Marketing Report for Tesco: Environmental Analysis, STP Analysis and Marketing Mix

This report provides an analysis of Tesco's marketing strategy, including environmental analysis, STP analysis, and marketing mix. It examines the impact of environmental factors on Tesco's operations, and provides recommendations to improve the marketing strategy. The report also includes an in-depth analysis of Tesco's STP strategy and marketing mix.

Marketing
Management

Table of Contents
INTRODUCTION ..........................................................................................................................1
MAIN BODY...................................................................................................................................1
Application of Environmental Analysis tools and its impact ...............................................1
Application of STP analysis ..................................................................................................7
Examination of the Marketing Mix........................................................................................8
Recommendations to improve marketing strategy ..............................................................11
CONCLUSION..............................................................................................................................12
REFERENCES .............................................................................................................................14

INTRODUCTION
Marketing management includes the execution of conception, planning process,
promotion, pricing and distribution of goods in order to satisfy organizational individuals and
goals. It is basically a process of planning, controlling and decision making of a organisation in
terms of marketing concept and somewhere within the marketing system. Marketing is basically
a business function which is involved in controlling the demand in the marketplace. It basically
focuses on creating a demand for goods in the organization. A marketing plan involves
marketing efforts of a organisation which is usually for one year. It involves marketing,
advertisement and planned strategies. In this report, Tesco is chosen as the selected company. It
is a UK based company founded in 1919 with its headquarters situated in Welwyn Garden City,
United Kingdom. In the present scenario, the company is planning to introduce new range of
baby care products. This report includes how company is analysing its external environment in
order to determine threats and opportunities that effect its operations. Moreover it involves STP
strategy. Moreover, it involves marketing mix of the organisation and suggestions to modify its
marketing mix.
MAIN BODY
Application of Environmental Analysis tools and its impact
It involves the process that examines all the components which has an influence on the
performance of the company. The information gathered from Environmental analysis can be used
in order to assess operating environment and set up organizational goals. The process of
environment analysis helps managers to be well aware of the linkage between environment and
organisation and keeping them well informed and alert. The general environment forces have a
major impact on business organizations. It has the ability to shape the task environment and
company's abilities to export goods and resource needed materials. They also can affect
important aspects of their business which involves customer's willingness to purchase their
product(Al Badi, 2019).
Swot Analysis of Tesco :
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It includes various techniques in order to assist the company to determine its strengths,
weakness, opportunity and risks in relation to business competition and project planning. It is
also known as situational analysis. In context to company, it uses swot analysis to determine the
weakness and strengths for the purpose to develop various strategies and create its marketing
plan(Arora and Narula, 2018).
Strengths
 The company has strong customer base
as compare to its rivals.
 The company has a strong brand image
in the market.
 The company holds a 26% growth and
13% share in countries such as Europe
and Asia.
Weakness
 The organisation's sales increases only
when it sells low price products in the
market.
 Tesco's main weakness is that it is
substantially depended upon the Great
Britain for its sales.
Opportunities
 The company includes a scale effect in
its home brand line and carries a high
degree of purchasing capacity.
 The organisation's operations in
Europe and Asia results in increase in
sales.
Threats
 Increase in prices of raw material can
lead to crashing general profit
boudaries.
 The organisation's performance can be
highly stricken by its consumer's
thinking and mentality which can turn
into a threat for the organisation.
Pestle Analysis:
It includes crucial part of the marketing plan and involves various strategies for
marketing and customer powerfulness. In order to understand the external environment factors,
Pestle Analysis is used which involves economic, political, technology, social and legal factors.
Pestle analysis is basically a framework used by marketers in order to analyse and monitor
various marketing environment factors that have a major impact on organisation, company and
industry(Banerjee, 2017).
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Political Factors :
It basically involves how the government intervenes in the economy. Political factors
creates a strong influence on profitability and sustainability in long run. Its presence in
international stage results in increasing the company's sensitivity in order to deal with political
environment. Instability and growing tensions can affect the industry growth and results in
limiting the opportunities for growth. It involves factors such as tax policy, environment law,
labour law and other restrictions related to trade. In context to the company, it is highly affected
by various law-makers and political conditions which also involves European Union.
