marketing audit- tesco introduction - · pdf filemarketing audit- tesco ... intermediary...
Post on 06-Mar-2018
297 Views
Preview:
TRANSCRIPT
1
MARKETING AUDIT- TESCO
INTRODUCTION
Tesco is the largest grocery retailers in the United Kingdom and it was founded by John
Edward Cohen in 1924. Tesco Plc has at present 2318 stores including supermarkets,
superstores, and convenience stores across UK, Europe and Asia. In addition to
supermarkets the Tesco also offers various financial products like insurance, banking
services, telecommunication and electrical appliances. Moreover Tesco Plc employs over
520,000 people across the world. Tesco Plc also provides online services through its
subsidiary Tesco.com. In the United Kingdom Tesco offers more than 40,000 food products
as well clothing and other products under four banners such as Tesco Extra, Tesco
Superstore, Tesco Metro, and Tesco Express. Recently Tesco has become the largest petrol
independent retailers in the United Kingdom. There are three levels of company's label
products; value, normal and finest, and the own label brands account approximately 40% of
the sales (Tesco, 2012). In addition to United Kingdom Tesco has stores in rest of the EU,
comprised of Hungary, Republic of Ireland, Poland, Slovakia, and Czech Republic. Whereas
the stores of Tesco Plc in Asia includes South Korea, Thailand, Taiwan, And Malaysia. The
products and services offering of Tesco includes, food retail, non food retail, petrol stations,
home living range, Tesco Personal, life, home, motor, and home Insurances, credit cards,
investment bonds etc. Tesco Plc has been named as the priority store by customers for
purchasing organic food products (Tesco, 2012).
This report gives an emphasis to the marketing audit of Tesco Plc, UK. In order to carry out
the marketing audit, the author adopts the model of FEPSOS developed by Kotler (2008).
FEPSOS stands for, Functional Audit, Environmental Audit, Productivity Audit, System Audit,
Organisational Audit, and Strategic Audit.
SOURCES OF DATA
In order to carry out the marketing audit of Tesco Plc, the author has gathered data from
various sources and that includes both primary and secondary data. An interview was
carried out by author with two line managers of Tesco Metro, Upton Park as part of primary
data collection. Moreover, the author utilized various books, articles, academic journals,
publications with regards to Tesco, In order to collect data.
2
TESCO – FUNCTIONAL AUDIT
Attributes Analysis Evaluation
Product Varieties of products: Tesco offers various products ranges that
includes food, electronics, non food products, banking, insurance
etc.
Over 40,000 products line: At present Tesco has over more 40,000
products line.
Strength
Price Setting price according to the demographic: This means that Tesco
sets their prices according to the income of the demographic area of
the stores located. However Tesco do not trim down the price like
ASDA, and stays somewhere in the middle
Dual pricing strategy: This means that the prices of products
excluding those at promotions will not be higher in order for the
store to make more profit.
Strength
&Weakness
Place Great store network: Tesco posses a great store network and that
comprised of six formats namely; Tesco Extra, superstores, Metro,
Express, One stop, Tesco Home plus. Tesco decides to locate the
type of store according to the nature of area.
Sophisticated online store. Tesco has sophisticated online store
namely Tesco Direct, as such customers are enabled to purchase
simply with free delivery.
Strength
Promotio
n
One off promotion: This means that Tesco match the price with
other competitor in order to attract customers. However it seems
Tesco usually is unable to match the price with ASDA, meanwhile
ASDA 10% price guarantee.
Tesco Club card: Tesco offers promotions through Club Card
through which customers get points while purchasing this points
later can be redeemed to cash.
Advertising on TV and social networking sites: Tesco has various
ads in TV as well as advertising websites to convey special offers.
Strength
&Weakness
Process Outstanding purchasing process. Tesco offers outstanding simple
and easy buying process for customers.
Various check out options at stores. In order for the customers to
save time Tesco offers two types of check out option in which
customers either pay at the till or at self check
Strength
Physical
Evidence
Store design: Tesco does not have very attractive store design and
do not give much focus on that.
