“Organic food is food which has been produced to standards designed to keep the production more 'natural'.”
Due to the sudden increase in ‘organic food’ Tesco decided to create a new brand which was to do with the Tesco Organic Range. This was due to the fact that Tesco felt it was the latest trend and a very profitable area as consumers feel it is healthier than the other ranges.
One of the major issues that Tesco have faced with organic produce is that during the current recession climate people are resorting to not purchasing organic products due to the fact they are dearer to that of other products. To overcome this problem Tesco introduced their own brand of organic food which they supply in many different varieties they stock over 1200 competitively priced organic foods, from fruit and vegetables to meat, dairy and drinks. This enables customers to have more choice of products and offers them more variety.
The company markets organic food extremely well by presenting them throughout the stores well and displaying them in an attractive and pleasant manner. They also show the discounted and reduced prices well and also offer customers who purchase organic food double club card points. This is a good marketing tactic as more people will purchase organic food because they receive more points which will entitle them to more discount vouchers.
Another major reason why Tesco, have decided to enter the organic market is because competitors Sainsbury’s have been succeeding massively and Tesco believe that they may also benefit from it hugely. “It wants to ensure they are available in every single store in a bid to become the biggest seller of organic products in the UK.” However one thing I find difficult to understand is that Sainsbury’s currently stocks the highest range of organic food. I feel that Tesco need to investigate in this field more and see how they can offer more variety for consumers to improve this situation.
After thorough research I have found that Tesco have decided to focus on another brand which is ‘healthy eating’. This is because they have found through statistical data that obesity in on the increase throughout the U.K and the Government is pressuring manufacturers to produce foods with lower fat and healthier items. Tesco have acted on this even though it meant the company had to invest large sums of money to offer these new healthy items.
“The Tesco Health Living range contains over 500 tasty products that are low fat, contain less salt and reduced sugar. The range includes low fat cuts of meat, convenience foods, and all sorts of things to spread, dip, slurp and drizzle.”
We can see that Tesco have offered huge variety for their customers as they are able to choose products which suit their needs, and Tesco have made sure they have provided the same products but healthier version. This not only pleases the Government but also the consumers as they are being able to eat healthy products at the same low price rather than having to pay the odd more just because it is ‘healthy’.
Tesco have ensured that all of their Healthy Living products contain:
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Lower fat – with less than 3% fat or half the fat of a Tesco standard product
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Lower sodium - either containing 10% less sodium than a Tesco standard product or they are already a low sodium product
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Reduced sugar - no more added sugar than a Tesco standard product
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Clear labelling -easy to identify nutrition information on the front of packs that highlight fat, saturated fat, salt, sugar and calorie content.
This shows how dedicated Tesco are to ensure their Healthy Living range contains exactly what it should and they are complying with the Governments requirements and also giving customers exactly what they want.
“Britain’s biggest supermarket chain has splashed out £2.5m on an overhaul of its Healthy Living range and the introduction of a new brand, Light Choices, aimed at dieters.” We can see that Tesco are extremely dedicated in providing the healthiest, nutritious and best priced value food for their customers. They are also going directly head to head with some of the country’s biggest manufacturers to produce their own Healthy Living range and ultimately rewarding them with more sales and profits.
“Big on taste, but low in calories, sugar or fat, Tesco Light Choices is the easy way to lose weight. Every product meets strict criteria for sugar, saturated fat and calories, and has either less than 3% fat or 30% less fat than a comparable product.”
They have also introduced the new ‘Light Choices’ range, this is aimed at customers who are very health conscious. This is another way Tesco have achieve a larger market as they have been extremely innovative and introduced a new range which customers will purchase from especially as the obesity rate in the U.K is increasing.
They have also made major improvements to their health website by introducing new regimes where they offer customers information on all of their healthy living products, recipes they can use and also dieting information. This shows that Tesco is taking a huge interest into society and the company is showing good morale as they are aiming to help people, this not only improves the image of the brand but also may draw in new customers because they are providing excellent service.
