Marketing Essentials: Tesco's Marketing Plan and Strategies

This document provides an in-depth analysis of Tesco's marketing plan and strategies. It covers the company's marketing objectives, situational analysis using PESTLE and SWOT analysis, and the marketing mix strategies. It also discusses the measurement and control methods used by Tesco. The document is a valuable resource for understanding the marketing essentials of Tesco.

Marketing Essentials

Table of Contents
INTRODUCTION...........................................................................................................................3
LO 3.............................................................................................................................................3
CONCLUSION..............................................................................................................................11
REFERENCES................................................................................................................................1

LO 3
EXECUTIVE SUMMARY
Tesco plc is a multinational retailer of general merchandise and groceries headquartered
in Hertfordshire, England and a leader of supermarket chains and grocery retailer around the
world. The marketing plan of Tesco demonstrates the strategic marketing objectives, situational
and market analysis using Pestle analysis which determined possible external factors that can
impact its marketing plan, strategies and tactics on the basis on market segmentation in context
of &Ps of marketing mix, budgeting in context of financial performance of the company and
various measurement and control methods.
OBJECTIVES
The marketing objectives of Tesco are aimed towards international expansion and
product diversification along with gathering a huge customer base and creating of brand equity
and leadership in the retail segment. The objectives can be classified as specific, measurable,
attainable, reliable and target oriented as follows:
 To boost up the market share by 25 %
 To increase the profit and revenue up to 10 % within 12 months.
 To diversify the non-food segment of product line
 To expand into other countries of Europe
SITUATIONAL ANALYSIS
The market analysis for attaining the marketing objectives has been done using PESTLE
and SWOT analysis to determine the external and internal market situation Tesco can face:
POLITICAL FACTORS
In order to expand business operations in other parts of Europe as well as increasing
revenue in the present annual year, Tesco may have to face political hurdles such as impact of
post Brexit referendum. Huge tariffs are being imposed on imported goods such as finished
products and foods and drinks. The supply chain of the supermarket has been disrupted and the

logistics infrastructure has weakened which has led to higher costs, lower quality products and
less choices for consumers (Bloom and et.al., 2019). For employment legislation government
promote to retailer in providing jobs for employee in making more opportunities with flexible,
local based jobs with high skilled. Tesco also interpret that their business will have great striking
on jobs and in different countries when they open new stores in retail aspect such as traditional
stores and other stores become more competitors in market.
ECONOMIC FACTORS
The major economic problems that Tesco can face in its marketing objectives are low
level of income, changes in demand and supply, high inflation and rising unemployment level.
All these directly and indirectly affect consumer behaviour and their response towards
advertisements. Increasing labour costs can cost millions of pounds to Tesco and expansion
issues as the company is majorly dependent on UK market.
SOCIAL FACTORS
Socio-cultural factors like underlying values, beliefs as well as changing trends,
perceptions, tastes and preferences along with dynamic lifestyle choices directly impact
consumer behaviour. There is a rise of organic products and healthy items which have to be
marketed by Tesco. Tesco has high number of loyal shoppers of Tesco can be provide with
relevant options to penetrate the market by increased discounts and loyalty cards and
memberships.
TECHNOLOGICAL FACTORS
RFID technology that has been installed in the UK stores can be used for increased
customer convenience. It is used for stock management and enhancing in-store experience.
Digital payment systems like PayQuid can be further improved and integrated. The company can
increase its digital presence and go forward with social media marketing (Aggarwal and Sharma,
2017). Tesco has important performance from advance technology which helps them in
developing Club card for their customer and also self services check outs points provided for
customer and help in company for reducing costs.

