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Executive Summary
This report analyses Tesco PLC as a business organisation from a Marketing perspective. This paper is divided into two sections: Understanding the marketing function and its significance, and 2) developing a marketing plan for Tesco. As a trainee marketing officer, it was important to understand the various marketing functions that come into play when evaluating the success of a business. It also evaluates the inter-connectivity of marketing function with other organisational departments to make organisational success possible such as Supply Chain, Purchasing, Finance, and Operations departments. The marketing function has a very significant role to perform along with other units to continually maintain Tesco’s market dominance. The second section of this report that develops and evaluates a market plan conducts a SWOT analysis for Tesco to first understand the market forces that act of the business as well as the internal strengths and weaknesses that come into play. It then analyses the external market and sets the marketing objectives of the strategy. The ultimate goal of this new market plan is to achieve sustainable marketing post COVID19 in order to emerge as a green and eco-friendly brand in the market as well as to sustain its business for all unforeseeable uncertainties to follow the year 2021.
Table of Contents
Marketing Trends & Concepts Adopted by Tesco. 4
Marketing Information Management 6
Interrelation of Marketing Function with Other Units. 6
Significance of Marketing Function in Meeting Goals. 6
Section 2: Developing and Evaluating a Market Plan. 8
Evidence based market scan for products. 11
Market Segmentation, Targeting & Positioning Strategy. 13
Section 1: Introduction
As a trainee marketing officer, I have been assigned to assess the different marketing functions within Tesco PLC and how they integrate with others to develop a sustainable marketing strategy for the retail giant. The report consists of a brief overview of the current market trends, concepts and the key marketing functions within Tesco. The report further illustrates how marketing interrelates with other functional areas within the business organization (Tesco, 2020).
Tesco – Business overview
Tesco is one of the largest retail giants in the UK, actively running over 3400 supermarkets, hypermarkets, and convenience stores. It also has market presence outside of UK with stores in Ireland, and parts of Asia (Tesco, 2020). The retail merchandise first began its operations in 1919 by Jack Cohen in London, UK. The company gradually grew over the following years and today leads the retail market across the country. The company aims to provide the best consumer products to its customers and ensure quality customer service (Brassington, FS., 2000).
Marketing Trends & Concepts Adopted by Tesco
In the recent years, Tesco has shifted it’s marketing strategy to adapt to the changing market dyanmics. For instance, following the 2013-2014 accounting scandals, the company made use of humour to recover from its tarnished reputation and build a sense of familiarity with the customers again (Tesco, 2020).
It also reviewed its marketing mix and introduced new, fresh product lines to its product portfolio a;ong with the re-branding of beef, poultry, and fruit to appeal to the growing market of cost-conscious consumers.
Next, the company made a shift from brick and mortar only to digital marketing given the rise of internet and online consumers. Consequently, the budget spent on traditional ad space for Tesco went down as it invests more on digital platforms to target individual consumers based on their consumer needs (Seth, A. & Randall, G., 2018).
This marketing trend also gave rise to its customising media strategy where Tesco is actively drawing promotional strategies for each individual customer thanks to e-commerce and big data availability. It’s focus on the individual experience helps Tesco come up with more efficient and effective marketing strategies that appeal to larger masses in general.
Key Marketing Functions
Product Management
Product management entails the designing or new products to meet changing market dynamics and growing consumer needs. This particular marketing function requires in-depth market research study to understand what people like and what will sell the most before developing a new product or a service. Some of the responsibilities of people in this function include conversing with prospective customers, conducting market analysis such as competitor analysis, and incorporating the feedback received by customers into the existing marketing strategies to enhance customer journey and experience.
Pricing
Marketing research also enables brands to decide on the price point they want to sell at. Often brands are required to find the right balance between price and brand positioning to create most value. High-end luxury brands deliberately price their product much higher than the cost or market average whereas, other brands might want to sell more volume and appear as an affordable brand (Seth, A. & Randall, G., 2018). Regardless, pricing requires market research and is therefore a marketing function.
Distribution
Even though distribution is typically viewed as a supply chain management function, it is often the marketing department’s responsibility to decide which distribution channels will best communicate the brand and how the business can reach the customer in the most effective way possible. Therefore, marketing managers work closely with supply chain counterparts to align product campaigns and distribution strategies (Haerifar, P., 2019).
Promotion
For any busines to be successful it is important that the product or service they offer is known to the potential customer. For this, brands conduct awareness campaigns and various other promotional activities to market the product or service they sell. While this role often overlaps with advertising and public relations, from a strictly marketing standpoint, they all fall under promotions. It also includes business activities such as content marketing, online selling, social media marketing, and using influencers to reach customers.
Marketing Information Management
Data is the new oil, and a good marketer knows this best. For marketers, the more information they have on customers the better it is because it helps them evaluate consumer behaviour and buying preferences as well as understand market gaps and give them the opportunity to launch new products and services into the market (Aaker, DA. & McLaughlin, D., 2010). Therefore, a core function of marketing is to collect data and generate valuable insights from them for future marketing strategies. It involves addressing the latest industry trends, responding to competitor messages, and speaking to customer concerns.
