Marketing Study for TESCO

This study analyzes the ethical and sustainable issues faced by TESCO, using PESTEL and SWOT analysis. It discusses the background of the issues, how to address them, and develops SMART marketing objectives and Integrated Marketing Mix to improve the brand image. The study also includes a discussion on TESCO's history, market share, and criticisms.

Running head: TESCO
Marketing Study for TESCO
Name of the Student
Name of the University
Author Note

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Contents
Introduction:...............................................................................................................................2
Discussion..................................................................................................................................3
-Background of the ethical/sustainability issue:....................................................................3
-Analysis Ethical/sustainable issue using PESTEL analysis and SWOT analysis................4
PESTEL analysis:...............................................................................................................4
SWOT Analysis:................................................................................................................7
-How to address the issue.......................................................................................................7
-SMART marketing objectives..............................................................................................9
Improving Public Relations:............................................................................................10
CSR Activity:...................................................................................................................10
Implementing Stronger Quality Control and Quality Assurance Policies:......................11
Increasing Online Traffic:................................................................................................11
-Integrated Marketing Mix and justification of choices.......................................................11
Conclusion................................................................................................................................13
References:...............................................................................................................................15

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Introduction:
TESCO is a British Public Limited Company with multinational presence. The
company is a part of the retail industry and specializes in groceries, retail and general
merchandising. The company’s headquarters is set up in Hertfordshire, England and is the
third biggest retailer globally in terms of its gross revenue and has outlets in Asia and Europe
(Tesco.com 2018). In the UK, TESCO is the market leader in groceries with a significant
market share of about 28.4%. The company was founded by Jack Cohen in 1919 as a group
of stalls in the market (Dillon 2015).
The brand name TESCO was formed after the owner purchased bought a shipment of
tea from T.E Stockwell and branded the product as TESCO leading to the first shop being
opened under the name of TESCO in 1931. By 1939, the company owned more than 100
shops in UK. The company started its global expansion from 1980, expanding its operations
to 11 countries (campaignlive.co.uk 2017). By 2013, TESCO stopped its operations in USA,
but continued to see growth in other countries. The company successfully diversified its retail
product lines to include books, toys, furniture, clothing, software, electronics, petroleum as
well as telecom service, internet service and financial service. By 1990, the company was
able to reposition itself in the market by diversification of its products into low cost ‘value’
items and high quality ‘finest range’ and allowed a significant increase in the number of
shops from 500 during the 1990’s to more than 2500 shops within the next 15 years
(McDonald, 2018). The company however also attracted several criticisms regarding its
operations such as stifling competition, breaching planning laws, price fixing, tax evasion,
illegal or unethical expansions, selling horse meat as beef in burgers, discriminating against
visually impaired customers, engaging in systematic slavery in Thailand, selling anti-Semitic
books and mothballing new shops (Smithers 2017; Peacock 2013; Reed 2018). Such

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allegations raised concerns regarding organizational ethics and sustainability of the
organization (Dillon 2015).
The aim of this study is to analyze the ethical and sustainable issues being faced by
TESCO using PESTEL and SWOT analysis, developing an understanding on how such
issues can be addressed by the organization, develop SMART marketing objectives and
Integrated Marketing Mix that can help to improve the brand image.
Discussion
-Background of the ethical/sustainability issue:
One of the biggest and most significant ethical as well as sustainability concern raised
against TESCO is the usage of unethical means to gain competitive advantage in the UK
(Smithers 2017). According to Bian and Çalıyurt (2018), the organization has utilized several
unfair means to stifle competition in the UK. These means include false branding of its
products in which the company created fictitious names of farms to label their products. This
created an impression among the consumers that the products were sourced from small farms
and thus have a higher quality (Smithers 2017). The organization also was involved in price
fixing for a number of products and has been accused of being a part of a cartel of 5
supermarkets, along with Morrsons, Sinsbury’s, Safeway and Asda (Peacock 2013). The
company was also accused for acting against the consumer’s interests while falsely
claiming to support thousands of farmers in the UK. The company also has been involved in
litigations regarding exploiting the cheap labor force in Thailand and engaging is systematic
slavery to produce its products at extremely cheap prices thereby further stifling competition
(Reed 2018). These ethical issues also challenges the sustainability of the organization in the
future and also tarnish the reputation and brand image of the organization (Crane and Matten
2016). Thus it is necessary to properly analyze the underlying factors contributing to the

