactly mirrors the demographic make-up of the UK. Simply this means they have somehow managed to be all things to all men. They have between 7m and 8m different variations on the mailings going out to their clients based upon demographic and transactional data. The objective has always been to up-sell to their existing customers through acquiring better customer data and meeting their needs. Now, through providing customers with what they want, the most significant strategy has been aimed at increasing the non-food section by capitalizing on the growing need for one-stop-shopping created by an increasingly time-starved population.
Asda's president and chief executive, Andy Bond, believes that businesses are being forced to adapt to a new era of ‘democratic consumerism' which has emerged from the ‘digital explosion and the trust vacuum'. He says people are ‘more connected than ever before, and they are putting their trust in themselves and each other'.
In response, the retailer has revealed a long-term strategy designed to engage with customers to regain lost trust and, ultimately, inspire greater loyalty.
As part of this strategy, Asda has rolled out three initiatives. First, the company is to build on its existing Pulse of the Nation shopper panel of 18,000 people to ask them for their views on the design of upcoming George clothing ranges and new food and household lines. It has named this open-door policy ‘Chosen By You'.
- Regular marketing research-Company needs to do regular market research in order to stay updated according to the market.
- Building excellent services-Company needs to give a good service both with the suppliers and the customers in order to build a goodwill for the company.
- distribution-Company needs to be very particular in terms of the distribution costs.if the distribution cost is high it might affect them in the long run in terms of increasing the total cost.
- Profit-A good marketing approach means that it is going to hit the right point which should be the profit.
- Customer loyalty and trust-Customer loyalty should be one of the key benefit. loyalty comes with the trust which is an important factor. when a customer trusts a company the customer will recommend it to the others. that is how the company will increase its benefit from the marketing approach.
Generally, it can be said that Asda, Tesco, Morrisons' as well as Sainsbury are being classified as part of the same strategic group as the four companies implies to the UK retailing business and industry and for some reason, those companies may incorporate the same strategy planning processes and motivation to stay focus and up-close within the market and they are in one cycle domain for the retailing trade ways in the UK. . (Beer and Eisenstat, 1996) Thus, the companies have the opportunity to be in the same strategic position for keeping intact into the macro-environment of the retail business in the UK, probably, sharing similar marketing strategies, segmentation, industry analysis and its business environment for such external and internal forces within its marketing assumptions as well as involving similar indicators in dealing to such PEST and SWOT analysis for a well emphasized business organization and structure and thus, the four companies implies a supermarket spirit unto the UK market areas. There was Tesco's aggression as matched by poor performance from Sainsbury's as there aims to analyse Morrisons strategy in macro environment using strategic models (Nellis and Parker, 2002) as applied in analysing profitability in UK market and that Morrisons strategy is for developing its for analysis of competitive instances. (Beer and Eisenstat, 1996).
Task 6: Market Segmentation of Tesco.
In the supermarket wars, the loyalty battleground is where the bullets fly thickest. And the grocer thought to have the most potent loyalty weapon is Tesco.
Yet one of the great mysteries of the data world is just how customer insights mined from Tesco Clubcard's data mountain help make it the UK's biggest (and most profitable) grocery chain.
In early 2001, six years after Clubcard's launch, Tesco bought a majority share in dunnhumby, its data analysis supplier. The word in data land was that something big was on the cards.
So it proved. Until 2001, Tesco and dunnhumby had typically restricted analysis samples of customers to around 10 per cent, in order to control the cost of data storage and transmission. The sea change came with lowering costs of technology, and Tesco's growing desire to delve deeper into the data for consumer insights. The challenge was to make sense of the 104 billion rows of data stored at any one time.
Tesco Lifestyles was the result - a segmentation and modelling system based on customer shopping behaviour. "Lifestyles is ultimately about trying to understand factors that drive shopping behaviour, for example price, promotions or healthy eating, together with measurement of Tesco's share of a customer's wallet or purse, says dunnhumby chief executive Edwina Dunn. "We wanted to capture more spend from each customer, and nudge them into buying products from Tesco that they might buy elsewhere."
WALSALL, ENGLAND -- Asda Living is the latest manifestation of an evolving small-store strategy that Wal-Mart's British division is using to test fresh approaches in a competitive marketplace. A combination of brand-extension, real estate and competitive strategies, this initiative will help determine how the company evolves beyond its supermarket positioning.
Already, Adsa is running super-centers in the United Kingdom, but expansion in large store formats is difficult and costly, points out Dominic Burch, an Asda spokesman, and getting full regulatory approval can take as long as 10 years for each location. Besides that, Asda's competition would be bidding on any prime site. On the other hand, positions in store parks (U.K. power centers) and high streets (U.K. main streets) are less troublesome prospects, although rents may be several times higher per square foot compared with what Wal-Mart pays typically for supercenters, British observers noted, depending on how prime a location is.
Asda, a supermarket chain is now the UK's second largest supermarket business by the process of acquisition with the US's Wal-Mart. And now, Asda has successfully widened its offering with enormously successful clothing brand George as they try to beat the Tesco and Sainsbury, the two considered competition.
It is true that the other competitors have a unique competitive advantage over their rivals and yet there are still other factors that affect the efficiency or advantage of a business in a market.
Upon examining the five forces that affects the performance of the ASDA, the strategy of the company must be intensified and function well. Asda already offered the food and drink, clothing and general merchandise, financial services, and now operate through online market to create transactions enabling them to reach the other side of the world.
The company is known for its two famous marketing campaigns: Asda “price campaign” and smiley face “rollback” campaign. The company also established an emphasis on sustainability policies like recycling and waste, energy and carbon, environmental sourcing, local suppliers and fair-trade. There is also availability on apparel, entertainment products, electrical goods, home ware, toiletries, photo processing, and on-line green grocers in the stores.
Marketing strategies tend to emphasize quality for one of the three reasons. One is to differentiate the products, especially at the luxury end of consumer goods markets, by emphasizing the exclusiveness or prestige of the product - so that the product functions primarily as a badge of social status. Second is as a response to marketing crises or as remedial marketing. Third, competing on product quality is less financially risky than price competition, especially for firms with high costs or narrow profit margins and during time of inflation (2002).
Moreover, the Asda launches a website to boost the labor recruitment and presented several benefits like salaries more than the expected basic wage, discounts on theme parks and car parking at airports, and giving the right for the workers to buy shares of the company stock - which is effective in the capitalist system (2008).