Marketing Report: Tesco's Marketing Environment Analysis and Integrated Marketing Communication

This report provides a detailed analysis of Tesco's marketing environment using SWOT, Porter's 5 forces, and SLEPTS approach. It also discusses Tesco's integrated marketing communication strategy and the integration of online and offline media.

Marketing and Data
Analytics

Table of Contents
INTRODUCTION ..........................................................................................................................3
COMPANY PROFILE ...................................................................................................................3
MARKETING ENVIRONMNET ANALYSIS..............................................................................4
Internal Environment- SWOT Analysis of TESCO....................................................................4
Strengths ................................................................................................................................4
Weaknesses.............................................................................................................................4
Opportunities..........................................................................................................................5
Threats ...................................................................................................................................5
Micro Environment-Porter's 5 forces competitive analysis........................................................5
Competitors............................................................................................................................5
Customers...............................................................................................................................6
Suppliers.................................................................................................................................6
Macro-environment Analysis- SLEPTS Approach.....................................................................7
Social......................................................................................................................................7
Legal.......................................................................................................................................7
Economical.............................................................................................................................7
Political...................................................................................................................................7
Technological.........................................................................................................................8
Sustainability .........................................................................................................................8
INTEGRATED MARKETING COMMUNICATION...................................................................8
Advertising..................................................................................................................................8
Sales promotion...........................................................................................................................9
Direct and digital marketing .......................................................................................................9
INTEGRATION OF ONLINE AND OFFLINE MEDIA ............................................................10
Clear and in-depth analysis of how the company integrates online and offline media using
relevant examples......................................................................................................................10
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Market Environment analysis refers to the analysis of internal as well as external
environment of the organization to measure the positive or negative impact on the performance
of business. To get competitive advantage in the market and to increase the market share,
business organizations need to analyse their internal as well as external environment to improve
the performance of business. They should strive to develop a large customer base through
effective marketing communication and by developing effective strategies of marketing
communication mix (Feher and Veres, 2022). The following report will cover the SWOT,
Porter's 5 Forces and macro-environmental analysis of Tesco, a UK based company. It will
explain the strategy of marketing communication mix and integrated marketing communication
followed by the company. Further, the integration of online and offline media adopted by Tesco
will also be discussed in this report.
COMPANY PROFILE
TESCO is a multinational public limited company in retail sector. It was founded in 1919
by Jack Cohen. The company is headquartered in Welwyn garden city, Hertfordshire, England,
UK. It is the third-largest retailer in the world in terms of its gross revenues. It deals in the
products such as groceries, clothing, and general merchandise such as food and home products.
The company is operating in many countries and serving worldwide with more than 4000 stores
Some of its famous brands include One stop, Jack's, Booker etc. It has some other business
divisions as well i.e. TESCO Bank, TESCO Mobile, TESCO stores etc.
The company is operating in the retail industry of UK. It has a strong brand recognition
in the global market and the largest market share. The company has a strong customer base in the
international market. It is a famous supermarket chain that is operating in 11 different countries
and is one of the largest retailer in the world. It had initiated the expansion strategy in 1970 to
open more retail stores all across England. To beat the competition with many big retailers like
Marks and Spencer, Morrisons, Asda etc., it implemented various business strategies to be a top
performer in the retail market.
By the use of big data analytics, TESCO has developed understanding of the shopping
behaviour of its large customer base across the UK through its loyalty programme. It is using the
big data of its millions of customers to build a “Health score” for each basket being sold at the

stores that facilitates in spotting the trends about the buying behaviour of people that what they
are buying and their changing behaviour according to the change in the events and seasons
throughout the year. So, in the capability Pyramid, it is on the top stage by effective
implementation of data analytics and technology at its stores (Big Data At Tesco , 2022).
MARKETING ENVIRONMNET ANALYSIS
It refers to all the internal as well as external factors that impact decisions of
organizations associated with its marketing activities. Organizations have control over the
internal factors but not on the external factors (Xi and Zhang, 2022). The market environment
analysis of TESCO is explained hereunder by using SWOT, Porter's 5 forces and SLEPTS
approach.
Internal Environment- SWOT Analysis of TESCO
This Analysis serves as a tool for the businesses to identify their internal strengths,
weaknesses and external opportunities and threats to improve the performance of business the
SWOT analysis of TESCO Plc. is explained hereunder :
Strengths
 Highest market share: TESCO is a top supermarket and grocery retailer of UK with
strong brand recognition in countries like Ireland, Hungary, Slovakia etc. with the large
market share of about 27 % (TESCO SWOT Analysis, 2022).
 Network of suppliers: As the company has a strong brand recognition in the global
market, it has an efficient network of suppliers that ensure timely delivery of products. It
is also supported by its efficient waste management system.
 Diversification: TESCO has its retail stores in more than 14 countries of Asia and
Europe. In the global market, it has more than 5000 supermarkets and grocery retail
stores.
Weaknesses
 Weak operating performance: In some of the retail stores of Tesco, it has low operational
performance in some countries like US and Japan that shows that its marketing
department is not strong enough to conduct effective research before opening up stores.

