Strategic Marketing Report: Tesco's Expansion into Brazilian Market

This report provides a strategic marketing analysis for Tesco's potential launch of energy drinks and energy bars in Brazil. It begins with a PESTLE analysis to evaluate the macro-environmental factors influencing the product's success. The report then explores various market entry options, including strategic alliances, mergers and acquisitions, and joint ventures, recommending mergers and acquisitions as the most suitable approach. Furthermore, it delves into the STP (Segmentation, Targeting, and Positioning) analysis to identify the ideal consumer segments. The report also examines Porter's generic strategy to understand how Tesco can differentiate itself in the Brazilian market. The analysis highlights opportunities such as the rising health consciousness and threats like foreign competition. The report concludes by summarizing the key findings and recommendations for Tesco's successful market entry into Brazil.

STRATEGIC MARKETING

EXECUTIVE SUMMARY
The report has discussed the company Tesco who wishes to launch a new energy drink
and energy bar into a new market that is Brazil. For this it has done a PESTLE analysis of
country Brazil to check that what will be the implications of any changes in the macro
environmental factors which has upon the company. Also, it has analysed the STP for the new
product along with some entry options into the market.

Table of Contents
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
PESTLE analysis.........................................................................................................................4
Market entry option.....................................................................................................................6
Market Segmentation, Targeting and Positioning (STP)............................................................7
Porter's Generic strategy.............................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Strategic marketing is a new and latest way of marketing within which the company tries
hard to differentiate itself from that of the competitors by working on its strengths and
overcoming its weakness and also by providing premium quality products to its customer (West,
Ford and Ibrahim, 2015). The present report is based on the company Tesco. It is company
which deals in groceries and general merchandising which was founded by Jack Cohen in the
year 1919. The present report will outline the Tesco launching a new energy bar and energy
drink in Brazil. The report will start by outlining the macro environmental factors which may
affect the new product of Tesco. Further it will analyse some market entry option for Tesco.
Further it will analyse the STP analysis for Tesco that who will be its target. At last, it will
discuss the Porter's generic strategy and how it benefits company in expanding its business in
Brazil.
MAIN BODY
PESTLE analysis
The PESTLE analysis is an analytical tool used by companies in order to study and
understand the impact and effects of any change in the macro or external environment on the
working and operations of the business. This analysis is mainly helpful for the companies who
want to expand into a new market or a new country. Since Tesco wants to launch a new product
that is Energy drink and energy bars in Brazil. So before launching the product in the country it
first needs to study and analyse the fact that whether the macro environmental factors will
support the new product or not. So the PESTLE analysis of Brazil is as follows-
Political- these are the factors which studies the interference of government and other
aspects relating to politics that affects and impacts the working and operations of the proposed
product or service. These also includes instability in politics, corruptions, government policies,
foreign trade policies and many more other options. The country Brazil is a member of many
international organizations like World Trade Organizations, BRICS, International Monetary
Funds and many more other international organizations. The country enjoys a strong political
relation with United Kingdom. With the benefit there is also negative impact that there is much
corruption in the country (PESTEL analysis of Brazil, 2018).
Economical- these are the factors which determines the performance of whole country.
Under the economic factors comes forces like changes in interest rates, economic growth rates,

inflation rates, exchange rates, disposable income of consumers and many such related factors.
All these factors can have either direct or indirect impact on the performance of the product or
services of the company (Moutinho and Vargas - Sanchez, eds., 2018). Brazil is the 9 Th largest
economy in terms of nominal GDP in the whole world. In the year 2018, the country showed a
growth rate of 1.4 % which was -3.6 % in the year 2016. Also, the unemployment rate was 11.8
% in the year 2018 which was 12.8 % in 2017.
Social- these are the general factors which represents the society. These factors include
societal factors like norms of society, customs, age, population growth rate, values and beliefs of
people in society, income distribution, demographic, cultures prevailing in market, lifestyle
attitude and many more factors relating to the society. Brazil is most diverse country in world in
terms of cultures. It has a population of around 208 million people along with life expectancy of
72 years for men and 79 years for women. Christianity is the main religion followed by people in
Brazil and Portuguese is the main language prevailing in the country.
Technological- these are special factors which relates to innovations and developments
of technology which may hinder or foster the growth and development of the new launched
product or service. These are the factors which majorly influences the decision that whether new
technology is to be adopted or not (Xu, Frankwick and Ramirez, 2016). This is because of the
reason that competition is being so tough that every second a new technology is coming in the
market and f the company does not adapt to these technologies then they become obsolete and
are out of the competition. The government of Brazil invests heavily in digital transformation
and adoption of latest and innovative technologies.
Legal- these are the factors which might overlap with the political factors but these are
different from political factors. These include all those laws and rules and regulations which the
company has to follow in order to launch a new product or service into a new country. There are
many laws such as employment laws, health and safety laws, patent laws, consumer protection
laws and many other laws which governs the working of business and has to be followed by
Tesco in order to launch Energy drink in Brazil.
Environmental- these are the recent factors which are to be considered by the company
before entering into a new market or a new country (Felix, Rauschnabel and Hinsch, 2017).
These have become important in recent time. This is because of the reason that the resources
used from environment are very scarce and limited and the user of these resources are much

