Strategic Marketing Report: Tesco's Market Entry in Brazil - MG626

This report provides a strategic marketing analysis for Tesco's potential entry into the Brazilian market with grocery products, focusing on the mobile phone industry. It begins with an executive summary and table of contents, followed by an introduction outlining the company's objectives. A PESTEL analysis is conducted to evaluate political, economic, social, technological, environmental, and legal factors within Brazil. The report then assesses opportunities and threats, explores market-entry options (strategic alliances, mergers, FDI, licensing), and recommends mergers. Market segmentation and targeting are discussed, including geographic, demographic, psychographic, and behavioral segmentation. Finally, Porter's generic strategies (cost leadership, differentiation, focus) are analyzed, with a recommendation for a cost leadership strategy. The report concludes with references.

Running Head: STRATEGIC MARKETING
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Strategic Marketing
Student’s Name -Student’s ID -
Word Count- 1500

STRATEGIC MARKETING
Executive Summary
Strategic Marketing involves an undertaking of marketing techniques to gain competitive advantage and
developing goods and services which helps in earning the profit. Strategic marketing planning consists of
various strategies that help any company compete with rival firms. Strategic planning is helpful for every
organization to scan the environment to identify different factors affecting the company and making out
the best strategies for the target market. It is also helpful in the proper utilization of resources for
increasing the sales revenue. It is important to analyze the strategic marketing plan to assess the internal
and external environment and analyze the strategies to gain competitive advantage by full use of
opportunities and strength and avoiding weaknesses and threats.
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Table of Contents
Introduction.................................................................................................................................................3
PESTEL Analysis........................................................................................................................................3
1. Political Factors...............................................................................................................................3
2. Economic Factors............................................................................................................................3
3. Social Factors..................................................................................................................................3
4. Technological Factors......................................................................................................................4
5. Environmental Factors.....................................................................................................................4
6. Legal Factors...................................................................................................................................4
Opportunities and Threats...........................................................................................................................4
1. Opportunities...................................................................................................................................4
2. Threats.............................................................................................................................................4
Market-Entry Options..................................................................................................................................5
1. Strategic Alliances...........................................................................................................................5
2. Mergers and Acquisitions................................................................................................................5
3. Foreign Direct Investment...............................................................................................................5
4. Licensing and franchising................................................................................................................5
Market Segmentation and Targeting............................................................................................................6
Porter’s generic strategy..............................................................................................................................8
1. Cost Leadership Strategy.................................................................................................................8
2. Differentiation Strategy...................................................................................................................8
3. Focus Strategy.................................................................................................................................8
Conclusion...................................................................................................................................................8
References...................................................................................................................................................9
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Introduction
Marketing is a process of providing value to customers by understanding their needs and performing
different strategies to gain competitive advantage. Strategic Marketing elaborates the company’s
objectives and lays down different ways to achieve those objectives. TESCO Company is taken for the
strategic marketing who wants to enter in Brazil market and the product which can be chosen by the
company is grocery product falling into the industry of retailing. Mobile phones are need of every
individual because it comes with new technology and has tough competition in the market. This report
highlights PESTEL Analysis to identify the macro-environmental factors and the results of these factors
will be helpful in analyzing the opportunities and threats for the TESCO and also analyzing different
modes of entering into the market, market segmentation and lastly Porters Generic Strategy for analyzing
the best strategy.
PESTEL Analysis
PESTEL Analysis is undertaken to identify different factors that affect the organization externally. This
framework is used to analyze an organization’s Macro forces that affect the company and the outcomes of
these factors are used to make full use of opportunities and minimizing the threats of the organization
(Issa, et al., 2010). The factors are explained as follows:
1. Political Factors
Political factors include the political instability, change of the governments and also bureaucratic issues
that the company can face during the course operations. This can have negative or positive impact on the
company (Bonnici & Galae, 2015). However, in Brazil, there is political stability. There is an
independent body for regulating the activities of the communication industry that monitors the activities
of mobile firms. Therefore a company can enter in that market by evaluating these forces that may affect
the mobile industry. Also, there are certain rules and regulations that can affect the mobile industry.
2. Economic Factors
Economic factors include the level of economic system and employment and economic structure that can
directly affect the sales of the company. In Brazil, the government is fair and therefore policies relating to
employment, interest rates, exchange rates, are favorable to the mobile industry. There is economic
instability as there are fluctuations in taxation and trade policies that affect the business. Also, due to the
fluctuations into the exchange rates, company’s business can be affected. For coping with the situation,
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the company can perform forecasting methods along with the efficient research and development team to
analyze the market situations.
