Marketing Plan for Tesco
Transcript of Marketing Plan for Tesco
Marketing Plan
Marketing Plan for Tesco Plc
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Marketing Plan
Executive Summary
This paper has discussed about the marketing plan developed for Tesco Plc that is a
biggest retail chain of U.K. the marketing plan has covered various important topics that are
significant to handle the marketing challenges posed by the internal, as well as, the external
environment. It has discussed situational analysis in which organizational strategy, customers,
porter’s five forces, SWOT analysis and marketing effectiveness has been described. In the
objective section of the marketing plan, mission, vision, corporate objectives and marketing
objectives have been discussed.
In the part of marketing strategy, strategies for segmentation, targeting and positioning
are described. Marketing models sections describes the strategic alternatives, generic strategies,
competitive strategies and other key themes like innovation and branding. Integrated mix part of
the marketing plan, seven P’s like product, price, promotion, place, people, processes and
physical evidence have been explained. Marketing budget has also been discussed in which staff
requirement, resources, timing and marketing expense have been elucidated. Evaluation &
control has also been given in the marketing plan, which includes key performance indicators.
Apart from this, contingency plan is also a part of the marketing plan.
Introduction
Changing scenario of marketing is posing challenges to the retailer companies, in-spite of
their competitive position in the market. Marketing plan is the reviving step for the company to
give new direction to their business. I have selected Tesco Plc for marketing plan that is a biggest
British retailer and operating well in the retail industry. Tesco plc is a global general
merchandising and grocery retailer. It is the largest UK based retailer in terms of its global sales
and domestic market share. It was established in 1919 by Jack Cohen. UK stores of Tesco are
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segmented into six formats that are Tesco Extra, Tesco Superstars, Tesco Metro, Tesco Express,
One Stop and Tesco Homeplus (Tescoplc 2009).
After Wal-Mart and France's Carrefour, Tesco plc is presently the third major global
retailer according to the revenue. On the basis of profitability, it is the second largest, after
Carrefour. In the beginning, the company has specialization in drink and food business, but later,
it expanded into segments like consumer electronics, clothing, telecoms, financial services,
health, home and car insurance, dental plans. Other areas in which the company is operating are
CDs, music downloads, retailing and renting DVDs, software and Internet services. Tesco is
operating well into its divided segments throughout the world, but there is a need to have a
competitive marketing plan, in order to reap out the benefits offered by the existing opportunities
of global market. Marketing plan for the company will be discussed in the next section.
Situation Analysis
Situation analysis is a crucial part of a marketing plan, as it discusses about the
organizational strategies, customers, marketing effectiveness, porter’s five forces, SWOT
analysis and marketing effectiveness. For situation analysis, FEPSOS approach will be applied in
which functions, environment, productivity, systems, organization and strategy will be discussed.
These are as follow:
Functions: The Company operates in diverse areas that are profitable for it. It operates a
grocery homeshopping service and provides telecommunications, consumer goods and financial
services online. It also provides internet based DVD’s on rental basis to the consumers that is a
profitable area for its business. It also operates in the area of home phones, mobile phones and
Voip business. The company also executes its activities in the banking sector, as it has a joint
venture with the bank of Scotland in the ratio of 50:50 partnerships.
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Environment: The firm operates in a competitive marketing environment. The macro and
micro environment both are favorable for the company operations. These are as follow:
Micro environment: Micro environment consists of various factors that have a direct or
indirect impact over the company operations and determine the company viability in long run.
These are as described:
Customers: The corporation provides its products and services mainly to the people of
various U.K. apart from this, it offers its products & services to the customers of various
countries like U.S, China, Thailand, France, Hungary, Poland, South Korea, Scotland, Indonesia,
Czech Republic, Republic of Ireland, Malaysia and Japan.
Suppliers: There are various suppliers of the firm throughout the world.
Employees: The company employees 444, 000 people in its different branches and
divisions.
Competitors: Retail companies like Wal-Mart, Carrefour, J Sainsbury and ASDA are the
competitors of Tesco plc.
Media: The firm uses online channels as the media sources for the marketing of its
products & services (Hague 2002).
