Managing Profitable Customer Relationship Marketing Essay

Managing Profitable Customer Relationship Marketing Essay According to (Kotler, 2006) marketing is Managing profitable customer relationship, the aim of marketing is to create value for the customer and to capture value in return. Marketing is all about dealing with customers and that is what TESCO plc believes in. Marketing strategy indicates the specific target markets and the types of competitive advantages to be developed (Dibb, Simkin, Pride and Ferrell, 1997). Tesco  plc  is a British international grocery and general merchandising retail chain. It is the largest British retailer  by both global sales and domestic market share. Tescos management places an emphasis on customer needs through Tesco values philosophy, expressed as two values -no one tries harder for customers; treat people how we like to be treated. Marketing business is about how one position their business, in order to satisfy your markets needs. Marketing mix is the collaboration of elements that we use to market our product. There are four Ps in marketing mix; they are Product, Price, Place, and Promotion. Tescos management first understands what their local customers want and what their needs are. On the bases of this, they produce and market their products. Management takes proper care in fixing their product prices, during which they mainly consider their customers satisfaction and then their profits. They make sure that their products sold, and are suitable for their local customer needs before they launch their products. Tesco is very skillful in promoting their products. The promotional offers that they give whenever their new products are launched and their advertisings in papers and magazine will prove this. These four Ps are extended to seven Ps in later stages; the extended Ps include People, Process, and Physical evidence. 2.2 TESCO IN INTERNATIONAL MARKET. International marketing is the process of planning and conducting transactions across nation borders to create exchanges that satisfy the objective of individuals and organizations Tesco operates in 18 countries all over the world. Tescos deep understanding of its customers in each market has led to many small changes in way Tesco operates its loyalty programs in each country. This manifests itself in even the simplest way, with the South Korean version named family card and the China program named member card. In such a manner, Tesco is making the local people of different countries feel much closer to them. The main difference between domestic marketing and international marketing will be that, in international marketing process behavioral aspects of marketing, such as mainly culture, societal, and social circumstances that will be re-flecked, so should be taken in to consideration. Where in domestic marketing these above aspects could mostly ignored. Tesco understands the countries culture, social responsibility and other key factors before it enters in to that country. It will make sure that it is capable of taking the necessary changes pre orderly. 2.3 SWOT ANALYSIS OF TESCO. SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a business venture. Strengths Weaknesses Leading market position Customization of products and services on bases of its local market requirements Low quality products produced in during 2009 in Ireland lease towards its loss of brand name Opportunities Threats New stores in different new regions Enter in to Indian market Growing population of tesco.com Recession effects in 2009 Heavy competition in UK grocery market 2.3.1 TOWS MATRIX TOWS matrix analyses the external environment (threats and opportunities), and internal environment (weakness and strengths). An organization can use this technique to think about the strategy of the whole organization. Strengths. Weaknesses Opportunities SO Brand awareness growing globally WO Innovation and alliances Threats ST Strong financial situation WT M table.1 The above matrix is the tows matrix. This tows matrix is helpful to explain the SWOT analysis more clearly. The below described pie diagram will give the details of the top ten food retailers in United Kingdom in year 2003. Country GROUP SALES ACROSS INTERNATIONAL MARKET (2009) in  £ bn UK 41.5 REST OF EUROPE 10.1 ASIA 7.6 US 0.2 GROUP SALES ACROSS INTERNATIONAL MARKET M Pie chart.1 SOURCE: http://www.investis.com/tesco/pdf/review2009.pdf (2010) 2.4 CULTURE IN TESCO. Understanding the culture in a country or region in which you are doing business is a critical skill for the international businessperson or organization. Without this knowledge, a successful outcome of the business venture can be in jeopardy. Gareth Morgan defines an organizational culture as The set of the beliefs, values, and norms, together with a symbol like dramatized events and personalities, which represent the unique character of an organization, and provide the context for action in it and by it. Tesco trusts that every employees job in the company is to help their customers, however they can and wherever they are needed. They treat their employees with trust and respect, and that is the major reason why so many of their employees are with them for more than 25 years. 