Tesco Marketing Strategies: A Comprehensive Analysis

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MARKETING ESSENTIALS
TESCO

Table of Contents
INTRODUCTION............................................................................................................................. 2
LO1.................................................................................................................................................3
P1 & M1..................................................................................................................................... 3
P2 & M2..................................................................................................................................... 6
LO2.................................................................................................................................................8
P3 & M3..................................................................................................................................... 8
LO3............................................................................................................................................... 12
P4 & M4................................................................................................................................... 12
CONCLUSION............................................................................................................................... 18
REFERENCES.................................................................................................................................19
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INTRODUCTION
Today, Tesco is among the world’s largest supermarket chains in the world. When Jack Cohen
started Tesco in 1919 from a grocery stall in East London, none would have thought that Tesco
would become such a mammoth organization as it is today. In 100 years of glory, Tesco’s
revenue had grown from £4 to £57 billion and it employees around 440,000 people in around
7000 shops across the globe. The success of Tesco is not just a coincidence, it is the result of its
marketing plan and its management practices. Since the beginning, Tesco projected itself as a
place for everyday people. Tesco had been trying to make everything available in its stores,
with a strong belief on its tagline ‘Every little helps’. This assignment will help to understand the
marketing and the key roles and responsibilities of marketing in an organization with the help of
Tesco. It will also explain how significant is the marketing functions for other functions of the
organization. The assignment will also explain the interrelationship between marketing
functions and different organization functions. It will help to understand the ways in which
organizations use elements of the marketing mix to achieve overall business objectives. In the
end, the assignment will help in producing and evaluating a marketing plan for Tesco.
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LO1
P1 & M1
Marketing is a very important element in every business. It represents the business and its
product in the market. Its main job is to promote the business before potential customers and
investors to help in building a brand name for the company and to bring the company in the
lights. Most organizations have a separate marketing department for marketing functions which
have several roles and responsibilities like: it conducts and manages campaigns for marketing,
marketing department selects a service or product to produce communication materials which
spread awareness about the product over a course of the sales cycle. It also produces
promotional and marketing materials to promote the products and business in the market.
Marketing department defines and manages the brand; it defines the brand's identity, its
beliefs, purpose, vision, mission, policies as well as its offerings (Jobber and Ellis-Chadwick,
2012). This helps in explaining how the brand wants to serve its customers and what kind of
experience it wants them to have.
The marketing department also does the job of representing the brand on social media by
monitoring and managing the brand on social media. The marketing department also takes care
of the media activities of the business; they guide the company and its executives while
responding media queries. Often marketing personnel represent the company on behalf of the
management to safeguard the company's interest and avoid any slip of the tongue from
inexperienced orators. The marketing department also helps in the internal communication of
the company (HF, 2019). It helps to produce employee’s newsletter to help the employees
understand the values, priorities, goals as well as changes in the company.
The marketing department also conducts researches about customers and markets to help in
understanding the market movements, and customer behaviours. These researches also help in
observing opportunities in the market and how the products and services of the company are
seen by the public. The marketing department also manages and coordinate with the vendors
and agencies which support marketing activities like print vendors, PR agencies, Web providers
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etc. Marketing department helps in product planning along with helping in establishing the
goals of marketing. It also ensures that the customers are well served to ensure that the
company has satisfied customers who can stay loyal to the company in the long term.
In Tesco, the Marketing department performs all the above-stated roles and responsibilities. It
conducts researches before entering into a new market and before launching a new product.
Marketing department helps in planning and execution of all the activities of Tesco as well as it
represents the company before media and helps in communicating desired messages with the
customers as well as employees.
The marketing department also has to play various roles based on different marketing
environment. There are 6 divisions of marketing environment and marketing department has to
play varied roles in all the 6 divisions. First division is Economic environment; economic
environment consists of many factors like inflation in the country, demand for goods, rising
income of the country, unemployment etc. these factors affects the buying behaviour of the
customers and thus Tesco has to continuously review its marketing objectives and plans to
manage its marketing activities as per the situation. The second division is the political
environment; it consists of factors like policies of the governments, restrictions or prohibition of
certain goods or practices etc. Tesco’s marketing department has to understand the policies
and procedures of every market along with any new policy or amendment to ensure smooth
operations and hassle-free sales in every country.
