Strategic Marketing

EXECUTIVE SUMMARY
The present research report provides a strategic analysis of TESCO. This report will be going to evaluate the current operations and various internal and external factors that might affect the functioning of the company. In todays fast paced and dynamic business environment, it becomes very difficult for the organizations to achieve competitive advantage through marketing over the other firms in the market. Thus, the subsequent research report deals with identifying various internal and external environmental factors, which will help the firm in achieving a competitive edge over the other firms in the market. Strategic marketing analysis is nothing but the process, which deals in developing and implementing decisions in order to provide strategic direction to the organization. It also helps in assisting the direction towards which the company is moving forward. Here, in this research report the researcher will identify the current issues impacting the Tesco. There are many issues, which are being faced by company. Tesco has its major operations in UK. Due to globalization and intense competition, the firm is faced with various challenges in regards with exploring and capturing new market. Tesco is also required to adopt various marketing strategies that are consistent with their aims and objectives in order to capture the new market and to sustain effectively in the present market. Attributing from the above fact, the subsequent research report will recommend various effective marketing strategies to TESCO through which company can achieve a competitive advantage. These marketing strategies will be recommended to the company after conducting thorough strategic evaluation of the organization.

Contents
INTRODUCTION ........................................................................................................................................ 1 TASK 1 ...................................................................................................................................................... 1 TESCO ...................................................................................................................................................... 1 Facts about the company ........................................................................................................................... 1 Current issues impacting TESCO ............................................................................................................. 2 TASK 2 ...................................................................................................................................................... 3 Strategic marketing ................................................................................................................................... 3 Internal environment analysis of TESCO ................................................................................................. 3 External environment analysis of TESCO ................................................................................................ 7 Organization approach to position in the market place ............................................................................. 9 Need for internal and external environment analysis................................................................................ 9 TASK 3 .................................................................................................................................................... 10 DECISIONS AND CHOICES AT CORPORATE LEVEL AROUSED FROM THE STRATEGIC MARKETING ANALYSIS ........................................................................................................................ 10 TASK 4 .................................................................................................................................................... 12 RECOMMENDED MARKETING STRATEGIES TO TESCO FOR ACHIEVING COMPETITIVE ADVANTAGE ........................................................................................................................................... 12 CONCLUSION ........................................................................................................................................... 13 REFERENCES ........................................................................................................................................... 14

INTRODUCTION
In order to become successful, each and every organization constantly makes necessary efforts to match their own capabilities with the needs and wants of their potential customers. This can be achieved by applying and using appropriate marketing practices. Marketing is a process, which helps in identifying the needs and requirements of customers, suppliers and other stakeholders of the company (Callon, 1996). Thus, strategic marketing management refers to the process of aligning the marketing operations of the organization with its external and internal environment. In todays fast paced and dynamic business environment, it becomes very difficult for the organizations to achieve competitive advantage through marketing over the other firms in the market. Thus, the subsequent research deals with identifying various factors that has significant impact on the functioning as well as operations of the company. This was further evaluated by conducting internal and external environment analysis. The case company taken under this study is TESCO (Joyce and Woods, 1996).

