INMT019CL Retail and Services Marketing: Tesco Analysis

This report provides a comprehensive analysis of Tesco's retail marketing strategies, examining its operations in both Malaysia and the United Kingdom. The study delves into the role of retail marketing at both local and international levels, highlighting its contribution to employment generation and customer satisfaction. It presents an overview of Tesco's marketing mix, including its pricing and store presence. Furthermore, the report evaluates the macro and micro environmental factors, including competitive rivalry, and formulates a STP analysis for the company. It also explores customer acquisition and retention strategies, the implications of innovation in marketing activities, and future trends in the retail sector. The analysis covers aspects like product offerings, pricing strategies, distribution channels, promotional activities, and the role of people, physical environment, and processes. The report also examines the political, economic, social, environmental, and legal factors affecting Tesco's operations in both countries.

Running head: RETAIL AND SERVICES MARKETING
Retail and Services Marketing
Name of the Student
Name of the University
Author Note

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Executive Summary:
The paper discusses regarding a specific organization named as Tesco which operates in the
global retail industry. The study provides a narrative discussion regarding the role and nature
of the retail marketing in Malaysia and United Kingdom and portrays the contribution of
retail market in generation of employment and in meeting the diverse demands of the
customers in a professional manner. Along with that, the study presents an important
discussion regarding the marketing mix where the application of low pricing and strong store
presence of the company at the global and local level is prominent. The study evaluates the
macro and micro environmental factors which highlights the intense level of competition of
the retail industry. Other than this, the study includes the formulation of a STP analysis for
the company and along with that, the study provides an important analysis regarding the
incorporation of the innovation in the marketing activities of the company.

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Table of Contents
Introduction:...............................................................................................................................3
Nature and Role of retail marketing at the local level:..............................................................3
Nature and Role of retail marketing at the international level:..................................................4
Retail Marketing activities:........................................................................................................5
Situational Analysis:..................................................................................................................5
Cognitive:...................................................................................................................................7
STP:............................................................................................................................................9
Segmentation:.........................................................................................................................9
Positioning:............................................................................................................................9
Target:....................................................................................................................................9
Customer Acquisition and Retention:......................................................................................10
Implications of innovation in the products and services:.........................................................10
Implications of the future trends in the marketing activities:..................................................11
Conclusion:..............................................................................................................................11
References:...............................................................................................................................13

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Introduction:
The study is based on one of the largest retail companies operating in the British
market which is Tesco. The study analyses the role of retail marketing at the local and
international level. In addition to this, the study delivers an efficient understanding on the
marketing programmes with specific mention of 7P. Apart from this, the study evaluates the
micro and macro environmental factors that the company is subjected to, at international and
national level. Along with that, the study provides an efficient analysis in relation to STP of
the chosen organization. Other than this, the study highlights the importance of the customer
retention activities and the significance of the innovations and future trends on the
performance of the company.
Nature and Role of retail marketing at the local level:
With a detailed consideration towards the retail industry of Malaysia, it is
understandable that the role of the industry in generating increasing number of employment
and in meeting the demands of the general customers is substantial.

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(Information: Number of people employed in the retail trade industry in Malaysia from 2010
to 2017 (in 1,000s))
(Information Courtesy: Statista.com 2020)
From the statistics, it is evident that the employment in the retail industry of the nation
has increased substantially. Other than this, the retail sales of the global direct selling industry
is observed to reach 5.29 billion U.S (Statista.com 2020). dollars which highlights the
enhanced ability of the industry in meeting the various needs of the customers in a
professional manner.
Nature and Role of retail marketing at the international level:
Similar to Malaysia, the retail marketing is observed to play a crucial role in
increasing the number of employment in the region which is prominent with the employment
of 3193000 number of employees in the year 2018 (Statista.com 2020). Other than this, the
retail marketing is seen to meet the diverse demands of the customers in a professional

