Comparison of Tesco & Unilever

TESCO is a British company which was founded by Jack Cohen in 1919 which was initially a group of market stalls. It’s headquarters located in Welwyn Garden City England. It is a multinational grocery and general merchandise retailer company which have a hierarchical organisational structure where the management positions are divided to ensure that the work and the responsibilities are efficient (Barnes, 2011). The ones at the top have maximum responsibilities. Over some years Tesco has diversified into different areas such as the retailing of clothing, furniture, books, toys, electronics, petrol and software, financial services, internet and telecoms and increased in the number of stores.

Unilever emerged in September 1929 by merging Dutch Margarine Unie and British soapmaker Lever Brothers with the name of a company originating from the combination of the two names of these companies. It is a British-Dutch transnational majorly dealing with consumer goods; its headquarters located in London, United Kingdom and Rotterdam, Netherlands (Chapter 3. Organisation, 2016). It manufactures a variety of items such as food, beverages, cleaning agents and personal care products. Its one of the oldest and largest consumer goods multinational company which is the world’s largest company in producing margarine and ranked seventh as the most valuable company in Europe. The company has its products in over 190 countries with over 400 brands. Recently the company has gradually started shifting from food brands to health and beauty brands (Davids, 2016).

Tesco and Unilever global companies’ uses elements of marketing mix and marketing planning process to achieve their business objective differently. The objective of these companies is to penetrate to new markets, increase their market share, creating brand recognition, building the name of their bands, increasing their net profit and the number of customers.

A product definition by marketers is a bundle of benefit which involves physical characteristics such as brand image, packaging and delivery. Primary characteristics which are benefits of the product and lastly auxiliary features which are the uniqueness of the product while services are intangible. Tesco deal with retailing clothing, furniture, books, toys, electronics, petrol and software, financial services, internet and telecoms (Barnes, 2011). while Unilever manufactures consumer goods such as foods, beverage, cleaning agent and personal care products. These companies have improved the quality of their product to increase preference and taste of the consumers and expanded advertisement to create awareness of their product to the people and compete with their rivals. Packaging their product into attractive packages is also important to attract the attention of the consumers and increase the quality, preference and taste, storage space and expiry date. They distribute their products through different to the customer at a discount cost or for free on time to attract customers.

 Branding is designing a product to distinguish one product from another in the eyes of the consumer. Branding is vital to consumers, retailers and manufacturers in different ways. It is essential because it enables easy product identification, communicate features and benefit of the product, will allow one to evaluate the products, it establishes the product in the market, minimise the risks of purchases, and finally, it creates interest of the product. To retailers, branding attracts customers, and they benefit from brand marketing support. To manufacturers, branding enables the creation of loyalty, assist against competition, allow the best pricing, and allow positioning and increased authority over retailers (Groucutt and Hopkins, 2015). Branding has helped Unilever and Tesco their marketing objectives as explained above

Product development is a process designed to develop a new product to the market. Product development aims to ensure the new product penetrate into the existing markets and get recognition by consumers. Tesco and Unilever have applied several tactics in product development whereby they have lowered the products price than its substitutes to attract more customers and giving that new product as a promotion product so that consumers can develop the taste of the product. Product lifecycle is a process by which product goes through from its introduced to the market to the time it declines its value. The life has five stages development, introduction, growth, maturity and decline stage. This cycle is essential to these two companies because it enables them to know the level and performance of the product in the market and whether the company should finance the development of the product to the next stage or abandon it.

Price is the monetary value of a product or what a consumer is prepared to give the seller to get a particular product. The costs of the products determine the organisation performance in the market. Organisations must set prices that are competitive and accepted in the market by consumers and distribution members. Also, they should ensure that they set prices that will earn the organisation profits. Lastly, the organisation must have proper knowledge of the current market prices, because this aid in putting prices of commodities correctly according to market demand. There are different factors which influence customer price valuation, they include, functional, operational, financial, personal and quality benefits. These factors determine whether the customer will be willing to purchase the products at the indicated prices. Tesco and Unilever use these factors to determine the amounts to put on different products they sell so that customers can buy the products. Pricing determinants are external factors such as consumers and consumers, legal and regulatory, channels of distribution, competitors and demand and price elasticity factors. These two companies always consider these factors before putting prices on different products and use different pricing strategies when dealing with these external factors. In customers and customers elements they ensure that they take into account the feeling and sensitivity of the end buyer, they provide prices restricted at the lowest end by cost and top end by what market will tolerate. They ensure they have adequate knowledge of the current market price and demand elasticity of their different products to fix market acceptable prices, which enable these companies to compete with their rivals.

