Detailed Analysis of Tesco's Marketing Process and Strategies

This report provides a comprehensive analysis of Tesco's marketing principles and strategies. It begins with an introduction to marketing principles and their application within Tesco, a leading global retailer. The report then delves into various elements of the marketing process, including market environment analysis, target market identification, and setting marketing objectives. It evaluates the benefits and costs of market orientation, examining both micro and macro environmental factors influencing Tesco's marketing decisions, such as political, economic, social, technological, legal, and environmental factors. The report proposes segmentation criteria for different markets and explores various targeting strategies, including undifferentiated, concentrated, and differentiated approaches. It also analyzes the influence of buyer behavior on marketing activities and the positioning of selected products. Furthermore, the report discusses product development to sustain competitive advantage, distribution strategies, pricing strategies, and promotional strategies. It also explores the extended marketing mix and concludes with a discussion of the marketing mix for different consumer segments and a comparison of marketing products and services to businesses versus consumers, as well as international versus domestic marketing.

Marketing Principles

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Various elements of marketing process............................................................................1
1.2 Evaluating the benefits and cost of market orientation....................................................2
2.1 Macro and micro environmental factors influencing market decisions...........................2
2.2 Proposing segmentation criteria.......................................................................................3
2.3 Choosing a targeting strategy...........................................................................................4
2.5 Positioning of selected products.......................................................................................4
3.1 Product development to sustain competitive advantage...................................................5
3.2 Distribution of products according to customer’s convenience.......................................5
3.3 Pricing strategies as per marketing conditions.................................................................6
3.4 Promotional strategies to achieve marketing objectives..................................................6
3.5 Additional elements of the extended marketing mix........................................................7
TASK 2............................................................................................................................................7
4.1 Marketing mix for two different segments of consumer markets....................................7
4.2 Differences in marketing products and services to businesses.........................................8
4.3 Difference in international marketing and domestic marketing.......................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Marketing principles can be defined as an idea that form widely agreed decisions on the
basis of different product promotional strategies. Business organization opts various marketing
principles in order to utilize the market performance for their existing products and also to
launch new products into brand new markets (Stover, 2007). In this context, the organization
undertaken for the present study is Tesco which is a British multinational grocery and general
merchandise retail company and is considered as third largest retailer in the world in term of
profits and second largest by the mean of revenue. Tesco has its operations in clothing, furniture,
toys, books, software, financial services, telecom and different types of internet services. This
present report is based on evaluating the different elements of marketing process. Further, this
report will also showcase the macro and micro environmental factors which will influence up the
marketing decisions. Moreover, this report will also have its significance on focusing on
different products which will lead organization to have competitive advantage over other firms.
TASK 1
1.1 Various elements of marketing process
Elements of marketing process within cited organization contains the following points,
 Analyzing market environment- Strategic tool require by Tesco in order to give their
competitors a stiff competition. Mentioned company can focus on PESTLE analysis,
SWOT analysis, PORTER five force, value chain, etc.
 Identifying the market target- Tesco can focus to target a specific segment of
population IN UK as well as in other countries in order to increase more of the
productivity and revenue of the firm.
 Setting core goals and objectives- Tesco have to set their marketing objectives which
will constitute maximization of profit for their short term and long term goals and
also focus on to increase the value of their goodwill (Petkus, 2004). Organization goal
is to be the growing retail sector in UK, increase the international presence with both
offline and online stores, develop more and more product services for the present
market, etc.
 Determining marketing mix- Organization focusing on only those goods and services
which satisfy the customer’s needs in significant manner. Further, the unique
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characteristics of their customers are fully and deeply understood by the management
of Tesco.
1.2 Evaluating the benefits and cost of market orientation
Marketing orientation is considered as a business model which focuses on delivering
products according to the needs and desires of customers. Further, mentioned company is
focusing on delivering best of the products at an affordable price to their large customer’s base
(Gordon, McDermott, Stead and Angus, 2006).
