Strategic Marketing Management
Strategic Marketing Management
Strategic Marketing Management
Introduction
Strategic marketing management is the roadmap that assists an organization to implement its marketing strategies to achieve competitive advantage in the market. An organization needs to understand the principles of strategic marketing management for determining the role of strategic marketing, processes involved in strategic marketing and links between corporate strategy and marketing strategy. Again there are different value model used in strategic marketing planning to have understanding about the tools used to developed strategic marketing strategy. Lining between strategic positioning and marketing tactics, analysis of relationship marketing are also require for this purpose. Organizations ability t o use strategic marketing techniques depends on using appropriate marketing techniques to ascertain growth opportunities in a market, planning marketing strategy option and creating appropriate strategic marketing objectives for a market. Organization also needs to respond with respect to changes in the marketing environment. It has to understand the impact of changes in external environment on marketing strategy, analyze internal environment to identify current strengths and weaknesses. Throughout the study a strategic marketing management of Tesco, has been discussed and developed. Tesco PLC is the UK's most successful supermarket which is a multinational retailer of grocery and general merchandize. It is world's second largest profit making retailer having stores in 14 countries in Asia, Europe and North America. Obviously it is the grocery market leader of UK with 30% market share. The name Tesco appeared first in 1924 although it was founded in 1919. Tesco was UK focused retailer until 1990 and then it has diversified geographically at a rapid pace from 500 stores to 2,500 stores fifteen years later. It covers areas such as the retailing of books, clothing, electronics, furniture, petrol and software, telecoms, internet and financial services, DVD rental and music downloads. Tesco is the 15th largest of any company with a primary listing on the London Stock Exchange having a market capitalization of approximately 24.4 billion as of January 15, 2012.
Competitors Wal-Mart Stores, Inc. J Sainsbury plc Carrefour SA
financial services. In the UK, we have built some strong, successful new businesses and our ambition now is to take that experience to all of our markets. To put our responsibilities to the communities we serve at the heart of what we do: The changes we have made to our Core Purpose and Values to reflect Tescos wider social purpose are clear signals that we put our responsibilities to the communities we serve at the heart of what we do. To be a creator of highly valued brands: Brands are about giving customers confidence in the quality, value and reliability of the things we sell. We aim to be a creator of highly valued brands across our offer, whether it is Finest, F&F or Tesco Bank. To build our team so that we create more value: As Tesco continues to grow and diversify we need more leaders to run the broad range of businesses, operations and support functions. We are investing in the development of more leaders and a bigger, more diverse talent pool to support the growth of the Group.
We want Tesco to be the most highly valued business by: the customers we serve, the communities in which we operate, our loyal and committed colleagues and of course, our shareholders. For these things to be possible our Vision for the business has five elements each of them describes the sort of company Tesco aspires to be.
Corporate Position Attractive Market Strong Position Attractive Market Weak Position Not Especially
Wanted and needed around the world We see it as essential not only to be the shop of choice for customers but also the place people want to work, a business that communities welcome and the retailer in which every shareholder wants to invest.
Whether its food or general merchandise, books or digital entertainment, banking or eating out, our business is full of opportunities for both customers and colleagues. We want our business to offer something new every time.
Modern, innovative and full of ideas Tescos success has always been based on trying to understand customers needs better than anyone else and then innovating to make their lives that little bit easier. This attitude, which brought online grocery shopping, extended shopping hours, Finest, Everyday Value, a range of formats from Express to Extra and all the other things that make us who we are is as central to our Vision now as it ever has been.
Winners locally whilst applying our skills globally Retail is local because cultures, tastes, climates, regulations are all different. But the core skills that we have earned in one place can be applied in others. For example, setting up our grocery home shopping operations from scratch in eight international markets across the Group wouldnt have been possible without what weve learned in the UK.
Inspiring, earning trust and loyalty from customers, our colleagues and communities We want Tesco to be a company that earns trust, not just respect, through everything we do be it our in-store shopping trip, our Price Promise, or our determination to assure customers on food quality. We want to be a business that customers, colleagues and communities trust and are loyal to
Tesco is one of Britain's leading food retailers with 568 stores throughout England, Scotland, Wales and Northern Ireland. There are also 103 stores in France, 43 in Hungary, 31 in Poland and 13 in the Czech Republic and Slovakia. Tesco is committed to creating shareholder value through an innovative customer focused strategy implemented by our people. This strategy is based on the following
principles:
Threats of substitute products Figure 1: Porter's 5 Forces Model (Porter, November-December 1996) SWOT Analysis: To integrate internal environment and external environment an organization emphasized both evenly. The best way to integrate them is SWOT analysis:
Strengths, Weaknesses, Opportunities and Threats. SWOT analysis allows an organization to identify its strengths, weaknesses, opportunities and threats. Strengths and weaknesses of an organization are the internal factors where opportunities and threats arise from the influence of external factors. SWOT analysis suggest to focus on strengths of the organization and to shore up on weakness. It also allows capitalizing opportunities by recognizing threats.
Internal Factors
Strengths
Weaknesses
External Factors
Opportunities
Threats
PESTLE: PESTLE is a very common and widely used technique to analyze external environment of an organization. PESTLE stands for Political, Economical, Social, Technological and Legal analysis which is also read as SLEPT. An organization needs to take into consideration external environmental factors while conducting strategic analysis and doing market research. PESTLE analysis allows an organization to understand its business position, market growth and decline, potential and direction for operation.