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ethical practice and develop strategies to address those issues and develop effective
marketing strategies that can help to improve the brand image (Quarshie et al. 2016).
-Analysis Ethical/sustainable issue using PESTEL analysis and SWOT analysis
Using PESTEL and SWOT analysis, the factors underlying the unethical practices of
the organization can be analyzed. These tools can help to understand how the environmental
factors have allowed the maintenance of these behaviors as well as understand the key
strengths and weaknesses of the company (Pan et al. 2018).
PESTEL analysis:
Political Factors: The organization operates in multiple countries and therefore is
exposed to various political factors. The political factors that influenced the operations of
TESCO includes rates of tax, legislations (both current and impending), political instabilities,
rate of unemployment and the economic conditions (Ndungu 2014). In UK, the government
increased the Value Added Tax (VAT) rate to 20% from 17.5% in 2011 in order to increase
the governmental revenues. According to James (2015), the increase in vat caused a reduction
in customer spending and adversely affected the revenue from sales. This directly affected the
profits of the company. The government of UK also imposed a ‘fat tax’ to reduce obesity in
the population by imposing higher tax on high fat food products (Madden 2015).
These political factors posed a significant threat to the organization by impacting the
profit margin, due to which they had to develop strategies to increase their profit margin,
sometimes relying of unfair means to stifle competition in UK (Dillon 2015).
Economic factors: This was a significant concern for the organization as they were more
likely to leverage the prices, profits, costs and demand. Since increase in the prices and costs
of product manufacturing and procurement can reduce the profits of the company, it can be a

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significant economic stressor. In the UK, a significant economic growth has occurred since
the financial crisis that is exhibited though a rise in the GDP by 2.7% since the pre-crisis peak
(Martin et al. 2016). The economic growth also helped in the development in the retail and
supermarket industry thereby helping TESCO to grow rapidly. On the contrary, during
economic recession, there is a rise in unemployment that causes a reduction in disposable
income. This in turn reduces the spending capacity of the customers thereby reducing
revenues of the company (Dillon 2015).
Thus the economic growth in UK proved to be a significant opportunity for the
company that helped its growth. However the previous economic recession was a threat for
the organization as it impacted its profitability.
Social Factors: In UK there has been a steady increase in the number of elderly population
because of the baby boom generation as well as due to a reduction in the birth rate in the past
and an increase in life expectancy. The increase in elderly population has also led to a shift in
consumer’s preferences (Ganna and Ingelsson 2015). For example, due to the limited
mobility of elderly people, there is acceptability and favorability towards online shopping as
it enables the elderly customers to shop from their home without having to travel to the
stores. Tesco was able to capitalize on this by implementing online shopping (Dillon 2015).
On the other hand, accusations against TESCO about selling horse meat in burgers
have led to significant outrage among the customers which could easily be shared on the
internet which was a threat to the organizational sustainability and brand image. This
reduced the brand image of TESCO (Smithers 2017).
Technological Factors: This is an important factor that can impact the supply chain
management of TESCO. The SCM helps to get a competitive advantage by improving cost
efficiency of the organization which cannot be easily replicated by the competitors. It is

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therefore necessary for TESCO to be aware of technological advances that can provide the
organization the opportunity to gain an advantage over its competitors. Technology can also
help to improve the distribution service as the consumers can have better accessibility to the
products from mobile devices (Kogan et al. 2017). The organization also needs to be aware of
disruptive technologies that can improve convenience of the customers which can foster their
implementation. Such disruptive technology can help TESCO to increase its market share if
used properly and meet the market standards for distribution (Buckley and Hashai 2014).
Thus technology can be a significant opportunity for the organization to improve its
productivity and thereby increase its profit margin.
Environmental Factors: Factors such as global warming and climate change have impacted
every organization across the world. There is an increased expectation from large
organizations to implement environmentally sustainable strategies to mitigate the
environmental impact. TESCO has also shown commitment to reduce its energy consumption
and minimize the emission of greenhouse gases. To achieve this, organization spent millions
of pounds in UK as well as offshore locations like Thailand. This have also put an economic
stress on the organization and increased the necessity of organizational change and
optimization of the operations to minimize costs (Epstein 2018).
Thus the environmental impacts indirectly could have led to a disadvantage towards
organizational growth, as it had to struggle to maintain its commitment towards
environmental policies while trying to maintain its profit margin.
Legislative factors: Several legislative factors have impacted the operation of TESCO,
especially due to the diversity of products sold by TESCO and its multinational presence. In
UK, agricultural policy reforms that reallocated the direct subsidies to the farmers actually
caused a reduction in the subsidies and reduced the farmer’s ability to maintain the standards

