Marketing Strategies Of Tesco: Elements, Segmentation, Positioning And Marketing Mix

1. The concept and process of marketing

1. Explain the various elements of the marketing process in Tesco, by providing an overview of marketing process in Tesco. You can discuss marketing audit process in Tesco; conduct a SWOT analysis for Tesco and identify marketing objectives of Tesco?

2. Evaluate the benefits and costs of a marketing orientation, and establish links between marketing orientation and building competitive advantage in Tesco. Look at how Tesco is being benefited from building customer satisfaction, relationship marketing and customer retention?

1. Show macro and micro environmental factors which influence marketing decisions in Tesco?

2. Propose segmentation criteria to be used for products in different markets, include a review of Tesco’s main market segments and an explain how they have been segmented e.g. demographic and geographic?

3. Choose a targeting strategy for a selected product/service in Tesco?

4. Demonstrate how buyer behaviour affects marketing activities in different buying situations with examples with Tesco products/services?

5. Propose new positioning for a selected product/service, by comparing Tesco with other supermarket chains?

1. Explain how products in Tesco are developed to sustain competitive advantage?

2. Explain how distribution is arranged to provide customer convenience in Tesco?

3. Explain how prices are set to reflect Tesco’s objectives and market conditions?

4. Illustrate how promotional activity is integrated to achieve marketing objectives in Tesco?

5. Analyse the additional elements of the Tesco’s extended marketing mix?

4. Using the marketing mix in different contexts

1. Plan marketing mixes for two different segments in consumer markets?

2. Illustrate differences in marketing products and services to businesses rather than consumers?

3. Show how and why international marketing differs from domestic marketing?

The following project assesses the marketing strategies along with detailed study of the recent standings of TESCO that is operating in the United Kingdom for many years. The project is being dissected based on various case studies and references related to the company sources. The study includes the basic principles of marketing and gives an impression of the marketing concepts of the company. It comprises of marketing defining, its concepts, possible costs, benefits and elements in the 1^st part. The 2^nd part deals with the complete view on the macro and micro elements while studying the targeting and positioning policies of the company. In the last part the project ends with the positioning planning and examining the impacts of these planning on the operating ideas of TESCO firm (Telegraph 2014).

Tesco utilized various marketing ideas and activities to focus in reducing costs and improve the rendering benefits to their customers.

The macro and micro elements that come under these goals have been discussed in a detailed view below:

1. Economies of Scale: Tesco has their grip in diverse sectors that helps them to buy raw materials in greater extent. This results in low investments and gives scope in endowing over other possible sectors.

2. Using more capacities: The Company does not deal in timely operations or solo product line which declines it of having idle hours of business conducted. The high infrastructure of the company makes it possible to use up the excess capacities to the fullest. Seasonal operations mixed with production synergies makes way for newer opportunities of producing more products (Pearson Education Limited 2005).

3. Expansion base: Tesco deals in supplying their own-brand products that leads to extended chances of supplying the trader with diverse goods in the future. The company is continuously working on growing their services to separate sectors.

4. Lowered promotion costs: Tesco works under a single brand name and have a large extended portfolio of services and products with lowered cost of promotion. Also its popular products give good scope in promoting its new products in the market (The Marketing Association of Australia and New Zealand).

2. Segmentation, targeting and positioning

Strengths

1. Higher market share: Tesco has access to 13% share in the retail market of UK.

2. Insurance: One million motor insurance policies had been insured under the banner of Tesco Personal Finance making it a leader in motor insurance policies.

3. Tesco online: It is the world’s biggest internet super-market and the group has reached sales of over 577 million pounds in the current year, a steep rise in 29% from last year (Tesco PLC 2014).

4. Brand value: The company’s profit increased in the last fiscal year by 78% from the markets of Europe, Ireland and Asia.

5. UK market leadership reinforced: The firm has worked in a successful strategy of multi format strategy that has escalated its advantage of toppling over Sainbury’s in the UK market sales by 71% (Datamonitor 2004).

Weaknesses

1. Tesco is highly dependent on the UK market. They although have a growing business globally and it is expected to add a higher amount of profit revenues to the company in the upcoming years.

2. Debt reduction: The Tesco company has invested large capital sum in its expenditure scales in order to open new stores globally.

Opportunities

1. Non-food trade: The introduction of more and more hyper market stores in the UK makes way for higher expectations of increased retail sales in the market in the recent coming.

2. Beauty and health: The company deals in UK beauty and health products are growing and are considered as the fastest developing skincare vendor in the market (Saylor 2013).

3. Further growth globally: The Tesco firm is now operating from six countries across Europe along with the UK. These countries include Hungary, Slovakia, Czech Republic, Ireland, Poland and Turkey. In Asia it works from their offices in Malaysia, Thailand, Japan, South Korea and Taiwan (Market Publishers n.d.).

Threats

1.The change in the UK market structure: The investors in the UK market are turning into responsible and hard customer in-price. They might incline towards Safeway because of change in its ownership and Sainsbury for their new technical management.

