Strategic Marketing: Tesco's Internal/External Analysis & Decisions

This report provides a comprehensive analysis of Tesco's strategic marketing approach within the competitive retail industry. It examines the role of strategic marketing in building customer relationships and achieving competitive advantage, focusing on Tesco's strategies for market research, product promotion, and customer loyalty programs like the Clubcard. The report explores the relationship between corporate strategy and marketing strategy, highlighting Tesco's emphasis on value for money and quality customer service. It also evaluates internal and external environmental analysis approaches, including SWOT and Value Chain Analysis, to understand Tesco's strengths, weaknesses, opportunities, and threats. Furthermore, the report discusses corporate-level decisions that influence marketing at business unit and functional levels, along with approaches to competitive positioning. The analysis incorporates real-world scenarios and Tesco's initiatives, such as CSR activities, to provide a holistic view of its strategic marketing efforts. Desklib provides a platform for students to access this report and other valuable study resources.

STRATEGIC MARKETING
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TABLE OF CONTENTS
INTRODUCTION................................................................................................................................
ACTIVITY 1........................................................................................................................................
1.1 Role of strategic marketing....................................................................................................
1.2 Relationship between corporate strategy and marketing strategy.........................................
1.3 Developing a marketing strategy...........................................................................................
ACTIVITY 2........................................................................................................................................
2.1 Evaluation of approaches to internal environmental analysis...............................................
2.2 Evaluation of approaches to external environmental analysis.............................................
2.3 Integration of internal and external analysis........................................................................
ACTIVITY 3......................................................................................................................................
3.1 Decisions and choices at corporate level.............................................................................
3.2 Decisions influence marketing at business unit and functional level..................................
3.3 Approaches to competitive positioning...............................................................................
ACTIVITY 4......................................................................................................................................
CONCLUSION..................................................................................................................................
REFERENCES...................................................................................................................................
INTRODUCTION................................................................................................................................
ACTIVITY 1........................................................................................................................................
1.1 Role of strategic marketing....................................................................................................
1.2 Relationship between corporate strategy and marketing strategy.........................................
1.3 Developing a marketing strategy...........................................................................................
ACTIVITY 2........................................................................................................................................
2.1 Evaluation of approaches to internal environmental analysis...............................................
2.2 Evaluation of approaches to external environmental analysis...............................................
2.3 Integration of internal and external analysis........................................................................
ACTIVITY 3......................................................................................................................................
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3.1 Decisions and choices at corporate level.............................................................................
3.2 Decisions influence marketing at business unit and functional level..................................
3.3 Approaches to competitive positioning...............................................................................
CONCLUSION..................................................................................................................................
REFERENCES...................................................................................................................................
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INTRODUCTION
As every organization operates in a highly competitive as well as a dynamic market, it
needs to have strategic marketing. In this, companies have to enhance their knowledge about
competitors they are having with their strategies. Strategic marketing is a process of making
long term plans which ultimately integrates with business strategy (Davies, 2011). It provides
guidelines for assessing customer preferences and also helps in creating a strong relationship
with them.
In this report, complete knowledge about role of strategic marketing and the relation
between corporate strategy and marketing strategy is being discussed. It will be done by
keeping a firm, Tesco in focus. It is one of the largest retail organizations in UK (Ries, 2003).
Here, an elaborative study on its internal and external environment will also be done. At the
international level Tesco faces many local challenges and there has been significant
speculation about possible exists from underperforming markets, due to recent scandals as its
share fell to 11.5% to 11 year low (Dave Luis Guardian 2014). But the company had been
reluctant to withdraw from further markets if there are other options available.
ACTIVITY 1
1.1 Role of strategic marketing
According to Boykin (2014) strategic marketing can be defined as identification of one or
more sustainable advantage that firm can have in order to get competitive advantage in
market in appropriate manner. It allows companies to deal with different kinds of issues like
the products that can be launched in market, the price of products, distribution strategies, etc.
According to Hunt and Arnett (2004) strategic management can be defined as proper
formulation and implementation of different goals and initiatives that are taken by company
so that it can present itself strongly in market and also in most suitable manner.
At Tesco, the main role of strategic marketing is to know about the markets where they
are going to operate and compete. After that it decides how they will compete and can gain
competitive advantage. The time of entrance in those markets is also predetermined so as to
know at which time they would get the highest benefit (Nandakumar, Ghobadian and
O'Regan, 2011). To maintain the high position within the retail industry and to promote goods
and services among its customer, in effective manner these preparations are essential.