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of agriculture required by TESCO (Franks 2016). This have resulted in TESCO having to sell
the products at a loss due to its lower product quality and also impacted the brand image.
This was a significant disadvantage for the organization as it allowed the marketing
of below par quality of products.
SWOT Analysis:
(Figure: SWOT analysis of TESCO. Source: self work)
-How to address the issue
Strengths:LargecompanysizeMultunationalpresenceSignificantCashReservesSignificantBrandEquityLonghistoryoftheorganizationAWeakness:CompetetionAllegationsofunethicalpracticesInadequatemonitoringofitsoperationsFinesimposedonthecompanyonfraudchargesClosingofseveralstoresacrosOppertunities:IncreaseinGDPIncreaseinonlineshoppingTechnologicalAdvancementsStrategicalliancewithotherbThreat:IncreaseinVATIncreaseinnegativepublicityduetopoorproductqualityGlobalClimatechangeRiseinthecostofrawmaterialsGovernmentalregulationsMoreSWOT

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In order to address the ethical and sustainability concerns for TESCO, it is important
to improve the brand image of the company and provide assurance to the consumers as well
as the governing bodies on the company’s commitment towards the quality of products and
towards ethical code of practice (Carayannis et al. 2015). Discussed are some strategies by
which the company can improve the brand image and provide assurance to the consumers:
Improving Public Relations: Using strong PR, the organization can disseminate the key
messages and values of the company to the public through online as well as offline media,
trade publications and news articles. A strong PR campaign can reposition the organization at
the top of the industry by gaining the trust of the consumers and stakeholders and thus
improve brand image. Good PR can also provide assurance to the consumers about the
product quality and the effort of the organization to meet their expectations and address their
concerns (Foxall 2014).
Improving the Credibility and Consistency of products: It is vital that the organization focus
on developing the consistency of the products as well as its credibility. This would imply
improving the product quality, avoiding false advertising and unethical operations within the
organization. The credibility of the organization can also be increased by improving
responsiveness of the company towards the consumers and their concerns (Hutchinson et al.
2015).
Involving in CSR activities: The organization can be involved in CSR practices through
various activities such as fair business activities, environmental awareness activities,
community health programs as well as employee welfare programs which can help to
promote the brand image. The organization can also show its focus on human rights and
positive work culture to improve its brand image (Pérez 2015).

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Increasing Community Involvement: TESCO can increase its involvement in local
communities through the CSR activities as well as local marketing campaigns and
community programs. This can help to increase the interaction of the company with the local
people and thereby gain their trust and improve their perceptions regarding the brand.
Community involvement can also help the company to understand the consumers in a better
way (Hutchinson et al. 2015).
Implementing stronger quality control measures: This is a vital strategy that can help TESCO
to ensure a consistent quality of its products and root out the practice of marketing below par
quality products to the consumers. Effective quality control can also help to ensure the
maintenance of the company’s commitment towards quality in its operations and
manufacturing (Foxall 2014).
Triple Bottom Line Approach: This approach focuses on three factors such as the people, the
planet and the profit. This approach helps to keep in focus the fair labor practices (people),
sustainable environmental practices (planet) and the organizations economic value (profit).
This approach can improve the consciousness of the organization towards their moral and
social responsibilities and thereby help to develop its brand image (Gouchev et al. 2017).
-SMART marketing objectives
Based on the strategies described above, SMART marketing objectives can be
developed for TESCO and ensure that the marketing activities are specific to address the
ethical and sustainability concerns outlined above, provide measurable outcome, provide an
actionable plan for the organization to work on, ensure relevancy of the plan with respect to
the desired outcomes and is time-bound in its execution (Chaffey 2015). Discussed below is
the SMART marketing objective for TESCO:

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Improving Public Relations:
Specific: Conducting marketing of social media and newspapers and participating in news
conferences to disseminate the commitment of the organization towards ethical work practice
and product quality. Using PR campaigns to strengthen ties with the public.
Measurable: A 25% increase in brand awareness.
Attainable: PR campaigns have helped TECO to increase their market penetration in Ireland,
Czech Republic, Hungary and Malaysia and a significant growth in its market share in these
countries.
Relevant: By improving the PR activities, the company can improve its brand image, improve
market penetration and brand awareness as well as improve the profitability of the company.
Time Bound: 2-3 months
CSR Activity:
Specific: Environmental awareness programs to educate the youth about environmental
change. Community health programs in the form of community clinics and free health
checkups for the economically disadvantaged. Fair work practice programs to highlight
company’s focus on fair work practice.
Measurable: 30% increase in brand’s goodwill.
Attainable: CSR activities have helped several organizations to improve its brand image and
goodwill.
Relevant: The CSR activities can help to emphasize on the commitment of the organization
towards environmental and social sustainability as well as its focus on fair business practice
(Carayannis et al. 2015).

