Tesco Retail Marketing - Essay Example

Retail Marketing It was in the year 1919 that Jack Cohen founded Tesco, when he began to sell surplus groceries from a stall in the East End of London. His first day's profit was 1 and sales 4. The name comes from the initials of TE Stockwell, who was a partner in the firm of tea suppliers, and CO from Jack's surname. It was in year 1929 that Jack Cohen opens his first Tesco store in Burnt Oak, Edgware, North London. And there's no looking back since then. Reasons behind success: The Glorious past: It is said that journey of 100 miles begins with one single step. That was exactly the case with Tesco having over 250,000 employees and over 1,800 stores today. A very humble beginning in 1919 when Jack Cohen began this journey gradually transformed the fortunes. Strong Government support: It was the state patronage which encouraged the promoters of Tesco to plan for future. Not many hurdles were created by the political class. In fact Tesco also kept the ruling class in good humor by taking politically correct steps from time to time. Minimal competition during those early days: Those were the golden days when Tesco came out with its first branded tea in 1924, not many competitors were around and terms like 'cut-throat' were not even introduced. Satisfied customer: Grabbing customer attention is not a big deal but retaining customer loyalty requires sound thinking at the top. A satisfied customer often takes pride in becoming a goodwill ambassador for the company. Tesco team says, "our core purpose is to create value for customers to earn their lifetime loyalty." By all accounts it can be said that they are indeed working, quite successfully, towards that. Reigns in the hands of able management and shrewd strategists: "Winners don't do different things, They do things differently"1 This statement gives full credit to strategists of successful enterprises. Strategic decisions provide a direction in which the organisation is to move. Organisation's mission and objectives find a reflection of strategists. Tesco has a long term strategy for growth, based on four key parts: growth in the Core UK, to expand by growing internationally, to be as strong in non-food as in food and to follow customers into new retailing services. Committed workforce: Organisations are not passive components. They are live, full of activity and environment-responsive like living beings. With time organisations acquire a character and develop a typical personality and we tend to make an image of the employee depending on the organisation he/ she works for. This very personality of the organisation considerably influences the functions of organisation in the long run. Reasonably good industrial relations: Keeping the workforce in good humor by providing them with adequate benefits and considering them as an inseparable part of the organisation helps in resolving the disputes quickly. Good investor relations: This becomes all the more important when general public has a stake in any. After becoming Tesco PLC from Tesco Stores (Holdings) in 1983, Tesco became a public company and it has been sharing good amount of its profits with investors. Understanding the environment: Continuously monitoring the environment and following the leads is key to a successful business. Continuously studying the different aspects of environment (social, political, legal, technological, etc) and taking corrective and adaptive steps accordingly helps in growing of an organisation. Tesco started computerised check out counters as early as 1982 and this stride continued with opening of www.tesco.com and its online operations. On the societal front Tesco states, "One of our most important values is to treat people how we would like to be treated."2 With this in mind Tesco makes a significant contribution to communities through its charitable giving and community-based education programmes Making excellent use of its strengths and grabbing the opportunities at the right moment: Understanding one's strengths and making fullest use of the opportunities makes a sound script for a success story. Be it in the case of making use of IT technology, opening of new stores or going global Tesco has done it all quite successfully. Role of Marketing Concepts: Marketing consists of the strategies and tactics used to identify, create, and maintain satisfying relationships with customers that result in value for both the customer and the marketer. Marketers are supposed to; Identify Target Markets: This segmentation is required to be done depending on the customer profile and geographical factors. In order to market a product or service, it is imperative that a company tailors the marketing and sales efforts to specifically reach the segment of population that are most likely to buy these products or services. Identifying primary market is very critical for a successful business. Though a supermarket chain is not limited to one particular segment but still for the sake of pooling efforts it is very important that Tesco identified and divided the customer base into a range from Finest for those wanting something special, to Value for those on a budget. Plan Products/Services as per the needs of the market: After having identified the market segments the products or services are planned accordingly. Tesco's growth strategy is based on four key parts; growth in the Core UK, to expand by growing internationally, to be as strong in non-food as in food and to follow customers into new retailing services. Plan a Promotion strategy: Inviting the attention of those for whom the products or services are meant is crucial for the long-term survival of a business. Tesco has indeed not been lagging behind in such media campaigns. And if the messenger is someone with whom the prospective customer can identify himself the message reaches swiftly and effectively. Set up a Marketing/ Distribution Network: Tesco has the big advantage that it's a brand along with a marketing network. So things become quite easy for Tesco while eyeing newer markets. For going International at times it had to look for someone on whose shoulders it can share some of the local burden. For example in China Tesco formed a joint venture with Ting Hsin, in 2004. With Japan it formed a collaboration with 'C Two-Network', in 2003. As of now Tesco is doing business with nearly 2,000 own-brand primary suppliers in 98 countries. Take Pricing Decisions: A product can be priced in many ways depending upon the cost of manufacturing, the cost of reaching out to customers, the income levels of market segment etc. Product pricing also depends on the availability of competitors in the market and certain rules and regulations of the land. Over the years Tesco has acquired an expertise in pricing, announcing frequent price-cuts and discounts sessions on different items and counters. Plan for After-sale Services: When customers aren't happy with your business they usually won't complain to you - instead, they'll probably complain to just about everyone else they know - and take their business to your competition next time.3 