 Low-cost technique: Tesco has been using low cost techniques such as cost leadership
strategy of low pricing while offering quality products to its customers. It is creating
negative impact on the profitability of the company.
 Failure in some international markets : Some of TESCO stores could not survive well in
the markets of US and Japan. It could be because of its western culture in the products.
To expand in Asian markets, it should adopt traditional approach in its clothing and food
products (TESCO SWOT Analysis, 2022).
Opportunities
 Online shopping store: The company has a mobile app for its online customers. It should
add some features for effective home delivery of products to develop a large customer
base by providing large access to them.
 Jack store: It has opened its new discount stores Jacks that are providing further growth
opportunities to the company to compete with its low-cost competitors such as Lidl and
Aldi.
 Growth of online grocery sales : Due to the covid19 restrictions, people were restricted to
go out. So, they preferred online shopping of grocery that increased the online sales of
grocery for Tesco's grocery business. Ocado experienced more than 70% surge in online
sales. The company has opportunity to expand its grocery business.
Threats
 High Competition: TESCO has many big competitors in the retail industry such as
Walmart, Aldi, Marks & Spencer that it has to compete with. They also have strong
customer base and technological advantage that TESCO must consider to ensure effective
growth.
 Economic Crisis: Some macro environmental factors like economic factors such as
taxations, government rules and regulations, credits etc. pose threat to the performance of
the company because of its multiple stores worldwide.
Micro Environment-Porter's 5 forces competitive analysis
This analysis facilitates the company in identifying the degree of competition in the
industry it is operating in. It helps in analysing the competitive environment by assessing the

number and power of competitors, customers and suppliers that impact the profitability of
company. The competitive analysis of TESCO plc according to the porter's model is explained
here:
Competitors
 Existing Competition: It refers to the competition of company with its existing
competitors currently operating in the market. Company needs to analyse their marketing
techniques and customer base (Bell, and et.al., 2018). TESCO has powerful existing
competitors in the UK market that also follow effective advertising and marketing
techniques. It has High competitive pressure form Aldi, Lidl in terms of price wars and
with other big competitors like Marks & Spencer in terms of effective marketing
strategies and quality products.
 Entry of new Rivals: It refers to the competition from new entrants in the market. For
Tesco, the threat of new entrants in the UK supermarket retail industry is low as it
requires huge capital requirements. Tesco has its effective competencies and economies
of scale. So the new entrants will not have much access to distribution network as
compared to Tesco.
 Threat of Substitutive products of competitors: It refers to the competitive pressure from
those companies that offer substitute products to the customers that make customers
switch to another company. TESCO has less threat from substitute products as it offers a
wide range of products. It offers the products like butter margarine, fresh milk, powder
milk and condensed milk etc.
Customers
This competitive pressure includes pressure from bargaining power of the customers. The
companies that have strong customer base face low pressure from bargaining power of
customers. This tends to increase when the buyers have option to buy the same product or
service form another company (Bosah, 2022). In context with TESCO, it has high competitive
pressure from bargaining power of customers as there are many retailers in the UK market
offering the same products like Teso such as Marks & Spencer, Morrisons, Asda, Aldi, Lidle,
etc. Customers have options to buy from any other company. It makes the switching cost low for

the company by making the bargaining power of customers strong. Also, the customers have
become more aware about the product, Price and offers because of internet channels that provide
them option to buy from the opted company. So, they have high bargaining power in context
with Tesco as well.
Suppliers
It refers to the competitive pressure from bargaining power of suppliers. It tends to
increase for those companies that have low access to the supplier chain in the market. Tesco has
an efficient supplier network that includes more than 2300 suppliers across UK and in other
countries as well. TESCO has a very strong bargaining power to negotiate with the suppliers in
UK market. It faces low competitive pressure from bargaining power of the suppliers.
Macro-environment Analysis- SLEPTS Approach
It is a framework that is used to analyse and evaluate the external environment of
business by considering the positive or negative impact of social, legal, economic, political,
technological and sustainability related factors to measure their impact on the performance of the
business. The SLEPTS analysis of TESCO is explained hereunder:
Social
These factors include change in customers' preferences, behaviour and other social and
cultural changes. In context with Tesco, the beliefs and attitudes of customers impact the demand
of products that is influenced by social conditioning. Tesco is offering more organic food
products due to its health conscious customers.
Legal
These factors include the laws and regulation of the country such as consumer protection
law, health and safety law etc. applicable on the company. To avoid their negative impact,
company needs to adhere to the laws. For example, Tesco has to follow the code of practice of
Food Retailing Commission (FRC).

