Tesco: Strategic Marketing Report - Germany Market Entry

This report, prepared for Ashanti Marketing Solutions, analyzes Tesco's potential entry into the German market. It begins with an executive summary and introduction to strategic marketing, followed by a PESTEL analysis of the German market, identifying political, economic, social, technological, legal, and environmental factors, along with associated opportunities and threats for Tesco. The report then explores various market entry options, including strategic alliances, foreign direct investment, mergers and acquisitions, and joint ventures, recommending the most appropriate option for Tesco. Furthermore, it delves into market segmentation, discussing demographic, geographic, behavioral, and psychographic segmentation approaches. The report concludes by summarizing key findings and recommendations, offering a comprehensive strategic marketing plan for Tesco's successful expansion into the German market, fulfilling the assignment brief's requirements by providing a macro-environmental analysis, assessing market entry modes, and applying market segmentation concepts.

STRATEGIC MARKETING
Executive Summary
This report is carried upon Strategic marketing which assists a firm in growing its business
operations and activities at new marketplace. Tesco is the multinational company which is
located in UK that offers different kind of services like advertising and sales promotion to its
customers. It is necessary to analyse the external environment for assessing the opportunities as
well as threat of business organisation. In addition to this, it is vital to identify the strategy

related to market entry as well as segmentation, targeting and positioning the market in well-
defined manner. Apart from this, Porter’s generic strategies are assessed in reference of selected
organisation in which one of the strategies endorses for the selected organisation.

Table of Content
Strategic MarketingExecutive Summary.........................................................................................1
INTRODUCTION...........................................................................................................................4
Market entry options........................................................................................................................5
Market Segmentation.......................................................................................................................7
Porter’s Generic Strategy.................................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
Books and Journals...............................................................................................................11
Appendix........................................................................................................................................12

INTRODUCTION
Strategic marketing is considered as a process which helps the organisation in expanding its
business activities and function in completely new market. Through this process, the marketer
can easily understand about technology, taste and preferences of consumer as well as
competition level at marketplace. In addition to this, they analyse the risk associated with
operating its business in new market. This report is carried on behalf of Ashanti Solution
Company. The chosen organisation for this report is TESCO. The founder of this company was
John Cohen in the year of 1919. It is the international company situated in UK offer variety of
products ad services to its customer. Apart from this, PESTLE Analysis is used to assess the
external environment which imposes direct impact on performance of business organisation. In
assistance of this, the marketer grabs opportunities by analysing the different market entry
option. Market segmentation and Porter’s generic strategy is adopted for taking effective
decision which will be beneficial for the business firm (Baker and Hart, 2016).
PESTLE Analysis of Germany
PESTLE Analysis is the framework which is used to assess the external environmental
factor in order to assess the level of competition prevailing at marketplace. In context of Tesco,
PESTLE analysis is used before taking entrance in a new country. Furthermore, it is used to
assess the environment for introducing a products and services in a new country. There are
different external factor which is going to be mentioned below:
Political: There are different factor such as taxation policy, government regulations, fiscal
policy as well as trade, tariff and many more. It is necessary for marketer to analyse the taxation
structure, government policies before taking entrance in Germany market. And also assess how
these factors will imposes direct impact on the performance level of business organisation. For
instance, the tax rate of Germany is around 30% to 33%. If the tax rate is increases will be
considered as a threat for company as well as downward the profit (Chaffey and Ellis-Chadwick,
2019). This company merged with any other company that helps them in reducing the tax burden
at workplace. It helps them in increasing sales as well as profitability level within business
organisation.
Economic: Economic factor are those which include interest rate, unemployment rate,
exchange rate as well as deflation and inflation rate and many more. The economy of Germany is
growing fast in Europe. It has a strong GDP as well as achieving the fifth position across the

