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Introduction of Organizational Strategic Marketing
To achieve continuous growth achieve success every organization tries to fulfill the needs and demands of their customers and for this there is a need to implement appropriate marketing practice. Marketing is a process, which helps in identification of customer needs and fulfilling it by providing the best product . Thus, strategic marketing is creating awareness of the products and services of an organization with proper planning and strategy. The current research report identifies various factors which play an important role in the functioning as well as the operations of Tesco. Further there will be an evaluation of internal and external environment of the organization.
Tesco is one of the best and the biggest grocery store based in the UK. It was introduced in 1919. Tesco mainly sells entire fast moving consumer goods such food products and general merchandise in their stores with its headquarters in Hertfordshire . Its large size has created employment opportunities for more than 470,000 people in the world. Its large size comprises of 4,331 stores in more than 14 countries of the world. Apart from retailing of food product and general merchandise, Tesco is also rendering online retail services through their official website i.e. Tesco Direct and Tesco.com. Furthermore, Tesco is also engaged in supply of services like internet and financial services via TPF (Tesco personal finance company) (Tesco PLC (TSCDY) Business and Value Analysis.
Facts about Tesco
During their initial phase they were mainly engaged in selling groceries, but, due to rising competition at increasing globalization, Tesco decided to increase the range of goods by selling furniture, apparels, software, financial services, electronics, and telecoms . With the beginning of 1995, the company also planned to execute a loyalty card scheme for their regular as well as loyal customers. This scheme was named as the “Club Card”. With the help of this card customers could avail discounts by purchasing goods and services from the store. After this Club Card facility Tesco came up in the market also proved the worth of their latest tagline which was “Every little helps”. All these efforts have played a very important role in achieving growth and success for Tesco. With the implementation of their strategies they achieved a great success in the domestic market and after that they moved ahead towards international markets, a result of which they have more than 4000 stores in 14 different countries .
With the view to achieve dominance in international market and to cope up with the rules and regulations of the international business environment, they have adopted a strategy of merger and acquisition with many big organizations . This also represents that frequent innovation and the growth achieved by this organization depict the efficiency of their operations. Tesco has also adopted all the management tricks and technique to grab a superior position and defeat their competitors .
Current issues faced by the organization
The present business environment is dynamic and is changing frequently. The biggest issues faced by the organizations are due to internationalization. There are many more organizations which opt the way of the international market to obtain the desired growth which they are unable to secure in local market . Tesco also affront a strong competition from the stores like JC Penney, Target, Wal-Mart and ASDA etc. With the view to compete all these competitors, it is required that Tesco adopt significant strategies and implement in a planned manner so as to achieve growth and also expand in the foreign market. Thus to achieve a significant growth in local as well as international market Strategic Marketing is required .
Another main issue being faced by Tesco is the reducing demands of customers and the declining profit margin. Recession is one of the biggest reasons affecting the pockets of customer it also raises inflation and reduce the purchasing power of Tesco’s potential customers by raising the cost (Tesco PLC (TSCDY) Business and Value Analysis, . Tesco also faces problems in holding the grip in new markets. It has a strong hold in the U.K. market, but in other market like in Asia they are still to be known (Graham, 2008). This gap in creating brand identity is because of its various competitors and also there are many more similar retail stores which are the biggest barrier in front of Tesco. Keeping an eye on all these factors, the current research report will carry out a strategic analysis of Tesco .
Strategic Marketing is defined as a set of process, which defines explain the proper implementation of strategies by which a firm can market their business and achieved desired growth. Here managers of an organization choose an effective plan and strategy the working process so as to meet the desired aims and objectives (Ohmae, 1982). It can also be stated that strategic marketing management is a continuous process, which supports the business and industries and let them progress. Effective strategic management helps an organization to identify the level of competition level of competition and also suggest measures to overcome.
Strategic Marketing helps to plan out various decisions which managers of the firm take to secure growth within an organization. It helps the managers in evaluating the working of the company and helps to gain the competitive advantage over its competitors . For proper planning and strategizing the mangers of an organization need to have a detailed knowledge of the organization. With this detailed understanding it becomes easy for the managers to plan and strategize the future development process .