Clean and calm atmosphere. It means that Tesco stores are very
Strength
&Weakness
3
clean and tidy and not noisy.
People Skilled employees: To satisfy the customers, Tesco divided its staffs
in six levels and each level needed specific skills and behaviors. The
employees of Tesco are trained and developed well.
Strength
In conclusion, considering the 7ps of Tesco, Tesco has both strength and weakness. Tesco
offer broad ranges of product in both stores and online, and it is great strength of company.
At the same time pricing strategy of Tesco does not seem worthy and attractive all though
they offer dual pricing strategy. Whereas promotion strategy has also its own strength and
weakness. Advertising through TV, social networking sites, and Club Card schemes are the
strength of Tesco, while unable to match the price with ASDA through one off promotion is
the weakness of the company. Meanwhile the people and process seem strength of Tesco,
whilst physical evidence shows certain weakness as the store lay out is poor.
ENVIRONMENTAL AUDIT
Micro Environment Analysis of Tesco
Attributes Analysis Evaluation
Customers Tesco works harder for customers: Tesco works hard to
understand the needs of customers.
Be first to meet their needs. Tesco value its customers
significantly. Tesco customers spread across the world and
they expect quality food products and non food products from
Tesco.
Various customer segments: Tesco segments its customers as;
Finer foods, Healthy, Traditional , Convenience, Mainstream,
and Price sensitive.
Opportunity
Competitor
s
Various competitors in UK and outside UK: Tesco has various
competitors in UK named, ASDA, Sainsbury's, Morrison etc.
While Wal-Mart, Carrefour, Safeway plc are the biggest
competitor globally.
Significant market share: Tesco is the market leader in the UK
with share of 30.7% whilst ASDA, Sainsbury, Morrison holds,
17.%, 16.6%, and 11% respectively. However in 2011 market
share of Tesco was 31% and it dropped down in 2012.
E-Marketing strategy: Among the competitors ASDA is the
great competitor in terms of e-marketing with ASDA direct.
Threat
Suppliers Suppliers across the world: Tesco occupy various suppliers
across the world to meet the needs of diverse customers from
different culture, ethnic, and region.
Opportunity
4
Tesco supply chain management: It emphasise that Tesco has
one of the best supply chain management system in the word,
that includes, transport, replenishment and IT system
Distributors Distribution network system: Tesco has the best distribution
network system globally.
Intermediary distribution channel: Tesco acts as intermediary
in the distribution where Tesco get products from producers
and distribute to customers directly. Examples of distributors
include, Jasmine rice, Sony electronic, Canon etc.
Opportunity
Stakeholde
rs
Various stake holders group: At present Customers,
staffs, investors, non-governmental organizations, suppliers
are the stakeholders of Tesco.
Opportunity
,
In analysing Micro environment of Tesco It is apparent that customers are the great
opportunity for Tesco. Tesco segments customers variously according nature of the
customers and Tesco work hard to value its customers. Whereas competitors are threat for
Tesco as they pursue various marketing strategy similar to Tesco. In has been observed that
Tesco market share has come down in 2012, thus market share need to be increased.
However in terms of supplier, distributions, stakeholders, Tesco perform well and these are
great opportunity for Tesco.
5
Porters five forces analysis of Tesco
Threat of New Entrants
(Medium)
It seems to be medium, since large supermarket chains
including Tesco, Asda, Sainsbury etc. hold the
dominant position and make barriers to entry.
Bargaining power
of buyers
(Medium)
This force is measured as
medium. This is because
large supermarkets take a
disciplined approach for
price setting and this
helps them to not
destroying each other.
Threat of competitors
(High)
Rivalry from competitors is
considered as high threat for Tesco.
The other supermarket chains and
online retailers such as ASDA,
Sainsbury, Amazon etc. pursue the
same concept of Tesco. That means
whilst consumer find little difference
between the products they will
select products based on price
Bargaining power
of suppliers.
