Key Principles of Marketing Adopted by Tesco

This report discusses the key marketing principles adopted by Tesco, including their vision, mission, objectives, and marketing mix. It also appraises the rationale of the current marketing decisions of Tesco and explores their segmentation, targeting, and positioning strategies.

Sales and Marketing

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
Key principles of marketing adopted by Tesco...........................................................................3
Appraisal of the rationale of the current marketing decisions of Tesco......................................5
Segmentation, Targeting and Positioning....................................................................................7
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12
Books and journals:...................................................................................................................12

INTRODUCTION
Marketing can be understood as all those actions or activities a company undertakes to
promote and sell goods and services to their clients as well as maintain healthy relationship with
them. Marketing objects to offer stand-alone importance for prospects and customers through
message with the long term objective of demonstrating the value of products, strengthening
customer loyalty towards brand and ultimately boosting the sales (Angulo-Ruiz and Et.al., 2018).
The report is going to discuss on Tesco Plc which is a British multinational corporation in UK.
The company was founded by Jack Cohen in 1919. Tesco headquartered in Welwyn Garden
City, UK. The organization has allocated their operations into several areas such as retailing of
books, furniture, toys, telecom services and many more. This report covers various topics such as
key marketing principles, appraisal of the rationale of the current marketing decisions and
concepts of segmentation, targeting and positioning.
TASK
Key principles of marketing adopted by Tesco.
Background of Tesco
Tesco is a multinational groceries and general merchandise retailer in British
administration. It has allocated their business operations in five countries crossways Europe and
becomes the market leader of groceries in the UK. Jack Cohen was the founder of Tesco. It has
diversified into areas such as the retailing of clothing, toys, books, furniture, petrol, financial
services, internet services and many more (Bin Sawad, 2020). By the year of 2020, the company
has total assets worth 12.879 billion. Along with this, they have more than four hundred
thousand staff members throughout the world. It provides millions of consumers every week, in
its offline and online stores.
Vision and Mission
The vision of the Tesco is to be the most valued business by their customers, society in
which they allocate their operations and have loyal and committed employees and shareholders
in their company. The mission of the company is to provide best product at best prices which can
be purchased with ease and delivering them in an effective way to the customers.

Objectives of Tesco
The objective of Tesco is to provide groceries, clothing, electronics and online services to
their customers. Also, there objecting to improve the online shopping experience in order to
attract many more customers which will help them to achieve ultimate goal which is profit
maximizing.
Marketing mix
Principles of marketing or marketing principles are agreed upon marketing ideas
organizations utilize for an effective marketing strategy (Cornia, Sehl and Nielsen, 2020). A
product promotional strategies are made up on these principles. Marketing mix can be
understood as a set of tactics or actions that an organisation uses to promote their goods and
services in the market. It also acts as a significant tool for the organisation as it determines how
their product is marketed or will be marketed in the future. Initially, there were 4P's in marketing
mix- price, promotion, product and place. Lately, the marketing mix increasingly covers many
other P's such as people, process and physical evidence. The marketing mix of Tesco is as
follows:
 Products of Tesco- Tesco delivers a broad range of their products which includes food,
cosmetics, stationary, electronics, clothing, financial services, telecom services and many
more. With ever intensifying product lines, it accommodates every possible requirement
of consumers. It involves every great brands in their stores in every product line. They
also deliver their own products such as Tesco value, Tesco Lotus, Everyday value, F&F
clothing are some of their own brands. It is also important to mention that the availability
of their product range depends on their kind of stores in which their customers visit.
 Prices of Tesco- Tesco enjoys the advantage of economies of scale because of their
efficient supply chain network which enables them to deliver products at lowest price
possible. It also doesn't compromise on their products quality for the sake of their prices.
They also acknowledge customer’s feedback and try to cut extra costs to offer low prices.
Therefore, cost leadership is the pricing strategy of the respective firm (Fadhilah and

Praja, 2019). Fierce competition from companies such as Lidl and Aldi in the UK market
also affects the Tesco’s pricing strategy.
 Place of Tesco- Tesco utilizes two main distribution channels that are online and offline.
It has approximately 7000 offline stores around the globe. The offline stores of Tesco are
of various types such as Tesco Extra, Tesco Express, Tesco Compact, Tesco Metro,
Tesco Superstores, Tesco Homeplus whereas online business is named Tesco Direct.
Therefore, Tesco utilizes various kinds of distribution channel to reach out their
customers.
 Promotion strategies of Tesco- As the company uses low cost pricing strategy, they are
attracting number of customers towards their brand (Hamilton, 2019). They are highly
focused on print and media marketing as a tested channel to convey messages of offered
products and services to the current and potential customers. As per the point of view of
Nielsen AdIntel, Tesco is the biggest brand in traditional marketing in the grocery retail
industry of UK where it spent more than £80.8m in 2019.
 Process in Tesco- Process is a bunch of activities performed by the company to achieve
something. Business process can be understood as a standardized set of actions that a
business performs to accomplish a certain goal such as processing an order of customer.
In offline stores of Tesco, consumer pick up themselves their product and visit checkout
points or customer assistants to pay. Along with this, Tesco also provide self-service
machine to clear their payments.
 People of Tesco- In Tesco, they employed approximately 5,00,000 people within their
company. In Tesco stores, there are great number of customer assistants who possesses a
prominent role in the success of the business. As their employees are competent, they
invest a great number of amount and time in the training and development program. In
company, their reward system is also very good. Nevertheless, many researchers argue
that they fail to encourage their young employees.
 Physical Evidence- Physical evidence or environment encompasses but not limited to all
the tangible representations of an organisation such as menu, furniture, brochures,
business cards, equipment, report, letterhead and signage. In context of Tesco, it hasn't
excellent brand logo and makes optimum utilization of colours (Hinson, Adeola and
Amartey, 2018). Offline stores of Tesco are easy to navigate for the customers as all the

