Tesco PLC: A Case Study in Marketing Planning and Implementation

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Marketing Essentials
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MARKET ANALYSIS OF TESCO PLC
Table of Contents
Introduction..............................................................................................................................................3
LO1 Explain the role of marketing and how it interrelates with other functional units of an
organisation..............................................................................................................................................3
LO2 Compare ways in which organisations use elements of the marketing mix (7Ps) to achieve
overall business objectives.......................................................................................................................3
LO3 Develop and evaluate a basic marketing plan.................................................................................4
Conclusion...............................................................................................................................................4
References................................................................................................................................................4
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MARKET ANALYSIS OF TESCO PLC
Introduction
A business process, which aims at building customer relations and satisfying their needs, is
known as marketing. Marketing is the backbone of any organisation for its progress and well-
being. (Baker, 2016) This assignment will take Tesco PL as its model company. Tesco PL is
one of the leading multination groceries and general merchandise retailer that is based in
Britain. Tesco follows a strong marketing plan for its organization which has made it one of
the most successful company in the world.
This assignment will contain the meaning of marketing, its role and its interrelationship with
the other functional units of an organization. The comparison of ways in which the elements
of marketing mix are used in an organization will be discussed. The development and
evaluation of a basic marketing plan will also be discussed.
LO1 Explain the role of marketing and how it interrelates with otherfunctional units of an
organisation
Definitions and the marketing concept:
In this world of globalisation one of the most important component for the multinational company is
the marketing that helps to develop a sustainable consumer base for the business development of the
organisation. The marketing concepts are totally based on the needs and the exact requirement of the
firm in an efficient manner. At present, the retail industry is dependent on the digital marketing
compared to physical marketing. On the words of Kowalkowski et al.,(2017), digital has almost 15 %
more effect than physical marketing. The future trend of the market it seems to be the digital
marketing, as 70 % of the consumers in The UK prefer to use a digital platform to select and buy
goods in an effective manner. The marketing concept includes the enhancement of the needs of
consumers in the market by creating a psychological demand through the process of promotion in a
prominent manner.
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MARKET ANALYSIS OF TESCO PLC
The external factors like technology, economic, political and legal situation should have an impact on
the marketing of the organization in an efficient manner (Dangelico, and Vocalelli, 2017). The
political situation in the UK is currently stable; a new government has arrived so the companies may
perform stable marketing promotions. On the other hand, technological development has enhanced the
promotion through digital media in an effective manner. In the UK, digital technologies like CRM and
database management have enhanced that influences the marketing policies of the organization to
enhance their sales in by almost 20 %. On the other hand, the economy of the UK is a little unstable at
present so the marketing should be done by the organizations keeping in mind about the cost-
effectiveness of the product.
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MARKET ANALYSIS OF TESCO PLC
Fig 1: Concepts of Marketing
(Source: Rapp et al., 2017)
The role of marketing:
The marketing role is essential and Tesco has simplified the marketing structure in an effective and
efficient manner. The marketing structure is essential that helps to formulate and implement
marketing in a prominent manner. In Tesco, the structure of marketing departments contains
marketing head and under the line so managers of marketing and sales department are present to
monitor and analyze the revenue and the strategies appropriate for the UK market (Papadas, Avlonitis,
and Carrigan, 2017). The strategies include the formulation of marketing strategies that include
promotion and pricing of a product in a proper way. The marketing mix involves promotion, product,
physical evidence, and product quality is analyzed to perform marketing strategies for Tesco. This
may enhance the revenue of the organization by almost 10%.
The marketing mix and strategies are slightly different for the B2B and B2C in an effective manner.
Tesco PLC is concere4nd with both Business-to-Business and business to consumers focusing more
on the B2C. In B2B, business process marketing role includes negotiation and proper pricing of the
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MARKET ANALYSIS OF TESCO PLC
product so that effective corporate collaboration among Tesco and other organization like SMV global
may be achieved in an efficient manner. However, for the B2C the marketing style should be trending
and going with the consumers buying patterns in an efficient manner. Innovative marketing style is
needed in both cases but according to experts, it is hard to perform B2C marketing, as the dynamics
are more (Rapp et al., 2017). During the formulation of a marketing plan in B2C mode one of the
most essential parts is allocating budget and developing a sustainable marketing plan like a digital
plan to promote products form a wide range of consumers.
