ASSESSMENT 2: MARKETING

FUNDAMENTALS ANALUSIS AND

EVALUATION
 Executive Summary
Covid-19 has severely affected industries across the world, specifically the retail industry.
The report has highlighted the impacts that the global pandemic had upon the retail giant of
the UK, Tesco. Tesco is one of the renowned retail companies of the UK that had to pay for
the effects that Covid-19 had upon it since 2020. During the first half of the onset of the
pandemic, the retailer had to quickly change some of the policies and businesses operations
that the report has discussed. With that, there have been observed effects from other external
factors that the report has covered with the help of PESTLE and Porter's five forces. The
internal analysis has also been covered by the report to understand the shift of strengths, and
future opportunities for the company as well as the weaknesses that came to the surface
during the pandemic and the possible external threats.

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Table of Contents
Introduction................................................................................................................................4

Impact of Covid-19 on the retail sectors of UK.........................................................................5

Policies to support the retail sector............................................................................................5

Steps taken by Tesco to handle the situation.............................................................................6

External factors affecting the company......................................................................................6

Internal analysis of Tesco...........................................................................................................8

SWOT analysis.......................................................................................................................8

STP of Tesco..............................................................................................................................9

Marketing mix of Tesco.............................................................................................................9

External Analysis of Tesco......................................................................................................10

Porter’s Five Forces.............................................................................................................10

Conclusion................................................................................................................................12

Reference list............................................................................................................................13

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Introduction
The total UK retail volume fell by around 1.9% in the year 2020 if compared to 2019. This is
considered one of the largest falls since the beginning of the records. It has been observed
that the retail industry has been severely impacted. Both the pandemic as well as the
responses of the public had major impacts on the retail industry and thereby on Tesco which
is the third-largest retail company in the UK (Khaliq, 2021). The report will highlight the
impacts of Coronavirus upon this retail giant of the UK. In this report, the internal and
external analysis of Tesco will be carried out. For that, SWOT, PESTLE and Porter's five
forces model will be used. Furthermore, the report will include information about the
policies, the current situation of the retail industry of the UK and the future of the industry
and Tesco.

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Impact of Covid-19 on the retail sectors of UK
In UK, due to the impact of the covid-19 the total retail sales volume had fallen by 1.9%.
Comparing that to the results of the 2019 which is considered as the largest annual fall on the
record. The impact of the pandemic on the retail sector varied with the clothing with the
volume of sales seeing a large fall. As it is seen that the retail industry in the UK is very
much important for the economy therefore fall in the volume of the sales affected a huge
portion of the economy of UK. Moreover, the public health response and the pandemic had a
huge impact on the global economy of UK. Particularly, with the impacting of the lockdowns
in the UK, the global economy had a huge fall (Ons.gov.uk, 2021). It is seen that during the
impact of the pandemic in the UK the consumers who preferred to do offline shopping moved
towards doing online shopping. The rising in the use of the online shopping thus eased the
impact of the pandemic on the retail sector. The online sales in the retail sector rapidly
boosted on the first half of the lockdown but dropped nearly around 5% in response to the
introduction of the second half of the lockdown.
The changes in the external environment that is being surrounded by the retail industry had
shifted the conventional wisdom and also created a latest structure according to the
circumstances. With the far-reaching implications for the economics and the politics the
digital economy had supported the economy and the lifestyle. The retail businesses that are
considered to be essential that handle foods and daily essentials obtained a business
continuity request from the government. Other kind of the retail businesses were compelled
to be closed. The economic effects are seen to be so severe that it will be taking few more
years to recover and come back to normal. The retail industry was hit hard since the
government ordered individuals to quarantine themselves (taken, 2021). The lifestyle of the
customers had been pushed to adapt substantially. Most of the customers preferred to stayed
back home instead of going for the shopping. Therefore, at this stage the internet shopping
got famous among individuals who had never used that before. As a result of the change in
the lifestyle the working style also got changed as people was asked to do work from home
due to the pandemic. It is therefore seen that the implementation of the digital technology
supported the online lifestyle and was seen popular for some time.
Policies to support the retail sector
In order to support the retail sector, the government needs to take initial steps in
strengthening its resilience. The government needs to make the liquidity assistance quickly
available to the retailers. As the non-essential retail activities, the retail companies had seen

