Tesco's Marketing Management: STP, Data, and Innovation Report

This report provides a comprehensive analysis of Tesco's marketing management, focusing on key areas such as the role of data in relationship marketing, the application of the Segmentation, Targeting, and Positioning (STP) model, and the company's approach to innovation in products and services. The report examines how Tesco leverages data to improve decision-making, enhance customer retention, and develop new marketing strategies. It also explores the STP model, detailing Tesco's segmentation strategies (geographical, demographic, psychographic, and behavioral), its targeting approach, and its market positioning. Furthermore, the report discusses Tesco's innovations, including technological advancements, and how these innovations contribute to the company's competitive advantage and customer satisfaction. The report concludes with viable solutions to meet customers’ demands.

MARKETING
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASKS.............................................................................................................................................3
Role of Data in improvement of Relationship Marketing...........................................................3
Segmentation, Target and Positioning (STP) Model...................................................................5
Innovation in Tesco’s Product and Services................................................................................7
Viable Solutions to meet Customers’ demands...........................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Marketing plan refer to the plan in the management of the company related to its marketing
structure. Marketing plan refer to the planning and procedure of the marketing in a way by which
company can get the best result out of it and can utilise the best of the resources in the
management and get the result out of it. Tesco is one of the largest retailers in the UK market of
the retail sector and is covering most of the market in UK and have business in 13 other countries
across the globe. The report will discuss the evolution of the marketing and relations in the
business and it will also discuss the target market and its segmentation with the positioning in the
market of the Tesco.
TASKS
Role of Data in improvement of Relationship Marketing
Marketing becomes the sole of every business whether big or small in order to expose its
good and services in the different markets. When marketing comes in play, the major thing
which is realized is the data or information to develop innovative marketing strategies in order
to move the business forward and keep itself ahead of competitors (Fitzpatrick, 2017). Tesco,
being a well-known group of retailers in UK, needs innovative policies and strategies to have
ever-deeper insights and to compete with its major competitors like Sainsbury, Morrison’s, Asda
etc.
The data helps mainly the marketing team to have greater insights about the preferences of the
citizens and the market. The way of gathering the data is becoming innovative day by day as
earlier it was collected in the form of statistics, figures etc. but now the companies are collecting
it from social media posts, feedback forms from customer etc. Tesco finds the following roles of
the data in relation marketing:
 The data or the information gathered by the company can help it in improving the decision-
making process (Nguyen and et.al., 2017). It can also enhance the company’s operational
processes along with providing innovative products and services to the customers thereby
satisfying their needs and desires.
 The data can also be used to improve the customer retention. Tesco can use this by using
social media in order to analyse the number of customers cancelling or renewing the
contracts. It can also evaluate the phone and text use patterns to monitor the customers’
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preferences. This information can be used during the marketing campaigns to target those
customers.
 These data-driven insights can be used to develop new strategies as in earlier times the
companies organized sales in the end of the season which made them earn a large profit
margin. But the data helped the companies now to change this traditional method and adapt
new and innovative ways for marketing the products and services of the company. Tesco
prefers reducing the prices to facilitate more number of customers of every class in order to
achieve a greater revenue and to satisfy maximum consumers.
 The data collected by the marketers of the company also helps to match products to
customers. This will also provide ways to reach them which will help them to know about the
products preferred by the customers. This will help in targeting certain products to certain
group of customers. For example, people in some areas in UK prefer junk food whereas some
are becoming health-conscious. So, the data collected by the marketers can help the company
to target the areas according to the customer’s choices.
 The major problem faced by the companies is to bring innovation in order to compete with
the competitors. The data proves beneficial to develop various strategies which can help the
company to emerge in this competitive markets. This will give a clear idea about the areas
which needs innovation and development to attract large number of customers. For example,
after collecting the data Tesco found out that the maximum number of people in UK prefer
taste as well as dietary food. So, the company can bring innovation like changing the
contents of the food products like Pizza, Burger etc. to make them organic as well as
delicious to eat in order to increase the customer base.
 The data can be proved useful in measuring the regular changes in the customer demands
which is not possible to measure without collecting a regular data. It can be gathered in the
form of charts, graphs to make it simpler for the marketers and the company to have a brief
analyse. Tesco used this policy in making its strategy to ask the customers before spending a
pound or a dollar on its stores. They considered customers as their first guardian to have an
idea to produce the products.
