Marketing Principles and Strategies: A Comprehensive Analysis of Tesco

This report provides a comprehensive analysis of Tesco's marketing principles and strategies. It begins with an introduction to the marketing process and its various elements, followed by an examination of the benefits and costs associated with a marketing orientation. The report then delves into the macro and micro environmental factors influencing Tesco's marketing decisions, including PESTEL and SWOT analyses. It explores segmentation criteria, targeting strategies, and buyer behavior, alongside discussions of product positioning and the development of a competitive advantage. The report further examines the marketing mix elements and the differences between marketing to businesses and consumers, as well as international versus domestic marketing considerations. The analysis reveals Tesco's market position, strengths, and weaknesses, offering valuable insights into its marketing practices and challenges within the retail industry. The report uses multiple frameworks like PESTEL, SWOT and 5M to analyse the case study.

MARKETING
PRINCIPLES

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Various elements of marketing process................................................................................1
1.2 Benefits and costs of a marketing orientation of Tesco .......................................................2
2.1 Macro and micro environmental factors influencing marketing decisions...........................3
2.2 Segmentation criteria used for products in different marketing segments............................5
2.3 Targeting strategy for............................................................................................................6
2.4 Buyers behavior affecting marketing activities.....................................................................6
2.5 Positioning strategy for selected product .............................................................................7
3.1 Developing products to sustain competitive advantage........................................................8
3.2 Developing distribution measures for consumer convenience..............................................9
3.3 Price strategies to attain organizational objective and market conditions..........................10
3.4 Promotional activities to integrate and attain marketing objectives...................................10
3.5 Additional elements of extended marketing mix................................................................10
TASK 2..........................................................................................................................................11
4.1 Marketing mixes for two different segments......................................................................11
4.2 Illustrating difference between marketing products to business rather that consumers .....12
4.3 Demonstrating why international marketing varies from domestic marketing...................13
CONCLUSION..............................................................................................................................13
ILLUSTRATION INDEX
Illustration 1: PESTEL Analysis......................................................................................................3
Illustration 2: Porter generic strategies ...........................................................................................7
Illustration 3: Product Concept........................................................................................................8

INTRODUCTION
The global business expansion has developed a trend within the market which has creates
a revolution within the economy. Business growth and development has adopted unique and
exclusive measures of promotion and marketing products and services within the economy.
These measures have helped businesses in developing the brand recognition and sales
maximization within the economy (Burgemeister, 2003). To evaluate the impact of marketing
principles the business operations of Tesco will be examined closely. This will help in
developing a clear and effective idea about marketing process measures and its impact on the
business growth and development. The overall analysis of marketing strategies will help in
developing efficient understanding of marketing principles and its contribution towards growth
and development of business.
TASK 1
1.1 Various elements of marketing process
According to Glowik and Smyczek, 2011 marketing is an activity which develops an
effective structure for the organizations to develop communication with the ultimate buyers for
enhancing product value, brand image and product demand. The marketing process helps
organizations in maximizing sale by breaking down the process in various strategies for
segmentation, positioning, distribution, development etc. (Madsen and Pedersen, 2013). Tesco is
one of the leading global retail business unit. The wide competition within the market demands
the organization to develop effective measures of marketing products and services. Elements of
marketing process adopted by Tesco include:
1. Understanding Market, needs and wants of customers: The situation of business
changes with changing marketing conditions and organizational conditions as well.
Marketing process analyses the situation that the organization is facing currently to
enhance the growth and development measures for the business unit (Mathur, 2006). This
element deals with carrying out the internal and external business analysis in order to
analyze the position of the company in the market. Tesco has faced the rough phase by
recording huge loss for the business. Thus, marketing activities of the company current
will develop activities to compensate the same. In addition to it, company need to assess
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the needs and wants of customers as well so that they develop appropriate products and
services.
2. Creating Customer Centric Strategy: The next element of process deals with
development of strategy to create a winning edge within the market (Andersson and
Servais, 2010). Tesco is planning its marketing process so as to create a valuable market
position and enhance growth and development measures within the economy. Here,
Tesco conducts segmentation and targeting so that actual customers can be identified.
