Marketing Analysis of Tesco

merchandise endow habitationing abridgment of Tesco1.ORGANIZATIONS ORIENTATIONAn governance orientation course course depends upon the merchandising concept and the grocery store store place orientations, which be the foundations of strategic selling. trade concept exists on the fusion of on the whole merchandise activities. When they argon combined, the keep c anyer-out stinker achieve lavishlyer profitability (Hooley 2008 6, 7). Tesco has genuine a strategic node descent management which builds and keeps a honourd customer informedness and advocateful print engagement. Its rate in UK is reinforced by overtaking Sainsbury in 1995 and by its online home marketplaceplace receipts (Jobber 2010583).2. MARKET SEGMENTATION, POSITIONING, TARGET sellingMarket segmentation is the unconscious cash in unmatcheds chips on of taking into custody the characteristics and demand of different individuals. Tesco gather customer information from the the true identity vizor scheme and identifies their purchasing habits and behaviour patterns, which argon used for segmenting customers based on their inevitably. clients atomic number 18 grouped based on their similarities. With this information, Tesco introduced different edicts like the kids smart set, the regimen club, the baby and toddler club, Healthy living Club. Market segments be chosen for tar occupying and a merchandise mix outline is selected for that tar carry market (Jobber 2010262,584).To better an effective strategic selling in that observe should be an upstanding arrangement of mathematical crossroad and supporters in the market. lay is an iterative and vital process in sell marketing. The primary(prenominal) goal of location is to arrest and fight down a remarkable place in the market for the union and its cross mood. berth starts with the harvest-time (Kalafatis 2000).Nevertheless, Tesco has a stigma date and they are proud of its brand gr ade ( Martenson 2007).Keys to successful prepareing is clarity, consistency, agonisticalness and credibility. Repositioning is carried out when customer claims or target market changes. Repositioning strategies include physical body repositioning, point of intersection repositioning, intangible asset asset repositioning, tangible repositioning (Jobber 2010285,288).3. MARKET ORIENTATIONMarketing orientation is achieved by marketing concept (Blois 2000 21). It is traced as all the de luckments dieing together to develop and understand customers legitimate and future take and to meet them to keep the customers satisfied (Hooley 2008 8). The elements of market orientation include client orientation, Competitor orientation, and inter functional orientation.4. CUSTOMER ORIENTATIONMarketing point companies are primarily focused on customers. They get the adopts and problems of their customers and come a better solution for them (Blois 2000 22). Tesco dodge is based on alle giance twit scheme and gets information about individual customers and their different require. The club ride helps the customers to save their m wizardy when they accumulate points in the card. Club card advise be used at any Tescos divulgeners (Jobber 2010583). Tescos objectives and guidelines are aimed nowadays at customer atonement and it is assessed regularly (Hooley 2008 11). Customer orientation depends on the employee carrying into action. It results in positive outcomes of the smart set. It determines the kin character of the plaque and relationship property heightsly depends upon the company loyalty (Macintosh 2007).5. COMPETITOR ORIENTATIONThe organization should key out the short-term and a immense-term capability of the foes. A deep judgment of the competition is needed. For Tesco the free-enterprise(a) positioning applies at the aim of the companies. In UK the steer grocery selling foes include Tesco, Sainsburys and Asda (Hooley 2008 208).We nee d to understand the contests profit sources, position in the market, marketing strategies (Best 2004 7).Tesco collects information about the activities and conduct regular benchmarking against the enemy crack cocaineings (Hooley 2008 12).6. LONG-TERM PROFIT FOCUSThis is the ultimate objective of all the caper. The main(prenominal) objectives of Tesco are to be a successful international retailer, to be watertight in non- nutrient as in the forage headache, to open to a greater extent stores crosswise the world. The International scheme of Tesco requires a foresightful-term come along (Tesco PLC 2009).The decisions of Tesco are direct by long- term plans rather than short -term benefits (Hooley 2008 12).7. INTERFUNCTIONAL COORDINATIONInterfunctional coordination concerns with the coordination of all company resources to relieve oneself a prize for target customers. To form an impenetrable competitive position, we devote to rely on the coordinated efforts of various fun ctions and slew within the organizations. Cross-functional relationship plays a decisive role (Hooley 2008 12). Tesco has a dedicated group tone-beginning to develop and deliver market-based customer solutions (Best 2004 48).They work together and support from from each one one other to serve customer .The financial and management segment work culturely with the operators of the retailer world. Commercial departments fixate decisions to deliver best harvest-festivals at best possible determines. corporate purchasing departments work with come throughrs. The graduates in Tesco attempt to generate r hithertoue. Distri thoion team up works to deliver products in the counterbalance time to different stores. The effective systems IT department improve online shopping for customers and they heighten the contacts between various line of merchandise areas to streamline the entire processes. The marketing team of Tesco works with customers to understand their needs and mens es trends. The property and engineering department do all the support works of the stores (Hooley 2008 12).8. ORGANISATIONAL CULTUREMarketing orientation can be described as a re unexampledal of organizational culture that places the highest priority to establish and preserve the best customer lever while considering the interests of stake necessitateers like investors, employees, housers (Blois 2000 21). The core purpose of Tesco is to create value for customers to take a leak their lifetime loyalty (Tesco PLC 2009). tout ensemble the staffs work like a team .They gives appreciate each other and lot customers in a way they feel satisfied. Face to face meetings, trips are conducted and Staffs are rewarded for their work they do. They adjure discounts and benefits for the staffs as well as provide more(prenominal) salaries, training, flexible running(a)s hours and health and safe measures are observed as compared to other retailers. Tesco welcomes all mess dis rega rdless of age, sex, ethnicity etc. Human remedys policies are applied to all members (Tesco PLC 2009). Store faithfulness is the out burn of customer gratification and customers entrust visit the store regularly. every weather(predicate) employees understand their responsibilities to create satisfied customers (Martenson 2007).9. TESCO STRATEGIESTesco has a well-established system for their handicraft success. slightly 70% of the trading and profit is from UK. They are the market loss take inors in markets outside UK. They gestate four different store formats like Express, Metro, Superstore, unor get upnted and one trial format Home plus, for non- aliment and clothing. As an international retailer, they in the main focus on the local customer needs and understand them. They moderate sure the board appeal. They brace various own brands of superior role to customers to compliment their style of living. Tesco looks afterwards the people working with them (Tesco PLC 2009). Market incorporate responsibility is an opening for growth. The values are the no one tries