Global Marketing of Tesco

critically analyse and evaluate the marketing approach of your chosen brand and critically assess the competitiveness and effectiveness of the marketing strategies employed in each country. To do so, you will need to conduct a comparative analysis and evaluation of the strategies employed in the UK versus those in your selected foreign country.The competitiveness and sustainability of a brand highly depends on the nature of its business environment of the market or industry in which it operates. It also depends on the efforts and strategies put towards enhancing its competitiveness and sustainability. This paper explores the above statement in the context of Tesco brand. It also  examines the nature of the global environment in which Tesco operates and the efforts and strategies adopted by Tesco PLC to support the competitiveness and sustainability of Tesco brand in the global market. Further, the paper examines the impact of the global environment and Tesco’s strategies and efforts on the level of competitiveness and sustainability of the brand. To achieve this, the paper explores the operations of Tesco brand in the UK and Chinese markets and  gives recommendations for improvement in the current strategies of Tesco that would help to improve the performance of Tesco brand in the global market.The market environment in which a brand operates has a significant impact on its performance. In most cases, the marketing environment influences the choices for marketing strategies adopted by a firm to enhance performance of its brand. Environmental factors such as the size of the targeted market and market strategies of a firm influence the level of marketing efforts needed to facilitate smooth performance of the firm’s brand (Kotler & Armstrong, 2012). When operating in the global market, firms are usually compelled to modify their marketing strategies and efforts with regard to the varying needs and preferences of consumers in different market segments. According to Whitelock (2003),the market environments of different countries, for instance, might be different, prompting firms to adopt different marketing strategies in those countries. As well, a firm’s marketing strategy and efforts influence the competitiveness and sustainability of its brand (Kotler & Armstrong, 2012). As such, the performance of the Tesco brand in the global retail industry is influenced by environmental factors affecting the industry as well as the marketing strategies and efforts of the Tesco PLC in the different countries and regions where it operates.The global retail industry in which the Tesco brand operates consists of firms that sell products for household or personal use or merchandise, including food and beverages, technological products, apparel and accessories, pharmaceuticals and music products (Zack, 2009). The industry was growing steadily prior to the recent global economic crisis. Recession resulting from the crisis in most developed countries led to a stagnation of the performance of the industry between 2007 and 2009. In 2009, the global retail industry recorded a negative growth of -0.6 percent in terms of sales (Zack, 2009). Since the end of the crisis, the market has grown as countries recover from recession. In 2014, for instance, the global retail industry grew by 2.3 percent. However, the growth in the retail market has been mainly achieved in the developing countries such as India and Brazil, where an increase in incomes has enhanced the purchasing power of consumers (Wrenn & Mansfield, 2014).In most developed countries such as the UK, the retail market is already saturated and thus, no significant growth is achieved. As a result, most players in the retail industry located in the developed countries have been expanding their operations in the developing countries with emerging markets in order to enhance performance of their brands (Lamont,2002). The global retail industry is expected to continue growing during the next three years unless circumstances emerge that will adversely affect the industry. The rate of growth is expected to increase to about 3.3 percent by 2017 (Wrenn & Mansfield, 2014). However, there is a high level of competition in the industry, implying that the ability for any firm to survive is highly influenced by its business and marketing strategies and efforts.One of the remarkable trends in the industry is that most companies have been enhancing the performance of their brands through implementing e-commerce strategies. Tesco, for instance, has an electronic website called Tesco.com through which it interacts with consumers and displays and sells its products to the interested consumers. China and the US have the largest shares of the e-commerce market in the retail industry, accounting for around 55 percent of the global market (Chaffey,  2006). The UK also has a significant e-commerce market that has been growing rapidly and is expected to continue growing in the future (Wrenn & Mansfield, 2014).Tesco is a retail brand that operates in the global market. The brand is owned by a company known as Tesco PLC that has headquarters in the UK. The company was established by Jack Cohen and it launched its operations in 1929 (Corina, 1971). Initially, the company specialized in selling food products through retail outlets, but it later expanded its product portfolio to other items, including music products and household items. Tesco has expanded its market