Marketing Analysis of Tesco - Assignment Example

Marketing outline of Tesco Contents Contents Introduction 2 Concept and process of marketing 4 Segmentation, targeting and positioning in organisations 7 The extended marketing mix and its elements 9 Application of the marketing mix in different contexts 12 Conclusion 15 References 16 Introduction This study is centred towards highlighting different marketing concepts which is implemented in real world organization. Marketing can be defined as identifying human needs and then offering products or services as per requirements. There are different dimensions of marketing concept such as emphasizing on product development, design of a new promotional campaign, etc. Marketing strategies are usually structured by the management and its goal is to achieve competitive advantage. Market share can only be retained when productive measures are adopted by an organization. Marketing strategy takes into consideration a thorough analysis of external and internal environments. Marketing mix modelling is a key factor during scanning of internal environment. This aspect even includes analysis of strategic constraints and its overall performance. The external environmental factors mainly comprises of target market analysis, customer analysis, competitor analysis along with evaluation of external environmental factors such as political, economic, legal, social and technological. Marketing strategies designed by an organization usually differs from another organization. These strategies are highly dependent on particular business scenario. Real life marketing needs to focus on external environmental conditions, market opportunity, uncertainties, and optimum utilization of available resources. In this study wide array of marketing concepts shall be applied on a UK based organization called Tesco. Tesco is a renowned multinational general merchandise and grocery retailer based in United Kingdom. The company has its retail stores located across 12 countries and is regarded as UK’s grocery market leader. Across the globe Tesco is considered to be second largest retailer in terms of revenue margins. The organization was founded in 1919 and since then it has implemented best marketing strategies. There are widespread aspects which are followed while designing its marketing strategy. Firstly different products or services of Tesco possesses specific target market segment. Their overall positioning strategy states that the firm is focused towards offering quality products at reasonable price. This marketing concept has enabled the company to remain competitive in the market place. In recent scenario the company has diversified into many areas like books, petrol, furniture, clothing, toys, electronics, financial services, internet, telecom, etc. This kind of diversification has supported the company to acquire greater percentage of market share. Tesco’s marketing strategies will be further elaborated in this particular study. Concept and process of marketing Marketing process is defined as a strategic philosophy to evaluate and meet customer’s needs. An organization needs to adopt customer focused approaches in order to achieve desirable results. In real time scenario, this process involves collecting and analysing customer data to develop productive strategies. There are three basic elements of overall marketing process. At the initial stage the entire consumer market is segmented on basis of demographics. In the second stage, positioning and targeting strategy is developed so as to offer products or services according to requirements of customers. This approach is then followed by structuring of marketing mix model. For every organization these three elements are regarded as the pillars of marketing strategy (Kotler and Keller, 2006). Market segmentation is about dividing wide heterogeneous market into small homogeneous groups possessing similar needs and wants. For instance, Tesco has a wider market segment which is based on income level. Tesco’s products or services are offered at low prices in order to acquire wider market segment. The major aim of this firm is to increase market demand for low priced items. Target market basically denotes a specific market where overall marketing efforts are centred. Tesco has wide range of products and each of them has significant target market. In overall context, this retail group majorly targets middle income and upper income class segment. Positioning refers to establishing an image which can reside in consumer mind. There are two forms of positioning that are incorporated by real world organizations. Firstly is the concept of functional positioning and it is totally based on different product characteristics. On the other hand, expressive positioning is inclined towards setting positioning strategy based on consumer characteristics. Positioning plays a vital role in context of retail companies since all firms in this industry tends to offer similar kind of products and services (Baines, Fill and Page, 2012). Tesco positions itself as a retail company that provides quality products at low prices possible. The company over the years has followed customer centric approach in order to achieve high revenue margins. Its marketing activities are highly focused on wide set of consumer characteristics. For instance some customers visit Tesco outlets for its diverse product range whereas some usually go for its cheap prices. There is lump sum investment involved in marketing activities. Promotions or developing advertising campaigns is considered to be the most costly initiative. Tesco promotes its products or services through different forms of media channels. This operational procedure adds on to the overall expenses of the company. However benefits of being market oriented are widespread since it adds value to its business operations. Market orientation is all about identifying evolving market trends and then forming strategies accordingly. These trends are critical factors because it denotes changes in consumer taste and preferences. The major benefit of market orientation is to outperform in an intensely competitive market place (Simms, 2007). Marketing products or services to various businesses is simpler than marketing to customers. This is simply because while marketing to business only certain profit objectives and needs are taken into consideration. While the scenario changes in context of