Low levels of economic activity can have a negative affect on Tesco’s. when the economic activity is low then consumers would be tight on their budgets and would cut back on luxuries, luxuries would be premium brands that Tesco’s sell which are pricey, so then consumers would go for cheaper alternatives such as Tesco Value brand which offers the same products as the high quality products except they are cheaper and have less quality. This can be bad for Tesco’s as they pay a lot for their suppliers to sell their premium brands and if no customers are purchasing them then there obviously won’t be any sales of premium brands and then Tesco’s would not be able to pay back their suppliers for these brands. This may also affect Tesco’s aim “to remain a growth company” because Tesco’s wouldn’t be making much profits if they’re not making a lot of sales from premium brands – and if they don’t makes sales from this then they won’t receive profits for which they could’ve used to increase the growth of the company.
When there are low levels of economic activity, then consumers tend to spend less and save money for a rainy day, so then consumers wouldn’t be spending on luxuries or buying a lot of products from businesses – from that business’s wouldn’t be making much profits. This affects Tesco’s from achieving their objective “To grow the UK core” because if consumers aren’t buying Tesco’s products then Tesco’s won’t be making any profits which they could use to reinvest into Tesco’s and further the growth of the company.
As consumers are careful on how much they spend during these tough economic times they want a lot of promotions, offers and discounts to save more money, this may mean consumers would want to purchase their most loved products/ luxuries but at the same time be able to afford it. This affects Tesco’s objective “To grow the UK core” because if Tesco’s are selling all these products and premium brands with promotions or discounts then they may be losing the chance on making profit because they are selling products at a lower price for what they paid their suppliers, they would lose money as a result of this and won’t have much profits to reinvest into the business and expand the business and increase growth of the business.
With low levels of economic activity it can be a major factor in causing unemployment as business’s would close and people will lose their jobs/ or some business may cut jobs to avoid closure which again would lead to people losing their jobs. This can affect Tesco’s from achieving their objective “To grow the UK core” because of low economic activity business’s such as Tesco’s would have to make setbacks such as cutting thousands of jobs which leads to unemployment, it prevents them from continuing the growth of the company.
Low economic activity can also reduce the average wages that people earn, the reason why is that business’s would again cut back on costs and reduce the wages that their employee’s earn so that the business makes some profit. This affects Tesco’s objective “To build our team so that we create more value” because money is a major factor in employee’s morale, if they are paid very good money then they will be motivated to work, but if Tesco’s is reducing the wages of its employee’s then they won’t be as motivated to work more and that they wouldn’t be enjoying working at Tesco’s.
Tesco’s want to further the growth of their company and continue to grow the business as a whole, but when there are low levels of economic activity then the chances of that happening would be slim because when there is low economic activity the numbers of businesses starting up are less than the number of business’s closing down. This may affect Tesco’s in achieving their objective “To grow the UK core” because Tesco’s wouldn’t be able to expand and open more and more stores around the UK, but this probably won’t happen because Tesco’s is an established business and it is popular and successful.
Competition
In this task I will be describing in detail how competition within the market affects Tesco PLC and the achievement of its aims & objectives. I will explain about Tesco’s and their rival markets compete against each other, how the actions of the competitors affect Tesco PLC’s aims & objectives. Competition is a measure of the number of businesses in a market relative to the number of customers. If there is a high level of competition then there would be a greater number of businesses are compared with the number of customers. Tesco’s is a major supermarket chain which has expanded their business to many other countries in the world. Yet they aren’t the only major supermarket chain as there are four other markets that offer similar goods & services and those markets are Morrison’s, Sainsbury’s, Waitrose and Asda (asset of Wal-Mart). Tesco’s competes with these rival companies financially and marketing wise, but they mainly compete over Price, Quality and Innovation.
Asda’s is considered as a major competitor to Tesco’s as they are the second largest supermarket chain in the UK, Asda’s parent company Wal-Mart is a big supermarket chain in America and it had brought their enterprise to Britain under the Asda brand. Asda specialises in retails food, clothing, general merchandise, toys and financial services. Like Tesco’s it also has a mobile telephone network called Asda Mobile, and they have a petrol service. Sainsbury’s is another rivalling supermarket chain (3rd largest supermarket in the UK) that specializes in healthy foods, retail food, clothing, and general merchandise. Sainsbury’s has a separate subsidiary called Sainsbury’s Bank (a joint venture with the bank of Scotland). Waitrose is a supermarket that heavily specializes in groceries and wines; they also have a royal warrant as they have regularly supplied goods or services for at least five years to certain members of the Royal Family such as Prince Charles. Morrison’s is the 4th largest supermarket in the UK, they offer groceries, retail foods, general merchandise and petrol service, Morrison’s used to have a financial service run by the HSBC but the agreement with Morrison’s to provide the service expired in 2009.
Asda’s competes with Tesco’s on price wars; Tesco’s is arguably the market leader for supermarkets in the UK. Every week these two companies always uses all types of media’s to promote their prices, when Tesco’s advertise their prices on say for a newspaper saying that you won’t find any other place cheaper for these products, then sooner or later Asda’s may backfire this promotion by going on TV stating that their prices are cheaper and that they have evidence and statistics from secondary research sources (moneysupermarket.co.uk). If this backfires for Tesco’s at every single time then it most probably shows that Tesco’s are misleading their customers and taking their well-earned money which is un-lawful. This could potentially affect Tesco’s from achieving their objective “To grow retail services in all our markets” because in this case customers would defect to Asda if this company is offering the same products and services only cheaper than Tesco’s, if this is the case then Tesco’s wouldn’t be able to grow their retail services as they are not making enough profits and there is no income as their customers may have switched to Asda’s, as this’d happen in the UK Market word may go out to other markets e.g. Tesco’s market (Fresh & Easy) in America may get affected by this as Asda is a part of the Wal-Mart Family and if customers learn that Wal-Mart offers products & services cheaper than Fresh & Easy then there is not telling of what would eventually happen as most customers may defect from Fresh & Easy to Wal-Mart, so therefore not only would they lose customers and be unable to grow their retail services in the UK market but this could possibly happen in Tesco’s US market.
