With the food and drink retail sector being the largest industry in the UK, it couldn’t escape being effected by the recent economic crisis of the recession. Consumers were forced to change their buying habits and start budgeting; the front runners in the industry had to pay closer attention to their strategies in order to stay ahead in the market. It is now time for supermarkets to research and evaluate the strategic options available to them which will in turn be best for their consumers and to take on their competition. Harvey (cited in Asch & Wolfe, 2001, pp.60-61) concluded that competition should not be judged in terms of the relationship between prices and costs at a point in time but rather in terms of the capacity to innovate over time leading to longer-term gains in quality, convenience and price. This report will establish how Tesco successfully manages to do this through its chosen strategic options in the current economy, dominating the middle mass market as can be seen in the graph below.
Profile of market leaders’ customer bases (Perks, 2010)
2. Current Positioning
Tesco is the UK’s biggest supermarket chain and has a dominant share in its market and has done so for more than 10 years. With this being the case it has a large customer base at hand for monitoring and analysing. Tesco’s core value is to “create value for customers to earn their lifetime loyalty” (Tesco PLC, 2010). They also value the thought that no other company tries harder for their customers and so their marketing strategies and objectives are developed to work around these values in order to ensure that they don’t let their customers down.
3. Tesco’s Current Strategies
1. Tesco Clubcard
The Tesco Clubcard retains their customers and attracts new ones, in 2009 Tesco re-launched this initiative as a result in the shift of their strategy, one of their marketing planning directors stated ‘’Tesco has realised that it must go back to putting individual needs at the heart of what it does’' (Marketing, 2009). The reward scheme allows them to do this as it targets their customers buying habits and offers them great deals on what they want.
Analysis of the UK database has allowed Tesco to enforce benefits in innovative ways. When data showed that customers were not buying nappies, investigation revealed the products were being purchased at Boots pharmacies, despite a 20% higher price. In response Tesco created a baby club offering advice on pregnancy and motherhood. Within two years the company had cornered almost a quarter of the mother and baby market (Strategic Direction, 2008).
2. Tesco’s Online and Mobile Strategy
Tesco’s various website services are also another means of boosting their success by offering various products for online purchase. There latest being their grocery App. Aaker (2007, pp 7-8) states that ‘to support a successful strategy, the propositions should be sustainable over time and differentiate the offering from its competitors’. Tesco fulfils this via their mobile strategy as it made them the First UK supermarket to launch a barcode reader and showed their strategic development in the present technological society. As a result of this, their target market reaches a broader spectrum, their loyal customers don’t spend time shopping around and grocery shopping can fit into their everyday lifestyles while on-the-go. Their current mobile strategy is constantly being developed so their services can be accessed from anywhere by anyone.
4. Tesco’s Marketing Mix
Tesco’s success is also due to its effective marketing mix and how it has established a well working relationship between the variables. With the use of both intensive and innovative distribution channels it allows their vast product variety to be easily accessed by its consumers. Doyle (2001, pp.20-21) states “The essence of effectiveness is innovation – finding new and better means of...