customers since there are varied choices and preferences. International marketing can be easily differentiated from the approach of domestic marketing. In international marketing goods are being transferred from one country to another. This in turn requires better understanding about global customers and their respective needs or wants. Global customers possess strongly differentiating characteristics in relation to domestic customers. In domestic marketing, culture does not play a vital role since standardized approaches are followed throughout domestic region. It can be stated that domestic marketing approach is easily implemented by firms because customer characteristics can be evaluated or analyzed at a rapid rate. On the contrary, international marketing is inclined towards analyzing respective cultures. Trading can be affected to a great extent through colour combination. This is directly associated with culture and it needs to be incorporated in every marketing strategy. Mobility is another concept that differentiates international marketing from domestic marketing. Production factors are immobile in international marketing in comparison to domestic marketing (Svensson, 2001). Documentation is not complex in context of domestic marketing but in case of international marketing it is a complicated mechanism. International marketing usually requires lump sum investment which is not applicable for domestic marketing. There is huge risk encompassed within international marketing. These risks are bad debt, political risks and foreign exchange risks that greatly affect marketing activities. There are risks associated with domestic marketing as well but the level of risk is significantly low in comparison to international marketing. Segmentation, targeting and positioning in organisations The process of segmentation, positioning and targeting are implemented by the company for marketing and selling its products or services. Segmentation involves in dividing the market into different segments or parts which are accessible and profitable for the company. Proper segmentation helps the company to grow. Tesco have segmented its market on basis of different factors. Its segmentation basis is geographic, demographic, psychographic and behavioural. Based on this segmentation the company has marketed its product and selected its customer base. Targeting is considered as second step of segmentation. After company has segmented the market it selects its target audience from the selected segment according to its product and services. Organization puts its effort and resources to acquire its targeted audience in the particular segment. Tesco have wide range of target customer. It targets its customers according to their wealth. Position means the marketing activities which help the company to position its business or products by analysing and finding new business opportunities. Tesco applies different strategies for positioning its products. The company deals with various marketing mix elements for attracting its customers. Functional, price, symbolic and experiential positioning is majorly used by Tesco. Tesco is operation a large business in many countries of the world. Therefore many factors are present which influences its business and its marketing decisions. Micro and macro environmental factors play a major role in affecting the marketing decisions of this company. Macro environmental factor of Tesco are identified by different process of environmental scanning. This process involves different factors like economical, political, social, technical and legal. On the basis of political and legal factors Tesco makes its marketing strategies by following rules and regulation of the country. Different countries have different legal factors and rules which companies have to follow for establishing its business. According to economic condition of the country Tesco makes its pricing policies, implements different strategies for establishing new offers. Advancement in technical factors influenced the company to implement different changes in its business process which indirectly affects marketing decisions. Cultural and social aspect of countries influences business environment of Tesco. It creates a high impact on decision making process of the organization (Lasserre, 2012) Micro environmental factor influences internal and external factor of Tesco. Some of major micro environmental factors are rivalry, supplier’s power, buyer’s power, substitute threat, threat of new entry etc. Existing business rivalry of Tesco influences the company to developing different effective decisions. As per substitute threat the organization establishes its business strategies which enhance its unique qualities. These strategies help to distinguish the company and its products from its rival and substitute company. In the business of retail industry Tesco faces high buyer power. For this reason the company make pricing decisions and many other decisions according to buyers need. Tesco in its grocery segment has introduces its own coffee product named as Tesco Gold instant coffee. It is a premium quality of coffee. Tesco gold coffee is made up of high quality of coffee beans. These coffee beans are freeze and dried properly so that delicate flavour of the beans is maintained. This coffee has a very attractive aroma which makes it very rich and smooth. It has become a very popular product of this company. For its distinctive taste a huge number of customer purchases this product. Tesco have implemented different targeting strategy for marketing and selling this product. The company targets young people as its target customer. It has priced its products low compared other coffee it sell. It is maintaining a unique taste of its coffee which acts as a strong strategy contributing this brand in its success. Behaviour of consumers plays a vital role in influencing different marketing activities of Tesco. Consumer behaviour means the psychology of customers which defines how they feel; think about different companies and their product. Behaviour plays a vital role in influencing consumers for selecting different products and brands. Tesco have its retail store in many places of the world. As a result the company have to deal with different types of consumers. Now day’s consumers are focusing more on online shopping and advanced technological factors. So the company is developing its marketing activities