Analyzing STP Tactic and Marketing Mix of TESCO

This assignment analyzes the STP tactic and marketing mix of TESCO, a leading supermarket in the UK. It discusses the segmentation, targeting, and positioning strategies used by TESCO, as well as the 4Ps for products and 7Ps for services. The assignment also provides suggestions for improving TESCO's marketing strategy.

MARKETING
MANAGEMENT

Table of Contents
Executive summary-........................................................................................................................3
INTRODUCTION...........................................................................................................................4
TASK...............................................................................................................................................4
1- Analysing STP tactic, providing and insight into how segmentation, targetting &
positioning recently applied by TESCO.....................................................................................4
2- Examining marketing mix, concentrating on 4ps for products & 7ps for services that
TESCO is currently applying......................................................................................................7
3- Assessing Tesco relationship advertising strategy with an emphasis on its current strategies
...................................................................................................................................................10
4- Suggestions in context of improving marketing strategy of TESCO...................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

Executive summary-
Marketing management is described as organizational discipline which concentrate on
specific application of advertising orientation, approaches and techniques inside companies and
on administration of a organization's promotional activities and assets. It smoother procedure of
exchange of services and products from companies to consumers. Just like other areas of
management, marketing administration encompasses of key functions like planning, managing,
coordinating, direction and controlling. It has been identified that TESCO marketing strategy is
quite effective and profitable. By using demographic and psychographic segmentation strategies,
company has gained benefits in term of targetting right people that are interested in purchase of
its goods as well as services. Furthermore, through this assignment it has been analysed that
organization used 4 ps of marketing mix in context of grocery and other items and 7ps in regard
to financial services & home delivery as well. It has been analysed that supermarket by using
loyalty club card scheme has successfully retained potential consumers and gain attention of
international buyers. By using this technique firm has build excellent relationship with its
customers.

INTRODUCTION
Marketing management is defined as procedure of planning, decision-making and
controlling advertising aspects of an organization in form of marketing concept. It may also
define as activity of executing pricing, conception, and promotion of products that help to gain
attention of consumers. The current assignment will be based on TESCO, which falls under the
category of leading supermarkets in the UK. Organization had the largest market share in retail
sector over period under consideration. It holds 42.7% of profits. The study will explain
effectiveness in context of marketing strategy of chosen organization. Furthermore, it will define
STP tactic, and also describe how segmentation, targetting and positioning currently applied by
firm. The report will justify marketing mix that focus on 4Ps in regard to products and 7Ps for
services that company's is currently applying. It will clarify relationship of marketing strategy
with an emphasis on current tactics. Lastly, the assignment will explain appropriate suggestions
that used to enhance marketing tactic of organization.
TASK
1- Analysing STP tactic, providing and insight into how segmentation, targetting & positioning
recently applied by TESCO
TESCO is known as the most popular supermarket in the world because it offers quality
and good quantity products to consumers. It has sustained in retail industry from longer period
by selling quality items and giving tough competition to its rivals such as ASDA, Sainsbury,
Waitrose etc. In order to gain set objectives and aims, organization used varied strategic models
and tools. In term of marketing strategy, it may utilize STP model which is quite beneficial for
its venture. It considered as marketing model that simplifies procedure of market segmentation,
targetting and positioning. It is a three stage process that permit company to target specific group
of people and develop actionable marketing tactic. STP model is the main concept of marketing
term, which may consider as key to serve a market successfully. TESCO currently applied this
framework by selecting and using effective strategies under each component.
Segmentation-
Market segmentation is defined as procedure of dividing a target market into smaller and
more specific categories (Liu and et.al., 2019). This term refers to aggregating potential
customers into segments or units with common demand and especially those that respond

similarly to a company advertising activity. It enables TESCO to target varied categories of
people in term of consumers who perceive full value of its goods and services differently from
another. Firm may apply STP model by selecting right strategy among four-segmentation-
strategies such as demographic, psychographic and behaviour tactic.
In order to target profitable and appropriate buyers, supermarket uses demographic and
psychographic segmentation strategies (Paluchová, 2017). Through demographic strategy,
company target all age categories in term of consumers. It targets males and females that are
included in low and middle income category. Employees, youngsters, professionals, students and
other people are included in list of TESCO target buyers. Firm's seek to offer all its services and
products to these people as it help management to cover all the spheres in market, which in
return increase profitability and sales of company even better than its rivals.
Illustration 1: Types of Market Segmentation Tactics
(Source: 4 Segmentation strategies to help target consumer, 2017)