2.Foreign returns could down surge: The international profits is highly based on higher returns as the overseas business goes past vital mass (BCMUK n.d.).

3.Completion from Wal-Mart/Asda- Wal-Mart, the giant shopping supermarket chain from the US has taken over Asda which has shaken the Tesco market in the top billing UK supermarket rank. Asda can now offer in a better price range with quality products range.

4.International investment: Venturing in a foreign land is expensive and requires heavy capital introduction. The investments are used up for marketing, operational cost, added distribution and purchasing land (Alternative Minds 2003).

Tesco has changed and looked deeply into their activities and business outline since it came under work. The company is in the multiple sector business since as early as 1990 to stay right on top of their business competitors. The company in the late 1980’s was considered as a low market product seller offering cheap goods. The scenario improved after the company focused on their marketing ideas of reaching out to more customers globally with their diverse set of services. This resulted in setting up a new image altogether giving it a new establishment. The company formed around the transforming marketing dynamics and worked in various areas geographically and social materials like books, DVD rentals and many more (Open 2008).

Tesco gained revenues that amounted to 33,557 million pounds that received an increment of 18.7% of the total amount of last year 28,280 million pounds. The total revenues are accumulated from three geographical parts- UK, Asia and Rest of Europe which totaled to 73.8%, 8% and 10.1% of fiscal income respectively. Extra revenues summed up to 8.1% of Tesco’s 2003 profit (Air CCSSE 2013).

Annual returns in the UK accounted to 24,760 million pounds with a rise in 16.2% from that of the previous years’ returns which were 21,309 million pounds. Tesco opened 8 new builds, 21 extras and 13 extensions making the Tesco 83 in all of non-food store space. The company also has 20 superstores, 4 metros, and transformed 138 T&S Stores in Express format.

3. Individual elements of the extended marketing mix

Year round returns in the UK summed up to 3,385 million pounds with a rise of 27.1 % to that of last year’s 2,664 million pounds. The company is a leader in the hypermarket sector with 4 out of 5 European markets. They serve 3 million customers per week and employing 41,000 individuals. Tesco has further opened more than 20 stores in Central Europe and has an annual sale of 2,669 million pounds from last year’s 2,031 million pounds, a rise in 31.4%. Tesco has up surged in the Asian market as well with more than 50 hypermarkets with more the 20,000 employees. Thailand is its largest market as it has 35 stores (Business Perspectives 2006).

Micro Factors which can affect the marketing strategy of Tesco

• Competitors: Market competition is a tough phenomenon when other companies start to serve the people at lower pricing resulting in lower expenditure.
• Employees: The employees are the main backbone of nay business. The company needs to attend all their requirements and need as a fall out can lead to delay of work and executing marketing plans.

 Macro Factors which affect marketing strategy of Tesco

• Economics: The market dip in 2008 made the consumers spend less. The high end products from Tesco’s stable took a reduction in their sales and the company had to think of newer trends to sell them.
• Environmental: The environmental concerns should also be kept in mind while promoting a product. If any of the Tesco products cause in harming the subjects of the environment then it will get tough to make a niche for that product. The company’s marketing strategies would get the hit if their products are not environmental friendly (Coriolis Research 2005).

Tesco has a large production of consumer appliances. LCD televisions are one such product and based on its categories the company has set up a target strategy of selling LCD in the UK markets.

1. Geographic: The company targets the lower and middle income and professionals from every sectors. The LCD range I available in UK and other 13 countries across the world. It is sold keeping both the urban and rural customers in mind comprising various age groups.

2. Demographic: Television is viewed by one and all be it a joint families, individuals or nuclear families. People from all age groups and profession are prone to watching it some point of time. The target area is thus diverse and widespread.

3. Behavioral: Customers are literate about the various types of offerings they are getting from investing in a particular amount. Customers are doubtful and positive at the same time (Greg Allenby n.d.).

The Tesco group targets for their brand LCD Technika TV focuses to the cost effective people who expects a good deal with multiple facilities. The target area of holding up the LCD is generally the supermarket stores.

The target strategy is further grouped under these policies:

1. Functional: The Tesco professionals segment their customers under the range and offers that they want from their LCD sets. The models are grouped under their features and additions.

2. Price: The LCD sets are marked with different pricings depending on its models and offerings so that their various target sectors can avail it (Tesco PLC 2012).

The market depends a lot on the consumer behavior as it is about an individual or group of people with similar preference or different choices. Consumers have a typical set of mind and selection process that makes them secure a product. The studies show the consumer of various societies with their preferred choice of product taste and their change in behavior on other products as well (Saylor n.d.).

Factors affecting consumer behavior

The factors which affect in the consumer behavior are based on these points:

1. Social Factors: It has the reference groups, family social roles, membership groups, status, etc.
2. Cultural Factors: These comprise of the culture, sub cultures, society trends, classes, etc
3. Psychological Factors: these factors include the perception, outlook, beliefs, learning, motivation levels, attitudes, etc.
4. Personal Factors: It comprises the way of life, revenue, age, buying power, individual character, life style, etc. (Columbia n.d.)

