UGB161: Marketing Audit, Segmentation, and Strategy for Tesco PLC

This report provides a comprehensive marketing analysis of Tesco, a multinational grocery retailer. It begins with an introduction to marketing and a brief overview of Tesco. The main body of the report includes a marketing audit, utilizing PESTLE and SWOT analyses to evaluate Tesco's external and internal environments. The report then delves into market segmentation, outlining demographic, geographic, psychographic, and behavioral segmentation strategies. Marketing research, including Porter's Five Forces model, is discussed to assess the competitive landscape. Consumer buying behavior and marketing strategies are also examined. Finally, the report concludes with recommendations for Tesco and a conclusion summarizing the findings, along with a list of references.

Introduction to
marketing assessment

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY ..................................................................................................................................3
Marketing Audit..........................................................................................................................3
Marketing segmentation..............................................................................................................6
Marketing Research....................................................................................................................7
Consumer buying behaviour.......................................................................................................8
Marketing strategies....................................................................................................................9
RECOMMENDATIONS...............................................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Marketing is termed as a set of activities that is undertaken by an entity for creating
awareness and promoting their products as well as services in market. In addition to this, it
consist of selling, advertising & delivering goods to consumers in an effective manner.
Marketing strategy is basically a long-term approach for planning that assist in attaining
competitive advantage at marketplace (Alam, and Raut-Roy, 2019). In the present report, Tesco
is taken into consideration. It is a multinational grocery store that was established in the year
1919 by Jack Cohen. The head office of Tesco is in Hertfordshire, England and at present it has
around 6,800 shops worldwide. The report will cover marketing audit that help in gaining
understanding about current performance of organisation. In addition to this, it describes
marketing strategy, market segmentation, marketing research & consumer buying behaviour of
TESCO.
MAIN BODY
Marketing Audit
It is defined as a systematic analysis of business marketing environment of a company
that is both internal and external. It is determined that an effective marketing audit assist an
entity to gain insight about the area that is required to improve or performing well. The
components involve in marketing audit is macro environment, marketing strategy, task
environment, system, function and so on. The higher authorities of Tesco make use of PESTLE
& SWOT analysis for marketing audit. These frameworks is given below:
PESTLE analysis
It is defined as a framework which is used for analysis of external factors and its pact on
performance as well as productivity of an organisation. PESTLE analysis of Tesco is given
below:
Political factors: This element consist of government policies & regulations, tax policy,
foreign trade and so on that has direct influence on activities and operations of an organisation
(Ali, 2018). With reference to Tesco, it is determine that government of UK is politically stable
and support companies to expand their business operations globally. In addition to this, free trade
agreement help company to reduce its sourcing cost that has positive influence on Tesco.

Moreover, performing the activities at an international market occur high cost to that has a
negative influence on business performance.
Economic factors: It involve elements such as interest rate, inflation rate, exchange rate
and many more. It is determine that these factors are main pint to focus by Tesco as the company
like to leverage cost, prices & profits as well. It is important for managers of Tesco to aware
about changes in policies take place that has impact on its finance (Armstrong, 2018) years in
order to gain success. It is analysed that because of reducing in household income and disposable
income levels, the respective company has shifted its focus on advertising its brand instead of
focusing on luxurious items.
Social factors: It involve factors such as social trends, customs, norms, values and so on.
It is determine that because of variety of changes in society, the customers of United Kingdom is
shifted towards one-stop shopping and bulk shopping. In context to Tesco, it has raise its
offering of non-food items that is demanded by customers and is influenced by social
conditioning. In addition to this, the company is focusing on developing organic products as
customers choice of people are shifted towards their health. It help company in attracting people
towards brand and increase its performance and profitability level in an effective manner.
Technological factors: It is determine that preferences of people is getting change with
the innovation and up gradation in technologies. In context to Tesco, it is determine that
technology develop opportunities for company that is online delivery and self-service check out
that is convenient for customers. In addition to this, Tesco is invested funds on energy efficiency
projects in order to decline its carbo footprint and to attain long-term objectives as well. It has
positive impact on the brand image and performance of Tesco in a positive manner.
Legal factors: It is determine that it is significant for an organisation to follow all the
rules regarding safety and health of employees, implementation of operations and expansion of
business as well (Brannen, Mughan and Moore, 2020). Diversification and internationalization
are two strategic keys that is focus by Tesco for many. With reference to Tesco, it has been
analysed that company follow all the code of practices of FRC and is liable to pay for employees,
if any of the incident is occur within the premises. It help company to systematically implement
out operations and activities that has a positive impact on productivity level and revenue of
company.