Tesco have also been extremely innovative as they have introduced a new online Healthy Living Tracker, this is done virtually and is a good tool for customers as they help customers to lose weight, improve their eating habits and the tracker can help them make better choices leading to a balanced diet.
Whilst investigating about the new healthy living range, I found that Tesco have also been extremely clever with their marketing tactics they have put the GDA programme on their website so people can see how many calories they should consume also they have put it onto all of their products this helps customers to understand the contents of the products.
Tesco have been placing the GDA guidance all over the store and this is because it helps customers make their choices on the products they purchase. Tesco need to be extremely meticulous as they have to stock the products at price competitive prices to ensure they remain the leading supermarket in the U.K.
I can see that Tesco have ensured they have done their best to provide customers with the best possible knowledge on the items which will best suit their needs as they are aiming to guide customers and want to ensure they retain their loyalty . Also as shareholders have invested large sums of money into this new range they have to make sure these items sell and this is done through them creating the best possible effort in displaying, promoting and pricing their products effectively.
Multicultural Society
Tesco has been extremely innovative by diversifying into a brand new market and responding to the population in Slough. From my research I have gathered substantial information on the general ethnicity of people in Slough which shows that there is a large amount of Asians in Slough as well as an increase of Polish people.
Tesco have leased some of their property to an Asian Halal Butchers and a Sweet Shop. The reason Tesco have sublet to these shops is because they know that it would attract a wider market which would ultimately reign in increasing more sales and profits as customers were able to purchase their weekly shopping as well as buying some sweets and meat.
I can see that Tesco have been extremely innovative and taken a huge enterprising move by working with smaller businesses and allowing them to trade in their building, it shows that the company is behaving in a very responsible way by allowing small companies the opportunity to trade in their store.
From my research I can see that Tesco have been extremely market orientated by becoming aware of the diverse multicultural society in Slough and that they have different diets, therefore they have decided to introduce a new aisle which is for Asian products in different sizes, brands and prices. We can see that by providing an aisle which is directly dedicated for the Asian Market they are looking after the needs of their customers. The main reason Tesco introduced this aisle was to ensure that customers don’t use the backstreet shops as they can purchase all their rice, spices, lentils and all exotic foods from Tesco and at the same time gain the benefit of the Clubcard points.
I can see that Tesco have invested shareholders money very wisely and it has given them a very good return on investment as large numbers of Asians purchase their products from Tesco and this has ensured that they are increasing sales and profits.
Above I have found data which displays the ‘Ethnic Mix in Slough’ and ‘Religion in Slough’. We can see that the Asian population is the second largest and on the increase as well as Muslim being the second largest religion in Slough. Tesco have been extremely wise in investing their money to provide for these customers and sect.
Royal Sweets
Tesco have been extremely innovative by allowing Royal Sweets to trade in their store. This displays that Tesco are helping and adjourning to the local community as the population of Asians in Slough is increasing massively. Tesco have been extremely wise in allowing an Asian Sweet Shop to trade in their store as they knew it would increase their profits and sales, it was also more convenient for customers as they are able purchase their spices and sweets from the same place without wasting time.
The Royal Sweets Shop will also bring in huge amounts of customs of Asian people during special festivals such as Eid, Diwali and Vaisakhi or when people have weddings and parties as they are likely to purchase sweets for the joyous occasions.
However during my research I have identified one issue towards the Royal Sweets Shop, is that the types of food it sells is extremely unhealthy, which could affect Tesco as they are promoting healthy eating throughout their store and this could lead to bad criticism and public relations.
Halal Meat Shop
Tesco have also introduced a new Halal Meat Shop in their store which has been there for almost three years and has been extremely commanding in Slough. Tesco had enough room in their new store to sublet to a Halal Butchers; and by enacting this they have attracted a huge customer base to their superstore.
The company saw a gap in the market and have filled it by supplying an authentic Halal Butchers in their store which benefitted Muslims and Asians extremely. The store has been extremely popular with customers as they are able to trust the butcher as he is working under the branch of Tesco whom have a huge reputation. Also it shows the company is displaying an effort of team-working with local stores by allowing them to trade in their store.
