Tesco Marketing Strategy Essay Example
The term ‘marketing’ has become an essential part of every organization’s life cycle and has been always a toll that can help the business increase its sales and remain competitive. Thereafter, marketing is a process of management and requires as much managerial skills as running the organization. It involves analysis and planning, investment and control of funds, resource allocation, well-qualified workers and physical resources. The principle of managing it are similar to any managerial activity – it might be implemented successfully and bring profits to the company, or result in sales’ decrease and poor performance. Marketing is also about supplying the customers’ needs. This is the main goal of marketing activities that would result in customer’s needs satisfaction. If the requirements are not fulfilled, it might result in failure of the expectations of both customer and organization. The task of the marketing strategy is to identify and anticipate the customers’ needs and to fulfil them, as marketer is able to provide only some sort of an offer to the customer after a thorough research of the market and the customers’ will.
Thereafter, the ‘need’ is a stimulus to find a solution and a purchase can be helpful in fulfilling it. The incentive to that might be internal, external triggers or just a matter of routine (when a customer knows that is a time to replace a cartridge in his/ her printer due to yearly maintenance). The generation of an area of opportunities requires quick reaction form the companies in order to be the first to satisfy the customers’ needs. If the wider environment changes, it might also create a need (Brassington & Pettitt 2013).
The good example of the company that knows how to meet the consumers’ needs, but was really having risen and fallen, by putting much effort into rebuilding the brand and achieving success, is Tesco. The objective of the following paper is to look at the marketing strategy of this company, analyse it and suggest possible ways of improvements.
Tesco and UK Market
Tesco is occupying around 30% of the UK’s market in grocery and one of the biggest retailers of the non-food related goods after the acquisition of Argos/ Homebase Company. After Walmart and Caffefour, Tesco is the thirst world largest retailer. The decades of growth resembled on the Tesco’s position on the market and has overgrown the size of its competitors almost twice. However, the period of prosperity ended in 2008 when the first quarter fall in shares was equal to 15%. Tesco has started to get the label of the ‘most unpopular store’ and even the Guardian reported that it was hard to find another company that faced such a strong bullying tactics from the public. This happened as the focus of the company was on other areas. Thereafter, the development strategy of Tesco Company is about relocation of 80% cost for development of business abroad, while in the UK it still had occupied around 70% of market share (Cravens & Piercy 2012).
Generally speaking, the UK market is a great example of a ‘battle field for a competition’. This is very observant based on the retail grocery business. When in the mid-2000s Tesco occupied the majority of retail market shares in the UK, it looked almost impossible for competitors to do something about that, but the economic downturn hit the organization severely. The consumers quickly migrated to other chain, looking for the lowest price good, and supermarkets like Lidl and Walmart could offer it. The Tesco was left in a very bad position of a possibility to being stuck between those who choose very low price goods and those who are more quality-oriented and prefer to support the local organizations such as Sainsbury and Waitrose (Piercy, Cravens & Lane 2010). The research of the following paper will provide an overview of the marketing strategies used by Tesco in order to remain in the position of the leading grocery store in the UK.
The retail industry has a direct contact with market and consumers, which enable Tesco to use the marketing strategy related to market orientation and be successful in it. It is even bringing better results in entering new markets and Tesco proved that orientation on customers’ needs and satisfaction of their requirements is vital for the organization. Tesco possesses certain tool, known as the philosophy of ‘Tesco Values|’ that is about treating people the way they want to be treated and putting customers’ needs above any other company’s objectives. Long ago, one of the fusty marketing strategies was about distribution of the Tesco newspapers to the customers. However, this type of practice is not specific for the UK and Tesco had to implement further marketing strategies.
Tesco has earned a reputation of an organization that has certain innovations on the market and its central figures of informational solutions are ‘Clubcard’ (a system of loyalty) and a website. Tesco is one of the largest retailers in the UK and based on that privilege, it has quite a significant database of clients, which they use for further studies and investigation of the marketing needs. Clubcards stimulate customers to come back to the shop on a regular basis and this is a spur to deep and wide relationship between the organization and consumers. Thereafter, the conclusion can be made that the part of the marketing strategy that was about implementation of Clubcard made a significant positive impact on the consumers’ behaviour in the UK. The internal marketing programs had an objective to brief the staff that Clubcard is a very important programs and no customer should be deprived of a right having that, especially due to low attention form the workers’ side.
Actually, the following paper finds it relevant to have mentioned that marketing strategies used for ordinary types of shopping and online shopping are quite different, as each customer differs from another. The online shopping website is constantly developing and owners try to increase the speed of loading, add interesting and useful applications and offer grocery delivery services. The main objective of the website is to simplify the purchasing project for the customers, so the time to make the first order can be decreased to minimum. At the very begging the time needed to conduct first order was 1 hour, now it is less than 35 minutes, and this is to be improved in the future.
