Strategic Marketing Analysis of Tesco: Market Size, Competitor Analysis, STP Analysis, and RACE Model Framework

This article provides a strategic marketing analysis of Tesco, including market size, competitor analysis, STP analysis, and RACE model framework. It also includes a marketing roll-out plan, budget assumptions, and recommendations on how Tesco can continue to engage its customers through digital channels.

Strategic Marketing

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Market analysis of Tesco.............................................................................................................1
Campaign strategy ......................................................................................................................5
Implementation of strategy in marketing mix of Tesco and RACE model framework...............6
Marketing roll- out plan...............................................................................................................7
Budget assumptions of campaign................................................................................................7
Key performance indicators ........................................................................................................8
Recommendations on how Tesco can continue to engage its customers through digital
channels........................................................................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Strategic marketing can be defined as techniques which use varied disciplines in attaining
organisational goals and gaining sustainable competitive advantage (Beirman, 2020). It is
essential for organisations to boost their sales and attract potential customers. It aids
establishments in using their available resources in optimizing manner so that they can
influences target audience. In order to better understand strategic marketing management, Tesco
company is taken. Tesco is a UK based multinational retail sector company which deals in
groceries and merchandising. Company is founded in 1919 and has its headquarter at Welwyn
City Garden, United Kingdom.
This project comprises of market size, stakeholder and competitors analysis to better
understand how to plan promotional campaign strategy. This project also encompasses
framework to plan digital campaign. It also consists of recommendations on how organisations
can continue their digital channels.
MAIN BODY
Market analysis of Tesco
Market size
This can be described as number of potential consumers that an organisation can
influence to purchase their products or avail their services (Brooksbank Subhan and Miller,
2018). Determination of market size is significant for businesses to plan their marketing
approaches in relation to target market. Market size of Tesco is very huge. It expanded its
business globally and has large number of stores in UK and other European countries. It has
acquired over 25 % of market share in UK retail industry.
Competitor analysis of Tesco
Competitor analysis is a process of identifying competitive rivalry in market by gaining
insights into their marketing and pricing strategies of their products or services (Campbell, Lowe
and Reeher, 2021). It helps the mangers of Tesco in assessing their competitor's strategy as well
as refine theirs to gain competitive advantage. Major competitors of Tesco are Sainsbury, Asda
and Morrisons. Competitor analysis of Tesco is as follows:
1

Basis of
Difference
Tesco Sainsbury Asda Morrisons
Promotional tools Tesco uses
hoardings and
television
advertisements
for promoting
their products and
services.
Managers of
Sainsbury take
help of newspaper
and leaflets for
marketing their
products.
Managers of Asda
uses sponsorship
to various events
as their
promotional tools.
Morrisons
promote their
products through
providing special
discounts and
offers to their
customers.
Pricing strategy Tesco works on
cost leadership
pricing strategy
where it reduces
its operational
expenses to be at
competitive edge.
Sainsbury
practices
competitive
pricing strategy in
its business
operations.
Asda has adopted
low price strategy
to provide
products at
affordable prices
to customers.
Morrisons uses
premium pricing
strategy and
provides quality
products to their
customers.
Number of
employees
Tesco has
310,000
employees
working in their
stores all over
UK.
Sainsbury has
employed
195,000
employees in its
organisation.
Asda has 160,000
employees
working in its
organisation.
Morrisons has
employed
132,000 UK
citizens.
Micro and macro factors affects the business of Tesco
SWOT Analysis
This framework used to analyse internal and external factors that aids in assessing
organisational strengths and weaknesses (Chandra and Sharma, 2018). It assists managers of
Tesco in planning according to varied threats and opportunities it has. SWOT analysis of Tesco
is as follows:
Strength Weakness
2

 Largest company- Tesco is a leading
retail company which established in
1919 in UK, now firm expand its
business around the world, with 7
stores operates outside the UK. There
are over 4000 stores that serves
millions of customers.
 Multiple award holder- Tesco has earn
revenue in billions which made it to
win grocer of the year award last year.
 Less operating profit- When Tesco
start earning more revenue in UK then,
managers of company decided to open
its stores in USA and Japan, but
organization failed in generating
profits. So company had to shut down
their retail stores from these 2 countries
after 9 years.
 Fraud scandal- Tesco faces scandal for
giving bribe to concerned authorities
for overrating its profit. This leads to
negative impact on the organization.
Opportunities Digitalization- Tesco can increase sales
through online channels especially at
the time of covid pandemic.
 Collaborations- Tesco can collaborate
with other small brands to reach a large
customer base.
Threats
 Brexit deal– It act as a threat to Tesco
as it has close down its operations in
European Union that lead to loss of
loyal customers as well as profits.
 High competition- Tesco faces high
competition from its rivals in retail
sector of UK.
PESTEL Analysis
It is a framework that is used by organisation to scan varied external forces of
environment that influences business operations in a positive or negative manner (Direction,
2018). Various factors of PESTLE analysis in relevance to Tesco is mentioned below: Political factors– There includes tax rate, political stability etc. In UK, political stability
supports businesses to grow and expand their operations. In relation to Tesco, due to
stable political conditions managers do not have to modify their rules on regular basis.
This led company to focused on its operations.
3

