Tesco's Marketing Mix and STP Analysis: A Detailed Report

This report provides a comprehensive analysis of Tesco's marketing strategy and its effectiveness, utilizing tools such as SWOT analysis, STP (Segmentation, Targeting, and Positioning), and the marketing mix. The SWOT analysis identifies Tesco's strengths, weaknesses, opportunities, and threats, providing insights into its internal and external business environment. The STP approach examines Tesco's market segmentation, targeting strategies, and positioning tactics, highlighting how the company aims to meet customer demands. Furthermore, the marketing mix analysis delves into Tesco's pricing, product, place, and promotion strategies, evaluating their impact on revenue generation and customer attraction. The report concludes with recommendations for enhancing Tesco's marketing strategy to maintain its competitive edge in the retail industry. Desklib is your go-to platform for accessing more solved assignments and study resources.

MARKETING
MANAGEMENT

EXECUTIVE SUMMARY
The study is based on analysis of marketing strategy and their effectiveness for an
organisation. In order to identify the effectiveness, internal and external business environment
and competitive position of the company in the industry, there are several tools and techniques
which are implemented in this report.
In order to identify business environment, a detailed SWOT analysis has been discussed
which defines numerous strengths, weakness, opportunities and threats by examining the
business environment. These are internal and external factors which are responsible for
influencing the business environment. With the help of this framework, the organization will
analyze the strengths of business, identify opportunities which can be targeted to gain
competitive advantage for business. This model will also help in determining weakness for
which improvement strategies can be formed. This framework is also helpful in identify sources
which can possess threats for the organization and can create a negative impact on the operations
and continuity of business functions.
This report will also outline marketing strategy such as STP approach which will be used
to analyze the effectiveness of the marketing strategy of business. With the help of STP
approach, the company will analyze the market segmentation strategy which will be helpful in
targeting the market segment effectively. This framework will also help in define the positioning
strategy which is followed by the organization to target customers and meet customers demands.
Lastly, the report will define marketing mix which will help the organization in
identifying various factors which are helpful in meeting customer demands. This model is
helpful for analyzing factors such as process, place, product and promotion strategy of business
through which they can generate higher revenues and attract grater number of customers. This
model will also help in identifying the promotional strategy followed by the company through
which customer attention can be grasped and effective marketing strategies can be formed and
executed.

Table of Contents
EXECUTIVE SUMMARY...........................................................................................................2
INTRODUCTION.........................................................................................................................4
TASK..............................................................................................................................................4
SWOT analysis of Tesco.............................................................................................................4
STP approach of Tesco................................................................................................................7
Marketing Mix of Tesco..............................................................................................................8
Recommendations......................................................................................................................10
CONCLUSION............................................................................................................................11
REFERENCES............................................................................................................................13

INTRODUCTION
Marketing management is the organizational discipline which emphasis on practical
application of marketing orientation techniques and approaches followed by an organisation. It is
the process of controlling the marketing aspects defining organizational objectives in organizing
a plan through a step-by-step procedure by taking decisions and through executing such action
plan in order to meet consumer demand and objectives of business (Adams, Freitas and Fontana,
2019). Marketing management is the approach which offers opportunity that can be profitable for
business in satisfying the customers. As it is a customer-oriented approach, it supports the
organisation to meet the needs and expectations of customers in order to meet all shortage which
can be faced by an organisation. The strategy is based on product, price, place and promotion
which is used to attract customers generate higher revenues and maximize business profitability.
Tesco PLC is a British multinational company which is operating in retail Industry. The
company offers groceries and general merchandise. Tesco was started by Jack Cohan in 1919
and there are several subsidiary companies which are started by Tesco such as- Tesco Bank,
Tesco mobile, Tesco Ireland and many more. The company offers products through
Supermarket, Hypermarket, super store and convenience Store.
This report outline effectiveness of marketing strategy followed by Tesco with the help of
various tools techniques and models. In order to analyze the competitive organisation
environment, the environmental analysis tool- SWOT analysis of Tesco will be discussed.
Further to gain better insight of STP strategy of marketing will be used. At last, the project will
outline marketing mix strategy and some recommendations which will be helpful for enhancing
marketing strategy of business.
TASK
SWOT analysis of Tesco
SWOT analysis is a strategic planning technique which is implemented by an
organisation to analyze and evaluate their strengths, weakness, opportunities and threats in
relation to business competition or project planning (Aghazadeh, 2015). This framework is used
to examine and identify organizations competitive position.