Sainsbury’s also competes with Tesco in a similar way too, although their main focus is not on prices, Sainsbury’s specialize in the Quality of healthy foods and constantly promote healthy lifestyle – this is how Sainsbury’s differentiates itself from other supermarkets. Tesco’s uses celebrities to promote their business as do Sainsbury’s, although Sainsbury’s sticks to their mission in pushing healthy lifestyle, offering High Quality Healthy Foods and they use Jamie Oliver a famous cook to help promote this mission. This shows that Tesco’s aren’t taking into account about the importance of healthy lifestyles, and this could possibly lead to Tesco’s losing customers who have healthy lifestyles, this in-turn prevents Tesco’s from achieving their objective “To put our responsibilities to the communities we serve at the heart of what we do” because they’re not being responsible to their customers health because if Tesco’s is not promoting the healthy foods that they sell then less customers are going to purchase them so they would lose profits, but most importantly customers would take the wrong idea on Tesco’s take on healthy living as they only sell products at affordable prices and most of them are just retail foods so customers will start to believe that Tesco’s are just trying to feed us with a lot of unhealthy foods and that would just be unethical – to avoid this, Tesco’s must heavily promote their healthy range of products such as the Tesco Organics ranges to that they can get to the level where they can dominate Sainsbury’s in the competition between which supermarket sells the best healthy products.
Another way that Tesco’s competes with its customers is through Innovation. Tesco’s finds new ways to reward their customers for their loyalty; they introduce new innovative services to reward customers for their loyalty such as their popular Club card. Tesco’s club card is what gives customers points for every product they purchase at Tesco’s – these points add up to discounts or vouchers which the customer can use for future purchases. The Nectar card is also a loyalty card scheme that partners with companies like Sainsbury, British Petroleum and the banking firm American express. Sainsbury’s uses the nectar card as a form of a loyalty card for their customers to reward them with incentives & discounts. This affects Tesco’s from achieving their objective “be a modern and innovative company” Tesco’s faces the threat of competition between them and Sainsbury’s as both cards benefit customers, in order to have majority of customers they need to offer new ways in which Tesco’s can reward their customers with the use of the club card such as free shopping for the rest of the week if you have 500 points or more, this will then differentiate Tesco’s over Sainsbury’s as they are introducing modern ways to rewarding customers.
Legal & Self-Regulatory Issues
In this task I will be describing in detail how legal and self-regulatory issues can affect Tesco’s from achieving their aims and objectives, I will choose certain acts from the law, describe them and explain how it can affect Tesco PLC as a company and its aims & objectives.
Legislation comprises the laws set by UK government and other international bodies such as the EU, it is mandatory for Businesses to comply with legislation which is intended to protect the rights of UK citizens, it exists to protect consumers, employees and other businesses. Self-Regulation is when business use codes of practice to protect the public and consumers. These self-imposed restrictions are intended to protect the image of the business, to ensure fair competition and raise consumer confidence in the business.
The first act I will be discussing about is the Sex Discrimination act of 1975. The Sex Discrimination act makes it an offence for the employer to discriminate and individual because of their gender, race, background and marital status. E.g. say that the employer is analysing two applicants – 1 male and 1 female, the employer can’t say not to the female and choose the male applicant over her even if she happens to have better qualifications for the job because that is discrimination, and any person is entitled to a fair opportunity. Tesco’s without a doubt follow this rule: “Everyone is made to feel welcome at Tesco, regardless of age, sex, disability, ethnicity, belief or sexual orientation”, Tesco’s needs to make sure that males and females are treated equally, this may include in recruitment and training of workers. Women and men are entitled and should receive the same opportunities. For example when recruiting a manager cannot discriminate between a man and a woman for their looks or by bribery – this is considered to be unlawful. This can affect Tesco’s in achieving their aim “to be the most highly valued business in the world” the reason why is because to be a highly valued business in the world you have to be highly valued by your staff – for Tesco’s to be highly valued by their staff then they must be an employer that treats staff with tolerance and respect, and show compassion, empathy and care towards their staff, so if Tesco’s employees are being discriminated because of their gender, marital status, or disability then that will make employees unhappy and they wouldn’t highly value Tesco’s.
Another act that should be taken into account concerning Tesco’s in achieving their aims &objectives are the “Trade Descriptions Act of 1968”. The trade descriptions act is intended to prevent businesses from misleading consumers into paying a big amount of money for their products or services. It also fines the business for false claims about the products or services that it sells. Tesco’s and Asda are constantly always changing the prices over a price war as they are both the top two supermarkets in the UK, Tesco’s air a lot of adverts claiming that their prices are cheaper than Asda and other leading supermarkets. Asda then reply by producing adverts weekly correcting Tesco’s that Asda’s prices are cheaper according to an independent source (www.moneysupermarket.co.uk), therefore resulting in Tesco’s promoting to backfire and also it put a bad image on the company as they have lied to consumers about which supermarket is cheaper. This affects Tesco’s from achieving their objective “To be as strong in everything we sell as we are in food” the reason why it affects this objective is because if the products and service that Tesco’s sell are offered at a slightly cheaper price at another supermarket like Asda, then obviously Tesco’s is not strong in what they sell, and if Tesco’s attempt to violate the law and make accusations that their products are cheaper then it shows that they are misleading consumers and it puts a bad image on the company as a whole. In order to keep up with competition, Tesco’s needs to update its price’s and keep up to date with the competitive prices so that they follow the rules of the Trade Descriptions Act.
