Marketing and Markets: An Analysis of Tesco's Strategies

This report provides a comprehensive analysis of Tesco's marketing strategies, focusing on the application of the Segmentation, Targeting, and Positioning (STP) model within the context of its competitive environment. The executive summary highlights key marketing issues affecting Tesco's strategic position, including competition, loyalty programs (like the Clubcard), and pricing strategies. The report delves into the concepts of segmentation, targeting, and positioning, examining Tesco's approach to gain a competitive advantage, utilizing geographic, demographic, and psychographic segmentation. It addresses the challenges associated with STP, such as understanding consumer behavior and the potential for overlooking market segments. Furthermore, the report offers strategic recommendations for Tesco to improve its current approach, including leveraging social media for advertising and implementing effective customer relationship management. The analysis includes both internal and external factors influencing Tesco's market position. The report concludes with a discussion of how Tesco can refine its STP strategies to enhance its market share and brand image.

Marketing and
Markets
(TESCO)

EXECUTIVE SUMMARY
It can be evaluated from the study that business analyses regarding the marketing
environment in which it operates. Therefore, it is essential for firm to undertake different
marketing concepts so that competitive advantage can be gained by firm. Further, STP needs to
be effectively implied to Tesco that helps in determining its effectiveness in order to attain
desired goals. Also, SAFe model has been implemented in regard to Tesco so that better
decisions can be made in regard to suitability, feasibility and acceptability. Tesco undertakes
different marketing strategies which are different as compared to its competitors and also faces
certain problems and issues with its marketing tactics as they possess the pressure of their rivals
at the time of making business strategies. However, Tesco possess its own brand identity in
market but still it faces problems of marketing such as price issues, new rivals, buyer shopping
behaviour etc. Further, Tesco undertakes different diversified marketing strategy such as STP as
compared to its rivals because it possess unique brand image in market. Club card is the best
marketing tool adopted by Tesco that helps them to give unique identity to their loyal consumers
and satisfy their needs. Also, it can be stated that marketing concept is encouraged in
organization then it is referred as strategic marketing. Furthermore, concept of marketing
depends on internal and external environment which facilitate proper formation of strategies that
can be beneficial for accomplishment of company’s objectives. Further, there are different issues
that were found in the enterprise such as lack of training and hiring mistakes, providing
ineffective customer service, threat of new competitors available in market, fluctuations in prices
etc.
Further, it has been founded that Tesco is undertaking STP process and thus provide
competitive advantage for firm in order to gain market share and brand image. Moreover, in the
current study both internal and external analysis has been carried out in order to analyze the
market environment. However, it can be assessed that business is required to use STP strategies
in order to implement effectual tactics for future course of time and thus implement within firm
to attain objectives. Business can become market leader through segmenting its client base and
providing them suitable products in order to satisfy their needs. Also, business positions its
strategy through social media marketing and attracts youth. At the end, report also provides
recommendation in order to counter the STP issues such as firm should provide advertising on

social media so that they can effectively communicate with consumers, benchmark effectual
customer relationship management so that best strategies can be attained.

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1 MARKETING ANALYSIS..............................................................................................1
Key marketing issues affecting the organizations strategic position and their significance. .1
TASK 2 UNDERSTANDING STP.................................................................................................3
2.1 Concept of Segmentation, Targeting and Positioning and their challenges.....................3
2.2 Tesco’s Segmentation, Targeting and positioning approach to gain competitive advantage
................................................................................................................................................4
TASK 3 STRATEGIC RECOMMENDATIONS...........................................................................5
3.1 Tesco improving its current approach to Segmentation, Targeting and Positioning.......5
3.2 Recommendations............................................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
Organization's marketing environment................................................................................14

INTRODUCTION
The present report is based on strategic marketing and relationship among corporate
strategy and marketing strategy of Tesco (Baig and Akhtar, 2011). Along with this, it also
focuses on internal and external environment encircling organization that it greatly impacts the
firm and its operations. At last the report covers some marketing strategies with their application
and implementation within company (Ambler, Kokkinaki and Puntoni, 2004).
