Principles of Marketing Management: Tesco Plc Marketing Audit

This report presents a comprehensive marketing audit of Tesco Plc in the UK market, examining both its micro and macro environments. The analysis begins with a company background, providing context on Tesco's operations and cross-functional associations. The macro-environment is assessed using PESTEL analysis, evaluating the impact of political, economic, social, technological, environmental, and legal factors on Tesco's business. The report highlights key influences such as government policies, economic downturns, changing consumer preferences, technological advancements, environmental concerns, and legal regulations. The micro-environment is then explored through the McKinsey 7S Framework, dissecting Tesco's strategy, structure, systems, shared values, skills, style, and staff. The report provides insights into Tesco's cost leadership strategy, organizational structure, and other critical internal factors, offering a holistic view of its marketing performance and strategic positioning within the competitive UK retail landscape.

Running head: PRINCIPLES OF MARKETING MANAGEMENT
Principles of Marketing Management
University Name
Student Name
Authors’ Note

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PRINCIPLES OF MARKETING MANAGEMENT
Marketing Audit of Tesco Plc in UK Market
Marketing audit indicates towards comprehensive, systematic, interpretation and analysis of
business marketing environment (counting internal as well as external), its goals, and
strategies, principles to determine the specific areas of issues along with opportunities and to
suggest an action plan to augment marketing performance. The current study elucidates in
detail about marketing audit and analytically evaluates the micro as well as macro
environment and competitive position of the firm Tesco Plc in the UK market.
Company/Brand Background
The company selected for the present study is Tesco Plc and the selected market is UK.
Tesco Plc is a well-known British transnational grocery as well as general merchandise
retailer headquartered in Hertfordshire, United Kingdom.
Size of the corporation: For the purpose of the study at hand the UK business will be taken
into consideration. The operations of the firm Tesco Plc in UK are necessarily the largest
within the specific group, with more than 3400 stores and more than 310,000 colleagues.
Range of products as well as services offered: The business concern Tesco Plc is
necessarily a retail corporation that is engaged in the business of retailing along with
associated services.

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Cross-functional associations within the corporation Tesco Plc:
Cross-functional associations can be regarded to be vital within a specific corporation such as
Tesco Plc. In itself, it is important that numerous areas of business of the company Tesco Plc
interact with one another in a bid to deliver a seamless information flow as well as strategic
expertise. Essentially, the marketing development has a cross-functional association with
various departments such as technology department in a bid to understand what products are
required to deliver to the market (Kotabe and Helsen 2014). Again, management of the firm
also needs to understand the crucial association that exists in different departments in a bid to
be rigorous on budgets. Essentially, the business will not function without interdepartmental
associations.
Other Stakeholders of the firm Tesco Plc:
Stakeholders refer to individuals, group else wise organizations that essentially has direct as
well as indirect position in corporation, it is affected by rules as well as regulations,
strategies, policies along with decisions of business concerns.
The external stakeholders of the firm Tesco Plc consist of:
Regional and national communities
Pressure Groups
Government
Trade Unions
Employees
The internal stakeholders of the firm Tesco Plc include the following:
Suppliers and customers

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Unions
Government
Director
Workers
Community
Creditors
Macro Analysis
PESTEL Analysis
Influence of the identified factors Impact
Political factors:
The current factor stresses on the role of government institutions.
For example, in UK at the time when the environment of the
business was struck by crunch in credit that again led to higher
unemployment.
Statement of impact on the company: In itself, this trend actually
aided TESCO owing to dominance in the market UK and being one
of the fastest developing retailers that made attempts to decrease
the overall level of the unemployment generated by these
alterations thereby created the employment (Chernev 2018).
There is higher rate of unemployment in the economy.
Statement of impact on the company In addition to this, for
employment legislation, the government of UK inspires retailers
(such as Tesco Plc) to deliver a combination of job opportunities
from flexible, low paid and regionally based jobs to various highly
(+)