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Tesco performs strategic marketing so as to build customer relationship by creating value
for them. It helps in market research as it is done according to the plans Tesco has made.
(Marketing Week. 2015). For instance, Tesco Club card strategy has been specified as the
most effective promotional tool which greatly contributes to the business strategy of cost
advantage. It helps the company in collecting some valuable information about consumer
behavior as well. Furthermore, it has helped the company in achieving value for the brand.
For the purpose of marketing, the brand will continue to open stores where opportunities
exists and focus on displaying some imaginative thinking in all sizes of stores.
The main aim behind strategic marketing is to increase the market share and establish a
good identity among the people. Tesco uses strategic marketing to show their unique features
and capabilities (Yannopoulos, 2011) and it justifies their mission statement. Through the
strategies which Tesco has made, actionable goals can be formulated. Marketing strategies
are made for the products that the company offers and the audience to which they are
offering. Strength of the products of the organization can be easily determined through these
strategies (Roetzer, 2011). At Tesco, competition and revenue also plays an important role in
strategic marketing. Competition pricing, as well as its distribution criteria, are also important
parts of strategic marketing (Marketing Week, 2015).
1.2 Relationship between corporate strategy and marketing strategy
Corporate strategy is a set of goals and the steps leading towards reaching these goals;
therefore corporate strategy is something that is decided to bring effectiveness in the business
processes. Undertaking of a corporate strategy requires great concentration and focus on
different types of factors. It is to be adopted when company is in need of improvements and
enhancements. Marketing approaches are part of corporate strategies.
One of the major corporate strategies of Tesco is to provide value for money and
considering this into focus, company markets itself as one of the companies that has cheap
and quality products available. The company also has a strategy to focus on customer
services and customer loyalty and for that it has launched different loyalty card schemes and
other loyalty programs which have helped it to attract customers in most appropriate manner
(Jordan, 2015).
Tesco's corporate strategy is one which primarily focuses on value for money and
offering quality customer service. For this, the company gives training and development on
regular basis from which standard services can be offered to customers. For increasing
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revenues, this firm has taken various initiatives as it diversified number of its products. It also
bought another business so as to enhance their business (TESCO Annual Report, 2014). It
assesses new technologies and also takes steps to increase sales volume of their products
(Daft, 2008).
At the time of making business plans, Tesco's executive management has to be in contact
with the marketing department. This is to check whether business strategies are aligning with
marketing strategies or not. Through marketing strategies, research is done on things like
consumer behavior and their needs. It also tells people about their superiority on competitor’s
product (Narasimhan, 2005). Without giving attention to marketing strategies, the long term
business strategies cannot be made. Whenever a corporate strategy has been made, it may
look hopeful but if strategy at marketing level is not referred, it could easily fail.
At Tesco, to be a good business unit first it has to be a good marketing unit (Linus, 2001).
Both (marketing and business unit can be described as same as they are customer oriented. As
for the corporate strategy of Tesco, the focus is on the overall business concept, and it is
made by the top management. While marketing strategies are made at middle level, and here
the focus is on the product, its advertisement and selling (Hunt, and Arnett, 2004). Business
plans are made for all the departments in this company. Marketing plans are just for its
department only.
In addition to it, company focuses on CSR activity also in order to develop a sound
relation with the society. For this purpose, company runs different campaigns such as
environmental steering group, energy saving, ecofriendly transport packaging design,
conserving water and other related. It has framed the tag line for CSR i.e. “we see ourselves
as good neighbors with a real sensitivity to environmental concern (Sir Richard Broadbent
Corporate strategy, 2015).”
1.3 Developing a marketing strategy
A well-defined marketing strategy proves to be very helpful in setting mission, vision
and objective of the firm. It helps in gaining competitive edge and contributes towards
earning revenue and profits. It has to be made with great concentration and focus. Strategy is
something which helps in achieving differentiation for the business. It is very evident that
retail industry is highly dynamic and competitive. Companies operating in the industry are
required to adopt effective marketing approaches from time to time so that awareness can be
created and customers can become familiar with the products and services.
