Marketing refers to activity taken by the company to promote the buying and selling of the product or service. It is a very wide term which includes advertising, selling, strategies and delivering of products and service to the ultimate customer. Tesco is one of the leading retailers in the food and non-food items and it has a significant internal and external environment as it deals in the retail sector. In this report the marketing strategies of the Tesco company is discussed and what are the strategies they used while opening their store in South America (Argentina).
Explain SOSTAC marketing strategies.
SOSTAC is a marketing model developed by the PR Smith in 1990 to help in strategic marketing planning and in business planning. It is rated in top three marketing models which is most popular. SOSTAC stands for
It is a collection of method which is being used by the manager for the analysis of internal and external environment of an organisation which impacts ability of an organisation so that they can achieve its objectives (Fahy and Jobber, 2015). Situational analysis can be done through SWOT analysis which assess the organisation strengths, weaknesses, opportunities and threats and from PESTLE analysis. Tesco is the worlds leading organisation in retail sector operating in 4331 retail stores in 14 countries. Tesco is having the largest market share in the UK as well as in the international through its marketing.
TESCO Swot Analysis
- TESCO perform well in achievingvarious awards for excellence in retailing and best services provider to the customer.
- Its one of the largest profitable supermaket and has a tough competition with other companies across the world.
- It has lots of property and assets which can provide a great infrastructure and financial support to maintain country economy.
- TESCO has maintain there goodwill by providing best services with the good quality to the customer.
- Tesco face problems due to fluctuation in price rates which effects the margin profit of retailers (Hastings and Stead, 2017). Tesco has to search more about marketing strategy and search for better substitutes to gain profit in this competitive market.
- The retailing strategy of Tesco has failed to provide better results which tells that Tesco has done weak marketing research.
- Consumer not able to purchase services due to high range as retailer fails to maintain its inventory and selection as well.
- The retailers of Tesco mostly deal with country UK and Europe for the sales and services and has paid less attention to expand market and to increase resources.
- Tesco has opportunity to increase their online market by providing services according to customers choice which they receive directly at home (Kotler and et.al., 2017).
- By Joining with local companies which can support Tesco in marketing research and helps to increase their sources of income.
- Economic changes which disturb market share and profit ratio of the world which lead to reduction in sales .
- High prices of food which leads to reduction in purchasing power of consumer.
PESTLE analysis of Tesco
Political factors greatly influence in the performance of Tesco as it operates globally. It covers Tax rates, legislation of the country and the strength of the country where it operates. Due to the financial instability of the world, many government give support to the retailers to create the job opportunities for the domestic public (Lovelock and Patterson, 2015). Tesco wants that their organisation is having the great impact on job and the people living there.
This factor is the most concern factor of the Tesco as it leverages its cost, price and profit. So the company has to aware of any changes in policies like change in the taxation policy or any other factor which effects the financial stability.
Consumer taste and trends are constantly changing by the time and people wants to deliver their goods fast even on the same day and needs the return policy. People of UK believes in one stop shopping and bulk shopping. Tesco rely on customers and understand their issues regarding the service. Now the consumers are becoming more aware for the health so the Tesco keeps the food organic as the demand is changing constantly.
Innovation in technology brings the various new opportunities for Tesco. As due to the advancement of technology Tesco introduce the online shopping and self service check points.
Government laws and legislations impacts the performance of the Tesco such as they have to conduct their operation accordance with Food Retailing Commission or any other laws of the country where it operates.
Tesco has the pressure from the government that they have to reduce its Carbon foot print by 50% till 2020. Tesco are planning to come in South America but they are liable to respond the issues and benefits to the company address to environmental issues.
The objective of the Tesco is to open the Super market in South America with the motive to sell, serve,increase the revenue and diversify the market. They wants to give the better services to the customers and provides them the additional services. Some of the objectives are
Objectives of Tesco
One of their objective to come in the south America is to make their presence globally and diversify their organisation.
Increase in sales
Tesco wants to maximise their sales and they can increase their sales by expanding the stores. If the sales increase than it will lead to increase the profit. They also use different strategies to attract the customers and retain them by offering deals and cutting price.
