Research Paper on Tesco Marketing Strategies
“Marketing is a management process responsible for identifying,
anticipating and satisfying customer requirements profitably”
Chartered Institute of Marketing (UK)
How does your organization (or an organization with which you are familiar) research its customer requirements? How are the data collected, transformed into useful information and disseminated to the right people?
- Your Organization (or the organization with which you are familiar with)
- Marketing – as a process of identifying, anticipating and satisfying customer requirements profitably.
- Market Research on customer requirements
- Collection, Processing and dissemination of information to the right people to facilitate decision making.
- Concept of Marketing Information system (MkIS)
The assignment should broadly cover following areas:
- Brief Introduction of your organization and markets it serves
- The need of marketing research in your organization – why is it essential today? ( 1000 words)
- How your organization research customers’ needs or requirements :
- Secondary Research or Desk research
- Primary research
- Sampling Techniques – selection of samples
- Role of MR agency – if involved in the process
- Need for MkIS to disseminate useful information. Effective and efficient MkIS is required today - why?
1.1 Brief Introduction to the TESCO Supermarket (UK)
The research paper deals with the criteria and Tesco marketing strategiesin the UK. TESCO is a multinational British retailer dealing with groceries and merchandise. The headquarters of TESCO is Hertfordshire in England in the area of ‘Welwyn Garden City’. It is considered to be the respective thirdand ninth-largest retail company based on the ‘gross-revenues’and revenues in the whole world. It has got its shops around the countries of Europe and Asia apart from the UK. It also spreads its market across the countries of Thailand, Ireland, and Hungary. The supermarket was found by Jack Cohen in the year 1919 as a market stall. The company’s first shop opened in the year 1931 at ‘Burnt Oak in Barnet’(tesco.com, 2020). Tesco marketing strategiesdeals with retailing of clothing, electronics, toys, books, telecoms, petrol, financial services, software, internet services, and furniture. It generates a ‘market-capitalization’ of nearly ‘18.1 billion pounds’and was added to the primary listing of the 'London Stock Exchange'. It has got around 450,000 employees and 6,800 shops all over the world.
1.2 Markets of TESCO
The company of TESCO in the UK possesses a vast structure of the business with around 2,200 shops involving many formats. They had spread their market across the countries of Thailand, Ireland, Europe, Asia, Hungary, and recently entered the market of India too(Chetthamrongchai, 2018). With its flexible approach to the market, it established a unique growth strategy by generating 56,910 million pounds of revenue per year.
The market mission of the Tesco marketing strategiesinvolves the creation of values for customers to gain their loyalty by understanding the responsible communities in meeting the needs of the market of the company. The financial condition of the supermarket retailer of TESCO includes the primary listing of the company in the ‘London Stock Exchange’ generating a 28.6% increase in revenues by the end of the year 2010. The market share of the company is mainly concerned with their strategies that are completely focused on their customers. It recorded a market share of 30.4% in 2010 and it rose to 0.3% from that of the market share of 2009.
The competitive structure of the market in the TESCO retail company of the UK faced a drastic change in 2004. The change came with the acquisition of the Safeway Supermarket chain by Morrison. It posed a great threat to the Tesco marketing strategies(Bailey & Alexander, 2019). Moreover, the biggest rival of TESCO, Walmart associated with the Bharti enterprises of India for seeking an updated opportunity in the business world. Tesco marketing strategiestook the chanceof forming a joint venture with a group of Tatas for entering the retail industry of India.
1.3 Marketing Procedures of the organization
According to the Chartered Institute of Marketing, the marketing processes of the company of TESCO can be referred as the processes of management that are responsible for identifying, anticipating, and satisfying of the ‘customer requirement ’in a more profitable way. The marketing of the TESCO supermarket retailing company of the UK is nothing but a business orientation that is focused on customer satisfaction according to their requirements(Armstrong, et al., 2018). It involves the customer requirements at the acceptable extent of costs and revenues in the company.
The elements of the Tesco marketing strategiesprocesses constitute the analysis of the market and environment, recognition of the target market, setting up of market objectives, and association with the components of the marketing mix. It also involves the reflected aspects, controls, and revision of the overall market structure. The market environment can be analyzed through various strategic tools like the ‘PESTLE analysis’, ‘SWOT analysis’, ‘value chain analysis’, ‘Porter's five force analysis’, and so on(Bentham, 2018). The recognition of the target market is mainly concerned with the identification of their target audiences from whom they can buy loyalty as well as profit.
