1.

Introduction
The report is being conducted on the company Tesco PLC that is UKs leading grocery store. The
aim of this report is to develop a three-year marketing strategy plan and a one-year tactical
communication plan for Tesco. Tesco at some stage has faced difficulty hence by exploring the
brand and critically analyzing its marketing strategy, I will then develop a strategy that would
turn Tescos fortune around.

1.1. Methodology
Market research for the brand has been conducted through secondary research by visiting
academic websites such as Mintel, Database reports,LexisNexis Database, Business reports,
Articles, Blogs and News online.

1.2. History
Tesco PLC is a multinational grocery and general merchandise retailer
headquartered in Cheshunt, Hertfordshire, England, United Kingdom. It is the
third largest retailer in the world measured by profits and second-largest
retailer in the world measured by revenues. It has stores in 12 countries
across Asia, Europe and North America and is the grocery market leader in
the UK (where it has a market share of around 30%), the Republic of Ireland,
Malaysia, and Thailand. Jack Cohen founded Tesco in 1919 as a group of
market stalls. The Tesco name first appeared in 1924, after Cohen purchased
a shipment of tea from T. E. Stockwell and combined those initials with the
first two letters of his surname, and the first Tesco store opened in 1929 in
Burnt Oak, Middlesex. His business expanded rapidly, and by 1939 he had
over 100 Tesco stores across the country. (TESCO PLC, 2015)

2.BRAND audit
2.0.BRAND AUDIT.
2.1. BRAND VISION:
Tescos' strategic aim is to remain the most leading grocery retailer in the UK and globally with a focus
on excellent quality products and exceptional customer service. Tescos vision is to form revelation by
being the most highly valued business around the world. It aspires to be an ever-growing modern business
that earns not only respect but also trust from its customers, different communities, committed colleagues
and shareholders. (TESCO PLC, 2015)

2.2. BRAND MISSION:

Tescos mission is of creating value for its customers and to earn their lifetime loyalty. They aim to
provide something new every time for its customers by understanding there needs and wants like no one
else. They want to be a business that not only earns respect but also trust. (TESCO PLC, 2015)

Tescos core purpose:We make what matters better, together. (Design like a quote on indesign)

2.3. BRAND PROMISE:

Tesco works hard for its customers as nothing is more important for Tesco than pleasing its customers and
gaining their trust. Tesco promises its customers to provide that trust through the food it produces and
sells. Philip Clarke, Chief Executive, Tesco summaries his promise by assuring its customers that Tesco
shall set a new standard for testing the products it makes, so that the customers know what goes in the
products they are buying aswell as how it is produced. It promises to provide all the information of what
goes in the food like no other retailer so that the customers can make much sensible choices when buying
food for their families. (TESCO PLC, 2015) (Our responsibility and our promise - Philip Clarke, 2013)

2.4. BRAND VALUES:

Tescos values are:

No one tries harder for customers: For Tesco customers, communities and colleagues
comes first so it will go at any extent of listening to them and providing them with all that
they desire for.
We treat everyone how we like to be treated: Tesco believes in giving respect as that is
the path of getting respect back. So Tesco treats its colleagues with all the love and
respect considering them a part of the Tesco family sharing knowledge with them so they
gain experience and get all the support required.
We use our scale for good: Tesco not only provides affordable and high quality products around
the world to its customers but through this scale Tesco aims to contribute positively towards the
society as a whole to create that greater value. (TESCO PLC, 2015)

2.5. BRAND ESSENCE:

ATTRIBUTES. Tesco is the most noted brand for its online experience,
confirming its strengths in e-commerce. (MINTEL, 2014).
PERSONALITY. Accessible and affordable.(MINTEL, 2014).
PROMISE. Tescos promise is that every little helps. That means testing that
every little helps promise is delivered effectively to the customers through
clubcard. (Humby, C., 2008).
SOURCE OF AUTHORITY.Grocer Gold Awards

In June 2014 we won the Grocer Gold 'Business Initiative of the Year' award
for actively changing customer behaviour towards low calorie drinks. As part
of our ambiiton to improve customer health, we are proud that we have been
able to remove over three billion calories from our soft drinks range, whilst
retaining great quality products.
PRWeek Global Awards 2014

We were a finalist in this years Corporate Social Responsibility category in

recognition of our Using our Scale for Good strategy and the progress we
have made in communicating it.
(TESCO PLC, 2015)
BRAND ESSENCE. Quality and best Customer service.

2.6. BRAND POSITIONING:

What makes Tesco different from its competitors is the wide range of products it offers however
according to (MINTEL, 2014) it is considered as a retailer that only focuses on profits. Despite that
association Tesco not only has a high level of usage in comparison to its competitors but also earns more

consumers who shop at Tesco on regular basis. These frequent and loyal consistent shoppers are all under
45s, indicating the overall strength of the brand.

A products position is the way the product is defined by consumers on important attributesthe place
the product occupies in consumers minds relative to competing A products position is the way the
product is defined by consumers on important attributesthe place the product occupies in
consumers minds relative to competing .(Philip, K 2008)
Tesco is focusing on market positioning and product positioning, In UK market Tesco having a
prominent position and advertising more to differentiate its brand image as well Tesco is offering low
price products as Tesco new CEO send email to all employees and direct them that we should focus on
customers.

High Price

High Quality

Low Quality

Low Price

Source: (MINTEL, 2014)

3.Situation analysis

3.1. Key Macro Trends

Key touchpoints of Marco environment and trends for TESCO.

INTERNET OF SHARING THINGS

Nothing gets trend watchers more excited than when two sexy trends get all
amorous (even if most mainstream consumers have hardly heard of either ;)
In 2015, the Internet of Things and the Sharing Economy collide to allow a
whole new world of asset sharing: spontaneous, useful, fun, profitable and
more. Last year we urged innovators to put basic human needs at the center
of their connected object initiatives. And there have been some exciting
INTERNET OF CARING THINGS innovations, such as Chinese tech giant
Baidus set of smart chopsticks, which can detect the freshness of cooking
oil. Now, where next for the Internet of Things?
Enter the INTERNET OF SHARING THINGS. As more objects become
connected, new ways of deriving value from them will become possible for
consumers, shared access being one.
The Collaborative/Mesh economy has long been predicted, but the
coming months will see it start to become a consumer reality via
the INTERNET OF SHARING THINGS. One signal: currently only 4% of
consumers own an in-home IoT device, but nearly two-thirds plan to
buy one in the next five years (Acquity Group / Accenture, August
2014).