3. Social Factors
Social factors are primarily concerned with the customer’s expectations, trends of purchase and also
analyzing the social patterns that could affect the business. The population in Brazil is large therefore
there is a huge market which can benefit the company in getting customers. There are variations in the
culture, attitude, and lifestyle of the people who have different perceptions regarding the mobile phones.
Therefore, Tesco can avoid the threat of social factors by making surveys of the customers that can help a
company to forecast the needs of the customers and their buying patterns in order to make the better
strategies for avoiding the possible threats.
4. Technological Factors
Technological factors include the advancements into the technology and rate of innovations brought up
by the competitors which can be a threat for a company who wants to enter into the particular country.
Similarly, rate of innovation in technology and the introduction of new technology play a vital role in the
mobile industry. The technological framework of Brazil is a little poor but the government in that country
is bringing new innovations to improve the condition. For avoiding these technological threats, Tesco can
make innovations into the product which can in turn help the company to gain competitive advantage.
5. Environmental Factors
The environmental factors include climatic changes, optimum utilization of resources and the use of
renewable products that can help the company to become environmentally sustainable. Environmental
factors include wastage of resources, water wastage, and climatic changes. The silicon wastage is a major
issue that a mobile industry faces while doing business. That wastage can cause serious harm to the
environment. A company should commence the business by keeping mind these factors. Moreover, Tesco
can reduce the threats of the environmental factors by producing sustainable products that can be
acceptable in terms of the natural resources and being environmentally acceptable.
6. Legal Factors
The legal factors include the laws and regulations pertaining to the mobile industry and also the legal
framework of the government that are expected to be followed by the companies (Song, et al., 2017).
However, the Brazilian government has laid down certain legal provisions and industrial and economic
legislations to increase the rate of development of industry and there are various formalities for starting a
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business. To solving the problem, Tesco can abide by the rules and regulations of the government in order
to avoid the negative impact.
Market-Entry Options
There are different modes of entering into a market and each mode depends upon the degree of risk and
the cost it carries. Some of which are explained as follows:
1. Strategic Alliances
The company can make a strategic alliance by collaborating with another company dealing in
smartphones to gain already available resources and existing technology. A company can collaborate with
another reputed company for sharing brand image and customer base (Jiang, et al., 2017).
2. Mergers and Acquisitions
Mergers and acquisitions are formed as a result of the amalgamation of two firms for their mutual benefit.
A company can acquire other companies or can make collaboration with another company. This can help
them in entering a new market with existing technology (Nelson, 2018).
3. Foreign Direct Investment
A company can do investment in a foreign country’s company. It can also open a subsidiary in that
country for entering into a market that will be less risky and will give access to expertise in management
and technology.
4. Licensing and franchising
By using licensing and franchising, a company can make an agreement to make use of the brand image. A
company can make agreement to use patent, copyrights of another company in consideration of a fee
called royalty. It will be fruitful for TESCO to get new business opportunities and creating good income
as well (Moran, 2015).
Recommendation
As TESCO is looking to enter in new market, mergers could be recommended because it is cost effective
for new firms. Mergers allow the firms to collaborate resources that can benefit the new firms who want
to introduce their new product in the market. Mergers can help the company to get already available
resources and expertise in order to avoid the expenses and also relying upon the idea of being of being
successful.
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Market Segmentation and Targeting
Market segmentation is a process of breaking the market into smaller parts. A company can do market
segmentation by dividing its customers into subgroups based on similar characteristics. After making
these segments, companies can achieve more productivity rather than making a single marketing plan for
whole market. After that company can adopt different strategies for different group by analyzing the
needs of every group (Wedel & Kamakura, 2012).
Targeting means the selection of target customers on the basis of the markets segmented. In this, an
analysis of market capabilities is made to determine the target customers.
Ways of Targeting:
 A company can target its customers by analyzing their needs and wants by performing a survey
method.
 TESCO should understand the expectation of potential customers and then making the product as
per their needs.
 A company can develop proper marketing techniques to reach the potential customers.
 Company should analyze mobile consumer’s behavior and their lifestyle.
 One of the best ways of targeting is advertising to get maximum customers.
There are different basis of segmenting the market and targeting the individual group. The following the
basis of market segmentation:
 Geographic
In geographic segmentation, market is divided on the basis of regional preferences because every region
has different kind of needs and different expectations.
 Demographic
In demographic segmentation, group is made on the basis of different demographic factors like age,
education, gender, the income level of different consumers because different age groups have needs from
smartphones and it also varies in males and females.
 Psychographic
Psychographic traits like attitude, personality, and values of the customers highly influence their choice of
product. It is necessary to for psychographic group to analyze the needs of individual group.
