Marketing Audit Tesco free essay sample

Marketing Audit Tesco Plc Marketing Audit [Name of the Writer] [Name of the Institution] Executive Summary This report contains the company overview and details of marketing audit carried on Tesco Plc, which is largest retailer in UK. The marketing audit has covered various important areas that are significant to analyze, indentify and understand the issues and challenges of internal and external environment of the business. Tools used to conduct marketing audit of the Tesco Plc are, marketing mix 4P’s, SWOT analysis, PESTLE analysis and porter five forces. Introduction Changing marketing scenarios are a challenge for retailers, despite the fact it has captured large share in the market. Tesco PLC has been chosen to perform the marketing audit, as it is largest retailer in UK and having 30% of share in the market (www. guardian. co. uk). Tesco plc is a global marketing and general grocery retailers. It is operating in 14 major countries and employing 500,000 employees worldwide. We will write a custom essay sample on Marketing Audit Tesco or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page It is the leading UK-based retailer in terms of global sales and domestic market share. Jack Cohen established this company in 1919 (Tesco Plc, 2012). Tesco Plc is running under six formats in UK, such as Tesco Express, Tesco Extra, Tesco Supermarkets, Tesco Metro, Tesco Home Plus and Tesco One Stop. Altogether Tesco acquires 3000 stores in UK and employing around 300,000 employees and over 60% group sales and profit comes from UK business (Tesco Plc, 2012). Tesco is ranked on third position after the Wal-Mart and Carrefour but on the basis of profit comparison it is considered as the second largest, after Carrefour (www. upermarketnews. com). Tesco is operating extremely well in all its business sectors worldwide, but to grow further as number one global leader, it still needs wide marketing plans and strategies, this reports carries out marketing audit of the company which shows threats and opportunities of internal and external environment. Marketing Mix Neil H Borden in 1964 published the article on marketing mix primarily and thereafter the term became famous and i ntegral part of marketing plan of every organization Chandrasekar, 2010). The firm can create its marketing mix once its target market is defined and that provides competitive advantage to the company. Marketing mix is the blend of product offering, pricing, promotional methods and place or distribution channel that brings specific group of consumers with superior value (Gitman and McDaniel, 2009). In the context of Tesco, entry to China market made them to adapt their culture and norms in order to reach consumers in big china market. But company needed to stick fast with its principles and basic standards set. There would be changes in terms of services with regards to 4p’s but the company cannot deviate to its set standards which are inherent to the company. Product Product is the heart of Marketing mix, of course it is hard to design and decide place, promotion or price and the nature of product plays vital role, when marketing any product or services (Lamb et al, 2012). In case of China, Tesco needs to figure out who the end consumers of the products are, what they are looking for, their existing products are fulfilling customer needs, what they are offering and which product needs to import or make in house to complete the demand of Chinese customers. In order to compete with local retailers and gain more market share, Tesco also needs to provide Chinese based products with and that can be done by developing the Tesco owns brand products which can be marketed strategically within the region of China. PricePrice refers to the amount the customer has to pay in order to buy the goods and services (Chandrasekhar, 2010). Tescos marketing department is responsible for the price charged for the products and that would be based on rivals offering prices and original cost prices of products. They are responsible for the prices of new products introduced and if required revising of prices of old products. In china prices of products differs from UK because of several factors (i. e. cheap labor cost), so rices can’t be same in all countries They also decide whether the price should be reduced to attract more customers and how to alter the cost of the products, which has short life and would be expire soon. The Marketing department also responsible for making the deals and discount offers packages for customers in order to avail maximum profits (Chandrasekar, 2010). Promotion Promotion refers all the activities performed to introduce the product and services among the customers for se lling purpose (Lamb et al, 2012). Many areas are considered before TESCO actually promoting the product, including how to inform customers about their products and services. They also need to know what type of advertising they use and where they can be used to direct the attention of customers and what other ways to apply can promote their products. A good way to do it and get free advertising is to distribute free samples and run the competition of product by selling in cheap prices initially. Promotion of the products can be done easily now days on the internet and through online shopping. Place Place simply refers to point of sale (Chandrasekar, 2010). Another important mix is place, whether the products will sell to the retailers or directly to the end user, through store or online. As TESCO itself is a big retailer and expanded its business worldwide and have thousands of stores. It also needs to open the stores and provide online facility of shopping in low developed areas in order to gain more market share, targeting low income group will enable the company to gain the trust of local and ultimately it will also gain more favor and relaxation from Government of that region (Chandrasekar, 2010). The effective marketing mix leads more customer satisfaction, and what Tesco needs to do, is to understand the needs of customers in target country or region. SWOT analysis SWOT analysis is a fundamental tool in marketing plan that helps to assess Strengths, Weaknesses, Opportunities and Threats of any organization (Pahl Richter, 2009). | | |Strengths |Weakness | |Strong brand image |Failure to lead the city center Market | |Market Leader |Lack of Marketing Approaches | |Diversified Business Globally | | |Competent Distribution Channel | | | | | |Opportunities |Threats | |Increasing Demand for private labeled products |Low price supermarket discounting stores. | |Diversifying Market Appeal |Economic conditions | | |New Entrants | Strengths 1. Strong Brand Image Tesco has strong brand image as it is older retailer of UK and established its brand image with the span of time. 2. Market Leader It is ranked as third largest retailer in the world and it puts positive impact on customers. 3. Diversified Business Its worldwide spread business in different countries enhances its strength 4. Competent Distribution Channel Tesco has competitive and well established distribution channels and it is the positive factor for the company Weaknesses 1. Failure to lead the city center Market This is one of the major drawback and weakness that Tesco is failure in leading city center markets. 