Furthermore, with psychographic segmentation strategy, brand may target those people
that wear clothes and purchase things according to lifestyle. It also focuses on those individual
that are carrying easy going personality in term of adopting trend current trend and goes with it
just like other customers.
Targetting-
STP model encompasses three basis and targeting is the second one, which known as
multi-segment advertising (Nadube and Didia, 2018). This marketing tactic includes determining
particular markets or personas for products and services of TESCO. It makes firm able to breaks
its large market into smaller segments, which is quite important for business growth and success
of marketing activities. In the world of business, there are 4 form of market targeting tactics are
available that many companies utilized according to size of target market and their venture
operations. TESCO applied differentiated marketing strategy to target all the people. It is also
known as concentrated marketing tactic, which allow firm to sell its goods and build long-lasting
relations with potential buyers for longer period (Kaleka and Morgan, 2019). The chosen tactic
puts all the attempts of firm towards offering products to each different market segments that is
targeted by using demographic and psychographic segmentation strategies.
Differentiated tactic is the one through which firm decided to offer separate offering
like sports wear, grocery products, jewellery to each varied consumers. With this strategy,
TESCO target male, females, youngsters and sports lover that seeks to purchase items according
to preferences from well-known brand with reasonable price tag (Market Targeting, 2019).
Enterprise target low and middle income people, because they are unable to buy a better quality
goods due to high costs. Supermarket targeted each segment in specific manner as it caters
unique benefits to all of them.
Positioning-
Positioning is defined as concept of developing and associating a mental position in
consumers consciousness about specific brand (Iyer and et.al., 2019). In order to set the excellent
image in mind of buyers a company may select and use the best approaches. There are many
tactics accessible in the world that all the firms may use according to venture operations. TESCO
used four types of positioning strategies. For example, firm use functional positioning tactic
through which it sells the finest range of items to target consumers (Rosnizam and et.al., 2020).
Quality of its range of items is serving as main point of marketing for chosen customer segment.

Supermarket, through symbolic positioning strategy trade range of its goods in grocery and
food sector. It is utilized by firm in relation to apparel items and by refusing utilize of cotton
grown in nations where child labour is use in cotton manufacturing.
Furthermore, along with two strategies TESCO also used price positioning, which allow
management to set great image in mind of target people who are turned into its loyal consumers.
It is applied by company in context of wide range of its own brand goods including wide screen
HD ready LCD. The main reason for employing this tactic is to gain attention of potential buyers
that are concerned with price of electronic and other items. Experiential positioning strategy
use by TESCO focus on offer beaut and health range of items to women's as target consumers.
2- Examining marketing mix, concentrating on 4ps for products & 7ps for services that TESCO
is currently applying
Marketing mix is one of the best strategic frameworks that encompasses set of tools,
strategies and methods, which a company utilized to promote their product and service in market.
Here, this model is applied in context of TESCO services and goods in two different format that
are;-
4Ps of marketing mix in context of products-
Product-
It considers as key element that contribute to maximize productivity and profitability of
companies. A product is an item that is produced, offered and sold in wide quantities by a
company. In order to increase satisfactory level of consumers, TESCO offer range of goods and
also added valuable items in its product portfolio which is quite beneficial for brand in varied
manners (Fatricia, 2017). In term of product strategy, organization may use product life cycle
model (PLC), which caters a clear image of stage that an item endures. It allows firm to deliver
quality products and add more valuable features according to buyers needs.
Price-
It is the key component of marketing mix model that help TESCO to gain attention of
consumers and retain existing for longer period. Several forms of pricing strategies are available
and used in the business world. Supermarket may use penetration pricing strategy, which is
quite beneficial for its venture growth and success within retail sector (Chen and et.al., 2019).
According to this tactic, company offers low price product to people that allow management

