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Digital Marketing Plan of Tesco Plc

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Executive Summary

In this report, the digital marketing plan of Tesco Plc, the retail organisation of UK has been
described in detail. Tesco is one of the largest retail supermarket industries of the world and
the functioning of this industry is driven by its customers. Therefore, the digital marketing
plan of this industry should be focused on the theory of customer acquisition and retention.
The digital marketing plan has been strategically developed by the SOSTAC model.
Theoretical concepts and insights from credible sources are drawn to strengthen the report
and provide it a critical structure. The report has been demonstrated by gathering potentially
relevant information about the chosen industry.
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Table of Contents

Executive Summary ................................................................................................................... 2

Introduction ................................................................................................................................ 4

Digital Marketing Plan: Definition and Structure ...................................................................... 4

SOSTAC Planning Model: ..................................................................................................... 5

TESCO: Situation Analysis ....................................................................................................... 6

SWOT Analysis: .................................................................................................................... 6

PESTLE Analysis:.................................................................................................................. 7

Tesco: Objectives ....................................................................................................................... 9

Tesco: Strategy & Tactics ........................................................................................................ 10

Tesco: Action & Control .......................................................................................................... 11

Conclusion: .............................................................................................................................. 12

Reference ................................................................................................................................. 13
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Introduction

Digital marketing is defined as the marketing and publicity of services, facilities and products
of a particular company with the assistance of digital platform. Digital technologies such as
internet, display advertising, Search engine optimisation, influencer marketing, social media
and e-commerce marketing etc can be termed as several methods of digital marketing
(Strauss, 2016). Digital marketing strategy is a planned channel of strategies that is an
ensemble of researched information about customer behaviours. Digital marketing planning
refers to an innovative and creative mode of marketing management employed by different
business organisations to enhance the growth of their business. The difference between
digital and traditional mode of marketing is that digital marketing exploits all the digital
modes to communications and technologies to reach to a wider group of customers
(Armstrong et al., 2015). Digital marketing planning consists of three chief stages, namely,
opportunity, strategy and action. The digital marketing planning structure of any significant
business organisation should first summarize and assess the marketing and sales
opportunities, the second stage is to generate a planned digital structure wherein the company
can re-evaluate their digital schemes and the third stage is to set the action by measuring the
budget and the required management systems (Armstrong et al., 2014). However, in this
report the digital marketing plan of one of the largest retail organisations in UK, Tesco Plc
will be developed. The report will be developed by drawing relevant concepts from the
available digital marketing models, theories and concepts.

Digital Marketing Plan: Definition and Structure

Digital marketing plan of any particular business organisation is most effective when they are
integrated with offline method of marketing communications such as phone or e-mail.
However, these plans are part of a broader marketing plan covering the sales distribution,
marketing communications, services and the details of the products (Bång and Roos, 2014).
As far as the digital marketing plan structure is concerned, the report will be entirely based on
the SOSTAC model. The digital marketing model of TESCO Plc will be strategically
described as per the guidance of this widely known and largely accepted model.
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SOSTAC Planning Model:

The SOSTAC planning model of marketing is the most widely used model of digital
marketing planning developed by PR Smith in the year 1990.

Source: (Visually, 2012)

In order to structurally organise a digital marketing plan the companies first need to analyse
the situation of the company. The growth forecast, competitive markets, internal and external
environment should be studied in detail in order to implement the online and offline
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marketing performances of the organisations. The objectives of the company are equally
significant in designing the benefits and purposes of the efforts that are being undertaken.
Objectives cannot be achieved without the existence of a planned strategy. Strategies are
generally summarized as the means through which the goals and objectives are delivered
(Blakeman, 2018). Strategies are also the propositions of supporting customer acquirements,
adaptation and retention. Strategies are implemented through strategic tactics. Digital
marketing plan is generally constructed of the marketing and communication mix as well as
the channel mix and premeditated tools. The detailed workability of the tactics is processed
through the prompt actions. Tactical digital tools are itself miniature projects that need to be
managed proficiently. Towards the end of digital marketing planning the respective
companies are required to question the measurements of control whereby they can analyze
whether the plans adopted by them are succeeding or weakening (Camilleri, 2018). Through
the concluding phase of control, the companies can monitor on a regular basis the web
analytics facilities. The specific visitors, queries, durations, subscriptions and sales reports
are monitored by the control subsection.

