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Analysis about Costs and Benefits of Marketing Principles

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Managing Principles of Marketing

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Introduction to Marketing Principles

Marketing is an act of selling goods and services by satisfying the needs and wants of customers. Marketing principles such as product, price, place and promotion plays an important role in the achievement of organizational goals and objectives. For this project report, Tesco is selected which is one of the largest retailers in UK. This project report depicts the micro and macro environmental factors which closely affects the marketing decision of company. Besides this, it also depicts segmentation, targeting and positioning criteria which Tesco uses to sell its products and services. It indicates the extent to which the marketing activities affect the buying behavior of individuals. This report also depicts the ways through which company is able to build and sustain competitive advantage. Extended elements of marketing mix also provide help to company for achieving success in the dynamic business environment.

Task 1

1.1 Elements of marketing process

Various elements of marketing process are as follows...

Corporate objectives

Corporate objective of Tesco includes mission, vision, strategies and policies of company. It guides and provides direction to its employees to make their best efforts which enable company to meet their marketing goals and objectives.

Marketing audit

Marketing audit shows detailed statement which contains the marketing activities of Tesco. Besides this, it also entails the past, present and future actions of Tesco. It enables company to compare its performance as against to its competitors.

Marketing and environmental analysis

Through marketing analysis, Tesco is able to identify the effect of market growth, trend, cost and pricing structure upon the profitability of firm. In addition to this, environmental analysis indicates effect of legal, political and economic factors upon the business operations of organization.

SWOT analysis

SWOT analysis shows strengths, weaknesses, opportunities and threats which are present in the business environment. It aids to Tesco to convert its weaknesses into strengths and to build the competitive advantage.

1.2 Costs and benefits of marketing orientation program

Marketing orientation can be defined as a tool through which Tesco designs and delivers its product as per the needs, wants and desires of customers. To deliver the products and services more effectively and to satisfy the customer needs, Tesco undertakes marketing orientation program. Company conducts research to identify the needs and desires of customers. For this, the organization prepares questionnaire and makes a survey to identify the needs and wants of customers. Besides this, organization also makes use of email id to understand the needs and wants of customers. It proves to be more beneficial for the organization as it makes contribution in increasing the productivity and profitability as well as helps the firm in maintaining long term relationship with the customers. In addition to this, it also imposes high cost in front of company in terms of marketing research. Customer’s demand and expectations are continuously changing with the passing time. It is very difficult for Tesco to understand the customer’s needs, wants and desires in the same manner. If organization succeeds in identifying the customer needs and wants through market research program, then it provides benefits such as customer satisfaction and customer loyalty as compared to the cost that is associated with the market orientation program.

Task 2

2.1 Effects of macro and micro environmental factors on marketing decisions

Micro environmental factor consists of controllable or internal factors which can be easily controlled by Tesco. It includes customers, competitors, employees, shareholders and suppliers. They have direct impact upon the business operations and success of the firm. So, Tesco needs to take into consideration all the above mentioned factors before making any marketing decisions. Impact of micro environmental factors such as competitors and employees upon Tesco are as follows...

  • If there is more competition in the market then organization requires making more focus on the promotional strategies.
  • Before making any decision, Tesco needs to understand and consider the competitor’s policies and strategies.
  • Employees of company closely affect the marketing decisions of business. If they are able to deliver cost effective and satisfactorily services to the customers then company needs to make less expenses on the promotional activities and vice versa.

Macro environmental factors are known as uncontrollable factors which cannot be controlled by Tesco. Political, economic, social, technological and legal factors are the main macro environmental factors which closely affect the business strategies, policies and marketing decisions of company. Impact of macro environmental factors such as economic and social factors upon marketing decisions of Tesco are as follows...

  • Economic conditions such as inflation and deflation highly impacts the marketing policies and strategies of organization. During inflation, purchasing power of customers increases so Tesco needs to consider marketing condition while making the marketing decisions.
  • Customer’s needs and expectations are continuously changing as time passes. To cope up with this situation, Tesco undertakes marketing research program which imposes cost in front of company and affects the other marketing decisions.

2.2 Segmentation criteria which can be used for product in different markets

Segmentation can be defined as a process through which company takes total heterogeneous market for a product and then dividing it into several sub markets which can be served with distinct marketing mix. Tesco introduces health drink product to increase its sales and profitability in beverages section. To segment its customers, company uses demographic aspects such as age as well as Tesco can also segment its customers on the basis of their personality characteristics. By making segmentation on the basis of age, organization can easily attract children and old age people. Parents prefer more health drinks as compared to soft drinks which provide benefits to their children. In addition to this, old people are very health conscious so by introducing the benefit of health drinks, Tesco can attract more customers. Tesco can also segment its customer base on the basis of their personality characteristics such as attitude and habits which proves to be more beneficial for the organization. Health conscious people prefer health drink in the breakfast for better health. Appropriate segmentation of the customer provides help to company for increasing its productivity and profitability.