BRANDED GOVERNMENT
2015 will be the year for progressive brands to initiate, undertake or support
meaningful civic transformation. Across the globe, consumers know that
public authorities are struggling to address many pressing social and
economic issues in the face of constrained funding and/or ineffective legacy
systems.
In fact, 73% of Millennials dont believe governments can solve todays
issues alone, and 83% want businesses to get more involved (MSLGROUP,
September 2014).
Thats why in 2015, forward-thinking brands will step up to the challenge of
real, meaningful change in the civic arena. And not just with standard CSR
initiatives, but by identifying governmental shortcomings and either
through partnerships or by working directly with the community effecting
real and lasting positive change.
One caveat. If its just your marketing department driving a BRANDED
GOVERNMENT initiative, then may we humbly suggest you re-examine your
commitment to your chosen cause. If it feels and looks like a PR stunt, thats
probably because it is ;)
CURRENCIES OF CHANGE

In search of wellness, strength, new skills, knowledge and more, 2015's

consumers will embrace device-fueled rewards that incentivize improving
behaviours. The impulse towards self-improvement is deep-rooted, but too
often there's a chasm between aspiration and reality.
Set that chasm against the fact that 66% of consumers feel that the value
exchange between consumers and brands is one-sided. Meanwhile, 70% feel
that brands are motivated by a self-centered desire to increase profits rather
than by a sincere commitment to their customers (Edelman, October 2014).
In 2015, smart brands will look to flip that picture.
Here's one approach, build your inevitable 'what to do with wearables in
2015' discussion around how wearable devices (and smartphones) can
enable your customers to earn CURRENCIES OF CHANGE: personalised
rewards*, incentives and discounts that help them overcome the
inconvenience, cost or just the oh-so-human inertia that so often prevents
self-improvement.
Alfa-Bank, Foodtweeks and Fietsmodus
In June 2014, Russian bank Alfa-Bank launched a special account
that rewards customers for taking physical exercise. Users connect their
fitness tracker to the service, and for every step taken, funds from their
existing account are transferred into the savings account, which pays a
higher rate of interest than normally available.
Foodtweeks helps people looking to decrease their calorie intake. Users tell
the app what theyre about to eat and receive tips to reduce the dishs
calorie content. If the user says they followed the advice, Foodtweeks then
makes a donation of the equivalent number of calories to a local food bank.
In November 2014, the service had partnered with 55 food banks in the US.
Weve also seen a number of anti-phone CURRENCIES OF CHANGE initiatives,
from the UNICEF Tap Project to the McDonalds BFF Timeout in the
Philippines. One more: Fietsmodus (meaning Bike Mode) encourages people
to avoid using their cellphones while cycling. Launched by the Dutch
government in September 2014, activating the app while cycling earns
points which can be used for the chance to win prizes.
SYMPATHETIC PRICING
Get ready for a wave of imaginative discounts that relieve lifestyle pain
points or offer a helping hand in difficult times.
We've seen above that consumers will embrace rewards for good behavior.
And how brands can step in and provide essential public services. Now one
more totally practical way to prove that you 'get it' and are willing to put
your money where your mouth is: SYMPATHETIC PRICING.
Our full SYMPATHETIC PRICING Trend Briefing back in June 2014 looked at
how and why consumers will embrace helpful, compassionate discounts and
deals that support a shared cause or alleviate personal pain points. And the
examples just keep rolling in...

Why? Because when only 30% of global consumers think brands make a
sincere commitment towards their customers (Edelman, October 2014),
addressing an eternal consumer concern (price) and linking this to a personal
or meaningful cause, is a super-powerful way for brands to show they care.
So start brainstorming: how (and where) will you implement a SYMPATHETIC
PRICING strategy in 2015?
South China Morning Post, PareUp and Lote 42
In September 2014, Hong Kong newspaper the South China Morning Post
removed its paywall to give readers free access to the papers Occupy
Central articles.
Launched in May 2014, PareUp allows New York-based restaurants, coffee
shops and grocery stores to offer soon-to-be-wasted food at a discounted
price. Participating merchants can send alerts to users detailing what is
available, and the discounted price.
During the FIFA World Cup in July 2014, Brazilian publisher Lote 42
offered customers a 10% discount for every goal scored against the
national team during the soccer championship. After Brazil lost 7-1 to
Germany, customers were offered a 70% discount for 24 hours,
catapulting the brand to national attention. (Trendwatching, 2014)

3.2. PEST Analysis

PEST analysis is useful tool to measure marketing position of TESCO. It take
external factor to the organization, to prepare three years marketing strategy
plan for TESCO we need to scan external environment to identify TESCO
current marketing position in market, so there are PEST (political, Economic,
Social and technological) factors.

Political:
Tesco is operating in global environment, and it owns hundreds of stores in
all over the world its performance and decisions are highly influenced by
political factors, Different countries have different laws for foreign companies
Tesco has to follow all these laws and regulation e.g. tax rates, employment
legislation and of course due to financial instability of the world wants
companies to offer job opportunities. According to Burch v. George (1994)
Employment regulations require providing mix job opportunities to large
number of students, disable people, elders and other communities.
In each country where we operate, we may be impacted by legal and
regulatory changes, increased scrutiny by Competition authorities and
political development relevant to domestic trade and the retail sector. The

regulatory landscape is becoming more restrictive in many markets, which

may impact how we trade.Examples include stricter rules regarding opening
hours customer, supplier and data protection, corporate crime and
heightened banking regulation. (TESCO PLC - Annual Report and Financial
Statements, 2014)
Tescos worldwide presence means that its performance is influenced by
global political factors. These include specific acts of legislation, tax rates,
and the political stability of the countries in which it operates (Peter A. Koen
et al, 2011)