From my investigation I have discovered that Tesco used to supply their own Halal meat products but customers were reluctant to trust them and therefore it didn’t sell as well. This is one of the reasons why Tesco have decided to allow the National Halal Meat Shop to trade in their store as it attracted customers and looked more appealing.
I can also see that Tesco has been extremely market orientated with this huge project as there was a huge demand for a Halal Butchers in Slough because of the population of Muslims and Asians. Tesco decided to follow these demands and have successfully reaped the rewards as it has been a huge success and attracted more customers who are able to have a better shopping experience as they can purchase everything under the same roof. This is whole enterprising act has been extremely effective for Tesco as it has shown them team-working with local businesses and aiding them by allowing them to trade in their store and also it shows that Tesco have taken a huge interest in what their customers wanted and have delivered it.
Non-Food
Tesco is the leading supermarket within the Food & Drink market; however they have now decided to adopt a new aim which is to sell ‘non-food’ items. They have been extremely successful in diversifying into this new market as they are able to sell every type of product under one roof, this is has enabled Tesco to attract a huge customer base as it makes shopping much more convenient for them.
Tesco have used an extremely good enterprising technique as they put all of their non-food items at the beginning of the store and the food items at the back, this is to ensure that customers see all of the non-food items and special offers and may be tempted to purchase these items. As they know that customers are more likely to enter the shop knowing what they want to buy, so Tesco advertise the luxurious items very well so customers are persuaded to purchase them.
Tesco have decided to offer non-food products to attract more customers. This is as they are making it much more convenient for customers as they are able to purchase their weekly shopping and extra items all in one go. Tesco have been extremely successful in gaining a bigger customer base as they currently share 31% of the market. The research I have conducted shows me that out of 10 people a maximum of 7 people will spend £3 on non-food items. We can see that Tesco are doing extremely well with this new market and are leading the U.K market share.
Tesco’s non-food product range includes electrical, home entertainment, clothing, health and beauty, stationery, cookshop and soft furnishings, and seasonal goods such as barbecues and garden furniture in the summer. This shows that they have taken on a large variety of non-food items and they are giving their customers the choice to purchase every type of item they need with it also being cost effective. This is another good marketing factor as they sell everything under one roof and it is more efficient for customers especially those who work and don’t get much time to browse through different stores as Tesco provides everything for them.
Tesco have marketed there Non-Food items extremely well, they have introduced a new ‘Tesco direct’ catalogue which contains all of the non food products that they sell. This is an extremely good way of competing against competitors as they are offering customers something new and fresh. I believe that the ‘Tesco direct’ catalogue is similar to the Argos catalogue which does extremely well so Tesco have attempted to follow in Argos’s footsteps.
From this chart we can see that Tesco’s Non-food sales have increased massively over the four year period. We can see that the marketing techniques that Tesco have used have benefitted the sales of the non-food range and this shows us the dedication, team working and enterprising ideas they are using to sell and market them. Ultimately we can see that the non-food market is huge and Tesco have achieved huge sales and profits and hope to continue to do so.
Another innovative idea Tesco have come up with is the purchasing products online. This helps customers as they are able to choose a wide variety of items.
Here we can see a table showing the ways which Tesco deliver their products to customers. We can see that Tesco are aiming to ensure that they offer the best delivery service and are doing better than competitors.
I can see that the research I have carried out shows us that Tesco took a huge risk, diversifying into the non-food products as they weren’t sure how customers and competitors would react to it. Tesco wanted to become not only the best supermarket in the U.K, but also the biggest retailer of non-food.
Tesco also invested a huge amount of money into to this project as they wanted to carry out their new aim successfully, and become the largest sellers of non-food items. They have diversified into a huge amount of different products and sell these at a cost effective price for customers to gain as much profit as they can. I believe Tesco have done extremely well with this goal.