world in 2017. This will be advantageous for Tesco; it helps them inn boosting its market share
as well as profit. Moreover, if the inflation rate is increased then it imposes direct impact on the
price and products of company. The company can segment their market according to the level of
income of people of German. It can target high class and middle class by offering high quality
products and services to its customer.
Social: These factors include demographics, market trends, population and many more. It is
necessary for Tesco to assess the population as well as taste & preferences of customer of
Germany for targeting the product. Moreover, if in the Germany market, there is a demand for
innovative and unique products as well as services to its customer which can be beneficial for
company to take entrance in the new market (Rowley, 2016). The company can tie-up with the
local companies that help them in increasing knowledge regarding local products and services of
company. It helps business organisation in introducing innovative products in future period of
time.
Technological: Technology plays an important role for the success of business organisation.
Therefore, it is necessary to implement the advanced technology in order to bring innovation as
well as creativity within business firm. Furthermore, the technology which is used in Germany is
similar as UK. But it is quite expensive, therefore, it is necessary for the company to set a target
of how much investment made in the technology.
Legal: There are different laws, rules, safety standard and legislations which impose direct
impact on business environment of the country. Therefore, the company must analyse the
consumer and employment law of Germany for reflecting its impact.
Environmental: These factors include geographical locations, climatic as well as weather
condition which imposes direct impact on environment of business. Therefore, it is necessary for
Tesco to assess the business environment of Germany in order to analyse the pollution, areas as
well as eco-friendly.
Opportunities and Threat to Tesco in German market:
Due to implementation of advanced technology, this helps the business firm in bring the
innovation and creativity at marketplace. It assists Tesco to boosting its sales and profitability
level in upcoming period of time. On the other hand, there are different factors such as market
risk, level of competition, change in customer taste & preferences which is necessary to analyse
business environment at marketplace (Charter and Polonsky, 2017). In addition to this, the

change on currency rate, taxation involves risk. Therefore, it is necessary for Tesco to make
effective research, plan in order to overcome with the threat prevailing at marketplace.
Market entry options
In present context, it is necessary for business firm to make an effective plan in order to
assess new foreign market before launching products within marketplace. In addition to this, the
business firm provides appropriate products and services to its customer in order to satisfy their
need and wants. Apart from this, it is vital to understand the options for taking entrance in new
market to achieve the target in most suitable manner. Through this process, the business firm can
achieve the benefits such as boosting the goodwill, profit as well as optimum utilisation of
resources and many more (Sahaf, 2019). There are various kinds of strategies which can be
adopted by the management of Tesco which is going to be mentioned below:
Strategic Alliances: It is considered as a process in which two or more person work together
in order to achieve goal and objective of business organisation. This is advantageous when firm
agrees to work together in forming alliances in various projects as well as market. Moreover, in
context of Tesco adopts strategic alliances in order to work with other firm in the similar industry
in Germany market in order to prepare the projects. In context of innovative products as web
designing is not beneficial for the business firm because of entering in the new market.
Foreign direct investment: It is considered as an investment which helps in controlling the
possession in business firm of one country by the firm of another country. In context of Tesco,
they can take full control over Germany market when introducing the innovative products at
marketplace. And also, they earn more profit, retention of customer as well as increase its market
share (Crick and Crick, 2016). Moreover, Due to full control over Germany market, Tesco
emphasised on coordination across the world and have access of economies balance. It is
expensive and taking too much time in context of financial resources.
Merger and acquisition: Merger & Acquisition is considered as a strategic process in which
the firm agrees to work with other company in order to undertake the business operations and
projects in an effective manner. The merger arises when the business firm agrees to take over
another company while acquisition occurs when they decide to operate their work with another
firm in specific operations. This helps in increasing the market share of company as well as
reducing the cost. In context of Ashanti solution, the marketer assesses the other companies of

Germany and amalgamates with them or establishing acquisition. It assists them in increasing
revenue in upcoming period of time (Whalen and Akaka, 2016).
Joint Ventures: It is a kind of strategic alliances which is used to take entrance in the new
market. In foreign market, there are different kind of alliances apply by using franchising,
management contracts as well as licensing based on the size of market.
In context of Tesco, if the company want to minimise the cost as well as risk then they should
start their business firm like as Joint venture. This is applied by using franchising, licensing and
management contract in order to achieve a leading position in the marketplace. It allows the
business firm to take entrance in Germany market in order to increase its market share and profit
by satisfying the need and wants (Vellas, 2016).
Market Segmentation
In market segmentation, the customer is distributed into various segments. Therefore, the
business firm focuses on segmentation, targeting and positioning of product in order to gain
more profit. It also helps the company in achieving competitive advantage over rival firm at
marketplace. In context of Tesco, there is various type of market segmentation which is going to
be mentioned below:
Demographic Segmentation: Demographic segmentation includes different factors such as
population, income, age as well as gender and many more. In context of Tesco, it is necessary for
the company to assess the taste and preferences of customer for targeting them. Apart from this,
the customer can target by business firm in order to boost sales as well as profitability level
(Zghidi and Zaiem, 2017).
Geographic Segmentation: Herein, the customers are divided into different region like
local, national as well as rural and many more. In this segment, Tesco segment their customer
according to the region and area of the marketplace. In addition to this, the company provides a
wide variety of products as well as services agrees to launch a generic product for various
segments in the marketplace. Because they want to take entrance in Germany market with
innovative services named as Web Design in order to target professionals, small business firms
and so on (Frösén and Tikkanen, 2016). This process can be applied through geographic
segmentation of customer at marketplace.
Behavioural Segmentation: Behavioural Segmentation is considered as a process in which
customer is divided on the basis of their attitude towards product, price, and promotion.