Shareholders:
Macro environment: Macro environment consists of various factors, which also have a
direct or indirect influence over the business. These are as follow:
Political and legal factors: The country has Conservative and Unionist Party in
dominance. There is liberal Democratic Party that leads the UK government. Legal foundations
for economy are developed in the country that reflects the potency of UK in terms of its legal
structure.
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Social and cultural factors: In the entire UK, British culture is followed by the residents.
There are various ethnic groups residing over here and it is favorable for the company. People in
UK are more interested in the culture and literature. There is no official language in UK, but
mainly English language is spoken by the denizens. People in UK have different taste &
penchant for diverse products & services, which again is profitable for the different segments of
the company.
Economical factors: UK has sound economic stability, which enables it to take the
advantage of numerous opportunities, but it must take care of the potential risks. Two major
issues are associated with the business growth are foreign exchange and mounting overseas
costs. UK is recognized by the presence of formalized foreign exchange policy. Pound Sterling is
the currency of UK that owns the highest value in the world. Economic conditions of UK are
also favorable for the company operations.
Technological factors: UK is identified for its strong IT that denotes its technological
advancement. The nation has taken many strategic initiatives to make the technology updated
according to the trends taking place, across the globe like the e-governance program. This factor
of macro environment is also constructive for the company’s business (Wilson & Gilligan 2005).
Productivity: Productivity of the firm can be observed through its market position that is
third in terms of revenues and second in term of profitability in the retail industry.
System: The company system is also effective that is up to the mark and effective to face
the challenges posed by the increasing globalization. Personal site of Tesco, Tesco.com is the
leading Internet delivery service in Britain. The company stores have electronic shelf edge
labeling all across the store, self service pre-packaged products, self scanning tills, coffee shop
on mezzanine floor and trading of fresh products.
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Strategy: Tesco adopts effective marketing strategies to attain its stated objectives that are
viable for the long run success of its business. With the help of these strategies, the company
competes in the global market and has attained the top position in the retail industry.
Organization: The Company is organized in a viable manner that is responsible for its
leading position in the retail industry. For this part, Mckinsey’s model of the 7Ss like strategy,
staff, shared values, structure, skills, system and style will be applied. These are as described:
Staff: Well- skilled staff will be hired, who have diverse knowledge of marketing
concepts for the marketing plan.
Shared values: People who have integrity, honesty and fair attitude will be hired for the
marketing plan.
Structure: Formal and competent structure will be followed for the marketing plan.
Skills: People, who have competency to carry out the marketing plan successfully, will be
hired (Peters & Waterman 1980).
System: E-marketing will be adopted to generate awareness about the fairtrade product
for which the marketing plan has been developed.
Style: Participative style will be followed for the execution of marketing plan activities.
Porter’s five forces model: This model is applied to assess the competitive advantage of
the industry or the industry attractiveness. Tesco plc is operating in a retail industry, which is a
diverse industry. Industry competitiveness for Tesco plc is as follow:
Threat of new entrants: Threat of new entrants is low in retailing industry due to higher
level of barriers. New entrants like the low price discounters are posing some challenges to the
company that is a major issue of concern.
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Rivalry among the existing players: Rivalry among the existing players in retailing
industry is intense due to the pricing cutting strategies. Competitors like Wal-Mart, Carrefour, J
Sainsbury, ASDA, and K-Mart are also posing challenges to the operations of the company
(Peter & Donnelly 2002).
Threat of substitute products: There are various substitute products available in the
market, so the threat of substitute products is also higher.
Bargaining power of suppliers: There are many retailers in the industry that need
suppliers for their operations. So, bargaining power of suppliers is also low. This is also a major
issue of concern for Tesco plc.
Bargaining power of buyers: Bargaining power of buyers is not high in this industry that
is profitable for the company.
SWOT analysis
SWOT analysis is a crucial part of a marketing plan, as it determines the company’s
strength, opportunity, weakness and threats that are important for it future. These are as follow:
SWOT Table
Strength
1. Strong brand image: Strong brand
image is the strength of the company.
2. Market leader: Tesco Plc is the third
largest retailer of the world that is a
positive aspect for the company.
3. Diversified business across the world:
Diversified business in numerous
Weakness
1. Failure to lead the city center market:
Failure to lead the city center markets is
the major weakness of the company.