TASK 1 MARKETING ANALYSIS
Key marketing issues affecting the organizations strategic position and their significance
After analysing the different marketing environment in the Appendix it can be assessed
that Tesco adopts different marketing strategies in order to promote business.
 Competition- Business owns around 30% of the market share in the UK retail industry
and aims to gain more consumers from home country and then concentrate to the other
countries so that they can enhance the customer base. For this they are making huge
investment in market and carrying out business operations. Tesco faces competition from
different retailers such as Asda, Sainsbury's Aldi, Morrison, Lidl etc as they are offering
products at low prices in order to attract consumers and satisfying their needs (Allio,
2005). Further, Tesco introduces new strategy in market i.e pay less for quality products
as compared to rivals.
 Loyalty card- It is an effectual marketing strategy adopted by business to attract
consumers and enhance market share. Tesco was the first retailer to introduce loyalty
card scheme for its clients. Tesco club card is the most effective marketing tool to
influence consumers and increase loyal customers in the business (Baig and Akhtar,
2011). Main importance of introducing loyalty cards is that it helps in providing benefits
to consumers and improve the business performance by attracting wide range of target
consumers and satisfying their needs.
 Pricing- Tesco faces tough competition from Wal-Mart which is a big competitor and
thus sells similar products therefore, it is essential for Tesco to cut its cost and negotiate
with suppliers in order to grow the market share. Also, firm uses diversification strategy
in order to expand the business into overseas market such as Tesco bank, insurance and
telecom services (Amalesh, 2011).
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 Business faces issues from the new entrants in market such as Wal-Mart as it buys Asda
in UK that raises main issue for Tesco as it needs to redevelop its marketing tactics.
Further, business faces issues regarding marketing as it is necessary for firm to develop
its marketing campaign because of wide range of competitors present in market and using
different promotional technique to enhance customer base. Thus, Tesco faces marketing
issues.
 Tesco faces issues at the time of targeting the market segment in order to sell the products
and services (Curtis, 2007). For instance, business targets their customers as per their
wealth through its club card database as firm has distinguished its customers on the basis
or rich and poor as per their earlier spending. Thus, here firm faces issues at the time of
targeting specific market and ignoring the rest of the market. For instance, if any body
building tonic is marketed by the company to only the gym going persons and not others
than it affects the needs of other people who need protein diet. However, it is essential for
business to market its products and services to the target market and for that firm is
required to undertake effectual marketing strategy. Thus, it faces issues for Tesco to
attain desired goals.
TASK 2 UNDERSTANDING STP
2.1 Concept of Segmentation, Targeting and Positioning and their challenges
However, it is essential to understand segmentation, targeting and positioning in such
competitive market so that firm can measure competitiveness in the market especially at the time
when competition is very high.
 Segmentation- Market segmentation can be stated as the method of sub-dividing the
market into different homogeneous sub sections of customers. Thus, through developing
particular marketing mix it helps in selecting a specific target market. However, it is a
process that helps in dividing the market into different sub groups of consumers with
same requirements (Islam, 2003). While carrying out segmentation, business tries to
separate the particular group of people with particular requirement and firm believes that
they will respond quickly to the product. Main purpose of carrying out segmentation is to
assess the particular group of people where possibility of selling the product is high.
Segmentation can be divided into demographic, geographic, behavioural and
psychographic. For instance, if Nike launches a new product such as athletic design shoes
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its focus is on sports persons such as cricketers in order to attract them for newly launch
shoes and gain high market share. Furthermore, market segmentation in the retail clothing
business are often based upon the gender such as Zara deals in fashion industry and thus
geographic segmentation is very crucial for Zara as they target young women to sell
fashionable clothing to them (Clark, 2000).
 Targeting- It is the process in which firm select such market segment and then design the
products and services in order to personalized for each segment. However, targeting is
not the same as market segment allows firm to focus upon the specific market which is
more likely to purchase the specific product from firm. For instance, Nike company
produces best athletic shoes and make the products targeting for the sports person or
other consumers who are fitness freak such as routine joggers, gymers etc. to buy the
products because they need such shoes for running (Rhee and Mehra, 2006).