TASK 1
TESCO Tesco is one of the largest multi-national food retailers all across the world. The company is mainly based in UK and it was incorporated in the year 1919. Tesco sells groceries, fresh foods, food products and general merchandise at suitable locations in various parts of the world. It has its headquarters in Hertfordshire (Koutsochera, 2012). Due to companys large operations, many employment opportunities are also being generated for the people of UK on a regular basis. It provides employment to around 470,000 people of the world. In addition to this, the company also operates around 4,331 stores in more than 14 nations all across the globe. Apart from retailing of food and groceries products, Tesco is also engaged in rendering online retailing services by their official website i.e. Tesco Direct and Tesco.com. Furthermore, firm also provides internet connection and financial services through their Tesco personal finance (TPF) company (Tesco PLC (TSCDY) Business and Value Analysis, 2011). Facts about the company During the period if their initiation, Tesco has mainly emphasized only on retailing groceries. But, due to pressure from global competition, company has decided to enlarge their assortment of goods in the direction of apparels, furniture, electronics, software, financial
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services and telecoms (Bryson, 2002). In the beginning of the year 1995, company has planned and executed a loyalty card scheme for most of their loyal and potential customers. This scheme was branded as Club Card. This card of generally meant to render discount to customers who make purchase of products and services with the company. Soon after this, the advertising slogan of the firm was also appeared as Every little helps. All these efforts have significantly helped TESCO in achieving the growth and success in the market. They have implemented efficient strategies and soon after getting success in the domestic market, company decided to internationalize their operations and adopted the expansion strategy (Ohmae, 1982). In order to capture the market share in many parts of the world, Tesco has decided to move their operation in different part of the world. The expansion strategy of the company also included various mergers and acquisitions of big companies (Koutsochera, 2012). Articulating from the above fact, it can be concluded that through rapid innovation and efficient operational management system, Tesco has significantly achieved superior performance. At the same gaze of time, firm has also acquired large market share in many parts of the world. In addition to this, Tesco has implemented numerous business strategies from time to time in order to clutch the position of outstanding international retail stores all throughout the world (Henry, 2008). Current issues impacting TESCO Present business environment is ever-changing and dynamic. Thus, the major trend in todays global business is internationalization of businesses. There are large numbers of firms, who are experiencing exponential growth in the international markets in comparison with their domestic markets (Grant, 2010). Say for example, there are many automobiles companies who are facing intense competition all around the globe. For the purpose of combating all these undesirable trends in the market, each and every company along with Tesco is required to come up with successful strategies so that they can better expand in the foreign market. Thus, in order to succeed both at international and domestic level, a good marketing and overall business strategy is required apparently (Callon, 1996). The main issue being faced by Tesco is deteriorating demand and profits. Due to global slowdown and recession, firm is being facing continuous problem. The global downturn has significantly affected the demand, cost, prices as well as profits of the company (Tesco PLC (TSCDY) Business and Value Analysis, 2011). Tesco is also facing problem in capturing new market. This can also be considered as the major issue for the company. Most of the major
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operations of Tesco are concentrated only in United Kingdom (Graham, 2008). Due to stiff competition in the market from various giant players like ASDA, Sainsbury and Morrisons, Tesco is facing difficulty in capturing new market in most of the areas. Keeping all these factors in intellect, the current research will focus on carrying out a strategic analysis of a company. The subsequent piece of work will look at internal and external environmental analysis of TESCO (Joyce and Woods, 1996).

TASK 2
Strategic marketing Strategic marketing management is being defined as a set of process, which defines the strategies of organization. Through this process, managers can select an appropriate and effective strategy from the set of strategies, which significantly helps in accomplishing the objectives and goals of the company (Ohmae, 1982). In other words, it can be said that strategic marketing management is nothing but an ongoing process, which provides a supportive hands in evaluating the business and industries in which the firm is being engrossed. An effective strategy being implemented by the company will help in assessing the level of competition prevailing in the market as well as defines ways to overcome and excel over these competitors. Further, it also renders support in setting up an objective by assembling the present and future competitors of business (Cooper, 2000). Strategic marketing management encompasses bundle of decisions as well as acts that all managers are required to undertake within the organizations. Strategic marketing analysis also helps the managers in evaluating the performance of the company, decisions making process, attaining the best performance as well as gaining a competitive edge over the other firms in the market (Grant, 2010). For the purpose of setting an appropriate organizational strategy, each and every manager is required to have detail knowledge and comprehension regarding the surroundings of the organization. These understandings will enable them in taking appropriate decisions in relation with the company (Bryson, 2002). Internal environment analysis of TESCO Internal environment analysis helps in assessing the internal strengths and weaknesses of the organization (SWOT, PESTEL, Porter's Five Forces and Value Chain Analysis of Tesco, n.d). It also helps in identifying various competencies of the company, which in turn support the
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managers in further strategic decisions making process. This can be done by adopting various tools and techniques such as SWOT analysis and value chain analysis (Henry, 2008). These tools will highlight the competitive advantage being possessed by the firm. The internal environment analysis of Tesco is as follows: SWOT analysis The major strength of Tesco is its strong financial performance and position in the market Company also possess powerful retail brand in most of the markets of UK Strengths In global market, TESCO enjoys very secured position Company also have the benefits of economies of scale Tesco has effective retention strategies for their potential consumers Top management of the firm is competent enough Gained customer base of many local customers by developing various loyalty packages (Ohmae, 1982) Bad-debts from credit cards has significantly impacted the financial profits of the company Weaknesses Firm is struggling to capture new market Less attention towards specializing in one area (Marketing activities, n.d). Tesco is lacking free cash and initiating online selling need more cash Major operations of Tesco are mainly concentrated in UK Rapid growth of the firm in retail market Opportunities Entry in the Indian market has reinforced the global market position of the company Company can avail market opportunity through franchisee agreement between Tesco and TRENT

