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. Organization’s 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 15 th 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 Organization
Tesco 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 Tesco’s 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 Tesco’s
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 Marketing
Tesco 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. [ CITATION Joh96 \l 1033 ]

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 Strategy
Corporate 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 [ CITATION Nan01 \l 1033 ].

Corporate Position Corporate Strategy Marketing Strategy

Attractive Market
Invest best resources Offer best product
Strong Position
Attractive Market
Concentrate on strengthening position Offer best product
Weak Position
Not Especially
Invest best resources Effective marketing
Attractive Market
Continuing earning and holding position Sales promotion
Strong Position
Not Especially Concentrate on product
Attractive Market Concentrate on strengthening position Effective marketing
Weak Position Sales promotion

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.

A growing business, full of opportunities

Whether it’s 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
Tesco’s 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 wouldn’t have been possible without what we’ve 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:
2.1 Models Used in Strategic Marketing Planning
There 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.
Porter’s 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 Porter’s
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

Bargaining power Rivalry among Bargaining power

of suppliers established organization of buyers

Threats of substitute
products

Figure 1: Porter's 5 Forces Model [ CITATION Mic961 \l 1033 ]

SWOT Analysis: To integrate internal environment and external environment an
organization emphasized both evenly. The best way to integrate them is SWOT analysis:
r
S
g
W
e
o
p
O
i
n
u
h
T
s
t
a
k
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.

T
W hre
Stren
Internal

eak
Factors

O pport
External
Factors

gths
unities
ats
nesses
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 Tactics
Strategic 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 5D’s 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 you’ve 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 Strategy
Customers 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
it’s 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 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 New Products
Markets
Existing

Market Product
Penetration Development
New Markets

Market Diversification
Development

Figure 3: Ansoff Matrix [ CITATION HIg57 \l 1033 ]

 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. [ CITATION Bri97 \l 1033 ]

Stage 1 Stage 2 Stage 3

Prior to Marketing During Marketing After Marketing
Activity Activity Activity

Market Research Developing the Evaluation of

Marketing Mix Marketing
3.2 How to Use Marketing Strategy Option in a Market
Porter 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
Scope Segmentation Strategy

Broad Market Differentiation Cost

Scope Strategy Leadership

Figure 4: Porter Generic Strategies [ CITATION Mic961 \l 1033 ]

GE Model: The best business portfolio fits organization’s 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.

Size Profit Level

Growth Ability to Differentiate
Competitive Rivalry Cyclicality
Market Attractiveness
High Medium Low
Low
Product A Product B Product C
Competitive Strengths

Market Share
Size/Scale
Medium

Quality
Technology Product D Product E Product F
Cost Base
Brand Strength
Customer Loyalty
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.
3.3 Appropriate Strategic Marketing Objectives for a Market
Strategic 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 précis

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. [ CITATION
Geo01 \l 1033 ]
4.1 Impact of Changes in the External Environment on a Marketing
Strategy
The 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. [ CITATION Bob02 \l 1033 ]
 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 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.
4.3 Strategic Marketing Responses to Key Emerging Themes in a
Marketing Strategy
Tesco 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
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.