MARKETING
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Student ID:
Degree Title: MBA
Level: 7
Module Title: Marketing at a Global Age
Module Code: M003LON
Seminar Lecturer: Dr. Lin Su
Assignment Title: Marketing Plan
Word Count: 2545
Link: To shared files, wordpress.com Blog, etc.
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I, [ ], confirm that this submission is my own work and I accept all responsibility for any copyright
infringement that may occur as a result of this submission.
Date of Submission: 2020
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Executive summary Tesco is a leading retailer in UK with a significant market share. Tesco has a long a
successful story of its growth which is based on smart marketing and its historical position
to make affordable food accessible for people.
Considering the leading role of Tesco in UK market it is influenced by most macro-
economic factors to a certain extent. The brand, diversified stores formats, developed
loyalty program are making the Tesco strong but the threat is coming from a competition
with the discounters. Tesco mainly targets the cost-conscious individuals and positions
itself as an innovator in the industry.
The objectives proposed to Tesco are the increase of market share and sales in UK. They
can be realized in 2021 following the designed action plan that would include market
penetration and product development strategies. The actions aim to improve awareness
of customers about Jack’s stores, reinforcing Tesco Finest, targeting the growing number
of millennials and advertising winning products group.
The realization of objectives would require actions to pursue various marketing mix
attributes that all impact the strategy success. The implementation is divided into actions
for Q1 to Q4 2021 and can be measured using such KPIs like revenue and customers
conversion.
The Tesco’s position in UK is strong today, keeping the leadership in a fast-developing
industry is a challenge that requires progress and improve along with the agile
competitors.
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Contents
Executive summary ......................................................................................................... 2
Introduction...................................................................................................................... 4
Situational Analysis ......................................................................................................... 4
PESTEL ....................................................................................................................... 4
SWOT .......................................................................................................................... 7
STP .............................................................................................................................. 8
Objectives........................................................................................................................ 9
Strategy ......................................................................................................................... 10
Implementation or Tactics ............................................................................................ 10
Action ............................................................................................................................ 13
Control ........................................................................................................................... 14
Conclusion..................................................................................................................... 15
References .................................................................................................................... 15
Appendices.................................................................................................................... 17
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Introduction
Tesco is a leading retailer in UK, serving millions of customers every week in stores and
online (Tesco, 2020). The Tesco’s market share in UK is the largest in the Tesco group.
The footprint counts 3,787 stores and 340,000 employees. The operation profit in 2019
for the UK & ROI division amounted £1,537 m (Tesco PLC, 2020).
Tesco started its history in 1919 – 1920 by its founder Jack Cohen and the first Tesco
store opened in 1929 (Tesco, 2020). Over its history Tesco succeeded and expanded
rapidly in UK and abroad where the key for success was a smart marketing strategy. The
positioning of Tesco started with a belief of the founder “in putting affordable food in the
reach of everybody” (Tesco, 2020).
Tesco’s major marketing activities that brought them forward include advertisement
campaign with Sir Save-A-Lot Back in the 1960s, arrival of superstore in 1968,
introduction of Tesco Value in 1993, launch of Tesco Clubcard loyalty program and launch
of Tesco Finest brand in 1998.
Tesco faces now new challenges and completion coming from other ambitious players
on the market. Tesco needs strong marketing plan to keep leadership and outcompete
rivals. The objectives proposed in this outline are defined by the analyze of the Tesco’s
position on the market and supplied with a relevant action plan for realization.
Situational Analysis It is important to overview Tesco before defining the objectives and plan actions. The
situational analysis looks into macro-economic factors that impact Tesco operations in
UK by applying PESTEL framework and review strengths, weaknesses, opportunities and
threats of the company by applying SWOT framework.
PESTEL
Political
Since this plan reviews Tesco within its UK scope, political factors would not impact
organization as much as it would be if we looked at Tesco from its international
operations. Nevertheless, political events like Brexit create uncertainties and consumer
confidence remains weak until the exit negotiations are finalized, and outcomes
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introduced (Eley, 2018). In case of ‘no deal’ scenario and the potential for an abrupt
departure from the EU impacts that might result are as follows:
Free movement of labor might be blocked once any Brexit deal is settled upon.