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skilled, high paid and centrally situated jobs (Keller and Kotler
2016).
In addition to this, strong restriction imposed by the government is
against the monopoly of the company (Kotler 2015).
Statement of impact on the company: The company Tesco also
have the need to analyse different aspects of government policies
on particularly taxation since high level of taxation can be
considered to be a major issue in UK as it is never stable (Kotabe
and Helsen 2014). Fundamentally, the issues associated to
government policies on mainly trade restriction and execution of
novel regulations can also affect in a manner when there is free
trade between particularly the European Union.
Influence of the identified factors Impact
Economic factors:
There is another environmental facet that can exert huge influence
on the business of Tesco Plc. For example, the economic downturn
encountered in UK owing to the unemployment that drastically
decreased the demand of so many goods affecting the overall
demand (Kotler 2015). Also, higher unemployment rate
characterised by lower disposable income also adversely
businesses.
Statement of impact on the company: This can be considered to
be a major area of concern to the company Tesco Plc as they are
(-)

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highly dependent on the market of UK. Furthermore, if the
company Tesco Plc had known about recession in the economy,
with the use of PEST framework it would have aided plan.

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Influence of the identified factors Impact
Social factors:
Demographics, culture, customs alongside tastes and preferences of
customers are said to have high impact on retal business of UK.
Statement of impact on the company: Tesco Plc can be
considered to be one of most popular retail groceries operating in
UK that has successfully addressed social as well as cultural
requirements of people. This is because of the increment in the total
amount of non-food items held for sale. Also, this has also kind of
inspired customers to move towards shopping in bulk (Armstrong
et al. 2015). In addition to this, demographic alterations such as
lifestyle that is necessarily associated to beliefs of customers along
with attitudes have made the company Tesco plc to focus on
various value added products as well as services. Yet another
important factor is the population that has compelled Tesco Plc to
have higher interest in increased demand of customers for different
organic products. Essentially, this in turn can aid the company
Tesco Plc to devise strategies to drive costs out the specific market.
(+)
Influence of the identified factors Impact
Technological factors:
The utilization of technology can enable customers to disburse bills
electronically thereby lessening long queues, online marketing, in
particularly marketing .
Statement of impact on the company: This technological
(+)

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progression can be considered to be of the expansion strategies of
the company Tesco Plc. Again, online marketing also exerted
influence on development of several Tesco products. This also
helps both the corporation along with its customers (Armstrong et
al. 2015). In essence, this personalized service can make shopping
experience of the customers more convenient and can positively
exert influence on growth rate of Tesco Plc (Store.mintel.com
2018). Essentially, the company has acquired benefits from its
technological innovations and transformation from ‘bricks and
mortar’ to particularly ‘bricks and clicks’. This has led to the
surfacing of Tesco Direct that is an online grocery stage with
‘click-and-collect’ function. The company has implemented
digitalized in-store experience, Tesco Club card and many others.
Influence of the identified factors Impact
Environmental factors:
Identification of challenges and overcoming the same: There are
several environmental factors that affect the business environment
of the company. The corporation plays an important role in
shielding the business environment and help in comprehending and
addressing the influence in the operations as well as supply chain.
In carrying out this task, the company can enhance resilience to
diverse risk, and secure overall supply of products and deliver
opportunities for saving money. Management of the company also
continue to identify changes in climate as the highest environmental
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threat the entire economy encounters (Monteiro and Birkinshaw
2017).
Paris Climate Agreement: Subsequent to the Paris Climate
Agreement, the company also inspires all its suppliers and operate
successfully with them to establish credible targets on specifically 2
degree trajectory. The company also has the intention to attain
absolute reductions, founded on level of 7% by the year 2020 and
35% by the year 2030. Furthermore, management of the firm also
pledges to achieve zero deforestation by the year 2020. Also,
management of Tesco Plc is also committed to source seafood
sustainability to make certain the future of the seas, aquatic life
along with fishermen who depend on the seas. The company works
with “Marine Stewardship Council” to enhance range of certified
sustainable counter, “Sustainable Fisheries Partnership” to map and
assess risk of all of the seafood supply chains (Ingram et al. 2015)