according to that. Tesco has introduces its online business and different other technical advancements which facilitates its customer and matches with their behaviour. Some new positioning strategies are recommended for Tesco gold coffee. Present the coffee is only target to young people. It acts as a strong beverage for them. But to increase its sales and target customer Tesco can position this coffee as a beverage for old as well as young people. It can improve the quality of coffee which will suit the taste of old people also. The company should do different kinds of branding activities which will help to popularise this brand more among its targeted customer. The extended marketing mix and its elements Product: The large retail organization Tesco deals with a wide range of products. Product plays a vital role for making the company successful. In its product category this organization deals with the products of other companies as well as its own products. The company is continuously expanding the range of its product for last few years. Wide range of services and products are offered by Tesco which includes clothing, food, electronics, financial services etc. The main aim of the company is to achieve various competitive advantages by providing balanced quality and price for its services and product. The company sells those products which has a market demand and satisfy the needs of customers. Price: It determined how much the customers of Tesco are willing to spend for products. Price of the product depends on its availability in market. The marketing department of Tesco is responsible for fixing prices of products. This department also makes decision for reducing the prices of products. Tesco makes different strategies which enhances its pricing decisions. The company provides different discounts on its products which attracts many customers. The firm’s pricing strategy is developed as per business strategies (Henry, 2011). Tesco reduces its operational and purchase cost by economics of scale. It also follows many other strategies for enhancing its pricing policies. Place: It means the location where the company sells its product or its different distribution channel. In Tesco place means the retail stores and online stores. Buyers purchases different products from these places. Retail stores of Tesco are present throughout the world. Now a day for developing its business and satisfying its customers need the company has developed its online retail store. In this store products are sold through internet. It is an important element of marketing mix. Online stores of Tesco are known as Tesco Direct. It has four types of offline retail stores. They are Tesco Metro, Tesco express, Tesco superstore, Tesco Compact. Promotion: It includes all marketing strategies and communication process implemented by firm for promoting its products and services. It includes advertisements, word of mouth, public relations, sales promotions etc. Tesco implement different business strategies for marketing its products. The company considers different areas for promoting its product. It implements different strategies for informing its customers about its services and product. The company’s promotional strategies are consistent with its business strategies and cost advantages. Tesco’s promotional strategy focuses on profit maximisation in long term and short term perspectives. Brand image of Tesco is enhanced by its promotional activities. Through its different ways of promotion the company announces its offers and discount to its customers. People: The individuals who are involved in purchase and sales process of services and products are important element of marketing mix. This element acts as a paramount in this industry. This is because incompetent sales person reduces effectiveness of the company. Tesco maintain highly competent employees to grow its business. The company organizes different initiatives and programs to provide high quality of product and services to its customers by its efficient employees. Employees are very valuable resource for Tesco (Churchill, 2009). It provides different types of training to its employees for motivating them and makes them capable of dealing with the customers. Process: It includes various procedures and mechanisms which help the company to sale its product and services to its customers. Process also involves in analyzing the procedure of delivering the products to its customers. In this element of marketing mix Tesco focuses on its operational activities which contribute a lot for delivering its service effectively. The company sets different associated factors which help the customers by providing them assistants. It keeps adequate number of sales people who are present in the stores for solving customer queries. For its online stores Tesco has efficient customer care department who deals with online customer. Efficient online business process of Tesco helps to attract more customers. Physical evidence: It helps the marketer to make its customer aware of different benefits and unique features the company is providing to them through its product and services. Tangible elements of Tesco are considered as its physical elements. These elements are its stores, design of store, quantity and size of car parks in front of stores, packaging quality, existence of wheelchair facilities etc. Tesco has developed all its physical elements in by maintaining a high quality and standardised format. These elements reflect all visual things of the brand in its multiple levels. With the help of these physical elements consumers develop a perception about the brand (Fill, 2013). Tesco has not invested much on its store design but it always keeps it stores clean and organised which attracts many customers. Application of the marketing mix in different contexts Marketing mix of Tesco can be applied in two different contexts. Tesco sales a wide range of products and services for its different types of customers. Tesco can divide its customers on two segments. One is young customer segment and another one is aged or adult customer segment. On the basis of these segments the company apply its marketing mix strategies. Marketing mix for young customers Products: Tesco sells different products of technology and gaming in its stores. Young generation are very fond of these things. Gaming products mainly attracts kids and teenagers. The company sells gamming