Tesco's Marketing Strategies: A Comprehensive Analysis

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Marketing Essentials
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Table of Contents
Introduction................................................................................................................. 3
LO1............................................................................................................................. 4
LO2........................................................................................................................... 10
LO3........................................................................................................................... 15
Conclusion................................................................................................................ 21
Reference List...........................................................................................................22
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Introduction
Marketing is one of the most important functions of any organisation. It refers to the
exchange of goods and services. Marketing also involves the concept of effectively
creating all the marketing elements of the company, like development of products.
The marketing function of an organisation is responsible for effectively planning and
strategising a marketing plan in order to properly sell or launch a product into the
market. Marketing also involves finding the correct market segment to sell the
products in a manner that generates the most revenue.
The chosen organisation for this study is Tesco PLC. Tesco is none of the world’s
biggest supermarket chains that sell groceries and general merchandise. The
headquarters of Tesco is located in London, UK (Tesco plc, 2019). This study will
explain the roles of the marketing function of the company. It will also elaborate on
the use of the 7s of marketing mix to achieve organisational goals. A marketing plan
of the chosen organisation will also be given in detail.
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LO1
P1 Explain the key roles and responsibilities of the marketing function.
Marketing is one of the most essential functions of a company. Marketing is the tool
that is used by an organisation to create a product and bring it to the customers for
their consumption. This entire process of exchange of goods between an
organisation and the customer can be elaborated by the marketing process of a
company. This exchange is the key role of the marketing function. The key roles and
responsibilities of the marketing function is explained below.
Figure: Marketing Roles
(Source: Feng et al., 2015)
Market Research
The marketing department of Tesco needs to gather all the necessary information of
the market and analyse it. This is the first step in marketing a product. The
procurement of market information is done through various techniques, like
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conducting surveys and analyzing the consumer reaction to advertising campaigns.
Crucial information regarding the entire marketing process of the product is gathered
here, like the target audience and their wants and demands. The objectives of the
marketing process can be understood from here.
Marketing Plan
When market research is conducted, the aims and goals of the company is
understood. The marketing function of Tesco then is to systematically plan and
strategise the way it will achieve those objectives. Many factors are analysed here,
like the marketing budget and expected revenues and profits (Lim, 2016).
Development of Product
As per the information gained from market research, the perfect product is
developed by the Research and Development Department of Tesco. This
department analyses the information provided by the Marketing Team and create a
product as per customer needs and demands. This helps Tesco to gain a
competitive edge in the market (Aschemann-Witzel et al., 2016).
Grading and Standardisation of Product
The various characteristics of the product, like its quality, size, weight, use of raw
materials and product design determine the products standard. Standardisation
helps in making the product unique and different from other products in the market.
After the product is standardised, it is graded according to its standard. Grading is
done by giving similar products of the same standard a grade, like A, B, C, and so
on. This is mostly done in the case of agricultural products. Groceries of Tesco will
be graded.
Packaging and Labelling of Product
All products of Tesco need to be packaged properly so that it does not rot or get
damaged during transportation of the products from one place to another. Packaging
is done by encasing the product in bottles, boxes, cans, and many other forms.
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Labelling of the product is done to give the products a label. The label of a product
mentions all the important information about a product like its manufacture date,
expiry date, name of manufacturer, ingredients, and much more.
Branding of the Product
In order to make the product distinguishable from others, Tesco names all their
products. Along with naming, the brands logo is also printed in the product
packaging. This process is called Branding. This is done by Tesco to give their
products their own unique identity (Feng et al., 2015).
Product Pricing
Pricing of a product is one of the most important roles of the marketing function.
Every product made by Tesco has its own target customer base, which determines
the pricing of a product. For example, if the target customer of a product of Tesco is
towards low and middle income class people, the products need to be priced lower in
order to make it affordable to target customers.
