Marketing Function Elements and Interrelationships in Tesco

This assignment discusses the different elements of marketing function in Tesco and how they interrelate with other departments. It also analyzes the advantages and disadvantages of each department and how the marketing unit helps the company survive in a dynamic environment.

INTRODUCTION
Marketing refers to a process of purchasing, advertising, distributing product by adopting
different channels, selling services and product. It is an activity of attracting potential customers
towards their particular product and services. Marketing is done by professionals by following 7
P's of marketing. As it include all the activities that every organisation is need to follow to
promote as well as sale various variety of product to customers or end-users. By adopting
marketing mix it is to be done. The organisation that is selected in this project is Tesco. It is a
groceries and general merchandise retailer. It has its headquarters in Welwyn Garden City,
England, United Kingdom. in In terms of gross revenue it is third largest retailer but as per
revenue it stands in ninth position in the world. Analysation of key elements relating to
marketing function and importance of marketing and other functional unit interrelationship are
also explain in this assignment. On the basis of marketing environment roles and responsibility
for marketing function is to be evaluated. Definitions of strategic marketing is also be describe in
detail in the report. It also evaluate the manner of applying the seven P's to achieve the
organisational object after doing comparison to same industry competitor.
TASK 1
Explanation of different marketing function elements
Marketing involve all the efforts and activities that every company undertake to transfer
goods from producer to customer. Marketing function deals in specialized activity that is
necessary to perform at the time of doing marketing as it take goods and services from origin
location to consumption place. Tesco perform an act for that purpose by making link between
producers and end users. Marketing department of Tesco focus on various areas for effective
results as they do direct communication with their customers. Tesco advertising compaign aim to
develop trust in their brand. To perform marketing function various element should kept in mind
as these are explain in detail as per company prospects in the following paragraphs.
Marketing Planning: The position where the company is at present and the position it
wants to reach in future is done only with the help of doing proper planning. Separate department
is prepare in every organisation for that. Marketing planning includes communication strategy,
financial planning, sales forecasting etc. to achieve the strategic targets in future. Timeline track
are also be kept by this department of Tesco so that it can easily determine whether the
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organisation are on track or not. By following various marketing strategies it holds the third
position in retail market in the world. Tesco focus on accessibility, diversification, awareness,
etc. to expand their brand. By adopting the strategy of marketing related to brand positioning,
customers acquisition they promote their product and capture large area of market share. Tesco
not only adopt online mode but also make update on online channels for product product.
Pricing: It is a most crucial function that every manager has to perform in every
organisation. Various aspects such as profit rate, cost of production, competitors price,
government policies etc. affect the price of product. It is to be set in such a way that its not
become too high and at the same time they can earn maximum profit. Tesco by adopting the
policy of “Big price drop” and set different measures to pass cost advantage as brand value to
their customers.
Market information: It is an important element in that wants of the customers, the
quantity they require and the amount they are ready to pay are analyse. All the information is to
be gather by doing survey as it help to identify the needs of consumers. After doing this it is to
be analyse that to which item has great opportunities in competitive market. By using loyalty
card scheme Tesco observe the behaviour of their customer. They group their customers on the
basis of their similarities and at regular interval of time reposition is done as per target market
changes.
Product distribution: It is necessary to take effective decision for transferring the items
from production place to consumption place. For that four factor should be consider such as
Inventory, arrangement of store, transportation, caring cost, ordering cost. Tesco expand item
range of product and services to every thing and expends overseas also. Multichannel
distribution channel of marketing is use by the company to reach consumer.