Another Act that is taken into account is the “Food Safety Act of 1990”. The Food Safety Act is a set of laws that makes it illegal to sell contaminated foods, foods that have been adulterated, unfit for human consumption, or labelled/ marketed in a way that is misleading to consumers. Like every other foods retailing business Tesco’s must comply with this act and follow the two important rule’s in the act: “premises selling food must register with the local authority” and “training must be provided to all staff who handle food”. If a product that is labelled to have 10% butter then it should contain the exact amount, the label on foods has to give the list of ingredients – the reason why that is there are strict rules about what is allowed to go into certain foods. If Tesco’s are selling products that don’t declare what actual ingredients are in the products then they will be prosecuted by the Food Standards Agency. This can affect Tesco’s from achieving their objective “To put our responsibilities to the communities we serve at the heart of what we do”, the reason why it affects this objective is that if Tesco’s are selling products that are not meeting the standards of the food safety act then it shows that Tesco’s aren’t taking care of their customers as they are selling them products that can potentially harm them and give them illnesses such as salmonella or food poisoning. If Tesco’s wishes to avoid this situation then they must inspect every single product they sell and that they meet the standards of the food safety act.
Social & Ethical Values
Social and Ethical values express’s a customer’s/ organisations view of what’s right or wrong and summarize any concerns or beliefs they may have, it helps determine their attitudes to products/ services. It’s important for business to make sure that their products are sympathetic to the social and ethical values of their customers.
Tesco’s has a corporate responsibility which helps shape all that Tesco’s does. It is at the heart of their business strategy, as well as their approach to communities and the environment, it is their core purpose: ‘to create value for customers to earn their lifetime loyalty’. Everything Tesco’s does is rooted in two values: 1.No-one tries harder for customers and 2.Treat people how we like to be treated. In Tesco’s corporate responsibility they have a community promise called Tesco’s community promises, their values are reflected in their corporate responsibility strategy, which we call Community Promises. Tesco’s Values are reflected in five things of their corporate responsibility strategy, which they call Community Promises and they consist of:
1. Buying and selling our products responsibly
2. Caring for the environment
3. Actively supporting local communities
4. Providing customers with healthy choices
5. Creating good jobs and careers
Out of the five promises, there are three that affect the social and ethical values of Tesco. The first one is “buying and selling of our products responsibly” – this basically means that they promise to sell their products without misleading customers, sell them at affordable prices and not affecting the environment at the same time. These days consumers are very health conscious about themselves as they are aware of how bad being unhealthy is, in today’s society people tend to try and maintain a healthy lifestyle. So in Tesco’s case Consumers would want to be aware of what products they are buying and if it is healthy for them or not, the only way of them knowing this would be if Tesco informs them e.g. on certain food products Consumers would want to know if there are any additives in this food, what Tesco’s could do is label whether it has additives or not. If Tesco’s fails to do this then it affects them of achieving their objective “To put our responsibilities to the communities we serve at the heart of what we do” the reason why is if Tesco’s aren’t helping customers with their healthy needs then it puts a bad image on them as it shows that this business is purposely attempting to feed its customers misleading products in the intention of making profits, Tesco’s needs to avoid this if they are to achieve this objective and maintain their status as a highly valued company.
The second community promise show’s their initiative in helping the environment – “Caring for the environment”. Tesco’s has long term plans to be a zero-carbon business by 2050, they aim to create more sustainable ways of doing business. They are reducing the impact they have on the environment, including energy use and waste. They are continuously working with their suppliers to manage resources more carefully such as reducing water usage. One way that Tesco’s reduces its carbon footprint is that they recycle all of their cardboard, metal, office paper, plastic, chicken fat and cooking oil. Tesco’s is the largest retail recycler of cardboard in the UK as they process 300,000 tonnes yearly. This affects their aim “to be a modern & innovative company” because it shows that Tesco’s has various services in which their customers can recycle all sorts of stuff and in-turn they can contribute in helping the environment, not only for customers but Tesco’s as a whole benefits from this so that they can further themselves in reaching their aim to be a zero-carbon business.
In Tesco’s other community promise they show their initiative in providing customers with Healthier choices. What this means is that Tesco’s are aware of customers choice’s of being healthy as it is the trend nowadays. People want to live longer so they try to maintain a healthy lifestyle, so Tesco’s help their customers in achieving this, they partner with government organisations such as Change4life (a public health campaign), Tesco’s raise awareness of this campaign and repeatedly advertise it to their customers so that they take a look at it. This helps Tesco’s in achieving their objective “To put our responsibilities to the communities we serve at the heart of what we do”, the reason why is that it shows that Tesco’s is a caring organization as they are always showing their customers methods in where they can improve their healthy lifestyles like giving promotions for purchasing fruit and vegetable in-store, promoting campaigns they partner with: Breakfast4Life (encouraging healthy breakfasts, especially with children), they also provide articles on healthy eating in the Tesco Magazine, this impacts all of Tesco’s customers as there are a decrease in obesity levels and most of their customers get active and participate in all sorts of sporting activities that Tesco’s provides.
Task 3: Research
In this task I will carry out research to find out how marketing activities, enterprise skills and teams have contributed to the success of Tesco PLC. In order to do this I will need to conduct primary and/ or secondary research.Marketing Activities are what actions a business does or what they plan to do in order to improve the business, its sales, awareness and so on, it includes activities include sales,advertising,sales etc. Most importantly it includes the four marketing tools of the marketing mix: Product, Price, Promotion and Place.
Marketing activities allows Tesco to examine its business in great detail so they can further improve it and maintain their market position. It allows them to develop competitive intelligence which is a vital tool in a competitive market. Tesco is involved in many of the traditional marketing activities. Tesco carries out television advertisements regularly. They are also run a promotional program of giving away vouchers for schools computers. Tesco also participates in print advertisements, and runs a loyalty card scheme – the Tesco club card.
