Advance Diploma Of Marketing: Importance Of Marketing Strategies And Risk Management Utilizing TESCO As A Case Study.

Developing the marketing objectives

Discuss about the Advance Diploma of Marketing.

The current assignment revolves around the core marketing strategies and its effectiveness. There are several definitions of marketing; however, it is observed that marketing is the technique of planning, implementing the concept, pricing and promotion to gain certain advantages In addition, it can also be mentioned that the concept of marketing is related to achievement of organization goal and objectives. Thus, in order to understand the importance of marketing strategies, the current operation of the organization TESCO has been considered. The report starts with an overview of the marketing objectives and likewise, the report carries forward with risk marketing risk management strategies.

The strategic directions of TESCO can be categorised in different sections. The starting point of the organization is the market where it serves the large number of the customers. It is observed that the UK market is the most successful market where TESCO serves most of its customers. As per the current report, the UK market represents more than two-thirds of the overall sales of the organization. The main focus of the organization is on service, range and availability. The core business of the organization is based on the effective service. However, the organization is lagging behind in implementing this in the recent time. In addition, over the past few years, the organization has significantly increased the number of products in its range. Nevertheless, this has put certain pressure on the store challenges of the company.

From the strategic direction of the organization, it has also been observed that Tesco needs to protect as well as strengthen its financial position. Thus, the organization could maintain the flexibility to invest more on better shopping trip for the customers. Moreover, the organization is committed to stronger financial disciplines across the capital spending. The organization relies on the trust customers, suppliers and the communities. Furthermore, it is also observed that the business model of Tesco consists of products, customers and channels. The aim of the organization is to assure everything in the business that is built in the most efficient way to generate value for customers (McDonald 2013).

Strategic analysis- According to the recent report, in the year 2013, Tesco has achieved revenues that is around £ 35, 557 million, which indicates an increase of 19.7% against the previous years (Lowe, George and Alexy 2012). In the current year, in the UK market, the organization Tesco has extended its operations. As mentioned by Soosay, Fearne and Dent (2012), the organization has also built up 20 superstores and achieved a tremendous growth in the business. Mostly importantly, it is identified that the overall sales in UK market of Tesco is greater than the total sales in Asian market. The organization has increased the market share. Similarly, the brand value of the organization has also increased due to the current operations. However, the structural change in UK market could spark a price way in the coming years (Dowling and Moran 2012).  Further, the returns from the overseas could fail. This could create obstacles for the organization.

Strategic analysis

Nevertheless, it is also identified that Tesco currently holds 13% share of the retail market of UK. The company has a multi-format capability which indicates that Tesco may continue to increase the share in food, whereas maximizing the space contribution from the hypermarket that is allowing the organization to deal with higher share in non-food (Lowe, George and Alexy 2012). Further, it is observed that the international business segment of Tesco is dramatically increasing. It is assumed to contribute a quarter of group profits over the coming years. As put forward by Singh and Sahay (2012), if the geographical spread continues to increase, it may ensure Tesco’s persistent regional growth. Brand value of the organization is gradually increasing as the profits for the operations done by Tesco in UK, Asia and Ireland increased by 79% at the time of fiscal year. Moreover, the organization has strong image and it is associated with the good quality of products and services. As mentioned by Frow et al. (2014), the trustworthy products may represent the excellent brand value. Tesco uses innovative ways of enhancing the customer shopping experience. The organization also put a large amount of efforts in branching out into the finance as well as insurance.

Scoping the marketing opportunities- The organization could pay attention to the non-food retail. The implementation of this approach may provide further marketing opportunities. The new customers could come; thus, the organization may increase the customer base. In addition, the organization could also focus on health and beauty. In order to apply this opportunity, the organization may have to develop the health and beauty products. Lastly, the organization may extend the business to internal platform. For example, it could extend the business in other country where marketers have optimal opportunities for retail business.