Therefore, the marketer of Tesco segments their market according to the taste and preferences of
customer. Also, it helps them in retaining customer for a longer period of time by using different
techniques such as promotions & offers. It is necessary to increase the satisfaction level of
customer by understanding their attitude towards products and services of the company.
Psychographic Segmentation: It includes opinion, interest and perception of customer
towards products and services in the marketplace. In reference of Tesco, it is important for
marketer to understand the need and requirement of customer in different market. Apart from
this, it is necessary for business firm to analyse the customer taste and preference form time to
time in order to take effective decision for achieving goal and objective at marketplace.
Nature of Market Segmentation: It is necessary for Tesco to assess the risk during the
period of introducing products and services in UK. Therefore, there is different segmentation
which is used by company in order to recognise the market in an appropriate manner. And also,
they make effective strategies, plans and procedures in order to modify the products according to
the need of customer in the marketplace. It helps them in boosting profitability level in upcoming
period of time (Kumar, Sharma and Gupta, 2017).
On the basis of above-mentioned strategies, it has been analysed that the customer is divided
according to the behaviour towards products, price as well as promotion at marketplace.
Therefore, in context of Tesco, behavioural segmentation is justified for the business firm.
Porter’s Generic Strategy
Such strategies are implemented by many companies with an aim to acquire competitive
advantage and enhance the profits. Michael Porter brought this model into existence in 1980. The
essential objective of this strategy is to achieve an influencing approach in the market area. Apart
from this, it also includes concepts such as differentiation and cost leadership. By applying this
effective model Tesco may adopt a good position in the market for a great period. Executing
various techniques such as minimising manufacturing costs without affecting quality can surely
help in lowering product prices. This is a great method to attain higher value at marketplace
while competing with the rivals (Liebl, 2018).
Higher price of market shares is another approach to get benefits than the ones with low
market share price. Thus, it is more convenient for the organisations to bring up new products in

the market which have a good brand value. In reference to this, some important strategies are as
followed-
Cost leadership Strategy:
To achieve competitive benefits Tesco can apply the method of price reduction of its
products. According to the current economic conditions of Germany, it’s essential to lower the
prices in the areas where it’s possible. This method can also be beneficial to beat competitors
with same product industry. Following are the steps to be applied-
 Focus on both operating costs (direct and indirect) is also being done by the company to
attain more customers (Pu, Gong and Han, 2019). The organisation is also putting its best
efforts to win the trust of its customers by delivering good quality of products.
 Utilising resources in their best ways to lower the costs is being adopted by the
organisation while bringing the products in the market so that the goals can be acquired
efficiently.
 Other affecting areas such as IT, finance and sales etc. should also be taken in awareness
by the managers of the company to acquire great level of benefits and gain good
profitability in the competitive market.
Differentiation Strategy:
To improvise the image and value of brand in an entirely new area, it is mandatory for the
organisations to have high quality of products which they are providing to the end users. Apart
from this, Tesco can also differentiate its goods and services so that the objectives can be
achieved in an appropriate way (Ratten and Madichie, 2016). The firm must be aware of
customers’ requirements on a consistent basis to make improvisations with time if needed. Tesco
is focusing on its brand value to attain customers globally. Delivering noticeable ads is another
effective technique of company to let the people of Germany knows more about the products and
services of it.
Focus Strategy: This kind of strategy is used to achieve the target in order to gain
competitive benefits over rival firm at marketplace. It is necessary for business firm to assess the
need and requirement of customer in order to launch generic product at marketplace. In addition

to this, the marketer of Ashanti Solution makes effective strategy and plan for boosting sales in
future period of time.
From the above-mentioned strategies, it has been examined that Tesco adopt the
differentiation strategy in order to gain competitive advantage at marketplace. The company use
their reputation in an appropriate manner for attracting the customer across the world. It helps in
increasing future sales as well as profitability level.