They also consider the essential and anticipation of diverse members of delivery chain before setting the product prices each require profit to cater for incurred cost during resale processes. They also set rates according to the nature and level of competition whereby they will set lower price when there is a lot of competition and high prices during monopoly and high cost at some time during stiff matches to maintain the image of the products among the customers. And lastly, the put price by the European political and regulatory framework (Brassington and Pettitt, 2017).

The following are pricing tactics they apply: they give discounts to customers, they use promotion technique where customers are advised to buy a certain amount of products and get one for free and giving allowances to customers such as trade-ins. 

The place is a dynamic and fast-moving area of marketing, which is majorly concerned with the movement of good from producer to consumers. Channel distribution is the path in which products move from the producer to the final consumer. Tesco and Unilever deals with consumer and B2B goods respectively. Consumer markets and B2B markets have different channel structures. And ensures that they identify appropriate new geographical positions which would favour their business activities

Tesco Company uses, producer-customer (direct supply), producer-retailer-customer (short channel), producer-wholesaler-retailer-customer (long channel) and producer-agent-wholesaler-retailer-customer marketing channels. These marketing channels are important because they enable Tesco to conquer new market. Unilever uses manufacturer-user, manufacture-distributer-user, manufacturer-agent-user and manufacturer-agent-distributor-user (Barnes, 2011). The importance of this sale agents is they save these companies transportation cost incurred in transportation of small quantities of products, thy act as channel of information to this companies and inform them about the market competition. Tesco and Unilever uses different retailing outlets such as supermarkets, hypermarkets and E-commerce. The mentioned companies ensures that there is proper channel, supply chain management and logistics by ensuring that there is a good coordination between the channels, prevent emergence of conflicts and resolving existing conflicts and ensuring there is a good communications between the marketing intermediaries.

Promotion type of marketing communication used to inform the audience about the importance of a particular product while integrated communication mix ensures that all information and messages are linked together. Promotion tools are advertising, personal selling, sales promotion, public relations and direct marketing. These organisations use different types of adverts to achieve their objective of global awareness despite being recognised by nearly three-quarter of the earth’s population and sale promotion to attract and entice more customers through coupons, cent-off deal and premiums. Recently they have started using direct marketing such as electronic and online marketing since it is a cheaper, fast and reliable method of passing information to consumers.

People, this is everyone who is directly or indirectly involved with the services and products. They include those individuals employed by the company to do different tasks in different departments. The people used by this organisations have various roles. Customer interfacing personnel have the function of distributing products to consumers, producing quality products to impress the consumers and convincing the consumers to purchase their products. Support personnel who are always available for any advice to the customer regarding the products they bought. And they must be friendly.

These people have different skill depending on their department of work. Those delivering customer products must have good navigation and driving skills. They must have an excellent attitude to the customers whom they are delivering the product to and be trustworthy. Lastly, they must be obedient and calm to the customer.

Services are intangible, however customers uses the physical cues to enable them assess the commodity before purchase. The marketer must design the tangible evidence. The corporal section of the service is physical evidence.  It includes all elements all efforts undertaken by the service provider to tangibilise their service, which provides for physical and social environments. Physical environments include visual, aural and olfactory items which get influenced by colour, light, noise, scent and freshness of the air (Mcdonald and Wilson, 2011). Visibility is the customer ability to see, and this affects the customer perception of the quality of the services provided according to the images they see. Aural is the sense of hearing. Excess noises jeopardise the customer perception of the quality of the service offered. Olfactory is the sense of smell whereby good smell will impress the customer and have faith that the service provided is of good quality. These two companies ensure that they design the right visual, aural and olfactory elements of physical evidence to ensure that their customer has trust and good perception about the excellent quality of the services they offer.