2. Lack of marketing approaches: Lack of
marketing approaches is another weak
point for the company.
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countries is strength of the company.
4. Competent distribution channel:
Distribution channel of the company is
also competitive that is positive factor
for the company.
Opportunities
1. Increasing demand for private labeled
products: Customers of UK are
demanding for the private labeled
products that are opportunity for the
company to increase its customer’s
base.
2. Diversifying market appeal: There are
still some uncovered areas, which have
ample opportunities for the company
(Tesco Still Has Opportunity to Growth
2007).
Threats
1. Low price supermarket discounting
stores: Increasing participation of low
price supermarket discounting stores is
another threat that may affect the
business of the company (Tesco’s still
pushing discount products to fight back
competitors 2009).
2. Economic conditions: Changing
economic conditions like recession may
also pose threat to the firm’s position
by affecting its market share and
profitability.
3. New entrants: New entrants are another
threat for the business, as they may
pose challenge to the business
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operations.
Some aspects have come out of this SWOT analysis conducted on Tesco, which will
assist in developing a marketing plan for the next 12 months.
Mission of the company: To develop value added products for the customers, in order
earn their long term loyalty.
Objectives: To achieve a substantial share in the market, it is indispensable for Tesco plc
to have some effectual objectives that are focused mainly on SMART pattern (specific,
measurable, attainable, reliable target). Corporate and marketing objectives for the firm should
be both customer and business oriented that is promising from the business point of view. These
are as follow:
Corporate Objectives Marketing Objectives
To improve staff productivity To attain leading position in the retail
industry
To align business operations by
providing training to the staff
To boost the market share up to 40 % in
12 months
To maximize customer satisfaction by
increasing the response rate
To increase sales up to 70 to 80% in 12
months
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To establish stores in untargeted areas To increase the customer base in a year
To augment the revenues, as well as,
profitability up to 40 % in 12 months
Increase awareness about the fairtrade
products (Nicholls & Opal 2005).
These are some detailed objectives that are intended to cover as a principal part of this
marketing plan. After the attainment of these objectives, it would be easy for the company to
capitalize the plentiful opportunities that are existed in retail industry (Kotler, Armstrong, Wong
& Saunders 2008).
Marketing Strategy (STP)
Segmentation, targeting and positioning are the three marketing strategies that should be
used by the company to promote its fairtrade products aggressively, in order to raise its sales.
These are as follow:
Segmentation strategy: Segmentation strategy plays a profound role in the success or
failure of the company. Mass, local and niche all market segments should be addressed in the
marketing plan to boost the sale of fairtrade products by increasing customer satisfaction in an
effective manner. To maximize the customer value, consumer behavior will be studied before the
segmentation in which their taste & preferences, attitude and buying behavior will be assessed.
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High Medium Low
Mass market Niche market Local market
Pink: Red part of the matrix denotes the area, which is of high segment attractiveness and
most suitable for the company in long run.
Red: Red part of the matrix reflects the medium, which have less segment attractiveness
in comparison to the mass market. This part has less suitability for the plan in comparison to the
mass market (Peck, Christopher, Payne & Clark 1999).
Green: This part of the segment matrix, reflects the least attractiveness in terms of
segment and has less suitability for the marketing plan developed for the retail chain.
Targeting strategy: Targeting strategy in marketing plan also determines the business
viability. Target market for the marketing plan should involve all those people, who have
preferences for fairtrade products like children, youngsters and middle age people. Company
should assess the customer needs, in order to target them in a well planned manner. For this, the
firm should analyze their preferences & taste for fairtrade products (Hall 2008). Consumer
behavior should be well analyzed before the commencement of the targeting strategy.
Positioning strategy: Market positioning of the selected products play a critical role in the
marketing plan. Fairtrade product should be positioned in the city center marketplace at the
stores of Tesco. Fairtrade product is for the youngsters and middle aged people of U.K and other
intended countries. To meet the rising demand of the target customers for the fairtrade products,
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the product will be positioned in a persuasive manner. By intimating the innovative design and
value added quality of Farirtrade, this product will be positioned in customers’ intellect. This
brand competes with the fairtrade products offered by Wal-Mart. For this, company should go
for some innovative modes, in order to lure the attention of the customers towards the fairtrade
products (Lancaster & Reynolds 2005).
