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Marketing Management

  • 20 Pages
  • Published On: 02-10-2023

INTRODUCTION

Marketing is a very crucial aspect of any business organization. The success of an enterprise, to a great extent, is dependent on it (Hutt and Speh, 2005). Basically, it is a process through which the company can reach out to its customers, interact with them and develop effective relations that would help in the development of a strong image in the target market(s). This report consists of an analysis of environment that Tesco, a giant retail organization in the UK. Here different tools for marketing analysis such as SWOT and PESTLE would be used in the research. This study would help in conducting a thorough analysis of the UK retail industry.

BACKGROUND

Tesco is a big retail organization in the UK. It provides different Fast moving consumer goods (FMCG) and products at competitive price. The mission of the firm is to deliver high quality, efficient and effective products and services to its customers at best price, to improve their overall shopping experience (Witt and Moutinho, 2014). While it is corporate objective includes becoming a leading retail organization in the UK and provides its customers with high-quality services.

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Since its establishment, the retail store has been able to work on these objectives and attain them to a great extent. It can be supported by the fact that the company owns several retail stores across the UK and in many other countries around the world (Chonko and Hunt, 2007). The mission of the retail giant is to provide effective retail products and services to its customers. Through this aim, management of the organization strives at satisfying the needs and demands of its clients and attempt to gain their loyalty. Furthermore, this aim would also enable the organization to work much efficiently and effectively in the retail industry. This way the firm can sustain in the market and also gain as well as retain its competitive position.

Since its establishment, the retail store has been able to work on these objectives and attain them to a great extent. It can be supported by the fact that the company owns several retail stores across the UK and in many other countries around the world (Chonko and Hunt, 2007). The mission of the retail giant is to provide effective retail products and services to its customers. Through this aim, management of the organization strives at satisfying the needs and demands of its clients and attempt to gain their loyalty. Furthermore, this aim would also enable the organization to work much efficiently and effectively in the retail industry. This way the firm can sustain in the market and also gain as well as retain its competitive position.

MARKET AUDIT

In the following paragraphs, internal and external environment to Tesco has been carried out through tools such as SWOT and PESTLE analysis, respectively.

SWOT Analysis

It is a tool through which internal environment of an organization can be assessed thoroughly. It helps in identifying and understanding various internal factors that affect operations of an organization (Jüttner, Christopher and Baker, 2007). Such an analysis is important from the viewpoint that it helps in obtaining understanding about the functioning of an enterprise. This way different factors and forces that affect the company, internally, can be easily identified, thus enabling the management to take steps that would help in managing them and resolving any issue(s). In the following points, SWOT (Strengths, Weakness, Opportunities, and Threats) analysis of Tesco is presented:

  • Strengths:Strengths: One of the biggest strengths of the firm is its uniquely developed operations framework and business model which puts it in the list of top 100 valued brands in the world. The retailer provides various kinds of retail products and services at competitive rates at its 6784 stores across the world (Duchêne, 2009). Its innovative business models such as Tesco Metro and Tesco Express and online presence provides an edge over competitors. There are very few stores in the world that operate on various models. It also benefits from economies of scale.
  • Weakness:On the other hand, weakness of the retailer is related to its scale of operations. It has a huge product portfolio which includes food, books, clothing, furniture, insurance, petrol, and financial services. This has impacted its profits because of bad debts and credit cards (Liu, Kasturiratne and Moizer, 2012). Another weakness is its entry into the inexperienced markets such as smartphones and tablets.
  • Opportunities:Opportunities: There are plenty of opportunities and chances that Tesco can avail. One of them is to expand into growing markets such as digital entertainment. The retail industry works at international level and currently there are many established and emerging areas of the world. For instance providing all products and services on an online platform (Hollensen, 2015). Further, by establishing its operations in Australia, Tesco can expand its business boundaries as there is limited competition in the Australian retail industry.
  • Threats:Excessive competition is the main threat that Tesco is facing in the present business environment from various players such as Asda, Sainsbury, Morrison and many other retailers. This show there is a large number of retail organizations in the world as well as in the UK (Wilson and Gilligan, 2012). Another threat to Tesco is Asda's takeover by Wal-Mart, which is its biggest industry rival. Thus, Tesco needs to add necessary skills, resources and experience to overcome from this.

