Globalisation of Tesco - Research Paper Example

? Globalization Of Tesco Globalization of Tesco It is very necessary for any company to set marketing strategies in such a way that the business gets a broader customer base, i.e. a large clientele, from all walks of life. Marketing trends are wholly based on the wants and needs of customers. To make business profitable and expandable it is essential to keep up with the demands of customers and cater to them properly. Britain’s famous retailers Tesco and the French retailer Carrefour are competitors and have been vying for the best spot (second in this case) for a long time. Both of these brand names have not only established a broad customer base in their homelands, but are also well established in other regions around the world. If we analyze the spread of Tesco and that of Carrefour, we can see that Carrefour has indeed taken a lead when it comes to establishing a global presence. The consideration of the marketing strategies of Tesco and Carrefour is very important to analyze the impact that they have upon their customers. By conducting an analysis of the retail marketing it was identified that the only reason Tesco was able to pull a large clientele was because of its effective and flexible marketing strategies, which were designed by specifically defining customer’s needs and making the customer’s choice a preference. The strategy employed by Tesco involves the use of many different deals and schemes, which gives customers a lot of options to choose from, and therefore keep the customers happy. In retail business, a happy and satisfied clientele means a lot of customers coming back again for business and this is what is happening with Tesco. They are earning profits at a growing rate and they are capitalizing on the growing profits by global expansion of their business (Zoratti & Gallagher, 2012). When it comes to the world market it can be observed that both of these retailers are big contenders eyeing for the first place in retail category. Although there are giants present in the market in the likes of Wal-Mart, for instance, but then again they are yet to expand globally. The only country they are operating in besides the US is Canada (Lal, Quelch & Rangan, 2005). The start of Tesco as a retailing business was not a glamorous one. They had started as a chain of market stalls, and then expanded by opening shops. Currently they are the biggest retailing store in England as they now consists of extra stores, hyper markets, metros, home plus and Tesco Express. If the current situation of Tesco is to be considered, they have dwindling profits. The main reason for that can be explained by some of their marketing strategies that backfired causing some serious controversies. The most prominent controversy involved the selling of halal meat and horse meat that was found in the burger patties being sold by Tesco. Despite these controversies when it comes to the global level, it can still be seen that Tesco leads ahead in comparison to Carrefour. Tesco is no more a departmental store, but has many other businesses under its wings. The basic reason behind the success of Tesco in the international market is its partnerships with local companies. The tactic used by Tesco involves establishing its business with local retailers so as to get access to the local masses easily without the need of creating their brand presence prior to establishment. Except for Japan, Tesco has been generating decent profits in the Asian region. Tesco however, sold its operations in Taiwan to Carrefour stating that they would concentrate in all those regions where they have a strong market. This marketing strategy would help Tesco establish a strong market presence. Another key factor that makes Tesco appealing to customers is that it sells its products under its own brand, rather than stocking products from different vendors. This makes it shopping at Tesco very appealing to the customers, for every necessity can be found at their stores (Zoratti & Gallagher, 2012). However, when Carrefour is considered, it needs to be noted that it does not sell products under its brand but usually stocks imported products on its shelves. This strategy has failed to take the Asian market mainly because of the fact that it failed to adapt with the local trends. Consumer behavior was not followed properly which therefore resulted in poor marketing strategies, causing Carrefour to halt its operations in various countries. The most prominent example is that of Korea. After operating for period of ten years, the company failed to get profits that had been expected. As a result, Carrefour is now wrapping up its business in Korea completely in the same fashion as they had to in Japan. Carrefour is the largest retailer in Europe but when it comes to the international level it needs to be noted that Tesco and Carrefour compete neck to neck. The biggest flaw in Carrefour is that they do not easily adapt to the way of life and local trends while moving to a new market. These factors should be incorporated in its strategic planning when they plan to expand. The reason that Tesco is advancing at such a rapid pace and, at the same time causing all the other international retailers to revise or redesign their retailing strategies, is because of the way it translates its knowledge about customer preference and then get customer’s attention, thereby gaining