LEGAL FACTORS
Tesco has to comply with all the rules, regulation, quality standards of Food retailing
commission (FRC), legalities, employee laws for a trouble-free operation. It has to avoid the
legal threats it faced in past like the legal action workers took against Tesco for low pay and
discrimination as well as the accounting fraud where Tesco had to pay a huge penalty of £12
million to settle the matter. Company do not pay any fewer wages to their employee which is
already set by government for retail sector. It could not also sell liquor who are underage
customer, if Tesco do they have to pay some fined and misleading customer for services and
products.
ENVIRONMENTAL FACTORS
The existing stringent laws and environment friendly operation is a fact that supermarket
chain has to deal with positively. It already has committed to use of renewable resources to
generate its electricity by 2030 and aiming to minimize its carbon footprint (Nath and
Ramanathan, 2016). Many stores of Tesco in many countries is facing issues related to
environmental that identify from government laws. This pressure is not only from government
side but also from people side who are facing issue from environment. In taking this responds
company has taken steps in removing many millions of plastic from each store and make proper
use of recycle products.
STRENGHTS
Tesco has numerous number of awards in retailing, customer services and best shopping
experience. It is reasoned largest and most suitable supermarket in world with many competitors.
Company have improved technology and create great cost ratio and provide their customer with
experience in products and services.
WEAKNESSES
Company have more competitive in market as they also try to focus on competitive
advantages. Consumer may not be buying some items which are related to disposable income

and did not manage its inventory and selection, just working with inventory in higher cost. Tesco
profit level have bad impact due to falling in credit and debit liabilities.
OPPORTUNITIES
Tesco has recently developed new stores which show expansion for market. Processing
partnership strategic can also lead for companies in having the best opportunities for offering
more attraction of customer towards their products and services. They also provide online
shopping and home delivery for loyal customer with many new goods in different countries.
THREAT
Due to more storess in different may also ead to increase wages and salary, which will
further drop some pressure on pricing strategy of company. Government rules and legislation can
be also threat for company and have load attendant to environment and social responsibility
which cause on Tesco cost.
STRATEGIES & TACTICS
SEGMENTATION, TARGETTING AND POSITIONING
Demographic segmentation: On the basis of age, gender, family size, income level, occupation,
social class, Tesco can target the population by using the facility of Clubcard data and devise its
promotional strategies accordingly such as cosmetic products can be targeted towards young
women or highly discounted products can be targeting to price sensitive people (Chernev, 2020).
Behavioural segmentation: Clubcard can enable distinction of consumers on the basis on their
purchase behaviour such as information regarding when and where of shopping, time spent, rate
of utilisation of products, commitment to certain brands etc.
Geographic segmentation: The Presence of Tesco is majorly in UK and 13 other countries
across central Europe and Asia. In order to target European countries, specific attention has to be
paid to the cities, urbans and sub-urban areas, supply chain and local markets for promotional
tactics. It is used in dividing the market according to their climate, population and income

sources as company can make them more target for selling their products and services with
reasonable rates and develop their more customer with users of luxury products.
Psychographic segmentation: Tesco has to capture the lifestyle choices derived by
psychological needs such as personalities and tastes and has to target its promotional strategies
using its lifestyle magazines and creation of several areas like Food, Healthy Living, Wine etc.
MARKETING MIX STRATEGIES
PRODUCT
Tesco provides a wide range of retail outlets and online stores which include groceries,
food, clothing, telecommunication and financial services and electronics. It can further focus
upon product diversification and development by creating new product line such as on own
branded items and expansion of non- food items (Aiello and et.al., 2020).
PRICE
Currently Tesco uses the cost leadership strategy by maintain as low prices as possible
while maintaining the quality. Tesco can further restructure its products in to various segments
and ranges and offer frequent discounts to counter its competitors Lidl and Asda. It can follow a
price penetration strategy by offering every low price (EDLP) and offer temporary price
reductions and offer loyalty discounts. Many stores in many countries have some unique
products for all age of people with some changes in price and make more price promotional
strategy for buying and selling their products to their loyal customer.
PLACE
Tesco operates in various locations across UK and central Europe. To expand into
Europeans markets, Tesco has to improve its logistics infrastructure by partnering up with local
suppliers and distributors to establish its hyper stores in other places. For its online consumers,
Tesco has to maintain warehouses in specific zones and establish its speciality stores such as
Tesco Extra, Tesco Express, Tesco Metro and Tesco Superstore in other parts of the continent. In
developing countries Tesco develops many stores with online and offline services and home
delivery services as food or products.

