MBA7003 Marketing and Management: Tesco's Home Electrical Product

This report provides a comprehensive analysis of Tesco's marketing strategy for introducing a new home electrical product in the UK market. It begins with a macro-environmental analysis using the PESTEL framework, examining political, economic, social, technological, environmental, and legal factors influencing the market. The report identifies growth opportunities for the new product, focusing on user-friendliness, attractive packaging, and strict financial controls. It details Tesco's segmentation, targeting, and positioning strategies, targeting single and family homeowners using geographic, demographic, psychographic, and behavioral segmentation. The marketing mix strategy is presented, covering product, price, place, and promotion, with recommendations for attracting customers and enhancing their experience. The report concludes by emphasizing the importance of understanding market research and adapting to environmental and organizational activities to achieve marketing objectives and sustainable sales growth in the UK market.

Running Head: MBA7003
Marketing and Management
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Table of Contents
Introduction.................................................................................................................................................2
Macro-environmental analysis (PESTEL)...................................................................................................2
Growth opportunity for the new product offering........................................................................................4
Segmentation, Targeting, and Positioning...................................................................................................5
Marketing mix.............................................................................................................................................8
Conclusion.................................................................................................................................................11
References.................................................................................................................................................12

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Introduction
Tesco Plc. is a leading retailing organization based in England, UK. Its headquarters is in
Welwyn Garden City, Hertfordshire, England, UK which was founded in 1919 by Jack Cohen.
The company serves products and services across several countries like United States, China,
India, Malaysia, Thailand and many more. Currently, it is regarded as the third largest retail
organization in the world. It specializes in selling products like internet related services,
software, electronics, financial services and so on. The paper will design a new product offering
within the UK market. It will help in creating specific market space for the new product with a
clear strategy and target audience.
To determine the current trends in the UK market, the paper will provide macro-environmental
analysis. It will help in developing positioning and strategy of Tesco related to its new product. It
will also present the marketing mix strategy of Tesco and provide recommendations to attract
customers and enhance their experience. Thus, it will discuss marketing objectives, decisions,
and strategies of Tesco. Therefore, the paper will help in critically evaluating and understanding
market research based on the principles of environmental and organizational activities.
Macro-environmental analysis (PESTEL)
Political factors Economic factors
 UK government adopted a tax measure
 UK government increased the rate of
VAT from 17.5% to 20%
 Increased VAT rate adversely affected
the sales revenue of Tesco (Wood, Coe
and Wrigley, 2016)
 To control obesity UK government
adopted a fat tax
 Import duty on products can affect Tesco
as it imports some inventory outside the
UK like East Asia and China
 Tesco tax proposed by Tesco was
 The UK economy shows positive
signs of recovery from the financial
crisis
 The UK forecasted higher economic
growth rate
 The gross domestic product is
expected to be 2.7%
 UK economic growth is beneficial
for Tesco as it leads to growth in the
supermarket industry (Hood, Clarke
and Clarke, 2016)
 Labor cost, profits, prices, and cost

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refused by the UK government
 Such initiatives may negatively affect
Tesco
may affect Tesco in the UK
 Tesco possess a 27.7% share in the
UK grocery market
 Tesco is highly reliable on the UK
market
Social factors Technological factors
 In the UK the number of older adults is
increasing because of baby boom
generation
 There was an increase in life expectancy
and a decrease in birth rate
 This results in a shift in tastes of people
which creates an opportunity for Tesco
 Tesco adopts online shopping for
grocery products to overcome the
mobility issues
 In the UK Tesco was accused of not
offering high-quality products
 This negatively affected the customer's
perception of Tesco (Bilińska-Reformat,
2016)
 This leads to a decline in sales and also
affected its image
 65% of UK shoppers are regarded as
loyal shoppers
 It is an opportunity for Tesco to stay
connected with customers and develop
close ties with them
 The UK shows advancement in
technology
 Advancement in technology provides
various opportunities for Tesco
 Firstly, introducing and developing
online shopping and home delivery
facilities
 Secondly, self-service checkout
points have provided ease and
convenience to consumers
 The UK implements disruptive
technology within the market
 UK consumers give priority to
present technology than disruptive
technology
 Disruptive technology will be
unattractive to Tesco
 Tesco adopts available retrial
technologies (Griva et al., 2018)
Environmental factors Legal factors