The number of workforces from EU employed in the retail industry is not high, but
the EU migrants mainly occupy positions of transport drivers and work in food,
drink and tobacco processing. Those positions are widespread in the retail industry
and shortage of workforce for it is likely to impact the costs (Willis Towers Watson,
2017).
Tariffs might grow significantly on the commodities imported from EU countries
and exiting the single market with EU might change the behavior of retailers as
those start to buy in the cheapest markets (Willis Towers Watson, 2017).
Apart from Brexit impacts might come tax rates applied by UK government, acts of
legislation and of course, the stability of the country.
Economic
Economic factor might be the main concern for Tesco. Department stores among retailers
in general remain the most vulnerable (Eley, 2018). This factor directly impacts demand
and profit and customers activity. E.g. according to Statista data the GDP growth fall is
forecasted for UK as a short-term (Statista, n.d.) and Tesco might experience decrease
in revenue due to this outcome. Tesco’s main revenue is made in UK where in 2018 its
market share of grocery stores was close to 30% (Statista, 2019), therefore any economic
issues would have a major impact on the customers’ budgets force them to reconsider
the concepts of value in which Tesco should be able to respond (Tesco PLC, 2020). The
economy growth positively impacts the supermarkets industry, whereas economic
recession increases unemployment and customers become more conscious about their
spending.
Social
Tesco serves customers with different preferences and buying habits, of different age,
generations and social status. Different trends emerge among customers like the recent
one healthy awareness and healthy food. All those elements belong to social factors that
influence the industry or food retail. Tesco must be aware of them and respond with
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appropriate strategies to satisfy and attract different groups. Tesco should take into
consideration and ensure adaptation of stores and services to be accessible to mobility
impaired and elderly group of people. The advertisement of Tesco needs to be conscious
to respect rights and religious of all groups, otherwise reputation of the company might
harm.
Technology
Technology penetrated well the industry and retailers use it to develop supply chain
management systems. It allows gain competitive advantage and improve cost efficiency
(Tan, 2001, p. 41).
The advancements in technology have brought various new opportunities for Tesco.
However, overall technology creates dependency and requires constant improvement
and investment into disaster recovery (Tesco PLC, 2020).
The emergence of new technologies might be a risk factor for Tesco where it will require
its implementation and maintenance in order to remain competitive. Whereas smaller
firms might benefit of it by faster implementation.
Environmental
The pressure to bring attention to environmental issues has increased on companies. It
pushed them to worry and take initiatives to adopt operation processes. Retailers should
ai to reduce carbon footprint and minimize waste in the stores. According to Retail Insight
grocers had to react on the higher awareness of people about devastating effects that the
sheer volume of plastic created. It was as well noticed that contribution to environmental
care is recognized by customers when they do their choices (Retail Insight, 2018)
Legal
In-country legal and regulatory requirements might directly impact the business of Tesco.
Tesco needs to abide to it and be ready adopt in case of changes (Tesco PLC, 2020).
Tesco holds a large amount of customers’ and employees’ data (Tesco PLC, 2020) and
is subject to GDPR which remains in force until December 31 2020 (The GDPR Group
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Ltd., 2019) or its successor. Any violation in this aspect might lead to financial penalties
(Tesco PLC, 2020).
SWOT
Tesco’s Strengths
1. Tesco is the leading grocery retailer and No.1 supermarket in the UK. It has higher
sales and revenue as compared to other supermarket chains in Great Britain and
its market share is about 30% in UK (Statista, 2019).
2. Tesco operates different formats of stores. The portfolio includes Tesco Homeplus,
Tesco Metro, Tesco Extra, Tesco Express, One stop, and Tesco Superstores
(Tesco, 2020).
3. Tesco offers diversified ranges of products. It has clothing range, home-ware
items, mobile phones business, music downloads and DVD rentals, school
uniforms, financial and telecom services… (Tesco, 2020).