Setting up of market objectives include short- and long-term perspectives of market profitability. It also includes the criteria through which the market brand name and the market value can be increased. It includes seven factors. They are growing at the core of the UK, increase in international market structure through offline and online channels, growth of retail services, focus on the responsibilities of corporate society, increase in the brand name, diversified market, and teamwork for enhancing value. The company of TESCO also deals with the marketing mix components through account wants and needs along with the understanding of the customer convictions.
The retail market of TESCO undergoes a periodic management procedure for assessing the levels of effectiveness in strategic market operations. It also includes improving the aspects of marketing by changing the internal as well as external environments. The Tesco marketing strategies are mainly concerned with an increase in the profitability of the company along with the increase in customer satisfaction(Evans & Mason, 2018).
2. The needs of marketing researches for the organization
2.1 Analyzing the market
The analysis of the Tesco marketing strategiesin the UK involves PESTLE analysis, SWOT analysis, Porter's five force analysis, and STP analysis.
The PESTLE analysis (TESCO)
The PESTLE analysis involves a better understanding of the international platform of the TESCO company in terms of a multi-retailer aspect. It deals with several factors associated with the macro-environment that possess an impact over the operations of Tesco marketing strategies(Heese, et al., 2019). It includes factors influencing the political, social, economic, environmental, technological, and legal aspects of the company.
The political factors
Global factors of political aspects possess a great influence on the company of TESCO. It is mainly concerned with the rate of taxes, legislation acts, government intervention of various countries, and the political stability of the countries in which the company operates. Because of the instability in financial conditions around the world, various governments motivate the retailers for creating jobs for the population of the respective countries. Tesco marketing strategiestends to create opportunities for employees to increase its product demands through a diversified workforce.
The economic factors
The economic factors of the Tesco marketing strategiesinclude demand, supply, and leverage costs for gaining profitability through maximizing opportunities(Ibrahim, et al., 2017). To have an impact on the financial condition, the company must follow certain rules to curtail the operational costs and increase the total amount of revenue in terms of profitability.
The social factors
Because of the variety in social changes, the indicating trends follow the shift of the UK customers of TESCO towards one-stop and bulk shopping. Since the types of products and services delivered by the company are mostly influenced by the beliefs and demands of the customers, their attitudes are reflected in the company’s social conditioning(Planning, 2017). The health awareness among their customers is continuously changing for which the company increased its food products in terms of varieties and diversities.
The technological factors
The technological factors of the Tesco marketing strategiesinvolve various advancements in the technological field like online shopping and home delivery facilities. Self-service points of checkouts reducing labor costs also provided convenience for customers. It also includes energy-efficient projects for fulfilling its long-term reduction of carbon footprints.
The environmental factors The environmental factors include a reduction in the carbon-footprints at a rate of 50% by the year 2020 to maintain environmental sustainability(Price & Moore, 2018). It also includes the minimization of waste materials and increasing social conscience among the employees and customers of TESCO.
The legal factors
The legal factors involve various government policies and social set of rules and laws for facilitating the market policies of the Tesco marketing strategies.
The SWOT analysis (TESCO)
The SWOT analysis of the company of TESCO is illustrated in the following table.
Strengths of the company
· Increasing shares in the market
· Insurance of the company
· Online channels of Tesco marketing strategies
· Brand value
· Reinforcement of the market leader in the UK
Weaknesses of the company
· Reliance on the market of the UK
· Reduction of debts
· Serial acquisition signs point
Opportunities for the company
· Retail based on non-food products
· Health and beauty opportunities
· Further growth in the international market(Evans & Mason, 2018)
Threats of the company
· The structural change in the UK is capable of striking a war of price
· Returns of overseas are capable of falling by market challenges of Walmart or Asda
· International expansion introducing complications in competitiveness
Table 1: SWOT Analysis
Porter’s five force analysis (TESCO)
The porter's five forces analysis of TESCO includes competitive market rivalry, power of suppliers, power of buyers, substitutional product threats, and new entrant threats.
Competitive market rivalry
TESCO has various competitors in its UK market. The competitors like Walmart and Asda spend a great amount on their marketing and advertisement processes(Rosnizam, et al., 2020). This may lead to the war of price having an immense impact on the marketing of the company.
Power of suppliers
The company of TESCO is associated with around 2,500 suppliers across the world. The company is aimed at negotiating power margins with its suppliers for increasing their profitability.
Power of buyers
The company of TESCO is very much customer-centric(Evans & Mason, 2018). They are more focused to bring change in their marketing according to the customer conviction than their planning. Substitutional product threats The emerging industries in substitutional products are a major threat to the Tesco marketing strategiesenhancing rivalry.
