Analysis of Tesco's Digital Marketing Strategy: Case Study Assignment

This case study analyzes the digital marketing strategy of Tesco, a multinational UK-based retailer. It begins with an introduction to Tesco's operations, its expansion into online services, and its shift from low-cost retailing to a provider of quality goods. The situational analysis includes a SWOT analysis, examining Tesco's strengths (customer service, brand equity), weaknesses (profitability of certain operations, competition), opportunities (alliances, website improvements), and threats (increasing competition, external forces). The analysis then extends to competitors like Sainsbury's and Asda, evaluating key success factors. Customer analysis explores Tesco's use of loyalty cards and real-time data analysis to understand customer behavior and gain a competitive advantage. The conclusion emphasizes the need for Tesco to use digital marketing techniques to maintain its market position, focusing on areas like customization and web design to increase online sales. The case study answers the question of where Tesco should focus to ensure continued success online, suggesting awareness creation in new markets, better promotional techniques, and responsive web design.

Digital marketing strategy
of TESCO

INTRODUCTION:
 TESCO is a multinational company of UK founded by Jack Cohen, dealing in groceries
and merchandise retailing.
 It is one of the largest retailers of the world based on the revenues that it earns. The
UK groceries market is dominated by TESCO.
 TESCO has its shops in seven countries across the globe (Tesco, 2019).
 The company is presently operating in 11 different countries across the globe.
 It has expanded its operations to a wide variety of products including- books, groceries,
clothing , toys, software, financial services and internet.
 The company changed its position from a low cost retailing of down market goods to a
company that provides the finest goods.
 TESCO started its online services in the year 2006 to meet the requirement of groceries
through online orders placed by the customers. These stores were called the dark stores.

 The TESCO dark stores provide an option to the customers to pick from stores, to pick
from stores with delivery being mechanised.
 It also gave options to pick from stores with delivery being mechanised and zone
picking.
 These options made online shopping easier through select, pick and delivery options
provided by the store.
 TESCO also started home shopping options for its customers in UK.
 TESCO had been the first company
to become profitable in the field
of retailing of groceries through
home shopping in the year 2006.

SITUATIONAL ANALYSIS
 A Situational analysis is a technique of understanding the internal and external environment of the
company and the same is often represented by SWOT analysis.
 A SWOT analysis discusses the company’s strength and weaknesses that are internal to the
company and Opportunities and threats that are influence by the external environment of the
company (McDONALD, 2016).
Strengths of the company
 It is known for its customers service and robust retailing practises that have earned the company
many rewards and the company believes in providing the best shopping experience to its customers
(Rothaermel, 2015).
 The format of retailing used by TESCO is followed by many of its competitors.
 The company’s brand equity is a major strength for the company and it helps the company in
overcoming many difficulties.
 The company is respected across the globe for its quality and customer services.
 The company earns its credibility because it has been in existence since a long time and that is why
it is the most preferred supermarket among its customer base in UK.

 The company's online services helps it in meeting the needs of the tech savvy
customers and through the use of digital marketing techniques the company is able to
increase profitability through the use of both the channels of offline and online
shopping.
Weaknesses suffered by the company
 Many operations of the company are not operating as profitably as the others because
they are being affected by various external forces like government policies and others.
 For instance the finance function of the company was affected recently by the credit
crisis and as a result its performance was affected.
 Due to fierce competition from the competitors TESCO has been earning lower profit
margins because of reduction in the prices of the commodities.

 The company focuses on increasing its sales in the UK and Europe that is why the
company is not paying sufficient attention to the other markets where it is operating
and thus it is losing that much of profits.
 The company is not being able to reach the tech savvy customers of the new market
due to poor digital promotional techniques used.
Opportunities of the company
 The company can enter into alliances with other reputed company’s in order to reduce
the price wars and to provide more products to the customers.
 The company can improve its online shopping facilities and bring changes to its
website- by creating an attractive web page.

 In the markets where TESCO is not performing well, it can enter into joint ventures
with other local company’s as those companies can help to provide better information
about the local market and the company can meet the needs accordingly.
Threats faced by TESCO
 Competition in the retail market is continuously increasing and there may be some
other giant retailers who are providing better variety of good than TESCO at reduced
prices.
 The external forces that are beyond the control of the company will always be a threat
for the company because they affect the customers purchasing capability such as
various government policies on the credit crisis and others.
 The overall prices of the commodities is increasing that reduces the disposable income
of the customers as a result of which the customers may reduce their purchases.
 The pressure that is being put by the stakeholders on the company for carrying out its
corporate social responsibility affect its cost strategy.

 The company is facing competitors who are focused on only one channel of sales such
as they are focused only on online shopping.
 The customer base for those company’s in continuously increasing because they are
being able to provide better online services to the customers.

ANALYSIS OF COMPETITORS
 The analysis of competitors is an important strategy for all organizations.
 It helps in analysing the strengths and weaknesses of the competitors such that steps
can be taken by the company to improve its performance in comparison to the
competitors (Fleisher & Bensoussan, 2015).
 The major competitors of TESCO is that Sainsbury and Asda.
 All the three companies belong to the retail industry and all are focused on meeting the
daily requirements of the customers through their supermarkets.
 Sainsbury’s is a UK based retailing industry that occupies about 16.1% of the market
and as a result it is the 3rd largest super market chain and a major competitor of
TESCO.
 It was the first company of UK to carry out self service retailing and also heyday.
 The Sainsbury is divided into three main areas such as: the Sainsbury supermarket , the
Sainsbury bank and the Sainsbury Argos.

 Sainsbury is known for carrying out experimentation with its layout of stores, they are
known for being friendly to their customers and they even charge premium prices for
their products due to the brand equity that they have.
 The company is focused on providing convenience goods.
 The company is also engaged in providing online services which is growing fast and so
they are giving fierce competition to the TESCO not only through their offline stores
but also through online services.
 The second competitor of TESCO is Asda which a retailer of the British supermarket.
 The company provides mobile phone services and financial services apart from its
supermarket.
 The company’s aim is to provide goods at lower costs thereby proving its slogan
correct that is to save money and to live better.
 The company applies the penetrating pricing strategy to win customers over its
competitors.

Analysis of competitors
Key
success
factors in
industry
Weights Rating of
Sainsbur
y’s
Weightag
e of the
1st
competit
or
Rating of
Asda
Weightag
e of the
second
competit
or
Site
location
0.3 7 2.1 5 1.5
economica
l Pricing
strategy
0.4 5 2.0 7 2.8
Product
range
0.1 6 0.6 4 0.4
Focus on
customers
0.2 7 1.4 4 0.8
total 1.0 25 6.1 20 5.5

ANALYSIS OF CUSTOMERS
 Customer analysis is important for organizations to identify the customers and to reach
them.
 Customer analysis and analytics help to gather sufficient information about the
customers.
 This technique helps to understand the needs of the target market and provide products
and services accordingly (Haben, Singleton & Grindrod, 2016).
 TESCO was the first retailing company of UK to carry out customer analysis with the
use of its system of loyalty cards.
 With the help of this the company can look after the activities of its existing customers.
 The company newly appointed CTO said that the company's future retailing activities
depends upon real time analysis of the customers data.
 The use of up to date information by the company and use of proper analytics is the
way by which the company overcomes problems of changing customer behaviour and
for gaining a competitive advantage over its competitors.