Different departments of Tesco interrelate with each other regarding marketing function
The functional areas can not work individual in any business they must involve an
interaction between all departments and making good communication among them. None of
business can work alone in their functional areas. To understand the current trend and need of
consumers, marketing team of Tesco works with customer and by using various different tools
they force people to buy their product. It makes positive impact on sales department because it
increase sales. If sales increase in company the related unit contact to production department to
produce more so product are available at every point of time. Production department of Tesco
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contact to purchase unit to buy raw material to produce more good. In the organisation to make
orders, large number of suppliers are contact to purchase department. After checking the
suppliers invoice they make payment so that to avoid mistakes. If there is any query relating to
payment, services, product Tesco staff directly make contact with their staff. To fill the job
vacancies in the company HR department contact to government agencies. Finance department
also communicate with Human Resource Department to take information regarding staff
payrolls. Human resource department of Tesco make arrangement of training session for their
staff members. If proper training structure are not followed in the organisation, they are unable to
handle certain critical situations that can let customers down. In this way it makes negative
impact on sales of the company that reduce profit of the company so it creates problem of
survival in the market. The work are interrelate with each department in the organisation. In
Tesco if there is need to increase the production it require large number of workers to produce
the product. So manager of production department may contact to HR department to make
arrangement of skilled labours to produce goods. In the same manner finance department contact
to production department to take information related to raw material, production expenses etc. to
make records in their documents. In Tesco sales and finance function are connected to each other
because sales department provide all information to the finance department to record all
transactions related to money earned from sales. In the organisation all function areas work
together to run their business smoothly.
Analyse advantage and disadvantage of every department to the marketing unit along with
suitable examples
Advantage of purchase department: It help to make availability of raw material and
equipments every point of time to produce large quantity of goods. It is also responsible for
procuring raw materials at the best possible price. Purchase department of Tesco always make
arrangement of sufficient stock in their ware house to keep customers happy. Regular evaluation
is done by the unit to analyse whether material available at the best possible price in order to
maximise profitability. In the organisation staff of purchase department communicate with
different vendors, negotiate better pricing for bulk orders. The main function of marketing
department is to promote their brand or product by adopting various marketing tools. By making
available product for sale it help the marketing department.
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Disadvantage: If department does not purchase raw material on time, it create problem
to produce goods that make negative impact on marketing also. Tesco marketing department
promote product and attract customers but due to unavailability of goods it dissatisfy customers
and diversify them towards other competitor product. In this way it reduce the sale and profit of
the company.
Advantage of finance department: In Tesco budgets are prepare by this department
after considering all the money transactions. Actual position of cash is analysed by the
department. By providing cash, promotion of product through different modes of marketing is
done in this way it help the marketing department in the company. As marketing team expects
that finance executive manage risk by reflecting the actual performance of the company. Finance
executive help by adopting challenges and transformation. With defining appropriate and
realistic marketing metrics they can help the finance unit. Once in different manner finance
become engaged and start thinking about marketing in a effective way, marketing is on its way.
Disadvantage: Promotion of product cannot become possible with out cash so if finance
department of tesco does not show actual position of cash and not provide appropriate cash to
marketing unit it creates difficulty to do marketing. It impact negatively on sales of the company
and affect the growth in terms of revenue.
Advantage of Human resource department: As it make arrangement of experience
employees to do marketing. Induction, training and development programme are conduct by HR
department to improve the knowledge and efficiency of employees. By appointing suitable
candidate for marketing and providing apprenticeship HR help marketing department. If
employees trained properly it can help to create initiative ideas to promote product and do
marketing. The Human resource unit of Tesco serve workforce to the company as employees can
become brand ambassador that strengthen the marketing department's mission of spreading the
brand message and image to consumer. Collaboration between marketing leaders and human
resource may leads to higher productivity and innovation.
Disadvantage: If Human resource department does not appoint appropriate number of
employees for marketing it creates difficulty to do promotion as humans are the assets of the
organisation. If sufficient employees are not available on time it make negative impact on sales
because limited employees can do limited work. In Tesco training programmes are not conducted
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by HR department that provide untrained employees, who does not have knowledge of smart
strategies of marketing. Due to this marketing plan fail, as it result decline in the sales and make
negative affect on profit also.
To survive in dynamic environment how marketing unit help the company
Marketing plays a crucial role in any business. It create customers and generate revenues,
directs the future plan and define whether it become successful or not. Marketing can become
possible, without a team but it cannot succeed. For a sustained marketing efforts business
requires a dedicated marketing department. By using different tool like product development,
promotional campaigning, advertising it can create market awareness.