TESCO: Situation Analysis

A digital marketing plan generally begins with the detailed situation analysis of the company.
Situation analysis is a constitution of the potential strengths, weaknesses, opportunities and
threats. The digital marketing plan of a multi-channel business should definitely concentrate
on the specific SWOT analysis of the company. Situation analysis also includes the detailed
analysis of environment of the particular company. Environment analysis can be done
through the assistance of a detailed PESTLE analysis. For a huge business organisation like
Tesco, it is highly necessary to have a detailed SWOT and PESTLE analysis in order to refer
and recommend its core business strengths in the retail industry (Chaffey, 2016).

SWOT Analysis:

Since its formation in the year 1919, Tesco has been able to recognise itself as a rich heritage
of retail industry. In order to analyse the situation or the environmental status of Tesco, it is
primarily necessary to structurally scrutinise the strengths, weaknesses, opportunities and
threats of the company. SWOT analysis is not only a mere summarisation of the current
situation, but it helps in demonstrating, formulating and developing the digital marketing
strategies. Tesco is a giant chain of multiple retail industries. Originating from UK, the chief
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strength of this retail industry is steadiness, sustainability and dependability. According to the
CEO of Tesco, Terry Leahy, the company provides services to the requirements of almost
90% of the British Population. Because of the trust, dependability and conviction of the
customers, Tesco is able to successfully hold its market share which acts as another strength
to survive in the retail industry (Chaffey et al., 2013). In spite of having substantial strengths,
Tesco has considerable amount of weaknesses that requires special concentration. Tesco
leadership needs to work on their competition management and business expansion plans.
Competitors such as Wal-Mart and Carrefour may exploit these loopholes and invent
different strategies to attract the customers leading to the reduction of Tesco’s market share.
The viability of implementing cloud-based technologies and creative cycles of product
developments are certain areas of development where the company can seek lucrative
opportunities. In order to save the threats of added expenditure, the company can test and
verify the capacity of their automation technologies (Chaffey and Smith, 2017). A few highly
required opportunities that can be authentic and necessary in the digital marketing planning
are reviews of business strategies, measurements for controlling quality and empowering
inventive models to enhance the marketing sales.

PESTLE Analysis:

PESTLE analysis is equally important to study the external environment of the company and
analyse the situation as per the outcomes. PESTLE analysis is concentrated on the political,
economic, social, technological, legal and environmental aspects of the company. Digital
marketing plan is strictly based on the details of the situational environment of the company.

Political: The new tax policy employed by the UK government has affected Tesco. The VAT
rate has been increased from 17.5% to 20% with an aim to amplify the government revenue
by £13 billion per year. However, an increased amount of VAT rate generally lowers down
the spending of the customers. As sales revenue is the key foundation of the company’s
income, this political agenda has a substantial consequence on the gross profit. Apart from
strategically addressing this issue, Tesco has also subsequently launched its ‘healthy food
range’ to respond to the government policy of controlling obesity and other medical issues
(Chaffey and Smith, 2017).

Economic: The growth and recovery of UK economy is a positive indication for the retail
industry and by default, for Tesco as well. During the economic recession, there was a huge
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increase in the unemployment rates. Under such circumstances, the revenue growth was not
satisfactory and customer retention became difficult. With the economic recovery, the
revenue growth of Tesco has been stimulated (Charlesworth, 2014).

Social: Studies have suggested that the number of elderly people in UK is augmenting due to
the increase in the expectancy of life. Therefore, the online shopping strategies should be
adopted taking into contemplation the mobility issues faced by the aged people. Due to age
related issues, the elderly people in UK are more likely to use the internet and get hold of
products online (Tuten and Solomon, 2017). Tesco has successfully addressed to this issue of
social change. The corporate strategies should also be synchronised with the respective
business environment taking into consideration the shift of customer opinion about the
quality and quantity of the products and the service available by the company. The negative
implications associated with the horse-meat scandal at Tesco in the year 2013 were extremely
huge for the goodwill of Tesco (Donnelly et al., 2015). Therefore, before digital marketing
plan requires the advertisement and assurance of quality products.

Technology: Both the supply chain management and the digital marketing plan is critically
associated with the implementation of an efficient and cost effective technologies which
would also reflect the chief competencies of the company. Technological advancements are
scope of opportunities for Tesco. Improving the mobile technologies or advancements of e-
grocer facilities is significant to enhance their presence in the retail supermarket industry.
Enhancing the technological advancements is also necessary to present the services provided
by the company more attractively to the customers. Technology boosts up the standard of
performance and makes them more convenient to the customers. Technological advancement
is also necessary to increase the worth, value and popularity of the company (Fichman et al.,
2014).