Promotion of Products
The customers need to be informed about a product. This is done through product
advertising. This refers to the action of providing all the necessary information about
the products through various advertising channels. Advertising channels consists of
mass media channels like newspapers, radio, television, banners, the internet, and
many more (Felix et al., 2017). This is a very crucial marketing role as good and
catchy advertisements that cater to the target consumers will help in increasing
brand awareness and generating interest in their minds to buy the product. Catchy
slogans, taglines, and brand ambassadors are featured on the product
advertisement of Tesco.
Physical Distribution of Products
In order to physically distribute a product from the manufacturers to the customers,
the product needs to go through several; channels of distribution in order to reach its
final destination. During distribution, several factors are taken into consideration, like
fragility of the product, its warehousing, and finally its transportation. Tesco needs to
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store its products in a warehouse and catalogue the inventory. Transportation is
done through vehicles in the correct way as Tesco is a multinational company with
customers all around the world.
Customer Support
Customer support refers to the actions taken in order to efficiently address the
customer feedback regarding a product. This is one of the chief functions of the
marketing department as it helps in improving an existing product or developing new
product concepts based on customer suggestions (Schlegelmilch, 2016). Technical
services and credit facilities are given to improve customer support and brand image.
All these steps are done in order to properly market a product. Efficient marketing of
products allow Tesco to generate revenues and profits and decrease operational
costs.
P2 Explain how roles and responsibilities of marketing relate to the wider
organisational context.
The marketing department of Tesco, UK has to carry out several duties in order to
market the organisation’s products. Their duties are described below.
Conducting market research
A fundamental responsibility of the marketing department is to do thorough research
of the market to understand the current trend of the market according to that they
must adopt needed steps to meet the demands of the public. Moreover, a detailed
survey helps to navigate the new possibilities in the market so as the organisation
can expand by distributing its products and services.
Developing a marketing strategy
To expand the reach of an organisation in the market, the marketing team must
come up with a solid scheme. The marketing team of Tesco, UK have the
responsibility to come up with strategies after surveying the current preferences of
the public with the objective of increasing the sale of Tesco’s products.
Development of better customer relationship management
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The marketing head also needs to make sure the customers’ relationship with the
company is developing to earn loyal customers, as they help the company to make
more profits (Hill and Alexander, 2017).
Marketing department maintains a strong connection to departments such as IT and
HRM. In order to advertise Tesco, UK and promote the products on the digital
platform marketing department has to work with the IT team. The marketing
department surveys the market to know the present demand (Hair et al., 2015). After
identifying the demands, the marketing team with the help of human resource
department carry out the production. With the help of the finance team, marketing
department comes up with the right product pricing. Along with the finance team,
Tesco’s marketing department comes up with a budget to carry on the promotional
activities. To make sure all the processes within Tesco, UK is going smoothly
marketing department must maintain bonding with other departments.
To ensure Tesco, UK has competitive advantages in the market place the important
departments such as human resource, IT, finance, and marketing must work as a
team. If the departments have good relations among them, it will be easier to
understand each others’ responsibilities, which will help to attain the organisation to
its objectives. To maintain a friendly relationship in the organisation, Tesco, UK
conducts meetings in order to increase the level of production and profits.
With the growing popularity of social media and digital platforms, Tesco UK’s
marketing team has come up with strategies of trading into the online territory. To
reach more people, the marketing team is advertising their products on social media
and selling their products on digital platforms. Tesco, UK has a significant boost in
the number of customers as well as in their revenue. As social networking, sites are
very popular among young people; Tesco, UK’s products have reached to the young
people.
The most fundamental key for an organisation to grow is the customers. The
marketing team plays a very significant part to drag the attention of potential
customers towards the products of the organisation. The marketing team is solely
responsible for conducting a detailed survey of the public to have the knowledge of
their requirements so that the organisation produces the products that are in
demand. For an organisation to succeed, it must maintain a good relationship with its
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customers (Noe et al., 2017). It is the responsibility of the marketing department to
bridge the customers and the organisation in a good way so that the company can
have loyal customers. Marketing department’s duty also concludes the responsibility
of maintaining a positive brand impression among the market people. It can obtain
when the marketing team listen to the customers’ demands and solves their issues.
