Marketing Report: Tesco's Strategies and Buyer Behavior

This report provides a comprehensive analysis of Tesco's marketing strategies, examining the influence of micro and macro environmental factors on its marketing decisions. It explores segmentation criteria for entering new markets, proposes targeting strategies for specific products like its mobile division, and demonstrates how buyer behavior affects marketing activities across different buying situations. The report also suggests new positioning strategies for selected products, considering factors such as customer psychology, social trends, and personal factors. The analysis covers key aspects of Tesco's operations, including its responses to political, social, technological, environmental, legal, and economic factors. The report provides insights into how Tesco can effectively adapt its strategies to meet changing consumer demands and maintain its market position.

TESCO

Table of Contents
INTRODUCTION ...............................................................................................................................3
TASK 2.................................................................................................................................................3
2.1 Influence of macro and micro environmental factors which influence marketing decision in
Tesco................................................................................................................................................3
2.2 Propose segmentation criteria to be used by Tesco while entering different markets..............4
2.3 Choose a targeting strategy for a selected product of Tesco.....................................................5
2.4 Demonstrate how buyer behaviour affects marketing activity in different buying situations...5
2.5 Propose new positioning for selected product...........................................................................7
Conclusion............................................................................................................................................7
REFERENCES.....................................................................................................................................7

Illustration Index
Illustration 1: Tesco Club Card.............................................................................................................7

INTRODUCTION
Marketing principle help to optimize the performance of product and to increase the
products share in the market. Tesco is the lead retailer in the United Kingdom. To understand
Tesco's marketing principle it is important to study the affect of various market forces that influence
sale of its product. Various marketing strategies are researched in the project which allows the
product to reach its best user. Buying behaviour of consumers is discussed to understand what
factors are directly influencing minds of customers (Grinstein, 2008). This strategy helps to
promote the product iun a better way and also boost sales. Segmenting the market helps to target the
audience to position the respective product in the eye of the customers
TASK 2
2.1 Influence of macro and micro environmental factors which influence marketing decision
in Tesco
Both internal and external factors affect the business cycle of the company. These factors are
easily studied through micro and macro environmental analysis. Micro environmental factors
affecting Tesco are mentioned below as- Suppliers- They have a low bargaining power over Tesco as company provides high
volumnised orders to the suppliers. Tesco is the leading Multi-Channel Brand in UK,
therefore, suppliers are loyal in providing on time delivery to the company. Customers Power - Customers want best services and products at the lowest price. Tesco's
growth and sales will depend totally on the customer's buying capacity. Young generations
demand for innovations which provide new target to the company (Martin, 2009). Competition- Due to High set up cost, new companies are hesitant to compete with the
pricing of Tesco. Biggest competitors of Tesco are ASDA and Sainsbury; both retailer are
trying to raise their market share along with getting the competitive advantage.
 Shareholder- They are the stockholders of company. They influence the decision making
process of company as they buy shares which give rights to him or her to get participation
in the decision making process (Smith, 2006).
Macro enviromental factors affecting Tesco are explained with the help of Pestel analysis-
 Political Factors - Tesco has to face many issues due to change in political policies,
government structure, tax rates, inflation rates and instability in the government of UK . Social Factors – It include the factors such as lifestyle, behaviour, attitude and social class
of individuals (Anandan, 2009).