higher so it needs to use them optimally and efficiently. If the resources are not used properly by
Tesco or the product or service launched by it then it is possible that the people of Brazil does
not favour the product or service because it harms the environment and its components
(Hollebeek, Conduit and Brodie, 2016). Brazil faces some environmental challenges like illegal
wildlife trade, animal poaching, water and air pollution, deforestations, land degradation, severe
oil spills and many more challenges relating to environment.
Opportunity- the major opportunity for company is the increase in the standard of living
and increasing trend of health consciousness. Because of this the energy drink and bar can be a
successful product.
Threat- the major threat is the foreign competition. This is because of the reason that
health consciousness is the latest and recent trend going on in the world so many companies are
coming into this business which can be a major threat for Tesco.
Market entry option
The market entry option refers to various types of options which are available for a
company in order to enter into a new market or a new country. There are many option available
with companies, so these companies before going for the option must first evaluate all the risks
and benefits attached to these option. This is because of the reason that all the options are
differently suitable for all the countries that is one option may be advantageous for one country
but may be disadvantageous for the other country. So before going for expansion into new
country it is very necessary for company to evaluate different option of market entry. The
following are the options available for Tesco to enter into Brazil for launching its Energy bar and
Energy drink.
Strategic alliance
This is a system wherein two companies come together and unite their work in the
direction of some common goal and objectives but these two companies remain independent and
works with sharing the strengths and resources of both the companies. The option of strategic
alliance helps the company in developing a more effective process to expand into new market
and also to develop a competitive advantage over its competitors in that new market. The major
advantage for Tesco if it goes for strategic alliance is that this alliance helps both the companies
to share the risk among both of them. Also, there is a benefit that when two companies of
different countries work together then they share good knowledge as both the countries have

different management, techniques, and different resources so both countries have different types
of knowledge (Rashid, Rahman and Khalid, 2014).
Mergers and acquisition
This is yet another method for entering into new market being available for Tesco. Under
this method, the company either purchases or acquires other companies in full or a part of it. In
merger, two different companies joins its working and both the companies comes up with a new
single company. On the other hand, in acquisition one company which is large acquires a part or
full company which is small in its operations. This is a beneficial option for company as it
increases the market share and also the positioning of the company into a new market or
company (Felzensztein, Brodt and Gimmon, 2014).
Joint venture
This is also a mode of entering into a new market which can be adopted by Tesco. It is
form of business wherein two companies comes together for accomplishing a particular
objectives and goals and as and when these goals and objectives are achieved the joint venture
comes to an end. This is because of the reason that joint venture is made for a particular
objective or goal only. It is type of temporary partnership which is just made for attainment of a
particular objective.
Recommendation
The best suited option out of the three for Tesco is to go for merger and acquisition. This
is majorly because of the reason that with the help of merger and acquisition, Tesco can have
option of directly capturing a good market share which the acquired or merged company have in
Brazil. Under this method Tesco needs to find a company which is dealing in energy drinks and
bars and needs to either merge or acquire that company. With this Tesco will gain the pre-
established market of the acquired firm. This is also helpful because the merged company will
already have a goodwill in the market which will help Tesco in further growth. Also, merger and
acquisition will provide the benefit of economies of scale because of the reason that the
resources of both the companies will be combined so it will provide the benefit of economies of
scale.
Market Segmentation, Targeting and Positioning (STP)
The STP is a strategic marketing technique and tool used in modern marketing. The STP
is a process with help of which the company link its marketing activities with the target which

