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Strategic Marketing Management: Tesco

3786 words (15 pages) Essay in Marketing

24/04/17 Marketing Reference this

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Strategic Marketing Management in Action

Tesco Supermarket

Introduction:

In 1919 Tesco had established by Jack Cohen started selling surplus groceries from a stall in the East End of London. In 1924 when Jack Cohen bought a shipment of tea from a Mr T. E Stockwell. The initials and letters were combined to form Tes-co. In 1929 Mr. Cohen opened the flagship Tesco store in Burnt Oak, North London. The first Tesco supermarket was opened in 1956 in a converted cinema in Maldon, Essex. Tesco’s first “superstore” was opened in 1968 in Crawley, West Sussex. From the starting day to till day the company has increase its business and now the company’s more than 923 stores open in all Europe and Asia. Tesco’s more than 700 store in UK. And in total more than 240,000 people employs in Tesco. This company earned of £42641 million during the year ended 2007, and raise 8.1% over 2006. In the year 2007, the working profit was £2648 million and raise of 16.1% over 2006 (tescocorporate.com).Tesco operates 2,318 stores in 12 countries. Tesco is Europe’s second largest supermarket after the French firm Carrefour, and according to Mintel market research in 2004, Tesco is closing the gap. It is the fourth largest supermarket in the world. [1] Now Tesco is the largest food retailer supermarket of UK. Tesco continue to increase market share through their policy of cheaper prices, offering better value and providing more choice and convenience for their customers. [2] 

Tesco’s main business is food but now it do business electrical, home entertainment, home shop, cook shop and even white goods and furniture. Recently Tesco have focused on developing the brand into non-food and now stock electrical items, home entertainment, toys, sports equipment, gardening equipment, , clothing, CDs cook shop, kitchenware and even lighting and furnishing in many of its larger stores. Tesco increase its business in petrol pump and banking sector as well.

Tesco’s service and quality is very good. . It is committed to the customer to reducing its Prices and offering the goods services and best value. The company is doing continues research to improve its quality and service. The company used modern technology and instrument to provide service of their customer. Tesco’s marketing strategy is so good to get this success. Tesco has change time to time it’s marketing strategy in time to time according to changing situation and its external environment. The all working staffs are so loyal of their company and they are good trained about the work so the customers are more attractive in Tesco day by day. Tesco has been bringing new new offer of their customer according to time and situation. For example we can take the Tesco’s customer bonus card. Therefore the customers of Tesco are increasing day by day. Tesco’s marketing strategy is so strong so the company gets success day by day

2. Mission and Vision of Tesco:

Every company have their own mission and vision. Without any mission and vision the company cannot get their goal. Mission and Vision is the most important thing of company. Mission is the organisational principal and overriding purpose, it reflects the values of expectations of stakeholders and answer the quiestation “what business are we in?” vision is the future state desired by the organisation’s strategies.

(A) Mission of Tesco

The mission of Tesco is ” Creating value for customer, to earn their lifetime loyalty”. We deliver this through our values, ‘No-one tries harder for customers’, and ‘Treat people how we like to be treated'”. The underlying aim is of course to make higher profits, but there is a clear focus on customer service at the top level of the company [3] . Tesco is to provide superior technical representation. Tesco to add value to a focused group of leading edge corporations by offering synergistic, valuable and highly innovative solution for their customers’ design, procurement and manufacturing need with continuous improvement of their quality, service and productivity to a competitive advantage.

Tesco has focused in this two value of business:

No one tries harder for customers.

Understand customers better than anyone.

Company should always keep in mind the customers need and demand. The policy should be customer-oriented. To try to capture all level of customer. Always keep going with continuous research regarding customer satisfaction and improvement of service. Try to introduce new type of features in future which may attract the customer. Tesco Company has the business marketing plan, product marketing plans and brand marketing plans. Tesco has applied three marketing plans in terms of customer satisfaction and getting higher level of value. Tesco main priority can be sorting out form its mission statement. Company main priorities are to retain loyal customer. This shows the customer don’t go to their competitors like ASDA, SAINSBURRY and Summerfield.