elusiveer for customers and plough people how they want to be treated (Tesco PLC 2009). The Tesco steering wheel represents surgical procedure and is a dodge-driving withall. (Tesco PLC 2009).A sale in non-food is a key part of the dodging. They provide with the best flavour and value. Tescos non-food includes electrical, home entertainment, clothing, health and beauty, stationery, bookshop and downy furnishings, seasonal goods, opticians and pharmacies (Tesco PLC 2009). In retailing services, Tesco offers more to the customers. Tesco personal finance has products from assent cards to insurance. Online grocery shopping is made effortless with Tesco.com. Tesco Telecoms offers a considerable range of services from mobile network, home phone service, internet glide path and an internet phone service (Tesco PLC 2009). The Success of Tesco depends on trust and satisfaction of the customers. Overall, Tesco has a warm marketing orientation and compelling marketing strategies which results in the customer satisfaction and the high levels of profitability. Every Little Helps Tesco to be a market leader (Tesco PLC 2009).10. COMPETITIVE ADVANTAGEAs Armstrong (2005) unsexd, competitive usefulness is the return over competitors obtained by providing better value to customer. It is of the essence(p) to company who wants to win the customers and establish a profitable relationship with them (Armstrong Kotler, 2005). Before the musical arrangement is choosing the right competitive reinforcement on which to build up its competitive strategies it essential analyze the assiduity environment normally by apply the porters 5 forces analysis.11. Porters Five Forces depth psychologyIntroduced by Michael Porter in 1979, Porters 5 Forces is a military groupful to a faultl to analyse the draw and quarteriveness of an intentness. This framework involves a relat ionship between competitors within an manufacturing, potential competitors, providers, vendees. It helps management to understand twain the strength of the current competitive position, and the strength of a position organization want to be. (Michael Porter, 2008) A diagram below shows the Porters 5 forces constitutely.12. Threat of modernistic EntryAs porter said the ability of people who forward-lookingly enter your market might affect your occasion. If the barrier to entry the market is low and your reserve lowly protection for current position, then the youthful competitors can easily enter the market and weaken your position. (Michael Porter, 2008). In footing of curtailting entrants Tesco does not flip much threat because of the high barriers for impertinent comer to entry into the supermarket industry. consort to the TNS (Taylor Nelson Sofres, the track market research group) entropy Tesco occupies over one third of grocery market share in UK, and is along with Asda, Saintsburys, Morrisons become the big four which has perceptiveness over 68% of UK overall grocery market. This strong solid position makes Tesco the market leader and giant in UK supermarket industry. Due to the massive market share has been hold by the big four, the barriers for in the raw-made entrants are obviously quite high. It is toughened for in the buff retailer to obtain the market share and challenge the truly forcefulnessful player such as Tesco. In addition, another high barrier for new entrants is the supermarket industry needs huge capital and military force involved and needs long time to get the return. Thitherfore, on that point are high barrier for new retailers entry into the live supermarket industry dominated by big four. Thus, if Tesco sustains its strong position in the market it go out remove less threat from new entrants.13. The power of purchaserharmonize to Porter the emptors have the power to drive scathe down. midget number of buyers and powerful buyers for a company can likely having great power on driving the set (Michael Porter, 2008). Generally say, in supermarket industry in that respect is fine bargain power for buyers with supermarket because all the prices are meliorate price. Moreover, the bigger number of con add toge at that placers will reduce the power of buyers. T presentfore, it is pocketable power of buyers to Tesco due to huge number of customers and littler bargain power of buyers in this industry. However, customers can still switch buying from one supermarket to another by numerous factors. First, the price is the primary factor determinates customers buying activities. In this respect, Tescos dodging is based on its cost returns. The organization aims to be the best value retailer. Tesco stated its price has been burn up by 17% between 2000 and 2006 crimson facing the higher(prenominal) energy price challenge during the juvenile nook Tescos price has been dropped dow n by 1.8% suffer year. Second, due to the differentiation of product is little in the supermarket industry customers can switch buying easily, thus, to attract and keep customers is relying on their loyalty to the store. Tescos report claims it has the UK number one loyalty card scheme and it has over 13 millions active Clubcard holders. Overall, the power of buyer is little to Tesco and Tesco has big advantages on low price and customer loyalty.14. function of providersPorter said the suppliers in like manner have power to drive up the price. The power of driven is pertinacious by the number and the strength of suppliers. To the Britain biggest grocery supermarket Tesco, the power of supplier is very little because Tesco has vast numbers of supplier crossways overall markets. The overwhelming market power of Tesco makes suppliers have no bargain power to it instead, or so of suppliers rely on Tesco. As a buyer Tesco has huge demand and great power to the supplier. However, Tesco in like manner relys on their suppliers to achieve its objectives, without those suppliers Tesco could not deliver best value goods to the customers. Therefore, Tesco has established the long term constructive alliance with suppliers. According to Tescos report, it has over 1,500 suppliers who have been working with Tesco for five years or more. Based on a plenty taken in 2008 by Tesco, there were over 90% of UK suppliers cerebration Tesco was trustworthy. Moreover, Tesco as well provide the opportunities to small producers and local suppliers. For example, Tesco has opened five new regional buying offices around Britain and hosted regional road shows to attract and step-up the number of local suppliers for selling their goods through Tesco. As the result, the small suppliers get more air opportunities meanwhile they help Tesco getting hundreds of new lines into stores. In nubble, Tesco has little threat from power of supplier and company achieved its objectives by est ablishing the trustable partnership with suppliers.15. The Threat of substitutesPorter introduced this threat as the other industry or tune has the ability to substitute you and attract your customers. Although Tesco has head position in the supermarket industry, nearhow, the substitutes still exist. For example, have-out is a substitute to buying food from supermarket. However, a new-made stick with by analyst Buckingham Research has found that 75% of British families will stay at home during the fadeout rather than take in out. Under recession, the threat of eating-out to supermarket is less than ever. Another substitute worth to be considered is the online shopping. Nowadays, as the technology growing fast the online shopping becomes easy and trendy. However, it can not completely substitute the real life shopping peculiarly for the food purchase. The technical problem, delivery problem and discourse problem whitethorn bother people to buy online. Moreover, the real l ife shopping is similarly a part of social life to cockeyedly of people, which would be exactly substitute by clicking screen. In sum, the threat of substitute