Economics:
Tesco is operating in international market so it effects worldwide economic
down turn and recession. And change in tax rate or interest rate directly
effect Tescos borrowing power and profit after tax as I discussed early that
Tesco is major dependent on UK market. Tesco is growing internationally it
has more than 28.5% of market share of UK in 2014 that 2.5% lower than
previous years.(The Guardian, 2014)
Although UK tax rate decreases over the years this may affect Tesco in
meanwhile we have to consider people buying power and their disposable
income to spend. (The Telegraph, 2013)
In each country where Tesco operates, they may be impacted by legal and
regulatory changes, increased scrutiny by competition authorities and
political development relevant to domestic trade and the retail sector.
(TESCO PLC - Annual Report and Financial Statements, 2014)

Social:
With the passage of time, there is variety of social changes, trends and
changing shopping patterns have been affected in people living style,
working conditions and the increasing number of young single professional
people. That indicates that customers are changing their buying habits they
are moving towards bulk shopping and prefer one-stop shopping that why
Tesco is offering non-food items as well that are demanding by customers
due to change in social conditions and trends (TESCO Careers, 2014)

Now customers are becoming more health conscious so they are changing
their food TESCO needs to consider these changes. (Marketing Week, 2014)

There has been a marked rise in young professionals and working women.
Both of these factors have led to noted declines in the amount of time that
households spend on main meal preparation in the UK.

Technological:
Technological changes and advancement brings many new opportunities for
Tesco. Some distinctive are development of new online shopping systems for
customers are happy and satisfied to use this system and product can be
bought online and deliver at their home.
(Ma et al, 2014).

Tesco is also developing energy efficient projects for future use. Change in
technology effecting Tesco operations recently Tesco launched a Hudl, a 7
tablet developed by retailing giant Tesco, waslaunched in 2013, this will give
Tesco a competitive advantage and provide ways for customers to interact
with Tesco.Tesco said of the device in its first-half results statement: Hudl is
tailored around customer needs and ease of use with instant access to our
full range of digital services, all in one place - these include Blinkbox movies
and music, Clubcard TV, banking and of course shopping for groceries,
clothing and general merchandise, as well as other popular pre-loaded apps
such as YouTube, Google Maps and Google Play. (Retail week, 2013)

4.Market Analysis
4.1. Market research
4.2. Market segmentation
A market segment consists of a group of customers or consumers who share
the same or similar needs. Tesco markets falls into natural groups, or
segments, which contain customers who exhibit the same broad
requirements. (Malcolm, M. and Hugh, W., 2011)

Customer segmentations
Segment based on geographical;
Tesco is a multinational grocery retailer operating more than 13 countries
including base country UK, its offering a multiple portfolio of products
including food, non-food goods and services. Tesco distribution network is
spreading all over the world through its stores e.g. Tesco super store, Tesco
extra, Tesco metro etc. a substantial online customers. Tesco offers goods to
all age group male, females in urban and rural areas. (The Telegraph, 2014)
Segment based on psychological;
Tesco offers its goods to all types of customer and for high or lower income
customers.
Segment based on behavioral;
The buying behaviors of Tesco customers consist of cost-conscious
individuals who are interested in bargains and sales and value variety of
choice in Tesco products and services.
Segment based on demographics;
Demographics are commonly use descriptions of customer and consumers
according to public and measure criteria(Malcolm, M. and Hugh, W., 2011)

Tesco divide their customers into different categories according to age, sex,
rich and poor by using Club cards in order to personalize its websites to
display items geared toward your health. Tescos club cards customers more
than 18 million, will be segmented into separate groups, how much
previously they spend and when logged onto website. (DailyMail, 2012)

4.3. Market share

Market Share of Tesco:
Uk Grocery market has become more competitive over previous years, Tesco
has 29% to 30% market share. Tesco has lost its from previous two to three
years but they are investing more finance in marketing.
The big three in particular, Tesco and Sainsburys are suddenly having to
pull a halt to ambitious expansion plans and in Tescos case have been left

red faced by profits falling short of profit forecasts. Now there is limited
chance to open new big stores and market shifts toward small stores. Tesco
should change their strategy and invest in local small stores.
Kantar said the grocery market was at its weakest for at least 11 years.
Tesco's market share dropped to 29% from 30.5%, while Morrisons' share fell
to 10.9% from 11.6%. The drop in Tesco's share is the highest since Kantar's
records began in 1994. (The Guardian, 2014)
Tesco sales decreased by 3.8% in 12 weeks period ended July 20 2014.
Kantar research shows that overall UK Grocery market Recorded 0.9% growth
in last period. (This is Money, 2014)

UK Super Market Share 2014

Total till roll, 12 weeks to 9 November 2014.

Market share
Lidle; 4%

Other; 7%
Aldi; 5%
Tesco; 29%
Waitros; 5%
Co-op; 6%
morrisons; 11%
Asda; 17%
Sainbury's; 16%

Source: (The Guardian, 2014)

Tescos Seven Years Market Share Analysis

Tesco's Seven Years Market Share Analysis

31.5
31
30.5
30
29.5
29
28.5
28
27.5

2008

2009

2010

2011

2012

2013

2014

Tesco Market Share Analysis

Source: (Guardian/Kantar Worldpanel, 2014)

4.4. Market Growth

Tesco has lowest market growth in a decade and it was record reduction in
sales in previous 12 weeks. Tesco sales are decreasing by 3.8% in last 12
weeks July 20, 2014. Although in UK the Grocery market was recorded 0.9 %
growths which is lowest in last 10 years. (Grocery News, 2014)
As Compared to Tescos competitor Aldi is booming at the expense of Tesco
and growth rate is 32% for last 12 weeks said Edward Garner, director at
Kantar World panel. (BBC News, 2014)
UKs Big four super markets, Tesco and Morrisons lost their market share, but
Asda and Sainsbury keep their growth rate. Tesco, which has reported lower
sales for three successive quarters, saw sales drop by 3.8% in the period,
Kantar.(BBC News, 2014)
In the face of declining sales, Tesco decided to make new strategies and the
changed their leaderships also increased number of staff but sales
continuously declining. (This is Money, 2013)

Industry Trend:
In the UK, food retail industry sale growth remains subdued over last years,
now we have seen reduction in large store opening. Large retailer in UK
reduced their net space of store by 38% as compare with previous years.