(B) Vision of Tesco:

Vision is a realistic view of a future yet to be which creates meaning and purpose, catapults both individuals and organizations to high levels of achievement.

The main vision of this company is to gain more customers with excellent service. Providing efficient service to all general public compared to other company.

Business Principles should be clear, which depends upon the conduct of every individual in company. Whole company should be familiar with these principles and apply them consistently and rigorous in business activities each day.

Strategic marketing and strategies – Planning activities of Tesco:

In the Uk’s high streets the Tesco became a familiar name. Tesco was able to take advantage of commercial economies of scale through largeness purchase of goods, the existence of resale price maintenance restricted the ability of Tesco to be as competitive as trading conditions now allow. The system authorized suppliers to insist that retailers sold their products for a set price. Tesco used other strategies to make customer loyalty including the use of stamps that could be exchanged for cash or goods. Tesco have made a clear strategic marketing and strategic planning activities. Tesco should try to focus in this thing:

To maximise sales

To grow and maintain the number one retail company in the U.K

Tesco wants to outshine their competitors and remain the market leader

The main aim of Tesco is to maximise profit

To provide goods/services that is cheap and affordable to consumers or the public.

Company should mainly focus on price factor which helps in attracting the more customers. Its initial success was based on the “Pile it high, sell it cheap” approach of the founder Jack Cohen [4] . It also should focus on all common public with low price with high quality. Company should try target all class customer and add more features which may attract the new customer.

Tesco Plc is creating new sales from new product to existing market. Company has analysed the customer needs and satisfaction and continually improving the production and quality level as well as production range.Tesco basically, sale their goods high quality at a low price. So the first strategic decision for a company is to choose the basis on with our will compete: price of quality. By this strategic Tasco can make more people of Their customer. When made more customer naturally they can successes to collected more profit.

Marketing strategy should include all 4ps of marketing that is price, product, place and promotion. These all factors play a significant role in marketing process. So the company should make sure that it implements these 4ps effectively to achieve its goal. The company can merged with other company as partnership as one of the strategic marketing. It helps in expansion of business in different area.

So the minimizing the cost an adding the values can be used as important tool to attract the customer. Educating and providing training to the sales man which helps in effective sale. Company should able to spend on advertising by which company will be known by different set of customer.

So the aim of the compny can be achievd through wise implementation of the these above startegies. There should be proper communication among mangemnt its employees and all branches. Tesco try to improve the following thing:

Try to |Making their shopping easy as possible.

All the time seeking to reduce the goods prices to help customer spend less.

Offer the convenience of either large or small stores to the customer.

Bringing value and ease to difficult markets.

SWOT analysis of Tesco Marketing Strategies:

The aim of any SWOT analysis is to identify the key internal and external factors that are important to achieving the objective. SWOT analysis groups key pieces of information into two main categories:

Internal factors: The strengths and weaknesses internal to the organization.

External factors: The opportunities and threats presented by the external environment.

strengths

Tesco main strength is it’s brand name. All customer know it’s reputation and good will so they easily believe the Tesco product and goods. It’s all staff are trained so their behaviour to customer is also good and familiar. Tesco business is Customer base this is strength of Tesco. The company bring time to time many kinds of offer of their old and new customer. In the Tesco store we can get many kinds of varity so it is easy to customer to buy the goods this is also strength of Tesco. Tesco have secured commercial standing with in the global market place winning” world retail Award”. Tesco group have published sales gain of 13% for UK market, and 26% growth in international market. Tesco has reserved fund form property portfolio development fund. To sell daily consuming goods in a reasonable price and earn the customer loyalty is a main strength of Tesco.

Weakness

the weakness of Tesco is too much diversity of their business. Profit level is decreased by bad debts, arrear in credit cards and insurance (house hold) claim. Grocer outlets are not set up to operate as specialist retailer. The company doing delayed to increase of their business in other new place this is another weakness of Tesco marketing. Tesco did not success to decrease of their operation cost so the cost of good is little bit high in the market. In the UK comparative on the Asda and Iceland supermarket the price of some goods of Tesco is high. So Tesco should do decrease the some dally consuming food price. Large Capital and expenditures is the another weakness aspect of Tesco.

