Marketing Strategy of TESCO







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Marketing Strategy of TESCO

BU 7005

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Executive Summary

The marketing plan for Tesco plc has been discussed in this paper. The company is the largest retail chain in U.K. This paper includes various strategies that are to be followed which are significant in handling the challenges posed in the market both external as well as internal means. The situation analysis ahs been discussed which includes the organizational strategy, SWOT analysis, customers, marketing effectiveness and porters’ five forces. The objective session includes the marketing plan, vision, corporate objectives, marketing objectives and mission of the company.

The strategies for targeting, positioning and segmenting are discussed in this part of the marketing strategy. The marketing model section explains about the generic strategies, competitive strategies and strategic alternatives. It also includes branding and innovation. The seven p’s which forms the main part of a marketing plan like promotion, price, product, process, physical evidence, place and people are discussed. The budget for marketing are also described in which the resources, staff requirement, marketing expense and timing are elucidated. The marketing plan also has the control and evaluation that for the indicators of the key performance. The marketing plan also describes about the contingency plan.

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Introduction

The main issue that is being faced by the retail companies is the constantly changing scenario of the marketing along with the competition facing in the market. The company can be taken to a new dimension only when there the marketing plan is revised. The company which I have selected for the marketing plan is Tesco plc, the largest retailer in British which is doing a great job in the retail business. The company mainly deals with grocery and general merchandising in the retail market. In U.K this is one of the best companies both in terms of domestic market share and global sales. It was started by Jack Cohen in the year 1919. The six segments of Tesco in UK are Tesco Superstars, Tesco Extra, Tesco Express, Tesco Homeplus, Tesco Metro and One stop (Tescoplc 2009).

In terms of its revenue the Tesco Plc is in the third position in global retail business; the first and second being occupied by Wal-Mart & France’s Carrefour respectively. It started with specializing food business and drink in its initial phase, later, segments such as financial services, telecom, electronics, home, health, clothing, dental plans and car insurance are also included. The company also handles music downloads, CDs, renting and retailing DVDs’, internet services and software in other areas. Even though the company is well versed in its segments all over the world, the marketing plan of the company should be so competitive such that it can get the benefits of the opportunities of the market. The marketing plan of the company is discussed further.

Situation Analysis

The situational analysis of the company is the crucial one as it is the one that describes the organizational strategies, marketing effectiveness, SWOT analysis, customers, and porter’s five forces. The FEPSOS approach is applied for the situational analysis which discusses about the environment, organization, functions, systems, strategy, productivity and organization. They are discussed further.

Functions

The company has a diversified network that brings profit to the company. It has grocery home shopping services and also providing consumer goods, telecommunication and online finance services. Another area where the company increases its profit is by renting out internet base DVDs to customers. The company also has its operation in Voip business, mobile phone and home phones. The company also has a MoU with the Bank of Scotland in the ration 50:50 thus involving it in banking also.

Environment

The company has a very good competition in the market. The company has a favorable micro and macro environment for its operations. They are:

Micro Environment

These include factors that have an impact on the company’s operations either directly or indirectly and also the viability of the company for the long run. They are as follows.

Customers

The services and products of the company are mainly done to people of various parts of UK. Along with this the services and products of the company also extends to different countries like China, USA, France, Thailand, Poland, Hungary, Scotland, South Korea, Czech, Indonesia, Malaysia, Japan and Republic of Ireland.

Suppliers

The company has different suppliers all over the world.

Employees

The total employee strength is about 444,000 which are located in its various divisions and branches.

Competitors

The main competitors of Tesco plc are retail firms such as J Sainsbury, Wal-Mart, ASDA and Carrefour.

Media

The services and products of the company are mainly marketed through the online channels which serve as the media source (Hague 2002).

Shareholders

The company is in stock market and it has a very good market price.

