Principles and Practice of Marketing - Case Study Example

SWOT analysis

There are many brands, which Tesco is using to advertise the products and create better brand awareness. There are many customer’s groups, which need specific products, like organic products for customers who have healthy way of life. Such strategy is common now due to the high trend for the organic food. There are many people, who want to consume the organic food, hence they think that such food is not so harmful as ordinary. Many companies like Tesco used this trend as their advantage to get more customers to brand. Thus, Tesco, being one of the largest groceries brands used it to gain competitive strength in this sphere (Allen and Wilson, 2012).

Thinking of the strengths of this brand, one should underline that it is strong due to the fact that there are many supporters of the healthy way of life. They want to consume only organic food that is made following all standards, without application of the harmful substances and other things, which can decrease the quality of products (Allen and Wilson, 2012). One more strength is associated with the becoming stronger trend for healthy and sport life. To keep such way of life, most customers prefer to consume better products, which are made without pesticides and nitrites. Comparing such produce with ordinary, one should underline that latter is more harmful. Thus, Tesco has strong influence on many customers and their numbers will only grow.

One of the weaknesses is associated with the modern way of life, when people do not have much time to cook good food, hence they need to work, to prepare for the next day. Many people take high positions, thus, they live part of their lives in offices and physically cannot prepare good food, so preferred food is fast-food that is designed for such customers. Furthermore, unstable trends in society can undermine the policy made on some particular trend, since, society can develop another trend that will change the customers’ behavior and make them purchase other products and this brand will be ineffective. This weakness is hard, due to the fact that it influences the business activities and can decrease amounts of sold products (Bourlakis and Weightman, 2004).

Main opportunity of such brand lies in influence on health-aware customers, who understand how organic food can make their health better. However, to use this opportunity, company should maintain good advertising policy and PR to show customers how company is preparing products, what companies are involved in supplies. That is the important thing in the brand development. It has strong claim that other products are not so good for health as organic, thus, company should prove that they are better, that they are produced in another way that is different from the ordinary products. Furthermore, making the advertising of organic products, company should be aware of own “un-organic products”, which can be influenced by such advertising in negative way. However, this opportunity is quite strong in the current state of affairs.

Apart from the last thesis, company should be aware of the adaptability of brand to face changes and to override competition. There are many companies, which can easily maintain their services to face the new customers’ requirements. They can easily react to changes, which market has, while working in organic food sphere, company can lose customers due to some changes in public opinion and trends. Furthermore, there are products, which are not healthy, but easy to consume and do not require cooking and is useful for people who have no time or wish to cook own food. Working in different industries, fast-food restaurants can dramatically influence sales of retail shops, which work with organic food, as latter can be substituted with other products, which are much more comfortable to use. Thus brands like Organic can face problems with substitution threat that is strong enough to provide significant problems (Boynton, 2007). Considering pricing, one should underline that fast food is much cheaper than organic food, thus, many customers who are used to spend a little money on food. There are customers’ groups, which just do not have enough money to afford organic food, therefore, they will use more affordable option that is presented by fast foods.

Segmentation strategies

To achieve substantial results in sales, company should maintain segmentation strategies, which will be aimed on the increasing of sales and identifying the main customers’ group to concentrate on (Careers in natural and organic foods retailing, 2009). There are many customers, which have their own needs and requirements, they all have products, which they prefer to consume, knowing the main audience, company can maintain its activities to present special products in the special environment to particular customers.

Thinking of the customers’ behavior, company will work on the satisfying needs of customers with special requirements. Such customers, who are main priority of brand Organic belong to health way of life supporters. Such people suggest it unacceptable to consume usual products due to some harmful contents and bad conditions of production, while healthy products without pesticides and other auxiliary substances are better choice. These customers are mostly the main target audience of this brand. There are customers who prefer to be part of the trend and use only Organic products (Food Industry and the Internet, 2001). Such customers are important for company, thus, Tesco is working hard to maintain better awareness among the customers about the reliability of suppliers, which offer only quality products, about the living conditions of the animals, which were used for making meat, etc. All these things are part of the great PR strategy used to emphasize the positive effect of products on the health, comparing them to the usual products.

Thinking of the benefit segmentation, one should underline the main one that is clear from the name of the brand. It says that the food is completely healthy and organic, so there are only few of the substances, which can harm the health, as opposite to the other products, which are not so healthy. This brand offers only marked with Organic sign products, which are claimed to be healthy and clear from the bad contents. That is the main benefit from this brand for customers (Hammett and McMeikan, 1994).