Reviewing the current performance of the organization

The current performance of the organization indicate that Tesco has developed a significant multi-format strategy that in turn provides certain benefits to the organization. For example, in the recent time, it has been observed that the overall sales of Tesco has now increased 70% bigger than the increment of overall sales of Sainsbury in UK’s market. As per the competition Commission report, it is difficult for the competitors of Tesco to throw challenge to Tesco. As opined by Mukerjee (2013), the chance of stealing UK leadership by Wal-Mart is less; thus, Tesco is significantly in a strong position in the domestic market.

Scoping the marketing opportunities

There have been certain risks associated with the operations of each organization. More specifically, it can be added that the organization in its own industry might have to deal with some common risks elements. The appropriate risk response could be different from organization to organization based on how the management considers the risks in respect with magnitude. There have been certain steps involved with the risk management strategy that can be applied to deal with the common risks.

Step 1-Identify

The initial step of executing the risk management is to identify the potential risks that are inherent to the business as well as the operation of the organization. For instance, the organization could implement self-assessment process and conduct the survey to learn the facilitated risks. There are certain advantages associated with this particular mechanism. The major advantages of this technique is the capability to have workshop for multiple level of responsibility. For example, the governance level of could have a different view of magnitude of risk than frontline employee. As mentioned by Galician (2013), the decentralized risk ownership may require risk evaluation.

Figure 1: Risk management strategy

(Source: Galician 2013)

Step 2- Assess

The second step is to assess the risk on two dimension namely the likelihood of occurrence as well as the impact of occurrence. While developing the risk management strategies, it is necessary to assess the risks. By assessing the risks, the Tesco could find out further solutions. Hence, Tesco might have to deal with the external risks such as competitor strategies and changes in the market demands. At the end of this step, the risks are identified, measured as well as assessed as to the extent of severity. The resulting information from these steps can be considered as the risk profile. As mentioned by Shani and Chalasani (2013), a risk analysis technique could help to capture information from the first steps with the help of facilitated risks.

Step 3- Measure

The organization Tesco should determine how the exposure can be stated in different terms like the financial challenge, the challenge of damage to business reputation or the challenge of inefficiency in the techniques used.

Step 4- Determine risk

This particular step is about determining the risks in hand. This steps determines the appropriate response that can be effectively managed. In addition, for each identified risk, the particular risk can easily be articulated. It is assumed that if the severity of the risk is comparatively high, there be strong risk response. In addition, it can also be mentioned that each organization may have its own risk threshold. For instance, if the risk response is to accept the potential risks, this could become the part organization’s risk threshold.

Reviewing the current performance of the organization

Step 5- Assign responsibility

This step is about assigning the responsibility to a certain position. Each of the risk should be assigned to a particular position within the workplace of the organization. The person responsible for the positions need to assure that the risk response is properly translated on a regular basis. The responsible person needs to develop the required solutions for the risk identified. For example, if the customers have issues regarding the sales or the services, the sales manager needs to identify the issues. Based on the identification certain solutions can be developed.

Step 6-Monitor

After implementing the risk responses and management techniques, the managers need to take the responsibility of monitoring the significant activities to assure that the identified risks remain within an acceptable threshold (Mitchell and Greatorex 2013). In such case, the organization may adopt the centralized risk management groups to monitor. This group would take the responsibility of determining the extent of risks.

Step 7-Report

The executive management may require the information to be reported that could further allow them. The managers of the organization need to determine the form of reporting to positively inform the core body of the organization.

Step 8-Inform

The information gained from the reports can be further utilized to manage the annual updates of the risk analysis. In addition, the management of the organization needs to adhere to control the usual techniques of marketing.

Identification and analysis of marketing opportunities:

Nowadays, the retail industry has been experiencing the robust growth in the global market. The retail industry is in a growing phase and it facilitates to strengthen the economic development of the country (Ryan 2014). The changing lifestyle and its rapid development have facilitated the organizations to enhance the business opportunity in an effective manner.