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manner in the nation and along with that, one of the important factor in the retail industry of
the nation is seen to be the ability of the organization in applying the low pricing strategy.
Retail Marketing activities:
Product: The company is expected to offer grocery and FMCG products to their customers
(Tescoplc.com 2020).
Pricing: The company has the reputation of applying low pricing strategy which enables the
company to target the customers of different income levels.
Place: The company is observed to have strong presence across the globe both in the form of
brick and mortal stores and online stores.
Promotions: The company is observed to conducts social media based promotions and along
with that, the company follows the practice of the offline promotions with the help of the
newspapers and magazines.
People: The company is seen to employ 450,000 number of employees across the globe
(Tescoplc.com 2020).
Physical Environment: As mentioned earlier that the company has strong presence across the
globe and that is visible with 6800 number of physical stores (Tescoplc.com 2020).
Process: the company is seen to apply various technological gadgets for the smooth
management of their business actions which is visible with Customer Relationship
Management system and Management Information System.
Situational Analysis:
Malaysia:

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Competitive Rivalry: High: AEON, Glant, Cold Storage, Sam’s Groceria and Village Grocer
are observed to provide tough competition to Tesco in Malaysia (Aeonretail.com.my 2020).
Threat of New Entry: High: The substantial growth of the retail market of the nation have
influenced increasing number of new companies such as Jaya Grocer, Jasons Food Hall and
Presto Grocer to enter into the market (Mymydin.com 2020).
Threat of Substitution: High: The ability of the competitor organizations in utilizing low
pricing strategy for their products, applying product diversification strategies for increasing
the product chain and to continuously enhance the quality of the products, is increasing the
threat of substitution for Tesco (Siah et al. 2018).
Bargaining Power of Buyers: High: The application of low pricing, product diversification
and continuous quality enhancement strategies from the part of the competitor organizations
is increasing the number of options for the customers.
Bargaining Power of Suppliers: Low: The ability of the suppliers in supplying accurate
quality and on time delivery amongst the majority of the supplier organizations of the nation
is ensuring low bargaining power of the suppliers.
United Kingdom:
Competitive Rivalry: High: Sainsbury’s, ASDA, Morrisons, Aldi and Lidl have the potentila
to provide tough competition to Tesco (Asda.com. 2020).
Threat of New Entry: Low: The substantial market share of the established companies is the
main reason of low threat of new entries in the market.
Threat of Substitution: High: Majority of the above mentioned companies are continuously
applying competitive prices, diversifying their product offerings and are keen on

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incorporating the customer inputs in their design and that increases the threat of substitution
for Tesco (Thomassen et al. 2017).
Bargaining Power of Buyers: High: The development of optimum quality bestseller products
from the part of the above mentioned competitors and offering the same at considerably low
prices, are increasing the bargaining power of customers.
Bargaining Power of Suppliers: Moderate: The availability of the suppliers with the services
of cold storage, ability of on time supply, accurate quantity and lucrative discounts at bulk
purchases, prepares Tesco to face moderate bargaining power of suppliers.
Cognitive:
Malaysia:
Political: Strong Connection with the world recognized associations such as United Nations,
Commonwealth of Nations, ASEAN and Organisation of Islamic Cooperation (Asean.org
2020).
Along with that, the country has a stable yet corrupted political system which is a point of
concern for Tesco to run their business in Malaysia.
Economic: The estimated GDP (PPP) of the nation is expected to increase to 1.148 trillion
US dollars by 2020 (Tradingeconomics.com. 2020).
The estimated GDP (Nominal) of the nation is expected to increase to 381.523 billion US
dollars by 2020 (Ceicdata.com. 2020).
As a result, Tesco is subjected to a strong economic growth in Malaysia.
Social: The Human Development Index of the nation is as high as 0.804 in 2018
(Hdr.undp.org. 2020).

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The citizens of the nation are considerably tech savvy which is visible with the substantial
presence of them in social media and online platforms.
Environmental and Legal: Environmental Quality Act of 1974 is the heart of the
environmental sustainability of the nation (Env.go.jp. 2020).
The labour legislation of the nation is dependent on the Employment Act 1955, Industrial
Relations Act 1967, Employment Regulations Act 1980 and Employees Social Security Act
1969 (Ilo.org. 2020).
United Kingdom:
Political: Proactive Government of the nation, comparatively fair environment increases the
suitability of UK for Tesco, however, Brexit has an important say in the sustainable business
management of Tesco in UK.
Economic: The estimated total GDP (PPP) of the nation was expected to be 3.131 trillion in
2019 (Tradingeconomics.com. 2020).
The estimated total GDP (Nominal) of the nation was expected to be 2.744 trillion in 2019
(Ceicdata.com. 2020).
Hence, it is understandable that UK is a strong economy for Tesco.
Social: The Human Development Index of the nation is 0.920 in 2018 which is considerably
high (Hdr.undp.org. 2020).
The high HDI score highlights the rise of literacy amongst the people of the nation which
provides greater agility to Tesco in gathering skilled and experienced professionals.
Environmental and Legal: Climate Change Act 2008, Environmental Protection Act 1990,
Control of Pollution Act 1974, the Carbon Budget Order 2011 and the National Environment