In order to implement a proper strategy in relation to virtual part of sales (website), the marketing information was gathered due to Clubcards that holds basic info about customers and their preferences. The other IT programmes were installed in order to smoother the process of tracking the customers who should be recognized and rewarded. Such practice, according to the vision of Tesco’s marketing team, might help the customers to be more spiritually attached and loyal to the retailing outlets. Moreover, due to the fact that Tesco is constantly adding extra partners where the Clubcard can be used and point can be collected, assures customers that this organization is really caring about them and is constantly growing as well as improving. On the other side, this is very beneficial for Tesco, as if a customer is using an auto car service and collects the points to Clubcard, the company has a vision of what car the customer has and can further offer special prices for products related to the brand of the car, which might be of a particular interest to the customer. In addition, the special IT systems help the Tesco team to see the interaction of customers’ needs in terms of brands and make a comparison of one who shop offline with the one who shop online. Another strong marketing strategy is related to offering special deals and significant discounts to the most loyal customers, which actually ‘almost binds’ them to the retailer. The other important issue that marketing strategy was to address was related to increase the number of visitors and purchases and the target audience were the customers who deemed dormant. More attention is given to the customers who have come back to the store after a long break. Marketing strategy also includes in its main pillar the great focus given to data analysis: data quality, data currency, database analysis. Deeper motivation was to find out why customers behave in such way and what products are in favour and the reason behind that. Such practice is helping Tesco to become successful in selling goods, the ones that were sold poorly before. The vivid example of how such data analysis became beneficial for Tesco was the sales of baby nappies. They were very poorly purchased in the retailer shops and the sales in Boot were drastically high despite the fact that the price in the last-mentioned was 20% higher. Apparently, the low-pricing policy was not enough stimuli for customer to purchase the item. Based on data analysis, the marketing decision was to allocate specialist who would provide advice and consult about baby products. Such approach helped to double the sales.
Marketing information in general is very important to Tesco, as they gather data based on ‘Brand Behaviour’ program. Every department gathers its own information in relation to Brand Behaviour and after the summary and analysis conducted on that, the organization might select what prices, services and brands’ development strategy it should apply by establishing a Customer Plan. In order to win the market share from the main competitor, which was Argos, Tesco has launched the order-and-collect service related to catalogue sector (Siddall 2012).
The marketing strategy of Tesco is client-oriented and they do their best to satisfy the customers’ needs. The research shows that not only that can be seen in using of proper pricing, discounts and rewarding policies, but by taking active part in such important thing as environmental policy. The example to that was that in 2008 Tesco has started the practice of putting labels on the products that show the carbon emissions. The main objective of this was to inform the customers that there are products that contain the smallest carbon footprints, as it was done already before with labelling milk and other products that are organically grown (Landcare Research 2012). Such activities help the organization to reduce costs and make the customers happy. Moreover, this might be resembled at cost and Tesco is conscious not to increase the prices as the main customer of this retailer are people of middle and lower class who are very selective in times of economic turbulence.
The economic downfall has negatively influenced Tesco Company, as it has been mentioned before in the paper. In order to make a proper move and to improve the situation, Tesco had faced its problems seriously. Due to a need of cost-reduction, Tesco has cancelled its program known as Double Points, which was implemented initially in 2009 and was very successful during economic downfall. The main message of Tesco Company during recession was that Clubcard was able to help customer to get advantage on every penny they spent. The implementation of Double Points program helped the organization to attract additional 500,000 cardholders but was no longer efficient. The head of marketing has implemented Big Price Drop policy, as a new incentive for customers (Baker 2011).
Based on the analyzed information, it is clear that marketing strategy of Tesco’s marketing strategy can be classified as the one proposed by Eric Shaw. It is clear that the company had separate strategies when entering the market, during market growth, market maturity and market decline (Shaw 2012).
Tesco and Its Marketing Mix
Among the most important things that help the companies to remain competitive in terms of marketing strategies are an effective learning and sensing capabilities in order to constantly monitor the trends, events and surroundings. It is actually one of the most important benefits that helped Tesco to remain competitive even after the drop in conditions of economic downfall. This would enable the organizations with understanding the market and help them to learn and proactively address the forthcoming threats and opportunities. The research made by multiple institutions suggests that market sensing is a very important tool that helps many companies. Tesco has a very good market learning and sensing capabilities (Cravens, Piercy & Baldauf 2009).
