Marketing is a key function of a business operations meant to enhance performance in terms of acquiring and retaining customers. The functions have several aspects and concepts with different businesses focusing on aspect which are key to their operations in terms of market orientation. In addition, there are several factors that affect a business marketing operations. In that respect, this analysis seeks to analyze the marketing concept and orientation in reference to Tesco business by analyzing its marketing process, target marketing, factors affecting its marketing as well as discussing how it can benefit from customer retention, satisfaction and relationship marketing.
- Marketing Concept, Process and Orientation
Elements of marketing process in Tesco
Pricing: Being involved in selling various products that target different target groups, Tesco applies various pricing methods that are meant to reflect value to the business and consumers as well given the varying focus of each target segment as follows:
Target return pricing is the method in which the price is set to achieve a target return-on-investment. This identifies the expected sales and the required amount to give a certain return and the price is calculated to give the amount. (Kotler, 1988)
Psychological pricing takes into consideration the consumer’s perception of the price, figuring things like:
- Positioning where Tesco’s products are viewed as fairly priced than the competitors.
- The popular price points at which people are much more willing to buy products.
- Fair pricing perception in which customers have a perception of a price limit without regard of the value of the good.
Tesco applies target return, value based and psychological pricing as it has had a continuous focus on its price relatively positioned depending on customers’ needs. With its long history, the business has maintained its position as the shopper’s choice through value based pricing method where it positions itself for different income level groups with different products. (Kotler & Armstrong, 2004).
It entails advertising , personal selling, public relations, direct marketing and sales promotion
Distribution: Distribution involves getting the products to the consumers and determines availability of a business ‘goods to customers which may be through direct supply by the business or through distributers and other intermediaries like the retailers and local outlets. For Tesco, it involves considerations like; the distribution channels, market coverage, inventory management, warehousing, distribution centers, transportation, and order processing. (Kotler, 1988)
People comprise one of the most important elements of Tesco’s service as they are the element that defines the service. Their behavior and skills in service to customers seeks to enhance the attractiveness of the business’s service on bases of competence and customer service. In that respect, Tesco has well qualified and trained people with a focus on customer satisfaction.
Process represents the way in which Tesco’s services are delivered to the end customer and is important in creating customers perception. If the service process is convenient and offers value to the customer, the business gets a favorable image hence earning customer trust and loyalty. Thus the business has clearly defined processes for its services to satisfy the customer needs. (Kotler, 1988)
Physical evidence is importance in service delivery so as to give customers something tangible to identify with. For Tesco, the business evidence is its outlets where customers get its products. Physical evidence is used as a differentiator of Tesco’s service hence achieving a competitive advantage over the competitors. (Porter, 1980)
Marketing audit process in Tesco, marketing process SWOT analysis and marketing objectives
Marketing audit process
- Tesco is a well known brand in the market which enhances marketing success.
- The business has adequate marketing resources including finances and human resource for its marketing operations hence ability to address customer needs through suitable marketing activities.
- Technological advance presents new channels and avenues for marketing the business including online and social media platforms
- The customers changing lifestyles and preferences presents opportunities to the business marketing with the business having new needs and demands to address through suitable brands and positioning. (Brown & Day, 1981)
- Increasing market competition as well as changing customer needs presents threats to the business marketing hence a need for the marketing function to remain innovative in terms of developing effective marketing operations through suitable products positioning, pricing, distribution and promotion. (Porter, 1980)
Marketing aspects defining Tesco’s’ operations have a number of objectives that include
- Increase market share through customer introduction and retention.
- Create a favorable brand image.
- Persuade customers to buy the products.
- Delivering products and services to customers at suitable pricing and time. (Porter, 1980)
Cost/ Benefits analysis of Tesco’s marketing orientation
Marketing orientation is implementation of marketing concept catering to customers which is also known as marketing concept or consumer focus. It helps a business set its strategies to meets its target market wants and needs including potential customers. The concept also helps a business in having a commitment in valuing customers and their needs which results to transformation of the business culture in line with the customer needs changes.
Marketing in consumer oriented business like Tesco is done by:
- Identifying target market in which the business identifies the customers they want to serve which is determined by the customer’s needs and the business ability to serve them.
- Market research is done in which information about current and potential customer needs are identified. This may include research on buying habits and competitors services and pricing.
- Product development is then done in which product and services tailored to customers’ needs are produced. In this respect, Tesco sources for suitable products from its suppliers.
- Marketing mix it then put in place to serve the target market involving product, pricing, distribution and promotion strategies for the goods and services. The mix is suited to offer value, communicate and avail goods to the customers.
- Market monitoring is also done to ensure that the business retains customers and is done by analyzing customer’s feedback on satisfaction. (Porter, 1980)
Possible benefits to Tesco for building customer satisfaction, relationship marketing and customer retention
- Customer satisfaction
- Increased spending by customers.
- The customers would encourage others to buy products from the business hence the business having an advantage of the word of mouth marketing for its products and services.
- Relationship marketing.
- Enhances the ability to tailor services and some brands to suit specific customers’ needs that are identifiable in the process of relating with them.
- It would help in easily addressing specific customers’ issues and concerns regarding the business operations hence ability to effectively address key customers issues.