products are well categorized which make it easy to find products. Apart from this,
official website is also fantastic and easy to operate.
Appraisal of the rationale of the current marketing decisions of Tesco.
The marketing strategy of Tesco correctly targets its potential customers with the support
of its well organized brand image. As the company offers a broad range of their goods and
services in several markets it cannot segment on the basis of psychographic for demographic
factors. The target market of Tesco is those customers who are cost conscious and who are
extensively have their interest and bargaining and sales and who values varieties. In order to
reach out their customers, the company position itself as a low cost and high volume retainer.
Shifting towards digital marketing-
Tesco has a sophisticated online strategy that allows customers to enjoy seamless digital
shopping. E-Commerce strategy of Tesco reflects the commitment of brand to value and
convenience (Luo and Et.al., 2021). The website of company is also similar to their offline stores
where they easily navigate to their purchases. Online business of company has already
performing well as a result their sales increased by 15% in South Korea and Ireland. In grocery
market of UK, it also has achieved double digit development. The company has also introduced
click and collect services which allows their consumers to procure their products online and
collect them from any offline store operated by respective organisation. Tesco Direct also
enables their customers to procure clothing, electrical products and general merchandise.
Overhauling product packaging-
Another big shift at their retailing giant included repackaging most of their high quality
products in higher quality packaging. Tesco identified the products which were suffering from
customers drop offs in demand and which are valued just normal. So, Tesco was able to develop
new branding campaigns and packaging designs for their products in requirement of hindrance.
Customizing media-
The marketing expertise of Tesco has been come up with different marketing ideas for
customizing media. The company sees a big need for concentrating on the individual
experiences. From big discounts on birthdays by email to print advertisements provided directly

to their doorstep. Hence, customization is a new key in the world of marketing. The brand
believes that instead of maintaining a big and generic position in the market they aim hyper
target particular customers and gain their trust. So they are focusing on direct customizing
marketing concepts that deal to specific customer’s desires.
Sales Promotion-
There are different types of sales promotion act as an integral role within the marketing
strategy of Tesco. In context of Tesco, the supermarket chain offers sales promotions in the
following layouts:
 Clubcards: Consumers receive one point for every GBP 1 spent in Tesco. In a particular
year, customer receives numerous times statements and vouchers equal to the points
value they have hold.
 Free gifts: The supermarket chain provides free gifts such as buy one get one offer in
order to increase their sales for a particular variety of products (Martínez-López and
Et.al., 2020).
 Point of sale materials: This form of sales promotion is commonly accompanied with
producer’s cooperation that they may supplies with display stands and posters and other
point of sale promotional things.
Creating new product lines-
The respective brand was also launched a new line of new farm brand goods. This intense
rebranding of goods such as fish, beef fruit and pork permitted to appeal to those consumers who
were cost conscious but didn't value the offerings previously. So, Tesco understood the
requirement to compete in this segment and prices were diminished which result in a dramatic
change as it increases the sales in farm and fish at the new price point.
Segmentation, Targeting and Positioning.
Segmentation, targeting and positioning are the common tools that has been used by
organisation to assess different needs, desires and wants of customer. Also, each and every
consumer has a different culture, background, education, or experiences that is why
organizations required to look for the products and services that can work with the need of
various categories of customers.

Market Segmentation
Market segmentation can be understood as the process of market categorization into
different subgroups of customers with common characteristics or needs and choosing one or
more segment to target with a different marketing mix. The following is the target customer
segment for the respective brand’s own TV named Tesco Technika:
Market segmentation are divided on the four bases:
 Geographical segmentation- Geographic segmentation is one of the traditional methods
of categorizing the customer market depends on the geographical location. In context of
Tesco, they providing their products and services in UK and 13 other countries, includes
urban and rural areas.
 Demographic segmentation- Demographic segmentation is the division of customer
market depends on the different variables of customers such as gender, age, income,
marital status, education, community, family lifecycle, nationality, social status and many
more (Nugroho and Witarti, 2021). In context of Tesco, they providing their services to
all categories of ages, males and females, providing products to low and middle income
category at very affordable prices and so on.
 Psychographic segmentation- It is a segmentation in which customer are divided on the
basis of lifestyle, personality, habits, tastes, or attitudes. In this segment, a personality
refers to the characteristics which feature a person as extrovert, introvert, ambitious and
many more. Lifestyle refers to how an individual lives his life and how he spent his
income. In context of Tesco, lifestyle involves traditionalists or contended conformers,
whereas personality of consumer is determined and easy going.
 Behavioral segmentation- The segment in which market is divided on the basis of
knowledge of customer about the product or usage of that product. The segmentation of
customer is based on those who have a knowledge about the product and who don't know
anything about the product, which involves potential users, Ex users, existing users or
first time users of product or services.
Nevertheless, the target customer segment for products and services of Tesco demonstrates
the cost conscious customers who are highly interested in discounts, bargains, sales as well as
value range of choices.

