Tesco's Marketing Strategies in India: A SOSTAC Analysis

Desklib provides solved assignments and past papers to help students succeed.

PRINCIPLES AND PRACTICE OF
MARKETING
TESCO
1

Contents
INTRODUCTION...........................................................................................................................3
DISCUSSION..................................................................................................................................3
SITUATIONAL ANALYSIS......................................................................................................3
MACRO ENVIRONMENT ANALYSIS................................................................................3
OBJECTIVES..............................................................................................................................6
STRATEGY................................................................................................................................7
PORTER’S GENERIC FORCES............................................................................................7
ANSOFF’S MATRIX..............................................................................................................8
TACTICS.....................................................................................................................................9
PRICE......................................................................................................................................9
PRODUCT...............................................................................................................................9
PLACE.....................................................................................................................................9
ACTION......................................................................................................................................9
CONTROL................................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12
2

INTRODUCTION
Tesco is one of the leading supermarket retail business unit in the UK and is serving millions of
people on daily basis, but this is possible because of the highly effective marketing practices of
the company and the strategies that they utilise. After analysing the current situations of the
company and its statistics, portfolio, events, organizational culture etc. Now, in order to analyse
more effectively, here in this part of the study, SOSTAC model will be utilized so as to enhance
the operating areas of the company to another potential country. The assignment will be
conducted in three sections in which initially the analysis of the situation of the company will be
conducted with the marketing tactics, then an evaluation of the effectiveness of the retailer’s
current SOSTAC strategy will be highlighted and at last the evaluation of the marketing strategy
for an international market which is selected as India will be done.
DISCUSSION
SITUATIONAL ANALYSIS
MACRO ENVIRONMENT ANALYSIS
Tesco has been operating in more than 50 nations with itself and partners and is trying to reach
new standards every day. But, since the market dynamics are changing and people and
companies both are more directed towards the digital technologies, the macro environment
situations are changing which is presented here with the help of Pestle analysis and Porter’s Five
Force analysis for Tesco.
PESTLE ANALYSIS
Politics – Tesco has been a leader now, the politics is not the area that affects the business of the
company but the policies that changing governments develop, the regulations that need to be
followed are some reasons that keep Tesco bind to grounds at some regions.
Economics – Being a leader of the markets as a retail giant, Tesco basically has deep pockets for
the financial crisis situations and recessions to support their strategies as well as employee base
for their growth in future.
Social – Tesco work on social concerns, events, public relations and the image is increasing as
one can see through its CSR report and sustainability reports.
3

Technology – internal technologies for operations are highly advanced and are efficient in
reducing the costs and energy to the company while increases the productivity ratio with fewer
errors. The company has high tech systems at every level of the organisation and its functions
from management, finance, marketing, production, supply chain etc.
Environmental – Tesco’s approach for achieving its Plan A 2022 is very effective and involves
all the aspects like carbon footprint reduction techniques, energy usage, waste management etc.
which makes it positive with environmental benefits
Legal – company follows all the legal and regulatory compliances of all the countries while the
laws and policies like employment act, working hours, ethics are also focused at every stage of
the business in Tesco.
PORTER FIVE FORCES
Element Description Force
Buyers power Important for any business and hence they involve all
the necessary activities to satisfy their customers
High
Suppliers Power Since Tesco is the multinational retail giant and
leader, they produce most of their products by their
own and hence this is a becoming a second priority
for the Tesco. Still, the suppliers they have, possess
food relationship status from both the sides
Comparatively low
New Entrants As mentioned, Tesco is the giant of their industry and
hence no business which is establishing can directly
compete to affecting them at a bigger level
Low
Competition There are companies like Aldi, Asda, Sainsbury’s,
Ikea, Morison’s; Future Group, Reliance and other
medium scale business in India which will definitely
affect its position in India working as a joint venture
with the brand name Star Bazaar
High
Rivalry As mentioned above, the competitor’s list is so long
hence this is an area of the business which needs
High
4

proper analysis and management by Tesco
(Source: The Economic Times, 2014; Retail Detail, 2012)
HOFSTEDE’S CULTURAL DIMENSIONS
Figure 1: Cultural dimensions for India
Source: [Hofstede Insight, 2019]
Power distance – with a high score of 77, India is a country which prefers hierarchy and top-
down structure in the organisations and society. The real power is centralised, employees expect
to be directed clearly, control is familiar and hence the Tesco must continue its top-down
management approach.
Individualism – score is intermediate with 48 which depicts that the society is with both
collectivistic and Individualist traits. Individualism is dominated by the Hindu culture and hence
people are responsible for the way they live their lives. Tesco has to deal with this and create
some strategic methods to avoid any instance related to this aspect.
Masculinity – score is 56, and is considered as a Masculine society and is very masculine in
terms of visual display of success and power
Uncertainty Avoidance – with the score of 40 and hence has a medium-low preference for
avoiding uncertainty. They are comfortable with the change and ready to accept imperfection,
people rather prefer simple things than being compelled to take action-initiatives and so it will be
5

beneficial for Tesco to explore some new and strategic options while working with Tata Group
in India.
Long Term Orientation – 51 score is an intermediately result hence a dominant preference in
Indian culture cannot be determined. India has great tolerance for religions and hence companies
like Tesco should not neglect this cultural aspect while working within the country.
Indulgence – A low score of 26 in this dimension, meaning that it is a culture of restraint and
they do not focus on leisure time and control the gratification of their desires
OBJECTIVES
The current business plan of Tesco in India as a joint venture with Tata is planned to operate
with the objectives:
 With the investment of $140 million and become the first foreign supermarket to enter
the country's $500 billion pounds retail sector, the first objective is to get the ROI by
serving people through several physical locations in India
 To strengthen the relationship and bond of Trent and Tesco that provides the back-end
support and expertise to gain a platform or a way as the entry vehicle for Tesco in India
(Live Mint, 2013)
 To ensure that their stores around the world are well-stocked with products from Indian
suppliers (Tesco PLC, 2019)
6

