A Marketing Plan for TESCO - Case Study Example

A Marketing Plan for TESCO March 18, 2008 I. Executive Summary TESCO is one of the leading retail chains in the worldwide market. As a British-based company, it occupies the leading slot in its industry as it continuously aim to achieve global leadership by strategic marketing and expansion plans in the years to come. TESCO’s first store opened in 1929 in Middlesex (TESCO. 2007) but started growing in terms of expansion and acquisition in the 50s and 60s. Over the years, it has experienced changes in management and in management directions. It experimented on various strategies to be able to conquer the market. Finally, in 1995, it was able to reach the top spot in UK’s supermarket industry. At present, TESCO wishes to reaffirm its position in the market and retain customer loyalty by improving its image in the community. By this strategy, it looks at further bringing the company to higher profit margins and more expansion in neighboring countries. It also works on further improving its acquisition procedures and pricing strategies to be able to sell at a more competitive price to their market, giving it an edge compared to competitors. While doing this, TESCO is looking at global domination by through its expansion plans in the US and in Asia in the years to come. Retailing is also significant it its social dimension as well. Whilst economically retailing bridges production and consumption, in social terms it effects most of the population every day. It is the rare person who does not go shopping, or indeed has not worked in retailing or been involved in it in some way. For some, retailers offer their major social intercourse of the day or week and act as a social network, setting or centre. The quality of UK retailing and its locations thus has both an economic and a social bearing on the perceptions of the country II. Mission Statement TESCO’s mission statement is to become the community’s caretaker, providing for the immediate needs of the community members by offering the best store environment to the customers. This way, customers will be enticed to return, resulting to repeat purchase. TESCO aims to take this community leadership further by its expansion plans to the US in 2008. III. Product and Market Review TESCO is a grocery and merchandising retail chain, which is primarily located and based in Britain. It is the world’s third largest retailer and the largest in Britain. While it originally marketed food, it has expanded its product lines over the years and started including clothes, consumer electronics, consumer financial services, DVD and CD sales and rentals and other consumer goods. TESCO was first introduced as basically a Supermarket, which retailed various products and operated in various locations in UK and nearby Scotland, Ireland, Poland and other locations. As it expanded its product lines, it likewise expanded its sales channels by becoming successful in Internet Marketing and Retailing in the 2000s. At present, it has attained its market position as one of the leading supermarkets in the world. The Retail Business will continue to thrive in the UK. Retailers prove to be helpful to manufacturers and end-users in the achievement of their own individual objectives. For manufacturers and wholesalers, retailers provide the most accessible sales channels for the products. It gives manufacturers the desired sales and profits minus the concerns of managing a store’s daily operations. For end users, retailers provide a ready and a wide-array of product choices to choose from. In the US and the UK, Retailing is still the fastest-growing segment of the economy. In US alone, retail contributes about 38% of its gross national product (How to Start a Retail Business. 2008). With this, competition proves to be stiff. Retailers need to devise ways and means to continue capturing their target market’s interests and imagination. It’s a dynamic process that needs to be addressed constantly. Retailers cannot afford to just sit back without being conscious of the current trends. Given the scenario, Retailers have more roles in fulfill to their customers. According to Mr. Ted Haribut of Inc.Com, Retailers need to involve its customers in their operations and create an experience that would leave a lasting mark to them. (Create a Retail Experience. 2008). This way, retailers may be able to establish repeat purchase and eventually, loyalty among target market. Operations-wise, retailers also need to improve constantly. It might be that the customers’ demands are being delayed due to non-efficiency of the operations. Retailers must identify the smoothest way possible to deliver a customer’s preference, as time is money, and the last thing for them to mistakenly do is waste their customers’ time. Customer service is also another factor to consider in the Retail Business. It is one of the most important factors in identifying the right marking mix for products and services (The Importance of Customer Service. 2008). It is important to be able to develop the right customer service skills to be able to understand and effectively respond to the market’s needs and wants (Customer Service: The Importance of quality Customer Service 2008). Further, it is important to be able to build customer trust, as this is the only way to make them come back and buy some more (5 Principles to Cement Customer Trust. 2008) IV. Objectives This business plan aims to achieve the following: 1. Reaffirm the company’s mission statement by studying the factors that affect the store sales and operations; 2. Identify the right marketing and advertising tools to continue reaching the target market; and 3. Steer the company through strategic plans to help achieve its financial objectives. V. SWOT (Strengths, Weaknesses, Opportunities, Threat) Analysis Strengths 1. TESCO is already the leader in retail sales of grocery goods and related merchandise in the UK. It already has a steady customer base and solid positioning in the market. 2. TESCO has strategically situated itself in key points in the country and is able to reach other market through the effective implementation of its website. 3. TESCO has its own product line under their own labels, which makes profitability high. This is one of their pride as this fact gives consumers a fresh and quality product lines. This also adds to their already wide set of products. 4. TESCO’ tried and tested operational policies prove to be a backbone for the stores’ success. Particular emphasis is given to their highly organized work delivery scheme. Weaknesses 1. TESCO’s Marketing Plans may need to be revisited for it to be able to compete globally with direct competitors Waltermart, which is US-based and French company Carrefour. Their concept of being a local friendly store may prove not to be effective in the global market as their strategies are more micro in nature. 