The Role Of The Marketing And Information System In An Organisation: The Case Of Tesco

The Role Of The Marketing And Information System In An Organisation: The Case Of Tesco

1. Introduction

Tesco is a leading United Kingdom retailer headquartered Chestnut, UK. It is also the world’s third largest retailer after Wal-Mart and Carrefour, as measured by the total revenues and the world’s second largest retailer after Wal-Mart as measured by total profits (Potter & Mahlich, 2011). Currently, the retail giant has a firm foot print in Asia, Europe, and North America. In the UK alone, it enjoys a 30 percent share of the local market. It also enjoys market dominance in the Republic of Ireland, Malaysia and Thailand (Deloitte, 2010). Since 1919, when the company opened its first doors, it has rapidly diversified its market share courtesy of its aggressive marketing strategies of responsive product development and differentiation that is built around modern information technology innovations such as virtual selling. Today, the company sells a wide range of merchandise including groceries, electronics, books, clothing, fuel, music and even financial products.

This report will evaluate the role of marketing operations at Tesco, evaluate how the company develops its markets, and lastly, evaluate how the company utilises information systems to achieve its objectives. The company was selected because of its large share within and beyond the UK as well as its knack to leverage modern information technology innovations in fulfilling the needs of its stakeholders.

1. Role of Tesco’s Marketing Operations

Sound marketing operations enable the company to determine the extent which it fulfils its corporate responsibility and in extension, the needs of its stakeholders. According to Kotler (1988), an organisation serves its stakeholders well when it goes out of its normal business ways to seek direct opinions especially when it is carrying out its marketing activities. Tesco corporate responsibility strategy is tailored in a way that it gives the company an opportunity to constantly learn the concerns of its stakeholders (Bell & Orzen, 2010). The company has five core corporate responsibility pillars which it popularly refers to as community promises. These include buying and selling responsibly, supporting local communities, caring for the environment, providing its customers with healthy choices, and creating quality jobs (Tesco, 2012). Through its marketing operations such as promotional drives, product surveys, and meet-the-people tours, the company gets an opportunity to determine how it is tackling climate change, how it is serving its customers, how its customers perceive its products, how it is treating its suppliers, how it is being a good neighbour to its immediate communities, and most importantly, how it is treating its employees.

Tesco’s marketing operations help it to focus on its business strategy. The company’s business is conceptualised into a five-component “Steering Wheel”. The steering wheel has five components of Community, Finance, Operations, Customer, and People. To serve its people (suppliers, customers, employees, society, shareholders, and the governments) well, the company collects important data stealthily and through known market research tools. On the other hand, in fulfilling the finance goals of maximising profits, managing investments and realising growth in sales, the company carries out regular appraisal of key activities that form its marketing mix such as pricing of its products and reviewing of its product qualities. This is in accordance with Kotler (1988) postulations that marketing operations in large companies should be closely linked to finance goals so as to allow for easy adjustment during times of financial difficulties. Similarly, Agnilar (1967) argues that a company should put the needs of its immediate community when rolling out its marketing operations. To this end, Tesco ensures that its marketing operations are responsive to its customers and members of the larger community. This is achieved through ensuring that the major performance targets for each of the key performance indicators for the five core segments of its business approach are achieved.

The close monitoring of the corporate responsibility strategy and the broad business approach through responsive marketing has helped Tesco to achieve immense growth. According to financial data for the year ended 2011, the company realised a pre-tax growth in sales of 7.4 percent to register £72.0 billion and a pre-tax growth in profit of 5.3 percent to register a total of £3.8 billion (Tesco, 2012a). Consequently, it is arguable that this immense growth is as a result of the large investments Tesco has made in creating its marketing mix especially having in mind that the company operates in a highly competitive market. As a matter of fact, an analysis of the global retail market using critical indicators such as Porters Five Generic Forces (as shown in the next paragraph) shows that it is one of the most competitive and unpredictable.

There is a high buyer power in the global retail industry since there is low product differentiation among retailers and the cost of switching from one product to another is fairly low. Similarly, Tesco faces high competitor rivalry from leading retailers such as Asda, Sainsbury and Carrefour (Bell & Orzen, 2010). However, Tesco faces a lower supplier power as suppliers fear losing large-scale clients of Tesco’s magnitude who always buy in large volumes. On the same note, the company faces low threat of entry from new competitors. This is because, it requires large capital investments for new entrants to make any impact in the retail market as major brands such as Tesco, Asda, Sainsbury, and Carrefour occupies a lion share of both local and international market. Similarly, the threat of substitute goods in the retail market is relatively low due to the low level of product differentiation among leading retail brands (Deloitte, 2010).

• How Tesco Develops its Markets

Tesco marketing operations can be described as aggressive yet responsive. They are aggressive and responsive because they are built on the pillars of creating value, choice and service to the millions of consumers across North America, Asia, and Europe (Potter & Mahlich, 2011). Specifically, the company employs both direct and indirect avenues in undertaking core marketing mix functions such as product placement – direct avenues involve opening stores in areas considered to be strategic as well as making direct visits to communities as part of fulfilling the mission to understand customers’ needs so as to serve them effectively and responsibly (Deloitte, 2010). On the other hand, indirect avenues involve virtual placement and advertising through the official company website. These two product placement options are pursued within the framework of buying and selling responsibly, partnering with multiple stakeholders, respect to the environment, providing customers with healthy choices, and supporting local communities. For example, the company opened its Central and Adams store in South Los Angeles in a socio-economically neighbourhood as part of its marketing strategy to provide fresh food and quality jobs to local communities (Tesco, 2012b).

The UK giant retailer develops its market through collaboration with local authorities and local consumers. Such collaborations are based on the notion that the best way to serve a market well is to constantly monitor the changing needs of the consumers and react accordingly to fulfil such needs (Kotler, 1988). For instance, when the company was opening its Southwold Express store in Suffolk, UK the company conducted a survey on more than 1,100 households. This survey comprised of a detailed plan on what the store would include and sought customer feedback on what should be added or removed from the plan. Over 90 percent of the surveyed households indica.............