Marketing Strategy of Tesco - Analysis of Past and Present Strategy

This report analyzes the past and present marketing strategy of Tesco, the leading supermarket in the UK. It includes a PESTLE analysis, SWOT analysis, Porter's generic strategies, and competitor analysis.

Marketing Strategy

Executive Summary-
This report shows the analysis of the past and the present marketing strategy of Tesco.
The Marketing Strategy means the plans made by an organization in order to enhance its
efficiency, profits, sales and demand of the products. Tesco provides a wide range of products
and facilitates financial activities for people. Tesco made plans according to the market situations
and used marketing strategy that is based on cost leadership. It also shows the history, purpose
and the problems of Tesco . The efforts made by the institution to achieve competitive advantage
and its current competitors and substitutes that are introduced in the market.

Table of Contents
Executive Summary-........................................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
The reason behind choosing the organization-............................................................................4
Past of Tesco-...............................................................................................................................4
Present Problems-........................................................................................................................5
Players-........................................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
Books and journals...........................................................................................................................9

INTRODUCTION
Marketing strategy means the plan of an organization implemented in order to increase sales,
productivity and to achieve a competitive advantage (Yunus and et.al., 2019). It is a process of
understanding the market situation and how the institutions make new plans and strategies
according to the trends of market. Marketing Strategy helps in improving the goods and services
of the firm. Tesco is one of the leading stores of groceries and general items in UK. It provides
its products and services at stores as well as online. It is the biggest retailer in UK and sold dry
goods and branded products. This report shows the reason behind choosing Tesco and its
history, origin, purpose and values and also the needs of customers fulfilled by Tesco. In this
report present problems of the organization and hoe effectively and efficiently it is working is
discussed. The competitors or the substitutes of Tesco and their effects on the business.
MAIN BODY
The reason behind choosing the organization-
Tesco is chosen as it is one of the biggest retailer of UK and has more than 3400 stores
nationwide. It is the leading supermarket of groceries and sold good quality and branded
products (Tesco, 2021). Now Tesco is increasing its presence through digitalization that is by
providing its goods and services on social media platform or online. Tesco was the first
organization who facilitate online shopping. It has a wide range of customers as consumers trust
its product quality and are satisfied with its after sales services at stores as well as online. Tesco
has metro shops and fuel stations and the goodwill of the firm is also markable. It provides eco-
friendly products and tries to follow all the rules, laws and regulations of the business. It is one
of the best brand in UK and also operates the business of mobile phones and gives financial
services through Tesco bank.
Past of Tesco-
Tesco was founded by Jack Cohen in 1919 and he starts the business from a small
grocery stall at Well Street Market in London. It was appeared as a brand name in 1924. The first
Tesco shop was opened in 1931, stores in 1947 and first supermarket in 1956. Tesco is the
largest shop in Europe and mark its appearance in Guinness Book of Records (Tesco Grocery &
Clubcard, 2021). This business was created in order to provide good quality products and
services to the people at cheaper rates. The main motive of Jack Cohen was to expand the range