Marketing strategy: Models
This is an important area for any marketing plan; the organization should follow some
well defined models and approaches to carry out the marketing plan successfully. These are as
follow:
The Ansoff Growth matrix serves as strategic alternatives, which assists the company in
deciding about the product and the market growth. The output of this matrix assists in developing
the growth strategies.
Ansoff Matrix
Present Product New product
Present Market Market Penetration Product Development
New Market Market Development Diversification
From the above diagram, it is clear that market penetration is the best and fitting strategy that
should be focused by Tesco plc as it has to increase its dominance in the present market with
present product.
Generic strategies: Business strategies, corporate strategies and functional strategies play
a crucial role in the marketing plan of the company. These are as described:
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Business strategies: The Corporation should align all its business related practices, in
order to increase the sale of fairtrade products.
Corporate strategy: The business firm should develop effective policies to attain the
stated goals. For this, it should set a specific timeline (Drucker 2008).
Functional strategy: Company should allocate responsibility to its highly competent
employees according to their expertise. Also,it should provide resources for the product delivery
in a successful manner.
Growth vector matrix for Tesco
Market Diffusion Continuous product
development
New product development
Market Penetration
Expansion of Fairtrade
products into City center
marketplaces of U.K, South
Korea, Poland and Japan.
Diversification Diversification as per product
Market Development Diversification by market Product & Market
Diversification
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Green: Areas, which the company should focus to attain the marketing and corporate
objectives.
Red: These are the areas, will be adopted in future by the company.
Sky: These are the areas, which are not of vital importance for this marketing plan.
Marketing integration mix
It consist of mainly seven segments, there are suggested strategies for each marketing
mix of Tesco. These are as described:
Product: The Company should provide value added faire trade products, in order to
maximize its customer base.
Price: The Corporation should provide the fairtrade products at lower rate in comparison
to its customers. It is essential to provide the products at value added price, so as to lure the
attention of the customers.
Place: Fairtrade products offered by the company are gaining popularity, so it should
place them in city center marketplaces at a huge level (Hill, O'Sullivan & Hill 2003).
Promotion: The Company should adopt aggressive promotional strategies, in order to
boost its sales in next 12 months. Moreover, it should adopt online, print, broadcast channels for
the promotional campaigns. The firm should create a slogan or logo to draw the customers
towards the fairtrade products.
People: Company should hire well trained and skilled people, in order to deliver the
fairtrade products to the customers in an effective manner. Company should provide training to
its people to make them competent enough to use new technology in an effective manner (Miller
2005).
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Process: For placing the fairtrade product aggressively and effectively, company should
adopt the B2C marketing approach. It also must develop tailor-made systems, in order to design
the process more easy for the customers and employees to communicate for the delivery of
fairtrade products (MacDonald 1999).
Physical evidence: Company should improve availability of the fairtrade products to the
customers by placing them in city center stores located in U.K (Montana. & Charnov 2000).
Marketing Budget
To accomplish these objectives, the company should develop some brilliant strategies
that are accessible within the scheduled time period. Estimated budget for the marketing plan is $
5000. Company should hire those people, who treat the customer by listening carefully them and
solving their problem without any issue (Brewster & Harris 2004). A precise timeline for the
actualization of these objectives should be developed, in order to make sure the delivery of right
message to the right person in right manner at right place.
Evaluation & control
Evaluation and control part of the marketing plan plays a critical role in the successful
execution of the intended marketing activities that are aimed to increase the sales of fairtrade
products, in order to fight with the low discounters.
Marketing Objectives KRI Timeline
Increase sales up to 70-80% Sales amount March 2010
Increase awareness about the
fairtrade products among the
customers
Data collected through
customer survey
December 2009
Increase market share Analysis of market June 2010
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capitalization
Maximize customer
satisfaction
Customer response February 2010
Contingency plan
In case of plan failure, the firm will go for market development instead of market
penetration suggested in the Ansoff matrix of marketing strategy. Company will develop new
strategies for the market development, in order to explore new areas for the trading of fairtrade
products in a successful manner. The contingency plan of the company will be 10% of the
marketing plan. The corporation will change its marketing strategy, so as to shift the focus from
market penetration to market development for the long run profitability and attainment of the
stated corporate objectives.
