Tesco

Introduction

Tesco is Britain’s leading retailer. Tesco one of the top three retailers in the world .operating over 3700 stores globally and employing over 440,000 people. Tesco operates in 13 countries outside the UK-republic of Ireland , Hungary ,Czech Republic ,Slovakia, Turkey and Poland in Europe ,china , Japan ,Malaysia , South Korea ,Thailand and India in Asia and the US.

Tesco the leading UK based supermarket chain is the worlds third largest after us wal-chain of stores and farces Carrefour in tems of volume but second profit with annual turnover profit of over £3 billion employing over 250,000 staff , Tesco originally traded in foodstuff and drinks but later diversified to employees to encompass apparel and electronics. It has now moved into financial products , telecommunications, mortgage, medical services, and interment merchandise.

Marketing strategy of Tesco

The SWOT and PESTEL analysis show that Tesco currently has the resource capabilities to successfully enter the baby wear market and capable of Implementing a market development strategy building on the success of its Tesco stores in the country. The report recommends that Tesco target the high-end market segment with a differentiation strategy.

Mintzberg (1987) says ;marketing strategy is a systematic process. First we think ,then we act, we formulate then implement, strategy is a account of a future oriented action and plan that is always directed toward. Marketing strategy is the conduct of the making decision on the intensions and plans of the organization mission, vision and objectives, developing employment relationship resourcing and implementation plans.

(A)Tesco vision statement

Vision is a simply the ability to see. Vision is always leading the organization that company delivering high quality evaluation, training and evaluation. The world is going to change day to day. Tesco vision helps the some predict the future , others wait unit they fall upon it, the vision can see it coming early.

Enough to see adopt to it. Actually clear vision in our business is very important to success. There some paints which is related our Tesco.

At Tesco values code of conduct. They are the way have chosen to work and drive the whole way do business. They are;

Understand customers.

Be first to meet their needs.

Act responsibly for communities.

These customer values reflect that in Tesco everything starts with the customer and that passion to provide customers with values and service overrides all else.

Treat people how like to be treated.

Work as a team.

Trust and respect each other.

Listen, support and say thank you

Share knowledge and experience.

Enjoy to work.

Tesco want people to be well managed and to work in an environment is based on trust and respect. Learnt over the years that well motivated and managed staff will give customers great service. By living the people values create a great place to work and one where great service is delivered.

(B) Tesco mission statement.

Mission is a detail explanation of Tesco companies fundamental purpose. A mission statement always answer the question. “why do we exist?”the mission statement enunciates the company purpose both for these in the organization and for public. Every business should have vision and mission statement. In my opinion mission statement means a combination of what your company does and how and why it does it defined at right way that summarizes the values that are essential to our company. Some steps of mission statement are:

Describe what your company does:

Tesco company’s purpose to: provide of healthy food.

Describe how it does:

Tesco company‘s purpose of healthy food by good serving.

Add why:

Tesco c healthy company ‘s purpose to: provide of healthy food by good servicing that gives people safe and healthy food choices.

Tesco objectives

T0 maximize sales.

To grow and maintain the number one retail company in the uk.

Tesco wants to outside their competitors and remain the market leader.

The main aim of Tesco is to maximize profit.

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

High competition:

Tesco is consider one of the big four stakeholder in the retail industry in UK. The competition of Tesco is very high because there are other retailer stores like ASDA, Sainsbury, Morrison and Iceland. This is to identify external opportunities, obstacles facing the organization and identify internal strengths and weakness of the organization and analysis extensively.

Tool and techniques for developing marketing strategy:

TESCO porter’s five forces model:

Michael porter provided a framework that models an industry as being influenced by five forces. There are:

intensity of competitive rivalry:

The intensity of competitive rivalry used by a Tesco company which can intensity completive pressures on their rivals is likely to be based on dimensions such as price, quality and innovation. Technology advances protect companies

from competition. Tesco company applies to product and services. Tesco companies that are successful with introducing new technology are able to charge higher prices and achieve higher profit, until competitors imitate them. Recently, Tesco have been producing new thing and reduce a business own cost. Some advantage over its rivals, Tesco can chose from several competitive moves:

=changing price.