Macro environment

The macro environment will also have a direct or indirect impact on the company. They are,

Political and legal factors

The dominant party in the country is Conservative and Unionist Party. The UK government is lead by the Liberal Democratic Party. The potency of the country with respect to the legal structure is reflected by the legal foundations that are developed for the economy of the country.

Social and cultural factors

All the residents of the UK follow the British culture. The favorable aspect for the company is the people with different ethnic groups in the country. Even though the company does not have an official language, English is widely spoken by the residents. The people in the company have different choices and penchant for the diverse products which is profitable for the company.

Economical factors

In spite of the potential risks, the company has numerous opportunities because of the stable economic condition in UK. The increasing overseas costs and foreign exchange are the two main issues that are involved in the growth of a business. The country is recognized by a formal foreign exchange policy. The currency of is UK is pound sterling which has the highest value for currency in world. The company’s operation is favorable by the country’s economic position.

Technological factors

The technological advancement of the country is denoted by its strong information technology. The country has taken strategic initiatives such that the technology is constantly updated to its trends over the entire region. One such example is e-governance program. This also helps the company for its development (Wilson & Gilligan 2005).

Productivity

The company lies in the third position in revenue and second with respect to the profit in retail industry. These cases explain the productivity of the company.

System

The company has an effective system which is at its level and thus ready to accept the challenges that arise due to the globalization. “Tesco.com” which is the personal site of the company is leading in the internet service delivery in Britain. The stores of the company have electronic labeling in shelf edge that is present all over the stores, self-scanning tills, pre-packaged products, coffee shop on the mezzanine floor and fresh products trade.

Strategy

The marketing strategy of the company is so effective in order to get its objectives that are stated for the successful run of the business. The company is able to compete in the global market with these marketing strategies and thus had got a top position in the retailing business.

Organization

The main reason for the leading position of the company in the market is also due to its organized functioning. The company has used the 7Ss model of Mckinsey which includes shared values, skills, strategy, skills, staff, style and system. These are discussed further.

Staff

The marketing plan is executed by skilled staff members, who have a diversified knowledge in the marketing concepts.

Shared values

The person having honesty, fair attitude and integrity are hired for market planning.

Structure

The marketing plan takes a competent and forma structure.

Skills

Those people having the competency to execute the market planning successfully are hires Peters & Waterman 1980).

System

The market plans are developed to create awareness regarding fair trade product which will be adopted by the E- marketing.

Style

The market plans are executed by the participative style.

Porter’s five forces model

The industry’s competitive advantage and the attractiveness of the company are analyzed by applying this model. The company has its operation in retail business that is very diverse. The industry competitiveness for the company is followed.

Threat of new entrants

These kinds of threat are low in this field because of high barrier levels. But entrances of low price discounts will be a major issue that should be concerned.

Rivalry among the existing players

The price cutting strategy is the main cause for the rivalry between the existing people in the retail industry. The competitors like ASDA, Carrefour, K-Mart and Wal-Mart pose challenge for the operation of the business (Peter & Donnelly 2002).

Threat of the substitute products

This is also highly seen in the market that will have an impact on the company as threats are seen in the markets.

Bargaining power of the suppliers

The bargaining power of the supplier in the market is very low as many retailers need suppliers for the operations in this industry. This is also one of the major issues of the company.

Bargaining power of the buyers

This a good aspect for the firm as the buyers do not have higher bargaining powers.

SWOT analysis

The SWOT analysis plays an important role in the market planning of the company as it is the one which determines about the strength, opportunity, weakness and threats of the company which are important in the future. The analysis is as follows.