Selling
Perhaps the most obvious marketing function and also the ultimate role of marketing is to sell a product or service to a customer. All marketing decisions and actions are strategically planned in a way that the end result for the marketing function is to sell. Whether the business is selling to other businesses (B2B) or to consumers (B2C), marketers work towards the end goal of selling.
Interrelation of Marketing Function with Other Units
While marketing function handles the organisational front of any business, there are several other department units that all work closely to achieve the end goal of the business. The marketing function looks over the effective promotion of a product or a service (Haerifar, P., 2019). However, there is a full value chain behind the marketing function that enables the product or service to be worthy of the sale. For instance, the purchase and procurement department that sources the raw materials needed to manufacture goods, and the operations department that overlooks all administrative and on-field tasks and activities, and the finance department that helps budget financial resources and supervises cost allocation and monetary decisions (Brassington, FS., 2000). Similarly, the supply chain department oversees the entire logistical aspect of the business. The marketing function strongly intertwines with all other business functions as it is the end unit of the value chain, polishing the product or service at offer by a business.
Significance of Marketing Function in Meeting Goals
The goal of marketing function in any organisation is to sell an organisational strategy such that it results in the sales of product or service offered by the company. While it’s primary goal is to sell the product or service, it also relates to the integration of market study with the organisational strategy to develop the existing market as well as to plan for new markets for a product or service. Marketing, therefore, is the process of creating value for the brand by creating value for the customers. It is a critical organisational unit that plays a vital role in helping a business meet its organisational goals and objectives. Some key areas within the marketing function include the study of the industry and market that a business operates in, understanding all external and internal forces driving the business, and developing strategic ways to make use of existing resources and opportunities to best create brand value. This is done by ensuring revenue generation through sales, maximising profit margins, and promoting the brand to expand its reach and customer base.
Section 2: Developing and Evaluating a Market Plan
SWOT Analysis of Tesco
Marketing Mix for Tesco
Product
The corporate strategy for Tesco is to be a one-stop solution for all its customers’ needs. This resonates well with the company’s product range as it incorporates a well diverse portfolio with not only shopping items but also communication and financial services. Tesco caters to products throughout the broad spectrum from low-end, everyday value goods to high-end, premium quality products and food brands (Dubrin, A., 2008). The retailer also has its very own product line to combat economic crisis and in an attempt to enhance operational efficiency. In the year 2015, Tesco reduced third-party products by thirty per cent and instead focused on the development of its own brand and solidify customer loyalty for own brands such as Technika and Chokablock. However, cutting down the product range and exclusion of other brands also meant that Tesco now offered less brands and therefore, gave an opportunity for competing brands like Sainsbury and Asda to use this to their advantage (Tesco, 2020).
Price
Tesco makes use of the cost-leadership advantage throughout its operational units as the company is well reputed for offering the full product range at minimum prices. The company does so by utliising the economies of scale in the market and purchases stock in bulk quantities at a wholesale rate. It also routinely reviews store performances and evaluates product performance to evaluate how Tesco is doing in terms of prices and how it can continually attract more customers. Tesco has also consistently made use of the first movers advantage by acting quickly and adapting to changing market conditions such as timely responding to price shifts, quickly adding new products to its range and so on (Dubrin, A., 2008).
Place
Situated across UK, Tesco operates over 3400 stores and manages a human resource base of over 310,000 employees. The retail brand has different store types and chooses the optimal store based on the location it situates in, to address various market demands and customer needs. Each store is specifically designed to offer optimised products and services as per the market dynamics in that geographic location. At present, Tesco has five different types of stores as listed below:
Tesco Extra – Largest Tesco stores located typically in suburban regions selling everything on the commercial market.
Tesco Superstore – Hypermarkets but relatively smaller in size compared to Tesco extra and located more frequently as part of malls and shopping complexes.
Tesco Metro – Situated in main cities near bus stops and metro stations, these stores cater to high selling products such as grocery items. Smaller in size but bigger price margins as they sell at a price higher than that at Tesco extra or Tesco superstore
Tesco Express – Similar to Tesco Metro conceptually, these stores are usually part of fuel stations or places that are crowded and frequently visited.
One Stop – The latest store concept at Tesco which does not carry the Tesco brand name, these one-stop shops are built to quickly shop for groceries on the way home. Prices are higher than hypermarkets, but these stores are located in rural areas and villages.
Tesco also has an online presence.
Promotion
Tesco has a coherent marketing system in place where it uses various print and media channels to promote itself as a lowest price, savings retail brand. The company also has a promotional club membership card known as the Clubcard which offers promotional discounts and personalised offers to its loyal customers. However, at present the company does not have a more innovative reward scheme and does not cater to all customers.