Demographically, almost all demographic groups belong to target audience. However, considering the fact that young people are mostly aware of the modern trends, latter can get stronger influence by the brand. One more demographic group of customers, which can be influenced are older people, who care about their health and remember the times, when products were better and without any admixtures. Thus, they prefer to consume only clear products, which belong to Organic ones. Thus, brand is aimed on young and older people, who much more aware of their health (Hastings, 2007).

Thinking of the geographic segmentation, one should underline that in all countries there are people, which belong to target audience, thus, one cannot underline the specific country that can be influenced with a higher effect, however, thinking of the USA, there are many people who prefer to consume fast-food and thus, they can find Organic products to be not so attractive as they have differences in culture of food (Hastings, 2007). Trend for healthy food is strong in USA, however, people should accept it, and it is the matter of time.

Marketing mix

Considering the marketing mix of the brand, one should emphasize the fact that is works around the health and the healthier way of life that can be achieved with consuming special products (Lindgreen and Hingley, 2003). They are claimed to be better than usual for multiple reasons. Tesco is caring about customers and according to the newest claims, Tesco considers customers to be their highest priority concern, thus, they try to keep pace with social trends, which are all around the better way of life. Thinking of the product that Tesco’s brand offers, one should underline that groceries marked with this brand sign are claimed to be healthy. Specifically, healthy means that they are produced without application of the bad production processes, soils were fertilized by harmful fertilizers, farmers have not used poisons and variety of pesticides. All these things mean that products are better than usual, as according to Tesco’s reports, other products have high amount of such substances. Thus, people, who care about their health understand that only through consumption of better products they can increase their living conditions (Lindgreen and Hingley, 2003). Actually, products are better, as Tesco should work with proven suppliers, which use special fields for growing such crops, they use special conditions for animals, which are grown for meat, etc. All these things eliminate the negative features of the usual products, which differentiate latter from the Organic ones. Thus customers should be aware that the products with sign Organic are made to avoid harmful effects as the food is important factor in the health of all people, especially for the vulnerable groups of customers, who have allergic diseases, or various gastro-enteric diseases, which can cause them more problems in case of consumption of bad food.

Considering place of sales, Tesco is selling the products in almost all stores to make customers easily access healthy products (McDaniel and Gates, 2005). Globally, one cannot identify better place for selling such products, as in almost in all countries there is quite strong trend for healthy food that is powered with increasing amount of obesity rates among young people, growing numbers of fast-food restaurants, which substitute health food stores, etc. All these factors produce positive conditions for selling products globally. Thus, place is not so important in sales under the aegis of Organic. There are countries, which are not so interested in such products and thus, company spends less resources in such countries like USA, as there are many people, who are engaged in their daily activities and they cannot afford cooking (McDaniel and Gates, 2005). Furthermore, company is not working with countries where there is a high level of poverty, hence products by Organic are relatively expensive and people in such countries can face troubles purchasing such products, they have their own suppliers, which offer much cheaper food.

Pricing for product is made to cover all expenses, which associated with looking for better suppliers with good fields and developed farms, which will offer better products. Customers should know what suppliers are used and what products will be offered. Thus, company is working only with proven suppliers, who have high rates of the positive feedbacks from customers. Marketing strategy here is aimed on the proving that company is using only best suppliers, which can offer good products, which are unique in the industry and have special equipment and conditions to make food better (Organic, 2001). That is the main reason why price is so high. For many customers this price is not affordable, thus, we can underline the fact that company is targeting the middle and well-to-do class of customers, who can afford purchasing of such products. Furthermore, such people understand that their main value is health and they will spend all their available resources to keep them healthy. That is the main advantage that is used to influence customers (Organic, 2001). People are ready to agree with prices, when they understand that such products will not endanger their health conditions. Considering the growing rates of cancer diseases, customers are aware of the fact that bad products cause such problems, thus they prefer to use only proven products. One of such suppliers is Organic brand powered by Tesco (Palmer, 2004). Pricing strategy is different in variety of regions, as company is trying to maintain the price to be acceptable for various regions of the world and in the UK itself that is the main market of company.

