Marketing Systems and Structures, Tesco in the United Kingdom - Assignment Example

MARKETING SYSTEMS & STRUCTURES “TESCO IN THE UNITED KINGDOM” Table of Contents Introduction to TESCO 2 Type of customer to be examined 3 Parameters for consideration with regard to Customer Centrality 4 Literature review 6 Customer Centrality 6 Concepts and philosophy of customer centrality 6 Customer loyalty 8 Customer retention 9 Relationship marketing 10 Application of above theories in TESCO 10 Customer Centrality in TESCO 11 Conclusion 12 References 14 TESCO in UK Introduction to TESCO Tesco grocery retail store is considered to be the largest grocery retailer in the British economy. In the rankings at the international Tesco comes at the third level. Tesco grocery retail store has its stores across Europe, Asia, and USA. The founder of Tesco was Jack Cohen who founded it in the year 1919. He used to sell groceries at a stall in the city of London (Tesco PLC- About Us 2010) The founder, Jack Cohen started off his business by attaining surplus level of tea from a tea company that was named as T.E. Stockwell. Later Cohen combined his name with T.E. Stock well and gave the tea brand the name of TESCO. The first store by the name of TESCO opened up in the year 1929 in the north part of London (Tesco PLC- About Us 2010). Tesco has expanded its number of stores widely around the region of UK as well as around the world. They offer retail services according to the need of the customers. The main aim of the grocery retail store is to “serve the customer”. It is important for any retail store to make sure that their customers are satisfied with them. For the retail stores to be successful, it is necessary that customers make repeat visits to the store, in this case the grocery retail store Tesco (Tesco PLC- About Us 2010). Focusing on customer satisfaction may allow the grocery retail store to become highly cost effective as they then would be able to attain a large customer base. The focus of the retail stores should be highly revolving around the issue of customer satisfaction by meeting the demands of the customers (Reichheld 1996). Tesco in UK alone has around more than 2200 stores. The product range of Tesco includes the groceries, general merchandise, electrical goods, the aspects of banking and insurance services and others of such types (Tesco PLC- About Us 2010). This assignment basically focuses on the customer centrality and the customer loyalty aspects are focused by the grocery retail store of Tesco in the United Kingdom. Type of customer to be examined The type of customer that is going to be examined in this specific case is the loyal customers of Tesco. Customer loyalty can be a very important and strategic factor of allowing the organisation to become highly successful in the competitive market. Tesco has demonstrated in many areas that they work upon developing loyal customers for their grocery retail store. Some of their schemes have been discussed ahead. Tesco has worked on making their outlets a one stop shopping place for their customers. Now by just visiting Tesco all the needs of the customers may be fulfilled and this way more customers may be interested in visiting Tesco for their groceries and other needs being fulfilled accordingly. Tesco has also worked upon increasing more loyal customers by developing their website by the URL address www.tesco.com. This website tends to attract a lot of users and this allows Tesco to become more successful and profitable. By launching their website, Tesco has given opportunities to a wide range of people that may not be the users of Tesco but now after visiting the website they may have made up their mind to visit Tesco for their grocery needs. Parameters for consideration with regard to Customer Centrality Customer centrality focuses on all those aspects that bring the customers of the organisation as a specific and most vital attention for the business. For grocery retail stores the products and services provided to customers depict the level of customer centrality that Tesco stores have for its valuable customers. The parameters for focus on consideration of the aspects of customer centrality issues are as follows (Stanton and Herbst 2005): Focusing on the current product needs of the customer All customers regarding any product need may focus on features and benefits of the product before they plan to use it. Therefore all those types of products must be kept by the store so that may be of high interest to the customers so that they may plan to buy their regular products from the specific store which they are satisfied with (Reynolds 2004). Focusing on the future needs of the customer A vital element in the aspects of customer orientation are to focus on the future needs of the customer and therefore Tesco should keep in track of products that may be a need of the customer in the future (Kotler et al 2003). Pricing levels according to need of customer Customers usually opt for those products that are being provided at low prices or at reasonable prices. Customers will pay those prices that they feel are reasonable for the product they are buying therefore pricing should be considered carefully keeping in perspective the motive of the customers while buying the products (Kotler et al 2003). There are some products that customers may prefer to buy branded and they may also be willing to pay high prices for it so for those products high prices should be kept and for other regular products low prices so that all types of customers are satisfied with the pricing strategies of Tesco (Kotler et al 2003). The information needs of the customers Customer surveys should be constantly carried out in the market so that the organisation knows what the changing needs and demands are of the customers. Through customer surveys the present satisfaction level of the services provided to them can also be attained so that with the help of these valuable suggestions improvements can be made according to the requirements of the customers. The number of products available for the customers that are usually demanded by the customers Tesco has various parameters for considering the customer centrality issues in their grocery retail store. Tesco focuses on conducting proper training and development programs for their employees so that they can deal in a suitable manner with all