EXECUTIVE SUMMARYThis paper will focus on highlighting the essential factors that influence and change the marketing environment for Tesco and its operations across the United Kingdom. Tesco is a large group that is operating in different areas such as grocery, banking, electronics, clothing and the list can continue. We will focus on grocery retail as we will analyse different frameworks to help us understand how and what influences decisions in the business. It is important to mention that the frameworks approached in this essay will consist of micro and macro factors that are usually driving managers to changing strategies or policies. By the end of the sections the reader will then have information on both the internal and external trends although they will not be presented individually, independent of the frameworks. I chose three main models to describe Tescos grocery operations in the United Kingdom to be able to critically assess reasoning behind business decisions: SWOT and PESTLE analysis along with Boston Consulting Group diagram (BCG matrix). Firstly,with the help of the SWOT framework we will get a better view on the strengthsand opportunities of the company, as well as its weaknesses and threats,presented in the right marketing environment. Secondly,we will use PESTLE analysis to differentiate between certain areas that mightconsist of obstacles for Tesco to succeed in reaching their goals and targets. Followingthat, the BCG diagram will help us see in more depth over their products andwhat is it that gives Tesco revenue, growth and market share along withproducts or areas with far less growth, return on investment or marketexpansion opportunities. Last but not least,after successfully analysing these concepts and how they influence Tescosgrocery in the UK, there is the last section consisting of a set ofrecommendations based on a survey that summarises customer demands, so that thesupermarket experience to be as pleasant as possible, which is also thecompanys goal. Tescos goals can be found in the mission and vision section aswell as future target areas that have also been mentioned and explained acrossthe paper. INTRODUCTIONTesco is one of the largest retailers in theworld and the biggest supermarket chain in the United Kingdom by market sharewith a percentage of 27.8. Tesco has the widestrange of products i.e. food in the UK, with two main self-owned food brands:Everyday Value and Finest, each selling over £1 billion per year. Its Every little helps philosophy puts customers,communities and employees at the top of their priorities list, making it easilyrecognisable for everyone to associate it with the company. Tescosoperations in the UK are the largest within the Group, with over 3400 storesand, therefore, the focus of this essay will consist in Tescos grocery operationsin the United Kingdom. FromMarch 2017 onwards, grocery market share figures reveal that UK supermarketsare experiencing their best sales growth in the last five years. Mr McKevitt announced for BBC that All four ofBritains biggest grocers managed to grow sales for the fifth consecutiveperiod, a run of collective success not seen since 2013. Since we areconsidering market prosperity, we need to analyse the primary target points andthe procedures chosen in order to achieve and maintain the companys goals. As marketing is a process of identifying, anticipating andsatisfying customer requirements and that Tesco succeeded in taking over themarket, we can argue that the group successfully accomplished to identifyneeds, wants and to deliver value to their customers.There are three main components of a marketing concept:customer orientation, integrated effort and goal achievement. We will analyseall of them along with the marketing planning process to help us understand whyand how did Tesco become the biggest supermarket chain in the UK. MISSION AND VISIONIn order to critically analyse the market environment Tescooperates in, we need to identify their mission and vision and do theappropriate research in order to assess if their marketing approaches areefficient and satisfying. Tescos vision is to be the most highly valued business by: the customers weserve, the communities in which we operate, our loyal and committed colleaguesand of course, our shareholders. (TescoPLC).As we are talking about a changing world especially in this industry, companieslike Tesco are focused businesses and they have a core vision that remainsunchanged while business strategies, practices, customer needs and marketschange. Tescos vision is an aspiration for certain goals that the company has,so they came up with a business strategy divided in several parts to help thembuild their vision. We therefore have a benchmark for what it aims to achieve: indispensability;growth with plenty of opportunities; modern and innovative ideas; inspiring,earning trust and loyalty from customers, colleagues and communities. Along with their marketing strategies, the vision and missionare correlated, so their mission stating Serving Britains shoppers a littlebetter every day (Tesco PLC) follows the vision of the company to efficientlysucceed in placing the customers at the heart of everything they do. Theaspirations of the managers are outlined in Tescos vision and thus it isdriving the business while embedding the strategic planning process.MARKETING ENVIRONMENTIn order to be able to assess how Tesco built a dominant positionin the retail market within the UK it is essential to evaluate theenvironmental trends that the company is actively engaged in. We will thereforelook at the micro and macro factors that Tesco needs to overcome whilestrategic planning. Also, we will undertake a SWOT and PESTLE analysis to fullyunderstand the marketing environment and to provide a more in depth picture ofinternal and external factors that are the focus point behind every business ormarketing strategy.