Marketing Planning Report: Tesco's Challenges and Strategies

This report presents a comprehensive marketing planning analysis of Tesco, a prominent UK-based retail organization. The report begins with an introduction to marketing planning and its evolving perspectives within the UK retail industry, specifically focusing on Tesco's historical journey and its current challenges. It includes a detailed organizational audit, incorporating SWOT, PESTEL, and Porter's Five Forces analyses to assess Tesco's strengths, weaknesses, opportunities, threats, and its external environment. The report identifies barriers to marketing planning and suggests strategies to overcome them, drawing comparisons with similar organizations in the industry. Furthermore, the report explores the introduction of a new product or service, emphasizing the significance of marketing planning in the strategic planning process and identifying techniques for new product or service development. Finally, the report addresses ethical issues in the workplace and proposes solutions to mitigate them, providing a holistic view of Tesco's marketing strategies and challenges.

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MARKETING
PLANNING

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Table of Contents
INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................4
1.1 changing perspectives in MARKETING planning in an organization in UK...........................4
1.2 organization’s capability for planning its future marketing activity......................................5
1.3 Provide techniques for organizational auditing and for analyzing external factors that
affect marketing planning............................................................................................................7
1.4 organizational audit for your selected organization and provide an analysis of external
factors that affect marketing planning under current issues........................................................8
SWOT of Tesco.......................................................................................................................8
PEST of UK...........................................................................................................................10
Porter’s 5 forces.....................................................................................................................12
TASK 2..........................................................................................................................................13
2.1 Main barriers to marketing planning in your organization.................................................13
2.2 Business, and another similar organization related to your industry, may overcome barriers
to marketing planning................................................................................................................14
TASK 3 .........................................................................................................................................15
3.1 introduce a new product or service for a selected market....................................................15
3.2 Importance of marketing planning in the strategic planning process for your newly
suggested product or service in your new market......................................................................15
3.3 Identify and explain techniques for the new product or service development in your market
....................................................................................................................................................16

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TASK 4..........................................................................................................................................18
4.1 Ethical issues occur at workplace............................................................................................18
4.2 Respond on overcoming for ethical issues...........................................................................18
CONCLUSION..............................................................................................................................20
REFERENCE.................................................................................................................................21

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INTRODUCTION
Marketing planning is an essential task that needs to be done by all organization so as to
ensure its success in local and global market. A marketing plan is basically an outline of the
marketing effort of an organization. The perspectives of the marketing plan and its design
changes over the years in line with the changes in the environment in which the organization
operates. In the following pages a marketing audit report is being compiled followed by the
development of a marketing planning proposal.
TASK 1
1.1 changing perspectives in MARKETING planning in an organization in UK
A unique position in the British retail industry is occupied by Tesco. The supermarket is
visited by millions on a regular basis but at the same time it has been subject to severe
controversies. There is a statistics about Tesco which says that at a time when the organization
was at its peak, one in every seven pound spent in UK, went to Tesco. Tesco started its journey
in 1919. At the end of World War 1 where Jack Cohen was employed in the Royal Flying Corps
used the money to buy excess supply from the army and sell it from Hackney. The first stock that
he sold was fish paste and golden syrup. By the year 1924, he started selling his own brand of
tea. The name of the brand was made up by combining the first three letters of his supplier and
the first two letter of his name (Winterman, 2013). The first TESCO shop was set up in 1929.
The business model that was used by Cohen in his company was to stack the goods high and sell
them at very low prices. The people gave them the nickname of “Slasher Jack”. At this time
there was lot of austerity around and the fact that Cohen was able to develop his business during
such a time gives a lot of credibility to him. At the start of the recession during the 1990’s Tesco
learned that the customers wanted that their money should go further. In this realization the value
range was launched by the company in 1993 which helped it to become the second largest
grocery brand in UK. By the year 1996, sales of Tesco in UK had marched ahead of Sainsbury.
The size of the company at that time allowed the company to get the biggest bargains even from
the biggest of the manufacturers. Tesco was found to be very aggressive in its bargains and got
the best deals from its customers (Winterman, 2013). However, the single most important fact
that helped Tesco in dominating the market is watching the behavior of customer. Tesco club