New entrant threats
New markets and other emerging industries like Walmart and Asda are considered to be a major threat to the profitability of the company of TESCO. To reduce the threat, they must introduce a diversified range of products.
The STP analysis (TESCO)
The STP analysis of the Tesco marketing strategiesdeals with its segmentation, targeting, and positioning. The market segmentation is based on geographic, demographic, psychographic, and behavioral categories. It deals with the customer segmentation in a proper way for introducing their products and services to the customers(Williams & Sir, 2017). After the segmentation, the targeting of the market is done by the company in terms of the proper identification of its target audiences to achieve customer loyalty. Lastly, the company is involved in the inappropriate positioning of Tesco marketing strategies to increase their customer satisfaction and business profit.
2.2 Understanding customer requirements
The company of TESCO possesses a customer-centric culture for its market improvement and business expansion(Sparks, 2019). Firstly, their product development is based on customer convictions. They are targeted to understand customer preferences in building up their market values. Secondly, the company deals with ranging of prices for aiming to win customer loyalty(Tuten, 2019). Thirdly, the company is determined in developing their stores according to customer preferences and feedback. Lastly, attaining their customer’s loyalty is the main scheme of the Tesco marketing strategies.
2.3 Significance of market research
Market research is important for conducting the performance levels of the Tesco marketing strategies(Tuten, 2019). It is very important to analyze the conditions of the micro and macro environment existing in the industrial market for proceeding towards further improvement and development of the business processes of the company. It includes the analysis of the market and environment, recognition of the target market, setting up of market objectives, and association with the components of the marketing mix. It also involves the reflected aspects, controls, and revision of the overall market structure of the Tesco marketing strategies.
3. Organization researches for customer needs and requirements
3.1 Desk Research (Secondary Research)
Identifying the customers is a very essential step for the organization. This is also known as "Customer Research." To target the ideal customer, market research is mandatory(Cleeren, et al., 2017). It identifies new opportunities and enhances the sales performance of the organization. Maintaining regularity in market research helps to develop an improved marketing strategy. It helps to know about the products and services, customer needs, market competitors, and the challenges. Secondary research is more popular among organizations and businesses because it is cost-effective(Guerin, et al., 2018). Not every organization has the capability to conduct primary research because of its high cost and time. In secondary research method, data could be retrieved sitting behind a desk, so it is also known as "Desk Research."
The popular types of secondary research methods are:
a. Internet-In the present day, there are many Websites providing lots of information that could be used by organizations. Data is readily available across the web and could be downloaded easily(Davcik & Sharma, 2016). Organizations just need to pay a negligible amount to download or collect the data which already exists on the internet.
b. Libraries-Public libraries are an excellent source for collecting data. Important research copies which were conducted earlier are easily available in the libraries which could be used for gathering information.
c. Commercial Sources-Television, radio, weekly magazines, and local newspapers are a great source to collect data for secondary research methods. These sources provide first-hand information to the organization to conduct the research.
d. Agencies-Data could be collected from some government and private agencies for secondary researches. For example, the "US Census Bureau" or "Small Business Development Centers" provides relevant data that the organization can use.
Advantages and disadvantages of Secondary Research
Most of the information is readily available on the internet and there are many sources to collect the relevant data(Hendricks, 2019).
Unauthentic websites may provide wrong information and that must be considered
Costs for this type of research are minimum or negligible and also, it is time-efficient.
Data is accurate if it is collected from trusted sources but, not all the data resources offer the latest and updated information.
Table 2: Advantages and disadvantages of Secondary Research
3.2 Primary research
Primary research is the method that is applied by the market researchers of Tesco marketing strategiesto collect the customer data directly. This type of research on Tesco marketing strategies focuses on a specific or single point of the issue which leads to obtaining the proper solution. For example, an organization is about to launch a new product. It is a necessary factor to conduct market research about the features and qualities of the product the organization is going to introduce. This research on Tesco marketing strategies will gather information from the opinion of the people about the product. Based on this research, now the organization can think about the probable solutions to make the required changes to the product if needed. There are several methods of primary research on Tesco marketing strategies, such as:
a. Interviews- This may be conducted face-to-face or through telephone calls. It is a "qualitative research method" to collect customer data. Also, the researcher's ability and experience depend on conducting these types of researches.
b Observation-In this research methodology, there is no direct interaction between the researcher and the customer(Manias, et al., 2016). The reaction of the customer is noted by the researcher to collect customer data. Some researchers also use cameras to record customer reactions.
c. Online Survey-Nowadays, most researchers conduct online surveys to collect data from the customers. Experienced researchers use a combination of open and close-ended questions in these types of surveys(Hulland, et al., 2018). Normally, short time surveys are conducted with specified time so that the customers may not lose their interest to answer the questions.
d. Group Focusing-This is another popular type of primary research. This research is used to collect data from small or large groups of people(Kinalski, et al., 2017). To identify the "Niche market", organizations need to apply this type of researches.