Tesco has been paying due attention to this particular aspect Gather Feedback: Keeping eyes and ears on the customer behaviour helps in gathering enough feedback for any organisation. Factors to be taken into account while opening stores abroad: New avenues for business are explored when environment demands increase in pace of activity. Strategists feel more satisfied and comfortable with the prospects of growth from expansion and once the company feels secure and experienced enough on the home-ground it can very well start thinking about crossing the borders. Though UK remains its main market, the group's global footprint is also growing fast. Tesco is already having its business in 98 countries, therefore it can very safely be termed a veteran in such expansion plans. In general the strategies for expansion abroad can be categorized as; 1. A multi domestic strategy 2. A global or international strategy 3. A transnational strategy A multi domestic strategy enables individual subsidiaries of a multinational firm to compete independently in different domestic markets. Global strategy is a strategy that seeks competitive advantage with strategic moves that are highly interdependent across countries. In transnational strategy a company often enters into strategic alliances with their customers, suppliers, and other business partners to save time and capital. Such alliances when they becomes long-term partnerships may bring to the firm specialized competencies, relatively stable and sophisticated market outlets that help in honing its products and services, or stable and flexible supply sources. For a hyper-market chain like Tesco Transnational strategy is the best option. The company is to take stock of the country, its demographic profile, customer's needs etc. Maslow's hierarchy of needs says that the driving force for human actions is an urge for 'satisfaction of one or the other need'. These needs go on changing depending upon a number of factors. Therefore, Tesco will have to be very specific in its strategic approach depending upon the country it intends to go. For example in Thailand Tesco opens its stores at 0909 hrs because this time is considered auspicious in that country. Couple of other factors too needs a thoughtful consideration like; In case of a neighboring country, at times, some delicate balancing act is required to be done. For example relations between the two nations, the competitive rivalries and political equations are to be taken care of, because these very political equations become a deciding factor while seeking permissions from the respective governments. There are some regional factors too. Europe is the home region for Tesco but coming to India, a huge South-Asian is an entirely different experience. India is a fast developing nation of more than a billion people and a middle class of more than 300 million. A leader in IT enabled services sector, it has become a darling of global outsourcing companies and this trend is continuously on increase. This burgeoning IT enabled services sector, outsourcing, and the call centre phenomenon is giving plenty of opportunities as well as good amount of spare bucks to spend, to the youth of the day. Call centres have been one of the growth triggers as far as consumerism is concerned. It is therefore quite imperative that Tesco plans its marketing strategy with special emphasis on this sector. Increasing craze for branded items will help Tesco in establishing itself firmly. While planning for a country like India, it must also be borne in mind that India is a multi-religious, multi-cultural, democratic set-up. Hinduism has the largest number of followers. Though by and large Hindu society is quite accommodative, but quite often heated debates and discussions take place on issues like non-vegetarianism and beef consumption. Recently, McDonald the international chain of food stores had to clarify its stand on 'French Fries' when it was said that it contained beef. Cultural values are deeply rooted in the psycho of a common Indian. The concepts of Joint family, respect for the institution called 'marriage', respect for elders are factors, which often invite curious looks for westerners. There's also a large Muslim population in India as well. Though, in today's world order, terrorism has been de-facto identified with Muslim society, yet the Muslim society in India is much different than their counterparts in some other countries. This segment though quite liberal with the mainstream, is also very sensitive on religious matters. Recently, brand like Nike and Coca-Cola were at the receiving end for some inscriptions on their products which hurt the Islamic sentiments. But the secular character of the state and responsible government actions helps in resolving such issues. Therefore, it is equally important for Tesco that it must be seen in the good books of the government of the day. Concerns for the society at large must also been in its actions. Tesco is indeed doing its bit towards schools and charities, and a country like India will definitely provide more such opportunities to the company. Such actions help in generating goodwill amongst the masses. Why Monopoly Hurts: It is said that in having a big company the consumers are at a disadvantage. In monopoly Control of the supply, distribution and/or price of a commodity is in the hands of one entity (government or company). So by definition it can be said that it doesn't care about customers and cares for its coffers only. Tesco reported a profit of more than 2bn in 2005. But there is a growing coalition raising questions about how global giants, including Tesco, affect independent retailers, producers at home and abroad, and the environment. They've come out with a slogan 'every little hurts' (as opposed to Tesco's slogan of 'every little helps'). Their contention is 'Tesco's strength is harming many others in the community as well as the local and global environment. But in today's Information age, it can be safely said that no company can afford to loose the sight of customer satisfaction, because customers too have many options now. During those early days, the customer had to be content with whatever is available around him, but no more. With the increasing use of Internet and online stores, things have become comparatively easy for customers, and the 'king customer' seems to be relishing this status. In a market driven economy a market regulator has to keep an eye for unethical and illegal practices on the companies, but the real regulator happens to be the customer, which no company can afford to offend. Tesco has been doing its bit towards philanthropic efforts for the society and the environment, still there are some concerns. Tesco will do a world of good for itself if it takes note of such accusations as well and try addressing these concerns as amicably as possible. Resources: http://news.bbc.co.uk/2/hi/business/4122460.stm http://www.businessengine.com/customers/success.html www.tesco.com http://www.knowthis.com/tutorials/principles_of_marketing.htm http://www.businesstown.com/marketing/customer.asp Read More