Economical
These factors include the impact of change in inflation rates, interest rates, disposable
income of people on the business of company. In context with Tesco, due to the decline in
disposable income of people, it has shifted itself from providing more luxurious items to
advertising the value brands to get the economic advantage.
Political
It means the impact of governmental policies such as political instability, restrictions on
trade, foreign trade policies etc. In context with Tesco, it has faced the political instability due to
Brexit and COVID-19. Also, it had taken the initiative for creating job opportunities as part of
government policies due to financial instability in world.
Technological
It refers to the impact of new technology, new innovation and use of E-commerce,
artificial intelligence in the business to get the competitive advantage (Alanzi, 2018). Tesco is
majorly affected by technological factor by getting the advantage of its newly launched mobile
app with the help of E-commerce to facilitate home delivery to the customers by developing
large access to the customers. Also, it has its own website www.tescoplc.com that it gives
constant notifications through. It has also been using a customer relationship management
system to interact and communicate with the customers through email, telephone etc. for
generating information regarding its products and for providing frequently asked questions as
well.
Sustainability
It refers to the environmental impact i.e. sustainability towards the environment (Alfon,
2018). Tesco has invested on energy efficiency projects to reduce its carbon footprints. Also, it is
making efforts to reduce waste produced in the stores. It is taking initiatives to become zero-net
deforestation in the waste of wood and paper products. It plans for sustainability programmes
can be found on its website. The company had initiated a sustainability plan a year ago i.e. Little
Helps Plan that committed to remove deforestation from Tesco's products. As part of its

sustainability plan, it has also committed to make its packaging fully recyclable and compostable
by the year 2025.
INTEGRATED MARKETING COMMUNICATION
IMC is a process that is used to integrate the marketing communication elements
customers’ analytics, social media, public relations, advertising to create brand identity by using
various media channels. It facilitates the businesses in ensuring effective customers' experience.
IMC combines traditional and new media practices by considering marketing strategies with
business development needs (Chang, Hsu and Yang, 2018).
Marketing Communication Mix
It is a combination of advertising, personal selling and public relations that company uses
to achieve its marketing goals. It uses different communication channels to deliver promotional
messages to the people. The following are the elements of marketing communication mix:
Advertising
In this, customers are provided information about the products and services through
television and radio. Public Relations form of advertising provides more convenient way of
communicating the information about the products and services. Broadcast advertising, digital
media are most common type of advertising that the company uses to communicate the features
of its products by interacting with the customers.
Sales promotion
In this, some short-term incentives are included to convince the customers for buying the
products of company. It includes rebates, discounts, paybacks, coupons etc. It also involves
providing a reason to the customers such as discount to buy the product. It is used as a marketing
tool with the increase in E-Commerce and online sales.
Direct and digital marketing
It refers to the promotion of the products and services directly with the customers without
involving any third party. For example, companies can use email messages, faxes and mobile
phones to communicate directly with the prospective customers. Digital marketing helps in
reaching the wider base of customers and generates more revenues as compared to traditional
advertising (Elango and Dhandapani, 2020).
DRIP Model in marketing communication

DRIP model is used to facilitate marketing communication planning for achieving
marketing goals. It stands for Differentiate, Reinforce, Inform and Persuade. It is used to
communicate the characteristics of products with the prospective customers and convince them
to buy the products.
 Differentiate: It states to differentiate the product by stating where it is placed in the
target market. The differentiation of product of the company can better be explained by
its marketing mix strategy that states the product, price, place and promotion strategy for
the company's product line. Tesco follows competitive pricing strategy and digital
marketing strategies to communicate about differentiation of its products.
 Reinforce: It includes convincing the customers by demonstrating the benefits of
products or by explaining them about the superiority of company's products as compared
to other companies. It includes to reinforce the brand message.
 Inform: It includes spreading awareness about the brand of company. Company
elaborates the features of products and its availability at the stores (Hardy, 2018). Tesco
uses customer management relationship system to inform its customers about the
products like availability of food and clothing through email and telephone.
 Persuade:. Companies must be able to encourage the customers to visit the website of
company for reading the essentials of the product to purchase the products of company.
For example, company can engage with the customers on social media websites to
communicate about the products and to encourage the positive customer behaviour. As
regards Tesco, for the external communication with customers, it uses its own Twitter
account. For solving the queries and taking feedbacks of customers, it communicates with
them via Facebook.
TESCO uses different forms of advertising including sales promotion and digital marketing to
promote its products. It also uses its own website to communicate the characteristics of its
products. It uses effective integrated marketing communication in promoting its wide range of
products. For direct marketing, it uses personal email addresses for customers to send
promotional offers, special offers about new products.
It also uses digital marketing and E-commerce by using its mobile app and communicate
with customers through its social media pages by posting and tweeting about the products. Its
sales promotions include buy one get one offers and discounts in its stores and online as well.

