1.0 INTRODUCTION In our research report, we aim to understand how Tesco UK does their marketing activities. The marketing activities include the way Tesco UK does their segmentation, targeting and positioning (STP) so that they can know where to concentrate their commercial efforts. By doing so, the organisation’s resources can be effectively and more efficiently utilised. Not only that, we also look into Tesco UK’s assessment of current situation with respect to the marketing environment which consists of economic, competitive, technological, sociocultural and political and legal forces. This assessment is done to enable Tesco UK to modify their marketing strategies and plans so as to stay relevant in this ever dynamic environment. Lastly, analysing the creation of Tesco UK’s marketing mix: product, place, price and promotion that strives to match with the needs of their customers in the target market.
2.0 COMPANY BACKGROUND Tesco UK, United Kingdom, is one of the entities under the group, Tesco plc. The core business of Tesco is in UK although they have expanded to all the other places such as Eastern Europe and China, Malaysia, Thailand and Japan. Tesco UK is a British multinational grocery and general merchandise retailer. Aside from groceries, household or even electrical items, it offers also services such as banking, insurance and telecom. It started trading in 1924 by Sir Jack Cohen. To date, it has 2715 stores with around 290,000 employees in the UK, making it to be the core business contributing to the group. Around 60% of the group sales and profits come from the UK operations. Since March 2011, Richard Brasher was appointed to be the Chief Executive Officer for the UK operations. Tesco’s philosophy is to deliver great shopping experience to its customers in every store that they go to. They believe in “Every Little Helps” and reward its customers with more savings in Tesco when they use its Clubcard (a Tesco customer loyalty program).
3.0 SEGMENTATION, TARGETING AND POSITIONING (STP) Segmentation, Targeting and Positioning (STP) process is a method in which the whole markets are divided into different segment. With the obvious rising of mature market, the diversity of customer needs, and the ability to capture the niche segments, the use of STP is more frequent (Oxford University Press 2012). Segmentation: Data collected from the Clubcard helps Tesco to do their segmentation. Tesco UK has segmented their customers using the demographic variable which is income of the customers. This demographic variable-income helps Tesco to determine which customer will be able to afford its different products range. For example, Tesco Finer Foods and Tesco Organic are developed for upmarket group with more disposable income while the Tesco Value is for the price sensitive or less affluent market. Another demographic variable used is the family life cycle. People inevitably go through different stages of life and need different product to cater for every stage in their life. Tesco UK has developed many product lines targeting at high income earning singles and busy lifestyle with Tesco “meal for one” range. While, the Tesco Value products are for families who wants cheaper products that usually comes in multi-packs. As the family grows larger with children, Tesco UK brings in many baby products such as baby cot and baby stroller with different brands to their customers. Aside from segmenting their customers demographically, Tesco UK also segmented their customers based on geodemographic segmentation. Tesco UK engages information companies such as ACORN (A Classification of Residential Neighbourhoods) to get geodemographic data so that Tesco can use micromarketing to determine the right merchandise mix for their individual stores. In other words, Tesco can tailor their products and services to the local customers in every store. Targeting: Once the market segments are identified and evaluated, marketers decide which...
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