Marketing Concepts of Tesco - Essay Example

? Marketing Table of contents I. Introduction Ii. Elements of marketing concepts Iii. Characteristics of marketing oriented organization Iv. Benefits and cost of selected marketing organization V. Macro and micro environmental factors Vi. Segmentation criteria Vii. Targeting strategy Viii. Problem faced by Tesco Ix. How to rectify the problem X. New Tesco positioning in U.S Xi. Conclusion Marketing refers to all inclusive functions that relate the company to customers’ needs and wants, with a core purpose of getting the right product to the right place at the right time. Marketing also includes system of management that identifies, anticipates and supplies customers’ requirements efficiently and profitably. Marketing objectives rotates around meeting the needs and wants of customers. It is an organization broad activity that involves a process of keenly analyzing customers’ needs, and getting ways to provide goods and services to meet those needs. Effective marketing does not only provide customers with products and services, but also successfully provides changing benefits to the changing needs and demands to various consumers (Stahlberg, 2009). Elements of Marketing Concepts Marketing concepts introduces new requirements to the product development process. An organization that uses marketing idea to improve it products starts with market research. It tries to look for consumers wants that has not been met in the market. It also link with consumers, to investigate the type of products they would like to be supplied with. This helps the organization to know what customer wants even before moving to the next step of creating new products. For a company to fully incorporate marketing concepts in its operation, it has to fully observe every element that is involved in marketing concepts. These elements are; ethics, consumer psychology and marketing mix. I. Ethics This refers to the psychological effect that marketer’s impact to the consumers. This influence always introduces marketers’ to the field of legal guidelines and ethical challenges. For a successful business, marketers must complement and maintain honesty when dealing with customers. They must avoid actions that can affect consumers demand. II. Consumer Psychology Mostly every facet of marketing is guided by consumer psychology and behavior. Marketers have realized that consumers can be driven by advertisement in making a decision on what to purchase. They have identified that a desire for a service or product can be kindled in a customer who would otherwise have no such desire. This has influenced marketers to keenly developed advertisement that have a psychological and emotional impact to the consumer (Sullivan & Adcock, 2002). III. The Marketing Mix This involves all elements of marketing. Some popular components of the marketing mix are; advertising, sales, promotion, public relation and to some degree product development. Characteristics of Marketing Oriented Organization The main purpose of marketing oriented company is to ensure that they keep a close relationship with their customers. This gives the company competitive edge to stay ahead of their competitors. Some of the distinctive features that define marketing oriented organizations include; shared values, organization, stakeholders and ultimately policy. All the decisions made by this business oriented organizations should consider the customers demand first. They should ensure that they share common values of high quality products with the customers. These organizations also have few levels in their organization structure. Their policies are clear and unambiguous to understand and apply. They always have a long term strategies that are flexible and participative. These companies always put stakeholders’ expectation first before they begin to make some critical and dynamic organization decisions. Benefits and Cost of Tesco Fresh and Easy Tesco fresh and Easy sell its products at a lower prices compared to other companies. This has been it significant advantage to US middle and low level consumers. The organization ensures that its customers are able to purchase fresh foods at a 15% lower, in price than they were used to. The organization is also known with giving it customers’ excellent offers and promotions. Early in 2009, it launched a 98% variety of products and 1% festive offers. It also came up with a campaign where it offered $6 –off ticket to shoppers who spent more than thirty dollars in a visit. One of the costs that hit Tesco fresh and easy is its location. The organization opted to launch its primary branches in southern Carolina; Phoenix and Las Vegas. These three cities have always been the worst hit by the US downturn. This has immensely cost the company a lot of its fortunes. It has made the company continue operating under losses since it was started in US (Plunkett, 2008). Macro and Micro Environment Factors: A. Micro Factors The company faces almost six micro element forces that affect its ability to serve customers. These factors are; suppliers, marketing intermediaries, the company itself and customers. For instance, marketing intermediaries play a vital role in helping the company to promote and sell its products to the final consumers. Some of the intermediaries like resellers help the company to reach customers and make sales to them. Other intermediaries like marketing service agencies help the company in targeting and promoting its products. The second force is the company itself. Top management is responsible for setting of long term goal and making other key strategic decisions. Marketing managers should also ensure that they work closely with the rest of companies departments. This ensures that the company key departments like finance, manufacturing, purchasing and accounting are fully linked to improve marketing operations in a company. Suppliers also play a key role in the company operation. They are responsible of providing the company with needed resources. They ensure that there is the availability of raw materials needed in companies operations. This helps the company to avoid production stoppages that allowing sustainable flow of good to the markets (Hamilton & Webster, 2012). B. Macro Factors Macro environment refers to forces that affect both the organization and its external competitors. These forces prove to be harder to control compared to micro forces. Some of these macro forces are; economic factors, legal factors, demographic factors and technological factors. For instance, macro economic factors always check the direction of demand in the economy. For example, if the government reduce taxation rate, there would be a lot of money in the economy. This will lead to upsurge in demand of various commodities. This rapid increase in demand calls for sustainable supplies to ensure the company maximizes its sales. Segmentation Criteria to be used by Tesco Fresh and Easy One of the key purposes of segmenting a market is to allow business marketers to focus on the potential of different class of persons or a region to obtain and use company products. Tesco Fresh and Easy should choose to use behavioral segmentation criteria. When carrying out behavioral segmentation, Tesco should carefully divide people into groups in accordance with their behavior towards its products. This will help Tesco sales personnel to keenly investigate and understand what the buyers need and want from the