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Influence of the identified factors Impact
Legal factors:
Competition law:
“Competition Law” intends to make certain both fair as well as honest trading.
Statement of impact on the company: Essentially, this can permit Tesco plc to
gain reasonable prices on particular products (Simon et al. 2014). Nonetheless,
retail suggested price is taken into consideration in this case. For instance, in case
if the RRP is 90p for a cheese packet, then Tesco Plc can follow the suggested
price as it is fair to sell the product at that price.
-Discrimination Law:
A legal issue is the discrimination regulation that indicates towards the
Discrimination Act of the year 1975, the race relations act of the year 1976,
employment equality regulations of the year 2003. In addition to this, this
regulation includes disability act of the year 1955 and employment equality
regulations of the year 2006 and many others.
Statement of impact on the company: The company Tesco has the need to
conform to the prescribed regulations to operate a successful business (Cascio
2018).
Fair Trading
Government establish fair trading to provide all businesses equal opportunity to
compete with one another (Wheelen et al. 2017).
In essence, this is known as OFT and this can make certain that markets operate
well for different customers and providing different choices. The Enterprise Act
of the year 2002 delivered OFT the authority to inflict fines along with other
punishments to businesses that participate in this kind of actions. During the year
(+)

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2009, the company imposed total fine of the amount £129million in England who
were against the regulation.
Statement of impact on the economy: Tesco has incorporated the policy of Fair
trade since it started in the year 1994 and now delivers customers a range of Fair
trade certified products
Brief Note of key points on PESTEL
Political
- crunch in credit
- higher unemployment
- strong restriction imposed
by the government is against
the monopoly of the company
(Phadermrod et al. 2016)
Economic
-economic downturn
encountered in UK
- unemployment rate
Legal
- Competition law
- Discrimination Law
- Rules of fair trading
Technological
- transformation from bricks
and mortar’ to particularly
‘bricks and clicks’
- Tesco Direct that is an online
grocery stage with ‘click-and-
collect’ function
Environmental
- established science based
targets for reductions of carbon
- Paris Climate Agreement
- Marine Stewardship Council
- Sustainable Fisheries
Partnership
Social
- focus on various value added
products as well as services
(Grant 2016)
- higher interest in increased
demand of customers for
different organic products

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- Tesco Club card
-
Note on marketing audit undertaken on macro environment of Tesco
Briefly, it can be stated that business of Tesco has been favourably affected by technological
progressions. The credit crunch has led to the higher rate of unemployment as well as. The
company has recruited huge number of employees to deliver the job opportunities and to act
responsibly in this regard. The issue of government policies are also said to have high impact
on the company such as taxation issues. Also, social factors such as interest of individuals
inorganic products has also directed the company to market the same. Also it is evident
from the sustainability report of the firm that Tesco is committed towards its goals of
enhancing the quality of life of people. For that it abides undertakes different programmes
and abides by the laid regulations.
Micro Analysis
7S Framework
The McKinsey 7S Framework explains the overall linkage between seven separate
components of the business to enhance overall effectiveness (Shabanova et al. 2015).

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Figure: 7S Framework
(Source: Anton 2015)
Strategy: Management of Tesco Plc UK pursues cost leadership strategy as per the
marketing communicating message of the company “Every Little Helps”. Essentially, the
supermarket chain can sustain this specific stratagem owing to the extensive utilization of
economies of scale and practice of bargaining power in handling with suppliers to secure low
level of purchasing costs (Hasan 2016). The strategy of Tesco is to handle the issue by
reducing capital expenditure by GBP 1 billion, replacement of benefit pension plans for
different employees and assessment of property portfolio with the intention of cost reduction
(Tong et al. 2015).
Structure: The new CEO eradicates the roles of deputy store executives during the year 2015
as part of endeavour to simplify the structure of the organization. Essentially, there are 10
different members particularly in The Board of Directors and Executive Committee of the
company that again comprises of 11 members.