PESTLE Analysis

This is a tool to analyze or evaluate the external environment that an organization operates in. It is crucial that such environment is thoroughly assessed, so as to make sure that the company operates in an efficient and effective manner (Kotler, 2011). The following points present PESTLE (Political, Environmental, Social, Technological, Legal and Environmental) analysis of the retail industry in the UK.

  • Political:One of the major political issues today in the UK is tax measure. As a matter of fact, it is a big problem for the all the companies in the UK. The UK government has increased the VAT rate from 17.5 percent to 20 percent (Belz and Peattie, 2009). Due to this, consumer spending is affected in a negative manner, hampering the revenues of the retailer and entire retail industry. The decrease in revenue has ultimately affected its revenue.
  • Economic:Financial and monetary condition around the world, especially for the retail industry, in general, is not very good. Slowing economic growth in countries such as China and growing unemployment in USA and UK are some such factors which are affecting the retail industry in a negative manner (Meffert, 2013). Due to this reason, there has been a major dip in performance of the retail sector, thus hampering the operations of retailers such as Tesco. The only positive sign for Tesco is the growth in the economy.
  • Social:Today the UK population consists majorly of elderly people. There is an increase in life expectancy and a decrease in birth rate. This change in the social environment has made significant new developments in the retail industry in the UK (Gronroos, 2011). Further, internal has proved to be a good platform for the elderly people as they can purchase daily grocery without leaving the comfort of their home.
  • Technological: Major changes have happened in the technological aspect of the retail industry. It can be supported by the fact that e-commerce is becoming popular. More and more customers prefer to book grocery and other products through the organization’s website and pay for it through online payment gateway systems (Cronin, 2011). This has resulted in the development of new technologies through which overall experience of the customers can be enhanced significantly.
  • Legal: There are many laws and regulations that govern or monitor the working of retail firms. One of them is the Data Protection Act, which states that private and confidential information about customers cannot be provided to any unauthorized or third party (Hunt and Morgan, 2014). The government is very strict with such regulations and any organization which is found to be in violation of these, is penalized heavily; moreover, in some cases, such firms are even sued.
  • Environmental:The natural environment is deteriorating at a very rapid pace, due to which industries are being influenced in a negative manner. Global warming is one of the major issues that are affecting the business of many companies. Tesco is trying to overcome from this has reduced utilizing greenhouse gasses and consumption of energy (Witt and Moutinho, 2014). For instance, the company takes into account all such environmental factor while designing its retail stores.

MARKET OVERVIEW

The retail industry is one of the biggest players in the UK. It can be supported by the fact that there are 539000 establishments within the country which collectively contributes 10.3 percent of the UK businesses. In this sense, it may not be wrong to say that this sector is crucially important for the country as the market size is immense. At present, there are around 90 retailers and 60 wholesalers, and it is expected in coming years that demand for the retail industry would rise considerably, but the falling value of Euro is a major concern (Hollensen, 2015). Due to this reason, a shortfall in the demand for luxury products can be expected that would influence the performance of the industry. For Tesco, there are many competitors. Firms that the cited retailer needs to compete against are the likes of Wal-Mart, Asda, Morrison and many more. These firms are the big players in this market and control a major portion amongst them.

PRODUCT AUDIT

The retail store essentially provides various kinds of products and services at competitive rates. For instance, the price of its self-packed products is much less than that of the market price. Further, there are many types of brands and products. The price and attributes of these products and services are different from one another. The organic products are costlier than regular products while the branded products are at competitive rates. However, the self-packed products are offered at a lesser market price as it has got the benefit of economies of scale (Cova and Salle, 2008). However, these self-packed products also have some major downsides as well. For instance, customers always compare prices of organic products with self-packed products without considering their attributes. This results in dissatisfaction among the customers.

