Strategic Marketing Management

IntroductionStrategic 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 to 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

1.1 Role of Strategic Marketing in an OrganizationTesco sets its marketing actions such a way so that it can achieve customer satisfaction and organizational goals. It includes planning and executing of the ideas of conception, pricing, promotion and distribution of goods and services in order to satisfy customer. To achieve these objectives Tesco approaches towards strategic marketing. It is more structured process because it helps to identify its resources and opportunities to achieve sustainable competitive advantage in the market. Moreover, it aims at to analyze and evaluate organizational effectiveness. Tesco can achieve better understandings about its existing and potential customers by communicating through marketing activities. We can enumerate the role of strategic marketing in Tesco as below: It assists Tesco to understand customers need and demand so that new areas can be opened. It relates marketing strategy with business strategy. It structures Tescos future direction strategically. It assists to increase organizational effectiveness and revenue. It helps to identify and create new opportunities for the organization. It considers customer voice to take decision about various aspects. It helps to develop proper marketing structure.

To grow the UK core: To grow the UK core, the largest business in the Group and a key driver of sales and profit, is a priority. Our Building a Better Tesco plan has been restoring growth to the business through a comprehensive series of improvements for customers. To be an outstanding international retailer in stores and online: We have established profitable businesses in Asian and European markets. Today, 32% of our Group sales and 29% of profits are made internationally and our goal now is to take the performance of these businesses to higher levels. To be as strong in everything we sell as we are in food: Food is our heritage but as the business has grown and diversified over recent years, we have added an ever-wider range of products and services in-store and online, bringing Tesco value and quality to many more categories. To grow retail services in all our markets: Consumers are increasingly spending a bigger proportion of their income on services whether it is in telecoms, eating out or 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.

1.2 Processes Involved in Strategic MarketingTesco strategic marketing planning process seeks to establish a clear direction and unified purpose for marketing efforts. The outcomes are documented in a marketing plan and updated regularly by the marketing management. Strategic marketing process of Tesco involved 5 steps: identifying a mission, analyzing the situation, setting objectives, developing a marketing strategy and planning for evaluation.1. Identifying a Mission: The first step is to articulate the mission statement to anticipate future benefit from target customers. It also includes a clear explanation of ongoing role for the goods and services of the organization. For instance, an airline could state a mission to provide continuous innovation in global transportation.2. Analyze the Situation: In this step organization conducts SWOT analysis to evaluate and understand the resources they can build on and the challenges they face. For example, using best quality technology would be a key strength for smart phones while a poor relationship with dealer would be a weakness. Opportunities and threats are derived from the influence of external factors like changes in taxation systems.3. Setting Objectives: The third step is to set clear and measurable goals so that decision makers have a basis for making choices. In general objectives are expressed in terms of some quantitative measures like sales revenue, net profit, market share etc. For example, targeting an increase of sales by 5% within a year may be realistic but not within a quarter.4. Developing a Marketing Strategy: In the fourth step a marketing strategy is developed by targeting market from where organization highly likely to add value. Managers also determine implementation tactics of effective ways of mixing product, promotion and price to the prospective buyers.5. Planning for Evaluation: At the very last stage of strategic marketing organization specifies how, when and by whom the overall activities are to be monitored and assessed over time. (Byrne, August 26, 1996)

Our Vision sets out what we want to be:In any business, clear direction is vital. Our Vision guides the direction and the decisions we take as an organization. Tesco is a company built around customers and colleagues, high quality assets around the world and multiple opportunities for growth and these characteristics are central to our Vision for the business.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.

1.3 Link between Strategic Marketing and Corporate StrategyCorporate strategy is set up with overall business concept and the CEO of the organization is responsible to set the over all corporate strategy. On the other hand marketing is the operational strategy which includes activities such as product identification, advertising, selling etc. Corporate strategy is developed not only for marketing department but also for the others. Strategic marketing assists marketing department in achieving marketing objectives so that corporate strategy will also be achieved. In an organization, corporate strategy is supposed to be determined before setting marketing strategy. For example, to achieve corporate strategy such as sustainable competitive advantage marketing strategy will be providing quality goods and services. A suitable marketing strategy may be the best way to achieve the corporate strategy because it is unswervingly connected with the customer from which value of an organization derived. Marketing strategy emphasizes more on the customer and value creation. The more value creation the more competitive advantage. We can relate corporate strategy with marketing strategy as follow (Nancy Upton, January 2001).