 Positioning- Within such strategy it states that the business aim to focus its image in the
minds of consumers. However, it helps firm to carry out the process and attract
consumers to buy the product because of the brand image, reputation of firm in market.
For instance, whenever any consumer thinks of buying smart phone it thinks of Apple
iPhone as company has created such a unique position in the minds of consumers and
provide suitable products to attract large market share. Further, effective positioning
strategy helps in considering the cost, quality, flexibility and services of the product
which are unique from its rivals (Walter, 2011).
 Key issues with STP- STP can be stated as crucial marketing tool that helps firm to attain
goals. On the other hand, understanding consumer behaviour requires deep vision as it
helps firm to sell their products in market. Further, STP has its own issues which vary
from firm to firm or it depends upon their strategies they made. For example, in
segmentation it is difficult to select the demographic consumers as Zara mainly
undertakes demographic segmentation as attracts young women to purchase the clothes
(Pride, 2010). However, it is difficult to undertake physiographic segmentation of
consumer because female choice differs from one region to another. Thus, such issue
raises problems for the company.
 Furthermore, at the time of targeting a specific market it means that firm is ignoring the
rest of the market. Thus, it states that the market which is not targeted will respond
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quickly as compared to the target market. As Nike just targeted the athletic people rather
than other people who are fitness freak but they could respond to it quickly because of the
promotional campaign or celebrity attraction. Thus, company losses the potential
consumers while targeting the specific consumers (Jaakkola, 2006).
 Another issue relates to positioning strategy which arises issues because it is the
consumer perception towards the company therefore, it is essential for firm to make a
strong brand image or logo and develop a new message that helps in changing the mind-
set of consumers. Hence, it is crucial for firm to come up develop effective feature of the
product which already exist in the market in order to gain the market share and enhance
consumer base (Salaimeh, 2008).
2.2 Tesco’s Segmentation, Targeting and positioning approach to gain competitive advantage
 Segmentation of Tesco- STP marketing strategies is the best as it helps Tesco to analyse
the consumer base and sell the products and services. For instance, in order to launch
unique product of Tesco, it uses effective STP strategy and attract consumers. Firm uses
geographic segmentation i.e. UK as a region, demographic segmentation such as age,
gender such as focusing upon students or older people. Furthermore, psychographic
segmentation such as lifestyle of people and assess shopping behaviour of consumers in
UK market (Walker and et. al., 2006). For instance, Tesco provides products and services
for every age group and thus satisfy their needs.
 Targeting of Tesco- Business targets its consumers as per the wealth, thus it takes help of
club card database system that helps firm to divide its consumer upon different categories
such as rich and poor. It helps Tesco to differentiate their clients upon its different
categories such as Tesco Everyday Value and Tesco Finest product that clients can buy as
per their wealth. However, with the help of club card, company can determine the
spending behaviour of its clients and now customize its website in order to target
potential consumers as club card provides data regarding the loyal customers only (What
is Marketing Strategy. 2013).
 Positioning of Tesco- Business positions its products with the help of marketing mix
strategy in order to attract consumers in an effective manner. Tesco uses price positioning
strategy to sell its product range and overcome rivals. Firm also adopts competitors
positioning strategy in order to target right people by providing right price as compared to
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rivals such as LIDL, Asda, Wal-Mart etc. (Mentis, 2013). Tesco positions itself in the
minds of consumers by delivering quality products at affordable prices. However, it
carries out price positioning strategy which helps in developing effective prices as
compared to Lidl and Aldi and thus helps Tesco to enhance consumer base. For instance,
consumer should adopt Tesco for carrying out their shopping because they are providing
quality products and services at affordable prices as compared to other rivals such as Aldi
and Lidl.
TASK 3 STRATEGIC RECOMMENDATIONS
3.1 Tesco improving its current approach to Segmentation, Targeting and Positioning
Following are the current STP strategies that Tesco uses in line but in order to enhance it
to get high market share and attract more consumers. STP options Tesco may consider certain
recommendations options such as-
 Segmentation options- Tesco is required to consider behavioural segmentation within
segmentation strategies such as how many loyal clients with positive behaviour purchases
company's products. While, another option is Tesco is required to develop their
segmentation through analyzing consumer shopping behaviour as it has direct connection
within marketing process (Baig and Akhtar, 2011).