CONCLUSION
On the basis of above discussion, it has been examined that strategic marketing is necessary
to increase the sales as well as reputation in order to gain competitive advantage over rival firm
at marketplace. In addition to this, there are different segment of market which is used to make
changes can aid assistance over rival firm. Apart from this, it is necessary to analyse the taste and
preference of customer in order to gain profit. Joint ventures, acquisition, franchising and many
more used for deliver the product in the market so that client can buy form them. At last,
PESTLE analysis is adopted for increasing the knowledge regarding market in the new area.

REFERENCES
Books and Journals
Baker, M. J. and Hart, S. eds., 2016. The marketing books. Routledge.
Chaffey, D. and Ellis-Chadwick, F., 2019. Digital marketing. Pearson UK.
Charter, M. and Polonsky, M. J. eds., 2017. Greener marketing: a global perspective on
greening marketing practice. Routledge.
Crick, D. and Crick, J., 2016. The first export order: A marketing innovation revisited. Journal of
Strategic Marketing. 24(2). pp.77-89.
Frösén, J. and Tikkanen, H., 2016. Development and impact of strategic marketing–a
longitudinal study in a Nordic country from 2008 to 2014. European Journal of Marketing.
Kumar, V., Sharma, A. and Gupta, S., 2017. Accessing the influence of strategic marketing
research on generating impact: Moderating roles of models, journals, and estimation
approaches. Journal of the Academy of Marketing Science. 45(2). pp.164-185.
Liebl, F., 2018. What Is Strategic Marketing in an Innovation Society. In Innovation Society
Today (pp. 165-181). Springer VS, Wiesbaden.
Pu, X., Gong, L. and Han, G., 2019. A feasible incentive contract between a manufacturer and
his fairness-sensitive retailer engaged in strategic marketing efforts. Journal of Intelligent
Manufacturing. 30(1). pp.193-206.
Ratten, V. and Madichie, N., 2016. The dynamics of sport marketing. Marketing Intelligence &
Planning.
Rowley, J., 2016. Information marketing. Routledge.
Sahaf, M. A., 2019. Strategic marketing: making decisions for strategic advantage. PHI
Learning Pvt. Ltd..
Vellas, F., 2016. The international marketing of travel and tourism: A strategic approach.
Macmillan International Higher Education.
Whalen, P. S. and Akaka, M. A., 2016. A dynamic market conceptualization for entrepreneurial
marketing: the co-creation of opportunities. Journal of Strategic Marketing. 24(1). pp.61-75.
Zghidi, A. B. and Zaiem, I., 2017. Service orientation as a strategic marketing tool: The
moderating effect of business sector. Competitiveness Review: An International Business
Journal.
Online
PESTLE Analyses.2016. [Online]. Available through :<
https://businessteacher.org.uk/assignments/ashanti-marketing-solutions-company-strategic-
marketing.php>

Appendix
PESTEL analysis of Germany
Factors Description
Political Factor  The main aim is to offer the opportunities to the individual
person who wants to start the new business firm at
marketplace in successful way.
 It is important for Tesco to assess the employee’s legislation,
government regulations, taxation structure as well as culture
before launching its new product in Germany market.
Economical Factor  It is necessary for the marketer of Tesco to know the
economic condition of Germany in order to fix the cost of
products as well as services.
Social Factor  It is important for marketer to understand the taste and
preferences of customer in order to satisfy them.
 Moreover, it is vital for Tesco to adopt the effective
techniques for providing better services to the audience of
Germany.
Technological Factor  The marketer of Ashanti Solution makes appropriate strategy
for analysing how much investment is needed to implement
latest technology in Germany market.
 The process of implementation of technology is costly as well
as time consuming process in Germany market.
Environmental Factor  It is necessary for the business firm to assess all factors for
masking alteration based on the customer need and wants.
Legal Factor  The business firm must analyse the consumer and employment
law before launching the new product in the Germany market.