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TESCO

NEW MARKET ENTRY STRATEGY

HATIM NATHDWARA

EXECUTIVE SUMMARY
Marketing strategies provide a proper way or guide an organization to enter into the market, to sustain in competitive market and also helps in exiting from non-profit market. TESCO is known to be renowned company retail organization in retail industry. Their strategies to enter into Indian market are described taking help of this project and a detailed research is conducted in TESCO retail organization.

INTRODUCTION
Every organization works to achieve their pre-defined goal and to achieve that goal there has to be proper way or path to achieve organizational objective. Marketing strategy defines that way in the form of strategies that let an organization to focus their overall goal. Strategies are defined for every department of an organization and different goal are set for each department. in the same way this report is formed with the aim of forming market entry strategies in to new market, and this research will be performed under TESCO retail organization, who wants to enter into Indian market. TESCO is a biggest retail chain of UK, operating their business in broad range of product category like groceries, clothes, food, cosmetic and sports. They have successfully placed themselves in UK market with their low cost strategy for their product class. They are also giving neck to neck competition to wall mart, ASDA and wall market in international market. Company is operating their stores around maximum countries of world. In present study, researcher have discussed about porter's five force model for the assessment of Indian market. With this assessment, what strategy has to be opt to enter into Indian market will be sort out for TESCO. Moreover, this report will explains internal firm analysis of TESCO industry and some market entry strategies that should be followed to enter into new market. At last a conclusion and recommendation our present study will be drawn out.

MARKET OPPORTUNITIES IN INDIA


An analysis of the structure of the industry should be undertaken in order to find effective sources of competitive advantage. Therefore, in order to analyze the competitive environment of Tesco, Porters five forces analysis has been used by the researcher are as follows:

Threats of Substitutes The substitute is product which performs similar activities. The substitute is a threat because of reasons like competitive price of substitute, quality products of substitute or low switching cost for customers. The threat of substitute in the industry of food and grocery is quite low but due to various others super market and nearby stores, customers have wide options to choose product from. However, the substitutes to the giant stores like Tesco (in the food retail market) are small chain of ease stores, organic retailers, malls, dedicated stores etc. This may become hindrance to them as customers will go for convenient stores. Threats of New Entrants Threats of new entrants are threats from new competitors to existing players in an industry. The threat of entry is very low into the food retail industry which is the prime market for Tesco. This is so because it takes high investment to establish and become competitive in the market and also to make a brand name. The target market of Tesco is daily grocery items. Although, this is a highly aggressive segment this type of market structure is highly unstable, continuous improvement is required by Tesco to keep the market share in India. Rivalry The intensity of rivalry among competitors in an industry refers to the extent to which firms within an industry put pressure on one another and limit each others potential profit. The rivalry in grocery and food retail market is very high. There is a cut throat competition in this segment as there are many giant players are involved in competition along with small retailers. Since UK has a full-grown food retail market which makes Tesco a market leader there but to acquire same position in India, company must takes market share from existing competitors. Bargaining power of buyers It is the power of buyer which can be exercise on the businesses to provide high standard products at lower prices and better customer service. In a market where a product is standardized, switching cost is relatively low and customers may easily swap from one brand to another. Low prices will attract more and more consumer through which Tesco will be able to switch customers over there stores.

Bargaining power of suppliers Supplier power is relatively weak because there are a large number of supermarkets and a small numbers of buyers.

COMPANY SITUATION ANALYSIS


The UK supermarket group after becoming leader in their home country plans to invest in India after approval of FDI in multi brand upto 51%. Company is planning to develop a new market for their existing products. Since Indian economy contains very little percentage of organised retail sector which results in potential growth for Tesco here. The organisation is using strategy of market development of Ansoff Matrix. Ansoff matrix is a portray that focussed on potential products and markets. This matrix provides 4 different growth strategies. 1.) Market Penetration: The firm achieve growth with existing product in existing market aims to increase market share. 2.) Market Development: The firm achieve growth with existing product into new market. 3.) Product Development: Firm develops new product for existing market. 4.) Diversification: Firm seeks growth by developing new product for a new market. Tesco is now an established international organization with operations in Europe, Asia, and North America and is growing rapidly. India will results a crucial market for UK giant and helps them to achieve growth. This can be done by use their own-brand products which are divided in 3 categories. Finest: High quality food with highest price rages Mid-range Tesco brand : Medium quality and average price range Low-price Value brand: Low quality products with lower price value

MARKET ENTRY STRATEGY


To become a world leader, one has to utilize all of their resources effectively and utilize every opportunity. Also the firm has to start their business operations in different country to acquire growth and development. To enter in a different potential market various types of strategy is available. This can be are as follows:
1.) Foreign Direct Investment: is a direct investment into production or business in a country

by a company in another country, either by buying a company in the target country or by expanding operations of an existing business in that country.

2.) Joint Venture: A joint venture is a business agreement in which the parties agree to develop,

for a finite time, a new entity and new assets by contributing equity. They exercise control over the enterprise and consequently share revenues, expenses and assets. 3.) Direct Exporting: Transfer of products and services from one party of one country to another party in different country. 4.) Licensing: A license may be granted by a party ("licensor") to another party ("licensee") as an element of an agreement between those parties. 5.) Franchising: it is a practice of using another successful firms business. There is a wide range of ways by which Tesco could enter India. Tesco can follow strategy of Foreign Direct Investment and have full control of its operations within India. While such a strategy carries the greatest risk it also provides the greatest reward and, most crucially, protects the integrity of the business and the brand. Tesco has the financial resources, expertise and experience to do so and has recently demonstrated its ability and proficiency in entering new, competitive markets with the highly successful introduction of Fresh & Easy into North America. A barrier to such strategy is the Indian Govt. which introduced cap over FDI in multi brand that should not increase more than 51% but this is an effective strategy of entering in Indian economy.

IMPLEMENTATION OF STRATEGY
After knowing all the probable methods of entering in new market, Tesco plans to enter into the Indian market through a wholesale business and tie up with Tata group which is one of the strongest players available in India. Tesco plans to open the cash-and-carry outlets which will be providing their products to small retailers. Moving forward Tesco also enter into franchise with retail chain of Tata group i.e. Trent and help them to increase its hypermarket businesses. These strategies will help Tesco to capture large market share in food and grocery segment which will ultimately result in growth of the company in a long run. CONCLUSION & RECOMMENDATION Conclusion It could be concluded that effective marketing strategy is the pre-requirement for entering into new market for every organization. Marketing entry is considered as the proper path for any firm because any manger could not plan to enter into new market until the basic marketing

strategy has not been implemented. Hence, for TESCO to enter into Indian market in-depth analysis of Indian market and their own firm is required so that a smooth entrance in Indian market by TESCO can be made. Recommendation According to researchers analysis and evaluation of topic, following recommendation is being drawn out. These are as follows: Indian customers are much more attracted towards discount and low prices. Company should provide quality products at lower prices and should also introduce discount schemes on timely basis. Tesco does not position itself next to global brands like Coca Cola, Nike etc. instead they adapt to local markets to win over the new market in India. Gaining customer loyalty towards their brand helps in capturing greater market share. Company should come with different schemes of gifts and discount to earn customer loyalty.

Tesco should know the market structure of the country and recognize other elements such as suppliers, transport, home grown facilities.

Understanding buying behavior is a psychological task, behavior has to be monitored and market research has to be setup to provide products that are best suited to consumer of that country. These are few recommendations which Tesco undertake to run their business in India

successfully and effectively.