International Marketing Strategy for Tesco

Executive Summary

This report outlines international online marketing strategy for Tesco because of its market admittance into Sweden with a variety of baby wear. The SWOT and PESTAL research show that Tesco currently has the learning resource capabilities to successfully enter the market and implement a market development strategy. The survey recommends that Tesco focus on the high-end market portion with a differentiation strategy.

This report will assist in understanding and the formulation of an international online marketing strategy for Tesco Plc. The report will use PESTLE and SWOT analysis to offer an insight into Tescos current market situation. This will help management to make the correct proper choices in conditions of commercial and international strategy in conditions of lunching a variety of baby wear (infant & young child clothes) into Eastern Europe (Namely, Sweden). The article will describe how Tesco will make such market variety and also controlling corporate portfolio. We use the Ansoff Matrix to consider market access models. The ultimate part of the report provides an activity plan for Tesco plus a profit and loss consideration. Measurements and control with contingency plans will also be discussed.

Company Profile

Tesco works more than 2, 300 supermarkets, hypermarkets, and convenience stores in the UK (where it is the market head in food retail), Ireland, Central Europe, and Asia. Its businesses include convenience and gasoline retailing (Tesco Express), small metropolitan stores (Tesco Metro), hypermarkets (Tesco Extra), and financial services through Tesco Personal Finance. A global innovator in online grocery store sales, it has a 35% stake in US grocery store chain Safeway's GroceryWorks. It is the leading online grocery store and it is now broadening its business with a TV channel and a "retail structured education institution.

SWOT and PESTLE Research of Tesco Plc

A PEST analysis of the industry will verify the local, national and global affects of political, economical, social and scientific factors to understand opportunities and threats well.

I

N

T

E

R

N

A

L

STRENGTHS
  • Diverse runs of products
  • Open 24 hours a day
  • Strong Cash Flow Position
  • Increase turnover and trading profits
  • Strong Balance Sheet
  • Leading Supermarket Chain
  • Brand Awareness
  • Human resources
  • Online Shopping
  • Capabilities to carefully turn resources into advantages
OPPORTUNITIES
  • Develop brand consciousness globally
  • New Markets
  • Market move to globalisation
  • Health awareness progress -GM crops
  • Innovation & Alliances
  • Low cost brand growth
  • Diversification
  • Non-food - offers untapped new marketplaces with higher margins

E

X

T

E

R

N

A

L

WEAKNESSES
  • Perception of poor -(Tesco value brands)
  • Lack of local understanding of customers and culture
  • Foreign brand
THREATS
  • New & existing competition
  • Volatility in Price of fresh materials
  • Economic recession
  • Market switch to globalisation
  • Takeover bids
  • Far-East low priced brands
  • Extremely high competition for customers and resources

All of those (political, economic, sociable, technological, legal and environmental) factors will somewhat connect with the retail industry in Sweden.

POLITICAL - Following a European Integration and Free Trade Agreements, the marketplace has exposed for British isles Companies to purchase Eastern Europe. Tesco already has 60 Hypermarket store in Hungary. Lidl is uncompromisingly fighting with each other to keep its market tell an aggressive charges strategy.

ECONOMIC - the Retail sector is rather downturn prawn and also very hypersensitive to changes in interest levels. Since the happenings of Sept 11th the planet economies have endured heavily, securities plummeted and prices are at all time lows. The planet market is however, now on the up post September 11th. Individuals are optimistic and the retail industry is once again booming.

SOCIAL - changes in consumer flavour and lifestyle signify both opportunities and dangers for the industry. Opportunities in terms of new market and consumers, however, there are added threats in conditions of alternative proven Swedish national sellers (foreign company bias).

TECHNICAL - Changes in retailing methods as such clothes sales via the web is now a common place in retailing. Paperless operation, the management and supervision of the company are undertaken on IT systems, that happen to be accessed through secure machines; provide overall flexibility in the jogging of the business enterprise. As Sweden is at the forefront of scientific advancement with nationwide companies like Ericsson, Tesco would benefit from the comprehensive logistic and circulation channels already set up.

LEGAL - Country wide legislation for health and protection both in terms of consumer rights and also in conditions of development of own natural renewable resources to make clothes.

ENVIRONMENTAL - The renewable way to obtain resources used in production, namely cotton and wool are environmentally friendly. The threats are in terms of legal consequences for livestocks in terms of health insurance and safety.

