Analysis Marketing Plan of Tesco free essay sample

Table of Contents Executive Summary Introduction 1. Contextual analysis of the Tesco 2. Customer Analysis (markets, segmentation, targeting and positioning, branding) 3. Competition analysis (major competitors, their strengths and weakness etc) 4. Tesco strategic approach 5. Channel analysis (distribution and communication) 6. Marketing Management Implementation of Tesco Plc 7. Contingency Plan Conclusion References Executive Summary This article discusses about marketing-plan developed for Tesco Plc which is the largest retail network of retail food stores in UK. The marketing plan covers various important aspects which are significant for processing the marketing problems connected with internal and the external environment of Tesco. The article has critically analyzed the situational analysis in which organizational strategy, client’s behavior, Porter’s five forces; the Ansoff matrix (to determine products and market growth strategy), SWOT-analysis and marketing efficiency have been described.In the objective section of the marketing plan, mission, vision, corporate objectives and marketing objectives of Tesco are examined from high angle of perspective and various strategic measures of segmentation, targeting and positioning are suggested to gain competitive advantage. We will write a custom essay sample on Analysis Marketing Plan of Tesco or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page As Tesco constantly faces threats of capturing its market share by nearest rivals, how marketing mix of 7ps, will help Tesco to analyze its current position in food retail sector of UK is highlighted. Assessment of Tesco management also has been given in the marketing plan which includes key parameters of efficiency.Beside contingency plan of Tesco is also discussed. (Clarke, 1994) Introduction Changes occurring in scenario of marketing have been posing problems for all retail companies in-spite of their competitive positions in the market. The marketing plan is revival step for the company to give a new direction for its business. I have chosen Tesco Plc for the marketing plan which is the largest UK retail trade and operational chinks in field of food retail commerce. Tesco PLC is the global general merchandising and the grocery retail seller.It is the largest British retail from the point of view of global sales and a fraction in a home market. 1. Contextual analysis of the Tesco Industry analysis: Pestel framework Political Factors Operating in globalization conditions with stores worldwide (Tesco now operates in six countries of the Europe, in addition to the Great Britain, Ireland, Hungary, Czech, Slovakia, Turkey and Poland, it also operates in Asian countries such as South Korea, Thailand, Malaysia, Japan and Taiwan). Performance of Tesco is highly under influence of political and legislative conditions of these countries, including the European Union (EU). For employment, the government encourages stores to provide mix jobs possibilities for employment from flexible, lower paid and local jobs to highly paid, highly skilled and centrally located jobs. Also to cater the demands of the population categories such as the students, working parents and older people. Tesco understands, that retail commerce has dramatic effect on jobs and people factors (new development of store often saw, how destruction of other jobs in sector of retail commerce as traditional stores leave business or compelled to save the cost to compete), being inherently and local labor-consuming sectors. Kotler, 2008) Economical Factors Economic forces cause concern to Tesco because they can affect demand, costs, the prices and profits. One of the most influential factors on economy is the high rate of unemployment which decreases demand for many goods, negatively influencing on the demand of such goods necessary for manufacture. These economic forces substantially do not depend on the company, but their influence on productivity and marketing maybe deep.Though the international business still grows, and it is expected, will assist the greater sum on profit of Tesco within next several years, the company still depends strongly on the market of the Great Britain. Consequently, Tesco will be strongly affected with any slowdown in food market of the Great Britain and exposure to market concentration risk. Social/Cultural Factors Current trends specify that the British clients have inclined to one stop and volumetric shopping that is connected with various social changes.Therefore Tesco have increased the quantity of non food items available for sale. (Kotler, 2008) Demographic changes, such as ageing of the population, an increase of women-workers and decrease in house preparation of meal means, that the Great Britain retailers are concentrating on added value products and services. (Lancaster,2005) Besides concentration is now moving towards, own labels share of business mix, supply chain and other operational improvements which can lower expenses of business. National retailers are more and more constrained to find new suppliers.Type of the goods and the services demanded by consumers depend on their social conditionality and their subsequen t installation and belief. Consumers become more and more informed on questions of healthcare, and their attitude to meal constantly change. One of examples Tesco adaptation of its product mix is to accommodate increase in demand of organic products consists. The company also was the first to permit consumers to pay in the form of checks and cash in cash department. Technological FactorsTechnology is a major macro-environmental variable which has influenced the development of many of Tesco products. The new technologies benefit both customers and the company: customer satisfaction rises because goods are readily available; services can become more personalized and shopping is more convenient. The launch of the Efficient Consumer Response (ECR) initiative provided the shift