An Overview Of Tesco Marketing Marketing Essay

Published Date: 23 Mar 2015

In this report we have discussed briefly about the different strategies in marketing that are being adopted by TESCO for their sales across the global market. In the following report we have analyzed the four key aspects of marketing such as company orientation, competitive advantage, marketing mix and SWOT analysis. The segments of B2B and B2C of the SWOT analysis are being well examined. We have discussed the various theories that can be implemented by the organization.

"At Tesco, the philosophy behind Every Little Helps is at the very heart of everything we do. It's not just a marketing slogan, it's what makes us different." - [TESCO]

Tesco is the largest giant in grocery retailing in UK and it stands as the third largest retailer across the globe and it is the largest e-supermarket in the world. It has started its carrier in United Kingdom and at present it has stepped into 13 other countries in Europe, Asia and currently USA in the name of” Fresh and Banner”. It has more than 4,300 stores in UK. It is known for its valuable product at low cost. It has its operation in food, clothing, financial service, telecomm, gas stations, insurances etc. Tesco is having more than 4.6 million people using their credit card and their insurance policies. Tesco apart from their business and is doing services for the welfare of the people.

Tesco was founded by Jack Cohen in 1919 in the East End London stall. His first sales were £4 in which he made a profit of 1£. His carrier started like this and the brand name “TESCO” was formed in 1924 and it opened its first store in Burnt Oak. In 1932 it became a private limited company and in 1947 it s share price was 25p. It slowly expanded by buying some rival shops and expanded its conquer over the shops. AS a result in 1961 it was recorded in the Guinness book as the largest store in Europe. In 1970, revolution of supermarkets was developing, because people could get the entire product in a same place and saved their time. Tesco in 1974 has opened its first gas station and it was the largest retailer in petroleum where their sales were £1 billion in 1979 and by 1982 it was doubled to £2 billion.

Tesco launched the “ Value Range “ in 1993 and after two years it launched “Club Card Scheme” in 1995 , which got more popular in between the people .As a result, Tesco overtook Sainsbury's which was holding the first place in UK as the largest food retailer till 1995. Followed by this Tesco stepped and launched its supermarket overseas.

In 2000, Tesco launched Tesco.com and where the revolution of online supermarket was booming. By 2001, it reached £1 million price cut and “Customer Champions” was introduced for the labours to develop the customer service. By the end of 2004 it stepped into some parts of Asia and they launched their own brand Fair-trade range. Simultaneously it entered the telecommunication sector and launched its broadband service, with a music download facility which was for the first time done by supermarkets. Tesco had a profit of £2 billion in 2005 and it launched ‘Tesco Homeplus'. Followed by this Tesco Direct was introduced for developing the online purchase.

USA has the launch of ‘Fresh and Easy' by Tesco in 2007. In South Korea it has conquered 36 hypermarkets to its name. They launched Discount Brands and Personal Finance. In 2009 Clubcard was re-launched for the customers to double their points on vouchers by spending £150million.

Tesco in 2010, announces to save carbon by a new innovative packing. It has over a profit of £3 billion which was 5.5% higher compared to 2008 and it ranks third in the globe ranking behind Wall-Mart and France's Carrefour.

MARKET ORIENTATION:

Market orientation is the core of retails brand strategy. Most retails, they sale same goods as their competitors, the key is they have to create their own unique market position, through their market orientation to distinguish with their competitors.

“Market orientation is concerned with the processes and activities associated with creating and satisfying customers by continually assessing their needs and wants, and doing so in a way that there is a demonstrable and measurable impact on business performance.“ (Uncles 2000: 1)

TESCO is a customer-oriented British retail giant. it is a prime example of a market oriented company. For TESCO, "customer-oriented" is their core objectives they always hold on, under this guidance, company's overall strategy is committed to a long-term development, adhere to "create value for customers, win their loyalty for life"

Components of a Market Oriented Company:

There are three major components of a market oriented company,

1. Customers Focus

Tesco is popular for his price and service. If you visit Tesco's web site, you will see such as "Happy shopping every day""you do not have to queue"

Listen:

Tesco gathers suggestions and requirements from thousands of customers, they know lots of people busy working whole day, with this in mind, Tesco use "you don't have to queue" as their new advertising.

Solve:

If you do not satisfied with the goods what you bought from Tesco, you can bring it back in 28 days, Tesco will pay back your money.

Impact:

Rather than make profit and competing, Tesco focus on environment protection, in2007, the fourth environmental store was opened in UK.

2. Competitor Focus

“Understanding the profit pool of your industry-where your competitors really make money-can open your eyes to new opportunities” (Fredman 1999: 201)

Tesco provide same quality products and services as his competitors, but their price will lower than his competitors, "low prices everyday" and "the price are good for you “are their advertising, there's no rivals can be able to sale the same products with a lower price than Tesco, because they sent price inspectors every week..

