Principles and Practice of Marketing Final Assessment - Tesco

Principles and Practice of
Marketing Final Assessment -
Tesco

Table of Contents
INTRODUCTION...........................................................................................................................3
Background of TESCO....................................................................................................................3
TASK 1............................................................................................................................................4
SOSTAC Model to marketing strategy used by supermarket.....................................................4
TASK 2............................................................................................................................................9
Evaluation needs to be undertaken of effectiveness of the retailer’s current SOSTAC strategy
currently used in the UK.............................................................................................................9
TASK 3..........................................................................................................................................10
Current marketing strategy used by the supermarket in the UK, and evaluated in task two,
could be implemented in the international market in task one..................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Marketing is defined as business process of creating effective relationships with
consumers and satisfying them. It is activity which is set of institutions and procedures for
communicating, exchanging, creating and delivering values for partners, customers, society and
clients. This can be done in different ways for attracting consumers and creating awareness for
products with help of advertising, offers, promotions and offers (Buhler and Nufer, 2012). The
given assignment is based on Tesco which was founded in England, United Kingdom in 1919. It
is British multinational supermarket that provides variety of products such as books, electronics,
clothing, petrol, telecom. There are more than 460000 employees working in organisation in
6569 stores globally. This report highlights SOSTAC model which is used by respective firm in
new country. With help of this model, Tesco can know about different elements applied to
business. SOSTAC strategy is evaluated and used in UK market.
Background of TESCO
UK industry is covered by many retailers and Tesco is one of the leading company which
has covered maximum market share. The company also focus on building a market in food
industry too. The company was founded in 1919 when it started diversifying the market product
suggested by jack Cohen, as planning to add groceries from a stall with in East End market of
Brixton which is in London. The beginning of the decision has come-up with a great
achievement as Mr. Cohen made a profit £1 from sales of £4. This gives a big motivation in the
mind of every individual working with company, however Tesco started maintaining a stability
in market and within five years, it started visible in market. In the year 1924, Mr. cohen took an
initiative to bought a shipment of tea from Mr. T.E. Stockwell. It works so well that after getting
an achievement in market, it combine later with initials letters to form Tesco and Mr. Cohen
opened a flagship Tesco store in Burn Oak, North London. The day was coming when Tesco was
going to fly in sky as it covers a lot of market share by providing various product in market. In
1930's the demand of Tesco product gets high and Mr. Cohen has decided to build a headquarter
warehouse within the north London, and within 1932 Tesco become a private limited company
(PLC). The demand and supply started increasing a goodwill in market, but later in 1974 a big
challenge come-up and Tesco stores (Holdings) Ltd has floated to the top of the stock market
with a share price of 25p. The downfall in market gives an entire team a big shock. Department

of non-food merchandise such as clothing and electrical goods add-up in market which gives
revenue to company with an appropriate manner. Tesco has cover the entire team of 326, 000
employees and operating around 2,318 stores within the UK, Europe and Asia. Tesco is based in
Cheshunt which is a town in the Borough of Broxbourn. The company works so well that it
recorded revenue of £42,641 million during the year of 2007, and raise 8.1% over 2006 which
gives more motivation to all employees working with company. They also made a profit £2,648
million during the financial year of 2007, and raise 16.1% over 2006.
Expanding business is a part of success and business like Tesco took an initiative and
entered in South Korea in year 1999 and form a joint venture with a well established local
retailer-Samsung. Business entering in other country always try to take a help of established
company, which tesco adopted and that joint venture helped company acquire in-depth
knowledge of the market. Location which focus a market segment as more customer attraction is
the aim of every business, so Samsung helped Tesco in acquiring the best store locations. The
company has started operating in country under well established 'Home Plus' banner. Taste and
preferences are strategies which Tesco adopted and localized all its stored according to the
consumer's convenience which favour all taste and preferences in market.
TASK 1
SOSTAC Model to marketing strategy used by supermarket
SOSTAC is marketing model which was developed in 1990s by PR Smith. It has focused
on six fundamental elements such as situation, objectives, strategy, tactics, action and control.
This can be applied in various commercial situations as it focus on implementing various stages
of process and on marketing communications. Structure of SOSTAC is very simple which builds
on basis of in-depth situation analysis that make decisions about strategy and tactics. This helps
in making better decision making and plans for business (SOSTAC Model Of Marketing – step
by step, 2018). This model is used by Tesco as it is planning to expand business in other country
that is North Korea. It is explained below:
Situation Analysis- Where are we now
This step includes various marketplace SWOT, competitor analysis, market trends,
customer analysis, competencies analysis and performance or results. As per scenario given in
report, macro environment is used for situation analysis.