Cost- Marketing orientation comes up with a significant cost as Tesco have to identify their all
the required resources and factors in effective as well as efficient manner. However, Tesco
finance profit level was badly impacted with bad debts, customer’s credit card arrears and also
with different household insurance claims. Further, cited company is retail leader in the UK
market but their effective advertisement expenses is decreasing their profit as they have some
high prices for some of the products and services. Further, Tesco also have huge electrical and
other costs which is generally impacting their overall revenue and productivity. Further, rainy
seasons also impact the performance of the cited firm.
Benefit- Tesco has secured the best commercial standing in global market by achieving “World
retailer award” and this can be used effectively in all the advertisement promotion of their
existing or new products and services. Further, market where other competitors like Sainsbury,
Asda, Marks and Spencer showing decline on the level of performance, organization like Tesco
is able to maintain their sale and revenue both in national as well as in international markets
(Armstrong, Adam, Denize and Kotler, 2014). Further, mentioned company is having excellent
brand image especially in UK and also other in the other part of world too. Further, organization
having a base of loyal customers which help Tesco in increasing their revenue and profit.
2.1 Macro and micro environmental factors influencing market decisions
Micro environmental factors are close to the business organization and can significantly
impact the performance of mentioned retail venture. Some components are stated below: Employees- Organization having strength of more than 500,000 employees and they are
giving their productive services around the globe. Further, employees of cited
organization are skilled, motivated and quite knowledgeable (Sridharan and
Viswanathan, 2008). These employees plays significant role in providing best and
effective customers service.
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 Customers- Customers are the king of the market and they are generally considered as a
soul of retail organization. Mentioned company comes up with all those goods and
services which satisfy the customers need in significant manner. Shareholders- With increasing awareness among customers, Tesco is able to increase
their market share and are focusing on attracting more and more shareholders in order to
increase their capital base.
 Suppliers- Suppliers also plays a crucial role as they are giving best quality of products to
Tesco for manufacturing new things. Mentioned retail organization has large chain of
their suppliers which will help them to increase more of their customer’s base (Rimal and
Creel, 2008).
Macro environmental factors are those factors which affects the corporate performance
from outside sources as some of the factors are not in control of the organization. Political- Mentioned company is getting affected by the political factors which includes
recession in some of the countries which is leading towards high number of
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Illustration 1: PESTLE analysis
Source:
http://www.professionalacademy.com/media/images/PESTEL-With
Logo.png

unemployment. Further, by employing more of the individual to the unit, Tesco can
reduce the level of unemployment as it is considered as fastest growing retailer. Economic- Tesco is having one of the greatest competitive advantage as it has
overwhelming presence and most of the people in the world are fond of its working
culture. A rise in inflation rate of will affect the corporate products and services (Peattie
and Peattie, 2009). Low earning of individuals also affecting the demand of Tesco’s
products and services. Social- People in UK has shifted towards one stop and bulk shopping segment and this
happened due to variety of social changes. In order to meet this, Tesco has generally
increased the production of non food items. Technological- Increase in technology has led to development of many new products and
services for Tesco. The new technological advancement is helping both company as well
as individuals. Moreover, customers are more satisfied as they are getting products and
services readily available. Tesco further using intelligent scaling, self-checkout machines,
electronic shelf labeling in their physical outlets (Nwankwo and Gbadamosi, 2010).
 Legal: The policies' and legislations implemented by the government direct affects the
performance of Tesco. However, the firm should follow these laws, rules and regulations
in their business operations. For instance, if some food product is prohibited by the
government of UK than Tesco should not promote those products.
 Environmental: The environmental factors make huge impact on the business practices
of Tesco. The environmental factor include natural calamities and weather effects such
as, heavy snowfall, high density earthquake etc. which can increase and decrease the
demand of customers.
