Comprehensive Marketing Audit and Analysis of Tesco Supermarket

This report presents a comprehensive marketing audit of Tesco, a leading UK supermarket chain. It begins with an executive summary highlighting the importance of marketing for businesses and the application of PESTLE, Porter's Five Forces, and STP analyses to assess Tesco's external and internal environments. The report then delves into key issues and challenges, including competition from discount retailers and changing consumer perceptions. It outlines Tesco's marketing objectives, such as increasing sales, developing its online shopping platform, and enhancing customer loyalty. The analysis covers market segmentation, targeting, and positioning strategies, emphasizing Tesco's focus on the middle and lower-income groups. The report also examines the marketing mix, including product, price, and promotion strategies, and concludes with recommendations for future growth, such as expanding into new market segments and attracting higher-income consumers. Appendices include PESTLE analysis, the S model of Internet marketing, and a brand equity model, providing further context to the analysis.

Marketing
Management
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Executive summary
Marketing has become very crucial aspects of businesses as it provides several kinds of
benefits to them. One of the major advantage of marketing is that it supports in transfer and
exchange of product and service. Further, with the help of different tools and techniques of
marketing, companies try to inform people in the market about their products, services along
with their features and benefits. Effective use of marketing tools and techniques can offer
businesses with opportunities to enhance their brand image, sales and market share. Tesco is a
well known and very renowned chain of supermarket which operates in UK and other countries
of the world. In order to carry out marketing audit of the firm, the researcher has used three
major tools which care PESTLE analysis, Porter Five forces and STP analysis. From PESTLE
analysis it has been found that the brand is getting affected in both positive and negative terms
by different external business environmental factors. For example high rate of technological
advancement in the country has supported Tesco in carrying out free flow of all its operations
and activities.
On the other hand, changing trend in society has affected entire sales and profits of the
brand in negative sense. After applying Porter Five force model on Tesco, it has been found that
some forces in external business environment are very high whereas some are quire low. For
instance the threat of competition is very high and it has created various obstacles in achieving
higher growth rate and success for the brand. The retailer is facing very high degree of
competition and this has created problem for Tesco to increase its market share by attracting
more customers. By carrying out STP analysis, it can be expressed that Tesco is using two
different segmentation strategy. On the other side of this, different approaches to positioning has
been adopted by the company.
In order to achieve success and higher growth rate in the market place, it is required by
Tesco to develop new range of product and services for complete new market segment. At
present the brand is focusing upon satisfying the need and demand of middle and lower income
group. Therefore, now it has an opportunity to meet the demand of people which belong to
entirely new market segment. In order to attract people from elite or higher class, the retailer will
be required to focus on three major areas which are product, price and promotion. Extensive
promotion will be required to carry out by the brand to attract more customers by creating
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awareness among them. Along with this, it will be also required to focus on the fact that quality
services and products are being offered to new customers at high prices. The use of high prices
strategy is going to be very effective in attracting people which fall under the category of higher
income group. It can be also stated that without effective marketing companies cannot make their
products and services successful in the market place.
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TABLE OF CONTENTS
Introduction .....................................................................................................................................4
1- The Audit ....................................................................................................................................5
2 Key issues and challenges.............................................................................................................5
3 Marketing Objectives....................................................................................................................6
4 Segmentation Targeting and positioning .....................................................................................7
Segmentation...............................................................................................................................7
Targeting......................................................................................................................................8
Positioning...................................................................................................................................9
5 Marketing mix ............................................................................................................................10
Products.....................................................................................................................................11
Price...........................................................................................................................................11
Promotion...................................................................................................................................11
6 control and measurements ..........................................................................................................12
Conclusion.....................................................................................................................................13
6 References...................................................................................................................................14
Appendix Pestle analysis ..............................................................................................................15
S model of Internet marketing ......................................................................................................16
Appendix brand equity model .......................................................................................................16
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INTRODUCTION
In the present scenario, marketing has started to play very important in growth and
success of a business enterprise. The current research report is based on Tesco which is one of
the leading retail supermarket chain of UK. This study highlight analysis of internal and external
business environment of Tesco.
