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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The Porter's Five Forces is a simple and powerful tool for understanding where power
lies in a business situation. In this regard, following is the Porter’s five force analysis of
Tesco:
1. Threat of new entrants: Entry of new competitors requires huge investment in order to
give tough competition to firm like Tesco. Also, UK retail sector is stagnant due to
prevailing of cut throat competition. Due to this, threat of new entrant is low.
2. Threat of Substitute product: In grocery sector, threat of substitute product is low in
the case or food items and high for nonfoods products. There is wide range of
substitute to Tesco such as convenience stores, license stores, organic shop and other
related. However, this doesn’t possess threat to Tesco as it has high brand image and
presence in the market. Tesco fasces high threat of substitute products in the case of
clothes etc.
3. Extent of Rivalry: UK retail market witness high competition due to which company
need to develop new set of strategies and tactics on regular basis.
4. Bargaining power of Buyer: It is high for Tesco as there are numerous competitors
exist that offers almost same set of products. Also, there is low swapping cost to
customers and gives high bargaining power.
5. Bargaining power of Supplier: Majority of suppliers is inclined towards food and
grocery retailers and this factors helps in declining the bargaining power of supplier.
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2.3 Integration of internal and external analysis
(Source Banerjee, 2009)
Based on SWOT analysis, company is able to identify the market opportunities and
threats. Further, PESTEL analysis aids in identifying the factors that can affect its operation.
Based on it, company is able to make choices for future expansion.
The graph above shows the integration of internal and external environment of the
company. If the internal and external analyses of Tesco's environment are integrated, it would
help to formulate future strategies for the organization. When there is a complex knowledge
about the internal and external factors of the company, it would also increase the quality of
performance of employees working at Tesco. By having thorough knowledge about both of
the environments, its opportunities can be captured by assessing its strengths (Brooks and
Simkin, 2012).
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Tesco can easily merge its strengths, weaknesses, threats with its political, legal and other
analyses. One major weakness that was analyzed by Martin in the Asian Sector as the Tesco
as a company was not able to represent themselves appropriately in front of people (Martin,
2014). In India the company was forced to shut the stores that had been established in
collaborations with some third party companies because it affected the operations of local
retailers. In order to cope with that the company made different deals with local retailers and
continued its business on the name of partner through which business was initiated.
Furthermore, the company also made an agreement with government to ensure that if rules
are changed in the future, the company will be given some advantages (Mookerji, 2015).
ACTIVITY 3
3.1 Decisions and choices at corporate level
Vision of Tesco is based on 5 key elements i.e. wanted and needed around the world,
continuously growing the business, innovating services, winning local market and earning
loyalty and trust of customers. In addition to it, mission statement states “We make what
matters better, together” (Corporate strategy, 2015). In order to attain their vision and
mission, corporate level officials play a significant role. Here, corporate level can be referred
as top level management that develops strategy and tactics for business growth. It makes
critical decisions at the time of deviation so that chances of losses or negative impacts of
company can be reduced. Also, it mtakes decision for on providing funds in the company for
attaining growth. With the help of it, the company is able to meet the objectives and hence
able to sustain in the market for longer.
As in any organization, at Tesco also, decisions and choices are being made on three
levels. These are top, middle and lower level. Corporate decisions affect all these levels in
one way or another. Decisions which are directly related to the objective or goal of the firm
are made at corporate level (Nandakumar, Ghobadian and O'Regan, 2011). It is the highest
stage where resources are allocated to each area and strategies at all levels are coordinated.
Decisions taken at corporate level includes for example the diversification in of
products. Here, it refers to either superiority on quality or price of Tesco's products. At its
corporate level, decision is taken regarding different features that the company wants to
provide to their customers and that no other firm has (Indridason and Wang, 2008). Therefore
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strategies are being made at the top level of the organization, including differentiation in its
products like change in taste or packaging.
Furthermore, top level officials mtake decision regarding business expansion also
through Ansoff’s matrix (Bērzins, n,d). In this, decision is mtadken by Tesco regarding
market penetration, product development, market development and diversification. This
model comprises of four quadrants and each has been enumerated below:
Market Penetration: It includes marketing existing product within existing market. Tesco has
increased its grocery market through this.
Product Development: Tesco developed Tesco Mobile that offer telecom services to
customers across the UK. This helped the company in entering into new segment through
which sales of the company is increased.
Market Development: Tesco has moved into convenience store market in order to boost its
sale and operational base.
Diversification: Tesco even entered into petroleum and financial sector for developing wide
product portfolio. This assisted in boosting operational efficiency of the company.
Figure 1: Ansoff matrix
(Source: Fuchs and Diamantopoulos, 2010)
Porter Generic Strategy
Porter generic strategy is a tactic tool that helps company in pursuing competitive
edge in the allotted market segment. In this regard, there are basically four types of strategy
i.e. cost leadership, differentiation, cost focus and differentiation focus. In cost leadership,
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company aims to offer low cost product so that more of customers can be attracted towards it.
