The strategic management aspect plays a major role in any business organization as the different strategies form an essential aspect in the firm and its success in the long run. The key to success in the current business environment is achieving sustainable competitive advantage as it will go a long way in ensuring that the company is able to perform well (Abushova, Burova and Suloeva 2016). Hence, it can be stated that Strategic and Tactical Marketing play a major role in heling an organization to attain sustainable advantage and this will be discussed effectively with respect to the UK supermarket Tesco.
Strategic and Tactical Marketing
Strategic Marketing can be described as the manner in which a firm will be effectively able to able to differentiate itself from that of its competitors and be able to emphasize on their strengths in order to provide better services to the different customers. The company in such a scenario needs to get more creative than the existing marketing mix.
The companies need to understand the capabilities and the aspiration, the competition under looming and the consumer market in order to maximize the differentiation of the firm in the eyes of the competitors (Moutinho and Vargas-Sanchez 2018). The main zest of Strategic Marketing lies in understanding the three essential question which refer to the manner how, when and where the business needs to compete. For this purpose, the business needs to lay down a proper marketing plan to pave a way for the firm and determine the effectiveness.
To put into simple terms, Strategic Marketing concentrates on deciding the following aspects:
- The markets which the firm is required to compete in
- The basis of the firm`s competitive advantage
- The manner in which a company shall enter into a new market is also a huge factor.
The tactical marketing strategy largely concentrates on how the different strategies which have been formulated will be carried out. If the tactical marketing strategy looks after the long term vision of the organization, the tactical marketing looks after the execution of vision and the appropriate planning and steps which need to be taken effectively for that purpose.
The major difference between strategic marketing and tactical marketing is that where strategic looks after the planning aspect, tactical looks after the execution.
However there is a major gap between the strategic marketing and the tactical marketing. Before tactical marketing needs to be executed it is important for the firm to indulge in proper market research, competitive intelligence and focus groups to ensure that the strategic marketing is successful (Rothaermel 2015). It is crucial in determining the requirements of the customers and what they are looking out for.
Tactical marketing broadly looks at placing media, creating marketing tools and advertising techniques to ensure that the planned brand image is portrayed and the target market is attracted successfully and informed about the product and offerings. For effectiveness, the tactical marketing needs to be based on strategic marketing. This makes them cost effective and profitable. The tactical marketing can be described as a onetime process which can help in creation of the profiles of the customers and identify the exact target market which will be required to ensure success in the long run.
Sustainable competitive advantage
The Sustainable Competitive Advantage can be described as an efficient prospect which can be utilized effectively in order to help a company to achieve success in today`s competitive global environment. It is crucial for a firm to possess sustainable competitive advantage or the company may not be able to recover from loss and be stuck in the previous activities at large (Slack 2015). Sustainable competitive advantage can be in the form of the assets of the company, attributes or the abilities which may be difficult to duplicate and copy. A sustainable competitive advantage tends to provide a favorable long term position over the different competitors.
A competitive advantage may come in the form of the following:
Low cost provider- The firm may get sustainable advantage by becoming a low cost provider. This way they will be a suitable option for the different consumers which will then serve as a good option for the company and this tends to differentiate it from the consumer perspective.
Pricing Power-The company may gain a sustainable advantage by gaining price power. Pricing power may be present in case the company has the authority to change the different pricing strategies and the pricing of the particular product as present in the market.
Brand Power-the brand image may also serve as a competitive advantage for the company
Unique Product Line- A unique product line also goes a long way in assisting the organization to ensure that its products are quite different from that of its competitors (Tesco.com. 2018).
Unique Management- Very often a unique management also assists in the success of the firm. The unique management goes a long way in ensuring that the firm is successful.
Strong Marketing- A strong marketing plan also assists the firm in achieving a strong position in the competitive environment.
