Tesco PLC: Largest UK Grocery And General Merchandise Retail Outlet

As a Marketing Consultant for A Business Consultants Ltd, you are required to prepare a 3,000 word report to the Marketing Director of an organisation of your choice covering the following questions. You are also required to prepare a 500 word background report describing the current marketing strategy of your organisation. Although this background information will not contribute towards your final grade, it will provide the research on which to build your graded answers. 

1. Examine the effectiveness of your organisations current branding strategy with particular reference to the brand equity models used by Professor K L, Keller and Professor D, Aaker. 

2.Critically apply Professor Svend Hollensen’s “Glocal” theory to the international marketing strategy of your chosen brand. Within your answer compare standardisation and adaptation models to the international marketing mix of your brand. 

Introduction to Tesco PLC

Tesco PLC is the largest Grocery and general merchandize retail outlet which is based in the UK. The company has more than 6000 stores and serves approximately more than 1 million customers in a week. The company operates in 7 countries including Asia and Europe. The company which was founded in the year 1919 by Jack Cohen has estimated revenue of 48.9 Billion pound in the year 2016. Major competition of Tesco is Aldi, ASDA, Sainsbury and Morrison. Company uses the GLOCAl concept as its international marketing strategy, it thinks local while going global. This is one of the major reasons for the success of the company in International market.  Tesco is a market leader in the UK market.

The company marketing strategy is derived from its Marketing mix. It offers millions of products used in everyday life as a part of its product offering. The price of its products is extremely competitive and depends on different markets. The company sells its product through retail outlets which are present in more than 7 countries. The company’s promotion strategy is a combined mix of both traditional and contemporary marketing tools. The company is performing exceptionally well in the Europe and the UK market however it has to create strategic differentiation to succeed in the Asian market. Tesco works in highly competitive environment and uses GLOCAL strategy to succeed in International markets. In the recent times Tesco faced financial challenges, however the company is geared to make the most of the opportunity and succeed in its business operation to ensure business sustainability.

1.Tesco PLC is one of the largest Multinational groceries and general merchandize retailers with Headquarters in England. Walmart was founded by Jack Cohen in the year 1919 is presently been led by Dave Lewis. The grandiose of the organization can be imagined by seeing the number of people it employees and serves, the company has almost 6809 stores across the world and employees over 460,000 people. The company which serves more than a million members per week earned revenue of 48.4 Billion pound in the year 2016. The company is well positioned in the minds of consumer as a brand which provide great quality food and reliable services to every single customer of Tesco. Based on this preamble, effectiveness of current branding strategy of Tesco will be studied (Tesco, 2018).

Brand Recognition

Brand recognition is the extent to which a customer rightly identifies a particular product or service by just viewing the logo, tag line, packaging or the advertising campaign (Hamid, et. al, 2012).

Tesco PLC's Marketing Strategy

Tesco’s brand is seen as synonymous to shopping in the UK. Tesco’s brand is highly recognized especially in the UK and other places due to its neat and clean Logo in read with Blue dotted lines beneath it. Tesco also focuses greatly on its packaging, recently it brought in a big change in its packaging, and it repackaged its higher quality products in much higher quality packaging. The brand is recognized all over the world for its huge product offering, reliable and higher quality products. The company further makes the brand recognized to its customers by its highly targeted campaigns on the social media and traditional media. According to the Keller model of Brand equity the company focuses on creating experiences for its users through its advertising campaigns, the company believes that through high brand recognition the company will be able to sell more and people will recommend Tesco to other people as well.

According to the Aaker model of brand equity, the company focuses on creating brand awareness through its highly targeted campaign for its consumers. Further company leverages TV, Newspapers and digital marketing tools to increase its brand awareness. The company already has a good awareness in the UK and other markets owing to its good promotional strategy (Çifci, et al., 2016).

Brand Identity

Brand identity is the perception the company wants to build in the market in the mind-set of its target audience.

Tesco’s brand identity reveals that it wants its consumers to see the brand as the provider of best quality goods at a very reasonable price. The company aims to push the envelope of its services to benefit its customers largely. It treats the people like the way they want to be treated. Also, the company focuses on environmental sustainability and wants to be perceived as the company with serious concern for the environment (Petek and Ruzzier, 2012).

The company is creating salience in its brand identity according to the Keller model by the usage of its differentiation strategy. The company aims to position itself as a brand which knows the demand of its customers and focuses on delivering the same value to them, thus achieving salience in its brand identity.