Financial Services
Tesco have taken an extremely innovative step by diversifying into Financial Services, and it has proven to be a great success. It has increased their sales and profits by £350million. They offer a range of services for customers these are: Insurance, Credit Cards, Loans, Mortgages, Savings and Travel. I can see that Tesco have invested a lot of time to set up this project and that has proven to work. It also is a more social benefit, as customers are literally able to purchase everything under one roof. Tesco has been extremely clever by introducing this as they know people have very busy lifestyles and they will be willing to use Tesco’s financial services as they already trust the brand and the products.
Tesco: 'We want 10% of financial services market' http://www.dailymail.co.uk/money/article-1263268/Tesco.html#ixzz15eIDVHMw
I can see above the objective Tesco have set themselves, and that their Financial Services is working. Below are also some figures about Tesco’s Financial Services.
Tesco’s Finance Figures:
- 5.5 million Customers
- 1.3 million Credit Card Accounts, 390,000 Savings Accounts
- 6.9% share of credit card market
- 2,700 ATMs in Tesco stores
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4.3% of car insurance market
Tesco have also carried out an effective marketing strategy to advertise their financial services, they have a range of different leaflets by the checkout which may interest customers. However I feel that the way Tesco markets these services are inadequate and that the best way to attract customers would be by having a separate area in the store which should be only used for ‘Financial Services’ this may attract more customers as they would be able to talk to an advisor and ,may trust the service more.
Tesco’s financial services will be affected extremely by the economy if the country is undergoing a ‘Boom’ customers would be more likely to purchase these financial services as they have a higher spending power. Whereas currently the country is undergoing a ‘Recession’ Tesco would have to advertise their services very carefully and offer the best offers they can in order to sell these services. This is because consumers will have lower spending powers and will not be able to purchase these high price services.
Location
In the 1980’s Tesco decided to locate and expand their store in the centre of Slough as the location was considered a prime location as it was right next to the High Street. This allowed Tesco to gain an advantage over their competitors because they were able to attract a larger market.
Tesco took a courageous step by investing £29 million into the location and it has shown its success by allowing them to dominate the High Street, and become the leading supermarket with 31% market share.
The location is also a huge success as it is situated on a main road, and linked to the M4. This enables Tesco to attract more customers as the location is easy and accessible to surrounding towns such Windsor.
Also as Tesco is situated in a highly populated area, which is continually busy, they have more potential customers who are going to use their services.
As Tesco is located near the High Street, it makes shopping convenient for customers as they can buy what they require from specific high street shops e.g. Marks and Spencer and can do all their weekly grocery shopping in one trip.
Also Tesco is situated near the bus and train station they are able to attract commuting customers who will pop in to the store to purchase some snacks, or even do their weekly shopping, as it saves them time rather than travelling to a different town at a different time. This location again helps Tesco to attract more customers and increase sales and profits.
Tesco is also surrounded by Thames Valley University and large businesses such as O2, Yell, and Royal Mail. Being surrounded by these companies increases Tesco’s customers as employees from these firms may shop at Tesco to purchase their lunch or weekly shopping as it is open 24 hours a day. This helps Tesco to increase their sales and profit margin as they have more customers coming in to their store.
Also due to the size of the store Tesco offers customers access to their large free car park, this attracts customers as they are able to leave their cars in a secure place and do their shopping as well as being able to go to the town centre.
Although the cost of the land was very high it has benefitted Tesco as they are able to offer customers a large free car park, a petrol station and a wide range of products which helps them to sell everything under one roof. Tesco’s location has allowed them to become the U.K’s number one supermarket making around £2.5 billion profit this year.
However with the recent opening of Sainsbury’s, which is just five minutes away…
Marketing
Marketing is a key essential for the success of Tesco. They need to ensure that they carry it out effectively because it could affect the amount of influx they receive from customers. One way that Tesco ensure they have good marketing is by using the ‘marketing mix’ this is: Product, Place, Price and Promotion. By using these techniques Tesco are able to market their brand successfully.