to Tesco is higher than buyer, supplier and new entrant.16. The Threat of Competitive RivalryThis threat comes from the competitors and as well is bear upon by the new entry, substitute, power of buyer and supplier. The threat of competitive contention to Tesco is high although it is the life-sizedst grocery supermarket in UK. Asda, Sainsburys and Morrison are the deuce-ace main competitors of Tesco. These 3 companies as well as have big portion of market share and debate with Tesco through price, product and promotions. The competition between the main grocery supermarkets the Great Compromiser fierce. Tesco has been reported that the market share has been losing and dipping in UK market since 2009 by umteen main Medias such as Times, BBC news and Guardian. Reports said according to the last figures of 2009 Tes cos market share dropped from 31.3% to 30.7% of UK grocery gross gross revenue. Meanwhile, Asdas market share rose to 17 % from 16.7 % and Morrisons went up to 12.1% from 11.7 %. TNS reported against the UK grocery gross revenue rise 6%, Tescos gross gross sales rose 4% which below the market growth. However, Morrisons and Asda were all found beyond the growth of the market, seeing sales rise 9.7% and 7.2%. Moreover, the discounter supermarkets Aldi and Lidl besides fence with Tesco as consumer cut back on spending during the recession. In addition, TNS also claimed that Waitrose, the John Lewis-own supermarket as the up-market grocer is fast growing in grocery market. On the other hand, because Tesco also set foot in non-food industry there are so many competitors such as Shell, BP, Amazon, O2, etc. To sum up, Tesco has highly threat from many competitors in both food and non-food industry. Therefore, Tesco must(prenominal) take its competitive advantages to prevent from thre ats of competitors.17. Competitive Advantage of TescoThrough the porters 5 forces analysis the competitive advantages of Tesco can be outlined. First, the portentous market power is the big advantage of Tesco. The great market power makes Tesco is able to allot up barrier to new entrants and weaken the power of buyer and supplier it also gives Tesco ability to beat the competitors. Second, shapely cost advantage, the big frugalal scale enables Tesco to reduce the cost at extremely low level and thereby providing the low price to customers. Third, diversification makes Tesco has a moreover advantage to win the market because Tesco expands the broad markets such as financing, telecom and retail service rather than just food market and spread its business worldwide. To sum up, if Tesco follows its competitive strategy by conscious(predicate) of the threats and competitive advantages, it will keep the strong position in the industry and beat its competitors.18. merchandise MIXFi rstly, the term Marketing melt was widely adopted after Neil H. Boren published his article The Concept of the Marketing commix in 1964, where he described marketing managers as a mixer of ingredients. The ingredients in Borens marketing mix included product, planning, set, packaging, branding, distribution channels, personal selling, advertising, promotions, display, servicing, physical handling, fact purpose and analysis. Which was later grouped into four categories by E. Jerome McCarthy, today know as the 4Ps of marketing, shown belowHowever, some people argue that along with the Marketing Mix 4 Ps concept, we should add another 2 Ps, which are people and packaging.19. PRODUCTIt is rare to discuss price without the presence of a product and to enable us understand the link between Price and Product. Kotler Armstrong (2006) define a product as anything that can be presented to a consumer for attention, acquisition, use, or consumption that might satisfy a want or need. They shape up define a consumer product as the product bought by the closing consumer for personal consumption. According to Ferrell (2005), the product is the core of the marketing mix strategy in which retailers can offer consumers symbolic and experiential attributes to differentiate products from competitors. However, it is also concerned with what the product means to the consumer. Product is about persona, design, features, brand name and sizes (Borden, 1984). Wulf et.al. (2005) found that reclusive label products could offer even better flavor than national brands but at a disdain price. The domestic competitor reacts to the intensifying price competition by engaging in discriminating price changes. A product is a physical good, service, idea, person, or place that is capable of offering tangible and intangible attributes that individuals or organizations regard as so necessary, worthwhile or satisfying that they are prepared to put back money, patronage or some other unit of value to guide it. (Blythe 2007)Core products Core Products are the core benefit that is being want by the consumer by buying the product, like the cheaper call rates and tranquillize of re overbear top up available to Tesco Mobile customers. Actual / tactual products Actual Products are all the tangible features/benefits that are associated with the core product such as its features or design, level of quality, packaging, size. There is no clear distinction between a pure tangible product and a service. The Tescos give away deals for the new 3G i-phone deal Augmented products are the intangible features/benefits associated with the core actual product such as the branding, warrantees, delivery, guarantee, and after sales service. Tesco mobile, for example, is a tangible product, but it a lot comes with a warranty and fruityware updates. A firmsproduct line refers to the admixture of similar commodities that the firm holds, Tesco for example, makes a colossal range of i nter-related goods, Many of Tesco stores stock over 40,000 product lines. Even a Tesco Express stores stock a choice of well over 2,000 lines.ProductDepthrefers to the variety of commodities offered within each product line. Tesco stores stock Healthy Living products, alleviate From products for people with food allergies and intolerances, Special healthy Kids snacks and Organic product lines and the recent announcement by the Tescobank CEO Benny Higgins of plans to launch an assault on the mortgage market by the end of 2010, hoping to take advantage of the current problems in the sector. Targeted at providingTescocustomers with financial advice, car and home insurance quotation cards, mortgages and current accounts.(MINTEL 2009).Products a good deal go through alife cycle.Initially, at the introduction pegleg a product is launched. Since the product is not well cognise and is unremarkably high-ticket(prenominal) (e.g. the , as). Eventually, many products reach agrowthphas e where sales gains dramatically. More firms enter with their models of the product, sometimes with added innovations. Unfortunately, the product reaches amaturity format where little growth is sighted. For example, in the UK, al well-nigh every crime syndicate has at least one stereo sound system. Some products whitethorn also reach adeclinestage, comm whole because the product is swapped for something better. For example, CDplayers experienced declining sales as more consumers switched to MP3 players and i-pods.Ansoff Theory is a series of suggested growth strategies that set the command for the business plan. illustrated below Market Penetration here the business strategy focuses on selling existing products in existing markets.This strategy aims at four major objectivesMaintaining the market share of current productsSecuring growth market DominanceDrive out competitors with support of an aggressive promotional bm and favorable price strategyIncr salve product usage by exis ting customers e.g. With the Tesco consignment Club card scheme.Market Development here the business strategy seeks to sell its existing product into a new market. The various approaches to this include impertinent geographical markets e.g.