Opportunities:

Tesco mobile have grown ¼ million customer in 2008 and it can move to profitable status suggesting further development within the technological area can be developed Tesco online and catalogue shopping can help to grow the use of technology. Tesco is the Repuated super market so it have a many new market opportunities in the world. There should be not need to too much advertisement to sell their good in the market. From these opportunities the company can sale their goods on the low price. Tesco has good will, so the company can easily increase its business in the new place. Every place there is automatically having a Tesco customer. Tesco can easily increase its business in the Product and service oriented as well not only selling oriented.

Threats:

There is many threats have in the Tesco. First and main threat is to maintain it present business success and good will. And the another threats of Tesco is to decrease its operating cost and increases it’s profit rate then decrease the price of their selling goods. The another Threats of Tesco is to made new marketing policy in time to time and increase it’s business in the world. Due to the recession, market has been affected by the economic factors. Clashes with farmer union Rising raw material cost in both food and non food item. But the company canhandle this situation utilising strengths and opportunities in the business with the help of strategic marketing options.

Process of Tesco:

Tesco is the retailer supermarket so it main work is acquiring the goods and sale it. In this section I am going to explain the product, sale and distribution process of Tesco.

Production process of Tesco:

Tesco did not product all goods which it sale. Tesco buy the goods in wholesale price and packing in suitable pack and tag the price and Tesco logo then sale it from their store. Some good item are product also. Tesco is a retailer supermarket so there is no need to explain the product process of the Tesco.

Sale process of Tesco:

There is a variety of sale process of Tesco. First the company packing the goods in the economy pack and then tag the price and company label and decorate it in the store according to goods nature and durability. The customer himself can easily saw and take their need goods from the store. Tesco give the facilities to buy good from phone shop, online shop and store shop. The customer can pay bye cash and card. In the online shopping the can pay by the bank card.

In the store every goods have computer entry so any customer did not bring the store goods by the illegal method. If they do that the store siren is crying. In the every item have price tag. In the shop when the customer collect their need goods and they go to the paying counter and pay the price of goods and then they can carry of their goods. In the shop has monitoring by the CCTV camera to customer safety. In the store there is store staff help to the customer to collect the goods. In this way the sale process is doing in the Tesco shop.

Distribution process of Tesco:

Tesco is retailer store so it did not distribute it’s goods to other store expect their own store. Tesco has distributed the goods of their other store from their central store. The sale store are demand the goods to the central store. According to sale store demand the central store distribute the goods.

6. Marketing Strategy Options:

There should be low purchasing power of consumer in the economic recession. These time is global economies recession time, in this market situation above mentioned Tesco marketing policies must be suitable for consumers. In this way this Tesco marketing strategic may work in this easily.

Tesco has operated successfully introducing clothing as well as non food items. According to the Michael Porter new entrants are able to bring in new capacity to the industry in such way long term company goal will be achieved. In terms of new business era, company can differentiate its product especially in the developing country; level of family range is different. So it can launch its product as per the consumer needs and perception.

Buyers:

Customers or buyers are the assets of the company. Company should always respect their perception. Company should maintain the loyalty of the consumer. Buyers are the price sensitive in some cases and product (quality) sensitive as well. Therefore Tesco can offer the qualitative products in low price by using high volume procurement of the product.

Suppliers:

Company can receive goods and services in cheaper rate if only buy the product in large volume. Company also might be faced of farmer union group. Therefore Tesco can purchase directly in the huge amount so that it can get huge discount.

