Marketing Strategies of Tesco: STP, Marketing Mix, and Recommendations

This report provides a detailed analysis of Tesco's marketing strategies. It begins with an introduction to marketing strategy and its application to Tesco, the UK's market leader in groceries. The main body examines Tesco's effective marketing strategies, including relevant humor, product line creation, digital marketing, and product packaging overhauls. The report then delves into the application of STP (Segmentation, Targeting, and Positioning) strategies on Tesco, detailing geographical, demographical, psychographic, and behavioral segmentations. It also examines Tesco's marketing mix, focusing on the 7 Ps: product, price, place, promotion, process, people, and physical evidence. The report further explores Tesco's relationship marketing strategies and current tactics. Finally, it concludes with recommendations for Tesco's future marketing endeavors.

Marketing TESCO

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Effective marketing strategies of Tesco.......................................................................................1
Application of STP strategies on Tesco.......................................................................................2
Examination of Tesco's Marketing Mix with focus on Ps of Products and services...................4
Relationship marketing strategy of Tesco on current tactics.......................................................6
RECOMMENDATIONS ............................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Overall game plan of a business to reach the expected targets of consumers to make them
customers of particular product or services, is known as marketing strategy. Tesco is the
company chosen for analysing the marketing strategies. Tesco is the market leader in the UK's
groceries market. With the help of STP strategy this project will discuss how segmentation,
marketing and positioning is applied in Tesco. Marketing mix of Tesco will analyse the 4 Ps
explaining the market strategies. For analysing the long term engagement, interactions and
loyalty of the customers of Tesco this project will explain the relationship marketing strategies
for Tesco's current tactics. The main aim of this project will be to recommend a suitable
marketing strategy for Tesco.
MAIN BODY
Effective marketing strategies of Tesco
The chosen company for this project is Tesco. Tesco is the third largest retailer in the
whole world, according to its gross revenues. It deals in Europe's 5 different countries. That
being said it is also the market leader in the UK's groceries market. Being founded by Jack
Cohen as stall group in 1924. Since then his business is said to have increased after 1939,
reaching a mile stone of 100 shops in the country. Tesco has been seen refreshing their
marketing strategies for better outcome in their business. Few steps taken by Tesco which has
effected its strategies are,
Relevant Humour :
Tesco has been known for very stable, easily recognizable, but very corporative
marketing strategy. The marketing head of Tesco has realized that humour teaches its campaign
lot of important lessons. Which has indeed helped the business in adapting to future plans.
Humour does have a risk gambit in many people but Tesco's management have been very
successful in its application (Expert Commentator , 2017).
Creation of Product lines :
With the review of marketing mix one of the steps taken by Tesco has been to launch a
new line of products related to farms. For cost conscious customers of Tesco the company
decided to rebrand some of its farms products. This provided Tesco with increase in their
customers because before the rebranding these products where 15 % more expensive. This is
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how the company understood the needs and with effective marketing strategy brought dramatic
results.
Digital Marketing :
Many businesses around the world who share the same kind of magnitude as Tesco have
been seen investing millions on advertisements in TV, radio, cinema and press. After realization
for the need of such marketing strategy. Tesco started to make a huge shift in their marketing
strategies. Result of which company has now started spending 30% of its marketing revenues of
digital marketing. This helped the company to reach targets which would not have been possible
by traditional marketing methods.
Overhauling in Product packaging
With observations of Tesco products the management found out that those products
which are lacking in proper packaging are not showing good results. This influenced Tesco to
come up with new packaging designs for required items. This change automatically reflected on
those struggling products proving the effectiveness of the marketing strategies.
Customizing Media :
Marketing ideas needed to be changed by the marketing team of Tesco for improving the
individual view or experience. Some idea where delivering discounts to the customers on
birthdays, delivering the products to the door steps of the customers. Such innovative ideas
proved essential in the business of Tesco.
Application of STP strategies on Tesco
STP marketing strategy is segmentation of market, targeting of customers and to position
segmented offering (Jewel and Kalam, 2020). There are three steps which frame this marketing,
Segmentation, Targeting and Positioning. Tesco offers services and products to many people in
general but it is not possible attract all of them. This is due to the different demands among the
people. For identification of possible customers market segmentation is required.