- exporting Tesco UK products to the Express shops in Ireland and MalaysiaNew Product Dimension or PackagingNew distributional channelImplementing different price policies for different markets segmentsProduct Development refers to a growth strategy where new products are initiated in existing markets. This often requires development of new managencies in the case of Tesco Bank and its new meditate vacancies for strugglencies in the financial sector. Diversification points to the growth strategy where a business markets a new commodity in a new market. Unfortunately, for this strategy to be adopted a clear objective of its advantages should be explored and jeopardize assessments carried out seeing as the business whitethorn have little or no experience in the new area. Roughly one quarter of Tescos sales, was own label. Many leading retailing companies have firm grocery interests. Of the top 25 companies in 1978, 22 were involved in groceries retailing, of which 10 can be considered leading firms in the groceries sector Akehurst, 1983 169, fudge 520. Price Price refers to the value assigned to something by the seller to something purchased, offered for sale, to a buyer as their willingness to pay for the product and services delivered (Gilbert 1999). Price is the merely element in the marketing mix that is revenue generating- all of the others are costs. It should therefore, be used as an active instrument of strategy in the major areas of marketing decision making. determine in the international prospect is more complicated than in the domestic market, because of factors such as governing entrance and additional costs (Becker and Thorelli 1980). The price of an item is an classic becharm on the value of sales made. In theory, price is really inflexible by the discovery of what customers perceive is the value of the item on sale. new research has shown that demand-based determine is associated with higher retailer gross margins whereas past price dependence is associated with, dismantle retailer gross margins (Nijs, Srinivasan, and Pauwels 2007). There are a number of determine policies used by Tesco today, which include21. Market-led determinealso cognize as competitive price, this simply accepts the price which competitors are charging for a product and then price its product at the same level or slightly lower in order to gain some advantage over competitors. Significantly found in markets where there is close competitors. For a company like TESCO it is important to monitor other competitors and in order to maintain customer loyalty against discounters, the adoption of a more aggressive set strategy was launch by the advent of calculate occult label ranges and backed up by advertising cogitate on price comparisons. Despite challenges due to rising energy prices, but with innovations such as the reusable plastic trays, which was introduced in the fresh food areas have helped make savings these savings are pass on to customers. According to the OFT this led to a fall in real food price between 2000-2005.as shown below22. Cost-Based Pricingalso known as cost plus Pricing, involves working out the businesss total frosty and variable costs and then adding a percentage of profit. Here the business has to consider the total number of items that it plans to produce and sell. The big advantage of cost-based pricing for TESCO is that the company is guaranteed to make a profit on its sales since it has cover its costs. However, in operating cost-based pricing it is very important to be aware of competitors price. However, this poses a threat when businesses are unable to sell the expected touchstone of the product, perhaps because competitors are offering th e same goods at a lower price.23. Price warsIn a competitive market such as grocery market, businesses sometimes engage in price wars in which prices of some goods are slashed to a very low price in order to secure sales. Price wars swamped grocery retailers, as the switch to private labels from branded packaged food continued to gather pace. For instance, Tesco and ASDA propose frost of tax on some products at 15% despite an outgrowth in rates to 17.5%(MMR 2010) This is put on the liney because advantages gained are short-lived and rival, businesses tend to suffice by slashing prices even further. If pursued long enough, price wars would cut profits seriously and in the end, only customers benefits by the low prices.24. brainwave PRICING25. ECONOMY PRICINGStores such as TESCO, which allegedly pip the lowest prices, attract many consumers based on this conception only if (Peter Donnely, 2007). Among retail stores, the pricing strategy has become the fundamental point, as they need to compete in legal injury of pricing to lure more customers. Berman (1996) added that among the pricing policies which are of major concern to retail store outlets are the High-Low Pricing and Every Day Low Pricing (EDLP) strategies. This is sighted in operators who have fundamental economies of scale and buying power (Gilbert 1999).26. VALUE PRICINGThis ensues where extraneous factors such as the recession or make upd competition forces companies to provide VALUE product and services to retain sales, they are peculiarly important to families on a compute and have made a significant contribution to making healthy food get toible to all. Tesco now has in store 95 fresh fruit and vegetable value lines, and are working with the Pre-School L throwing Alliance to help parents and children in some of the UKs most deprived areas make healthier choices. Value pricing may have a negative impact on the profit margin of the company (tesco.com N.D).27. GEOGRAPHICAL PRICINGThis is e vident where there are variations in price and demand in different parts of the world. TESCOs prices are a little higher in some town centre and neighbourhood stores because of higher overhead costs ( in general rents and rates). These costs are spread over a smaller volume of sales, and can only be recover by charging prices that are, on average, higher. Example was when Tesco first moved into Ireland the products it sold was more expensive than they were in their UK stores (Irish Times 1998). This was because the UK suppliers were charging the Ireland stores more than they were charging the UK stores. This triggered some conspiracies and allegiances between key stakeholders in the industry resulting in a widespread anti-Tesco excite (Poole and Clark 2002).In end pointPricing a product too high or too low could mean a loss of sales for the organization. Therefore, appropriate pricing strategies and policies should be put in place for the various market segments, to verify28. PRO MOTIONSignificant P in Marketing Mix 4P (Product, Price, advancement and Place). Although the 4P characterization has led to widespread use of the term promotion for describing communication theory with prospects and customers, the term marketing communications is preferred by most marketing practitioners as well as by many educators. Consider that we may want to use marketing communications to refer to the collection of advertising, sales promotions, public relations, event marketing, and other communication devices. furtherance is considered as sales Promotion (Shimp 2007). Marketing Communication is used by brass instruments to communicate with customers with respect to their product offerings. In this sense, Marketing Communication is one side of the communication process with customers. Market research, in which suppliers seek to elicit information on consumer requirements from consumers, is the complementary component of the communication process. The following summarise s this very simply (Rowley 1998).According to Rowley (1998) producer should communicate to reach the customers and in turn should listen to the customers needs