Tesco is the leading large-scale retailer in the United Kingdom and world’s third largest (after Walmart and Carrefour). The company operates in estimated 6,400 stores in 14 countries and employs over 500,000 skilled and non-skilled staff. It began with a narrow range of food and groceries but later expanded to electronics, furniture, cars, cosmetics, clothing and accessories retail. According to (Palmer, 2005), the company operations extend to the banking, recreation, health, and beauty service industries. Tesco was founded as a groceries stall in east London by Jack Cohen in 1919. In the year 1947, it was listed on the London Stock Exchange as Tesco Stores Limited. The company opened the company’s first self-service store (supermarket) in 1956, which drove the company’s sales significantly. By 1960, Tesco grew organically, a result of acquiring weaker competitors in the neighbouring countries. Consequently, in 1961, it made an entry into the Guinness book of records as Europe’s largest retail store in Europe.
Company segmentation
The companies fast-tracked its growth through aggressive acquisition of competitors in Europe and Asia throughout the 2nd half of the 20th century. In an early 21st century, Tesco embarked on a diversification strategy to widen their share in new markets. However, a series of redundant strategy in overseas markets (especially United States) led to recurrent losses that drove the company out of particular markets (Palmer, 2005). In recent years, the business organization seeks has sought to strengthen its position in the European retail market by merging with robust companies like the Booker Group in Britain. However, the company remains one of the largest retailers in the global market.
Market segmentation
Tesco uses integrated marketing approach which targets consumers with a combination of strategies that optimize the communication of a consistent promotional message. Coupling strategies enable organizations to harness the benefits of each communication strategy. Thus, a more precise impact is made to the target market than if the approaches were used individually. Tesco commands customer loyalty in approximately 30% of the global food products market (Dibbs and Ferrell, 2005). In recent decades, the company has recorded significant growth due to its commitment to customer needs, expansion of product portfolio, and digital advertisements. In the rapidly evolving food industry, the integration of effective marketing strategy has enabled Tesco to compete aggressively in local and overseas markets.
Tesco Marketing Strategy
Advertising is one of Tesco’s key advertising strategies which has evolved into an American tradition that attracts millions of global viewers, high-ranking models, and famous music stars. They significantly boost sales before and after a product is created leading to a widespread appeal for the company's products. Additionally, the company utilizes the occasion to enhance brand awareness by inviting live coverage from top global media organizations. The shows are a critical part of the company's marketing strategy.
Product Adaptation
Tesco excels remarkably in a unique industry, whose capacity for growth is yet to be fully exploited. The company has differentiated its products significantly to tender to the diverse needs of its broad customer base. Expansion into overseas markets is preceded by market research to determine the social-cultural factors that influence food patterns in certain regions (Levy and Weitz, 2004). The insight is utilized to develop brands for specific markets. For instance, in the Middle East, Tesco products that are consistent with the dictates of the Islamic culture. Similarly, in the American, European, and Chinese markets, the companies design products to suit the tastes of the customers and invoke a cultural appeal. The effectiveness of their product adaptation strategy is reflected in the company's success in markets with diverse psychographic and demographic patterns.
Digital Marketing
Digital technologies offer businesses effective, up-to-date approaches to promoting brand awareness. Tesco marketing management is currently integrated with online networks like Facebook, Twitter, and Instagram. As a result, they can reach out to a larger number of potential customers with promotional messages for their products. Noteworthy, the digital mediums are partly responsible for the success that the company has recorded in Asian markets. The integration of online stores into their supply chain offers customers greater convenience in choice and purchase (Choi and Dawson, 2006). In this regard, product information is availed on their websites, and social media handles to support customers' decision making. Similarly, remote payment and efficient delivery make Tesco products easily desirable. The vast presence of active social media users in almost all global markets allows Tesco to promote brand awareness.
Industry Focus
Tesco operates in a lucrative industry with few competitors. A significant majority of their customers are affluent consumers, who have an affinity for high-quality products, which appropriately communicate their status. Furthermore, expansion into new markets is guided by comprehensive market research to mitigate the possibility of underperformance due to unaffordability of their products. The industry focus is primarily responsible for Tesco's marketing success.
Targeting and positioning Strategies
Multi-channel Strategy: Tesco delivers product to the final consumers through their supermarkets and online channels. The multi-strategy enables the company to reach out to their broad customer base at their convenience. The channels target different customer segments and deliver the products efficiently (Choi and Dawson, 2006). Concentrated Operations: Tesco’s withdrawal from key markets operations concentrated in particular regions like the United Kingdom (Munusamy and Wong, 2008). Centralized operations make it affordable for the company to transport products from the producers to the retail outlets. Latest Technology: online shops are a form of integration of latest technology in the distribution of products. The strategy has notable merits such as reliability and efficiency. Tesco utilizes the internet to establish consumer’s proximity to their closest outlets and arrange for delivery.