 The data also provides the companies about the marketing methods. The people of UK are
becoming socially active which helped Tesco to carry out its promotional activities online
through social networking websites and other platforms (Grewal, 2018). It started giving all
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the updates to the customers about the discounts and offers on its official websites which
enhanced the marketing method by bringing innovation in technology.
 Tesco realized the importance of data in all is marketing activities so it must do partnership
with the data analyst company as Tesco is weak in collecting the mass information. As Tesco
has no financial issues, it can buy the data analyst company which can deliver customer
insights to improve its data collecting processes. Using this policy, Tesco can develop
Clubcard schemes in order to compete with its competitors who were using loyalty card
schemes to collect the data.
 The companies use two different types of data customer data in making various decisions in
testing the ideas before implementing them and performance data to develop new ideas and
offering it to some customers instead of targeting a vast region (Foabeh and Achaleke, 2020).
Therefore, both the types of the data are used to check whether the new ideas work according
to the expectations or not thereby satisfying the changing demands of the customers.
Therefore, the data can be proved beneficial in relation marketing as well as all the activities of
Tesco. There must be efficient data analysis to know the changing demands of the customers and
to develop strategies accordingly. The marketers and the data analyst playa a major role in
collecting the information of customers and the emerging market.
Segmentation, Target and Positioning (STP) Model
The model is a central concept in marketing which is an absolute key to serve the market
successfully. Marketers segment the market and then identify the attractive segments to target,
and then positioning happens. It prefers the 3 activities segmentation, targeting and positioning.
Segmentation: -
The STP model start with the dividing of the market.
Market Segmentation: - Market segmentation is a process of dividing the potential market of
the customer or group, on the basis of their characteristics. The segment can be created
composed to the customer on the respond to the marketing strategies who shares the traits of the
similar interests, location and needs (Perreault,2018).
Segmentation of the market for Tesco are as follow: -
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Geographical segmentation: - The geographical segmentation of the product and the company
shows the Geographical factor which influence the working of the company in the given market.
TESCO working in major part of England and is covering most of the retail sector in the UK
retail market. It operates in 13 other countries apart from ENGLAND. The division to the market
based on the country attentions and running to specific need of the segments. After that the
further division is made on the basis of the cities and the local market of the country working in.
Demographic segmentation: - Demographic segmentation include the different factor of age,
value, sex, size of the family, life stage, income, occupation, generation of income, social,
education, class etc. As the company is focusing in the direction to the organic and dietary
products. The company is targeting the choices according to the demographic segmentation as
the segment include the age, sex etc. The product of the Tesco is targeting the market of 35years
above age class for its diet product as it helps them in the digestions and better immunity which
according to the age is essential for the people. The other target is of the low rates as the low-
income customer can easily utilise the products from the Tesco and can provide a lot of verities
in low rates.
Psychographic segmentation: - This segmentation of the Tesco chooses the psychological
needs of the customer and consumer; they target the customer according to the needs of customer
to choose whatever they care about (Bian,2019). In this segment the company focus on the
personalities of the customer and the target segments on the reaction to the personalities of the
audience. This show that if u find that the audience is choosing quality then the product needs to
be quality oriented. It's recommended that if you cover at least several psychographic traits when
forming your marketing approach & to ensure that you don't miss any of perspective that your
audience might have.
Behavioural segmentation: - Behaviour segmentation of the company product refers to the
choices and the reaction of the customer for the product and trends in the market. It reflects the
behaviour of the customer for the market and the product choices which directly shows the
segmentation of the market on the product behaviour of the audience. Behaviour of the customer
related to the organic products and the dietary products.
Targeting market: -
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The second part of the STP model include the target in the market. It refers to the
determining the targets, the target include the working of the segments which uncovered should
be targeted and focused a comprehensive programme of marketing. The approach of DAMP: -
DISTINCT: - Each of the segments must be differ from another’s segments, which makes the
different marketing mix necessary. Tesco distinct the products and give a variety to the different
audience a choice to choose within.
ACCESSIBLE: - The promotion activities of the buyers must reach to different distribution
channels and appropriate activities. Tesco focus on the channels so that they can cover a wide
range of market.