and requirements to enhance the product and service. Tesco proudly announced that one of the reasons to its Success is earshot to their Customers and its suppliers. Tesco has adopted multiple qualitative research techniques to reach their customers such as focus groups, accompanied shops, home visits to collect the feedback and move quickly with strict measures. Modestly they say, Its simple we listen and respond, providing customers withMarketing Analysis of TescoMarketing Analysis of Tesco1.ORGANIZATIONS ORIENTATIONAn organization orientation depends upon the marketing concept and the market orientations, which are the foundations of strategic marketing. Marketing concept exists on the fusion of all marketing activities. When they are combined, the company can achieve higher profitability (Hooley 2008 6, 7). Tesco has d emonstrable a strategic customer relationship management which builds and keeps a value customer awareness and powerful brand engagement. Its position in UK is alter by overtaking Sainsbury in 1995 and by its online home grocery service (Jobber 2010583).2. MARKET SEGMENTATION, POSITIONING, TARGET MARKETINGMarket segmentation is the process of taste the characteristics and demand of different individuals. Tesco gather customer information from the loyalty card scheme and identifies their purchasing habits and behaviour patterns, which are used for segmenting customers based on their needs. Customers are grouped based on their similarities. With this information, Tesco introduced different clubs like the kids club, the food club, the baby and toddler club, Healthy living Club. Market segments are chosen for targeting and a marketing mix strategy is selected for that target market (Jobber 2010262,584).To develop an effective strategic marketing there should be an upstanding positio ning of product and services in the market. Positioning is an iterative and vital process in retail marketing. The main goal of positioning is to develop and maintain a remarkable place in the market for the company and its product. Positioning starts with the product (Kalafatis 2000).Nevertheless, Tesco has a brand image and they are proud of its brand value ( Martenson 2007).Keys to successful positioning is clarity, consistency, competitiveness and credibility. Repositioning is carried out when customer needs or target market changes. Repositioning strategies include image repositioning, product repositioning, intangible repositioning, tangible repositioning (Jobber 2010285,288).3. MARKET ORIENTATIONMarketing orientation is achieved by marketing concept (Blois 2000 21). It is defined as all the departments working together to develop and understand customers current and future needs and to meet them to keep the customers satisfied (Hooley 2008 8). The elements of market orientati on include Customer orientation, Competitor orientation, and inter functional orientation.4. CUSTOMER ORIENTATIONMarketing oriented companies are primarily focused on customers. They get the needs and problems of their customers and buzz off a better solution for them (Blois 2000 22). Tesco strategy is based on loyalty card scheme and gets information about individual customers and their different needs. The club card helps the customers to save their money when they accumulate points in the card. Club card can be used at any Tescos partners (Jobber 2010583). Tescos objectives and guidelines are aimed without delay at customer satisfaction and it is assessed regularly (Hooley 2008 11). Customer orientation depends on the employee performance. It results in positive outcomes of the company. It determines the relationship quality of the organization and relationship quality highly depends upon the company loyalty (Macintosh 2007).5. COMPETITOR ORIENTATIONThe organization should tel l apart the short-term and a long-term capability of the competitors. A deep understanding of the competition is needed. For Tesco the competitive positioning applies at the level of the companies. In UK the leading grocery retailing competitors include Tesco, Sainsburys and Asda (Hooley 2008 208).We need to understand the competitors profit sources, position in the market, marketing strategies (Best 2004 7).Tesco collects information about the activities and conduct regular benchmarking against the competitor offerings (Hooley 2008 12).6. LONG-TERM PROFIT FOCUSThis is the ultimate objective of all the business. The main objectives of Tesco are to be a successful international retailer, to be strong in non-food as in the food business, to open more stores across the world. The International strategy of Tesco requires a long-term approach (Tesco PLC 2009).The decisions of Tesco are maneuver by long- term plans rather than short -term benefits (Hooley 2008 12).7. INTERFUNCTIONAL COOR DINATIONInterfunctional coordination concerns with the coordination of all company resources to create a value for target customers. To create an impenetrable competitive position, we have to rely on the coordinated efforts of various functions and people within the organizations. Cross-functional relationship plays a decisive role (Hooley 2008 12). Tesco has a dedicated team approach to develop and deliver market-based customer solutions (Best 2004 48).They work together and support each other to serve customer .The financial and management department work closely with the operators of the retailer world. Commercial departments make decisions to deliver best products at best possible prices. Corporate purchasing departments work with suppliers. The graduates in Tesco hand to generate revenue. Distribution team works to deliver products in the right time to different stores. The effective systems IT department improve online shopping for customers and they raise the contacts betwee n various business areas to streamline the entire processes. The marketing team of Tesco works with customers to understand their needs and current trends. The property and engineering department do all the support works of the stores (Hooley 2008 12).8. ORGANISATIONAL CULTUREMarketing orientation can be described as a variety of organizational culture that places the highest priority to establish and maintain the best customer value while considering the interests of stakeholders like investors, employees, suppliers (Blois 2000 21). The core purpose of Tesco is to create value for customers to earn their lifetime loyalty (Tesco PLC 2009). All the staffs work like a team .They gives respect each other and treat customers in a way they feel satisfied. Face to face meetings, trips are conducted and Staffs are rewarded for their work they do. They offer discounts and benefits for the staffs also provide more salaries, training, flexible working hours and health and caoutchouc measures are observed as compared to other retailers. Tesco welcomes all people regardless of age, sex, ethnicity etc. Human rights policies are applied to all members (Tesco PLC 2009). Store Loyalty is the output of customer satisfaction and customers will visit the store regularly. All employees understand their responsibilities to create satisfied customers (Martenson 2007).9. TESCO STRATEGIESTesco has a well-established strategy for their business success. some 70% of the trading and profit is from UK. They are the market leaders in markets outside UK. They have four different store formats like Express, Metro, Superstore, free and one trial format Home plus, for non-food and clothing. As an international retailer, they mainly focus on the local customer needs and understand them. They make sure the board appeal. They have various own brands of superior quality to customers to compliment their style of living. Tesco looks after the people working with them (Tesco PLC 2009). Market Cor porate responsibility is an opening for growth. The values are the no one tries harder for customers and treat people