Positioning of Marketing Management

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Requirement

Prepare a report comparing the retail strategy and implementation of two retailers with a UK presence competing in the same market sector (based on both desk research and store visits) in the light of the competitive environment. The two companies are Tesco and Waitrose UK supermarket companies.

Solution

Executive Summary

This paperwork relays the methodology and research of the development professionals from the University. The research was performed in order to define and develop an assessment tool to monitor assessment. After in-depth work on research groups, & case studies, we were able to identify two important retailers of UK which are Tesco PLC &Waitrose which have a strong presence across & how they compete in the same market. This report covers external & internal factors, resources surrounding Tesco & Waitrose Company. It conducts an in-depth analysis & identifies implementation of retail strategy mix which could differentiate Tesco & Waitrose existing in the same environment. The core emphasis lies in the strategy planned & marketing mix used by both in key highlighting their strength & weakness.

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Both the companies are leading companies in super market stores especially in food & drink industry. Even after having knowledge of  know how techniques of handling resources in manufacturing, management of supplies, trained staffs how they are both able to distinguish themselves & still provide  unique essence of retailing industry. 
For understanding the research we measured various parameters & the scope of project by reading reports, magazines, books & online searches.

Introduction

Leading UK companies in super-markets how they compete in the same environment facing challenges internally or externally & how they transfer it their strength & sustain their market share. Reading about previous strategy retail mix used, analyzing it in depth through researches online & from reports helped in translating into a live example to resolve the current implementation of retail strategy issues. The research questions to approach this hypothesis focused on the following main themes:

  • Issues during implementation of retail strategy mix

  • Solutions to smoothly implement retail strategy mix

  • Strategies used in distinguishing itself 

  • What recommendations or conclusions can be drawn while implementing 

This report summarizes the implementation of the retail strategy mix be it in Tesco or in Waitrose UK, ways to strategize it, and optimizing it to capture maximum market share. All the key topics are bifurcated into seven chapters which comes helpful in learning & concluding issues. First, it highlights the key topic covered in an introduction. The next section includes situation analysis & then it covers objectives. Chapter 4, explains the Positioning, targeting, image & Chapter 5 explains retail mix strategies to understand market & ways to capture it.  Last chapters draw conclusion part.

Situation Analysis

In this chapter, we draw comparisons between Tesco & Waitrose by understanding the situation in which both the company coexists and for this we did extensive research in situation analysis.

i)    Comparative PESTEL Analysis framework of Tesco & Waitrose

  • 1.    Political: For Tesco, UK political market has always been favorable and for Waitrose same is the scenario. The challenge remains when it requires penetrating into new global market segments it needs a political support & permission of targeted countries. For eg. Penetrating into India it needs to check political stability, favorable reforms & then decide launch of new stores & products. For this Tesco have huge resources and funds to sustain while diversifying globally but same is not the case with Waitrose which has limited resources with optimum utilization. Tesco has a vision to penetrate globally & keeps a check in a peer strategy for the road blockage while entering into new market domain & segments. On the contrary, Waitrose captures majorly in UK & has penetrated less globally hence it only compliances with UK government rules & reforms.

  • 2.    Economic: Favorable economic factors globally & locally are a big concern for both the companies. Downturn in economy results in consumer changed behavior while tough reforms leads to price dropping & no sales growth especially in non food items.
    However food items are last dropped item form the list during high inflation & economic downturns but still to sustain in existing scenarios & retain customer base TESCO should launch more loyalty & warrant cards scheme (Euromonitor, 2010).
    While for Waitrose it is highly dependent on UK economic reforms. As of now it has stable prices but due to the bad recession in 2008 it resulted in customer switching & heavy losses. Hence regular schemes, promotions, cards loyalty should be launched to maintain customer database

  • 3.    Social: Change in lifestyle, buying behavior, improved health awareness leads to changes in pattern. Tesco should consistently foresee changed social behavior & choose alternative plans. For example : keeping more organic or non-organic food items for a health- conscious people. Tesco keeps a tab on the payment methods used such as cheques, cash credit/debit card, bank transfer or payment through customer loyalty or cards which help in serving satisfied customers.  While Waitrose has adopted itself to changed mindsets of consumer behavior because of buying patterns, new lifestyles, habits & preferences. Waitrose follows an updated market trend of food or non food items & has excluded outdated stuff. Keeping abreast with Waitrose focus it came with up market promotional activities.