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 UK government is putting tremendous
pressure on the supermarket industry to
overcome environmental issues
 Tesco enhances its customers to shop at
tesco.com
 Tesco created Van Drivers
 Van drivers will collect unnecessary
plastic bags and use fuel-saving routes
from consumers and recycle them
 Tesco is highly committed to utilizing
renewable sources (Dibb and Simkin,
2016)
 It ensures if using 100% of electricity by
2030
 It promises to reduce 50% of carbon
footprint by 2020
 UK government is restructuring the
agricultural policy
 The government is redesigning the
way where direct subsidies will be
assigned to farmers
 Such laws affect Tesco as it produces
a wider range of services or products
 The agricultural policy results in
lower subsidies (Končar and
Leković, 2016)
 This influences farmers ability to
meet agricultural values created by
Tesco
 UK government has implemented the
Financial Services Act
 Tesco is involved in financial
services products such as mortgages,
loans, savings and cards (Jones and
C. Runyan, 2016)
 Tesco needs to operate its financial
services products based on relevant
regulations
Growth opportunity for the new product offering
Tesco aims to replace its value range with a new product known as Home electrical product. The
product will ensure 100% customer satisfaction. The product will be designed to sell valuable as
well as meaningful power protection. The home electrical product will be designed by a contract
manufacturer and will be sold to customers under the Tesco brand name. With this new product,
it will employ and design strict financial controls. The product will be designed as it is a user-
friendly product that will fulfill the needs of the customers (Lord et al., 2016). The product

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contains more attractive packaging which will be softer and colorful. The packaging will be
more convenient as it will be available in resealable bags and easy-open packets. The packaging
of the home electrical product will consist of a strip coated with natural product. To sell this
particular product in the UK market, the company will get the opportunity to gain profitability by
upregulating from the significant generation of power. It aims to become a profitable company
within one year. The company will utilize this business as an effective model for selling the
home electrical product to a wide range of customers in the UK.
It can be seen that Tesco will get some opportunities in the UK market that will help in
understanding customer expectations. As a result, the company will create useful and innovative
home electrical product where it will guarantee complete customer satisfaction (Mehta and
Bhanja, 2018). Tesco will give preference to outsource production as it possesses a strong
relationship with contract manufacturers. The production of the home electrical product will
generate major capital costs. The leveraging of resources and utilization of contract
manufacturers is the beauty of this particular business model. The marketing of this product in
the UK is safe and stable where Tesco always works hard to serve its consumers (Sharma,
Davcik and Pillai, 2016). These home electrical product will accurately influence the brand
equity of Tesco. This will help in gaining sustainable sales growth in the UK market. Thus,
Tesco will make use of both sales and marketing tool to promote and sell its product in the UK
market. The company will create a website that provides relevant information regarding the
product to its target audience. The site will encourage UK consumers to make repeat visits.
Segmentation, Targeting, and Positioning
Segmentation of Tesco
The most efficient and effective mixture of operational assets in targeted market segments
possess a huge return on investment marketing. To promote its new product, Tesco makes use of
various strategies related to consumer databases that constantly send direct marketing messages
and reward their consumers cataloged (Stocchi and Fuller, 2017). Tesco will be more focused
towards two segments such as single homeowners and family homeowners. The single
homeowners adopt the technology by utilizing lots of gadgets at their home, whereas family
homeowners possess a massive number of electronic devices.

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The segmentation of Tesco is based on four segments such as, geographic, demographic,
psychographic and behavioral.
Geographic segmentation
Tesco will target the country that contains a high demand for retail items and consumer buying
power. It aims to target a few of the countries such as Thailand, South Korea, the US, and the
UK. The density of the population depends upon urban and suburban locations. The urban
location consists of Tesco Metro whereas, sub-urban location possess Tesco Express, Tesco
Extra, and Tesco Superstore (Quinn et al., 2016). The division of the market is entirely based on
the country running, and huge attention is given to particular requirements of each geographic
segments. Furthermore, a subdivision will be made between local markets and cities of each
country to implement the promotional packages and products to local conditions.
Demographic segmentation
Based on a new product offering the company seeks to target different customers depending
upon their age, stage of life, social class, family size, sex, education, occupation, income and
many more. It aims to target both females and males of different categories. Based on the income
group the company targets middle and low-income category. Moreover, based on occupation it is
going to target professionals, employees, and students and from education, it will target
bachelors, technical and high school students (Donnelly et al., 2015). Whereas, by social status,
Tesco will target the middle class, lower middle class, skilled working class, and working class.
The family size of the customers must be extended and nuclear families and single individuals.
The implementation of Clubcard will give Tesco an ability to characterize consumers better and
place the product on the market as per their particular requirements (Booth, 2019). For instance,
initially, Tesco generated more disposable income for low-income consumers with huge
sensitivity to price.
Psychographic segmentation
Tesco will acknowledge the real psychological needs of the customers based on the home
electrical product. It will create multiple lifestyle magazines to target different people with
different tastes and personality (Anesbury, Winchester and Kennedy, 2017). The lifestyle