3. Construction of Integrated Marketing Programs: After developing customer centric
strategy, marketing program is developed in which marketing mix is focused majorly. In
this, decision with regards to product, price, place and promotion are taken so that
ultimate needs and wants of customers can be attained.
4. Developing Relationship with Customers: At this moment, Tesco develops strategy for
making sound relations with customers. Through this, company gains loyalty from it and
this also helps in attaining benefits in terms of repeat purchase.
5. Deriving Value from Customers: At this stage, company gains value from customers by
gaining support from them. At this position, company is able to increase its sales by
meeting with varied requirement of consumers. Tesco seeks the effective system and
measures to implement the marketing plan for the organization and develop strategies to
enhance growth for the same.
1.2 Benefits and costs of a marketing orientation of Tesco
Marketing orientation is a refined and most effective version of marketing development.
Chandrasekar, 2010 defined marketing orientation as a culture where companies focuses on
analyzing and meeting consumer needs so as to create a valuable market position for the
products and services offered. These measures helps organization in developing high market
demand and sales within this highly competitive market. This strategy helps the business in
enhancing consumer satisfaction for the business. Tesco has adopted this measure to develop
high impact on sales and profitability of the business. The benefits and costs associated with
marketing orientation are discussed hence forth.
Tesco is a leading retail business unit which operates efficiently around the world. The
process of marketing orientation helped the company in creating wide sales through adopting
consumer focused approach and strategy (Dibb, Simkin and Ferrell, 2012). The retail consumers
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demanded quality products at low cost. The organization developed effective measureless to
deliver the same for the buyers. Thus this measure helped the business in developing a global
recognition. It created high level of consumer satisfaction as well. This helped the business in
enhancing the demand and sale within the competitive market thus making Teco globally
acclaimed business unit of retail industry.
The above mentioned measures has certain cost associated with it. Marketing orientation
is highly focused strategy which demands high level of investment in terms of time and cost for
carrying out market analysis and consumer needs and demands (Gellynck and et.al., 2012).
Tesco adopted this measure to create a competitive edge in the economy. Moreover, retail
segment have to face the risk of immediate change in trends and demands due to intense market
concept. The strategy adopted by the company was to attain price leadership to gram highest
retail sales. This however resulted the company on losing focus on internal business operations.
This resulted in internal conflicts and falling market sales (Why Tesco can't compete with Aldi
and Lidl. 2014). High employee turnover and change of management resulted the company in
losing employee trust for the organization. This resulted in causing a loss of ₤ 6.4 billion for
Tesco (Tesco posts record £6.4bn annual loss. 2015). Based on this discussion, it can state that
company can gain benefits from the marketing orientation. However, there are numerous costs
associated to it, but this essentially helps the company in meeting with the diverse needs. This
certainly retains the customers by gaining loyalty from their side. This signifies that Tesco
possess profitable future through it that aids in attaining their objectives in an effectual manner.
2.1 Macro and micro environmental factors influencing marketing decisions
Marketing decisions of the company demands effective marketing audit for the business.
In order to carry out the environmental audit for Tesco various tools are used to analyze the
market position and internal business strength for the business.
Macro analysis
This is an effective and most convenient measures to analyze the external factors which
have a direct impact on the organizational operations of the company. The PEST analysis of
Tesco is as follows:
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Illustration 1: PESTEL Analysis
(Source: Graham, 2008) Political factors: Tesco is operating effectively around the world. The political factors of
he countries helps the company in analyzing the policies of government which may help
the business unit in establishing the business operation (Jackson and Sparks, 2005). The
stable government and well developed policies of UK helps Tesco in enhancing the
business growth measures within the counrty. Economic factors: These factors deals with the economic policies, population rate,
inflation rate etc. Tesco analysis these measures to ensure the growth measures while
expanding business operations. The current economic position is effective for retail
business growth (Kapur, 2009). This reflects that Tesco may face huge market
competition due to liberal economic policies and high disposable income with people in
the country. Social factors: These factors helps in analyzing the trends and preferences of buyers and
consumers. UK market currently demands effective marketing measures to attract
consumers and create market demands to cover up the wide loss that business faced
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recently. Low consumer loyalty in the retail sector demands the company to develop
effective measures to create market demand (Kotler and Armstrong, 2005). Technological factors: Advances technology and effective measures helps businesses in
enhancing market sales. Tesco has adopted latest technology and updates measures for
business operations thus these factors has helped business in developing sales. Legal Factors: Laws with regards to Competition Policy Act, Employment Act, Health
and Safety Act and other related affects the operation of company. It cannot practices
comparative advertising as per competition act which doesn’t help in influencing more of
customers. It also needs to adhere to employment and health & safety act for
safeguarding them from penalty and fine. Environmental Factors: Company faces immense pressure from regulatory bodies to
focus on environment and social welfare. This hampers the performance of the company
and ultimately affects profitability as well. Also, there is code of practice for same such
as Food retailing commission and other which also affects its operation.