(S)trengthsOne of the most important asset that Tesco currently has incomparison with its competitors is that it is the leader in terms of marketshare with a percentage of 27.8%. At this scale it is not hard to predict thatthey have the highest number of customers, 66 per second respectively, so thestandard need to be set high in order to meet the demands of each customer. Sothey introduced Tesco Values, an own-label branch that underpins the growth,success and strength of the company. Apart from that, Tesco is actively engagedin meeting the ever-changing standard of the society and in bringing new andold customers in its stores again, thus they want to reward its customers withTesco Clubcards as a way of saying thank you. The power of this marketingstrategy lies within the parameters of giving the company insights intoconsumer habits, preferences and trends. The marketing team is then ready tooffer customers personalised promotions and additional incentives for them toshop further with Tesco. On the other hand, they have Tesco own-brand products whichare of substantial importance for the company as they are an opportunity togrow strategic advantage especially because they have the advantage of beingthe first supermarket to launch a Value range in 1993(Tesco PLC). The group hasfound the right path to innovation and, therefore, their Finest and EverydayValue products are now the largest food brands in the UK. (Tesco PLC). Among the market advantages that Tesco has is that it isefficiently involving in environmental issues and thus they are the firstsupermarket to open the first zero carbon store and, according to Tescos chiefexecutive Sir Terry Leahy, the new store cost 30% more to build, but it uses50% less energy, which sent Tesco right at the top of supermarkets race to begreen. (W)eaknessesGiven thedynamic nature of the retail sector and product offering, studies show thatonly 6% of grocery customers use the sameretailer in a typical month, so we need to take into account the high level ofretail switching. Brexit is one of the main weaknesses right now forTesco, driving high inflation in the UK and increased costs from a weakerSterling. New import duties and tariffs will have a major economic impact andcompetition, markets along with political and regulatory compliance are just acouple of the obstacles Tesco will encounter in the next years.According to Tescos Strategic Report, international sales growth weakened in the second half of the financial year due to an increasingly competitive environment in Europe, particularly Poland. Considering Brexit and growth of awareness on locally produced good, the farmer markets in Europe are gaining more trust from customers and thus BIO products are gaining very high demand in comparison with the usual day-to-day products that customers generally find in supermarkets. Due to the size of the sector supermarket retailers operate in, this is not a major liability for the Group. These uncertainties could cause an adverse effect on their operations, thus as Brexit emerges, the management should be able to assess potential risks and impact especially for Tesco shareholders.(O)pportunitiesTakinginto consideration that the food retail sector is moving toward a degree ofprice uniformity, studies show that, on average, 50% of grocery shoppers statethat the main difference between large chains of supermarkets are their ownbranded products. Therefore, Tescos own-range is one of its biggest assets atthe moment. Customers look for products with a fair price-quality balance andTesco already succeeded in meeting customer demands and, thus, they have thewidest self-owned food brands. As 37% of supermarket shoppers would like to seeincreased quality in supermarkets own-brands, this is an obvious opportunitythat Tesco has to find the suitable business and marketing plan to meet demandand ensure growth and profitability. Another aspect of certain retailerstrategies is to move away from a promotion-led strategy to anevery-day-low-price (EDLP) strategy. This action will help to reduce foodwaste, once more proving Tescos willingness to involve in environmental andsocial issues that the world faces nowadays. InJanuary, the Group announced a future merge with Booker Group, an action thatwill create the UKs leading food business. It will bring together bothcomplementary skills in retail and wholesale business will give Tesco theopportunity to discover new paths and to achieve one of their goals moreefficiently, respectively to serve their customers better with high-qualityaffordable food wherever and whenever they need it. Moreover, asmentioned before, Tesco was the first to open an environmental friendly storeand it aims to be a zero-carbon business by 2050. This is a valuableopportunity as more and more people are engaging in environmental causes, sothis