Market Research
Tesco’s identifies its customer needs as it counts towards one of their community promises, in this case “Buying and selling our products responsibly”, as in this promise they explain that Strong relationships with their suppliers allows them to innovate to meet changing customer needs and to attract new suppliers to work with Tesco’s. As supply chains increasingly come under strain from environmental change and population growth, they continuously work to make them more sustainable. Strong relationships with their suppliers allow Tesco’s to innovate, meet changing customer needs and to attract new suppliers to work with them.
Tesco’s uses their innovative club card as an effective method to respond to their local customer needs and reward them for customer Loyalty and gain valuable information about their customers. Club card provides Tesco’s with an insight from millions of customer transactions – what the customer buys, from this data Tesco’s can make/ develop tailored ranges, promotions and marketing by country or region e.g. by offering ranges, promotions to customers by sending them mail, so if a customer regularly buys products like drinks/ chocolates then the club card can notice this shopping habit and offer discounts/ promotions that they can use in future purchases.
Tesco’s also identifies certain customer needs providing them with healthier choices in some markets, customers expect basic food safety as a given; If Tesco’s has a reputation for selling safe food in a market where food safety is an issue, it helps them to build trust, giving them a significant competitive advantage and the opportunity to work with governments to improve standards. Helping customers eat more healthily allows Tesco’s to open up new business opportunities, especially in markets where obesity is a major issue. Tesco’s ‘get active’ programmes around the world help their customers get fit, as well as increasing customer loyalty.
Tesco’s has a method of collecting primary data via their ‘every comment helps’ Initiative encourages customers to give instant feedback on their Shopping trip – including both the customer service they receive and the range of products Tesco’s offers. Customers are able to share their feedback by either text or email. The comments that they receive helps Tesco’s to understand more about what’s important to their customers and identify any areas where they can improve. They put plans into action based on the feedback that they receive so that Tesco’s can learn from this and improve the shopping Experience of its customers.
Product
Product is a general term that is used to define the goods and services that are supplied by a business, Product is considered to be the most important element of the marketing mix. Tesco’s core product areas consist of Groceries, Consumer goods, financial services and telecommunications.
Groceries are the products that a business deals in or sells, this includes food and drink. Originally Tesco’s mainly specialized in selling essential products such as Food & Drink and to this day Tesco Still does. Tesco’s competes with other supermarkets which deal in/ sell groceries (e.g. Asda, Morrison’s…). But Groceries aren’t the only products that Tesco’s sell and compete with, they also specialise in Consumer Goods.
Consumer Goods are bought and used by customers, rather than by manufacturers for producing other goods, there are four types of consumer goods such as convenience products, shopping products, specialty products and unsought products, out of the four types, Tesco’s deals with products that are convenient to customers (convenience products). Convenience products are widely distributed and relatively inexpensive goods which are purchased frequently by customers with minimum effort, such as petrol, newspapers, and grocery items.
Tesco’s other product area is Financial Service. Tesco’s has its very own banking firm called Tesco Personal Finance plc. – Their trading name is simply Tesco Bank. Tesco Bank is a telephone and internet based commercial bank that sells consumer finance services such as loans, credit cards and insurances (car, pet, health, home, travel, life, dental and so on). Tesco’s other product area is in telecommunications, Tesco Mobile. Tesco Mobile is a mobile network that runs on the O2 network; they offer mobile contracts, mobile tariffs and pay as you go phones. According to the Tesco Annual Report it is stated that their two successful businesses Tesco Bank and Tesco Mobile make significant contribution to the company’s sales and revenue.
Originally Tesco’s specialised in food and drink, Now 92 years after its inceptionTesco’s now also retails in books, clothing, electronics, furniture, petrol and software. Tesco’s has many services, most notably its mobile and financial services, but their most successful is the Tesco Club card. The Tesco Club card is a loyalty card scheme that operates in the UK, Ireland, Poland and several other countries, the club cards scheme has been highly successful in the UK market with over 15 million members (as of 2010).
Tesco’s offer a range of products to meet the needs of different customers; they sell fresh Foods such as fruit, dairy products, meat and chilled foods. Tesco’s also sells Bakery foods such as bread, pastries, cakes etc. Tesco also specializes in Frozen Foods such as meats, fish, poultry and ice cream. They also offer some International branded foods to meet the needs of their foreign customers. To cater needs of some customers say for people who like meat but need to be assured that its produced by professionals, there are counter butchers and fishmongers in store that tailor in selling professional meat.
Price
Price is the amount of money charged by a business for the sale of its goods and services. When setting their prices, Tesco’s need to take into account three factors: The cost of producing the product, the price charged by competitors and the price consumers are willing to pay.
When looking at the cost to produce the product, Tesco’s look at the amount of money spends to produce their products they buy to sell to their customers. With this information, Tesco’s can come to decision on what price they should charge for the product. The price should be higher than the cost to make the product so that they can make a profit.
When looking at the price charged by their competitors, Tesco’s makes comparisons of the prices for their products/ services to their competitors who offer similar services such as Asda as Tesco’s so that they can decide how to price their product. Tesco’s would attempt to do whatever in their power to offer their products at lower prices than of their competitors, a good example of this would be their price cut named the nations shopping list which has a list of all products and their prices in comparison to competitors. From this they took a look at what products they should charge more and what products they should charge less.
When looking at the prices consumers are willing to pay, Tesco’s set their prices at the fact of how much customers are willing to pay for products/services. Customers will surely pay their money on essential products as they are necessities rather than purchasing non-essential products as they are just luxuries. One way Tesco’s finds out about how much they are willing to pay for products are through the club card. The club card has a database of millions of customers and it tracks what they buy, Tesco’s uses this data to aid in changing the prices for their products as they know what products customers tend to buy or don’t tend to buy.