Differentiation aims to develop distinctive products or services that that of competitors in
order to remain attractive in the world. On the other hand, focus strategy concentrates on
particular niche markets.
A cost leadership strategy is done at the corporate level as well. The main aim behind
this is to lower its prices by producing products at low cost. If it provides identical products at
low cost but with equal quality, people will prefer these products and only this will lead to
increase in sales and thus profits (Gurau, 2008). These decisions are being taken to gain
competitive advantage in the market. Being a cost leader is the most powerful tool for Tesco
to capture market as consumers are price sensitive.
Figure 2: Porter Generic Strategy
(Source: Daft, 2008)
3.2 Decisions are influence marketing at business unit and functional level
Marketing activities make impact on business units because promotion is done based
on needs and wantswishes of the customers. Considering this, the marketing plan is
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developed to give support to attract customers. Also, it includes funds which certainly affect
the business operation if not plan it in appropriate mannerplanned appropriately.
There are different decisions that influence the marketing of a business unit and on
functional level. These include decisions regarding segmentation, promotion, price setting,
selection of source for promotion, or targeting strategy for example. In order to manage
decisions with regard to marketing, proper market research and feedback from customers
need to be taken so that effectual results can be attained through them. Through this, better
strategies are developed at business units. and efforts are incorporated accordingly to attain
the same.
Tesco is a large corporation and has various business units. Taking dDecisions on
competition as well as on different channels of distribution are also done made here (Doole
and Lowe, 2008). For dissimilar product groups, different strategies are being made. It is the
responsibility of each business unit to set its own strategy for its specific product group.
Coordination in between all these units with their decisions leads to accomplishment of
corporate level strategies (Daft, 2008). There must be proper cooperation in between these
business units as without that, the ultimate result of the organization cannot be achieved.
However, it does not mean that corporate strategy is the total sum of business strategies.
Nevertheless, decisions taken made at these units levels haves its crucial impact on decisions
at top level of Tesco (Fuchs and Diamantopoulos, 2010).
At Tesco, functional or tactical decisions are taken made by different departments of
each business unit. Here, there are strategies such as marketing strategy and pricing strategy
that come into the picture (Dekimpe and Hanssens, 2004). Various specialists are involved at
Tesco to make these decisions. All the functional strategies have to be properly linked with
business and corporate strategies to make their best use in achieving the organizational goal.
Besides, marketing objectives are set by the company so that they can attract customers and
hence can able tocan ready to boost the sales volume. Additionally, marketing content is
developed at functional level and same is promoted through different media in order to spread
the awareness. Other functions related to marketing is assessing the response rate of the
marketing and identifying loopholes so that same they can be rectified.
3.3 Approaches to competitive positioning
Competitive positioning can be defined as a situation in which firm possess possesses
high capability in the market which its competitors is are not able to imitate. It is essential to
acquire competitive edge so that firm can sustain in market for longer and hence is able to
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earn high profit. For competitive positioning, different measures can be taken into account by
company such as offering sound customers service, loyalty card, customer oriented products,
low queue for payment system and other related. (Doole and Lowe, 2008).
At Tesco, competitive positioning is done through various ways like it can be done by
becoming the market leader or follower or challenger. To become a market leader, its
positioning will be based on its quality. In this endeavor, it will try to keep in mind of
consumers that they are the providers of the best quality of a particular product
(Yannopoulos, 2011). Therefore Tesco has to make various strategies to show their
superiority over competitor's products. It will bring differentiation as well as diversification
in their products and will create value for the market. Without showing how the product is
different from others, it will take more time to position that (Roetzer, 2011).
Additional method that Tesco uses to position their product is cost leadership that is to
provide the cost to the people that are easily affordable to them. Also, they do not have to
compromise at quality. This strategy proves to be the most advantageous for gaining higher
profits for the firm as the target market as well as the competitor's market can be easily
captured through this. Product specialization is also used by this company to position its
separate category of products for a specific group of people only (Ries, 2003). It can be done
for their luxurious products which are highly expensive too.