PROMOTION
Promotion can be done using traditional and online marketing methods. Traditional
marketing could involve print ads & hoardings, broadcasting, referrals, direct mail to Clubcard
members, publishing its lifestyle magazine etc. Social media marketing can be done using
Facebook, Instagram and Twitter advertisements, celebrity endorsements, food bloggers, social
influencers etc. Database marketing can be a big game changer with personalised marketing
techniques. Other tactics would include consumer engagement, charitable events, personalised
offers and discounts for Clubcard members (Dadzie and et.al., 2017).
PROCESS
The supply chain process of the company can be improved by use of technology and
automations. The procedures and policies for employees have to be standardised to avoid
deviations and fast paced work culture to enhance in-store experience of customers. The
serviceability, convenience, quick billing, services features has to be further improved.
PEOPLE
Effective recruitment and selection is conducted in the company which aims at placing
right people for right positions and roles along with workplace diversity and good training
methods. The main aim of the people of the supermarket should be customer service and sales
assistants should be effectively trained. The company should include more employee privileges
such as Colleague Privilege card, Buy-as-you-earn, Save-as-you- earn etc. to promote loyalty
and boost morale.
PHYSICAL EVIDENCE
Company can enhance its existing ambience and furbishing by including simple designs
and convenient architecture with more spaces in aisles and billing area. The offers can be placed
in a way that they attract consumer, and the products should be well categorised and easy to
navigate.
FINANCE AND BUDGETING

MARKETING BUDGET
The estimated marketing budget in context to previous years is illustrated as follows. The
total expenditure for various marketing activities including market research, traditional
marketing and Online marketing for a period of 2020 can be summed up to £95 million.
S.No. Particulars Amount (in £)
1. Market research 1,500,000
2. Traditional advertisements 64,000,000
TV And broadcasting 24,000,000
Direct mail 5,000,000
Print ads and Promotional brochures 10,500,000
Banner advertisements and hoardings 12,900,000
Promotions and discounts 11,600,000
3. Online marketing 29,500,000
Social media marketing 11,000,000
Endorsements 5,400,000
Web advertisements 4,000,000
Database marketing 8,600,000
Miscellaneous 500,000
Total expenditure £ 95,000,000
Illustration 1: Advertising expenditure of Tesco
Source: Joseph Johnson, 2019 (Statistica)
BALANCE SHEET

Illustration 2: Financial statements of TESCO
Source: Annual Report, Tesco plc, 2020

MEASUREMENT AND CONTROL
MARKETING METRICS:
Marketing Metrics refer to measurable values which can be used by marketing team of
Tesco plc to demonstrate and monitor the effectiveness of campaigns across
all marketing channels (Sharp 2017).
 Return on marketing investment (ROMI)
 Analytical tools and techniques: Attribution tools, web analysis, Mobile analytics,
campaign automation, social analytics and tag management.
 Bottom line performance and Contribution Margin
 Key performance indicators
KPI: Key performance indicators have to be used for evaluation and measurement of
performance and to address changes in resource allocation and budgets and attainment of targets.
 Increase in profit and Sales revenue for the annual year 2020-21
 Inbound marketing return on investment for 12 months
 Customer Lifetime value
 Customer Acquisition costs
 Social media traffic and conversion rate
 Abandonment rate

REFERENCES
Books and journals
Aggarwal, R. and Sharma, A., 2017. Implementation of Smart Supermarket Using Rfid
Technology.
Aiello, L.M., and et.al., 2020. Tesco Grocery 1.0, a large-scale dataset of grocery purchases in
London. Scientific Data.7(1). pp.1-11.
Bloom, N., and et.al., 2019. The impact of Brexit on UK firms (No. w26218). National Bureau
of Economic Research.
Chernev, A., 2020. The marketing plan handbook. Cerebellum Press.
Dadzie, K.Q., and et.al., 2017. How firms implement marketing strategies in emerging markets:
An empirical assessment of the 4A marketing mix framework. Journal of Marketing
Theory and Practice.25(3). pp.234-256.
Nath, P. and Ramanathan, R., 2016. Environmental management practices, environmental
technology portfolio, and environmental commitment: A content analytic approach for
UK manufacturing firms. International Journal of Production Economics.171. pp.427-
437.
Sharp, B., 2017. Marketing: theory, evidence, practice. Oxford University Press,.
Online
Advertising expenditure of Tesco, Joseph Johnson, 2019, Available through:
<https://www.statista.com/statistics/549738/tesco-uk-ad-spending/>
Annual Report TESCO PLC, 2020 Available through:
<https://www.tescoplc.com/media/755761/tes006_ar2020_web_updated_200505.pdf>
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