Use of Strategic and Tactical Marketing for Tesco
As stated earlier, the Strategic and Marketing can be used as an efficient tool in order to achieve sustainable competitive advantage for a company like Tesco. The main purpose of a strategic marketing and tactical marketing is to provide overall value to the different consumers and the different competitors (Stead and Stead 2013). Tesco PLC is one of the largest supermarket brands present in the business in UK. The following marketing strategies can be used by them to achieve a competitive advantage
- Align Products with Customer Needs
Tesco sells basic grocery products. However, the needs of the different customers have been changing considerably and the company needs to ensure that it is able to keep up with the needs of the customers. For this purpose, using strategic and tactical market, the company needs to employ suitable marketing strategies of market research and brand image to ensure that Tesco is able to gain competitive advantage in the business domain.
- Attack New Markets
Using strategic marketing technique, Tesco can look out to enter into new markets. Broadly stating, the company has its operations only in UK and hence, it should be ensuring that it reaches out to the new emerging countries and thereby create a first to market advantage (Martinsuo 2013). If Tesco is able to successfully do that, it will be able to successfully ensure it increases its market base and is able to increase the revenue. The emerging countries lag foreign competition in the given segment and thus, Tesco can take advantage of its strong brand name and technological innovations to have an access to the emerging markets.
- Expand Distribution Channels
Tesco can also utilize its resources and target the customers thereby increase the opportunities for the different customers in the long run. This means the different distribution channels need to be expanded. In this manner, Tesco can thereby expand into mobile commerce or e-commerce avenues to be successfully able to meet the changing needs of the different consumers Using tactical marketing, exclusive advertisements can be made for the target market and the channel increase can be tapped accordingly.
- Emphasize Customer Service
The Tesco Supermarket can also indulge in suitable strategies for the different target market and customers to keep them satisfied. This can com e in the form of providing efficient after sale services, promotional strategies, addressing their concerns, proper marking and improving the products and service offering.
Conclusion and Recommendations
Therefore, from the given analysis it can be stated that the company Tesco Supermarkets needs to take into consideration suitable plans and strategies that will go a long way in helping the firm to achieve long term success and being able to create sustainable advantage (Jarzabkowski and Kaplan 2015). The given report discussed the different tactical and strategic marketing techniques which can be used by Tesco to gain sustainable competitive Advantage. It is recommended, that it monitors its activities continuously to ensure assured performance and success.
The given section discusses the strategic analysis of the supermarket industry in the chosen country, Australia. The Australian supermarket and grocery sector has increased considerably and the growth has been at a steady rate. There are various players present in the external environment and these are companies like Woolworths, ALDI, Coles and Wesfarmers. Strategic analysis forms an essential part of the organization whereby it helps in the evaluation of the current business strategies which are adopted by the different companies in the Australian Supermarket sector (Wright, Paroutis and Blettner 2013).
In order to be able to analyze the appropriateness and attractiveness of the Australian Supermarket, the strategic tools which will be used are different tools used by external and internal environment. The tools which are used by the external environment are the PESTLE Analysis and the Michael Porters Five Forces and Value Chain will be used for the internal environmental analysis.
External Analysis of the Australian Supermarket Industry
The given section will be analyzing the external environment of the Australian Supermarket using the Pestle Analysis
The PESTEL analysis is a useful tool which is used in the analysis of the external environmental factors which are prevalent in the industry. They tend to help in determination of in what way will the company get affected in case there are certain problems existing in the external organization.
Political: The political conditions which tend to affect the supermarket industry in Australia are the competition policy which tends to prevent the major powers like Woolworths and Coles and helps in eliminating competition (Merat and Bo 2013). There has been an increase in the competition in the given domain and this has led to the smaller retailers struggling for the performance.
Economic: There has been a decline in the economic market conditions across the country and this has bought about a huge impact in the given scenario (Team 2013). The different economic indicators like the fluctuations in the currency and exchange rate along with the weakening of the Australian Dollar have affected the performance of the difference retail operations.
Social: The different social factors which tend to take place in the Australian Supermarket comprise of the different factors which affect the industry and the different companies who operate in the given industry. The different organizations operating tend to achieve higher development as the customers like to deal with organizations which tend to be socially more responsible.