A briefly discussed SWOT analysis in relation to Tesco has been explained below:
STRENGTHS
 Vast network of stores- Tesco has
vast stores operating in UK, this has
been an advantage in terms of scale in
negotiating power of the company
(Chernev, 2018). This strength
supported company to negotiate
favorable contracts with suppliers and
ensure continuous efficiency
improvement.
 Unique profit model- The unique
profit model of Tesco is a strength for
the company, as it collects sales tax
and VAT from their customers which
is helpful in strengthening and
increasing the net sales revenue by
1%.
 Effective expansion strategy- The
expansion strategy of operations of
Tesco in developing countries has
been effective and acted as strength
for the organisation. This supported
the organisation in creating a presence
in the online retail market.
 Incorporation of technology- The
use of technology has been a strength
for Tesco which supported the
company in enhancing shopping
experience of the customers through
which the organisation can meet
WEAKNESS
 High dependency on UK market-
The incline in international business of
Tesco has created heavily dependency
on the UK market which has acted as
weakness for the organisation. This
also influence the business if the
economy condition of the market is
slow.
 Legal combats- Tesco has faced
several legal battles and fight against
violation charges has also increased
which created a negative impact on
the brand name and reputation of the
company in the industry.
 Poor operational performance in
specific markets- Tesco's stores and
food outlets are underperforming in a
few countries (Chonko and Hunt,
2018). According to analysts, Tesco
did not perform enough market
research prior to entering these
locations.
 Financial errors- Tesco's financial
profits have been deeply affected by
its massive debt and credit card
problems.

demands of the customers in timely
manner and indulgence in business
success.
 Efficiency of operations- With the
help of automatic parking systems in
some stores and with the use of
effective technology, this has acted as
strength for Tesco which resulted in
incline efficiency of the operations
performed by the company.
OPPORTUNITIES
 Use of online platforms- Due to
enhancement of technology, the
company has spent a significant
amount of money on their online
platform which is opportunity for the
business for the new distribution
platform (Hua, 2019). This helps
Tesco in understanding their
customers and meeting their needs
with the help of Big data analytics.
 Incorporating new environmental
policies- Tesco implemented new
environmental policies which has
acted as opportunity for business to
capitalize its edge in emerging
technology and gain market share in
new product segment.
 Differentiated pricing strategy- The
company also adopted differentiated
pricing strategy which has been in
THREATS
 Incline in tariffs- Tesco has faced
many challenges due to suspension of
EU's free trade agreement. By
adopting these new rules, it can result
to incline in tariffs, quotas and custom
inspection. It is also responsible for
creating negative impact on the supply
chain management and distribution of
Tesco.
 Economic downturn- Another major
threat is economic downturn which
has led to decline in buying power
(Keller and Kotler, 2015). Such source
affects Tesco profits, increases
unemployment and creates a layer of
financial uncertainty for the customers
of Tesco.
 High competition- High competition
in the marketplace is another
responsible factor for influencing the

opportunity for the organization.
Tesco focuses on offering excellent
services which will be helpful in
attracting new customers by adding
value added offerings.
profitability, sustainability and success
of business. As Tesco is operating in
retail industry, there are several other
companies which process high
competition and threat to the
organization and such threats can
affect customer loyalty and
engagement which will directly create
a negative impact on revenues and
profits earned by Tesco.
STP approach of Tesco
STP is a marketing approach which is a three-step model used to analyze and examine
the products and services and share those benefits to customers in order to meet organizational
objectives. It focuses on creating interpersonal relationship with customers which will be helpful
in strengthening the competitive and financial position of business within the industry.
A detailed STP analysis of Tesco has been discussed underneath:
Segmentation- Market segmentation is the process of determining the behavior and
demands of numerous consumers. Tesco leverages consumer data from its loyalty card system to
determine purchasing patterns and behaviours, which are then used to segment customers based
on their needs (Kerr and Patti, 2015). Tesco's customer base is a budget-conscious consumer who
values variety of options and is interested in discounts and deals. Consumer buying behavior has
significant effects on the business operations in a wide range of instances.
Targeting- Tesco uses a mass marketing strategy to reach out to its consumers. A mass
marketing strategy aims to ignore market segment differences and target the whole market with a
single offer. Rather of focusing on what customers have in common, it concentrates on what they
don't have in common. Tesco does not differentiate between the kind of clients it serves; instead,
it serves as many as possible (Krasyuk and et.al, 2017). Most customers come to Tesco for a
common need, which is a low-cost product; as a result, Tesco, as a discount store, wants to offer
a bigger number of customers with similar needs rather than discriminating them.