that is now apparent in the management of food supply chains. Tesco stores utilize the following technologies: †¢Wireless devices †¢Intelligent scale Electronic shelf labeling †¢Self check-out machine †¢Radio Frequency Identification (RFID) The adoption of Electronic Point of Sale (EPoS), Electronic Funds Transfer Systems (EFTPoS) and electronic scanners have greatly improved the efficiency of distribution and stocking activities, with needs being communicated almost in real time to the supplier. (Lancaster,2005) Environmental Factors In 2010 pressure upon many companies and managers has been increased to recognize the responsibility before a society and to operate by which society is benefitted as a whole.With the basic social question threatens sellers of food stuffs were the environmental problems and one of key areas for the companies to operate in socially responsible with maintenance of its reputation. Therefore, accepting this tendency within the limits of wide ethical positions, to corporate social responsibility of company Tesco concerns ways in which the organizations exceeds the minimal obligations to the interested sides specified by means of regulation and corporate management.In 2010 the government plans to start new strategy of stable consumption and manufacture to reduce waste, to reduce consumption of resources and to reduce to a minimum damage to an environment. The last the legislation has created the new tax to advertise with a high degree of processing and fatty foods. So-called fat tax directly mentions product Tesco’s ranges which subsequently have been adapted, mentioning attitudes as with suppliers and clients Legislative Factors Various legislations government policies also render direct influence on performance Tesco.For example, Food retailing commission (FRC) has offered Code of practice should be created, prohibiting many of existing practice, such as demanding payments from suppliers and variation in the coordinated prices retrospectively or without notice. Availability of powerful competitors with known brands creates threat of intensive price wars and strong requirements to differentiation of production. (Kotler, 2008) Government policy on monopoly of management and decrease in power consumption of buyers can limit an input in this sector from such control, as license requirements and restrictions on access to raw material.With a view of realization politically a proper pricing policy, Tesco offers consumers, reduction of prices on purchase of fuel on the basis of the sum spent for products in the stores. Though the prices are lowered on the advertised goods, the prices in other shops rise to compensate. (Lancaster,2005) 2. Customer Analysis (markets, segmentation, targeting and positioning, branding) Marketing strategy (STP) Segmentation, targeting and positioning are three marketing strategy which should be used by the company for promoting its Fairtrade products aggressively, with objective of increasing sales. Porter, 1980) The f ollowing concern to them: Segmentation of strategy: Segmentation strategy plays a huge role in success or refusal of the company. Mass, local and niches, all segments of the market should be considered in marketing plan on expansion of sale of Fairtrade products for increasing satisfaction of clients in effective manner. For maintenance of the maximal consumer value, behavior of consumers will be studied before segmentation in which their taste and preferences, attitudes and the behavior of buyers will be estimated.Pink: Pink part of a matrix designates area which has high appeal of a segment and the most suitable for the company over the longer term. Red color: red part of a matrix reflects environments which have a smaller piece of appeal in comparison from the mass market. This part has less validity for the plan in comparison from the mass market. Green: In this part of a segment of a matrix, reflects to a measure of appeal from the point of view of a segment and has smaller validity for marketing-plan developed for a retail network. Targeting strategyTargeting strategy in the marketing plan of business al so defines viability. The target market for marketing plan must involve those people who have preferences for Fair trade products as children, youth and people of middle age should participate all. The company should estimate demands of clients, with objective to reveal them in well planned in the image. For this purpose the firm should analyze the preferences and taste in Fairtrade products. The consumer behavior should be well analyzed prior to the beginning of targeting strategy. (Porter, 1980) Positioning strategy: positioning in the arket for separate types of production plays a major part in the marketing plan. Fairtrade products should be located in city centre market in all stores of Tesco. Fairtrade products for youth and people of middle age in the Great Britain and other countries are recommended. For satisfaction of a growing demand for target clients for Fairtrade products, the product will be positioned in a convincing manner. On quality Fairtrade hints innovative design and to the added cost, this product will be positioned in intelligence of clients. This brand competes with the license goods offered by Wal-Mart.For this purpose the companies should go on some innovative modes to entice attention of clients to production of Fairtrade products. 