PESTLE Analysis- PESTLE or PESTEL analysis is tool that is used for monitoring and
analysis of macro environmental factors which can impact performance of organisation. This
tool is used for environmental scanning components of strategic management. Such framework
can be used by firm when entering into foreign market or new business. As Tesco is planning to
expand market in North Korea so it need to analyse macro environment of respective country.
According to situation arise in enterprise, expansion can be done. There are six elements of this
model which are described below:
Political Factors- This determine impact of government and its policy on business or
organisation. It includes trade policy, taxation policy, political policy and stability. Due to
political condition of North Korea, economy of China is growing at pace. In 2010 it is rumoured
that North Korea has done corruption due to which Chinese investors has faced problems. It is
open market for all investor who wants to invest in that country. Per capita of North Korea is
$22,000 which is great opportunity for company like Tesco to expand their business. For making
money, North Korea import consumer goods from China so by expanding business of Tesco can
lead higher profits (Inside North Korea's not so isolated, free-enterprise economy, 2019)
Economic Factors- These are factors which can impact economy or performance of
organisation and its profitability. It includes following: interest rate, foreign exchange rate,
employment or unemployment rate. The North Korea's gross national income is US$ 33.8 billion
in 2016. This country has to depend upon China for their business so here Tesco has an
opportunity to expand their market and business. The people of respective country want more
opportunities and economic progress (How Kim Jong Un wants to develop his economy and
secure his regime, 2019). Products that are provided by China are not satisfying consumer so
Tesco can easily expand business and enhance profits.
Social Factors- Such factors focus on emerging trends and social environment. This
helps marketers to understand need, want and demand of consumers. This factors includes
education levels, attitude, values, beliefs, changes in lifestyle, family demographic. The people
of North Korea are very trendy and prefer latest fashionable products. It import products from
China as Tesco deals in clothing segment which can easily fulfils need and demand of people.
The country want to upgrade and improve standard of individuals living in North Korea. Social
values and culture of North Korea is very high because of people.

Technological Factors- The development and rate of technological innovation which can
affect industry or market. Such factors includes changes in digital technology, automation,
research and development. North Korea is very rich in technology which uses updated
technology for doing business. In order to expand business by Tesco in North Korea need to
upgrade their technology and manufacturing process for fulfilling needs and demand of
consumers. Before entering into that market, it should study about technology used by China as
it is neighbouring countries who provide goods and services to it.
Environmental Factors- The factors that is related to influence surrounding environment
and impact of ecological aspects. This factors includes recycling procedure, climate, waste
disposal, carbon footprints and sustainability (French and Russell-Bennett, 2015). Due to rise in
CSR importance, this element is more significant. North Korea want safe and clean environment
for survival. As they has high CSR for society. In order to expand business by Tesco, it need to
follow environmental laws for survival. Thus, they only prefer those organisation who does not
pollute their environment and make it safe and clean.
Legal Factors- In order to run business in any country, it is very important for Tesco to
know what is legal and illegal. This factors are: employment legislation, health and safety,
consumer law and internation law, trade restrictions and regulations (Ennew, Waite and Waite,
2013). While expanding business by Tesco, it need to follow all legal laws and regulations.
While manufacturing goods in North Korea, staff should be provided with safe and health
environment in order to avoid harm. All the laws should be implemented in organisation for
better outcomes.
Objectives- Where do we want to get to
This is second planning that includes mission, vision, KPI, objectives, 5s. Before setting
up business in any country, it is very important for Tesco to identify objectives. This provide
guideline to organisation to work in effective manner. The objectives set by Tesco are as follows:
Mission- The mission statement of Tesco is “We make what matters, better together”.
Vision- Vision of Tesco has five elements which are as follows: first is modern, full and
innovative ideas, second is needed and wanted around world, third is growing business with
opportunities, fourth is winners applying skills globally and fifth is earning trust, inspiring and
loyalty from colleagues, customers and communities.