2. Despite the presence of its own brands, TESCO can still be very dependent on its product lines’ performance. 3. TESCO spends much on its operational requirements, particularly in its network and transport systems. The use of fossil fuel would also prove to be disadvantageous in terms of its relations with the green community. 4. The large organization may lead to flaws in operational policies and implementation. Opportunities 1. With the changing demands on the society, and the added clamor for accessible means to satisfy the market’ basic needs, TESCO has a lot of area to expand and grow for. 2. There is a never-ending opportunity for expansion, particularly to other areas in the United States and in Asia. Fast growing economies are potential areas for growth, and these are where TESCO is heading. Threats 1. The innovations being implemented by rival companies may pose a threat to TECO. Other groups are becoming heavy on the technology in bringing good product lines and services to the market instead of concentrating on marketing campaigns that are focused on a local level. 2. Online and offline innovations by other supermarkets aimed directly at taking customers from TESCO. 3. Tax increase in particular products, leading to less profit margins. PEST (Political, Economic, Socio-Cultural, Technological) Analysis VI. Political Analysis 1. The Planning Policy Guidance may affect the business. This guidance says that the Government remains firmly committed to the objectives of PPG6, which seeks to sustain and enhance the vitality and viability of our existing city, town, district and local centers and to make them the focus for retail investment”. This may result to the fact that it could be very difficult to get planning permission for out-of-town stores. Economic Analysis 1. The current global economy doesn’t protect the local industry to make it recession-proof. Socio-cultural Analysis 1. At the rate of how people live nowadays, with both men and women getting busy with work, retail stores would always have a good market share. 2. Products that promote healthy eating may be more aggressive in distributing the items to local stores. Part of their marketing strategy is utilizing all media channels to promote their products, giving the retail arms that carry them greater mileage. Technological Analysis 1. Continuous development in bar coding, stocks monitoring and inventory would help the retail stores in their operations. 2. The Internet’s influence to the market will definitely help retailers in the marketing strategies. VII. Target Market TESCO’s target market remains to be across all market segments, with particular emphasis on the household’s planner and on those who have the ability to decide on their spending. VIII. Marketing Strategies/ Advertising Plan 1. Advertising TESCO shall utilize both TV and Radio as advertising tools for its branches, promos and products. A 30-seconder TV as and another 30-seconder radio ad shall be aired four times a day in one local TV station and two local radio stations respectively. This will be done for the first two months of launch. A sustaining effort utilizing both media vehicles shall also be implemented. This time, highlights of the advertising materials would be the latest promotions and gimmicks. Banners and signages shall also be installed in key locations within the vicinity. Below-the-line advertising shall be implemented in high-traffic areas, commercial establishments and subdivisions. 2. Sales Promotions Every year, one promotional campaign shall be implemented in this TESCO store. This would be in the form of a raffle promo wherein customers who have attained a certain minimum purchase shall have a chance to win big prizes in the raffle draw. 3. Direct Marketing TESCO will surely continue to captivate the target market by means of its website. Through this website, TESCO’s products and services shall be brought closer to shoppers. Customers may also purchase items online, targeting additional revenues for the store. 4. TESCO Pricing TESCO’s value proposition is “Every Little Helps”. Its main strategy is to make as many products as widely available to as many people as possible with smaller margins. It focuses on the bulk sales it would make rather than accumulating huge profits for every sale made. As such, the chance of capturing a steady number of consumers is high. Shoppers would buy in bulk because of the savings they get from doing so would allow them to purchase more than the usual. 5. Social events TESCO’s campaign to be the community caretaker shall be strengthened by various events and activities that support civic causes and other outreach projects that help uplift the less-fortunate. This way, TESCO may strengthen the brand and create awareness and loyalty among the target market. IX. Execution/ Budget An Advertising and Promotions budget amounting to £ 10M shall be spent on the implementation of the media plan alone. As sustaining effort, another £5M shall be used for below-the-line efforts such as billboards and transit advertising. £20M shall be used in establishing the TESCO Call Center in the UK. This shall include operations and manpower costs. X. Evaluation The effectiveness of all the planned marketing strategies shall be measured against the actual revenues to be computed collectively from all TESCO branches in the UK. All strategies are geared towards the increased revenue per hotel. More than just the acquisition of customers, these strategies aim to encourage added spending among the target market. These results are exactly what the TESCO management shall expect upon implementation of this marketing plan. Reference List Tesco. Retrieved March 19, 2008 from http://en.wikipedia.org/wiki/Tesco How to Start a Retail Business. Retrieved March 15, 2008 from http://www.entrepreneur.com/startingabusiness/businessideas/startupkits/article75912.html Create a Retail Experience. Retrieved March 15, 2008 from http://www.inc.com/resources/retail/articles/200802/hurlbut.html The Importance of Customer Service. Retrieved March 15, 2008 from http://www.thetimes100.co.uk/theory/theory--the-importance-customer-service--414.php Customer Service: The Importance of Quality Customer Service. Retrieved March 15, 2008 fromhttp://www.customerservicetrainingcenter.com/customer_service_the_importance_of_quality_customer_service.htm Marketing Research Proposal. Retrieved March 15, 2008 from http://destinydawnmarie.blogspot.com/2007/05/marketing-research-proposal.html 5 Principles to Support Customer Trust. Retrieved March 15, 2008 from http://retailindustry.about.com/cs/tm_customerservice/a/uc_obarski5.htm 7 Habits of Business Success. Retrieved March 15, 2008 from http://sbinformation.about.com/cs/development/a/032303.htm Market Research. Retrieved March 15, 2008 from http://www.managementhelp.org/mrktng/mk_rsrch/mk_rsrch.htm Read More