Now customers buy goods from their nearest stores rather than travel long
distance. Now market trend is, opening small stores nearing to markets
rather than opening big stores.

4.5.Consumer Insight

4.6.Target Audience
A set of buyers are sharing common needs or characteristics that the
company decides to serve. Tesco is targeting mass customers rather than
focusing in deferential strategy or charge premium prices, Tesco is cost
conscious and trying to cut its prices due to high completion in retail
industry, in previous years Tesco is losing its profits now they are targeting
deferent customers even if some customers want to bargain. Tesco mobile
and tablet is low cost not targeting rich customers as compare to Apple
IPhone is charging premium prices. Waitrose is targeting high-incomeaffluent
customers who think about quality rather than price.Tescos target consumer
mainly consists of people who want more product range but at a cheaper
value and a reasonably good quality. These customers range from young
students to the older people who run families.According to (Mintel, 2014)
Tesco not only has a high level of usage in comparison to its competitors but
also earns more consumers who shop at Tesco on regular basis. These
frequent and loyal consistent shoppers are all under 45s, indicating the
overall strength of the brand.

5.Customer Analysis
Customer Trends:
Technology is changing the way consumers consume, Consumers are
increasing internet usage for research 63% shoppers use their smart phone
in stores and 43% ok UK customers use mobile to compare price or read
review when they are in Store. In 2009 approximately 29% UK customer
purchase three or more time food or Grocery, but in 2013 this proportion
increased to 49%. (TESCO PLC - Annual Report and Financial Statements,
2014)

Online consumer Trend:

Tesco is biggest online Grocer has increased its online market share by 2.4%
due to offer online distribution. UK grocery market growth increases by 2.8%
in 2014. Online sale contribution is 7.7 bn. compared to the whole of the

grocery market worth 174 bn. (IGD, 2014)

Consumer Spending In UK Grocery Market (2003-2013)

5.1
4.2

4.5

3.8
3.3
2.9
2.3

1.1

2003

1.3

2004

1.5

2005

1.7

2006

2007

2008

2009

2010

2011

2012

2013

Source obtained: Kantar Worldpanal/ Shopping for Groceries - (Intelligent

positioning, 2013).

6.Cultural Analysis
Before making any strategic marketing planning businesses need to assess
culture in target markets, But unfortunately Tesco fails to understand cultural
issues in some countries and unable to operate in market. Tesco is unable to
understand Chinese consumers culture and what products were suitable for
the market therefore they had to step back from china.(Food Manufacture,
2013)
Tesco also closedits American stores due to Cultural Differences.
(Kwintessential, 2012)
The supermarket giant has made some embarrassing approaches to
international business and 2011-2012 has seen Tesco pull operations in
Japan, and consider the same course of action in the USA. (Wolfestone, 2012)

Tesco cultural web

Stories

Symbols
Tesco is market leader by doing
the little thing for customers and
colleagues

Tesco established in 1919

by jack Cohen , everything
we do about helping our
customers.

The Paradigm

Organizational Structure
Tescos Board consist Chairman, Two
executive Directors and seven nonexecutive directors. Tesco also has
executive committee

Rituals
Create value for
customers to earn their
life time loyalty

Power Structure
Control System

Tesco implements UK code of

corporate governance which sets
main principles and guide line how
to govern

80% Management positions come

from Tesco employees

Source: (TESCO PLC, 2015)

7. Competitor Analysis:
As we se see in below igram Tesco lost its market share by 3.6 over the year that
was higest reuction as compare to its other compatetors sainsby (3.1%) Morrison is
(1.8%). Durining analysis we can find that Aldi market share is higjest ever in one
year that is 27.3% lidle folowed him by 18.1%. this analysis concludes that aldi and
lidle growth is on the expense of Tesco.

Chart Title
2013

2014

Change

30.1
28.8

27.3

17.3
17.2

18.1

16.7
16.1
11.9
11.6
6.46.4

-3.6
Tesco

1
Asda

6.8
4.95.2

3.84.8

3 3.5

Aldi

Lidl

-1.8
Sainsbury Morrisons
-3.1

Co-op
-0.4

Waitrose

2 1.9
-0.7
Iceland

Source: (Grocery News, 2014)

UKs Largest Four Grocery Retailers:

AS earlier discussed that Tesco is losing its market share., but it is reducing its space
are over theyears in 2009 it was 5500000 square feet but in 2013 it was reduced by
1600000 square feet to 3900000 square feet.

6000
5000
4000
3000

5500

4900

4900

2000

3900

3900

2012

2013

1000
0

2009

2010

2011
'000 sq ft

Source: (IGD, 2014), (TESCO PLC - Annual Report and Financial Statements,
2014)

7.1. Porters Five Forces

Before making three years strategic marketing plan, Tesco need to
understand dynamic of competitors with in industry where you are entering.
Its very critical for many reasons; one is to explore new opportunities
because you are new player and how you can differentiate from others. So
for external analysis Porters Five Forces are very useful tool.

Threat from new Entrance:

Tesco is operating in Grocery industry UK, and dominated in Industry having
approximately 30% market share following asda with 17.2% and Sainsburys
with 16.4% of UK market. Grocery industry is now expanding and
incorporated into hypermarket and need high investment to operate in
grocery market. It is very difficult for new entrants to catch up with Tesco,
because they have invested huge amount in marketing and to establish
brand. Tesco set aside 1 billion to spend in marketing. (Statista, 2015)

Threat of new Substitute of product:

with the passage of time as organizations are moving toward technology
intensive, it is a big threat for organizations substitute products. Tesco is

operating its super stores and superstores;Asda and Sainsburys are trying to
acquire small-scale business and opening stores, metro in local areas and
cities. Many private shops also operating in grocery, so Tesco should consider
all factors.