=Improving product differentiation.

=creatively using channels of distribution

The bargaining power of customers

The power of buyers is the impact that customers have on a producing industry In general, when buyer power is strong, the relationship to the producing industry is near to what an economist terms monophony-a market in which there are many suppliers and one buyer. Under such market conditions, the buyer sets the price. In reality little pure monotony exist, but frequently there is some asymmetry a producing industry and buyers.

C) Threat of substitutes:

Tesco supply a unique product that automates an important process, people may substitute by doing the process manually or by outsourcing it. Tesco is trying to find a different way of doing provide different product.

D) Supplier power:

Tesco company requires raw materials labour, components , and other supplies. This requirement leads to buyer supplier relationship between the industry and the firms provide it the raw materials used to create product. Suppliers, if

powerful, can exert an influence on the producing industry, such as selling raw materials at a high capture some of the industry’s profit.

E) Barriers to entry / threat of entry:

Barriers to entry are more than the normal equilibrium adjustments that markets typically make. When Tesco company profit increase, we would expect additional firms to enter the market to take advantage of the high profit levels, over time driving down profit for all firms in the industry. Example ,when Tesco company profit decrease, we would expect some firms to exit the market thus restoring market equilibrium. Falling prices, or the expectation that future prices will fall, deters rivals from entering a market.

1.2.2 Tesco SWOT Analyses:

SWOT Analysis:

A SWOT Analysis is a strategic planning used to evaluate the

Strengths, Weaknesses, Opportunities, and Threats of an organization. With the help of this SWOT analysis we will be able to find out the positives and negatives of Tesco’s.

Strengths:

Tesco’s is developing in different location around the city. This is competitive advantage over its competitor. It has a good consumer brand and it’s liked by and consumers. Example,

-Brand name

-Loyal to the customers

-Having competitive advantage over the competitors

-Giving good services to the customers

Weaknesses:

Most of the stores are located not closer to the around to customers unlike others are located within the reach of the customers. Example:

-Product range missing

-Target is only premium class customer

-Price is impacting more

Opportunities:

Online sales are a great opportunity. Online margins are very high and investments are not large. Tesco can sell and capture the market place because of their so many supermarkets and convenience store in different parts of UK. Example:

-Target new customer or new market.

Threats:

Tesco is losing market in the direction of their products pricing, other stores like Morrison’s and Iceland have cheaper products than Sainsbury.

-New competitors

-Economic changes may affect the business

Tesco would now know where they stand. This will also allow them work on their opportunities, weaknesses and threats and build up on their strengths.

1.2.3 Marketing Mix (4ps):

The marketing mix is the set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market. The marketing mix consists of everything the Tesco can do to influence the demand for its product.

Product:

Tesco can change attribute of product to provide more value to customers increasing product quality to gain advantage over competition.

Price:

A decrease in price will increase sale, this will give Tesco and edge over other competitors to hold the market.

Place:

Tesco can add new places channels to increase the intensity of distribution in each channel to boost its products distribution which gives an edge over competitors.

Promotion:

Tesco can increase advertising to create more awareness of its products and services which leads to an increase market share over its competitors.

1.2.4 PEST Analysis:

This is done to see if Tesco can operate in their current environment:

Political:

Tesco has to follow Government laws and regulations of their trade e.g being a multinational company they operate in different country which have their own laws and regulations e.g employment laws, national wages etc.

Economical:

The way they structure the market .ie segmentation of product and customer highly depends on economical factors. It will put expensive brands in areas of great wealth and cheaper brands in areas of lower income.

Social:

Socially the world is becoming more technologically advanced ie there is internet. Customers are up to date and have must knowledge of product as compare to some time back. They know each and every thing about the product that which food is healthy and which brand is good. Tesco have to be careful that what they offer otherwise they will lose its market. At the same time they can use interest as a advertisement tool. They can advertise their new products for the customer.

Technology:

Technology is making a retail industry grow bigger. They can sale more and more at the same time e.g they can put self payment machines which save the time of the busy man who do not want to waste time standing in a long queen.