(Low)
It considered as low,
since large
supermarkets always
dictate the price they
pay to the suppliers
Threat of Substitute products
(Low)
The threat of substitute is considered as low, because
rivalry from other retailers that can provide substitute
product brings the both companies' prices down.
6
Macro environment
Attributes Analysis Evaluation
Political Mix of job opportunities : Tesco is encouraged by UK
government for providing mix of job opportunities.
Regulatory and changes: Tesco is affected by the regulatory
and tax changes of the country where it operates.
Threat of activism and terrorism.
Opportunit
y &
Threat
Economical High level of unemployment: The level of unemployment is
high that decreases the demand of many goods at Tesco.
Tesco Depends upon UK market: Tesco is is relied on the UK
market and therefore the downturn in the UK food market are
exposed to market concentration risks.
Threat
Socio
Cultural
Current trends of one stop and bulk shopping: According to
the current trends UK customers moved one stop and bulk
shopping.
Aging population and increase in female workers:
Demographic changes like enhance in female workers and
aging population and decrease in home meal preparation
forces retailers to focus on ready to eat and value added
products services
Opportunit
y
Technologic
al
New technological advancement: The new technological
advancements is advantageous for customers and company.
New technology makes shopping more convenient and service
become more personalised.
ECR system: Food supply chain of Tesco is improved by
introduction of Electronic computer response system.
Opportunity
Environme
ntal
Strategy of sustainable consumption and production: The UK
government launched a new strategy for sustainable
consumption and production to reduce waste, thus this forces
Tesco to reduce consumption of resources.
Climate change and sustainability: Climate change and
sustainability affects the operation of Tesco in various
countries.
Threat
Legal Policy for controlling monopoly: The government' policy for
controlling monopoly and reducing buyers control may limit
the industry
Threat
7
To conclude, in evaluating the macro environment of Tesco, it has been observed that there
are both threat and opportunity for Tesco. It shows that Tesco has opportunity in
considering technological and social factors, while there is threat for Tesco in considering
environmental, legal and economical factors. However according to political factor it has
both threat and opportunity on Tesco. Thus Tesco need to give focus on threat and
overcome this by pursuing new strategy.
PRODUCTIVITY AUDIT
Attributes Analysis Evaluation
Profitability Sales growth: Tesco achieved groups sales of £72bn with
7.4% groups sales growth in 2012 globally.
Strong international performance and online: This
means that At present Tesco perform well international
market.
Reduction in UK business. There is reduction in UK profit
of Tesco
Strength &
Weakness
Cost
effectiveness
Fixed Asset increases: Increase of fraud and dishonesty
increases.
Efficiency in supply chain management: Outstanding
supply chain management in introduced by Tesco to
increase cost effectiveness
Strength
In sum up, it is observed that , in terms of profitability Tesco is performing well as they
achieved groups sales of £72bn as well as Tesco shows great international performance. It
is a great strength of company, Nonetheless, there has seen a decrease in UK business in
2012 and it emphasises that Tesco is in weak condition in the UK market. Considering the
cost effectiveness, Tesco seems good as there has seen an increase in fixed asset and in the
efficiency of supply chain management.
SYSTEM AUDITING
Attributes Analysis Evaluation
Marketing
information
system
Decision support system: Streamless flow of information
from top to bottom. That means it comes through front
liner-middle to top management.
Supply chain management system: Tesco innovative supply
chain management system that controls the supply chain all
over the world
Point of sales system : Tesco gather, use, protect and keep
track its sales and financial records with this system
Strength
8
New product
development
system
Oracle EPR: Tesco utilizes EPR system for product or service
development. It helps Tesco to identifies and solve issues
and finally take decisions.
Strength
Transaction Transaction processing system: Tesco utilizes this
information processing to collect, and retrieve all the
information of customers on online ordering service
Strength
To conclude, Tesco has innovative marketing information system that includes the
components of decision support system, supply chain management system and point of
sales system. It looks to be great strength of Tesco. Considering the new product
development system Tesco introduced Oracle EPR system while transaction processing
system was implemented to improve the transaction process in Tesco Direct. These give
Tesco to gain competitive advantage in the market.