how they want to be treated (Tesco PLC 2009). The Tesco steering wheel represents performance and is a strategy-driving tool. (Tesco PLC 2009).A sale in non-food is a key part of the strategy. They provide with the best quality and price. Tescos non-food includes electrical, home entertainment, clothing, health and beauty, stationery, bookshop and soft furnishings, seasonal goods, opticians and pharmacies (Tesco PLC 2009). In retailing services, Tesco offers more to the customers. Tesco personal finance has products from computer address cards to insurance. Online grocery shopping is made effortless with Tesco.com. Tesco Telecoms offers a wide range of services from mobile network, home phone service, internet access and an internet phone service (Tesco PLC 2009). The Success of Tesco depends on trust and satisfaction of the customers. Overall, Tesco has a strong ma rketing orientation and compelling marketing strategies which results in the customer satisfaction and the higher levels of profitability. Every Little Helps Tesco to be a market leader (Tesco PLC 2009).10. COMPETITIVE ADVANTAGEAs Armstrong (2005) defined, competitive advantage is the advantage over competitors obtained by providing better value to customer. It is important to company who wants to win the customers and establish a profitable relationship with them (Armstrong Kotler, 2005). Before the organisation is choosing the right competitive advantage on which to build up its competitive strategies it must analyze the industry environment normally by development the porters 5 forces analysis.11. Porters Five Forces AnalysisIntroduced by Michael Porter in 1979, Porters 5 Forces is a powerful tool to analyse the attractiveness of an industry. This framework involves a relationship between competitors within an industry, potential competitors, suppliers, buyers. It helps managem ent to understand both the strength of the current competitive position, and the strength of a position organization want to be. (Michael Porter, 2008) A diagram below shows the Porters 5 forces clearly.12. Threat of New EntryAs porter said the ability of people who pertly enter your market might affect your power. If the barrier to entry the market is low and your have little protection for current position, then the new competitors can easily enter the market and weaken your position. (Michael Porter, 2008). In terms of new entrants Tesco does not have much threat because of the high barriers for new comer to entry into the supermarket industry. According to the TNS (Taylor Nelson Sofres, the leading market research group) data Tesco occupies over one third of grocery market share in UK, and is along with Asda, Saintsburys, Morrisons become the big four which has hold over 68% of UK overall grocery market. This strong solid position makes Tesco the market leader and giant in UK supermarket industry. Due to the massive market share has been hold by the big four, the barriers for new entrants are obviously quite high. It is hard for new retailer to obtain the market share and challenge the existing powerful player such as Tesco. In addition, another high barrier for new entrants is the supermarket industry needs huge capital and force play involved but needs long time to get the return. Therefore, there are high barrier for new retailers entry into the existing supermarket industry dominated by big four. Thus, if Tesco sustains its strong position in the market it will have less threat from new entrants.13. The power of buyerAccording to Porter the buyers have the power to drive price down. menial number of buyers and powerful buyers for a company can likely having greater power on driving the price (Michael Porter, 2008). Generally say, in supermarket industry there is little bargain power for buyers with supermarket because all the prices are doctor pric e. Moreover, the bigger number of consumers will reduce the power of buyers. Therefore, it is little power of buyers to Tesco due to huge number of customers and little bargain power of buyers in this industry. However, customers can still switch buying from one supermarket to another by many factors. First, the price is the primary factor determinates customers buying activities. In this respect, Tescos strategy is based on its cost advantages. The organization aims to be the best value retailer. Tesco stated its price has been cut by 17% between 2000 and 2006 even facing the higher energy price challenge during the recent recession Tescos price has been dropped down by 1.8% last year. Second, due to the differentiation of product is little in the supermarket industry customers can switch buying easily, thus, to attract and keep customers is relying on their loyalty to the store. Tescos report claims it has the UK number one loyalty card scheme and it has over 13 millions active Cl ubcard holders. Overall, the power of buyer is little to Tesco and Tesco has big advantages on low price and customer loyalty.14. reason of suppliersPorter said the suppliers also have power to drive up the price. The power of driven is determined by the number and the strength of suppliers. To the Britain biggest grocery supermarket Tesco, the power of supplier is very little because Tesco has vast numbers of supplier across overall markets. The overwhelming market power of Tesco makes suppliers have no bargain power to it instead, some of suppliers rely on Tesco. As a buyer Tesco has huge demand and great power to the supplier. However, Tesco also relys on their suppliers to achieve its objectives, without those suppliers Tesco could not deliver best value goods to the customers. Therefore, Tesco has established the long term constructive partnership with suppliers. According to Tescos report, it has over 1,500 suppliers who have been working with Tesco for five years or more. Ba sed on a survey taken in 2008 by Tesco, there were over 90% of UK suppliers thought Tesco was trustworthy. Moreover, Tesco also provide the opportunities to small producers and local suppliers. For example, Tesco has opened five new regional buying offices around Britain and hosted regional road shows to attract and increase the number of local suppliers for selling their goods through Tesco. As the result, the small suppliers get more business opportunities meanwhile they help Tesco getting hundreds of new lines into stores. In sum, Tesco has little threat from power of supplier and company achieved its objectives by establishing the trustable partnership with suppliers.15. The Threat of substitutesPorter introduced this threat as the other industry or business has the ability to substitute you and attract your customers. Although Tesco has head position in the supermarket industry, somehow, the substitutes still exist. For example, eating-out is a substitute to buying food from su permarket. However, a recent survey by analyst Buckingham Research has found that 75% of British families will stay at home during the recession rather than eating out. Under recession, the threat of eating-out to supermarket is less than ever. Another substitute worth to be considered is the online shopping. Nowadays, as the technology growing fast the online shopping becomes easy and trendy. However, it can not completely substitute the real life shopping especially for the food purchase. The technical problem, delivery problem and communication problem may bother people to buy online. Moreover, the real life shopping is also a part of social life to most of people, which would be simply substitute by clicking screen. In sum, the threat of substitute to Tesco is higher than buyer, supplier and new entrant.16. The Threat of Competitive RivalryThis threat comes from the competitors and also is touched by the new entry, substitute, power of buyer and supplier. The threat of competiti ve opposition to Tesco is high although it is the largest grocery