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At Tesco may it providesprovide a framework in which information about what steps need to
be taken are mentioned (Holm, 2006). Tesco develops its marketing strategies through
various steps. These steps are as below:
 Identifying business goals – In the first step, Tesco decides about their business goals
which they have to achieve within a stipulated period, time, termand term. Its objectives can be to increase awareness about products they are offering or to
capture a new target market (Klausner, 2013). Stating the marketing goals – In the next step, marketing goals of the firm is being
decided. These targets will specify the standards which they have to meet.
Benchmarks help the employees of Tesco to achieve their goals on time (Clayton and
Heo, 2011). Market research – For any marketing strategy, research is the most important part. It
includes the complete knowledge and information about market as its size, social
trends and growth. It is essential to do this so as to know if there are any changes in
the environment occur (Brooks and Simkin, 2012). Profiling the potential customers – Then Tesco profiles those customers who come in
its target market for assessing their needs. It helps it to identify their buying patterns
as well as in maintaining a relationship with them. Profiling the competitors – Then it is identified that what competitors are offering in
the market such as information related to products and services, supply chains and
their pricing strategies. It helps Tesco to have competitive advantage (Banerjee,
2009). Developing strategies helping in marketing goals – The strategy is made in this phase
in order to attract the target market and retain existing one. Here, advertising is used
in different ways. Using 5 P’s of marketing – Product, price, place, promotion, process and physical
environment are taken into consideration in this step to make marketing strategy more
successful (TESCO, Annual report, 2013)..
 Testing ideas – In the last step, a new idea or decided strategy is being checked by
taking reviews from staff and customers of Tesco. It proves to be very helpful in
improving the sales results. (TESCO, Annual report, 2014).
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ACTIVITY 2
2.1 Evaluation of approaches to internal environmental analysis
For the purpose of assessing the internal environment, SWOT analysis can be done. It
includes strength and weakness which are internal factors whereas opportunities and threats
are external factors. With the help of it, company can manage their threats and weaknesses
through its strengths and market opportunities.
SWOT Analysis:
It is a valuable technique for understanding, evaluatinge our company Strengths and
Weaknesses, as well as to identify Opportunities, Threats you will face, during the analysis.
 Strengths: It possess description It have depiction regarding capabilities of
the business
 Weaknesses: It highlights the weak side(s) of the business
 Opportunities: It comprises actions that can be taken for boosting the
operation of the company.
 Threats: elements that can affect the operation of company (Jordan, 2015)
(Figure: SWOT Analysis)
(Source: Yannopoulos, 2011)
Referring to the above for evaluating the internal environment of the organization,
Tesco uses some approaches like SWOT Analysis and Value Chain Analysis as well. In some
cases, functional approach is also being used. Through value chain, the organizational,
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functional activities can be determined. In this context, value chain can be referred to a
practice of creating and building value by the company at every steps of the operation. Value
chain is full range of activities that comprising production, design, marketing and
distribution. Companies that operate in production industry, value chain initiates with
procurement of raw material and ends when the item is being sold to customers. Main
purpose of this model is to develop value from each stage of activities so that operational
efficiency of the company gets increased. Porter divided the business function into two
categories i.e. primary and support activities. Primary activity comprises of following
elements: (Avijit 2011)
 Inbound logistics: It comprises of raw materials and its procuring, storing and
distribution are taken into account.
 Operation: Here, raw materials are transferred into final goods.
 Outbound Logistics: Final products are distributed to end users.
 Marketing and sales: It is required that company must conduct marketing so that
awareness among target customers can be increased. Here, practice like advertising,
promotion, CRM, pricing and other related factors are taken into account.
 Service: This refers to after sales service that been offered to customer in order to
address their grievances. It is also comprises of training, installation, repair, warranty
and maintenance (Arline, 2015).
Apart from this, following are the support activities:
 Procurement: This refers to obtaining raw material for products.
 Technology: Through this, company is able to produce high quality products. Also, it
aids in R&D from which company is able to develop advanced and effective products
that directly meets with the needs of the customers.
 Human Resource Management: Company need to recruit and retain skilled employees
so that they can be able to design and develop quality products.
 Firm Infrastructure: It is comprised of company structure and its management (Arline,
2015).
Value chain helps Tesco to know how to create values for their customers. These have
proven to enable the company to understand what activities are creating maximum value for
their customers (Parry, 2004).
Primary and supportive activities can be differentiated here with respective strategic
target areas. For evaluating the internal environment of this company, this approach
sometimes creates confusion as it is somewhat complex in nature (Narasimhan, 2005).
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Using SWOT Analysis helps Tesco to know about their strengths and weaknesses. It
will also help the company identify the areas from where they can increase their profits.