Organizational audit:
Attributes Analysis Evaluation
Shared
Value
Corporate Social Responsibility: Tesco significantly focus on CSR
on solving social problems.
Tesco beliefs: Belief of Tesco is in enhancing its sophisticated
management techniques to the higher standard value.
Strength
Strategy Business model: Tesco's strategy is to put into action through
business model: 'To create value for customers to earn their
lifetime loyalty'.
Right products at the right time: Tesco offers right products at
the right time
Best location and store format: Tesco locate and make the
format of the stores according nature of the location.
Store Design and Logo : Tesco does not attractive store design
and logo
Strength &
weakness
Structure Hierarchical structure : Tesco is hierarchical structure, therefore
there is a close control of workers.
Specialized team: Tesco has specialized team who span the
breadth of purchasing requirement
Strength
Staffs 52,000 employees: Tesco employees about 52,000 people
across the world.
Skilled employees: Tesco provides training and development for
the employees to work effectively and to increase skills.
Strength
9
Style Steering wheel approach: Tesco uses steering wheel approach,
so that major areas; financial, customers, operations and
employee performance are considered.
Strength
Skills Providing development and training: Tesco provides training
and development to improve the knowledge of employees.
Knowledge of the product: Temporary staffs do have adequate
knowledge on the products
Strength &
weakness
System Steering wheel approach: Tesco uses steering wheel approach
to effectively accomplish its organizational objectives and to
facilitates employees
Strength
It can be concluded that , considering the Mckinseys 7s, It is clear that Tesco has significant
strength in the market. Shared value, strategy, structure, staffs, system, style, skills are the
vital strength of the company. However, there is certain weakness shows on the skills of the
employees. All though Tesco provide training and development to permanent employees,
the temporary staffs don not get adequate training thus they do not have sufficient
knowledge on the products and services. Beside , the strategy of Tesco also shown a
weakness in some extent based on the store design and logo, therefore this need to be
reconsidered.
STRATEGIC AUDITING
Attributes Analysis Evaluation
Mission
statement
To be greatly valued by the customers we serve, the
communities where we operate, and by our committed and
loyal staffs; to be a successful, modern and innovative
organization. It means that it is the strength of Tesco, as the
clearly stated the mission statement
Strength
.
SMART
objectives
To grow the UK core business.
To become strong in non food as in food
To develop retailing services.
To put the community at the heart of what we do.
To be a successful international retailer.
It gives an emphasis that Tesco has set up smart objectives,
thus they are succeeding continuously day by day. It is the
strength of Tesco.
Strength
Current
strategies
Various types of formats like Express, Metro etc.
Making corporate social responsibility integral.
Offering quality products, great price ranges, and
Strength
10
services.
Offer various service such as Tesco Telecom, Tesco
personal finance etc.
Best location and store design.
Developing people
Right products at the right time.
Segmentation
strategy
Various segments: Tesco follows mass, local and niche all
market segments. Tesco study the taste and preferences,
attitude, buying behaviour prior to segmentation . Tesco
segments its customers as; Finer foods, Healthy, Traditional
, Convenience, Mainstream, and Price sensitive.
Strength
Considering the strategy audit of Tesco, Tesco shows ground breaking movement in all
attributes strategy auditing. In evaluating the strategy it is apparent that Tesco pursue that
strategy in order to meet the SMART objectives. They embrace various strategy according to
the obejctives. Moreover Tesco segments their market well to reach all types of customers
in all region. Meanwhile Tesco has given much focus SMART objectives as it can be seen that
they have set up smart objectives to gain significant success. Whereas the mission
statements itself gives an emphasis that Tesco place customers at the very top and it is the
great strength of Tesco
SWOT analysis of Tesco
Strength
1. Brand image: Tesco holds the brand
image.
2. Market leader. Tesco is the largest
retailer in UK whilst 3rd largest in the
world.
3. Diversified business worldwide.
Tesco has food and non food
business worldwide.
4. Leadership in UK market intensified.
Tesco continue to hold the leadership
position in UK.