2.2 Proposing segmentation criteria for products in different markets
Tesco is the leading retail organization in UK and mentioned corporate is focusing one
new marketing strategy in order to strengthen their brand image and profits. Tesco is further
realizing their requirement for effective segmentation and in order to accomplish them, they are
seeking to make it more reliable and also actionable.
Tesco is the leading retail organization in UK and mentioned corporate is focusing one
new marketing strategy in order to strengthen their brand image and profits (Sheth and Sisodia,
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2015). Tesco is further realizing their requirement for effective segmentation and in order to
accomplish them, they are seeking to make it more reliable and also actionable. Cited firm is
majorly focusing on demographic as well as physiographic segmentation in order to increase
more of the sale and productivity of the organziation.
2.3 Choosing a targeting strategy
Once after completing the market segmentation criteria, Tesco is focusing on adopting an
appropriate targeting strategy as single marketing strategy will not let organization to give stiff
competition to their potential competitors. There are different targeting strategies which have
been discussed below:
 Undifferentiated strategy: It is a type of strategy where organization can send a single
promotional message to all the customers (Wood and Suter, 2004). This strategy is useful
only when a particular product having less competition and company can design a single
advertisement for all different segmentation
 Concentrated strategy: Concentrated strategy focuses on designing a promotional
message that communicates the benefit for particular single segment
 Differentiated strategy: It is a type of strategy where organization focuses on two or
more market segments by developing a suitable market mix for each and every segment.
Because mentioned company is bringing new apparels in clothing sector, company can
implement differentiated strategy as Tesco have to advertise different promotional message for
the different bifurcated segment i.e. women and kids. These products are introduced by
considering the needs and demands of their customer base and this was the sector where
mentioned retail organization was lacking up the most (Munoz and Huser, 2008).
2.4 Buyers effect on marketing activities in different buying situations
Buyers behavior is based upon the internal and external factors about why consumer
should buy a particular product or services. This kind of buyer behavior can affect the whole
marketing strategies. One of the most basic component of buyer behavior is product's demand
and supply and complex decision making ability of the consumer. For instance, in some specific
situation the demand of particular food product is increased. Then, Tesco should increase the
production and fulfill the demand of the customers moreover, Effective customer services also
make impact on the buyer's behavior and decision making ability. Effective customer services in
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Tesco will retain the customers. Moreover, The consumer would always buy products from
Tesco because of its effective customer support.
2.5 Positioning of selected products
Positioning is considered as developing a brand image or goodwill in the eyes of
customers. With all new products, more and more people will reach to Tesco physical store at
different places around the globe. Further, women and kids can choose best of their desired
product according to their maximum utilization of wants. Mentioned company is opting
symbolic positioning which is generally based on value, aims and aspirations of individual
customers.
For their clothing products, Tesco has clearly elaborated the type brand and size on
product which will give customer a clear hint that what product is. Further, cited organization
can also implement price positioning strategy as Tesco can set the price of the clothing according
to the different sizes and also by considering the aspect of kids and women (Jobber and Ellis-
Chadwick, 2012). The price which organization will set will in the budget of the customers and
they will be getting most of the outcome.
3.1 Product development to sustain competitive advantage
Sustainable competitive advantage is the central point of a corporate business. It allows
the maintenance and transformation of an organizations competitive position in the market.
Product development is a benefit that enables firm to survive in the competitive market for a long
period of time. For instance, Tesco is in clothing business for women and kids, for developing
the products, the firm can develop the clothing range by considering latest fashion trends and
weather conditions (Stead, Gordon, Angus and McDermott, 2007). Tesco can manufacture the
kids clothing according to kids choice, for example, children likes cartoon characters the most.
Thereby, the product range for kids can be developed with the images of cartoon characters on
the cloths. Furthermore, for women the clothing range can be developed by considering latest
fashions. These clothing range should be developed with the best quality material and economic
prices. So that the firm can attract more consumers.