To create a superior product, customer satisfaction is not the only requirement. We have to know the competitors and identify if the competitors are the alternate satisfiers for the potential and current customers. In competitor focus, we will look along the following lines:

· Product Differentiation:

Tesco provided some different products and services from his competitors. Tesco has effective use of club card to collect a lot of information with a variety of analysis, such as regional analysis, store analysis, product line analysis, these analysis of data help Tesco to segment the market more efficiently .also, they start to use new productions and services. More ever, according to some customers interested in net work, Tesco started their on line marketing, delivery goods to your home, just access the "tesco.com”, on line shopping is very easy and convenient.

· Product and Market Diversification:

Tesco was started his business with food. However, at the end of 20th century, Tesco's business has accessed to financial, net working, telecommunications, tourism and other fields. For example, in 2003, Tesco cooperate with MMO2 which is a net work operator, to start their own branded mobile phone service. Because they know Britain is the second largest mobile phone market in Europe, there are 50million peoples use mobile phones.

3. Interfunctional Orientation:

The third and final component of Market orientation is interfunctional orientation.

” The achievement of customer satisfaction relies on integrated effort. The responsibility for the implementation of the concept lies not just within the marketing department. The belief that customer needs are central to the operation of a company runs right through production, finance, research and development, engineering and other departments.” (Jobber 2004: 5)

MARKETING MIX:

Marketing mix is one of the most important elements of marketing mix. It elements are basic, tactical components of marketing called as product, price, place and promotion or very well known as 4p's. Every element of a product is very important from organisation point of view missing of element may harm the organisation a big deal.

PRODUCT:

Product is the most significant element of marketing mix, without which the process of marketing mix cannot begin. Product contains two elements tangible as well as intangible. Tesco as a retailer satisfies both the elements of product as the tangible product (book, wines, DVDs, fmcg, grocery etc.) as well it satisfies the intangible element of a product (brand value, customer satisfaction, etc). The company has various brands in products and also their own brand of products with good quality and quantity which satisfies the need of various costumers. Tesco is biggest threat to the other retailers of UK because of its diversification, expansion and improvement in the retailing which makes TESCO understand consumer needs and grab the maximum market share.

Core product is one of the important aspects of product. To differentiate the products from other brand it should have a bigger brand value (Tesco value) which has an input of both quantity and quality, and it offers better service to the costumers, by which the organisation makes the product to complete its cycle by transforming itself into augmented product

In addition to tangible products and services organisations have made an improvement in the concept of PRODUCT. Product marketing can be classified on the basis of ORGANISTION, PERSON, PLACE and IDEAS. (Kotler, Armstrong, Saunders, Wong 2002)

1) ORGANISATION:

Organisation for promoting their business carries out various nonprofits oriented activities this are done by the organisation in regular intervals of time which results them in promoting their brand which results in increasing their market share and costumer attraction in long run process of business.

“TESCO OPENS FIRST CARBON NEUTRAL STORE”

TESCO super market has opened its first zero carbon zone. (MINTEL 03-02-2010)

In the phase of this modernisation there are hardly any places left which are pollution free TESCO in regarding to this has taken a very important step to create people attraction and developing hygienic place for the people in the society.

2) PEOPLE:

Many of the organisations perform people marketing which helps the organisation to develop, maintain or transform the behaviour of the consumer. This even helps the organisations in living their impact on the people in society.

“TESCO TO OFFER FREE EYE CHECK UP IN 131 STORES”

Choosing glasses with optician TESCO intension regarding the people eye safety is a way of marketing a product looking from the people's point of view. Tesco has launched new range of spectacles and promise to make the cheapest form of spectacles compared to other spectacles chain in United Kingdom.

(http://www.which.co.uk/news/2010/03/tesco-to-offer-free-eye-tests--204904

3) PLACE:

Place is a form of marketing where the decision is restricted in the hand of the government or the high range officials of a particular state or a country. Government of a particular country takes a step to change the behaviour of the people, have a positive impact on the economy, even to attract the tourists etc.

”INDIA CALLS ON TESCO TO REFORM FARMING INDUSTRY”

This step was taken for the benefit of farming economy in India and TESCO being among the top 5 retailers of the globe had to play a vital part. This would help the local farmers by getting good rate for their agricultural produce.

4) IDEAS:

IDEA is also a form of marketing. All the marketing activities which follow “Idea”, is a narrow concept of marketing. It can involve health campaigns, environmental campaign and donation for a growth of society. This marketing can also be called as SOCIAL MARKETING.[Kotler, Armstrong, Saunders, Wong,2002:465]

“RETAILER TESCO IS FIRST AT THE FOREFORNT AMONG UK GROCERS TO BE GREEN, AND PROVIDE GBP25 MILLION OF FUNDING TO UNIVERSITY OF MANCHESTER TO SETUP A SUSTAINABLE CONSUMPTION INSTITUTE” .(MINTEL 03/02/2010)

Social Marketing (IDEA) performed by TESCO is wonderful step to implement education in regard to sustainable consumption. This will have a positive impact on the people living in the society and develop a hygienic standard of leaving.

