Background
Question:
Discuss about the Development Environment and Strategic Choice.
Marketing audit indicates towards comprehensive, systematic, interpretation and analysis of business marketing environment (counting internal as well as external), its goals, and strategies, principles to determine the specific areas of issues along with opportunities and to suggest an action plan to augment marketing performance. The current study elucidates in detail about marketing audit and analytically evaluates the micro as well as macro environment and competitive position of the firm Tesco Plc in the UK market.
The company selected for the present study is Tesco Plc and the selected market is UK. Tesco Plc is a well-known British transnational grocery as well as general merchandise retailer headquartered in Hertfordshire, United Kingdom.
Size of the corporation: For the purpose of the study at hand the UK business will be taken into consideration. The operations of the firm Tesco Plc in UK are necessarily the largest within the specific group, with more than 3400 stores and more than 310,000 colleagues. Range of products as well as services offered: The business concern Tesco Plc is necessarily a retail corporation that is engaged in the business of retailing along with associated services.
Cross-functional associations can be regarded to be vital within a specific corporation such as Tesco Plc. In itself, it is important that numerous areas of business of the company Tesco Plc interact with one another in a bid to deliver a seamless information flow as well as strategic expertise. Essentially, the marketing development has a cross-functional association with various departments such as technology department in a bid to understand what products are required to deliver to the market (Kotabe and Helsen 2014). Again, management of the firm also needs to understand the crucial association that exists in different departments in a bid to be rigorous on budgets. Essentially, the business will not function without interdepartmental associations.
Stakeholders refer to individuals, group else wise organizations that essentially has direct as well as indirect position in corporation, it is affected by rules as well as regulations, strategies, policies along with decisions of business concerns.
The external stakeholders of the firm Tesco Plc consist of:
The internal stakeholders of the firm Tesco Plc include the following:
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Influence of the identified factors |
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Political factors: The current factor stresses on the role of government institutions. For example, in UK at the time when the environment of the business was struck by crunch in credit that again led to higher unemployment. Statement of impact on the company: In itself, this trend actually aided TESCO owing to dominance in the market UK and being one of the fastest developing retailers that made attempts to decrease the overall level of the unemployment generated by these alterations thereby created the employment (Chernev 2018). There is higher rate of unemployment in the economy. Statement of impact on the company In addition to this, for employment legislation, the government of UK inspires retailers (such as Tesco Plc) to deliver a combination of job opportunities from flexible, low paid and regionally based jobs to various highly skilled, high paid and centrally situated jobs (Keller and Kotler 2016). In addition to this, strong restriction imposed by the government is against the monopoly of the company (Kotler 2015). Statement of impact on the company: The company Tesco also have the need to analyse different aspects of government policies on particularly taxation since high level of taxation can be considered to be a major issue in UK as it is never stable (Kotabe and Helsen 2014). Fundamentally, the issues associated to government policies on mainly trade restriction and execution of novel regulations can also affect in a manner when there is free trade between particularly the European Union. |
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Economic factors: There is another environmental facet that can exert huge influence on the business of Tesco Plc. For example, the economic downturn encountered in UK owing to the unemployment that drastically decreased the demand of so many goods affecting the overall demand (Kotler 2015). Also, higher unemployment rate characterised by lower disposable income also adversely businesses. Statement of impact on the company: This can be considered to be a major area of concern to the company Tesco Plc as they are highly dependent on the market of UK. Furthermore, if the company Tesco Plc had known about recession in the economy, with the use of PEST framework it would have aided plan. |
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Social factors: Demographics, culture, customs alongside tastes and preferences of customers are said to have high impact on retal business of UK. Statement of impact on the company: Tesco Plc can be considered to be one of most popular retail groceries operating in UK that has successfully addressed social as well as cultural requirements of people. This is because of the increment in the total amount of non-food items held for sale. Also, this has also kind of inspired customers to move towards shopping in bulk (Armstrong et al. 2015). In addition to this, demographic alterations such as lifestyle that is necessarily associated to beliefs of customers along with attitudes have made the company Tesco plc to focus on various value added products as well as services. Yet another important factor is the population that has compelled Tesco Plc to have higher interest in increased demand of customers for different organic products. Essentially, this in turn can aid the company Tesco Plc to devise strategies to drive costs out the specific market. |
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Influence of the identified factors |