Segmentation :
Market segmentation is done by division of the total population into different groups in
accordance to their demands, wants and other criteria so that products can be developed to fulfil
their needs. Segmentation ca be made into different categories, such as geographical,
demographical, psychographic and positional basis.
Geographical Segmentation -
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Tesco's geographic segmentation is done according to the region in which its customers
are divided. Tesco operates in UK and 13 other countries. Therefore, first segmentation is done
on the basis of country it operates in, secondary segmentation is done on the basis of the
destination of Tesco customers dividing them into Rural or Urban sources. Customers situated in
the cities are considered to be a part of urban segmeThwala, K.C. and Slabbert, E., 2018ntation
whereas those living in the outskirts or small towns are part of Rural segmentation (Morys and
et.al.,2018).
Demographical Segmentation -
Tesco has to consider demographical segmentation in various types such as Age, which
includes all the categories of age group that are part of the customer base to Tesco. This gives the
company opportunity to have products preferred by different age groups. Gender is an easy way
of segmentation for the company. There consists lot of differences in the needs of both the
genders, which further provides the company the need of dividing their product accordingly.
Customers of Tesco are also divided by their income status, the company should have products
of different brands and quality for customer with different income status. There are other ways in
which customers are segmented demographically on the basis of Occupation, Education, Social
Status and the size of family they belong to. These segmentations provide Tesco with
opportunities to consider before introduction of new or modification in older products.
Psychographic Segmentation -
This segmentation is done according to the lifestyle and personalities of the customers.
Such segmentations are hard to be identified but once observed can be useful if saved in the data
base. Such customers have unique demands which can be satisfied by the company.
Behavioural Segmentation -
Such kind of segmentation is also not easy to recognized, It is differentiated according to
the behavioural differences in the customers. Customer shows differences in behaviour due to
certain occasions which may be social or cultural. Some other ways these differences are seen
are attitude, user status and benefit sought (Vinuales and et.al., 2019).
Targeting :
Following the step of segmentation, targeting is the strategy of marketing which breaks
huge market into tiny segments for concentrating on a customer with specified groups. Tesco
targets the potential of each division of segments after analysing the commercial attractiveness of
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each segment. Company decides on which segment or segments to tackle according to their
potential. For example Tesco as a company noticed that petrol pumps have been very popular for
different people stopping by to fill up their cars with gas. This gave rise to an idea for Tesco to
start small stores near petrol pumps. Those stores keep products which where used for travelling
and other general necessities such as food etc. This is how Tesco targeted the potential
customers.
Positioning :
Tesco deals with different individuals of marketing mix for targeting customers segment
in a very effective manner (Dudovsky, J. ,2017). Positional strategies used by Tesco is of very
wide range for attracting targeted segments of customer. Some of these strategies are
Functional positioning –
This is associated to increasing range of products as well as increasing quality of
services. This can be explained better with an example of Tesco Sells, which is a fine range of
products which are advertised as the main products targeting a market segment of customers.
Products sold by Functional positioning are comparatively more expensive than rest of its
product.
Symbolic positioning –
Such type of positioning is subjective and based on aims and values of the customers.
Tesco utilizes this functioning in its Fair Trade range for products in grocery and food sector.
Tesco also uses this in clothing products of the company.
Price positioning -
In this positioning attraction of specific customer segment is done who are concerned
with the difference in price of the product rather than its quality compared to other products.
Such positioning is done to fulfil the needs of such specified customer segmentation.
Examination of Tesco's Marketing Mix with focus on Ps of Products and services
Marketing Mix is state of factors coming together from control of a company in order to
influence customers for purchasing its products. Marketing Mix focuses on multiple areas in
comprehensive market plans (Thwala and Slabbert, 2018). This term is often refereed for
classifying the seven Ps , product, price, placement, production, process, people and physical
evidence. Considering the marketing mix of Tesco company seven Ps of marketing mix are,
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Product :
The Company Tesco mainly deals with the food and daily necessities of the customers.