PRODUCT LIFECYCLE STRATEGY:

“The course of a product's sales and profits over its life time, it involves five distinct stages: product development, introduction, growth, maturity and decline.” [Kotler, Armstrong, Saunders, Wong 2002:518]

Each and every company when they launch a new product they don't expect their product to last in the market for ever. The product follows five stages.

Sale and profits over the products life from inception to demise

1) PRODUCT DEVLOPEMENT:

This is very first stage this can be also called as pre launching stage. At this stage companies Investment (cost) start mounting at that particular period Company expects future profits.

2) INTRODUCTION:

This can be also called as launching period. Introduction is a stage where the company expects limited sales with fewer profits which cannot cover the maximum investment (cost). In this stage company invests by knowing the peoples opinion and increasing the awareness of the product. (Advertising, Promotions)

“TESCO FIRST AMONG THE SUPERSTORES TO LAUNCH FAIR TRADE COTTON KNIT WARE AND DOUBLE THE RANGE OF FAIR TRADE COTTON SCHOOL UNIFORMS”

Tesco introduces a fair trade cotton clothes. This is an introduction stage of Tesco and it is also spending on promoting a product which specifies the price of the product and social cause behind producing the product, this will help them in creating the value for their suppliers and also increment in sales.

3) GROWTH:

This stage can also be called as the post launching stage. The company expects growth in sales and growth in profits as well.

“ONLINE SALES AT TESCO HAVE ROCKTED ALMOST GBP1BILLION, HELPING THE SUPER MARKET CHAIN TO POST A PROFIT OF GBP2.25BILLION THIS WEEK”

(25/4/2006)

Tesco has nearly 750,000 regular costumers and it takes order of 200,000 costumers per week. The number show the capacity of market share and this has been the reason for opening of a tesco.com warehouse in south west to full fill the needs of the costumers.

4) MATURITY:

Maturity is a very interesting period where we have immense of competition in a market different companies entering with the same of product where we find price wars this indirectly results in decrease in sales. To cope with this, the company starts diversification and might launch a new product or enter into different fields or find a different market for a similar product.

“TESCO SLIPS TO PLACE FOUR AMOUNG GLOBAL RETAILERS”

(THE TIMES 11/1/2010)

All the retailing giants showed a growth in their sales revenue but they got caught up at their profits they invested more to ensure that the shoppers kept spending. Tesco ended in 4th rank.

5) DECLINE:

Decline is stage where we have very less demand which results in less sales followed by less profit. The product might decline slow, rapidly or might stick at the same place for a very long period. The current society is habited for new quality of products and the manufacturer has to deliver it if he fails to do so than his organisation may find itself in the decline stage of the PLC curve.

BCG MATRIX

Tesco introducing fair trade cotton clothes act as a question in the market as the product is just introduced in the market. Tesco in grocery is cash cow for them. An online sale of Tesco performs as a star. This strategy is used by many companies which help them to determine market place for their products. This also allows organisations to analyse their competitor's strategy as well.

PRICE:

Price is most important element of marketing mix without price revenue cannot be generated. Price of the product helps the company in gaining back the all the efforts which are implemented to develop a product. Other three elements of marketing mix are just cost. Managers should understand how to charge a price both over charging and under charging will result in loss to the organisation.

(KOTLER, ARM STRONG 598)

THE DEMAND CURVE

Price plays an important role in the market as it is specified in the diagram. When the price is high for a product demand is low because it is not affordable by every consumer and organisation practicing this kind of strategy focuses to a group of consumers whose income level is above average. When the price is low demand is high for a product because the product is priced taking all section of consumers in mind. Tesco as an organisation uses strategy where the price is low which increases demand in the market for their products.

Pricing strategy for a new product:

Pricing strategy usually changes as the product passes through different stages in PRODUCT LIFE CYCLE. Product can be priced in four different strategies as shown in the above diagram.

While positioning a product managers have to look at different aspects of the product ie quality, quantity price demand etc. PREMIUM PRICING STRATERGY the quality of the product is high and charged lower price where as on the other hand side ECONOMY PRICING STRATEGY low quality product are sold at lower price. These pricing strategies can exist in the market where we find two types of buyer first one who are quality conscious and the second one who is quantity conscious. People who like to save money buy from 1GBP shop on the other hand people who are quality conscious buy from TESCO.

GOOD VALUE STRATEGY high quality products are sold at a premium price. This kind of strategy is developed to setback organisation using premium pricing strategy. This pricing strategy develops good market share of a organisation. OVERCHARGING STARTEGY low quality products are charged at a very high price. Organisation using this kind of strategy doesn't last in the market for a longer period of time.