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an unprecedented drop in the demand due to the implementation of the lockdown. The
government had already offered transversal emergency support in order to ensure that it is
accessible to all the retail firms. Be it small or large. Beyond the emergency support the
liquidity support measure should be made available for the firms in order to prevent the
business dynamism. The government on the other note, needs to deal with the retailers with
labor supply shortages (OECD, 2021). On the other hand, the essential retail companies
experienced a rise in the demand of the product and at the same time drop in the labor supply.
It is because of the containment measures and the restrictions for the confinement.
The government of UK had taken steps in order to ensure that all households have enough
goods stored with them. In order to do that the government had increased the financial
incentives for the retail workers. The government temporarily eased the labor market and
made smooth the demand-supply matching of the retail jobs. Furthermore, the government
provided guidance for safety in the retail stores which is a prime concern for the employee.
The government on the other hand must also assists the retailers in order to implement the
social distancing measures to keep the customers and the employees safe (Oecd.org, 2021).
Lastly the government needs to ensure that the competition in the retail sector remains
sufficient in following the crisis. Despite the best efforts of the government the pandemic had
led to exit many of the retailers from the retail industry.
Steps taken by Tesco to handle the situation
 During the global pandemic, Tesco took a step forward to ensure the safety and health
of the customers as well as the employees and changes the opening and closing hours
for some of the stores. The hours were easily found on the website.
 With that, the company has doubled the grocery home shopping slot numbers since
the beginning of the pandemic and most importantly it has offered priority slots
separately for vulnerable customers (Tesco PLC, 2021).
 It has offered a 'quieter hour' for a set of customers who prefer shopping at times
when the shop is less busy. With that, the opening hours can be easily found on the
local store's website.
 For the safety of all, Tesco came up with a one-in, one-out system in the stores and
with that, the company has aimed in continuing to limit the number of people in the
stores.

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External factors affecting the company
Political factors – The company TESCO is operating in the countries such as China, Czech
Republic, Hungary, Slovakia and so on. Thus, the political environment of all the countries
are different. Thus, in order to do a stable business, the company needs to follow a stable
political environment. The trade conflict that is between the government of China with the
other countries led to a problem for the TESCO to do business independently.
Economical factors – The pandemic of covid-19 had impacted the business of TESCO very
badly. It was mostly due to the restrictions of the Covid-19 on physical contacts, lockdown,
social distancing and shutdown of many business. The higher unemployment rate in the UK
created an atmosphere of social unrest and financial instability (Shaw & Shaw, 2021). The
land of the United Kingdom still produced foods that can cater to many. Therefore, the
shortage will be temporary and things will be going back to normal soon.
Social factors – In UK the company follows all the local, social and the cultural factors of
different communities and serves food accordingly. For example, in order to cater meat for
the Muslims, the company uses the label of Halal meat over that. The company also offers
kosher products for the Jewish customers in UK (Shaw & Shaw, 2021). In UK, many people
are switching to vegan meat therefore the company started amplifying the sales of the vegan
products.
Technological factors – Due to the pandemic there is an increase in the online shopping.
TESCO survived the pandemic and the lockdown only because of using this typical
technology. With their e-commerce platform the company catered all their customers during
the pandemic.
Environmental factors – The company in UK had recently launched a recycling plan which
comprised of reusing and recycling of the plastic. The company also started on working on
the project of recognizing the illegal fishing boats that are endangering sea life.
Legal factor- The government rules and the legal structures are different in different
countries; therefore, Tesco needs to follow both the international as well as local laws to
carry out its business operations. For instance, the European Union has introduced laws that
restrict the companies to carry out any activities that are anti-competitive which indicates that
the retail giant cannot merge or acquire with any bigger companies similar to its size in
Europe. Moreover, cannot sell any alcoholic drinks to underage teenagers. It has been
observed that, in the past, the court has imposed heavy fines on Tesco in order to violate
these laws.

