Tesco: Marketing at Tesco

Company Description:

Tesco started life in 1919when Jack Cohen started selling surplus groceries from a stall in the East End of London. Mr Cohen made a profit of £1 from sales of £4 on his first day. It then appeared as a brand after five years later in 1924 when he bought a shipment of tea from a Mr T E Stockwell. The initials and letters were combined to form Tes-Co and in 1929 Mr Cohen opened the flagship Tesco store in Burnt Oak North London.

In the 1990's, Tesco continued to tighten its grip on the UK with more store openings and aggressive marketing campaign in an attempt to surpass Sainsbury's as the UK leading grocer.

Tesco.com was launched in 2000 and the Supermarket continued to expand its range of products which now includes clothes, electrical and personal finance. In 2004 Tesco entered the broadband market.

Tesco introduced its first 24 hour store while it also expanded overseas opening shops in Poland Slovakia and the Czech Republic.

Tesco has gone globally as well, by launching ambitious plans to open stores in the USA under the name ‘Fresh and Easy' and funded by existing resources Tesco operated in 13 countries.

Tesco has got access in every single postcode area in the country. As it stands there is only one postcode in the UK in Harrogate in North Yorkshire which does not have a Tesco.

Hence, Tesco is the largest British retailer by both global sales and domestic market share with profit exceeding £3 billion. It is third largest global retailer based on revenue after Walmart and France Carrefour. But second largest based on profit. It has diversified its market such as consumer electronics, clothing, financial services, telecoms, home health and car insurance, dental plans, internet and software.


The marketing audit is a fundamental part of the marketing planning process. It is conducted not only at the beginning of the process but also during and after the process completion. Marketing audit not only consider its own plan but also considers internal and external factor that affects marketing planning. Some important tools used by marketing audit are SWOT for internal and external environment where as PEST and Five Forces Analysis which focus only on the external environment.

It can be viewed as an ‘umbrella that covers efforts to asses customer needs and wants and to understand community patterns. External environment is reviewed at micro and macro level.


The marketing Audit has been defined by Phillip Kotler as a comprehensive, systematic, independent and periodic examination activities and resources in order to determine problem areas and opportunities and to recommend a plan of action.

As per the definition:

Marketing Audit is Comprehensive, systematic, independent and periodic features. In simple words marketing audit is the complete review of the environment that includes both internal and external environment of any organization. The marketing audit follows the following areas as components of marketing audit:

· Environmental Audit which includes Macro Environmental Audit and Micro Environmental Audit.

· Marketing Strategy Audit

· Marketing Organization Audit

· Marketing System Audit

· Marketing Productivity Audit

· Marketing Function Audit


Processes and techniques used for auditing the marketing auditing environment follows simple three steps are:

a) Agreement on objectives, scope and approach: Marketing auditor must prepares for the marketing audit by holding discussion with the CEO and the executive staff and briefly reviewing some financial and marketing data. Often objectives are discussed in the meeting such as determine how market views the company and its competitors, recommending a pricing policy, determining sale activity. The audit would cover the marketing operations of the company as a whole.

b) Data collection: More time is spent on the gathering data. More auditors are involved when the project is large. Auditor has to spent time in deciding what question to be asked, who will be interviewed and so on so forth. Daily reports of the interviews are to be written up and reviewed.

c) Report preparation and presentation: When the data gathering is over, auditor prepares notes for a visual and verbal presentation to the company officer.

Techniques used for auditing the marketing environments are as follows.

1) SWOT Analysis: It is one of the most important tools of marketing audit. It helps a lot of help to the marketers and is used at the beginning of the marketing audit process. It has advantages as well as drawbacks. Some of the drawback are subjective and cannot be relied too much. Therefore it should be used as a guide in the marketing planning and not as a prescription to the process.

2) PEST Analysis: Various factor of the marketing is analysed by PEST analysis that effects upon the marketing process. An organization that is carrying the analysis needs to study the environmental factors that are internal and external.

