Comprehensive Marketing Audit Report: Tesco's Performance Analysis

This report presents a comprehensive marketing audit of Tesco, a leading UK retailer. It begins with an introduction to marketing concepts and then delves into an external marketing audit, utilizing PESTLE analysis to examine the political, economic, social, technological, legal, and environmental factors impacting Tesco. The report also analyzes micro-environmental forces such as customers, competitors, suppliers, and promotional strategies. It then assesses Tesco's current marketing position by evaluating its product offerings, pricing strategies, promotional activities, and customer-centric approaches (4 P's). The report further explores customer satisfaction through the service-profit chain model, highlighting the relationship between employee satisfaction, customer loyalty, and profitability. The analysis includes how Tesco targets families and young people. The report concludes with a discussion of Tesco's strengths and strategic initiatives to maintain its competitive advantage in the retail market. The report also references relevant academic sources.

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Management Perspectives
7/29/2019

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Contents
Introduction...........................................................................................................................................3
(A). External Marketing Audit Information...........................................................................................3
1. Macro-environmental analysis of Tesco (Pestle analysis)..........................................................3
2. Micro-environmental forces:.........................................................................................................4
(B). Tesco’s current marketing position...............................................................................................6
Conclusion.............................................................................................................................................7
Task 2: Customer satisfaction................................................................................................................8
References...........................................................................................................................................10

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Introduction
The report brings about the discussion on the concept of marketing and analysis of the
marketing functions, objectives, and strategies influencing organisational performance. The
discussion will carry out the assessment of external and internal factors affecting
performance, i.e. macro environment and micro environment. ‘Tesco plc.’ has been selected
as the company for the assessment of marketing audit and gaining an understanding of factors
influencing performance.
(A). External Marketing Audit Information
The term marketing audit refers to the systematic analysis and evaluation, interpretation of
business environment i.e. both internal and external. It has been found through research that
external audit describes the environment and market, in which the company operates.1
1. Macro-environmental analysis of Tesco (Pestle analysis)
Factors/Forces in environment Influence on the organisation
POLITICAL The political environment of the country UK is the major
factor impacting long-term profitability of the company.
Tesco is affected by the political factors such as tax rates,
current legislation, and unemployment rate. For an example,
the import duty on the goods affects the operations of
Tesco, as it relies on inventory from other countries such as
China, and East Asia.
ECONOMIC The factors such as inflation rate, savings, foreign exchange
and interest rates mainly impact the operations of Tesco. In
the country, labour costs has been a vital factor affecting
the supermarkets. The company should focus on the
increasing borrowing costs in UK, to control over demand
and prices.
SOCIAL In context to retail business, consumer shopping experience
plays a vital role, as people prefer one-stop shopping.
1 Armstrong, Marketing: an introduction.

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Therefore, Tesco ensures providing services to the UK
customers as per their demands.2
TECHNOLOGICAL Tesco works with high efficiency and uses modern
technologies such as RFID was introduced to improve the
in-store experience. Online payment system is also used by
the company called as Pay Qwid.
LEGAL Employment, safety law, anti-trust law, and consumer
protection against any kind of discrimination are legal
factors that impact the working of Tesco. It can be stated
that Tesco must comply with the Food retailing commission
(FRC) strict code of practice, to increase effectiveness, and
attain high levels of customer satisfaction.
ENVIRONMENTAL For protecting and preserving environmental resources the
company encourages their customers to purchase from
Tesco.com, and Tesco van drivers collect wastes from
customers, along with the use of fuel. They make use of
renewable sources and generate electricity.
Thus, the above pestle analysis of Tesco has demonstrated well, that the company sustains a
great level of competitive advantage in the industry, with better performance.
2. Micro-environmental forces:
The main competitors of Tesco are ASDA, Sainsbury’s, Morrison’s are often called the big
four competitors as retailers in UK.
Customers
Discussing about the customers, it has been found that Tesco targets everyday people, and
provide them best products. For an example, Tesco provides the cod liver oil, to thousands of
2 Grosso, Sandro, Anjana, “How store attributes impact”, 117-124.

