MBM7002M Strategic Marketing Planning
MBM7002M Strategic Marketing Planning
Introduction
The current selected company for this assessment is Tesco which is one of the largest retailing organisations in the United Kingdom. The company was established in the year 1919 and has expanded its business all around the world. Currently, the organisation sells a wide range of products including groceries, frozen foods, dairy products, personal care products, beauty products and so on. In regards to the higher range of products sold by the organisation; it has managed to expand its revenue to £61,344 million in 2022 (Tesco Plc, 2022). The assessment will analyse the TOWS metrics and develop a three-year strategic plan.
Market audit
In respect to the Macro environment analysis such as PESTLE, it is understood that the UK has faced political instability over the last few years [Refer to Appendix 1]. Due to that, the constant risk for the companies has expanded after Brexit occurred in 2020. The inflation rate has risen up to 4.6% which is extremely high (Commonslibrary, 2023). Due to that cost of the company has expanded at a massive rate, Similarly, GDP has expanded to 0.2% in 2023 which is beneficial (Ons, 2023). The constant technological development has helped the business to improve managerial efficiency. The strict legal and environmental laws have caused barriers to completing the business tasks for Tesco.
Porter’s five forces have indicated only supplier bargaining power is low in the UK retail industry. However, other factors are extremely high in the business [Refer to Appendix 2]. It is also identified that the competition of Tesco is extremely high with ADLI, ASDA and Sainsbury’s. In this respect, the organisation can face a huge competitive risk that can lead to a huge financial crisis in the future.
In respect to the BCG matrix, it has been identified that the DOGS are the lowest performing products which do not have sufficient demand in the market and neither high market rate. Therefore, the products under the DOGS section can be eliminated from the company instead of selling them (Chiu and Lin, 2020) [Refer to Appendix 3]. On the other side, the cash cow section products allow the management of Tesco to collect the highest amount of money. The question mark section products have an uncertain future in the business as the organisation does not know whether the sales of these products will increase in the future or decrease (Hossain and Kader, 2020). Finally, the star section products have the highest demand and sales in the fiscal year.
Tesco’s TOWS analysis
Strengths
|
Weaknesses
|
|
Opportunity
|
S-O
● The company has a skilled workforce which helps to capture the opportunity to launch its own organic product line. ● The high brand image can help to grab the opportunity to promote sales of fresh food and maintain growth in fruit and vegetable sales. |
W-O
● Tesco can reduce the decline of the retail cash flow by capturing the opportunity to promote sales of fresh food and expand sales of fruit and vegetables to increase cash flow. ● The lower corporation tax opportunity can help to increase cash funds and reduce the weakness of the high debts of Tesco. |
Threats
|
S-T
● The high market share of Tesco can help to reduce the threat of massive competition in the market.
● The high brand image of Tesco can help to resolve the supermarket price competition in current times. |
W-T
● The debts of Tesco need to be mitigated in order to cope with the competitive risk and the company can improve the quality of its products and services. ● Retail cash flow decline can be reduced to cope with the threat of losing reputation. |
Table 1: TWOS analysis (Source: Created by author)
Assumptions based on TOWS
In respect to the TWOS analysis conducted by the organisation, it can be assumed that Tesco will be able to use its strengths and opportunities in the current times to meet the weaknesses and threats. In this regard, the potential income of the company can grow in the future times. As per the annual report of Tesco, it is realised that even after collecting a higher revenue of £61,344 million, the net profit has decreased to £1,483 million in 2022 which is lower than in 2021 (Tesco Plc, 2022). Due to the weakness and threats of the organisation in the current times, the decrement in profitability has been recognised.
On the contrary, as per the views of Krummel (2022), it is assumed that by utilising the strengths and opportunities of the organisation, the management will be able to meet the risks of the company and continue the business activities efficiently in the market. In this respect, the potential financial performance can develop continually in the upcoming times. In addition, it is also assumed that if the management of Tesco is able to implement an innovative strategic direction by including the next generation of automation and AI technologies, then the future performance of the company can continuously develop over the years (Rosnizam et al. 2020).