The marketing department at Tesco also handles the communications with the administration
of a country to receive support in conducting business activities. The third division is
Competitive environment; the marketing department has to keep an eye on activities of the
competitors to help in competing with them. Competitors also influence many activities of the
business like their innovation generates the need for innovation in a company as well, Tesco
can also get inspired by them, they can also capture Tesco’s market share. The fourth division is
socio-cultural environment; Tesco operated in multiple locations and thus the marketing
department has to ensure that its activities and products are not offensive to the society and
culture of a place. The fifth division is technical environment; Tesco has to continuously adopt
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technological trends and try to achieve technological advancement which could help it to gain
competitive advantage, avoid losses and keep updated. The sixth division is the legal
environment; legal environment consists of all the legislation of a jurisdiction. The marketing
department has to ensure that Tesco adheres to all the laws and legislation as company's who
break the law don’t do well in the long term and it will also affect the brand name of the
company.
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P2 & M2
All the functions of every organization are interrelated and every department has to work in
alignment with other departments to reach organizational goals. The marketing function has to
coordinate with all the other departments to reach the organizational goals. The
interrelationship between finance and marketing department is very necessary since the
finance department provides funds for the marketing activities and as a result of these
activities, the finance department gets profits. Finance department ensures the financial
viability of the organization and marketing department ensures the engagement of customers
with the company to generate sales. Together these departments play key roles in the functions
and growth of the organization.
The interrelationship between Marketing and sales department is also very significant in view
of the aligned task of both the department. Marketing department generates the demand and
sales department and converts that demand into revenue. Thus both these functions are very
necessary to attain the primary goal of Tesco which is profit.
The interrelationship between the marketing and operations department is also very necessary
as sound and smooth operations not only ensure the company's profits but also increases the
satisfaction of the customers. The marketing department has to represent the firm and had to
make claims and promises with support of the operations department to assure customers
about the delivery and availability of the goods along with practices of the operations to gain
trust from the market. In the supermarket’s business operations play a key role in building the
brand image as people would like to prefer going to a place where all the products are available
every time. Thus operations and marketing both play a big role in building goodwill of Tesco.
The interrelationship between Human resource and marketing department is also very
significant since marketing creates a brand image in the market due to which more employees
get interested to work for the organization. The marketing department also conducts various
researches which help the human resource department in planning the number of employees
and skills needed by Tesco for its stores and other operations to ensure customer satisfaction.
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The interrelationship between IT department and Marketing department is also very necessary
nowadays as Tesco also has to promote itself through e-commerce. Tesco had to lead many
social media campaigns for which it needs strong support from the IT department.
The key elements of marketing function are research, strategy, planning and tactics (MI, 2018).
These elements interrelate with most of the organizational functions like, Research helps in
understanding the shortcomings of all the activities and guides the functions to take actions
which improves customer satisfaction. The strategy helps in aligning the efforts of all the
activities and functions of the business to put a combined effort in achieving organizational
objectives. Planning helps in forecasting the situations and preparing to deal with them.
Marketing helps in planning which helps finance department to get the funds available, HR
department to get the employees and skills available and production, sales and operations
department to be ready to play their part in the strategy.
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LO2
P3 & M3
The success of an organization in the market is based on its use of 7 Ps of the marketing mix.
These 7 Ps are the product, price, place, promotion, people, physical promotion, process. For a
better understanding of the ways in which different organizations use marketing mix, a contrast
is drawn between Sainsbury and Tesco. This contrast will help in understanding how the
elements of the marketing mix are used by both companies.
Sainsbury supermarkets ltd. is the UK’s third largest chain of supermarket chain (GD, 2019). It
was started in 1869 at Holborn, London, the UK by John James Sainsbury. It is a subsidiary of J
Sainsbury plc. Elements of the marketing mix will provide more information about Sainsbury.
Product: Product is the offering of the business, it could also be a service or any product. This
element says that the company should provide products based on the needs and demands of
the customers (Enache, 2011). Every company designs its product to ensure its usability and
good appearance. Every company aims to develop a strong product line to improve their
offerings. Tesco provides financial services, clothing, food, electronics etc. Their product line is
continuously expanding to meet all the developing needs of the consumers. It provides more
than 40000 product lines in its stores. Customers at Tesco can choose from a wide range of
choices it offers in types, sizes, brands, thus no customer feels short of choices when he comes
to Tesco. Sainsbury of the other hand also stocks around 30,000 product lines among which
1/5th are of its own label. It deals in household products, health and beauty products, beer,
wines and other drinks, Bakery and Dairy products, fish and meat products and fruits and
vegetables. Sainsbury always believed in providing quality products at lower prices and thus
aims to provide everyday products to the customers.