According to the Aaker model the company is creating brand association by the virtue of loyalty points, reward points, offering membership and valuing their association by giving them additional discounts on their purchase. Offering customized deals and discount is another way of creating brand association with the customers (Farhana, 2014).

Brand Positioning

Effectiveness of Tesco PLC's Branding Strategy

Brand positioning is an extension of brand strategy statement to create a unique impression or differentiation in the mind of the consumers and also to show how it differentiates itself from other competitors (Chowdhury, 2013).

The company uses various brand positioning strategies to differentiate it from its competitors. The company adopts response of the Keller model by calling in specific segment of customers that are concerned with the price. This way the company is able to cater to a wider audience without hurting its profits.

The company focuses on its perceived quality by providing maximum customer satisfaction by virtue of its best practices and 24*7 customer supports. Tesco by providing high quality products at a reasonable price is being perceived as the one stop store for all the grocery requirements of the consumers.

Brand Personality

It can be understood as the set of characteristics which are attributing of the brand name. It is something with which the customers can easily relate to and the company ensures the same by the virtue of specific traits which its customers enjoy (Keng, Tran, and Le Thi, 2013).

Tesco uses the Brand archetype of an Everyman. The everyman archetype wants to belong and fit in and desires to connect with others. The mark or trait of an Everyman is seen by its home culture, which create things used in everyday life and help people to feel that they tool belong with Tesco.

Brand Affinity

Brand affinity is one of the most enduring and valuable level of customer relationship which is based on the mutual belief that the customer and the company share common values. It is the mark of customer loyalty and a sign of unshakable trust in the mutual relationship.

The company applies resonance from the Keller model by offering customized deals, loyalty bonus points, membership and other promotional offers for its customers. Tesco believes in improving the life of customers by providing them hassle free top notch quality of realisable products under one roof.

Tesco serves almost one million customers every week; this is a symbol of brand loyalty which the customers show in the brand. Hence, brand loyalty is a direct implication of the footfall in the stores.

Keller’s Brand Equity Model

Multiple factors are responsible in building a brand name, and to make it highly successful, Keller’s Brand equity model helps in identifying such factors to establish the brand and register it in the minds of consumers (Gill and Dwara, 2010).

Keller's Brand Equity Model for Tesco PLC

The questions asked in the pyramid are what the customer subconsciously asks about the brand, and these questions form the basis of 6 building blocks which must be in place to make the brand successful and to reach on top of the pyramid.

Brand Identity

The first step is creating a brand identity, answering the question who are we. Customer needs to be aware of the brands activities in the industry or in the marketplace. Brand identity also helps the brand to stand out amongst its competitors (Farhana, 2014).

Brand Meaning

The goal in this step is to identify and communicate the meaning of the brand and what it stands for. The two building blocks in this stage are – Performance and Imagery. The understanding of performance can be derived from five categories which are; product reliability, durability, service effectiveness, efficiency, empathy, style, design and price. The understanding of imagers is how well the brands product does and services meet the demand of consumers on a social and psychological level (Hamid, et. al, 2012).

Brand Response

The response of a customer about the brand falls in two categories- Feeling and Judgement. The customer consistently makes judgements about the brand in four categories, namely quality, credibility, consideration and superiority. Customer also has a tendency to respond on how they feel about the brand and what feeling does the brand evoke in them. For example Apple users get a feeling of status symbol by the use of Apple products.

Brand Resonance

Brand resonance sits at the top of the pyramid because it is most difficult to attain and at this stage customers feel a deep, psychological connect with the brand. Keller has broken down resonance in 4 categories:

• Behavioural Loyalty
• Attitudinal attachment
• Sense of community
• Active engagement.

Aaker Model of Brand equity

The model was founded by Professor David Aaker and he viewed brand equity as a combination of brand awareness, brand loyalty, perceived quality, and brand associations. All of these combine to create brand equity of the company and makes its consumers connect with the brand (Farjam and Hongyi, 2015).

Brand loyalty- This is the benchmark of the loyalty to the customers with the brand.

Brand awareness-This is the extent to which the brand is known the public, for example Coca-Cola is known to 98% of the world’s population.

Perceived Quality-This is a measure of how people perceive the brand in terms of its product, services and customer support.

Brand associations-These are the various association which are triggered by the brand (Farjam and Hongyi, 2015).

Other Proprietary-Patents, copyrights and Intellectual property are some of the examples of Proprietary items. The greater proprietary items in the company, more is its brand equity.