1- THE AUDIT
It can be stated that marketing of products and services is not an easy task and therefore,
companies needs to place wide variety of resources and efforts. The concept of marketing can
support organization to grow and expand themselves in the marketplace (Lambert, García‐
Dastugue and Croxton, 2005). In order to carry out audit or analysis of a business enterprise,
different models and tools can be used. By carrying out the audit of Tesco using PESTLE
analysis model, it has been observed that at present the tax rates are low and UK is politically
very stable. This has supported the company in achieving higher rate of growth and profitability.
On the other hand high growth of economy provide the company with adequate opportunities in
terms of expansion. The brand is also required to make changes at regular intervals as per the
modifications in need and demand of people in the market. From the environmental audit, it has
been also observed that the company needs to lower down its waste and carbon footprints
(Clarke-Hill, Comfort and Hillier, 2008). Tesco is also getting affected by high rate of
technological advancement in positive sense. It has provided the brand with an opportunity to
deliver services in more satisfactory manner. Other than this, at the time of service delivery the
brand needs to comply with all rules and regulations framed by government and other regulatory
bodies. From the research carried out, it can be stated that at present the market share has fallen
from 28.6% to 26.3% (Tesco losses its market share, 2016). Furthermore, the brand is loosing its
market share to players like Lidl and Aldi which are German based discounted retailers.
On the other hand, by carrying out Porter Five Force analysis, it has been observed that
Tesco is getting affected by increasing competition and high power of all its suppliers. However,
it can be argued that the brand do not face high threat of suppliers and new entry. Tesco is using
different approaches of market segmentation and it has mainly targeted individuals which fall
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under category of middle and lower income group. Tesco has positioned itself as a low cost
retailer which sells quality products at convenient prices.
Refer appendix 1
2 KEY ISSUES AND CHALLENGES
1. Competition and High bargaining power of all its customers
2. Introduction and increasing popularity of discounted retailers such as Aldi and Lidl
3. Changing perception of people in market after the horse-meat scandal
4. Changing economic climate of the country
Refer appendix 9
3 MARKETING OBJECTIVES
In the present scenario, marketing objectives has become very important in success and
growth of a business enterprise. Nowadays, companies develop marketing objectives and tries to
modify them at regular intervals in order to achieve desired results (Cravens, 2010). The
rationale why marketing objectives has started to play such an important role is that these
objectives support organizations in providing a clear direction for future. The marketing
objectives which has been developed by Tesco are provided below as:
 To increase sales by 10% within the next one year : It can be expressed that in order to
sustain in long run and maintain its market position, the brand is required to focus on
increasing its sales. The rationale behind this is that higher sales will increase revenue
and support in future expansion. As it has been already discussed in the above mentioned
study that the brand is continuously loosing its market share. There, Tesco objectives is to
increase its sales by 10% within one year so that it can stay competitive in market place
and gain desired market share.
 To develop a larger internet shopping site : Tesco aims to provide groceries, electronics
and clothing goods through online mode since this is the most convenient source of
delivering products to different places (Cravens, 2010). The business also aims to
develop the online shopping experience as this is the best way of persuading many
customers towards the business products and services. On the other hand, this is also
significant for the purpose of meeting organizational aims and objectives. Sales as well as
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profitability of the business both can be increased through internet shopping website.
Moreover, Tesco has to include a variety of products in the existing product line so that
consumers can conveniently order for the products they desire to purchase.
 To enhance the rate of customer loyalty and repeat purchase by 20% by the end of this
year : This objective can be achieves with the help of carrying out extensive market
research that will support in identification of need and demand of people in the market
(Lambert, García‐Dastugue and Croxton, 2005). On the basis of information collected
products and services can be developed to gain customer loyalty and repeat purchase
from them. At present the company is facing issue related to high degree of competition
among marketplace and therefore this issue can be resolved by getting high degree of
customer loyalty and encouraging them to repeat purchase. For this purposes, the
objective of company is to use ten new channels of sales and distribution. The budget
allocated for marketing and sales is also going to increase by 5% in every six months to
overcome the above mentioned issues.