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Time Bound: 3 to 6 months.
Implementing Stronger Quality Control and Quality Assurance Policies:
Specific: Policies aimed to maintain higher quality standards
Measurable: Increase in product quality by 10%
Attainable: This can be a challenge as higher quality would mean more costs for the
company. However, it would prevent marketing of below par product and thus maintain a
good brand image.
Relevant: Better quality products would gain the trust of the consumers and foster brand
loyalty (Epstein 2018).
Time Bound: 2 months
Increasing Online Traffic:
Specific: Using search engine optimization to increase online traffic.
Measurable: 50% increase in online traffic to the company’s website
Attainable: Search Engine Optimization can significantly help to increase online traffic by
keeping the company’s website at the top of search engine results.
Relevant: Increasing online traffic would help to increase the number of online purchases.
Time Bound: 1 month
-Integrated Marketing Mix and justification of choices
By using an effective integrated marketing mix, the organization can significantly
optimize its marketing process and help to improve its market penetration as well as brand
image (Andrews and Shimp 2017). An effective marketing mix can be developed using the 7

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Ps of marketing which involves factors such as: Product, Price, Place, Promotion, Physical
Evidence, People and Process (Kushwaha and Agrawal 2015). Discussed below is the
marketing mix for TESCO based on the 7 Ps frameworks:
Product Quality: TESCO can increase the range of products to attract more customers and
expand its business. The quality of the products can also be developed and the company can
take actions to ensure maintenance of the product quality. Moreover, it is also important that
the company should label the products properly and honestly and not use fake farm names to
give false impressions to the consumers (Kushwaha and Agrawal 2015).
Pricing of products: TESCO can price the products based on its quality, source, availability
and cost of production. It is vital that an effective pricing is utilized to prevent unethical
pricing strategies for the products. Labeling products according to the price range can also
help the customers to choose the product based on their purchasing power. The company
should also continue marketing its low price as well as high quality products simultaneously
to attract a larger consumer base. Discounts can also be offered by the company to further
improve sales (Andrews and Shimp 2017).
Place in the market: The Company can have multiple warehouses for the storage of different
product categories which can help in better supply chain management and thus optimize its
operations (Epstein 2018).
Promotion strategy: TESCO can use online as well as offline advertisements as well as
providing offers on selective products. Offers such as ‘buy one and get one free’ can help in
product sales, and effective clearance of the stock. Advertisement campaigns can also be
conducted on newspapers, television and radio to maximize brand awareness and sales
(Andrews and Shimp 2017).

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Physical evidence: The stores can use effective display strategies by placing the products
based on their categories, price and usage. High quality as well as budget products can be the
physical evidence of the product diversity (Epstein 2018).
People: TESCO should also focus on employee and staff training on effective strategies to
retain and engage more customers and thereby improve the sales and brand loyalty among the
consumers (Kushwaha and Agrawal 2015).
Process: The marketing process should aim towards consumer’s satisfaction and to enhance
their experience when buying from TESCO. Factors such as quick billing, online payments,
customer service and addressing customer grievance can further improve the marketing
process (Andrews and Shimp 2017).
Promotions: Another factor that can be included in the marketing mix is effective promotion
of sales through various strategies such as coupons, price packs, product samples, patronage
rewards, point of purchase systems, lotteries and games, seasonal promotions and product
rebates. The company can also use both push and pull strategies to promote its products in a
more effective manner (Caber and Albayrak 2016).
Conclusion
TESCO is an international retaining, merchandising and grocery company with
multinational presence. The company is based in UK and is one of the market leaders in the
industry with a significant market share in the UK. Since its foundation in 1939, the
organization has seen enormous growth and development, spreading to multiple countries.
However, the organization also faced several criticisms on unethical business practices that
significantly tarnished the reputation of the company, impacted its revenues and long term
sustainability. The study analyzed the factors that have impacted the organizational processes

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and allowed the unfair working practices to continue. A PESTEL and SWOT analysis have
helped to show how the internal and external environmental factors contributed to the
problem as well as identify the key strengths and weaknesses of the organization. Strategies
to address the issue have also been outlined that can help to overcome the challenges faced by
the company and SMART marketing objectives have been developed for an effective
marketing campaign. Moreover an effective marketing mix have also been developed that can
help TESCO to improve its market penetration and brand image and thereby helping to
improve the revenue of the organization.

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