Market Entry Strategy

We may use Ansoffs product/market matrix to recognize directions for Tescos tactical development. This matrix offers directions for strategic option open to Tesco in terms of products and market coverage, considering its strategic functionality and also expectation of stakeholders

Products

Existing

New

Markets

Existing

Protect/build

  • Consolidation
  • Market penetration

Product development

  • With existing capabilities
  • With new capabilities
  • Boyond current expectations

New

Market development

  • New segments
  • New territories
  • New users
  • With new capabilities
  • Beyond current expectations

Diversification

  • With existing capabilities
  • With new capabilities
  • Boyond current expectations

Source: Johnson, G. , Scholes, K. , Whittington, R. , (2005)

We can see from the Ansoff Matrix that Tescos meal of Baby wear in Sweden calls for a market development strategy. As Tesco already provides kids clothing (existing product) but Sweden is a new market. Both capacity and market factor has motivated Tesco to into development into new marketplaces. Kids clothing is something that can be exploited in other market sections and also geographical spread internationally. Tesco may face some problems around creditability and prospects as they attempt to get into the new market. Tesco may not be seen as a credible ˜mainstream company.

Tesco Plc Focus on Customers

Tesco must make a decision which market portion in Sweden it would like to focus on; this will eventually determine its common strategy. If it desires to with the low cost merchants then it must choose a cost management strategy. Otherwise it will have to consider differentiation so that it can charge superior prices at the high-end market. As the competitive rivalry in the reduced cost market is intense, Tesco should go into the high-end market with a differentiation strategy. However, before Tesco chooses on its aim for customers, we need to conduct a market analysis, in terms of size of the infant clothing market in Sweden, market shares of all existing firms in the market and finally sections within the marketplace, to identify particular sections, so that Tesco can concentrate on these and adapt its marketing.

Marketing Objective

Tesco may have the following aims
  • Profitability, in conditions of operating margin (a 10% concentrate on)
  • Swedish Market share (a 20% concentrate on)
  • Customer advocacy (the amount of customers who recommend Tesco branded clothing, duplicate business)
  • Respected company (the amount of community stakeholders who respect Tesco)
  • Employee desire (the amount of employees who feel determined to deliver Tescos goals)

Tesco must ensure that it places ˜SMART marketing goals that are measurable, time limited, achievable and relevant.

Marketing Strategy

Tesco strategy is clear, with expansion being pursued from four areas - the key UK food business, non-food, international growth and retailing services such as financial services, the dotcom business and telecommunication deals. Fundamentally, Tesco is which consists of strong stable main to keep carefully the business ticking over while it forges new riskier areas of growth. Pushing further into non-food in the next period (Johnson, G. , Scholes, K. , Whittington, R. , (2005)). Lidl is currently "destroying" the market by selling the merchandise below cost price. Therefore, Tescos universal strategy will have to be cost command, unless we can efficiently differentiate our type of clothing so that we can charge reduced price.

A marketing strategy calls for analysing the market segments, and which products to provide. The strategy is carried out through marketing methods, which involve detailed decisions about factors including the price and the way the product is sent out. So Tesco must choose its style of entry in terms of, own stores, Internet advertising or joint venture with an existing national store.

Activity Plan

  1. Market Research
  2. Market Examination (including demand for baby wear)
  3. Mode of Entry
  4. Marketing Mixture Decisions (Place, Price, Product, Campaign) decisions
  5. Methods of campaign - advertising, pr, direct mail, sales advertising and personal selling

Profit & Damage account

Measurement & Controls

Tesco must have in place both financial and tactical controls. Financial handles are in terms of profit targets, capital bids and performance appraisal. Strategic controls in conditions of overall tactical balance, arranged business plan, optional services and infrastructure and any short-term constraints such as recruiting.

Contingency Plan

The contingency plan must maintain destination to ensure that if the product fails having made large capital investment funds in new store, Tesco will need to have other products within its stock portfolio, which it can establish.

References and bibliography

  1. http://www. forbes. com
  2. Johnson, G. , Scholes, K. , Whittington, R. , (2005) Exploring Corporate Strategy Text and Situations, 7th Edition, Foot Prentice Hall
  3. http://www. hoovers. com/nike/--ID__14254--/free-co-factsheet. xhtml
  4. ACCA Paper 3. 5 Strategic Business Planning and Development (2001) The Financial Training Company
  5. M. E. Porter, Competitive Advantages: Creating and Sustaining Superior Performance, Free Press, 1985
  6. Jeannet, J. , Hennessey, D. H, Global Marketing Strategies, 6th Release, Houghton Mifflin

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