Corporate PositionCorporate StrategyMarketing Strategy

Attractive MarketStrong PositionInvest best resourcesOffer best product

Attractive MarketWeak PositionConcentrate on strengthening position Offer best product

Not Especially Attractive MarketStrong PositionInvest best resourcesContinuing earning and holding positionEffective marketingSales promotion

Not Especially Attractive MarketWeak PositionConcentrate on strengthening positionConcentrate on productEffective marketingSales promotion

Wanted and needed around the worldWe 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.

A growing business, full of opportunitiesWhether 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 ideasTescos 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 globallyRetail 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 communitiesWe 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:

2.1 Models Used in Strategic Marketing PlanningThere business environment of smart phones and tabs is so competitive and growing at a rapid pace. To cope up with the competition Tesco uses following techniques and models for risk assessment in the environment, competitor analysis, internal and external analysis.Porters 5 Forces Model: Competitive forces of an organization can be analyzed by a framework developed by Michael E. Porter. This framework is commonly known as Porters 5 Forces Model and the forces are as below:1. Risk of new entry by potential competitors.2. Revelry among established organization within industries.3. Bargaining power of suppliers.4. Bargaining power of buyers.5. Threat of substitute products.Porter said in this model that those organizations have lesser opportunity to raise price and earn profit where these forces are strongly active. He added also that weakness of these forces means there is more opportunities to earn greater profit.

Risk of entry by potential competitors

Rivalry among established organizationBargaining power of buyersBargaining power of suppliers

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 FactorsExternal Factors

Figure 2: SWOT Analysis

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.

2.2 Link between Strategic Positioning and Marketing TacticsStrategic positioning complies with the development of a product or service and a marketing mix to occupy a specific place in the minds of the targeted customers. Positioning is required for perceptual processes of customers, greater competition and growing volume of commercial messages. It allows organization to screen out more information, to share more customers and to promote clutter. Marketing tactics are the measurable goals that an organization attempts to achieve for a target market within a specific time period. The most popularly used tactics for strategic positioning is the 5Ds of Positioning. Documenting: What benefits are the most important to your current and potential customers? Deciding: What image do you want your current and potential customers to have of your organization? Differentiation: Which competitors do you want to appear different from, and what are the factors that you will use to make your organization different from them? Designing: How will you develop and communicate these differences? Delivering: How will you make good on what youve promised, and how do you make sure that you have delivered?Some organizations develop strategy in such way that will position them close to their competitors so prospects can make a direct comparison when they purchase. Some organizations use marketing tactics like offering a superior benefit depending on the marketing mix strategy.

2.3 Merits of Relationship Marketing in a Strategic Marketing StrategyCustomers are the value creator of an organization. Success of an organization depends on the satisfaction of their customers. Organization needs to take appropriate strategies to satisfy them. This includes providing quality product and services at minimum price, ensuring availability, post sale services, polite behavior with customers etc. The goal of relationship marketing is to develop loyalty between customer and organization. It may be with particular brand or product to the targeted customer base. Relationship marketing provides following benefits. Customer Value: Relationship marketing assist in determining who the most valuable customers for the organization are. It also determines who are too costly to maintain relationship with. For example, relationship with a non-profitable customer will lead subsequent cost by nonpayment or less payment. Communication: Philip Kotler suggested in his books that organization should find its easier and more efficient to obtain and keep their customer. Organization can provide promotional incentives for repeat communication. Innovation: Organization such as Starbucks through their website 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 MarketStrategic 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 ProductsNew Products

Existing MarketsMarket PenetrationProduct Development

New MarketsMarket DevelopmentDiversification

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.

