Tesco started as a small market stall in 1919 and has since grown to become a large international retailer. It opened its first store in 1929 and continued expanding in London through the 1930s. In the following decades, Tesco introduced various store formats and expanded its product range. It now operates over 3,400 stores across several countries. Tesco uses strategies like competitive pricing, a loyalty program, and various store formats to target different customer segments in both domestic and global markets. Adapting strategies to local conditions and customer needs is important for Tesco's international expansion.

1. GROUP 8
CASE STUDY PRESENTATION ON TESCO

2. A BREIF HISTORY OF
TESCO
Tesco started in 1919, when Jack Cohen started selling
surplus groceries from a market stall in Hackney.
The Tesco brand didn't appear until 1924, when Jack
purchased a shipment of tea from Thomas Edward
Stockwell, and made the new labels by using the
initials of the supplier (TES) and the first two letters of
his surname (CO), forming TESCO.
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3. Jack's market stall grew, and by 1929, the first
Tesco store opened in Burnt Oak, Edgware. The
store focused on dry goods, including the Tesco
branded tea.
During the next 10 years, the business continued to
grow, with Jack opening stores in expanding
London Suburbs. In 1934, Tesco purchased a plot of
land in Edmonton to allow him to build state of the
art headquarters and warehousing. It was one of the
first modern warehouses built for food, and
introduced breakthrough ideas for stock control.
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A BREIF HISTORY OF TESCO

4. Tesco Stores (Holdings) was floated on the stock
exchange with a share price of 25 pence. Jack Cohen
decided to venture into self-service following a
research visit to North America. The first of these new
stores opened in St Albans, Hertfordshire in 1948 with
a mixed reaction from customers at first. The picture
shows colleagues delivering goods to the store.
1958 - The first supermarket was opened in Maldon, Essex.
1960 - Tesco started to offer new product ranges outside of
its food stronghold. In 1960, home electronics started
appearing in its larger stores.
1968 - The term 'Superstore' was first used by Tesco, when
they opened a 40,000 sq. ft store in Crawley.
1973- Tesco opened its first petrol station at major sites
across the UK. 4
A BREIF HISTORY OF TESCO

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• 1979 - Shook the Tesco business, as its founder Jack
Cohen passed away.
• 1994 - The first Tesco Express store opened in London.
Offering local convenience shopping. Within a few
months, 13 had opened across London.
• 1994 - The first Tesco Express store opened in London.
Offering local convenience shopping. Within a few
months, 13 had opened across London.
• 1998 - Just 5 years after its Tesco Value launch, Tesco
introduced its Finest range.
During the period of 2000-2017, TESCO started its internet
shopping business, and launched F&F, TISCO’s first major
push into fashion retailing.
• 2007- first US Fresh & Easy store opened. First move
into US Market.
• 2009- Tesco Bank launched.
• 2010 - The first zero-carbon store was opened
• 2014 - Tesco introduced its new 'Healthy Living' brand,
supporting its customer to lead healthier lives.
TESCO started expanding overseas in 1995, starting
with Hungary, and now has a presence in China, the
Czech Republic, Hungary, India, Japan, Malaysia,
Poland, Ireland, Slovakia, Thailand,
Turkey and United States.
A BREIF HISTORY OF TESCO

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PRODUCT LINE
• Tesco sells a wide variety of products including
food, clothing, stationary, cosmetics, electronics,
financial services etc.
• With ever expanding product lines, it caters to every
possible need of customers.
• Sells products from great brands in almost every
product line
• It has its own products too
• Everyday Value, Tesco Lotus, Tesco Value, and
F&F Clothing are some of Tesco’s own brands.
• The availability of the range product categories
depends on the type stores customers visit.

