Case Study
Marketing Mix of Tesco

Introduction

Tesco has been a high growth and well performing retailers around the globe. The successes of Tesco in UK and abroad have been drawing many academic and researchers attentions. The key success factors of Tesco are widely debated. One obvious and often quoted critical success factors of Tesco is the continuously expanding of range of products sold by Tesco. Many people tend to believe that ‘products’ are therefore the most important elements in marketing mixes of Tesco.

However, in this paper, it is discovered that other elements in the marketing mix are also equally important and contributing to the successes and profitability of Tesco in the past. Furthermore, it is found that a mutually supportive and internally consistent among the various elements of the marketing mix of Tesco is the main reason leading to Tesco successes that it enjoys today.

Marketing Mix of Tesco

In this section, the successful management of several dimensions of marketing mix of Tesco is discussed. Firstly, the ‘products’ dimension is discussed. It is shown that the popular belief that Tesco successes are contributed by wide range of products are valid. However, it is also argued that such a belief does not depict a comprehensive picture of the successes of Tesco. The other elements of marketing mix are presented, and how Tesco has been utilizing these dimensions for superior growth and competitive advantages are presented in the subsequent paragraphs.

Product

For Tesco, as discussed previously, one of the key success factors is the company’s ability to enlarge the products portfolio offered by the firm to the consumers. Today, Tesco had already successfully transformed itself into a diversified international business, whereby consumers can purchase many types of items ranging from food, non-food, electrical, electronics, office equipment, gardening equipments, apparel, and etc. from Tesco. By offering a wider products portfolio to the consumers, Tesco enable a convenience shopping experiences to the customers. Essentially, Tesco become the one stop solution from consumers’ perspectives, and this has further enhanced the brand name of Tesco (Lowe, 2009; Annual Report 2009).

Besides, Tesco is able developing products with its own brand name. Such a move enables Tesco to sell the products with cheaper pricings to consumers, while enabling Tesco to earn a higher profit margin. This creates a win-win situation for the customers. Apart from that, such a strategy also enables Tesco to control the quality of products sold under its brand name. In the long run, Tesco is well-positioned as the company that delivers quality products to consumers, with cheap pricings (Ritson, 2008).

Furthermore, Tesco is employing innovation for the products to add value for the customers. For example, Tesco developed a new dairy product that is proved able to reduce cholesterol for consumers, to cater for health conscious consumers nowadays (Lowe, 2009).

Price

Pricing is also one of the key competitive advantage of Tesco, whereby except larger retailers such as Wal-Mart and Carrefour, very few competitors able to match the price offered by Tesco to consumers (Ritson, 2008).

Places/ Distribution Channels

In this dimensions, Tesco is enjoying a large distribution network and a lot of retail stores around the world. Many of the stores are strategically located, after considering the convenience they bring to consumers and the rental costs associated to the location. Besides, this effectively further enhances the brand name of Tesco. Apart from that, many of the leading stores of Tesco are operating 24 hours a day. This had further deliver convenience to customers. As a result, customers’ satisfaction and loyalty are improved (Rogers et. al., 2005).

Besides selling the products in the retail stores, Tesco is also selling the good online in the recent years (Annual Report 2009). The ‘Click-and-Collect’ methods are introduced, whereby customers can now click the goods they want to purchase, and then to collect the goods via drive-through from their cars (McTaggart, 2006). This again speed up the time required to purchase products from Tesco, and able to cater for the urgent lifestyle of customers today. With a variety of easy, convenient and fast choices for consumers to reach Tesco, the consumers largely are happy with the services provided by Tesco and stick to purchase their necessities from Tesco for a long time.

Promotion

One of the most successful promotional activates launched by Tesco is the introduction of loyalty card, namely the ‘Clubcard’ to customers. For this, loyal customers are often rewarded with points or a variety of discounts offered by Tesco. Very often, special offers are available to the repeat customers, which are designed to help the consumers to save more money. In the long run, customers become satisfied, more loyal and eventually choose to buy whatever they required from Tesco in order to enjoy further discounts, promotions of simply to collect more points for their ‘Clubcard’ (McTaggart, 2006; Annual Report 2009).

People

One of the critical success factors of Tesco is the effective management of people in the organization. In fact, many researchers are arguing that the key factors leading to Tesco success is due to the people factors. In Tesco, people drive the strategy, the marketing activities and the daily operations to greater heights and better performances around the world. The management publicly acknowledges that people are the organization’s most priced assets – in delivering remarkable, excellent and friendly customer services in the marketplace (Annual Report 2009). In Tesco, people are properly trained, developed and cared for. An effective internal marketing is adopted in Tesco, whereby as the employees are treated with respect and care, they will in turn treat the customers in an excellent manner. When the workforce are empowered, they are more motivated to participate and involve seriously and proactively in taking care of the company’s interests from time to time, which ultimately enable Tesco to achieve high degree of customer satisfaction (Plimmer, 2010; Annual Report 2009).

Physical Evidences

A walk in the Tesco retail stores can deliver a pleasant experience to consumers, as the stores are properly organized, clean, and nicely decorated. It is not hard to observe that the layouts of the stores are delivering pleasant shopping experiences to customers. Besides, some of the stores are also designed to exhibit socially responsible acts from Tesco. One of the successful social marketing approaches employed by Tesco is the opening of environmentally friendly supermarket that able to reduce carbon footprint by half. It is hard to deny that environmentally conscious consumers today will feel nice and build positive perception against Tesco when shopping in these stores (Rogers et. al., 2005).

Process

The value delivery process of Tesco is also well-designed. According to researchers, the online portal of Tesco is specially designed and frequently tested to ensure as little time as possible is required by consumers to make a purchase online. The several dimensions focused by Tesco in order to ensure pleasant consumer behaviors from online purchase include: ease of use, speed of site, relevance, wide range of products sold online, easy to navigate, and etc (Annual Report 2009). Besides, Tesco has also been capitalizing on IT/ IS and the “Clubcard” internally developed Customer Relationship Management (CRM) system to keep close interaction with customers. Tesco try to reward every interaction with the customers, while collecting information from the customers through these interactions. With the data collected, Tesco is able to provide personalized services to consumers, while at the same time creating targeted and concentrated marketing campaigns as when needed (Ma et. al., 2010; Siddiqui et. al., 2003).

Conclusion

As we had discussed above, it is found that Tesco is indeed a market-oriented company (Narver & Slater, 2009). The successes of Tesco cannot be solely attributed to the ‘products’ of the company. Other dimensions are equally important. By ensuring the other elements in the marketing mix are effective, as discussed above, Tesco is able to deliver a more comprehensive, complete and satisfying experiences to the consumers. Indeed, it is reasonable to mentioned that the various elements of marketing mixes are mutually supportive and internally consistent – and a combination of these smartly crafted elements in marketing mix are the source of competitive advantage of Tesco in the challenging business environment.

References

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