3) Five Force Analyses: This is an analysis that helps the marketers to have a clear picture of competitor's for the market. This analysis has some similarities with PEST analysis. In this analysis the marketer goes through five areas of concerns.


Analyse and evaluate the external environment of the organization by using PEST framework, Porter's Five Force model and Product life cycle.

Company's profle:

Tesco runs more than 2300 supermarkets and convenience stores in the UK, Ireland, Central Europe and Asia. It is operating in almost areas such as gasoline retail( Tesco Express) small urban stores ( Tesco Metro) hypermarkets ( Tesco Extra) and Financial service ( Tesco Personal Finance). It covers up to 35% stake in US grocery. It is the leading online grocery store and is now expanding its business with a TV channel and a retail based education institution.

A) A PEST Analysis of the industry was then undertaken to examine the local, national and global influence of political, economic, social and technological factors to understand opportunities and threats well.

An assumption was made that most of these ( political, economic, social, legal and environmental ) factors would, to some extent apply to the retail industry in Sweden:

Political: Following the European Integration and Free Trade Agreements, the market has opened British Companies to invest in Eastern European. It has 60 stores in Hungary. Lidl is fighting hard to maintain its market share with an aggressive pricing strategy against Tesco.

Economic: Retail industry is fairly recession proof and also very sensitive to interest rate. Because of September 11 events, the world economy have suffered heavily, stocks were plummeting and prices are low all time. However the world economy is up after the September 11th attack. Consumers are optimistic and retail industry is once again boosting.

Social: There are changes in consumer taste and lifestyle present both opportunities and threats for the retail industry. There are alternative Sweden national retailers which poses additional threats to the Tesco while entering in the Sweden market industry.

Technical: Introduction of online shopping via internet is now a common place in retailing. IT system undertakes a paperless operation, the management and administration of the company which are monitored by the secured severs, it provides a flexible base for running the business. Sweden is at the forefront of technologically developed with national companies like Ericsson, hence Tesco gets an advantage of developed logistics and distribution channels already in place.

One other tool that will be used in these areas is Porter Five Forces. This model can be used to good analytic effect alongside other models such as the SWOT and PEST analysis tools.

Five Forces analyses five important in the determination of competitive power and these are:

· Buyer's power:

· Suppliers' power:

· Rivalry among competitors:

· Threat of new entrants:

· Threat of substitute products:

Below is the diagram which describes the Porter Five Force Model:


Problems faced by Tesco can be explained by Porter's five forces including of the threat of substitutes from other supermarkets, buyer power, supplier power and the power of customer.

Buyer power also decides the prices in the market. If products are expensive in Tesco then they will purchased from Sainsbury. This mean market is disciplined which make the pricing is disciplined as well. This in turn stops them to destroy the market in a profit war.

Supplier power is an important part of this model. Supplier power is wielded by suppliers demanding that retailers should pay them certain price for their goods supplied.

There is always a threat of substitution, although Tesco tries to ensure brand image and quality by having the best value for the products.

Tesco acknowledges the fact that there have always been threats from the competitors and new entrants into the markets and therefore always plan to improve upon developments in its stores.



Identifying and analysis the main barriers to marketing planning:

There are different barriers in the market

1. Weak support from the chief executive and top management.

2. Lack of a plan for planning.

3. Lack of line management support due to any of the following such as Hostility, Lack of skills, and Lack of information, Lack of resources, Inadequate organizational structure, Confusion over planning terms, Numbers in lieu of written objectives and strategies, In detailed, Once a year ritual, Separation of operational planning, Failure to integrate marketing planning into total corporate planning system, Delegation of planning to a planner


Tesco needs to face the markets and so it would need to overcome the barriers listed above in some of the planned ways:

Be strategic:

Finally there are many human organizational and culture barriers which prevent an organization deriving the maximum benefit from marketing planning.