Thinking of the promotion of products, company is trying to substitute the usual products with organic ones, it works with companies, which have the same customers as Tesco in this particular situation and thus they use special packages to show customers that the products are healthy. Furthermore, under the aegis of the Organic brand, company starts the campaign to offer “-free” products ,which are free from the sugar, gluten, etc. Such approach can attract more customers, who have variety of problems, which just cannot consume usual products. Furthermore, company is using the website to promote the brand and in the peaks of the customers’ activities, company is offering the products with significant discounts to attract more customers to special products. Furthermore, company is working hard with the application of the TV and other channels of advertising to impose the healthy way of life to bring more customers to brand. That is making stronger the trend that is useful for company and presents more revenues. To promote the products, Tesco also uses the “organic seasons” strategy that is aimed on putting many products on sale to attract more customers, furthermore, it encourages customers to consume products with Organic signs to make it more developed and recognizable (Stahlberg and Maila, 2010). According to the modern reports, company is working on the substitution of the “non-organic products” with the Organic ones, directly on the pay desk (Stahlberg and Maila, 2010). Thus, customers have a choice to change their usual products for Organic for the same price. That is quite strong promotion strategy aimed on the promotion of brand features and making the products available for all customers. However, due to the pricing policy, not all customers can allow consuming of such products, as they are quite expensive for them. Usual products are much cheaper and brands, which offer such products are usual for most customers, thus they prefer to use their familiar brands, instead of the new ones promoted by Tesco. To differentiate the Organic products from usual ones, Tesco uses special signs and labels, as shown below (see figure 1). Using such signs, company manages to provide the information regarding the product and its nature (Stern, 2006).

Competition analysis

Mostly the main competitors, which present the main competition are associated with other retailing shops, which also have sub-brands aimed on the organic food market. Thus, such stores are competing the Tesco’s efforts through better promotion and PR strategies, however, according to the modern reports, customers trust the Tesco to be the reliable supplier of the organic products, as it is one of the oldest grocery stores in UK and thus, apparently company has many connections with the modern suppliers, which can offer better products (Tesco Case Study, 2011). Furthermore, company often claims that it has its own fields, which are used for growing crops and other resources for making products, which are offered. Thus, company is working quite hard to make stronger the brand. There are not so strong companies, which can produce the substantial competition, except the companies, which totally concentrated on the organic food and have specialized shops, which sell only this produce. However, even such companies cannot present the significant competition, as Tesco is offering usual products along with Organic ones, thus, customers who visit Tesco for usual products can purchase also Organic ones, and competitors have specialized shops, which are completely aimed on this audience. From the point of view of the brand, it can be substituted with other products, which are not so healthy but easy to cook. Furthermore, there are fast-food restaurants and half-finished goods retailers, which offer one more option for food that Organic offers. IT means that customers have another option and can use it when they have no time to cook the food, that is the main threat of this brand and the main competitor that can take customers. Along with the trend for healthy food, countries are developing and more people become involved in business processes, work in offices and have no time to make their own dishes, thus, they have no need in Organic products, hence the main priority for them is fast food that can be easily cooked and eaten. Half-finished goods retailers also provide the goods-substitutes for Organic products, as they can be easily cooked and ready in a few minutes as opposite to the usual products, which require preparation and understanding of basics on how to cook. Social situation in UK and other developed countries shows that customers have no cooking skills and they need fast solution that will prevent them from studying how to cook. High availability of the fast-food restaurants also presents the problems, since, they are located in the main point of interests to attract customers, who have no time to go back home to cook the food. They have special services of food delivery that can help them to stay in the work place and eat without distraction, while Organic food cannot be served without preparation and the necessity for instant delivery is useless here.

Recommendations

There are many issues, which should be solved to avoid the threats and to make opportunities stronger. The first issue that should be addressed is brand’s flexibility, there are many problems, which are caused with the low flexibility of brand, while other brands can easily adapt to the modern requirements of society, Organic brand cannot do so and will have particular problems with sales in case of drop of demand for healthy food. Furthermore, brand should work on innovations, which will help to address the competition from the fast-food restaurants, which have more opportunities to conquer the market over the Tesco’s brand. Company can work on the preparation of food and offering customers already prepared meals through the delivery services. One more option that can help to avoid the competition issues is to maintain the Organic fast-food services, which will attract more customers to the Tesco’s brands and will make customers more aware of the healthy way of life. To aid customers’ trust to the brand, customers can know how the food is cooked and what products are used, as there are many pseudo-healthy restaurants, which use bad products, just like the fast-food chains and claim to be healthy. Innovations and the flexibility are the main factors, which should be addressed to make brand stronger and to maintain its stable position on the market.