Promotion
Promotion is a series of marketing skills that are designed to make customers aware of products/ services and to persuade them to buy the products. Promotion is an important part of the marketing mix and business’s can use a variety of different types of promotion such as Advertising, Sales Promotion, Merchandising, and Public Relations.
Advertising is a way which business pays for communication with actual and potential customers through newspapers, television, radio and the internet. It can be expensive but it is effective in influencing customers to buy products/ services. Advertising can be informative by setting out increase consumer awareness of a product – this form of advertising is based on facts rather than images. This is the type of Advertising Tesco’s carry out as in their adverts they always state fact such as “in Asda 709,000 baskets are cheaper yet at Tesco’s 1,020,000 baskets are cheaper” and in some cases it backfires or their competitors react to these statements in the same way of advertising by stating that “at Tesco’s 716 products are cheaper, but at asda 6355 products are cheaper, why pay more?”.
Sales Promotion is any activity that provides a financial incentive to purchase a product; this may include Coupons, Loyalty cards, Price-off offers, free samples, competitions etc. Tesco’s are very fond of using Sales promotions as on most of their popular products they usually have price off offers, also they usually have buy one get one free offers on selected products, but their most popular sales promotion is the uses of their Club card as customers can collect club card points on anything that they buy and they can use the points to get discounts on anything they buy in the future.
Place
Place is just one of the four main P’s of the Marketing Mix – which on a simple level is Product, Price, Place and Promotion – that is used to focus a marketing strategy in a coherent direction. ‘Place’, however, is often over-looked due to the lack of flexibility and long-term logistics of placing products effectively – distribution is more likely to be adapted to meet customers’ needs instead. But Tesco’s new drive-through shopping experience changes this: customers will be collecting products from their cars, rather than at the till, which should give them a competitive edge in their saturated market.
To develop their success in retail, Tesco should make big money investments in store expansion in low-income districts and localities. By getting involved with public and private sector groups like local community based associations, colleges, and chambers of commerce, Tesco will be able to open sites in economically disadvantaged places such as in China. Targeting these areas will enable the company to gain the trust of local communities and gain favour from the local government by providing employment to the locals.
Enterprise Skills
Enterprise skills are the skills and personal characteristics possessed by successful business people or entrepreneurs. Enterprise skills consist of Self-Confidence & Motivation, Risk Taking, and Ability to Innovate, Ability to build teams, ability to inspire and identifying and exploiting market opportunities.
Tesco’s uses enterprise skills to help their business meet their objectives. Tesco use motivation& confidence to make sure their company meets all their objectives. Tesco’sbusinesses expand by building new stores, but without confidence Tesco might be scared to move out of town or build new stores, this could result in loss of profit or this will result in them losing a per cent of the market. An example of this would be the fact that Marks and Spencer did not have the confidence to move out of town, which did cause them getting a loss in profits. Another reason why a business would need good motivation and confidence would be for adapting new ideas. Tesco have this ability because they broadened their retailing to sell stuff other than Foods/ Groceries, such as Tesco’s clothing brand (F&F). The clothing brand has brought in a lot of profit, so has their electrical items they sell which are also sold in well-known high street stores but are much cheaper at Tesco. Also Tesco use motivation and confidence to set goals and targets that they wish to achieve.
Tesco’s are also well known for taking risks, some of the risks Tesco have taken are moving into new product areas. These product areas such as clothing have been great for the customers whether they are rich or poor. Tesco’s have also taken their business into telecommunications with their dedicated mobile network Tesco mobile, this could have been a serious loss in profit because there is so many phone networks which very competitive amongst one another. Another major risk Tesco took was building some new stores like Tesco express. Most companies would not build new stores in case of loss of profit, which is why most companies need good confidence and motivation. Also Tesco take risks every day by setting pricing strategies like buy one get one free. This could produce a loss in profits if their pricing strategies don’t go to plan.
Tesco’s also has a good ability to innovate new products or services. By having this skill Tesco’s are able to be successful in all the new product/ service ideas they come up with. For example moving their company into other retail areas (Such as clothing, technology etc.) allows Tesco’s to be a lot more successful and control a large percentage of the market.
Tesco’s have innovated their clothing brand. Tesco have also innovated their Tesco mobile network as they have offers that provide great deals and new phone models at affordable prices. All these areas have been a great success for Tesco’s which have gain them lot more customers and profit, this is because they took a risk by going into areas in retailing.
For Tesco’s to be able to have all this success Tesco’s needed the ability to inspire the staff and customers. Tesco’s must offer great training programs for their staff. If you ever shop at Tesco’s you can really see a good relationship between each employee this helps Tesco’s motivation to progress into new product areas. This motivation also helps the company take risks to inspire growth, for example when Tesco build new buildings, which would need good motivation
Teams
Teams are groups with clear objectives. In a team, the individual members of the group work together and support each other. Tesco’s go to say that their stores don't manage themselves but every store is run like a business in its own right - a busy, fast-moving, high-achieving, high-rewards business full of people who are dedicated to providing great customer service.. For employees to reach their full potential Tesco’s provide great leadership to their employees so then they can reach their full potential.
Tesco’s believe that Flexibility is key. Their management teams ensure that their stores deliver to the crucial, customer-driven values that have made them a success. It's a simple but challenging philosophy that unites every part of the business. They call it “Every Little Helps”, and their stores are at the very heart of it. Because Tesco’s is customer-driven, their view on leadership doesn't involve sitting in an office issuing instructions all the time.
