Tesco's Marketing Plan - Case Study Example

Tesco’s marketing Plan Name Instructor Subject Date Executive summary This is a report on a marketing campaign for Tesco for the launch of their new services which is the sale of new cars. Following the detailed research, a marketing team has been set to analyze the conditions and economic atmosphere of the contemporary UK market before undertaking a marketing campaign. All the factors such as the best promotion tool, advertising platform have been stipulated below. This report also gives the most appropriate strategy and competitive move that the company can take. In addition it stipulates how the 7Ps can be used in the marketing campaign. The report ends by outlining the possible limitations to the marketing campaign and how it can be avoided. Introduction Marketing is an essential tool in any organization, it is the link that communicates a firm’s desire to offers services and products to customers. Marketing also sets out the uniqueness of the service or product from competitors, stipulating the prices, the target group being lured and the importance of the product or service to the customer. This report will aim at outlining the significance of marketing for Tesco’s new line of products, it will clearly define the approach the firm should take in order to have consumers responding to their products. Significance of marketing to Tesco A recent statistic by Booz and Company indicates that 66% of all new launches fail with two years after introduction into a market. Doblin Group adds to this, stipulating that 96% of new innovations do not return their initial capital that was invested (Chemssi, 2013, p.146). However, in this instance, it is not the case of a new innovation per se but it is entirely the case of a new launch. The statistic suggested that companies have to consider the following in order to avoid risking failure of their new product. First, the marketing must aim at acquiring customers- a marketing campaign should target on luring the target market as quickly as possible. From the research carried out on Tesco’s launch of the sale of cars, the report indicated that they have a well-defined online presence. This can be utilized to the company’s advantage in that the marketing campaign will encourage customers to review the company’s services and quality of car bought; in this digital era such reviews play a major role in spreading the word about a product (Data monitor Firm, 2008, p. 173). Secondly, the UK market that Tesco wishes to launch this new line of services and products has other key players, but none with the market share and online presence Tesco has. The marketing campaign for the sale of new cars will major on the main stream media as a means of jump starting reaction from the public and then utilize social media platforms to keep the conversations going. source: (Marketing society, 2009) Fig 1. Above is a previous depiction of how the UK retail market is shared. source: (Zoratti & Gallagher, 2012) Fig 2. Above is a recent depiction of how the UK retail market What this show is that the market share varies overtime but Tesco has been able to maintain the lead in the UK. Thirdly, the marketing campaign for Tesco will perfect a mix of Medias for advertising. Over the recent years, there has been debate on whether TV and radio should be a significant part of advertising anymore (Bruhn & George, 2006, pp. 114-115). New theorists in this field hold that this form of media is no longer as vital as it was in the past. Studies have shown that these platforms are as significant as social media, since there is a large older generation of consumers that only rely on them and print media for information. This marketing campaign will utilize all the platforms available, since it is designed for success. An interesting case was signified by Kayak.com which had massive success online and grew steadily two years in a row without marketing themselves in mainstream media. However, after one single advert on TV their sales experienced dramatic lift. Fourth, the marketing campaign for the launch of new cars sales for Tesco will be designed in such a way that the campaign will be the beginning of a continuous process for the customers to perceive Tesco. The initial campaign will be followed by a series of other campaigns that will ensure the customers do not get their minds off Tesco. This will be as a remedy to common mistakes that marketers make when they assume that their launch is over and they stop marketing. What happens then is the shift of attention of their customers to competitor’s products and services, Tesco intends to lure and keep their new customers. source: (Rowley, 2006) Fig 3. Shows how share prices fell in the wake of 2012. As illustreted above Tesco’s price in the UK has been steady for a number of years. This signifies how musch their market precense is srtong an not easliy wavered. Porter’s generic strategies There are a number of strategies that a firm can use to ensure that their entry in the market is felt and will relate to quick sales. The strategy has to be sustainable in the long term endeavors of the firm, at the same time yielding profits. Here are some of the available strategies for the firm; 1. Cost leadership- this is where Tesco can decide to launch the car sales with low prices, this would increase the sales of the retailer since the prices are affordable for all economic classes. This is quite sustainable for the retailer but it eliminates the customization for specific customers. This will make the high end clientele to avoid the cars since, high end customers are known to prefer customized products (Zopoundis, Pardalos & Baourakis, 2001, p. 159). 2. To counter the first strategy; Tesco can consider product differentiation- this is where a supplier of a service/product models the product to suit the needs of specific customers, it is meant to make the products unique and preferable for their customers. This kind of strategy is usually utilized by small suppliers and is usually avoided by firms with or targeting large markets. 3. Focus strategy- here, a firms may decide on focusing their efforts on the supply of a given product and major on it, this would have all their marketing, sales and distribution on that product (Turow, 2006, p.261). The current case here has Tesco intending to sell cars for the larger UK, according to the analysis, this project has to sail through since the company is losing a lot in other market. So in order to win this market, the firm has to utilize focus strategy whereby it will aim at cost leadership and ensure it brings affordable cars in the market. Possible competitive moves Tesco’s marketing campaign has to be modelled in such a way that the entry of new competitors is limited and this will enhance their already large market share. This combined with the online presence will makes them invincible and market leaders (Humby, Hunt & Philips, 2004, p.189). A good example that has utilized this to conquer the markets is coca cola; Pepsi on the other hand tries to acquire a share of Coca Cola. Pepsi in this instance can be referred to as a market challenger, to some length Tesco is a market challenger since despite its large market share it is a new entry to the car sale market. It will have to challenge the market share of another firm. Such a move