Environmental: Global warming and the results associated with it are the most significant
challenges Tesco has came across. Environmental sustainability has been greatly emphasised
by both the customers and the Tesco authorities. A number of policies have been adopted by
Tesco to protect the environment. For example, Tesco is dedicated to reduce the consumption
of energy and greenhouse gases to protect the environment (Hanssens and Pauwels, 2016).

Legal: A number of laws and policies that are propagated by Tesco authorities can affect the
products and services of Tesco. The reformation of the common agricultural policies by the
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UK government which revises the allocations of direct subsidies to the farmers is affecting
the agricultural standards set by Tesco. Financial services such as credit cards, loans and
savings are implemented as per the standards of the Financial Services Act of 2012 (Hanssens
and Pauwels, 2016).

Tesco: Objectives

While the situation analysis elaborates the current external and internal position of the
company, objectives provide a clear direction to the digital marketing plan. Objectives are
also necessary in order to seek the most benefits of the digital marketing. There are five
objectives of digital marketing that can be abridged as the 5 Ss. The 5 Ss can be termed as
sell, serve, speak, save and Sizzle. These 5Ss collaboratively drives the digital marketing plan
of a company (Holliman and Rowley, 2014). At Tesco the 5 Ss go as below:

Sell: Sell refers to the growth and development of the business to generate 30% more
revenue. Growth of the sales is generally achieved through wider online customer support
through email. A set of tangible, accurate, succinct and meaningful messages delivered to the
customers can allow Tesco its desirable competitive advantage (Järvinen and Karjaluoto,
2015).

Serve: To serve is to add value to the services and the products. Making excellent online
services and benefits available can generate a wider response. Serving to the individual
requirements with special attention to the cost-effectiveness, time and energy increases the
loyalty and relevance (Holliman and Rowley, 2014).

Speak: Speaking refers to developing a close affinity with the customers by tracking them
and questioning them by organizing online interviews, conducting a dialogue, supervising the
online forums, blogs, groups, social media networks. Tesco believes in collecting the tangible
customer knowledge to respond to their opinions in a structured way (Jeanpert et al., 2016).

Save: The fourth objective of Tesco is to save expenditures of the sales promotions,
transactions and administrative services. Tesco has brilliantly switched to telemarketing and
Facebook based customer services to make available efficient and effective services.
Transaction costs have been reduced in order to make online sales more profitable. Cost
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saving ventures has enabled Tesco to generate a greater amount of market share (Jeanpert et
al., 2016).

Sizzle: The objective of sizzle is to build and administer the Tesco brand to optimize the
results of product selling. Online facilities add value for creating brand consciousness and
recognition.

Tesco: Strategy & Tactics

While objectives analyse the directional dimensions of a company, strategy summarizes how
the company can achieve the goals and objectives of the tactical decisions. Tesco believes in
the strategic move of acquisition, retention and introduction of new features as their chief
strategies. Strategies are the key features of accompany that differentiates the competitive
advantages of a company. Digital marketing strategies are all about innovation, creativity
and uniqueness. Strategies direct the company towards establishing an integrated web
database to strengthen the communicative measurements. A digitalised strategic manoeuvre
is also required to design a strong value chain facility. Value chain system is required to build
a stable digital marketing plan (Kannan, 2017). However, a strong value chain can be
strategically executed by the model of Porter’s Five Forces. Porter’s Five Forces helps the
organisation to statistically determine the threat of new entries in the market, the power of
buyers and suppliers, potential risks of replacement and competitive rivalry. These are
essential qualities that should be kept in mind in order to determine the customer loyalty.
Digital marketing plan is enhanced by the particularities of customer choices, pricings,
standards of quality and required services or definite products. Strategies that are oriented
with customer value retention are defined as long-term strategic perspectives (Karjaluoto et
al., 2015). However, it should be mentioned that if the strategies are non-coherent and
irrelevant, the entire e-marketing plan is liable to fail. Marketing strategy is structured with
some key components which are commonly known as STOP (Segments, Target Market,
Objectives, and Positioning) and SATIS (Sequence, Acquisition/Retention, Tactical tools,
Integration and Social media influences). In the context of Tesco, the segment is the retail
supermarket market and the target market is the potential customers. As it has already been
discussed objectives are commonly termed as the 5 Ss. Digital marketing position should be
based on the online value proposition (Kaufman and Horton, 2014). Market positioning
should always be directly proportionate with the perceived price value of the company. As far
as the SATIS model of strategies are concerned, the first strategic move should be the
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sequencing the digital tools that would be most pertinent to build the awareness, for example,
online public relationship, advertisements or sponsorship. Acquisition, retention and
integration are completely focused on customer satisfaction as customers are the chief
mediums of gaining attention (Killian and McManus, 2015).