Technological: With the advent of technology, he dimensions of the supermarket industry have changed considerably and the application for the green refrigeration which can store perishable products for a longer time frame (Johnson 2016).
Environmental: The environmental factors also tend to have a huge impact on the performance of the retail industry and the wine making business and the use of harmful gases in the storage of the products tends to pose considerable threats which then tend to affect the performance of the company and tend to affect the different business operations.
Legal: The different legal factors which tend to have an impact on the business of the supermarket industries (Lasserre 2017). The operations of the chosen supermarket industry tend to be regulated by the Australian Competition and the Consumer Commission. Hence, the different supermarket companies need to perform adequately.
Therefore, from the external market analysis it could be stated that when an organization is forming an adequate strategy they need to ensure that they take care of such factors which exist in the market. Innovation is a necessity which needs to be adapted to and the different social trends need to plan accordingly.
The internal environment analysis can be described as the factors which tend to have an impact on the performance of the different companies and lie within the control of the different companies present in the supermarket industry. The internal environment analysis is primarily done through the Porter`s Five Forces Analysis and the Value Chain Analysis.
Porter Five Forces
The Porters Five forces analysis tends to determine and assess the different position of the competitive industry and determine the performance conditions for the same. The analysis has been done as follows:
Bargaining Power of Buyers: The power is significantly high in Australia because the number of retail stores is quite high and the consumers have wider options available.
Bargaining Power of Suppliers: The supermarket industry in Australia is highly concentrated and thus, the different big companies have concentrated majority with respect to the market share. Hence, the power of suppliers is quite high (Vogel and Güttel 2013).
Threats of New Entry: The threat of new entry is quite low as the existing firms make it very difficult for the new firms to enter the industry.
Rivalry among Existing Firms: The threat of rivalry in the given industry is quite high because the margin between the different companies is comparatively low and the major competitors who are present ate Woolworths, Coles Supermarkets, Asda and others (Kalkan and Bozkurt 2013).
Threat of Substitute: The retail industry sells all essential products which are quite important and there are quite less substitutes present as the consumers do not have a choice.
Value Chain Analysis
The Value Chain Analysis can be described as a tool which is used effectively in the measurement of the internal performance conditions (Hubbard, Rice and Galvin 2014). The Value Chain of the different companies tend to indicate the external as well as the internal factors which exists in a given organization. The primary activities comprise of the different activities like the inbound logistics, operations, sales, service and out bound logistics. On the other hand, the secondary activities in a value chain analysis comprise of the Technology, Infrastructure, Procurement and the Human Resource Management (Morschett, Schramm-Klein and Zentes 2015).
The different companies need to align their different activities in a manner such that it can attain sustainable performance conditions and the products produced tend to reach out to the different customers effectively.
A majority of the companies in the Australian supermarket industry tend to adopt the sourcing strategy as it helps them to attain a competitive advantage. The different companies in the given industry also tend to adopt the local food sourcing strategy which then assists it in achieving sustainable performance and ensures the growth of the local companies as well. The large local supermarkets support the local producers and this gives rise to sustainable development. The different products are sourced accordingly and the companies use its name to ensure success in future.
The primary activities form a key and integral part of the organization which is then followed by the secondary activities. The different companies in the Australian supermarket sector tend to believe that the human resource forms the heart of the business and that there needs to exist a specific culture and strategy which will assist in supporting the different customers (Hill, Jones and Schilling 2014). The companies have built a long term commitment with the employment of diverse crowd which tends to ensure that the employees perform well for the welfare of the different companies. The infrastructure of the different companies are excellent and the Australian supermarket is one of the most efficient markets present around the globe.
Hence, if any company is looking out for expansion in the given Australian Supermarket then they would require to be aware of the different political conditions as prevalent in the country. The strategy of fair price should be followed and the companies. This is because the social trends and preferences present dynamism which are required to be addressed through the consideration of high growth levels. Lastly, the companies need to engage support from the different skilled employees through additional training and development mechanism.