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card launched in this regard was the single most important step in the history of the company.
This helped Tesco to collect raw data about the goods that were bought by customers and the
company was able to turn this information for making profit out of it. Tesco was also able to
give personalized discounts to customers. Tesco launched the club card across the nation in 1995
and by the next year it had become the top super market in UK. In fact the reason behind the
success of the company lies in its ability to spot and cash on opportunities before others could
identify the same. However, there has been change in times and Tesco has lost a great amount of
market share in the past few years. At the time of joining Tesco, CEO Dave Lewis and Tesco got
themselves embroiled in a big accounting scandal and also the company had reported a £6.4bn
loss which was one of the worst in the corporate history of UK (Vizard, 2015). In this new reality
there was a change in the business planning and the marketing planning. In line with the falling
market share of the company the first year under the new CEO has been about get the basics
right for the company and bringing the stability back (Vizard, 2015). In this regards Tesco has
been hiring a greater number of shop floor staffs so as to serve the customers well, has cut prices
of the products so as to bring them at par with the market and has at the same time reduced its
range of products. This means that the company is aiming for less amount of duplication and is
trying to allocate more space for products and brands that are actually brought by customers.
Tesco wants to place itself as a retail destination where the customers can purchase full range of
products rather than going to more than one shop. In regards to marketing effort the company is
trying to differentiate itself from the discounters who are taking on a major share of the market
by talking a lot about food and product and there is much less talk about price.
1.2 organization’s capability for planning its future marketing activity
Tesco has been losing market share for quite some time and had reported one of the
largest losses in the corporate history of UK. In order to help the company make a turn around
the marketing strategy of the company needs to change. The new marketing strategy of the
company is required to reflect the new direction of the company and differentiate it from its
competitors. In order to take the company to a new direction there needs to be a change in the
strap line of the company from ‘Every little helps’. If the strap line of the company is changed as
per the new marketing strategy, then it is also important for the company to get a new strap line
that explains to the fullest the answer to the question of what the business is about. This is an

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important next step in the revival of Tesco wherein the CEO needs to go beyond the business
basics so as to fix the affection and trust of the shoppers on brand and help in luring the
customers back to shopping at Tesco.
Tesco needs to decide in this regards the identity that it wants to create for itself. Does the
company take a leadership role amongst the competitors through quality, fun, being serious or
through value. The company needs to think about the clear choice in which the company is to be
headed into for future. That is to say does the company want to distinguish from the competition
by being a price leader, a leader in terms of quality, or it wants to go back to 1980s and mean all
things to all people. One of the steps that the company can take is to return to the market as an
innovator. The company needs to know that it can’t beat the discounters in terms of money or the
price being charged on goods. However, there is a possibility that Tesco can beat the discounters
in terms of service, in-store environment and depth of range.
In order to check the capability of Tesco and whether it would be able to afford such an
investment let’s check the financial capability of the company. The financial analysis of the
company is presented in the following figure. The financial analysis of the company shows that
the company is in a sorry state of affairs and the financial ratios of the company are on a decline.
However, the company has been able to generate a free cash flow of £1088 million at the end of
2016 which is far better as compared to the year 2015. This amount can easily be used for the
new marketing strategy for the company.

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Figure 1 Financial analysis of Tesco (Morning Star, 2016)
1.3 Provide techniques for organizational auditing and for analyzing external factors that affect
marketing planning
The tools that can be used for auditing the organization and understanding its capability
are SWOT analysis and Porter’s value chain. The SWOT analysis helps us to understand the
strengths and weakness of the company and the way it can capitalize on its strengths to overcome
weaknesses and address the opportunities in the external environment and also overcome the
threats that lurk in external environment. The porter’s value chain on the other hand talks about
those activities of the company that adds value to it. There are two types of activities in this
regards and these are primary activities and supporting activities.
On the other hand the tools that are mainly used for the analysis of external environment
are PESTEL and Porter’s 5 forces. PESTEL analysis helps to form a broad view of the
environment and helps in understanding how factors in the environment impact the organization.
The factors that are studied under PESTEL are Political, Legal, Economic, Social, Technological
and Environmental. Based on the direction of these different factors the marketing strategy of the
company is designed or altered. For example after noting that the country was passing through a

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phase of recession and in this phase the customers wanted that their money should do more, the
TESCO launched value range and captured the imagination of customers. Another tool that is
used for the analysis of external environment is PORTER’s 5 forces. The Porter’s 5 forces tries
to analyzes the forces that play in the external market like the bargaining power of the buyer,
threat of new entrants, competitive rivalry within the industry, threat of substitutes and
bargaining power of the supplier. Through this analysis the company is able to understand the
right strategy that can be used to enter into a market and identify the market where there is less
competition so as to taste success. For instance when the Virgin Mobile tried to enter the market
in USA, it was already a very crowded market and there were lot of different players in the
market. However, Virgin became successful as a late entrant into the market by identifying a
blue ocean segment in the market. The company understood that the segment of Americans
under the age group of 30 were underserved and a probable blue ocean. It targeted that segment
and within 3 years of its launch in the US market, it had gained more than 4 million subscribers
(Wolcott, 2009). In order to cut the bargaining power of suppliers who have a major say in the
garments industry, Zara does not outsource the production of its garments to the fullest extent.
Over half of the production is done in house by Zara and this leads to a reduction in lead times.
Most of the retail stores of the company are directly owned by Zara and thus it can have a direct
connection with the customers of the company. At Zara the design to retail cycle has been
reduced to 15 days by the company. This results in the fact that as compared to other retailers
where the customers wait for sales, at Zara they have to purchase the designs as soon as they
appear or they are quickly replaced by the company (Wolcott, 2009). Thus Zara as a Spanish
retailer can clearly dodge with the bargaining power of supplier and customer in the highly
competitive garments retail environment.
1.4 organizational audit for your selected organization and provide an analysis of external
factors that affect marketing planning under current issues
SWOT of Tesco
Strengths