- Customer retention
- Would enhance repeat sales hence improving the business’ performance
- It would help in having a significant market share that would be available even for introduction of new products(Hooley, Nicouland & Piercy, 2011)
- Segmentation, targeting and positioning
Macro and Micro factors affecting marketing decisions in Tesco
- Micro factors
Micro factors are the internal factors that affect the business marketing activities hence its performance. They include the factors within the business control as follows
- Suppliers determine the company’s competitiveness in the market. Ability of the company to source inputs reliably and in competitive prices makes it competitive.
- Competitors also determine the strategies that Tesco apply in order to remain competitive. (Brown & Day, 1981)
- Shareholders expectations on the company affect its marketing activities.
- Customers needs determine the strategies the company applies in order to remain relevant in a market where customer preferences are changing.
- Tesco’s distribution channel determines its ability to reach customers in a reliable and convenient manner. (Sengupta, 2005)
- Macro factors
Macro factors are the external factors that are beyond the business control and which have an effect on its operations hence marketing devesions as follows
Economic factors: Include those factors that affects pricing decision including
- Inflation increase which is the rise of the general prices reduces consumer’s purchasing power resulting to reduced demand. A fall in inflation relatively increases purchasing power increasing demand and vice versa.
- Unemployment level which determines the level of disposable income available in the market hence need for the company to review its pricing.
- Interest rate affects the ability of a business to borrow investment capital thus low interest increases investment increasing competition in the market while high interest rate in an economy reduces investments reducing competition.
- Economic growth determines the disposable income and the aggregate demand in an economy. High economic growth means that there is high demand in the market while low growth results to reduced demand hence a need to consider it in products’ pricing. (Kotler 2004)
Social factors: Affects the nature of products demand hence having effect on product positioning decisions as follows
- Health concerns in the market affects demand for different products. An example is the concern over obesity and other health effects of Tesco’s brands consumers. This sometimes results to the company developing new products which are more health conscious.
- Social organization in a market determines the brands that consumers would want to be identified with. This influences the marketing activities that the business undertakes like advertising teens targeted products with an appeal to that age group among others.
- Lifestyle determines the consumer’s preferences and tastes and their change requires a business to provide relevant products which satisfy them.
Cultural believes and practices also affect preferences for different groups determining the demand of business products. This also influences the advertising a business does. (Kotler 2004)
- Gender difference and their preferences which guide marketing campaigns.
- Age determines the social organization and lifestyles which determines tastes and demand for certain brands.
- Population size and density determines the demand for goods in a place. High population means a high demand and vice versa. (Sengupta, 2005)
- Free trade in the current globalization is increasing competition in the market.
- Foreign direct investments regulations by the government;
- Consumer rights awareness affects product development with consumers increasing awareness of their rights which could result to litigations if businesses violate them.
- Legal requirements and regulations in different countries country determine the marketing activities that Tesco undertakes with an example of regulation on advertising. (Sengupta, 2005)
- Technological advance enhances introduction of more innovative products.
- Promotion and advertising has been made easier with availability of technology like the digital cables and internet.
- Business process processes are becoming more efficient with technological advance reducing cost and increasing competitiveness. (Marshall, 1996)
- Weather conditions change affects sourcing of agricultural produced raw materials and demand for products like soft drinks and others. (Kotler, 2010)
Tesco’s main market segments
Segmentation is identified as important in marketing since a business cannot be able to satisfy all customers with the same products and services due to their diverse tastes and preferences. Thus satisfying customer needs requires dividing the diverse market into segments which have common characteristics and needs which are to be served by specific products and the segment markets the target market.
Buyer behaviors’ effects on Tesco’s marketing activities in different situations
Marketing involves addressing consumer’s needs through positioning of products and services to suit those needs. However, customer buying behavior is determined by several factors which determine how they buy and the process of buying hence having an effect on businesses’ marketing activities. (Engel, Kollat & Roger, 1968) In that respect, some of the customer behavior effects on Tesco’s marketing can be demonstrated by the analysis of the behaviors, their causes and end results in terms of Tesco’s response as explained below.
The several factors that determines Tesco’s customers buying behavior include income level, cultural factors, lifestyles and social factors which determine buying aspects that define the marketing activities for Tesco. Such aspects include the customers’ buying time, buying pattern and buyers considerations. (Fred, 2011) In that consideration of the causes and the aspects Tesco’s marketing activities in response to those factors include
- Establishing suitable distribution channels that address the access and shopping time preference for consumers. This has been done through development of outlets that are suitably located and which operate within the customers preferred shopping time. The business also applies other distribution means like the online system that address the buying behavior of the technologically savvy customers.
- Promotion channels depend on customer behavior with specific grouped being targeted using different promotion methods. Example is the use of online promotion platforms like the social media which seek to target the social media users who also seek online access of products and services.
- Pricing is done depending on consumers’ perception of value which determines their busying behavior. To the high income group who would have preference for high value goods, the business has premium pricing.
- Consumer’s preferences determine the product features that the business delivers to the market. (Hooley, Nicouland & Piercy, 2011)
The analysis has demonstrated that a business market activities are tailored to suit its marketing objectives. In addition several factors including micro and macro have been identified as key in influencing marketing decision making. In that respect, Tesco applies suitable marketing strategies that seek to feature its marketing orientation with a focus on customer satisfaction that would enhance market share growth and customer loyalty.
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