of the products and to open stores and supermarkets at different locations. The subsidiaries of
Tesco are Tesco Bank, fuel station, Tesco Metro Shops, One stop, Tesco mobile, F&F clothing,
Jack's etc. Tesco use economies of scale and maintain the healthy relations with suppliers.
The key purpose of Tesco is to Grow the brand of the company nationwide and
worldwide. Tesco delivers its products at standard values to the customers in the right way. The
core purpose is to become the best supporter or winner for customers and to serve buyers in an
effective manner . Tesco works on the values such as to fulfil the needs of the customers,
understand them and to act as a responsible organization for communities. Tesco has happy and
satisfied customers as it provides the products at reasonable price and manage the needs of the
consumers. It shares the information and experience with the buyers and also trust and respect
them.
Present Problems-
Pestle Analysis:
Pestle analysis includes external factors such as political, economical, social,
technological, legal and environmental factors (Edwards and et.al., 2019). These factors directly
affect the efficiency and growth of the organization. Following is the pestle analysis of Tesco-
Political Factor- These factors includes stability of the country, tax rates and acts of legislations,
etc. As today the whole world is facing the problem of financial instability and government of
UK increase tax rates imposed on corporate income to overcome the situation. Tesco has to pay
high taxes that affect its profit rate and increases its cost.
Economical Factor- These factors includes inflation, taxation policies and economy of
government (Deák and et.al., 2021). The business of Tesco is growing globally but company is
dependent on UK market and as the financial condition of market is not good so that Tesco has
to reduce the price of its products. It also influence the cost, demand and sales of the firm.
Social Factor- The main components of social factor are customers, social institutions,
communities, etc. These factor includes changing trends and changing preferences of the buyers.
In order to adapt these changes in the market Tesco has to increase the range of its products and
also tries to fulfil the demands of customers for organic food.
Technological Factors- In this era of digital world Tesco have many new opportunities to
enhance sales and growth of the company. As advancement of technology facilitates Tesco to

provide online platform for shoppers. Tesco also invested on energy efficiency projects to
achieve long term goals and objectives.
Legal Factors- Legal factors includes rules, laws and legislations of the government to support
the ethics of the business. Tesco provides standard wages to employees and also takes care of the
safety and protection of workers.
Environmental Factors- It includes protection laws for the environment so that no one can harm
it. Tesco tries to identify the environmental issues and also take steps to benefit the society by
reducing its carbon footprints.
SWOT Analysis-
SWOT analysis includes Strengths, Weaknesses, opportunities and threats. SWOT analysis of
Tesco is as follows:
Strengths- Strengths of the organization refers to the factors that make them extraordinary as
compared to other competitions in the market (Quezada and et.al., 2019). Main strengths of
Tesco is its brand name, advanced technology, old and trusted customer base, etc. Tesco also
tries to attract new customers as well as investors to achieve success.
Weaknesses- Weaknesses creates hurdles in the path of company's success and stops them to
perform well according to their capabilities. The weaknesses of Tesco quality control,
leaderships change, inventory management, shortage of products and food safety issues, etc.
Tesco is putting efforts to overcome these weaknesses.
Opportunities- Opportunities includes some external factors that favours the enterprise in order
to achieve competitive advantage (Pavliuk and Noda, 2020). Some of the opportunities of Tesco
are increase in online sales, learning of new technologies and machine and expansion of social
supermarkets. These new chances help the firm to increase its productivity and profitability.
Threats- Threats includes some factors like shortage of labour , increasing competitors, etc.
Tesco is facing the threats of new competitors and substitutes introduced in the market and to
overcome this problem or threat Tesco has to reduce the cost of its products. After covid-19
crisis the biggest threat of Tesco is economic recession and tight labour supply.
Porter's Generic Strategies-
Porter's generic strategies help the institutions to achieve healthy competition or
competitive advantage according to the changing market trends and preferences of the customers
(Paracha and et.al., 2020). This includes cost leadership, differentiation and focus.

Cost Leadership- It refers to the management of cost of the products of organization. In this
strategy a company tries to become the low cost producer in the market.
Differentiation- In this strategy an enterprise tries to become special or unique and also tries to
includes some aspects that can be liked and valued by the customers.
Focus- This strategy has two variants cost focus and differentiation focus. This strategy is based
on competitive scope.
Tesco apply the strategy of cost leadership as it provides goods and services at low prices
as compared to the other competitors or substitute products in the market. Tesco is a low cost
producer and utilize all sources of cost advantage.
Players-
Porter's five forces framework can be used to analyse the competition in the market and help the
organization to achieve the competitive advantage. It includes five elements such as-1. Threat of new entrants (Low)- Tesco introduced the new products at low or reasonable
prices to reach the customers (Chkanikova and Sroufe, 2021). Tesco is a brand and is
trusted by the customers from a very long time apart from this the economies are very
high for the new entrants so it is very difficult for them to earn high profit pecentage and
to compete with the standards of Tesco.2. The bargaining power of buyers (moderate)- The power of bargaining is in the hands of
buyers and they bargain a lot for quality products at low prices. So in order to reduce the
bargaining power of customers Tesco provides its products at reasonable prices that can
easily be affordable by them. It also give the discount vouchers and the complementary
gifts to the customers.3. The bargaining power of the suppliers (Moderate)- Tesco buy the raw material from
various suppliers and sustainable sources, and they try to use their bargaining power to
impose higher prises for the raw material (Ying and et.al., 2019). This affect the
profitability and sales of Tesco.
4. The threat of new substitutes (Low)- Tesco have a threat of new substitutes or products
that are arrived in the market on the same prices as the firm already have. Tesco use good
quality material for its products and makes it as a brand in order to compete with the
other substitutes introduced in the market. As Tesco have a strong base of old, trusted