1.2.5 BCG Matrix:

The Boston consulting group approach using the Boston using the Boston consulting group (BCG) approach, a company classifies all its SBUs according to the growth-share matrix shown in Figure. On the vertical axis, market growth rate provides a measure of market attractiveness. On the horizontal axis, relative market share serves as a measure of company strength in the market. The growth share defines four types of SBU:

Star:

Star are high-growth, high share businesses or products. They often need heavy investment to finance their rapid growth. Eventually their growth will slow down, and they will turn into cash cows.

Cash cows:

Cash cows are low growth, high –share businesses or products. These established and successful SBUs need less investment to hold their market share. Thus, they produce a lot of cash that the company uses to pay its bills and to support other SBUs that need investment.

Question marks:

Question marks are low –share business units in high-growth markets. They require a lot of cash to hold their share, let alone increase it. Management has to think hard about which question marks it should try to build into stars and which should be phased out.

I want to more invest in the more promising question marks to make them stars and to maintain the stars so that they will become cash cows as their markets mature.

1.2.6 Tesco’s Product Life Cycle Model:

Product also has their own life-cycle. From birth to death human beings pass through various stages e.g. birth, growth, maturity, decline and death. The product life cycle goes through phases, involves many professional disciplines, and require many skills, tools and processes. There are four stages in a product life cycle. There as follows:

Market introduction stage:

Tesco makes the high cost of production and slow sales volumes to start. There is no competition and demand has to be created. Customers have to be promoted to try the product. Tesco makes no money at this stage.

Growth stage:

Tesco does costs reduced due to economics of scale and sales volume increase significant. Profitability begins to rise and public begins to rise. Its competition begins to increase with a few new players in establishing market. It is increased competition leads to price decreases.

Maturity stage:

Costs are lowered as a result of production volumes increasing and experience curve effects. Tesco’s sales volume peaks and market saturation of competing

products. Tesco’s brand differentiation and feature diversification is emphasized to maintain or or increase market share.

Saturation and decline stage:

Tesco’s costs become counter-optimal and sales volume decline or stabilize. Its prices, profitability diminish. Tesco’s profit becomes more a challenge of production/distribution efficiency than increased sales.

The best tools for Tesco

BCG matrix is use to ensure long term value creation, a company should have a portfolio of product that contains both high growth product in need of cash inputs and low growth product that generates a lots of cash. Now as per BCG matrix, Tesco is in the star segment means high growth high market share. That means Tesco is generating large amount of cash from the market and from its luxury products. And Tesco is the leader in the market now. But you cannot define the market share and market growth of Tesco in the market. So you can not say that high market share is the only success factors for Tesco in the market. And market growth of Tesco is not the only indicator for attractiveness of the market. Now if we see the value chain analysis for Tesco than we realise that Tesco has strong value in the marketing segment. Tesco spend more on buyers compares to the supplier and technology that it uses. With the help of this Tesco is successful in the market and have edge over the competitors. And it also depends on its pricing strategies that affect the market growth and market share for the product. As we know Tesco is on luxury product line so its price is also based on that and its target customers are premium class people. And Tesco using premium pricing for its products.

Marketing strategy options:

A marketing strategy is a process that can allow an organization to concentrate its (always limited)resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage.

Customer relationship marketing strategy:

CRM marketing strategy means simply as a customer data management activity. Tesco does managing detailed information about individual customers and carefully managing customer and carefully managing customer “touch points” in order to maximize customer loyalty. Tesco helps to build and maintain profitable customer relationship by delivering superior customer value and satisfaction. It deals with all aspects of acquiring ,keeping and growing customers. For ex. Tesco company obvious is fast and reliable package delivery. However by using Tesco customers also may receive some status and image values.

Strength:

Provides innovate and services.

Provide faster customer services, more reliable and good delivery.

Weaknesses:

Customers often do not judge product values and costs accurately or objectively. They act on perceived value.