the company chooses with help of segmenting and positioning. It comprises of three components
which are segmenting, targeting and positioning. The STP can also be defined as the process
through which the market is split and divided into much smaller parts so that company can focus
on those smaller parts (Cwalina, Falkowski and Newman, 2015). The components of STP are
explained in detail in the adjoining points-
Segmenting- it is a process through which the consumers are divided or segmented into
smaller parts n basis of some common traits and characteristics. Since the market is very large
and diverse so it is not at all possible for company to take care of the whole market (Josephson,s
Johnson and Mariadoss, 2016). So for this the company tries to divide and group the consumers
into some common groups which makes it easier for the company to cater to the needs of those
particular segment as compared to catering the needs and requirements of whole market.
Segmenting can be done on many basis like, demographic, behavioural, geographic, psycho
graphic and many more basis and criteria.
For launching a new energy drink and bars Tesco needs to divide its consumer group
mainly on the basis of age. This is because of the reason that now- a- days most of the young
people are more health conscious, so they focus and prefers healthy diet and drinks. So the focus
of Tesco should be on the youth of Brazil so that the energy drink and bar of Tesco is successful
in Brazil. Another segmenting which can be used by Tesco is the status and standard of living of
people. This is because of the reason that mostly the people having high standard of living
prefers these types of energy drinks and energy bars because they have to maintain their standard
of living and status.
Targeting- once the company divides its customer into different segments then comes the
next step that is targeting. Under this step the segment chosen for product is targeted that is the
company tries to market the product specifically for that particular segment only. In this stage of
STP process, the company tries to devise and develop different types of marketing planning and
developing some marketing strategies and schemes in order to promote the product and the
services for the segment out of the whole population which is being selected.
For this Tesco needs to target mainly on the teenagers and people up to the age of 45 this
is because of the reason that now people are becoming more updated and knowledgeable
regarding their health status and the increasing danger of obesity in their life. The another target
which Tesco can focus is the people or consumers belonging to higher income group. This is

because of the reason that people belonging to high income group are people which have to
maintain a high standard of living so for that they like to use such kind of Energy drinks and bars
to eat and drink in order to stay healthy and fit (Kozlenkova, Samaha and Palmatier, 2014).
Positioning- this is the last step of STP process. Under this step the company focuses on
presenting the product or services in front of consumers into the market. The step of positioning
helps the company in creating a perception regarding the product or service in the minds of
consumers. For this Tesco can use different types of marketing methods like advertising, social
media networking, print media advertising, and many other tools and techniques of marketing
(Strauss, Frost and Sinha, 2014).
Porter's Generic strategy
It is a strategy which is used by companies in order to find a competitive advantage over
its competitors and market. This strategy defines four different types of strategies which can be
used by companies in order to secure a competitive advantage over its competitors within the
cut-throat competitive world. This strategy was developed in the year 1980, by Michael Porter
and this theory or strategy can be applied to any size and type of business. The company's
position in the market defines its profitability among its competitors. There are basically three
strategies of Porter that is cost leadership, differentiation and focus strategies. In focus there are
further two strategies that is cost focus and differentiation focus. The explanation of all the four
strategies of Porter are explained in the following points-
Cost leadership- under this type of strategy the company wants to become a low cost
producer in the whole industry. This is because of the main reason that the competition is very
tough, cut-throat and hard and to survive in this competitive world it is very essential for
companies to have a cost lower than its competitors. Because if the cost will be low then only
the consumers will come to that particular store again. If they will find the competitors price low
then they will switch over to the competitors product and services.
Differentiation- it is another strategy consisting of Porter's generic strategy model. Under
this strategy the company tries to develop products and services which are unique in the market.
The companies following this strategy believes that being different will target much larger
portion of the market and will have the competitive advantage. Here the company thinks that
being unique and innovative in their products and services will make the company differentiate
from its competitors and will provide a competitive advantage for the company.