SWOT Table

STRENGTH WEAKNESS OPPORTUNITIES THREATS
Strong brand image: The biggest strength of the company is its strong brand image. Failure to lead city center market: The major weakness of the company is the failure to lead city center market The increase in demand for the private products: The customer base of the company can be increased as the people of UK are mainly demanding for private labeled products, thus being an opportunity for the company. Low price supermarkets: The business of the firm is affected by the introduction of the supermarkets that offer low price and discounts (The company is still pushing discount products in order to fight back competitors 2009).
Market leader: The company serves the third position in the retail business. This is one of the positive aspects of the company. The Lack in the marketing approach: Another weakness of the company is its lack in the marketing approach. Diversified market appeal: The company still has more amount of opportunities in many unexplored areas thus the company has a growth. Economic conditions: The change in economic condition such as recession also plays an important role in threat of the company. This affect the profit and market share of the company.
Diversified business over the entire world: The operations of the company are in various fields for the entire stretch of the world. New entrants: The new entrant is another threat to the company as they pose challenge to business operation.

The SWOT analysis that has been carried out in the company will help in developing market plans for the subsequent year.

Mission of the company

“To develop value added products for the customers, in order earn their long term loyalty”.

Objectives

The objectives of the company are very important and that too in case of Tesco plc it is essential for the company to achieve a major share in market. The objective should be focused on the SMART pattern that means specific, measurable, attainable, reliable target. The marketing and corporate objectives of the company must be both business as well as customer oriented which is promising in the business point of view. They are as follows:

Corporate Objectives Marketing Objectives
To improve the staff productivity To obtain the leading position in retail industry
The staff is provided adequate training and thus the business operations are aligned. Within 12 months the market share to be boosted up to 40%.
Response rate in increased to increase the customer satisfaction. In 12 months the sales should increase 70 to 80%
Establishing the stores in new areas To increase customer base within a year
To increase the revenues and the profit up to 40% within 12 months.
To Increase the awareness about fair trade product (Nicholls & Opal 2005).

The above are the detailed objectives that are mainly to enclose the major part of the market planning. After the achievement of the above said objectives, the company will be able to capitalize plentiful opportunities which are present in the retailing industry (Armstrong, Kotler and Wong & Saunders 2008). Marketing Strategy (STP): The three marketing strategies which must be used by a company are Segmentation, targeting & positioning to promote the fair trade product more intensively, such that the sales are raised. They are as follows.

Segmentation

This strategy plays an important role in the company’s success or failure. All the marketing segments including mass, local & niche should be included in the market planning in order to boost the sale of the fair trade product. This is carried out by increasing the customer satisfaction. In order to maximize customer value, the segmentation is done after studying the customer behavior thus analyzing the preference, taste, buying behavior and attitude of the customer.

High Medium Low
Mass market Niche market Local market

Pink

The pink part of matrix is the area, where there is high segment of attractiveness and the most suitable market for long run of the firm.

Red

The Red part of matrix is the area of medium attractiveness when compared to mass market. This area has minimum suitability for plan when compared to mass market (Peck, Christopher, Payne & Clark 1999).

Green

These are the areas which have least attractiveness with respect to the segment and also have a less suitability of the market planning developed for retail chain.

Targeting strategy

Business viability is also mainly determined by the targeting strategy. The market that is being targeted for market planning must involve person who has preference for fair trade product like people of middle age, children or youngsters. The customer need should be analyzed by the company so that they can target in a manner which is well planned. This is done only when the firm analyzes the customer preference and their taste for fair trade product (Hall 2008). The targeting strategy should only be commenced after knowing the consumer’s behavior.

Positioning strategy

The market planning is also affected by the positioning of certain products in the market. The fair trade products must be placed in city center (market place) in the Tesco stores. The fair trade products are for middle aged and youngsters of the UK and the other countries. The product must be placed in the persuasive manner in order to meet the demands that are being by target customers of the fair trade product. The only way to keep these products in the customers mind is by innovative design and the value added quality. The fair trade product exhibited by the Wal-Mart company serves as a competitor. Thus the company must develop innovative methods to attract the attention of customers for the fair trade product (Lancaster & Reynolds 2005).