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magazine will be created to target contended conformers and traditionalists. The personality of
the customers must be determined and easy-going.
Behavioral segmentation
The company must implement Clubcard which is a tool that will help Tesco to get appropriate
knowledge regarding the buying behavior of customers. To sell Home electrical product Tesco
aims to target active users who are regularly using Tesco products. Tesco will be targeting
customers who are positive and skeptical (Ieva and Ziliani, 2017). This involves knowledge of
when and where consumers shop, the commitment of certain brands, the rate of utilization of
products and where customers spend their time in the shop.
Targeting of Tesco
Tesco's targeting strategy is entirely dependent on its behavioral, psychographic, demographic
and geographic segmentation for offering a better direction. However, Tesco will implement a
similar marketing strategy because retail markets are focused on producing products that fulfill
all the requirements. Tesco seeks to create everything and anything that customers find
appropriate to themselves. Moreover, considering geographic segmentation Tesco will
concentrate more in the UK as it is their major business. In demographic Tesco will be focusing
more on the home electrical product as it will provide huge amounts of profits. Based on
psychographic segmentation the organization will be concentrating more on different lifestyles
of people; Tesco fits all types of preferences and tastes of the customers (Cabras and Bamforth,
2016). By considering behavioral segmentation, Tesco aims to grab customer loyalty. Therefore,
the company will always seek to improve their marketing strategy.
The buying behavior of customers has direct implications on Tesco’s marketing activities
towards a huge range of purchasing situations. For example, the current economic crisis and
global financial possess certain implications on the buying behavior of customers in the UK.
This has led to a reduction in customer spending level (Tadajewski, 2018). A specific change in
customer behavior related to the home electrical product will be addressed by the marketing
management team of Tesco. This will be done by emphasizing cost-effectiveness into the
practices of integrated marketing communication.
Positioning of Tesco

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The organization has effectively positioned themselves in the perception of customers as the
brand that provides a wide range of high standard products at relatively low costs. On the other
hand, by having an online store, Tesco has gained benefit as the online stores are convenient for
shopping and extremely time-consuming. Tesco has also developed itself as a focused customer
organization by creating and providing unique products. The labels of the organization are
divided into finest, normal and value (Sanders, 2016). To sell home electrical product Tesco
offers online services through its e-shop, Tesco.com. To promote the new product, Tesco deals
with each element of the marketing mix to grab the attention of target consumers efficiently and
effectively. The organization will make use of a huge range of positioning strategies to attract a
wide range of target consumer segment.
Marketing mix
The marketing mix strategy of Tesco is followed by 4Ps as follows:
Product
Tesco manufacturers a wide range of product offerings at different stores. To fulfill the
preference and needs of consumers, Tesco aims to create a home electrical product. To promote
this particular product it will target different segments within the market. It will offer this new
product to different types of stores. Recently, Tesco has reduced the product lines by 18% by
reviewing 33 product categories (Joshi, 2016). To sell its new product Tesco bank will provide
financial services like insurance, mortgages, credit cards, savings accounts, and loans.
Price
To manufacture home electrical product Tesco will follow a smart pricing strategy. It will offer
the product at a relatively affordable cost to compete with the international and domestic market
and attract UK customers as they are very price sensitive. Tesco always competes with giants
such as Morrisons, Asda and Sainsbury's and emerged as the largest retail chain in the UK
market. The organization will choose the pricing strategy such as product line pricing,
competitive pricing, and penetration pricing to become a leader in the supermarket industry. It
aims to provide high-quality products with lesser costs as compared to its competitors. However,
in the pricing strategy, Tesco follows a cost leadership strategy. With the new product offering, it
aims to provide a high-quality product at an affordable price (Yamoah, 2016). It makes use of