Moreover, A competitive advantage survive when the organization is able to deliver the
same advantage as competitors are providing but at a lower cost. Thus, it is very important for
Tesco to develop clothing range for women and kids to sustain competitive advantage.
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3.2 Distribution of products according to customer’s convenience
Distribution of products in market as per convenience of customers is essential to attract
more number of customer’s. Thereby, with the help of effective medium of product distribution
Tesco can increase the sales and profitability of the business (Grunert, 2015). Distribution is
below the group of place and therefore, the firms build up an accurate distribution methods so
that product is easy to reach the customers and increase the sales of Tesco.
Currently, online distribution of products is in trend. People are preferring shopping
online than going to the stores. Thereby, Tesco can increase business by selling through online
portals. Moreover, the firm can also increase sales by distributing the clothing range to the retail
outlets because, it is more suitable for the customers to purchase from online portal or retail store
than buying from factory (Hills, Hultman and Miles, 2008). Thus, distribution process of Tesco
can be both its strength and weakness. In current scenario, it is very important for Tesco to
consider strong distribution channel so that their product should be available easily to to
customers.
3.3 Pricing strategies as per marketing conditions
Most of the firms now realize the misconception cost based pricing and its unfavorable
effect on profit. As an outcome, many of the organizations have taken pricing authority away
from the finance department and provided the rights of pricing to the sales and marketing
department (Grier and Bryant, 2005). However, this way of pricing is clearly according to the
value based pricing, because marketing and sales are the essential part of Tesco for its best
positioning in understanding the value of customer.
However, the level of competition which Tesco is facing determines the pricing strategies
also. Sometimes the firm has the scope to set the prices for its clothing range and sometimes not.
When Tesco have the scope to determine the prices, there is huge number of pricing strategies
are there which the firm can choose. As there are no such competitors of Tesco which can
compete with it in quality of products. Thereby, Tesco can select the Market skimming pricing
strategy. Tesco has adopted this strategy as the firm wants to hold maximum share of the
business and profit. At this moment, there are no competitors of Tesco. Hence, the firm is free to
decide the prices for its clothing ranger of women and children (Wood and Suter, 2004). But for
increasing daily sales of the products Tesco can use low price policy and increase the
profitability and sales of the organization.
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3.4 Promotional strategies to achieve marketing objectives
Promotion is a characteristic of marketing mix which consist of communication with the
customers and vendors of the products. Promotion activities are crucial factor of marketing
objectives because it showcases the product range to the consumers from different regions. It can
be difficult for product selling if they are not being anticipated in the market by various
promotional activities.
Tesco can use various promotional strategies to achieve marketing objectives such as,
Television advertisement, new paper advertisement, personal selling, posters etc. For instance,
Tesco can promote clothing range of women and kids by television advertisement. Ki8ds wear
can be promoted by advertising on kids channels, similarly, women clothing range can be
promoted by advertising between TV shows and serials etc. these promotional strategies of
Tesco can be more beneficial to achieve the marketing objectives (Ferrell and Gonzalez, 2004).
Moreover, Tesco can use many other promotional activities also by using mass media
communication such as, newspapers, pamphlets, magazines, radio, banners, internet an social
media etc. These promotional strategies will be helpful for Tesco to achieve the marketing
objectives and also it will increase the sales and profitability of the organization.
3.5 Additional elements of the extended marketing mix
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Additional elements of extended marketing mix are as follows, People: People plays crucial role in promoting and marketing a product. Tesco's staff can
promote the clothing range locally and also promotes from within. This additional
marketing mix strategy allows the employees the operations to understand the cultures as
well as the corporate belief. The people who are chosen for marketing should be trained
in cultural variations and customer focus. People are the important aspects in promoting
the product range of the organization. Process: In all over the world, Tesco uses the same process for manufacturing the cloths
of women and kids. Also by keeping in mind the cultural and fashion trends of the
particular place. The quality of the fabric is the same everywhere (de Vasconcelos
Marques, 2009). It is essential for all vendors to meet these specifications. Retail outlets,
brand logos, sizes and prizes are the same everywhere. Tesco also defined efficient
processes for online delivery service of the cloths. Tesco assures its customers that cloths
which is ordered online should be duly packed and reach to customers on time.