Marketing strategy Model

This is a crucial point in market planning. The company must have some clearly defined approaches and models to execute the market planning with great success. They are as follows:

The strategic alternative is Ansoff Growth matrix that helps the company in taking decisions regarding the market growth and product. The matrix also helps in the development of growth strategy.

Ansoff Matrix

New product Present Product
New Market Market Development Diversification
Present Market Market Penetration Product Development

Thus we conclude that the market penetration is the strategy that is worth and the fitting one which must be focused by the company for its increase in dominating the current market with current product.

Generic strategy

This strategy includes the corporate strategy, functional strategy and business strategy that are very important in market planning of a company. They are as follows.

Corporate strategy

The goals of the company that are stated should be achieved by developing effective policies. This should be done within a specific time limit (Drucker 2008).

Functional strategy

Based on the expertise of the employees the firm must give responsibilities to the highly competent employee. The resource for product delivery must also be provided successfully.

Business strategy

All the company related practices of the corporation should be aligned for increasing the sale of the fair trade product.

Marketing integration mix

This is made up of seven segments. The Tesco plc has a preformed strategy to market mixing for each market. They are product, price, place, promotion, people, process and physical evidence.

Marketing Budget

In order to achieve the objectives, the firm must have brilliant strategies which can be implemented within the given period of time. The budget that is estimated for market planning is $5000. The company must hire persons who solve the issues properly without any problems by listening carefully to the customers (Brewster & Harris 2004). A time line for executing these objectives must be set by the company such that the right message is delivered in a right place in a right manner to a right person.

Evaluation & control

This part of the market planning is very important for the successfully executing the marketing activities that are intended aiming the increase in sales of the fair trade products.

Conclusion

Thus from the given summary, it is clear that the market planning is very crucial for a company’s successful long run. The main aim of the plan is to increase the profit of the company by introducing new practices and policies. Thus it is necessary for a company to formulate the contingency plan such that it is one which holds the company in future when the marketing plan is not to expected level.

References

Brewster, C., & Harris, H. (2004), Globalizing Human Resource Management, New York: Rutledge.

Drucker, P. F, (2008), Management: Tasks, Responsibilities, Practices, Transaction Publishers.

Hague, P. N, (2002), Market Research: A Guide to Planning, Methodology and Evaluation 3rd ed, Kogan Page Publishers.

Hill, E., O'Sullivan, T., & Hill, L (2003), Creative Arts Marketing 2nd ed, Butterworth-Heinemann.

Kotler, P., Armstrong, G., Wong, V., & Saunders, J., (2008), Principles of Marketing, 5th European Edition, Prentice Hall.

Lancaster, G., & Reynolds, P. (2005), Management of Marketing, Burlington: Butterworth-Heinemann.

MacDonald, M, (1999), Marketing Plans 4th edn, Butterworth Heinemann.

Miller, K, (2005), Organizational Communication: Approaches and Processes 4th ed, Thomson Wadsworth.

Montana, P. J., & Charnov, B. H, (2000), Management, 3rd ed, Barron's Educational Series.

Nicholls, A., & Opal, C, (2005), Fair trade: market-driven ethical consumption, Publisher SAGE.

Peter, J. P., & Donnelly, J. H, (2002), A Preface to Marketing Management 9th ed, McGraw-Hill Professional.

Peters, T., & Waterman, R, (1980), Structure is Not Organization, McKinsey & Company consulting firm.

Peck, H., Christopher, M., Payne, A., & Clark, M., (1999), Relationship marketing: strategy and implementation, Butterworth-Heinemann.

Porter’s Five Forces, (2008), retrieved online from website,

Tesco Still Has Opportunity to Growth, 2007, retrieved online from website, .

Tescoplc, (2009), retrieved online from website, .

Tesco’s still pushing discount products to fight back competitors, (2009), retrieved online from website, .

Wilson, R. M. S., & Gilligan, C (2005), Strategic Marketing Management: Planning, Implementation and Control 3rd ed, Butterworth-Heinemann.


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