Marketing Plan For Tesco Plc: Analysis Of Internal And External Environment

In this report, Tesco Plc Company has been chosen to introduce the marketing plan including various analysis of internal and external environment of the company. The marketing plan is based on various strategies to analyse the company’s position in the market as well as to explore the challenges and opportunities of the companies globally.    

Background & Objectives – It is the biggest and most renowned companies of UK in the retailing chain industry (Tesco PLC, 2017). It was introduced by Jack Cohen in 1919 in London, UK which is currently operating in more than 12 countries and it is located above 6553 stores presently. There are more than 476,000 employees work in the Tesco covers mostly all the grocery retailing items leading the position in Europe and Asia regions. The aim of the company is to provide affordable good in a good quality as its motto suggests ‘Every Little Helps’ explains they want to facilitate best experience to their customers at the Tesco stores and supermarkets (Tesco PLC, 2017). The company’s main objective is to cater the effective services and make the availability of all products and service in a single roof with selective prices. It wants to gain the loyalty of customers with various programmes customised as per customer’s requirements along with some of the financial and restructure focused discipline.

• The brand is very popular in UK.The company facilitates very qualitative and valued service to the customers. It is very flexible in its approach as compared to other companies and brands due to less integration (Benett et al., 2009).
• The company mainly focuses on the low cost price strategy which also provides competitive edge to Tesco. The competitive prise strategy is also embraced with possible price cuts backed up with the volume of the products.
• The company is expanded in many regions and not only in UK. It is also very popular and biggest market share in Asia and Europe regions.
• It does not involve any middleman or agent for marketing purpose of the company.
• The customer loyalty program called ‘Tesco Club card’ of Tesco is very effective in attaining the improved relationship with customers (Tesco PLC, 2017)

• It has been noticed that the growth of Tesco is very much based on the low price items that actually negatively influenced the price of expensive products of the company (Ansoff, 2016).
• The UK stores and business model with strategic management is the foremost base for the Tesco growth and development, which makes it depended on the UK sales and does not appropriate for other region expansions.

• Tesco stores have a wide range of brand lines and scale effects in products that positively enhance the purchasing power of the customer to a very high degree.
• It has been observed that the company has very successful operations in online sales as well as it is also blooming in Asia and Europe regions which create greater possibilities to the company in the near future (Benett et al., 2009).
• The company can expand its operations in the technological area too which will also ensure the profitability and growth of the organisation.

• The downfall in the economy has an impact in the Tesco growth and sales all around the world.
• Political, legal, climate and environmental changes also leads to external threat for the company where it is operating its business.
• Any change in the raw material of the company will directly affects the profit margin of the company which is a challenge for the company to survive when raw materials cost are at its peak (Benett et al., 2009).
• The change in customer’s preference, taste, lifestyle, attitude and belief also affects the company’s sales
• The retailing market of UK is intensely competitive which makes it easier for the giant competitors to takeover other company such as Carrefour can capture Tesco as a market leader at present.

The analysis includes factors such as political, environmental, economical, legislation and social aspects that influences the survival and growth of the company. The Pestle analysis of the company is as follows:

Political factors – the globalisation has led to many challenges for the MNC’s which is extremely influential with factors such as political. The legislation conditions and political impact affects Tesco’s growth and development in a particular country to a large extent. Some of the issues are employment legislation, low pay policies and other standards that are important through law as well as very essential for retaining customers and their loyalty (Tesco PLC, 2017). Along with this, the corporate decisions of development product, joint ventures and strategic alliance for the expansion of the business in new market.

Economic factors – unemployment in any of the location cause the less demand of Tesco goods plus change in the taxation policy also influences the margin of the company and financial resources as well (Ansoff, 2016). Thus, economic factors highly impacts on the profits, demand, prices and leverage cost of the company that directly connects the growth and development of the company. To improve and minimise the effect the company comply diversification and internationalisation as a strategy for success in the market. The company also retained the position of leader in low price value goods because of household income and disposable income levels.