2.3 Targeting strategy for new product

Target market can be defined as a group of customers which Tesco select as a target and focusing its marketing efforts and strategies. Company can use differentiated, undifferentiated and concentrated targeting strategy as a tool to serve the customers more effectively and efficiently. It makes contribution in the achievement of organizational goals and objectives. Tesco undertakes differentiated marketing strategy to fulfill the needs and desires of the customers more effectively. In differentiated targeting strategy Tesco uses different strategy to attract the different segment of customers because no one strategy is suitable to all consumer groups. To achieve success in the competitive business environment Tesco targets kids and old people. Because most of the buying decisions are taken by the old people as well as children also affects the buying decisions of the family.

2.4 Effect of buyer behavior upon marketing activities in different buying situations

Buyer behavior highly affects the marketing activities of Tesco in different buying situations. Buying situations and behavior depends upon the quality of services and information which firm provides to its customers. Besides this, experience which customers get from the sales personnel and product or services of retail store has impact upon the repeat purchase of the customers. Different buying situation has different impacts upon the marketing activities of Tesco which are as follows...

Straight re buy

In straight re buy situation customers are engaged in the routine purchase of the product. They purchase product from the known supplier because they are more familiar with the product and shows less involvement in purchasing. It indicates customer loyalty towards the specific product and supplier. It has direct impact upon the marketing activities of Tesco. Reference group such as family, friends as well as social status of the customer also affects the buying decision of the customer. Tesco needs to be taken into consideration all the factors which affect the buying decisions of potential as well as loyal customers and impacts marketing activities of the firm.

Modified re buy

In modifying re buying situation customers are more involved in the purchasing decisions. According to this, customer purchase similar product but it differs from the previous purchase in terms of the supplier or product characteristics. Customers undertake research to identify the quality and services of different supplier and make comparison with Tesco to make appropriate decision.

2.5 Positioning strategy for product and services

Positioning can be defined as a tool to design company's offering in such a way which creates distinct image in the target customers mind. Tesco can use different positioning strategies to positioned itself as against to competitors. It proves to be more beneficial for Tesco in achieving success in the dynamic business environment. Organization can positioned itself on the basis of quality of health drinks. Quality of the product plays an important role in attracting more customers as compared to competitors. On the other hand, Tesco can also position itself on the basis of price that it provides health drink with high quality at very low price. It enables firm to increase productivity and profitability. To take competitive position in the dynamic business environment company make use of brand endorsement strategy. To position its services Tesco can take help of sports star, Bollywood stars and other great personalities of England in promotional strategies or campaign. It helps company in attract more customers and fans of great personalities to make purchase and experience of health drink.

Task 3

3.1 Development of product to sustain competitive advantage

To survive in the dynamic business environment Company needs to build and sustain competitive advantage. For this, Tesco can use either cost leadership strategy or cost differentiation strategy. For example: Tesco adopts cost differentiation strategy which indicates that it provides quality products and services at very low cost. It enables firm to achieve success by attracting more customer. Besides this, Tesco can also build and sustain competitive advantage by providing better discounts to customers as compared to competitors.

In addition this, organization undertakes research and development activity to assess the customers’ needs, wants and desires. It provides deeper insight to the company about the likes and dislikes of the customer. Through this, Tesco is able to develop or produce innovative product or services which creates mental satisfaction among them. By raising the satisfaction level of the customer organization can build loyal customer base. It enables the organization to build and sustain competitive advantage in the dynamic business environment. Tesco operates in the retail industry so it needs to make efforts to offer the wide variety of product and services to the customer (Hollensen, 2015). Along with the food products, organization requires to offer cloths and other unique products to their customers. By taking advantage of wide level of customer base organization is able to achieve competitive position in the dynamic business environment. In order to cope with the strategic business environment Tesco make efforts to offer innovative services to its customers as compared to their rivals.

3.2 Distribution arrangement to provide convenience to customers

Distribution arrangements play an important role in providing satisfaction and convenience to customers. Tesco adopts both direct and indirect channel to distribute its services more effectively and efficiently. To provide more convenience to customers Tesco also makes available product through online retail store. Through this, customers are able to purchase products at any time from any place. Besides this, it enables them to compare the product and price with competitors. On the other hand, Tesco also provides home delivery arrangements or services which provide more convenience to customers (Solomon and, 2014). They can order the products through a phone call or mail. It develops satisfaction among the customers which provides more benefit to the company in terms of increasing productivity and profitability of the organization.