MyStarbucksIdea.com offers their customer to provide ideas. It allows customer to vote, discuss and share their views and ideas. Customer Feedback: Relationship marketing allows organization to open
communication and cooperation so that customer concern, complaints and compliment can quickly be addressed. Organization can use customers feedback to make appropriate adjustment with the products and services. Advocates: When customers are pleased and satisfied with a consistent experience, they share this information with others. Relationship marketing use these tactics for suggestions and recommendations.
3.1
Appropriate
Marketing
Techniques
to
Ascertain
Growth
Opportunities in a Market
Strategic marketing is an overall marketing plan which is designed to meet the needs and requirements of customers. For example: For a high profile brand like Apple IPhone the focus will be on promotion and physical evidence. To ensure effectiveness a number of techniques are employed. Ansoff matrix is a strategic marketing tool to determine product and growth strategy. This matrix suggests an organization that whether it should focus to grow in existing or new market with existing or new product. Existing Products Markets Existing Market Penetration New Products Product Development
Markets
New
Market Development
Diversification
Figure 3: Ansoff Matrix (Ansoff, September-October 1957) Market penetration is the growth strategy in which organization focus in its existing market with existing product. This strategy is more applicable when organization seeks to increase its current market share and dominance in the market by means of product. To apply this strategy organization needs to have very clear idea and good information about its competitors and customers. The market development of growth strategy means providing existing goods and services to a new market so that the size of market widens. This strategy is more risky than penetration strategy because organization needs to develop a new customer group along with a new distribution channel and pricing policy. Product development strategy is the growth strategy by means of providing new goods and services to the existing market of the organization. This strategy may lucrative when customers seek for differentiated products. But there is a risk that new product and service may not attract customer. So organization needs to have strong capability in research and development. The most risky growth strategy is diversification strategy which means to provide new goods and services to a new market. Organization implements this strategy after having a clear idea about market and customer needs and risk assessment procedure.
Market research enables Tesco to identify the best marketing mix which should include right product at right price in the right place by using of most suitable promotional techniques. To create the right marketing mix organization must ensure that the product has right features, price is accurately charged, product will be in right place at right time and target group of customers are aware through promotion. (O'Reilly, March 3, 1997)
Market Research
Segmentation Strategy
Differentiation Strategy
Cost Leadership
GE Model: The best business portfolio fits organizations strengths with most attractive opportunities. Organization must decide where to invest more or less by analyzing current
portfolio. To add new products and businesses with the current portfolio organization should develop a growth strategy. The diagram of GE model below illustrates some possible elements of determining market attractiveness and competitive strength.
Market Attractiveness High Low Market Share Size/Scale Quality Technology Cost Base Brand Strength Customer Loyalty Competitive Strengths Product A Medium Product B Low Product C
Medium
Product D
Product E
Product F
High
Product G
Product H
Product I
Figure 5: GE Model
In the above diagram, factors of competitive advantage are market share, size/scale, quality, cost base, technology, brand strength, customer loyalty etc. Organization with the use of these strengths attracts market and the factors are size, growth, competitive rivalry, profit level, ability to differentiate and cyclicality etc.
It is very difficult to define and formulate objectives of strategic marketing in a prcis manner. In this case, organization must demonstrate their best policies and procedures so that objectives can be set more precisely. Sometimes it seems difficult to distinguish between strategies and tactics. A strategy is an idea which conceptualizes how the goals of an organization could be achieved. To execute strategies all the necessary actions are taken as tactics. For the accomplishment of strategic marketing objectives organization needs to ingrate its marketing activities like 7Ps (product, price, place, promotion, people, process and physical evidence) of marketing and resources requirement for the execution. (Day, February 2001)
4.2 Internal Analysis to Identify Current Strengths and Weaknesses in a Marketing Strategy
Tesco conducts a three steps internal analysis process of identifying strengths and weaknesses of the organization. Understand the process by which companies create value for customers and profit themselves, and the role of resources, capabilities & distinctive competencies in this process.
Understand how important superior efficiency, innovation, quality & responsiveness to customers are in creating value & high profitability.
Analyze the sources of company's competitive advantage to identify what is driving the profitability of their enterprise and where opportunities for improvement might lie. The elements of internal environments (men, machine, money, materials and markets) are comparably easy to control and change to external environment. Organization has competitive advantage when it has greater profitability than average in the market. The sources of competitive advantages are strategy, distinctive competency and extended market share. Strategies are made at all the levels of organization in creating competitive advantage. Distinctive competencies arise from resources and capabilities. Resources allow organization to create value for its customers and competencies of organization coordinate resources for productive use. Sustainability of competitive advantage depends on two factors. 1. Barriers to Imitation: This includes the factors that create it difficult to copy the competencies of the organization for its competitors. 2. Capability of Competitors: Competitors degree of response to competitive advantage to identify value and new knowledge.
Conclusion
Strategic marketing management aims at to assist the organization in achieving competitive positioning within few years. While developing a strategic marketing strategy it is important to analyze both internal and external factors of the environment and identify the opportunistic and treat factors. Organization must remind about the customers, the value creator, while developing marketing strategy. The strategy should include pricing and distribution systems, and also define communicating ways to customers. Most challenging and difficult task in strategic marketing management is to implement it in practically. Organization should identify it drawbacks and response to key emerging themes in a marketing strategy.