Marketing Strategies of Tesco 

Executive Summary

Marketing is considered essential for growth and success of business. The type of tools that are used for marketing by the firms have evolved as the demand for the customers are no longer simple.  The aim of the paper is to provide relevance of new and old forms of marketing. The paper provides the detailed marketing strategy that are followed by Tesco. The findings have revealed that the company has been following old marketing strategy along with new strategies to stay in the competition. It has been recommended that for implementing digital technology in business, the company should consider customer centric strategy and value proposition in business. 

1.0 Introduction 

The success of a company lies heavily on the marketing strategies followed by it.  Promotions, advertising, sales and public relations are certain aspects that are considered very important in case of marketing. Researches have proven that even though business might offer best services and products but due lack of marketing initiative the product fails to reach the potential customers (Letaifa and Perrien 2007). The way the marketing strategies are implemented has evolved overtime. It has been seen that companies are moving from traditional marketing strategies to modern marketing strategies. The paper provides the importance of moving towards new DNA structure of marketing from old marketing techniques. The aim of the paper is to study the present marketing techniques in context of Tesco and recommend innovative marketing technology. Tesco is one of the multinational retail company based in the UK. Jack Cohen founded the company in the year 1919. The company’s operation was initially limited to Europe but it has gradually diversified operation to the US and Asian countries. The business performance of Tesco for 2015-2016 was remarkable as it incurred cash of 2.6 billion pounds from its retails operation (Tesco PLC, 2016). The amount was 0.7 billion pounds higher than that accrued in the previous year. The areas that are going to be addressed in the paper are marketing technology, STP strategy and marketing mix in reference to Tesco and further recommendations are provided on the way 21st century marketing tools can make difference to the business operation.  

2.0 Technology in marketing

2.1 Marketing technologies used by Tesco

Technology is gradually making an important place in marketing as this help satisfy customers and allows companies to boost their sales. Tesco has also been implementing technology to improve their marketing strategies. The use of online forum has helped in generating huge sales and turnover rather than their offline stores. The company started selling its products online using the internet service in 1995. Tesco had highest number of online customers in the UK than any other super market retail chain (Tesco PLC, 2016). The online website was quite simple and convenient for the customers, who were interested in purchasing their products online and wanted it to be delivered at their home. Even the delivery of the product is made as per the convenience of the customer. Tesco tries to provide the customers same day delivery or within two to three days. To ensure ease of payment of online goods, Tesco has provided the different payment modes. However, the customers are increasingly using the online payment medium due to convenience (Munusamy and Wong, 2008). 

Tesco has been increasingly depending upon the developing online services as online information are used for understanding items which are high in demand and to see items that require marketing and promotion. Apart from this, online information helps in providing Tesco about rate of satisfaction and responses of the different customers. The availability of huge amount of online information helps Tesco in designing its existing online marketing strategy and provides customer with services. Apart from website or e-commerce marketing, email marketing has also proved to be a convenient way of sending products and service related information to the customers. Email marketing has proved to be quite beneficial for Tesco with respect to online business. Tesco generates almost 60% of the online revenue through email marketing (Munusamy and Wong, 2008).

Social media has been increasing being used by almost every organization to advertise their products. Companies can expect higher responsive rate from people due to their presence in social media. Even Tesco has an overwhelming existence in different social network website. Both Facebook and Twitter forums has helped Tesco in building a closer relationship with the customers and helped in carrying out promotional campaigns (Munusamy and Wong, 2008).

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2.2 Recommended innovative marketing strategy for Tesco

The existing technology that is used by Tesco in marketing is limited to e-commerce and social media. However, the company should consider upgrading it and using innovative strategy. The demand of the consumers is no longer simple rather it has become more complex, so web analytics is going to help in comprehending the minds of the customers. Tesco should focus more into analysing their customers through data as this helps in predicting the future profitability and the growth of the company. Web analytics is a way of measuring, collecting, analysing and reporting of web data for the optimising and understanding web usage.  The use of web analytics is going to help Tesco to determine segmentation of market, market interests, and trend in the market. It is considered as an important tool for understanding the interest and the preferences of the customers. Since Tesco generates large share of revenue from online website so the use of web analytics is going to help largely. Web analytics can be easily track web traffic through different sources like social media, emails, search engines and advertisement displayed. Even with lower marketing budget, Tesco can expect huge profit through reports produced by web analytics.  

The utilisation of Big Data analytics is gaining momentum and is increasingly being used by a number of companies to improve their competitiveness. The use of big data by Tesco is going to help in improving operational efficiency and its revenue collection. In order to support prescriptive and predictive analytics, Tesco should ensure using big data analytics tools. The use of such tools is going to help in analysing huge amount of data instantly, on a real time basis. The advantage of using big data is that, it can work on both structured and unstructured forms of data. Some of the data mining techniques that are used for developing consumer insights are clustering, segmentation, regression and correlation. Hadoop, R and Weka are some of the advanced analytics software or tool, which Tesco can use for witnessing a transformation in business. CRM is also considered quite important in managing consumer satisfaction. Even Tesco should consider using CRM and internet based technologies. The use CRM will not only help Tesco in managing the existing customers but it is going to help the company to acquire more customers. 