Bargaining power of buyers:

Tescos famous customers loyalty club card is still earning high profits and
customer are increasing and buying more goods through loyalty cards. Tesco
is fulfilling customers demands and lowering down prices, constant product
promotion. Tesco has aligned its performance objectives to manage customer
friendly prices. Tesco always engages in price comparison with its rival to
ensure price should be in favor of customers (TESCO PLC, 2015)

Bargaining power of Suppliers:

Bargaining power of supplier is an important elements term of labor, material
or any other form of input e.g. expertise. Tesco may face threat that their
suppliers may increase price of material but quality remain same this cause
reduction in profits. (John, F. and Leigh, S., 2004)
Tesco may not face such situation because it is a high investment retailer
and buys in bulk.

Rivalry:
the Intensive competition and rivalry in food and grocery business in UK.
Tesco is facing tough competition from its competitors especially from ASDA
and Sainsburys,Morrisons and the cooperatives. They all have more than
51% market share of UK. They all are competing in products, prices and
promotions. ASDA is main competitor of TESCO with 17% to 18% market
share. Increasing competition from these competitors shows they are
increasing market share as well this is a big threat for Tesco to maintain its
position as a market leader. (Statista, 2015)

8. SWOT
SWOT analysis is a useful tool before preparing long term marketing plan, to
analyze TESCO current position. The process of SWOT analysis evaluates TESCO
internal strengths, weaknesses and external market opportunities and threats that
can provide competitive insight into critical issues that can impact the success of
business

Strengths:
Strong Market leader

Tesco is UK largest retail brand, according to BBC news magazine

every one pound out of seven pounds spent goes in Tescos cash
till. So almost 30% market share of UK food and non-food market
captured by Tesco plc. To retain this share Tesco needs huge
advertisement campaign to reach customers.

Strong brand name:

It is one of the largest British retailers and holds third rank in

retail industry after USA based company Wal-Mart and France
based company Carrefour. It sells around 4000 food products.
(TESCO PLC, 2015)

Overseas expansion

Tesco is rapidly expanding in overseas markets, during sir Terry

leahy era Tesco had built highly profitable empire in overseas.
Expansions includes south Korea, Malaysia, hungry Poland US and
CHINA, across hypermarkets and supermarkets (This is Money,
2011)

Tesco is now become online pioneer of online selling in allover the

world through its official website and make huge profits through
Online pioneer

online sales. After success of online services they are now

offering non-food through Tesco direct. (TESCO PLC, 2015)

Numerous awards

Tesco won big in the grocers foods and drinks awards for own
Label. (TESCO PLC, 2015)

Loyalty cards, Club

Cards and Dunnhumby
data base

TESCO launched its club card in nationwide in 1995, this was the
foundation of Tescos rise and become a dominant retailer in the
world. It was one of the retail innovations by company in 20 th
century. The loyalty card, and particularly the Dunnhumby
database behind it, provided Tesco with an unprecedented level
of detail into who its shoppers were and how they shopped. (The
Telegraph, 2014)

Weaknesses:
Losses in US

Expansion in US was a bad experience Tesco lost money and

repute. Tesco cut its profits by half after this failure and sold its
stores. Profits at Tesco slumped by 51 per cent last year as it
wrote off 1.2billion on a failed attempt to conquer the United
States.
The fall in pretax profits down by 2billion to 1.96billion was
its first in 20 years. (Daily Mail, 2014)

Warren Buffett sold more than 245 million shares in Tesco and
said it was my mistake to invest in Tesco. (CNBC, 2014)

Non-food exposure
Tesco who were specialized in food industry, once they moved in
non-food industry, initially they faced many problems. (The
Telegraph, 2013)

Negative Media
Coverage

Due to the Horsemeat controversies Tesco has absorbed a lot of

negative media coverage, which has knocked of 300m off
Tescos market value working a s disadvantage towards the brand
image as well as profits. (The Telegraph, 2013)

Opportunities
International Expansion

Tesco should expand in different markets where there is potential

of making profits like the Asian and the eastern markets.
However it should not make the previous mistakes it made of not
understanding the culture and market before entering into a new
market.

Banking Service

As discussed earlier Tesco is one of the bog brand in UK and

having more than 30% UK market share they have good
opportunity to create trust among customers and offer more
mortgage products to its loyal club card customers.

Strategic alliances

There are opportunities for Strategic Alliances with local retail

chains to offer more products; Tesco is not operating in many
countries of ASIA. So they can make Alliance with local stores in
India and Pakistan. This Opportunity will give Tesco a strategic
support.
Recently Tesco Confirms Joint Venture with Tata Trent for $140
Million; Will Operate in Indian Retail Market worth $500 Billion.
(IBI Times, 2014)

Threats:
UK competitors
Tesco is facing tough completion from UK and Non UK customers
as Tesco is selling high quality good so risk of losing customers,
they might switch to its competitors due to low prices offer by
them. Although TESCO is trying to repositioning and catch up
with what its rivals are doing. (BBC News, 2014)

Overseas problems
Tesco is facing some cultural and local issues in some countries
e.g. in south Korea they are facing shop opening hours
restrictions by Government while China remains problematic.
(Asian Global Impact, 2013)

Economic Recession

Recent Economics recession and credit crunches will effect Tesco

profitability and always a big threat change in foreign exchange
rates as it is operating all over the world, reduction in purchase
made by customers.

9. Strategic Marketing Objectives

Tescos main marketing objective is to improving the customer proposition,
revamping retail stores and cut down prices. Tesco Chief executive Philip
Clarke during his interview, he told Tescos objective is to invest in
marketing.
He listed three areas for investment: a large store refresh program,
convenience stores tailored to their local consumers needs and digital.
(Bold, B., 2014)
The big opportunity I see for us is to be much more joined up in the way we
engage with individual people across all the different offering we have in the
portfolio. Tesco CEO. Dave Lewis.(Marketing Week, 2014)

Other short term Objectives of Tesco is; Maximization sales revenue and
Tesco forecasting its sales increased by 1.36%. As its profits are decreasing
so another objective is to maximization profit after tax, Tesco forecast its
profits by 32%. And increase market share as it is decreasing. (Tesco PLC,
2015)
Tesco was facing big crises and its sales and market shares was reducing
over the years under the leadership of CEO Clarke, After changing
management structure new CEO Dave Lewis, Tesco changed its strategy and

committed to increase market share and profits.