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Systems: Essentially, the newly formed management led by the Chief Executive Officer
Dave Lewis declared plans to simplify organizational systems in a bid to get the business
operations of the firm on track. The restructuring of Steering Wheel performance appraisal
arrangement that contained over and above 40 different dimensions can be indicated as an
appropriate system (Watrobski et al. 2016)
Staff: The Company Tesco plc in UK recruited over and above 400000 employees. Members
of the staff mention about the total number of staff in the corporation.
Style: The Company Tesco Plc utilized Steering Wheel to attain its goals. In essence, it has
90 degree arcs. In this there are four main areas that are taken into consideration namely
financial, operations, performance of employees and customers (Ekpo et al. 2015)
Skill: This illustrates overall capabilities of the corporation or else the employees to a
specific task (Kleinaltenkamp et al. 2016). The company Tesco plc delivers full knowledge to
the employees to operate effectually and efficiently within the corporation.

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Key points on Micro Analysis using 7S Framework
Value Chain Analysis:s
This is a significant analysis that can be undertaken to recognize various non value added
actions, resources of which can be deviated for the purpose of strengthening various value
added activities.
Strategy:TescoPlcUKpursuescostleadershipstrategyStructure:10differentmembersparticularlyinTheBoardofDirectorsandExecutiveCommitteeofthecompanythatagaincomprisesof11members.System:restructuringofSteeringWheelperformanceappraisalarrangementStaff:Recruitedoverandabove400000employeesStyle:utilizedSteeringWheeltoattainitsgoalsSkill:Tescoplcdeliversfullknowledgetotheemployeestooperateeffectually

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-
-InboundLogistics:ThecostleadershipstrategicmanagementofthecompanyTescoPlcisexhibitedintheleanaswellasagilelogisticsfunction.-Operations:OperationsofthefirmTescoPlcisprimarilyappraisedbysupplychainmanagementcriticsforitseffectualuseofITsystemsthatcanfacilitatelowcostofthecorporation.-Outboundlogistics:TescoPlcmaintainsaleadershippositioninbothonlineaswellasofflineretainsectionthatisowingtothecompany’seffectiveoutboundlogistics.TechnologicalDevelopments:TescoPlchasadoptedtechnicaldevelopmentthatessentiallyhascreatedopportunitiesforthefirm.Forex,.bricksandclicks,TescoDirect.TescoClubcard.Procurement:lookafterpurchasinggoodsaswellasservicesnotforsalefortheentireTescoGroup,ProcurementteamsofTescoalsocoverdifferentareasofGSNFRinlcudestechnologyhardwareaswellassoftware,plasticbags,diverseTescotrolleys,deliveringahugeopportunitytooperatebydevelopingpurchasingcapabilities

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Key Points of value chain analysis
Marketing Mix Analysis
Particulars Illustration
Product The company Tesco Plc has extensive range of product offerings (Baker 2016)
- The product of the company that include food as well as beverages, pet care,
bakery products, pet care products and many others. This company has its own
brands such as Tesco, Tesco Loves Baby, Tesco Value, Tesco Bank and many
others
-Tesco has currently assessed 33 categories of food and lessened the lines of the
product by approximately 18%. In itself, Tesco Bank delivers financial services
namely loans, credit cards, insurance and many others.
Price Tesco delivers low as well as stable prices after getting feedback from the
customers. Essentially, Tesco pursues stratagem of cost leadership as pricing
strategy. Tesco utilizes economies of scale and the best channels for procurement
to uphold low prices (Weinstein and Pohlman 2015).

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- The company Tesco also cut promotional expends to lower prices. Essentially,
Tesco Plc has a unique programme known as Brand Guarantee in which if
customers can acquire lower prices of any branded product.
Place The company Tesco Plc has approximately 6900 stores in around 11 nations.
Different types of stores of Tesco Plc include Tesco Metro, Tesco Superstore,
Tesco Express as well as Tesco Extra (Kotabe and Helsen 2014).
Promotion The company Tesco Plc has a strong brand image that depends on low prices.
The company Tesco Plc has promotional actions that are centred on this theme
(Chernev 2018). Tesco plc essentially utilizes hoardings, television
advertisements as well as charitable events as promotional channels. The
company utilizes “Tesco Clubcard” that permits to segment and target customers.
Key Points of Marketing Mix (Tesco Plc)
{ProductPricesPromotionsPlace