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8
Internal analysis of Tesco
SWOT analysis
Strength
 During the Coronavirus pandemic, the strength of Tesco was found to be its sales as
per the news (Partridge, 2021). Although the profits of the company were seen to be
tumbled by fifth to £825m in 2020, it managed to win customers from its rivals.
 With that, the total sale of Tesco was observed to rise by 7% to more than around
£53bn up to February in 2021. This beat the expectations of the city analysts. In
Ireland and UK, the sales rose to around 8.8% (Partridge, 2021).
 Besides, the company has seen a rise in its online sales by around 77% in 2021.
Weakness
 Due to the Covid-19 pandemic, the retailer giant had to make many changes in its
policies and strategies (Tesco PLC, 2021). With this hassle, some of its weaknesses
came to the surface. The company did not make any plan regarding controlling the
reliant audit approach in its business.
 It had weaknesses in its IT environment as well (Tesco PLC, 2021).
 It has noticed many deficiencies in the system that affected the databases and
applications.
Opportunities
 Tesco has opportunities to increase its market share as well as customer base through
its online shopping. It has been the first leader in the UK market that has fulfilled
around one million grocery orders during the Covid-19 outbreak.
 In the year 2019, it had a market share of 30.7% in online grocery as compared to
other companies such as Sainsbury's with 14.4%, Asda with 17.6%, Morrisons with
4.5%, Ocado with 15.3% and Waitrose with 3.0% (RM, 2020). Therefore, it has the
opportunity to increase its market share and remain the leader in online grocery.
 Besides, during the pandemic, Tesco has been reported to announce the hiring of
around 20,000 temporary workers (Rubinstein, 2020). Therefore, it has the
opportunity to carry out its services even in the crisis period by hiring temporary
workers.
Threats
 As per Louise Manning (2020), certain principal risks are likely to come forth in the
business operations of Tesco plc. The risks could be seen in the Financial Statement

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 (2020) and the annual report of Tesco Plc. In the study, the principal risk was
annotated as well recorded as to whether that risk will increase or decrease or whether
any new risk will arrive.
 The risks categorised included value delivery and value proposition including trust,
reputation, brand and most importantly customer.
 Besides, the risk is seen in the technology competition and capability apart from
liquidity (Manning, 2020). Covid-19 together accompanied by Brexit affected the
supply chains and threats are seen in there apart from health and safety as well as
responsibly sourcing.
STP of Tesco
People across the world are getting more used to mobile and online shopping. The reasons are
valid, there are no long queues and thereby no wasting of time (Smith, 2020). The
Coronavirus pandemic has shifted the target customers of Tesco to those who prefer online
shopping and are used to it. This includes the youth and middle-aged men and women.
The segmentation for Tesco in the UK besides 13 more countries, both rural and urban. The
retailer giant targets both males and females of the middle abs low-income category during
this pandemic period. As has been discussed, the retail giant has made separate shopping
facilities for the vulnerable (Tesco PLC, 2021). On contrary to other companies such as
Waitrose that target the population with high income, Tesco is a home for all.
The positioning of Tesco includes functional positioning and through this positioning, the
company sells its finest products. Besides, Tesco has moreover applied the price positioning
in a wide range of brands including LCD TVs (Haill, 2021).
Marketing mix of Tesco
Product strategy of Tesco
During the lockdown, the company has renewed its focus on premium products under four
strategic priorities that are new. This includes providing a value that is magnetic to the
customers. It has moreover aimed to evolve the Clubcard proposition, driving cost savings
and convenience (Jefferson, 2021). Due to an elevation in the demands of the products, the
CEO of Tesco has announced the strategic shift of the products. It has therefore planned to
innovate product solutions that are new to the customers, extend product ranges under new
categories so that more customers can buy them.
Price strategy