  • 4.    Technological: Keeping stocks fresh, introducing latest technology, maintain logistics is all tricks to penetrate easily in the market & cater to the needs of customer (Office for National Statistics, 2010).Tesco upgrade itself to latest style & technology in order to sustain & compete with peers. Customer Loyalty programs, cards, schemes, convenient payments system result in customer loyalty which has very well utilized by Tesco (Sun, 2009). While Waitrose keep itself updated & adapted patterns changed technology, storage, supply deliverables, transportation in grocery food items segment catering majorly to UK citizens.

  • 5.    Environmental: Government support & strategically encouragement resulted in Tesco promotions in the targeted company. Carbon footprint resulted Tesco introduction in organic & non organic food items (Wood, 2009).
    For Waitrose, reduce food waste, ban of plastics & using of more environment friendly decomposable stuff (Yuthas, 2009).

  • 6.    Legal: Service tax in food items & VAT in non-food items has been applied as per targeted countries in Tesco.
    Minimum wages pay & gender equality has been implemented in the Tesco as per the specific country norms.
    While for Waitrose its more a pro UK oriented & hence domestically it includes all laws, reforms, taxes etc. & globally it adheres to quality standards set by institutes reforms to strategize penetrated markets.

ii)    PORTER competitive analysis for Tesco plc & Waitrose

These can be distinguished & analyzed on the basis of below points-:

  • 1.    Bargaining power of suppliers: Tesco strategies through low specific suppliers dealing in the market & price rise in inputs result in producing products at higher costs while for Waitrose switching to the alternative suppliers due to cheap supply are low since margin are quite low.

  • 2.    Bargaining power of buyers: Since companies like TESCO exists in a perfect market hence their end products should be of same price while for Waitrose switching costs are readily available due to many options available (Davey and Laurance, 2008).

  • 3.    Threat of new entrants: New entrants in various sectors delivering products & services at a cheaper prices, breaking market share of Tesco PLC. While for Waitrose it is able to sustain in the market, capturing market share since it provides better crème class products & services at same price Sainsbury charge its customers. Waitrose unique essence of its product is high quality products which keeps it class apart from other competitor M&S.

  • 4.    Threat of substitute products: For Tesco, cheaper substitutes products are readily available in the market while Waitrose caters to a specific domain of retail market hence levels of substitutes are quite low. For Tesco, some existing players are big & dominant in the market hence entering into a completely new domain will result in resistance & forces. For, Waitrose if it wants to enter in a new market they should have hands on experience & market knowledge (John Lewis, 2012).

  • 5.    Rivalry among the existing players: For Tesco, constant competition between Wal-Mart, Carrefour, J Sainsbury, ASDA, and K-Mart & thinking of new strategies & techniques to keep rivals at bay. (Peter & Donnelly 2002) while Waitrose competitors are M&S & Sainsbury need of middle class delivering products with freshness & crème upmarket products.

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iii)    Comparative SWOT Analysis of Tesco & Waitrose

A strengths, weaknesses, opportunities and threats (SWOT) analysis of Tesco &Waitrose has been provided below.
1.    Strengths
Tesco main strength lies in-:
TESCO caters in various divisions & sub segments & has a 4,331 stores in the USA, Europe and Asia.  After Walmart & Carrefour, Tesco captures a third largest grocery retail market share in the world (Euromonitor, 2010). Tesco introduced a loyalty scheme card as a ‘Tesco Clubcard’ for the regular customers. 
While Waitrose main strength lies in, exclusivity supply to Prince Charles. Waitrose has 300 stores it’s able to capture 1/6th market share in UK. myWaitrose loyalty card launch resulted in customer retention scheme. With employee strength of 1,00,000 it got appreciated with many rewards & recognition for best quality products.
2.    Weaknesses
Tesco weakness lies in cut throat competition resulting in changing alternative strategies & cost cutting. Due to the tough competition certain Tesco products could not survive with peers competitors& had to be recalled due failed strategies & losses. It deeply affected brand image of the Tesco as they opted for the using cheaper alternatives with high quality. 
While Waitrose weakness lies in niche & focus on one segment of retail. It should diversify into more market segments. High Price wars & cut throat competition in the market resulting in slashing of prices. Negative feedback & bad image portrayed due to the magazine Waitrose Kitchen.
3.    Opportunities
The opportunity of Tesco lies in been secured a global place hence its commercial portfolio should widen up. Focusing on the geographic diversification & opening up of more stores will capture more market share customizing to the needs of the customer. Due to the global presence the customer base has also increased & scope is to diversify into more customer segmentation which will generate more per unit sales. To expand in various countries & break barriers to entry they can tie up through joint venture & franchise options. (Daily Mail, 2010).
While Waitrose opportunities lies in penetrating into more diversified segments & capture more market share. Build heavy loyal customer base & launch more schemes & loyalty cards.
4.    Threats - for Tesco aggressive competition in the market leads to revise strategy planning & invest more alternative strategy to save market share. Unemployment, market down turn leads to changing behavior of consumer for non food items hence threat lies in cost cutting techniques. While Waitrose threats lies in the Competition wars & penetration into new segments will result in price wars and Waitrose has limited funds.