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PRODUCT STRATEGY
• Tesco has a huge range of product offerings at its
various stores.
• Tesco also sells its products online
• Tesco has recently reviewed the 33 food categories
and reduced the product lines by 18%.
• Tesco bank provides financial services such as loans,
saving accounts, credit cards, mortgages and
insurance.
• Tesco has a well-diversified product range-One-stop
Solution

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PRODUCT STRATEGY
• The company successfully covers many market
segments, from the low-end (e.g. Tesco’s own
Everyday Value line) to the high-end (e.g. Finest
brand).
• Tesco has focused on a reduction of third-party
products to improve its operational efficiency and
development of its own brands to strengthen customer
loyalty

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PRICING STRATEGY
o Tesco pricing strategy can be described as cost leadership.
o The pricing strategy is developed according to its business strategy and the pricing
strategy contributes to its competitive advantage.
o Specifically, Tesco pricing strategy is based on its marketing message of ‘Every
Little Helps’.
o Tesco management aims to reduce the cost of purchase and operational costs
through economies of scale and a set of other measures in order to pass the cost
advantage to customer as the main brand value.
o The company also uses economy pricing, psychological pricing, product line
pricing and geographic pricing strategies

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o Tesco enjoys economies of scale and works continuously with it suppliers to
make the supply chain efficient to reduce prices.
o Fierce competition from companies such as Aldi and Lidl in the UK market
also impacts on the pricing strategy of Tesco.
o However, it is worth mentioning that Tesco has planned major price wars
against the discounters (Quinn, 2020).
o Tesco launched a "Price Promise" scheme last October that automatically
took money off at the till if a customer could have got an item cheaper
elsewhere. Retail analysts called it a "game-changer" at the time.
PRICING STRATEGY

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PLACE STRATEGY
• TESCO employs over 310,000 employees in more than 3,400 stores across the UK.
• TESCO superstores are large supermarkets which sell groceries and a small range of non-
food items.
• TESCO express are smaller stores which essentials and high margin products. products at
express are priced higher than other TESCO stores.
• Higher margin products are sold at higher prices in TESCO express, while better deals and
better variety can be found in TESCO superstore .
• TESCO metro are sized on an average 1,000 square metres, situated in towns and city
centres.
• In addition to physical stores, TESCO sells its products and services online (e.g. TESCO
delivery saver and TESCO bank).

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PROMOTIONAL STRATEGY
o Tesco has a very strong brand image.
o Tesco uses hoardings, television ads, and charitable events as promotional channels.
o It also uses a large extent promotional discounts and offers such as buy one get one.
o It has a loyalty card called ‘Tesco Clubcard’ which allows Tesco to segment and target its
customers by offering a wide variety of promotions and discounts.
o Tesco also sells and promotes its products online.
o Promotional opportunities are given to the staffs that are identified to have greater potential.

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DISTRIBUTION CHANNEL OF TESCO
• Tesco uses two main distribution channels i.e. online and offline. It has thousands of stores operating in the UK and abroad. These
stores are of different types i.e. Tesco Express, Tesco Metro, Tesco Extra, Tesco Compact, Tesco Home plus and Tesco Superstore.
• Customers wishing to purchase anything from the company may pay a visit to any of its stores. Most of the stores are open between
6am and 10pm which gives its employees enough time to restock the shelves. However, it is worth noting that managing so many
stores worldwide is expensive.
• Tesco also sells its products online via its official website. Customers need to open an online account to use its delivery service. Upon
purchase, Tesco delivers the products to the doorsteps of the customers. In the UK, it currently has a flat pricing structure i.e. one-hour
delivery slot costing £4.50.
• However, this pricing structure has angered some customers who used to rely on getting the cheapest delivery slots costing £2
(Mason, 2020). It is worth mentioning that Tesco has a different pricing structure in Ireland i.e. an upfront monthly subscription
starting at €7.50 a month (Tesco, 2020).
• Tesco’s online distribution channel has been a very good success recently. More customers are turning to its online platform and
therefore, it had to increase its delivery capacities (BBC, 2020). Online sales contributed immensely to the profits of the company both
in the UK and Ireland.