5. Great distribution channel. Tesco's
distribution channel is very strong.
Weakness
1. Reliance upon the UK market. Tesco
is still relied on the UK market even
though global business is still
growing.
2. Debt reduction.
3. Missing out North American market:
All though Tesco is successful across
the word, they did not attempt to set
up business in potential NA market.
11
Opportunities
1. Increasing presence in global market
2. Increase presence in Health and
beauty. The health and beauty of
range of Tesco continues to grow and
there is an opportunity to become
the largest skincare retailer in UK.
3. Enhancing demand of private
labelled products. Nowadays
customers in UK demand private
labelled products.
Threats
1. Changing economic conditions: The
ever changing economic condition
like economic down turn is big
threat.
2. Discounted supermarket stores: The
increasing numbers supermarket is
another biggest threat.
3. Threat of new entrants
4. Competitors rivalry. Now Tesco faces
tight competition from ASDA and
Sainsbury to get the top position in
the UK market.
In analysing the SWOT of Tesco, it has been observed that Tesco has more strength
compared to weakness. It must be taken to consideration that Tesco need to embrace new
strategy in order to overcome the significant weaknesses. In addition Tesco need to
consider the threats which are going to affect Tesco and take adequate actions to address
the threats like economic downturn, emergence of new supermarkets, and increasing
rivalry. Meanwhile Tesco has to exploit the opportunities that pose to them while retaining
and increasing the strengths that currently Tesco having.
REFERENCES
Browne K (2010) A Frame work for marketing management, fourth edition, Pearson
Prentice hall
CSM- Cranfield School of Management (2002) Marketing Management : A
Relationship marketing Perspective , Palgrave
Cengage Learning (2011) Tesco, Use of IT systems, available at
http://cws.cengage.co.uk/colekelly7/students/Video%20Cases/Chapter%2030%20-
%20Video%20Case%20Study%2027.pdf, accessed on 18th November 2012
Isobel D and Robin L (2008) International Marketing Strategy, 5th Edition, Sage
publishing.
Jobber D (2010) Principle and Practice of Marketing: 7th Edition, John Wiley
publishing, London
12
Kotler and Armstrong (2006) Principles of Marketing. International 10th Edition,
Prentice Hall.
Kotler, P, Armstrong, G, Wong, V & Saunders, J, (2008) Principles of Marketing , 5th
European Edition, Prentice Hall, London
Lancaster, G. & Reynolds, P, (2005) Management of Marketing , 4rth Edition,
Burlington:
Peter, J. P & Donnelly, J. H,( 2006), A Preface to Marketing Management 9th edition ,
McGraw-Hill Publication
Rao (2004) Services and Marketing, 4th Edition, Pearson Education India
Standing, C and Jackson, P (2010) An Approach to sustainability for information
systems, Journal of Systems and Information Technology, 9 (2), Emerald Group
Publishing Limited
Turban, E, Aronson, J, E and Liang, T (2008). Decision Support Systems and Intelligent
Systems.
Tesco’s still pushing discount products to fight back competitors, 2009, Viewed 20
November 2012, <http://news.idealo.co.uk/news/4521/tescos-still-pushing-
discount-products-to-fight-back-competitors.html>.
Tesco Plc (2012), Out strategy at Tesco, available at
http://www.tescoplc.com/index.asp?pageid=12 accessed on 18th November 2012.
Tesco Plc (2012) Customer Analysis, available at, http://www.tesco-
graduates.com/home/programmes/office/research-and-analysis, accessed on 17th
November 2012.
Tesco Annual Report (2012)
http://www.tescoplc.com/files/pdf/reports/tesco_annual_report_2012.pdf, viewed
on 15th November, 2012
Wilson, R. M. S & Gilligan, C, 2009, Strategic Marketing Management:
Planning, Implementation and Control 5th ed, Butterworth-Heinemann.18
Workforce Logistics (2011) Tesco Distribution system available at
http://www.workforce-logistics.com/Case_study_Annual_Hours_at_Tesco.htm,
accessed on 17th November 2012
top related