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Strategic Planning Case Study Of Tesco And Morrisons Marketing Essay

3120 words (12 pages) Essay in Marketing

5/12/16 Marketing Reference this

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Furthermore, a report from Mintel’s Retail Intelligence, there states that food retailing in UK is one of the most dynamic and innovative retail sectors, with steady sales forecasted at 17 percent within the year 2004 and 2006 and that sales by these food retailers were comprised of £92.3bn ( 2000) as strategies like for instance, Tesco will incorporate the value of customer loyalty and be distributed throughout UK as there allows access to economies of scale as acquired by grocery company with policies that are designed in enhancing productivity from work environment like the share schemas for the employees. There involves sequence loop as products are developed from views of customers in determination of retail success as attributed to UK global growth and that customers can look forward for stable prices and enjoy job chances and tough with fierce competition and continued service for the customers in achieving better availability. (2000)

There can be better retailer business within as the Tesco runs over eight hundred stores around Europe as Tesco has been providing such range of business services that is for the business in distribution process of warehousing as well as advertising and the integration of financial service as possible as well as the transportation and interaction of such services. Aside, there indicates that Tesco continues in leading over. Tesco, being the largest British retailer having global supermarket chain as Tesco being UK’s successful retailing firm in the supermarket industry is able to reduce its unit cost of production as the scale of operation increases. ( 2006;2006; ) It is able to use its commercial or market power to bid down prices to obtain preferential rates thus enjoying large discounts for manufactured goods, vegetables, raw materials and transport via bulk buying and allowed Tesco to enjoy productive efficiency thus allowing cost advantage.

There was a greater cost advantage therefore means total cost of production is minimized hence securing and maintaining higher profit margins. Then, in Tesco, there identifies such factors effecting the structure of business in terms of exposing Tesco’s harmfulness as well as helpfulness to the business as there involves planning for the macro-environment role in effective functioning. (2006; 2006; 2006) There involves the distribution process to shareholders as dividends and with Tesco’s growth reflects stability in supermarket chain in UK. There can be use of Mintzbergs management strategy as there stating of deliberate strategy as a realized option of the strategy and has emerged from the changes upon certain review of marketing environment. (2007) Tesco uses such strategy such as the main UK business, the retail service as well as the non food and global strategy as Tesco have grown in profitability due to the strategy used as there saw an increase of 12.7 percent in group sales as well as retail profits of £40m also, the non food has a 4 percent market share and growth in sales comprising of 25.6 percent and if being closely examined, ( 2007) Tesco’s success strategy have the need to emphasize the value of business mechanisms along with its desirable market cycle for a sound business milieu concerning UK’s retail schemes in better pursuit of growing market share.

Furthermore, according to research by Data monitor during the year 2002, it mentioned that the British grocery shoppers spent £395 million online that was more than half that can be due to such amount of data as precise to the competitors of the retail business. ( 2001) For the PEST analysis, such companies as Morrison’s’, and Tesco for its political matter, the UK government are in control of the supermarket prices and provide sanctions for advertisements by means of print ads and media tools such as TV and radio as UK in those companies market, the operation process tries to explore the marketing activities in contributing retail success for better customer needs. There involves the coordinating function as a means to achieve certain market objectives as well as using some approach in lieu to effective communications but the quality product value that the customers want from those companies. ( 2007; 2006) There needs also knowing the cost upon the selectiion of workers and thus, such several surveys as there found certain negative relationship among such turnover as well as customer satisfaction. For the SWOT, several UK retailers have learned that brand identity is important than the products being sold and is essential for the future as such, Tesco was aggressive and increased market share steadily behind Sainsbury’s as the share overtook that of Sainsbury for 25 percent lead as there needs to build leadership in continuing

Moreover, (2006) have surveyed a total of more than six thousand households have quizzed consumers about where they liked to shop and asked them to choose between Asda, Morrison’s, Sainsbury and Tesco and others. Then, Tesco was voted in second place after Morison’s knocked it off the winner’s podium for service and thus, breaking down the figures, (2007; 2006) Morison’s did well as compared with the other chains and the shoppers rated it as best retailer over Tesco regulars and can be because Tesco have variety of fascias so people’s experience can be less consistent. Generally, Tesco and Morrison’s shoppers have reckoned stores best and even, consumers does not shop like in other stores , but sill have good perception of the company as there reinforcement of dominance in UK. ( 2007; 2006) Tesco is strong in heartland but the Morison’s reformats its stores and prove such risk to their rivals in boasting ways in becoming a growing retailer in UK market.