Patent License Agreements: the company holds patents rights and license agreements to a broad range of developed technologies. The patent agreements are crucial ensuring smooth distribution of the products to the market without fear of duplication. Tariffs: the movement of goods across state borders invites additional charges that are referred to as tariffs (Palmer, 2005). Tesco’s expenditure on duties is significant because they operate in overseas markets where the costs are different. Fragile or Perishable Goods: the distribution of perishable or fragile goods necessitates extra costs regarding insurance covers to circumvent the possibility of losses when accidents occur. Tesco’s expenditure on insurance covers for distribution of perishable products is substantial. Warehousing Expenditure: Tesco incurs expenses in the storage of products that await transportation to outlets. The costs are part of the total expenditure under the company’s distribution channels.
Decentralization of Manufacturers: the company should decentralize food production to overseas markets where their outlets exist. The costs of transportation of products across states invite costly tariffs that, which affects its profitability. Digital Marketing: Digital technologies like the internet offer Tesco an opportunity to manage the distribution of products to consumers in overseas markets with higher efficiency. In this vein, the company may find the need to eliminate costs associated with renting retail spaces by identifying potential markets via the internet and managing the distribution of products through online shops.
Research and Development: The Company should improve and enhance its supply chain by investing in research to support a dynamic distribution channel for local and overseas markets. Global Challenges: Contemporary economists reached a consensus that uncertainties predicted in the global social and political environments may affect business operations significantly. Tesco distribution operations may be changed in particular overseas markets by social or political instabilities. Risks in the petroleum industry: Tesco diversified its operations into oil exploration and marketing. Risks processes involved in the transportation of petroleum are significant. Notably, there are pollution regulations that can claim a considerable portion of Tesco’s expenditure. Competitive Threats: the internet delivers easy and affordable distribution that have propelled smaller retailers like Amazon to the global arena, where they are competing aggressively against giant dealers such as Tesco, Walmart and Carrefour.
Significance of its marketing position (Potential market)
Tesco occupies a prominent position in the global retail industry. Drawing from (Palmer, 2005), in recent decades, Tesco has evolved to become one of the market leaders in Europe, and the leading in U.K. noteworthy, the success is a result of revised marketing strategies that are focused towards brand portfolio development, customer focus, and innovation. Strong presence in dynamic markets such as Europe and northern America puts the company in a strong competitive position.
The company should supplement its channel strategy with the use of the internet. Noteworthy, the online shop strategy is useful, but it can be enhanced with market-based distribution agents to assists the web-based company representatives. In this respect, the company eliminates the costs of establishing or renting space for supermarkets because the web-based and market-based agents can coordinate the delivery of products to the final consumers.
Evaluation of the company
Tesco Company should use digital marketing to optimize its market strategy and expand into emerging market. Social networks like Facebook, Twitter, and Instagram makes it easier for the company companies to create awareness and promote their products and services to relatively untapped markets. (Choi and Dawson, 2006) explains that barriers to entry are few and competition in these markets is manageable. Tesco can reduce the risk of loss associated with socio-political instabilities by merging with local retailers in dynamic markets that exist in unstable regions or countries.
Conclusion
Domestic partnerships enhance the security of the business' assets and reduce the costs that are associated with operating solely in foreign markets. Government regulations affect foreign investors than local counterparts significantly. Tesco's position in the global retail industry is prominent. The company has a strong presence in European and northern America markets. Their channel strategy ensures smooth movement of goods from manufacturers to its market-based retail outlets. However, the company has an online shop that coordinates sourcing and delivery of the company’s products to web-based consumers. The company should harness the power of digital marketing technologies to improve their productivity.
References
Palmer, M., 2005. Retail multinational learning: a case study of Tesco. International journal of retail " distribution management, 33(1), pp.23-48.
Dibb, S., Simkin, L., Pride, W.M. and Ferrell, O.C., 2005. Marketing: Concepts and strategies (p. 850). Houghton Mifflin.
Levy, M. and Weitz, B.A., 2004. Retailing management. McGraw-Hill/Irwin.
Munusamy, J. and Wong, C.H., 2008. Relationship between marketing mix strategy and consumer motive: an empirical study in major Tesco stores. Unitar e-journal, 4(2), pp.41-56.
Choi, S.C., Larke, R. and Dawson, J., 2006. Tesco: transferring marketing success factors internationally. In Strategic Issues in International Retailing (pp. 182-207). Routledge.