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 Behavioral
Behavioral segmentation is made on the basis of their perception regarding the product. This segment
divides the customers according to their attitude and buying decision of a mobile.
The following table shows different market segmentation along with the target customers of mobile
phones in Brazil market:
SEGMENTATION BASIS TARGET CUSTOMERS
Geographic Region Brazil
Density Rural and Urban areas
Demographic
Age 18 to 65
Gender Male and female
Income Lower and middle income
Occupation Students, Employees and Professionals
Education School students, Graduates
Psychographic
Lifestyle People having modern lifestyle
Personality Cost conscious people, determined, trendy
Social class Middle class and upper class
Behavioral
Occasions Regular
Attitude Positive
Perceived benefit Technology specific, trendy perception, cost and
quality conscious
Porter’s generic strategy
Porter’s generic strategy focuses on attaining a competitive advantage in the narrow or broad market. In
this, best strategy is analyzed among the combinations of strategies for opposing the competitors in the
specific industry (Manteghi & Zohrabi, 2011).
The following strategies are included in this model:
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1. Cost Leadership Strategy
In this strategy, a firm attempts to be the lowest cost producer in the industry. This strategy is used to
achieve above the average performance of the firm and getting maximum competitive advantage by
beating the rival firms in terms of sales. But this strategy has its disadvantages as well because the firm
can profit subsequently but it may suffer losses in the long-run (Leitner & Guldenburg, 2010).
2. Differentiation Strategy
Differentiation strategy focuses on creating a unique product for creating a brand value for the firm. It
attempts to create a supreme quality product by adding special features to their products or service like
special design, reputation and brand image (Baroto, et al., 2012).
3. Focus Strategy
Focus strategy focuses on the narrow market and also known as niche strategy. It has two types which are
as follows:
 Cost focus strategy that focuses on producing lower cost product in a narrow market
 Differentiation focus strategy focuses on making unique products in few markets
Recommendation:
The company should use cost leadership strategy to gain competitive advantage. As TESCO Company is
entering into the new market by mobile phones, it should start its business at a lower cost to attract
maximum customers and making a customer base. Once the company has made the customer base it is
easier for the company to be renowned in the market and maintain the reputation of the company as well.
Conclusion
The purpose of this report is to analyze the internal and external environment and also strategic marketing
plan of a company. For this PESTEL analysis is done for TESCO Company who wants to enter in Brazil
market with mobile phones as their product. PESTEL analysis is undertaken with suitable factors for
identifying the external environment to determine opportunities and threats and possible solutions to
avoid threats. Apart from this, we have also discussed different modes of entering into the market and
market segmentation to identify the target customers through different basis for identifying them and
lastly done an analysis through Porter’s generic strategy for choosing the best strategy.
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References
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Darroch, J., 2014. Why Marketing to Women Doesn’t Work: Using Market Segmentation to Understand
Consumer Needs. In: Why Marketing to Women Doesn’t Work: Using Market Segmentation to
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Issa, T., Chang, V. & Issa, T., 2010. Sustainable business strategies and PESTEL framework. Sustainable
business strategies and PESTEL framework, 1( PESTEL framework), pp. 73-80.
Jiang, X., Bao, Y., Xie, Y. & Gao, S., 2017. Partner trustworthiness, knowledge flow in strategic
alliances, and firm. Journal of Business Research, 69(2), pp. 804-814.
Leitner, K. H. & Guldenburg, S., 2010. Generic strategies and firm performance in SMEs: a longitudinal
study of Austrian SMEs. Small Business Economics, 35(2), pp. 169-189.
Manteghi, N. & Zohrabi, A., 2011. A proposed comprehensive framework for formulating strategy: a
Hybrid of balanced scorecard, SWOT analysis, porter‘s generic strategies and Fuzzy quality function
deployment. Procedia - Social and Behavioral Sciences, Volume 15, pp. 2068-2073.
M., M., D. & I., 2013. Market Segmentation: How to Do It and How to Profit from It. In: Market
Segmentation: How to Do It and How to Profit from It. s.l.:John Wiley & Sons.
Moran, A., 2015. Understanding Screen Franchising. Media International Australia, 156(1), pp. 50-59.
Nelson, T., 2018. Mergers and Acquisitions from A to Z. In: Mergers and Acquisitions from A to Z.
s.l.:Amacom, p. 372.
Song, J., Sun, Y. & Jin, L., 2017. PESTEL analysis of the development of the waste-to-energy
incineration. Renewable and Sustainable Energy Reviews, 1(1), pp. 276-289.
Wedel, M. & Kamakura, W. A., 2012. Market Segmentation: Conceptual and Methodological
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Science & Business Media, p. 382.
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