 Global economic slowdown can have negative influence on the UKs economy Major threat from continuous changing buying behavior of customers Food and grocery retailing market in UK is suffering from intense Threats competition (Tesco PLC (TSCDY) Business and Value Analysis, 2011) Takeover of ASDA by Wal-Mart Government, monopoly and mergers commission greatly influenced the expansion strategy of Tesco

Value chain analysis The value chain analysis is the framework that helps in understanding the activities by which most of the companies achieves a competitive edge over the other rivalries firms in the market. This analysis also renders support in creating value for the shareholders. A value chain is being defined as that chain of activities, which are performed by each and every organization in order to be successful in the market (Joyce and Woods, 1996). In other words, companies use value chain in order to deliver something valuable to their potential customers. Thus, attributing from the above fact, it can be said that the main motive of value chain activities is to provide value to all customers at each individual level of activity (External environment factors, n.d). Furthermore, seeking help from the value chain, the value level of customers will exceed the cost of the activities, which will significantly crop higher profits margins for the companies (Peng, 2009). There are mainly two types of activities involved in the process of value chain analysis i.e. primary and secondary activities. The primary value chain activities of almost every firm are inbound logistics, operations, outbound logistics, marketing and sales and services. On the other hand, the secondary value chain activities comprise of firm infrastructure, HR management, procurement and technological development (Hall, 2002). All these secondary activities support the primary activities (Tescos IT strategy to support international expansion, 2008). Inbound logistics The cost leadership strategic management of Tesco is being reflected by its inbound logistics. According to various authors, it is the leading economies of scale and market position that have enabled the firm to bargain in order to achieve low costs
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from its suppliers. Furthermore, there are many analyst who have thrown light in relation with the approved vendor lists, constant upgrading of ordering system and in-store processes. For the purpose of inducing efficacy as well as effectiveness into inbound logistics operations of the company, these entire lists were improved (Ohmae, 1982). Operations management In order to facilitate the low cost leadership strategy, Tesco has made use of effective IT system. In this regards, the firm is also being praised by a number of supply chain management. In addition to this, the company has also invested around 76 million for reforming their operations (Rajan, 2006). Their operations were reformed by seeking help from Tesco Digital program. The following program was also been considered as the third generation ERP solution for Tesco. Through implementation of this system, Tesco has significantly increased their level of profits. Furthermore, the ERP system has also facilitated the minimization of stock holdings within the company (Peng, 2009). Outbound logistics Tesco was successful in holding a leadership position in regards with the online and offline food retail segments, due to its effective and appropriate outbound logistics. The company has also developed wide range of store formats in order to achieve the exposure from the customers. There were many formats being developed, some of them are Metro, Express, Superstores, Homeplus and Extra. All the above targets were segmented according to the target population (Cooper, 2000). Marketing and sales For the purpose of discouraging the customers to switch towards the competitors, the company has introduced various loyalty programs in the market. They have implemented these programs by making use of information technology. One of the loyalty programs of the company was branded as Club card. Furthermore, to provide advice in regards with the environmental issues, company has also introduced Greener Living Scheme (Marketing Activities, n.d). Services The importance of customer service has increased substantially, as the company is following a dual strategy i.e. cost leadership and differentiation. The strategy is being reflected by the development of focused direct marketing, self-service cubicles, promotions and financial services. For the purpose of putting the value chain analysis of Tesco into perspective, it is noted worthwhile that despite of cost leadership strategy, company has successfully created a high degree of value for their consumers in
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comparison to their key competitors (Tesco PLC (TSCDY) Business and Value Analysis, 2011). External environment analysis of TESCO PESTLE analysis

There are various regulations, laws and political conditions, which have significantly influenced the operations and functioning of Tesco. There Political are various government legislations in regards with the employment, which has persuaded retailers in order to provide work for different people. The free flow of foreign trade is encouraged due to the ingress of China in WTO. This in turn is providing way to Tesco to enter into the world most lucrative markets. Further, the firm has also many loyal customers, due which Tesco was able to achieve a competitive advantage Tescos IT strategy to support international expansion, 2008). The prevailing economic factors are considered as the major point of concern for the company. Demand, price, costs and profits of the firm Economical are greatly affected by these economic factors (Rajan, 2006). In addition to this, economic recession has increased the level of financial insecurity. This in turn indicates lower amount of spending in regards with the purchase and of products and services of the company. Due to these factors, the sales and profits margin of TESCO will be affected negatively. The population of United kingdom mainly comprise of retired people as compared to children. Articulating from this fact, it can be said that the ageing population will surely going to discourage the food retailers, along with Tesco (Hall, 2002). However, there are many British Social customers in UK who are characterized as the one shop shoppers, have significantly made the company to diversify their share in various markets. Since, the people in UK are now becoming more aware and
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conscious regarding the health issues; Tesco has accommodated this demand by introducing organic food in the market.