What are the advantages and disadvantages of Primary Researchon Tesco marketing strategies?
In this type of researches, there is no dilution of data occurs. Data collected from the customers is first hand and provides accuracy.
It is an expensive method. The organization may require a huge sum of money to conduct such types of researches.
This is a time-tested method of research. The organization can rely upon the data collected from the customers.
One type of primary research is not enough in all cases. It may require conducting more than one research which increases the cost and time for the organization.
Table 3: Advantages and disadvantages of Primary Research
3.3 Sampling Techniques and selection of samples
Sampling is an efficient way to obtain opinions from people, selected from wider groups. As a market research tool for the organization requires understanding their "target market" or research thoroughly for the new business opportunities, sampling is beneficial in this issue. It is highly expensive and a lot of time is consumed to collect and gather data from the people and groups of the "target market", so by sampling the demographic with care, there is a possibility to build the organization's "target market" in a proper way.
a. "Cluster sampling"
In this sampling method for Tesco marketing strategies, the target demographicof the organization can be targeted using certain demographic groups or ‘clusters’(Muralidharan, et al., 2018). It is a time-efficient sampling technique for those organizations looking to conduct the research method within a short period.
b. "Convenience sampling"
This is one of the easiest forms of sampling method, this type of sampling targets the people or groups who are trying to volunteer their jobs and these people are readily available for answering the questions, the organizations with low budgets can gather and collect large amounts of data within a short period.
c. "Pure random sampling" In this type of sampling procedure, every individual within the "target population" is given an equal chance and is selected for answering the questions. It determines both the estimate of the "target population" and sampling error which is comparatively an easier process.
d. "Judgment sampling" This type of sampling is a very purposeful method to understand the organization's target population. Organizations searching for valuable and detailed examples of the case studies, it is an excellent sampling method for them.
e. "Systematic sampling"
In this sampling method for Tesco marketing strategies, people or groups are selected from a huge population. This is done throughout a "random starting point" and a "fixed periodic interval."
f. "Quota sampling"
The goal of this sampling method is to gather a "representative sample" which is collected from the entire "target population(Kvam, 2019)." Organizations are required to go through this process by splitting the population using "key variables" and the sample is drawn from each variable.
3.4 Role of MR (Marketing Research) agency in Tesco marketing strategies
Accurate and detailed information is the foundation of success for all businesses and organizations. Market Research is a process for collecting, investigating, and gathering important information about the market in which the organization is operating(Keegan, et al., 2017). A company that offers"market research services" to clients or organizations by providing a group of researchers could be defined as an MR agency. The agency may offer both types of researchers such as qualitative researchers or quantitative researchers with workshops and campaign facilities as required by the organization to improve business growth. The main roles of MR agencies are:
a. Identifying the valuable Tesco marketing strategies-MR agencies working with the client or organizations focus on the Tesco marketing strategies to improve the business results and maximizing the ROI (Return on Investment)
b. Evaluating the marketing results-Monitoring the marketing efforts and using the collected data to enhance the campaign results is another significant role of MR agencies.
c. Implementation of marketing solutions-MR agencies execute and manage the marketing campaigns for the client or organization they are working with.
4. The requirement of MkIS (Marketing Information System) to circulate useful information
4.1 Defining MkIS in the present scenario
Marketing Information System (MkIS) of Tesco marketing strategiescould be defined as the methodological collection, analysis, and storing of the market information of the organization. It is collected on a regular and continuous basis from both the "internal and external sources" of the organization. The MkIS distributes vital information to the marketers who can take proper and effective decisions related to the operating issues of the market. The information may involve pricing of the product or service, packaging, media, or new product development.
Each marketing technique and operation performs simultaneously with the conditions convincing both internal and external sections of the organization. There are a couple of sources like "Marketing Intelligence" and "Marketing Research." The required information about the market can be obtained by Tesco marketing strategiesthrough these sources.
With the betterment of computers and technology, organizations are showing more interest in the development of an "inte¬grated management information system". The purpose of this sys¬tem is to take over all of the flows of "recorded information" in the entire company which is unified. Moreover, it is guessed that the management of the organizations bear the capacity for planning and controlling the activities will be enhanced. This type of system is often noticed as a "marked improvement" over the current set of procedures.