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mothers, who wish to supplement their children with the best diet. In addition, they also
maintain strong and healthy relation with their distributors and suppliers. Tesco supplier
network has been established that determines a strong connection, and optimum use of
resources.3
Suppliers
The major suppliers of Tesco include dairy farmers, house made family and other
manufacturers. The supermarket at Tesco works with the suppliers to keep prices low, that
reports an increase in the total sales.
Sales and profit margins
For promotion of their products in the markets across nations certain strategies, such as
advertising is mainly used as mass media by the company to attract customers. Good public
relation is another strategy integrated into Tesco’s marketing objectives to gain customer
attention, thereby increases sales. It has been found through the research reports that UK’s
biggest supermarket Tesco has earned almost 28% rise in the annual profits in the last year
2018, led by an increase in the rate of sales within last three months.
Costs
Costs of the firm, Tesco has been put under control by providing special discount offers ton
the customers. This is done to promote the sales, and sale out their products to the people.
The company also makes investments into different manufacturing activities to maintain the
quality of food, incurring costs.
Marketing information research
The marketing information research team at Tesco analyses the market to design new
promotional campaigns, and the way to effectively communicate with their customers.
Marketing research is a significant element of the marketing intelligence structure of any
3 Nikhashemi “The significant role of customer”, 182-188.

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organisation facilitating the decision-making process. Moreover, it denotes the marketing
research assist the top management for carrying out marketing activities of the company.
Effectiveness of Marketing mix elements
Besides, in consideration to the distribution of the products, Tesco has around more than
6,900 stores in almost 11 countries and stores are varied in nature, and customer needs,
determining the effectiveness of marketing mix. Thus, it can be stated that the retailer Tesco
has gained effective marketing internal audit leading to attainment of goals.4
(B). Tesco’s current marketing position
Now, this section will analyse the aspects and effectiveness of the marketing mix or 4 p’s of
retailer, i.e. Tesco.
Product:
I learnt from the research data and findings in context to the brand that Tesco has wide range
of product offerings at their various stores, i.e. electronics, clothing, financial services, and
others, and have 33 food categories and other products, determining their effectiveness in
terms of superior products. Therefore, I can state that the company has achieved a strong
position in the retail market of UK.
Price:
Moreover, the retailer has gained enough efficiency due to their pricing strategy, i.e. cost
leadership strategy which aims to fulfil the needs and demands of their customers. I have
analysed from the analysis of various companies, Tesco adopted the strategy of low prices
which attracted customers around the world. Moreover, Tesco has spread their operations in
various regions or countries, and the company is currently operating in 13 countries.5
Promotion:
For promoting the products of the brand, it has been analysed that Tesco has gained
efficiency through the use of various mediums. Examples here include hoardings, television
4 Efanny “The relationship between marketing”, 192-208.
5 Hökelekli, Lamey, Verboven, “The battle of traditional”, 11-22.

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ads, and charitable events as promotional events. The use of ‘Loyalty card’ i.e. club card and
discounts has been largely impacting by boosting the product attractiveness, and sales of the
company.6
People:
Tesco uses programmes such as Colleague Private card Save as you Earn, and others to
encourage people towards purchasing the products of the company. Thus, it has been
analysed that the company Tesco has achieved greater effectiveness in terms of the marketing
mix i.e. product, price, place, promotion, people, physical process, and physical evidence.
Internal recruitment, training and development, and code of conduct is practised effectively
as guidelines, to promote people working in the organisation.
Conclusion
To conclude the above discussion it has been analysed that Tesco has been a leading retailer
in the UK industry, and continues to achieve success. The report has demonstrated that the
company targets people or customers of all the age, and satisfies them through their products.
The discussion of the internal and external marketing audit has reported that the retailer has
gained efficiency in their performance in context to all the environmental forces.
Task 2: Customer satisfaction
The process of marketing management determines the plan to achieve and integrate the
marketing objectives of the firm in a certain time-period. The discussion in this essay will be
based upon the analysis of various marketing management tools or models to develop strong
relationships with customers.
Here, the consumer group ‘Families’ has been taken for the assessment of the marketing
activities of Tesco directed towards attaining maximum levels of customer satisfaction. The
6 Felgate, Andrew “Analyzing the impact”, 471-475.

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essay described the use of ‘service-profit chain model’ as the most effective marketing
strategy of the firm.7
Service-profit Chain model
The ‘service-profit chain’ model attempts to establish relationships between the aspect of
profitability and customer loyalty, employee satisfaction, and productivity. Therefore, it has
been found there is a connection between service on one hand, and profit on other. Tesco
identified the aspect that profitability, customer loyalty and satisfaction of employees
indirectly leads to increased customer satisfaction. Amongst these elements, customer
loyalty (or customer satisfaction) play a vital role in enhancing the total revenues or profits of
the firm. For attaining customer loyalty it is important for the firm to attain employee
satisfaction as it determines the quality of internal service quality.8 Employees play an
essential part in the organisation. It is because they are the people who undertake the several
functions in order to satisfy the customers. Employees of the Tesco have also given the
appropriate training so that they get the necessary information regarding changing needs of
the customers as well as changing internal requirement.
The implementation or application of the elements of service profit chain model has been
linked to customer satisfaction, in context to businesses such as retail stores, manufacturing
company, or banks.9
In context to the brand, Tesco loyalty has been a major factor that assisted in enhancing their
sales, and profits. The company earns customer loyalty through offering products at low
prices, effective promotions, and investment in club card. In the recent time, it has gained the
loyalty from its customers in spite of the presence of several competitors.
Higher customer satisfaction implies that the company is able to provide best services and
maintain strong relationships in longer period. It has been found through research that there
has been a positive relationship between the club card, and customer loyalty, which has been
attained by Tesco. Tesco is able to satisfy the customers by undertaking the several activities
in positive manner. Thus, it has been analysed that the company Tesco has achieved greater
effectiveness by effectively ensuring the marketing mix in terms of product, price, place,
promotion and people.
7 Hingley et al., “Intermediaries in power-laden”, 78-84.
8 So, “What do customers get”, 196-206.
9 Bilińska-Reformat “Sustainable development concept”.