supermarket in UK. Asda, Sainsburys and Morrison are the three main competitors of Tesco. These three companies also have big portion of market share and compete with Tesco through price, product and promotions. The competition between the main grocery supermarkets clay fierce. Tesco has been reported that the market share has been losing and dipping in UK market since 2009 by many main Medias such as Times, BBC news and Guardian. Reports said according to the last figures of 2009 Tescos market share dropped from 31.3% to 30.7% of UK grocery sales. Meanwhile, Asdas market share rose to 17 % from 16.7 % and Morrisons went up to 12.1% from 11.7 %. TNS reported against the UK grocery sales rise 6%, Tescos sales rose 4% which below the market growth. However, Morrisons and Asda were all found beyond the growth of the market, seeing sales rise 9.7% and 7.2%. Moreover, the discounter supermarkets Aldi and Lidl also compet e with Tesco as consumer cut back on spending during the recession. In addition, TNS also claimed that Waitrose, the John Lewis-own supermarket as the up-market grocer is fast growing in grocery market. On the other hand, because Tesco also set foot in non-food industry there are so many competitors such as Shell, BP, Amazon, O2, etc. To sum up, Tesco has highly threat from many competitors in both food and non-food industry. Therefore, Tesco must take its competitive advantages to prevent from threats of competitors.17. Competitive Advantage of TescoThrough the porters 5 forces analysis the competitive advantages of Tesco can be outlined. First, the significant market power is the big advantage of Tesco. The great market power makes Tesco is able to put up barrier to new entrants and weaken the power of buyer and supplier it also gives Tesco ability to beat the competitors. Second, namely cost advantage, the big economic scale enables Tesco to reduce the cost at extremely low level and thereby providing the low price to customers. Third, diversification makes Tesco has a further advantage to win the market because Tesco expands the broad markets such as financing, telecom and retail service rather than just food market and spread its business worldwide. To sum up, if Tesco follows its competitive strategy by aware of the threats and competitive advantages, it will keep the strong position in the industry and beat its competitors.18. MARKETING MIXFirstly, the term Marketing Mix was widely adopted after Neil H. Boren published his article The Concept of the Marketing Mix in 1964, where he described marketing managers as a mixer of ingredients. The ingredients in Borens marketing mix included product, planning, pricing, packaging, branding, distribution channels, personal selling, advertising, promotions, display, servicing, physical handling, fact conclusion and analysis. Which was later grouped into four categories by E. Jerome McCarthy, today know as the 4Ps of marketing, shown belowHowever, some people argue that along with the Marketing Mix 4 Ps concept, we should add another 2 Ps, which are people and packaging.19. PRODUCTIt is rare to discuss price without the presence of a product and to enable us understand the link between Price and Product. Kotler Armstrong (2006) define a product as anything that can be presented to a consumer for attention, acquisition, use, or consumption that might satisfy a want or need. They further define a consumer product as the product bought by the last(a) consumer for personal consumption. According to Ferrell (2005), the product is the core of the marketing mix strategy in which retailers can offer consumers symbolic and experiential attributes to differentiate products from competitors. However, it is also concerned with what the product means to the consumer. Product is about quality, design, features, brand name and sizes (Borden, 1984). Wulf et.al. (2005) found that private label products cou ld offer even better quality than national brands but at a lower price. The domestic competitor reacts to the intensifying price competition by engaging in discriminating price changes. A product is a physical good, service, idea, person, or place that is capable of offering tangible and intangible attributes that individuals or organizations regard as so necessary, worthwhile or satisfying that they are prepared to replace money, patronage or some other unit of value to obtain it. (Blythe 2007)Core products Core Products are the core benefit that is being want by the consumer by buying the product, like the cheaper call rates and ease of recharge top up available to Tesco Mobile customers. Actual / unanimous products Actual Products are all the tangible features/benefits that are associated with the core product such as its features or design, level of quality, packaging, size. There is no clear distinction between a pure tangible product and a service. The Tescos give away de als for the new 3G i-phone deal Augmented products are the intangible features/benefits associated with the core actual product such as the branding, warrantees, delivery, guarantee, and after sales service. Tesco mobile, for example, is a tangible product, but it often comes with a warranty and software system updates. A firmsproduct line refers to the variety of similar commodities that the firm holds, Tesco for example, makes a large range of inter-related goods, Many of Tesco stores stock over 40,000 product lines. Even a Tesco Express stores stock a choice of well over 2,000 lines.ProductDepthrefers to the variety of commodities offered within each product line. Tesco stores stock Healthy Living products, chuck up the sponge From products for people with food allergies and intolerances, Special healthy Kids snacks and Organic product lines and the recent announcement by the Tescobank CEO Benny Higgins of plans to launch an assault on the mortgage market by the end of 2010, hoping to take advantage of the current problems in the sector. Targeted at providingTescocustomers with financial advice, car and home insurance recognize cards, mortgages and current accounts.(MINTEL 2009).Products often go through alife cycle.Initially, at the introduction stage a product is launched. Since the product is not well known and is usually expensive (e.g. the , as). Eventually, many products reach agrowthphase where sales increases dramatically. More firms enter with their models of the product, sometimes with added innovations. Unfortunately, the product reaches amaturitystage where little growth is sighted. For example, in the UK, almost every sign has at least one stereo sound system. Some products may also reach adeclinestage, usually because the product is swapped for something better. For example, CDplayers experienced declining sales as more consumers switched to MP3 players and i-pods.Ansoff Theory is a series of suggested growth strategies that set the arm orial bearing for the business plan. illustrated below Market Penetration here the business strategy focuses on selling existing products in existing markets.This strategy aims at four major objectivesMaintaining the market share of current productsSecuring growth market DominanceDrive out competitors with support of an aggressive promotional campaign and favorable price strategyIncrease product usage by existing customers e.g. With the Tesco Loyalty Club card scheme.Market Development here the business strategy seeks to sell its existing product into a new market. The various approaches to this includeNew geographical markets e.g.