The nature of business environment is dynamic as it change at very short interval of time.
For example change in taste,choices, technology, government policies, political factors etc.
By building relationship with users marketing department creates business and product
awareness that develop interest and attract audience. It also create new business opportunities by
brining new customers. Marketers of Tesco try to purchase goods from domestic market that
makes the product available at affordable prices. It help consumers to buy at reasonable prices,
by offering items at low cost they distract the customers towards their product. By offering
discounts, festive offers, coupons etc. marketers promote sales that helps to survive in the
competitive environment. Marketer make changes in their strategies time to time after analysing
political, economical, technological, environmental,social, legal factors and implement that
strategies so that business survive in the dynamic environment. Markers can create create new
market and new uses for product as they also requires a company to stay ahead of others and
update their own technology to retain in the competitive market. Whereas the political
environment include all laws and regulation as marker make aware of these restrictions. For
example regulation in packaging, such as the necessary inclusions of food products must be
understand by marketer of tesco to avoid negative public perception. Basic values and belief of
people are covered in cultural environment. The values can also be further categorised into core
belief that was passed on from generation to generation and are very difficult to change and
secondary belief that tends to be easier to influence. As marketer after doing analysis find the
difference between two belief and make focus on their marketing campaign to reflect the values
of target audience in this way they help tesco to survive in market.
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Members of marketing unit identify customers, understand their needs and wants. To
whom to target and way to reach them is also identified by this department. Make the right
service or product available to the right people at the right time, in this way they satisfy their
customer and create the market. Customer purchase goods in large quantity if good image is
created in their mind that leads to increase sales. It also rise profit that makes positive impact on
business survival. By giving customer a reason to keep coming back they retain their customers.
Purchasing power of people and the manner people spend their money are observe by marketers .
After considering all these factors marketers choose the best suitable product and do advertising
through different modes like Television, radio, newspaper, advertise on social media in this way
maketing department help the organisation to survive in dynamic environment.
TASK 2
Definition of market environment
As per marketing term marketing environment is also known as business environment. It
refers to factor and forces that makes impact on firms ability to develop and maintain successful
consumers relationship. It refers to all forces that are external to a business and that are beyond
its control. Environment of business means forces and institution. Outside the firm with which
its member deal to achieve the organisational purpose. The environment provides both
constraints and opportunities such as economic condition, government regulations, customs,
availability of natural regulations, availability of natural resources, labour, supply etc.
Environment offer firm numerous opportunities in changing need of customer and market.
Company that fail to adapt to their environment are unlikely to survive in the long run.
Various characteristic of business environment are totality of external forces, dynamic,
uncertainty,complexity, specific and general forces, interrelatedness.etc.
Target market is an association of customers to whom an organisation try to sale its
product as well as their services. Particular customers are also included in this group to whom
company instruct their marketing efforts. Marketers break market into different units and make
focus on specific unit to analyse the need of the market. Diversification is to be done on the
basis of three elements as these are explain in below paragraphs.
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Demographic segmentation: In this grouping is made on the basis of income, gender, age,
education, marital status, religion, race etc.
Psycho graphic segmentation: It divide the market on the basis of lifestyle preference or
socio economic class.
Geographic segmentation: On the basis of location segmentation is done after focus on
various areas like city, religion, state, country etc.