action will bring positivity, sympathy and trust from customers as theyhave proof the Group is genuinely keeping its promises to help overcomeproblems of such importance. (T)hreatsCustomers are key to risk movements as the retail industry isindeed dynamic and a failure to listen to the grocery shoppers and tounderstand the marketplace will lead to a loss of market share, as customerspurchases will be made with Tescos competitors. In terms of market share, itsbiggest competitors are Sainsburys (15.8%), followed by Asda and Morrisonswith a market share percentage of 15.3% and 10.4% respectively (See Appendix 1and 2). If the company fails to review trading opportunities, competitorstrategy and activity then it will result in a loss of the market advantage itcurrently has, so the level of risk of this particular threat remains unchangedregardless of their head start and ability of doing business.On the other hand, considering changing marketing strategies,the major downside of moving towards an EDLP strategy is that the level ofimpulse shopping will diminish if we consider that promotions attract impulseshopping rather than shopping made on a daily basis. Apart from competitors and changing strategies, there is alsothe risk of the unknown caused by a changing political environment thatresulted in increased regulatory intervention in the UKs food retail market.If the company fails to comply with the new requirements due to changes in thepolitical landscape this will give Tesco consequential litigation, negativereputation and unfavourable effects on their ability of implementing innovativebusiness and marketing strategies to cover the new needs of legislations. PESTLE AnalysisTesco has reported a £1.28bn annual profit, sales of49,9bn(4.3% rise), in the UK like for like sales went 0.9% up, being the firstfull-year growth since 2009/10 and their net debt is now £(3.7)bn, 27%down, beatingevery analyst expectations. There are several factors that may affect thissudden growth of the Group and, in order to get a better understanding of thereasons and drivers, we will analyse them through a PESTLE analysis.(P)olitical FactorsSince we are talking about a company that operates globally, international political factors have a great influence on its performance. Those include tax rates, inflation, exchange rates, legislation and, undoubtedly, the economic stability of the country in which they operate. Since we are considering its operations across the UK, Brexit is its main enemy as this event will cut down even further Tescos stability in terms of shareholders and financial statements. As they are playing an important part in creating growth and innovation opportunities for the retail market in the country, they need to successfully adapt their strategies in order to overcome future events when England will actually leave the EU. (E)conomic FactorsA big concern for Tesco are the economic factors as theseinfluence demand, costs, profits and prices. It goes without saying that demandfor goods is influenced by the level of household incomes and employability anda fall in the two mentioned mean an altering of demand and supply curves bothfor the business itself and for the whole market. These factors are completelyoutside the control of the company, but they make a big difference onperformance and the marketing mix of Tesco. As Brexit occurs, there willcertainly be a major change in prices especially considering the area whereTesco uses outsourcing as trading will occur at a higher price so any slowdownin the Britains food market will badly affect their imagine of providing thecheapest products, therefore they may consider further diversification.(S)ocial factors Lifestyle changes, education, living conditions and movementtowards organic products are trends that indicate that generally, in the UKshopper choose either bulk or one-stop shopping. Therefore, Tesco has increasedthe variety of their non-food items and chose an approach to constantlychanging their organic and fresh-food range. They anticipated that demand isinfluenced by peoples beliefs which are also influenced by social conditionsand so they reach out to these problems by altering their corporate behaviourby introducing working flexibility, a gender pay gap scheme to reduce thedifference in payments for equal levels of work between men and women alongwith other actions to help both workers and communities. (e.g.: the horsemeatscandal consumers to be cautious with their purchases)(T)echnological FactorsIntroducing new and innovative technologies into the businesswas and will be Tescos advantage for improving customer satisfaction. Amongtechnologies such as electronic shelf labelling or electronic fund transfersystem, the self check-out machines are becoming more and more popular amongstcustomers as they are more convenient, together with the introduction of onlineshopping with home delivery facilities. This way, Tesco managed to improvestocking and distribution processes as well as to reduce labour costs andwaiting times for customers.