Further pricing strategies are divided in two parts:

MARKET SKIMMING STRATEGY:

It can be defined as “setting a high price for a new product to skim maximum revenues layer by layer from a segments willing to pay the higher price the company makes fewer but more profitable sales”

(KOTLER, ARMSTRONG 598)

When companies invent a new product with high technologies they cover their production cost by charging higher price. Charging higher price shows the product uniqueness and also allows the organisation to cover the investment cost in small period of time.

MARKET PENETRATION STRATEGY:

This can be defined as “setting a lower price for a new product in order to attract large numbers of buyers and large market share”

(KOTLER, ARMSTRONG 599)

Organisations which follow this strategy charge very less price for their product which facilitates the organisation to increase their market share with more revenue and no profit or more sales and less profits. This strategy helps the organisation in cost cutting of a product in long run and increase in sales which indirectly results gain of good profits.

“TESCO EXTENDS DOUBLE CLUBCARD POINT OFFER”

Tesco retail giant in UK industry also follows the market penetrating strategy. Double club card point launched by Tesco encouraged more than 1 million new buyers to sign up and receive the club card benefit. This strategy helps the organisation in cost cutting of their products and also increasing their market share.

PROMOTION:

Promotion is also called as promotion mix. Promotion can be defined as “The specific mix of advertising, personal selling, sales promotion and public relations that a company uses to pursue its advertising and marketing objectives.” [Kotler, Armstrong, Saunders, Wong-2002:624]

In this modern world way of marketing a brand the companies approach towards the consumer has changed a big deal. Companies are using advertising agencies to know behaviours of costumers, intermediaries etc

Promotional mix is also called as communication mix. This consist specific blends of advertising, personal selling, sales promotion, public relations and direct marketing.

The five main promotional tools are as follows:

Advertising:

“Any paid form of non personal presentation and promotion of ideas, gods or services by an identified sponsor” [Kotler, Armstrong, Saunders, Wong-2002:626]

Tesco performs advertisement where medium like television, news papers etc to promote the product and also develop consumer attractions.

Personal selling:

“Personal presentation by firm's sales force for purpose of making sales and building costumer relationships” [Kotler, Armstrong, Saunders, Wong-2002:626]

Tesco having cash and carry outlet is personal presentation of a firm for making sales of the product and club card is the form of developing relationship with the costumer.

Sales promotion:

“Short-term incentives to encourage the purchase of a purchase or sale of product or service” [Kotler, Armstrong, Saunders, Wong-2002:626]

Tesco providing double point club card offer to the costumers is a form of short term incetives where as Tesco providing bonus during Christmas to its employees is a form of short term incentives to its employees.

Public relations:

“Building good relations with company's various public by obtaining favourable publicity, building up good ‘corporate image', and handling or heading off unfavourable rumours, stories and events”. [Kotler, Armstrong, Saunders, Wong-2002:626]

Direct marketing:

Direct marketing is a key element of promoting a product. Direct marketing promotional strategy is used to sell a product to the targeted costumer.

Tesco is a best example of direct marketing of a product it target the costumers of each and every segment in terms of various product offered.

Communication:

Communication plays a vital role in promoting a product or a brand. Effective communication between the consumer and organisation helps to know the costumer expectation from the company and also organisations image in the mind of costumer. There are certain steps which have to be followed, in order to communicate and promote the product effectively in the minds of the customers. They are

* Communicating Based on the Audience

* Identifying the Objectives of Communication

* Developing the Message

* Medium of Communication

* Customers Feedback

Ø Communicating Based on the Audience:

The first and foremost thing which has to be followed in promoting a product is that a set of audience has to be clearly targeted in mind and then the process has to be started. The targeted set of audience can be their existing customers, potential new buyers and can even be a single. The targeted set of customers can also be grouped on the basis of their age group, sex etc which is related to the type of product that has to be promoted. The communicator should make a heavy impact in the minds of the targeted customers about the product which will be the considered as the first step of success in influencing the customer to purchase the product.

TESCO targets its audience based on its products, for example the retailing giant targets the females for its grocery products which is a huge success in terms of the promotion of the products.

Ø Identifying the Objectives of Communication:

The objectives of communication has to be determined by the communicator after deciding the type of audience they are targeting. The primary objective of the communicator should be to make the customer buy their products. The secondary objective of the communicator should be based on the following aspects,

The communicator should try to make the customer aware of the product and about the organisation. Even though the buyer has a prior knowledge about the company and its product but might not have a deep knowledge about it. So the communicator should make them understand the positive things about the products.

The third objective should be that the communicator should impress the customers by effectively communicating with them and make them purchase the product. The communication with the customer should be in a way that they should prefer the organisation products then the others.

Tesco is one of the few retail industries in the world which has some key objectives which helps them to market the products. Their objectives are,

§ To offer the customers the best value for their money

§ Satisfying the needs of the customer continuously.

§ Returns for the shareholders

§ Safeguarding the environment.