3.0 STP Strategy 

3.1 STP strategy of Tesco

Segmentation, Targeting and Positioning (STP) strategy is followed by Tesco to promote free fair trade aggressively to increase its sales. Tesco tend to cater to all market segment i.e. the mass, local and niche customers by making their products easily available to them. The segmentation of Tesco is based upon the geography, demographics, psychographic and behavioural aspects. Through the positioning of product, there involves dealing with individual aspect of marketing mix so that target customer segment could be attracted. There are a number of positioning strategies followed by Tesco to attract target customers. Tesco in order to sell finest range of products uses functional positioning. The fair trade products in the grocery and food sector are sold via symbolic positioning. This type of positioning is based on the aims and aspirations of customers. The target customers are the conscious individuals who are interested in bargaining over their product. These type of customers are mainly youngsters and mid-aged individual (Munusamy and Wong, 2008).  

3.2 Brand strategy and Brand image of Tesco

Tesco has always considered customer as part of its priority list. It has a very unique from of branding strategy because it aims at making the supermarket competitive. The lower and stable pricing assured by the brand ensures that customers rely on their products. Apart from this, Tesco tries investing in those that helps it to stand out (Vizard, 2016). Among this, the investment is made more in ways to reduce costs, as there is increasing number of online and convenience grocery stores. In the year 2011, Tesco had taken the first initiative towards adopting global brand strategy by considering the launch of non-Tesco products i.e. pet products and ice cream range. Tesco is trying out all categories for creating its brand (Barnes, 2011).  The brand image of Tesco among the customer is positive, as they trust the product and service quality of the company (Khan, 2013). The inclination of the customers towards Tesco products has developed over time, which has helped them to witness excellence in each interaction. 

3.3 Characteristics of the Tesco customers 

There are four type of retail customer groups, who generate sales for Tesco. These groups are classified as focused fulfillers, product groupie, pleasure seekers and general browser. Tesco should concentrate upon focused fillers and product groupies as these two groups provides maximum conversion rates. The features of focused filler includes those who move through the store until they get the desired and are likely to have previewed the product prior purchasing. Product group generally walk in the store and head towards specific departments. This type of group goes through a number of products but ultimately purchases the products he targets. 

3.4 Recommendation for improving STP strategy

Tesco should consider ways of product branding as it has been noted branding is considered to be important in any type of organisation. The main marketing goal is to have the target market to think about the company, when they consider buying products. Customer service is considered as an integral part of the business. Tesco must realize that the modern day customers are looking out for guarantees on the products and exceptional after-sales services. In case of internet purchases, the buying decision is considered important for customer services. In order to accept the brand, there is a need for the people to believe in the person behind the brand, so building of trust is quintessential. Tesco should actively engage the target consumers so that it helps them realize that the company is actively working for them. Keeping in touch with the customers is vital as this helps in ensuring success of any business strategy. Similarly, Tesco must keep in touch with the customers on a regular basis through the newsletters or emails so that it does not lose contact with the customers. The logo that the company uses helped in reflecting the values of the brand. The logo that Tesco uses must reflect the brand and should allow it to be differentiable from the others in the competition. The logo of the company is considered as public face of the brand and the way consumers identify themselves with the brand. 

4.0 Marketing Mix 

4.1 Extended marketing mix 

The traditional form of marketing mix includes 4Ps of marketing strategy i.e. product, place, price and promotion. However, the marketing mix structure has undergone changes in the recent year so the structure include more three elements i.e. process, physical and people. The main implication to extend the marketing structure is to ensure that marketing turns out to be effective. The following is the structure of the 7Ps marketing mix:

Product: The goods and the services that firms provide the customers

Price: The amount that is paid by the customer for the product.

Place: The way the product is distributed to the customers. 

Promotion: The different ways used by firms for persuading customers to purchase their products

People: The person involved in making contact with the customers for delivering products 

Process: The way or system that helps deliver product to customers 

Physical: The elements present in the physical environment that helps in enhancing the customer experience. 

The 7Ps market structure helps in dealing with all types of issue related to goods and services provided to customers.  It is an ideal way of building and valuing customers (Hollensen, 2015). (Appendix: Figure 1)

4.2 Relevance of marketing mix in the digital era 

Marketing mix concept is still relevant in today’s marketing strategies adopted by the companies (Warner, 2011). Marketing strategy helps in strategic thinking and lays down the foundation for developing optimized advertising campaigns. With the technology being evolved, the classic 4Ps of marketing is going to aid marketers to satisfy the concept of finding the right customer at the right place and time (Keller and Kotler, 2016). Though landscape of marketing has changed dramatically, yet the core objective of marketing mix and its elements has equal importance today as it was held years back. The traditional framework of 4Ps helps in describing the way marketers control and not on the things that they need to achieve (Keller and Kotler, 2016). It is an ideal model for modern day firms to describe the factors that the company is in control.