Positioning- The need of providing appropriate tools for analyzing corporate requirements in
relation to the industry is emphasized by competitive positioning. Furthermore, the degree of
choice that separates unique items from their rivals emphasizes competitive positioning.
According to Porter's approach, an organization's position is effective if it considers its
environment. Using Porter's Generic Strategy Framework to build a strategic fit between the
environment and the organisation is another way to get a competitive advantage. Tesco promotes
itself as a low-cost retailer by advertising “cheapest price every day” on a variety of products in
its stores. This technique has shown to be highly effective in the market, attracting a large
number of customers who are looking for low-cost items (Obradović, Kostić and Mitrović,
2016). As a result, a customer perception such as "Tesco sells lower-priced products every day"
would develop. Tesco has a customer loyalty programme that rewards customers after a certain
amount of time has passed. Customers will receive points in this incentive programme based on
how much they spend. Tesco will then send the customer a cash voucher for the value of the
point they earned. Tesco is using this strategy to represent itself as a company that values its
customers and offers them with rewards if they continue to shop there.
Marketing Mix of Tesco
Marketing mix is a foundation model of business which involves a set of actions or
tactics used by an organization in order to promote their products and their brand in the industry.
In other words, it is also known as set of marketing tool which is used by an organization for
completing marketing objectives in the target market to maximize business profitability and
work towards business success. There are several factors such as- price place, product and
promotion which are identified with the help of marketing mix tool.
A detailed marketing mix in relation to Tesco has been mentioned below:
Price- The pricing strategy of Tesco is cost leadership. By following cost leadership
strategy, Tesco maintains to offer products at low price without sacrificing with the quality. With
this pricing strategy, Tesco manages economy of scale and work regularly and collaboratively
with their suppliers to ensure effective supply chain management which leads to reduction in
prices (Park, 2020s). However due to high competition in the industry, such sources can also
influence the pricing strategy of Tesco and in order to face the challenges Tesco plans major
price wars against the discounters. National brand products are not eligible for cost-based

pricing, only Tesco own label items are. This is due to the fact that Tesco prices its own-brand
goods based on its production expenses. As a result, Tesco brand products are 30-40% less
expensive than national brand ones. Another pricing strategy of Tesco is cost-plus pricing
strategy for competing with other businesses. Cost-plus pricing is a pricing strategy in which a
standard markup is added to the price of a product. Good-value pricing was Tesco's most recent
pricing policy. Good-value pricing offers the perfect mix of quality and value for money. Tesco,
for example, offers various goods at reduced costs on a regular basis.
Place- Tesco uses two main channels of distribution which are online and offline
channels. The company have 7000 offline stores which are operating all around the globe
through different mediums such as- Tesco Express, Tesco Metro, Tesco Extra, Tesco Superstore,
Tesco Compact and Tesco Homeplus (Parsons and Lepkowska-White, 2018). The online
medium a business of the company is known as Tesco direct. With the help of online and offline
mediums/channels this supports the company in reaching out to the customers and meeting their
demands regularly.
Product- Tesco is one of the leading giants which offers broad variety of products, such
as groceries and general merchandise. Tesco offers a variety of products which involves clothing
stationary cosmetics food electronics and financial services. The company also offer products
with their own brand range which are everyday value Tesco Lotus Tesco value and F&F
clothing. In order to attract high number of customers and to build customer loyalty, this helps
Tesco in offering value added services such as free parking, baby room, customer services and
fully air condition stores. Tesco noy only offers groceries and merchandise, it also offers several
range from food to electrical products, household goods and furniture. Tesco stores offers 70%
of food products and 30% of non-food products. Even the company do not put much more
emphasis on product quality, whereas they make sure that the quality and quality of their goods
are offered at acceptable margin.
Promotion- Tesco has a strong brand image, which helps with its marketing efforts
substantially. Television, newspapers, and other kinds of media are used by the company to
interact with its customers. In addition to advertising, Tesco uses a number of promotion
strategy. A loyalty card is also included in the promotion strategy of the company (Marketing
Mix of Tesco, 2021). Tesco Clubcard holders receive points every time they purchase, which

