Strategic Retail Marketing and Promotions for TESCO in Malaysia

This report analyses the retail marketing strategies of TESCO in Malaysia. It covers the roles and nature of the retail market, 7P's, PESTLE analysis, STP, customer acquisition and retention, innovation and trends, and recommendations. The report also includes a comparison of TESCO's strategies in the UK and Malaysia.

Running head: TESCO 0
Strategic Retail Marketing and Promotions
TESCO

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Executive summary:
TESCO is the company that is a very big name in the retail industry. This is the company that is
headquartered at UK and has set up many of its stores in different countries. All over the
company have its stores in around 15 countries. Malaysia is one of those countries where the
business of TESCO is gradually uplifting. It has been analysed that the retail market of Malaysia
has high potential and thus results in providing many opportunities that can be explored by
TESCO.

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Table of Contents
Introduction:...............................................................................................................................................1
Roles and nature of retail market:...............................................................................................................1
7P’s..............................................................................................................................................................2
PESTLE.........................................................................................................................................................5
STP:..............................................................................................................................................................6
Customer acquisition and retention:...........................................................................................................7
Innovation and trends:................................................................................................................................7
Recommendations:.....................................................................................................................................9
Conclusion:..................................................................................................................................................9
References:..................................................................................................................................................9

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Introduction:
Setting up the business in the international market requires the company to analyse the market
and the environment of the international country. Tesco is a British general merchandise and
multinational grocery retailer having its stores situated in 12 countries across Europe and Asia.
TESCO is the company that is headquartered at UK and has stepped into Malaysia as well. It is
also a market leader in grocery in UK, Hungary, Ireland and Thailand. There is a constant
increase in the revenue of the company over the years and is currently reported to be increased to
£55.92 billion in the year 2017 from £53.93 billion in the year 2016. The main competitors of
Tesco include Sainsbury’s, ASDA, Lidl, Aldi, Waitrose and Morrison’s. In terms of profits,
Tesco is the third largest retailer in the world. Moreover, Tesco has occupied the position of
ninth largest retailer in terms of revenue. In the year 2016, Tesco Malaysia was ranked at first
position among the other retailers in Malaysia by Kantar World panel.
The trends in the retail industry are at the changing phase due to various new developments and
varying demands of the customers. Nowadays, those retail businesses are becoming popular who
are involved in the promotion of transparency of operations, better quality of products and the
adoption of sustainable practices. Moreover, the provision of unique in- store services to the
customers is becoming popular among the retailers. The latest technological developments have
necessitated the retailers across the globe to adopt mobile payment solutions. Also,
personalization of services has also become a trend in the retail industry for enhancing the
experience of the customers on the stores and while making online purchases.
Following is the report that focuses on analysing the strategies of the company in the local
market that is UK and the international market that is Malaysia.
Roles and nature of retail market:
Retail market is the market that deals with selling the consumer goods to the market. It is very
much required to manage such retail market and the industry as a whole. This is because when
the monopolistic conditions appear, the market tends to exploit the consumers by charging high
prices as they are selling consumer goods which need to be bought by the consumers at any cost.
There are various components of retail market such as product, rice, place, promotion, customer