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Technological factors: The utilization of technology can enable customers to disburse bills electronically thereby lessening long queues, online marketing, in particularly marketing . Statement of impact on the company: This technological progression can be considered to be of the expansion strategies of the company Tesco Plc. Again, online marketing also exerted influence on development of several Tesco products. This also helps both the corporation along with its customers (Armstrong et al. 2015). In essence, this personalized service can make shopping experience of the customers more convenient and can positively exert influence on growth rate of Tesco Plc (Store.mintel.com 2018). Essentially, the company has acquired benefits from its technological innovations and transformation from ‘bricks and mortar’ to particularly ‘bricks and clicks’. This has led to the surfacing of Tesco Direct that is an online grocery stage with ‘click-and-collect’ function. The company has implemented digitalized in-store experience, Tesco Club card and many others. |
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Environmental factors: Identification of challenges and overcoming the same: There are several environmental factors that affect the business environment of the company. The corporation plays an important role in shielding the business environment and help in comprehending and addressing the influence in the operations as well as supply chain. In carrying out this task, the company can enhance resilience to diverse risk, and secure overall supply of products and deliver opportunities for saving money. Management of the company also continue to identify changes in climate as the highest environmental threat the entire economy encounters (Monteiro and Birkinshaw 2017). Paris Climate Agreement: Subsequent to the Paris Climate Agreement, the company also inspires all its suppliers and operate successfully with them to establish credible targets on specifically 2 degree trajectory. The company also has the intention to attain absolute reductions, founded on level of 7% by the year 2020 and 35% by the year 2030. Furthermore, management of the firm also pledges to achieve zero deforestation by the year 2020. Also, management of Tesco Plc is also committed to source seafood sustainability to make certain the future of the seas, aquatic life along with fishermen who depend on the seas. The company works with “Marine Stewardship Council” to enhance range of certified sustainable counter, “Sustainable Fisheries Partnership” to map and assess risk of all of the seafood supply chains (Ingram et al. 2015) |
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Influence of the identified factors |
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Legal factors: Competition law: “Competition Law” intends to make certain both fair as well as honest trading. Statement of impact on the company: Essentially, this can permit Tesco plc to gain reasonable prices on particular products (Simon et al. 2014). Nonetheless, retail suggested price is taken into consideration in this case. For instance, in case if the RRP is 90p for a cheese packet, then Tesco Plc can follow the suggested price as it is fair to sell the product at that price. -Discrimination Law: A legal issue is the discrimination regulation that indicates towards the Discrimination Act of the year 1975, the race relations act of the year 1976, employment equality regulations of the year 2003. In addition to this, this regulation includes disability act of the year 1955 and employment equality regulations of the year 2006 and many others. Statement of impact on the company: The company Tesco has the need to conform to the prescribed regulations to operate a successful business (Cascio 2018). Fair Trading Government establish fair trading to provide all businesses equal opportunity to compete with one another (Wheelen et al. 2017). In essence, this is known as OFT and this can make certain that markets operate well for different customers and providing different choices. The Enterprise Act of the year 2002 delivered OFT the authority to inflict fines along with other punishments to businesses that participate in this kind of actions. During the year 2009, the company imposed total fine of the amount £129million in England who were against the regulation. Statement of impact on the economy: Tesco has incorporated the policy of Fair trade since it started in the year 1994 and now delivers customers a range of Fair trade certified products |
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Political – crunch in credit – higher unemployment – strong restriction imposed by the government is against the monopoly of the company (Phadermrod et al. 2016) |
Economic -economic downturn encountered in UK – unemployment rate |
Legal – Competition law – Discrimination Law – Rules of fair trading |
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Technological – transformation from bricks and mortar’ to particularly ‘bricks and clicks’ – Tesco Direct that is an online grocery stage with ‘click-and-collect’ function – Tesco Club card |
Environmental – established science based targets for reductions of carbon – Paris Climate Agreement – Marine Stewardship Council – Sustainable Fisheries Partnership |
Social – focus on various value added products as well as services (Grant 2016) – higher interest in increased demand of customers for different organic products- |
Note on marketing audit undertaken on macro environment of Tesco
The McKinsey 7S Framework explains the overall linkage between seven separate components of the business to enhance overall effectiveness (Shabanova et al. 2015).
Size and Product Range of Tesco Plc
Strategy: Management of Tesco Plc UK pursues cost leadership strategy as per the marketing communicating message of the company “Every Little Helps”. Essentially, the supermarket chain can sustain this specific stratagem owing to the extensive utilization of economies of scale and practice of bargaining power in handling with suppliers to secure low level of purchasing costs (Hasan 2016). The strategy of Tesco is to handle the issue by reducing capital expenditure by GBP 1 billion, replacement of benefit pension plans for different employees and assessment of property portfolio with the intention of cost reduction (Tong et al. 2015).
Structure: The new CEO eradicates the roles of deputy store executives during the year 2015 as part of endeavour to simplify the structure of the organization. Essentially, there are 10 different members particularly in The Board of Directors and Executive Committee of the company that again comprises of 11 members.
This is a significant analysis that can be undertaken to recognize various non value added actions, resources of which can be deviated for the purpose of strengthening various value added activities.