It can be stated that in order to achieve the above mentioned objectives within specific
time period, Tesco is required to place huge amount of efforts and resources. The brand can also
encourage views and suggestions of its employees in order to develop effective plans and
develop a sense of satisfaction among them. In order to measure the success of the company,
Tesco is required to adopt several methods so that overall growth and prosperity aspects can be
identified. Increase in the frequency of sales can reduce the number of customer complaints;
hence through this, effectiveness of Tesco's operations can be identified.
4 SEGMENTATION TARGETING AND POSITIONING
Segmentation
Segmentation can be defined as the process in which entire population is divided on the
basis of customers with similar needs. In order to carry out effective operations, it is required by
every business enterprise to segment its market (Dann and et.al. 2007). It can be stated that the
retailer has segmented its market on the basis of behaviour of individuals and geographical
location. It can be stated that segmentation provides Tesco with several kinds of advantages and
contributes a lot in enhancing its overall profitability. One of the most important benefit of
segmentation is that it helps the brand in focusing upon market in more effective manner
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(Lingard, 2006). Furthermore, better market focus helps in maximising return on investment. On
the other side of this, segmentation of entire market also supports Tesco in increasing its overall
competitiveness in the market place. Another important benefit of segmentation is that it
provides the retail supermarket with more potential opportunities to carry out expansion in the
future. Now the brand has an opportunity to introduce premium range of products and carry out
segmentation of market by income level. Here, people which belong to hire income group and
who look forward for buying only premium products. At present there are different type of
segmentation strategies which can be used by businesses to operate in the market. In future the
brand can make use of demographic segmentation to carry out its operations and earn higher
profits.
Demographic segmentation will the effective strategy for market segmentation and here
in Tesco can use income, age, gender and education level for the purpose of segregating the
market types. Since, Tesco has all types of products and services; therefore as per the product
category, the process of segmentation can be adopted. Further, age and income both are another
categories through which markets can be segmented. For example – food products should be sold
according to the age group as proper segmentation can only result in adequate sales and
profitability.
Targeting
As it has been already discussed that the competition among food retail supermarket is
getting intense day by day along with the passage of time. It has become very important for
businesses carry out effective targeting (Gilbert, 2003). Tesco has mainly targeted individuals
which fall under category of middle and low income group. It can be also expressed that
developing a well defined target market has helped Tesco in interacting with its customers in
more effective manner. The use of appropriate targeting strategy has resulted in carrying out
more focused operations and activities of the retail supermarket. On the other side of this, it has
also supported the company in understanding need and demand of people in market in the best
possible manner (Meydani, 2009). The use of appropriate targeting strategy has also resulted in
lowering down the entire cost of operations of the retailer. The rational behind this is that
targeting helps in developing only those services and products which are being demanded by
people in the market. In terms of strategies, it can be expressed that the brand has implemented
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multi segment targeting strategy in which it is serving different customers by satisfying needs
and customers of different customers. In future the brand can adopt focus or concentrated
targeting strategy where it can target needs and demands of specific people in the market.
Furthermore, the retailer will also be required to adopt a specialized marketing mix in order to
effectively carry out concentrated targeting strategy. As per the strategy, Tesco can develop and
market its products in a well defined and specific segment of consumer population. It is helpful
in achieving strong market position in the specific market segment. Apart from this, the strategy
will be significant for Tesco as it serves without mass production and mass distribution. Refer to
appendix 3
Positioning
The retailer also carry out positioning of its products on the basis of their class and
characteristic. This has supported Tesco in developing a distinctive image in the entire
marketplace. In the present scenario, product and service positioning has become very important
for growth and success of a business enterprise. Further, effective strategy of positioning gives
customers with a clear reason that why they should choose products and services of a particular
business enterprise over other market players. The use of positioning strategy has helped Tesco
in becoming market oriented. In addition to this, market oriented businesses are the one which
deliver and make changes in products and services as per the need and demand of people in the
market (Chimhanzi, 2004). However, it can be argued that one of the most effective benefit of
positioning to Tesco is that it has supported the retailer in implement and manage changes at
regular intervals and stay competitive in the marketplace.
In order to target people which belongs to elite or high class, the retailer can make use of
its prices as a positioning strategy. This means to attract customers from elite class, the company
can position its products as very high priced one which is simply going to reflect high quality of
products. In future, Tesco can adopt different positioning strategies; however that should be
related according to the products. Products can be properly promoted through emphasizing on
specific attributes and this can also meet the needs of promotional strategies. For example- food
products for kids can be promoted through using cartoon and attractive characters that could
entice the customers towards the products and services. This is also useful for the purpose of
increasing sales and profitability ratio.
