Instructor Dr. Lee Meadows
January 6, 2013
Marketing Recommendations for Tesco
Tesco, the third largest retailer in the world, underwent a change of leadership in March of 2011. Sir Terry Leahy stepped down after a highly successful 14 year run with the company that saw the retailer reach 30% control of the British market (Anonymous, 2012). However, the last year and a half has seen declining market share and stock prices. Additionally, the long-term growth strategy of penetrating the US and Chinese markets has not gone as well as anticipated (Anonymous, 2012). This fact, combined with the declining British market share and corporate stock price has created a sense of urgency and has brought about the need for Tesco to rethink their current marketing management strategy.
When looking at Tesco’s base business model, the majority of their revenues come from the British market. They saw net income of 2.8bn last year (2011), versus 800m when Sir Terry Leahy took over the company in 2002. However, income is expected to drop to 2.6bn in 2012 (Oliver & Armstrong, 2012). This lost market share and drop in revenue is directly attributed to Tesco’s failure to maintain its focus on its core business at home in Great Britain. Instead, the focus of the company was, arguably, too forward focused on global growth in both the US market with its Fresh & Easy stores and the Chinese market (Oliver & Armstrong, 2012). This global growth strategy not only took focus from the British market, it also took valuable capital dollars from the British stores. The myopic view of global growth over existing British business has brought about a need for Tesco to change its marketing orientation and bring its attention back to its core British business (Finch, 2012). This will be vital to the long-term success of Tesco, as its competitors have been doing...