Tesco is one of the supermarket giants experiencing rapid growth in the global platform.  It is the third biggest retailer in the world having outlets in 14 different nations (Solomon 2014). Although the organization has established its business in the UK in an effective manner, Tesco needs to focus on their international business for experiencing the profitable outcome. By analysing the positive aspects of the business process management, it can be assessed that the organization has been focusing on enhancing the business in the large demographic areas (Green, Whitten and Inman 2012).

Business Viability depends on several factors including competitive advantage model along with target segment analysis. Moreover, it consists of product growth directions, BCG matrix analysis. Although the organization has been facing difficulties for enhancing business areas in the market, the company operates its business in Asia, including Thailand, South Korea, Malaysia and Taiwan (Gabrielsson, Gabrielsson and Seppälä 2012). The CEO of the organization has stated that they are looking forward to implementing several strategies for gaining competitive advantages in an efficient manner.

Developing a marketing risk management strategy

External factors:

External factors including social, economic, political, cultural and technological factors influence the organization to execute the business process management in an effective manner. In this context, Tesco has been experiencing enhanced business growth worldwide through utilizing its effective marketing opportunities.

Political factors:

Tesco considers the several political factors for executing the business in the global environment. On the other hand, the organization has analyzed each political issue in a detailed manner, which facilitates them in identifying the key development area in the business (Devi Juwaheer et al. 2012). Most of the business analysts have accepted the fact that political and legislative conditions have been influencing the business of Tesco in an efficient manner.

Economic factors:

Economic factors are the most important concerns of the business, as it is responsible for influencing the demand, costs, prices and profits. High unemployment level indicates the most influential factors, as it decreases the effective demand for many goods (Gabrielsson, Gabrielsson and Seppälä 2012). On the contrary, it affects the demand for producing the same product line.

Other external factors:

By analyzing different marketing factors, it can be assessed that the organization focuses on cost, benefits, risks and opportunities for the execution of business in an efficient manner. There are several beneficial aspects of the business enhancing the opportunity for profit maximization. By discussing the benefits of Tesco, several business processes can be identified such as economies of scale, diversification, minimum standards, large employers and flexible hours (Solomon 2014). The strong financial assets of Tesco indicate its capability for implementing diversification into the product category. In this context, Tesco has facilitated in increasing the competition in the global market. On the other hand, the large size of the business facilitates the organization for obtaining benefits from the economies of scales including transportation, distribution, marketing and technology (Ryan 2014).

Costs of Tesco depend on several factors including consumer’s choice, size and market power, profit margins, and accessibility time (Solomon 2014). The CEO of the organization believes that the company needs to have a wide range of products for providing high choice to the consumers. On the other hand, profit margins play an important role in the business, as it facilitates the organization to obtain success in an efficient manner (Gabrielsson, Gabrielsson and Seppälä 2012). Cost analysis includes the accessible time for business. Tesco operates its business 24 hours for providing enhanced facilities to the customers.  

Although the organization has adequate brand values in the international market, it faces several risks in the business. The prime threat to the organization is that the UK structural change could spark a price war (Ryan 2014). On the other hand, most business analysts have discussed that the overseas returns could fall at any point in time. The organization faces threats from its competitors including Walmart and Asda. However, the management team at Tesco has implemented several unique strategies for diminishing the marketing challenges in an appropriate manner (Solomon 2014). In recent years, the organization has been trying to expand the business on the global platform.

By discussing the opportunities of the business, it can be assessed that Tesco can enter into the health and beauty segment for the enhancement of business. Moreover, the organization needs to focus on further international growth. Tesco has conducted a customer feedback where the organization has accumulated suggestion on developing non-food retail section (Green, Whitten and Inman 2012). Hence, it can be assessed that the organization has several opportunities for the business enhancement in the global platform.