 Technological Factors - Tesco is focused on understanding the demand of technology
available in the UK market. Introduction of online shopping facilities like pay as you go,
pay monthly and home delivery are the important features which need to be considered by
the management of company. Environmental Factors - Company is struggling to make efforts in order to protect and save
the environment by generating renewable electricity and using solar panels.
 Legal Factors - Legal policies such as employment policy, labour policy and data
protection act are necessary to be followed by Tesco at the time of performing its business
practices (Siomkos, 2009).
 Economic Factors - Issues affecting company are leverage costs, demand, profits and prices.
Uncertainty, financing and funding of money are caused by the fluctuations in the economy
to a higher level.
These factors affect company through both internal and external way. These factors are to
be studied and taken care in order to avoid any loss in the business of Tesco.
2.2 Propose segmentation criteria to be used by Tesco while entering different markets.
By considering the present scenario, Tesco can make the use of demographic segmentation
in order to attract its targeted customers. Attributes that can be used in this segmentation are wealth
and age. Entering into new markets requires a study for the company to ascertain the wealth
capacity and age of individuals.
Wealth is an important factor as pricing of the product is totally dependent on it. Tesco will
have to segment the market depending on the earning capacity of individual i.e. students or working
class. Students are hesitant to spend more money especially when they are not employed. They
prefer low value products as compared to people who are already employed. Working class people
do not care about the price unless its too costly (Grinstein, 2008). They prefer to just buy whatever
they need to and do not much care about the product's cost.
Tesco's success in Asia and South Korea emphasis on the fact that age factor influences
directly on the business of company. Categorisation on age basis makes it easier for the company to
sell specialised products in an effective manner. People below the age of 18 do not indulge in
buying high price products whereas customers of age between 18-40 are interested to spend on
various luxury items (Brooks and Simkin, 2012). Selling of non food items is also affected by the
age segment. Children have tendency to buy only toys and gadgets while customers other than
children are interested in purchasing the products related to house and office cores.
These dimensions help Tesco to attract customers as well as manage stores in a proper way.
Company has made efforts to arrange items on the basis of customer's value. Further, organization

needs to analyse the consumer's behaviour based on their earning skills and age. Shopping habits of
consumers are affected by many reasons. Ability to spend is the number one criteria for the
segmentation of classes. Expansion in other countries or new market is only possible, when retailer
strikes to adopt the culture of the respective market. Entering into new market is an expensive
process. Various reasons affect the target market. In order to avoid these factors, in depth analysis
must be done which helps understanding the economy of the company.
2.3 Choose a targeting strategy for a selected product of Tesco
Tesco can use differentiated market approach to attract new customers for its mobile
division. Tesco has to focus on both young and old age group of people. Differentiated strategy
helps in the formulation of different promotion ways in order to charm both young and old age
market interests. More than one promotion ways need to be developed to attract both the different
targeted market.
In order to attract target market of young age group, company has to concentrate on making
the product of low cost. Applications for business and entertainment purpose must be created to
help the consumers. Apart from this, company is required to understand the issues of financing as
young consumers prefer contractual payment facility on yearly basis. Social media is a strong
platform to promote the mobile in front of target market (Jorgensen, 2012). Young age group is a
constant user of social media and they are easily attracted through this promotional way.
In order to indulge old age group with the mobile, company must make the product which is
easy to handle. Simple features should be in the mobile phones and operating system should be
simplified to service the basic purpose. Various features can be added to make the product more
attractive and associable. In case of old age group, they have issues with vision screens resolution
and size that could be modulated to suit their needs. Disability is an another major issue faced by
people after a certain age; to help them with this, disability mode can be added in the operating
system so as to make it easy to operate (Martin, 2009). Old age people are involved more in
commercials and digital prints. Therefore, catalogues and coupons can be printed in newspaper in
order to attract this age group. Hoarding and TV commercial are also helpful tools to attract the old
age group towards the product as it supports in communicating the message to the customers.
Differentiated strategy helps to easily differentiate the target customer group. This strategy
helps in developing mutual trust between company and target group. Tesco is able to study and
research the target market group in order to create personalised promotional strategy.
2.4 Demonstrate how buyer behaviour affects marketing activity in different buying situations
Buyer behaviour reflects the emotional and mental well being of the customer. The buying
behaviour in customers is affected by various reasons. Buying behaviour is a process of making the

right purchase. The process consists of problem recognition, information search, evaluation of
alternatives, purchase decision and post purchase behaviour. Buying behaviour is affected by these
mentioned factors-
 Psychological factors- These factor compromises of human thoughts and feelings. These are
the variables of human instinct that directly affect the attitude and behaviour of the
customer. Consumer psychology interrupts through their spending capacity (D'Esopo and
Almquist, 2007.). Tesco famous promotional product, Tesco Clubcard is an example of how
psychology affects the mindset of the consumers. Customers are attracted to save money and
earn points this mentality drives them to Tesco.
(Source: Philip Graves, 2013)
 Social Factors- Social attitudes of UK's society has affected the sales of Tesco. Consumers
taste and preferences are affected directly by the current trends floating in the market. Tesco
is famous for its exquisite food items and the food department is very much affected by
these trends. Rising demand for healthy and low calorie food items influences the
consumers choice.
 Advertisement- Buyers are 100% affected by the advertisement provided through different
media. Sales are affected directly through advertisement. Brands that have high budget
profile advertise more in the market. Private labelled brands are affected through this buying
behaviour (Brooks and Simkin, 2012). Consumers have a tendency to purchase the brand
which endorses itself more in the market.
 Personal Factors- These factors include variables like lifestyle, occupation and demographic.
Changes in lifestyle of consumers directly affect the buying behaviour. These factors are
seen in clothing products of Tesco. Change in fashion and seasonal variations influence the
purchase of clothes in the store. Young generation are known to quickly change their
preference of brand
Illustration 1: Tesco Club Card

