E Business Strategy Of Tesco Marketing Essay

Modified: 1st Jan 2015
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Task 1 is focused on Company that has created for increasing demands in various outlets. In this part, there is an insight of the situation analysis of its products, marketing objectives, marketing strategies, SWOT analysis that have been used to assess the current position of this company in today’s retail marketing. At the end of this report, I also tried to explain global transformation and e- business strategies of Tesco Company.

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Introduction to company

It is the biggest British retailer by both global sales and home market share, with profits more than £3 billion. It is currently the third chief global retailer based on revenue, behind Wal-Mart and France’s Carrefour, but second biggest based on profit, ahead of Carrefour. at first specialising in food and drink, Tesco is a UK-based international grocery and general merchandising retail store. Tesco is one of the world’s leading retailers with over 2100 supermarkets, in Europe, US and South East Asia. it has diversified into areas such as clothing, consumer electronics, financial services, telecoms, home, health and car insurance, dental plans, retailing and renting DVDs, CDs, music downloads, Internet services and software. It is dedicated to dipping prices for customers and offering the best value.  It seeks to help customers spend less. Tesco has over 400,000 employees.

Tesco strategy and objective

Tesco’s marketing strategy has been stand around a database strategy driving a huge direct marketing movement. There customer base approximately accurate mirrors the demographic make-up of the UK. Simply this means they have somehow managed to be all things to all men. They have between 7m and 8m diverse variations on the mailings going out to their clients based upon demographic and transactional data. The objective has always been to up-sell to their active customers through acquiring better customer data and gathering their needs. Now, through providing customers with what they want, the most significant strategy has been aimed at increasing the non-food section by capitalising on the rising need for one-stop-shopping created by an increasingly time-starved population.and also by making their shopping trip as easy as possible,constantly seeking to reduce their prices to help them spend lessand offering the convenience of either large or small stores

Use of information

Based on their marketing objective and strategy TESCO have protected commercial status within the global market place winning Retailer of the Year 2008 at the “World Retail Awards”. This can be used for marketing campaigns to drive advantage towards the demographic base for future growth and sustainability. Suppliers are globally sourced, and Tesco increase scale economies from its large buying volumes.  This has enabled the company to keep prices down and supported its low price strategy aimed at the broad consumer market another advantage is Tesco has appear to increasing efficiency and effectiveness.  Cost savings have been required from the supply chain, through better use of IT, and from policies and management of suppliers to make sure the greatest value to the business and customer.

Tesco has been mainly successful because of its powerful strategy and objective  It has a status for value, low prices and for being customer focused.  Its brand equity and associations have helped the business to expand into new sectors and markets.  Tesco has also been strong in public relations, advertising and building profile in catchment areas on a local level.  This local approach to marketing appears to be a key driver for success .Tesco bring about a lot of changes in its marketing strategies and has grown-up to become UK’s number one retailer. Today in the UK, the retailer has been the dominant force for more than 10 years.

Tesco has been capable to use its loyalty program very well to set up mutually beneficial relationships with its customers. Thus the main reason behind the success of Tesco’s relationship marketing strategy and loyalty program has been the way it has handle to establish Club card not as a marketing tool but as a product of significance and value for the customers.

Global marketing impact

Tesco had learnt some lessons on globalization from its harsh experiences in France and as well from other companies like Marks & Spencer , the UK-based clothing retailer. Its experiences in France gave it an insight about the functioning of different markets. Tesco understand that business strategies that were successful in the UK would work in the other markets only if they were given a local taste. The company also be taught that it was important to hire local staff and use personnel from the UK to spread knowledge about the company. so initially, Tesco did not have any hypermarkets in the UK and it extended its international operations by opening hypermarkets abroad. This show to be an advantage, as Tesco did not try to repeat its standard practices in the UK in other countries and instead started afresh according to the local needs and demands. When Tesco start opening hypermarkets in the UK, its international experience was very useful. Tesco’s lessons in localization helped it serve its customers better. For example, in Britain, where there was a high attention of immigrant.

E-business strategy of tesco

The central role of grouping in e-business is such that businesses need to consider the concept of the virtual organisation, and the implications of strategy formulation and delivery not only within an organisation, but also across the grouping that make the virtual organisation.