4. Lean technology was implemented by Tesco to optimize supply chain and bring
discipline to the suppliers. Tesco was one of innovative companies that
successfully adopted this new way of working brought from automotive industry
(Evans & Mason, 2019).
Tesco’s Weaknesses
1. According to analysts at UBS, Tesco was 20 percent more expensive than the
German discounters for everyday products. Though Tesco managed to reduce
prices, there’s still a gap which is at about 6 per cent. In the wake of the competition
the discounters, the low-cost strategy can lead to reduced profit margins (Eley &
Walker, 2019).
2. The closure of Tesco Direct, which aimed to compete the Amazon’s Marketplace
but which lost £23 m in the first half of the year is a factor that negatively impacted
Tesco shares potential (Eley & Walker, 2019).
3. The stagnant share price does not add attractiveness to Tesco in front of Investors.
The group’s finances have improved, despite a £4bn cash and shares acquisition
of wholesale group Booker. Tesco’s net debt peaked at £12bn, but still remains at
£5bn (Eley & Walker, 2019).
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Tesco’s Opportunities
1. Tesco introduced discount chain Jack’s to compete the Aldi and Lidl. The success
of this initiative is questioned, but the potential creates opportunity to outcompete
the German discounters (Guardian, 2019) (Tesco PLC, 2020).
2. Tesco can use the analytical data from its loyalty program to build tailored
assortments and target them effectively to drive conversions (Petro, 2019). It is
forecasted that Millennials overtake Boomers in population in 2019. Therefore,
Tesco could find a way to provide value to the important group of aging consumers,
while attracting Millennials and Gen Z consumers (Petro, 2019). This might be an
opportunity for Tesco to adopt its strategy and verify assortment.
3. E-commerce including food and personal care segment is gradually growing every
year in UK. The revenue forecast for 2020 in the food and personal care segment
is 49.5 billion dollars versus 2019 43.9 billion dollars (Statista, 2019). Tesco could
use this opportunity to further develop and upgrade its online shopping segment.
Tesco’s Threats
1. With Britain no longer in the European Union, the trade deals and cost matters
have posed a threat for Tesco, which would require retailer to undergo adaptation
and adjustment of its supply chains (Eley, 2018).
2. Retailing is highly competitive, merged Saintsbury’s and Asda, move of Amazon
into physical grocery after buying Whole Foods, competition of discounters Aldi
and Lidl. Tesco needs to remain in shape to win otherwise its market position can
be threatened (Evans & Mason, 2019). According to CBINSIGHTS the discounters
ALDI and Lidl demonstrated a much higher sales growth in 2017 versus Tesco
(CBINSIGHTS, 2017).
STP
Segmentation
The variables for segmentation are categories: demographic, physiographic, and
behavioral. Tesco segments its stores according to the location using different
formats from Tesco Superstores to One Stop stores.
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Targeting
Target customers for Tesco are cost-conscious individuals who are interested in
bargains and sales and value variety of choice. However, Tesco tries to attract
other customers and competes discounters with its new band store Jack’s and
product line Tesco Finest.
Positioning
Tesco positions its itself as an innovator in the retail industry oriented to listen
customers and meet their needs better than anybody else. Tesco aims to provide
customers with quality products at great prices (Tesco PLC, 2020).
The perception map below shows the position of Tesco among the other key
players in the UK food retail market, Tesco close to the middle balancing between
the quality and price.
Objectives The proposed objectives derive from the situational analysis executed in this report. The
Objectives look ambitious for a one-year term but considered achievable. Due to the high
competition in the UK retail market and especially coming from discounters such as Aldi
and Lidl, which sales demonstrated a rapid growth in UK (CBINSIGHTS, 2017) it is
important for Tesco to realize Objective 1. Increase the market share in the UK by 1.5
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% by the end of 2021 and Objective 2. Increase sales in the UK market by 3 % in
2021
Strategy Tesco can realize the proposed objectives by using appropriate marketing strategies.