The company also uses print and media advertising to send promotional messages to existing as
well as prospective customers. By the use of these marketing tools of communication with
customers, it has developed a large customer base on a global basis by using online as well as
offline mediums of marketing communication.
INTEGRATION OF ONLINE AND OFFLINE MEDIA
It refers to combining the offline and online promotional activities and it could be best
achieved by bringing the offline promotional activities to online mediums. By the use of digital
marketing, companies can organise online marketing campaigns to advertise and promote their
products. Businesses can boost their offline marketing activities by sharing them through digital
marketing, social media pages etc.
Clear and in-depth analysis of how the company integrates online and offline media using
relevant examples
Online Marketing
Marketing through Email messages, digital marketing tools, social media marketing and
website marketing provides various advantages to the company as compared to offline marketing
campaigns. It provides international access to customers and provides cost and time effective
methods of marketing. It also involves personalisation.
Offline Marketing
It involves face-to-face experience with customers with variety of channels like
billboards, print and TV media but it involves huge costs to organise offline marketing
campaigns.
Integration
Businesses can integrate online and offline media of marketing by following ways:
 By brand Consistency, businesses can achieve integration of their online and offline
media of marketing. For example, a company can provide the customers with a leaflet
stating to access the website of company or signing up in the electronic newsletter for
which the website or news letter should mention the branding and language of the leaflet
for ensuring brand consistency. It will help in making the brand more recognizable. In
context with Tesco, it can use Design systems to ensure consistency across all channels.

 Tesco can also invite the customers to visit its E-commerce website through TV or Print
advertising. It can also promote the workshops on social media channels or by pay-per-
click advertising.
 Companies must use the same keywords on online as well as offline mediums such as in
print ads and in online marketing for successfully integrating its marketing channels
(Martin, 2018). Although Tesco uses effective digital marketing strategies but to achieve
more cost effective methods of promotion, it should integrate offline and online
marketing by organising social media campaigns for effective marketing communication
mix.
Big data analytics help the businesses in predicting the behaviour of customers and in improving
the decision making process. It also helps the companies in determining Return on investment of
its marketing efforts. It helps the companies in building large market share and in business
expansion as well. It helps in real-time decision making about the implementation of marketing
strategies (Suay-Pérez, and et.al., 2021). Tesco uses hoardings, television ads and charitable
events as its promotional activities. It also uses a loyalty card i.e. Tesco club-card to target its
customers. Through its Loyalty programme by the use of big data analytics , it has been able to
ensure customer engagement, prediction of shopping trends and analysing the behaviour and
habits of the customers. It provides the company with detailed analysis of latest trends in
customer behaviour that help in formulating marketing strategies.
Social media metrics for online marketing include customers’ engagement, their access
and communication to increase customer loyalty. In context with Tesco, it uses social media
marketing to achieve customer loyalty by solving their feedbacks and queries related to the
products of the company. Tesco also uses E marketing to promote its products through email
messages and by website access. It should integrate its online as well as offline channels to
create large access of customers internationally.
CONCLUSION
From the above discussion, it has been concluded that to get the competitive advantage in
the market and to increase economies of scale , organizations analyse their internal as well as
external environment. To improve the performance of business, they use different business
frameworks such as SWOT Analysis, SLEPTS approach and competitive analysis. They

implement effective marketing mix communication strategies to develop effective promotions
and advertising campaigns. Like in the above report, Tesco has launched a Loyalty Programme
for customer engagement by the use of big data analytics. There are various ways to advertise
the products such as Tesco uses Direct marketing by sending email for special offers about new
products. The DRIP model is also very useful in persuading the customers to buy the product by
communicating the information about the characteristics of company through advertising
campaigns or social media marketing like Tesco uses social media websites such as Twitter and
Facebook to provide information about its products to persuade the customers. Tesco has
successfully integrated its online and offline mediums of marketing. It also uses big data
analytics to predict the behaviour of customers for implementing digital marketing tactics.

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