(L)egal FactorsGovernment policies and legislations directly impact thecompanys performance. For example, the Code of Practice is banning manycurrent practices such as changing agreed prices without notice or demandingpayments from suppliers (Mintel Report, 2004). Government practices formonopoly control and reduction of buying power limits entry to these marketsand as they impose license requirements and limits. Tesco addresses to thesepolicies by providing price reductions and promotions for fuel purchases inaccordance with the amount spent in its supermarkets. In terms of employability legislations, the Britishgovernment encourages retailers to provide a mix of job opportunities and tomeet demand when it comes to population categories such as working parents,students or seniors. Among other legal factors that the company needs to accountfor are quality control regulations in order to assure that customers get theirdesired quality for the price they pay.(E)nvironmental factorsTescos corporate social responsibility image is recentlyseen extremely positive as they are constantly involving in differentactivities to reduce their impact on the environment. As they operate in thefood sector, their life span depends on the health of the nature so theyclearly state their role in protecting the environment by addressing impacts onoperations and supply chain. Also, by 2020 they are committed to reduce theircarbon footprint by 50% and to minimise the waste produced in their stores.Their target is to implement strategies to produce more food to feed a growingglobal population and to restore farming practices along with reducing fieldemissions. (Tesco PLC). They are also engaged in achieving zero netdeforestation by 2020, a sustainable footprint on climate, local reductions onwater waste, marine initiatives and many more. Furthermore, they introduced theReduce, Reuse and Recycle action in their stores, to give customers recyclingoptions in their stores.BCG matrixTheBoston ConsultingGroup matrix helps in allocating resources and distinguishing aspects of thebusiness such as profitability and position in the market. Cash cows have high market share and low growth in a maturemarket. Needless to say, Tesco main source of profit it is its fresh meat as ithas the highest demand across the UK. Despite the incident with its meatsupplies that damaged their brand image, they managed to overcome this problem andregained customer trust. Considering there are other meat retailers operatingat a large scale suggests that the market is operating at a mature stage, thus,the high income generated from meat sales makes it one the cash flows of thegroup. Apart from meat, their fresh fruit and vegetables are also included inthe cash cow category as there is high demand for these and, implicitly,opportunity to high revenues. Stars are products that create growth for the business andthat run in markets characterised by opportunities to develop. They usuallyrequire more investment than cash cows but they can grow into cash cows whenthe market becomes mature. Here we can include Tescos finest range as theytarget customers who are willing to pay more for a certain degree of quality. Dogs have low market share, low market growth and in order tokeep the operations going they require investment, which however can result inpoor performance still. A suitable example for this situation is Tesco Mobilewhich has an uncertain future and it is unlike to generate expected resultssince the mobile industry has high competition and slow growth potential.Question marks consists of products that create lowerrevenues and are not considered as profitable. The future of these products isuncertain as the market may grow, therefore it can become a positive source ofrevenue. They have the potential to become stars or dogs so they need to behighly analysed before making investment decisions. In this category, we caninclude Tescos lard which generates some income but it does not create highdemand among customers. All these frameworks have been used to critically analysedecisions behind the business rationale and to be able to understand more indepth how certain areas such as legislation or environment can alter marketingstrategies or business decisions. RecommendationsLooking at results from supermarket shoppers that were askedwhat they would change about their favourite supermarket, significant amount ofpeople chose selected improved availability, improvement of a loyalty scheme, improvementin the quality of fresh foods, waiting times at checkouts and ease of storenavigation. Arguably, for a customer it is highly essential to find all theproducts they need within a single store, at a reasonable price and withoutwasting too much time. In order to correctly choose marketing strategies Tescohas to look at customer desires so that they have a broader view on demand andthus investment or new strategies will be implemented in the right sector. Itis essential that the company succeeds in anticipating trends and marketchanges in order to keep its current advantage of being the market shareleader. AppendicesAppendix 1REFERENCE LIST: http://www.bbc.co.uk/news/business-41011259https://www.cim.co.uk/media/4772/7ps.pdfhttps://www.tescoplc.com/about-us/our-businesses/tesco-uk/tesco-in-the-ukhttp://businesscasestudies.co.uk/tesco/vision-values-and-business-strategies/vision-and-mission.htmlhttps://www.theguardian.com/business/2010/feb/02/tesco-carbon-neutral-green-buildinghttp://academic.mintel.com/display/804121http://academic.mintel.com/display/804123Get Help With Your EssayIf you need assistance with writing your essay, our professional essay writing service is here to help!Find out more