Economic Factors:
Economic elements involves factors such as profit, price, demand and supply factors.
Slowdown in economic environment can affect the business operation which can turn into the
risk factors for the company. It involves those factors which affect the economy which involves
governmental activities, tax rates, interest rates, policies and wages. All these economic factors
are not directly in relation with organisations but has a major influence on its investment value in
future(Eryigit, 2017). In context to TESCO, the economic factors are a reason of concern as it
affects the demand, profits, prices and cost. One of the crucial influential factors involves
increasing rate of unemployment resulting in decrease in demand for goods.
Social Factors:
The social factors involve changes in society and culture which plays a very important
role in any organization. Due to various social changes and trends, the business operations are
affected. In order to handle these changes, the company need to be well aware of religious beliefs
and value of people living in various regions.It involves the range of elements that have their
roots in the social environment. In context to Tesco, its operations in Malaysia have disposed to
one stop shopping which is connected with different social changes. To deal with these changes,
the organisation has enhanced the quantity of non food items. Various other factors involves
increase of women-workers, ageing of the population that has affected company's operations.
Technology Factors :
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There is a major impact of technological factors on an organization. Innovation and
advancement of new technology helps to bring success and development to the organization. It
involves communication and information resources, e-commerce technologies, production,
logistics and production technologies. In context to Tesco, the various technological factors acts
as a major external component that has a major consequence on evolution of company's products.
The development and innovation of new technologies benefits both the customers and company.
In order to enhance operations, the stores of Tesco utilizes various technologies which involves
intelligent scale, electronic shelf labelling, Electronic point of sale etc(Farooq, and Raju, 2019).
Environmental Factors :
It involves factors such as population density, food, pollutants, sound and light. It
includes all those factors that have a major impact on living organisms. In context to Tesco,
managers need to recognise its responsibility towards society. The company in order to fulfil
these social obligations have started following various strategies developed by government
which involves development of new strategies for consumption and manufacture to reduce waste.
Legal Factors:
The operations of the company are directly influenced by government legislatives and
policies. In order to survive in a new consumer market, it’s important to study the legal
environment. The company gives importance to address the issues related to environmental
factors. The environmental factors affect the business operations. It involves factors that
determine what a business organisation can do or cannot do. It involves various political factors.
Both the political and legal factors intersect when government bodies introduces new legislature
and policies that affects the business operations. In context to Tesco, there are various
government policies which have a direct influence on company's performance. In addition to
that, marketplace dominance can lead to decrease in power intake of buyers and several laws
enforced on approach to raw materials.
Porter's Five forces analysis
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It is a tool which is used in order to analyse a organisation's competing surroundings. It
involves power and organization's competing rivals, suppliers, potentiality of consumers,
substitute goods, that basically affects a organisation's earnings.
In context to the company, it focuses on analysing the consequence of the five forces which
involves competitive rivalry, threat of substitutes, buyer power and supplier power with warning
of new entrants on organisation which functions in the market business enterprise(Hunt, 2020).
Bargaining power of customers or buyers:
The organisation serves a million of customers every week through its online and
physical stores. In context to Tesco, the negotiation power of consumers is low as they are not
unionised as compare to its competitors such as Sainsbury and Asda. However, some experts
debated that the purchasing power of the grocery consumers is high in UK as these years there
are various competitive merchandising which involves Aldi, Poundland and Lidl who are
contend for the identical consumers and as compare to the organisation “Tesco”, few of them are
inexpensive as well. In order to deal with this situation, the organisation need to support its cost
low which leads in major outcome on the income boundaries.
Bargaining power of suppliers:
The organisation deals with approximately 2,500 providers in UK and many more
suppliers across various parts of the world. Even so , these providers cannot utilise any
important powerfulness on the organisation as there are huge number of suppliers in the market.