3. Competition analysis (major competitors, their strengths and weakness etc) Strategy: Tesco accepts effective marketing strategy for achievement of objects in view, which are viable during long success of start of the business. By means of these strategies, the company competes in the world market and has reached the top position in field of retail commerce. The company is organized in viable image which is responsible for its lead positions in field of retail commerce.For this part, model of McKinsey from 7Ss as strategy, staff, shared values, structure, skills, system and style is applied in Tesco. Five forces of Porter model is applied for an assessment of competitive advantages of industry. Tesco PLC works in industry of retail commerce, which is diversified industry. Progress of a competition in the industry for PLC Tesco looks as follows: Porter’s Five Forces Analysis The analysis of structure of the industry should be undertaken to find effective sources of competitive advantage. Porter’s Five Forces, 2008)Therefore, with objective of the analysis of the competitive environment of Tesco, analysis of Porter’s five forces has been used by the researcher as follows: Threat of substitute products and services †¢The threat of substitutes in the grocery retail market is essentially below for food stuffs and f rom an average up to high for non food items. †¢In retail trade of food stuffs, substitutes of the giant food retailers are chain of small convenience stores and organic shops which are not considered as threat for supermarkets as Tesco which offer products of high quality under significantly lower prices. Besides Tesco is further holding its upper hand by, opening Express shops in local cities and the city centers thereby creating obstacles for these substitutes in the market. †¢Nevertheless, threat of substitutes for non food products, for example clothes is rather high. It is necessary to note, that until then as economic recession prevails, clients will be inclined to discounts, and consequently, Tesco is threat for special-purpose shops. (Porter’s Five Forces, 2008) Threat of entry of new competitors †¢Threat of occurrence of new competitors in the food-processing industry is low. It requires huge capital investments to be competitive and to create a brand. The basic brands which have already grasped retail trading in food stuffs are Tesco, Asda, Sainsburys and Morrisons and their fraction is 80 % of shopping in the Great Britain. Thus, new participants should make something at extremely low price and / or high quality to establish their market. †¢Reception of permit from planning local self-management borrows a significant amount of time and resources for creation of new supermarkets and it is therefore a significant obstacle for new participants. Intensity of competitive rivalry The intensity of competitive rivalry in food and grocery retail industries is extremely high. †¢Tesco has an intensive competition from the direct competitors, including Asda, Sainsburys, Morrisons and Waitrose which compete with each other at the price, products and promotional activities. Therefore it is necessary to emphasize, that Asda is one of the basic competitors in this segment with an increase in fraction of the market from 16,6 % up to 16,8 % in 2010 financial year / 09 while Sainsburys has shown growth up to 16,1 % from 15,8 % and Morrisons up to 11,6 % from 11,3 % through the same period.Slow growth of the market in essence means that these increases of a fraction of the market from competitors became more active in the mark et rivalry which threatens leadership of Tesco’s position in the market. (Porter’s Five Forces, 2008) †¢In rural areas where the nearest supermarket maybe at some distance, some primary consumers are attracted by Somerfield and Co-op. †¢Rigid discounts by Aldi, as well as Lidl have taken in the market during recession. In 2008 they have recorded growth of sales more than on 25 %.Bargaining power of buyers †¢Bargaining power of buyers of buyers rather high. †¢In cases when products have small differentiations and more standardized, switching cost is very low, and buyers can easily be switched from one brand to another. †¢ It was offered, that clients are attracted towards the low prices, and with availability of online retail stores, the prices for products can easily compared and, thus are chosen. Bargaining power of suppliers †¢Supplier’s bargaining power is low. It is necessary to note, that suppliers are always inclined towards big grocery food retailers and fear to lose the business contracts with large supermarkets. Consequently position of retail commerce of Tesco, Asda, Sainsburys further strengthen and negotiations are positive to receive the lowest possible price from suppliers. (Porter’s Five Forces, 2008) SWOT Analysis of Tesco SWOT-analysis Tesco in the Great Britain: Strengths Reputation of Tesco for low costs of products, can receive Fair-trade cotton clothes high market proportion in the Great Britain.Tesco growth in sector of insurance provides financial stability for Tesco in the Great Britain. Other important factor is the increase in growth of sales through the Internet and fair-trade products of a cotton fabric can be included in these sales. Brand recognition of Tesco in the Great Britain is the important force and will help fair trade products of a cotton fabric. (MacDonald, 1999) Weaknesses Tesco’s weaknesses are that still it substantially depends on the Great Britain for its sale. Hardly will it support fair commerce objectives for cotton fabric.Business-model which Tesco uses approaches for the Great Britain, instead for other world. Though Tesco sales grow with the low priced items there is a falling on sale insignificantly on expensive products. If Fair-trade cotton clothes are perceived as insignificant, its sales objective will not be reached. Tesco suffers from hopeless debts, debts on a credit card and household insurances claims. It is financial wearisome. Opportunities Tesco can carry out a high degree of purchasing capacity to guarantee, that it has a scale effect in its Fair-trade cotton clothing line.Opportunities in Europe and Asia provide excellent possibilities for growth. The most important, growth of on-line sales shows a fine possibility for an increase of sales Tesco. Threats Increase of Fairtrade prices of cotton clothing can lead to decrease in sales of food products and decrease in profit for Tesco. Variations in purchase trends of consumers in Great Britain due to variation of technology can lead to loss of clients in the Great Britain. (MacDonald, 1999) 4. Tesco