build loyal consumer base. It enables brand to become a market leader by selling low cost items
such as grocery, food & beverage, apparel, electronic goods etc.
Place-
It refers to methods, source and location that a company may use to sell its goods and
offer services to target buyers. TESCO in order to sell its quality products use its own outlets
where consumers may easily reach and select prefer goods. Organization uses offline and online
approaches to sell each product (Li and et.al., 2019). Through 3,968 outlets in the UK,
management delivery items to target customers, which help them to gain competitive edge and
increase profits margin. Along with home town, firm also has thousands of stores that operating
in abroad.
Promotion-
It refers to act of advertising product and service of a company in market to gain attention
of new customers. There are many forms of promotional tactics accessible that TESCO may use.
In recent time, organization used traditional sources or methods to advertise its range of items
(Petit, Velasco and Spence, 2019). It includes newspaper, templates, magazines and billboard,
through which firm's promote all the goods in market to aware new people and inform existing
customers about these. Moreover, for gaining more benefits supermarket uses social media
platforms like Twitter, Instagram etc. as digital marketing channels to generate brand awareness
and spread information about goods in market.
7Ps of marketing mix-
Here, the model is applied in context of grocery delivery services and financial services
of TESCO.
Product-
It considered a valuable source that supports in growth and excellent success of the
company, within the retail sector. In term of product, TESCO offer financial services to UK
residents and also offer grocery delivery service to its customers, which is quite beneficial for
brand as it help increase its consumer base even better than rivals (Locke, 2017). While offering
these two services, firm may focus on needs and satisfactory level of individual buyer, because it
enables them to develop further strategies accordingly and allow improving current.
Price-

It is one of the important sources that help supermarket to retain exiting customers and
gain attention of profitable buyers. TESCO used competitive pricing strategy in context of
grocery or home delivery services and financial service as well (Domański and Łabenda, 2020).
It is one of the tactics in which rivals' prices are taken into consideration. Organization may take
it into thought while setting the price of the same services that its competitors currently offer in
the UK. It allows firm to be competitive for longer period.
Place-
TESCO satisfy their customers, by offering home delivery services. Along with that, firm
in order to support needy people provide financial services. Thereforce, both activity has been
conducted through its own outlets where skilled employees are able to serve in ethical manner
without making any kind of mistakes. TESCO through its bank offer insurance service to local
people in the UK. It has 3,968 outlets in the United Kingdom where workers contribute to grow
the venture and maintain its image in the mind of customers by offering home delivery services
with an overall concentration of social distancing (Tesco store numbers in the United Kingdom
(UK) and Ireland, 2020).
Promotion-
Service promotion in the market may help to generate awareness and gain the attention of
people when offers are suitable according to them. Along with traditional marketing tools and
techniques, TESCO also used digital channels such as Facebook, Twitter, Pinterest and
Google+ to advertise grocery delivery and financial service at international level (Crane and
Meyer, 2017). Firm utilize newspaper, television and other media sources to take its influencing
message to all consumers. In the UK, organization is considered as the biggest spender in
traditional marketing within retail sector.
People-
It is one of the most important and valuable components of marketing mix, because
people in term of workers supports to serve quality and appropriate services to consumers
according to individual buyer needs and expectations. TESCO along with above sources used
current in effective manner. It recruited approximately 420,000 employees worldwide that are
capable and have competence to serve grocery delivery and offer financial services to people
(Tesco group: number of employees in the United Kingdom, 2020). Furthermore, in order to
strengthen the workforce, the firm also plans to arrange training sessions at the workplace, which