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The positioning map of Tesco is provided below as:
From the above carried out STP analysis, it can be recommended that Tesco should now
look forward for attracting people which belong to higher income group or elite class.
Furthermore, in order to enhance its brand image, the company can introduced complete new
range of products at higher prices. This is going to support Tesco in increasing its sales, profits
and gain competitive advantage over other market players (Hall, Jones and Raffo, 2007). As it
has been already discussed that the brand is facing very intense competition in existing market
segment. Along with this, Tesco is trying really very hard to develop services and products
which are unique in order to attract people in the market and increase its sales. T
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Illustration 1: Positioning map of Tesco

5 MARKETING MIX
The detailed recommendation for three marketing mix which will enable Tesco to
achieve its desired targeting and positioning are mentioned below as:
Products
It can be recommended that Tesco should make changes in its existing product and
services in order to attract people from higher income group. At present, the retailer is offering
only those products which can satisfy needs and demands of low or middle income group
(Handlechner, 2008). Furthermore, delivering the best quality products at higher prices will
easily result in attracting people or individuals from elite class. It can be stated that at present the
brand is offering wide rang of products and services to all its customers. Further its products
range includes clothing, home electrical, clothing and jewellery, gaming etc. There are some
finest range of products which are offered to target people from higher income group but it has
not achieved desired results for the same. Thus, it can be recommended that more research can
be carried out by the brand to become aware about specific requirements of people in higher
income group. On the basis of information collected by those researches, modifications can be
carried out in existing products to attract more customers and overcome issues related to fall in
market share.
Price
It is also recommended that the retailer should carry out modifications in its pricing
policy to achieve desired targeting and positioning (Hastings and Saperstein, 2007). At present
the brand has adopted for low cost strategy and due to this it is also considered as cost leader in
the industry. However, to specially target people from elite class, it can be recommended that the
brand can make use of premium prices strategy. Here, Tesco will be required to offer products
and service at prices which are higher than other market players. It can be also argued that the
company needs to really work hard to make sure that customers start perceiving high price
products as of high quality.
Promotion
In addition to this, in order to promote its products, the brand can use various online and
offline channels (Henry, 2008). This means marketing and promotion can be carried out on over
internet and social media such as Facebook and Twitter. On the other side of this, Tesco can also
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promote new range of its products by carrying out promotional events and marketing campaigns.
It can be also recommended that in order to overcome its issue related to high degree of
competition, the brand should make use strategies such as point of sale promotion and end cap
marketing. The rationale behind this is that the above mentioned two strategies are also termed as
some effective ways to promote products and services which are being sold through stores.
Furthermore, the above recommended strategies are also termed as cost effective and
convenient. As per these strategies, items can be placed near checkout and cash counter so that
they can be made visible to customers and they can purchase them same during the time of
checkouts.
6 CONTROL AND MEASUREMENTS
It can be stated that new promoter score is one of the most effective technique or tool of
management which can be used by companies to determines customer loyalty and their
relationship with business. After calculating the net promoter score, it can be stated that the
company scored 28 points which cannot be considered as satisfactory. On the other hand, repeat
purchase rate is another effective way which can be carried out by brands to determines the
loyalty level of their respective customers. Due to strong market share, the rate of customer
repeat purchase and loyalty has reduced and this has affected the sales and profits in negative
terms. For this purpose only now objective of Tesco is to gain higher degree of customer
satisfaction and loyalty so that it can make improvements in its net promoter score and rate of
repeat purchase.
With the help of suitable Gantt Chart, it is essential for Tesco to monitor the performance
level through different stages and time schedule. In the below mentioned section, several
methods are discussed through which measurement can be conducted: Critical Success Factors: Critical success factors determines several aspects through
which success and growth of Tesco can be measured over a confined period of time.
Through CSFs, business can identify the areas where in improvements and modifications
are required. Key Performance Indicators: Key Performance Indicators shows how well Tesco is
performing in the existing business sector. Hence, existing business performance can be
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