requires aggressive marketing and focused growth strategies (focused cost leadership). The other option would to be a market follower- here a firm can follow a market leader and profit by a little a differentiation and no major ambition of conquering that market. This competitive move is not applicable for Tesco since it is a market leader already (Jackson, 2009, p. 182). The best competitive action move for Tesco, would be to be a market leader since all the other options for competition are unviable. As a market leader, Tesco would have the economic power to sway prices their way or their favor. Market leader such as Coca Cola are able to make adjustment in their products and services without engaging in price wars or companies market share allocation. Significance of market mixing for Tesco Market mixing is a vital tool for Tesco as it markets its launch of the sale of new cars in UK; market mixing basically means that the right product is put in the right place, at the right time for the right customers. The concept of market mixing has evolved over time, however, its proprietor James Cuilton described it as a means of advancement that is improved as a market uses the ‘recipe’ of another ‘cook’. It was later simplified into four Ps which signify the following: 1. Product-in this instance the product is the new service Tesco is launching; selling new cars to their customers. The role of marketers is to utilize the resources of the company to ensure they bring out the best factors about Tesco, why it is the preferable choice to buy a car from. The marketers will not be selling the brand of the car, but rather why that brand is best provided by Tesco (Kotler & Armstrong, 2012, p.21). Some of the merits they would use in their favor is the credit and banking services offered by the firm and the vast online presence of the retailer. 2. Price- the marketers of this campaign have the duty of aligning the prices of the cars being sold to the market strategy and competitive move of Tesco. The price must reflect on the entry prices of the firm, the market skimming prices, market penetration prices and neutral prices (Stahlberg & Maila, 2010, p.67). The marketing team must be aware of consumer’s ability to note a referential value and the choice they have of opting for the differential value of the cars from competitors. At all times, the prices offered by Tesco must be in favor of the firm and preferable to the customers. 3. Promotion- this is the tool the marketer uses to make known of their product. The marketers have option such as advertising, sales promotion, public relations and so on. The marketers in this instance will be spoilt for choice on which platform to use. As stated earlier, all platforms are essential in marketing and none is superior to the other, promotional offers are an effective way of pulling potential customers since the retailer has banking services, they could offer loans on the cars being sold and ensure that they are in line with the company’s strategy; the reason why I am insisting on all factors aligning with the strategy is because it is the roadmap to the company’s goals (Tsiotsou & Goldsmith, 2012, p.367). 4. Place- this refers to the location where the business will making its distribution. This is quite simple for the marketers since all they will have to do is enhance the many distribution centers that Tesco has across UK. The brand of the company has already been established, the point of access recognized (Rowley, 2006, p.34). Marketers will only be convincing the customers on why they should be visiting their nearest center to get a fair priced deal on a car. The seven Ps theory include additional factors such as; people- it referred to the people who were involved in either sides of a sale, in this instance the people selling and the ones buying (Trout & Rivkin, 2010, p. 167). The other P is proof- in this instance it would apply in the actual sale of a car from a Tesco to a customer. Process is the seventh P; it signifies the procedure a customer would have to adhere to while making a purchase. Tesco advertising team would have to show how short the procedure is, in order to lure clients who do not like to queue for long hours. source: (Sheehan, 2010) Fig.4 shows how social media classifications have been distributed in terms of popular. While pursuing the 7Ps, the marketing teams should consider social media in order of how popular it is among the customers and general public. A BCG analysis tends to categorize product line and market them separate in order to enhance their brands, Tesco as a retail brand would not be as suited for this matrix since it’s a brand n its own. If Tesco were to use BCG it would rather focus on the new car line and market awareness of the new product line. However, Ansoff’s matrix would be more appropriate as compared to BCG since it assists the manager’s precept a market then make entry of their new product. This matrix also evaluates the managers to assess the economic situation in a market. Fig. 5 BCG matrix fig. 6 Ansoff’s matrix Source: (Trout & Rivkin, 2010) Possible limitations in marketing for Tesco Cost of a new marketing campaign is one of the most common limitations when it comes to advertising. Despite the one billion pounds outlined for Tesco’s new product line, resources are designed to be scarce and cannot be termed as endless. Tesco has to run the campaign numerous times on TV and radio, on print media and social network all of which requires money (Buhler, Chadwick & Nufer, 2009, p.32). The campaign must be effective in order to capitalize on the market as earlier stated, therefore Tesco has to utilize a large portion of their resources to achieve this; money that could have been utilized to stimulate the state of other retails points across the world, for instance the retails in US. Recommendations To remedy the company has to identify a capable team of marketer and have them critically analyze the market and give a comprehensive report on how the situation of the UK market and how it can be penetrated. The failure of having a competent team might put the whole project at jeopardy and risk failure. Tesco would be able to know if the team is competent if the report they deliver has considered market segmentation and spotted the target group from the segmentation. As stipulated earlier, Tesco’s strategy is focused cost leadership which targets the middle class and the low income earners. The marketing team must outline their campaign in relation to the management’s desire of targeting this segment of the market. One of the threats for Tesco as illustrated in the analysis is the high competition in the retail sector; the company intends to use this campaign as a rebranding campaign, it would be in their best interest to have aggressive corporate social responsibility incorporated in their campaign. It would increase the general public’s perception of them and increase their global image. Conclusion Marketing is essential part of any project a firm takes, this paper has stipulated the path which Tesco’s marketing team should follow before engaging in advertising and Tesco rolling out their service. A successful marketing campaign has benefits such as; effective corporate social responsibility and the enhancement of the global image of the firm. 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