Tesco 26.2

Morrison’s 9.76

Morrison’s dominated the full-size superstore market in the United Kingdom. In descending order of size the other Tesco and Morrison’s strategy is based on doing the basics efficiently, selling predominantly food at low prices and doing so only from large stores. There was a diverse approach from other retail chains: Tesco in particular have moved into “retail services” such as banking; the same company are expanding into the convenience store sector; and Tesco place great emphasis on their non-food ranges and are experimenting with stand alone non-food stores. The Morrison family currently own of the company, Morrison’s announced that sales at its 378 stores trading in the first 7 weeks of its new financial year were up 3.2 percent however, the rate of momentum increased when sales rose 3.7 percent at the then 378 trading stores. ( 2005)

The sales increased marginally by 0.1 percent, reflecting the impact of the significant store disposal program. In the 9 weeks since the AGM like for like sales have increased by 7.5 percent. (October 2006; 2005) Last September 2006, Morrison Chairman has announced profits of £134.2m for the 25 weeks ending 23 July 2006. (October 2006;2005) The company is perceived to trade towards the lower end of the mainstream supermarket sector, offering value above choice and premium quality. Morrison’s trademark black and yellow colours are established symbol of the company’s presence associated in some areas with the group market position as a regional supermarket chain. ( October 2006; 2005) As of February 2007, Tesco has 31.4 percent of the UK grocery market and Morrison’s at 11.0 percent. ( 2007)

C) what are the reason for the market leader success ?

The reason of Tesco successfully

Tesco has been particularly successful because of its powerful brand.  It has a reputation for value, low prices and for being customer focused.  Its brand equity and associations have helped the company to expand into new sectors and markets. Tesco has also been strong in public relations, advertising and building profile in catchment areas on a local level.  This local approach to marketing appears to be a key driver for success.

Tesco has a good range of products, including own label products.  It seeks to provide excellent customer service, and ensure high levels of customer satisfaction.  The own label products have helped strengthen profits for the group, and it broad appeal through good, better, best (finest ranges) caters for the widest consumer audience.

Aggressive overseas expansion has helped to keep profits high.  The organization has expanded into Eastern Europe, emerging nations such as China and South Korea and even the US, through mid market supermarkets known as, “fresh and easy”.   Its strategy of being close to the customer has been assisted in the UK specifically, when Tesco developed different formats for shopping (convenience, metro, express, superstores).  It has been the best retailer for format delivery and obtaining some of the best retail positions.

It gained a first mover advantage when it launched Tesco.com, which is one of the biggest and most successful online retailers.  This part of the business continues to grow market share and has provided a channel to sell non-food items and other areas of the business including finance.

Information technology has revolutionized the retailer, not only in stock-control and distribution worldwide, but also in terms supplier management.  It has enabled better I) retailer-manufacturer innovation ii) shortening of decision making and greater knowledge sharing.

Tesco is one of the most advanced companies in consumer understanding aided by IT (e.g. Dunhumby and Tesco Clubcarddata).  Consumer data has i) shaped product offerings ii) ranges iii) given Tesco a better understanding of consumer segments and shopping profiles and iv) helped marketing to build loyalty and develop promotion offerings that suit target groups.  This level of sophistication has helped Tesco to remain leader within the UK market.

Suppliers are internationally sourced, and Tesco gains scale economies from its large buying volumes.  This has enabled the company to keep prices down and supported its low price strategy aimed at the broad consumer market.

However, the company has been criticized for its management of suppliers and clashes with the farmers union.  There has been growing opposition to the supermarket because of its size, and the government (through the Monopolies and Mergers Commission) has been involved in ensuring competitive markets in the UK.  Recent acquisitions such as T&S stores, have led to a high concentration, with only few dominant players within the market.

The organization has a diversified product portfolio, which includes telecommunications, finance, insurance, which provides cross and up sell opportunities to customers.  Profits have been invested to support research and development, and its aggressive international expansion plans.

The reason of Morrison’s successfully

Wm. Morrison Supermarkets PLC is holding its own in the battle for the British supermarket customer, despite its relatively small size and regional focus. Uk fifth largest supermarket group, behind the national giants, Tesco, Safeway, Sainsbury ,and Wal-Mart-owned Asda, Morrison remains somewhat concentrated on its traditional northern uk region, despite moves during the late 1990s to open stores in the country’s southern regions. Morrison operates 107 stores, some 80 of which include gasoline stations. More than 30 Morrison supermarkets also feature branch banking in a partnership arrangement with Midland Bank. Morrison stores stock some 20,000 items; Morrison’s private labels account for more than half of all sales. The stores feature a ‘Market Street’ concept, with specialty shops, including fishmongers, butchers, pizza, and baked goods, and American shops–selling doughnuts and hotdogs–providing a High Street shopping experience to Morrison’s largely suburban customers. Morrison boasts to be the sole grocer in the United Kingdom that offers the same prices in all of its stores. The company also produces most of its own products, through its Farmers Boy and Wm. Morrison Produce subsidiaries, enabling it to keep its prices–and costs–low. Morrison is led by 70-year-old Chairman Ken Morrison, son of the founder. The Morrison family owns 40 percent of the company, worth about £900 million. With no clear successor in sight, the company has not ruled out a future takeover by one of its larger rivals.

William Morrison began his career selling eggs and butter wholesale, founding William Morrison’s (Provisions) Ltd. in 1899. Soon after, Morrison opened a stall in Bradford, England’s market, and then added stalls in other nearby markets. By the 1920s, Morrison’s business had flourished enough to allow him to open his own retail stores, offering counter service, in the early 1920s. Morrison’s operation remained a small, Bradford-area focused business throughout Morrison’s lifetime–the company’s warehouse was in the garage behind the family’s home. Morrison had six children, the youngest of whom, Ken, the only boy, was born when Morrison was already 57 years old.