product. This will help the sales department to clearly understand what customers want, thus enabling them to tailor different fresh food products to different groups of customers. As a result, this will strengthen the company sales (Grundy & Brown, 2002). Targeting Strategy Targeting strategy refers to the process of identifying potential customers who the business would wish to sell it products to. Tesco should consider low income consumers as their target strategy. Income is used to determine the demand of a product because it clearly indicates a given group buying potential. Tesco should concentrate to serving low income group of consumers because it is able to sell at a lower discount than its competitors. There is growing population of low income earners in America, so with its ability to offer product at a lower prices, Tesco should think of establishing a strong link with this group. The group is known to be more brand loyal than the high income earners. If Tesco succeeds to create a link with this group, and successfully tap this untapped pool of customers, then it will be assured of earning profits (Gopalakrishnan & Sundaresan, 2004). Problem Faced by Tesco A) Consumer, Buyer Behavior This is essentially the most challenging concept in marketing. It tries to understand why customers behave differently in different occasions. It also helps the marketers to know what mainly influences customers to make decisions that they make. One of the main problems Tesco has faced is to change consumers’ habit. Consumers always have their preferred shopping centers everywhere in the world. So many customers in US had already identified their shopping destinations before Tesco Fresh and Easy launched its products in US. US supermarkets being the best in the world, Tesco has faced a formidable challenge in convincing customers who had already become loyal to their local shopping malls to shift. This has impacted negatively on the Tesco sales. There are few customers who are attracted by their low pricing strategy because at some point customers tend to too loyal to the supermarkets they are used to, rather than considering the prices of other players in the market. This fact has contributed to Tesco misery despite it attractive offers and promotions (Doo le & Lowe, 2012). B) Packaging Packaging has also denied Tesco a fortune in US market. Different customers make different decisions and choices depending on their education level. Customers’ decisions to purchase a commodity are influenced by various factors. One of the key factors is the product package. Tesco Company packaged its products with materials used to package frozen food in US. Dealing with fresh food, the company faced massive resistance from consumers who could not believe that the package contained fresh foods. This increased drop in net sales of the company in US. Consumers too tend to be influenced by brand name in their decision on whether to purchase a product or not. According to consumer buyer behavior principles, consumers tend to consider the relevance of the name before buying a product. Different countries have a different meaning to a given name. In UK Tesco refers to a powerful brand which symbolizes quality, value and trust. With this in mind, the company decided to use the same brand name in US. It has appeared that in US, the words Fresh and easy are generic; thus, it will take time to earn status in US market. All these factors related to consumer behavior have significantly contributed to loss of market for Tesco products (Boone & Kurtz, 2011). Solutions to Tesco problems 1. Link with competitors When Tesco decided to penetrate the US market, it highly underestimated its competitors. Doing well in UK, the company thought that it will easily penetrate the US market. This has proved costly to the company. For any foreign company, ignoring the local competitors is the greatest mistake it can make. To revive its operations in US, Tesco Fresh and Easy need to rethink its relationship with local supermarkets. It would be better for the company to consider working with other famous local supermarkets as co-brand. This will hugely boost its sales. Local supermarkets have wider market knowledge. This means that they widely know the consumers demand and needs, so linking with them, Tesco will be able to gather a wider experience and knowledge. This will help the company in creating products that are ideally accepted in US thus boosting its market share. 2. Revise their brand name Secondly the company also needs to revise their brand names and their packaging techniques. Though their packaging and brand name goes well with UK market, Tesco Fresh and Easy Company should realize that US is a new market with customers from a different culture. It should develop new packaging methods that will be accepted by US customers. This will avoid the confusion created by it old packaging method that are highly mistaken by US consumers for frozen foods (Boone & Kurtz, 2009). 3. Carry out the research Tesco must carry out an extensive research to get facts about the US market. Initially the company used research finding to prove its operations rights rather than getting the facts. Facts help a business to have a wider knowledge about the consumers and market in general. This will help Tesco Easy, and fresh company to come up with appropriate strategies to re-enter the market afresh. With this, they would be able to identify the real markets gaps and go in to tapping them. This will result to a huge rise in their sales. New Positioning Brand positioning is the disciplined thinking that guides the basis for building a relationship between brand and customers. Tesco should consider using quality positioning in its attempt to revive its US operations. It should consider attaching a higher price tag to it products. Sometimes a higher price tag is of benefit to many consumers. Attaching higher price tag to it products will allow many consumers to get psychological satisfaction from the purchase and consumption of it products. In this case, Tesco does not need to add some value to its product to justify the higher price. From the findings on the above case study, it is true that for a company to do well in both local and foreign markets, it should ensure the approaches it intends to adopt are favorable for its operation otherwise it will fail to deliver in the new market despite its financial power and resource base. References Boone, L. E., & Kurtz, D. L. 2009. Contemporary Marketing. London: Cengage Learning. Boone, L. E., & Kurtz, D. L. 2011. Contemporary Marketing. London: Cengage Learning. Doodle, I., & Lowe, R. 2012. CIM Course book 08/09 Strategic Marketing Decisions. New York: Routledge. Gopalakrishnan, P. & Sundaresan, M. 2004. Materials Management: An Integrated Approach. New York: PHI Learning. Ltd. Grundy, T., & Brown, L. 2002. Strategic Project Management: Creating Organizational Breakthroughs. London: Cengage Learning EMEA. Hamilton, L., & Webster, P. 2012. The International Business Environment. London: Oxford University Press. Plunkett, J. W. 2008. Plunkett's Retail Industry Almanac 2009 (E-Book): Retail Industry Market Research, Statistics, Trends and Leading Companies. Houston: Plunkett Research, Ltd. Stahlberg, M. 2009. Shopper Marketing: How to Increase Purchase Decisions at the Point of Sale. London: Kogan Page Publishers. Sullivan, M., & Adcock, D. 2002. Retail Marketing. London: Cengage Learning EMEA. Read More