The interrelationships of functional units:
Marketing is one of the most essential components that should be regarded as one of the most
significant business function. In the words of Foellmi, and Zweimüller (2017), about 30 % of the
revenues of an organization is dependent on the marketing of an organization. The budget allocation
is essential and the financial department t has string interrelationship with the marketing department
of Tesco. Tesco is witnessed that almost 10 % of the total budget of the organization is given to
formulating both physical and digital marketing for the company. Moreover, the sales department has
the most important relationship with marketing as the over sales strategy is done according to the
marketing plan of the organization (Deshmukh, and Mohan, 2017). For example, Tesco at present
gives more stress on digital marketing and sales of the company is now dependant on the digital
mode. On the other hand, the human resource department has a strong relationship with the
marketing department as tech-savvy and market appt human resource are to be recruited to implement
the marketing plan in an efficient manner.
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MARKET ANALYSIS OF TESCO PLC
LO2 Compare ways in which organisations use elements of the marketingmix (7Ps) to
achieve overall business objectives
Marketing mix is a tool taken up by an oganisation to determine the factors that may
influence consumers to buy their products. There are seven elements of marketing mix.
(Wongleedee, 2015.)
Figure 2: The Seven ‘P’s of Marketing Mix
(Source: JAIN, 2017)
 Product
Products are the physical output that an organisation produces that are ready to be
used by the consumers. Services are those characteristics that are offered by an
organization in exchange of money. For example, Tesco PL offers products in its
retail form and also services like customer care, online shopping facility and so on.
Branding is an important element of a product as it helps to differentiate a product of
an organization from its competitors, Tesco do not compromise in its branding as the
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MARKET ANALYSIS OF TESCO PLC
brand is one of the most prominent one in the world. Product development is a stage
which helps an organization to determine the potentiality of the offered product.
 Price
Price is the most important aspect of the marketing mix. It is the rate of a product
which the organization is willing to take in exchange of the product offered in the
market. There are four strategies of pricing, which is premium pricing, penetration
pricing, economy pricing and skimming strategy. (Li, B., et al., 2016) Tesco PL
follows a strong pricing strategy which has been quite profitable for the company. It
uses the economy price method of pricing where the company has very low profit
margin as it targets towards a mass market and a high market share. The new products
introduced by Tesco PL uses the method of penetration pricing where the price is set
quite lower than its counterparts for a quick market share.
 Place
This is one of the most impotent factor of marketing mix. Here, the places of
sales is decided by the company. The efficient use of the right place for sales is
related to the channel of distribution of the products which determines the efficient
pathway of the products to be offered in the market. Tesco operates in several places
in UK. Tesco Extra are large hypermarkets, Tesco Supermarkets are large
supermarkets that offer small range of non-food goods, Tesco express are
comparatively small neighborhood shops and Tesco.com, launched on 2006, is an
online retail store of Tesco PL. Primary distribution is the area of focus for Tesco to
reduce cost and inbound logistics. Primary distribution is the term preferred by Tesco
for its logistics process. (Lightfoot, and Evans-Lamswood, 2015)
 Promotion
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MARKET ANALYSIS OF TESCO PLC
Promotion is one of the main factor for an organisation to build as it increases the
popularity of the brand. Integrated marketing communication is a basic concept of
integrating all the promotional tools to work together efficiently. Promotion mix
comprises of advertising, personal selling, sales promotion, public relation and direct
marketing. Tesco has been developing their promotional strategies regularly in
accordance with the market. They have increased their advertising budget in the
present time and the inculcation of humor in their commercials have also helped them
gain popularity. Once a customer registers its name and number with Tesco, it
constantly interacts with them. Tesco faces a high competition in the market, to
counter this competition Tesco has come up with ground breaking promotional plans
that helps them to give rewards to their customers, discounts and so on. The public
relations team of Tesco has been strong from years, the website Talking Tesco helps
people to give their feedbacks online and Tesco Diets helps the customers to get
information about healthy eating. (Felgate, and Fearne, 2015.)
In the late 1970’s, there were proposals of updating the four marketing
mix tools. Hence, the marketing mix was updated from four to seven giving
marketing mix tools to organisations offering services and not just physical products.
 People
The people in any organisation plays a significant role in the company. The
directors, manager and supervisors in a workplace have different sets of
responsibilities in an organisation. A director having a specialized expertise on a
particular type of business helps in making an efficient business plan which acts as the
framework of an organisations. Manager helps in managing the ongoing activities of
the organization which is all taken care of by the backbone of the company called the
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MARKET ANALYSIS OF TESCO PLC
supervisors who knows how make things work at ground level. People delivering
products or services to the customer should have a good personality, great
communication skills and the ability to have instant solutions to any arising problems.