The marketing mix of Tesco includes Product that are not only grocery goods, but also insurance and other services as well as more brands with a higher quality to target different customers. The website of Tesco has an application for customers to download music, which is an attractive customer-oriented offer. The Price is about implementation of Clubboard loyalty program. The Promotion is done through advertisement on TV and on the street, as well as sending emails and papers to the customers. Tesco is also trying to get an advantage on the marker by increasing the quality and range of food. Place in Tesco’s marketing mix is about the chain of shops that are available almost all over the whole UK, abroad and are from small outlets to big multi-variety stores (Tesco, 2014).
Tesco management team is definitely is not standing still and despite the fact that global economic recession is over, the market is still volatile and the organizations need to fight to get new consumers and preserve the existing one. The chief executive of Tesco together with other important members of executives has shared their strategy to growth on public level. Thereafter, the pace of changes that the company is undertaking and is going to take is enormous. The main investments are related to refresh programmes in the large stores, outlets that would be tailored conveniently to the customers and digital sales improvement. Much emphasis is going to be put for further development of seamless connections with consumers by providing “the right blend of price, range, quality and service”. The very important sector of marketing strategy would be on the development of Clubcard system, so this would be advantageous for laptop and smartphones users. The visions of Tesco are about satisfying the customer and the representation in digital shopping would be more personalized and have rewarding systems for its users. The system would have an advantage of price-comparisons for shoppers in electronic form.
The strategy about refreshing the stores is also aimed to satisfy the customer’s needs, as according to this objective, both small outlets and big area supermarkets will become more attractive and convenient, offering a larger choice of goods and services. It is a time, when a ‘second curve’ would be starting to bring improvements as the ‘first curve’ was started by Terry Leahy, a former CEO, 17 years ago (Bold 2014).
Unfortunately, for the moment the market share of Tesco Company has dropped significantly (Ruddick 2014). The fall in profits has reached 6% (Ahmed 2014). However, the company has quickly reacted to such change and started a policy related to price reduction and offering online deliveries for only £1 (Straus 2014).
Recommendations for Improvements
Successful marketing strategies of Tesco Company are related to such activities as sending postal and email information to the customers, trying to maintain a constant bond with customer and encourage loyalty through Clubcard program; constantly improving and increasing the demographic appearance as well as the range of goods in the existing outlets; demonstrating that they have advantages in quality, range and price. The most successful marketing campaign is considered Tesco Clubcard implementation and the marketing technique about targeting all types of customer is also bringing positive results. In general, the marketing strategy implemented by Tesco is excellent, but there is always a room for improvement. This means that the basics will not help. The works is moving very fast into the technological progress and the most significant marketing trends of the recent years are related to increase of mobile payments, social media, mobility due to IT technologies, QR codes usage and other (Greengard 2013). This means those customers who are considered to have an average and low buying ability turn to usage of mobile devices anyway. The suggestion for Tesco Company is to develop more positioning of its brand in social media, so it would get somehow attractive for young active people, who would further promote it. Moreover, Tesco is really an environmentally-oriented company, but the suggestion is the marketing team can think about more campaign related to green impact on society. Nowadays, organizations are valued not only because they are customer-oriented, but also based on their corporate social responsibility policies. Tesco also has a strong corporate social policy (Tesco 2013), but more media awareness and social programs related to that would be an advantage.
Tesco Company is one of those organizations, which marketing strategy is very ‘customer-oriented’ and can serve as benchmarking for other retailing and non-retailing industry businesses. Based on the information found in the terms of the following research, it is clear that Tesco is constantly undertaking many marketing activities and they try to combine the marketing strategies with the other activities, such as environmental aspects. The Clubcard program implementation was one of the best strategies ever selected by Tesco that helped it become a number one grocery retailer in the UK. The micro-marco approach that helped to collect proper financial data and make further investigations of the market was also an advantage of the marketing strategy used by Tesco (Zentes, Morschett & Schramm-Klein 2007). Marketing strategies of this company are very strong and the marketing team is quickly reacting to any kind of changes on the market.
In UK, it is common when retailers target certain demographic area of population and apply marketing strategies according to that. Tesco maid a very smart decision and targets more inclusive area of population, which is a definite advantage. By offering the discount in prices for range of goods and increasing the offerings in terms of quality, perception and other attributive’s depth, Tesco had implemented a winning marketing strategy (Siddall 2012). Even despite the turmoil and unstable economic conditions, Tesco has been doing its best to overcome the crisis and regain market shares. The marketing team of Tesco is definitely moving as fast as the changes come to the worlds market, but there are some recommendations that might be important to look at. Thereafter, the objective of this paper has been achieved as deep analysis with prof that Tesco is a marketing-oriented company along with further recommendations have been provided.
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