2. Lack of Marketing Approaches Tesco runs on its established brand image, it has lack of marketing channels and hence approaches, which is also weakness and give chance to other small player to bite its portion of market. Opportunities 1. Increasing Demand for private label products Customer demands various local products, but which would be labeled as Tesco, in order to get the reliability. Local brands are also cheap then international brands and Tesco has opportunity to meet the demands of customer, already it is making its own products in various categories, it should enhance further. 2. Diversifying Market Appeal Tesco has covered still 14 countries and it has the opportunities to grow further in many countries. Threats 1. Low price supermarket discounting stores. Growing of small medium low prices stores are becoming the risk for the company, like Lidl, 99P stores etc to capture some part of market share. 2. Economic Conditions Global Financial crisis also put a bad impact on company’s growth and productivity, so if any economic crisis is expected company needs to be aware and take some precautions and lean down the processes, like cost cutting etc 3. New Entrants New entrants are also the threats, although it is big in size, many new entrants are following new strategies to attract customers , like online purchasing of grocery and fast delivery on end consumer doorstep. Macro Environment The macro environment comprises of a variety of factors, which has a direct or indirect influence on the organization. There are various tools available such as PESTLE, PORTER FIVE FORCES to analyze the factors of external environment, which might have impact on business in terms of threats or opportunities (Stonehouse et al, 2004). PESTLE Analysis According to Bangs (2002) â€Å"Pestle analysis will help to capture understanding about aspects of the context by using the prompts political, economic, sociological, technological, legal and environmental†. A Pestle analysis is vital in the development and the success of Tesco’s in addition to day to day management of each store in line with strategic decisions. It would be hard to take effective and proper decision for the well being of organization if the external factors effecting business are unknown. Factors effecting Tesco are, Political Factor Political factors can be national or international, Many Governments take parts and get involve. For example, Tesco got interruption in coffee supply due to political issues between Britain and Colombia. Political factor is sometimes in favor like UK government has three ruling parties and currently governed by liberal Democratic Party, and all are well structured for the development of the country and that represent good sign and strength for UK (Peter Donnelly, 2002). Economic Factor Economic factor has a huge impact on business, tax increases; fluctuation in stock exchanges can seriously hit the performance and revenue of companies like Tesco Plc. Sociological Factor This factor varies from the change in fashion to the impact on immigration. UK is the country where whole country follows one type of culture and speaks English, and this also gives positive exposure on company’s environment. Technological Factor UK is well developed country and having all sort of IT technologies, which bring advancement in the society (Hall, 2008). New technologies have a great impact on the success of organization, for retailer like Tesco Plc got enormous success from its online shopping platform. According to Wilson Gilligan (2005) to be up to date with this factor would always be productive for company’s business. Legal Factor The changes caused by all external impacts lead to many legal problems Environmental Factor Large Corporation has also environmental concerns and contribute for the well being, like Tesco uses fossil fuel in its transport network and reducing in demand is a major challenge for company. Tesco Plc should consider its external factors in detail and evaluate how their impacts continually change. Porter Five Forces Model Michael E Porter well-known framework, known as the five forces model, helps manager to identify the intensity of rivalry among established companies within an industry, the risk of entry by potential competitors, the bargaining power of buyers, the closeness of substitutes to an industry’s products and bargaining power of suppliers (Hill and Jones, 2008). This model is applied to assess the competitive advantage of the industry. Tesco is operating its retail chain globally and the retail industry competiveness for Tesco Plc is as follows Threats of new entrants Entry of new entrants is low due to high level of barrier, like new companies who wants to enter in retail sector of UK needs large amount of funds to compete with Tesco or other big retailer. Small retailers who opened individual shops of grocery, butcher has least impact on Tesco Plc performance. Rivalry among the existing Players There is huge competition in existing players in retail industry of UK, as Tesco has market share of 30% but still 70% is captured by different companies like Sainsbury’s, Asda , Lidl, Wal-mart etc and all are giving tough challenges to the operations of the company Threat of Substitute Products Threat of substitute is higher, because majority of retailers are offering same kind of products by different brand names and prices. Tesco products have many substitutes offered by other big and small retailers. Bargaining Power of Suppliers There are many retailers in markets and all they need reliable and established suppliers for their operations, hence due to tough competition in retail industry, supplier also take benefit from this, this is also one of the key concern for Tesco Plc Bargaining Power of Buyers Bargaining power of buyers normally doesn’t apply in this industry due to fix shelf prices that is positive aspect for the company Conclusion In recent years UK supermarkets have come under increased scrutiny over their treatment of suppliers, particularly of own-label products, yet the development of strategic supply networks has been an integral part of most supermarket strategies for the past decade. Marketing audit of Tesco Plc has shown marketing mix, internal and external environment factors and what are its effect on company performance. Effective blend of marketing mix variables would satisfy the customer needs and attracts more customers; hence company will ultimately enhance its market share. Internal and External environment of company is evaluated through various tools, which helps organization in proper and right decision making process. References Bangs. D. H (2002), The Marketing Planning Guide, 6th Ed, A Kaplan Professional Company – USA Chandrasekar (2010), Marketing Management – Text and Cases, Mc Graw Hill, India Gitman. L. J, and McDaniel. C (2009),The Future of Business – The Essentials,4th Ed, South- Western Cengage Learning- USA Hall. J (2008), Tesco Curbs its supplier prices, http://www. telegraph. co. uk/finance/newsbysector/retailandconsumer/2783800/Tes