Tesco Marketing Report

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INTRODUCTION
Tesco is one of the biggest grocery and general merchandise retailer in the world, operating around 6,351 stores across Asia, Europe and North America. Tesco’s core UK business is very significant within the group, with around 3,054 stores and over 300,000 employees, operating under four banners of Express, Extra, Metro and Superstore. Tesco as well has the widest range of any food retailer in the UK including the leading own-label range. Also, the company offers a home-shopping service through ‘Tesco.com’ website. (Tesco PLC, 2012) This report will provide an insight into Tesco’s marketing strategy with its real marketing practices and activities, also recommendations will be made in regards to the marketing based strategies. CRITICAL FACTORS OF SUCCESS Tesco’s annual revenue has reached £42,248 in the financial year 2011/2012. Three factors which we believe that have contributed to the group’s success are identified in this section. VALUE AND PRICE

The group aim to provide better-quality goods to customers with lower cost comparing to other retailers. Porter theorised that the more products that become standardised or undifferentiated, the lower the switching cost, and hence more power is yielded to buyers. (M. Porter, 1980) As Tesco mainly sells necessities rather than luxuries, price will greatly affect customers buying decision. Also, Tesco’s famous loyalty card, Clubcard, has remained the most successful customer retention strategy, that greatly raise the profitability of the business. STORES AND FORMATS

Tesco has around 3,054 stores in the UK so far, operating under four banners of Express, Extra, Metro and Superstore. General substitution is able to reduce demand for a particular product, as there is a threat of consumers switching to the alternatives. (M. Porter, 1980) In the UK food retailing sector, this has been further weakened by some new trends, such as smaller chains of convenience stores or local shops are emerging the business even the whole industry. So Tesco is running a ‘Faster store refresh programme’ in order to acquire some existing smaller scaled business, and has opened some Tesco Express and Tesco Metro in local towns. As well this practice will introduce a warmer look and feel to the customers. BRAND AND REPUTATION

Nowadays companies have to focus on selling their brands rather than selling the product, this is the real market trend. Tesco started its UK trading in 1942, and has a very long recorded trading history, which is more like a culture and has set up a secured commercial standing for the business. Now Tesco has transformed its basic brand into a specialised one, through carefully branded packaging and an “every penny counts” promotion.SWOT ANALYSIS This section will provide a SWOT analysis of Tesco supermarket, which critically examine the strengths, weaknesses, opportunities and threats of its marketing practices and activities. STRENGTHS

Tesco is the largest food retailer in the UK and also has already gained a secured commercial standing within the global mark. As a market leader, it has over 25% market share of the UK food retail sector, over 30% share of the UK grocery market and around 20% share of the beauty and health market in 2011. The company ranks second in the sales of music, video and household segments. As well, the group’s market leader position enhances its brand image and private label products. Another strength of the group is its high performing online service system, Tesco.com. This is one of the biggest home-shopping services website in the UK. The strong online presence makes it possible for the business to provide new customer segment and meanwhile avoid high costs in real infrastructure, earning better margins also. WEAKNESSES

The group’s high dependence on the core UK business is the most important weakness. As the tables showed below, in the fiscal year 2011/12, Tesco’s total sales was £72,035m, while its core UK business has distributed...
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