may be redeemed for discounts. Personalized discounts and offers are regularly sent to them. To
maintain its brand image consistent in the minds of customers, Tesco employs a few components
of the promotional mix to connect with customers, including sales promotion, advertising, and
public relations.
Recommendations
Some of the recommendations which will be helpful in enhancing the marketing strategy
and its effectiveness for Tesco are outlined below:
 Identify the target audience- It is important for Tesco to identify the target audience in
order to implement an effective marketing strategy. This will help the organization in
shaping productive marketing strategy which will be helpful in meeting customer
demand, increase customer loyalty and retention that well lead to benefit for the overall
organization.
 Focus on creating effective content- As content is one of the important elements for
marketing, Tesco must focus on their content marketing by ensuring effective writing and
offering opportunity for developing faulting content which will be helpful and lasting
customer retention (Tan and Vicente, 2019). Such content is the core strategy for
effective marketing, Tesco must higher employees who can effectively perform all
required for functions which will be an advantage for increasing the profitability and
productivity of business.
 Promote by collaborating with influencers- Social media has covered geographical
area and is one of the easiest approach to grasp the customer attention and increases
number of customers for an organization. In case of Tesco, the company must promote
their products and services by collaborating with influencers who has potential of
creating the impact on business which will be helpful in gaining competitive advantage
and attracting customers from larger and wider geographical area.
 Focus on resolving consumer problems- Conflict resolution plays an important role in
an organization. In case of Tesco, the company must focus on solving problems in
concerns of their consumers which will be helpful in gaining back customer trust and in
retaining high number of customers (Tanasiichuk and et.al, 2019). The company must
encourage their employees to work collaboratively which will be helpful in resolving

many issues. Tesco must focus on finding solutions for customer services which will help
them in meeting all organizational objectives.
 Use big data to target audience- With the help of big data, Tesco can target specific
customers and forecast the buying patterns of consumers through which they can
regularly meet consumer demands. This will be helpful for Tesco to connect with their
customers before they search for products and services.
 Engage through social media platforms- As the era of digitalization has been
increasing, this led to incline in engagement of customers on social media platforms
(Visconti, Peñaloza and Toulouse, 2020). Tesco must use social media platforms which
will be helpful in targeting higher number of audiences in greater geographical area and
this will create a possibility of earning higher revenues and maximizing business success.
 Measure returns on marketing investments- In order to attract new customers, this will
involve high cost. Customer experience is one of the factors which encourages people
how to work continuously and effectively in the organization where search experience
can be helpful in answering business profitability, customer engagement, business
awareness, acquisition and consumer loyalty to the brand.
 Control cost- Controlling cost for various functions in operations of business will be
helpful in creating smart watches. In terms of Tesco, the company control cost which
supports them in investing their financial resources where they can generate high
revenues and maximize business profitability.
 Enhance customer experience- The company must focus on enhancing customer
experience which will be helpful in strengthening the brand image in the industry. In
terms of Tesco, the organisation must strategically plan their operations to meet customer
demand by regularly forecasting demand and such strategies will be helpful in enhancing
customer experience (Weinstein and Pohlman, 2015). The company will also focus on
quality and quantity offered by the organisation which will support in enhancing
customer experience as this will lead to strengthening the brand image, creating goodwill,
generating leads and retaining high number of customers.
CONCLUSION

By analyzing and understanding the above-mentioned information, it can be concluded
that marketing is one of the practices followed by a business which supports them in promoting
and positioning their products and services through which business can gain competitive
advantage and ensure business success. It can be analyzed that Tesco has gain several advantages
from their strengths, such as strong and vast network, effective supply chain management, us of
advanced technology, unique profit model and may others. Some other forces such as online
presence with the help of online mediums, collaboration with influencers will be helpful for the
organization in generating leads and working towards the progress of business.
It can also be evaluated that high competition and legal threats are some of the threats and
challenges which are aced by the organization while operating within the retail industry. The
company follows cost pls, competitive and good pricing strategy which helps the organization in
managing to earn profits from their operations and focus on enhancing the efficiency of
operations. Tesco uses traditional as well as modern approach of promotion through which they
can engage with greater number of people and target audience form larger geographical are
through which they can make progress towards business success and excellence.