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.

References CBINSIGHTS, 2017. This European Discount Grocer Is Going After The $608B US

Supermarket Industry. [Online]

Available at: https://app.cbinsights.com/research/aldi-grocer-teardown-expert-

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].

Statista, 2019. Tesco Group in the United Kingdom (UK). [Online]

Available at: https://www.statista.com/study/31608/tesco-group-in-the-uk-statista-

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].

Tesco PLC, 2020. Tesco Annual Report 2019. [Online]

Available at:

https://www.tescoplc.com/media/476422/tesco_ara2019_full_report_web.pdf

[Accessed 9 April 2020].

Tesco, 2020. Tesco PLC Corporate Website. [Online]

Available at: https://www.tescoplc.com/about/

[Accessed 30 March 2020].

The GDPR Group Ltd., 2019. Knowledge Advice Education Tecnology. [Online]

Available at: https://www.gdpr.associates/gdpr-brexit/

[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)