Pestle Analysis

Social and cultural factors- The one stop shopping and bulk shopping is the new trend in the UK market which has attracted many customers recently (Hensmans et al., 2012). The company also increased the non food items for sale along with organic products due its demand in the market. The demand of qualitative and health conscious products which is influenced with the attitude and belief of the customers are in demand in the trend which has changed the products of food.

Technological factors- the company integrates advanced technology as a new opportunity. The company also introduced online shopping experience for its customers which also cater the facility of home delivery (Tesco PLC, 2017). In addition to this, the company declines the labour costs by introducing self service at the point of sale that makes the operations easy and flexible. Moreover, its aim to reduce the carbon footprints is being achieved with the help of long term objectives by investing the large amount on the technology related to the energy efficiency projects.

Environmental factors – the strategic goal of the company is to trim down the carbon footprint by 50% in 2020 along with the effective waste management to improve the society and increasing customers concerns (Tesco PLC, 2017). Furthermore, the company also concerns with the environmental issues and espouse various strategies to improve the society.

Legal factors – The Food Preservative and Food Retailing Commission (FRC, 2004) are the government policies and legislation that influences the current codes of practice of the company. The demand payment from supplier and changing price without notice are some of the issues that come in legal affairs (Tesco PLC, 2017). License requirement, competitive prices, restrictions on access of raw material and advertisement related legislatures are the prime concern in the legal factors that influences the prices and sale of the company intensely.  

It has been investigated that Tesco basically covers all the segments including niche, mass and local market which helps the company in expanding its business in the marketing plan (Hensmans et al., 2012). The company focuses on the maximum satisfaction of customers which is attained through profound study of behaviour, taste, preference, belief, attitude and values of the customer. Tesco’s target customers are youth, children, low-middle aged group and all professional people (Mason and Evans, 2015). Moreover, the company offers its products to the urban as well as rural population with a well planned strategy by investigating implementing suitable strategies according to it. The company always approaches to its customers with conveniences and availability at the city centre places. The products are of innovative and creative designs that entice customers and provide competitive edge to the brand as well as creating market positioning.

Competitive Environment

As per the stats Tesco is holding number one position in the UK market in retailing sector. The main competitors of the company are Carrefour, Wal-Mart and Sainsbury. As per the industry reports, all of these competitors and Tesco are the multi format retailers that are leading their position due to reduced price and good quality products (Tesco PLC, 2017). Along with this, they have giant stores that make it easy for the customer to shop all the stuffs at a single roof.  The stats of the competitors and Tesco are given as follows:

Furthermore, competitor’s analysis has been provided by discussing Porter’s Five Force analysis below:

This analysis explores the competitive environment of the company and it also examines the source of competitive advantage in the retail industry.

Threat of substitute products and services: it has been analyses that in food products the degree of threat is low because essential daily items are below for food and it is in the competition of small vendors which is not a great threat for supermarkets (Haerifar, 2011). In case of non food items such as electronics and cloths it is comparatively high degree of threat of substitutes due to economic recession clients tend to shift to discounted shops.

Threat of entry of new competitor- it is considerable low degree of threat as new competitor needs to achieve economy of scale and become price leader for this purpose. This costs huge amount of investment as well as competitive with other supermarket giants too (Harrison and  St. John, 2013). Resource and time is another element that needs to be considered while entering in the retailing sector.  

Intensity of competitive rivalry- this is extremely high degree of intensity due to big supermarkets and high market retailing chains plus there are various discounts shop and local vendors that are popular in this sector (Curtis, 2012). Price, product and promotional activities highly influences the customer choices and growth of the company. The intense competitiveness also slows the growth of the company and threatens the leadership of the company as well.

Bargaining power of the buyers- this has a high degree of impact in the market as well. Small differentiation in the products facilitates switching cost at very low price that changes the customer’s brands frequently (Curtis, 2012). Moreover, offers and online availability with price comparison highly impacts on the sale of the products and process of choosing retailer.

Bargaining power of suppliers- the supplier’s degree of bargaining is lower because large number of suppliers and tendency to incline towards supermarket and hypermarket (Cummings and Angwin, 2015). The big supermarkets are highly negotiable and strengthen at the lowest possible price positively without ruining relations from suppliers.  