type of customers. Customers are all of different types and nature and therefore the employees need to be trained to handle all customers effectively. It has been recognized by Tesco that it is highly important to improve the level of skills, the level of knowledge and the level of job satisfaction of their employees so that a positive growth path can be observed by the grocery retail store, Tesco. Literature review Customer Centrality Customer centrality can be defined as considering and focusing most importantly on the customer of the organization and in this case the customer of the grocery retail store, Tesco. The term centrality can be defined as the most important, vital and critical position that attracts high attention towards a person, object, process and even an idea (Kotler et al 2003). In the business context therefore, customer centrality diverts the complete attention towards satisfying the needs and wants of the customers. Concepts and philosophy of customer centrality The main objective of any organisation is to become successful and profitable in its business environment. All product oriented organisations and service oriented organisations have the ultimate priority of focusing their attention on the customers. The loyal and repetitive customers of any organisation tend to allow the organisation to become successful. In this case, the grocery retail store Tesco need to build strong and long lasting relationships with their loyal customers so that Tesco can remain successful in the competitive market of grocery retail stores. All planning and strategies developed by Tesco may be strongly revolving around the fact that they have to meet up the expectations of the customers and fulfill their demands accordingly. The way a customer perceives any organisation’s products and services play a highly vital role in the decisions taken by the organisation (Reynolds 2004). The advertisements are prepared according to the requirements of the customers so that the maximum amount of customers can be attracted. In this case, advertisements are prepared so that customers decide to visit Tesco retail stores present in the United Kingdom for their one stop shopping needs. The main philosophy behind customer centrality is to find out the present needs and demands of the customers and form their products accordingly and sell them in the market. All organisations need to focus on putting their customers as their first priority. Organisations should make an extra effort to understand their customers so that they can develop towards fulfilling the needs and demands of the customer (Burts and Sparks 2003). Also grocery retail store need to provide some extra services for their customers so that customers get attracted towards visiting their grocery retail store such as providing parking spaces to their customers that are usually reserved for the employees of the firm. The authors Narver and Slater (1990) have defined three types of dimensions that depict that an organisation is market oriented. The three dimensions are competitor orientation dimension, customer orientation dimension, and the coordination level in the inter-functional dimensions. It is not easy to implement the aspects of customer centrality in any organisation. A lot of balance in operations is requires while the firm focuses on customer centrality. The needs of stakeholders need to be also considered along with the customer centrality aspects. All other stakeholders are also equally valuable for the organisation as much as the customers of the organisation (Jobber 2004). Marketers face difficulties while focusing on the idea behind customer centrality. There are many marketing managers who portray that the most important thing is to meet the needs of the customers in an effective manner. They implement this as the only thing and there is nothing after it. However, there are other marketing managers who see this aspect as anticipating customers to spend money on their organisation products and services (Brennan et al. 2003). This should not be considered as differences in view regarding the value of customers that some marketers value customers more than others. Customers may be willing to spend money if they feel that they are getting value added products and services in their grocery retail store visit to Tesco. Customer loyalty According to Peter Doyle (2000), he criticized the phenomenon of customer centrality in his book of Value-Based Marketing. The purpose of the book was to redefine the marketing roles in the organisation and he focuses on the issue that marketing has still not been merged with value creation phenomenon and instead focuses on a profit making purpose through marketing. Doyle states that organisations succeed due to valuing their stakeholders instead of valuing customers by going out of the way. He also states that customer centrality is not an easy concept that can be implemented easily by the marketers or the organisation; there are immense levels of difficult aspects involved in implementing the customer centrality as the main aim in organisations. Customers are one of the most important stakeholders group and it should be realized strongly by organisations that the income and profits that organisations need for running their business successfully in the market (Stone et al 2004). One of the works on customer loyalty has been carried out by Dick and Basu (cited in Huddleston et al 2004). This model basically focuses on the attitudes of the customer related to any brand. There are 3 types of antecedent factors involved in this model. They are as follows (Huddleston and VanAuken 2004): Cognitive Antecedents: having some belief on any object Affective Antecedents: emotions and feelings of customers Conative Antecedents: the response level of the customers based on their feelings and expectation towards any object. There are some positive aspects obtained if customers show strong loyalty towards any brands. They are as follows: Customers may not switch easily to other brands They may show resistance to change from a particular brand or service They may recommend the brand to others Adapted from: Dick and Basu Customer Loyalty Framework (Cited in Huddleston et al 2004) Customer retention The customer retention can be observed by any organisation if the customers of that organisation are satisfied with that firm. Customer