Cost focus- this strategy is similar to the cost leadership style only. The only difference is
that in cost focus strategy the company tries to focus on a particular and specific segment of
market only rather than trying to sell to whole market (Mullin, Hardy and Sutton, 2014). This
type of strategy is not helpful if the company wants to cover the whole market at a single time,
but is helpful if the company wishes to capture a limited portion of the whole market. This
strategy uses the principle of cost leadership in order to focus on a specific and limited portion of
market and to become the leader in that particular market (Morschett, Schramm - Klein and
Zentes, 2015).
Differentiation focus- this is also similar to differentiation strategy but the only
difference is that this strategy also focuses on catering to the needs and requirements of a
particular part or segment of whole market. This is more beneficial strategy because of the
reason that by focussing on a smaller number of consumer the company can have a better
understanding of the requirements, needs and wants of the consumer and produce the products or
services according to the requirements of those consumers.
Recommendation
Out of the above four strategies the best suited for Tesco in launching Energy drink and
bars in Brazil is the 'Cost Leadership' strategy. This is because of the reason that with this
strategy the company can capture a large portion of market. As the competition is tough so every
company tries to mark its price higher, so if Tesco charges low or minimum prices then it will
capture a large market segments (Müller, Fries and Gedenk, 2014).
CONCLUSION
With the help of the study it can be concluded that marketing is very essential for the
success of any business. This is because of the reason that marketing helps the company in
promoting its product and services in front of consumers and potential customers and the targets
so that the sales and revenue of the company increases. With the help of the above study it was
summarized that before launching a new product or service into a new country it is very
necessary for the company to understand its environment of that country wherein the company
wants to expand its business.
Like in the study it was concluded that understanding the macro factors of the country is
very necessary for Tesco before entering into Brazil. For this it took the help of PESTLE
analysis which helped the company in knowing and understanding the effects of changes in

macro environment on the business. Further it outlined various methods through which the
company can enter into new country like strategic alliance, mergers and acquisition and joint
ventures and out of these mergers and acquisition is the most suitable option. Further it discussed
the process of STP through which the company first divides its population into some segments
and then target them according to their requirement. At last the report outlined the Porter's
generic strategy.

REFERENCES
Books and journals
Cwalina, W., Falkowski, A. and Newman, B.I., 2015. Political Marketing: Theoretical and
Strategic Foundations: Theoretical and Strategic Foundations. Routledge.
Felix, R., Rauschnabel, P.A. and Hinsch, C., 2017. Elements of strategic social media marketing:
A holistic framework. Journal of Business Research. 70. pp.118-126.
Felzensztein, C., Brodt, S.E. and Gimmon, E., 2014. Do strategic marketing and social capital
really matter in regional clusters? Lessons from an emerging economy of Latin
America. Journal of Business Research. 67(4). pp.498-507.
Hollebeek, L.D., Conduit, J. and Brodie, R.J., 2016. Strategic drivers, anticipated and
unanticipated outcomes of customer engagement.
Josephson, B.W., Johnson, J.L. and Mariadoss, B.J., 2016. Strategic marketing ambidexterity:
Antecedents and financial consequences. Journal of the Academy of Marketing
Science. 44(4). pp.539-554.
Kozlenkova, I.V., Samaha, S.A. and Palmatier, R.W., 2014. Resource-based theory in
marketing. Journal of the Academy of Marketing Science. 42(1). pp.1-21.
Morschett, D., Schramm - Klein, H. and Zentes, J., 2015. Strategic international
management (pp. 978-3658078836). Springer.
Moutinho, L. and Vargas - Sanchez, A. eds., 2018. Strategic Management in Tourism, CABI
Tourism Texts. Cabi.
Müller, S.S., Fries, A.J. and Gedenk, K., 2014. How much to give?—The effect of donation size
on tactical and strategic success in cause-related marketing. International Journal of
Research in Marketing. 31(2). pp.178-191.
Mullin, B.J., Hardy, S. and Sutton, W., 2014. Sport Marketing 4th Edition. Human Kinetics.
Rashid, N.R.N.A., Rahman, N.I.A. and Khalid, S.A., 2014. Environmental corporate social
responsibility (ECSR) as a strategic marketing initiatives. Procedia-Social and
Behavioral Sciences. 130. pp.499-508.
Strauss, J., Frost, R. and Sinha, N., 2014. E-marketing. Upper Saddle River, NJ: Pearson.
West, D.C., Ford, J. and Ibrahim, E., 2015. Strategic marketing: creating competitive advantage.
Oxford University Press, USA.
Xu, Z., Frankwick, G.L. and Ramirez, E., 2016. Effects of big data analytics and traditional
marketing analytics on new product success: A knowledge fusion perspective. Journal
of Business Research. 69(5). pp.1562-1566.
Online
PESTEL analysis of Brazil. 2018. [ONLINE]. Available
through:<https://www.howandwhat.net/pestel-analysis-brazil-brazil-pestel-analysis/>