Tesco takes care of the employment process where they make sure that a work is
given to people with the right skill and knowledge of it.
 Physical evidence
A customer satisfaction in the service industry depends upon the reliability,
tangible, assurance, empathy and responsiveness of the organization. Almost all
services need some physical evidence to have a proof of the transaction. Tesco
generally does not deal with intangible products but they do provide profound
customer services after selling their products to the consumers.
 Process
The delivery of the service to the consumers is an essential part of the marketing
process. The delivering process of the organisation should be efficient and sustainable
to increase the goodwill of the company. The organisation must try to offer and
provide the services to the customers accurately. Tesco provides home delivery for
the customers availing the online services of Tesco. They try and deliver the products
on the previously specified date and time. The customer service also help to solve
customer complaint if any.
Marketing planning process is a systematic process of achieving marketing goals.
The factors include situation analysis, setting of objectives, strategy formulation,
development of action programs, implementation and control. (McDONALD,
M.A.L.C.O.L.M., 2016)
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MARKET ANALYSIS OF TESCO PLC
Marketing strategy is a document that provides the timing for each factors of a
marketing process which is needed for increasing the customer base.
LO3 Develop and evaluate a basic marketing plan
Marketing plan
The marketing plan has immense value as it helps to formulate the exact requirement to attract the
market segments targeted by the organization in an efficient manner. The formulation of the
marketing plan includes the allocation of resources like human resource and financial resource
according to the exact need (Jarach, 2017). The optimization of resource use during the
implementation of the marketing should perform if the marketing plan is developed beforehand
according to the requirement. The basic marketing plan for Tesco is established in the following parts.
Potential marketing segments
In the marketing, plan one of the most important things that include the potential market segments.
The market segments may be divided by behavior, geographic and psychographic parameters. In the
case of Tesco, the middle class and the high-end consumers are targeted in an efficient manner to
develop the business by almost 20 %. Tesco is diversifying and targeting the remote places of the UK
as well so that Geographic barrier should get in the way of business of Tesco (Tuten, and Solomon,
2017). The decision-making pattern of the consumer is dependent on the behavior of consumers that
should be analyzed to develop a marketing plan
Target marketing and positioning of the product:
Marketing positioning is essential as it helps to develop a unique sailing point of the products of the
organization in an efficient manner. The Products of Tesco is cost-effective compared to its
competitor and the delivery and supply chain management are premium quality this should be
marketed to establish market posting in the UK (Chernev, 2018). Appropriate use of market position
has helped Tesco to achieve a market share of approximately 27% in the UK retail market. At present
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MARKET ANALYSIS OF TESCO PLC
through digital marketing and promotion of online shopping, the company is trying to enhance the
market share to 30 %.
Marketing and financial objective of the Plan
At present, the Brand value of Tesco is almost a billion dollars worldwide. Approximately 20 % of the
finance should be allocated to the digital and physical marketing of the company to achieve the
objective of 30 %market shares in the UK market in a prominent manner. The main marketing
objective of Tesco is to enhance online sales by almost 5 billion dollars (Tuten, and Solomon, 2017).
At present, the online market of Tesco PLC includes the financial profit of almost 4.2 billion dollars.
Marketing objectives should be formulated before developing the marketing plan. For example, the
marketing objectives of Tesco include the promotion of the product in the economic market segment
of UK to enhance the sustainability of the organization in the UK market. The financial budget or
financial plan is one of the most important components of the marketing plan. The financial plan of
marketing consists of the human resource cost, technological cost and the promotional cost of
different products of Tesco through offline and online mode. The total marketing should consist of
approximately 200 thousand dollars
Marketing strategies
The marketing plan consists of product, pricing, promotion in an efficient manner. The cost-benefit
analysis should be done so that Tesco Plc in the UK market may extract competitive advantage and
maximum profit in an efficient manner (De Pelsmacker, Van Tilburg, and Holthof, 2018). The
promotional activities include enhancement of footfall by the use of promotion in online mode and by
endorsement through celebrities that may attract the consumers to the store. The pricing strategy
should be regularizing for the economy class and the prices of goods should be adjusted. A
monitoring committee should be developed in a prominent manner.
Evaluation of the marketing plan
The marketing plan that is developed for Tesco Plc has a useful component like focusing on digital
marketing in an efficient manner. The digital marketing should help to enhance the market share of
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