Employees would spend most of their time on the shop floor, seeing first-hand what makes their customers and staff tick. And there are times when everyone mucks in, such as when preparing for their busy evenings. The whole team work together to ensure stores are ready and that every shelf is stocked. Management Teams at Tesco’s ensure it's all done quickly and efficiently.
Task 4: Marketing Activities
In this will be using the research I had obtained in task 3 I will explain how market research has contributed to the success of Tesco PLC. I will clearly relate my answer to the aims and objectives of Tesco PLC. My explanation will include how each of the following has contributed to the success of the Tesco’s:
- Market research
- Product
- Price
- Promotion
- Place
Market Research
Market research is any organized effort to gather information about markets or customers, Market research is a key factor for a business to gain advantage over competitors. Market research provides important information to identify and analyze the market need, market size and competition.
Tesco’s uses a majority of way to get market research of their customers, so this may be what they buy, what their shopping habits are, what products are/ least popular, which products to customers usually go for and what prices are they willing to pay.
One way that Tesco’s gains customer research is through their Club Card. Tesco’s uses their innovative club card as an effective method to respond to their local customer needs and reward them for customer Loyalty and gain valuable information about their customers. Club card provides Tesco’s with an insight from millions of customer transactions – what the customer buys, from this data Tesco’s can make/ develop tailored ranges, promotions and marketing by country or region e.g. by offering ranges, promotions to customers by sending them mail, so if a customer regularly buys products like drinks/ chocolates then the club card can notice this shopping habit and offer discounts/ promotions that they can use in future purchases.
This marketing activity has contributed to the success of Tesco’s because customers of Tesco’s have remained loyal – the reason why is that customers are satisfied with the range of products, the changes in prices, popular products always on promotional offers and the fact that some of the customers favourite products are discounted. This is due to the fact of the customer research that has been obtained from the customers for their use of the Club card. This helps Tesco’s in achieving their aim “To be a modern and innovative company” because Tesco’s are taking advantage of technology so they can use it as an effective method to gain more information about their customers and what they can do to keep them satisfied and content.
The Use of The Club card is one method that Tesco’s uses to obtain primary data of their customers, another way Tesco’s obtains primary data is via their ‘every comment helps’ Initiative. It encourages customers to give instant feedback on their Shopping trip – including both the customer service they receive and the range of products Tesco’s offers. Customers are able to share their feedback by either text or email. The comments that they receive helps Tesco’s to understand more about what’s important to their customers and identify any areas where they can improve. They put plans into action based on the feedback that they receive so that Tesco’s can learn from this and improve the shopping Experience of its customers. This Marketing Activity has contributed to the success of Tesco’s as it helps them to reach their aim “To be the most highly valued business in the world”, because when Tesco’s analyses the feedback they receive from the customers, then they can thoroughly check any strengths and weaknesses in the way they serve their customers, so if there are any complaints about floors being slippery then Tesco management can resolve the issue so then customers can feel more safe when shopping at Tesco’s and then eventually customer will value Tesco’s highly for how they care for the safety of their customers.
Tesco’s also identifies certain customer needs providing them with healthier choices in some markets, customers expect basic food safety as a given; If Tesco’s has a reputation for selling safe food in a market where food safety is an issue, it helps them to build trust, giving them a significant competitive advantage and the opportunity to work with governments to improve standards. Helping customers eat more healthily allows Tesco’s to open up new business opportunities, especially in markets where obesity is a major issue. Tesco’s ‘get active’ programmes around the world help their customers get fit, as well as increasing customer loyalty. This Marketing activity has helped Tesco’s in achieving their objective “To put our responsibilities to the communities we serve at the heart of what we do”, as it shows that Tesco’s is being responsible for the well-being of their customers, they are also making the effort to get their communities fit & healthy so they may live longer and continue to shop at Tesco’s.
Tesco’s conducts interviews with its customers as a method of primary research. Tesco’s has face-to-face interviews with their customers, they find out valuable information about the concerns of the customer, they would usually ask customers to conduct an interview with staff for 5 minutes so they can get the necessary research. This marketing activity has contributed to the success of Tesco’s as it helps them to reach their objective “To be a creator of highly valued brands” because when Tesco’s carry out the interviews with their customers, they can find out certain stuff like what kind of brands are they interested in so then Tesco’s can meet their needs and produce the brand of products. This can also help Tesco’s achieve their aim “To be the most highly valued business in the world”, as when Tesco’s conduct the interviews with its customers then they can find out certain information such as what improvements they can make to the supermarket and by asking this question they can receive feedback directly from the customers – such as customers want more tills where they can pay for their products/ services, and if Tesco’s listens and implement more tills then they are meeting the needs of the customers, thus customers will highly value Tesco’s as a business.
Tesco also uses Focus Groups as method of primary research. In a focus group there are a group of people that are asked about their opinions, beliefs and attitudes towards a product, service and in some case the concept, advertisement, idea, or packaging. For example, When Tesco’s launches a brand new product; customers can try out the product and give feedback about the product. This marketing activity contributes to the success of Tesco as it helps them achieve their aim “To be the most highly valued business in the world”, as when Tesco’s sample the product, some customers may have opinions about it like if they don’t like it, what improvements can be made so that the customer will like it, so if Tesco’s implements improvements to the product then the customer will feel satisfied as Tesco’s is meeting the needs of the customers and the fact that Tesco’s have asked for the opinion of the customer it motivates them as if they are an important part in producing top of the line brands so the customers will highly value them.