Conclusion
From the above discussion, it can be inferred that marketing plan plays a pivotal role in
the success or failure of the company business. The plan involves various activities that are
intended to maximize the profit from some new policies or practices. Strategic management
forms a critical part of a marketing plan. Company should also develop segmentation, targeting
and positioning strategies according to the demand of marketing plan. It is necessary for the firm
to formulate a groundbreaking contingency plan that in future acts as a backbone for the
company, in case of failure of the developed marketing plan.
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References
Brewster, C & Harris, H, 2004, Globalizing Human Resource Management, New York:
Rutledge.
Drucker, P. F, 2008, Management: Tasks, Responsibilities, Practices, Transaction Publishers.
Hague, P. N, 2002, Market Research: A Guide to Planning, Methodology and Evaluation 3rd ed,
Kogan Page Publishers.
Hall, J, 2008, Tesco 'curbs' its suppliers' prices, Viewed 2 November 2009,
<http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/2783800/Tesco-
curbs-its-suppliers-prices.html>.
Hill, E, O'Sullivan, T & Hill, L 2003, Creative Arts Marketing 2nd ed, Butterworth-Heinemann.
Kotler, P, Armstrong, G, Wong, V & Saunders, J, 2008, Principles of Marketing, 5th European
Edition, Prentice Hall.
Lancaster, G. & Reynolds, P, 2005, Management of Marketing, Burlington: Butterworth-
Heinemann.
MacDonald, M, 1999, Marketing Plans 4th edn, Butterworth Heinemann.
Miller, K, 2005, Organizational Communication: Approaches and Processes 4th ed, Thomson
Wadsworth.
Montana, P. J. & Charnov, B. H, 2000, Management, 3rd ed, Barron's Educational Series.
Nicholls, A & Opal, C, 2005, Fair trade: market-driven ethical consumption, Publisher SAGE.
Peter, J. P & Donnelly, J. H, 2002, A Preface to Marketing Management 9th ed, McGraw-Hill
Professional.
Peters, T & Waterman, R, 1980, Structure is Not Organization, McKinsey & Company
consulting firm.
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Marketing Plan
Peck, H, Christopher, M, Payne, A & Clark, M, 1999, Relationship marketing: strategy and
implementation, Butterworth-Heinemann.
Porter’s Five Forces, 2008, Viewed 2 November 2009,
<www.ifm.eng.cam.ac.uk/.../paradigm/5force.htm>
Tesco Still Has Opportunity to Growth, 2007, Viewed 2 November 2009,
<http://www.talkingretail.com/news/industry-news/6742-tesco-still-has-opportunity-for-
growth.html>.
Tescoplc, 2009, Viewed 2 November 2009,
<http://www.tescoplc.com/plc/corporate_responsibility_09/suppliers_ethical_trading/
fairtrade_products/>.
Tesco’s still pushing discount products to fight back competitors, 2009, Viewed 2 November
2009, <http://news.idealo.co.uk/news/4521/tescos-still-pushing-discount-products-to-
fight-back-competitors.html>.
Wilson, R. M. S & Gilligan, C, 2005, Strategic Marketing Management: Planning,
Implementation and Control 3rd ed, Butterworth-Heinemann.
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Appendix 1
Appendix 2
SWOT Table
Strength
5. Strong brand image
6. Market leader
7. Diversified business across the world
8. Competent distribution channel
Weakness
3. Failure to lead the city center market
4. Lack of marketing approaches
Rivalry among Existing companies
Rivalry among the existing players like Wal-Mart, Carrefour, J Sainsbury and ASDA is intense
Bargaining power of the Buyers
This can affect the market position of the company
Bargaining power of Supplier
This force can affect the distribution channel but in a limited manner
Threat of Substitute Products
This will increase the competition among the existing players and can affect the market share comapny
Threat of New Entrants for Tescoplc
Impact of this force is low
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Opportunities
3. Increasing demand for private labeled
products
4. Diversifying market appeal
Threat
4. Low price supermarket discounting
stores
5. Economic conditions
6. New entrants
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