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Distribution Channel of Tesco
• 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 club card 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).
• Tesco works with thousands of suppliers and partners around the world. These suppliers grow,
manufacture, and package products for the company. Tesco has 23 warehouses across the UK. These
warehouses are for the storage of products received from the suppliers before they are distributed to
various individual Tesco stores in the UK.
• Tesco works very closely with its suppliers to improve its supply chain efficiency and increase supplier
satisfaction. However, it is worth mentioning that the company was found in 2016 delaying payments
unreasonably to suppliers to improve its own financial positions.

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MERCHANDISING STRATEGY
Brand Positioning: Tesco was positioned as the high-
volume and low cost retailer but in future they have started
positioning as Tesco finest for premium range of products.
Awareness: the company heavily relied on the offline
marketing, by pouring million on billboards, print ads and
TVC etc.
They aimed to get maximum exposure to get maximum foot
fall

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Merchandising strategy
Customer Acquisition: After the awareness and positioning. Grabbing the customer is the important strategy.
The company offered green shield stamp. for the customers to visiting the stores. But couldn’t gather the customer
information
To get the brand loyalty and customer purchase information. Tesco offered “club cards” to the customer, encouraging them
to visit the stores again by offering them the reward points. And use the card to get the purchase behavior of the customers.
Diversification: not just sticking to retail but also expanding to the FMCG. They have introduced brand such as
Chokablok, Halo and Parioli.

17. Store Design
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• Tesco adopted a grid layout system
• It is a linear system of shelves where fixture are arranged at right angle to form
vertical and horizontal isles through out the stores
• The larger stores provide vital facilities such as car parking, toilets, food stalls and
changing facilities
• The products are segregated according to the department such as dairy, vegetables
etc.
• Tesco modifies the layout depending on the requirement of the customer needs in
different location
• The grid layout is quiet methodical and efficient
• It is helpful in better visibility of the merchandise

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MARKET SEGMENTATION
o Geographic segmentation
o Operates in 13 international markets
o Segmented based on the country of operation
o Demographic Segmentation
o Segmented based on information derived from Clubcard along with user data.
o Customers are classified based on this data
o Psychographic segmentation
o Customers are segmented on the basis of personality and lifestyle.
o Clubcard data is used
o Behavioural Segmentation
o On the basis of purchasing behaviour – occasion, benefits sought, attitude etc.

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TARGET MARKET
• Cost conscious individual
• “Everything to Everyone” approach – targets all possible segments.
 Tesco Value – targets price sensitive consumers.
 Tesco Finest – targets consumers with more disposable income.
 Tesco Health Living targets health conscious people.
 Tesco Organic targets people interested in environmental.
 Tesco Express and Tesco Extra – targets customers with dissimilar needs and
shopping habits
• With clothing and technology products and services like petrol stations and financial
services, Tesco targets customers who want a full shopping trip.

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TESCO APPS
o Club card
o Tesco pay
o Tesco bank
o Tesco mobile pay monthly
o International calling.
o Tesco mobile pay as you go

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ONE IN FRONT
• Smart lane queue-busting camera technology,
developed by IRISYS, in-store queue waiting time
is kept to a minimum for customers
• The IRISYS cameras use sophisticated thermal
imaging technology
• The IRISYS smart lane solution uses ceiling
mounted infra-red sensors above the checkout
lanes.

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Tesco Top 100 customers were worth as much as bottom 4000
Bottom 25% customers represented only 2% of sales.
Top 5% customers were responsible for 20% of sales.
Introduced the Clubcard.
Vouchers for frequently bought items.
Offered to explore parts of store that they did not visit recently.
Different lifestyles magazines created for different customers.
High value customers had personal shoppers, valet parking etc.
CUSTOMER RELATIONSHIP MANAGEMENT

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CUSTOMER RELATIONSHIP MANAGEMENT
The company polls around 12,000 customers in their annual customer
question time.
They receive more direct feedback on products, price, quality, service, and
the company’s role within the community.
In 2009, Tesco branched out to the iPhone by launching three different
applications.
In 2010, Tesco created a new mobile website to facilitate easy shopping.
Provides efficient services - its “one-in-front” plan.
Added student club card and mothers club card.
By the end of 3rd year they identified 108 customer segments.