Tesco is generally recognized as the worlds largest online grocer and it has an annual turnover of £1 billion online in the UK and has open in other countries, globally and is diversifying into non-food group .Tesco.com relies on in-store advertising and promotion to the supermarket’s Club card loyalty scheme’s customer base to persuade customers to shop online. For existing customers, email marketing and direct mail marketing to provide special offers and promotions to customers is important is their main strategy Tesco then use automatic event-triggered messaging can be formed to encourage continued purchase. Not only this but The Web site explains the overall benefits of e-services and answers questions about each e-service. Tesco.com fulfilled 150,000 grocery orders a week but now also present more intangible offerings, such as e-diets and music downloads. . tesco provides a single source, and consistent way of doing business with a wide-variety of e-service providers

Task 2

The Ford Motor Company was open in a converted factory in 1903 with $28,000 in cash from twelve investors, most notably John and Horace Dodge .Henry’s first attempt under his name was the Henry Ford Company on November 3, 1901, which became the Cadillac Motor Company on August 22, 1902. During its early years, the company produced just a few cars a day at its factory on Mack Avenue in Detroit, Michigan. Groups of two or three men labour on each car from machinery made to order by other companies. Henry Ford was 40 years old when he founded the Ford Motor Company, which would go on to become one of the world’s largest and most gainful companies, as well as being one to stay alive the Great Depression. As one of the largest family-controlled companies in the world, the Ford Motor Company has been in permanent family control for over 100 years. Ford sold the United Kingdom-based Jaguar and Land Rover companies and brands to Tata Motors of India in March 2008. Also in 2008, Ford Motor is in negotiations with Shanghai Automotive Industry Corporation to sell its Volvo cars separation. Ford’s parts division sells aftermarket parts under the Motor craft brand name.

Ford Motor Company’s primary marketing strategy has been directly aimed at the American Male people. Rugged publicity themes, such as those of the Ford F-150 Pick-Up, and the Ford traveller advertising campaigns are god picture of this strategy. While the F-150 and Explorer keep on to be the number one export vehicles in their class, Ford needs to tap new customers as the U.S. market is becoming increasingly saturated. The most logical and opportunistic rest to develop this new market is Mainland China. With China’s entry into the World Trade group in December 2001, connotation lower excise on imported cars, now is the great time to enter this market aggressively. Ford has had a imperfect presents in fine china over the years, with six joint venture at this time active produce mainly car part and contribution after market sales service. In 2000, Ford acquire Daewoo motors, giving them a brawny presence in Korea and India. Ford also carries on acquiring European carmakers such as Aston Martin, Jaguar, and Volvo in recent years. With its attainment of Daewoo, Ford may now be poised to attractive a major player in densely inhabited China.3Although the population of China is slowing, due to the government.

Using of strategic marketing concepts and models on Ford company

For analysing the company’s current position and strategies in last five years, there used BCG growth Matrix and product life cycle. Because the BCG matrix can be used to determine what priorities should be given in the product portfolio of a business unit and for finding the company’s current position product life cycle can be used.

BCG growth Matrix on Ford company in USA

BCG matrix is a method which is based on the theory of product life cycle. This method helps in determining what should be prioritised in the product portfolio of any Business Unit. It has basically two dimensions: Market Share and Market growth. The underlying interpretation would be that the bigger the market share a product has or the faster a product grows it would be better for the company. Placing products in BCG matrix would result in 04 categories i.e Stars, Cash Cows, Dogs and Question marks on the market share and market growth. In order analyse BCG matrix for Ford company we need to interpret the market share if Ford Motors

.

Ford’s share of the market, the number of motor vehicle it sells, is pretentious by a number of factors including how Ford’s products compare with those accessible by other manufacturers based on Price, Quality, Styling, dependability, Safety, and Functionality. Henry Ford began to construct what today is one of the world’s largest company. Perhaps Ford Motor Company’s single greatest donation to automotive industrialized was the moving assembly line. This technique greatly increased good organization through specialization by allowing

While advertising targeting classy automobile customer is one of the key character of Ford’s new movement, the company has not dumped its younger and less affluent clients. The Ford focal point is a vehicle designed for buyers aged 35 and under, and the cost tag for the vehicle reflect this market (Halliday, 2000a). The brand is being characterized as an ideal vehicle for echo boomers (children of baby boomers) who are upwardly mobile, but not yet ready for the purchase of a true luxury vehicle. Ford’s goal, as represent throughout all of its new advertising, is to produce sufficient vehicle variety in addition to price .