Create Employment opportunity
As Tesco enters in the South America than it also create the opportunity for the domestic public and to local community by providing the jobs. Their aim is to reduce the unemployment in the area where they operate.
Success of the company depends upon the marketing strategies in the organisation. Tesco use the 4p's to analysis the market situation as they help to find the competitor strategy, so they reduce their cost and increase the profit (Shaw, 2016). They can even give add the additional services, gives better quality services to attract the customers and they can also attain the objective of an organisation. Even they use the techniques of Segmentation, targeting and positioning
They can also use the STP technique to capture the market of Brazil. They segment the market by age, income, gender and occupation and provide the product. They can target the youth of Brazil because 62% Brazilians are below 29 year. They can target them by providing the latest technology and fashionable product. They can use the different channel like social media to target there customer. By providing better quality product and services they can position the market.
Tesco is the biggest industry in the retail sector and their aim is to increase the customer loyalty and its core. Tactics are the strategies which is being implemented by the organisation in the market. They use the 4p's strategies for penetrate the market
Tesco gives the diversity in products which includes food, clothing, grocery, electronics and many other products. While coming in the South America ( Argentina ) they try to provides every need of customers. They have the product from all great brands in all the product line.
Tesco is the leader in the pricing strategies as a result they offer the product in the low price as much as possible without any compromise in the quality. Tesco want economies of scale and they work continue to supply their products without any problem and also offer the products at lower cost.
Tesco is having more than 6900 store in 11 countries like Tesco Metro, Tesco Express, Tesco Extra etc. As they now open the supermarket in the Argentina, Tesco can open the physical store in public place. The online company of the Tesco is called Tesco direct. Size of the city decides that which category of store they want to open.
Tesco has the strong brand value and it is known among people that they serve the products at the lowest cost. As they are opening in the new market the promotional activity is the centred in the theme. Promotion is done by Tesco through the hoardings, television ads, social media marketing etc.
STP techniques are
It is being divided in 2 parts that is geographic and demographic, segmentation is basically done by dividing the population into groups as per their needs, wants or the section of the society. Segmentation also decides the suitable area where the Tesco has to open their store.
Tesco has to target the customers of South America (Argentina) that which class of people they want to serve so that they can attract the majority and increase the revenue.
Positioning of the product includes dealing with people so that they can attract their target customer. Tesco makes all the strategies in order to target all the possible consumers. Types of positioning are symbolic positioning, price positioning, Experiential positioning and Multi-segment positioning.
It is the planning of any organisation that how they have to execute the strategies made by the organisation and to make the action measurable. This section covers what they need to achieved in each of the tactics. Action refers to proper implementation of the strategies.
The final stage of SOSTAC is control. Controlling is the method to regulate the organisation's strategies and activity. It also measure and monitors the performance based om the objectives. Tactics which were planned and the controlling unit provides the series of dashboards. For the effective implementation of store in Argentina, there Tesco can use decentralize method as it saves the time and allows delegation of work. It motivates the lower level for work hard.
Background of TESCO marketing
Tesco which was started in 1919 by Jack Cohen. The third largest British retailer and headquarter is in England. Across Asia and Europe it has seven shops and the first shop of Tesco opened in 1931 in Burnt Oak, Barnet. The first brand of Tesco appeared in 1924. And listed on London stock exchange as well .In 1995,Tesco introduced a loyalty card, brands club card. After that Company also have started to increase the rang of products such as house hold goods , clothing for sale under the brand name called the Delamare brand in 1960. Tesco lotus was also become a joint venture of the Charoen Pokphand group in 2003.
Tesco is the first company which started selling of petrol in 1974 in united kingdom and after several years later Tesco become a part of financial services and started work with The Royal bank of Scotland. This tie up provides growth to the Tesco brand.
In 2003 with the help of joint venture with O2 network Tesco started mobile phone business and then Tesco reached to the high profit growth and it had over 2.5 million UK mobile customer. This company has large number of superstores and supermarket across the world where they provide groceries to the customers and are mostly located in engaged city, residential areas, small towns and villages. Tesco has made a commitment to fulfil the social responsibility in 2006 and contribute 1.87 of its pre tax profits as a charity to the local community organization.