The organisation discusses very ambitiously with their suppliers in order to gain its income
perimeters. In the past, the organisation has been suspect of domineering the suppliers over cost
cuts. Bargaining power of suppliers can be affected by few potential factors which includes
Strength of distribution centre, input differentiation, input substitute availability etc.
Threat of new entrants :
In terms of organisation, the danger of new entrants coming into UK grocery industry is
very down specially due to capital requirements. The company does not need to concern about
its entrants as the organisation has its own core ability and utilise economic system. In terms of
its ambitious rivals, it may not have approach to system web, enough money and skillfulness to
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investigate the grocery store business in the UK. The entry of new entrants will impact the
overall profits of the industry and cause a reduction in profits. In order to deal with the new
entrants the company need to block the entry of competitors in the industry(Kitchen, 2020).
Threat of substitute services and products :
In context to tesco, the organisation offers a broad variety of merchandise and also sales
various options for the absolute majority of its goods. For example, the company offers both
margarine and butter. In addition to that it also offers powder milk, fresh milk and condensed
milk. Consumers can easily switch to new alternatives and substitutes where it does not make a
difference and requires any input. Various factors that can result in customer shift to other
substitutes includes reduction of quality, switching costs of buyer, close substitution, price
performance of substitute. Therefore, the danger of second-string services or goods for Tesco is
highly inapplicable(Kowalik and Danik, 2019).
Rivalry among existing competitors:
In context to Tesco, the organisation has various strong rivals in UK market. All these
rivals spend richly on various marketing techniques and advertising. Though the organisation is
the market individual but the pressure level from its nearest competition is blood-and-guts. In
addition to that Tesco's earnings edge are stricken by price-wars establish by Aldi and Lidl.
Moreover, the company has been investigating proper methods in order to gear with the
difficulty of cold rivalry. There will be a high chance of competitors if the resources and money
are limited. It will also result in weaken the position of the company. The potential factors that
influences the company's competition involves Sustainable position in competitive advantage,
continuous innovation etc.
Application of STP analysis
The company for the purpose of improving its reputation, image and branding of service
or product need to segment its audience and target each customer group on the basis of their
needs and habits and development of marketing strategies in order to fulfil their preferences and
needs.
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STP Analysis:
It is basically a selling instrument that simplifies and summarizes the process of
marketplace division. In context to Tesco, the organisation identifies clear purchasers who differ
in needs and habits. The organisation need to exercise various selling schemes in order to boost
fair trade product to enhance the reputation and image of the service or product and its
branding(Liu, 2019).
Segmentation : It basically involves division of huge market into identifiable groups in order to
develop engaging and related marketing campaigns. In context to Tesco, the organisation need to
divide its target market according to the customer groups which basically involves mom's who
will have a keen interest in baby care products. The organisation need to develop strategies
according to sections based on behavioural, demographic and geographic.
Targeting: It basically involves the procedure of distinguishing prospective customer to whom
the organization wants to provide its services or products which includes determining products
that need to be offered, segmentation of market and choosing appropriate market. In context to
Tesco, the company is basically focusing on mothers who are very particular about their baby's
care and would be highly attracted towards new launches of company(Niavand and Mahesh,
2018).
Positioning: It is basically the last stage that focuses on how consumer eventually reacts to the
brand's service or product as compare to other competitors in order to gain competitive benefit in
the market. In context to Tesco, the company in order to attract customers need to provide unique
features to its customers as compare to its competitors in order to create a strong impact on target
audience.
Examination of the Marketing Mix
The term marketing mix refers to the various elements that requires attention as part of a
comprehensive plan to carry the function of marketing. The marketing mix is a combination of
seven components i.e. product, price, place, promotion, people, process and physical evidence.
Effective evaluation of marketing mix helps an organisation to make better decisions in order to
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generate revenues. In context to Tesco, the company is engaged in thorough analysis of
marketing mix to formulate better plans and strategies in order to improve its performance.