Additionally, there is risk in attaining competitive edge as the company needs to
develop varied set of strategies and incur different set of cost. If any deviation arises them
then it certainly increases the marketing cost from which profitability of company gets
hampered. If things go well, then firm like Tesco can able to can ready to attain the position
of market leader. In this context, market leader refers to a position where company is
competent capable from that of its rivals in every sense such as high customer satisfaction,
enhanced loyalty and high market presence. Sound brand awareness and other related
(Dekimpe and Hanssens, 2004). Through this, other company will follow the strategies and
approaches taken by Tesco in order to attain competitive positioning. This particular situation
is termed as market follower. Apart from this, market niche can be referred to a small yet
profitable segment in the market that been created by identifying the needs and wants of the
customers. recognizing the necessities and needs of the clients
ACTIVITY 4
4.1 Strategies contributing business competitively competitive advantage
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Tesco has many strategies which contribute to the competitive advantage it gains in the
market so as to bring stability. The most common among these are defensive strategies. It
helps the firm to maintain competition for its business from other firms and gaining an
advantage from that (Badur, 2011). In reducing risks from uncertain activities as well as from
the threat of competitors, it proves to be the most effective. By bringing innovation in their
products through the use of latest technologies, Tesco gains the competitive advantage of
providing the most advanced product. In the present scenario, people want innovation in
things which they are using, and this company is successful in providing this (Nandakumar,
Ghobadian and O'Regan, 2011). Their customer service is also uses one of the best strategies
for making benefits from their competition. As they are providing many products which are
the same as those of competitors, to attract customers they have to adopt the defensive
strategy. It increases the satisfaction level of customers (Indridason, and Wang, 2008). Also,
it helps to increase customer loyalty towards Tesco’s brands as they get their demands,
expectations and needs fulfilled.
Furthermore, there are some more strategies that can be used by the company:
 Market Development - It will allow Tesco to gain competitive advantage. Through
this the company can advance its business by entering into new market segments
(Doole and Lowe, 2008). For this, the company will require a good marketing strategy
so that proper mission of market development can be defined. This particular strategy
will allow the company to gain more revenues and it will also be able to capture new
customers.
 Differentiation - It is one of the best strategies that can be adopted by Tesco in order
to enhance perceived value of its brand. Company can attain differentiation by
developing techniques like competitive pricing, distributor location, enhancement of
functional designs and features and expanded distribution channels (Badur and et.al.
2011). By offering unique and good services to customers, the company will be able
to attract more and more customers and it will also help them to create a unique brand
identity in market.
 Cost Leadership - This strategy facilitates competitive advantage. By using this, the
company can set the prices of goods low but still keep the quality of products very
high. It will create a positive impression in the mindset of customers and they will
become loyal customers of Tesco. By using this, the company will also be able to
20

increase its revenues and enhance market share as compared to its competitors
(Nandakumar, Ghobadian and O'Regan, 2011).
In addition to it, Tesco need to conduct STP (segmentation, targeting and positioning)
so that it can ablecapable caters the attention from right set of customers. Here, segmentation
refers to dividing whole market on the basis of different factors such as demographic,
geographic, or psychographic, for example. Based on this, targeting strategy is applied such
as differentiated, un-differentiation and concentrated. By doing this, company is able to
position itself in the eye of the customers. Further, relationship strategies refers to addressing
the grievances and issue of customers from different means and making regular contact with
different means such as email, mobile marketing and through social media in the form of
newsletter. This aids in gaining regular support from the customers and it ultimately helps in
gaining loyalty from them. Tesco does the same through email, mobile marketing and social
media. Besides to that, concept of developing unique and novel product or service is termed
as product innovation that helps company in catering the attention from distinct customers. In
this regard, Tesco offers low cost products and concept of click and collect that helps in
meeting with the needs of different customers. (Butler, 2014).
Branding is another concept that helps the company in attaining an edge over rivals. It
is a practice of developing unique and distinctive image at the marketplace. In this regard,
Tesco has a brand image of offering quality and variety of products at relatively low cost
compared to their competitors. Additionally, service marketing refers to promotion of
economic activities that is been offered by the company. Beside this, competitive advantage
can be attained with the help of marketing strategies of pricing and distribution. Price need to
be quoted in a manner so that target customer can afford it and distribution should be in a
manner that products are available within the convenient reach of the clients. Tesco focuses
in on theseis particular aspects and offers low cost product through physical store and from
online portal. It also does marketing on internet as majority of customers access to the
internet on regular basis. In this regard, Tesco conducts e-marketing in the form of email
marketing, mobile marketing, SEO (Search Engine Optimization), pay per click and other
related.
4.2 Marketing communication strategies for business
Marketing communication can be referred to as a practice of sharing messages to
customers and potential customers so that brand awareness can be increased.
21

Through the use of marketing communication, brand awareness is being increased by Tesco
towards their consumers. With the help of this, customers make perceptions about what
information they get from the market. It also helps in positioning its products to the target
market. Public relation can be maintained through this. Tesco uses target and benefit strategy
for marketing communication (Gurau, 2008). Benefit strategy shows various profits along
with its products so as to make customers believe that they have benefit and value for what
they are spending. For this, Tesco uses many promotional activities like advertising showing
the product's features with benefits. In target strategy, the communication is done in order to
know which market segment is going to produce the highest revenues for the amount invested
(Doole and Lowe, 2008). This is defined as segmentation as well as prioritization. Personal
selling and direct marketing is also applied in marketing communication of Tesco. It is
helpful in interacting face to face with the customer as in this; their actual and instant reaction
can be captured. Ultimately it helps in making various decisions regarding a particular
product (Daft, 2008).
