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Tesco's Strategy for Australian Market Entry

Tesco is a global supermarket chain headquartered in the UK that operates in 12 countries. To expand into the Australian market, Tesco must analyze the macro environment conditions, including competitors. The Australian supermarket industry is dominated by Coles and Woolworths, which control 75% of the market. Tesco would need to adapt its marketing mix of products, pricing, placement, and promotion to compete with these major rivals in Australia. This includes providing a wide range of high-quality goods at lower prices to attract Australian consumers.

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69 views4 pages

Tesco's Strategy for Australian Market Entry

Tesco is a global supermarket chain headquartered in the UK that operates in 12 countries. To expand into the Australian market, Tesco must analyze the macro environment conditions, including competitors. The Australian supermarket industry is dominated by Coles and Woolworths, which control 75% of the market. Tesco would need to adapt its marketing mix of products, pricing, placement, and promotion to compete with these major rivals in Australia. This includes providing a wide range of high-quality goods at lower prices to attract Australian consumers.

Uploaded by

Devender Sharma
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Management Test

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Answer 1:

Introduction

Tesco is a global supermarket with headquarters in England that operates all over the world. The
group operates stores in 12 countries and is a global leader in the food industry. Tesco has a
market share of more than 28% and has significantly increased its operations. Tesco must
investigate the appropriate macro environmental conditions that affect the sector in which it
wishes to extend its operations. This will illustrate the marketing mix adaptation by Tesco to
enter the Australia market (Mollah, 2014).

A brief overview of the Australian supermarket

Tesco must first assess the macro environmental conditions before establishing a presence in
Australia. In the Australian supermarket, there are several rivals, including Coles and
Woolworths, which dominate the entire industry. These two supermarkets control the majority of
the market, accounting for 75% of the total (Ismail, 2017). Aldi is also rapidly expanding in
Australia, and independent retailers are concerned about its growth. The Australian market is
favourable for Tesco's growth, but it should weigh the myriad other conditions of its rivals
before expanding in Australia that are Economic Analysis, Political Analysis, Social & Legal
Analysis and Cultural Analysis (Brannen, Moore & Mughan, 2013).

TESCO's marketing mix adaptation to enter Australia

Marketing mix is an organizational component of a marketing strategy. Marketing mix built on


four Ps: Products, Price, Location, and Promotions. Marketing mix is described as a set of
adaptable tactical marketing tools used to achieve the strong mix of products, prices, location,
and promotion desired by the target market (Kotler and Armstrong, 2010).

Product: The central aspect of the market is the product, which is characterised as the
assemblage of the products and offerings provided by the company that add worth to the
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consumers (Kotler and Armstrong, 2010). The substance can be both concrete and non-tangible.
The division of marketing has given a cumulative estimation of output, distribution ratio, and
revenue generation value. Tesco sells a wide variety of goods, including food, clothes, hardware,
and financial services. In addition to more than 40,000 or more items in each segment of its
department outlets, it has a food delivery service and free music downloads.

Price: Price is one of the most significant factors in any industry because it reflects the monetary
worth of the good or services that consumer’s pay for. It is known as "the sum paid by the
customer to purchase the offered product or service (Solomon et al, 2009). Tesco strives to keep
premiums as low as possible without sacrificing product quality or compensating for damages.

Price: One of the most important aspects of a corporation is its location, which encompasses all
of the things that take place to make the commodity accessible to consumers (Kotler and
Armstrong, 2010). Business channel, delivery, and intermediary are all included. Tesco's
Marketing department included insight on store positioning based on industry observational
analysis. In England, Tesco has a shop in every town and city. Tesco has 6 different categories of
markets in its offline operations: Tesco Express, Tesco Extra, Tesco Metro, Tesco Compact,
Tesco Superstore & Tesco Home Plus.

Promotion: It is described as "the awareness of a product conducted by marketers to educate


consumers and attract potential customers" (Solomon et al, 2009). The Tesco division of
marketing is solely dedicated to product promotion through selling, publicity, advertising,
targeted communication, internet touch. Tesco distinguishes itself from other supermarket
chains. Throughout the year, Tesco has a variety of exciting offers for their clients. These
grocery stores are really easy to find in the way of any roving client, for example "half price",
"buy one gets one free". Furthermore, Tesco Club membership makes use of the facilities to
provide consumers with additional reductions.

Conclusion

Consequently, Tesco will face a variety of hurdles before establishing a presence in Australia. It
must strive to improve product consistency in order to compete with other supermarkets. Tesco's
corporate operations are also assisted by a favourable political, legal, and economic climate.
Tesco will deliver high-quality goods at a lower cost, and as a result, Australians will choose to
purchase their groceries from Tesco. People in Australia are now willing to spend more costs on
high- superiority goods, which would benefit Tesco.

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References

Brannen, M. Y., Moore, F., & Mughan, T. (2013, September). Strategic ethnography and

Reinvigorating Tesco Plc: Leveraging inside/out bicultural bridging in multicultural

Teams. In Ethnographic Praxis in Industry Conference Proceedings (Vol. 2013, No. 1,

pp. 282-299).