The marketing book by Michael John Baker




Tesco has been doing extremely well in focusing on different markets by sticking to its principles' every little helps'. Tesco implements market planning specifically market penetration, product development, market development and diversification in order to see which ways is competing with the competitors in the market. Tesco battles by expanding market demand and increasing market share and defending market share with strategies such as flank, pre-emptive or mobile. Competitors are using offensive strategies such as flank to gain market share.

Tesco's strategy explains clear



(goods answer to barriers)

In order to overcome the barrier Tesco must ensure it sets SMART marketing objectives that are specific to the needs of the consumer which is measurable, attainable, and relevant and time limit.


Write above task 2 from here.


Tesco has a need to be innovative in the market or services in order to formulate the marketing plans as the Swedish market is very competitive therefore Tesco needs to use their financial resources to create and sustain a high profile with multi level marketing campaign to raise the profile of Tesco in Sweden and introduce the concept of quality children clothes at Tesco.

Need to be innovative in the market are as follows:

a) Business survival: Tesco has to be innovative in the market for the business survival. If they don't be innovative the market is going to be captured by their competitor's.

b) For better returns: Innovation not only helps to gain the market share from the competitors' but also helps the company to gain better returns from it.

c) To take advantage of opportunity: Modern market is full of opportunity but only for those who can grab the opportunity. Tesco has to take the opportunity from their competitors and hence they has to be innovative.

d) For profitability: Tesco believe in quality with value for price. Cost cutting is something that Tesco will not agree on and hence to gain profit than cutting cost will arise the needs for innovation.

e) Competitive Advantage: Innovation will help Tesco to have an edge over the competition which is possible only by having a innovative ideas and technology.

Other reason and needs for the innovations are such as for the progression of human well being, economic growth and etc.


Tesco's Marketing Plan for new product launch in Sweden.










Diverse ranges of products

Open 24 hours a day

Strong Cash Flow Position

Increase turnover and trading profits

Strong Balance Sheet

Leading Supermarket Chain

Brand Awareness

Human resources

Online Shopping

Capabilities to turn resources into advantages


Develop brand awareness globally

New Markets

Market shift to globalisation

Health awareness growth -GM crops

Innovation & Alliances

Low cost brand growth


Non-food - offers untapped new markets with higher margins










Perception of low quality -(Tesco value brands)

Lack of local knowledge of customers and culture

Foreign brand


New & existing competition

Volatility in Price of raw materials

Economic recession

Market shift to globalisation

Takeover bids

Far-East low cost brands

Extremely high competition for customers and resources

Tesco will use Ansoff's product market to identify direction for Tesco's strategic development. This will help to give Tesco a products and market coverage knowledge taking into the account its capabilities and also expectation from its stakeholder. Below is the diagram explaining its Swedish market for Tesco.








Market penetration

Product development

With existing capabilities

With new capabilities

Beyond current expectations


Market development

New segments

New territories

New users

With new capabilities

Beyond current expectations


With existing capabilities

With new capabilities

Beyond current expectations

Source: Johnson, G., Scholes, K., Whittington, R., (2005

From the Ansoff's matrix above, it is presumed that Tesco's launch of Baby wear in Sweden market will involve market development strategy. Sweden offer new market for Tesco and so Tesco needs to conforms whether the existing product serve the necessary criteria. Therefore, it is important to decide on the appropriate market segment to target in Sweden as this will determine its generic strategy. If it has to compete with ASDA George brand and Sainsbury's new TUI range, then it must consider cost leadership strategy. Tesco needs to have premium prices with luxury end to stand its competitor in the market. Tesco needs to have Differentiation Strategy to enter in the market as the Sweden market prices are low with good quality product, therefore Tesco will incur high cost and needs to enter the high end market with a differentiation strategy which would allow the entering in the Sweden market for clothes made for renewable sources such as cotton and wool and paying attention to environmentally friendly approach.

Market analysis needs to be taken:

The market size for baby and infant in Sweden

Market share of the competitors

Market segment, profile for the new buyer, targeting methods, marketing campaign.