Objective 1 – Increase the market share in the UK from by 1.5 % by the end of 2021
To increase market share following strategies are proposed:
o Execute deeper market penetration though improving awareness of
consumers about Jack’s brand as a discounter store from a Tesco family.
o Develop the product through reinforcing the Tesco Finest brand by
attracting higher-income customers to select this product line. The
development should conclude launch of Tesco Finest mono-brand stores,
which would compete with M&S’s Simply Food and John Lewis’s little
Waitrose formats (Tesco PLC, 2020).
Objective 2 – Reach the sales growth rate of 3% in the UK market in 2021
To increase the sales following actions are proposed:
o Penetrate market by target the growing ratio of millennial customers with an
advertisement of the most preferred products in their group. Develop and
launch additional advertisement campaign oriented to attract Millennials for
the shipping at Tesco.
o Develop the product by create a winning assortment group of 100 products
using the analytics from the Tesco Clubcard program and offering these
products at a 3% discount versus competitors. This strategy would require
development and roll-out of strong visual advertisement of the winning
products in all UK Tesco stores.
Implementation or Tactics The 7Ps marketing mix applied to the proposed objectives combines and reviews
elements that contribute to the realization. Both objectives are reviewed together as they
come along most of the time during strategy’s application program.
7 Ps Objective 1 and Objective 2
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Product Tesco’s product in a broad sense is a grocery service that offers a
variety of products’ differentiated brands to satisfy customers with
different expectations.
Tesco already has a significant variety of products; the Jack’s
stores require higher awareness among customers to become
successful and a new mono-brand Tesco Value store will enforce
the brand.
Price The Tesco’s price strategy was oriented towards price cautious
customers looking for bargains and maximum quality in return. It
uses product bundle pricing and competes in all segments of food
retail.
Tesco should maintain its existing price strategy in general and
induce customers for better purchasing by introducing a discount
for the 100 most demanded products. The 5 months discount
campaign will result profit loss but compensated through higher
sales.
Place There are two marketplaces, where Tesco delivers its service to
customers: retail stores of different format and online shops through
its website. In 2019 number of grocery stores in UK & ROI counted
3,961 (Statista, 2019).
Tesco should ensure balanced development of both marketplaces
and focus on delivering the new Jack’s store format on a
competitive level to anchor its place in the discounter segment.
People Tesco management believes that people have a significant role in
the company’s success, and they want every colleague to
understand the part they play in servicing customers.
As stated by Tesco “Customers are at the heart of everything they
do” and the customers’ net promoter score 17 pts in 2019 (Tesco
PLC, 2020).
It’s important for Tesco to maintain the care about employees by
creating strong culture in the organization and taking care of
customers. Customer’s preferences are to be researched and the
product lines formed based on the preferences of the targeted
customers groups.
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Process Using the Lean technology for managing the supply chain brought
a success for Tesco (Evans & Mason, 2019). Technology made
operation process efficient and transparent.
Tesco should aim to apply Lean to the sectors of its supply chain
where it hasn’t been applied yet and invest into process automation
that will ensure advantages in front of the fast-growing competition.
Physical
evidence
The physical evidence of Tesco are the stores and website. The
stores serve well their purpose and are arranged depending on the
format and size. The website is easy to navigate and provides
customers with all needed information about the products. Stores
are not overloaded with branding and promotion.
Tesco should be very attentive and constantly look for improvement
in layout and navigation of the stores. The newly proposed format
of Tesco Finest mono-brand store should have attractive design
and be more spacious compared to standard formats.
Promotion Tesco’s promotion was focused to advertise the attractive price and
offers. It served well its purpose and made the Tesco brand strong.
Tesco’s promotion should reach the targeted customers and
generate awareness of the products and brands. New formats like
Jack’s and Tesco Finest stores would require dedicated promotion.
The wining assortment discount campaign should be promoted in
the stores and to the online shoppers.
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Action
Activities January February March April May June July August September October November December
Develop the advertisement concept of Jack's
Production of advertisement content
Launch and run of the advertisement campaign on TV and other media
Measurement of advertisement campaign results
Finalizing the concept of Tesco Finest Mono-brand store
Rollout the Tesco Finest Mono-brand stores in London
Launch of Tesco Finest Mono-brand stores
Research and analyze on the Millennials preferences
Targeted advertisement to Millennials
Measurement of Millennials conversion
Research and validation of the product list for 100 products campaign
Preparation for the campaign
Launch and run of the campaign
Measurement of campaign outcome on sales
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Control The control measures are to be planed for monitoring the execution of the designed strategy. The control should enable to react and
correct planning timely. The table below summarizes the KPIs and timelines for measurements to be applied in 2021 when realizing the
action plan.