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There have been certain advantages to the firm with the use of service-profit chain model, as
Tesco targets families, and young people who are attracted towards these high quality
products. The retailer is considered to be the fastest growing organisation with the aim of
improving the customer loyalty, by satisfying large number of customers. Tesco worked with
the strategic aim to provide better food, clothing, and other services, in optimum manner as
they cater to households.10
The model of service profit chain enables the managers to identify and recruit talented people
who will work towards attaining maximum customer satisfaction. They provide rewards, and
recognition to their employees based on their performance levels, and this further leads to
increased customer loyalty. Along with this, the company ensured a peaceful and healthy
work environment which led to a positive commitment of employees in the organisation.
From the research reports, it has been understood that more than 2 million households has
been added, i.e. have chosen to shop the products at Tesco. This has been a major factor
demonstrating the activities of the firm towards enhancing their customer loyalty. Thus, it
has been found that Tesco has created a strong brand image in comparison to their
competitors Sainsbury within industry.11
10 Morgan, Tallontire, Foxon, “Large UK retailers' initiatives”, 227-238.
11 Ramanathan “Impact of customer loyalty”, 478-488.

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References
Adewuyi, Adejumo Wahab. "Ratio Analysis of Tesco Plc. Financial Performance between
2010 and 2014 in Comparison to Both Sainsbury and Morrisons." Open Journal of
Accounting 5.03 (2016): 45.
Armstrong, Gary M., et al. Marketing: an introduction. Pearson UK, 2018.
Barta, Gergő. "The increasing role of IT auditors in financial audit: risks and intelligent
answers." Business, Management and Education 16.1 (2018): 81-93.
Bilińska-Reformat, Katarzyna, et al. "Sustainable development concept and creation of
innovative business models by retail chains." International Journal of Retail &
Distribution Management (2019).
Efanny, Wita, et al. "The relationship between marketing mix and retailer-perceived brand
equity." IMP Journal 12.1 (2018): 192-208.
Felgate, Melanie, and Andrew Fearne. "Analyzing the impact of supermarket promotions: a
case study using Tesco Clubcard data in the UK." The Sustainable Global
Marketplace. Springer, Cham, 2015. 471-475.
Grosso, Monica, Sandro Castaldo, and Anjana Grewal. "How store attributes impact
shoppers’ loyalty in emerging countries: an investigation in the Indian retail
sector." Journal of Retailing and Consumer Services 40 (2018): 117-124.
Hingley, Martin, Adam Lindgreen, and David B. Grant. "Intermediaries in power-laden retail
supply chains: An opportunity to improve buyer–supplier relationships and
collaboration." Industrial Marketing Management 50 (2015): 78-84.
So, Jing Theng, Tracey Danaher, and Samir Gupta. "What do customers get and give in
return for loyalty program membership?." Australasian Marketing Journal
(AMJ) 23.3 (2015): 196-206.

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Hökelekli, Gizem, Lien Lamey, and Frank Verboven. "The battle of traditional retailers
versus discounters: The role of PL tiers." Journal of Retailing and Consumer
Services 39 (2017): 11-22.
Nikhashemi, Seyed Rajab, et al. "The significant role of customer brand identification
towards brand loyalty development: An empirical study among Malaysian
hypermarkets customer." Procedia-Social and Behavioral Sciences 207 (2015): 182-
188.
Ramanathan, Usha, et al. "Impact of customer loyalty and service operations on customer
behaviour and firm performance: empirical evidence from UK retail
sector." Production Planning & Control 28.6-8 (2017): 478-488.
Morgan, Elizabeth, Anne Tallontire, and Timothy J. Foxon. "Large UK retailers' initiatives to
reduce consumers' emissions: a systematic assessment." Journal of Cleaner
Production 140 (2017): 227-238.