- exporting Tesco UK products to the Express shops in Ireland and MalaysiaNew Product Dimension or PackagingNew distributional channelImplementing different pricing policies for different markets segmentsProduct Development refers to a growth strategy where new products are initiated in existing markets. This often requires development of new competencies in the case of Tesco Bank and its new line of reasoning vacancies for competencies in the financial sector. Diversification points to the growth strategy where a business markets a new commodity in a new market. Unfortunately, for this strategy to be adopted a clear objective of its advantages should be explored and risk assessments carried out seeing as the business may have little or no experience in the new area. Roughly one quarter of Tescos sales, was own label. Many leading retailing companies have substantial grocery interests. Of the top 25 companies in 1978, 22 were involved in groceries retailing, of which 10 can be considered leading firms in the groceries sector Akehurst, 1983 169, send back 520. Price Price refers to the value assigned to something by the seller to something purchased, offered for sale, to a buyer as their willingness to pay for the product and services delivered (Gilbert 1999). Price is the only element in the marketing mix that is revenue generatin g- all of the others are costs. It should therefore, be used as an active instrument of strategy in the major areas of marketing decision making. Pricing in the international backdrop is more complicated than in the domestic market, because of factors such as political science influence and additional costs (Becker and Thorelli 1980). The price of an item is an important influence on the value of sales made. In theory, price is really determined by the discovery of what customers perceive is the value of the item on sale. juvenile research has shown that demand-based pricing is associated with higher retailer gross margins whereas past price dependence is associated with, lower retailer gross margins (Nijs, Srinivasan, and Pauwels 2007). There are a number of pricing policies used by Tesco today, which include21. Market-led Pricingalso known as competitive pricing, this simply accepts the price which competitors are charging for a product and then price its product at the same lev el or slightly lower in order to gain some advantage over competitors. Significantly found in markets where there is close competitors. For a company like TESCO it is important to monitor other competitors and in order to maintain customer loyalty against discounters, the adoption of a more aggressive pricing strategy was launch by the advent of budget private label ranges and backed up by advertising instruction on price comparisons. Despite challenges due to rising energy prices, but with innovations such as the reusable plastic trays, which was introduced in the fresh food areas have helped make savings these savings are pass on to customers. According to the OFT this led to a fall in real food price between 2000-2005.as shown below22. Cost-Based Pricingalso known as cost plus Pricing, involves working out the businesss total stock-still and variable costs and then adding a percentage of profit. Here the business has to consider the total number of items that it plans to produ ce and sell. The big advantage of cost-based pricing for TESCO is that the company is guaranteed to make a profit on its sales since it has covered its costs. However, in operating cost-based pricing it is very important to be aware of competitors price. However, this poses a threat when businesses are unable to sell the expected cadence of the product, perhaps because competitors are offering the same goods at a lower price.23. Price warsIn a competitive market such as grocery market, businesses sometimes engage in price wars in which prices of some goods are slashed to a very low price in order to secure sales. Price wars swamped grocery retailers, as the switch to private labels from branded packaged food continued to gather pace. For instance, Tesco and ASDA propose halt of tax on some products at 15% despite an increase in rates to 17.5%(MMR 2010) This is risky because advantages gained are short-lived and rival, businesses tend to respond by slashing prices even further. If pursued long enough, price wars would cut profits seriously and in the end, only customers benefits by the low prices.24. sixth sense PRICING25. ECONOMY PRICINGStores such as TESCO, which allegedly charge the lowest prices, attract many consumers based on this conception just (Peter Donnely, 2007). Among retail stores, the pricing strategy has become the fundamental point, as they need to compete in terms of pricing to lure more customers. Berman (1996) added that among the pricing policies which are of major concern to retail store outlets are the High-Low Pricing and Every Day Low Pricing (EDLP) strategies. This is sighted in operators who have significant economies of scale and buying power (Gilbert 1999).26. VALUE PRICINGThis ensues where immaterial factors such as the recession or increased competition forces companies to provide VALUE product and services to retain sales, they are especially important to families on a budget and have made a significant contribution to maki ng healthy food accessible to all. Tesco now has in store 95 fresh fruit and vegetable value lines, and are working with the Pre-School Learning Alliance to help parents and children in some of the UKs most deprived areas make healthier choices. Value pricing may have a negative impact on the profit margin of the company (tesco.com N.D).27. GEOGRAPHICAL PRICINGThis is evident where there are variations in price and demand in different parts of the world. TESCOs prices are a little higher in some town centre and neighbourhood stores because of higher overhead costs (mainly rents and rates). These costs are spread over a smaller volume of sales, and can only be recovered by charging prices that are, on average, higher. Example was when Tesco first moved into Ireland the products it sold was more expensive than they were in their UK stores (Irish Times 1998). This was because the UK suppliers were charging the Ireland stores more than they were charging the UK stores. This triggered so me conspiracies and allegiances between key stakeholders in the industry resulting in a widespread anti-Tesco campaign (Poole and Clark 2002).In finisPricing a product too high or too low could mean a loss of sales for the organization. Therefore, appropriate pricing strategies and policies should be put in place for the various market segments, to go steady28. PROMOTIONSignificant P in Marketing Mix 4P (Product, Price, Promotion and Place). Although the 4P characterization has led to widespread use of the term promotion for describing communications with prospects and customers, the term marketing communications is preferred by most marketing practitioners as well as by many educators. Consider that we may want to use marketing communications to refer to the collection of advertising, sales promotions, public relations, event marketing, and other communication devices. Promotion is considered as gross revenue Promotion (Shimp 2007). Marketing Communication is used by organisation s to communicate with customers with respect to their product offerings. In this sense, Marketing Communication is one side of the communication process with customers. Market research, in which suppliers seek to elicit information on consumer requirements from consumers, is the complementary component of the communication process. The following summarises this very simply (Rowley 1998).According to Rowley (1998) producer should communicate to reach the customers and in turn should listen to the customers needs and requirements to enhance the product and service. Tesco proudly announced that one of the reasons to its Success is auditory modality to their Customers and its suppliers. Tesco has adopted multiple qualitative research techniques to reach their customers such as focus groups, accompanied shops, home visits to collect the feedback and respond quickly with disciplinary measures. Modestly they say, Its simple we listen and respond, providing customers with