STRATEGY
PORTER’S GENERIC FORCES
Figure 2: Porter's Generic Forces
Source: [Mind Tools, 2019]
Cost Leadership – there can be two basic ways for achieving with cost leadership strategy by
Tesco if they focus on increasing the profits by reducing the costs while charging industry-
average prices at the same time they must try to increase their market penetration through this
strategy in India
Differentiation – making products and services different from others with some unique
modifications and strategies. So, Tesco should apply a significant good research, innovation and
development practices, generate competencies to deliver high-quality goods and services, by
applying some strategic marketing and selling strategies
7

Cost Focus – focusing on costs must involve the strategies to focus on particular niche markets
through understanding the market dynamics in order to make strong brand loyalty in India.
Differentiation Focus – Tesco has to make a strong focus by adding something extra and reach a
wide range of people that are present in Indian markets. They can impose any sort of strategic
plans and practices with the experience of the Tata group to reach this objective in the markets.
ANSOFF’S MATRIX
Figure 3: Ansoff's Matrix
Source: [Mind Tools, 2019]
Market Development – since Tesco has thousands of products under its brands and Tata also
operates in the retail industry so, they can develop the markets of India by these available
products so as to create high brand popularity, loyalty and value in the markets of India
Product development – by reaching people of India with some new products and services which
might involve some innovative ideas and facilities that that of others
8

Market Penetration – this is slightly difficult for Tesco as they have to rely on familiar products
and services by Tata group in the retail sector so as to penetrate the markets, but with Tesco, this
can be done after a successful reign of at least a decade in India
Diversification – reaching a diverse range of customers by proper segments, targeting and
positioning strategies so that they can create and identify the range of their potential customers
TACTICS
This aspect of the SOSTAC model involves the strategic, physiological and unique practices that
can make them successful and help them in attaining the desired results. For Tesco’s business in
India, the tactics are presented under headings mentioned below:
PRICE
As mentioned above, Tesco can introduce and serve the products and services to the people of
India with low costs or average industry costs so as to create a brand value and popularity which
will help them in retaining millions of the customers in India and get their ROI soon.
PRODUCT
The strategies and tactics involved in products by Tesco in India are reliable on to some aspects
like demographics, market need, customer preferences etc. In addition to this, they can also try
some of their products in India which they already serve in other countries
PLACE
Going and working in countries like India is itself a tactic to grow and reach millions of the
customers as India is one of the fastest growing economies and the people easily get attracted
towards the new brands and their schemes or discounts. In addition to this, Tesco can also focus
on serving local products to India people as they are reaching in variety which is variable
according to the demographic locations.
ACTION
For the business operations in India, the actions that are required by them must involve the
monitoring and interpretation of the results after their implementation of any strategy of tactic.
The other actions that might be used as actions by Tesco can involve the CSR practices, energy
9

and waste management practices, social causes like Tata etc. for creating a unique position in
locations of India.
CONTROL
In the last, the control strategies that can be implemented to control any sort of consequences that
might be faced by Tesco in India need to involve some ways that can help in overcoming from
the challenges and concerns in the markets and business operations. Some of them are mentioned
below:
 Tesco should involve ways that can help in maintaining the relationship with the partner
brand Tata as they are working in Indian markets from centuries rather not in the same
industry but they have a view and experience to serve people in their market dynamics
 Tesco should develop a backup plan like Plan A for 2022 in India also so that they can
create a unique value
 Controlling must involve the regeneration of financial benefits to a company and hence
Tesco must create a plan first to get ROI with Tata in India
These are some control measures that can be utilised by Tesco in order to attain their desired
goals and objectives in Indian markets and continue their glory like other countries.
10

CONCLUSION
11

REFERENCES
Hofstede Insight, 2019. COUNTRY COMPARISON, online available at https://www.hofstede-
insights.com/country-comparison/india/ last accessed on 21st April 2019.
Live Mint, 2013. Tesco, Tata may make it official, online available at
https://www.livemint.com/Industry/ZZZ1ZhRRslnbheE0KtV3iP/Tesco-Tata-may-make-it-
official.html last accessed on 21st April 2019.
Retail Detail, 2012. Tesco's war with competitors... and itself, online available at
https://www.retaildetail.eu/en/news/mode/tescos-war-competitors-and-itself last accessed on 21st
April 2019.
Tesco PLC, 2019. Tesco in India, online available at https://www.tescoplc.com/about-us/our-
businesses/tesco-in-india/tesco-in-india/ last accessed on 21st April 2019.
Tesco, P.L.C., 2010. Corporate Responsibility Report 2010. Accessed via http://cr2010. tescoplc.
com/.
Tesco, P.L.C., 2014. Annual report and financial statements 2014. Zugriff am, 15, p.2014.
The Economic Times, 2014. Tesco confirms joint venture with Tata Group in India, online
available at https://economictimes.indiatimes.com/industry/services/retail/tesco-confirms-joint-
venture-with-tata-group-in-india/articleshow/32428491.cms last accessed on 21st April 2019.
12