MARKETING ASSUMPTIONS

On this basis, it can be suggested to the company that it must change its marketing strategy and tactics. It must promote its products, i.e. organic, branded and self-packed, by highlighting their attributes as against price. This would help in attracting the customers, both existing as well as prospective ones. Further, the marketing strategy must now focus on expanding operations of the company to other parts of the world such as Australia where there is less competition in the retail industry (Jüttner, Christopher and Baker, 2007). For instance, establishing operations in various countries could help the retailer to cater to demands of a large customer base. This will help the firm to establish itself in the international arena.

For this, the marketing objectives could be related to highlighting the USP of organic products produced and packed by the company itself. The objective here would include aspects to increase market share of the retailer in the organic food market (Belz and Peattie, 2009).

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ESTIMATION OF EXPECTED RESULTS

It is assumed that single Tesco store sells 500 units of organic food which cost the company ₤1000 at a sales price of ₤4 per unit and thus generating revenue of ₤2000. Thus, the store will generate the profit of ₤1000. However, the company invests ₤1000 on the marketing of its organic products, and it increased the sales to 2000 units (Liu, Kasturiratne and Moizer, 2012). Thus, the cost incurred on 2000 units is ₤5000, and it generated total revenue of ₤8000 and thus giving the store a profit of ₤3000. This shows that by investing ₤1000 in marketing, the store can increase its profit level from ₤1000 to ₤3000.

CONCLUSION

Marketing is that aspect of business enterprises, which if not considered properly or maintained appropriately, could be very harmful to the organization. The existence of companies, to a great extent, is dependent on it. During this research study, it was noted that Tesco operates in a very volatile and highly competitive marketplace. Due to this, it needs to pay a lot of attention to its approach to marketing. Further, the study also revealed that future of the retail industry in the UK is bright, as it is expected to grow, but at a slow pace. Further, on the basis of SimVenture software, it can be suggested that company should invest in its marketing strategies for its organic food products as it will increase its profit margins.

REFERENCES

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  • Cova, B. and Salle, R., 2008. Marketing solutions in accordance with the SD logic: Co-creating value with customer network actors. Industrial marketing management. 37(3).pp. 270-277.
  • Cronin, J. J., 2011. Green marketing strategies: an examination of stakeholders and the opportunities they present. Journal of the Academy of Marketing Science. 39(1).pp. 158-174.
  • Duchêne, A., 2009. Marketing, management and performance: multilingualism as commodity in a tourism call centre. Language Policy. 8(1).pp. 27-50.
  • Grönroos, C., 2011. A service perspective on business relationships: The value creation, interaction and marketing interface. Industrial marketing management. 40(2).pp. 240-247.
  • Hollensen, S., 2015. Marketing management: A relationship approach. Pearson Education.
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  • Hutt, M. D. and Speh, T. W., 2005. Business Marketing Management. South-Western Publishing Company.
  • Jüttner, U., Christopher, M. and Baker, S., 2007. Demand chain management-integrating marketing and supply chain management. Industrial marketing management. 36(3).pp. 377-392.
  • Kotler, P., 2011. Marketing Management. [pdf]. Available through: < http://dl.ueb.edu.vn/bitstream/1247/2250/1/Marketing_Management_-_Millenium_Edition.pdf >. [Accessed on 4th March 2016].
  • Liu, S., Kasturiratne, D. and Moizer, J., 2012. A hub-and-spoke model for multi-dimensional integration of green marketing and sustainable supply chain management. Industrial Marketing Management. 41(4).pp. 581-588.
  • Meffert, H., 2013. Marketing-Management: Analyse—Strategie—Implementierung. Springer-Verlag.
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  • Witt, S. F. and Moutinho, L., 2014. Tourism marketing and management handbook. Prentice-Hall International.

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