Chosen Products
As part of the market plan development, the product chosen for Tesco to be the primary focus in this strategy are sustainable meat alternatives i.e. plant based food sources to cater the rising market of people who are conscious consumers and care about the planet.
Marketing Objectives
- To introduce a new, wide range of healthy and sustainable food items and meat alternatives, sourced 100 per cent organically
- To sustain low-cost advantage and deliver quality product and service
- To increase sales and generate higher profit margins
- To gain customer retention through online sales
- To make use of big data and AI technology to enhance customer journey and experience
- To create valuable insights for improved marketing by using big data
Evidence based market scan for products
It is estimated that meat production will reach unsustainability by the year 2050 given the current rates of consumption. This is because of the high destructive cost and the intense resource utilisation that goes into meat consumption. Whether is it red meat, poultry, or pork, all meat-rich diets are rapidly moving towards unsustainable consumption patterns (Aaker, DA. & McLaughlin, D., 2010). This presents an opportunity for producers around the world to step in and revolutionise the food consumption market. At present, there is a sharply growing market for meat alternatives. Meat alternatives substitutes of meat that provide similar nutritious characteristics and even similar textures but are purely plant based. Some popular meat alternatives include beans, lentils, and tofu.
In the UK market, the meat alternatives market was valued at £353.35 million and is expected to reach £524.97 million by 2025. To put things in perspective, this makes up for about 30 per cent of the total European meat alternatives market. The following chart represents the growth of this market over the years as well as its forecasted growth from 2021 to 2025:
Figure 2 : UK Meat Alternatives Market Growth & Forecasts (TheVeganSociety, 2021)
Given the fact that the meat alternatives market is the fastest growing consumer trend in the UK it makes sense for Tesco to introduce a dedicated product line as part of its sustainable development program following COVID19.
Market Strategy
| Marketing Strategy for | Tesco PLC |
| Marketing Strategy Year | 2021 |
| Objectives | Introduce Meat Alternatives Product Line |
| Products | Over 20 plant-based items |
| Customers | All food consumers |
| Competitors | Asda, Sainsbury, Marks & Spencer Food, and other retailers |
| Position | Leading in the sustainable foods department |
| Pricing | Competitive and lower |
| Sales & Support | Online and in-stores |
| Promotion | Digital marketing, print media, membership card rewards, and introductory discount prices |
| Action Plan | To launch new product line of sustainable meat alternatives and grow sales to 10 per cent of total sales by 2022 |
Market Segmentation, Targeting & Positioning Strategy
The new product line of meat alternatives will directly target to the environmentally conscious and healthy eaters of the UK market (Aaker, DA. & McLaughlin, D., 2010). It shall include males and females both, of ages 18 and above, belonging to socioeconomic classes A and B and having the decision-making power. It will also cater to the vegan and vegetarian market in the UK.
Monitoring & Control Plan
| Launch of the New Product Line | July 2021 |
| Phase 1 (pilot project) | Duration: 6 months |
| Evaluation of performance | February 2022 |
| Final implementation | March 2022 |
The new product line shall be introduced in selected stores across UK. The stores will be selected based on their strategic, geographic positioning after a market research is conducted to decide where market for meat alternatives is highly dense. The product line will run its course of six months and its key performance indicators will be closely monitored to understand all factors affecting its sales. Then, after a final review and any modifications that may be required, final implementation and introduction of the new sustainable product line shall be done in all stores across the UK (Brassington, FS., 2000).
Summary & Conclusion
The meat alternatives market is a new and growing market in the UK. This is a great opportunity for Tesco PLC to introduce as part of its brand and emerge as a relevant and sustainable brand in the UK. Given the COVID19 pandemic, there is greater rise when it comes to sustainability and a greener future for generations to come. This marketing strategy and new product line will ensure Tesco has a first mover advantage in the retail market and caters to the rapidly expanding plant-based, organic market.
References
Aaker, DA & McLaughlin, D 2010, Strategic Market management: Global Perspective, John Wiley & Sons Ltd, Chichester.
Brassington, FS 2000, Principles of Marketing, 3rd edn, Prentice Hall, Harlow.
Dubrin, A 2008, Essentials of Management, 8th edn, Nelson Education, Ltd, Montreal.
Dunn, A & Mason, O 2004, Tesco in Switzerland. Web.
Farrall, C & Lindsley, M 2005, The Marketing Mix, Cambridge University Press, Cambridge.
Haerifar, P., 2019, Performance Management in Tesco, Grim Verlag, Norderstedt.
Morris, T 2014 Tesco: A Case Study in Supermarket Excellence, Coriolis Research, Auckland.
Plunkett, JW 2017, Plunkett’s Retail Industry Almanac, Plunkett Research, Ltd, Houston.
Seth, A & Randall, G 2018, The Grocers: The Rise and Rice of The Supermarkets Chains, 3rd edn, Kogan Page Publishers, London.
Tesco 2020, Annual Report and Financial Statements 2020, Tesco PLC, Hertfordshire.