Micro analysis
The micro factors of the company focus on analyzing the internal business capacity of the
company.
SWOT Analysis
Strengths
 High market share
 Quality brand image in UK market
 Varied product portfolio
 Large number of stores across UK and
online platform
Weaknesses
 Decline in profit margin
 Decline in debt
 It is highly dependent upon UK and Europe
for sales
 Tesco’s subsidiary is not functioning well.
Threats
 Cut throat competition in the retail market
 Economic recession
 Credit crunch
 Rise in the food items certainly increase the
price of goods for Tesco.
Opportunities
 Entering into emerging market like India
 Initiating the concept of click and collect
operations
 It can focus on market intelligence for
boosting the sales in existing market.
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Five M
Five M framework of internal analysis will helps in analyzing the internal strength of the
company.
Axis Current scenario Analysis
Manpower
High employee
turnover, low
employee loyalty
High employee turnover has resulted in low
productivity of the company thus weakening
market position
Material
High quality product
of premium brands
The products and services of the company are
of premium quality and brands which provides
the organization high capacity of generating
sales (Chaharbaghi and Lynch, 2010).
Machinery
Advanced technology
and effective measures
of business operations
Effective technology helps the business in
enhancing sales and developing organizational
process of sales and production.
Money Suffered heavy loss The company is currently facing financial
deficit due to heavy losses in 2014-15
Method
Developed effective
measures of business
operations and sales
Teco has developed effective process and
methods of selling which has the capacity of
business to enhance sales.
The above analysis helps in clearly determining that the market position for Tesco is
weaker in retail industry. However the organization has effective capacity to develop its business
operations efficiently within the current market scenario.
2.2 Segmentation criteria used for products in different marketing segments
Segmentation is a method used by business unit to divide the huge market into different
and manageable segment which helps the companies in developing wide market sales in
appropriate and manageable way (Cooper and Schindler, 2011). Through this practice, company
can focus on particular set of customers and hence develops strategy accordingly so that overall
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sales of the company can be increased. This helps in developing dedicated strategy as well.
Tesco has adopted effective measures to enhance the food segment within the economy. The
segmentation methods used by Tesco are: Geographic: Tesco has developed effective measures to analyze the needs of consumers
in different regions and places. The products and services are developed by the company
to attain those needs and requirements. For example products and services for UK
consumers are according to local needs of people while demands of Asian consumers are
assessed in different way (Dibb and Carrigan, 2013). Psychographic: Tesco foods analyses the needs of consumers o the basis of lifestyle and
social class and develops strategies to enhance sales accordingly. For example grocery
shopping for high income group is stressful if people have to wait for the same thus the
organization has developed pick and drop options for these consumers to avoid stressful
waiting.
 Behavioral: This segmentation measure focuses on developing strategies to enhance sales
on the basis of behavioral factors of consumer on the basis of occasions, usage etc. To
cover up the dropping sales Tesco has developed a planned and effective measure to
boost Christmas sales this year (Creswell, 2013). Special discounts and benefits provided
to the buyers has helped the company in enhancing sales widely.