Development of wide range of products and services of Tesco are being affected by various technological factors. There are many reasons attached behind the satisfaction of customers towards most of the products and services of Tesco. Some such reasons are more personalized services and making shopping more expedient, goods are Technological made available to customers readily and many more. For the purpose of managing the food supply chain, company has also introduced efficient consumer response (ECR) initiative (Marketing activities, n.d). In addition to this, Tesco has also initiated online retailing of food through their official websites such as Tesco.com and Tesco Direct. Furthermore, they have also introduced many loyalty programs in order to attract more and more customers by seeking help from information technology. This has significantly helped the company in discouraging the customers to switch towards their rivalries firms. Various policies, procedures and legislation directly influence the Legal performance and working of the company. The government of UK is making necessary efforts in order to reduce the monopoly controls. Further, they have also recommended the food retailing commission to ban some of the current policies regarding the changes in price notice and demanding payment from supplier (Business Strategy Analysis, n.d) Tesco will enter into a huge market by in-warding towards the market of China. The todays modern environment is very difficult and crucial to Environmental forecast. Even though, Tesco is tackling all these environmental changes very strategically. In addition to this, company can also grab the market

by minimizing the climatic changes. By the end of the year 2050, Tesco has a mission in their corporate governance responsibility policy to become zero-carbon business. This will substantially help the customers in reducing the carbon footprint by 50%. Organization approach to position in the market place There are varieties of ways through which positioning strategies can be developed and conceived. This can be achieved from application, product attribute, types of consumer being involved and competition (Tesco Competitive Analysis 2005, 2011). All these above mentioned attributes depicts a wide range of approaches in developing strategies for positing the brand in the market. Tesco has position its brand in the market on the basis of two approaches i.e. competitors and price. Pricing as one of positioning strategies There are most of the consumers in the UK who are of the view that if the products and services are charged high by the company than it is of superior quality and vice-versa. It is a perception of consumers that those products and services which are lower in price is of low quality and does not match with their standards. Tesco has also adopted the same price quality strategies in order to position itself in the market. They charged higher prices for their goods and services, which signifies standardization of services and attract more and more potential customers towards the brand apparently (Henry, 2008). Positioning strategies on the basis of competition In such a type of positioning strategies, competitors are considered as the implicit and explicit frame of reference. Positioning strategies on the basis of competitors is defined as that strategy in which the firm either uses the same strategies being adopted by the competitors or adopts some new strategies by taking the competitors strategies as a base. Tesco has also adopted many strategies by taking into consideration the competitors such as ASDA, Sainsbury and Morrisons (Datta, 2011). Need for internal and external environment analysis There are many two types of factors i.e. internal and external, which might affect the functioning as well as operations of most of the organization. Internal and external environmental analysis is required to determine the development and forecast the factors in order
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to influence the success of the organization (Hall, 2002). Environmental analysis is defined as the process of effective utilization of facts and information regarding different patterns and trends in the market. Further, it also renders support to managers in future decisions making process. Here, in this research report internal analysis is being conducted by adopting various tools such as SWOT analysis and Value chain analysis. Through these tools and techniques, managers will be able to assess the opportunities being present in the market as well as threats that might affect the functioning of the organization (Ulwick, 2005). On the other hand, external environment analysis is being carried out by making use of PESTLE analysis (Tesco Competitive Analysis 2005, 2011). This method helps in evaluating various factors such as political, social, economical, technological and other factors that have an influence over the functioning of the organization. Thus, to conclude it can be said that strategic and internal and external environment analysis helps the firm in identifying the competitive structure of the organization. Through this analysis, company will be in a position to evaluate various factors that might impact its functioning and can take corrective actions in order to succeed in the market (Cooper, 2000).