Analysis of the Internal Environment of TESCO.
With analysis of the internal environment one can easily identify the strengths and weaknesses of the organization. Various methods or the models used for the internal analysis of an organization are at SWOT and Value Chain Analysis where as PESTEL is used for external analysis. This model helps in identifying the various abilities which an organization possesses and helps in the decision making process (Henry, 2008). Here the internal environment of Tesco is analyzed based on the above stated models:
- The financial stability or the sufficient revenue which company has for the futuristic planning
- Tesco is one of the renowned brand in the Market and also has the largest group of loyal customers
- Tesco has an advantage of the low cost over its competitors.
- Senior management of Tesco is skilled and competent, which help them to give a strong competition in international markets.
- The firm is stable in the U.K. but is struggling to gain competitive advantage in the New markets
- Wastage of stock, they have adopted measures to safeguard still the bulk of food items get wasted, left unsold.
- Their online selling strategy increases the cost of the company.
- Retail store like Tesco have chances of growth in developing countries.
- There are various options available like the joint venture, franchise for targeting markets where they are unable to reach
- Recession and the economic slowdown have negatively affected the U.K. economy.
- Another threat is that the continuously changing buying behavior of customers
- They also affront a strong completion and also fear the risk of takeover by some strong competitors. For example takeover of ASDA BY WALMART.
- Frequently changing government legislations in different market.
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Value chain analysis
Value chain analysis helps an organization to understand the set of activities which an organization possesses; this understanding helps an organization in gaining the competitive advantage. Companies use this model to deliver valuable services to their loyal customers (External environment factors, n.d).
Two main activities involved in the process of value chain analysis are as primary and secondary activities. The primary activities are inbound logistics, operations, outbound logistics, marketing and sales and finally services, whereas secondary activities comprise of infrastructure of the firm, HR Management, and technological development .
Inbound logistics – Inbound logistic helps Tesco to gain cost advantage. It has provided Tesco the bargaining power against the suppliers as the purchase their stock in bulk. They frequently upgrade their in store processes so as to create an efficient management of the stock purchased.
Operations management – With a view to maintain the cost leadership Tesco has used the effective I.T. The system also they have spent more than $75 million to transform their operational processes. This transformation in operation was done with the help of the Tesco Digital Program, which also increased the profits of Tesco .
Outbound logistics – Tesco has successfully supplied their goods and services to their customers, with the online and traditional selling. Apart from this they also have various formats of store like Metro, Express, Superstores etc. Tesco reached their desired customer by segmenting the market .
Marketing and sales – They have an effective marketing and Sales strategies and also appointed professionals in the field. Like to keep intact their potential customer they have introduced loyalty programs like the Club Card. They are also concerned about the environment and have introduced the greener living Scheme .
Services – Customer Service is a very important part in any organization which helps in keeping the customer intact and also achieves a sustainable growth. From providing valuable services they have adopted cost leadership as well as Differentiation, their products are low cost also they provide online and Traditional store.
Analysis of External Environment of TESCO
There are various legislations which Tesco has to compromise like the free flow of foreign trade also there are legislations related to employee benefits which sometimes become an obstacle in front of Tesco but with the support of loyal customers Tesco is able to achieve competitive advantage expansion.
Economic factors like the Demand, Price, Cost and profits affect the profitability of the Tesco (Rajan, 2006). The recession has increased the insecurity in the organization. Tesco is facing the problems in maintaining the low cost and also in operations because of these economic factors.
Social culture basically is the thinking strategy of the local people of a country. In the U.K. there are more old aged people and also possess loyalty. They do not migrate to another store, till they are not satisfied with the products and services . This Tesco has to understand the weak points of their competitors and plan accordingly.
Technological advancement is also an issue which Tesco has to solve. With the frequently transforming technology their spending on bringing the new tools and techniques is increasing. Though they are a grocery store but they also need modifications with the changing time.