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Due to the Covid-19 pandemic, Tesco has launched few initiatives to compete on the ground
of low prices. The customers that Tesco targets demand competitive pricing on the products
that they buy every day. Tesco had addressed this demand with the 'Aldi Price Match' as well
as 'Low Everyday prices' (Jefferson, 2021). With that, during the ongoing global pandemic,
people can get reliable products at secure prices at great value at all times.
Place and distribution strategy
During the pandemic, Tesco has shifted to online mode and has focused more on that as the
revenue gain was more. However, as the situation started to bounce back to normal, it is now
available in both online and offline mode. Many of the studies on Tesco has revealed that
customers were not happy with bigger stores such as Tesco extra. However, smaller stores
with easy availability are preferred by all.
Promotion strategy
In the year 2021, Tesco has announced a new media offering for advertisers. After
Coronavirus and as the companies across the world are reviewing and bringing about changes
in their strategies, Tesco has revealed that it is about to bring forth new ways for the brands to
advertise to its customers while Tesco sets itself up as one of the media owners that can rival
its reach of Channel 4, Sky and Facebook (Faull, 2021). This is a powerful strategy of 'Media
and insight' as per Tesco.
External Analysis of Tesco
Porter’s Five Forces
1. Competition in the industry
Tesco has high completion in the industry where it operates. Companies such as Asda,
Sainsbury's, Waitrose, and others are its rivals (BBC, 2020). However, the pricing strategy
and promotional strategy that Tesco has adopted during the Covid-19 pandemic has made the
company stay ahead of the competition and still the first preference for many.
Besides, this supermarket giant has observed a first-half rise in the profit more than if
compared to its rivals as the customers bought more products, specifically food during the
pandemic from online. With more customers who are turning and choosing online shopping,
Tesco has doubled its delivery capacity to around 1.5 million slots in a week which is more as
compared to its rivals.
2. Potential of new entrants into the industry

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 Source: (BBC, 2020)
From the above graph, it can be seen that Tesco is leading during the pandemic with a market
share of 26.8% compared to Sainsbury's which is 14.9% and others which are much lesser
than Tesco. Therefore, the threats from new entrants are low as new entrants cannot compete
with the retailer giant like Tesco whose market share and strategies are better than even the
existing retailers.
3. Power of suppliers
The power of suppliers is low in the case of Tesco as they cannot define the prices. Tesco has
loyal suppliers and as has been reported, the retailer giant during the lockdown despite
different challenges that are at present affecting the industry, the resilience of Tesco's supply
chain as well as the depth of the partnership of the supplier has proved to be one of the
company's key assets (Davey, 2021).
4. Power of customers
Here, the power of the customers is medium as there are other retailers such as Sainsbury's,
Asda in the market. Tesco has set the prices and strategies as per the customers and the
customers found it convenient (Scott, 2020). The easy availability and price that Tesco offers
cannot be ignored so, there will remain some loyal customers as well.
5. Threat of substitute products
The threat of the substitute product is less as during the lockdown Tesco has offered great
services to its customers and as per the report, the percentage of online customers and thereby
the revenue rose more as compared to other rival companies such as Sainsbury's, Asda and
Waitrose.

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Conclusion
The report has discussed Tesco, the retailer giant and has highlighted the impacts and
immediate changes in its business operations and strategies during the Covid-19 pandemic.
The report has discussed the impacts and has carried out the external and internal analysis on
the same. It has highlighted the policies as well. With that, the competitive advantage of the
company could also be known during the pandemic. From the report, it can be concluded that
Tesco has been affected during the first half of the lockdown and the breaking out of the
global pandemic. It took some time; however, it has been observed that the company, in order
to cope up with the pandemic brought about certain changes in its business operations such as
it changed the opening and the closing hours.

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