strategic approach Market objectives and strategies implementationStrategy framework and structurization tools are keys to an assessment business-situation. Risk and cost compromises neatly, leading to specific proposals to raise value and to lower risk. Explicit plans of action, including effective indispensability of planning should be developed Tesco as strategic alternatives. From the general strategy it was spoken above, Tesco is possibly to apply two strategic versions which are prime objectives of the market and also can concentrate on development of the market, though partner attitudes and diversification by development of new products use. Peck, 1999) Market Development Strategy: Joint Developments and Strategic Alliances With entering into new markets such as China and Japan, it can serve key factor in growth of incomes of the company and strategy of expansion. Interests of Tesco in Japan, possibly, will continue to grow in due time as the Asian markets show growth in consumer spending and an increase of the tendency towards retail commerce. These new markets also serve as high opportunity demographically markets. In case of Tesco, one of offered strategic versions in the international alliances is with local retail dealers in the Asian markets.It will be considered as a method of progress and maybe generated on use of existing resources and the competence. Entering into joint ventures or partnership, with objective of reception of a greater scale effect greater presence in the market, Tesco will lean on an extensive local knowledge and experience of the partners while adding own circuits of deliveries, progress o f a product and keeps operations skills to deliver better shopping experience of clients. However, considering huge scales, potential and complexities in these markets, Tesco can feel that being the first mover, advantage is not mandatory. Success of partnership will be connected with three basic criteria of success: stability, acceptability and feasibility. Whether stability will be engaged Strategic circumstances in which the company works are considered. It is a question about a background of this strategy development for expansion of the market. Acceptability is the risk level and probability of reaction of the interested sides concerns to expected profitableness from strategy. Whether technical and economic will consider Tesco has resources and the competence to deliver strategy. (Peck, 1999) Product Development: DiversificationVariations in the business scenario can create needs for new products and services at the cost of established provision Ansoff matrix also assumes, that if new products are developed for the existing markets strategy, then strategy to develop product, should be considered at management level by the company. In expansion and diversifications, assortment of products for Tesco is of critical i mportance for realization of internal progress when new products are developed. Character and a degree of diversification should be considered also in connection with a background of corporate strategy and a variety of a portfolio.Following changing in demands of Tesco clients, it is possible to launch new types of products. It can demand more attention on RD that leads to additional expenses. The retail industry experiences superfluous capacities both innovative services and the products, being the basic competitive advantage. Thus, the innovation should be a major factor for development of products of company Tesco. For example, Tesco can launch portfolio for various stores formats in the Great Britain and each of which is intended for different shopping experience.Though the majority of the East Europe and the Far East outputs are hypermarkets, Tesco also can develop various types of stores in these markets, as well as the added cost by virtue of uniqueness finally will lead Tesco commands the high price. Management of technological innovations is increasing in all strategic decisions more actively. Tesco should use the internal forces and minimize the internal weaknesses for achievement of stable competitive advantage (Though competitive advantage is objective of innovators wish to reach, the possibility of creation of a platform and depends on how they could operate innovations.Nevertheless, it does not mean, that the innovator should possess all necessary capabilities, the main thing, skill to organize and use a possibility of others to create business-platform). (Peck, 1999) 5. Channel analysis (distribution and communication) Tesco continues to focus on peak efficiency of the chain deliveries, but what consequences for sustainability? We detect, Tesco in complex objectives for minimizing waste for satisfaction of cost, productivity and ecological objectives.Under policy of ongoing Tesco network optimization program, Tesco has developed significant infrastructure over the last de cade, by opening new warehouse, site closures, and transferring of management. Tesco moved from Crick regional distribution centre and the Wincanton-operated Middleton 1 depot to add more network capacity at new distribution centre at Livingston and a new purpose-built RDC at Lichfield. Tesco also has opened new centre of distribution in the Goole for the slow moving grocery and non food items. Palmer, 2005) Delivering an integrated transport solution In a transport network, there was precise focus on driving efficiency by progress of a primary network of consolidation while a cargo transportation stations and onwards play a key role in granting constitutions to concentrate on own store pick and delivery operations. This installation allows naturally for the best product grouping so that products come together to store by one special delivery. There also it has been directed on improvement and integration of initial and average fleet of transport.Tesco has been working on various chains deliveries initiatives and new business practice on storekeeping fuel economy, recycling, developing transport solutions, logistics