Developing the message:

The next step in the process of communication is developing the message which should get proper attention in the minds of customers, make them interested in the product, they should desire for the product and should take the appropriate action in getting the product. This process is called as the AIDA process which means

A - Attention

I - Interest

D - Desire

A - Action

The diagrammatic representation for the product is given below,

AIDA model

AIDA Model (http://www.davedolak.com/advtg.htm)

Attention: The product should get the interest of the people by the effective means of communication made by the communicator with the customers.

Interest: By gathering the attention of the customer the product should be promoted in such a way that it gains the interest of the people by its features.

Desire: The next step is to make the customer feel that he wants the product so badly which is a great success for the communicator.

Action: The final step in the process is the appropriate action taken by the customer to purchase the product.

Ø Medium Of communication:

The communicator must select the medium of communication through which he can communicate with the customers. There are two types of communication mediums which are Personal communication channel (Kotler, Wong, Saunder and Armstrong 2002: 639), Non-personal communicating channel (Kotler, Wong, Saunder and Armstrong 2002: 641).

* Personal Communication Channel: In this type of communication the communicator communicates with the customer one on one through telephone, email and even face to face communication can be done.

* Non-personal Communication Channel: In this type of Communication the communicator communicates with the customers through the medias such as television, news papers etc.

TESCO being one of the largest retailers around the globe communicates to the customers through the Non personal medium of communication.

Ø Customers feedback:

One of the main factors in the process of communication is to hear the feedback from the customers and trying to rectify the mistakes. If the customers feedbacks are heard and worked accordingly it makes the customer happy which drives the customer again in to the organization which helps to increase the sales revenue of the organization.

TESCO always hears the feedbacks from the customers and tries to rectify it which has helped the retailing giant to be one of the global leaders in the field of retailing.

PLACE:

This entails transferring products from manufacturers to intermediaries till it reaches the customers. It is defined as the process of functions that are involved in the clearly movement of products, accessories and finalised products from manufacturers through some process and the final customer. [Jobber, Fahy 2003: 236]

According to Tesco distribution is not just lorries and lots of box, they consider it as a more complicated thing, where it lies as an important aspect of today's Tesco. They have a good distribution chain where they deliver the products into the shelves of their supermarket so that the customer need not wait or miss a purchase. http://www.tesco-careers.com/home/you/distribution

[http://www.bandk.co.uk/sectors/distribution/tesco-distribution-centre-goole/]

[http://www.dailymail.co.uk/home/moslive/article-1020934/The-terror-Tescos-finest--forklift-driver-Leicester-Somalias-feared-general.html]

Physical distribution is geared at providing channels and consumers with the desired materials and in the desired quantities, in the desired place, at the most appropriate time. It is the topic of managerial focus in the sense that it focuses on cost savings and enriching consumer satisfaction. Cost savings is gained by reduction in inventory level, by means of lower methods of transportation and shipping in larger portion than lower quantities. Major elements in physical distributions are customer service, order processing, inventory control, warehousing, transportation and materials handling. [Jobber, Fahy 2003: 237]

Customer service

This entails prompt delivery service and consistency within a specified time frame where goods are meant to be delivered. Customers satisfaction should always be considered at this point. Ways in which customers service standards can be enriched through availability and maintaining a demand time frame. [jobber, Fahy 2003: 237]

Tesco has several methods for serving their customers, they accept good not received in condition and unsatisfied products. They have the ‘Return Policy', Tesco direct help, etc for the customers to review their products. A card fraud and return policy help the customer to get their money back if a card fraud occurs of if you are not satisfied with its products, can be return or complained within 28 days of the purchase.

Order processing

This involves how customers order are attended to .Minimising the time where a consumer places an order and the delivery time where the product would be delivered. Electronic media is a major fastener in this process where availability, consumer's credit status, ordering the warehouse, debiting the consumer and updating records of inventory. (jobber, fahy 2003: 238)

Tesco PLC had a massive increase in its customer since 1996; it added many products in its non food products. To manage this massive growth it built the Tesco.com Service, where the customer could place their order online and this increased the order processing capacity. Tesco was the first ones to introduce online shopping in UK. This increased the sales by 25% until 2006. After the introduction of Tesco Direct it had 5000 orders per hour. To sustain and manage the online shopping it introduced the Tesco Direct.com in 2006, which have home delivery option from 2 hours for small items and from 2 days delivery time period for large items.

Inventory control

This involves the number of inventories that needs to be in place. There should be a balance between the need to have sufficient products that would meet consumers demand and at the same time meeting up with the cost of holding larger amount of inventories. The cost of having all products available might be relatively expensive and at the same time conclusions has to be reached as to when to order new products and this should be done before goods reach out of stock, because of time frame between placing order and receiving order. [jobber, Fahy 2003: 238]

Warehousing

This entails all the functions for storing products as to when products are made and when they are moved to the client. It involves a lot of actions like splitting products in the position they meant to be and also storage. Warehouses keep products for a longer period of time while distribution centres function as central areas where products are dispatched quickly. Warehousing systems entails places and total units to be in place.

