Marketing Plan for Tesco

Marketing Plan

Marketing Plan for Tesco Plc

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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

Weakness 1. Failure to lead the city center market: Failure to lead the city center markets is the major weakness of the company.

largest retailer of the world that is a positive aspect for the company. 3. Diversified business across the world: Diversified business in numerous

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

Threats 1. Low price supermarket discounting

products: Customers of UK are

stores: Increasing participation of low

demanding for the private labeled

price supermarket discounting stores is

products that are opportunity for the

another threat that may affect the

company to increase its customer’s

business of the company (Tesco’s still

base.

pushing discount products to fight back

2. Diversifying market appeal: There are still some uncovered areas, which have

competitors 2009). 2. Economic conditions: Changing

ample opportunities for the company

economic conditions like recession may

(Tesco Still Has Opportunity to Growth

also pose threat to the firm’s position

2007).

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 operations.

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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 • To improve staff productivity

Marketing Objectives • To attain leading position in the retail industry

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To align business operations by

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providing training to the staff •

To maximize customer satisfaction by

12 months •

increasing the response rate •

To establish stores in untargeted areas

To boost the market share up to 40 % in

To increase sales up to 70 to 80% in 12 months

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To increase the customer base in a year

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To augment the revenues, as well as, profitability up to 40 % in 12 months

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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.

High Mass market

Medium Niche market

Low Local market

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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, 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

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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 Market New Market

Present Product Market Penetration Market Development

New product Product 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: 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

New product development

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development

Market Penetration

Diversification

Diversification as per product

Diversification by market

Product & Market

Expansion of Fairtrade products into City center marketplaces of U.K, South Korea, Poland and Japan.

Market Development

Diversification

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.

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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). 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

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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 Increase sales up to 70-80% Increase awareness about the

KRI Sales amount Data collected through

Timeline March 2010 December 2009

fairtrade products among the

customer survey

customers Increase market share

Analysis of market

June 2010

Maximize customer

capitalization Customer response

February 2010

satisfaction 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

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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, . 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: ButterworthHeinemann. 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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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,

Tesco Still Has Opportunity to Growth, 2007, Viewed 2 November 2009, . Tescoplc, 2009, Viewed 2 November 2009, . Tesco’s still pushing discount products to fight back competitors, 2009, Viewed 2 November 2009, . Wilson, R. M. S & Gilligan, C, 2005, Strategic Marketing Management: Planning, Implementation and Control 3rd ed, Butterworth-Heinemann.

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Appendix 1

Threat of New Entrants for Tescoplc Impact of this force is low

Bargaining power of Supplier This force can affect the distribution channel but in a limited manner

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

Threat of Substitute Products This will increase the competition among the existing players and can affect the market share comapny

Appendix 2 SWOT Table Strength

Weakness

5. Strong brand image

3. Failure to lead the city center market

6. Market leader

4. Lack of marketing approaches

7. Diversified business across the world 8. Competent distribution channel

Marketing Plan 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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