In this context, it should also be mentioned that strategies cannot be achieved without
appropriate and unique tactics. Strategy is driven by the choice and mix of marketing tactical
tools. Marketing communication mix and a ground-breaking contact plan helps to
successfully accomplish the strategies. Tesco, however, believes to implement new ventures
as widely accepted marketing mix. Tesco analyses its marketing mix on the basis of the 4Ps
(Product, Price, Place, and Promotion) model. Products at Tesco are huge and needs to cater
the multidimensional preferences of customers from various market segments (Lamberton
and Stephen, 2016). Tesco has a wide range of products such as food and beverages, bakery
and frozen food materials, pet food, gaming and technological products, home decor items
etc. Apart from that, Tesco also owns its authentic brands such as Tesco, Everyday Value,
Tesco Lotus, Tesco Value and F & F Clothing etc. The pricing tactics for Tesco is to manage
cost strategically. Goods are provided in minimum prices maintaining the quality. The supply
chains of Tesco have been constantly working to reduce prices efficiently. Around the year
2016, the average costs of weekly shopping have been reduced by more than 3 %. Customer
feedbacks are essential in order to provide minimum yet stable prices. Tesco has even
reduced the expenditures of its promotional prices as well (Leeflang et al., 2014). Tesco has
more than 6,900 stores in over 11 countries. There are wide ranges as well as variety of Tesco
stores available such as Tesco Metro, Express, Extra, Superstore and also smaller store such
as One Stop. Promotional campaigns have been given significant focus. All the promotional
activities of Tesco are focused on building a strong brand image with cost effective agendas.
As far as the digital marketing mix is considered, Tesco uses hoardings, charity events,
television advertisements, endorsement deals and sponsorships as key mediums of
promotional activities. Tesco also has a loyalty Clubcard for its premium customers and avail
them with online promotional discounts and offers (McDonald and Wilson, 2016).

Tesco: Action & Control

The last phase of SOSTAC digital marketing planning is to take proper action and
simultaneously control those actions to make the strategies realistically attainable. Action can
also be termed as the successful implementation of the policies and strategies undertaken by
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the company. Risk management is a significant aspect of the action phase (Ryan, 2016). The
authorities at Tesco have given ample importance in responsibly maintaining the structural
strategies and are always prepared for any threatening situation. Control mechanisms such as
process and system control, skill and internal resource management as well as ensuring the
consistency of the external agencies are significant aspects of Tesco’s digital marketing plan
(Palmer et al., 2014). The last part of this digital marketing plan module is to control or to
monitor the well execution of the entire plan. The 5S’s objectives of the company should be
constantly monitored in order to optimize the performance of the company. Tesco also
believes in tracking consistently the review and opinion of its customers as customer
acquisition and retention is one of the key agendas to monitor the performances. Optimizing
the conversion rate is a crucial aspect of controlling and monitoring the feasibility of adopted
strategies. However, at Tesco the authorities have adopted the policy of constant and frequent
reporting of how the entire procedure is going on or the condition of the plan. An organised
and coherent set of actions authenticate the digital marketing plan and helps the company to
strengthen their marketing facilities through a digitalised platform (Peppard and Ward, 2016).

Conclusion:

To conclude the report it may be said that, SOSTAC model of digital marketing plan is quite
relevant and effective in delineating the e-marketing plan of a notable business organisation.
The chief motto behind digital marketing is to be able to connect to the customers. In this
digitalised era of marketing, it is highly necessary for the business organisations to follow a
systematic plan (Royle and Laing, 2014). This model which has been adopted in this paper
effectively analyses the environmental situations of the company, the objectives of the
company which would be further necessary to guide the e-marketing plan, evaluates the
strategies adopted by the company to further seek out the tactics through which it would be
possible to provide the digital marketing plan a reliable background. Finally, through the
phases of action and control, the company ensures the realistic outcome of all its strategic
activities (Young, 2014).
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