Price: Price of the product should be attractive for the customers to afford it and it should also
be as per the perceived value of the customers. It should also not be too high when compared
with competitors providing similar products. The price of the product should also help the
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company to meet its expectation. At the same time a lower price also sometimes present the
products as inferior. Thus a company has to consider several factors before deciding the price
of its products. Tesco always tries to provide the products at the lowest price possible without
compromising the quality or leading the firm into losses. Price of its products was expected to
rise but due to economies of scale, its prices stayed unaffected. Though prices of some products
are high in its small stores due to more overhead costs but to deal with that Tesco started a
club card system. In such system, customers get points on the purchase of goods which can be
converted into money and thus it helps to build loyal customers which further decreases the
prices and increases sales without much effects on profits (MT, 2018.). Sainsbury, on the other
hand, aims to provide value for money and has a different set of products at different prices. It
does not believe in price cutting by any compromise in quality or services. Yet it is able to
provide kids and basic products at a lower price than its competitors. It also sources its grocery
and fresh produce from the local market and thus has been able to maintain reasonable and
affordable price rates.
Place: Every company has to ensure that its products are in the reach of the customer so that
not much efforts or travelling is needed to avail the products. Thus every company aims to
develop its stores in key locations with the high crowd and easy accessibility. Tesco has a global
presence with it’s around 7000 stores. Since it is not possible to establish big stores in every
location thus Tesco has six types of stores based on their sizes ranging from Extras to Metro.
Tesco also has an online channel of distribution which is gaining popularity and have good
prospects as per development trends. Sainsbury, on the other hand, serves only in the UK with
its 1415 stores. It has acquired several shops and converted them as convenience shops.
Sainsbury too has an online channel of distribution which provides many offers, gifts etc. along
with providing tokens which are redeemable at Sainsbury’s outlets.
Promotion: Promotion refers to spreading awareness about something. In Marketing, mix
promotion is very important to ensure that customers are well aware of the offerings of a
company and its presence. Promotion helps in generating interest of the people and thus
increases their engagement with the brand. Tesco is known for its lowest prices and thus it uses
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this in all its promotional activities. It also uses practices like TV ads, Special offers, Discounts,
Sponsoring events etc. for promotions. It also uses club card services which help to track
customer's buying habits and accordingly promotes itself and make loyal customers who feel
Tesco cares for their needs.
Physical evidence: This element comprises of the design and structure of stores, their
employees' clothes and etiquettes etc. which involves physical interaction with the customer.
Every company designs its physical evidence cautiously as it represents the brand itself. Tesco's
stores are not highly decorated or similarly furbished yet very clean and organized. This is
because Tesco doesn't believe in spending much on the designing and decorating their store
and instead try more to provide offers and more products at a lesser price with that amount.
Sainsbury, on the other hand, has a variety of designs of stores and different layouts which
attracts the customers. They aim to make their stores impressive and convenient.
Process: Here Process consists of a variety of factors like how customers can check out, how
they will be served, How can customers avail a product or how the grievances of the customers
will be dealt with etc. Tesco tries to keep its customers satisfied with speedy billing and easy
accessibility of the products both online and offline. Tesco employs competent people who can
serve the customers well and address their grievances. Sainsbury continuously put efforts to
ensure a smooth process; it had made online shopping on its portal very easy and convenient. It
also continuously upgrades its stores to meet the changing needs of the customers.
People: The most important element of the marketing mix is the people who perform
marketing activities, the people who represent the company and deal with it public. Tesco has a
highly competent staff and they are also provided with many offers and privileges in its store.
People at Sainsbury too are very competitive and they ensure customer satisfaction at all its
stores (MS, 2019).
Different tactics are used by Tesco and Sainsbury and yet both of them succeeded to attain
their business objectives. Tesco aimed at lowering the prices of its products to the minimum
possible while Sainsbury aimed at keeping the quality of its products superior against its
competitors. Tesco promoted its low prices through different mediums and Sainsbury did the
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same. Sainsbury furbished its store but Tesco didn’t. A combination of all their practices helped
the customers to understand their offerings which attracted customers and hence resulted in
more profit and increased market share.
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