market shares. Tesco’s data management systems are excellent, and the customer related data is stored in such a manner that it helps Tesco in efficiently marketing its products according to market trends and the customer preferences. Tesco also has to its name an online grocery operation which is considered as one of the best and most successful ones in business. Tesco is also in talks to buy Carrefour’s majority of the franchises working in the Asian region due to its increased popularity in the region. One of many reasons which resulted in Carrefour backing out from South Asian region is that it mainly concentrated on high spenders rather than focusing on the larger population. Another flaw was that Carrefour remained loyal to their idea of hypermarkets whereas Tesco went on making smaller shops in the rural areas, thereby being able to cater the public at large. Furthermore, Tesco also understood that consumers an experience a lot better than Carrefour, which had already been operating. As mentioned earlier, one of the key points when entering an entirely new region is to have local support which can be gained if the company in question enters into a partnership with some local companies. Carrefour didn’t stick onto this strategy, whereas Tesco first brokered deals with local businesses and then then later started its stores, which helped them a lot in gaining access to the masses and establishing a clientele that would ensure a good turnover. On the other hand since Carrefour was all alone, it faced quite a lot resistance from local competitors who were already in a better position. This made it quite difficult for Carrefour to continue its business in an alien territory (Pringle & Thompson, 1999) Due to current economic conditions all of these retailers are facing problem in their homelands as profits have gone down dramatically. Therefore, they are now looking for expansion at global level to make up for the loss they are incurring back home. Results have shown that Tesco has done some real job in expansion whereas Carrefour ventures are no more that profitable as the profits are not meeting the expected values resulting in shutdown and a constant changes in their marketing strategy. Tesco’s current marketing strategy has been formulated keeping in view that they must be sustainable, and for now, positive financial results are indicative of the sustainability of Tesco in the international market (Marketing Society, 2009). Tesco uses four basic units to manage its businesses and upcoming strategies. Its database is extremely interconnected and maintained properly which serves as an impetus to its success in the international market. One of the best quality of Tesco which helps it in being better than its rival Carrefour is that it does not keep its products and other strategies same throughout. Tesco makes amendments and tailors its brands and product as per the lifestyle and culture of a place where it’s operating. Tesco tends to increase its sales by going on towards the underserved, low income neighborhoods where generally other retailers avoid this. This way Tesco has been able to gain a clientele composing of people ranging from high spenders to squatters (Hastings, 2007). Tesco’s expansion is going to be sustainable in the long run and this can be said because the conservative business plan that it has undertaken shows that Tesco does not enter numerous regions at the same time. At first it establishes itself in a particular place and once its roots became firm, then it starts diffusing gradually. Since Tesco operates in the form of small ventures, even if one of the venture fails the loss wouldn’t be huge. All these policies have enabled Tesco to reach the position in which it stands today. Even though Carrefour was the second largest retailer in the world but maintaining the spot has become impossible with the continuous spread of Tesco’s franchise. Investing in underserved areas has helped Tesco majorly. But to continue being sustainable, it is necessary for Tesco to keep in mind the environmental aspects of its business as well. When it comes to food products, hygiene and purity also matters a lot. Provision of fresh food according to the concerned population’s life style, if taken care of can help boost its sales. To sum up our entire discussion we can conclude that Tesco is far ahead than Carrefour. With its policies and the way it is operating, the company promises to have a successful future. However, when it comes to Carrefour it’s time they must plan and go ahead of their traditional strategies if they want to retain their status as number two retailer in the international market. (Stahlberg & Maila, 2010). References Hastings, G. (2007). Social marketing: Why should the Devil have all the best tunes?. Amsterdam: Elsevier/Butterworth-Heinemann. Lal, R., Quelch, J. A., &Rangan, V. K. (2005). Marketing management: Text and cases. New York, N.Y: McGraw-Hill/Irwin. Marketing Society. (2009). The future of marketing. London: Marketing Society in association with accenture. Pringle, H., & Thompson, M. (1999). Brand spirit: How cause related marketing builds brands. Chichester: Wiley. Stahlberg, M., &Maila, V. (2010). Shopper marketing: How to increase purchase decisions at the point of sale. London: Kogan Page. Zoratti, S., & Gallagher, L. (2012). Precision marketing: Maximizing revenue through relevance. London: Kogan Page. Read More