4.3 Marketing mix of Tesco 

The following is the marketing mix followed by Tesco:

Product: There are a wired product range that is offered by Tesco, which includes clothing, electronics, financial services, food items and more. The ever-increasing line of products provides all the needs of the customers.  

Price: Tesco tries to maintain a low price for its products without compromising on the quality of the product. To ensure customer enjoys all type of cost advantage, Tesco uses its economies of scale. The strategy followed by the company has surpassed all the expectation of the customers so it has emerged as a leading retail brand in the UK. The club card system of Tesco helps customers to gather points, which could be converted to money at a later stage. The company follows a price promotional strategy for the loyal customers.

Place: Online and offline are the two main channels through which Tesco offers its products. There are six different type of stores operated by Tesco and online e-ecommerce website. The products are available in entire Europe, US and some countries of Asia. 

Promotion: Television advertisements, promotional discounts, sponsors to charitable event and point of sale strategy are the commonly used Tesco for promoting the products. The aim of all advertising of Tesco focuses on the low price. Apart from that, it helps in attracting customers with a number of offers. The use of social media is being used more than other forms of marketing techniques as it helps the company in reaching wide spectrum of audience. 

Physical

Tesco has designed it stores as per the convenience of the customers i.e. the products are aligned in such a way so that it helps in cross selling of products. Cleanliness of the stores is considered as an important aspect. Apart from offline store, e-commerce of Tesco is easy and simple to operate.  

People

The success of Tesco largely is realized due to excellent sales assistant. A number of programs like Colleague Privilege Cards, Buy as You Earn are some ways that helps Tesco to motivate the employees. 

Process 

The process related to marketing mix of Tesco involves speeding up of the process of billing and conveniently acquiring of the products through offline and online medium. In order to ensure smooth work process, Tesco employs staff who are competent and are able to handle customers efficiently. 

4.4 Ways of improving marketing mix of Tesco with new marketing DNA 

Tesco needs to allow some form of variation in their marketing mix structure to enhance their existing marketing strategy. The following are some of the aspects that Tesco needs to consider for upgrading the marketing mix:

1. Use of Brochures: Though technology has evolved, Tesco still can rely on print marketing like brochures and business cards. There are a number of people who prefer hard copies rather than soft copies
2. LinkedIn: The presence of Tesco in business social network is going act as a business card. A number of people check out the name of the business on LinkedIn to have a better understanding. It is also important to link all types of social media to the website.
3. Website and Blogs: The existing website of Tesco must be made more interactive for the customers so that they are able to search for the product with ease. Answering to the queries of the customers on the website in a prompt manner is going to help in gaining the confidence of the customers. 
4. Use of CRM: CRM is a technology through which the needs of the customer is studied so that it helps in building a strong relationship with the company. CRM is going to help Tesco increase sales, identify the profitable customers and help in cross sell of products. There are different type of CRM software available so Tesco should be using as per the need of the company.
5. Email: An ideal way of building the relationship of a firm in a cost effective way is through sending emails. The use of personalised emails is an ideal way to show that the target customers are cared by the company.    

5.0 Conclusion and Recommendation 

5.1 Conclusion

The strong understanding of the business and the marketing techniques adopted is going to help in creating an effective strategy for marketing.  The business enterprises of the past as well as the present has realised the importance of marketing. Marketing is considered as an integral aspect despite the size of the business. Even Tesco has considered on changing their old marketing technique to newer forms so that marketing initiative gets more effective. Despite the old marketing strategies are being replaced due to its slow effectiveness it has proved to be successful. The main reason for this is that newspaper, television and radio are some of the easier accessible ways for people. The modern marketing ways like social media and analytics are boosting sales for modern firms yet there are some flaws, However, it the company can expect negative feedback and embarrassment. Thus, through the overall analysis it can be seen that there is thin line of difference between old and new marketing techniques. 

5.2 Recommendations

Tesco in order to improve the business through modern techniques should be considered using the following technique:

Customer centricity: Tesco through customer centric approach is going to help the management to recognize and take the advantage of the growth opportunities. It is an ideal way through which the company is going to expand its business and create unique experience for customers. Customer’s likes and dislikes are carefully studied through customer centric business strategy. 

Value proposition: Through value proposition, Tesco is going to promise the customers to deliver value. In order to develop the value proposition, Tesco must be able to identify its problem and then consider a solution to the problem. Apart from this, it should be considering the competition, experience, price and skills. 

Ways of getting in tune with modern lifestyle

Tesco has realised that more number of people are using social media and online channels so there is a need to investigate more into developing online marketing strategy, as it is a convenient avenue for generating higher amount of revenue. However, the traditional marketing procedures should not be ignored altogether.

Appendix

Extended 7 Ps of marketing 

Figure 1: Extending Marketing Mix

Extending Marketing Mix

(Source: Keller and Kotler, 2016)