Assess marketing environment as per marketing function
There are three levels that are involve in the organisation are:
external micro environment: Partner, customer and competitor are covered under this
environment. The main base of this environment is customer market. Various type of customer
market cover business market, consumer market, globalisation international market, government
market and reseller market. Individual who purchase goods and services for their personal
consumption are known as customer market. Buy goods and services for manufacturing their
own item to sale it is called business market. Whereas the government market involves
government agencies who purchase goods to produce public service and to make transfer of
goods to other person who want them. On the other hand international market include buyer in
different other countries. The other factor that are cover in the micro environment are competitor
s it involve companies that offer similar goods and services. Public is the final aspect of micro
business environment. Public make impact on company as change in their attitude, that can
make sales to go up or down because public is the customer base of company.
internal environment: It include those physical and social factors that are directly taken
into consideration in the decision making behaviour of individual. Various examples of
international environment are value, culture, vision, ethics and social responsibility etc. All the
department like purchase, HR, finance, research and development are included in this
environment. To ensure that goods will be transfer to customers on time, the marketing
managers watch supply availability and other trend at the time of dealing with suppliers.
external macro environment: It include various different concepts like
economy,technology, demography, politics, culture etc. PESTLE are the factors that affect the
organisation in macro-environment. Demography means to study human population on the basis
of size, age, gender, race, location, density and occupation. It is important element for marketer
to study and become helpful to divide the population into market segments and target market.
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Each diversification has different features as it can be beneficial to marketer as they help to
decide to whom their product and services benefit most and tailor their plan of marketing to
attract that segment. Another aspect is the economic environment, it indicates the purchasing
power of consumer and the manner people spend their money. The natural environment is also a
factor of macro-environment. It include natural resources that an organisation uses inputs that
make impact on their marketing strategies. Government intervention is the last concern that
creates difficulty for a company to fulfil their targets as requirement gets stringent. International
trade play a significant role for Tesco as it is the largest suppliers and producer of food and non
food product. Moreover in the countries where the tesco do business, financial uncertainty are
faced by it. In this situation customers reduce their spending on costly items as it make negative
impact on sales and income. On the other hand at the time of recession, consumer will eat less
when they are outside and they eat more when they are at home. Since tesco is a global grocery
retailer, recession provide it with an opportunity to increase their output. The technological
factor is the fastest changing factor in the environment. To understand spending pattern marketer
need to take into consideration about technological development that makes effect on
employment and market growth. The political factor cover law, regulations, government
agencies etc. It is necessary for Tesco marketer to be aware of these restrictions. To conduct
business in United Kingdom the government try to ensure best possible platform to start and
grow a UK digital business. Social environment is the last aspect of macro-environment. It
involves basic value, institution and beliefs of a group of people. As a marketer it is necessary to
enter into an age where technology play a key role in forming of social belief and values.
TASK 3
Design strategic marketing plan and evaluate 7 P's that are applied to achieve business goals of
tesco as compare to same industry competitor.
Marketing strategy: It is a long duration, futuristic approach and the whole game plan of
company having fundamental objectives to achieve competitive advantage by observing the
demands or desires of customers. Marketing team of tesco made strategies for long term after
observing the need of consumers so that their objectives of increase sales are fulfil.
Strategic marketing plan: It includes various activities like fixing objectives and goal,
evaluation and analysation of external and internal business factors, planning of product,
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implementation etc. All the activities are put together in the process to become successful in the
business. Constantly change in the marketing scenario is the main problem that faced by the
retail industries along with the competition in the market. Company can achieve their target only
if they revise their marketing plan at regular interval of time. As Tesco expand their business all
over the world so the competitive marketing plan is choose by the organisation to get the benefits
of opportunities. Clear define approach and models are follow by company to execute effective
market planning. The company must focus market penetration strategy to increase its current
market with product. Other strategy that was adopted by tesco is marketing integration mix as
they are place, product, price, process, promotion, people and physical evidence.
Marketing plan is to be formulate to achieve organisational objectives as these are
prepare as follows:
Executive summary: Marketing plan is a comprehensive document that reflects overall
marketing efforts of company. At present short market plan is prepare by tesco. and market plan
includes introduction, market landscape, SWOT analysis etc.
Goal: The main target of the plan is to attract large number of customers and capture the
huge market area.
Determine current situation of company: The present position is quiet strong but tesco
wants to explore their business in many other countries also.