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BENEFITS OF CRM
Build mutual relationship with customers – providing rewards in exchange for
information
Find new customers more easily
Increase sales per customer
Save on the cost of promotions by promoting to loyal customers
Keep prices down on familiar and staple pricelines.
Hold customer evenings to gather more information, bring in new customers
through referrals and improve their relationship

25. AS TESCO EXPANDS
OVERSEAS, CAN IT
SUCCEED BY USING THE
SAME STRATEGIES IT
HAS USED IN THE
UNITED KINGDOM? WHY
OR WHY NOT? WHAT
ARE THE FACTORS
THAT SHOULD BE
TAKEN INTO ACCOUNT
WHILE FORMULATING
STRATEGIES IN A
GLOBAL MARKET?
No. Tesco’s strategy in the UK is to open different stores
with different sizes and sell different products at these
stores. The Tesco UK operations alone carry different
portfolios such as Tesco Extra, Superstores, Express, One
Stop, Metro and petrol stations and this portfolio has been
successful in the UK. Unfortunately, Tesco cannot succeed
by using the same strategies it has used in the United
Kingdoms (UK) as the same strategy will not work the
same in every country.

26. THE FACTORS THAT SHOULD BE TAKEN INTO
ACCOUNT WHILE FORMULATING STRATEGIES IN A
GLOBAL MARKET
• Flexibility
• Local operations
• Multi-format offerings
• Capability in people, processes and systems
• Brand-building

27. TESCO’s GLOBAL STRATEGY
The rapid gains over Central Europe and Asia and a considerable market share have come from
its effective strategy.
in its global strategy, the company mixes global management in many areas and domestic
responsiveness.
Tesco’s tactic generally is to purchase an existing retail chain, or an important share of one, and
transform it to subsidiary of Tesco.
After that, the company can start the usual strategies by aggressively competing price,
undercutting local businesses, selling petrol, creating Clubcard to build customer loyalty,
opening 24 hours service and so forth.
For its international stores, Tesco prefers large hypermarkets. These hypermarkets concentrate
on non-food products.
Retailers from rich countries look for five characteristics in countries – high population growth,
big population, consumers levels of GDP edging per capita, high growth of income, and poor
supermarket presence.

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WHAT ARE THE
WAYS IN WHICH
TESCO CONNECTS
WITH ITS
CUSTOMERS TO
PROVIDE MORE
VALUE TO THEM?
Some of the value driven strategies are:
o Cutting down the price
o Use of ClubCards
o Internet capture
o Private label success
o Understanding customer choices
o Identifying customer segments
o Increasing competitive options(for example,
offering more products)
o Avoiding price wars
o Improving service quality
o Focusing on what is meaningful to customers
o Improving brand success

29. CONCLUSION
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The brand sees a huge need for focusing on “the individual experience” in its resurgence. Tesco's
marketing team has come up with a variety of great marketing ideas for this approach. From deep
discounts delivered by email on birthdays to print campaigns delivered directly to the door,
customization is key in the new world of marketing.
Marketers with the company report that instead of maintaining a big, generic image, its goal is to
hyper-target specific shoppers and earn their trust. Much of this will be done through direct
customized marketing approaches that appeal to specific shoppers' desires.
The reinvigoration of Tesco's strategies – and subsequent financial rebound – is a testament to the
power of marketing. As businesses continue to feel the strain of competition both domestically and
internationally, these entities will need a response plan.
In the wake of multiple scandals and plenty of competition, Tesco has managed to deliver both to its
shareholders and shoppers. This truly successful and innovative resurgence is a far cry from such a
horrible slump that haunted the company just a few years prior.

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