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Posted: August 23rd, 2023
Tesco operates globally; in addition to UK it operates in Republic of Ireland, Hungary, Czech Republic, Slovakia, Turkey and Poland. Tesco also operates in Asian market which includes; South Korea, Thailand, Malaysia, Japan and Taiwan. Tesco performance is highly influenced by the above countries government legislations including EU.
For operating in these countries, Tesco has to develop the job opportunities for the local people in order to grow the business in these countries.
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Like any other organisation the Tesco is also influenced by economic factors, one of the most influential factors is a high unemployment level in the market, which has effectively decreases the demand for many products.
These economic factors are externally generated and is not in company’s control, but the effect of these economic factors are on performance and marketing mix of the organisation. Tesco is expanding internationally and expecting to contribute great amount to tesco’s profit but still highly dependent on UK market.
Due to current trends of market customers have moved to One-Stop and bulk shopping practice which is in response of variety of social changes. In result of this change Tesco has increased the amount of non-food products available for sale.
The existing demographic changes where there is an increase in female workers and result in decline the home meal preparation the Tesco focused on added value products and services for the customers.
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Customers are becoming more health conscious and their attitude towards the food is constantly changing, the example is increase demand of organic products.
Technology is a major macro-environmental factor which has influenced the production and development of many products of Tesco. This benefits both customer and the organisation in shape of goods are readily available, personalised services and convenient shopping experience. Due to launch of Efficient Consumer Response the Tesco stores are utilising the following technologies;
Wireless devices
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Intelligent scale
Electronic shelf labelling
Self checkout machine
Radio frequency identification
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One of the main societal issue which has affected and threatening the food retailers was environmental issues, the core area for the organisation to act in a social responsible way. Due to these ethical stance Tesco social responsibility is concerned with the ways that an organisation exceeds the minimum stakeholders specified obligations by regulation and corporate governance.
Tesco focuses on the strategy for sustainable consumption and production of cut waste and reduce the consumption of resources to minimise the environmental damage.
Like any other organisation Tesco is not free of Governments various legislations and policies which directly influence the Tesco performance. For example The Food Retailing Commission, has suggested the enforcement of Code of Practice has banned many current practices of Tesco.
In order to apply the politically correct pricing policies, Tesco offers consumers price reduction on fuel purchases based on the amount spent on groceries at its stores.
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It is process through which the organisations identify the different portions of the market according to how the market will respond to various products and services features. Segmenting any market is a vital part for any organisation to identify their customer needs and wants.
Tesco has entered the market with a range of segmented products and services based on demographic, geographic, psychographic and behavioural. The reason for dividing the market into small segments is to address the needs and wants of smaller groups based on various factors and to produce according the consuming habits of the buyers.
Tesco has segmented the market in such a way, which covers all kind of population regardless of social, aging, gender and environment. Tesco has segmented the market by providing food and non-food products to the buyers to give options to everyone.
Tesco entered to the market with the range of options including targeted to the richer (Tesco finest) and poorer end (Tesco value) ends of the market, which has taken significant number of customers from Sainsbury.
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Tesco has also targeted to the multi-cultural customers; for instance, by providing Indian curry’s food which has increased the number of customers in Tesco by having an option of food variety.
Positioning plays an important role when attracting customers, this is a process where customers build an image of the brand and are able to understand the uniqueness of the particular brand or product when compare to the other brands or products.
Tesco has positioned its markets through different ways; for instance, Tesco Extra larger market, Tesco supermarket sized standard large supermarket, Tesco metro in between Tesco express and Tesco supermarket, Tesco Express neighbourhood convenience store.
Tesco is large organisation providing every kind of product to the customers and opened in every town that is convenient for everyone.
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There are number of alternate products that consumer buy due to their cultural and religion reasons. If we take an example of meat and halal meat to justify why market segments should be targeted. Taking into account that there are many multinationals lives in the UK from different cultural and religion background. Tesco is providing a wide range of food products which also includes the meat. Considering the segmentation when we divide the market into small segments to justify and fulfil the needs of consumers its very important to look into what type of markets organisations are targeting based on the demographic and behavioural aspect. Some of the markets targeted are based on muslim community who do not eat pork and the meat providing the stores are not halal, considering the fact that not every customer is buying a meat just due to the religious reasons the organisations should target the local market where they segment the products. If Tesco segment the market in such a way that fulfil the locals requirement it will be more effective to the organisation to target the market. The prime example is Asda, inspite that it is also one of the superstore it provides the halal meat for those who can not buy meat because of religious reasons. They feel comfortable to go to Asda and do the meat purchase.
Considering this example the organisations should target the markets through segmentation.
Explaining the situation where buyer behaviour affects the marketing activities the tobacco is a prime example of certain situations where customers prohibits the smoking and banned the advertisement which influences the youngsters. The buying behaviour has changed the marketing activities since the policies about the sale of tobacco came into effect. In any store the tobacco is not sold unless the consumer is above 16 years old. This restriction has changed the marketing terminologies for the suppliers.