Objectives- The main objectives is to lead retail supermarket and providing high quality
goods and services at low cost that are cheaper than competitors.
Strategy- How are we going to get there-Big picture
It is most important step that define segmentation, targeting and positioning. Before
entering into new market, it is necessary to identify STP for goods and services so that their
objectives can be achieved (Fletcher and et. al., 2017). The STP of Tesco for North Korea are
described below:
Segmentation- It means identifying different groups of consumers on various aspects.
Segmentation can be done on basis of following factors such as demographic, geographic,
psycho-graphic and behavioural. On basis of such factors, segmentation can be done by Tesco.
Targeting- It is second strategy in which selecting market is provided with goods and
services. The segmented market is targeted by Tesco to provide goods and services. Here, on
basis of geographic, it has targeted North Korea market that is urban and rural. On basis of
demographic, it has focused all age group of people that is male and female for providing goods
and services (Hall, 2014). It has targeted all lower, middle and upper group of people such as
professional, students, employees. While targeting particular individual, it is important to know
about lifestyle and personality of consumer so accordingly goods are provided. Similarly, on
basis of behavioural also market should be targeted that is occasion, benefits, user status and
attitude. There are many user who purchase on occasion basis, taking cost advantage. Thus, in
this way targeting should be done by Tesco after analysing each and every situation.
Positioning- It is last step where consumers has perception of products in their minds.
Positioning can be done by Tesco on basis of various communication channels on mind of
consumers. As it is using personal selling and advertising tools such as influencing sales person,
face to face communication, newspaper, internet, banner, social media.
Tactics- How are we going to get there- Detail
It is regarded as fourth step of planning that identify communication tools used for
message to consumers. There are various tactics which can be used by Tesco for expanding their
market in North Korea for increasing their shares and profits. With aid of marketing mix, Tesco
has used three tactics for their new market which are described below:
Price- Tesco keep prices of their products low by maintaining quality of products. For
getting cost advantages to its consumers, it uses measures such as economies of scale to keep

them happy (Horner and Swarbrooke, 2012). It allow to use club card system for their consumers
for collecting points for purchase which can be converted to money at later stage. This can serve
price promotional strategy to provide loyal consumer with offers and discounts. As it uses low
pricing strategy for their individual to provide them with all benefits. It can lead high profits and
revenue.
Product- Tesco provide variety of products which includes clothing, financial service,
electronics, accessories, footwear and others. As it can expand product line in every sectors as
well as online also for their consumers. It is offering more than 40,000 product line and free
grocery delivery and music downloads for all users (Housden and Thomas, 2012). Within every
category, Tesco can provide different choice ranging from regional produce, brand, type,
international cuisine in food and others (Marketing mix of Tesco – Tesco Marketing mix, 2019).
Place- Tesco has more than 6,900+ stores in 11 countries. There are different types of
stores such as Tesco metro, Tesco extra, Tesco Express and Tesco Superstore. This also uses
online and offline goods for their consumers. As it is planning to expand market in North Korea
so it can open stores and offline to delivery products and services.
Actions- Who is going to do what and when?
This identify what actions are required to be taken by organisation for effective outcome.
After conducting all above plan, actions required to be taken by Tesco for expanding business in
North Korea. They can add new products and services and selling to their existing and loyal
consumers. North Korea people like new and innovative product for using, if Tesco expand
business with new philosophy then it can earn maximum profits and earn revenues. They can
improve their communication, promotional and manufacturing tools for maximum productivity.
Control- How can we control, measure, and develop process
This means keeping track of all above steps and identify responsibility, resources,
performance, review of measurements and action on variance. It is last step of planning which
keeps track of all steps (Jobber and Ellis-Chadwick, 2012). Each and every activity performed by
Tesco need to be review and if required correction actions should be provided. There should be
maximum optimum utilisation of resources. Measurement helps in taking better decision
regarding goods and services.