Daily necessities such as groceries, bread, drinks, cosmetics and frozen food are few varieties of
product of Tesco. Along with the large variety of super market it also has online website where
customers can purchase stuff online. Tesco as company is known for its versatility in products.
The reason why Tesco has been in the market is that it has been able to satisfy the needs and
demand of the customers in market. To improve its efficiency Tesco has reduced third party
products and started developing its own products to increase customer loyalty (Sopasoap, P., and
et.al., 2021).
Price :
Most of the products sold by the company Tesco, has a MAP (Minimum Advertising
Price) this means that Tesco cannot sell the product under this cost. And to compete in the
market the company keeps the price pretty reasonable. One of the main drawbacks of Tesco's
pricing model has been week focus on segmentation in high ends. Despite all this the strategy
used by Tesco across all its products is cost leadership strategy. For achieving this the company
takes systematic review of individual performances of its stores.
Place :
Tesco has different variety of stores, starting from Hypermarkets which are the largest
scaled stores owned by Tesco. These are usually situated in the centre of the town or city.
Secondly comes the Supermarket. Those are standard large size markets which are smaller that
Hypermarkets but are still very big for any normal store. Then there are Tesco Metro which
again are smaller than Supermarkets but are bigger that Tesco Express. These are usually based
near railway stations or regular side walks. Then the small scaled store build to cover the
neighbourhood, these are called Tesco Express This contains high margin product to increase the
revenue for a small scaled store. In addition to this Tesco has over 310,000 employees and 3400
stores in UK.
Promotion :
Tesco as a company has never been behind in the advertising department as they have
produced many commercials, first one being called “Checkout 82” that was made in 1982. Since
then, Tesco has hired many celebrities to promote itself. Tesco has a magazine which has been
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circulating the most out of any other magazine in UK as of 2013. After the digitalization and
introduction of social media Tesco started promoting itself in social media platforms as well. To
target individual advertising they started to get in contact with people of their owned petrol
pumps. Despite all that Tesco has not been as near in the promotional strategy as Tesco's
competitors. Meaning that Tesco should invest in developing progressive and innovative
schemes, specially targeting the online customers.
Physical Evidence :
The company promises its customers about providing good quality products along with
that it has various laws supporting its promises towards the customer. However, the company
Tesco has been guilty of misleading and cheating with the customers. For example in 2013 horse
meat was found in the burgers as reported by the British media, further it was proved that other
products also contained horse meat. This resulted in withdrawal of 26 products by Tesco in the
response with further investigation. Based on these following events Tesco needs to be loyal to
its customers with its product to build back the trust of the customers.
People :
For a company to work properly its employees are the key to surviving in the market.
Tesco being a large company is responsible for many employees and their livelihood. The
perfect person should be hired for its desirable job as every job title is unique and requires
specialization. As the company has found success over the years we can conclude that people
working for the company where well managed and treated. One example of smart hiring of
personnel is that Tesco hired locals as the employees in foreign countries who could connect to
the customers better, thus fulfilling the needs of the customers and also the people.
Process :
This term refers to the steps a company takes before delivering the product. For
generating sales Tesco has various type of store for various type of customers. Tesco has
different types payment process for receiving money from the customers against their products
bought by them. Tesco has lot of employees to carrying out the distribution process. All these
processes are meant to be taken care of by Tesco's management.
Relationship marketing strategy of Tesco on current tactics
Long-term engagement with customers by maintaining loyalty and interactions such a
strategy is called Relationship marketing strategy. This strategy provides customers with direct
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informations suiting their needs and demands in order to create strong connections with the
customers. Currently Tesco has been looking particularly on engaging itself in online shopping
and online delivery services. Tesco sees this as the best way of connecting to the customers since
the situation of Covid -19 (Barker, M., 2021).
According to Tesco's management the growth in sale in Supermarkets showed only 8.1%
where as the growth in online sales where more than 80%. compared to the same time last year.
Result of this CEO of Tesco has decided to increase its online capacity in market. Targeting the
customers which are incapacitated for using online services (Rajapathirana, R.J. and Hui, Y.,
2018). Customers have been seen ordering as much as they can because they don't have to visit
the store. This is reason why Tesco has issued special club member cards which provides
addition discounts over higher amount of purchase.