It can be said that Aaker model encompasses every single attribute of a brand which can also be used at any stage of the marketing strategy to either leverage the on the brand or to create market dominance.

2.Tesco PLC which is one the largest grocery and merchandize MNC of England has a presence in 7 countries across Asia and Europe. The success mantra or the strategy of the company in international market is its adoption of GLOCAL (Go Global and Think Local) strategy.

International Marketing

International marketing in the simplest of terms is the application of marketing principles in more than one country. It refers to the marketing activities which are coordinated and integrated across multiple countries and markets. International marketing focuses on leveraging the assets of the company, vast experience and products globally to adapt to what is truly unique to that market. International marketing is thus adapting to the values, cultures, belief of the foreign country and adopting the same values in the organization to take the leverage from the international market (Lishchenko, Shieh and Chen, 2011).

Reasons to go International

A large number of companies these days are going international with a view of increasing its global footprint and increase its business revenues. Companies are focussing on international markets with a view of creating shared values and make people realize that the company is in the market to serve them better and provide them value (Lishchenko, Shieh and Chen, 2011). Tesco has been into 7 countries and have been doing well because it is headstrong about its purpose to go international. For example the company knew that India is one of the largest market owing to its demographics thus it makes sense for the company to expand its business in India. Thus, the primary reasons for the company to go international are:

• Utilization of the domestic resource
• Availability of cheap labour
• Increasing the global footprint.
• Increase in revenue/sales
• Leveraging economies of scale in the business.
• Become a global player
• Creating shared values
• Leverage the business opportunity of the international market.

EPRG framework for Tesco PLC

EPRG framework is an important concept of International marketing which was propounded by Wind, Douglas and Perlmutter. The framework analyses and addresses how the strategic decisions are made and how the relationship is shared between the headquarter and its subsidiaries (Drachal, 2014). Within the purview of the framework, it focuses on 4 different stages:

(Source: Shoham, 2015)

Ethnocentric Orientation

In Ethnocentric orientation the practices and policies of the headquarters are replicated in the subsidiary markets. Tesco applies this and tries not to change its product line in line with what other country requires. The company also focuses on hiring regional staff in comparison to getting the staff from the home or the native country.

Polycentric Orientation

As the name suggests, Tesco gives equal importance to the domestic market of every country in which it operates. Every other country is treated solely and individual strategies are carried out to excel at the domestic level. This approach is suitable for countries which have some kind of political, financial and cultural constraints (Drachal, 2014).

Geocentric Orientation

This orientation is the true embark of global marketing. Under this the company does not bring any kind of differentiation between superiority and nationality. All the possible issues are solved at the global level and the best possible man is chosen for the job irrespective of the national boundaries. This orientation ensures the optimum utilization of human resources.

Regiocentric Orientation

As the name suggests, in this orientation the company looks for similarities in the politics, culture, and economic climate to satisfy the needs of potential customers. For example the company uses the same philosophy for all the European markets because of high similarity index (Drachal, 2014).

Standardization VS Adaptation in the Marketing Mix

Modern Businesses have large opportunities for revenue maximisation by entering into new markets. International marketing strategy requires the top management to take decision on the strategic level decision making in order to build global branding strategies. The company has to choose from the wide range of option available to enter the new markets such as: Joint venture, wholly owned subsidiaries, exporting, licensing and also deciding the level of standardization and adaptation of products and services in new markets (Çifci, et al., 2016).

Factors favouring standardization versus adaptation

Factors	Standardization factors	Adaptation Factors
Business environment	The factors are economies of scale in Research & Development	Local environment, government and regulatory influences
Competition	Competition at global level	Competition at the domestic level
Needs of the consumers	Converging the taste and needs of the consumers	Varying needs of the consumers
Management	Centralized management	Fragmented and decentralized function used by the subsidiaries
Competitors	Competitors used the concept of standardization	Adapted concept used by the competitors.

Standardization VS Adaptation of Products

Tesco ensures that it keeps its product line standardized across all the markets. The company believes that keeping its product line constant across all the markets will ensure good brand equity. However, the company tweaks some of its product offering or restricts its product for different markets. For example in the Indian market the company does not focus much on the non-veg product line. However, the product line is almost same across all the markets.

Standardization VS Adaptation of Pricing

Tesco always knew that the company has to be adaptive when it comes to pricing strategies. It knew that Tesco’s product can be perceived as expensive in other markets due to the different purchasing power parity. Thus, the company uses different pricing strategies for each market. Asia is a price sensitive market thus it keeps the price of products low (Çifci, et al., 2016).