Tesco’s uses Secondary Research as a method of market research. Tesco’s uses statistics of the market they are in which is the supermarket business. They look at the level of success between Tesco’s and their competitors such as Asda’s, Sainsbury’s etc. From this they look and compare statistics with their competitors and see who is at the top of the market. E.g. Tesco’s would look at the profits/ revenue that Tesco’s produces in comparison to Asda – this shows how well Tesco’s are competing with their competitors. The use of secondary research has contributed to the success of Tesco’s as it helps them achieve their aim “To be a growth company” because it shows how Tesco’s is progressing as a company in comparison to their competitors, and if Tesco’s is doing considerably better than their competitors in the market then it shows that they are currently in the lead and are at the top of the market – and this obviously means that they are making the most profits and making more money than their competitors, so if Tesco’s is making more money, then they can use the profits to re-invest back into the business and increase the growth of the company.
Task 4: Place
In this task I will be researching and explaining how place from the marketing mix has contributed to the success of Tesco. I will be discussing about what distribution channels Tesco’s uses, what types of outlet do Tesco’s have, how many they have and I will clearly relate my answer to the aims and objectives of Tesco’s.
Place is a term for distribution, it covers the range of activities necessary to ensure that goods and services are available to customers. Deciding on the right place involves a range of decisions. Generally Place is where products are made available to consumers – this part of the marketing mix includes the selection of outlets, also the distribution channels.
Tesco’s has a range/ different types of outlets where they sell their products such as Tesco Metro, Tesco Extra, Tesco Express, Tesco One Stop and Tesco Superstore, Statistically – Tesco’s have 5,380 stores worldwide, 2,715 are stores all over the UK. All six of their outlets are different formats of their stores, each of them is distinguished by the size and the range of products sold.
• A Tesco superstore is the basic store format for the company - These large supermarkets stock and sells all the groceries with a wide range of non-food products such as clothing, electrical etc. They also offer an in-store pharmacy.
• A Tesco Extra store is a large out-of-town huge supermarket that stock’s nearly all of Tesco's product ranges including clothing, entertainment products and consumer electronics. Unlike other stores, Tesco Extra stores are usually open 24 hours a day. Most Tesco Extra stores have a café and all stores have a Tech Support Team.
• A Tesco Metro store is a medium-sized store (sized between Tesco superstores and Tesco Express stores) that offer a range of food products. They are mainly located in city centres, the inner city and on the high streets of towns.
• A Tesco Express store is basically a convenience store that is usually located They are found in busy city centre districts, small shopping precincts in residential areas, small towns and villages and on Esso petrol station forecourts. Their stock includes foods, with an emphasis on higher-margin products alongside everyday essentials.
• A Tesco Home plus stores offers all of Tesco's ranges, except food. They are in warehouse-style units based in retail parks. These large units feature an Order and Collect desk where customers can purchase and collect most items without delay. Tesco uses this format because only 20% of its customers have access to a Tesco Extra store, and the company is restricted to how many of its superstores can be converted into Extra stores and how quickly it can be done. Large units for non-food retailing are much more readily available at these outlets.
• One Stop stores are the very smallest Tesco stores; one stop is the only outlet that doesn’t use the Tesco name. These stores work on a different pricing to all the other store formats and are also distinguished by their later opening hours. Some One Stop stores have Tesco Finance branded ATM machines.
As Tesco’s has many stores this shows that they are big successful business and this helps them succeed more. Also the fact that they have many different outlets it accustoms to certain customer’s needs. This has helped Tesco’s in the success of achieving their aim “To remain a growth company” as they are operating and producing a growing number of stores in the UK market - evidently In the past year 205 new Tesco’s stores have been opened and are operating, this figure is up from the previous year, this shows that the business is continuingly growing – this links to the fact that Tesco’s are opening more stores across the UK this mainly helps Tesco’s in achieving their objective “To grow the UK core” as it would meet the needs of their customers, for example Tesco’s opening more Tesco’s express stores makes it more accessible for customers to purchase Tesco’s products and services as these outlets are generally in the neighbourhood convenience stores so customers won’t need to travel into town a lot to purchase Tesco’s products at other Tesco outlets.
Tesco use different distribution channels to distribute their products. To stock products in all their stores, Tesco uses Lorries to send the goods from their warehouses/ wholesalers to all their stores so that the stores are in stock of products. When customers order from Tesco’s such as online, they receive their goods delivered by a Tesco Branded Delivery Van.
Tesco’s always finds new ways to make their products accessible to their customers. Tesco’s customers don’t usually need to travel to a Tesco outlet to purchase products as there are other ways in which customers can buy products, Tesco’s have their own shopping website (Tesco Direct) where customers can simply shop online from the use of their computer/ smartphone, customers can shop at the comfort of their homes or when they are out and about, on certain smartphones customers can use the dedicated app to shop – customers receive their shopping as it is home delivered. Tesco’s are always developing new ways in which customers can shop at their business.
For example, in august of 2010, Tesco conducted a trial at their store in Baldock; Hertfordshire where they conducted a new shopping method of drive thru, this service was to allow customers to pick up their weekly shop without leaving their vehicle. Customers would order shopping online and then drive to a designated area in the store's car park to have their products loaded into their car at a pre-arranged time. Tesco said that the service had been designed for shoppers who want their shopping to be picked up and packed but who do not have the time to wait at home for delivery and need it ASAP. This has contributed to the success of Tesco’s in achieving their aim “be a modern and innovative company” because this shows that Tesco’s are continuingly developing/ innovating new point-of-sale where customers can buy products so it can meet certain customer needs such as for customers with disabilities who are unable to travel to a Tesco store. Tesco’s has highlighted this issue and has responded to this by providing these services like drive-thru, home delivery etc.
Task 4 Price
In this task I will be using my research to explain how price of the marketing mix has contributed to the success of Tesco’s. I will clearly relate my answer to the aims and objectives of the business. I will describe the factors which influence price in Tesco’s, I will also explain how ‘Price’ helps contribute to the success of Tesco’s and I will relate my answer to the aims and objectives of Tesco’s.