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services, presentation etc. Retail is the market where the retailers are directly in contact with the
customers while wholesale is the market that sells bulk products to the retailers.
In UK: UK retail sector involves all the business that deals with selling the goods to the public. It
covers all the large chains and the department stores along with the independent and virtual
stores. This sector employed around 10% of the al over UK workforce. This is the largest private
sector of the country and accounts for more than 5% of the total revenue of the country’s
economy (Hassan and Rahman, 2012). Tesco is one of the firms from the retail industry that is
headquartered in UK. IT is confided as one of the largest firms in the industry and faces
competition from some other firm such as Sainsbury, Aldi etc. Wal-Mart is the very big name of
this industry and thus it is big competition for Tesco.
In Malaysia: Malaysia is the country having very large and growing food retail sector. This
industry is supplied by many local and imported products. As far as the data of 2016 is
considered, it has been counted for about US $ 16 billion in Malaysia. The predictive growth for
this sector in the next year is 3% and this is the slowest till now. Retailers face higher costs of
doing business with the depreciation of the Malaysian Ringgit and government increased subsidy
rationalization (Munusamy and Wong, 2008). The spending power of the Malaysian people is
decreasing and thus the companies in the retail sector are facing the consequences. Online
retailing is also gaining much attention by the people in Malaysia and Tesco has taken the
initiative to serve the customers by online stores. Since then, most of the major retailers at the
country have followed the way and started their online stores such as Lazada, MilkADeal etc. the
retailer have also collaborated with the taxi services such as UBER to deliver the festive gifts to
the customers at the time of special occasions (Chamhuri and Batt, 2013).
7P’s:
TESCO 7P’s at UK (Local market) and Malaysia (International market)
UK MALAYSIA
Product TESCO offers a great variety
of products such as:
 Clothing & jewelry
In terms of product, the company
provides the products of daily needs to
men and women. It provides the

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 Technology & gaming
 Health & beauty
 Home electrical
 Entertainment & books
 Home appliances
 Baby & toddler
 Garden
 Toys
 DIY & Car accessories
The range of products
availability depends on the
type of the stores. Express
stores have least products
while extra stores have large
variety of products.
customer with the goods that are
produced and is serves the market as the
solution for the goods problem (Wel, et
al.2012).
Price The price strategy of the
company is defined by cots
leadership. It has been
analysed that the marketing
message of the company that is
“every little helps” clearly
justifies the marketing strategy
of the company (Mohd Roslin
and Melewar, 2008).
Competitive and low piece strategy of the
company helps it to be very effective in
the market. Low price strategy of the
company helps it to earn more revenues
and customers. The business of TESCO
in Malaysia has implemented a strategy
of Everyday reduced pricing.
Place Place is about the location
where the company serves the
customers. In this case, Tesco
serves the market with online
and offline mode.
TESCO is Malaysia operates with 36
merchant and two platforms. There are
two platforms such as TESCO
hypermarket and TESCO added
hypermarkets. Hypermarket is the place
that allows the customers to buy every
kind of products under one roof. TESCO

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added hypermarket is the structure that
serves the requirements of individuals,
businesses and households just in one
place (Choo, 2010).
Promotion Even in the advertisement by
print or broadcasting media,
the company focuses on
promoting its low price
strategy as this is the major
strength of the company
(Ahmad, Ihtiyar and Omar,
2014).
TESCO is the company that is very much
dependent on its promotional activities
and is very active in conducting new
promotional practices now and then.
They offer specialised prices daily and
other offers to the customers. The
company also promote its brand name
with billboards, catalogues etc.
Process The process of the company is
very fast in UK. This is
because it the place where
headquarters are located. It has
been analysed that the major
process of the company
focuses on delivering the
satisfaction to the customers
by fast billing and resolving
their grievances.
Some of the elements of the TESCO
process are:
-We try to get it right first time
-We deliver consistently everyday
-We make our jobs easier to do
-We know how vital our jobs are
-We always save time and money
People Although, the company
focuses on employees as well
as customers but the great
concentration remains in
training the sales staff.
As far as the people are concerned, it has
been analysed that the company respects
it customers but also respects its
employees as well. The value of the
company suggests that the company
believes in respecting the personnel that

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are associated with the company. It has
been analysed that the company not only
focuses on supporting the employees but
also supports the customers (Grewal and
Levy, 2007).
Physical evidence The stores of TESCO UK are
not overly elaborated like that
of Sainsbury. They are clean
and attractive as the company
does not believe in spending
much on making the ambience
fancy.
Tesco ensures that as soon as the
customers enter the merchant or the store,
they should experience a personal feel
that comes from the ambience of the
store. The ambience of the store includes
the lightning effect, shelves, marking of
the prices; placement of the stock etc.
facilitates the customers and helps the
customers to have great shopping
experience.
PESTLE:
PESTEL components Malaysia UK
Political Malaysia is the country that
rules with multi-party
democracy. This results in
instability of the government
and thus affects the business
of the international countries
in Malaysia (Hassan, et al.
2013).
UK political scenario is very
favourable for the companies
like TESCO.
Economical the economy of the country is
experiencing a gradual and
The economy of UK is very
stable and although TESCO is