 Targeting options- Business is required to adopt effective targeting strategies in order to
target students or old people as per their product line but on the same side firm are not
able to target their loyal consumers and thus losing the same. Second option is that Tesco
could develop targeting strategy in order to target the business people as per their demand
of products through both ways online as well as walking in the store (Ambler, Kokkinaki
and Puntoni, 2004).
 Positioning options- It states that position strategies impact upon the consumers as Tesco
uses experiential positioning or product based positioning as the position is all about
dealing individual product of marketing mix. For instance, as per the CEO of Tesco it is
essential for firm to develop strategies through considering the qualities and quantities of
product and develop the brand in market. Business develops its products by considering
the target market and enhances the good quality product available at low prices
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(Drummond, Ensor and Ashford, 2013). Business uses effective measure such as
delivering quality products at cheap prices and thus attracts consumers to enhance sales.
 Tesco segment its market based on demographics and income level. Thus, it helps them
to segment its market i.e. old people and provide them required products in order to
satisfy their needs (Drummond, Ensor and Ashford, 2013). Tesco attracts targeted
segment as per their demographic and income level. For instance, firm is required to
attract each and every age people so that required products can be provided.
3.2 Recommendations
For company like Tesco, its marketing STP objectives are:
 Segmentation recommendations- As Tesco is enlarging its business activities it is
essential for firm to capture both home market and international market in order to attain
success. For instance, firm is required to grow its branches in India, Bangladesh, Pakistan
as there is no big retailers. However, business faces issues in UK market but in order to
overcome this, firm is required to expand its operations in worldwide market as it is the
era of globalisation and each and every competitor is trying to move outside the country
to enhance consumer base. Moreover, business is facing issues in the UK market as there
are high competitors available in business such as Aldi and Lidl and thus attracts
consumers by providing best discounted products.
 Positioning recommendations- It is essential for Tesco to develop quality product and
provide it at best prices as compared to rivals in order to build brand image in market. For
instance, because of such marketing strategy people buy Tesco's products and enhance
sales and profitability (Doole and Lowe, 2008). Targeting recommendations- Business is required to target the geographical segment
consumers outside UK such as India, Bangladesh as these economies are developing and
attract other target segment such as students in order to enhance market share. Business
adopts advertising strategy as it helps them to attract customers and capture high market
share.
Further, firm can apply SAFe model so that results can be attained-
 Suitability- Expanding in region like India is suitable for company as the country
possesses second highest population in the world after China. This gives huge
opportunity to company in boosting its sales volume. From this, the company is able to
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enhance its market share along with profitability which will assist it to sustain for longer.
Expanding in region like India will act as a base for company in South Asia through
which it can enter into nearby economies for example Pakistan and Sri Lanka (Wilson,
2005).
 Feasibility- Considering the feasible aspects of expanding Tesco in India, there exist
certain issues. India, being a democratic country, has a policy of 51% in the multi brand
retail which act as a barrier for Tesco. Due to this, Tesco need to enter into joint venture
with local company of India in 51:49 ratio. From this, profit from this market will be
distributed that leads to low return on investment. This is one of the limitation from
Indian market which will not be fruitful for shareholders. However, fact cannot be denied
that there is huge market opportunity in India as company retail sector here is highly
unorganized. Also, there is no international player in retailer which can give huge growth
rate to the company. Therefore, it is feasible to expand the operation of Tesco in Indian
market.
 Acceptability- In addition to it, recommendation of opening store in India is highly
acceptable from shareholder point of view as well. Through this market entry move,
Tesco will be able to conquer higher market share and growth potential.
CONCLUSION
Strategic marketing plays an important role for organization by aligning objectives of
organization with marketing goals to systematically gain company’s goals. The leading retail
firm Tesco is trying to overcome its losses in all its subsidiaries by providing products to
customers that are beneficial to them and satisfy their requirements.
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