3.3 Pricing strategies of Tesco which reflects its objectives and market conditions

Tesco needs to be taken into consideration objectives of company and market condition while framing pricing strategies and policies. For example: One of the main objectives of Tesco is increasing productivity and profitability of the company through customer satisfaction. Tesco adopts penetration pricing strategy through which firm charges low price of the product and provides quality services to customers. It enables company to increase its market share and obtain long term profitability and productivity. On the other hand market conditions such as inflation and deflation also affects the pricing decisions and strategies of the firm. During inflation Tesco must adopt skimming pricing strategy which makes contribution in the achievement of organizational goals and objectives. In contrast to this, deflation or recession indicates the situation where purchasing power of the customers decreases. Penetration pricing strategy enables Tesco to attract both potential as well as existing customers. Because prices charged by Tesco is very low during the period of deflation.

3.4 Integration of promotional activities to achieve marketing objectives

Tesco undertakes advertisement, publicity, relationship marketing and word of mouth as a promotional tool which helps it in increasing productivity and profitability of the company. Through advertisement in newspaper, books etc. about discounts and availability of the product Tesco can easily attract wide customer segment. Besides this word of mouth is a non paid tool which increase sales and profit of the company. Satisfied customer share their positive experience with friends, family etc. and motivate or suggest others to make experience of Tesco retail outlet. In addition to this, Tesco can use relationship marketing as a tool to retain its customer base. By providing regular information about products and discount firm can easily fulfil it goals.

3.5 Extended elements of marketing mix

It is also known as augmented marketing mix which includes following...


Employees are the asset of the organization and plays an important role in providing satisfaction to the customers. Success of the organization depends on the quality of the service provider. Tesco organizes training and development session to improve the skills of the employees which enables it to provide satisfactorily services. If employees of the company treat its customers very politely and solve their problems then customers are motivate to make purchase only from Tesco.


Process indicates the way through which Tesco deliver its services. For example: Effective problem solving procedure and effective payment system plays an important role in achieving success.

Physical evidence

It plays a vital role in influencing more customers. Interior and exterior, music, arrangement of merchandise also helps company in increasing productivity and profitability of the firm.

Task 4

4.1 Marketing mix for two different segment in consumer market

Marketing mix can be defined as a combination of four inputs such as product, price, place and promotion which constitutes core of a company's marketing system. It plays an important role in the achievement of organizational goals and objectives. Company is planning to introduce diet chips in UK market. In this, Tesco can segment its customer base on the basis of their age such as young and old customers. For this segment marketing mix develops by Tesco are as follows...


Core product which Tesco is going to introduce diet chips. In the present scenario, old age and young people prefers to consume diet chips which place positive impact upon their health. Thus, by making focus upon such people company can attain success in the competitive business arena.


Price has significant impact upon the old age people. Tesco sets competitive prices for diet chips which helps them in attracting the more customers of UK.


Tesco will offer diet chips through their all the retail stores which are situated in UK. In addition to this, company will also offer such chips through its online store which also offers convenience to its customer base.


Tesco undertakes social media advertisement to develop the awareness among the young and old people about the diet chips which are offered by them. Moreover, people spend their lots of time on social networking sites. Hence, it is the best way through which company can maximize its sales and profitability aspects.


From this project report it has been concluded that various elements of marketing process plays an important role in the achievement of organizational goals and objectives. Besides this, it also has been concluded that micro and macro environmental factors has significant decision upon the marketing decisions of the firm. It can be seen in the report that segmentation, targeting and positioning plays a vital role in achieving success in the competitive business environment. By summing up this project report it also has been concluded that to develop and sustain competitive advantage organization needs to make focus on effective strategies. In addition to these pricing and promotional strategies enables Tesco to increase productivity and profitability of the company.


  • Akgün, A. E., Keskin, H. and Ayar, H., 2014. Standardization and Adaptation of International Marketing Mix Activities: A Case Study. Procedia-Social and Behavioral Sciences.
  • Armstrong, G. and Cutler, F., 2014. Marketing Principles. Translated by Mehdi Zare, Tehran: Office of Cultural Research.
  • Bouzdine-Chameeva, T. and Hill, A. V., 2015. Pricing Strategy in a Clearance Period. In New Meanings for Marketing in a New Millennium.
  • Cui, G. and Choudhury, P., 2015. Effective strategies for ethnic segmentation and marketing. In Proceedings of the 1998 Multicultural Marketing Conference.
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