Processes are different designing and value-added services, added to products to be unique and different from those of the competitors. They include after-sales service and warranties. It is involved in delivering services to consumers and uses various methods to advance the marketing functions. It’s essential for Tesco and Unilever companies because it enables these organisations to achieve their objective of increasing their market share and effect way of competing with their rivals due to their unique services. 

A market planning process is a process of examining different marketplaces to determine the performance of the business in these areas. It is essential to these organisations because it enables their management to compete with their rivals efficiently. Market planning results in marketing strategy. The planning cycle consists of four steps: analyse, planning, implementation and control (Jobber and Chadwick, 2012). The sequence begins with audit and analysis, which is the first step. In new organisations, auditing and analysis processes facilitate business planning while in prevailing bodies, the levels of analysis and planning are determined by the recession, technological changes and stiff competition.  In this step, a marketing plan consists of the audit and analysis results, marketing objectives, marketing strategy and lastly the tactical plans. The third stage which is the implementation states is made up of promotional and marketing mix. In this step, the companies’ officials ensure that policies which they had formulated to deal with a certain market problem or to bring a solution to an existing market challenge is fully implemented and operational. Control/evaluation is the final stage which ensures that the objectives of the process are met and ensures that there is utilisation of the metrics. These include; ability to meet customers’ expectations, whether the organisation is strong, weak or vulnerable and how they can exceed the expectations of customers in future. The outcome information of control and evaluation feeds back in planning and implementation cycle.

Marketing strategy is a concept or a formula that sets out the planned path. The process consists of the company vision, mission, objectives and the procedure. It’s concerned with how organisations will achieve their marketing objectives. It’s involved with policies that improve the company competitive ability. It focuses on competitors, customers and corporation. Marketing strategy uses research methods and analytical tools.

Unilever and Tesco companies’use market planning process and marketing strategies to achieve their business objectives and mission. They use this method to make their customer satisfaction objectives where the preferences and taste of the customers are determined. These strategies enable these two organisations to efficiently compete with their rivals by having appropriate marketing planning process.

The 7Ps framework of the market mix has a lot of positive and negative effects associated with it. It enables Tesco and Unilever organisations to achieve or to fail in achieving their objectives.In discussing the positive and negative impacts of the 7Ps, we will consider the effects of each element. The element of the product hurts these companies because they are required to reinvent the product when they reach decline stage so that they can have high demand. Products must be unique from those of the competitors. The positive effects of products element are that it ensures that manufacturers produce products that having demand in the market. Price of commodities keep on changing with time depending on market demand and supply, and this can lead to these companies getting huge losses during periods when the costs of their products have reduced, and lastly a company can fix low prices with the aim of penetrating into a new market and be rejected by consumers. The positive effect of this element is that these companies can set prices which accommodate their profits and fix high price of their products to maintain the product image. Place element is essential to enable these firms to distribute products to consumers through different channels, efficiently. The adverse effect is that members of the distribution channel such as wholesalers may reject products of particular companies. Promotion is an essential component of enabling the products to be recognised by consumers in the market. It can also lead to consumers have a lousy perception of specific products due to the horrible advert of those products.

People element which enables a company to determine the demographic factors of their customers to produce products of their preferred choice. The company employ individuals who provide superior services to the clients. The adverse effect of this element is some of this service is expensive to offer, and these corporations incur a lot of money in providing them. Finding skilled and experienced people to offer this services is a challenge, and those present require huge salaries. Process element ensures minimisation of cost and maximisation of profit in an organisation, during execution of the services. Its adverse effect is that these systems and processes may lead to an error on some occasions. The last element is physical evidence which is advantageous since it creates a psychological sense of the business exists in the consumer minds. This component relates to adverse effects, where the customer has a lousy perception of particular brands of products in the market.

The transition from traditional marketing mix on 4 Ps to service marketing mix was significant since the usual marketing mix focused majorly on products instead of the service based economy. It was a tool for marketing strategies since it lacked goals and it did not have people, process and physical evidence element that is essential in a 21st-century market. Service marketing mix incorporated people, process and physical evidence elements that were lacking in the traditional marketing mix (Kotler and Armstrong, 2013). These items are necessary since they discuss major factor that majorly determines the competitive ability of the organisations in the marketing environments. These elements focus on different people whose performance result in a good quality of services, processes used to provide services and physical clues about the variety of services they provide.