SOSTAC strategy in UK supermarket
SOSTAC is a marketing planning model and was invented by Paul Smith. It focuses on the six elements and helps in the planning system of the organization around the world and each of these six elements plays an essential role in the marketing plan. Tesco uses these elements to improve financial status, attract customers, business processes, learning and growth.
Tesco is known as the largest food retailers in the world, which is currently operating with around 4331 retail stores in 14 countries around the globe. It has 960 express stores that sell approximately 7000 items including food and non-food items. Tesco also has 170 metro and 450 super store and is the market leader of groceries in the UK. The company's share market is the largest in the UK which is around 28.4% as well as international market such as Ireland, Hungary and Thailand due to implications of strong marketing strategies (Chaffey and Ellis-Chadwick, 2019). Tesco strengthened the value proposition and food quality at the highest level helped them to increased profits, generated more cash and reduce the debts significantly. The annual revenue of Tesco in the UK and the Northern Ireland accounted to approximately 45 billion British pounds. Tesco is able to target the customers with the variety of products and network in different parts of the countries. They understood the importance of new marketing strategies to attract more customers and overcome the competitive advantage over other retailers. For every business customers plays a crucial role for the survival and growth of the company. Tesco is full aware with the needs and demands of its customers and work accordingly to meet the expectations in a better way. To fulfil these need company focuses on the development of product and market strategies by conducting market research and survey to attract more customers and identifying their behavioural needs. The strongest growth of Tesco has been recorded in seven years which is boosted by its acquisition of the booker cash and carry group. The CEO of the company Dave Lewis cut the prices on fresh food lines which helps in 300 million pounds of sales in UK. They set their growth plan by delivering food to clients more quickly in some areas.
Tesco is operating in a strong competitive market, competing with three major retailers i.e. Morrison, Sainsbury and Asda. Tesco has overcome its weaknesses and reducing the threats from competition by implementing various strategies such as brand management, leadership, diversification etc. and it has various growth opportunities of emerging market like China, Japan etc. Tesco has also started working in non-food sector like insurance and other financial services, merchandising trading etc.
Tesco has well structured system of values, strategies and policies which help them in accomplishing the goals and objectives. The company is mainly focuses with its strategic planning with every aspects of business i.e. customer satisfaction, employee performance, financial position, operations and maintaining the consistent and standardized growth of the business. Tesco's other objective is to recruit diverse staff which have diverse views, ideas, skills and capabilities which will help in creating the innovative and creative path to achieve the success (Strategic Marketing, 2019). It also aims on providing training and development programs to enhance the personal and professional skills of employees.
Strategy and Tactics
Strategic marketing helps the organisation to consider every aspects of business such as competition, future plan and opportunities etc. the valuable strategy helps in accessing the current position of the company considering 4 P's of marketing i.e. product, pricing, place and promotion. Strategic marketing provides benefits such as it guides management in decision-making, understanding the market trends, customers and competitive behaviour. Tesco gains operational effectiveness through the implementation of strategic marketing that means employees are ware about their roles, functions and goals of the company.
- Market Penetration: Tesco has increased market share with existing products and services and become successful in penetrating within the existing market in the UK as well as other countries.
- Product diversification: Tesco has various type of products and operating with good services such as food, non-food items like insurance, petrol etc. and also adopting competitive pricing strategy which is giving them advantage over rivals.
- Market development: Tesco has created the network all over the world with it new and diversified product which is helping them in making alliances, partnership and growing their business globally.
- Brand management: Tesco has created the strong brand identity with the help of their values and ethics and providing quality products and services. It has managed its branding by using innovative ideas to improve the customer shopping experience.
Actions and Control
Tesco used some actions to improve the performance management framework by adopting Corporate Steering Wheel which was designed to outline the company's top strategic priorities supported by key performance indicators and the main purpose is to take the organization to success. This wheel was based on the fiver perspective such as financial, customer, community, operations and people.
It is all controlled by CEO of the company, Dave Lewis which stated that this wheel is the shared language and shared way of thinking and a common method for action. This wheel was used to measure the performance over all the organization from leaders to the employees. It is described as a round balanced scorecard or strategy map (De Mooij, 2018). The implementation plan will be presented to reach the objectives showing which marketing elements that will be executed when and this will be followed by a budget.