These indicators must be acknowledged by the retailer in order to unde4rstand the latest
buying behaviour of consumers. As these behaviour are not stagnant in the retailing industries. New
factors and changes are always affecting Tesco.
2.5 Propose new positioning for selected product.
Positioning strategy helps the companies product to achieve a distinct brand image in the
market. As this strategy focuses directly on the characteristics of the product it is easy for customers
to locate which product they need to buy.
Positioning strategy is based on uses of the product. Use of a mobile can be for varied
reasons as each person has its different uses. In this advanced technological era, a mobile is used by
different sectors in many different ways. Youth uses it for education and entertainment purpose
whereas working class customers can use it for office purpose (Henley, Raffin and Caemmerer,
2011). Tesco has to position its product in each class in a way that everyone can understand how to
make best use of their mobile. The company must strike and place its brand perfectly in the market
in order to increase sales. For children the major use of mobile is for the gaming purpose. Couples
having family will insist on buying the mobile which has features where kids can play and enjoy.
This example shows hoe complex it is for the retailer to place the product in customers eye.
As mobile industry already have high competition level. Existing brands have already made
their position very clear in the eye of customer. Positioning is also important as it helps the
company to sale right product to right customer. To expand the share of the market it is important
for the company to introduce the uses to the customers (Anandan, 2009). Events or Exhibitions are
the tools that easily attract customers and also are platforms that help the customer to understand the
features of the mobile. Modules must be provided so as to understand the product
Positioning plays a very important role in mobile industry because of the varied uses of the
brand. Positioning the mobile to its correct user segment, will help to boost sale of the mobile.
CONCLUSION
The study shows what factors are influencing the sales in Tesco. Micro and macro
environmental factors both affect the companies objectives. These factors are intangible to the eyes
but have a influence on the business cycle of the company. The research also studies various
marketing strategies like Targeting, Positioning and Segmentation. This strategies help the company
to understand the consumers needs and also helps in improving the sales of the products.

REFERENCES
Books and Journals
Anandan, 2009. Product Management, 2E. Tata McGraw-Hill Education.
Brooks, N. and Simkin, L., 2012. Judging marketing mix effectiveness.Marketing Intelligence &
Planning.30(5).pp.494-514.
D'Esopo, M. and Almquist, E., 2007. An approach to mastering the marketing mix. Business
Strategy Series. 8(2). pp.122-131.
Grinstein, A., 2008. The relationships between market orientation and alternative strategic
orientations: A meta‐analysis. European Journal of Marketing. 42(½). pp.115 – 134.
Henley, N. Raffin, S. and Caemmerer, B., 2011. The application of marketing principles to a social
marketing campaign. Marketing Intelligence & Planning. 29(7). pp.697-706.
Kolassa, M. E. and et.al., 2012. Marketing: Principles, Environment, and Practice. Taylor &
Francis.
Martin, M.D., 2009. The entrepreneurial marketing mix. Qualitative Market Research: An
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Siomkos, G., 2009. Seven Principles of WOM and Buzz Marketing. Springer Science & Business
Smith, M., 2006. The ethics of business strategy. Handbook of Business Strategy. 7(1). pp.201 –
206.
Wise, R. and Sirohi, N., 2005. Finding the best marketing mix. Journal of Business Strategy. 26(6).
pp.10-11.
Online
Graves, P., 2013. The Psychology of Shopping: the Tesco Clubcard. Available Through:
<http://philipgraves.net/the-psychology-of-shopping-the-tesco-clubcard>. [Accessed on 14th
November 2015].
Jorgensen, K., 2012. 5 Ways Buyer Behavior Impacts Sales and 3 Things You Can Do About It.
Available Through: <http://philipgraves.net/the-psychology-of-shopping-the-tesco-clubcard>.

[Accessed on 14th November 2015].