TASK 3 DECISIONS AND CHOICES AT CORPORATE LEVEL AROUSED FROM THE STRATEGIC MARKETING ANALYSIS
After conducting the strategic marketing analysis of Tesco, there were many issues which were found. The very first issues were related with capturing market share in the international markets (Datta, 2011). The retail food and groceries sector is facing intense competition in the UK market. There are many competitors of Tesco like ASDA, Morrisons and Sainsbury. All these companies are giving stiff competition to Tesco. The other issue being faced by the Tesco is current prevailing economic factors. The economic factors largely influence the demand, cost, prices and profits of the concern. In order to curb this situation, corporate level strategies need to be devised effectively (Koutsochera, 2012). Corporate strategy reflects all those strategic decisions, which influence the whole organization. All these strategies might impact the functioning of several different businesses such as Human Resource management, Information technology, finance and research and development department (Ulwick, 2005). Generally, corporate decisions are taken by the board
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of directors of an organization. Tesco is being dedicated towards becoming successful international retailers. Further, the company is also dedicated to develop the core business of UK (What is strategic analysis, 2013). In order to combat the issue being identified earlier, assessment of five forces of Tesco will be helpful and the analysis is as follows:

Forces

Description The food and grocery retail industry is facing high level of competition in the market of UK. There are many competitors of Tesco is UK market like Amazon, ASDA, Super markets, Sainsbury, Morrisons and Non-food retailers. All these firms are competing with each other on

Competitive rivalry

the basis of promotion, price and products. The market growth of Tesco is very slow, which signifies that the share of competitors in the UK market is increasing. This will going to threaten the leadership position of Tesco (Tesco Competitive Analysis 2005, 2011). Supplier enjoys low bargaining power. It is to be noted that supplier will move towards those companies who will

Bargaining power of the suppliers

possess major share in the market. Further, Tesco is losing their projects and contracts with large super markets. Due to this, the position of ASDA, Sainsbury and other food retailers is strengthening up in the UK market (Massive, 2011). In retail food and grocery industry, the threat from new entry is very low. Here in this industry, in order to become competitive in the market, very high capital investment is

Threats of new entry

required. Many large and big giants like Tesco, ASDA, Sainsbury and Morrisons has captured around 80% of the market in UK. Attributing from this fact, in order to enter in
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these market, new firms are required to produce high quality products with low prices with a view to ascertain their value in market (Koutsochera, 2012). Buyers enjoy high level of bargaining power. This is because of the fact that the This can be attributed form the fact that the switching cost is very low in this market. It is world Bargaining power of buyers known fact that customers will be attracted towards those companies who provide them high quality products in reasonable prices. Say for example, if food and other vegetables are expensive in Tesco than customer will shift towards other firm, who is offering them the products in relatively low prices (Marketing Strategy: Definition and Process, n.d). Threat from substitute products is also very low in food and grocery retail market. As a result, Tesco has lower amount of Threat of substitute products threat from other substitute products in market. The probable substitutes of the company can be the organic shops, small chain of convenient stores and off licenses shops.

TASK 4 RECOMMENDED MARKETING STRATEGIES TO TESCO FOR ACHIEVING COMPETITIVE ADVANTAGE

In order to achieve competitive edge over the other firms in the market, Tesco is required to adopt various marketing strategies that are consistent with their aims and objectives (Callon, 1996). By conducting the internal and external environment analysis, there were many issues being identified such as capturing the international markets and threats from economic factors. All these issues can be combat if the firm adopts appropriate marketing strategies (Graham, 2008). Based on the above analysis various recommendations regarding the marketing strategies to be adopted by Tesco for achieving competitive advantage are as follows:
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 Segmentation strategy It is highly recommended to Tesco to adopt segmentation strategy. Here in this strategy, company is required to select the target market segment i.e. luxury, upper middle class or lower middle class. Through this, it will become easy for the firm to target and capture new market (Graham, 2008). Social marketing Tesco is also suggested to design, implement and control those programs, which helps in increasing the social practice among the people of UK. These programs may include initiating campaign for any social cause, environment degradation, smoking etc. This will help the firm to position in the market even better (Gordon, 2002). Relationship marketing It is defined as the process of selling products and services by maintaining long term relations with the potential customers. in this marketing strategy, complete information in regards with the choice of customers is maintained in the companys sales database, which can be further used to maintain cordial and trustful relationship with the end users of products.

CONCLUSION
Strategic marketing is nothing but the process, which deals in developing and implementing decisions in order to provide strategic direction to the organization. It also helps in assisting the direction towards which the company is moving forward (Bryson, 2002). Thus, it can be said that it is the market determined process for developing a strategy by taking into consideration the ever changing business environment and market trends. Further, the strategic marketing process also pays attention on various new opportunities and probable market threats that might affect the future of the company (Rajan, 2006). Here, in this research by conducting strategic analysis of Tesco, various issues were identified that might impact on the functioning and sustainability of the company. Through various analysis recommendations pertaining to marketing strategies were also being made, which might take Tesco to the path of success and growth (Cooper, 2000).

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