Some of the marketing communication strategies that can be used by Tesco are:
 Direct communication - This method targets the consumers directly and personally.
In this, popular media tools like TV, radio are not used but instead some personalized
techniques like event organization, door to door selling, etc. are used to attract
customers (Banerjee, 2009). Through this, Tesco will be able to define its key
consumer groups rather than mass audiences. Some techniques that can be used in this
are personal selling, public relations, sponsorship, etc. It is a traditional mode of
promotion but is very effective in the existing business environment also. It helps in
knowing the customers in more personal manner and provides more information
about their taste and preferences (Doole and Lowe, 2008).
 Above the Line Promotions- This technique can be used in order to communicate
with people via mass media channels adequate to the intended target audience in an
appropriate manner. There are different methods like print, TV, radio, advertisement
which are used under this approach (Roetzer, 2011). This helps in reaching maximum
audience thus creating high measures of promotion for the company (Badur and et.al.
2011).
 PR- is an indirect influence of public (customers and business partners) by portraying
positive image on the corporate in media. Most typically, PR articles show the
company and brand name in connection/when delivering news on charity events or
22

supporting social causes. The objective of PR activities and PR communication is
both to increase brand awareness in the relevant public audience as well as to enhance
brand image.
 International communication: Tesco can even do global communication with the
help of internet and by using social media as platform. This will help in boosting the
awareness of company in the market that helps in attracting large number of
customers towards it.
 Cost Decisions: Additionally, cost decisions with regards to marketing
communication need to be considered. Communication need to be done in a manner
from which benefits is attained more than that of cost. . Correspondence should be
done in a way from which advantages is accomplished more than that of expense.
All these strategies are very popular and it helps Tesco to attract customers in the best
possible ways.
4.3 Marketing strategies and their implementation
Tesco implements a variety of strategies in its organization to ensure smooth functioning.
These strategies are applied in the firm to manage its resources as well as to achieve its target
in the most effective and efficient way (Jordan, 2015). Some of these strategies are:
Scarcity marketing – Tesco provides some products whose raw materials are not
easily available because of their higher quality. In this case, the company makes these
products only for those customers who can afford them (Badur and et.al., 2011).
Diversified marketing – Tesco targets different segments of customers. It includes
distinct tastes, beliefs and expectations of people for whom certain products have been made
(Banerjee, 2009).
Relationship marketing – Tesco believes in building relationship with their customers
so as to increase their brand loyalty and satisfaction, too. It helps in maintaining stability in
the organization and also increases its period, time and term to stay in the market for further
years (Salaimeh, 2008).
Furthermore, there are some more strategies that can be used by Tesco:
Direct Marketing- It is the most basic method of marketing that can be adopted by Tesco
in order to attain all objectives in an effective manner (Clayton and Heo, 2011). This
particular method includes different techniques like personal selling, emails, telephone
conversations, filtering, catalog distributions, etc. These methods are very costly but they
23

generate quick results for the company (Brooks and Simkin, 2012). Using this technique,
Tesco will be able to contact its customers in an appropriate manner and this will help
them to achieve their business objectives more easily.
Online Marketing- This type of marketing strategy is considered as increasingly
significant these days because more and more consumers are moving towards the online
market and with this technique the company will be able to target people more efficiently
(Fuchs and Diamantopoulos, 2010). Marketing is done through social media websites,
websites and other sources of internet. Through this, Tesco will be able to attract large
masses with very low cost (Roetzer, 2011). Furthermore, the company can also make use
of interactive media to target the customers appropriately.
Organizational Monitoring - Tesco can directly monitor the performance of all the
strategies that it has implemented as it will help them understand drawbacks of all these
strategies which will focus them on corrective actions (Yannopoulos, 2011).
CONCLUSION
Strategic marketing helps the company in developing the competitive edges of the
company, to evaluate the actual measures, to promote its products and services and to
establish the brand image in this competitive market. It can be concluded from this report that
Tesco's strategic marketing is powerful enough to generate high revenues for the firm. All
strategies whether they are made at corporate, business unit or functional level, are important
for the organization. These have helped the company in creating an edge in the retail market,
in developing its business and evaluating the scope of growth as well. To enhance the
relationship between Tesco and their customers, its marketing communication proves to be
efficient (Singh, 2007). It increases the satisfaction level of the customers and thus leads them
to stay with the company for many years. Tools like PESTLE helped in analyzing the internal
and external factors affecting the business of the company. In order to cater for the needs of
customers, Tesco needs to employ more modern and dynamic methods of marketing.
24

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