 Economic factors- These factors includes unemployment rate, rising GDP trends and
increased inflation of a country. In UK, due to global lockdown many people loses their
jobs that increases unemployment rate. This also effects on purchasing power of people.
This situation has negative impact on Tesco's business operations as this results in
decreased revenues. Social factors– UK citizens are very much fond of shopping and maintaining healthy
lifestyle. Tesco is benefited from this situation as they can target large number of people
by addressing their buying behaviours. Technological factors - UK is one of the technology advanced country. Tesco
developed its online shopping app with facility of free home delivery that help in
generating more revenues. Environmental factors - UK government took strict steps in eliminating industries waste
and pollution. Tesco has taken initiatives to reduce the carbon footprints and recycling of
plastic waste. These practices of Tesco has influence consumers to buy their products. Legal factors- UK government has implemented various employment laws to protest the
interests of employer and employee. Tesco followed all employment laws that help
company in creating a positive brand image in the eyes of customers.
Customer analysis of Tesco
STP analysis is an exercise that allows companies to determine their segmented
customers and strategies to promote their products and services (Dmitrievna, 2020). It aids
managers of Tesco in reducing their advertisement costs by only catering to a particular segment
of customers. Elements of STP analysis in relation to Tesco is as follows: Segmentation refers to segregation of consumers on the basis of their preferences and
features (Elsharkas, 2021). Tesco offers loyalty cards to its regular customers and obtain
their information through this. Company chooses to segment consumer on the basis of
their buying behaviour and preferences. Targeting refers to an exercise of targeting the most ideal consumer segment that is
profitable for businesses (Guercini, 2020). Tesco has generally chose to target cost-
conscious individuals who wants to bargain and check variety of products before making
4

a purchase. Company essentially emphasizes on cost-effectiveness practice in their
workings. Positioning is considered with setting a differentiated position of company's products and
services in consumer's mind (Hansen and Juslin, 2018). It essentially includes all the
marketing strategies and tools that an organisation use to promote their products. Tesco
has adopted functional positioning technique where it offers information about how a
specific product is useful for consumer.
Stakeholder analysis of Tesco
It is a technique where organisation collects and evaluates qualitative information of its
stakeholders in determining their interests while planning a policy for company (Johnson, 2019).
It is beneficial for managers of Tesco as it assists in manufacturing quality product while
safeguarding the varied interests of stakeholders involved. Positioning of stakeholders in
relevance to Tesco is as follows: High power, high interest- These are the stakeholders who have high interest as well as
high power in the workings of organisation. In relation to Tesco, these stakeholders
includes mangers and leaders. These are significant for establishment as they manage the
operations and take critical decisions for the betterment of company. High power, low interest- These stakeholders are keep satisfied during the course of
business operations. In context to Tesco, these includes customers and investors as they
have high power for the survival and growth of business. At the same time, they have low
interest in business workings. Low power, high interest- These stakeholders have high interest and low power in
business activities. In relevance with Tesco, these includes suppliers and trainers of
organisation. These people need to be informed while taking any critical decision,
especially in regard to them.
 Low power, low interest- These stakeholders just need to be monitored accurately during
operations. In accordance with Tesco, these stakeholders includes its supporting team.
They have low power as well as interest in the workings of company.
Campaign strategy
Key strategic marketing objectives of campaign
5

Marketing objectives are goals that are set by organisation in order to promote their
products or services to prospective buyers (Khan, Freeman and Lee, 2020). Varied key strategic
marketing objectives of promotional campaign launched by Tesco includes fulfilment of their
consumer demands effectively and efficiently. It also comprises of reducing the sale cycle by
introducing and collaborating digital channels. It also encompasses of increase brand loyalty and
value among customers.
Strategic goal for campaign
Setting goals are important for creating marketing strategy effectively. Strategic goal get
by market analysts of Tesco for making the campaign successful is to create brand awareness
and increase company's reach to prospective buyers through digital channels.
Market opportunity for Campaign
Marketing opportunity for Tesco is determined by sales team through acquiring varied
leads from markets. It aids in driving sales and close it on a successful note. Tesco has huge
marketing opportunities in digitalization world. Company can increase its sales through its online
website and virtual store.
Target audience
This aspect is identified and assessed by mangers of Tesco during STP analysis.
Generally company targets cost-conscious customers who wants a large variety of products. For
this particular digital marketing campaign, it targets customers who enjoys online shopping.
General campaign messaging
General message through marketing campaign is given by marketers of Tesco is to make
a reach to prospective buyers in order to make them understand digitalisation of shopping
patterns.
Implementation of strategy in marketing mix of Tesco and RACE model framework
Marketing mix is a combination of varied elements that makes a significant part for
preparing marketing plan (Onu and Akinlabi, 2018). Various elements of marketing mix in
relevance to Tesco is as follows: Product- Tesco provides a large number of products in order to satisfy differential needs
of consumers. Its products includes beverages, bakery items, home appliances and many
6