Objectives

This chapter discusses about the Tesco & Waitrose objectives & how they capitalize same market still mark itself differently.
The objective of Tesco is to expand globally & diversify, promote more of nonfood section/divisions, while that of Waitrose is to provide quality groceries, wine, and spirits at a lower price & maintain a customer loyalty. Both the companies’ objectives are suitable as per the individual orientation.

Postioning, Targeting and Image

Through this chapter we are able to understand TESCO & Waitrose UK position, which sectors, products its should target & how to improve their brand, company image.

  • Target Market of Tesco PLC & Waitrose: Tesco targeted UK divisions & sub segments serving lower to upper class. It promoted aggressively & now stand as one of the cost leaders. While Waitrose only targeted UK sectors & focused in serving high class products with high quality serving from middle to upper class.

  • Positioning Strategy of Tesco PLC & Waitrose: Tesco PLC, when it entered market it was a focused only in grocery retail market & soon enough it has positioned itself as diversified brand serving in major segments & sub segments. While Waitrose, has positioned itself in the minds of consumers through the word of mouth & by tying up with branded companies to position itself as upmarket store. 

  • Image of Company Tesco PLC & Waitrose: Tesco has imaged itself from huge mega stores, express stores to normal convenience stores it has imaged itself as one stop shop. While Waitrose has improved its brand image consistently & labeled itself as par, fresh & unique through intelligent promotional activities. Now it Waitrose image is considered as one of the up market store.

Compative Retail Mix

This chapter key emphasizes in the retail strategy used in comparing Tesco & Waitrose UK. It considers all the key factors which affect it internally & externally such as business strategies, consumer preferences, management strategies to break competition & gain more consumer database.

  1. Range of Merchandize Mix: Tesco has a variety of products to offer & has diversified in the various segments & sub-segments. It has optimally utilized & imaged itself intelligently selling all the products & services under one roof such as Clothing & jewelry, Technology & gaming, Health & beauty, Home electrical, Entertainment & books etc. On comparison with Waitrose its product mix changes as per consumer tastes and it just concentrates on grocery, food items or non-food items.  Waitrose also introduces or remove certain products through keeping a track of the customer records & per sales unit sold of any labeled or non-branded products and then deciding whether to include or exclude it out.

  2. Pricing: Sine Tesco is considered as highest profitable hence it is marked pricing leader. Tesco needs to keep its pricing as per its business strategies. Due to the high economies of scale & low operating costs, Tesco can keep completion at bay through smart & uniformed pricing offered to consumers.. The company also uses economy pricing, psychological pricing, product line pricing and geographic pricing strategies. While Waitrose is better known domestically and has kept its prices stable. But judging price wars in specific segment, location or places it needs to keep its prices at minimum or at par to sustain competition. Sometimes due to discounts, promotions & giving club points also helps in pricing the product intelligently. Waitrose studies market globally and compares it with domestic & regional pricing to understand variation in pricing due to the changed lifestyles, customer preferences, new entry into the market & change of habits. All these factors have to be considered when Waitrose prices it products. Within a region, segment or division Waitrose will operate at same cost & have same pricing but if its regionally in different location it might have changed prices.

  3. Communications: Tesco has a strong marketing team & uses a competitive marketing communication correspondence with peers, customers, clients & with investors. On the contrary, Waitrose needs to have more aggressive marketing campaign for more promotion/ visibility activities & should strengthen its communication standards as per clients and investors. Tesco is a leading food & drink retailer with a 2,319 stores & has employed a workforce of over 325. While talking about Waitrose, as per February 2015 sources, it holds an "upmarket" reputation & has a 350 branches across the United Kingdom which includes 30 convenience stores.

  4. Location: If the location is high crème Tesco will also include high branded products & if its located in the regional place where there are health conscious people then it will include organic food etc. Whereas Waitrose supply of products depends on locations & stores sq. feet. Since keeping a huge stock may result in the less selling in a low customer centric place & similar keeping a low stock in a high demand place will result in spoiling of brand image due to shortages in stocks.