and satisfied consumers so it become critical for other organizations to beat the standards
of Tesco.
5. The intensity of competitor rivalry (moderate)- Tesco is facing various rivals in the
market such as Sainsbury. Tesco examine the intensity of existing and the new
competitors and try to expand its business by introducing new products such as books,
mobiles, electronics, etc. After the expansion Tesco attracts the new shoppers as well as
old buyers but still the competitors are affecting the demand of its products.
CONCLUSION
From above discussion, it can be concluded that Tesco is a brand and a leading
supermarket in UK. It has a strong base of customers as it works on the values to serve the
people and communities by fulfilling their needs of products at low costs. The main purpose of
Tesco is to expand the business all over the world. Tesco is working effectively and efficiently in
the market and the current competitor of the firm is Sainsbury. However, it can also be
concluded that Tesco is putting efforts in order to support the people after the crisis of covid-19
by providing them grocery and general necessity items online and also provides free delivery
services. It tries to reduce the unemployment rate by hiring the people as there is a need of
labours in supermarkets. Tesco use strategy of cost leadership to improve the efficiency and
growth of the company.

REFERENCES
Books and journals
Chkanikova, O. and Sroufe, R., 2021. Third-party sustainability certifications in food retailing:
Certification design from a sustainable supply chain management perspective. Journal
of Cleaner Production. 282. p.124344.
Deák, C. and et.al., 2021. Evolution of new approaches in pedagogy and STEM with inquiry-
based learning and post-pandemic scenarios. Education Sciences. 11(7). p.319.
Edwards, C.H. and et.al., 2019. A single-enzyme system for starch digestibility screening and its
relevance to understanding and predicting the glycaemic index of food products. Food
& function. 10(8). pp.4751-4760.
Paracha, A.T. and et.al., 2020. Critical Organizational Learning For Cost Leadership Strategy
And Performance: Study Of Telecom Sector In Pakistan. International Transaction
Journal Of Engineering, Management, & Applied Sciences & Technologies. 11(2). pp.1-
16.
Pavliuk, T. and Noda, V., 2020. Analysis of competitiveness and competitive advantages in
today's market conditions. Management and Entrepreneurship: Trends of Development.
2(12). pp.91-104.
Quezada, L.E. and et.al., 2019. Measuring performance using SWOT analysis and balanced
scorecard. Procedia Manufacturing. 39. pp.786-793.
Ying, F. and et.al., 2019. Customer mobility and congestion in supermarkets. Physical Review E.
100(6). p.062304.
Yunus, E. and et.al., 2019. The effectiveness marketing strategy for ride-sharing transportation:
Intersecting social media, technology, and innovation. Entrepreneurship and
Sustainability Issues. 7(2). p.1424.
Online references
Tesco, 2021. [Online]. Available through <https://www.forbes.com/companies/tesco/?
sh=4c5cadb16a72>
Tesco Grocery & Clubcard, 2021. [Online]. Available through
<https://play.google.com/store/apps/detailsid=com.tesco.grocery.view&hl=en_US&gl=
US>
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