Marketing mix strategy in UK and in international market
Tesco's current market strategy is the effective strategic marketing which helped the company to achieve the competitive advantage and to become one of the largest retailers in the world. This market strategy helped the company to expand its network and building the brand reputation. Tescos's customer-centered strategy is used to create values of products at the reasonable rates and providing them unique and quality products and services in order to enhance customer loyalty. This market strategy implemented in UK supermarket can also be applied in marketplace of Argentina, South America.
The culture of Argentina has been principally influenced and formed by its European roots due to the fact that it has both abundant natural resources and a well educated workforce. Private consumption by consumers plays main role in economy growth and accounting for approximately two-thirds of the GDP (Blythe and Martin, 2019). Argentinian people are good in relationship both in professional and personal use. Argentina put a high value on appearance which is an integral aspect of their culture. Argentinians accept power and hierarchy in society as Tesco having the largest network and have hierarchical organisational structure. Tesco has supportive and value-driven organizational culture which shows how staff behaves inside and outside the company.
Values to the customers of Argentina can be delivered in various ways such as financing plans to purchase the product, quality, brand name etc. As the demand of groceries are high in the Argentina, Tesco can fulfil the necessities of the customers by supply diverse range of product with high quality and affordable rates. The consumer in Argentina gets more attracted towards the brand name and Tesco is the biggest retailer who supplies the products according to the needs of the consumers and try to interact with customers through market strategies and identify their behavioural needs.
Argentina has the strong economic growth rate of 8.3% with GDP $470.5 billion. The biggest benefit Tesco can have in Argentina is that online retail sites have continued to grow and reached 74% of its total online audience (Culture and E-Business in Argentina – Infographic, 2019). The market has adopted the digital marketing as internet usage and availability in Argentina grew 17.5%. The online shopping for groceries are available in Argentina but not the online food services which can give advantage to increase their sales in food sector and will help in productivity of company.
To attract the Argentinian consumer, it is important to understand the search engine optimization and focus on top search engines in Argentina like Google, Bing, Yahoo, Babylon. The social media landscape in Argentina is one of the most important for online marketing as it promote the brand through channels to the consumers. Tesco can have benefit in promoting their brand because Argentina is the third most highly engaged social networking market worldwide with user spending 9 hours. Argentina's 95% or more population is engaged on the social sites such as Facebook (87.83%), Twitter (7.33%), Youtube (3.27%), Pinterest (0.64%), StumbleUpon (0.42%).
Tesco provide the high quality and wide range of products who have brand reputation all over the world and understand the needs of consumers on their daily basis and serves the products at the affordable range. This strategy can be helpful in Argentina as it has the population around 42.19 million and people are health conscious and always buy products looking at the quality and brand name. Numerous consumers buy products online so this will give opportunity to expand its business in online marketing with reasonable rates on products which will create a great attention on the social sites and more consumers will attract and increase the sales and profit.
As Argentina's concerns increasing towards health and safety, Tesco can recognize its customer's needs, preferences, expectations and lifestyle and design products and services accordingly (Baker, 2016). Tesco is famous for promoting green, healthy and fresh items in its stores. The company's success is all due to the implementation of branding and marketing strategies. Tesco has gain powerful position by promoting retailing concept through viral marketing, brand extension and culture sponsorship etc. It has applied new extension and diversification strategy so it can sustain its global leading position in the retail industry. The company is strives to innovate product so that they can attract every segment across the globe like socio-demographics, geographics and psychographics.
The above analysis of Tesco's marketing strategy in respect with marketing mix model and SOSTAC model showed that company had become successful in various markets because of its brand identity as well as marketing strategies. SOSTAC model helped the Tesco to understand these elements to improve financial status, attract customers, business processes, learning and growth. It had gain the good image and reputation in the market because of its diverse product range by providing the high quality and healthy products at the affordable rates. It also described the various development strategies and technology which helped them top survive and grow in the market. This report also highlighted the marketing mix strategies which is used at UK market could be implemented in Argentina, South America.
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