Price
Price is an extremely important aspect of marketing this is because it affects customers. Tesco are extremely clever as they have decided to start their own range which allows them to reduce the prices of these products. We can see here that Tesco has catered for every socio-economic group as they provide products to suit every income bracket. Tesco’s main competitor Asda has successfully achieved the award for being the cheapest supermarket; however we can still see that Tesco are the leading supermarket brand with 31% market share surely there is a discrepancy here. Tesco need to ensure they offer low attractive prices to customers to gain their customs. One way that Tesco is able to attract customers is by using the price check on their website and all over their stores this shows them the savings they could make at Tesco.
The price checker is another extremely innovative marketing strategy that Tesco have adopted. It enables them to distribute their prices to consumers as well as showing them the competitors and how much they are saving. Its helps attract customers as they are able to compare prices before shopping and are able to clearly see which supermarket provides them with the best bargains.
Price is an extremely important factor as if it is not done sensibly the products will not sell. Tesco have been extremely clever by using the Clubcard as an initiative for customers to purchase products. They provide more Clubcard points for customers when they purchase certain products, the Clubcard acts a partnership between Tesco and their customers, which retains them and displays their loyalty to the Tesco brand. We can see that this is an effective marketing strategy that it is extremely beneficial for Tesco to succeed.
One of Tesco’s aims states that they aim to provide customers with low competitive prices. To reach this aim Tesco need to ensure that their prices are lower than other supermarkets and that they competitive and suitable for all of the socio-economic groups. However they also need to take into consideration quality of their products, they may be cheaper but if they are not of a high standard some people may be put off.
I believe that many people are price conscious and some will not pay the higher prices at Tesco even though they are receiving Clubcard points. The Clubcard points are an added additional benefit for customers and not a contrast to high prices.
I asked a total of 50 participants if they shopped at Tesco from the Pie Chart it is evident that 54% of the participants answered yes, therefore we can see that the majority of people do shop at Tesco. This research shows that Tesco is the most popular supermarket and this is due to factors such as, their town centre location, their low prices and the free car park they offer.
Promotion
Promotion is another vital aspect for Tesco’s marketing strategies because if they didn’t promote their company well their products wouldn’t sell. However we can see that Tesco do promote their store very successfully as they have 31% market share and are a multinational well established brand.
Effective promotion helps Tesco reach their target market, they have done this several ways, one is by using the price checker they are able to attract customers as they will display all of their cheap prices and this enables them to gain customers which will ultimately lead to more sales and profits.
Tesco will also publicise all of the good actions they have done and take to make their brand even more successful. This will show that their company is ethical and they are doing the right thing.
Tesco will also promote their products through various occasions such as Christmas; they will display their Christmas products at the front of the store to attract the customer’s eye. They will also have special offers on all of the products to do with the festival and these will be advertised clearly. As well as this they know that people who shop at Tesco will need items which are necessities such as milk and bread, so these will be kept at the back of the store so customers are able to purchase different products on their way. They also have staff walking around with a ‘here to help’ sign who will tell customers about special offers. In addition to this they have well advertised displays around the store which they hope will attract customers. All of these different marketing tactics will alert interest into their products and lead to impulsive buying.
One factor of promotion that I feel Tesco need to improve on is with their financial services. Currently they advertise these on their website and with leaflets at the checkout, I feel that customers may be attracted to these and read a leaflet however they may not go through with it. If Tesco had a counter in their store which dealt with all of their financial services, customers may feel more comfortable decide to use
their services.
Van and Online Shopping, Clubcard! Carrier Bag Promotion, Fruit And Veg!
Going Abroad
One of the new aims that Tesco has adopted is to expand their brand name abroad. Tesco have been extremely successful througout the U.K and after this success decided the best option would be to expand abroad. Expansion has been a huge success for Tesco as they have increased their overall sales and profits and attracted a wider market and gained more potential customers which will ultimately lead to an increase in their sales and profits.
Tesco have expanded their stores all over the world which now spans 13 countries across Asia, Europe and the United States.
One way that Tesco has ensured its success with trading abroad is by responding and ensuring that they follow all of the legal factors, different currency fluctuations, and the culture of different countries. This has allowed them to trade successfully within these countries as they have adopted their trading styles and the different political
