Marketing Strategy and Firm Competitive Position: Tesco vs. Lidl

This report provides a detailed comparison of Tesco and Lidl's marketing strategies within the UK supermarket industry. It examines their backgrounds, competitive landscapes, and marketing mixes, including product, place, price, and promotion. The analysis delves into how each company positions itself in the market, with a specific focus on customer satisfaction and the impact of Lidl's entry into the UK market. The report utilizes a mixed research method approach including both primary and secondary data, with a sample size of 30-50 participants. The data collection methods included interviews and surveys. The report offers insights into the competitive dynamics between these two major players, highlighting their strengths, weaknesses, and strategic approaches to maintain or gain market share. Furthermore, the report includes a timeline and Gantt chart to visualize the research process and key milestones.

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Table of Contents
Introduction......................................................................................................................................3
Background of the Company...........................................................................................................3
Main Competitors of Tesco.............................................................................................................4
Competition with Lidl......................................................................................................................6
Marketing Mix.................................................................................................................................7
Marketing Mix of Tesco..................................................................................................................7
Marketing Mix of Lidl.....................................................................................................................9
Conclusion.....................................................................................................................................10
Timeline.........................................................................................................................................11
Table No 1: Timeline Table.......................................................................................................11
Figure No 1: Gantt chart............................................................................................................12
References......................................................................................................................................13

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Introduction
The variety and diversity of the different kind of brands within each of the retail category,
retail companies have the tendency to launch and manage different kinds of brands that have the
capability to compete against each other. Such a competitive nature of the market can be said to
be as the “market cannibalization”. According to, Aguirregabiria and Suzuki (2016) Market
cannibalization has recently seen a growth in number due to the increasing amount of retail
stores being opened in the business market. The market cannibalization is characterized by
means of competitive retail pricing, competitive analysis, strategy and the perceptions that are
related to the different kinds of the brands. The growth in the business and the growth in the
competition is one of the major characteristics of the modern global market (Amin 2015). The
increasing rate of competition, the rise in the global prices, and the innovation of the companies
along with the increasing competition in the market have made the management of the retail
organizations to be more pro active in nature. The growth in the competition clearly depends on
a number of key areas that has to be assessed during the business operations (Clapp Ross and
Zhou 2019). The pricing, products, innovations are some of them. The following report is based
on the determination of the competitive growth of Tesco in comparison to other retail stores of
the same origin. The report has detailed out the background of both the companies and has
analyzed the competition in between Tesco and Lidl by means of the marketing mix of the
companies.
Background of the Company
Tesco is a public limited multinational company that is based in Hertfordshire in England
(tesco.com 2019). The company is credited to be the third largest retailer of the globe in terms of

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the gross revenues and the ninth largest in terms of the total revenue it earns from the business
transactions. The company has its presence in seven countries across Asia and Europe and the
largest leader of groceries in the United Kingdom (tesco.com 2019). The company has annual
revenue of around pound 57,491 million and has been able to establish different types of shops
like that of Supermarkets, Hypermarkets, Superstores and convenience stores. Apart from the
likes of its own brand of stores, the management of the company owns a number of different
subsidiaries (tesco.com 2019). Some of them are Tesco Stores private Limited, Tesco Bank,
Tesco Mobile, Tesco Ireland, Jack’s, Booker group and many more similar as such.
Apart from the presence of physical stores, the management of the company has ensured
that they stay updated with the establishment of online stores like Tesco.com Dark Stores where
the company fulfills out all the online orders of the customers (tesco.com 2019). The online
orders of groceries and other items can either be delivered to one’s house or can be collected by
the one who places the order with the shop. Apart from this the company also operates a home
shopping service in the United Kingdom through the Tesco.com website (tesco.com 2019). The
company is the only retail store which has been able to garner profits from the online sale of the
groceries. The management of the company, in order to ensure the dominance in the retail
market uses a customer loyalty scheme in order to stay loyal to the customers and also to ensure
commitment from the customers (tesco.com 2019). The following scheme helps to establish a
strong base for the company and plays a pivotal role in the success of the organization in the
market.