MEASURABLE: - The segment must be easy to identify and easy to measurable. As one of the
top retailers it gives benefit to the Tesco in covering the wide range easily.
PROFITABLE: - The segmentation of the market and target sector need to be profitable and
should focus on provide the company a range amount of profit. Tesco make strategies so that
they can achieve the maximum number of profit.
Positioning: -
The final part of the model includes the positioning. Positioning refer to the place or the spot
the brand focus on putting efforts on. It refers to ensure the brand that choose a right spot of
target customer market. Positioning is the mean by which the goods and services can be differ
from one another and give a valid reason to the customer to buy the product. Tesco is targeting
the customer in the dietary products and the organic products and for that the positioning
required an important role to connect to maximum number of the clients (Stourm,2017).
Innovation in Tesco’s Product and Services
In order to compete with the competitors like Sainsbury, Morrison’s, Iceland, Asda etc.
and boost itself, Tesco must bring innovations regularly in its products and services (Olsson and
et.al.,2019). Tesco can bring following innovations in order to satisfy the needs of the customers
and to enhance the profitability by increasing the customer base:
1. Technological Innovation
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Technology acceptance Model can be used to analyse the users who accept and use
certain advanced technologies used by the companies in its products and services. Before
planning for innovation, Tesco must know whether everyone will accept that technological
advancement or not (Kotler, 2019). For this, the company must form Behavioural Intention
which will force the people to use the technology which will be further influenced by the
Attitude of that innovation to the customers.
For example, Tesco is planning to use advanced technology in all its processes like designing,
delivery, advertising etc. The company must introduce Self Check Out tills and online ordering
which will help it to increase its customer base rapidly as the company will be the first in the
retail chain to use these methods. Self Check Out tills: This will enable the customers to scan their items easily without asking
for the help from the staff members and it can be used for orders of any type (Keiningham
and et.al., 2020). It will also facilitate the customers with the automated checkout machines
which can reduce the time of the customers and the cost of staff. This will prove to be the
best method to attract maximum customers and profitability. Online Ordering: The company can detail itself on the most famous search engine Google.
Every person will search for the company before making a purchase. So, as the person
searches about the company it must get all the information regarding the offers, deals,
vouchers, coupons etc. Tesco must update its official website regularly and must provide the
facility of online ordering from anywhere in the country. The website must include all the
information including the location of its nearest stores, food guide, memberships, system
through which customers can give their feedbacks, business information etc.
Before planning for all these innovations, the company must be aware of the impact of certain
factors on the decision-making of the customers before any purchase. The factors considered by
the Technology Acceptance Model are as follows: Perceived Usefulness: This is mainly the degree which shows the extent to which the
customers will be facilitated by the technological innovation. For example, the self check out
tills can save the time of the customers as they do not have to wait for the staff members and
the online delivery will be useful to them by getting the items directly at the doorsteps
without moving to the stores at any point of time.
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 Perceived ease-of-use: This shows the extent of ease the customers will face while using that
innovation. For example, both the technological innovations mentioned above can be very
easy to use as the customers can order the food online without visiting the stores at any time
and place (Heller, 2017). The easiness to use this technology will develop positive attitude in
the customers towards the products and services of Tesco.
Many external variables like Social Influence determines the attitudes of the customers towards
certain technologies but as the majority of the people in UK are socially active therefore the
company can be benefitted in a great way by bringing such technological innovations.
2. Packaging
The company can bring innovation in the process of packaging also. As the people in UK are
environment-friendly and are environment-conscious, Tesco can use this measure in its
packaging process. It must deliver all the items in paper bags or jute bags rather than packing in
plastic bags. Giving the products in polythenes will not only harm the environment but also
disturbs the ecology by harming the animals who eats those polythenes.
So, the company must ensure that there is not a single item which is sold in plastic bags. This
will attract the customers as well as increase its goodwill in the market to the customers about
environment safety.
Therefore, the above mentioned innovations can prove much useful to the company to enhance
its customer base and earn a large profit margin and also helps the company to increase its
goodwill amongst its competitors and customers in the market.
