Tesco - Intoduction to Marketing

Introduction to Marketing

Background Information To Tesco

This essay will analyse the marketing environment of an organisation and the organisation chosen is Tesco plc. This will be done by focusing on the micro and macro environment forces affecting the chosen company. After looking at the forces which affects the company this will enable to produce a Swot Analysis which will analyse the strenght,weaknsess,opportunity and threats to Tesco plc.All the this will be done by doing a thorough research.

Jack Cohen was the founder of Tesco which began in the 1920's, selling groceries to the less fortunate people in the London east end. Jack Cohen used the phrase "pile it high and sell it cheap". This phrase has stuck with Tesco and represent what the company is all about to this day

Tesco runs more than 2,700 stores worldwide. Tesco principal activity is food retailing Tesco has supermarkets, supercenters, and convenience stores in the UK (where it is the number 1 retailer, in Ireland, Central Europe, Asia, and soon, the US.

Tesco dominates the middle mass market. A third of all consumers use Tesco for their primary grocery shop and in all 61% of adults over 15 use the store at some time or other.(Mintel 2006)

In the UK market, Tesco has developed a range of store formats which spans convenience stores to hypermarkets and is designed to give its customers access to the company in any given situation Its operations include convenience (Tesco Express), small urban stores (Tesco Metro), supercenters (Tesco Extra)

Since Tesco was first chosen to invest in lower prices in 1977, Tesco has been one of the major forces in the battle to be the cheapest grocer in the UK. Part of Tesco's appeal is that it represents good value for money

Tesco already sells more chat Cd than Woolworth, more kid cloths than M&S looks set to overtake Dixons is the Uks no 1 non food retailer. Tesco is a retail phenomenon with the profit topping Ј2billion a year.

Tesco has just announced plans to open its first non-food only store, to be named Tesco home plus.

In addition to food, the company now covers non-food products, personal finance, internet retailing, home shopping and petrol retailing in the UK, with Tesco.com and home shopping also operating in the Republic of Ireland and South Korea

The Marketing Environment

(J Newman ,P Cullen 2002:15) notes that The external environment of the firm consists of those factors outside the retail firm that affect the success of the retail business. It is part of the external analysis when doing market research and gives a certain overview of the different microenvironment and micro environmental factors that a company like Tesco has to take into consideration .

The external environment can be divided into the macro environment and the microenvironment. The Macro Environment comprises of PEST Analysis which stands for Political,Economical,Socio-cultural and Technological factors that affect the industry and the way people shop.

Political: This covers the external factors controlled by the government both national Political factors include areas such as tax policy, employment laws, environmental regulations, trade restrictions and tariffs and political stability.

There are several laws been passed by the government and this could affect the supermarket industries, these laws are put in place to prevent collusion between firms. Also laws like government ban on sale of alcohol to people under the age of 18 could affect the business. The smoking ban could have a huge affect on the shopping industry as large amounts of the populations are smoker. The consumer protection law prevents firms from supply of shoddy goods, telling lies on the adverts and packaging. if new laws are introduced like food taxation this would also be a concern for Tesco.

Tesco strongly supports Fairtrade, which guarantees that developing world farmers are paid a price that covers the cost of production, plus a premium to be spent on community projects such as better healthcare, sanitation, education or housing. This is vital in bringing stability to many small suppliers in developing countries.

Tesco stock over 90 Fairtrade lines, of which 14 lines are own-brand, including roses, mangoes, avocados, citrus fruits and cookies.

Tesco supported the Fairtrade Fortnight in March 2005 by raising customer awareness through in-store promotions and by inviting local Fairtrade groups to hold food tasting and talk to customers about Fairtrade in their stores

Tesco has introduced nutritional 'signposts', a new food labelling system which makes it easier than ever for customers to make healthier choices as they shop. The amount of salt, fat, saturated fat, sugar and calories in a serving of each product is clearly stated in grams on the front of the packs. The labels state how much of the guideline daily amount this makes up.

By separating the key nutrients, the labels help customers monitor all of the areas they are concerned about e.g. salt if they have high blood pressure or calories if they are watching their weight. The simple labelling means that it is easier for customers to stay within their recommended daily amount without doing complicated calculations

Economic Factors: Tesco cannot escape the effects of the factors in the

macroeconomic environment this could be domestic or global that influences

the local market.These are factors like exchange rates, interest rates, tax levels unemployment and this are some aspects of the economy which Tesco must cope with

Real growth makes more income available to people who then tends to spend more, leading to higher sales and more profits for Tesco However, growth also leads to higher competition in the long run As Tesco cost of goods increases, they attempt to pass on this increase to the consumers. Unemployment may affect sales of Tesco because if the unemployment rate is high this would mean that people would not be earning as much money and they might have to cut back on luxuries such as chocolate and other things that are not

The higher level of spending may also increase any existing deficit on the current account of the balance of payments so Tesco will be able to afford high wages and even expand their business

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