Generic Strategies- Michael Porters
The Michael Porters Five forces can be described as an effective tool which can be used efficiently in order to determine the growth strategies and expansion strategies which are adopted by the company for the long term. The different approaches which are presented as generic strategies are of three types. These strategies are the Cost Leadership strategies, Differentiation strategies and the Focus strategies (Williamson et al. 2013). The Cost Leadership strategies are primarily described as No frills strategies where the costs incurred are minimum so that the prices can be kept low. The second strategy is the Differentiation strategy which means that the organization would aim at creating unique and desirable products and services. Lastly, the focus strategy aims to ensure that the specialized service is available in the niche market.
Figure 2: The Generic Strategies (Source: Ginter, Duncan and Swayne 2018).
The Cost Leadership Strategy
The Porters Strategies generally look after gaining competitive advantage. It helps to gain an edge which will then help to fight against the different competitors present. The cost leadership strategy is highly concentrated towards increasing the profits, reducing the costs, and charging the industry average prices. The main trick is to increase the market share by charging lower prices and thereby making a reasonable profit because the costs have been reduced by the firm. The retail industry with special reference to the supermarket sector tends to follow the given strategy by manufacturing the products on their own so that the prices are decreased (Wheelen et al. 2017). Furthermore, they also try to reduce the costs by engaging in efficient technology and maintaining a transparent supply chain which is quick and with minimum middlemen present so as to disable them from adding up to the costs of the firm.
However, many firms in the given industry face the risk of competition cheating. The competitors might come to know the reason behind the reduced costs and may want to copy the given idea.
The Differentiation Strategy
The differentiation strategy can be described as a strategy which is adopted in order to differentiate the given product being offered by the company from that of its competitors. The way in which the product might be differentiated depends on the industry and the products being offered. However, typical features involve functionality, durability, support and the brand image (Zott and Amit 2013). If a company needs to make the differentiation strategy a successful one, the company needs to engage in an effective research, development and innovation strategy. Furthermore, the company needs to ensure that the products being offered or the services are of high quality.
In order to differentiate the company needs to ensure that they are well connected to the new agile strategies and product development processes. For the supermarket industry a differentiation strategy can come in the form of organic products being offered, or a new way of checkout or even a new set up or design (Frynas and Mellahi 2015). For example any supermarket store who plans to go online plans to go different from its competitors and provide the customers with a unique experience and offering.
The Focus Strategy
The focus strategy concentrates particularly on the niche market and understands the dynamics of the market which need to meet the unique customer needs. It either crates low cost or specific products for the market. A strong loyalty might be created in this scenario and the customer may make the particular segment so powerful that it might become less attractive to the different competitors (Gereffi and Fernandez-Stark 2016). The different companies need to decide whether their strategies are cost focus or differentiation focus. The extra component offered in the given dimension tends to add up to the product image and helps to gain a small but dedicated market share.
With respect to the condition of the different super markets, the stores can adopt a focus strategy by offering products or specialized services for a particular group of people. This can also come in the form of the design of the stores, where they can be designed according to the needs of the customers. If a store wants to be friendly to people with special needs then they can design the store aisle in a manner so that they can be comfortable while shopping and although this might be a differentiation focus and small change, the benefits can be observed in the long run.
The most relevant aspect about the Porters Generic strategy is that it goes a long way in helping the organizations to learn about the varied strategies that they are required to follow in the long run to be successful (Wood, Wrigley and Coe 2016). It helps them to pave a path for themselves and succeed accordingly. The three different strategies help the firm in gaining a competitive advantage and excel in the field.
The generic strategies have their own set of limitations. These are widely related to different aspects like the firms who tend to follow a generic strategy tend to share some features. For instance, a method to meet up with different costs is to ensure that not much money is spent on advertising but not every cost leader will follow the given path. Hence, all firms bought under the same category may not share every feature and characteristic with and the strategies are dependent on the firm and the industry. This is opposing the fact that not every generic strategy can be essential to cooking up the success of the organization and the application plays a major role in deciding the success.
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