Areas which can reduce their revenues are also identified through this approach, and also
creates many benefits for it (Linus, 2001). It tells about the strengths of competitors from
whom it is having threat. Ultimately it reduces the risk which can occur due to any uncertain
event.
Furthermore, there is one more tool that can be used by the company in order to
understand its resources based capabilities and that is VRIO (Value Rarity Imitability And
Organization) (Klausner, 2013). It is one of the best frameworks that can be used by Tesco in
order to understand its capability to determine competitive potential. It helps the company to
see its resources from 4 perspectives which are from the point of view of rarity, value,
imitability and organization. Tesco has been using this particular analysis on the regular basis
in order to place its products in market and to claim that they are different from others
(Butler, 2014). For example, Tesco loyalty cards were marketed on the basis of their rarity
and imitability in market and it helped the company to increase its value and attract
customers directly. Loyalty program helps the company in enjoying benefits in terms of
repeat purchase. Through this, edge is attained over rivals.
In addition to it, performance based internal analysis can even be incorporated. In this,
Tesco can assess its performance based on ratios such as financial ratio, operations efficiency
ratio, and quality control standard and employee productivity statistics. Through this, actual
performance of company can be evaluated based on standard performance level. In case of
deviation, corrective measures can be incorporated by Tesco (Nandakumar, Ghobadian and
O'Regan, 2011).
On the other hand, functional analysis can also be used by Tesco as part of internal
analysis. It includes arranging the function of the company so that it meets with the needs and
wantswishes of the customers. Tesco being a retail giant offers customized services in terms
of self-payment, bar code reader for identifying the price of varied products, online portals
and other related services (Roetzer, 2011). This helps the company in boosting its
competency in the market place.
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2.2 Evaluation of approaches to external environmental analysis
(Source: Clayton and Heo, 2011).
External factors include varied influences that affect the operation of company. To
ascertain the same, PESTEL analysis can be done that comprises of political, economic,
social, technological, environmental and legal factors. Based on it, factors and supporting
company can be identified through which appropriate strategies can be considered.
There are many factors which influence the external environment of Tesco. PESTLE
analysis is an effective tool to evaluate the external factors that influences the business
operation of the company. It helps in focusing on the various forces that affect the business
unit and influence the working system (Butler, 2014). If the external environment of this
company is assessed, both macro and micro environment can be studied.
Before entering into any new market, its economic conditions can thus be seen as well
as the role of government there, which must be analyzed in order to obtain appropriate
information of the regulatory framework of the country or market in respect of the
organization (Hunt and Arnett, 2004). It helps in knowing the restrictions that the government
has imposed on some firms. The complete regulatory framework is studied while operating a
new business. Legal environment plays a vital role in the success or failure of any firm. If
government rules and regulations are being ignored, it can lead the firm to failure. Tesco
takes various initiatives for having feedback from their customers so as to know at which
areas they fail (Holm, 2006). Through this, they make their products according to the
demands of people. It increases customer satisfaction which ultimately leads to increase in
sales as well as profits. Technology also plays a very important role in affecting external
environment of this organization. Those techniques which create highest profits for the firm
are being used. To select the best technology for the organization, the firm closely observes
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the competitor's process of working and the technology they have implemented to acquire the
desired results. Selecting the wrong technology can entail huge losses for this company
(Clayton and Heo, 2011). The social values of a new target market are studied in which Tesco
is going to operate. This is being done to make their product successful. To stay in the market
in the long run, Tesco needs to have proper knowledge about its external environment.
Competitor analysis of Tesco can be done from one of its biggest competitors that is
called Morrisons which is also a UK based retailer. Both of these companies represent
different characteristics in grocery retailing industry (Butler, 2014). Tesco is market leader in
the industry and it uses different types of strategies in order to influence the whole market.
On the other hand, Morrisons can be called a market follower and can act vulnerable against
Tesco. Tesco has more than 3000 stores in the UK and it delivers different services to fulfill
needs of different people. Morrisons on other side has fewer stores than Tesco and its market
share is also very low compared to the company (Marketing Week. 2015). In the past few
years it has been observed that the sales of Tesco has reduced because of not analyzing needs
of consumers appropriately and Morrisons has taken this as an opportunity to present the
market with goods that are demanded. It has helped them to increase its market share
appropriately.
(Source: Porter’s Five Forces model Michael Porter 1979)
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