Seven P's of marketing mix are discussed below:
Product :
It refers to the goods and services that a company manufactures in order to fulfil the
requirements of consumers and earn profits by the process of selling them in the market. The
decision regarding a product needs to be evaluated carefully in order to maximise the satisfaction
that it can give to the consumers. For effective marketing of a product or service, it is important
for an organisation to identify the differentiation that can be implemented in a product or service
to make it unique from other competitors in the market. In context to Tesco, the range of
products that the company offers is immensely wide indicating its remarkable position in the
retail industry(Permana, Hamdani and Lindayani, 2020).The different categories of products it
deals in includes food, pet care, beverages, home and garden, health and beauty, baby and
toddler, bakery, party and gift etc. The organisation has also launched vegan products for the
people who wants to lead plant based lifestyle. It has benefited Tesco as its customer base has
further increased and so does its market presence.
Price :
It refers to the value offered by a consumer in exchange of goods and services that the
seller provides. How a company decides their pricing policies directly impact the profitability
margins and customer base for the organisation. In context to Tesco, it provides low prices
without doing any compromise with its quality of products. It utilizes economies of scale and
constantly works with its suppliers to maintain effective supply chains. It make use of the best
channels for the process of procurement to maintain low prices. Tesco has launched a special
program called brand guarantee in which it ensures that a consumer pays them the least amount
for buying 10 or more products, if there is any branded product available at lower prices than
Tesco. Thus, Tesco has been successful gaining high customer base by lowering the prices while
maintaining high quality(Elena, 2018).
Place :
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This element of marketing mix denotes the location where the product is displayed or
where the consumer can see the product. The place factor is an important criteria in deciding the
reach and convenience of a consumer to purchase a particular product. In context to TESCO, the
company has more than 7000 stores in many countries indicating its high market presence and
reach to the customers. The different categories of Tesco stores includes Tesco metro, Tesco
express, Tesco extra, Tesco superstores etc. The company also provides online platforms to ease
the shopping process for the consumers. The online business of the company is known as Tesco
Direct which further enhance the market presence for the organisation. The company has
enlarged its network of operations by expanding the reach to its customers.
Promotion :
It includes the strategies and techniques used by an organisation to increase the number
of sales. Effective Promotional techniques are important for an organisation to gain the attention
of audience worldwide and increase the awareness about their brand. In context with Tesco, the
organisation follows various promotion techniques in the form of advertisements, commercials
etc. through TV, newspapers, posters and online websites. Besides advertising the products, the
company also promotes their products in other forms by providing various schemes and offers
like 'buy one get one free' including other consumer incentives like loyalty cards . These cards
allows customers to gain rewards based on the number of their purchases. The company has
gained worldwide recognition and established a high brand image by promoting its products on a
large scale (de Morais and de Camargo Junior, 2019).
People :
It includes all those persons who are associated with an organisation to conduct its
business operations. People are considered as the most element in the marketing mix as they are
the service providers in any organisation. People are the medium through which an organisation
is able to conduct its business operations. Tesco is one of the leading retail brands which
provides employment to over 400,000 people in different countries around the globe. Their
employees are efficient, possess required skills and well trained in their respective departments.
It values their employees by motivating them with various incentives and boosting their morals.
Tesco's staff members follow a code of conduct during their working hours maintaining the
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organisational standards. Beside this, the company assures the competency and efficiency of
their producers as the company provides best products to its customers.
Process :
It refers to the steps and procedures by which a product or service provided by an
organisation get delivered to a consumer. The activities involved in completion of a transaction is
known as process. Sometimes the companies provides a series of steps in order to procure a
product or service complicating the course of action, which can tire the customers and should be
avoided. In context to Tesco, its offline stores follows simple steps of process to increase ease for
consumers. The customer simply choose their products, collect them and go to assistants for
making payments. They also provide facility of self-service machines for the purpose of
payments.
Physical Evidence:
It refers to tangible elements which validates the occurrence of a purchase transaction in
an organisation such as invoices, websites, interior deign or layout, paperwork etc. In context to
Tesco, the organisation possess an excellent logo which captivates the audience and enhance its
brand value. The offline stores owned by the organisation have vibrant ambience and is easy to
navigate with products available in different categories. The company's website also have great
layout and is easy to operate(Ravihara, Danthanarayana and Fernando, 2019).