Environmental factors: It consist of factors like raw materials, weather, climate and so
on. With the enhancement in pressure on organisation to consider environmental issues & to
applied various ways that benefit society and improve society, the higher authorities of society is
committed to decline its carbon footprint by 40% to 50% by the ending of year 2020. in addition
to this, the company is decline waste level developed in it store through raising social conscience
within customers. It has positive influence on market reputation and market share of company in
an effective manner.
SWOT analysis of Tesco
Strength weaknesses
 Tesco is one of the leading grocery
retailer in United Kingdom and it has
high level of sales as well as revenue as
comparability to other supermarkets
(Caliskan and Esmer, 2020).
 Another strength of Tesco is its market
presence, it has around 6900 stores
within 14 countries and has high
market share in Asian markets.
 By following Low-cost strategy, the
company is bale to attract become
leaders in market of UK, but it decline
profit margins of company.
 It is determine that few grocery outlets
of company are nor performing well
that directly impact negatively on
performance of Tesco.
Opportunities Threats
 It is analysed that recently Tesco has
introduced Jacks, which is a new
discount store and gain success as well
as growth in market. The company has
the opportunity to expand its market as
it help in attaining competitive
advantage at marketplace.
 Tesco has the opportunity to adopt the
option of joint ventures in areas where
its stores are not performing well. It
will help Tesco to improve
 Due to Brexit, it is determine that trade
deals & cost matters have posed a
threat for company.
 There are various supermarkets in UK
such as Aldi, Wlamart, Asda and so on
that decline the sales and profitability
level of Tesco.

performance level and earn profits.
Marketing segmentation
It is basically define as categorising the whole market into different groups and segments
which is based on various characteristics of an individual like needs, interest, locations and many
more. In addition to this, it assist company to personalize their products and services according
to the market segments (Caranante and Williams, 2018). It is determine that market segmentation
provide any advantages to Tesco in order to gain better outcomes. In addition to this, it also
assist in gaining insight about new marketplace which is better for launching a product.
Moreover, it also assist in expanding market and retaining customer for longer time period. It is
important for an entity to choose the right market segment and if not, it may occur cost to
company and decline the performance level of company. The market segmentation of Tesco is
divided into four categories that is described below:
Demographic segmentation: The factors involved in demographic segmentation is age,
gender, status, qualification, income, family members and many more. In relation to Tesco, it
segment market on the basis of age (all categories), income (low and middle), social
status(skilled working class, middle class), family size (bot nuclear & extended families). It
assist company to form a homogeneous group for goods as well as services. It is determine that
considering all such factors at the time of developing will assist company to attain success and
growth.
Geographic segmentation: Herein, the consumers or population are categorised on the
basis of country, city, state and so on. With reference to Tesco, its head office is located in UK
and it offer products and service in more than 14 countries and also cover neighbourhood places
of UK (Chaffey, 2019). This assist company in gaining understanding about customer needs,
their culture which in turn help in developing products accordingly and attainment of objectives
on time period.
Psychographic segmentation: Herein, factors consider for segmentation are personality
of an individual, characteristics, lifestyle and so on. In relation to Tesco, it segment personality
that is easy going and determined as well. In addition to this, it also segment on basis of lifestyle
(contended conformers, traditionalists). It help company to enhance its performance and attain
growth in the marketplace.

Behavioural segmentation: In this, the company categorise the market on the basis of
behaviour & pattern of consumer. Along with this, sometimes organisations also undertaken past
behaviour of users and customers as well. In context to Tesco, its segment people whose attitude
is positive and sceptical. It offer product on regular occasion as well that assist in satisfying
requirements of customers and attainment of higher growth within the marketplace (Gregory,
2019).
Therefore, Tesco considering all market segments that assist in achievement of desired
goals and long-term objectives in an appropriate manner.
Marketing Research
It is defined as a systematic procedure of collecting, recording as well as analysing
quantitative and qualitative information about issues associated with marketing of goods &
services. The primary aim is to analyse how changing factors of marketing affect on the
behaviour of customers. It is determine that market research is conducted by the assistance of
primary & secondary data and help an entity to gain an understanding about requirements of
customer, market trends and so on. On the other hand, market research has disadvantages such as
time consuming process, occurrence of higher cost and many more (Grigoryan, 2019). The
managers of Tesco make use of porter's five force model in order to gain understanding about
competition level, buyers, competitors and many more.
Porter's five force model
It is defined as a method for identifying level of competition of organisation prevailing in
the market. It consist of five competitive forces that is given below in relation to respective
company:
Threat of new Entrants: It is determine that threat of new entrants for Tesco is low as
establishing such business level require high capital and time as well. It is determine that the
company is not require to worry about new entrants as it has own core competencies and it
enjoys economies of scale as well.
Bargaining power of buyers: It is determine that Tesco have a high bargaining power a
here are lot of supermarkets prevailing such as Aldi, Sainsbury's , ASDA and many more. It state
that customers are easily shift to other brand if they find it more beneficial in terms of cost,
conveyance etc. Therefore, it is essential for Tesco to offer quality products at an affordable

