SOSTAC Analysis of Tesco Supermarket: A US Market Expansion Strategy

This report provides a SOSTAC (Situation, Objectives, Strategy, Tactics, Action, Control) analysis of Tesco Supermarket, focusing on its potential expansion into the United States market. The analysis begins with an overview of Tesco's background, its current market position, and its previous unsuccessful venture in the US. It then delves into a situation analysis using the 4Ps of the marketing mix (Price, Product, Place, Promotion) to assess Tesco's internal and external environments. The report outlines Tesco's objectives for US market entry, utilizing the 5Ss framework (Sell, Serve, Speak, Save, Sizzle). The report also covers the company's strategies and tactics for achieving its expansion goals. The study emphasizes the importance of market analysis and strategic planning for successful market entry, offering insights into how Tesco can leverage its strengths and adapt to the competitive landscape of the US supermarket industry. The report also highlights the importance of understanding consumer behavior and the need for effective marketing strategies, including social media and online platforms, to increase market share and profitability.

SOSTAC ANALYSIS OF TESCO SUPERMARKET 1
SOSTAC Analysis of Tesco Supermarket
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SOSTAC Analysis of Tesco Supermarket
Background
In the contemporary world of globalization more and more companies are choosing to
expand their reach into different markets apart from their primary market. Expansion into
different markets ensures that a company gains a larger global market share than it possessed
before the expansion and in the process increase revenue. Expansion into different regions across
the globe also ensures that a company is insulated from the economic rises and falls experienced
in one region such as Europe (Grundy, 2017, P. 25). This study paper intends to conduct a
SOSTAC analysis of Tesco supermarket in an endeavor to find how it could expand into the
United States of America. The United States of America is a suitable location for expansion by
the Tesco supermarket due to various factors. First the United States of America is densely
populated with a population of over 350 million. Another reason why the United States of
America is a suitable location for expansion is that the American market is very similar to United
Kingdom which is the primary market of Tesco supermarket (Witek-Hajduk & Grudecka, 2018,
P. 28). The analysis tool is popular due to its history of producing excellent results; the acronym
SOSTAC stands for, Situation analysis, Objectives, Strategy, Tactics, Actions and Control
(Riefer, Prior, Blair, Pavey & Love, 2017, P. 14). The SOSTAC planning tool understands that in
order for a company to make an entrance into a new market the first task is to analyze the
company’s current situation as well as the new market situation. Tesco supermarket is the top
supermarket brand in the United Kingdom with branches in over 11 countries. The supermarket
started out as a market stall and over the years developed into the major supermarket chain that it
is. Tesco supermarket was founded in the year 1919 by Jack Cohen. The supermarket is also the
third largest retailer globally in terms of gross revenue returns. Tesco supermarket was once in

SOSTAC ANALYSIS OF TESCO SUPERMARKET 3
the United States of America but had to pull out in April of 2013 (Jenkins & Williamson, 2015,
P. 34). The supermarket also has several subsidiaries such as Tesco bank, Booker Group and
Tesco mobile to supplement its revenue from the supermarket industry. This study paper will
make use of the 4Ps in marketing mix to analyze the external and internal environment of the
company. The research paper will also analyze the strategies implemented by major supermarket
chains in the United States of America in order to find the effectiveness of Tesco supermarket
SOSTAC strategies in the United States of America. This study is important as it will offer the
reader an insight into the workings of the world’s third largest retailer. The paper will also
provide the reader with interesting information on how to successfully implement the SOSTAC
marketing system as well as how to gain success while entering into a new market. This study
paper aims at analyzing the measures Tesco supermarket can take in order to enter the United
States of America market.
SOSTAC Analysis of Tesco Supermarket
The SOSTAC method of market analysis and planning is one of the most popular
strategic planning tools. The analysis tool is popular due to its history of producing excellent
results; the acronym SOSTAC stands for, Situation analysis, Objectives, Strategy, Tactics,
Actions and Control (Smith, 2018, P. 16). The SOSTAC planning tool understands that in order
for a company to make an entrance into a new market the first task is to analyze the company’s
current situation as well as the new market situation (Kita, KUPKOVIČOVÁ & Janska, 2017,
P.14).

SOSTAC ANALYSIS OF TESCO SUPERMARKET 4
Fig 1: SOSTAC model from (Visually, 2012, P. 19).
The situation is inclusive of the forecast market and policy involving the industry; this
information will assist in the planning process. The objectives of the company are also vital as
they will inform the management on the actions to take in order to achieve the objectives. The
next step in the SOSTAC model is coming up with an informed strategy. The strategy is the
means by which a company intends to achieve its goals and objectives. A good strategy should
consider the business environment and how it intends to meet its goals (Bång & Roos, 2014, P.
41). Tactics are the next consideration in the model; a tactic is like a small project that adds up to
the strategy and end up in a business achieving its goals. Actions are the specific steps that a
company will take in completing it’s already set out strategy. The final step in the SOSTAC
method is the control stage. Control implies to the analyzing of the company’s strategy and