To increase the profit by 12%

Swedish market share by 21%

Brand awareness

Motivating employees

Market Strategy:

Tesco's strategy is clear, areas such as UK grocery business, non food, global expansion, financial services, dotcom business and telecommunication business and hence Tesco can use its core areas to keep the business alive in the risky areas.

Tesco will use Differentiation Strategy to launch itself in the Swedish market by charging premium price from the elite customer who can afford to buy totally sustainable materials manufactured in Sweden itself against Florence and Fred or Cherokee names. However before deciding all this Tesco's needs to carry out market research to test the new product concept launch in the Swedish market, pricing strategy, attitudes towards the brand image as a retail outlet, buyers purchasing habits and so on.

Having defined the product specifications, differentiation strategy is applied which involves a detailed decision on Price, Product and Distribution.

Premium price can be charged on the basis of the quality and style being offered. Tesco cannot demand a premium price as compare to the price in the boutique as the product will be distributed throughout the Tesco chain.

Sweden is a huge country and the population is over a wide geographical areas. So, Tesco needs to decide distribution ways such as internet selling, joint venture or own stores chain. To sell its product, it has to cover maximum area. As Swedish people are technology savvy, internet selling can be a option,

Communication is very important, if product is not made known to the local and every people then the product launch would be a failure. Heavy marketing campaign will be carried to communicate to the common people in the vast geographical areas such as TV and radio repeated interval all day, Local newspaper, Media PR the alliance partner to issue press releases and talking to local people about Tesco and benefit such as availibity of jobs. Political PR, Billborad campaigns, Direct mailing, flyers, and internet ads and so on.

Task 4:

2 different organization to ethics in marketing. Identify and analyse different ethical issues in marketing strategy. Describe the implication of ethical issues on the marketing mix for the organization.


task 2



task 3




business ethics of tesco


business ethics of tesco


business ethics for M&S


notes on business ethics


good answer to write the task 4


best best answer to write abt the task 4

Marketing Ethics are the standards or moral principles governing the marketing profession.

In January 2007, Marks & Spencer step in the era of the eo-plan and with it a sense that a sustainable business model to broaden the range of retail and manufacturing industries. M&S is committed to doing the right thing for their customer, colleagues, shareholders, suppliers, the environment and local communities. M&S brand values of Quality, Value, Service and Innovation of their product and service. M&S follows values of loyalty and confidence for all customers above all else. M&S always make sure that labelling, advertising and other forms of communication are clear honest and accurate and will always work to respect cultural and ethical beliefs. M&S products are sourced from around the world, respecting

Third party and design integrity so that customers can get with the best quality products with competitive prices. All suppliers are complied with M&S Global Sourcing Principles and recognises international standard in Ethical Trading Initiative Base Code.

As Tesco is a brand name in the global market , hence it has to follow some marketing ethics. Tesco will face some marketing ethics issues which are as follows:

1) The search for universal values as a basis for international commercial behaviour.

2) Comparing the business ethics in different countries.

3) Comparison of business ethical tradition from various religious perspectives.

4) Other ethical issues such as fair trade movement or transfer pricing.

5) Globalization and cultural imperialism.

6) Varying Global standards such as use of child labour.

a) Lack in pricing

b) Price fixing

c) Dumping selling at a loss to increase market share and destroying the market so as to do price increase.

d) Claiming prizes through premium rate numbers.

e) Bait and Switch selling to enforce for more expensive alternative.

f) High pressure selling.

g) Goods and Brands piracy practice.

h) Misleading customer by copying the style of packaging.

i) Deceptive advertising

j) Unethical practices in market research and competitor's intelligence.

k) International marketing of products which are banned at home.

l) Altering side effects information

m) Production unsafe product

n) Inaccurate and incomplete testing of products

o) Treatment of animals in product testing.

p) Use of child labour and forced labour

q) Violation of the basic rights of workers

r) Ignoring of health, safety and environmental standards.

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