Tesco; Strategic Direction

Topics: Data warehouse, Data mining, Marketing Pages: 8 (2975 words) Published: May 6, 2012
The actual and potential impact of information on the strategic direction of the organisation. EXECUTIVE SUMMARY
This report discusses the actual and potential impact of information on the strategic direction of Tesco, a food and grocery retailer. This report also analyse the important of customer in Tesco and how they use Clubcard to earn customer loyalty. Tesco is the UK's largest grocer and they not only offer fresh food and chilled meals but also increased sales in the non-food sector (Datamonitor, 2009). Tesco know the basic principles of how to run a mass-scale, create value loyalty programme and had been proven and are still used today. Tesco can understand what their customer wanted by collecting data and with the simple marketing model for example ‘Every little helps' and saying ‘Thank you' to customers can achieve customer loyalty (Seth and Randall, 2005). In addition this report studied the interaction of five different forces that happen in the business using Porter's Five Forces Model introduced by Michael Porter (1980). The benefit of using of IT and internet for online shopping also gives benefit where Tesco can gain more profit. Implementation issue of strategy also explained for instance they have a problem when there was too much data and the problems with the data warehouses and how they create the solutions. This report also examined about the customer value in Tesco and discovered how they build a strong relationship to their customers. Lastly, the report concludes by recommendation that would be used by the organisation in order to maintain their growth in the food and non-food products. INTRODUCTION

Information becomes a resource when it gives value to the organisation. According to Garai (1997), all information started as data and it has to be converted into information, knowledge, understanding, communication and intelligence in order to be useful and powerful data. We look from the perspective of Tesco in order to understand the aspect of knowledge, information and data and how they apply in the organisation. Tesco had a 30.7 percent share of the UK grocery market (Datamonitor, 2009). It means that Tesco leading the market position and dominate the food and retailer sector. Tesco was the first UK grocer launched loyalty card and until recently they still use the information to mail customers every month (Palmer, 2004). What is more, Tesco is the most successful internet supermarket in the world, the biggest grocer in the UK and grow very fast in financial services companies. There are three levels of the company products, value, normal and finest. Tesco also has gas stations and become one of the Britain's biggest independent petrol retailers. (Datamonitor, 2008). Tesco very focus on customer data and they use data warehousing to analyse and organized data (Humby, Hunt and Phillips, 2003). From the data, Tesco can divide their product through customer segmentation. Discount of particular product also given to their value or loyal customer base on the data mining. Many strategies have been use to get the customer loyalty. For instance Tesco used customer loyalty contract so that the loyal customer can be a long term stakeholder for example they launched ‘Student Clubcard' and ‘Points on Petrol' as marketing techniques to get more customers (Humby, Hunt and Phillips, 2003). CUSTOMER'S DATA

Tesco started collecting data on customer with process which took about seven to eight years and they not only analyse but make sense of it (Mutch, 2008). Realistically Tesco try to develop individual into group target or put the groups into the data and make classification of customer. Tesco started from questions by asking customer not from collecting data where they use many useful capital customers and question (Mutch, 2008). They try to develop individual into group target and put the groups into the data. They make it in group to make different or using customer segmentation. Segmentation is making...
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