In the commercial, all of the Ford brands from Aston Martin to Volvo, Lincoln, Jaguar, and Ford Focus were depict. Elliott contends that while the mark was the first to comprise all Ford brand, its reason was less about business cars and trucks than it was about getting better Ford’s image. It reproduces the strategy of CEO Jacques Nasser, which is to have customers perceive Ford as the world’s most important company for both vehicle products and services. Part of Ford’s advertising problem is that it has become an incredibly diverse producer of cars, trucks, and SUVs.

Ford Motor Company, which made quality “Job 1,” just introduced a “complete action plan” to boost the company’s quality ratings, which had been measure Ford Motor Company was carry out to identify the ways in which a firm dedicated to quality can at the same time experience difficulties in preserve high levels of customer satisfaction

The strategic review of Volvo is in line with a broad range of performance Ford will taking to make stronger its balance sheet

2.3 Product life cycle

The following actions can be taken to improve the effectiveness of the product life cycle planning model:

Development

Introduction

Growth

Maturity and saturation

Decline

Ford motor company might be in maturity and saturation position because maturity occurs when the sales of the product level off at a peak, whilst saturation occurs as the volume of sales begins to slow down and according to this strategy from 2003 to 2007 Ford’s sales volume are now in peak position.

Ford motor needs to engage the whole organisation, because it requires internal an external communications so that they can be identified with the strategy and direction of the organisation. It is believed that ford cannot be continued unless it is supported by all employees adopting a customer focus

Once the internal orientation has been established for ford motor it is possible to take the message to external audiences. Encouraging employees to behave in such a way that they are perceived to support brand promises, provides a vital form of consistency to the organization.

Task 3

(A)

Impact of changing business environment on UK economy:

The recession in 2008/2009 is seeing private consumption fallen down for the first time in nearly 20 years. This implies that the complexity and intensity of the current recession. With consumer confidence so low, recovery will take a long time. The recession mainly causes bankruptcy, credit crunches, deflation, foreclosures, and unemployment. In UK economy, it is assumed that the GDP will continue to shrink down through 2009.

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The bigger proportion of the Britain national economy is its financial sector then its equivalent on the continent which was triggered by a banking crisis. UK economy also suffered from the double problem i.e. high consumer debts and asset bubbles, in the form of too- high house prices. While 16 countries economy grow 0.4% in 2009, then the British economy shrank by the same amount. There is also a problem for a euro country which is euro is still high against the dollar that means exports are still more expensive than manufacturers would like.

In a management editorial, it is reported that British economy is still in a transitional phase. It also focuses on the unpredictability of the UK economy specifically related to whether growth is returning or only constructing the middle prong of a W in the midst of a double-dip recession. “From bubbling confidence to biblical warnings – the current business environment would scarcely be more confusing if a plague of locusts descended from the sky and started running the stock market,” the article stated.

In the inflation Report, the Bank make new research showing that annual UK economic output was unsimilar to return to the £1.4 trillion level it peaked at in early 2008 for two more years. The UK faces a laborious struggle as it tries to restructure and rebalance its economy. Easy credit and risky derivatives are main reasons that precipitate this once-in-a-generation global financial crisis. The administrator of the UN Development Program, Kemal Dervis, warned that the, “current global economic conditions threaten the gains that have been made to reduce poverty, and advance development for large numbers of people.”

The UK authorities’ policy gives feedback on the recession problem and global financial crisis has been steeped and wide ranging. Public capital are now stored into weak banks and their troubled assets are being ring-fenced. Unique easing of monetary policy and transitory discretionary fiscal stimulus are in position. This feedback has been adequate with the particular disclosure of the UK economy to global shocks, because of the relation of large financial sector to the size of the economy, overheated property markets, high household indebtedness, and strong cross-border links.