Targeting in marketing
The targeting in the marketing concept is refer to the groups of customers that a marketer
of any company decides to deliver (Popov and Popova, 2021). It involves customers who share a
common wants, needs, tastes and preferences and the marketer picks to offer them. Targeting is
to examine potential and commercial attractiveness of each division and pick one or more
segments. In this, four different approaches are considered:
 Undifferentiated- In an undifferentiated concept, there is no description between
segments of market rather the market is viewed as one big market with one marketing
strategy for the whole market.
 Differentiated- A differentiated marketing concept identifies that there are various
market segments to target as each of them is attractive and important to the company
(Rusthollkarhu and Aarikka-Stenroos, 2019). In order to exploit such market segments, a
company is developed marketing strategy for every segment.
 Concentrated- It is also known as niche marketing strategy. It identifies that there are
different segments but implements a concentrated strategy in the market my
concentrating only on few market segments. Organizations which have limited resources
are usually adopted this strategy.
 Customized target marketing- The last approach is customized targeting approach in
which for each customer a marketing strategy is created. In B2B markets or consumer
markets, this is strategy is more leading as they valued highly customized goods.
In context of Tesco, they are using undifferentiated strategy in which they target the whole
market with a similar offer and focus on the common wants, needs and preferences of customer
rather than what is distinct. This means that they serve their products and services to the
customers as common and try to serve as many as they can. Also, the customers go into their
stores with the common motive as Tesco offers discounted prices on their products and services.
Positioning
Positioning is an action of designing the offering of an organisation and a brand position
to occupy as distinctive place in the minds of target customers. The main purpose is to position
the brand in the customer's mind to increase the potential advantages of company. Product

positioning can be understood as a positioning that how a product is perceived by the customers
based on their attributes in the customer's mind relative to competing goods (Rusthollkarhu and
Aarikka-Stenroos, 2019). It is essential to differentiate and determine the position of brand in an
effective way to accomplish competitive benefits during a product life cycle or and bids. Product
positioning dealing with single elements of marketing mix in order to attract the target customer
segment in the effective way. In context of Tesco, they are focusing on broader range of
strategies for brand positioning in order to attract countless number of customers.
 Functional positioning- Functional positioning is related with wide range of variety and
quality of functionalities of goods and services. In context of Tesco, they are selling
finest varieties of products through its functional positioning. Goods sold through
functional positioning a relatively higher in prices as compared to basic range of products
of Tesco.
 Symbolic positioning- It is based on the aims, values and aspirations of consumers. In
context of Tesco, this type of positioning is used to fair trade range of goods in grocery
sector. They sell fair trade product range to a smaller segment of customers for higher
prices in order to satisfy their self-perception.
 Price positioning- This is strategy is supplied by the Tesco in order to attract particular
segment of customers that are more conscious with their product or service prices.
 Multi-segment positioning- It is an alternate form of positioning which is used by Tesco
to target different customer’s segments at the same time but with varieties of products.
They make an extensive utilization of multi-segment positioning. For example, in their
store they sell Tesco Technika TV to those customers who are cost conscious but in
supermarket chain they also offers other products to different segment of customers who
are ready to pay extra for more quality.
Overall, it has been analyzed that Tesco position itself as a low price grocery retailer by
using their advertisement “cheapest price everyday” for particular product in their stores
(Timotius and Sukapto, 2020). And, this strategy is very positive and attract a number of
customers in the industry who come for lower priced products.

CONCLUSION
From the above report, it has been considered that marketing is very essential as it will
create awareness about products and services of a particular brand in the market. It also helps to
develop trust among the target customers and offers value to the viewers in the form of
entertainment, information and inspiration. Marketing mix covers 7P’s such as price, product,
promotion, place, people, process and physical evidence, which offers a knowledge about the
product and services that can provide to the customers. It is also helpful in creating effective
marketing plan. Also, it aids business to reduce costs and make use of their strengths. The report
is also mentioned with the marketing strategies that has been used by Tesco such as shifting
towards digital marketing, overhauling product packaging, customizing media and many more.
STP approach considers with segmentation, positioning and targeting which is very effective
marketing tool that helps to create an effective marketing plan. All the three are tools that aligns
the products and services with the right customers. Therefore, it supports business with the better
understanding who their potential customers are and they can reach them.

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