Analyzing Tesco's Marketing: Principles, Decisions, STP Framework

This report examines Tesco's marketing strategies, focusing on key marketing principles like product, price, place, and promotion, and their application within the organization. It appraises the rationale behind Tesco's marketing decisions, particularly in response to past scandals, including shifts towards digital marketing, customized media, and competition with smaller chains. The report also assesses Tesco's segmentation, targeting, and positioning (STP) strategies in the context of its products and services, highlighting how the company uses the STP model to efficiently allocate resources and achieve its marketing goals. The analysis covers Tesco's efforts to attract customers, create new product lines, overhaul product packaging, and utilize promotional channels like the Tesco Clubcard.

Sales and Marketing

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Key marketing principles and application to a given organisation........................................1
Appraise the rationale of marketing decisions taken by a given organisation.......................3
Assess segmentation, marketing, positioning in context of specific product or service........5
CONCLUSION................................................................................................................................9
REFERENCES................................................................................................................................9

INTRODUCTION
Marketing basically involves the process of creation, delivery and exploring of values for the
purpose to meet the needs and wants of target market in terms of the services and goods that
also involves the selection of target customers. A sale basically includes the transaction
among the two or more parties that involves tangible or intangible assets, services or goods
in terms of the exchange for the money. The marketing principles are basically agreed upon
the ideas of the company for the purpose to use an effective marketing strategy. These are
principles which are based upon building the product promotion strategies. In this report,
Tesco has been chosen as the organisation. It is a British based general merchandise retailer
founded in 1919 and headquartered in Welwyn Garden City, United Kingdom. The report
involves the description of the key marketing principles and their application in the
organisation. It further involves the marketing decisions taken by the organisation with
assessing the concept of the segmentation, targeting and positioning regarding the product or
service.
MAIN BODY
Key marketing principles and application to a given organisation
The marketing principles are basically the ideas related to marketing which are used by the
organisation in order to create effective marketing strategy and it also involves the various
principles which are based upon the promotion strategies. The main objective to use
marketing principles is to create effective promotion strategies for the goods or services. The
concept of marketing principles plays a very important aspect in the process of managing
and developing the functional and operational activities for the objective to promote a
business. The term marketing principles is used in order to optimize the market opportunities
for achievement of organisational goals and objectives (Quan and Xu, 2020). The main keys
of marketing principles involves the price, product, promotion, place and people. The
marketing mix is known for the operational and tactical part of the marketing plan. In
context to tesco, these are the key marketing principles used by the company.
Product: It is considered to be one of the core element in the organisations and can be
described as the combination of the services and goods which is offered by the organisation
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with value to the consumers. A product could be both intangible and tangible. In context to
Tesco, the organisation offers a wide range of products that involves the financial services,
electronics, food, clothing etc. In addition to that the organisation also offers free music
downloads and grocery delivery service (Phelan, 2019).
Price: It is considered to be one of the most significant factor in the organisation and also
depicts the monetary or cost of the service or product which is to paid by the consumers. In
context to Tesco, the organisation has kept its price as low as possible as compare to its
competitors like ASDA and Sainsbury. The organisation tries to keep its product’s prices as
cheap without compromising with the quality of the product. Moreover, the organisation
uses club card system that help the consumers to collect points which then can be converted
into cash. It also uses amazing promotional strategies that provides the consumers a
additional offer and their pricing strategy help them to boost the sales without affecting
profits (Шкорупова, 2020).
Place: It is considered to be another important element of the organisation and also involves
the activities of the company that is involved in the process of making the product available
to the consumers. In context to Tesco, the organisation has it stores operating in every part
of the England and has also divided its stores category into offline business that involves the
Tesco Metro, Tesco Home plus, Tesco express, Tesco Extra and various other stores.
Promotion: It can be basically defined as the idea or knowledge of the product which is
undertaken for the purpose to inform the customers and encourage them to buy products. In
context to Tesco, the organisation has fully focused on the product promotion with various
methods that involves the public relations, advertisement, sale, online communication and
promotion. The main advantage that Tesco has its low price of the products which helps the
organisation to differentiate it from other organisations. The company focuses on providing
various offers to its consumers and offers various rewards and discounts. The organisation
uses Tesco Club card that provides extra discounts to its existing customers (Lee, 2019).