Porter generic marketing strategy:

Each distinct organization must develop a strategy that best matches its internal capabilities and its situation with regard to the external environment. Still, many of the numerous strategy pursued by business can be loosely grouped under three main categories-cost leadership, differentiation ,and focus. Porter termed these categories “generic strategy” and claimed that most companies use variations of them. Either singly or in combination, to create a defensible position in their industry. On the other hand, companies that fail to target their efforts toward any of the generic strategy risk becoming “stuck in the middle,” which leads to low profitability and a lack of competitiveness.

The implication of change in marketing Environment for organizations:

The four different environments are often referred to as pest and allow a PEST analysis to be conducted this allows the organization to review and consider the environment in which it operates. The PEST factor than has contributed to the

Tesco company for many years, but has brought a drastic change was from the last three year.

Political environment:

Concerns the role of the government and its affects in an organization it also includes the extent to which the government intervenes in the economy. Example , Tesco company marketing decisions are strongly affected by developing in the political environment. The political environment consists of law, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society. Tesco requires food processors selling national brands to market low price brands also, so that low income consumers can find economy brands on the shelves.

The authorities have had to make sure that certain rules have been put into place. Tesco have had to rely on the political and environment effects on the feedback that they get to decide on what course if action to take on the Tesco.

Economic environment:

Activity in the economic environment is extremely important. Whilst assessing the economic environment in which different business operate. The government tries to terminate the level of economic activity to provide a positive and friendly environment for business. The main issue that would affect the Tesco, that would be seen as a short term effect would be that a company share values have decreased rapidly.

Social environment :

Is of great important when being applied to different organizations. The short term affect that the social factor has on the Tesco company is that, people have cut down on using to bye some product and services. The long term affect that is going to have is that if there are not as many customer, then the amount of staff that the companies have hired are no longer needed. This however is that short term affect, due to as soon as services are running back to normal prices will effectually increase in the market.

Techno logical environment:

Technological has always been a highly used by Tesco to ensure safety of customer. Also CCTV cameras are a large part of the technology measure used by Tesco.

Technology has rapidly advanced over the past few years and is continuing to do so. Organizations whether large or small have been affected and are unable to operate within latest technology. Tesco has taken out the time and costing of increasing technology, so that security in Tesco is at the tightest. This is seen as a long term effect, as no matter how quickly things go back to “normal” Tesco is not going to be taking the chance to see a repeat of the these activity. This is a positive effect, as due to the security tightening, It will make the public more aware that security is tight therefore they should feel more comfortable and secure about buying.

Recommendations for Tesco company:

Refuse the private branding and continue promoting and developing their items in price and quality of product which will attract the customer and wait for the customer to know about the low quality of private label products and in this way customer will come back to branded items.

Also start making products in private label because don’t give a chance to competitors of the similar product to copy other items otherwise they will start copying other items and can sell it in low price because of their low quality which customers don’t know about the cheap quality.

Make ideal combination of brands to hold the both end of the market and also make private label items to attract the customer by showing them private brand product in low price and then shift them to branded items by telling them quality difference of the both items.

The functional areas may develop to contribute to the achievement to contribute to the achievement of organizations marketing objectives:

There are many tasks every business needs to do if it is going to succeed. Each of these tasks is described as being a function of a business.

Explain:

Ensure the Tesco company has the best staff for the job and they are able too work effectively in a safe environment.

Finance :

Tesco will keep a record of all money coming in going out of the business. They have responsibility for securing finances for future expansion and playing staff and suppliers.

Administration and ICT:

Tesco support ensure the smooth running of the business on a day-to-day basis. They have responsibility for clerical duties, cleaning, computer and software support, security and health safety.

Marketing and sales:

Tesco will try maximize the level of sales by carrying out market research and promoting the goods or services through a motivated sales team.

Customers services:

Tesco will help the customer before and after a sale has been made by providing information, giving advice, providing credit facilities, delivering goods and providing after sales support.

Research and development:

Tesco will help the business remain competitive by developing new goods and services and updating the existing ones.

Tesco works on his own will be responsible for all of these functional areas. This compares to a large business where each functional area may have its own department with a specialised manager. Larger business thus have an advantage over smaller ones as they can employ specialist managers whereas the owner of a one person business has to be a “jack of all trades.”

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