Tesco has six depots separate for the clothing and non-food item and it has opened new depots of 780000 sq ft which is the largest and it operates 2million boxes of clothes every week and its Chesterfield depot operates with non-food item, where over 400 people are employed.[Jobber, Fahy 2003:238)

Transportation

Transportation of goods is done through these five mediums which are rail, road, air, water and pipeline. Rails is a major medium of transporting goods to longer stretched distances but the only lapse in it is flexibility over road transport cause road delivers the goods directly to its clients or warehouse without loading and road transport is more predominant in UK, while applauds much criticism because of its negative effects.

http://www.tesco.ie/press/images.html

While air is applauded with its speed and longer distance margin which is used in delivery of perishable goods, but its lapses are being expensive while its counterpart water transportation is not fast but cheaper. Lastly but not the least pipelines serve as a consistent and expendable medium for transporting minerals. [Jobber, Fahy 2003: 238]

Materials handling

Entails function of movement of goods in the manufacturer's production point, warehouses and transportation point. Recent storage makes room for automation. Machine robots are used in this process which effects speed. There are two improvements which are unit handling and containerization. Unit handling gets the best with the use of multi packages on pallets that fork-lifts can move. While containerization entails a mixture of broader quantities of products in a single bigger container, that once sealed can be transported to any place. [Jobber, Fahy 2003: 239]

SWOT Analysis

SWOT analysis is one of the key aspects of the marketing strategies which has to be implemented or identified in obtaining the long term objective of the organization. The word SWOT stands for,

§ Strength

§ Weakness

§ Opportunities

§ Threats

SWOT analysis is a “systematic way of integrating internal analysis and external analysis to find a ‘strategic fit' between what the environment wants and what the organization has to offer, as well as between what the organization needs and what the environment can provide ” (West, Ford and Ibrahim 2006: 87-88).

As stated in the definition, the SWOT analysis clearly differentiates the internal factors and the external factors of the organization through which the organization has to identify the internal factors. By identifying the internal factors, the organization can take control on the external factors which will give them an competitive advantage over their competitors. In the SWOT analysis the internal factors are the Strengths & Weaknesses and the external factor are Opportunities & Threats. By using the internal strength, increase the opportunities and by avoiding the internal weaknesses will neutralize the external threats of the organization. The diagrammatic representation of the SWOT analysis is given below,

Ø Strengths:

The Strengths are the internal factors such as the Resources, employees and the customer relationship etc which can be utilized to the maximum by the organization which will give them a competitive advantage in the market.

Ø Weaknesses: The weaknesses are the internal problems which are faced by the organization such as lack of employee-organization relationship etc which has to be avoided to run the business successfully.

Ø Opportunities: These are the demands which are available in the market which the organization has to take advantage off. The opportunities available in the market help the organization to boost its revenue.

Ø Threats: These are the hurdles in the market which the organisation has to overcome to survive and by neutralizing the threats, the organization can be the market leader.

TESCO'S SWOT Analysis:

The SWOT of TESCO can be analyzed by identifying the Strength, Weaknesses, Opportunities and Threats of TESCO. The following table gives TESCO's Strength, Weaknesses, Opportunities and Threats.

STRENGTH

WEAKNESS

OPPORTUNITIES

THREATS

* Highest Market Share

* Product Pricing Strategies

* Largest Online marketing

* World Retailer Award - 2008

* Brand Name

* TESCO Express

* TESCO Insurance

* Customer Satisfaction

* TESCO in Film Production

* TESCO in Broadband

* Dependence on UK market

* Lost the battle for sea side store

* TESCO slips to fourth in global retailers.

* Loses battle gainst store opening regulations.

* International growth

* Opportunities in non-food retail

* Growth in TESCO mobiles

* International Expansion

* Wall mart/Asda challenge

* Rising raw material cost

STRENGTHS:

TESCO has the highest market share in the field of retail in both United Kingdom as well as worldwide. It has a market share of around 30.7% which is the highest by a retail industry in the world which is considered as the huge strengths of TESCO which gives them a huge competitive advantage over their competitors. The product Pricing strategies of TESCO earns a lot of customers because they Price the basic day to day products quite cheap such as the diary products, groceries and increase the price of the branded products. The product pricing strategy of TESCO gives them an extra edge over their competitors such as Sainsbury's, Asda, Mark and Spencer which gives made them the largest retailer around the globe and in the United Kingdom.

TESCO was awarded as the “WORLD RETAILER - 2008” which was based on the global market share, sales revenue, Customer satisfaction and all other aspects which can be considered as the greatest strength of TESCO and by advertising it, the sales revenue can be further increased which helps in increasing the market share. TESCO has a very good brand name which offers great quality products at an affordable price which really is a worth for its customers. This brand name of TESCO makes the customers come frequently which is considered as one of the strength's of the organization. The TESCO EXPRESS are the shop's which are opened near the petrol bunks or stations and its main objective is to full fill the requirements of customers with in that area. The TESCO Express is the fastest developing shop in UK and its aimed to open nearly 50 shops an year. This shop provides greatest strength for the organization because it eliminates people's necessity to go the city centre for purchase.