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slow growth and it has been
forecasted to be grown
continuously. Even the food
retail market is experiencing
the similar type of growth in
Malaysia thus facilitates
TESCO to increase its sales.
Even the important duties on
the food products are also low
(Munusamy and Wong, 2008).
the company that is growing
internationally but still
dependent on UK market.
Social Most of the population in
Malaysia is Muslim and thus
they demand the halal
products that affect the food
products imported out of the
country. The products of
TESCO need to comply from
this religious requirement.
As per the recent trends in
UK, most of the people prefers
to do one stop shopping and
thus TESCO has included
many non-food items as well
in the stores.
Technological in terms of technology,
Malaysia is not upgraded as
per the conditions in the other
countries (Rambeli, et al.
2017). Technology is the very
integral part of supermarket
industry. All the processes like
billing, entry, order
processing, inventory etc.
requires technological
systems. Some of the major
Online shopping is the very
known technological
advancement that has changed
that nature of retail shopping
and TESCO has also started
the same.

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technologies that the company
uses are:
 Wireless device
 Intelligent scale
 RFID
 Electronic point of sale
Environmental the environment of Malaysia
is continuously deteriorating
and thus affects the production
of the gods here. It hardly
affects the imported goods and
thus TESCO is not directly
affected by the environment.
But, the deteriorating
environment drives the
companies to make their
process environmentally
sustainable in nature.
Tesco is clearly committed to
reducing its carbon footprint
by 50% by 2020. Also, Tesco
is minimizing the waste
produced in their stores by
increasing social conscience in
customers.
Legal As far as the legal factors are
concerned, TESCO has to
meet the legal requirements of
exports and imports as it is a
UK based company.
The Food Retailing
Commission has suggested
some of the code of conduct
that needs to be followed by
the companies like TESCO.
Technological environment:

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STP:
Segmentation: segmentation is the process that deals with dividing the market as per the common
characteristics of the population. TESCO has segmented the market in various ways such as on
the context of geographic region, demographic characteristics, psychographic and behavioural
characteristics (Abdullah, et al. 2012). Geographic characteristics of Tesco include those
countries where the consumers have high demands and buying power for the retail items such as
US, UK, Thailand, South Korea, etc. In the urban regions, Tesco Metro is located while in the
sub- urban regions, Tesco Extra, Tesco Superstore and Tesco Express is located. The
demographic characteristics of Tesco include consumers of all age groups with middle to high
income levels. However, lower income groups make the purchases of everyday value range from
Tesco. The consumers include businessmen, professionals, students, etc. The psychographic
characteristics of Tesco include the provision of best range of products to all social classes from

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lower to upper class. It also considers the preferences and lifestyles of all the individuals such as
stylish fashion for youngsters and professional wear for the business class. The behavioural
characteristics of Tesco include increased sales at the time of seasonal promotions for summers/
winters, Christmas and New Year. The Clubcard scheme of Tesco attracts the loyal customers
and also some of the non- loyal customers.
Targeting: this strategy defines the preferences of the company in order to sell the products. As
far as TESCO is considered, it is the store that serves the overall market that is from kids to
adults and from men to women. Thus, the company has to make the marketing plan as per the
target market of the company that includes all. However, such plan is dependent upon the
demographic, geographic, psychographic and behavioural elements. In geographic, the prime
focus of Tesco is in UK as it is their core business. In demographic, everyday value range is the
area of focus for Tesco due to the generation of large profits in the previous years from this
range. In psychographic, the focus is on the consideration of different lifestyles of different
people for meeting their tastes and preferences. In behavioural, customer loyalty is being pursued
by way of improving clubcard scheme.
Positioning: positioning is the strategy based on which the company has to make its own image
in the minds of the customers. As far as Malaysian customers are considered, TESCO is the
brands that are cheap for them. Customers believe that they can get anything of their need under
one roof in cheap prices as compared to other stores. It has become successful in positioning
themselves as the brand that provides high quality products along with providing convenient
shopping options to the customers that saves their time. Tesco is more customer focused in
comparison with its competitors as it has also launched Clubcard facility that is a way of giving
something back to their customers for their regular patronizing in Tesco.
Customer acquisition and retention:
Malaysia has the multi-racial population and thus the choices and preferences of the customers
also differ greatly. In terms of lifestyle, the population of Malaysia is gradually becoming
sophisticated and thus they prefer to consume more imported goods and products (Chamhuri and
Batt, 2009). About half of the population in Malaysia falls under the category of high and middle
income groups and thus have good purchasing power but in case of daily requirement items,