and collaborative options of transport with suppliers. Tescos Environmental Targets About the ecological agenda, some of complex objectives of Tesco in clude: †¢own distribution fleet, Tesco is directed on reduction of emissions of 50 % by 2012 †¢Tesco is participant of Carbon Trust and now participates for measurement of emissions of carbon on five basic categories food coverings tomatoes, Potato, orange juice, bulbs and washing-up liquids. Tesco has obligations on reduction of packing on 25 % on both branded and non branded products during the following of 3 years. To track the progress concerning the obligations, Tesco has rolled out packing parameters with suppliers. Tesco distribution owns more than 76000 SKU and 95 % of volumes are delivered through the centralized distribution. Re-designs of an infrastructure of deliveries for maintenance of stable future growth is one of key problems at 29 constitutions and more than 2000 vehicles, 659 million kilometers of primary and secondary transport operations.But it would be fair to tell, that Tesco has achieved significant progress for last two years and, undoubtedly, the nearest years will see the further variations. (Palmer, 2005) 6. Marketing Management Implementation of Tesco Plc It is the important area for any marketing plan, the organization should follow well defined models and approaches for carrying out of the marketing plan to gain advantage. The following concern to them: Growth Ansoff Matrix serves strategic alternative which helps the company with decision-making on a product and gr owth of the market. The output from this matrix assists in development of strategy of growth. Ansoff Matrix state clearly, that penetration on the market is the best fitting strategy which should be directed on Tesco PLC as it should increase the domination now in the market with the present product. (Wilson, 2005) Marketing integration mix It consist of seven segments and each offer strategy for each marketing combination of Tesco. They are as noted: †¢Product: the Company should provide qualitative added Fairtrade products with a view to maximize the client base. The Price: the corporation should provide Fairtrade products at lower price in comparison with the clients. It is important to provide products on value added price so that to entice attention of clients. †¢Place: Fair trade products offered by the company generates popularity, therefore it should place them in city centre in the markets at huge level. †¢Promotion: the Company should accept aggressive advertising strategy, with a view of an increase of sales during the following of 12 months.Besides it is necessary to accept the Internet, press and publicity, channels for advertising campaigns. The firm should create a slogan or a trade mark to involve clients to Fairtrade products. (Wilson, 2005) †¢People: Tesco should employ well prepared and qualified people to deliver Fairtrade products for clients in the effective image. The company should provide training of the people to make their competent enough, to use new technologies in effective manner. †¢Process: For accommodation of Fairtrade products aggressively and effectively, the company should accept approach ?2? of marketing.It also should develop individual systems to develop process by easier for clients and employees to communicate on delivery Fairtrade products. (Wilson, 2005) †¢Physical evidences: the Company should raise availability of Fairtrade products for clients, placing them in city centre of the shops located in the Great Britain. 7. Contingency Plan In case of failure of the market plan, firm will go on development of the market instead of market penetration that has been offered in Ansoff matrix of marketing strategy.The company will develop new strategy for progress of the market, with objective of studying of new areas for trading in products of Fairtrade in positive successful approach. The alternate plan of the company will make 10 % from the marketing plan. The corporation will change the marketing strategy to distract attention from penetration on the market for progress of the market in long-term profitability of performance and achievement of corporate objectives. (Hague,2002) Conclusion Success of Tesco shows, how with branding and effective granting of services that one can achieve in moving beyond splashing a logo on Billboard. It assisted powerful identities, having made them retiling to the concept into virus and its spending in culture through various channels: cultural sponsorship, political disagreements, consumer experience and expansions of brands. In quickly changing business-environment with pressure of high competitors, Tesco new strategy of expansion or diversifying into existing with a view of maintenance should accept its lead positions in the market in already installed retail market. The company should adapt for quickly changing circumstances constantly.Strategy formulation is necessary to consider as process of continuous training which includes studying objectives, influence of possible actions on achievement of these objectives and how to carry out and out these actions. Quality of formulated strategy and speed of its realization therefore directly depends on cognitive and behavioral of Tesco-processes. In the large organizations as Tesco strategy should be analyzed and it is carried out a t various levels in hierarchy. These various levels strategy should be connected and mutual supported. Strategy of Tesco at a corporate level defines business in which it will compete Tesco in such a manner that the basic attention resources, transform the distinctive competence to competitive advantage. From stated above, it is possible to come to the conclusion, that the marketing plan plays a key role in Success or a failure of business of the company. The plan includes various actions which are directed on the maximal profit on the some people of new policy or practice. Strategic management is the important part of the marketing plan.