TESCO insurance is one of the largest insurance companies in the United Kingdom which offers various ranges of insurance policies such as Home insurance, Medical insurance, Pet insurance, automobile insurance etc. It provides service to large number of people in the United Kingdom and it is the fastest growing insurance company in the country. It is also one of the greatest strengths of the organization as it is diversified in the market.

Customer Satisfaction is the most important aspect which decides the success and the failure of the organization and the customer satisfaction of TESCO is very good which made them the market leader and its by far the strongest strengths of TESCO.

TESCO is entering in to film production in a joint venture which will make movies based on highly sold books by the writers which includes Philip Pullman (Northern Lights) and Jacqueline Wilson (The story of Tracy Beaker). It has signed a contract with author Jackie Collins for four movies. The movie is expected to hit the theatres by may 2010 which again shows that TESCO is diversified [MINTEL: Campaign 29-01-2010 ].

Similarly TESCO is entering in the Broadband network facility and it has signed in the agreement with Cable & Wireless which will allow to give broadband and landline services which will boost its non-grocery revenues. In the statement it is been said that

” It will also allow for the provision of bundled broadband and home phone services from Tesco for the first time." [Source: MINTEL 19-11-2009].

WEAKNESSES:

One of the main weaknesses of TESCO is its dependence on the United Kingdom's market and the minimum focus on the international market. Being of the retail giants TESCO's focus on the international arena should be maximized which will help in increasing the revenue as well as the profit of the organization. But depending largely on the United Kingdom's market will be a danger for the retailing giant because the increase in the competition will result in price reduction to increase the sales revenue but the profit margin will decrease. Hence its better to maximize the focus on the global market to improve the sales revenue as well a the profit margin.

Recently TESCO lost its battle in trying to open a huge retail outlet at the Norfolk seaside town of Sheringham which was fought so long. Earlier the plan was approved by the planning officials and was sent to the North Norfolk District Council where it was refused and the reason stated by the councillors for the refusal was the retail outlet might affect the look and the tradition of the city and it might affect the local traders which is again a weaknesses for the retail giant [MINTEL: Independent 05-03-2010 ].

In the recent ratings for the global retailers TESCO has moved down a place from three to four and it stands after Wall mart, French grocer Carrefour and Metro Group of Germany which is one of the great weaknesses which has to be overcome quickly by the organization to stand firmly in the global market [MINTEL: The Times 11-01-2010].

TESCO has lost its battle in opening store where it spent nearly £ 240,000 in hiring expert witnesses and £ 711,000 as lawyer's fees and other £ 76,000 for legal battle and copying charges. The competition committee has said that it will consider the different types of super market available in that area before approving the proposal for the new store. [MINTEL: Guardian 16-10-2009].

OPPORTUNITIES:

The international growth of TESCO is good as its operating around so many countries in Europe and in some of the countries in Asia. If the focus on international arena is maximized by the organization then there are so many great opportunities available for TESCO which will help to become the leading retailers in the world and it will also help to increase its revenue.

AS TESCO is now starting to diversify to other field such as insurance, health and beauty, movie production etc which is helping them to increase the revenue of non-food retail and there are so many growth opportunities available for the organization which help them to succeed in the other fields which will give them a competitive advantage over their competitors.

TESCO was manufacturing its own brand of mobiles which are available in the retail outlets and the growth of the TESCO mobiles seems to be on the rise with more than ¼ million customers in 2008 and was increasing at a rapid rate which tells its improvement in the technological area and it will motivate them to innovate high technical based mobile phones and after covering a good market share in the mobile industry it can start its own network which can acquire the TESCO customers and boost its revenue.

THREATS:

There are several threats which have to be considered for TESCO, when they expand their organization internationally. The organization has to invest a large amount of money which might increase their local debt and it take certain period of time for the retail giant to bring a profit on a particular country until then the interest has to payed for the local debt. Even after then the organization has to take in to account the political and the cultural aspects of the particular country and more importantly it has to consider the local competitor for them and their strategies to become successful. So the retail giant has to be careful in expanding their organization internationally which will be the greatest threat for them.

One of the main threats for TESCO is the world's largest retailer and TESCO's competitor WALLMART and its branch which is called as ASDA in United Kingdom. ASDA the WALLMART group of companies is looking to capture the United Kingdom's market which is the main focus of TESCO and it has to carefully monitor the strategies used by ASDA in United Kingdom and should work accordingly to maintain its huge market share in United Kingdom.

As TESCO's main concentration is on the food retailing sector the rising cost of the raw material will be an important factor which the organization has to consider because if the raw material cost gets too high then the profit margin will decrease. If they tend to increase the price then their sales revenue will decrease which will affect their market share. So TESCO should take alternative measures to reduce the cost of raw materials to have their huge market share.

