Tesco

Introduction
Tesco is Britains 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 companys purpose to: provide of healthy food.
Describe how it does:
Tesco companys 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 porters 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 industrys 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 Tescos.

Strengths:
Tescos is developing in different location around the city. This is competitive
advantage over its competitor. It has a good consumer brand and its 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
Morrisons 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 Tescos 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. Tescos sales volume peaks and market saturation of competing


products. Tescos brand differentiation and feature diversification is emphasized
to maintain or or increase market share.

Saturation and decline stage:
Tescos costs become counter-optimal and sales volume decline or stabilize. Its
prices, profitability diminish. Tescos 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 dont 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 dont 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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Hara, M. (1999) Making Market Microstructure Matter. Financial
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McGrath, Michael E,2004, product strategy for High Technology
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Doyle p-Marketing management strategy.