is actually very beneficial for company in term of increasing its productivity.
Processes-
It refers to set of practice and activities that a company perform to achieve set aim and
business objectives successfully. TESCO apply the current source of marketing mix by setting
guidelines that each applicant should follow and consider while working in firm. These
guidelines may relate to daily work or task. For example, management provides a guideline to
workers through which they may speed up in the context of billing services in its supermarkets
offline and online. Furthermore, firms in order to enhance employees productivity conduct
effective activity in terms of addressing grievances that help to solve applicant's issues at the
workplace.
Physical evidence-
It is defined as any material object that helps to show the existence of a venture and
company in the business world. Tesco apply this source by creating own website upon different
social media platforms. Supermarket show its physical evidence or existence prof in retail sector
via logo and brochures, which is quite common sources that many firms may use for same
purpose (Caplan, 2017). TESCO has own website where it updates information about financial
services, money transaction facilities through debit & credit card etc.
3- Assessing Tesco relationship advertising strategy with an emphasis on its current strategies
Relationship marketing is described as tactics that a company designed to foster
consumer loyalty, build a long term relations and to interact with target customers (Relationship
Marketing, 2021). The main reason for conducting this practice is to develop strong bond with
individual buyer by providing valuable offers, services, etc. that directly suited to consumers
needs and demands. TESCO apply this source or use relationship marketing concept by
promoting its latest deals for all the consumers via online. It helps company to increase sales and
productivity as well as profitability level. Management applies this strategy in earlier period,
which is quite beneficial for its business in term of gaining attention of new buyers.
However, due to increasing competitive in retail industry, company may now develop
and use effective techniques and approaches in context of relationship marketing. Currently,
TESCO provide loyalty Club-card to its customers, which is quite unique and valuable
relationship advertising strategy (Aiello and et.al., 2020). It helps management to increase the
base of loyal consumers and also support engaging each customer with the purchase of its

grocery products and other services for longer period. Through club-card, firm offer
opportunities to buyers which they may grab to earn and save more rewards while shopping. It
gives individual customer points each time when they shop at TESCO and its chosen partners.
The collected points may convert to cash vouchers for further purchasing. It is an amazing offer
that help to retain profitable target customers and gain attention of more like them.
Relationship marketing method in firm is established on appropriate service provision by
workers and inculcated acuteness to be more active in context of consumers to inspire them and
gain their trust. TESCO use overall concept by introducing new services and goods which
mainly target emerging needs of its buyers. For example, launch of TESCO bank is mainly
targeted at market penetration utilizing wide consumer base that company had already developed
over time. The above applied and adopted relationship marketing techniques, provides a lot of
benefits and opportunities to firm in term of increasing its sales level, customer network and
strengthen relationship with buyers at global level. One of the chance that supermarket may grab
by using approaches is that it enhanced consumers' loyalty towards brand, because people who
have made a direct connection with organizations tend to be quite loyal.
4- Suggestions in context of improving marketing strategy of TESCO
 TESCO has used two type of segmentation tactics which are quite useful and beneficial
for its business. It may improve its marketing strategy by considering more strategies. For
example, along with current approaches, supermarket can adopt behavioural
segmentation tactic because it enables management to identify buying behaviour of its
buyers in systematic manner (Yamoah and Acquaye, 2019). It allows company to divide
each buyer by particular behavioural patterns they show while making purchasing
decision.
 Furthermore, TESCO can select celebrity-driven positioning strategy, which is quite an
effective technique. In recent times, consumers purchase products that are promoted by
their favourite celebrity, because they have faith in them. From grocery to luxury
products, customers love familiar faces as it felt attracted towards them.
 Organization along with above suggestions can also focus on more appropriate that help
improve marketing tactic which in return gain attention of new customer and increase
sales. For instance, TESCO can provide T-shirts to all its workers, upon which the
company name can be printed. It helps to promote business all over the world easily and