SOSTAC ANALYSIS OF TESCO SUPERMARKET 5
weather it is progressing as planned or if new challenges have arisen (Kobets & Yatsenko, 2018,
P. 18). In this stage the company will analyze the current number of visitors, the web traffic
among other factors to determine its marketing campaign success or failure. The SOSTAC
market analysis and planning tool has been in use for decades and is a proven method of gaining
information, making strategies and analyzing their success or failure (Visually, 2012, P. 16).
Situation Analysis
This section of the study paper will make use of the 4Ps of marketing to analyze the
current situation Tesco supermarket is in, in order to come up with effective strategies to help the
company obtain its goals.
Price Marketing Mix
Price is a very essential marketing mix tool that determines the success of a business. It
refers to the general cost of a product or service being offered by the business. Businesses are
able to formulate an optimum value through consideration of various costs such as discounts,
supply costs and the pricing of their competitors offering the same product in order to avoid
making losses while still being able to offer better prices for their goods (Išoraitė, 2016, P.6).
Tesco supermarket being one of the leading supermarket brands in the UK has a lot of price
marketing strategies that have been crucial to their success. Tesco supermarket has invested
heavily on sales promotion with the use of club cards where customers collect a point for every
one pound used while shopping and are notified on point value several times a year. These points
are thereafter converted to money and can be used to purchase their products. Tesco supermarket
also uses various measures such as the economies of scale to achieve low pricing for their
products which has contributed significantly to the increase of their customer base Tesco

SOSTAC ANALYSIS OF TESCO SUPERMARKET 6
supermarket also participates in price comparison processes where their prices of products are
compared to their rival’s prices which enables them to offer competitive prices. These sales
marketing strategies have allowed Tesco supermarket to grow from a bunch of market stalls to
one of the leading supermarket brands in the world (Dawes, 2018, P.9).
Product Marketing Mix
This marketing mix focuses mainly on the product and services offered by a certain
business and the strategies implemented by the business in order to market their products and
increase sales. It is essential for the product being offered by the business to satisfy a certain
need of the consumers or be attractive enough for the consumer to perceive the need to have it
(Groucutt &Hopkins 2015, P. 20). This strategy involves the understanding of a product’s
lifecycle and to create policies to deal with each cycle. Tesco supermarkets have a wide variety
of products they offer in the U.K, products such as food clothing and electronics are branded
according to a variety of ways such as brand, type and region among others. This has allowed
their customers to have a wide range of variety of choice. Tesco supermarket also offers financial
services through their affiliate Tesco bank which offers credit card services, insurance, savings
accounts among others. They have also expanded into the online platform where they offer
grocery delivery and a wide range of music downloads (Bahadir, Bharadwaj & Srivastava, 2015,
P.19).
Place marketing mix
This marketing mix mainly focuses on the venue where a business intends to sell their
products and how to get their products to the intended target market. Strategies implemented by
this marketing mix are usually based on how to position their products to a market that are more

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likely to purchase those (Pride & Ferrell, 2016, P.22). Tesco supermarket has its headquarters in
Chestnut, Hertfordshire, England. They also have a number of stores that are spread in various
locations in the U.K. They mainly use two avenues of product distribution, offline and online.
Offline product distribution is mainly constituted by physical stores where a customer can
purchase its products (Ferrell, & Speh, 2017, P.25). These physical stores comprises of six
different types, Tesco Express, Tesco Extra, Tesco Metro, Tesco Compact, Tesco Home plus and
Tesco Superstore. All these Stores are constituted differently in terms of size and product
offered. Online product distribution is mainly constituted by Tesco Direct where you get their
online webpage, www.tesco.com. This product distribution channel offers a wide range of
products where a customer can order online with delivery services available (Pirzada 2017,
P.26).
Fig: illustrates market dominance of Tesco in UK (Pirzada 2017, P.34)

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Tesco Objectives
In this section of the research paper the author will highlight and analyze the set out
objectives of Tesco supermarket. Objectives are what the company is out to achieve in the new
market or with the expansion. This study paper will use the 5Ss to analyze Tesco supermarket’s
objectives in their proposed expansion into the United States of America market. The 5Ss
include sell, serve, speak, save and sizzle.
Sell
The sell objective in the 5Ss approach targets the sales objectives of the company. Tesco
supermarket intends to increase their sales figures and gain a 30% increase in sales revenue by
expanding into the USA market. A 30% increase in sales revenue will be achieved through
intense marketing for their online purchases available on Tesco supermarket website. Social
media marketing is also expected to be useful in increasing the market share of the company
(Alexander, 2015, P.32).
Serve
Serving means delivering high quality value to the supermarkets market share
(Armstrong, Adam, Denise & Kotler, 2014, P. 31). Value for money can be achieved by Tesco
supermarket by ensuring the services and products they offers customer are of the highest quality
and standards. Value can also be delivered by ensuring customers get their products are can
easily and conveniently purchase items such as on online platforms.
Speak