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best channels and economies of scale for procurement to maintain low cost. It constantly works
with suppliers to make and improve the efficient supply chain to minimize cost. It has been
observed that massive competition with organizations like Lidl and Aldi in the UK market will
put an impact on Tesco's pricing strategy.
Place
Tesco possesses 7,599 stores along with franchises situated all over the world. It operates its
business across 12 countries in USA, Europe, and Asia. It possesses manufacturing offices, sales
outlets, and units across all these countries. The company aims to market its home electrical
product to the retail chains present in all the leading countries worldwide. They will be directly
providing the product to the customers. Tesco comprises of four types of stores such as Tesco
Superstore, Tesco Extra, Tesco Express, and Tesco Metro (Lacey, 2015). It will use Tesco Extra
to sell the new home electrical product as it provides a huge range of products under one roof to
offer convenience to its customers.
Promotion
Tesco possesses a strong brand image that significantly helps its promotional activities. It will
make use of various strategies to promote its home electrical product across the world. The
strategies are given below:
 Club cards for loyal customers
 Interactive websites
 Media campaigns such as TV commercials
 Text messages
 Email messages
 Mobile applications that will enable customers to order the home electrical product through
their mobile handsets
Tesco will also make efficient use of charitable events, television ads, and hoardings as
promotional channels. It will use huge promotional discounts as well as promote and sell its new
product online (Witek-Hajduk and Grudecka, 2018). Along with advertising, the organization
also makes use of various forms of sales promotion.

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Figure: Marketing mix of Tesco
(Source: Reformat, 2016)
Recommendations
To become successful in the UK market, by manufacturing the home electrical product, Tesco
must maintain its current pricing strategy of offering cheaper products than its competitors. The
organization must have a better understanding of the price-sensitive market in the UK. If the cost
of the product is too high than the consumers will go to Tesco rather, they will visit the
competitors like Asda, Morrisons, and Sainsbury. It must come up with new ideas for product
development and innovations. Such innovation and creativity will help the organization to
receive more popularity in international and domestic markets. The organization must open some
retail outlets and stores to grab the attention of the customers. This will help the customers to
have more access to their wide range of products. This will also lead to an increase in revenue.
It is essential for Tesco to implement a unique advertising plan to provide relevant information to
its customers regarding their product. Advertising plan includes different types of loyalty
programs, email services, SMS services, and attractive website with details of the company,
media advertising in the newspaper and catchy hoardings. The loyalty programs involve Club
cards concept that could be developed to retain and attract some customers. The company must
develop effective strategies to build team members to create new levels of excellence to
customers and work. It must invest in serving additional equipment and training to employees to

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better equip them with tools and skills to serve consumers. Such changes should be targeted in
the fresh food department and larger stores.
Besides this, the company must make efficient plans to redesign its existing stores by giving an
attractive and warmer look. They must efficiently assign their capital by reducing capital
investment and by focusing their expenses on increasing their existing stores with priorities
provided to express stores. It must double its offering range of products to enhance customer
experience. It must upgrade the online industry by generating new Click and Collect points for
providing convenience to its customers.
Conclusion
The paper demonstrated the fact that Tesco will design a growth strategy and competitive
marketing to promote its new home electrical product in international and domestic market.
Tesco is determined to be the market leader in food retailing in Britain and beyond the removal
price for money products. The company has created pioneered network of branches and
developed strong links. It focuses on its effective marketing strategy to develop a good
relationship with its consumers. The company has constantly, faced tough competition from the
competitors such as Asda, Lidl, and Aldi Morrisons and Sainsbury’s.
While dealing with such competition the company has effectively maintained its line of
operations with norms of Corporate Social Responsibility. It has manufactured and procured
ethical services and goods to its consumers. The organization seeks to expand its market globally
by creating a new home electrical product. As a result, the organization is following some clear
and strict marketing plans that will ensure long-run success. The planning and corporate strategy
of Tesco are determined to be the benchmark that could be followed by any multinational
organization to gain success in international as well as domestic market. Based on the new
product the paper provided segmentation, positioning and targeting of Tesco to grab the attention
of more number of customers to buy their product.