 Physical evidence: further, Tesco ensures that all the Tesco outlets are similarly created
at all locations with a range of quality clothing's for women and kids and customer
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Illustration 2: Additional elements of marketing mix
Source:
http://www.learnmarketing.net/extendedmarketingmi
x.jpg

friendly environment (Brassington and Pettitt, 2005). Tesco outlets should always serve
the customers with smile and effective service support. These are the all elements of
physical evidence that are standard in all Tesco outlets.
TASK 2
4.1 Marketing mix for two different segments of consumer markets
Recommended marketing mix for two different segment of consumer market is as
follows, Products: In the cloths buisness, The production and consumption of the cloths largely
depends and the customers demand. However, Tesco will produce cloths for women and
kids as per their demand. For women cloths should be designer, fashionable and as per
the customers demand. Similarly, Kids cloths should be also designed by considering
latest trends and weather conditions. Price: Further, the price of the product plays crucial role in marketing mix. Tesco should
determine the price for women clothing's by considering existing competitors price level.
However, the price for kids cloths should be also reasonable (Armstrong, Adam, Denize
and Kotler, 2014). The price of the cloths should be determined by Tesco by keeping in
mind the buying power of the customers.
 Place: After product range and prices, place play major role in products success and
failure. Tesco should make sure that product is placed in the market effectively and it is
easy in reach of all the customers. For instance, Tesco can open retail outlets for women
cloths and focus on Online selling for kid’s cloths.
4.2 Differences in marketing products and services to businesses
Marketing of products to businesses and the consumers is totally different. Marketing of a
product is better known as business to business (B2B) and marketing to the consumers is known
as business to consumer (B2C). Tesco can use B2B marketing strategies for its cloths for
distribution in the market who will sell products to the individual customers by retail outlets and
stores etc. B2B marketing is driven by a relationship with the customers so the quality of the
cloths, pricing and some economic factors should be taken care. B2B marketing is done for
targeting the potential market segment.
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However, the marketing of the business which sells products directly to the customers is
called B2C marketing. This marketing method is used for attracting large number of customers
in a short period of time (Gordon, McDermott, Stead and Angus, 2006). Tesco uses B2C
marketing strategies to attract more consumers. These strategies consist of gift vouchers,
displays, discount coupons and internet to invite the customers to buy more cloths from Tesco.
The marketing campaigns of B2C marketing focus on capturing the market share in a very short
duration.
4.3 Difference in international marketing and domestic marketing
International marketing is a form of business actions which is used for providing products
and services available to customers across the nation. However, domestic marketing is
constrained only in the native country market and targets domestic customers and domestic
economy of the native country (Dann, 2008). International marketing is a larger form of
domestic marketing where a firm deals with set of diverse people.
Domestic marketing of the firm face the competition with local competitors. Whereas,
international marketing face the challenges from businesses around the world. Thereby, the
principals and theories of marketing which is implemented at present for local competitors now
need a totally different use for the international marketing (Grier and Bryant, 2005). Domestic
market focus on selling the organization product in one financial market only whereas
international market focuses on selling products in different market to improve their efficiency
and capability. Further, domestic marketing deals only with one set of consumers while
international marketing deals with different types of consumers who have different tastes and
preferences.
CONCLUSION
Marketing principals of a business are defined as the ideas that are widely agreed on the
basis of product promotion strategies. All the businesses use various marketing principals in
order to increase sales and profitability of the organization. This report helped in understanding
the concept and process of marketing principals. Along with their segmentation, targeting and
positioning with the elements of extended marketing mix.
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