Viable Solutions to meet Customers’ demands
The main aim of the company is to satisfy the demands of the customers by analysing all
the factors. Tesco must focus on the 4 P’s of Marketing Mix which will help it to fulfil the
changing demands of the consumers in UK:
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Figure 1: 4 Ps of Marketing Mix
Source: The 4 Ps of Marketing, 2020
Product
Tesco must change the content of its products by adding the organic materials like herbs
in it. It must make its products like pizza, burger, sandwiches dietary so that the maximum
number of people who are health conscious are attracted towards it. It must mention the name of
its brand on the packaging of each product to give identity to the products which will increase
the number of loyal customers.
Price
As Tesco provides high quality food products, it must not reduce its prices instead it can
give discounts and offers to the regular customers in order to compete with the competitors. The
Clubcard scheme will prove to be the best offer in rewarding the customers by distributing
vouchers of special kind and extra points (Tirawatnapong and Fernando, 2019). This will help
the company to gain loyal customers along with keeping the prices same which will help it to
earn a high profit margin.
Promotion
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The company must advance its promotional activities by presenting itself more on online
platforms rather than investing a lot on marketing campaigns. Promoting via social networking
sites can be easy for the company as well as the customers. The company must update each and
every detail on its official website because the people in UK are socially active so they access all
the website before doing a purchase.
Place
Tesco must sell its products in its established stores as well as online delivery. All the
people do not prefer going to stores to buy the products so the company must also use online
platforms to sell and deliver its products and services (Wood, Coe and Wrigley, 2016). The
company must directly sell its products to the consumers rather than introducing middlemen
between them which can reduce its brand value and security issues. Tesco must also keep in
mind its competitors to decide about the place to sell its products.
Therefore, the above mentioned are the viable solutions which can be followed by the company
Tesco in order to target the maximum customers and increase its overall profitability.
CONCLUSION
The report explained the importance of the marketing plan in the business and the goals for
the company. Marketing plans are very crucial as they give the depth knowledge regarding the
business including the business segments and the evolution of the business relation with the
marketing. The report further tells the importance of the segmentation in the market and the
positioning of the market product to get the best result out in the market to achieve the business
goal and Tesco is providing the organic product and the dietary product to reach to the market
segments which they are targeting. At the end the report gives the solution which will help in
meeting the customer needs in the market (Chernev,2020).
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REFERENCES
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Chernev, A., 2020. The marketing plan handbook. Cerebellum Press.
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on Marketing Investments. John Wiley & Sons.
Foabeh, P.A. and Achaleke, H.F., 2020. ATTITUDES AND PERCEPTIONS OF
SHOPPERS’GROCERY SUPERMARKET CHOICES: A COMPARATIVE
ANALYSIS BETWEEN BIG C AND TESCO LOTUS. International Journal of
Research-GRANTHAALAYAH. 8(7). pp.67-79.
Grewal, D., 2018. Retail marketing management: The 5 Es of retailing. SAGE Publications
Limited.
Heller, F., 2017. Technological innovation applied to walmart and tesco’s supply
chain (Doctoral dissertation).
Keiningham, T. and et.al., 2020. Customer experience driven business model innovation. Journal
of Business Research. 116. pp.431-440.
Kotler, P.T., 2019. Marketing management. Pearson UK.
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atmospherics on consumer buying behaviour in terms of repurchase intention: an
empirical study of Tesco UK. In 4th International Conference on Innovation in
Economics and Business (Vol. 87, pp. 43-51).
Olsson, A. and et.al.,2019. Organizational climate for innovation and creativity–a study in
Swedish retail organizations. The International Review of Retail, Distribution and
Consumer Research. 29(3). pp.243-261.
Perreault, W.D., 2018. Essentials of marketing. New York: Mc Graw Hill.
Stourm, V., Bradlow, E. and Fader, P., 2017. Market positioning using cross-reward effects in a
coalition loyalty program. HEC Paris Research Paper No. MKG-2017-
1242.
Tirawatnapong, R. and Fernando, M., 2019. Factors Influencing Bangkok People Purchase
Intention towards Tesco Lotus House Brand Products. International Research E-Journal
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Wood, S., Coe, N.M. and Wrigley, N., 2016. Multi-scalar localization and capability
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Online
The 4 Ps of Marketing, 2020. [ONLINE]. Available through :< https://neilpatel.com/blog/4-ps-
of-marketing/>
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