Lewis is optimistic about the future of Tesco. His new strategy is a complete
focus on our customers. The steps were taking can help deliver that. (The
Telegraph, 2014)
Mr. Dave gave five tips for a strategic marketing Tesco includes be human,
listen to your customers, be clear about what you stand for, tell a story,
Make the first day count. Tesco has clear strategy about its brand revival and
growth. (Marketing Magazine, 2014)
Focus on The core UK grocery business.
Create Highly valued brand
To grow retail services in all our markets
To be strong in Non-food business
International Expansion
SMART OBJECTIVES
Tesco Objectives should be SMART (Specific, measureable, Attainable,
Realistic, Time bounded)
specific: Tesco wants to make profits,
Measurable: its objective is to increase sales by 1.36% is measurable.
Achievable:increasing market share and increasing the number of
customers can achieve this objective.
Realistic: Objective is realistic as based in facts and historic figures.
Time bounded by deadline, when it should be achieved.

10.Marketing Strategies
Tesco Strategic marketing Options/ Alternative strategies
Tesco needs to implement new strategies to revive brand image.

10.1. Product Life cycle

Businesses always trying to manage their products make them available to
customer all the time, and fulfill customers needs. Every individual product
launched by Tesco has four stages Introduction, Growth, Maturity and finally
decline.
For long term marketing plan its important for Tesco to know its product life

cycle which products can make more profits, I chose some of product for my
analysis for example Tesco grated cheese in growth stage as its low fat and
customers are health conscious, as well they dont have time to grate chees
and contrarily Tesco lard is in declining stage.

Introduction stage:
Its very first stage when product is launched, initially Tesco doesnt focus on
profits instead they are promoting goods. In 2014 Tesco launches organic
health bears and then started its marketing and promotional sales at Tesco
extra store across the UK. (Food Bev, 2014)

Growth:
at this stage product making high profits and competitors are attracted in
new market they offered same product. Tescos grated cheese in at growth
stage and sales are very high. In 2013 statistics Shows most of people used
Tesco supermarket brand for cheese that was 3.47 million people used Tesco
in the UK.(Statista, 2013)

Maturity:
Products sales are decreasing over the period, May be due to alternative
products or high competition, market for that product becomes saturated
need new product.

Decline:
Due to market downturn customers stop buying products due to which profits
are decreased as we discussed above Tescos lard is at decline stage as
customer are reluctant to buy, so the product should discontinue and call
back.

10.2. Gap analysis

Current situation
Tesco is currently dominated in UK grocery industry with 29% UK market
share and one of the strong brands. Tesco is declining its sales that are
around 64 billion. Tesco is largest retailer in Grocery 1st position in UK and
third position in Overall world market with 13% market share. It offers food
and non-food products and services e.g. hyper stores, petroleum, Insurance

business and banking. After huge investment in marketing Tesco continually

losing its market share and sales, around 1 million shoppers lost in a week.

Objectives:
Tesco is making strategy to get its market share back so as a implementation
its strategy it change its higher management and trying to invest in market.
In its forecasting Tesco reduce its sales 61 billion as compared to previous
years it was more than 64 billion. Tesco is committed to increased sales and
EBTA by 2017.
Tesco is expecting to continue grow in future years, so Tesco aims to fulfill
customers needs, cut prices and offer fulfill customer demand.

Recommendations:

In order to achieve its objectives Tesco should invest in small-scale stores in

local area. Grocery market is now turning into hypermarket. Customer
prefers to buy where they find low prices.

10.3. Ansoff Matrix

Ansoff matrix is useful tool used to identify opportunities for expansion or
growth, especially for those companies who are suffering problems like Tesco
is declining its market share, so this matrix helps Tesco to identify whether
they should develop products or need market expansion.

Market Development:
Tesco is developing its market by entering in new geographical markets e.g.
India, US and UK.Tesco is entering into India that has 1.2 billion populations,
so its huge and lucrative retail market for Tesco. (This is Money, 2011)
Another market where Tesco is entering is US retail market although Tesco
faced losses in US market but with new strategy they can success. (Huge inc,
2014)

Market Penetration:
Tesco is operating in UK core market with existing products; main object of
market penetration is Tesco wants to increase its current market share of
current products. This can be achieved by offering low prices and a good
marketing campaign through TV ads and promotion strategies. (The
Guardian, 2014)

Diversification:
Tesco is not only increasing its products in same market but it is entering into

unrelated diversification; Financial banking services is entirely new market

and new product for Tesco. It is a risky market Tesco needs to carefully
manage this product in case of failure Tesco faces a big loss.

Product development
Tesco selling new product in existing market, Tesco mobile is an example of
Product development, and Tesco fuel.
Tesco is eroding its profits and losing market share so I recommend Tesco
should focus on market development and market penetrations through
customer satisfaction and further investment in Marketing. (This is Money,
2014)

10.4. BOSTON Matrix

BCG matrix is tool to assess individual products portfolio. It was developed
by Boston Consultant Group in early 1970s.I recommend this model in my
marketing plan to assess product position, which product needs more
investment, more advertisement and which should be called off.

Stars:
Tescos products that have high market share and high market growth, such
products needs heavy investment, although they earned high income but
now they their growth is so slow and turn into cash cows. Tesco finest range
products are Star products they have high market share and high growth.

Cash cows:
Tescos products with low market growth but high market share, these
products generate heavy cash but need not too much investment because
they have already large market share. Tesco wine, grocery might cash cow
products as they are generating enough profits.

Question mark or Problem Child:

Those products with low market share but high market share, these products
need more cash to survive in market and hold its market share. Newly
launched Tesco mobile could be a problem child so Tesco should reconsider
about Tesco mobile and convert it into Star product otherwise it keep
contributing in Tesco bad performance.