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Tesco is a powerful retail brand and ranks amongst the top 100 brands in the world in terms of
value. TESCO is well known as a company that offers value for money and is the largest retailer
in UK.
Weakness
Tesco is quickly losing its market share. It has lost connection with the customers and is no
longer the brand that the customers love (Ruddick, 2015). Tesco had recently reported one of the
largest losses in the history of corporate UK and was embroiled in a large accounting scandal.
Opportunity
Tesco has the opportunity to define its unique value proposition and distinguish itself from the
competitors (Helms and Nixon, 2010). In this regards the marketing strategy of Tesco needs to
be redefined. The strap line of Tesco needs to be redefined in order to bring back the connection
with customers.
Threat
The online retail market is on the rise and more and more customers are purchasing or preferring
to purchase from online as compared to traditional retail outlets. According to the results of a
latest survey, shoppers were now found to be making 51% of their purchases in online market
place as compared to 48% in the year 2015. A year before that is in 2014, 47% purchases were
made in online platform. It is also found that there is an increase in the use of Smartphone for
making purchases. It was seen that as compared to 41% purchases being made through
Smartphone in previous year about 44% of purchases were made through Smartphone in the
current year (Ferber, 2016). As seen from the following figure UK is one of the largest E-
commerce markets in the world and it is expected that Business to customer sales in this market
would rise to £89.73 Billion or 16% of the retail sales by the year 2017 (Profitero, 2013).

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Figure 2 Ecommerce sales in UK from 2012 to 2016 (Profitero, 2013)
PEST of UK
Political
United Kingdom is a constitutional monarchy and it runs under the influence of parliamentary
system. The country is stable and fair and there are plenty of opportunities within the country.
This is a positive sign and it has aided in the growth of Tesco over the years. However, the
separation of UK from European Union is likely to have an effect on Tesco especially if it is
trying to export something. This is because if UK is unable to strike a deal with EU, then its
exports are likely to turn out costlier.
Economic
UK has a strong economic position amongst the countries in the world. The GDP of the country
is high and the economy is diverse (Yüksel, 2012). However, the recovery of the country from
recession has been slow. Another important factor that is important to note over here is that after
its detachment from EU, the tariff that the exporters have to bear while exporting from the
country depends on its relation with EU. Tesco is likely to be benefited by strong GDP, however,
the financial crisis and slow economic recovery of the country post crisis means that people
would likely want to have spending cuts. This is the reason that has led to the growth of discount
retailers like Aldi and Lidl and has lead to Tesco losing its ground or market share in quick

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succession. Thus the company must lessen its prices while it tries to create a difference for the
shoppers.
Social
There are many public services to the people of the country that are given free of cost. The
country has a dense population. The country is also open to inbound migration and this has
resulted in a cosmopolitan society. The standard of living is high. Tesco has to keep in mind the
diverse needs of the diverse population and should launch new products or services while
catering to the diverse needs of the diverse population.
Technological
UK as a country is known for high skills and innovation. The country has an expertise in terms
of technology and science. There are effective laws in the country to protect intellectual property
and people are early adopters of new technology. There is plenty of internal competition that
results in stimulation of growth. The people of UK are known as early adopters of technology. In
this regards the earlier pages have talked about the growth of e-commerce and m-commerce
markets in the country. Tesco also needs to increase its online presence so as to cater to the needs
of customers.
Legal
The legal framework of the country is quite strong and there are several laws in relation to fair
employment practices, competition etc. that are to be adhered by the businesses in the country.
Tesco as a company operating in UK is required to adhere to the legal boundaries or restrictions
in the country.
Environmental
It is important for the businesses to care of the environment as the customers keep a close track
of CSR activities of the business along with the suppliers of the company. This can have a major
influence of purchase decisions made by customers. As environment becomes a measuring yard
for the performance of business, Tesco too needs to be eco-friendly.

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Porter’s 5 forces
Bargaining power of buyer- high
In the retail environment the bargaining power enjoyed by the buyer is high as there is large no.
of retail outlets and the company can choose any of the outlets. Thus, Tesco needs to engage
with its customers and ensure greater loyalty from customers so as to thwart the effect of high
bargaining power of customers.
Bargaining power of supplier-low
The bargaining power of even the largest suppliers is quiet low as supermarkets like TESCO
have large purchasing power and are thus able to extract best deals from the suppliers
(Tavitiyaman, Qu and Zhang, 2011).
Inter-firm rivalry- high
The rivalry between the firms is quiet high as they are all trying to gain attention of the same
number of customers. Thus in Tesco needs to dwarf the competitors and build on its market
leadership position, it has to engage with the customers and win their loyalty.
Threat of new entrants-high
The threat of new entrants in the market is quiet high. For instance Aldi and Lidl were new
entrants in the UK market until a few years back but have gained market shares quickly. This
means that Tesco can never afford to be complacent with its position in the market and should
always try and outdo itself and the expectation of customers.
Threat of substitutes-high
The online retail landscape led by Amazon is providing to be a big to al the physical stores and
retail in physical format. Tesco can cope with this threat by increasing its own online presence
and encouraging the customers through innovative offerings to shop at its portals.