Launching any new product or service it is very important that the organisation has done the marketing process. Understanding the customer needs and wants is very important to conduct the research and design the strategies to fulfil the market demand. When positioning any product of service there are number of factors involve to consider, from which the cultural and religion factors are key areas. When position any product in the market it is very important to understand the cultural and social values of the targeting market. For example as we have discussed earlier that muslim community go for halal food, similar to successfully positioning the market in India the organisation needs to make sure that providing the vegetarian products to the consumers.
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The marketing mix model is used as a tool to assist in defining the marketing strategies to the marketers. Some marketing mix models follow the 7 P’s but we consider only 4 P’s which are most common variables used in constructing a marketing mix that includes; price, product, place and promotion. In context of Tesco, its entry in Chinese market should adapt to the culture of the customers in the China. However, the company should keep itself on the organisations own policies and grounds.
Product: considering the Chinese market, once the Tesco take control of their shops the management should set off their strategies by marketing their products in such a way to boost the company’s market presentation and market share. Tesco needs to consider revising their strategies and models of their products to provide Chinese customers what they need and want. By developing such strategies to customise the products to fulfil local requirements Tesco will build its image in Chinese territory.
Price: by looking at Tesco situation, as its an established super store but launching in Chinese market one way is to acquire the cost advantages by enhancing the efficiencies process, expanding the large suppliers contacts on lower cost materials. If the rival super markets will be incapable to lower their costs of products by a comparable quantity, the chances for Tesco to sustain a competitive advantage anchored cost leadership.
Place: placing the product with attractive price is very important for an organisation. since Tesco is placing its products in Chinese market to develop its successful operations it should make an investments in store expansions in low-income areas. Through this the Tesco will be able to open sites in economically disadvantage areas in China and this will enable the company to gain the trust of local luminaries favour from the local government by providing employment to the locals.
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Promotion: Tesco should constitute the approach, which is based on long-term strategic plan that centres on generating value to expand the loyalty of their customers. Tesco should not only strapping in non-food as food products and services but also establishing and extending the long-term good relationship with the consumers by ensuring a competent provision of its products and services.
As market segmentation is the process of dividing a total market into market groups consisting of people who have relatively similar product need. The market mix of various market segments sometime vary. The organisations have to customise the prices and features of the products according to the needs and wants of the target market segments. The 4 P’s are the parameters of marketing that the manager has to control, depend on internal and external constraints of the marketing environment.
Applying the marketing mix into two different segments is one of marketing manager’s role. Through applying the customise marketing mix according to the market segments give an organisation a competitive advantage to attract the local buyers. The objective of marketing mix is to make a decision that centres the four P’s on the customers in the target market in order to create perceived value and generate a positive response.
If we segment Indian market, we have to consider all the variable factors involved in making marketing mix decisions, as India is one of the emerging markets in the economy the marketing mix decisions will be base on all the pestle factors as well as swot analysis.
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Product refers to tangible or physical product as well as services. When taking the product decision to segment Indian market one should consider the following:
Brand name
Functionality
Quality
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Packaging
Warrantly
Styling
Above are some of factors to be consider while making product decision. When segmenting an Indian market, we should consider the cultural and social environment of the country also the localities where we open the stores. What kind of audience we are targeting to segment the product. Is it based on age, cultural or belief factors.
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Pricing is also one of the important element, when segmenting the Indian market the marketing manager has to consider following aspects;
Pricing strategy
Suggested retail price
Cash and early payment discounts
Bundling
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Price flexibility
Price discrimination
When look at Indian market, we should consider the fact either introduce the pricing strategy based on skimming or penetration, again depends on what type of audience we are the targeting.
Distribution is about getting the products to the customer. When targeting Indian market we need to consider the following channels;
Distribution channels
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Market coverage
Inventory management
Warehouse
Distribution centres
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Transportation
Order processing
Promotion represents the various aspects of marketing communication that circulates the information about the product with the objective of generating a positive customer response. Making decisions to do product promotion in India one need to consider what strategy should be adopted. It includes:
Promotional strategy
Advertising
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Personal selling and sales force
Sales promotions
Publicity
Marketing communication budget
The difference between the two concepts is that business marketing tends to concentrate on the sales of goods and services between businesses on the other hand consumer marketing is to concentrate on the sale of goods and services to the end consumers.
The way reaching the business customers needs to be different than approaching consumers. Business to business usually use the direct marketing methods where as end consumers uses indirect method of marketing;
Networking
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Selling
Tenders/proposal
Presentation
Seminars
Telemarketing
Advertising
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Signs
Media relations
Sponsorship
Website
Word of mouth
International marketing is facing more complex environment. Domestic marketing is conducted in the country of resident and faced corresponding structure of market environment is relatively simple, which consist of the familiar factors to companies, such as domestic political, economic, legal, cultural, environmental and legal issues.
However international marketing is facing more complex environments, its a market with multi-level structure and inevitably be subjected to the world market environment including world’s political, military, economic, technological and other aspects.
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