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The speak section of the 5Ss approach stands for having a close and positive relationship and
communication with its customers. Tesco supermarket can make a good relationship with its
customer base by using a social media campaign where they collect feedback from the customers
and also provide information on their product while explaining how they are better than the
competition.
Save
Tesco supermarket can increase its profit margins by reducing the costs of operations and
marketing in the process saving money. One method the supermarket has reduced operation costs
is by implementing social media marketing which is as effective as traditional media but at a
much cheaper price. Online shopping is another method of reducing costs and in the process
saving and increasing profits.
Sizzle
Sizzle in the 5Ss approach means stirring up interest and relevance in the current market. Tesco
supermarket can create interest by leveraging social media marketing tools (Pulker, Trapp, Scott
&Pollard, 2018, P. 30). Online marketing such as web based marketing and email marketing can
also be used by the supermarket to create relevance in potential customers.
Strategy and Tactics for Tesco Supermarket
The strategy is the means by which a company intends to achieve its goals and objectives.
A good strategy should consider the business environment and how it intends to meet its goals.
Tactics are the next consideration in the model; a tactic is like a small project that adds up to the
strategy and end up in a business achieving its goals. Tesco supermarket intends to implement

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different strategies in order to conquer the new market; one of the strategies is a social media
marketing strategy. Tesco supermarket intends to capture a large percentage of its intended
market using social media. Social media has intense penetration in the United States of America
with over 50% of the entire population being active social media users. This statistic makes
social media marketing a valid marketing option for the company. Another strategy Tesco
supermarket intends to use and has been used by the company successfully before is the
acquisition of new assets and retention of current assets. The supermarket will make a purchase
of new facilities in the United States of America so as to act as their physical location of stores
and sales within the market. Acquisition of new assets in the United States will increase investor
confidence in their move into the new market (Hasan, Sudarmaningtyas & Wulandari, 2018, P.
22). The move will also increase the supermarkets market share by announcing to the market that
they have arrived and are going to be present for a long time. The purchase of new assets in the
United States of America will also increase the supermarkets asset value making it worth more
money than it was previously.
Fig: demonstrates the global and local approaches in marketing (Young, 2014, P. 16)

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Tactical tools are what are used to achieve a particular strategy to its conclusion.
Strategies are made up of different tactical tools which achieve singular goals and objective
which adds up to ensure the strategy is attained. Tesco supermarket intends to use the four Ps as
a tactic in achieving the strategies mention in previous sections of this paper. The four Ps used
are price, place, promotion and product. The four Ps have been mention in a previous section of
this study paper and how Tesco supermarket intends to leverage them to their advantage. In
terms of product Tesco supermarket provides its customers with a large variety of products to
choose from home appliances to power tools ensuring customer loyalty and convenience. In
promotion Tesco supermarket intends to make use of social media to market their products to the
largest number of individuals possible. The supermarket concentrates its marketing efforts on
promotion of their brand as a quality provider of goods and services at an affordable price. Tesco
supermarket also engages in corporate social responsibility agendas so as to appeal more to
potential customers and make the local community accept the company more. The supermarket
also intends to use web marketing mixing both digital and traditional media to enhance the
promotion of their products and brand. The other tactic is on pricing, Tesco supermarket has over
the years worked hand in hand with its suppliers to ensure the cost of their products is at a
minimum while still maintaining the quality of the products. By ensuring that operational costs
are at a minimum Tesco supermarket can reduce the price of items on sale to the customers.
Tesco supermarket also intends to sue social media feedback from their customers in order to
establish customer needs and expected prices for the products offered. Place in the 4Ps approach
refers to the physical location of the products available on sale as well as other platforms in
which Tesco supermarket can sell their products to their customers. Tesco supermarket is one of
the larger supermarkets globally with over 6,900 stores in over 11 countries offering customers

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with a choice of location where to access Tesco supermarket products. Tesco supermarket also
increases the convenience of customer access to their product by offering online purchases which
can be done at the convenience of the customer then the goods are delivered.
Control and Action for Tesco supermarket
In this section of the study paper the author will highlight the actions and controls set up
by Tesco supermarket to ensure their strategies work and the goals and objectives of the
company are met. Actions are the specific steps that a company will take in completing it’s
already set out strategy. The final step in the SOSTAC method is the control stage. Control
implies to the analyzing of the company’s strategy and weather it is progressing as planned or if
new challenges have arisen. In this stage the company will analyze the current number of
visitors, the web traffic among other factors to determine its marketing campaign success or
failure.
Tesco supermarket has put in place measures to ensure they are able to detect any
problems that may arise in the implementation of their strategy and take corrective measures.
One of the control structures put in place by Tesco supermarket is constant monitoring of tactics
implemented by the supermarket and if they are working or not. In the case that some tactics
have lagged behind in achieving their objectives the company management is at liberty of
conducting a meeting and deciding on corrective measures. Another control measure Tesco
supermarket intends to use is the collection of consumer feedback from social media. The
feedback can be used to analyze the impression consumers have about the company to determine
the success of the strategies put in place. Tesco supermarket also believes in conducting regular
meetings with its employees in order to find out their opinions on whether they think the