Recommendations to improve marketing strategy
A marketing strategy basically involves an organization whole game idea in order to orbit
potential customers and changing them into customers of services or products. It involves a plan
of action which includes the organization's central brand messaging, data on target customer
statistics and value statement(Ofori, 2021).
Shifting Towards Digital marketing:
Digital marketing basically involves the promotion of brands in order to connect them
with potential customers with the use of various forms of digital communication and internet. It
involves web-based advertising, emails, social media and multimedia messages as a marketing
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channel. The companies these days are moving from traditional marketing to digital marketing
due to major influence of digital marketing on today's business operations. In context to
company, digital marketing helps the organization to reach extremely targeted individuals and
also renders a chance to reach billion of consumers through advance technologies and digital
methods. A true and tried mega-business in any marketplace would be anticipated to spend
billions in merchandising. The company has realised that it is important to make changes in
particular marketing strategy. The company in order to promote its new baby care launch need to
use various social media platforms in order to carry out promotional campaigns to attract
customers(Otterbring, 2021).
Innovative Product Packaging :
Packaging basically involves process of producing, evaluating and designing packages. It
plays an essential character in any organisation. In context to the company, it has to changed
towards high quality promotion. The company in the past has not yet been active in repackaging
of its advanced quality goods in higher superior packaging. The organization in order to position
out among its rivals need to create branding campaigns and new business designs for different
components. The company in order to attract its customers need to evolve branding campaigns
and new packaging designs which involves cute and attractive packaging according to new
products.
Creating new product lines:
It involves product which is not yet previously offered by the company in the market. In
context to improve its marketing mix and marketing strategies, the company has offered new line
of baby care products. In order to understand the needs of customers and to attract them it is
important for the organisation to keep its product's prices affordable(Rather, 2020).
Customizing Media:
In order to introduce its new launches, the brand is focusing on enhancing individual
experience. In context to Tesco, the organization's managers has come up with assortment of
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thoughts for this formulation. It basically refers to direct delivery to door, sending personalised
messages and discounts by emails on occasions including birthdays and Christmas.
Competing with smaller chains:
In the past years the company did not have to concern about competitive rivalry with
smaller chains but in present environment these concerns are necessary. With smaller chains
such as Aldi, they are progressing more on market share and it is important for the company to
fight down. The smaller units such as Aldi continues to contend on digital platforms and on the
far side. The company in order to compete with these smaller chains need to find a way to
promote and attract customers with advertisements and new value items including substantial
deals(Schiavone and Simoni, 2019).
Tapping into relevant humour:
The company in past times had a very recognisable , steady but corporate selling scheme
which is known as 'every little helps' strap-line. Its prosperity basically means lack of agility
and stagnation in engagement to deviate from the formula in previous years(Vural, 2017).
CONCLUSION
In the present report it had been concluded that commerce management shows an
essential function in improvement of organization's new merchandise and creating a market
plan which is crucial to present new product in the market. Moreover, it involves how
organisation investigates its outside surroundings in order to identify the strengths and
weakness. It also helps in understanding the process of planning, controlling and decision
making of a organisation in terms of marketing concept and somewhere within the marketing
system. It basically is a business function which is involved in controlling the mixture and
unwavering demand in the market. It basically focuses on keeping and creating a need for
services or goods of the system. A plan is basically a written document which relates to
marketing activities of a organization which is usually for one year. It involves promotional
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activities, advertisement activities, marketing strategy conceived for the period. It also includes
STP analysis and how segmentation, targeting and positioning are applied in the organisation. In
addition to that, the report includes the present marketing mix of company and how the
organization can amend its marketing strategies while introducing a new product. It also involves
different ways and recommendations and how a organization can better its reputation and
branding in the marketplace.
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Schiavone, F. and Simoni, M., 2019. Strategic marketing approaches for the diffusion of
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