SMART Objectives
In order to develop a suitable strategic planning for the company, the following SMART objectives are taken into consideration.
- To maintain a constant profitability growth of 5% in the next three years
| Specific | Measurable | Achievable | Relevant | Timeframe |
| The profitability of Tesco has decreased in 2022 which is not acceptable and profit growth needs to be maintained over the years (Chen, 2022). | The profit growth can be measured by comparing the annual report of each year and observing the movement of profit amount. | The objective can be achieved by reducing the unnecessary operating costs, debt-related costs and financial costs of Tesco. | Profit growth is essential for the company to stabilise its financial position in the market. | The objective can be achieved within 1 year. |
- To implement the next generation of innovative advancement to develop business efficiency
| Specific | Measurable | Achievable | Relevant | Timeframe |
| The next generation of technologies helps in reducing internal errors and improve product and delivery service quality (ZXhang et al. 2023). | The objective can be measured by analysing the overall internal performance efficiency development in the future years. | The objective can be achieved by Tesco after conducting an analysis of technological trends in the sector and capturing those trends. | This is a relevant objective as in the modern era, numerous rival companies of Tesco are capturing the technological trends. | The objective needs to be met within a year. |
- To capture the demands of customers and provide them with high-quality products
| Specific | Measurable | Achievable | Relevant | Timeframe |
| Quality demands of the customers need to be maintained to increase customer number and trends of customers need to be captured (Patel and Swamy, 2023). | The increment in customer number and sales volume can help to measure the current objective. | The management needs to consider customer analysis and segmentation to gather the needs of customers to achieve this objective. | The objective helps to expand the number of customers and develop the competitive dominance of the organisation which is relevant. | The objective can be met in the next 2 years. |
Strategic Direction
The strategic direction of Tesco can be determined using the SMP process which helps to determine the necessary activities for the current strategic direction. As per the Strategic Management Prospect, four phases in the strategic marketing plan of Tesco can be taken into consideration for the next three years.
Phase 1: Goal setting
In this phase, the management sets the mission of the company and develops the corporate objectives that the company needs to achieve. According to Zainudin et al. (2023), it is seen that for Tesco, the main objective is to have a constant profitability growth of 5% in the next three years. In the year 2022, the financial profitability of Tesco has decreased by a massive range which is not acceptable for the business. In order to avoid financial risk and establish a long-term financial plan, the main goal of the company will be to maintain constant profitability growth of 5% in the next year (Zainudin et al. 2023). In respect to this goal, the organisation can be able to implement a suitable financial performance. The second objective includes to implement the next generation of technologies in the organisation. With the implementation of the next generation of technologies in the business, the organisation can reduce the human-based errors identified in the internal operation and focus on improving the overall efficiency and quality of decision-making using AI technologies (Smith, 2023). The final goal of Tesco is to capture customer trends and quality management to expand the potential number of customers in the organisation in the next three years.
Phase 2: Situation review
Situation review is the second phase of SMP which directly evaluates the company’s current business situation. As per the business situation identified using the TWOS analysis, it is clear that the weaknesses of Tesco include massive debts and decrement in retail cash flow which is not beneficial for developing the profit of the company (Kim et al. 2019). However, based on the strength of a positive brand image, the organisation can reduce the threat regarding supermarket price competition in the current times. In addition, the competitive threats can be mitigated based on the skilled workforce continuing their business tasks efficiently in the market. Moreover, the mitigation of the identified weakness can be considered with the help of fresh food promotion opportunities and the growth of fruit and vegetable sales (ZXhang et al. 2023). In regards to the situation review, it is identified that Tesco can easily manage to overcome its weaknesses and threats in the next two years. The management needs to utilise its strengths and opportunities at an efficient rate.
Phase 3: Strategy formulation
In respect to the current situation analysed in the previous phase, the strategy is formulated in this phase. In the case of Tesco, the main strategy is to implement a cost management plan to reduce the additional costs over the years and continue the growth of the profitability rate (Aiello et al. 2020). In addition, the management will implement an innovation strategy based on which the quality of the product and service of the customer can expand in a continuous manner.