Substitutes:

The positions of substitute’s product are a matter of searching for

Other products that can perform the same function as the product of the industry or player in the industry (porter 1980). It has the lots of the product that can perform the same function. It has own network. It can be in touch through e-shopping and internet shopping to the customer. Industry

Competition:

Competition not only comes from existing competitors but also frompotential entrants such as retail supermarket, currently ASDA,

Sainsbury, Morison and Somerfield is the very competitors of the Tesco. But Tesco can launch its policy studying rival competitors strategy. Porter’s (1980) five forces provide basic view towards the analysis of competitive environments in particular organisations. Tesco can also apply differentiation strategy, products that offer benefit and differ from those offered by competitors.

Competitive advantage

Competitive Advantage is a firm’s ability to transform inputs into good services at a maximum profit on a sustained basis, better than competitors. [5] 

It is true there are many kinds of Supermarket in the market. So there is hard competition each other to business. Among them the Tesco company’s this marketing strategic help to get the competitive advantage for the customer. By the competitive advantage enables the company to create superior value for its customers and superior profits for itself Tesco Company. The goal of Tesco strategy is to achieve a sustainable competitive advantage. In this economics recession time the Tesco will get the power of challenge the more other problem. So this time Tesco use to advantage of competitive. By this advantage the company can expand the business and by that new business the company can earn more profit. In that situation the company itself established the market. This strategy enables a company to operate in a more efficient or otherwise higher-quality manner than the companies it competes with, and which results in benefits of company.

Tesco have own patent and trademarks, propricatary know-how, Installed customer base, reputation of company and brand quality has help to get comparative advantage.

(B) Investment opportunity evaluation

Tesco is a reputated supermarket so the customer believed the company. Its investment opportunity is very good. Tesco has successes to made loyal customer. The period of economic recession time Tesco has going to give their goods in the low cost. If the price is low than number of customer increases. when business get the success than investment opportunity also increases. These types of strategy help the investors to get back his investment.

Core Competencies:

Core competitive lead to competitive advantages when they relate to an activity that underpins the value in the products features, they lead to level of performance that use significantly better than competitors and they are difficult for competitors to imitate. Currently Tesco is trying to diversity its activities in the non food item as well, and try to be reputed as in food items. But for that purpose it has to lead the level of performance in terms of competitors. For Tesco, ASDA and Sainsbury are the rival competitors in food item they are also trying to provide goods and services in low prices in order to retain customer loyalty. Therefore Tesco can provide own private labeling product in reasonable price. In the current markets and scenario, indirectly, competitors try to make competition product failure by initiating their policies. So, in such case Tesco could be capable in regards of providing unique products.

(D) Value-based marketing strategy

Company can go with this strategy so that they can get value for the money. Product should be designed in such way which makes customer to buy that is service is value for money. Tesco supermarket gives the infancies to their customer. It’s main mission is “Creating value for customer, to earn their lifetime loyalty”. The value provided serves customers best interests. So it gives a priority of customer value. In so doing, a business succeeds, attracts new customers, and is able to continually improve the value offered to existing customers. The negative aspect of this Strategy Options is the company did not collect the more perfect in some time but in the long vision it is good for company.

(E) Market leadership

Market leadership is the position of a company with the largest market share or highest profitability margin in a given market for goods and services. Market share may be measured by either the volume of goods sold or the value of those goods. [6] Tesco should follow the focus on leading super market business. It should able to explore the benefits that suit its customer so it will lead to be leader in supermarket business on the world. It can target all the segment with better standard and quality goods. New business supermarket vision and variety of it’s selling good is going to help to become a supermarket leader.

4. Conclusion and Recommendation

(A) Conclusion

Tesco continuously doing marketing research and try to find out of the customer changing interest. As well the company doing research to new technology and business sector. In this way the business can improve continually according to market demand. It can be leader in the supermarket if it provides better good to the company. It also has to provide efficient service based on its scope. All marketing strategy should be used effectively which helps in betterment of the company. It shows the strategy adopted by company was effective in coming year also Tesco will introduce new feature of business.

Recommendation:

Tesco business is good in the present day but it is hard to maintain it business good will in the future. In the present day business is hard competitive business. We can see In the market there is many kinds of supermarket are introduce day by day so Tesco need to decrease it’s operating cost and sell the goods in the cheap price. Tesco need to add the other store in other someplace.

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