2.3 Targeting strategy for
Targeting refers to a practice of choosing specific customer segment from the segmentation
done so that appropriate marketing efforts can be taken to attract and influence them. It is one of
the foremost task that aids in developing appropriate strategy. Tesco foods have developed wide
market demands within the market. This has helped the business in enhancing and boosting the
sales in the overall market in UK. The targeting strategy adopted by the company to enhance
market sales is mass targeting strategy. Tesco effectively analyzed that grocery is the need o each
and every individual thus the organization must create effective measures to enhance market
sales by targeting on the overall market (Figge and et. al., 2002). The mass targeting strategy of
the company has developed unbiased and similar means of targeting for every individual.
The undifferentiated targeting strategy of Tesco has helped the business unit in
developing high market sales within segmenting the market. This strategy has helped the
business in enhancing high sales for Grocery sales both instore and online. The strategy focuses
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on promoting products in undifferentiated way while enhancing high benefits and value for
money or the product purchase. This helped the business in developing high market demand
within restoring consumer loyalty for the company.
2.4 Buyers behavior affecting marketing activities
Buyers are the major focus for the company to enhance sales and develop market
demand. Tesco has analyzed that buyer behavior has significant impact on the sales and growth
of company within the competitive market. The factors which influence buyer behavior within
this competitive market are: Psychological: This includes the perception, social influence and motivation that help the
buyers in enhancing market sales and developing wide market demand. Tesco closely
examines these factors to enhance product popularity in the market (Olson, Slater and
Hult, 2005). The company ensures that appropriate strategy is developed with regards to
marketing so that they can be influences for buying the products. In this respect, company
uses factors that make an impact on the psychology of the customers. Social: This includes the influence of family, friends and social group on the consumers.
Tesco foods has developed effective promotional strategies and discounting measures to
develop social influence for consumers within the market. Additionally, company offers
products for different age group and class that aid them in influencing to buy products
from Tesco.
 Personal: These include the demographic needs of individuals. Tesco has developed
convenient measures such as click and collect, Online shopping, pick and drop facilities
to enhance market sales and growth in the economy (Felsted and Smaith, 2015).
Moreover, company offers highly personalized services that aids in meeting with the
diverse needs of customers.
2.5 Positioning strategy for selected product
In order to position the grocery segment efficiently within this highly competitive market
and support the undifferentiated targeting strategy Tesco has adopted the following measures for
its food grocery segment to sustain profitability and create a competitive edge within the market.
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Illustration 2: Porter generic strategies
(Source: Rao, 2004) Cost effectiveness: Tesco is the company which has developed a price effectiveness
within the competitive market to develop an edge within the economy (Richter, 2012).
The Positioning strategy that the organization has developed to enhance market sales
involves a measures where the company has developed a brand image of an entity which
sells high quality products at lowest cost in the market. Hence, company has positioned
itself as a cost effective company. Product Differentiation: managing wide product range and developing effective
strategies for boosting market sales through offering products of quality standards, high
attributes and maximum value for money has helped the business in developing an
effective market position. Tesco is been perceived as a company that offers wide range of
products to customers through which their needs are satisfied. It also offers products of
different quality and range that helps in developing a differentiated image among retail
sector.
 Focus: Tesco has also developed effective measures to focus on its grocery segment and
develop measures to enhance sales by offering lowest price for wide variety pf food
products in the competitive market.
The above mentioned measures have helped the business unit in developing wide market
sales by developing a competitive edge within the economy.
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3.1 Developing products to sustain competitive advantage
Product development measures for retail industry are significantly a tough task to
accomplish as the industry operates to sell products and services of various companies under
their brand name. The concept of product is applied in a unique way by the organization.
Illustration 3: Product Concept
(Source: Saxena, 2009)
The product development concept for Tesco is applied in the following way: Core product: This layer develops a measure for Tesco where the company seeks the
demands within the market and develop effective measures to attain those demands. This
layer majorly focuses on making product available at right price to the consumers (Al-
turki, 2011). For examples increasing demands for perishable goods such as Kiwi and
Strawberries will be attaining by developing effective supplier relations for making the
products available in the market. Expected product: This layer of product development is achieved by the organization by
checking the quality and standards of the products for sale by Tesco. The company
closely examines and investigate the product standards to assure consumer preference
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