share in the UK and globally since its establishment, making it one of the largest and most popular retail brands in the global market. Currently, Tesco has a market share of 28.1 percent in the UK retail market, making it the leading retail brand in the UK (Tesco PLC, 2015). In terms of revenue earning, Tesco is currently the third-largest retail brand in the global market after Wall-Mart and Carrefour. The retail industry consists of firms that sell similar products given that suppliers sell their products to different retailers. In order to attract consumers and attain competitive edge, the firms operating in the industry must present themselves to the customers as unique brands. This highlights the importance of branding in the retail industry. Tesco PLC presents itself as Tesco brand, and its products bear the name of that brand. The branding strategy of Tesco has played a major role in facilitating the expansion of the market share of the company in the UK and Chinese retail markets (Tesco PLC, 2015).Tesco faces numerous competitors in the global market from the major and minor players in the global market. In the global market, the company competes with retailers such as Wal-Mart, Carrefour, Kroger, Schwarz Group, Metro, Target Corporation, Aldi, Home depot, Inc and Costco. Most of the global firms mentioned above operate in both the UK and Chinese markets where Tesco also operates (Temporal,2001). Tesco also faces competition from firms established in the local markets in the countries where it operates. In the UK market, for instance, the company faces competition from retailers such as ASDA, Sainsbury, Morrisons and others Harrison, 2014. In China, the Tesco has been facing competition from local retailers such as Beijing Jingkelong Company Limited, Carrefour China and Beijing Jingkelong Company Limited. In e-commerce, Tesco faces competition from online retailers operating in the global market such as Amazon.com and eBay. The company also faces competition from online retailers established in the local markets. A good example is Alibaba’s Tmall, an online retailer that operates in the Chinese retail industry. In addition to eBay and Amazon, Tesco faces competition in e-commerce from companies such as Asos, Play.com and Argos (Harrison, 2014).Tesco has been adopting various segmentation strategies to attract consumers with different needs and tastes. On of the most significant strategy adopted by the company is demographic segmentation (Humby & Hunt, 2008). The strategy involves dividing consumers in the target market based on demographic factors such as gender, age, income statistics and level of education. Tesco established a club-card aimed that enable it to determine and meet the needs and preferences of different consumer segments. For instance, the company has a kids club meant for children and toddlers club meant for mothers with very young children.Tesco also uses psychographic segmentation, which involves placing consumers into groups depending on their interests and spending patterns (Harrison, 2014). The establishment of the wine club, for instance, is one way of the company’s psychographic segmentation. As such, the establishment of the club card is one of the ways through which Tesco segments its targeted markets. The implementation of club card has enabled the company to attract consumers in the UK and other European countries, which is one of the factors that have enhanced the strength of the brand. However, the club card has not been effective in enhancing the strength of the brand in some countries such as China (Harrison, 2014).Tesco mainly sells food and beverages and household items in its UK stores.  The firm has diversified its portfolio to include products such as clothing, electrical appliances, DVD rental, petrol, furniture, software and music downloads. Recently, the firm has added financial products and services to its portfolio in the UK (Tesco PLC, 2015). In China, Tesco has been mainly focusing on selling grocery products, clothing and household items. The firm has not been offering financial products and services in China. Also, Tesco has been offering some food products in the UK stores that are different from the food items offered in the Chinese stores (Pringle & Thompson,1999). In the UK, Tesco offers a wider product range than in China (Tesco PLC, 2015).Pricing strategy entails the approach undertaken by a firm to set prices for its products and services (Kotler & Keller 2011). Prior to January 2014, Tesco mainly adopted a hybrid pricing strategy for its brand products and services in the UK. The company adopted both cost-leadership and differentiation strategies in determining prices for its products and services. In other words, the company adopted competitive pricing. In January 2014, however, the company changed the pricing strategy to the current market-based pricing (Harrison, 2014). The company decided to adopt the market-based pricing approach in order to enhance the value derived by consumers as they purchase the brand’s products and services. To achieve this, the company adopts a cost-leadership strategy through working with suppliers to increase volume and range of products and ultimately, reduce prices (Harrison, 2014). As well, Tesco has been adopting market-based pricing the Chinese market. However, unlike in the UK where the company has been focusing on enhancing the value derived by the consumers, the company’s aim in the Chinese market