 

(Source: Theodosiou & Leonidou, 2003)

Standardization VS Adaptation in Promotion

Promotional methods are a direct result of the advancement of the technology and the behaviour of the consumers in different parts of the world. There are certain countries which are advanced in technology thus Tesco uses conventional and traditional marketing tools and spends almost equally in both the categories. However, the company still tries using standardization but keeps its option open on adapting to the market depending on the technology penetration and consumer behaviour.

Standardization VS Adaptation in Place.

Tesco has large stores across 7 countries including Europe and Asia. The company maintains the similar structure across its entire company outlet irrespective of any company in which it is operating. Thus, Tesco ensures high adaptation in its place element of marketing mix

Glocalization concept using Hollensen Model

 

(Source: Hollensen & Moller, 2017)

Glocalization concept here shows that the strategy to be adopting while going global is to think local (Hollensen, 2010).

Characteristic of SME and LSE according to the model are:

Factors	LSE (Tesco)	SME
Resources	Plethora of resources at disposal. Increased coordination of personal, financing and market knowledge	Limited resources
Decision making process	Usage of adaptive decision making process by the use of incremental steps	Emergent strategy formulation
Organization	Formal /Hierarchical	Informal
Risk taking	Risk averse and focus on long term opportunities	Fluctuates between risk averse and risk taking
Flexibility	Low flexibility	High flexibility
Advantage of economies of scale and scope	Yes	Limited use
Use of information sources	Usage of technology: Data mining External consultancy Internet	Face to face information gathering Internal sources

The above table shows that Tesco has a huge advantage when it comes to international marketing. It has the expertise, the resources and the strategical know how to excel in the foreign markets. The company decides on standardization or adaptation based on the business environmental analysis of the country. However, it always tries to bring adaptation in its place and promotion and leverages adaptation in Pricing and Product strategy (Hollensen, 2010).

References

Chowdhury, P.P., 2013. Key strategies and issues of positioning: A review of past studies. American Academic & Scholarly Research Journal, 5(1), p.55.

Çifci, S., Ekinci, Y., Whyatt, G., Japutra, A., Molinillo, S. and Siala, H., 2016. A cross validation of Consumer-Based Brand Equity models: Driving customer equity in retail brands. Journal of Business Research, 69(9), pp.3740-3747.

Drachal, K., 2014. What Do We Know From Eprg Model?. Ecoforum Journal, 3(2), p.10.

Farhana, M., 2014. Implication of brand identity facets on marketing communication of lifestyle magazine: case study of a Swedish brand. Journal of Applied Economics and Business Research, 4(1), pp.23-41.

Farjam, S. and Hongyi, X., 2015. Reviewing the concept of brand equity and evaluating consumer-based brand equity (CBBE) models. International Journal of Management Science and Business Administration, 1(8), pp.14-29.

Gill, M.S. and Dawra, J., 2010. Evaluating Aaker's sources of brand equity and the mediating role of brand image. Journal of targeting, measurement and analysis for marketing, 18(3-4), pp.189-198.

Hamid, M., Rasool, S., Kiyani, A.A. and Ali, F., 2012. Factors affecting the brand recognition; An exploratory study. Global Journal of Management and Business Research, 12(7), pp.75-82.

Hollensen, S 2010. Global Marketing. Prentice Hall.

Hollensen, S. and Møller, E., 2017. Is “glocalization” still the golden way for Electrolux? Is there more to be done?. Thunderbird International Business Review.

Keng, C.J., Tran, V.D. and Le Thi, T.M., 2013. Relationships among brand experience, brand personality, and customer experiential value. Contemporary Management Research, 9(3), p.247.

Lishchenko, T., Shieh, M.D. and Chen, K.H., 2011. International Marketing Strategy of Design-Driven Companies. In International Conference on Financial Management and Economics, Singapore.

Petek, N. and Konecnik Ruzzier, M., 2012. Brand identity development and the role of marketing communications: brand experts’ view.

Shoham, A., 2015. The EPRG Framework: Does it Affect Managerial Perceptions of Export Success?. In Global Perspectives in Marketing for the 21st Century (pp. 366-371). Springer, Cham.

Tesco, 2018. About Us [Online]. Available at https://www.tescoplc.com/about-us/ [Accessed 8 May 2018].

Theodosiou, M. and Leonidou, L.C., 2003. Standardization versus adaptation of international marketing strategy: an integrative assessment of the empirical research. International Business Review, 12(2), pp.141-171.