The main components of MkIS are:
a. "Internal records"-The organization can collect all the data("sales data", "customer database" or "financial data") through its internal records.
b. "Marketing Intelligence System"-It provides the data about the current incidents in the market which is an external factor to the organization(El Banna & Labib, 2019).
c. "Marketing Research"-It is the methodological collection analysis of primary and secondary data to solve marketing problems(Kitsios & Kamariotou, 2017).
d. "Marketing Decision Support System"-It includes a couple of"software programs" and is frequently used by marketers(Hashem, 2016). This is an important method for marketers for analyzing the collected data and to make better decisions related to the market.
Figure 2: Components of "Marketing Information System"
4.2 Role of MkIS for the TESCO Organization
There are several roles of the MkIS which are explained below as follows:
a. Defining the market-Collecting and analyzing the data of market details for the organization.
b. Market Requirement-Analyzing the needs (product or services) of the market from the organization.
c. Categorization-Grouping the products according to the needs of the market and dividing them into different categories.
d. Selection-Selecting and approving the categories in which the organization can serve better.
e. Determination-Determining the cost value for the products or services that meet the market.
f. Offer availability-The organization is offering its product into the market. It is also necessary to check the availability of the offer among the market and customers.
g. Information-Informing the customers of the organization about the available offer which the organization is providing for the market and also for the customers(Lima?ski, et al., 2018).
h. Decision-Deciding about upgrading the offer with analyzing the market condition.
i. Co-operation-Cooperating with the organization's other functions. Moreover cooperating with other organizations for implementing new opportunities and marketing plans are also included.
4.3 Requirement of effective and efficient MkIS in Tesco marketing strategies
For every organization, an efficient MkIS is required. Here are several factors for the requirement of MkIS mentioned within this Tesco marketing strategies assignment:
Anticipation Of Customer Demand
Mass production and distribution are mainly based on anticipation of customer demand. Since the customer tastes is dynamic, under a customer-oriented marketing approach, every marketer needs to have sufficient and updated knowledge about customer needs. MkIS provides that sufficient knowledge to the marketers.
Complexity of Marketing
In the present day, the 'marketing process' has become much tougher and wide-spread for an organization. Ever-expanding market activities require adequate market intelligence services and an organized information system(Lessmann, et al., 2019). MkIS helps the market researchers to understand the market complexity clearly.
This is the decade of planning and programming. The plans and programs of an organization are based on the data supplied by economic research ('economic forecasts') and marketing research ('marketing forecasts')(Nderitu & Njuguna, 2017). MkIS provide requisite information about the economic and marketing conditions for the next days.
Development of Science and Technology
"Innovate or perish" is the main theme of the existing 'marketing environment'. Marketers have the latest information regarding technological developments. New products, new markets, new processes, new techniques could be figured out by MkIS.
In the present day market, the organization has a communication gap between customers and marketers. Improper marketing plans and programs are responsible for these communication gaps. Many marketers are isolated from the realities of the market. This has led to consumer dissatisfaction(Zikmund, et al., 2017).
Consumerism and increasing customer grievances indicate that products are not matching according to the customer needs and desires and marketers do not have any up-to-date knowledge of real and precise consumer demand. Up-to-date Marketing Information System (MkIS) alone can establish proper ways of information flow and understanding between the organization and customers in the market.
Since we are living in an information explosion, computer technology, and the internet is the most immediate force behind the information explosion.
The speed with which the computer can absorb, process, and reproduce large quantities of information is simply staggering. When a computer is effectively programmed, it can certainly add a quality of information flow. The winner organization will be the one who satisfies customer needs most comprehensively through well-organized Marketing Information System (MkIS).
Significance of Economic Indicators
The constant change in demand and supply determines general market conditions. In a complex economy, fluctuations in demand, supply, and prices are tremendous. Marketers must have updated information on the constant changes in supply, demand, and prices. For this reason, the marketer has to depend and rely on MkIS.
Significance of Competition
Present-day markets are highly competitive, Predicting the behavior of any competitors and to win over the competitor will need the services of 'marketing intelligence' (Component of MkIs). A marketer cannot handle the competition without up-to-date information about the market,
Table 4: Requirement of effective and efficient MkIS
This project summarizes the marketing researches and Tesco marketing strategies, located in the UK. In the first chapter, a brief introduction has been given about Tesco marketing strategiesand its market. The need for marketing research and the importance of the organization have been discussed in the next chapters. The research methods of Tesco marketing strategiesfor customer needs to be associated with the various factors like primary and secondary research, sampling techniques and the role of MR (Marketing Research) agency in TESCO also been covered in the project. Moreover the need for the MkIS (Marketing Information System) also been cleared related to the present scenario. ?
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