COMPETITIVE ADVANTAGE:

“The attempt to achieve superior performance through differentiation to provide superior customer vale or by managing to achieve lowest delivered cost” [Jobber 2003:591]

The competitive advantage can be achieved by producing value added product to the superior customer or producing the product at low cost. To achieve in the business the origination should compare their resources with competitors and produced the product to fulfil the customer's needs, as shown in the Competitive Triangle below.

[Adcock, Bradfield, Halborg, Ross 1998:57]

This can be achieved by the combination of Cost, Quality, Service, Brand, and Innovation.

Tesco is the leading grocery retailers in UK, which gains its competitive advantage through cost leadership over their competitors such as ASDA, Sainsbury, Morrison and Bookers. The success begin Tesco in retail world is its low cost production, product innovation and the loyalty schemes which cover more customers than other competitors.

The marketing director Carolyn Bradley formed a strategy, to attract the customers where Tesco gives a “double points” to the club card members as a loyalty, for those who purchase for a pound.

For example if the customer buys they gain 100 points as a reward where they can purchase for a pound or they can get the cash reward on their club card. Hence as a result of double point scheme they had gained more than one million customers and he informed that this will continue till the end for the benefit of the customers. [Mintel: UK 16-02-2010].

Also Tesco has its online directory called “Tesco Direct”. In this directory the customer itself finds their product, cost and the discount for the products by Tesco Direct voucher codes and Tesco Direct Discount codes, which helps the customers to save their time and money. As a result sales revenue of the company has increased through online.

COMPETITIVE FORCE MODEL:

Michael Porter analyzes the five force diagram of the different competitions in market segment of industries. An example shown below how the five force diagram can be implemented in Tesco.

GENERIC STRATEGIES:

Michael porter proposes the four generic business strategies that could be embrace to have an edge over their competitors. The four strategies that are related to the business activities are compared with broad and narrow scale production.

Cost leadership:

The cost leadership strategy is applied to be in the low cost end. It states that the manufacturing cost and the selling price should not be too low, it should maintain a reasonable price such that the customer believes that worth for that cost. [Jobber 2003:580].

Tesco has an advantage over their competitor by their cost leadership strategy which helped them to lead the retail industry. TESCO focuses mainly in making the customer believe that the money spent on a product is a real worth for them. TESCO offers some good discount for their products which helps them to increase their sales revenue and it earns good number of customers in their list.

Differentiation Focus:

Tesco focus a wide range of products with good quality and a sufficient quantity at low price than their competitors. Also Tesco targets the market and satisfy the customer needs by good value added products.

EFFICIENT SUPPLY CHAIN:

“The set of the firm's activities that are conducted to design, manufacture, market and distribute and service the products”. [Jobber 2001:591]

For efficient Supply chain the retail industry should maintain a good relationship between suppliers, intermediaries, and customer to lead the retail market. Thus Tesco has his own supply chain policy which helps them to deliver the products to customers and reduce the raw material holding in warehouse which minimises the wastage of the products. For this Tesco has three teams for efficient supply chain management they are,

1. SYSTEM TEAM.

2. ANALYSIS TEAM.

3. PROJECT TEAM.

Tesco has a weekly planned schedule in which they calculate the raw materials requirement to satisfy the customer needs. First the system team will look the in-store stocks and incoming stocks and they maintain the records of the stocks available in the warehouse. The analysis team will take surveys based on the availability of the products and their performances which will help to improve the Tesco's system, and the main objectives of the project team is to improve the product usage without waste, availability of the products in right time in right place and satisfy the customers. Also Tesco focuses to improve the supply chain management in the retail market by predicting their sales in the future and the ways to improve the delivery time. This enables Tesco to monitor every shop which helps to minimise the delivery time of the product at low cost then their competitors like ASDA, Sainsbury, Morrison and Bookers. Also Tesco has a huge number of suppliers in the retail market, so they can get their raw materials in bulk at a good quality at low cost. Tesco mainly focus on reducing their transferring time of the product from supplier to the customers at a low cost. Thus Tesco has its own supply chain policy which helps them to lead the retail markets.

SUGGESTION:

Tesco being a retail giant in United Kingdom has less concentration on the other countries. Thus the global ranking of Tesco has fallen from third to fourth. Hence Tesco must have a focus on other developing nations, such that they can have a large empire in the retailing industry over the globe, which will help them to sustain and improve their global ranking over their competitors.

If we look at the customer service of Tesco it lacking behind its other features and services, where the customers are disappointed and deviate to a better serviced area. This affects the name of the organisation, which lies as a major drawback factor. To overcome this drawback they must have an efficient help desk to serve its customer in any problems regarding their products and services. They must improve their online customer help services such that customers can clarify their queries at any time.

If Tesco has a good communication with its customer about their services and problem it would help them to gain more knowledge of the people's needs which would help them to change according to the circumstance. According to our suggestion if these factors are taken into consideration, Tesco will capture the highest position in the global market.

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