retention is a path that takes on to make the customers loyal customers of the organisation. Clark and Clark (2004) have stated that although customer satisfaction is an important element it does not guarantee the factor of customer loyalty. However, customer satisfaction helps towards masking the problems of customer retention. Relationship marketing Relationship marketing focuses on the building long term value relationships with the customers and adopts different types of communication strategies that are beyond the normal types of strategies such as advertising strategy and promotional strategy. It is very important for both products oriented and customer oriented organisations to think like a customer as this the key aspect of maintaining strong relationships with the customers. Their lies a strong relationship between the marketing strategies implemented and keeping in perspective the views of the customer (Tuominen et al 2004). Application of above theories in TESCO Relationship marketing can be observed in Tesco with the online retail shopping website. Tesco has formed online shopping website to facilitate all types of customers. The launch of Tesco Clubcard is one of the successful loyalty schemes that have been implemented in Tesco in the United Kingdom. Customers make purchases and earn points accordingly. Many popular companies are involved in this scheme and Tesco gets high benefits through the implementation of this scheme. The purpose of mainly launching the customer loyalty programs is to make sure that the customers feel they are being value. Value based marketing of such sort allows the customer base to be retained by the organisation. Customer retention then may open up new paths for making the customers loyal customers for Tesco. Furthermore the Tesco Clubcard has become a form of currency in the United Kingdom for the purpose of grocery retail shopping and other popular outlets that are part of the Clubcard scheme. The successful results of Tesco Clubcard have been highlighted and discussed in the Marketing Week (2009). These types of schemes depict that Tesco is working towards retaining their customers and making them bound to buy the products from their stores. If customers are retained for a long time and also become satisfied with the products and services then this way they tend to become loyal customers for the organisation. Multiple brand schemes allows customers to be fcilated by many of the outlts and this tends to attract the customers highly that by visiting one store Tesco they can be benefitted by many other aspects. Customer Centrality in TESCO The grocery retail store Tesco has been observed to have evidence of implementing the customer centrality aspects in the organisation. Tesco developed a loyalty program by the name of Tesco cardholders. Tesco initiated this program to target a particular segment of their loyal customers and also worked upon having good relationships with their customers. By launching different types of loyalty programs for loyal customers tend to add a great advantage to the organisation (Hallberg 2004). The customers of the organisation may feel extremely special as they are being valued by the grocery retail store and therefore may visit the stores more regularly than before (Dawson 2000). Tesco also initiated an e-tailer program in the year 1995 so that they could develop more loyal customers in the organisation. Through this e-tailer program by Tesco, the grocery retail store provided many other benefits to their customers ranging from the renewal of cards, rewards, discounts and other such offers (Hallberg 2004). By implementing this type of customer centrality in their organisation Tesco became successful in developing a strong loyal network of their regular customers. Also, Tesco focused on implementing marketing strategies that had focused on the interest of the customers and how they may get attracted towards Tesco grocery retail stores. This is the main aspect of retail stores that they need to widen their customer base so that they can achieve high profits and maximize their level of revenues at a fast pace. Conclusion Tesco organisation focuses on satisfying their customers to the optimum level. Tesco grocery retail store works on developing loyal customers so that they can build long lasting relationships with their customers. As discussed up loyal customers makes the businesses to earn a lot of revenue as customers make repeat purchases and customers also prioritize the outlets as their main stopover. The Tesco online retail website is a good step taken by Tesco and it depicts that Tesco is highly concerned about their customers and target their customers by applying new strategies. Tesco grocery retail store has planned their marketing processes in a way so that they can value their customers. If customers feel that they are valued then they may make more purchases from Tesco. Also for their valuable customers, Tesco has developed various types of schemes so that their customers can get more advantage. Some of the schemes have been discussed above in the discussion. Customer centrality is an important aspect for Tesco grocery retail store, they have a lot of competitors present in the market and therefore they need to develop strong relationships with their customers and work upon making their customers loyal customers for the grocery retail store. Grocery retailing needs to make sure that they keep those products that are demanded by customers so that they can constantly attract more customers in their stores. Customer centrality may allow a lot of effort to be invested from the grocery retail store but it may not necessarily compel the customers to resist from switching. Constant innovations and strategies need to be implemented in the store so that customers get attracted towards the retail store (Gupta et al 2004). Customer centrality may not be a flawed concept but instead it may require a lot of hard work to be taken up by Tesco so that it can make its customers feel special and valuable at all times by providing them with the products and services they require while they visit the Tesco stores. References Tesco PLC- About Us 2010. Available at: http://www.tescoplc.com/plc/about_us/. Accessed on 6 Jan 2011. Brennan, Ross D., Turnbull, Peter W. and Wilson, David T. 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