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Particulars |
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Product |
The company Tesco Plc has extensive range of product offerings (Baker 2016) – The product of the company that include food as well as beverages, pet care, bakery products, pet care products and many others. This company has its own brands such as Tesco, Tesco Loves Baby, Tesco Value, Tesco Bank and many others -Tesco has currently assessed 33 categories of food and lessened the lines of the product by approximately 18%. In itself, Tesco Bank delivers financial services namely loans, credit cards, insurance and many others. |
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Price |
Tesco delivers low as well as stable prices after getting feedback from the customers. Essentially, Tesco pursues stratagem of cost leadership as pricing strategy. Tesco utilizes economies of scale and the best channels for procurement to uphold low prices (Weinstein and Pohlman 2015). – The company Tesco also cut promotional expends to lower prices. Essentially, Tesco Plc has a unique programme known as Brand Guarantee in which if customers can acquire lower prices of any branded product. |
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Place |
The company Tesco Plc has approximately 6900 stores in around 11 nations. Different types of stores of Tesco Plc include Tesco Metro, Tesco Superstore, Tesco Express as well as Tesco Extra (Kotabe and Helsen 2014). |
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Promotion |
The company Tesco Plc has a strong brand image that depends on low prices. The company Tesco Plc has promotional actions that are centred on this theme (Chernev 2018). Tesco plc essentially utilizes hoardings, television advertisements as well as charitable events as promotional channels. The company utilizes “Tesco Clubcard” that permits to segment and target customers. |
Key Points of Marketing Mix (Tesco Plc)
In terms of share of market, the competitive position of Tesco Plc UK can be analysed. Analysis of market share of Tesco plc and its main competitors show that Tesco Plc have succeeded in succeeded in maintaining its leadership position. The table below presents the market share:
Comparative Analysis of competitors based on objective and strategic direction
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Firms |
Description of strategic objective as well as direction |
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Tesco and Morrison |
-Tesco plc and Morrison reflect different characters particularly within the grocery segment of the retail industry. Tesco acts as the market leader in the industry, and the share price of the firm shows the way it influences the entire grocery market. Contrarily, Morrison acts as a market follower and might perhaps act vulnerable when compared against both Tesco Plc and Sainsbury’s. Morrison reflects a declining trend of the price of the share. Despite being one of the major chains of supermarket, Morrison presented comparatively less ranges and varieties of shopping experience (Keller and Kotler 2016). -Tesco Plc has remained to be a market leader in the grocery market of UK from the past 25 years. This company owns approximately 3000 stores in the UK, and has around 28% market share. Also, Tesco delivers diverse grocery services in a bid to meet different demand and this included convenience stores, hypermarkets, supermarkets as well as superstores (Armstrong et al. 2015). |
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Tesco and Sainsbury’s |
Sainsbury’s currently ranks third in terms of market share. Sainsbury’s employs more than 150000 and the supermarkets deliver to over and above 18.5 million. Sainsbury’s deals in different products namely convenience, hypermarket and supermarket and many others. In addition to this, the company also operates through a number of locations (approximately 1415 stores). |
Strategic Group Analysis and Perceptual Mapping for determination of competitive position
Perceptual mapping is necessarily a diagrammatic scheme utilized by asset marketers that endeavours to visually display specific perceptions of customers or else potential customers (Kotler 2015). The perceptual mapping presented below helps in understanding the fact that Tesco Plc is at a better competitive position than its competitors Sainsbury’s and Morrison. This is so because it has comparatively low price as well as broad range of products measured in the two different axes of the map.
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Strength – The company has several awards for the firm’s operational excellence, quality of service to customers and superior shopping experience on the whole (technological progressions: pestle analysis) -Firm having largest market share and is one of the largest as well as the most profitable chain of supermarket (Kotler 2015).(competitor analysis, marketing mix : promotion) -Improved usage of technology (technological progressions: pestle analysis) |
Weakness – Competitive pressures have necessarily led to price wars. This again has eroded necessarily the profit margin of the firm (low and stable prices: marketing mix) -There is less amount of disposable income and this affects the buying potential of the corporation (Kotler 2015). (credit crunch and higher rate of unemployment-Pestle analysis) -Government restriction and taxation issues pose a threat (political factors) |
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Opportunity – There are specific opportunities for undertaking strategic alliances with different brands -There is considerable opportunity of the firm to develop its business by augmenting online shopping and offering home delivery services (Place: marketing mix) -Expansion by technological progression (pestel analysis for macro environment) |
Threat -Economic recessions along with credit crunches shall continue to threaten overall share of the market along with profitability (political factors: PESTLE analysis) -Competitive threats are also present with diverse other retail giants (competitor analysis) |
Conclusion
The above study helps in gaining deep understanding regarding marketing audit with reference to the operations of the firm Tesco Plc in the UK market. This in turn helps in thorough analysis of marketing plan, objectives, and present actions that is being executed by the firm.
Based on outcomes of marketing audit, it can be hereby said that management of Tesco Plc can work towards establishment of competitive edge over the rivals. Turnaround priorities for regaining competitiveness include better availability of the products that matter most in an everyday life. Also, management can establish lower and stable prices that they can trust instead of engaging in price wars. Lowering the price can make the products of the company affordable to the customers. This can counter the problem of less amount of disposable income of the consumers. Management of the firm can conduct thorough market research for improvement of customers, channels and product. For this purpose, administration of the firm can consider more effectual and considering the option of reinvesting some of the savings.
Cross-Functional Associations within Tesco Plc
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