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and Rural Communities Act 2006 are the main basis of the environmental legislation in the
nation (Legislation.gov.uk. 2020).
The Workplace Regulations 1992, the Health and Safety Regulations 1992, Manual Handling
Operations Regulations 1992, Personal Protective Equipment at Work Regulations 1992 and
Working Time Regulations 1998 are observed to shape the employment legislations in the
nation which Tesco is required to take care in a professional manner (Seton.co.uk 2020).
STP:
Segmentation:
The company is inclined towards attracting the customers who belong to the Middle
class and premium class household categories (Tescoplc.com 2020). The organization is
primarily inclined towards operating in the form of the retail or departmental stores.
Positioning:
Tesco is able to position their business in a perfect manner for becoming the best
choice for their customers in meeting their daily needs in an easy manner. Along with that,
the company is dedicated in delivering top quality products to their customers at a
considerably comfortable prices (Tescoplc.com 2020).
Target:
Gender: The FMCG and grocery products are dedicated for both male and female customers
and that is prominent with the consumption characteristics of the same.
Age: The customers belonging to the age group of 15 to 45 years are the main target for the
company.

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Income Level: The company is inclined towards targeting the customers belonging to the
income level of 90000 MYR per annum or above as that will be suitable considering the
ability of the company in applying the competitive or low pricing.
Others: The customers who have the tendency of using social media in an increased manner,
will be the target of the company as they will certainly provide considerable amount of ease
to the company in implementing the marketing communications.
Customer Acquisition and Retention:
The practice of the customer acquisition and retention related activities is observed to
be notably high in the modern world of trade. Considering the business operations of Tesco,
it is evident that the primary customer acquisition strategy, for the company is to deliver
continuously increasing quality in their products. The extensive training and developmental
facilities for the employees is playing a crucial role in delivering top quality products to the
customers. Along with that, the application of low pricing is also an important factor
influencing the customer acquisition ability of the company.
With an in depth consideration towards the importance of the customer retention in
the company, the substantial significance of Tesco Clubcard is notably prominent. The
company serves a series of benefits to their customers with the help of the clubcards to
recognize their loyalty towards Tesco (Chowdhury 2016). The attractiveness of the clubcards
is pretty prominent with the discounts and value added benefits that the card provides to the
customers.
Implications of innovation in the products and services:
Considering the products and services that the company offers to their customers, it is
understandable that the incorporation of the innovative solutions and technological gadgets in
the design of the products and services has the capability to provide greater value to the

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customers. Being one of the top most grocery sealers of the nation, the company faces the
necessity of utilizing the services of technological gadgets for the purpose of processing of
the products, storing the products and for the marketing of the products. Along with the
infrastructure of the cold storage for better processing and storage of the products can be
efficiently managed with the help of technology or innovative solutions.
Implications of the future trends in the marketing activities:
With a detailed consideration towards the future trends in the marketing activities, it
is visible that the company has the scope of promoting their business through the social
media platforms in a more efficient manner. The company follows the practice of the social
media marketing through utilizing their presence in various social media platforms such as
Facebook, YouTube, Twitter, Instagram and Pinterest (Tescoplc.com 2020). However, the
increasing efficiency in the marketing team of the company in creating the marketing blogs
and marketing content is observed to be the need of hour for the company. Other than this,
the company has the opportunity to utilize the exhibition for sales programs so that they
achieve the desired ease in communicating with the customers regarding the products and
services that they offer. In addition to this, the 360 degree video creation from the part of the
company for promoting their business activities and the store infrastructure, will be of great
significance for the company in enhancing the attractiveness of the marketing activities of the
company (Allen et al. 2016).
Conclusion:
On a concluding note, it is visible that the company has sufficient amount of scope of
conducting stable business in Malaysia. The economic stability, increasing purchase intent of
the customers and possibility of gathering higher amount of revenue are considered to be the
main influential factors for the company in professionally establishing their business in