• Product – The company offers mostly all the grocery items. The productsof Tesco are of various ranges are highly variable and the strategy in development of the product is diversification with other brand (Hitt et al., 2012). Apart from this, variety of portfolio and corporate strategies are followed to create a product in existing market strategy or as an expansion strategy.  
• Price- the company follows cost leadership by offering products at lower price than other competitors (Aaker and McLoughlin, 2009). It also adds the value added prices to entice the customers. The prices of the products are based on the promotional and competitors prices in the market.  
• Distribution- the company implements multi channel approach for distribution of the products by inserting online shopping experience and direct Tesco catalogue (Mason and Evans, 2015). Bigger stores and shop formats are being customised according to the need of the customer and nature of the product. Home delivery services are being provided in both the cases online or direct physical store shopping as per need and suitability of the customer.
• Promotion- Tesco uses various strategies as promotion of the brand to attract the customers. Short term and long term prospective are involved in the vision while adopting the method of promotion.It is associated with the brand image and therefore, company uses regular discounts and offers, point of sale marketing strategies and advertisements, media interaction and sponsorship of charitable cause and events for it (Mason and Evans, 2015). Furthermore, customer loyalty programmes are also included in the promotional strategies of the company.

In case of implementation and control plan, the company focuses on the financial and strategic control which incorporates capital bid, strategic operations and performance appraisal. The important implementation and controls strategies of the companies includes as follows:

• Improve customer offers by launching bigger and sustainable loyalty programs. Furthermore, various strategies to interact with customer in order to take feedbacks and reviews through social media and other means of survey are being executed.
• Promotion of suitable product at the right time- it can be monitored with the help of competitor’s survey and information of market trend (Seth and Randall 2011). Along with this, the main aspect is to create an effective and useful advanced technological product in the market which is cost effective and has minimum distribution cost that creates huge margin.  

Conclusion

It can be analysed from the above discussion that Tesco is the cost leader at the present market and offers various products within the range of low and middle class public with good quality of item. Furthermore, Tesco has huge competition in the retaining industry. Thus new strategies and implementation of existing strategies effectively is much needed at present. It can expand in new markets with some new product and diversification in the product in the retailing market. The company uses Tesco club card as loyalty program and also introduced online shopping experience with home delivery services.  

References

Aaker, D. A., and McLoughlin, D. 2009. Strategic Market Management: Global Perspectives. John Wiley & Sons.

Ansoff, H. I. 2016. Strategic Management. Springer.

Benett, A. et al. 2009. Good for Business: The Rise of the Conscious Corporation. St. Martin’s Press.  

Cummings, S., and Angwin, D. 2015. Strategy Builder: How to Create and Communicate More Effective Strategies. John Wiley & Sons.

Curtis, T. 2012. CIM Coursebook 03/04 Marketing Management in Practice. Routledge.

Haerifar, P. 2011. Performance Management in Tesco. GRIN Verlag.

Harrison, J. S., and  St. John, C. H. 2013. Foundations in Strategic Management. 6th ed. Cengage Learning.

Hensmans, M. et al. 2012. Strategic Transformation: Changing While Winning. Springer.

Hitt, M. et al. 2012. Strategic Management: Concepts and Cases: Competitiveness and Globalization. 10th ed. Cengage Learning.

Mason, R., and Evans, B. 2015. The Lean Supply Chain: Managing the Challenge at Tesco. Kogan Page Publishers.

Seth, A., and Randall, G. 2011. The Grocers: The Rise and Rise of Supermarket Chains. 3rd ed. Kogan Page Publishers.

Tesco PLC. 2017. [Online].Available at: https://www.tesco.com/ [Accessed on: 11 June 2017].

Tesco PLC. 2017. About us. [Online].Available at: https://www.tescoplc.com/about-us/core-purpose-and-values/ [Accessed on: 11 June 2017].

Tesco PLC. 2017. Annual Report 2017. [Online].Available at: https://www.tescoplc.com/investors/reports-results-and-presentations/results-and-presentations/ [Accessed on: 11 June 2017].

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