Dogs:
Tescos product neither they have high market share nor market growth,

such products needs enough resources but not guarantee to earn money.
Tescos lard is a Dog product.
I recommend Tesco that they should reconsider their product portfolio and
call off dog products because they only consuming companys resources and
problem child products should be converted into star products. So Tesco
should keep continuing its marketing campaigns.

Recommended strategy
10.5. 4 Ps
Marketing Mix strategy:
Marketing mix is generally used by companies as a marketing tool to target
its customers and market. It describes different kinds of choices. Tesco has to
make in the whole process of bringing a product or service to market. The 4P
are one way probably the best-known way of defining the marketing mix,
and was first expressed in 1960 by E J McCarthy.
Tesco need to reposition it brand image and products, Tesco needs to put the
right product in the right place, at the right price, at the right time.

Products
For strategic marketing plane its important for Tesco to define its product
line what they are offering. Tesco is offering more than 40000 products in its
4811 worldwide stores including 1200 organic food items ranging from beef
and garlic to chocolate and salad (DailyMail, 2010). Its products include food,
non-food, clothing, financial services, consumer electronics and other goods.
Tescos objective is to achieve competitive advantage by offering its products
balance of quality and low price to all consumers and want to offer all range
of product once customer enters into Tesco store doesnt need to go
anywhere to buy another product. Tesco should offer products that suit for
local culture like china so they should offer own branded stores in china.

Price:
Price is important marketing strategy for organizations; Retail industry is
very competitive industry so Tesco needs to develop customer friendly
pricing strategy. Tescos price strategy is on based of its marketing message
Every little helps. Customers who want low price products and bargaining
are lured away by Aldi and Lidls low price (The Economist, 2014).

Tesco wants prices to be stable, we want them to be logical and, we want

them to be competitive. (Tesco PLC, 2015)

Place:
Place is an important element of Marketing mix, Tesco needs to decide which
place is best for their products; so Tesco is using apparently two channels for
sale its online via its website and off through 4841 worldwide stores.
Recently Tesco went into joint venture with INDIAS largest brand TATA
Groups Trent Hypermarket ltd. Tesco had picked up 50% stake in Trent
Hypermarket Ltd. This Joint venture gives Tesco a competitive edge to enter
Indias lucrative multi brand retail segment. (Top News, 2014)
Tesco spent a huge amount on refresh programs on its stores, they reinvest
on big stores to insure that stores fulfill the needs of customers once they
visit the store.

Promotion:
Tescos promotional strategy is connected with its price strategy as Tesco
took decision to cut its prices to maximize sale. Promotional object can be
achieved through marketing, media attention, and advertisement. Tesco
recently invest one billion on its brand image marketing as well its online
click and bricks.
One of the important promotional tools is club card that is more now ever
before this. Club crad providing deferential services to Tesco customers,
they can choose unlock greater values. Around 35 million club cards issued
to customers who visits regularly.
Tesco also offers discounts to its customers. Tescos online grocery home
shopping Tesco generates more than 2.5 billion from UK sales. Tesco also
offers grocery click and collect around the UK at 260 stores. (Tesco PLC,
2015)
In new marketing strategy Tesco should reconsider its 4 ps, its critical
success factor for brand revival of Tesco. Specifically Tesco should cut its
price and more invest on promotions through more discounts and marketing.

Distribution Channel:
Tesco use different distribution channels to sell their products, they buy from
supplier and move through distribution network and sell to consumers. Tesco
has more than 38 Million clubcard customers; they visit Tesco 7300 stores
and buy their required product. 59.7% of UK customers use two channels
they come stores or online shopping. (Tesco PLC - Annual Report and
Financial Statements, 2014)

Strategic plan implications:

Target Audience:
Tescos target market is all level of incomes buyers but they divide
customers according to their wealth high income and low income and age in
an attempt to offer more targeted offer. Tesco design their website with
aimed at individual shoppers, Tesco wants their customers to feel a part of
special Group. Tesco uses club card to assess customers wealth. (DailyMail,
2012)

Customer spending in Retail market:

The consumer goods sector is now the biggest spender in terms of online
advertising and accounts for 16.1% of the total spend (IAB/PwC ad spend
survey H1 2014). (IAB, 2014)
UK shoppers spent 91bn online in 2013 and look set to spend 107bn in
2014. (Internet Retailing, 2014)

Annual Online Spender Per Customer:

Now customers change their behavior to buy products, they buy online
shopping instead traditional methods. When customers enter into store they
know what exact price and which product they are buying. Online spending
per customerare increasing over the years.

2013. 924
2014. 1071

Source: (Retail Research, 2014).

Online Retail Sales In UK:

As we discussed above that customer behavior is changing towards
purchasing goods they prefer to buy online so UK retails online sales
increasing and according to forecasters it will increase in coming years

UK ONLINE Retail Sales In Billions

UK ONLINE retail sales in Billion
52
45
39

2013

2014

2015

Source: (Retail Research, 2014).

Uk retail Industry spending on Advertizment In billions
25
20
15
10
5
0

2011

2012

2013

2014

2015

Source: (The Guardian, 2014), (Adassoc, 2014)

Tesco is one of the largest advertising spenders
UK supermarkets are spending less on marketing comparatively previous
years. In October 2014, the leading super markets spent 28.4 million on TV

and press advertisement 3.6% less than a year ago.Lidle spend 4.9 million
and Asda spent 5 million.
Tesco dropped spending 29% year-on- year to 3 million. Idle and Aldi are
focusing on discounts rather than advertising on TV and Press. (Nielsen,
2014)

TESCO PLC

2012
117,403,761

2013
116,269,526

2014
34,573,692

Sainsburys

60,698,553

60,440,611

19,878,158

ASDA

109,139,356

97,035,247

ALDI Stores Ltd

43,321,903

56,594,569

22,673,758

LIDL UK GMBH

24,923,504

30,347,048

13,839,038

Supermarkets Ltd

??