Ismail, I. N. (2017). The Roles of Corporate Governance and its Influences on Risk and

Performance: Tesco Plc.

Mollah, M. D. A. S. (2014). The impact of relationship marketing on customer loyalty at Tesco


Plc, UK. European Journal of Business and Management, 6(3), 21-55.

Kotler P and Armstrong G (2010), Principles of Marketing, 13 edition, London: Prentice Hall.

Solomon, Michael R. 2009, Consumer Behaviour: Buying, Having and Being, 8th edition,
Pearson International Edition.

Common questions

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Tesco can leverage its existing marketing mix by adapting each of the four Ps—Product, Price, Place, and Promotion—to fit the Australian market. For Products, Tesco can offer a range of local and international goods that appeal to Australian tastes. Pricing strategies may involve competitive pricing to offer value against local rivals. For Place, Tesco might analyze optimal locations and consider online delivery services to reach broader demographics. In Promotion, targeted campaigns highlighting special offers, or the benefits of Tesco Club membership, can enhance customer engagement and awareness. These adaptations, grounded in thorough market research, allow Tesco to address local competition and consumer preferences effectively .

Social analysis involves understanding consumer lifestyles, preferences, and cultural norms, which is essential for tailoring Tesco's offerings to meet local demands. Legal analysis ensures compliance with Australian laws, including trade regulations, labor laws, and taxation policies, which affect operational practices. Both analyses guide strategic decisions on product offerings, marketing approaches, and store operations. Failure to conduct thorough social and legal assessments could lead to misaligned business strategies and potential regulatory penalties .

Cultural differences between the UK and Australia could impact Tesco's marketing strategy by necessitating adjustments in communication styles, promotional content, and product offerings. Tesco must consider local customs, language nuances, and consumer behavior patterns in Australia to create relatable and appealing marketing messages. For example, leveraging Australian cultural themes in advertising and ensuring sensitivity to local traditions can help build brand rapport and acceptance. Understanding these cultural distinctions enables Tesco to tailor its strategy to resonate with Australian consumers more effectively .

The dominance of Coles and Woolworths, which together control 75% of the Australian supermarket market, creates significant barriers to entry for Tesco. This duopoly forces Tesco to adopt competitive strategies to differentiate itself and capture market share. Tesco must evaluate these rivals' strengths, weaknesses, and market strategies, potentially tailoring its marketing mix and operational strategies to address these challenges directly. Given the limited market share available due to these dominant players, Tesco will need to implement innovative and aggressive marketing tactics, such as unique promotions or leveraging its global supply chain, to penetrate the market effectively .

Conducting a comprehensive political analysis is crucial for Tesco to understand the regulatory environment, government policies, and political stability in Australia. This helps strategize around legal requirements for foreign investors, potential tariff impacts, and labor laws affecting employment practices. A stable political climate can facilitate smoother market entry and operational setup, reducing risks associated with policy changes or geopolitical tensions that can affect market dynamics .

To differentiate itself from growth-focused competitors like Aldi, Tesco can emphasize product variety, quality, and customer service. While Aldi is known for its low-cost, no-frills approach, Tesco could highlight its diverse product lines, including premium and organic options, to attract broader consumer segments. Implementing personalized marketing through loyalty programs and exclusive promotions can enhance customer engagement. Additionally, leveraging technology for seamless online shopping experiences and efficient delivery can set Tesco apart as an innovative and customer-centric choice in the competitive landscape .

Before entering the Australian market, Tesco needs to analyze various macro environmental factors, including economic conditions such as consumer spending power and economic growth, political stability and regulations affecting retail operations, and social or cultural trends that could impact consumer preferences. Additionally, legal frameworks related to trade and foreign direct investment must be considered, along with existing competition from established players like Coles and Woolworths .

Tesco faces challenges in maintaining product consistency in a new market like Australia due to differences in supply chain logistics, local sourcing requirements, and consumer expectations. Ensuring consistent quality across various product lines requires adapting to local regulations and supply chain infrastructures, which may differ significantly from Tesco's home market. Additionally, tailoring the product assortment to local tastes without compromising quality is essential, requiring careful supplier selection and quality control processes. This complex balance affects maintaining brand reputation and customer trust .

An economic analysis of the Australian market would examine factors such as consumer purchasing power, inflation rates, and economic growth. These factors influence Tesco's pricing strategy as they determine consumer sensitivity to price changes and the level of disposable income. By understanding these economic conditions, Tesco can set prices that balance affordability with perceived value, ensuring competitiveness against local rivals like Coles and Woolworths, which are already familiar with these dynamics .

Offering high-quality goods at a lower cost in the Australian market presents Tesco with the potential benefits of attracting price-sensitive consumers while simultaneously competing with established players like Woolworths and Coles. This strategy could enhance customer loyalty and market share by positioning Tesco as a value-for-money retailer. Additionally, responding to Australian consumers' willingness to spend more on high-quality goods can help build a reputation for quality and value, ultimately leading to long-term brand equity and competitive advantage .

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