Impact of changing world business environment on airline industry:

The inability of the airline industry in capacity management which led to an over ordering of aircrafts. However the airline industry has now realized the need for a radical change in capacity management.

In recent years number of factors have led to increase in the efficiency maintained by the airline industry. The government of many countries in order to control their finance and understanding the benefits derived from privatization has led to a paradigm shift of ownership of airlines from the state to private sector.

Globalization has led to major alliances which is stated as “Global Carriers” eg alliance of Northwest Airlines with KLM or merger of Kingfisher Airlines with Air Deccan in India.

The emergence of low cost airlines led a strong competative environment in the aviation market. The availability of low cost tickets has led to the increase of travel by passenger who otherwise would have use other means like trains or buses. This however has negatively impact the environmental condition to curb carbon neutral emission.

Though consumer benefited directly from the online use of airline industry where they get facilities of lower rates, but traffic for traditional scheduled airlines and flag carriers declined. They therefore follow the lead of no frill carriers and then improve their online presence to maintain their competitiveness. Airline industries employ ICT for a wide range of business basically for strategic and operational management. For developing the strategy of operation management, airline industry use technology as well as to monitor external environment and competition, attempted to do revenue analysis, forecasting, maintain historical data, predict demand. ICTS are used for developing and anticipating the performance of Strategic Business Units and for taking decision in which markets, airlines should enter and how. Routes and crew planning, service performance, selection of aircraft and developing relationships with strategic partners is key functions supported by ICTs. ICT also helps airlines to communicate with their stakeholders and to update them with related to their initiatives and developments

Task 3

(B)

The importance of branding – The current changes in the market structure has led to changes in the distribution channels. The increasing technology, growth of private label brands, consumer and distribution trends has resulted in changing the relationship of distribution channels. A product is an experience- a customer uses a product or service, if satisfied they grow to trust it.

A good brand can be described as easy to pronounce and easy to interpret. It could be combination of a

Brand Name

Brand Symbol, Sign or brand mark

Brand Design

Trademark

Brand name is the segment of a brand that can be pronounced such as Nike and its symbol which indicates the correct sign. Brands are like an assets and like any other assets ,if investment is reduced the assets value will undergo depreciation. The brand symbol or brand mark is a visual presentation of the brand design, is a the unique shape or creativity of a design that gives it a distinguished value or identification among other products. A trade mark is the name or part of the brand that have been registered, eliminating any chance of use of the same by any other company .For example Mc Donalds have their first ‘M’ in yellow colour.

Ten years ago retailer brands were regarded as inferior in quality to branded products. But today it is a acceptable fact that Mark & Spencer, Sainsbury, Tesco, Waitrose have successfully achieved brand status. Very few people would assume that private label brands are purchased because they are cheaper and the quality of the product is compromised. Sainsbury’s Novan was successfully launched into washing detergent market sector. A brand name or brand can be defined as a name registered by a company or labels of its products. When a brand is written in a specific way and is registered in the same order it becomes a trademark. Copyright are used for publication, musical work or an art.

Brand loyalty can be described as the choice or preference that a customer has towards a particular product inspite of similar product in the market for eg Addidas or Nike.

There is a need for the managing brands in the light of changing customer needs and environment .There is more emphasis on quality and range of products than brand when assessing providers. There is a need to manage brands with mergers and acquisition and there is a need to have an ongoing communication to all parts of value change.

Brand erosion is something very real it may be attractive for European producers to take on more private label so they can run across both sectors and take advantage of the wide appeal of confidential ranges. Making private label items is a very gorgeous option for the producer But it can be a dangerous business. For manufacturers constructing a quality brand, sticking a supermarket label on half the batch may shift more units, but the worth of the brand will be irreparably damaged. The consumer may buy another brand and the private label version and see they are both very similar If consumers go through that knowledge and observe the products as the same, brand erosion will happen. many companies carry on to make private labels and well-known brands. It will rising production costs and increased competition puts pressure on manufacturers. And in the current weather, one trend that looks set to grasp on is retailers who establish their own ability to take manage of private label production. If retailer gains cross-ownership they will be improved able to manage the production process and make the most of the customer insight gather through award schemes and point-of-sale business information.

 

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