The younger Morrison was already working for his father by the age of five, running deliveries and later stocking goods in the warehouse. While his father encouraged Ken Morrison to study for a different future, Morrison joined the army at the age of 18. In 1950, with his health failing, William Morrison offered the family business to his son. Morrison joined the company that same year, telling the Independent: ‘I decided to make a go of it.’

Ken Morrison approached the grocer’s trade with a new perspective. Rather than the small, urban center shops run by his father, Morrison saw the future in larger-scale supermarkets, particularly in ex-urban and suburban locations. At the same time, improvements in packaging, and increasing branding of grocery products were occurring, coupled with a growing trend toward self-service shopping. Taking over as company chairman in 1956, Ken Morrison steered the family company into the newly developing supermarket industry, placing prices on all of its goods and adding checkout lines, a first for the Bradford area.

Morrison next turned his attention to opening new stores. In 1962, he bought an abandoned theater in Bradford and converted it into a supermarket. Once transformed, the theater offered some 5,000 square feet of retail space and a parking lot for the company’s increasingly mobile customers. The success of that store encouraged Morrison to begin opening new stores. In 1967, the company backed its expansion with a public offering on the London Stock Exchange. Morrison’s focus remained on its northern England region, and by the late 1970s, the company had succeeded in establishing itself as the region’s top supermarket and one of the top chains in the country.

D) Contrast between two companies in the strategy

About the Tesco

  Tesco is the largest food retailer in UK, operating around 2,318 stores worldwide. Tesco operates around 1,878 stores throughout the UK, and also operates stores in the rest of Europe and Asia. Tesco.com is a wholly-owned subsidiary offering a complete online service, including tescodirect.com and tesco.net. The company also offers a range of both online and offline personal finance services. Tesco is headquartered in Hertfordshire, UK. Its products and services include:   Extra   Superstore   Metro   Express   Tesco.com   Store offerings:   Food Retail   Non-Food Retail   Petrol Stations   Home Living Range   Tesco Personal Finance:   Life Insurance   Pet Insurance   Home Insurance   Travel Insurance   Motor Insurance   Savings Accounts   Personal Loans   Secure Investment Bonds   Online Mortgage Finder   As well as operating in the UK, it has stores in the rest of Europe and Asia. 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 is a joint venture with the Royal Bank of Scotland. It has over 3.4 million customers, and provides various financial products and services.   The company has operations in the rest of Europe, including the Republic of Ireland, Hungary, Poland, Czech Republic and Slovakia.

Tesco objectives

The objectives of the strategy are:

To be a successful international retailer

To grow the core UK business

To be as strong in non-food as in food.

To develop retailing services – such as Tesco Personal Finance, Telecoms and Tesco.com

To put community at the heart of what we do.

Tesco – Formats.

Tesco’s UK stores are divided into five formats, differentiated by size and the range of products sold.

Tesco Extra 

Tesco Hypermarket 

Tesco Metro 

Tesco Express

TESCO Supermarkets SWOT Analysis

Tesco’s strengths using strategic marketing reports and other business resources. Specific analysis techniques to employ:

From the earliest stages of your research,  generate an ongoing SWOT analysis diagram of Tesco’s strengths, weaknesses, opportunities and threats. This will act like a mind map and brain storming tool that can lead you to ask more questions and generate more ideas than an unwieldy set of rough notes. Also, by the end of the process, you will have a diagram that could not fail to impress clients!

Visit a Tesco store and look for strengths in Tesco’s direct marketing. Compare Tesco with other stores. As questions like: Does Tesco have the best product line? Which supermarket group has the the best advertising?

Look at SWOT analysis case studies for Tesco, and for other companies. These can be found offline and online. Find online sources by pursuing a Google search. For offline sources of information use your local university and public libraries and ask for help from the librarians in finding what you need.

Weaknesses

In performing a SWOT analysis of Tesco’s weaknesses, think about the weaknesses that other companies share with Tesco. For instance, comparing Tesco with British Airways might get you thinking about how dependent Tesco is on the UK market (73.8% of 2003 revenues.) Comparing Tesco with Amazon might reveal flaws in its attempts to move into new markets.

Opportunities

Some of Tesco’s main opportunities are on the internet. Look at the Tesco website, and compare it to the opposition. Ask yourself: What opportunities is Tesco missing? Which opportunities are Tesco exploiting? For instance, compare tesco.com and amazon.com. How do the prices of books compare? Which site has the best features? What opportunities can Tesco take that Amazon might be missing?

Threats

Having already investigated the strengths, weaknesses and opportunities facing Tesco you should have some good ideas about the threats facing it. Concentrate especially on strategic planning to counter threats from other companies. For instance, investigate how Tesco’s financial products compare with those from more established providers. A SWOT analysis of Tesco must consider all the competition in detail.

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