Marketing process has both positive and negative effects in each stage of the process. The adverse effects of this different stages include; maintaining high-level efficiencies, enabling identification of goals, providing a roadmap which needs to be perused and ensuring proper performance of the business respectively. Their negative impacts include overestimations, weak accountability and implementation, failure of involving the right people respectively.

The framework of the 7 Ps and marketing process is useful in enabling Tesco and Unilever to achieve their objectives. They are efficient because these elements of the 7 Ps and marketing process have goals and objectives which are similar to these organisation goals. They include market profit, a low priced front and generation of quick cash flow. 

Marketing process and the 7 Ps frameworks have a lot of drawbacks, complexity and difficulties when competing with other firms. These methods don’t improve the performance of their own, requires a lot of time and financial resources, it’s at time difficult to obtain accurate details, difficulties in quantifying advertising contents and presence of messy data can affect legitimacy.

               Basic marketing plan for Tesco organisation

The primary marketing plan for Tesco includes the following stages.

1. Corporate objectives

2. marketing audit

3. SWOT analysis

4. Marketing objectives

5. Marketing strategies

6. Marketing programs

7. Budgets

8. Control and evaluation

                            Corporate objectives

In this stage involves the description of Tesco objectives such as market share, sales, profit, mission and value statements.

                            Marketing audit

This stage focuses on Tesco ability to respond to environmental problems. It is about developing a shared, agreed and physical understanding of Tesco Company. And internal and external variables must be considered for a complete audit. The interior and external review focuses on the 7Ps of market mix and how they fit together. These elements include product, price, place, promotion, people, physical evidence and process.

                            SWOT analysis

SWOT analysis model involves the study of Tesco strengths, weaknesses, opportunities and threats. Strengths and weaknesses focus on internal factors such as 7Ps and marketing package offered in the market. Opportunities and threats are external factors that affect Tesco performance.

                           Marketing objective

This stage will deal with implementing Tesco marketing strategies. It will focus on the company objective of increasing its market share, penetration and recognition in new markets.

                           Marketing strategies

It includes the means which Tesco sets out to achieve its marketing objectives. And increasing its volume, improving profitability and be maintaining what it has.

                           Marketing programs

In this stage, it will focus on Tesco’s implementing the formulated marketing strategies. And the marketing mix elements examined separately, and their effects and importance examined. The mangers of this organisation will focus on the areas of comparative strengths.

                             Budgets

This stage will tend to specify Tesco financial and other resource requirements, In advertisement campaigns, dealer support and marketing research.

                               Control and Evaluation

It is important for the managers of Tesco organisation to ensure that plans are implemented properly. They must put measure at the end of the planning period to ensure that the plans are achieved.

The following is a detailed marketing plan for Tesco organisation:

                                   EXECUTIVE SUMMARY

The primary focus is the market plan for TESCO organisation which is a global retail and supermarket chain. The principal objective is to determine the market position of the identified team and the competitors. The market plan uses SWOT analysis to assess company positions in the market. The four Ps which are Product, Price, Place and Promotion also examined in details.

                                   INTRODUCTION

Tesco was founded in 1919 by Jack Cohen. The headquarters of the company located in Cheshunt England. It is retailing company which was initially a grocery retailer and later diversified to books, toys, furniture, telecommunications and others. It appears on the London Stock Exchange (Barnes, 2011).

1.         MARKET ANALYSIS

This section explains in detail market share, competitor analysis and growth planning.

a) Market share

The market share of Tesco Company reduced from 2011 to 2012 from 30.6% to 30.2% due to the entry of the new competitor in the market. It decreased to 28.7% in 2014 due to the entrance of rival company in the retail sector.

b) SWOT analysis

Tesco competitor analysis should be explained with the aid of the SWOT analysis.

                                             Strengths

Tesco has the following concentration: technology that uses innovation in its operations.it has multiple stores in the neighbourhood to make it easy for customers to shop. Online shopping facilities, different brands that are internally recognised, recruitment of local senior management and innovation of various packages.