Target market: Tesco pay attention to middle class people having normal income. They
also target people who make more focus on quality. Tesco segment their market on the basis of
quality, income, prices. On the basis of that tesco target persons who are interested to purchase
something that is reasonable in terms of price as well as quality.
Marketing objectives: To expand retail service in domestic as well as international
market and to raise sales by 2.6% in next six months are the main objective of marketing in
Tesco.
Marketing strategies: Focus will be on 7 P's as these are describe in below mention
table:
Mix Tesco Sainsburry's Comparative
advantage
Product Large variety of items
of different brands are
Deal with huge variety
of products but less as
It bring the
supermarket health
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there in the company.
They differentiate their
product into five
unique calorie brands
to help match diet plan
.
compare to tesco. kick by offering from
companies like weight
watcher. As it help to
support consumers and
help them to achieve
health related goals.
Price They offer reasonable
product. Price
guarantee scheme is
also launch by the
company.
Costly product make
available in the stores
of Sainsburry's.
At the time of
recession tesco give
support to their
customers because
they provide product
at affordable price that
diversify consumers
from competitor
product to their items.
Place They have so many
large stores in
different location in
domestic as well as
other foreighn
countries.
They have few stores
as compare to tesco
and size of stores are
also small
Due to their large
stores huge variety of
items are available at
one place as it give
various options to their
audience to choose the
best alternative among
the available.
Promotion Tesco uses various
medium like online
marketing,
advertisement on TV,
Publishing offers in
news papers and
banner publishing to
It uses multi level
marketing strategies
and also advertises on
various media’s such
as radio channels, live
shows, live match and
so on to promote its
Tesco is big brand and
it has spent over 100
years in the market.
So, doesn’t requires
much effort to
promote its product.
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promote their product. product.
People More than 3Million
customers have been
used its product.
It has only reached
upto 100K customer
base so far.
Tesco is well known
by many customers
across the world.
Physical evidence It guarantees 100%
genuine product but
doesn’t shows how the
product it sold to
customer actually
manufactures and in
which condition.
It shows the real price
tag and how much it is
charged from customer
as profit margin.
Sainsbury proof to be
better in physical
evidence by showing
transparency in
product price to the
customer.
Process It uses latest ERP
system to integrate its
stock with sales to get
earlier alert for any out
of stock commodity on
time.
Besides ERP; it also
uses Rf frequency
Scanner software
which helps it out in
identifying the
frequency of repeated
customer with their
identity visiting
supermarket daily,
weekly and monthly.
Sainsbury is getting
extra advantage
through its Rf
technology where it
get information about
any new comers and
exit of existing
customer.
Budgeting: There is a adverse variance figure between the total planned consumption
and the actual usage of 6077. This is due to the fact that Tesco does not adhere to its spending
plan in various parts of the diagram, for example, stocks and updates. Tesco should take a group
at all costs and find out how to reduce the amount spent on inventory and repairs. They might
even come up with a financial plan for all expenses because they now understand how much it is
likely to cost.
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There is a volatile unfavourable figure between the proposed upgrade and the actual
upgrade of 800, later Tesco should promise not to spend too much, or a financial plan of
employment figures to fix it. This may be due to the expansion of the repair material. They don't
have to renew a large amount every year. On the off chance that they don't pay for a permanent
upgrade, they don't have to keep investing in subsequent upgrades.
Improving the Budget
To improve adversity for utilities, Tesco can try to eliminate phone and electricity usage
and water bills to make the figure smaller. They may also try to change their telephone and
electricity suppliers to find a better contract that costs them less. In any case, now that they know
how much resources they will spend, they can adjust their spending plan for the next year to
ensure they stay later on in the financial plan or trying to make the organization more energy
efficient.
There is a hostile difference between the planned stock and the actual cargo of 4730, so
Tesco had to buy less stock, and as they did not sell enough items, they may have to spend a plan
for larger quantities of stocks they buy in, on the basis that they currently understand what they
are likely to sell within the period Tesco could try to find softer ways to buy inventory or create
inventory - they could do so by using less expensive materials when delivering items.