  5. Store Design & Layout: Tesco plc has opened its stores at every corner of UK has expanded itself globally as well. It opens its new stores after been watchful of the population density and then penetrates through promotional activities & adding new customers to the database. Certain Tesco stores are from 25,000- 140,000 sq. feet. In comparison with Waitrose, its stores are located in south east & far north of the UK & Newark. Some stores are located high profiled shopping areas. The average Selling Space of a Waitrose Store is under 1500 sq. meter, which is fairly small. Stores sq. feet preferences are between 1500- 2000 sq meters & if at good location they prefer 2500 sq metres

  6. Customer Service: Guide customers proactively & prefers self-service & While Waitrose caters to customers but prefer they should be aware about know how services. Tesco has two modes to broadcast its products and services: online and offline. Online sales of Tesco helps in better connect with consumers & delivering quickly. Since its easily available & accessible hence popularity is increasing rapidly among consumers. As per stats 2014/15, Tesco’s online grocery business captured 20 % of market. While Waitrose has also tailored its online business as per customer requests through Waitrose Deliver, Waitrose Cellar and Waitrose Florist.

Waitrose, make a note of customer surveys & recording customer feedbacks about products & services helps in retailers assess market needs fast & substitute outdated stuff with preferred & adopted life styles (take away, healthy eating, alternatives food, exotic, ethnic foods of people.. This helps in better social connect with consumers while Tesco which has expanded globally and running in a larger scale across UK includes all the products from inferior to organic to high class products all under one roof.

Conclusion

This chapter draws conclusion in understanding the types of strategies used by Tesco or Waitrose how they are able to compete, survive in the market & class them apart.
Among the four leading UK retailer stores comes Tesco with a 28.1% share of market & then remaining grocery market share is shared with other three which is Sainsbury's, Asda and Morrisons which is approximately 28% of the UK grocery market. While Waitrose comes at sixth position & captures only a 5.1% share of the market in the UK.
Tesco PLC is a third major global general merchandising company as per its revenue & second largest in terms of profitability. It has diversified its business into six divisions which is Tesco Extra, Tesco Superstars, Tesco Metro, Tesco Express, One Stop and Tesco Homeplus (Tescoplc 2009). Additionally, Tesco PLC also provides online services by the name of Tesco.com which is also its subsidiary& its other retailing services Tesco Personal Finance. 
While Waitrose is a food retail division of John Lewis Partnership parent company & a sixth-largest grocery retailer in the UK with a gross sales in 2010 of about11.3%& profitability rose to +28.0% due to the restructuring & introducing fresh patterns in sales. (John Lewis Partnership Reports, 2010) whereas speaking about TESCO it held a 30.7% share of the UK grocery retail market & profitability of 14.9 % in the year 2010 (Euromonitor, 2010).Waitrose optimization strategy is to that allows it to target customers with specific, tailored experiences. Waitrose also operates online business through Waitrose Deliver, Waitrose Cellar and Waitrose Florist.
Tesco unique strategy to diversify & promote more of non food items helped it retained its position & visibility. Also, its aggressive visual campaigning across the world helped them capture more of market share. Risks & mitigation of risks needs to assessed beforehand& necessary actions should be taken  (Kotler et al., 2013). Major challenges are faced by the tough competitors& to break the stereotype image one needs to retaliate to accept it just like Tesco faces (Ruddick, 2014). 
Understanding strengths & optimizing opportunities result in the strategizing & foresee barriers. (Kotler et al., 2013).SWOT analysis, PESTLE & Porter 5 forces highlights that Tesco is well placed globally/ domestically & stands at par with other existing competitors such as Walmart & Carrefour due to its thoughtful planning and economic market knowledge. Penetrating market through online shopping portals, customer & employee centric policies. As per the stats, Tesco stands 2nd in terms of profitability after Carrefour. Even during turbulent times for e.g. recession in 2008, Tesco leadership was able to sustain the market due to the diversified strategizing, identifying potential markets & capturing market through product/services differentiation & highlighting uniqueness.
On the contrast, Waitrose it needs to have an aggressive marketing campaign for more promotion & visibility activities. 
Understanding business virtues, Swot analysis &retail mix of Waitrose it was able to optimize its costs & benefits analysis of pricing strategies adopted.
Analyzing PESTLE, Porters five forces analysis& various other parameters of Waitrose it is well read that it should diversify more, which help in capturing more market share & should expand in various horizons globally or domestically.
Taking customer feedbacks, fine tuning products as per the customer feedbacks, applying know how services resulted Waitrose capturing &positioning itself as an upmarket company.

References

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  • Ruddick, G. (2014). Tesco’s new chief executive handed £700m war chest. Daily Telegraph, 29th August 2014.

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