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Main Competitors of Tesco
The major competitors of TESCO in UK market are Lidl, ASDA, Sainsbury’s and
Morrisons. Sainsbury and Morrison’s were the main two competitors of Tesco bit in recent times
the German giants Aldi and Lidl have provided a huge competition to the company. The main
competition of the company is with the convenience stores as these stores have been gaining
huge popularity in the retail sector of the United Kingdom’s. According to the study of Zheng
(2016) the highly fragmented convenience stores market of the company leads to intense
competition in the business market. However, the management of the company has been able to
hold a strong share of the company in the market. Currently the company holds around 28.4% of
the market share. The analysts of market share have however predicted a fall in the market share
of the company in the recent times as the company will be facing a huge downfall due to the
innovative approaches of the management of Lidl and Aldi. Sainsbury’s is the third largest
operating retailer in the UK and with 1304 different locations all across the country, the company
has recorded highest footfall in the recent years (Teller Wood and Floh 2016). Apart from the
highest footfall, the company also enjoys the reputation of providing top quality groceries to the
customers.
Morrison’s operates around 514 stores and 150 different convenient stores. The
management of Morrison’s participates in food production and is one of the few sellers who
produce their own grocery. Ensuring the quality of the products again favors Morsion’s and it
has seen a decent rise of market share in the recent past. Aldi on the other hand is a supermarket
chain from Germany and has 10,000 different stores across 18 different countries. The company
is basically a niche seller and provides attractive niche discounts to its selected range of
customers. Lidl, also a German store operates around 10,000 stores in 28 different countries and

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is basically a discount grocer. The company mainly focuses on the customer satisfaction and
ensures a proper customer experience. All these competitors with their unique selling proposition
lead to a huge competition in the retail market.
Competition with Lidl
Customer Satisfaction is one of the many ways by which the management of Tesco has
gained its reputation. Satisfying the customers is one of the major things by which the
organization is able to meet the demands of the customers. Neglecting the customers and their
demand can lead to failure. The management of Tesco unlike the other retail stores of the United
Kingdom has given strong emphasis on the choice and demands of the customers. The emphasis
on the choice and demand of the customers has been important in the success of the organization
in the UK retail market (Teller Wood and Floh 2016). The customer loyalty scheme, Clubcard
has been a major success for the company. The Clubcard has provided the opportunity to the
organization to serve the customers in a better and efficient manner (tesco.com 2019). The
Clubcard provided the opportunity to Tesco to make the life of the customers better and also
provide them a reason to again come back in the stores. Apart from this then decision to reduce
the prices and offer discounts on goods has also been a large help to the customers.
Lidl’s entry into the United Kingdom market has been one of the major retail market
changes happening in the United Kingdom in the recent past. Different kinds of surveys have
revealed that most of the people who have once shopped in Lidl stores have started coming to the
stores on a regular basis (lidl.co.uk 2019). There has been a sprout in younger shoppers aged in
between 18 to 34. Thus the better and innovative niche strategies have been helping the
management of Lidl to expand their presence in United Kingdom. Limited Time special

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purchases and similar promotions have been helpful for the success of the organization in the
market. The presence of large number of small convenience stores has been another major
milestone for the organization.
Marketing Mix
Marketing Mix is all about putting the right product or a combination in a proper place, at
the perfect time and according to the perfect price that is fit for the market. Each and every
aspect of the business plan needs to be known in the best possible manner in order to implement
the marketing mix in the successful manner.
Marketing Mix of Tesco
According to, Teller Alexander and Floh (2016)The Marketing Mix of Tesco analyzes
the brand or company and covers the 4P’s of the marketing strategy of the company. The 4P’s of
marketing strategy includes Price, place, promotion and Produict. Each of the different elements
has its own characteristics in the marketing mix.
Product:
Tesco has a huge number of different types of products that are offered to the customers.
The product offering is vast so as to cater to the needs and the preference of a large number of
different customers (Richards Hamilton and Yonezawa 2018). The products that the management
of Tesco offers to the people are Food, pet care products, home and garden products, toys,
grocery and many more as such. Apart from this the company has its own brand of products that
includes Tesco kipa, Tesco loves Baby, Choice, Tesco Value and many more similar as such.