Breakeven analysis gives Tesco more control because it allows Tesco to sell the exact
amount it has so you don't lose any money. Fair review allows the organization to control how
much it spends, as well as makes them think about what they can do to get to the right point
sooner if it expands costs or sell more products in a given period.
[Tesco] Budget
INCOME Actual Budget Difference
Operating Income
Category 1 9,000,000 8,000,000 1,000,000
Category 2 4,500,000 5,000,000 (500,000)
Category 3 16,500,000 17,000,000 (500,000)
Category 4 13,500,250 12,500,000 1,000,250
Other -
Total Operating Income 43,500,250 42,500,000 1,000,250
Non-Operating Income
Interest Income 8,500 12,500 (4,000)
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Rental Income 6,500 6,500 -
Gifts Received -
Donations -
Other 12,000,000 8,700,000 3,300,000
Total Non-Operating Income 12,015,000 8,719,000 3,296,000
Total INCOME 55,515,250 51,219,000 4,296,250
EXPENSES
Operating Expenses
Accounting and Legal 65,000 (65,000)
Advertising 1,500,000 (1,500,000)
Depreciation 4,000,000 (4,000,000)
Dues and Subscriptions 1,500 (1,500)
Insurance 900,000 (900,000)
Interest Expense 12,000,000 (12,000,000)
Maintenance and Repairs 2,500,000 (2,500,000)
Office Supplies 8,000,000 (8,000,000)
Payroll Expenses 5,000,000 (5,000,000)
Postage 50,000 (50,000)
Rent 4,500,000 (4,500,000)
Research and Development 25,000 (25,000)
Salaries and Wages 600,000 (600,000)
Taxes and Licenses 1,500,000 (1,500,000)
Telephone 800,000 (800,000)
Travel 1,800,000 (1,800,000)
Utilities 168,000 (168,000)
Web Hosting and Domains 2,500,000 (2,500,000)
Other 900,000 (900,000)
Total Operating Expenses - 46,809,500 (46,809,500)
Non-Recurring Expenses
Furniture, Equipment and Software -
Gifts Given -
Other -
Total Non-Recurring Expenses - - -
Total EXPENSES - 46,809,500 (46,809,500)
Net Income Before Taxes 55,515,250 4,409,500 51,105,750
Income Tax Expense 300,000 3,500,000 (3,200,000)
NET INCOME 55,215,250 909,500 54,305,750
Evaluation and control:
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Marketing strategy is a ongoing process of making decisions, implementing them, arid
gauging their effectiveness over time. In terms of its time pre-requisites, there is certainly more
demand in critical assessment than compromise. Evaluation and control are related to
performance monitoring and. at the stage where it is essential; change plans to stay on target.
Similarly, evaluation reminds us to look for new opportunities and expected risks for the future.
The interface knot in the basic step of an advertising agency is shown in Annex 1-3. By taking
both the final stage and the main stage (assessment before you move) in the circle of the group,
the main assessment ensures that the procedure is a continuous task.
To increase profitability for a marketing plan, controls should be put in place to monitor
the progress of the agreement. As a demonstration plan progresses, studies continue to pause to
determine how the actual presentation of the agreement reflects the projections. Any progress to
be made will be subject to audit of advertising controls. Understanding the controls in an
advertising plan will help you to create good performance indicators.
During the control period during the development of the plan, the standards were
specified by the implementation. These include an increase in the nominal fee in contracts, an
improvement in revenue, an increase in the fee in the size of the email contact list, and an
increase in orders sent, to model give one or two. The assigned person should have the input to
build this guide when creating your promotion plan with the goal that you and the control
administrator know how to measure on performance.
CONCLUSION: Thus from the above given summary it is to be concluded that
marketing planning is important for company's long run success. The main purpose of the plan is
to raise the profit margin of the company by using new practices and policies. It is compulsory
for company to prepare contingency plan as it help the organisation at the time of failure of
marketing plan due to uncertain event. So to become successful it is necessary to formulate
marketing business plan.
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