Tesco, UK’s marketing team has adopted the strategy of selling and marketing the
products at the right time. The marketing department has improved the quality of
advertisements and made the digital shopping less complicated. It has successfully
dragged the customers’ attention towards them and increased the sale.
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LO2
P3 Compare the ways in which different organisations apply the marketing mix
to the marketing planning process to achieve business objectives.
Tesco’s marketing mix strategy will be compared with Sainsbury’s to demonstrate
how both companies are using different strategies to meet business objectives.
Marketing mix elements Tesco Sainsbury
Product Tesco has many products
under its brand name like
food products, electronic
goods, clothing, financial
services and many more.
The product line of Tesco
is continuously expanding
to include more products
so that the company can
successfully fulfil the
demands and wishes of
their customers. Tesco
also provides specialised
regional products that are
only sold in special places
and countries around the
world.
Its diversified product
ranges include fruits,
vegetables, dairy
products, bakery, health
and beauty, household,
pet care and others. It
sells more than 30,000
product lines and 20% of
which are Sainsbury’s
own-label brand
(Sainsburys.co.uk, 2019).
These diversified product
ranges serve customers’
varied needs and ensure
higher sale.
Price Tesco mostly sells their
products at low prices so
that it becomes affordable
to customers of every
market segment. The
pricing is set in a way that
prevents them from
Sainsbury sells products
with value for money for
which it has kept a
different pricing strategy
for different products. Its
basic products including
fresh, grocery and baby-
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incurring losses The
quality of products are
also maintained while
keeping prices relatively
low. Tesco keeps the
prices at low ranges by
reducing operational
costs. Keeping the prices
low have allowed Tesco to
become the leader of
supermarket chains in the
globe (Steenkamp, 2017).
Tesco also implements a
club card or loyalty card
system that allows their
customers with loyalty
cards to gather points by
purchasing products from
Tesco outlets. The
customers can then
redeem these points for
discounts in future
purchases.
food products are sold
based on competitive
pricing strategy. These
products are brought from
local suppliers and offered
at an affordable price. The
chosen pricing policy
helps to face price
designed by rival brands,
which meets its objective
of gaining competitive
position in marketplace.
Sainsbury’s bakery and
chilled products are sold at
premium-pricing to target
people with high income
and create a perception
that offerings are of good
quality (Johansson et al.,
2012).
Place The headquarters of
Tesco is located in
London, UK. Its main base
of operations is UK, where
it first started operating.
Tesco soon opened
outlets and stores all over
the globe in many
countries. Tesco has
expanded its selling
Sainsbury operates more
than 600 supermarkets
and 1400 shops. Market
dominance is in areas
such as Redhill, South-
East London, Torquay,
Guildford and others. It
shops have self check-out
services, convenient kiosk
and other counters
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operations by selling
products online. This has
allowed customers who do
not have access to their
shops to buy their
products, effectively
increasing sales and reach
of business (Martinez et
al., 2016)
(cnbc.com, 2019). It has
online presence that
allows buyers to purchase
by making orders through
website and mobile
application. Sainsbury’s
regional and national
distribution centres mange
its supply chain and help
in reaching products at
buyers’ place. Its huge
presence inside and
outside the country has
helped it to achieve 15.2%
of market share in retail
sector (Sainsburys.co.uk,
2019).
Promotion Tesco has the advantage
of selling their products at
lower prices. This is
considered as their Unique
Selling Proposition (USP).
Tesco have used their
USP at its maximum
potential to advertise to
customers and improve
their brand image. Tesco
also uses the Buy One
Get One Free (BOGOF)
offer on occasions and
other special promotional
offers and discounts to
keep customers coming in
ATL and BTL are popular
promotional strategies
used in Sainsbury. ATL
refers to ‘above the line’ in
which the firm use radio,
billboards, television and
print media to target
audience. BTL refers to
‘below the line’ in which
product demonstration and
direct email are used to
address specific groups
(Kacen et al., 2012).
Sainsbury’s Nectar
Reward enables
consumers to earn points
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