TESCO BUSINESS ENVIRONMENTExplaining the factors that determine demand and supply of houses in the UK during the above period

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Table of Contents

1.1. Intoduction21.2. Macro Analysis21. Sociocultural22. Economic23. Tecnological34. Politics31.3. Micro Analysis41. Customers42. Suppliers43. Distributors 44. Competitors 41.4. Swot Analysis 52.1. New Format 62.2. Segmentation 72.3. Targeting83.0 Positioning 91. Position objectives82. Position strategy83. Positioning strategy and communication104.0 Product life cycle115.0 Competitive advantage136.0 References........................................................................................................14

1.1 Introduction and Core (Tesco):

Tesco is one of the largest retailers in the world and the third in UK; it has stores across 16 countries in Asia, in six European countries and in North America in addition to the UK. it is a growth business (Annual Report for Tesco: 2011) .this essay will include environmental analysis of Tesco in the industry, then a new format with marketing plan include segmentation and targeting will be discussed, after that a positioning strategy will be designed for the new format, moreover all the stages in the life cycle will be identified, finally describe how it would be effective on the long term, and at the end there will be a summary about this new format.

The core: Tesco

Micro Environment Macro Environment

1.2. Macro Analysis:

1. Sociocultural: Society shapes the beliefs, values, and norms that largely define these tastes and preferences Kotler P. (2006:p87). Tesco looks into many factors to satisfy its customers needs and tastes, for instance, it is producing healthier and organic food to meet the demand of the increasing numbers of people who are concerned about their health and it's providing all kinds of prepared meals in some demographic areas due to the increase in numbers of female workers. Psychologically they are aware that most customers prefer to go to a one place for shopping where they can find their needs, so they supply many items more than the food, like clothes, home furniture and accessories. 2. Economic:

Tesco has survived the 2008 recession despite the fact that it slowed its juggernaut, and quickly increased the profit to 3 Bn in 2009 ( Finch,J. 2010). Moreover in Unemployment levels, it slows the demand of many goods, slow as well the demand to produce such goods. in the other hand it may be increasing the general traffic of money in the areas where it sets up new stores i.e. creating a culture of wanting to buy more things and encouraging people to spend more money on things they would probably not otherwise even want Tesco PLC Overview: 2004. 3-Technological: Tesco uses the technology in many ways to make shopping easier and much convenient to the customers, like home delivery, online shopping, self check points, electronic shelf labeling, club cards, and producing many technological products like wireless devices. 4- Politics:As mentioned before, Tesco has many branches in six European countries, so its performance is affected by the political and the economic system of each country, including the EU's regulations and those of each individual country; Tesco also has to respond to changes in the legal framework, employment legislations and other regulations.

1.3. Micro:

1. Customers:

Tesco has many customers of different ages and social classes, it is important for the company to gain customers loyalty, therefore they provide many services to keep the customers attached, like the club cards, Tesco has over 35 million club card holders worldwide. Tesco set up stores in different locations to the convenience of their customers, sells the products at affordable prices comparing to the rest of their competitors and supermarkets, besides providing home delivery and on line shopping. The numbers of customers are being increased year after year and the profits are being increased accordingly. 2. Suppliers:

Tesco has many local and international suppliers of many countries around the world; they also help the small suppliers to grow. On the other hand, they focus on their reputation in the market, and most of their products are bought at cheap prices. Tesco undoubtedly has power and can use it to push down the prices it pays to its suppliers. The Tesco Takeover (2005).3. Distributors

Distributers Help the company to promote sell and distribute its goods to final buyers (include resellers) Kotler P. (2006:p.66).Tesco is a retailer who sells directly to the public, doesn't deal with local or regional distributors. 4. Competitors:

The main competitors of Tesco are Asda, Sainsburys, Wm Morrison, and Safeway, these supermarkets provide similar products and services to the public, but Tesco keeps its customers loyal by different ways. EBITDAR* vs COMPETITORSEBITDAR margin %

1.4. Threats within the industry at both national and local levels:

StrengthsWeakness

Online shopping. International growth. Increasing in the market share. Focusing on the lower prices more than on the quality. It has high level of debts on the credit cards. Depends on the UK's market more than on the international.

OpportunitiesThreats

More international growth. Non food retail. New formats. Have more customers. Prices are within the competitors range. They may not succeed on the international level. Losing upper social class customers. New competitors appear in the markets.

Marketing strategy

2.1 New format for Tesco:

Tesco has six formats which are Tesco Superstores, Tesco Extra, Tesco Metro, Tesco Express, Tesco Home plus, and One Stop. These stores work on a different pricing to the other stores.A prospective new format is for Tesco to establish small stores on the university campuses; the location of any store plays an important part of success or failure, as Richard M. (1996) said The choice of a store's location is considered to be the single most important decision a retail organization has to make. The new format will be feasible due to the importance of the locations, and the volume of purchasing power by the increased number of the universities students, within the UK there are currently 1.9 million students, representing a combined spending power of 10 billion per annum (Jenkinson,E. 2000), and most of the students live far away from homes; they must depend on themselves especially for food shopping. More over the seven Ps have to be applied on establishing a new format.

2.2 Segmentation:

Segmentation is to divide the types of customers into four categories, geographic, demographic, physiographic, and behavioral, and to divide the market into smaller groups with distinct needs, characteristics or behavioral, this might require a mixed or separate marketing strategies. For effective segmentation it should be measurable, accessible, substantial, differentiable, and actionable. P. Kolter (2000:P.215).Tesco segment its customers according to their loyalty, and by different types of the Club Cards for the different products. A new segmentation for Tesco is to serve and satisfy all types of the students of different origins, religions, and classes.Geographic Segmentation:

It divides the market into different geographical units such as nations, states, regions, counties, cities, or neighborhoods. P. Kolter (2000:P.217).The students can be divided according to their geographic origin; Asian, African, Middle Eastern, etc. and try to provide the stores with international and ethnic food.

Demographic Segmentation:

Divides the market into groups based on demographic variables such as age, sex, family size, income, education, religion, race, and nationality. P. Kolter (2000:P.217).The students can be divided according to their gender, religion, and seniorityPsychographic Segmentation:

In this category the attitudes and lifestyle of the consumers are considered. The general personality traits of the customers must be kept in mind. The values of the people and the attitudes that they have towards certain products are crucial pieces of information for a marketer (Market Segmentation Analysis website), the students can be divided according to the social class, life style, personal characteristics.

Behavioral Segmentation:

Here the marketer takes into account the general behavioral patterns of the customers and tries to forecast what reactions they would possibly have to the adopted marketing strategies (Market Segmentation Analysis website). Focusing on the occasions like mother's day, Halloween, and Christmas and make special offers on cretin items during these periods, it divides the customers according to their loyalty, and attitudes.

2.3 Targeting: mediumAfter the segmentation process the company has to choose its target, Targeting is the process of evaluating each market segments attractiveness and selecting one or more segment to enter. P. Kolter (2000:P.215),Targeting the students is not easy according to (Beattie, 1997) as he said Consequently, they typically do not spend a great deal of time watching television or listening to radio, and their magazine and newspaper purchases are light. This is the reason why most corporations are avoiding targeting students.There are three types of targeting according to the theories, undifferentiated, differentiated, and concentrated. Targeting should be distinct, accessible, measurable, and profitable. The university students are a differentiated marketing target; witch could be segmented according to their nationalities, religions, financial situation and independency.

Nationality: Serves and sells different national foods, ingredients and dishes, such as local, Mexican, African and Chinese. Statistically, there are more than 1100 students from over 80 countries attending the Huddersfield University each year. (There are