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Appraise the rationale of marketing decisions taken by a given organisation
The rationale for the use of different marketing strategies involves better understanding of
the needs of the market and with the objective to satisfy these needs completely. In order to
appraise the rational of the marketing decisions the organisation focuses on development of
the effective marketing strategies that helps in achieving high sales volumes at desired
profit margins (Ayuningtyas, 2019). In context to Tesco the organisation has used various
marketing decisions that helped the company to get back on the track. Even the most
renowned brands faces choppy waters and one wrong move from the brand side can result
in decline in sales and loss of trust towards the brand. The organisation faced a lot of
multiple scandals and questionable investment decisions around the year 2013 and 2014
that resulted in the quarterly losses. In context to Tesco, the organisation took various
decisions in order to cope up with these risks and get back on the track which involves:
Tapping into relevant humour: The organisation in the past had been very recognizable
and stable and was also known for its corporate marketing strategies that involves the strap
line “every little helps”. For the purpose to deal with the accounting and meat scandals that
affected the company’s reputation it was essential to bring the necessary changes( Simone,
and TONELLI, 2020). The organisation tried to focus on creating new forms of the
marketing that basically involved a touch of humour in its Christmas based commercial
campaigns. Through use of various commercial actors in its new ads the organisation was
able to develop a familiar spirit around the new concepts.
Shifting towards digital marketing: It was realised that a true and tried mega business in
any organisation would expect to invest billions in the marketing process and moreover
various businesses have genuinely enjoyed the market share that the organisation has and
had also heavily invested in the cinema, TV, radio and press. The organisation had
realised that it is important to take necessary marketing decisions and working on a
particular marketing strategy. Digital marketing played a very important role and the
organisation has spend its 30% of the marketing revenue on the digital marketing which
allows the organisation to reach highly targeted individuals which was impossible with the
use of traditional marketing( Ameer and Halinen, 2019).
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Customising media: Customization is something which is really needed by the
organisation and in support of that the organisation’s marketing team has come up with the
marketing ideas and it focuses on providing deeper discounts on special occasions such as
birthdays and print campaigns as the brand has realised that in today’s scenario,
customization is the key to the new world of marketing. The marketers of the organisation
has realised that there was a need to focus on enhancing experience at individual levels and
in addition to that the marketing team of Tesco has come up with various marketing ideas
and also involves delivering deep discounts to customers (Fink, 2020). The organisation
has also realised that instead of maintaining generic and big image it is important to focus
more on the specific shoppers and building their trust. In order to deal with the plenty of
competition and multiple scandals, the organisation has managed to deliver both to its
shoppers and the shareholders. These marketing decisions will help the company to cope
up with the horrible slump.
Competing with smaller chains
In the past years the organisation need not to worry regarding competing with the small
chains but in today’s scenario, it is important to worry about the competition with the
smaller chains. The smaller chains such as Aldi is now encroaching towards the market
share. In context to deal with the competition it is important for the companies to fight
back as they are not left with any other choice (Friend, Malshe and Fisher, 2020). The main
and the biggest challenge is to stabilize the market share. The organisation has shifted from
a traditional method of marketing towards a digital marketing effort across all the channels.
The smaller chains are even competing on the social media platforms and in order to
compete online, the organisation has found different methods to attract and promote the
customers from outside its realm. Through the use of advertisements and new value items
it helped the company to bring back its customers and shoppers to its stores.
Creating new product line: In order to attract more and more customers, the company
reviewed its marketing mix which was a essential step in order to launch a new line of new
farm brand products. With the rebranding of products such as fruit, beef, pork, the
company attracted consumers who were not previously interested in the Tesco’s offerings.
The organisation understood the needs and wants of customers and the prices were reduced
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for each category which resulted in dramatic increase in the fish and farm sales( Spotts,
Weinberger and Weinberger, 2020).
Overhauling product packaging: The company had another huge shift in the grocery
giant which also included the repackaging of its various products and commodities in a better
and higher quality packaging. In context to organisation, the organisation was able to develop
new branding campaigns and packaging designs for the assistance of its items. Due to these
challenges, the organisation faced which provide the customers and shoppers a locally sourced
feel and organic feel in the products in a smartly manner (Le, 2018). In context to Tesco, the
organisation has focused on creating a better and enhanced product packaging which helps in
creating a sales for the organisation and will help in attracting more and more customers. In
context to Tesco, the organisation uses various charitable events, television ads and hoardings as
a promotional channel and also uses various offers and large extent promotional discounts which
includes buy one get one free. The organisation also uses “Tesco Club card” that helps in
segmenting and targeting the desired audience.
Assess segmentation, marketing, positioning in context of specific product or service
STP is a model that is used in marketing in order to grab the attention of the customers.
