The Marketing Planning Process Essay
As the business environment becomes increasingly unstable and unpredictable, diversification of products is at the centre stage of the objectives of most companies. Supermarkets have not been exempted from this trend and seemingly, the four major chains that hold the greatest market share in the UK have assumed this trend. After they have secured the market for most of their products, they would always want to diversify further in order to boost their immunity against the negative impacts of market changes and shocks. The main supermarket chains in the United Kingdom include Tesco, Morrisons, Asda and Sainbury’s.
Tesco has made major efforts to diversify its groceries in order to reach a wider client base. Notably, most of its stores across Europe are implementing these changes in a bit to explore other alternative products and enhance its competitiveness in the market. Later, the inherent changes would the regional boundaries to global domains. 1. 2 Company Profile Tesco Company has a total of 2300 supermarkets, convenience stores and hypermarkets in the UK, Asia, Central Europe and Ireland. It assumes the top positions in retailing food products.
Other operations include gasoline retailing, running small urban stores and providing financial services through its Personal Finance. It
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Thus the decision to venture in new flavoured onions was based on the findings of the SWOT analysis of the company. Deductions made from this evaluation indicated that the company had the ability to diversify its products in the respective market niche. In addition, they showed that Tesco had the capacity to implement a credible market development strategy in its entire stores across the region. In order to reap maximum benefits form this initiatives, the report recommends that efforts be done to specifically reach the high-end market segment. This can be attained by employment of a differentiation strategy.
1. 3. 1 SWOT Analysis With respect to the strengths of the company, Miller (2003) ascertains that Tesco has an exceptional strong cash flow. This is mainly got from its current operational stores across the United Kingdom. This is a sustainable source of capital that can enable the company to explore multiple options. Nevertheless, caution needs to be taken to ensure than any initiatives are worthwhile in order to reduce the possibility of negative implications that might stem from uninformed decisions. Another strength that the company has against its competitors pertains to its reputable customer service.
In this respect, The Economist (2004, p. 8) affirms that Tesco’s customer service particularly within the United Kingdom is exemplary. This can be used to explain why the company has a large client base as compared to its competitors. Further, the company has a very strong distribution system within the entire region. This has enabled it to purchase a significant percentage of its foodstuffs locally. In this consideration, it can be argued that this plays an instrumental role in saving the company various resources that can then be used for making alternative initiatives.
Also worth mentioning with regards to the strength of Tesco is its E-commerce feature. Currently, emergent research indicates that the Tesco. com enjoys a top position as the largest and most reliable grocery e-tailor across the globe. According to Bell (1999), it attained a significant twelve million pound mark in profits by 1999. E-shopping accounts for close to 12% of daily grocery purchases that are made in its stores. Since the program has proven to be successful, the company can benefit immensely if it employs the same in marketing and selling the new flavoured onions.
Tesco has also been employing loyalty card for a significant period of time now. This is an important mode of marketing and promotion of new products as they are often awarded more points. Child and Reid (2002) cite that it has also been a successful way of monitoring purchase trends. In this regard, the company can use the cards to determine data and monitor the purchasing behaviour of the customers. Also, the wide array of stores that the company owns can be considered a major strength. These include supermarkets, convenience stores that are also referred to as Tesco locals and hypermarkets.
Market analysis indicates that most supermarkets within the United Kingdom mainly sell food products. Compared to other stores, it is certain that the high number of stores gives the company an upper hand with regard to dominating the market. Regardless of its central position in the market, the company is also faced with the challenge of ensuring value and quality in order to benefit the most from this attribute. Tesco also grapples with certain weaknesses that undermine its ability to attain optimal growth and development.
In his research, Miller (2003) ascertains that the company’s efforts to expand its operations on an international scale have been met with a high degree of resistance. This has particularly been common in Western Europe and specifically in France. At this point, it can be argued that the company can introduce the new product in the UK market and evaluate its performance before exploring the international market. This would give it a chance to identify and bridge various gaps that can compromise its performance.
Nonetheless, this indicates that the company’s ability to develop geographically is at stake. Another weakness pertains to the small number of professionals that the company has. In particular, The Economist (2004, p. 8) affirms that the company’s top management is made up of few individuals who can not be withdrawn from the UK market. It is because this can result in the reduction of the company’s dominance within this market. This is a limiting factor as Tesco may experience great challenges when trying to diversify the products beyond the national boundaries.
Undoubtedly, this weakness has far reaching implications on the holistic welfare of the company. Intervention measures need to be adopted in this regard in order to enhance the quality of the service and give Tesco chances to not only expand but to also make diversifications accordingly. With regard to the opportunities that Tesco can seize to enhance the client reception of the new product and enhance sales, Miller (2003) cites that awareness of the current brand is significantly high. Compared to other products, onions are the most sold within the UK.
Market research shows that the awareness of this particular brand has the potential to grow very fast. The company can capitalize on this opportunity to improve sales. However, as indicated earlier, optimal performance in this respect would entirely be depended on the ability of the company to uphold quality. Further, Cateora and Ghauri (1999) cite hat the population is increasingly embracing the e-commerce culture. Since the company has the greatest experience in this field and is possibly the most efficient, it can seize the same to reach a wide range of clients.
This can enable it to exploit various markets ahead of its competitors. Furthermore, the fact that the company is price sensitive can enable it to penetrate the market very fast. In this respect, The Economist (2008, p. 8) ascertains that Tesco has the reputation for reducing costs of products without impacting negatively on their quality. This can enable it to explore the economically diverse market hat comprises of the client base that is outside the UK. Besides the opportunities, Tesco also faces certain threats that may make it difficult for it to penetrate the market effectively.
To begin with, Porter (2000) cites that it has various competitors who are increasingly adopting technological approaches in marketing and equally enhancing the quality of their products. Thus the clients that are yet to develop brand loyalties are likely to make alternative purchases. In order to counter this, the company needs to make timely interventions through intensive marketing and enhancement of the equality of their products. From the preceding analysis, it is certain that Tesco has the capacity to diversify its product and explore the market niche effectively.
Compared to the weaknesses and threats, it has more strengths and opportunities that enhance its competitiveness. This gives it an advantage against its competitors who have more limitations. 1. 3. 2 PESTEL Analysis In order to enhance performance, Tesco also needs to understand the nature of its external environment. Likewise, the viability of the new product within the market was assured by the PESTEL analysis that enabled the company to understand and appreciate the inherent threats and opportunities.
With respect to the POLITICAL factors, findings indicated that the integration of free trade agreements enabled the company to venture internationally. Currently, aggressive efforts are being directed at maintaining the highest market share through a viable pricing strategy. The main ECONOMIC concerns pertained to sensitivity to recession and constant changes in prices. Trends however show that the retail segment is progressively recovering form the impacts of the September 11th that affected world economies. The SOCIAL factors that could both be threats and opportunities include changes in consumer tastes and preferences.
The company needs to monitor these in order to align its quality to the expectations of the consumers. TECHNICAL concerns included technological advancements that would enhance e-market culture. Other companies are likely to assume the trend and hence increase the competition. LEGALLY, findings showed that there is an established legal system that oversees all relative operations at the national level. Finally, the ENVIRONMENTAL factors were mainly production oriented. The company was faced with the challenge of ensuring that all process did not impact negatively on the environment.