Tesco's International Marketing Opportunities: Belgium Case Study

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Assessment Two
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Table of Contents
Introduction......................................................................................................................................3
Main body........................................................................................................................................4
Section 1......................................................................................................................................4
Section 2......................................................................................................................................8
Section 3....................................................................................................................................12
Conclusion.....................................................................................................................................14
Reference List................................................................................................................................15
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Introduction
Introducing the report.
The report will focus on the international marketing opportunities for Tesco. A marketing
strategy for expanding the company in the international market is considered. A brief evaluation
of the operation of the company and the recent trends in the international market structure is to
be considered. The gradual development of the company in the Belgium market will be focused.
The long-term global strategy of the company to survive in the market structure of Belgium is
also to be considered. . Tesco has been considered for this assignment because it offers a wide
range of products and has a strong hold over the market and it would be a great opportunity to
analyse the marketing strategy of Tesco as a new retail chain in Belgium.
Background of the company considered
Tesco is multinational general merchandise and grocery retailer, founded in the year1919 by Jack
Cohen headquartered in Hertfordshire, UK. It is the ninth-largest retailer in the world, having
revenue of 63,911 million pound (tescoplc.com, 2019). It has an employee of 450,000. Its
products include Supermarket, Hypermarket, Superstore and convenience store. Its area of
operation includes the UK, Ireland, India, Thailand, Malaysia, Czech Republic, Hungary, and
Poland.
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Main body
Section 1
Trends in the environment and market for the sector.
Market Structure-Belgium is a developed country with a highly developed market economy. It
is one of the key founding members of the EU, having it is headquartered in Brussels. It is a
member of OECD “(organisation for economic cooperation and development)” countries. It is
also a member of the North Atlantic Treaty organisation (NATO). It follows a capitalist model
and is organised according to the free market structure. It ranks 17 among the free economy of
the world. However, it faces several issues regarding Property Rights, business freedom, freedom
of investment and monetary freedom (Auer and Schoenle, 2016).
Market and Environmental Trends-The business of the country is dependent on trade,
transportation, and services while the industrial sector is concerted on heavy industrial
equipment and machinery. Economic stability and growth have helped the country to maintain its
higher living standards and high productivity.
The key markets in Belgium include The Brussels Stock exchange (BSE), labour market,
industry, and agriculture. The banking system of the country plays a key role in the development
of the economy; this sector has undergone several reorganisation and modernisation. Belgium
lacks success in the labour market, as the working-age population is low in the market.
Unemployment rate persists depending on the geographical differences. Belgium is dependent on
raw materials from several industries the result of which they are imported. However, the exports
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include transport equipment, diamonds, iron and steel, leather and wood. It is also dependent on
nuclear power as 75% of its electricity is generated from it. Though the country has good quality
soil however only a small amount of the population is engaged in the agricultural sector. The
retail market in Belgium is well developed and the numbers of supermarkets have increased over
the years. Discount supermarkets are not popular in Belgium as compared to other EU countries.
Agriculture, economic policies and environmental factors affect the retail industry (Nunley et al.,
2017).
Market Sector in Belgium- Belgium has a number of international corporations, subsidiaries
and outlets. Foreign firms dominate some sectors of Belgian economy. The market structure is
highly dependent on the global economic structure. Unemployment rate has been a problem for
the county but it has shown massive improvements in this regard. Steel and textile production
has faced a decline.
The customer segmentation -in this report divides the customers concerning specific age
groups considering pensioners, infants, and babies. It also highlights the factors considered while
taking decisions regarding purchasing decisions of the products for each segment. The segments
is divided into four segments: Carpe diem customers, the well-off group of people, victims of the
crises, the emergency brake consumers (de Graaf et al., 2016).
Geographic spread of products- The natural resources of the country has exhausted
significantly. The leftover industries produce finished products by reprocessing materials. A
number of industries have emerged including pharmaceuticals, food processing, automobile and
so on. It has become a centre for international diamond trade.
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High quality
Low quality
High Price
Low
Price
Competitive positioning of the key products- There exists a huge level of competency between
the existing markets in Belgium. The products like food; health care, health care services are the
top priority. The beauty, sports products occupies a secondary position.
Figure 1: Positioning map of Retail Industry in Belgium
(Source: Created by the learner)
There are a number of retailer segments in Belgium like Delhaize, Albert Heijn, Aldi, Profi and
the focus stays on the development of these supermarkets, however, it saw a slight decline in
recent years. There is huge competition from the convenience store has posed a threat to the
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increasing price value of the supermarkets. Online grocery shopping has gained momentum in
the current market scenario; this has also caused a toll in the decline of the supermarkets.
However, about the opening of Tesco Delhaize and Albert Heijn can give competition to this
brand. Delhaize is one of the oldest supermarkets existing in Belgium thereby has already a
stronghold over the market. Moreover, it has products ranging from wholesale food to health and
beauty products can give a strong competition to Tesco.
Albert Heijn has a market full of services, produces good quality products; pose as a strong
competitor in the case of Tesco as it is the oldest organisation in the Belgium market. It has a
wide range of products to offer to its people. It produces a good quality product but the only
drawback of this organisation is the high price of its products. This brand already has an
established customer loyalty base. The carpe diem group and the middle-aged group are loyal to
this brand of supermarkets (Douma et al., 2016).