TASK 2
Evaluation needs to be undertaken of effectiveness of the retailer’s current SOSTAC strategy
currently used in the UK
After analysing SOSTAC strategy currently used in UK market are as differentiation and
market penetration which are described below:
Differentiation Strategy
It is the strategy which aims to distinguish goods, service, from other competitors
existing in market. This provide development of products, service which is unique for consumers
in terms of features, quality, brand image, design, customer service (Lees-Marshment, 2014).
When Tesco came in market for first time, it sell their goods to other companies. Gradually, it
has started selling their own brand name product to their consumers online and offline mode.
This is called differentiation strategy. With change in time and situation, it has changed their
mind and started earning maximum profits and revenue. When organisation adopt such strategy,
it become unique in market. Here, Tesco has chosen dimension to bring differentiation in goods
and services. Differentiation can be done on basis of product, pricing, place and promotion to
increase their consumers. After analysing SOSTAC model, strategy used by Tesco in terms of
segmentation, targeting and positioning. Tesco has following measures in terms of differentiation
strategy which are product innovation, increasing product performance, providing goods and
services as per requirement of consumers and creation of brand image by providing quality
services and consumer satisfaction. With the change in time, Tesco has changed it way of
manufacturing process, way of serving and others. When such strategy is implemented in Tesco,
then prices of products are low as it successfully implement then prices can be increase and there
is maximum earning of profits and revenue. Apart from above, other ways which are adopted by
Tesco for differentiating their products are in terms of innovation, price differentiation,
packaging, point of consumer interaction, product level differentiation, branding, service pre
sales and post sale, user convenience and offering variety of product.
Market Penetration Strategy
The next SOSTAC strategy used by UK market is Market penetration. It is the strategy in
which organisation sell existing product in existing market in order to increase share value. Here,
Tesco has plan to increase market penetration of North Korea so it is important to implement
such tactics and strategies that can increase sales and decrease competitors. For increasing sales

through this strategy, it has to adjust prices (Lefebvre, 2012). The increase in promotion can
increase market penetration. For example, the advertising tools and techniques used by Tesco
automatically enhance brand awareness in market. There are various distribution channels which
are used by Tesco for increasing sales and profits through email marketing, telemarketing. Also
products quality and packaging need to be improved by respective organisation in UK to capture
large market and consumers. Through help of this strategy, when demand is increasing, firm can
save money on creation of product costs because of greater volume of production. This type of
strategy provide faster growth to firm along with economic advantage.
The above two strategy such as differentiation and market penetration are used by UK
market for increasing their market share and profit. After analysing SOSTAC model, it has found
that these two strategy are more important for retail market.
TASK 3
Current marketing strategy used by the supermarket in the UK, and evaluated in task two, could
be implemented in the international market in task one
The two strategy which has been evaluated in task two are diversification and market
penetration. As Tesco is planning to expand their business in North Korea so it could
implemented such strategy which are discussed below:
Implementation of Diversification Strategy
Tesco already has large variety of goods and services which is providing to its
consumers. Through diversification, Tesco can easily provide different product line to North
Korea people in order to fulfils their needs and demand. The people of that country are very
trendy and prefer fashionable products. Thus assist in trapping of large number of market by
providing high quality goods and services to all consumers (Russell-Bennett, Wood and Previte,
2013). The money can be spend in research and development for developing technological
capabilities. When this strategy is implemented in organisation, then they are bound to gain
technological capability of company. Large production can be done by organisation through use
of latest technology which leads to maximum profits and revenue. The most factors which is
faced by each and every organisation is risk which can be reduced by implementing
diversification strategy for effective outcome. As there are large category of products which can

be sold to consumer and in case if individual does not like one product can move to another and
organisation can earn profit from another.
Implementation of Market Penetration Strategy
Tesco can easily implement market penetration strategy for their business in North
Korea. As this strategy exist in existing market with existing products (Salvo, 2015). Tesco has
wide range of products and services which is offered online and offline for better outcome. This
can provide lots of benefits to organisation in terms of earning profits, revenues, goodwill and
brand value. The firm always chose those strategy which can provide long term benefits with
minimum cost. Adopting of such strategy requires low cost as market is already known with
same category of products. This can lead opportunities to know more about taste and preference
of consumers and serving accordingly. This creates barriers to entry for other organisation
because of huge market and products (Smith, 2014).
CONCLUSION
From above report, it can be concluded that marketing tools and practices help
organisation to achieve goal and objectives. SOSTAC model has been used by firm for
expansion of market in other country. As this model assist in providing various situation,
objectives, strategy, tactics, action and control of planning process. It is very necessary to
analyse situation with macro environment and tactics with marketing mix tool. Currently, UK
market is following diversification and market penetration strategy for increasing their share,
profits and growth. This could be easily implemented in other country where organisation want
to expand their market which could provide various benefits.

REFERENCES
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Online
SOSTAC Model Of Marketing – step by step. 2018. [Online]. Available through:
<http://corporateskills.co.uk/sostac-model-marketing/>.
Inside North Korea's not so isolated, free-enterprise economy. 2019 .[Online]. Available
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How Kim Jong Un wants to develop his economy and secure his regime. 2019. [Online].
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Marketing mix of Tesco – Tesco Marketing mix. 2019. [Online]. Available through:
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