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Figure: Marketing Mix of Tesco Plc UK
(Source: Foxall 2014)
Competitor Analysis
In terms of share of market, the competitive position of Tesco Plc UK can be analysed.
Analysis of market share of Tesco plc and its main competitors show that Tesco Plc have
succeeded in succeeded in maintaining its leadership position. The table below presents the
market share:

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Figure: Market Share
(Source: Sheth and Sisodia 2015)
Comparative Analysis of competitors based on objective and strategic direction
Firms Description of strategic objective as well as direction
Tesco and
Morrison
-Tesco plc and Morrison reflect different characters particularly within the
grocery segment of the retail industry. Tesco acts as the market leader in the
industry, and the share price of the firm shows the way it influences the entire
grocery market. Contrarily, Morrison acts as a market follower and might
perhaps act vulnerable when compared against both Tesco Plc and Sainsbury’s.
Morrison reflects a declining trend of the price of the share. Despite being one
of the major chains of supermarket, Morrison presented comparatively less
ranges and varieties of shopping experience (Keller and Kotler 2016).
-Tesco Plc has remained to be a market leader in the grocery market of UK
from the past 25 years. This company owns approximately 3000 stores in the
UK, and has around 28% market share. Also, Tesco delivers diverse grocery
services in a bid to meet different demand and this included convenience stores,
hypermarkets, supermarkets as well as superstores (Armstrong et al. 2015).
Tesco and
Sainsbury’s
Sainsbury’s currently ranks third in terms of market share. Sainsbury’s employs
more than 150000 and the supermarkets deliver to over and above 18.5 million.
Sainsbury’s deals in different products namely convenience, hypermarket and
supermarket and many others. In addition to this, the company also operates
through a number of locations (approximately 1415 stores).

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Strategic Group Analysis and Perceptual Mapping for determination of competitive
position
Perceptual mapping is necessarily a diagrammatic scheme utilized by asset marketers that
endeavours to visually display specific perceptions of customers or else potential customers
(Kotler 2015). The perceptual mapping presented below helps in understanding the fact that
Tesco Plc is at a better competitive position than its competitors Sainsbury’s and Morrison.
This is so because it has comparatively low price as well as broad range of products measured
in the two different axes of the map.
SWOT analysis
Strength
- The company has several awards for the firm’s
operational excellence, quality of service to
customers and superior shopping experience on
the whole (technological progressions: pestle
analysis)
Weakness
- Competitive pressures have necessarily led to
price wars. This again has eroded necessarily the
profit margin of the firm (low and stable prices:
marketing mix)
-There is less amount of disposable income and

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-Firm having largest market share and is one of
the largest as well as the most profitable chain of
supermarket (Kotler 2015).(competitor analysis,
marketing mix : promotion)
-Improved usage of technology (technological
progressions: pestle analysis)
this affects the buying potential of the
corporation (Kotler 2015). (credit crunch and
higher rate of unemployment-Pestle analysis)
-Government restriction and taxation issues pose
a threat (political factors)
Opportunity
- There are specific opportunities for undertaking
strategic alliances with different brands
-There is considerable opportunity of the firm to
develop its business by augmenting online
shopping and offering home delivery services
(Place: marketing mix)
-Expansion by technological progression (pestel
analysis for macro environment)
Threat
-Economic recessions along with credit crunches
shall continue to threaten overall share of the
market along with profitability (political factors:
PESTLE analysis)
-Competitive threats are also present with diverse
other retail giants (competitor analysis)
Conclusion
The above study helps in gaining deep understanding regarding marketing audit with
reference to the operations of the firm Tesco Plc in the UK market. This in turn helps in
thorough analysis of marketing plan, objectives, and present actions that is being executed by
the firm.
Based on outcomes of marketing audit, it can be hereby said that management of Tesco Plc
can work towards establishment of competitive edge over the rivals. Turnaround priorities for