The main aim of the respective model is to make efficient use of the available resources so that
the marketing goals of the company can be accomplished. It is model which is based on dividing
the customers in different segments to select a suitable segment to target. Here, the company
selects a suitable segment to target. Further, they also position the product in an appropriate way
in order to gain the attention of target segment. The STP model aims to prepare suitable
strategies so that the company can accomplish its marketing goals and attain an edge over the
competitors in an efficient manner. It helps in improving the competitive edge of the
organization by strengthening its market presence. This model allows the company to target their
approach to fulfil the market needs and preferences in an appropriate way (Sutanti and et. al.,
2018). In context of TESCO, it is a well-known company of retail industry which offers variety
of products such as mobile phones, accessories, clothes, food, groceries and more. Segmentation
makes the organization enable to choose a particular segment in order to position the product in
an appropriate way. Different elements of STP model are given below:
Segmentation:
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It is a strategy of dividing the entire market into smaller groups. Here, groups are
formulated on the basis of characteristics, features of the individuals. While formulating the
segmentation groups, people having similar behavior, attitude , personality are combined
together in a group which save the efforts of the company to target different individuals. The
main aim of segmentation is to make optimum use of the resources to attain the marketing goals
and objectives. In addition to this, it also helps in inflating the sales & profit margin in an
efficient manner (Suryaningrat and Mussry, 2018). In this regard, the different types of
segmentation are mentioned below:
Demographic segmentation: It refers to bifurcate the audience on the basis of different
components such as age, income, occupation, gender and more. In case of TESCO, they are
targeting to the people of all age groups by offering products at affordable price. They have
products for both males as well as females. In terms of income group, they have been categorized
products in terms of premium and non premium products to attract the huge number of people.
Psychographic segmentation: Under this, segments are defined in terms of behaviour,
personality, attitude and more (Singla, 2017). It is based on the personality, life style of the
customers and distinguish them in different categories; customers who are concern for
environment and health and customers who are not give significant importance to environmental
issues.
Geographic segmentation: This segmentation is based on different geographic locations
of the individuals. In 2019, TESCO recorded presence at nearly 6993 stores at different locations
which make them enable to address the requirements of different people efficiently (Tesco's
number of stores worldwide from 2008 to 2021). Through the wide presence, the organization is
able to maintain a proper balance between demand and supply in market.
Behavioural segmentation: Behavioural aspect is related to with frequency and
occasion of purchasing the product or service. Though TESCO maintains remarkable sales round
the year but they record hike in demand of the products in festival season. Here, the company
offers discounts and other lucrative schemes during the festive season which stimulates the
people to buy their products.
Targeting:
After segmentation, the next step is targeting wherein the company targets a particular
segment. Here, they customized the offered products or serviced as per the requirements of target
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audiences. Main aim of targeting is to minimize the efforts in order to make positive image
within one particular segment. While selecting target segment, the organization needs to consider
several elements in terms of needs and requirements of customers, profitability, requirement of
resources, potential revenue and more (Widhaningrat, 2020). TESCO is using the approach
where “everything is for everyone”. This approach allows them to target huge segment. They are
basically targeting to price sensitive customers who look for quality products at affordable price
(Tesco targets Everyday people, 2012). TESCO is using differentiation strategy where they have
wide range of products for different segments of customers. They believe in providing value to
the customers in order to maintain strong and long-term association. The company offers variety
of products such as food and non-food products. Wide range of products allow them to fulfill the
requirements of larger audience in an efficient manner. Targeting right set of audience makes the
organization enable to earn substantial amount of profit significantly.
Positioning:
In STP model, positioning is the final stage wherein a brand sets its position among the
target group. Positioning refers to the perception of the customers regarding a particular brand. It
basically shows how the customers are perceiving a specific brand. It allows the organization to
improve their public image which further contributes in profit. Positioning can be positive or
negative. Here, positive positioning makes an entity enable to stand in the stiff competition and
sustain in long run (Frattasi and Della Rosa, 2017). In context of TESCO, it is perceived as a
valuable retailers, offers variety of products at reasonable price. The company is known for the
quality and diversity of its products. They offer different range of products in order to address
market demand in an efficient manner. Quality products make the organization enable to
maintain long-term and positive relation with the customers. Due to the positive positioning, the
entity is able to target huge number of buyers that will help them in accelerating the business
growth in an efficient manner. Huge market presence makes the entity enable to fulfil the
requirements of audience in timely manner. This positive positioning will help the entity in
setting a unique image in the market. Also, this is a reason that TESCO is maintaining the
position of market leader in the retail industry.
The above-discussion is regarding the STP model of TESCO. It is analyzed that they are
using demographic, geographic, psychographic and behavioural segmentation in order to
dividing the customers in different segments. In terms of targeting, they are targeting to the huge
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number of people by offering variety of products at different price. In addition, the company has
position of quality service providers within the affordable price range.
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CONCLUSION
To conclude, it can be said that marketing is an art of promoting the products or services.
Marketing and sales has significant relations. Through appropriate marketing, it is possible for a
company to enhance the overall sales and profit margin. The above-study is based on TESCO
that is a well-known retailer of UK. The organization adopts potential marketing strategies so
that they can thrive in the competitive environment. It is analyzed that the company is following
suitable marketing principles in terms of marketing mix. It is evaluated with the application of
marketing mix. Further, the organization takes necessary decisions in order to accomplish their
marketing goals of earning higher profit. Moreover, in context of STP, the company is using
behavioral, psychographic, demographic and behavioural segmentation to divide the customers
in different segments appropriately. Further, they are targeting to huge number of customers and
maintain a position of quality products provider within affordable price range.
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