has been to facilitate penetration into the local market (Keegan & Green, 2015). The penetration pricing does not give regard to the fixed costs, and a firm usually operates at a loss. This is one of the reasons why Tesco has been incurring losses in the Chinese market (Harrison, 2014).In both the UK and Chinese markets, Tesco adopts promotional strategies such as making media advertisements, offering discounts, sponsoring charitable events and giving promotional offers. According to Lal, et al., (2005) ,One of the most remarkable aspects in the company’s promotional strategy in the UK is the use of club card. The club card is a loyalty card that the company gives to its customers. Every time the customers shop in one of its stores, they accumulate points (Harrison, 2014). The customers can then use the accumulated points in making purchases in its stores. The customers also have an option to turn the points into cash. As such, the club card acts as a way of offering discounts to the company’s customers. The card has been an effective promotional tool that has enabled played a significant role in enhancing customer base for Tesco since establishment in the mid 1990s. However, the company has not been effectively utilizing the club card in the Chinese market currently. Unlike in the UK, the club card did not lead to significant increase in the level of consumer base in the Chinese market and thus, the company stopped using it as one of its key promotional tools in China (Harrison, 2014).The current overall marketing strategy of Tesco enhances its competitiveness and sustainability in countries where it already established such as the UK. The company’s market-based pricing strategy is designed to enhance the value derived by the consumers. The consumers who are price-sensitive are likely to be attracted by the current pricing strategy. Ultimately, the pricing strategy will stimulate growth in the level of sales made by the firm (Kotler & Keller 2011). Working together with the suppliers to reduce cost of products will play a significant role in supporting the sustainability of the current pricing strategy. Further, the product differentiation strategy of the company that involves offering a wide range of products helps in increasing choices for consumers. The strategy will play a significant role in helping the firm retain loyal customers.Tesco’s promotion strategy has been effective in enhancing the firm’s competitiveness since it attracts a large base of consumers and enhances their loyalty in the established markets such as the UK. Promotion strategies, such as the offering of discounts and club cards, will help in enhancing the competitiveness and sustainability of Tesco brand. However, Tesco may not be able to gain significant market share in the already saturated markets such as the UK with the current strategy. The company can gain additional share in the global market through expanding into the foreign markets with emerging markets such as Brazil and India. To succeed in the expansion process, however, the firm needs to be cautious about the factors that influence consumer behaviors in the foreign markets.Tesco failed to achieve significant success in the Chinese market as a result of failure to understand consumer behaviors in the local market. The firm introduced club card to the Chinese consumers without understanding the culture of the Chinese people. Recent studies have shown that Chinese consumers are hardly stimulated by club cards to become loyal customers to certain retailers, unlike the UK consumers (Harrison, 2014). To become more competitive and become more sustainable in the global market, the firm should focus on expanding its operations in the emerging foreign markets. In case of need, the firm should expand its product range in the stores located in the foreign countries (Lawrence & Weber, 2011).Overall, Tesco is one of the most remarkable brands operating in the global retail industry. The global retail industry has grown recently and it is expected to continue rowing in the coming years (Seth, & Randall, 2005). Branding is one of the factors that have facilitated Tesco to gain significant growth and market share in the industry and to surpass most of its competitors. Another factor that has facilitated the growth of the company is its innovative market segmentation strategy (Keegan, & Green, 2015). The current product, pricing and promotion strategies facilitate the firm to maintain competitiveness and sustainability of its brand in the established markets such as the UK. However, overall marketing strategy should be enhanced for the firm to be able to attain competitiveness and sustainability of the brand in the emerging markets such as China and Brazil.Tesco can enhance the presence of its brand in the global market through opening new more stores in markets with good growth prospects such as Brazil, China, Mexico and India. To succeed in the expansion process, Tesco should understand the culture and behaviors of consumers in the targeted markets and then use the information to design strategies that suit the targeted customers. Further, Tesco should improve its product range in the foreign countries through diversifying to products and services that it does not offer currently. Also, the firm can enhance the competitiveness and sustainability of its brand through diversifying its operations to other industries in all markets it operates (Czinkota & Ronkainen, 2012).