also help to show its existence in retail sector. In term of physical evidence, firm can
utilize this approach that help to advertise its business and attractive people when an
applicant offer home delivery service by wearing that t-shirt.
 Moreover, supermarket in context of improving its marketing strategy can follow varied,
but effective approaches. For example, company can create a social media page where
customers service department serve its services 24x7 hours especially at night. The
technique can be implemented by working in two shifts, through that firm can offer its
services on emergency basis to needy people in the UK.
CONCLUSION
From above analysis, it has been identified that by using psychographic segmentation
strategy company has successfully understood its consumers, and their buying behaviour.
Company has increased its customers base by focusing on products quality and offering good
quantity goods that match consumer satisfactory level appropriately. Furthermore, from above
discussion, it has been concluded that by applying penetration pricing strategy, firm has become
a market leader which in return boost its position in retail sector and reputation in market. By
using tangible elements for showing physical existence in industry, firm has gained buyers trust
and allow them to fully faith upon its services and products as well. Moreover, by summing up
above analysis, it has been summarized that by providing loyalty club card to all the consumers,
supermarket has build unbreakable relationship with each buyer, which is really very essential to
build and unique thing which many firms cannot be able to do.

REFERENCES
Books and journals
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.
Caplan, P., 2017. Win‐win?: Food poverty, food aid and food surplus in the UK
today. Anthropology Today. 33(3). pp.17-22.
Chen, X. and et.al., 2019. Optimal pricing strategy for the perishable food supply
chain. International Journal of Production Research. 57(9). pp.2755-2768.
Crane, F.G. and Meyer, M.H., 2017. Teaching Entrepreneurship Students about Social Media
and New Ventures: A Primer. Journal of the Academy of Business Education. 18.
pp.372-386.
Domański, R. and Łabenda, M., 2020. Omnichannel of private label grocery products in Tesco
and Carrefour retail chains on the Polish market. Ekonomski Vjesnik. 33(1). pp.191-
202.
Fatricia, R. S., 2017. STRATEGIC ANALYSIS OF TESCO SUPERMARKET. Journal
Manajemen Terapan dan Keuangan. 6(2). pp.69-86.
Iyer, P. and et.al., 2019. Market orientation, positioning strategy and brand
performance. Industrial Marketing Management. 81. pp.16-29.
Kaleka, A. and Morgan, N. A., 2019. How marketing capabilities and current performance drive
strategic intentions in international markets. Industrial Marketing Management. 78.
pp.108-121.
Li, Y. and et.al., 2019. Omni-channel retailing: Do offline retailers benefit from online
reviews?. International Journal of Production Economics. 218. pp.43-61.
Liu, J. and et.al., 2019. Market segmentation: A multiple criteria approach combining preference
analysis and segmentation decision. Omega. 83. pp.1-13.
Locke, C., 2017. Why financial services should accelerate biometrics adoption. Biometric
Technology Today. 2017(1). pp.7-9.
Nadube, P. M. and Didia, J. U. D., 2018. Market targeting and strategic
positioning. International Journal of Marketing Research and Management. 8(1).
pp.32-45.
Paluchová, J., 2017. 11. Consumer segments in an international context. Consumer trends and
new product opportunities in the food sector. p.173.
Petit, O., Velasco, C. and Spence, C., 2019. Digital sensory marketing: Integrating new
technologies into multisensory online experience. Journal of Interactive Marketing.
45. pp.42-61.
Rosnizam, M. R. A. B. and et.al., 2020. Market Opportunities and Challenges: A Case Study of
Tesco. Journal of the Community Development in Asia. 3(2). pp.18-27.

Yamoah, F.A. and Acquaye, A., 2019. Unravelling the attitude-behaviour gap paradox for
sustainable food consumption: Insight from the UK apple market. Journal of cleaner
production. 217. pp.172-184.
Online
4 Segmentation strategies to help target consumer. 2017. [ONLINE]. Available Through:
<https://www.veracentra.com/blog/four-segmentation-strategies/>
Market Targeting. 2019. [ONLINE]. Available Through: <https://blog.hurree.co/blog/market-
targeting>
Relationship Marketing. 2021. [ONLINE]. Available Through:
<https://businessjargons.com/relationship-marketing.html>
Tesco group: number of employees in the United Kingdom. 2020. [ONLINE]. Available
Through: <https://www.statista.com/statistics/490882/tesco-group-united-kingdom-uk-
number-of-employees/>
Tesco store numbers in the United Kingdom (UK) and Ireland. 2020. [ONLINE]. Available
Through: <https://www.statista.com/statistics/490947/tesco-group-stores-united-
kingdom-uk/>