                                           Weaknesses

Tesco has slowly diversified, from grocery to garments and furniture products. Profits are being affected by a sequence of bad debts, insufficient knowledge of the unexplored region.

                                           Opportunities

Tesco has a variety of opportunities in the market. Involvement in the entertainment section and great opportunities to expand into the international market.

                                            Threats

It is a target for many company rivals such as Sainsbury’s. In some countries, the company is restricted to perform business in store due to the concern for people working in shops.

c)         Growth strategy

It uses the following growth strategies.

                                           Market penetration

Tesco has understood the psychology of the consumers which tend to run after brands. It uses its advertising websites to attract customers (Tesco property market). It also uses Clubcard concept to gain loyalty and gaining customers.

                                           New products and services

For an organisation to grow, it should come up with new products according to the consumer’s preference and taste. Tesco has offered a variety of products and services, introduced innovative products and it is working to expand into mobile and tablets sectors which is successful in the Asian market.

                                           Market development

Tesco took William low supermarket, it bought stakes from associated British Foods retail and purchased Two-Network in 2003.tesco has undergone frequent changes such as changes in the Asian and European countries. 

                                           Product diversification

Lately, Tesco has diversified from food to non- food items. It started as grocery retail and later expanded into books, DVD sale and rentals. It also introduced clothing brands like Cherokee. It enables the company to attract more customers. Hence this will increase market share and profits

2. PRODUCTS

Tesco Company should eliminate the products which have reached decline stage into the market and try to introduce new commodities to increase preference and taste and demand. It’s crucial since it enables the company to penetrate a new market and also led an increase in the market share.

3. PRICE

Prices of commodities in the market affect demand and supply of goods and services in the market. The company must offer their prices at a lower price because UK customers are price sensitive. They should also sell their unique products at a higher rate to maintain the image of these products in the market

4. PLACE

Tesco should ensure that their stores are located in areas which are densely populated because these areas have a lot of customers. They must ensure that their warehouse is located in excellent geographical regions especially in towns where they can be easily accessible and located by customers.

5. PROMOTION

The companies should use various strategies to promote its products and services around the globe. They should use Email messages, text messages and media campaigns to advertise their product to get recognition to new markets. They should ensure that they have mobile applications where customers can order items via the net.

6. CONCLUSION

Tesco has designed a competitive marketing plan that will enable it to promote its product locally and internationally. Despite facing stiff competition from companies like Sainsbury’s, Morrisons it maintained its operations. The company will is to increase its market abroad which have resulted in the company following marketing plans which guarantees prosperity in the long run. The company market plan strategy is a reference which global organisations should design to enjoy success.

7. RECOMMENDATIONS

Tesco should maintain its price strategy of selling their products cheaply in the UK market, due to the price sensitive among customers. Should come with innovations to develop products.it should continue with its creation of producing items such as phones since this will earn the company popularity. They should open more store for easy access to more customers. They should frequently be advertising their items.

Finally, we have come to strategic marketing plan stage when implemented could assist in Tesco’s future development. Here we will consider steps which must be considered when developing a strategic marketing plan.

The strategic market plan consists of future goals which Tesco must achieve. Strategic market plan of Tesco organisation includes the following stages;

                        Review Tesco vision and mission

The concept and purpose of this organisation must be reviewed to determine how to improve market share and efficiency ratios. In this stage, the elements of 7 Ps which are products, price, place, promotion, people, physical evidence and process are reviewed to ensure they are strategically discussing the specific strategic market plan and how to achieve the overall objectives.

                        Analysis of the business environment

The business needs to find emerging trends in the market that affect its performance. And create new strategies. Tesco must have SWOT analysis to determine their future outcomes.

                       Creating tactical objectives

It is important because it shows where Tesco is heading. And demonstrate the need for formulating strategic marketing plans.

                       Resource allocation

Tesco organization should ensure that is has allocated enough resources according to the strategic objectives. And guaranteeing successful implementation of the plan.

                       Reviewing execution

It can be achieved by top and middle-level management. And need to maximise production. And finally, it is done to ensure that administration is efficiently working in making the company’s objectives.

References

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Kotler, P. and Armstrong, G. (2013). Principles of Marketing. London: Prentice Hall.

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