and technology products for different companies. Young people are very much addicted in using products of advanced technology. Tesco gets a good number of customers for this reason (Dahlen, 2009). Moreover the company also sells toys, sports accessories party equipments which attract a lot of young customers. Many entertainment items are sold in their shops which are targeted for young people. Price: Tesco evaluate the spending capacity of its targeted customers and fix the price of products according to that. Young generation have a tendency to spent more. Therefore the products which are being sold by this company are priced as per customer demands. Normally high quality technical items and luxurious goods are highly priced. But the company follows affordable pricing system for its products. So it maintains the prices which are lower than other retailers. Tesco offers different types of offers and discounts which attracts young customers. The young generations are very much fond of doing their shopping in particular time when they get high discount. Tesco analyses the psychological mind setup of its targeted customers in fixing its product prices. Place: Tesco’s online and offline stores are its business places. The company establishes its stores in different popular and places where people can easily come. Its stores are designed in simple and organized format. For providing vast range of products and services to its young customers the firm has designed its stores in such a way which facilities its targeted customers in their shopping. Young customers use different online stores of Tesco more than aged customers. Its online store involves different features which attracts and help young people more. Promotion: Tesco’s promotional strategies are designed according to its targeted customers. Different promotional tools are used for different types of customer. The company analyses various factors before doing any promotional activities. It analyses it details about trends and psychology of its targeted young customer for implementing its promotional tools. Young people are more addicted to internet. So the company promotes its brands and its different types of products through various sites of internet. These targeted people also takes part in different types of events and entertainment programs. The company for this reason gets involves in sponsoring activities for doing its brand promotion. Marketing mix for aged and old customers Product: In its wide variety of products Tesco sells many goods and services which satisfies the need and want of aged people. The company sells variety of products home, garden, grocery items etc. This targeted customer is mode fond of purchasing products which will help them to live an easy life. Different electronic goods which are sold in Tesco help them to make their life or daily activities easy. The company sells different financial services. Most of these financial services are targeted towards old people. Tesco bank provides the service of insuring the life of aged people. Price: Low pricing strategy of Tesco attracts many aged customers. Old or retired people have low income level. So tries to spent low while purchasing different things. Therefore the company is maintaining low pricing policies which satisfying the requirements of its old aged customers (Alba and Hutchinson, 2008). Place: Many aged customers of this company are fond of doing offline shopping. So the Stores of Tesco are providing many facilities which help the old people while doing their shopping. Moreover in a store of Tesco have all types of products under one roof. It helps its targeted customers in getting all required product from one place. Promotion: Tesco’s promotional strategies and activities are also targeting old aged people. The company organises many event where these types of people are involved. Its promotional activities like, TV ad, newspaper ad attracts many old customers. Conclusion As per this study, marketing strategies can be defined as the central component of overall business operations. Tesco has been able to retain its market share through innovative marketing strategies. There are different aspects closely knitted with the approach of marketing. Firstly, segmentation, targeting and positioning plays a critical role in terms of dividing heterogeneous market into smaller groups. Products or services are developed in such manner that it is able to satisfy needs or wants of customers. Positioning of the company is to offer quality and diverse range of products and services at least price possible. Tesco has been staying ahead of its competitors through following market oriented approach. The company invests lump sum amount in marketing activities in order to spread awareness amongst consumer market at a faster rate. Tesco implements different strategies in its segmenting, positioning and targeting process. The company segments its market on the basis of different criteria like demographic, behavioural etc. Based on this segmentation the company markets its different products and establish policies according to it. Targeting its customer base is another important task for the company. It targets its customers according to their spending capacity, preference, behaviour etc. Tesco position its product in such a way that it attracts a large number of customers. These strategies contribute a lot in its organizational success. Different elements of marketing mix help the company to in finding new business opportunities. Tesco deals will a wide variety of products which are targeted for its different types of customers. It maintains a low pricing strategy which acts as a competitive advantage for this company. The organization sells its product both online and offline for acquiring more customers. References Alba, J. W., and Hutchinson, J. W., 2008. Dimensions of consumer expertise. Journal of Consumer Research. 24(3). pp. 411-454. Baines, P., Fill, C. and Page, K., 2012. Essentials of marketing. Oxford: Oxford University Press. Churchill, G., 2009. A paradigm for developing better measures of marketing constructs. Journal of Marketing Research. 25(4). pp. 98-116 Dahlen, M., 2009. Marketing communications: a brand narrative approach.UK: Wiley. Fill, C., 2013. Marketing communications: brands, experiences and participation, 6th edition. Harlow: Pearson Education. Henry, A., 2011. 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