Marketing Strategy of Tesco Case Study Example | Topics and Well Written Essays - 3000 words

Marketing Strategy of Tesco - Case Study Example From its humble beginnings, Tesco Plc has gained the reputation of being the largest British retailer in terms of global and local shares. It is estimated that in every 8 UK retail sales, 1 is spent on Tesco (Tesco Plc 2007). Recognizing the growth opportunities in the virtual marketplace, the giant retailer has decided to establish online presence during 1994. Three years after, Tesco has started an online shopping which it named Tesco Direct (Tesco Plc 2007). Since then, Tesco has started offering grocery and food items in its virtual store, Tesco.com. On August 2006, the company announced the offering of non-food items in its online store under the name Tesco Direct. This marketing strategy has proved to be very efficient and profitable for the retailing giant. During the fiscal year 2006, the company announced a total annual turnover of 33.974 billion and reported a pre-tax profit of 1.962 billion. Out of this, 1.2 billion is shared by Tesco.com in terms of total revenue and 83 million in terms of profit. Even though the share of Tesco.com is meagre compared to total turnover and profit generated by Tesco Plc, its growth has been remarkable. The fiscal year 2006 reports online sales double-digit growth of 29.2% while profits soar by 49.5% (Tesco Plc Annual Report 2006). Compared to its rivals in the UK retail industry, Tesco.com captures a higher market share at 65%. Walmart-owned Asda chain lags behind with 16% while Sainsbury corners 14% (Best 2006). Its success has also been documented as it has been named the only retailer which has been able to make online shopping profitable (Walker 2006). On Crossroads: Evaluating Local and Global Opportunities The recent trends and developments in the global market stress the huge emerging opportunities in online retailing. In the UK alone, there has been a sharp rise in the number of people who are "cash rich but time poor" which triggers the higher demand for online shopping (Muncaster 2006). According to the National Statistics Office, the online market is still in the growth stage as only about 20% of adults in UK source food products from the internet (Best 2006). This improvement heats up competition in the local market as industry players battles for market share by launching aggressive strategies and enhancing the overall customer shopping experience. As a global player, Tesco Plc also eyes geographical expansion of its online shopping service by the identification of the profitable markets. In the global economy, it should be noted that internet usage has skyrocketed by 208.7% during the interval of 2000 to 2007 (Internet Usage Statistics 20007). Growth has been very significant in the highly developing Asian and Latin American countries including China, India, and Brazil. It is expected that the wide acceptance and popularity of the internet technologies in this country together with the sharp increase in disposable incomes in these regions will attract global retailers. Faced with these opportunities and challenges in the local and global market, Tesco Plc chooses the strategic direction