Point of Difference	Tesco	Sainsbury Store
Marketing Strategy	The company believes in holding its leadership position by endearing themselves to the customers through promotion of brand awareness and loyalty.	Here the company is fighting from its weakened market position and focusses on growing the market share by keeping a keen focus on the aspect of retaining the gained customers
Product Portfolio	Covers food and non-food items which includes almost each and every need of the shopper.	The store offers similar products with its diverse products range but aims to satisfy different classes of individuals separately.
Place and Distribution	Tesco Operates 1800 different stores across UK	Sainsbury Store has about 950 stores in UK.
Promotional Strategy	Tesco practices a modified style of direct marketing where it utilizes the information collected through loyalty cards for anticipating the needs of its customers.	Sainsbury Store on the other hand practices limited level of direct marketing but also utilizes its Nector loyalty cards for collecting information about habits and tastes of its customers.

The products of the Tesco categories are wide and diverse. The buyers can choose from a wide range of products that helps them to get more and more options. The products are kept with different price schemes with different product offerings and availability.

The availability of Tesco products in their various stores and super stores is also an advantageous aspect. The products should be offered across their many stores in various places globally. So many stores across so many places keep it among the popular and easily getable products in the market (CCSE Net 2010).

Pricing a commodity is very tricky and can amount to heavy profits or incur unfortunate losses. The price of a material should be marked keeping the demand and diverse offerings of the material. The target market should also be learnt properly to understand the consumer behavior of the group. A quality product shelled cheap can be a loss factor similar to a vague product with high pricing but no buyers resulting in losses.

4. Using the marketing mix in different contexts

The promotion factor of Tesco products has always been a deep researched issue. Tesco has over the years taken service from television advertisements to reach out to their customers. Product awareness is a must essential to get the maximum returns from a highly acclaimed product (Philip Allan n.d.).

1. People: The serving people under the Tesco wing is an asset as it is they who takeover all the initial obstacles. The service staff to the back end personnel the Tesco group of officials is well trained and skilled. They make sure of catering to all the requirements of their customers globally.

2. Physical Evidence: Customers like to believe what they see. The Tesco stores and superstores are kept clean and tidy to make it easier for the customers to buy. The sections are separated in a planned manner making the shopping places easily accessible and fast in getting the products. Even their online store has an easy use friendly interface and easy to shop options (Pearson Custom n.d.).

3. Process: Tesco has developed their buying process as they maintain a smart and fast buying procedure. The products can be purchased from their stores by till payment or self service which is ideal for saving time. The online payment features have also been made less complicated as compared before. The online products are priced at a cheaper price than compared to the real stores due to low availability of the products (Clarity Marketing Ltd 2005).

Element	Fruity Breakfast Cereal	Tesco Mobile
Product	Energizing Fruity Breakfast Cereal which comes with the ingredients to keep people healthy and kick start the day with energy.	Advanced Mobiles from the brand of Tesco which provides superior connectivity and longer battery hours.
Price	Offer a highly discounted offer price for a limited period.	Offered as an affordable no frills phone which is priced as an entry level mobile.
Promotion	Would be promoted using commercials in leading channels in UK. Regular monthly feature in Sunday newspapers.	Promoted through offers and discounted prices through local newspapers, magazines, and radio.
Place	Offered across UK at the departmental stores of the chain.	Exclusively available at the departmental stores of the chain in UK.

Marketing to Business	Marketing to Consumers
Customers are the people who purchase goods and might not be the consumers.	Consumers are the direct purchasers who would consume the goods.
Customers would only buy a particular good when there is a demand for a particular product or service. SO marketing efforts need to be directed towards the end consumer and not the customer/business.	Consumers would buy the particular good on offer as and when they need. Here the marketing efforts is definitely directed towards the consumer who is likely to make the move.
The value of relationship needs to be maximized.	The value of transaction needs to be maximized.
In this case it is a small focused target market.	It is usually a large target market.
Here brand identity is created through personal relationships.	Brand identity gets created through repetition and imagery.
It involves educational and awareness building activities.	It involves merchandising and point of purchase activities.
Businesses take rational buying decisions which is based on the business value.	Customers often take emotional buying decisions which is based on status, desire and price.

National marketing can be defined as a sale of different products or services to a local geographic location. The business needs to deal with a specific group of competition as well as a specific economic scenario as well. This makes it a lot easier for companies to market their products and services. Besides there is no such language barrier when it comes to marketing these products and services and it also facilitates easier collection and interpretation of data collected. On the other hand International marketing is a situation where the company is offering its products and services to different countries. With geographic diversity, there is a drastic change from one place to the other. Organizations need to deal with individual laws of different countries. It also needs to create separate set of marketing strategies for each country it offers their products or services (The Marketing Association of Australia and New Zealand n.d.).

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