Balanced Scorecard Benchmark Action Strategy and Key Tactics KPI Timeline for Measurement
Customer Jack’s stores advertisement
campaign Market penetration
Revenue of Jack’s
stores Q1 2022
Development Launch of Tesco Finest Mono-
brand stores Product development Growth in Revenue Q4 2021
Customer Advertisement campaign to
Millennials Product development Millennials conversion Q2, Q3 2021
Product 100 Products campaign Market penetration Revenue Q3, Q4 2021
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Conclusion
Despite the Tesco’s solid position in the UK market, it should remain in shape to maintain
it in the long run. Historically, Tesco’s marketing strategy was smart and innovative, it
helped the company to succeed over the years. The competition in the last years
increased, and rivals demonstrated fast growing sales. Therefore, proposed objectives
concern increases of market share and sales. The realization concept is straightforward
and fit into a short timeframe of one year. The achievement of proposed objectives will
enforce Tesco and fundament the position in the industry. It is important at this stage to
demonstrate capabilities to growth and improvements.
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Supermarket Industry. [Online]
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intelligence/
[Accessed 12 April 2020].
Eley, J., 2018. Markets ask who will go next on the UK high street. [Online]
Available at: https://www.ft.com/content/99c4d5f0-8eb2-11e8-b639-7680cedcc421
[Accessed 8 April 2020].
Eley, J. & Walker, O., 2019. Tesco investors still waiting for Lewis plan to bear fruit.
[Online]
Available at: https://www.ft.com/content/3503058c-23dc-11e9-b329-c7e6ceb5ffdf
[Accessed 8 April 2020].
Evans, B. & Mason, R., 2019. The Lean Supply Chain - Managing the Challenge at
Tesco. 2nd ed. London: Kogan Page Limited.
Guardian, 2019. Slow growth takes shine off Tesco budget chain Jack's a year on.
[Online]
Available at: https://www.theguardian.com/business/2019/sep/15/slow-growth-takes-
the-shine-off-tesco-discounter-jacks-a-year-on
[Accessed 8 April 2020].
Kotler, P. & Keller, K. L., 2016. Marketing Management. 15th ed. Edinburgh Gate:
Pearson Education Limited.
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Petro, G., 2019. 10 Predictions For Retail In 2019. [Online]
Available at: https://www.forbes.com/sites/gregpetro/2019/01/04/10-predictions-for-
retail-in-2019/#63254ddf5f13
[Accessed 8 April 2020].
Retail Insight, 2018. Retailers must adapt as environmental factors impact shopper
choice. [Online]
Available at: https://www.retail-insight-network.com/comment/retailers-must-adapt-
environmental-factors-impact-shopper-choice/
[Accessed 19 April 2020].
Statista, 2019. Online shopping in the United Kingdom (UK). [Online]
Available at: https://www.statista.com/study/22395/online-shopping-in-the-united-
kingdom-statista-dossier/
[Accessed 8 April 2020].
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dossier/
[Accessed 6 April 2020].
Statista, n.d. UK economic and financial indicators post Brexit referendum. [Online]
Available at: https://www.statista.com/study/36274/economic-and-financial-indicators-of-
the-uk-post-eu-referendum-statista-dossier/
[Accessed 6 April 2020].
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[Accessed 9 April 2020].
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The GDPR Group Ltd., 2019. Knowledge Advice Education Tecnology. [Online]
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[Accessed 7 April 2020].
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Willis Towers Watson, 2017. UK Retail Industry post-Brexit. [Online]
Available at: https://www.willistowerswatson.com/-/media/WTW/Insights/2017/04/UK-
retail-industry-post-Brexit.pdf
[Accessed 6 April 2020].
Appendices
(CBINSIGHTS, 2017)