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people prefers to go to the stores that provide them offers and discounts along with low prices
products. TESCO’s cost leadership strategy helps the company to acquire more and more
customers in Malaysia. The customer’s acquisition strategy of TESCO is Malaysia is providing
all the required products under one roof (Ihtiyar, Ahmad and Baroto, 2013). For acquiring
customers it has become a place where customers can fulfil all their requirements by getting both
food and non- food items. It also focuses on keeping its prices low in comparison of its
competitors. Its pricing strategy is also region specific. It has located its stores in the prime
locations where the people can get east access. It also adopts short- term and long-term
promotion measures for the acquisition of customers.
The customers can be retained by the company by providing them the offers on regular basis.
Offers for the loyal customers are also one of the strategies that results in strong loyalty of the
customers and their retention. Clubcard facility is provided to the customers for retaining the
customers on long-term basis. Moreover, the excellent quality of products provided by Tesco for
meeting almost every requirement of the customer works as a measure of customer retention.
Innovation and trends:
Hypermarket retailing is extremely recognized by Malaysian consumers as the main passage to
buy basic domestic requirements. In general, the development of hypermarkets has been far more
violent than supermarkets and shopping malls. This offers plenty of room to work on definition.
It can also be anticipated that the definitions for supermarket and shopping mall will be
sufficiently clarified through other research to prevent an overlap of definitions and confusion
among the retailing concepts (Kamarulzaman and Lih, 2010). Moving forward, it is expected
that hypermarket retailing in Malaysia will unceasingly develop with more innovative ideas
through partnership between practitioners and researchers with the consensus of consumers.
The retail market is not only expanding by enhancing the products range in Malaysia but also
taking the advantage of various innovations in their processes. TESCO and other such companies
have made use of self-check-out technology. It is the technology that helps the customers to
conduct al the purchase activities themselves. This innovative trend in the retail industry is
Malaysia is very popular and helping the industry to grow.

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The market share of TESCO suggests that it is increasing gradually and will make its leading
place in the Malaysian market soon.
Retail sector in Malaysia is developing with accelerated rate and this is because of the changes in
technologies and behaviour of the consumers. . Integrating channels and the power of big data
are not distinctive factors anymore but rather are prerequisites of competitiveness. As far as the
future growth in the sector is considered, it has been analysed that TESCO has made many
objectives that needs to be achieved to grow in order to be competitive in future (Hassan,
Mahdee and Sade, 2015). Some of the objectives of the company will be the strong pipelines of
the stores, maintaining better and transformed relationship with the stakeholders, growth towards
organic process etc.
Recommendations:
Following are some of the recommendations that the company should follow in order to be more
progressive in future:
 Compacting the stores so that they become more sorted for the customers
 New organic section should be introduced
 Serving the market with some localised products

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 New stores should be introduced in places where there are no such stores
 Attracting the customers on social media platforms by putting out content that is
emotional, cognitive and behavioural.
 Taking steps for the reduction of operating cost in order to server the customers with
lowest prices in the market.
Conclusion:
It has been concluded from the report that TESCO is one of the leading supermarket chains in
Malaysia and is serving the customers with wide variety of products, it has been analysed that
Malaysia market is suitable for more business growth for the company and thus the company has
many opportunities to explore in this market.
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M.T.H.M., Armia, R.N., Mat, N.A.N., Derani, N., Samsudin, M.M. and Zain, R.A., 2012. The

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