Phase 4: Resource application and monitoring
In the final phase, the financial resources, technological resources and human resources are introduced and monitored to evaluate their contribution to achieving the business objectives (Mohapatra and MV, 2021). The organisation will set a suitable budget for a three-year strategic marketing plan which will help to increase the success rate of this plan.
Tactics
In respect to the strategic decision and marketing audit, the main tactics that needs to be considered is expanding the cash cow and star products in the BCG matrix. In addition, the DOGS products in the BCG matrix needs to be eliminated by the management to avoid additional production cost (Mohapatra and MV, 2021). Finally, question mark products needs to be promoted to a higher number of customers to expand market share.
Customer analysis
The 6W customer analysis model can be implemented by the company in order to implement an efficient strategic marketing plan. The focus of the 6W customer analysis model is to determine Who, What, When, Why, Where and How factors (Alzoubi et al. 2022). These factors help to understand who is involved in buying and consuming which allows to select the target market. After that, the preferences of the target market are determined in the second step.
In the third step, the need for the product in the target customers’ daily lives is evaluated by the management. With the assistance of this process, the organisation can focus on selling the products which are needed by the customers on a daily basis (Pei et al. 2020). In the fourth step, the reason for using the product is identified which includes analysing product price, quality, and so on. In the fifth step, the source of purchasing the product is analysed so it can be provided in both online and offline stores. Finally, the process of using the products is analysed to determine the reputation cycle of purchasing that specific product (Pei et al. 2020). Based on these factors, Tesco can focus on selling those products which are used by the customers on a daily basis and customer repeats the purchase of those products in the market.
Budget
In order to implement the strategic marketing plan for the next three years, an approximate budget of 10 million GBP is needed for the organisation (Rowe et al. 2021). With the assistance of this budget rate, the next generation of technologies can be implemented in the organisation to improve the quality of the strategic marketing plan. Moreover, customer analysis and product analysis can be considered which will help to determine which products need to be sold at a higher rate in the market. However, it is important that the organisation restrict the budget to 10 million GBP. Expansion of this budget can directly lead to a financial loss for Tesco and the organisation will not be able to recover the loss from its three-year strategic marketing plan (Wang et al. 2020). It is evident that the business focuses on utilising the budget adequately and does not misuse it to complete the strategic marketing tasks.
Implementation
In order to implement the strategic marketing plan, firstly the investment of the budget will be taken into consideration by Tesco. After that, the organisation will conduct a market analysis to determine the needs of the customers and the current market trends (Varadarajan, 2020). In this regard, a marketing strategy will be developed based on the customer’s trends and the next generation of innovative technologies will be included in the business to achieve those trends. With the assistance of this process, the strategic marketing planning activity of the company can be easily taken into consideration by the business. This may help the company to generate a high amount of profit and continue the business activities efficiently in the market. After the implementation of the strategic plan, the overall sales revenue of the company will continuously expand and the company will be able to expand the overall profit (Katsikeas et al. 2020). However, during the implementation, the main risk that can be identified is budget risk. If the budget is misused and not utilised properly, a shortage of budget can be recognised which is not acceptable. Along with that, uncertain risks such as recession, change in customer behaviour and so on can be recognised.
Summary
From the above discussion, it is understood that the business has the capability to mitigate its current weaknesses and threats by utilising strengths and opportunities in an efficient way. However, it has been clearly identified that the organisation needs to consider suitable tactics such as the BCG matrix and 6W customer analysis to continue the business activities adequately. The main challenge of the organisation in conducting the strategic marketing plan can be a misuse of the budget. If the management uses the budget for their own purpose, the wastage of budget can be recognised which may lead to financial risk. However, an opportunity for a skilled workforce has also been recognised for Tesco which may help to reduce the challenge as the employees will prioritise the needs of the company instead of their personal needs. Nonetheless, the company will successfully implement the strategic marketing plan to expand its profit in the future. The reason for that is the advanced AI technologies which will help to identify problems and develop suitable solutions to improve strategic marketing planning.
References
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