2.5 COMPLEXITY ICEDRIPS MODEL. ICEDRIPS model will explain few major aspects of an organization. I Innovations: Tesco has being entering in to new markets every year. Tesco had recently interred in to India. It gives a chance to all their employees to give new ideas so that they can service their customers in a better way. C Competitors: Tesco has a heavy competition in its market. Asda, Sainsbury, and Morrison are the top competitors of Tesco. E Economic: Tescos major backup is its strong economic background. Its group sales in 2009 were  £ 59,426m. It has a very efficient money rotation process. D Demographic COUNTRIES POPULATION LANGUAGE GDP TURNOVER (2009) GDP PER CAPITA (PPP) UNITED KINGDOM 61,113,205 ENGLISH $2.224 trillion $38,191 $35,200 USA 307,212,123 ENGLISH $14.43 trillion $206 $46,400 ASIA 3,879,000,000 MANY $18.511 trillion $7,068 $20,800 EUROPE 731,000,000 ENGLISH $16.18 trillion $8,862 $32,500 R Regulatory: Before entering in to a countrys market, Tesco will first understand all its countrys rules and political influences of the country. I Infrastructure: Tescos management makes sure that they have the best infrastructure which will fulfil all their needs. P Partners: Partners of Tesco are Electra Entertainment, HP S Socio culture: Tesco understands that every different region will have a different culture and is trying to change itself to set in to it. 2.6 CORPORATE SOCIAL RESPONSIBILITY OF TESCO. In the World Business council for sustainable development, Lord Holme and Richard Watts (1.1.2000) defined corporate social responsibility, as It is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as the local community and society at large. Tescos Corporate Social Responsibility policy objective is to earn the trust or their customers by acting responsibly in the community they serve. Their core purpose of business is to create value for customers to earn their lifetime loyalty. Tescos aims: Is to offer value through competitive prices , high quality food Be helpful through customer service , customer communication To be innovative by their new products development, retail service through technology. As Tesco is a customer based company, which means service is heart of its business. It can provide more new services to its customers such as round the clock service, by setting up more new branches, taking proper care of existing branches which includes frequent checking of products availability, and staff availability, providing more offers and marketing the offers available. 2.7 BOSTON CONSULTING GROUP (BCG) MATRIX OF TESCO. The BCG Growth-share matrix is a portfolio-planning model developed by Bruce Henderson of Boston consulting group in the early 1970s. This matrix is based on the companys business unit and will classify into four categories based on combinations of market growth and market share. Tesco had kept its footprint in Ireland in the year 1998. It was hard for Tesco to reach the Irish customers, as they were extremely sensitive in regard to the foreign brands. Tesco strongly believes and understand that international differences will be taking place. So keeping this in mind, they have taking every small step in such a way that their customers are completely satisfied with their service. Let us consider an example: Tesco understands its customers in such a way that, in many Asian counties customers come in bikes and scooters as they prefer shopping in small quantities. So Tesco had taken steps in providing more bike and scooter parking when compared to car parking. They also take care in their prices, as they understand that they have wide range of competitors around them. 2.8 CHANNEL DECISIONS. According to Warren J. Keegan (1989) Channel decisions is defined as The structure of intercompany organization units and extra company agents and dealers, wholesale and retail, through which a commodity, product, or service is marketed. In this there will be two key elements: internal distribution and external distribution. These utilities are the basic source of competitive advantage and production value so should be considered as the key factor of an organization. How these internal distribution and external distribution are implemented in Tesco is explained below: Internal distribution KEY FACTORS IN TESCO Cost Lost cost brand growth. Strong cash flow position. Control Have in place both finance control (profits targets, capital bids and performance appraisal), and strategic control (overall strategic balance, agreed business plan, optional services and infrastructure). Customer service Customer service center open 24 hrs. Customer based company Motivation( employees) Allowance Friendly team leaders Order handling Outsourced transportation Outsourced External distribution KEY FACTORS IN TESCO Customer characteristics Understands customer requirements globally Nature of product Diverse range of products available Nature of demand Local need are understood Competition Wide range of competitors in different locations ( Asda, Sainsbury, and Morrison) Legal regulations It undergoes all the different regulations which are in all the countries 2.8 PROMOTION. According to Edward W. Cundiff and Marye Tharp Hilger (1988) Promotion is the communication function of marketing. Generally, promotion is communication with the public in an attempt to influence then toward buying your products and /or services. Tesco promotes its products in a wide range. It advertises their products through post, news paper, and television. Tesco understands the local customers interests and behavior and does its promotion such that they reach them. Tesco standardizes its product quality where ever it is. It also standardizes its customer service and its employees behavior towards their customers and also their co employees all over the world. Tesco needs to adopt new services and products, such as considering the local customers their requirements and needs. Tesco need to adopt the nature of providing products with high standards. Tesco believes that marketing is a process thought which they can reach their customers in the right direction and to satisfy their need, service is the only way. And Tesco is successful in most of the situations but it is not completely able to reach its international customers. It does not understand what their international customers as they dont supply all the local need to their customers. Tesco as so believes in marketing but fails in their promotion at some times. Tesco supplies its quality products but fails in some situation, because of which it had to withdraw from France and Taiwan.