more. Products have huge role in implementing any strategy as plans are formed
according to company's offerings. Price- Tesco has implemented cost leadership pricing strategy where it tries to reduce its
operational expenses. It provides quality products to its consumer with affordable prices. Place- Tesco operates through its physical stores as well as from online website. It have
differentiated stores operating globally in order to reach its consumers.
 Promotion- Tesco uses varied modern and traditional methods for promoting their
products and services. It uses television, hoardings and many more promotional tools.
RACE model is a four step process that is used in planning for digital market campaign
(Pierce, 2021). It is significant for managers of Tesco as it aids in developing a marketing
approach that helps to define varied key performance indicators. In relation to Tesco RACE
model is discussed below: Reach – It is concerned with making a reach of company towards massive customer base.
Tesco uses varied online and offline techniques to reach their customers. Company can
also take help of paid online advertisement on various sites to increase traffic of
customers virtually. Act- Through this, mangers of Tesco encourage customers to interact on company
website. It can be used by Tesco for getting customer reviews about products or services.
It would help organisation in providing relevant and reliable content to customers. Convert- This is concerned with conversion of promotions into sale. This can help
mangers of Tesco in receiving the payments through an online mode.
 Engage- Retain loyal customers is also an important aspect of businesses. This helps
Tesco in retaining their loyal customers through e-mails and social media channels. It
also aids in increasing customer engagement towards brand. This practice will led to
customer satisfaction.
Marketing roll- out plan (Gantt Chart)
Gantt chart for marketing roll-out plan in relevance to Tesco is as follows:
7

8

Budget assumptions of campaign
Budget assumptions are expectations that is done by businesses to know how much
amount will spend on a particular strategy implementation. In the process of developing
successful digital marketing campaign by marketeers of Tesco, amount assumed to one million.
This budget is prepared by considering varied costs, income and expenses by the financial
department of Tesco.
Key performance indicators
These are the critical measurable values that helps in measuring company's growth and
progress towards organisational goals and objectives. Managers of Tesco has used various KPIs
such as customer, sales, revenue and many more. Tesco is one of the leading retail company in
UK. Mangers of Tesco measure their progress on the basis of generated revenue and
profitability.
Recommendations on how Tesco can continue to engage its customers through digital channels
Mangers at Tesco can increase its sales through improvised use of digital channels. It
should use varied social marketing tools to engage youth in purchasing their products. It should
take help of search engine optimization in order to optimize its website for increasing traffic.
CONCLUSION
From the above report, it has been concluded that strategic marketing benefits companies
in analysing their external environment in order to plan promotional activities effectively.
Competitor analysis assists organisations in gaining insights about competitors and develop
various strategic plan.
9

REFERENCES
Books and Journals:
Beirman D, 2020. Restoring tourism destinations in crisis: A strategic marketing approach.
Routledge.
Brooksbank R, Subhan Z and Miller S, 2018. What differentiates successful strategic marketing
among manufacturers in an emerging vs developed market?. Asia Pacific Journal of
Marketing and Logistics.
Campbell M, Lowe N and Reeher O, 2021. Strategic Marketing Proposal for Setters, CPA &
Company.
Chandra P and Sharma V, 2018 Strategic marketing prospects for developing sustainable
medicinal and aromatic plants businesses in the Indian Himalayan region. Small-Scale
Forestry. 17(4). pp.423-441.
Direction S, 2018. Raising the effectiveness of strategic marketing: Why firms must consider the
operating environment.
Dmitrievna B. M, 2020. Development of a strategic marketing system in a company.
Elsharkas F, 2021 Strategic Marketing Management Book Summary.
Guercini S, 2020 Editoriale: The Actor or the Machine? The Strategic Marketing Decision-
Maker Facing Digitalization. Micro & Macro Marketing. 29(1). pp.3-7.
Hansen E and Juslin H, 2018. Strategic marketing in the global forest industries.
Johnson A, 2019 To study the effectiveness of strategic marketing techniques of builders in long
gestation project of with special reference to kent constructions, Kaloor. International
Journal of Management, IT and Engineering. 9(2). pp.201-210.
Khan H, Freeman, S and Lee R, 2020 New product performance implications of ambidexterity in
strategic marketing foci: a case of emerging market firms. Journal of Business &
Industrial Marketing.
Onu C and Akinlabi B, 2018 The Influence of Strategic Marketing Practices on Deposit Money
Banks Profitability in Nigeria. International Journal of Managerial Studies and
Research. 6(1). pp.21-35.
Pierce D, 2021. Attracting Enrollment: How to Use Strategic Marketing to Boost
Enrollment. Community College Journal. 91(5). pp.22-27.
10