Sources: (Newsworks, 2014), (Marketing Magazine, 2014)

Competitive Media Spending/UK Big Supermarkets Spend

On Advertisement

Tesco Marketing spending Analysis in Millions ()

Tesco Marketing spending Analysis in Millions ()
145.79
133.58
117.4

116.25

116.27

34.75

2009

2010

2011

2012

2013

2014

Source: (Mintel, 2013)

Tesco announced one billion pounds on marketing and revamping of its
stores. But over the period of time its marketing spending reduced that is
one major cause of its worst financial performance. In 2014 only 34.75
million was spent hat was 110 million less than spent in 2011, in my
strategic plan I strongly recommend Tesco to increase its marketing budget
in 2015 and 2016 as it was shown in forecast budget.

Tesco's Advertising Budget

Cinima; 1% Direct Mail; 8%
Door Drops; 1%
TV; 34%
Internet; 10%
Out Door; 5%
Radio; 3%
Press; 38%

Source: (Mintel, 2013)

Tesco is one of the big advertizer in UK , it spends more than 140 millions in
advertising. Substantial amount of its budget is spent on press and TV
advertisement, only 10 % in intenet.ir should increase budget in personalized
advertising and internet specifically social media spending.

11.Tactical Plan-Recommendations
Tesco tactical communications Plan how to approach to
customers.
Television:
Tesco 34% of its budget spends of TV ads, In 2012 Olympics Tesco advertise
and light up Wigan.In 2014 Tescos advertise on Christmas TV with a light
show.
Tesco advertise in Finale of ITVs Down ton Abbey. Which features strap line,
The 60 second ad Every little help makes Christmas. (The Grocer, 2014)
Tesco should allocate budget for Olympics 2016 hosted by Brazil. Tesco will

get advantages by spending in TV ads. (Campaign Live, 2014)

Internet:
Tesco selling its product online its worlds largest online grocery stores.it has
online integrated stores all over the world. Tesco uses 10% of its marketing
budget on Internet marketing.
According to DunnHumbyCEO The current model is broken. We spend more
time online than with any other media: the typical web user sees about
2,000 banner ads per month, but 70% cant remember the last ad they saw.
If they did recall it, 80% felt it wasnt relevant to them.
Tesco should spend more money on other types of Media e.g. fashion
magazines,Clubcard is 'key' to Tesco's online shopping evolution.
(Dunnhumby, 2014)

Personalized advertising:
Tesco should focus on personalized advertising and spend more on it,
acquisition ofsociomantic is a tremendous revolution in personalized
marketing. (Dunnhumby, 2015)

Events:
Tesco advertise it brand on special events by offering discounts e.g. Black
Friday, Christmas and Eid festivals. Tesco is losing its market share so they
should spend more in advertisement but inversely Tesco spend 8.3 million
and reduced its pending on this Christmas reduced by 21% as compare with
previous year, Tesco competitors Adli and Lidl spent twice as spent by Tesco.
(ESM Magazine, 2014)

Press Advertising:
Tesco is spending a huge amount of it budget on Press advertisement, so
keep investing in this media will increase sale, Tesco should advertise in
European supermarket magazine that is circulated in all over the world more
than 30 countries super markets.

Sponsorship:
Sponsorship is a good source of advertisement, Tesco should sponsor some
Hollywood movies, although they are spending in cinema Ads but it is not
stuffiest. Tesco must sponsor you tube videos and face book pages. Tesco
needs to spend a huge amount in Olympus 2016.

Social Media
Although Tescos presence in social media is enough but it has not seriously
replied some twitter feeds, which cause customer dissatisfaction, Tesco
should actively reply on social media e.g. Face book, Twitter and YouTube.
You tube is a good source of advertising now a days. Tesco should build some
microsites. (Giraffe Social Media, 2013)

Outdoors
According to Nielson, Tesco spends 9.9 million on outdoor campaign in 12
months ended 2013. (Campaign Live, 2013)

Direct mail:
Direct mail is a strong marketing tool where Tesco can contact its customers
directly and advertise itself, In early 2000 Tesco mailed 200,000 free-CDROMs featuring its online home-shopping software to households across. So
Tesco should invest on direct mail advertisement. (Marketing Magazine,
1999)

11.1. Timeline
Initially Tesco Rethink and resign its Marketing strategy. After resignation of
Tesco CEO Philip Clarke and newly appointed Mr. Dave Lewiss first priority is
Brand revival, Tesco should increase its advertisement budget in future
years. So start a long term strategy, Early 2015 invest on new software and
offer discount to customers. Increase advertisement on TV and Online
marketing, during 2015 offer summer sales around the world and end of
November/December 2015 increase spends on Black Day and Christmas.
Tesco should sponsor NBA Global Games London 2015 and Olympics 2016,
this would increase brand image.

11.2. Budget
Tesco Marketing Budget for Three years:

Budget is based on Tesco historic information; changes

are made based on our recommendations.
No

Way of
Communication
s
Ads on
Electronic
Media

Descriptions

2014

TV ads/Celebrity
endorsement

Social Media

Press/Print
media

Events

Personnel

Sponsorships

Printing

Online

Facebook
ads/YouTube
Business
Magazines/Retail
Magazines/Direct
mail
Black
Friday/Christmas
/New Year eve
Temporary staff for
Advertising and social
media campaign
Donations to
charities/ Donation to
Political Parties/
Sponsorship in
Olympics/ UK local
games
Brochures, displays,
banners
Update software

10

Launching new
product
range /Health
care coffee
shop

Tota
l

450000
00

2015
(Forecas
t)
550000
00

2016
(Forecast
)
5500000
0

300000
0
380000
00

300000
0
400000
00

3000000

210000
00

250000
00

2500000
0

200000
0

200000
0

2000000

150000
00

150000
00

1500000
0

700000
0
100000
00
900000
0

700000
0
100000
00
700000
0

7000000

150
million

160
Million

165
Million

4300000
0

1200000
0
5000000

Sources: (More About Advertising, 2012), (Nielson, 2013)

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i) Bibliography
ii) List OF Illustrations