Tesco believes that local shops have been seriously effected by the pandemic. But online
shopping have been performing well in this situation. Many employees of the company has been
seen working from home. This is how company has maintained relationship marketing strategy
in these current situation.
RECOMMENDATIONS
Sustainable growth and performance can be maintained by continuous improvement in
the marketing strategies as per business environment. For gaining competitive advantage by
means of marketing Tesco must give more emphasis on building relationship with its customers.
The existing relationship marketing strategies must be made more personalised which add values
to customer experience. The organisation can also make changes to its pricing strategies and
depending upon customer segment or the geographical aspects organisation must make necessary
changes to its pricing and product strategy (Cao and Tian, 2020). Retail segment is experiencing
huge competition from e-commerce sites. Thus monitoring of rapid changes play a very crucial
role in industry. For implementing more efficient marketing strategies organisation must modify
necessary changes in regular interval so that customers can experience and witness innovation.
Community engagement is also one of the strong marketing tool which contemporary
organisations adopt. Thus Tesco must also encourage initiatives or the activities which involve
participation of community. This marketing aspect will help organisation to build trust among
people and to enhance its brand value.
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It is also recommended that in this digital era Tesco must also make its marketing
strategies digitalised. It must employee local search engine optimisation campaigns or short
video promotions for social media platforms so that people can relate emotionally with the
organization. Now a day’s social media is one of the strongest platform to communicate with
people (Rauschnabel, Felix and Hinsch, 2019). Thus organisation must make attempts to fully
explore the potential of such marketing tools. Better services and marketing goals can be
accomplished when organisations are fully aware of their target audience. For global
organisations such as Tesco it is quite challenging to identify and understand the needs of diverse
consumers. However necessary attempts must be made by the organisation to conduct deep
market surveys or researches so that different needs of customers can be identified and company
can improve its service delivery mechanisms. It has been also analysed that at present
communication strategies of Tesco are not much interactive. Thus company must make
significant improvements in its communication channels. For instance, interactive participation
of customers in providing suggestions or feedbacks and regular updates to consumers can be
effective way for improving marketing outcomes. Organisation can implement these
recommendations by conducting market survey or by having increased communication with
customers on different digital platforms (Wang and Kim, 2017). It is also suggested that
organisation must try to create long term relation with its customers so that their loyalty can be
retained for long term. Tesco can achieve this by applying its marketing initiatives in higher
frequency. Like organisation must also send greetings marketing offers or feedbacks for after
sales to its customers even if they had not made any purchase recently. It will create a positive
impression on customers, and they will recognise company for long term. Thus, for improving
performance organisation must prioritise its relationship and social media marketing.
CONCLUSION
This report concludes with recommendation of different types of marketing strategies and
the best way of their implementation. According to this report Tesco has seen success even after
the downfall in market since the pandemic. With the help of marketing mix this report explains
the 7Ps related to product and services. This report shows how company performs with relation
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to its marketing mix and the 7 Ps. Tesco's application of segmentation, targeting and positioning
is explained in this project.
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REFERENCES
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Strategies for Growth in Foreign Markets: In the Case of Soft Drinks
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Vinuales, G., and et.al., 2019. Description and evaluation of an innovative segmentation,
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student learning. Marketing Education Review. 29(1). pp.24-36.
Wang, Z. and Kim, H.G., 2017. Can social media marketing improve customer relationship
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Interactive Marketing. 39. pp.15-26.
Online
Barker, M., 2021, Tesco sees strong online growth but stresses need to plan for all eventualities,
[Online]. Available through: <https://www.marketingweek.com/tesco-sees-strong-
online-growth-but-is-planning-for-all-eventualities/>.
Dudovsky, J. ,2017,Tesco segmentaion,[Online]. Available Through:<https://research-
methodology.net/tesco-segmentation-targeting-and-positioning-2/>.
Expert Commentator , 2017, How tesco refreshed their marketing strategy, [Online]. Available
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tesco-turned-marketing-strategy-around/>.
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