Environmental concern is rising and the firm is facing various issues related to environmental concern. Tesco focus on sustainable development. Their corporate social responsibility has an aim to achieve a zero carbon company by the end of 2050.
Organization approach to position in the market place
Tesco has positioned its brand in the market on the basis of two approaches i.e. competitors and price.
Positioning on the basis of the Price – Pricing plays a very important role in creating the position of an organization. In U.K. market high priced products are good whereas low priced products are of bad quality. Tesco deals in consumer goods which are already low priced. Tesco’s prices are high as compared to its competitors but provide various different services in order to maintain its standard.
Positioning on the basis of competition – An organization position itself in competitive market either by following the strategies of the competitors or creating new strategies. Tesco has devised new plans and styles of marketing and also keep an eye on their competitors.
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Decisions and Choices Arising from the analysis of Strategic Marketing
Several issues were identified after underrating the strategic marketing analysis of Tesco. The first issue was regarding Tesco’s market share in international market. Highest level of competition can be seen in UK’s grocery sectors where Tesco is facing some of the well known companies like ASDA, Morrison’s and Sainsbury . With increasing consciousness of companies towards their market share the completion level is also increasing. The economic condition of the country is also largely affecting the business performance of Tesco. The unstable economic conditions are another identified issue. The effective devastation of corporate level strategy is must as the economic factors have major concerns with cost, demand, prices and profits. In order to survive in tight economic conditions and face high level of competition effective use of corporate strategies is vital.
The business operations are largely influenced by strategic decisions which reflect the corporate strategy of the organization. Corporate strategy determines the long term business plan of the organization including decisions regarding several business functions such as human resource, finance, research and development, technology, etc. . Corporate decisions hold very much importance and thus, these decisions are made by the company’s board of directors. Tesco has been dedicated towards the development of its core business in the UK and becoming a successful retailer in international markets . The strategic decisions are largely inflected by competition level in the market and in order to make effective decisions it is must for the managers to evaluate the market competition. The best available tool for this analysis is Porter’s five forces. This method analyzes the level of competition on the basis of five major dimensions
Recommended Marketing Strategies to Tesco for achieving competitive advantage
The role of marketing strategy is vital in achieving an edge over the competitors. A strong marketing plan can vastly contribute in increasing market share as well as gaining a comparative advantage . In situations like current market condition an organization cannot afford to lose many opportunities of gaining competitive advantage. If an appropriate marketing strategy is adopted by the organization than most of the identified such as capturing the international markets can be resolved . On the basis of above analysis a set of marketing strategies can be recommended to Tesco:
Segmentation strategy – Segmentation is the best possible way to select a particular target and supply products as per their needs. On the basis of above analysis it is highly recommended to Tesco to adopt a segmentation strategy (Graham, 2008). By doing so the company will be able to select a particular target customer group i.e. luxury, upper middle class or lower middle class. This selection will help organize in focusing on particular groups and capture new market too.
Social marketing – With current technological world people are more familiar with social media and networking. These sources can be used by Tesco as major marketing dimensions. Along with this company can also design, implement and control programs, like campaign for any social cause, environment degradation, smoking etc., that help in increasing the social practice among the people of the UK .
Relationship marketing – It is most effective tool that not only reduces the bargaining power of buyers but also ensures the increasing sales figure during tough conditions. It is the process of selling products by maintaining a good and long-term relationship with customers. Organization need to communicate with their customers on a regular basis and identify their needs (Baker, 2000). Organization need to maintain a strong database that records all the information regarding customers.
In current tough market situations the role of strategic marketing is vital. It is the process of identifying organizational goals and establishing long-term business plans to achieve them. There are several decisions need to be taken by managers at every level but out of them corporate level decisions are most important. By using strategic marketing an organization can ensure their survival in the current competitive world. It facilitates strong decision making and effective resource utilization. By using a set of tools of strategic marketing an organization can get comprehensive edge over its competitors. On the basis of the above discussion it can be concluded that every organization needs to attract their customers by innovative promotional schemes and aggressive marketing campaign and thus, marketing has become an essential factor for organization succession.
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