Aldi falls in the Belgium discount chain, is a well-known brand, and attracts huge about of
customers. It has its operation both in the local and international level. It sells its high quality
products at low prices and poses a tough competition for Tesco (Schmid et al., 2018).
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Section 2
Summary of product and market focus,
The market demand in the case of Belgium can be categorised into four groups’ infants, young
aged, middle aged and old. The demand of the products varies according to the age group. For
instance, the infants’ demands for foods like milk products, diapers, and baby wipes demands are
fulfilled from several convenience and supermarkets. Similarly, the young aged group consisting
of the people who have recently demands electronics, furniture, telecom services, petrol and so
on. The old aged group demands of several kinds of financial services, home shopping facilities
banking facilities (Ruiz et al., 2016).
Tesco is a diversified company and has expanded its market over the years. It has a long-term
business strategy for increasing its profit margin and it that has contributed to his successful
market operation at the domestic, regional and international level. Its success largely depends on
its reputation, lower prices and concern for the customers. Its association and brand equity had
helped the company to expand. It focuses on building a strong public relation and this has led to
its success rate at the local level. It has a huge range of product and can easily cater to the needs
of its customers. Good communication and development of a number of products to meet the
changing needs of the customers has helped this organisation to expand its business both at the
regional and international level. Thus, Tesco can easily cater to its profit margin in the Belgium
market because it is also expanding (Tse, 2016).
Basis of current competitive advantage.
The structure of any company should be taken into consideration to understand its competitive
advantage.
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Threats of substitute products and services- For food items this force is low within grocery
retail market and for non-food items the force is subjected moderate to high. The substitutes of
food retailers are organic and convenience stores in the retail food market. Tesco provides good
quality products at lower prices, and has new express stores, and city centre has to create threats
for its rivalries (Heller, 2017 ).
However, the threats of non-food items for instance clothing is high and people prefer discounted
prices. This works as an advantage for Tesco and it works as a threat for its rivalries.
Threat of entry of new entrants - The threats of new entrants in the food retail industry is
relatively low because establishing a hold in the food retail market requires huge investment and
a long span of time. Moreover, the brands like Tesco; ASDA already has a hold over the market
and captures almost 80% of the market, hence there is no scope for the entry of new firms in the
already established market strategy.
Bargaing power of Customers- The power of buyers in the case of Belgium is high as a
number of options are available before its customers. In the case, Tesco the competition
concerning the food and clothing item is high because a number of super markets and
convenience stores are available before the customers.
Bargaining power of suppliers- the power of the suppliers is low and there is no minimum
supplier in the supermarket chain. The company delays its bargaining power in order to delay the
payments to the suppliers and increase its profit margin.
Rivalry among existing firms- The rivalry among existing firm is high as there are a number of
well-established brands in Belgium. The competition is high concerning Tesco and it takes steps
to make and initiate changes to sustain in its market economy.
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The strategic marketing challenges it is likely to face as it aims to improve its international
Opportunities:
Expansion of the business can be the greatest opportunity for the firm. It has recently introduced
a discount store and it has significant growth. The customers of Belgium usually prefer discount
stores due to the economic upheaval that occurs in the country. They prefer buying good quality
product at a lower cost, which will give an edge to the company to develope in the company.
It has an opportunity to grow and compete with its low cost rivals like Aldi. The concept of
building strategic relationships with other brands can help in the growth of the company and
improve its relationship with the other operating brands already established in the country
(Nguyen et al., 2017).
The opportunity to improve from a mere super market to online shopping can help in the
expansion of the business as the younger generation prefers more of online shopping hence this
gives it a scope to expand its market. The opportunity to endorse in joint venture with the
company is another opportunity for the company and it can help in gaining the company’s
organisational goals. Expanding its market internationally and having the customer support can
be a profitable business opportunity for the organisation.
Threats:
There are several well-developed retail markets in Belgium. They are well established and have a
strong customer base. Hence, it might be difficult for the company to fully establish itself at the
first place. Moreover, Tesco in spite of having a good reputation have been subjected to several
controversies from several rival group works as a major threat for the company. The Brexit issue
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has also served as a threat for the organisation and this has created loss due to the withdrawl of
Britain from the EU (Hills and Anjali, 2017).
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Section 3
Recommendations on how to build sustainable competitive advantage in the future.
Corporate objectives refers to a set of goals that the company sets to achieve by influencing its
internal factors and using strategic decisions. Testo should adopt the following corporate
objectives in order to expand its business in Belgium. They are:
It should fix its target achievement and then focus on achieving profits.This will give the
employees of this organisation to work hard towards achieving the company’s goals. It should
provide trainin to its customers depending on the needs and demands of the people of Belgium.
This will create a clear idea in the minds of its employees regarding the actual goal and
objectives of the company (Jaradt, 2017).
It should develope communication with the newly entered market by trying to provide excellent
customer service so that it can easily get hold of the market and expand its business. It should
aim at developing new ways of attracting the employees in order to work for them by promising
good remuneration.It should also develope its products depending on the changing needs of its
customers.
The company should focus on its long term goals rather than short term achievements. Hence it
should plan its agendas in the new market.It should focus on reaching to the right customers so
that itv can create a strong customer base.Customer loyalty plays an important role in the
expansion of the company in the newly emerged market.
Implementation actions that will be critical in building competitive advantage
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