The prime goal of the organization is to maximize the profitability of the business within a short timeline. Tesco is one of the giant organizations in the supermarket industry. The size and economic status of the organization have facilitated them to retain an enhanced brand value in the global market (Ryan 2014). With the involvement of the effective strategic implementation, the organization could achieve the organizational objectives in an efficient manner. On the other hand, the organization recognizes its customers for the enhancement of the business in the large demographic areas (Solomon 2014). The increasing market share of the organization has facilitated the company to achieve goals and objectives of the business in an appropriate manner. There are three prime opportunities for the organization including entering into the non-food retail, health and beauty and further international growth. Hence, it can be assessed that different opportunities of the business facilitate the organization in obtaining the profitable outcome in an efficient manner.

Evaluating each opportunity to determinate its impact on the current business:

Tesco has numerous opportunities for enhancing the business in the global platform. Tesco may include new ideas for the enhancement of the business in an efficient manner. These new business opportunities involve non-food retail, health, beauty, and further international growth. With the engagement of the new business involvement, the particular organization could enhance its assets in the business (Green, Whitten and Inman 2012). The core strength of the business is to increasing market share to develop the business opportunities. By entering into the non-food industry, Tesco could be able to enhance the business profitability in an efficient manner (Solomon 2014). On the other hand, the enhanced brand value of the company would facilitate them to obtain success in the new business ventures. Hence, it can be assessed that the new business engagement would be the best possible solution for the profit maximization.

Long term strategic objectives

The organization needs to focus on clear as well as definite plan outlined by retailer to tap the market. The organization needs to develop plans to establish a long-term relationship with the customers. In addition, the Tesco needs to focus on Asian market or the organization could extend the business in other Asian countries. In the recent time, the Asian economy is boosting the market. Thus, the organization may find effective marketing opportunities. In addition, the organization needs to focus on the products and customer services. Therefore, they could develop some new products based on the needs and demands of the market.

Formulating the KPIs

There are certain key performance indicators that could help to develop organizational performance.

• Customer recommends Tesco and pay frequent visits
• Highly developed products and services
• Customer services should be developed
• Requirement of non-retail food with existing services

The featured marketing plan for Tesco is suggesting the changes for the larger organization. It is to be indicated that the structure of the marketing plan for a larger organization may ensure several potential risks. Hence, it is required to formulate the relevant risks management strategy to mitigate the possibilities of emerging risks. Since, the marketing plan has been formulated for a larger organization, the establishment of the effective training and development session for the managers would be beneficial. In considering such process, the assistant director will be the major responsible person to provide training to the other managers in a hierarchal structure. The training process will be associated with the collaboration of different managers of diversified departments. The senior manager will assess the overall risks to the managers in such training period. Each of the segments will be discussed and the managers can even consult with other while undertaking any organizational decision.

The marketing plan is structured by keeping the focus on the marketing objectives that has been set previously. The structured process of the marketing plan determines the frequent way of conducting the business. The marketing activities are listed further:

• The marketing plan needs to be structured with the analysis of marketing mix where the different marketing segments will be analyzed. The application of marketing mix will be helpful for Tesco to identify the product, place, people, and the promotional strategy.
• Formulation of the structured budget followed by a synchronized action plan is necessary to understand the required amount of the capital investments and sequential actions.
• Tesco even needs to evaluate a monitoring plan for facilitating the frequent improvisation of the business practices.
• The entire summarization of the plan is needed to be documented and presented to the upper management.

Reviewing the documents is necessary in considering the frequent improvisation of the process. The marketing plan will thus be well structured and well contented.

Conclusion

On the completion of the report, it can be mentioned that effective marketing plan could provide certain marketing opportunities. It can be mentioned that if the marketing plan fails, the organization could go on enhancement of the market rather than penetrating the market. The organization needs to develop new strategy for the development of the market. In addition, the current operation of Tesco indicate that organization has a stronger position in the UK market. Tesco needs to pay attention to its customer service; if the organization provides an effective service to the customers, the company may increase sales and achieve an effective financial position.

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