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Place:
As said earlier, the company owns more than 7000 stores in 11 different countries where
it carries out its business operation. The company has a number of stores that includes the likes
of the Tesco Superstores, Tesco Extra, Tesco Express and convenience stores. Superstores of
Tesco are large markets which sell groceries and a large range of non range items. The metro
stores of the company are stores with 1000 square meter space and are present in almost every
towns and cities in the United Kingdom (tesco.com 2019). The extra stores are hyper stores
which sells wide variety of products under one roof. However, the convenience stores of the
company have been recently in news due to the steady profit it makes. The company also uses
online channels to reach out to the customers and sell their products.
Price:
The management of the company has taken the call on price after a wide range of
discussions and meetings. The management has implemented the cost leadership in the pricing
strategy of the business. The aim of the company is to provide goods of the highest quality while
at the same time maintaining quality. The company is in constant touch with its suppliers and
works with them jointly in order to, maintain a steady supply chain and accordingly reduce the
prices of the goods.
Promotion:
The management of the company uses television, newspapers and other kinds of media
outlets to send their message to the customers (tesco.com 2019). The company arranges for
charitable events, television advertisement and charitable events as promotional channels. The
“Tesco Clubcard” allows the company to segment and target the customers. The holders of the

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card receive points with every buy. These points are then redeemed at any point of time from the
point of sales of the stores.
Marketing Mix of Lidl
As the report is based on the comparison of the competitive nature of Tesco against Lidl,
therefore the marketing mix of Lidl needs to be analyzed to get the clear picture of the marketing
strategy of both the companies.
Product:
The management of Lidl offers fresh fruit and vegetable, meat, fish bakery, frozen food,
health drinks, health food and many more as such. The unique fact of Lidl is that the
management of the business organization receives its supplies from the British farmers and
suppliers. 70% of the supplies are supplied by the local farmers and suppliers (lidl.co.uk 2019).
This helps to boost the economy of the country and also helps in the reduction of the operating
cost of the stores. Apart from this, the company also sells its exclusive brand of products that
includes fresh fruits and vegetables. The company received Quality Food Awards in the year
2016 for six of its food brands and Mother & Baby Awards for its TOUJOURS Maxi Nappies
Size 4. One of the most important part about the product strategy of the company is to offer
regular world food themes. This is quite unique for the company.
Price:
Lidl being a discount giver, it believes in focusing on penetrative pricing. The following
pricing strategy refers to low cost but high sales. The company maintains it profit as because it

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sells most of the products of private level (lidl.co.uk 2019). The following strategy helps to
eliminate the presence of any kind of middlemen and thus reduces the cost of the products. Other
factors include but not confined to Lidl having a limited number of employees in each store and
selling fast moving products.
Place:
The place often refers to the distribution channels of the company as the company has
over 700 stores all across United Kingdom and a total of more than 10000 stores all across the
globe. The huge number of stores and its use of local products and supporting the local economy
have resulted in the success of the business in the vast global markets.
Promotion:
The company runs integrated promotional campaigns throughout the year (lidl.co.uk
2019). It has developed an application called Lidl app that is based on “I-phone “and android
platforms to help the customers explore all the different kinds of the current and upcoming
offers.
Conclusion
The analysis of the total report has provided a clear view on both the strategies of Tesco
and Lidl. It is quite clear that Lidl has been in the fray since a few years to establish itself as a
reputed brand like that of Tesco. The different innovative strategies that have been adapted by
the management of Lidl have been a supporter of the following fact. However, Tesco being one
of the oldest retailers of United Kingdom has established a loyalty strategy in order to gain the
trust of the customers and retain them for the future. However we can clearly conclude that

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Tesco has been and will be a powerful source of revenue contributor to the economy of United
Kingdom. The large market share and the presence of loyalty schemes make Tesco unique and
superior among others like Lidl. Apart from this the penetrative pricing strategy to attract
customers is not favorable for a certain number of customers who has the belief that low prices
can hamper quality. Lastly the huge number of products and large number of other stores and
subsidiaries makes Tesco the winner in this case.
Timeline
Task Name Duration Start Finish
Project1 155 days Tue 1/22/19 Wed
11/27/19
Identification of the
Research Issue
24 days Tue 1/22/19 Tue
5/28/19
Literature Review 31 days Wed 5/29/19 Wed
7/10/19
Data Gathering 32 days Thu 7/11/19 Fri 8/23/19
Data Analysis 62 days Mon 8/26/19 Tue
11/19/19
Final Submission of
the Report
6 days Wed
11/20/19
Wed
11/27/19
Table No 1: Timeline Table
Source: (As created by the Author)

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Figure No 1: Gantt chart
Source: (As Created by the Author)