price and maintain good relationship with its customers so that they did not even think to switch
the brand.
Bargaining power of suppliers: The bargaining power of suppliers is low as there are lot
of suppliers within the retail industry and Tesco have the chance to replace suppliers in order to
get raw material at less price that has positive influence on profit margins of company (Heese,
Srinivasan and Kelley, 2019). In addition to this, it also improves the revenue level of Tesco in
an effective manner.
Threat of substitutes: It is determine that this threat is high for Tesco that is mainly for a
grocery market. There are lot of supermarket that offer food and non-food product as well and is
prefer by majority of people. Therefore, it is important for Tesco to offer unique and quality
products to customers as it attract them and assist in retaining customers for longer time frame.
Industry Rivalry: The company is facing high competition from its rivals such as Asda,
Sainsbury's, Morrisons that offer clothing, food products, electronics at a lower and reasonable
price. It is significant for Tesco to offer discounts and offers in order to attract customers and
provide on-time service to customers that satisfy and retain them with company for longer time.
Consumer buying behaviour
It is define as an action take place by customers before purchasing goods and services. In
addition to this, consumer buying behaviour process consist of consulting search engines, social
media posts, suggestion of family and friends and so on. It is determine that all such factors
assist an individual to take better decisions and attain positive results as well. There are also
another factors that has direct influence on buying behaviour of users and is required to consider
by an entity before designing products as well as service (Kowalska, 2020). The factors in
relation to Tesco is describe below:
Social factors: It involve factors such as social status, references, family group, relatives
& status of a person. It is determine that buying behaviour of a consumer is mainly reflected by
family & groups of society in which they are living. For instance, if a person buy products then it
easily attract its surroundings and has positively impact on sales and profitability of company.
Tesco focuses on social factors at the time of providing products and ensure that quality and on
time product as well as service is given to customers.
Cultural factors: This factor plays vital role for every business entity in order to gain
success and growth in an effective manner. It is determine that Tesco conduct market research in

order to gain insight about culture and norms of people so that there is increase in acceptance
level of products in market and fulfilment of requirements of customer in an appropriate manner.
In addition to this, it also assist in attracting people towards brand that leads to increase in sales
and profitability of company.
Personal factors: This factor involve occupation, age, income, education, personality,
income of a person. It is determine that the requirements and wants of people is getting changed
with the change in income level, lifestyle and age as well. For instance, people from age group
20-35 prefer to eat Junk and spicy food but people of age above 40 like to eat healthy and
organic food. Tesco focuses on fulfilling requirements of people of all age categories and for
this, it start offering organic products in market.
Psychological factors: It involve elements such as attitude, beliefs, perception,
motivation, learning, ideologies of a person. It is determine if a product develop positive attitude
of consumer towards brand then it is having a repeat purchasing of a product and vice-versa
(Prentice, Chen and Wang, 2019). It is significant for Tesco to conisder all such factors before
offering products in market as it has direct impact on buying behaviour of people.
Marketing strategies
It is basically a plan that take place in order to reach large number of people and enhnace
customer base level of an organisation. In involve target market, marketing content or message,
value proposition, information and many more. It is a long term that assist an organisation to
attain competitive advantage ta marketplace. Marketing strategy of Tesco is explained by the
assistance of 4P's of marketing mix. These are given below:
Product: Tesco offer wide range of products such as clothing, food, financial services,
cosmetics, stationery, electronics and many more. Tesco sells product from various brand but
has its own brand too that is Tesco value, Everyday value, Tesco Lotus and so on. All this
products are offer at global level.
Price: Tesco follow cost leadership pricing strategy that is company offer product at
lower price without compromising the quality. It help company to attract large number of people
towards brand and attain competitive advantage at marketplace.
Place: The two main channels of Tesco for distribution is offline and online. The
company has presence in more than 16 countries and has 6, 800 shops worldwide. The online
business of respective organisation is named as “Tesco Direct”.

Promotion: It is determine that Tesco uses both traditional and modern promotional tools
for marketing its product in an effective manner. These are newspaper, television, media outlets,
social media applications, websites and so on. In addition to this, the company also conduct
marketing and adverting campaign in order to enhance its customer base level and earn higher
profits in an effective manner. s
RECOMMENDATIONS
For improving sales and profitability level of company, there are some suggestion
provided to managers of Tesco, which is given below:
 It is recommended to the higher authorities of company to provide training and
development session to the staff members of company so that they provide quality
service to customers and solve their queries in an effective and appropriate manner
(Prowse, 2020).
 Tesco can make improvements in its distribution channel as it help in providing products
to customers easily without any delays and issues.
 Moreover, Tesco can opt for Joint venture with market where its shops are nit running
well. It improve the performance level of company and also assist in gaining
understanding about requirements and culture of people of that particular country.
All the above given suggestions will assist company to enhnace its level of sales and profitability
(Puşcaşu, 2018). In addition to this, it also help in increasing customer base level and raise
market share of Tesco in an effective manner.
CONCLUSION
From the above study, it is concluded that marketing plays vital role in promoting a
product and raising profitability level in an effective manner. Using of PESTLE analysis assist
company to gain insight about impact of macro environmental factors on business activities and
operations. In addition to this, SWOT analysis is used for internal audit and also assist in
understanding about areas that require improvements. It is important for an entity to segment
market in a proper manner as it help in gaining success and growth. Porter's five force model is
adopt by companies for gaining knowledge about level of competition prevailing at marketplace.

REFERENCES
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