Stage 3After Marketing ActivityStage 2During Marketing ActivityStage 1Prior to Marketing Activity

Evaluation of Marketing EffectivenessDeveloping the Marketing MixMarket Research

3.2 How to Use Marketing Strategy Option in a MarketPorter Generic Strategies: Michael E. Porter describes three general strategies to achieve and maintain competitive advantage. These three strategies can be categorized in two dimensions: Strategic Strength and Strategic Scope. Strategic strength is a dimension that arises from the side of supply and suggests the organization to focus at the core competence of the organization. On the other hand strategic scope is a dimension that arises from demand side and suggests the organization to focus at the size of the market organization want to target. Porter identified two competencies: Product cost Efficiency and Product Differentiation.

Narrow Market ScopeSegmentation Strategy

Broad Market ScopeCostLeadershipDifferentiation Strategy

Figure 4: Porter Generic Strategies (Porter, November-December 1996)

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.

SizeGrowthCompetitive RivalryProfit LevelAbility to DifferentiateCyclicality

Market Attractiveness

HighMediumLow

Market ShareSize/ScaleQualityTechnologyCost BaseBrand StrengthCustomer LoyaltyCompetitive StrengthsLowProduct AProduct BProduct C

MediumProduct DProduct EProduct F

HighProduct GProduct HProduct 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.

3.3 Appropriate Strategic Marketing Objectives for a MarketStrategic marketing aims at achieving customer satisfaction so the value of the organization will increase. A well-defined objective of strategic marketing plays a crucial role in business performing. Setting marketing objectives is critical because organization has to articulate these with the overall mission and goals and also determine how it will be benefited. For example, marketing objectives for Tesco are as follows. Achieve an annual growth rate of at least 10%. Promote adventure activities through strategic alliances with clubs, local athletic organizations, and retailers. By the end of year three, achieve 28% of sales through the Internet. Become the market leader of adventure travel in the Woodville area.

Accomplishment of strategic marketing objectives goes through three steps.

Define Clear Marketing Objectives

Initiate Effective Strategies

Realistic Tactics to Accomplish

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)

4.1 Impact of Changes in the External Environment on a Marketing StrategyThe elements of external environment are uncontrollable but have direct influence on marketing strategy. Thus their existence may be either boon or threat to the organization. Efficiency of an organization does not depend only on building strength and analyzing weakness. It requires a third eye view for how external environment affects the organization externally and internally for strengthening itself. If an organization is sound and efficient internally then external environment may pose some threat on operation and profitability by imposing tax. (Banerjee, March 2002) Economic Forces: The growth rate of the economy, interest rates, currency exchange rates, and inflation or deflation rates are the most important factors of economic forces which affect on the ability to earn an adequate rate of return. Economic forces affect marketing strategy by extending sales when return is high. Global Forces: During last few decades there have been significant changes in the world economic system. Global forces affect marketing strategy to change. For example, due to elimination of international trade barrier new market is opened and new marketing strategy is taken for the outsiders. Technological Forces: After Second World War the pace of technological change has accelerated and become one of the most powerful forces in the external environment. Technological change is so rapid to the smart phones and tabs. For example, Tesco has a research team who regularly updated with the new technology. Demographic Forces: Like other forces, elements of demographic forces such as age, gender, ethnic origin, race, sexual orientation and social class forces marketing strategy to change. For example, increasing number of women in workforce has brought issues like equal pay and addressing sexual harassment. On the other hand different targeting strategy is required for different class of customers according to their tastes. Social Forces: Changes in social values may affect marketing strategy to change. Now organization goes for tree plantation, green operation, less carbon concept because of change in social belief. Again all promotional activities are conducted in such a way so that society cannot be harmed. Political and Legal Forces: Changes in laws and regulations force organization to price restructure, product differentiate and change distribution channel.4.2 Internal Analysis to Identify Current Strengths and Weaknesses in a Marketing StrategyTesco 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.

4.3 Strategic Marketing Responses to Key Emerging Themes in a Marketing StrategyTesco allows responses to key emerging themes as a part of its marketing strategy. The proposed responses are as follow. Reengineering the process of business Changes in distribution channel Change in the marketing mix Attracting customers through e-commerce Fascinating the website Allowing online order Benchmarking the performance Introduce balance scorecard Restructuring cost function Cost control Cost reduction Building a global network and more market-driven Updated with the world Relationship marketing

ConclusionStrategic 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.