Price is the amount of money that is charged by a business for its products and services. There are three factors that determine the price of a product – they can be summarised in three C’s and they are cost, completion and customer value.
Cost means the amount of money that is used/ needed in producing a product, if a business such as Tesco’s is to make a profit then it needs to charge a price that covers the cost of producing and selling the product. In some cases some business sell products at a price lower than the cost. Some business may use cost-plus pricing.
Tesco’s need to consider all three factors before they decide on setting prices for all their products, in some cases it would be appropriate for Tesco’s to set high prices for products that are in high demand and in other cases it would be appropriate for Tesco’s to set low prices for products that are in low demand so then they don’t make any losses.
If Tesco’s is to make profits, they will need to charge a price’s that covers the cost of making and selling their products for example: When Tesco’s producing their Tesco Value range of products, they need to consider the costs of making those products so for making Tesco value cola they need to consider the quality of ingredients & packaging (high or low quality) that they will use in production of the product, They would need to set a price higher than the cost of the product so if they use low quality then they can charge a price that may be the cost of producing high quality cola like coca cola.
This contributes to the success of Tesco’s in achieving their objective “To be as strong in everything we sell as we are in food”, because when Tesco’s sells their products they obviously need to make profits, if they are producing products that cost’s less than the price to make the product then Tesco’s can make a considerable amount of profit, and if they’re making profits on the products they product, then it shows that they are strong in selling these products.
Competitors simply mean the price that is charged for the product by the competitors. Business such as Tesco’s may want to charge a price at a similar level to competitors or slightly lower - This is otherwise known as competitive pricing. If the product is sufficiently unique and superior, then the business might feel it is acceptable to charge a price above that of its competitors.
Tesco aren’t the only supermarket chain in the market as they have four other competitive markets. As they are the market leader, Tesco’s need’s to think carefully about the competition they have before making a decision on setting their prices. When looking at what their competitors charge for the same products they sell, Tesco’s look at what will happen if they charge a higher/ lower price, If they compete against their competitors on price, If their prices are similar, And whether they use promotions -This influences the prices that Tesco’s sets for its products.
So if competitors offer prices that are considered to be better than what Tesco’s offers, then Tesco’s aim to reach the price range the price range of the competitors by charging a slightly cheaper price – this is known as competitive pricing. This is the same for promotional offers as Tesco’s always look to set promotions on their popular products to get customers to purchase them – this is known as promotional pricing.
To remain competitive Tesco’s runs a price check on all its products to show customers how much money they are saving on if they didn’t go purchase this product at their competitor’s stores, also Tesco’s has this big price drop promotion that had started in September of 2011, they have slashed the prices of more than 1,000 of its own products, as part of a promotional campaign, it’s in Tesco’s personal belief that that competitive pricing and new product launches would boost sales in the Christmas season. The "Big Price Drop" covers a total of 3,000 products including essential items like milk, eggs, fruits and vegetables.
This contributes to the success of Tesco’s in achieving their objective “to grow the UK core”, because as Tesco’s is competitive they tend to keep their customers and attract newer customers or get customers from their competitors to defect to Tesco’s, this will then lead to more profits being generated which can be used to re-invest into the business.
Customer Value basically means the price that customers are willing to pay for a product/ service. The price customers are willing to pay is determined by the value of the product to the target market – what customers are willing to pay for the product is affected by demand for the product. If consumers in the target market have the belief that they can gain benefits from the product – they would be willing to pay a high price. However, if the product gives fewer benefits then the consumers will likely to pay a lower price for the product.
If Tesco’s customers are under the belief that the product is of high quality, then they would be willing to pay a high price, if customer believe that the product is of low quality then they would be willing to pay a low price for the product. For example: Tesco Finest range of products will cost than Tesco value product range because the finest range is made of high quality so it would be priced higher – Tesco Value Coleslaw 500g costs £0.46 whereas Tesco Finest Coleslaw 335g costs £1.94, so some customers may go for price yet some may go for Quality.
This contributes to the success of Tesco’s in achieving their objective “To be a creator of highly valued brands”, as Tesco’s want to provide products that may prove to be worth the value to their customers, by offering low quality (Tesco Value) and high quality (Tesco Finest) it would give customers variety and they’d know why they are paying the amount for the product, e.g. if customers buy a Tesco Finest product they’d expect high quality product as its more pricey than a Tesco value product.
Task 4: Product
In this task, I will be talking about how product from the marketing mix affects Tesco’s in achieving their aims and objectives. I will be describing the range of products that Tesco PLC sells in their UK market – I will include examples of the brands within each range. I will also explain how the range of products & brands contribute to the success of Tesco’s by linking to the Aims & objectives of Tesco’s. I will describe the sizes and packaging that Tesco’s uses for its products and I will also explain how the range of sizes & packaging contributes to the success of Tesco PLC by linking to the aims & objectives.
Product is the general term that is used by a business for the products and services that they provide. Tesco’s has a wide range of products that are suited to different customer needs and target audiences. Tesco’s currently also has a limited range of services but they are growing business which means that more innovated services are likely to implemented into the range of services. The ranges of brands that Tesco’s provides are: Technika, Tesco Organic, F&F, Tesco Finest, and Tesco Organic & Tesco Value.
As Tesco’s is mainly a food business, they have a lot of food brands as well as their own brands. Tesco’s specializes in selling foods such as retail foods, frozen foods and bakery foods. Tesco’s Try’s to target a range of people and a lot of audiences that shop at Tesco’s, so it would make sense for them to innovate and produce their own food brands. An example of this would be Tesco’s Organic foods brands. The Tesco Organic brand is a brand that is dedicated in selling healthy organic foods/ vegetables. This contributes to the success of Tesco’s achieving the objective “To be a creator of highly valued brands”, as it shows that Tesco’s creates certain brands to meet the needs of certain customers, in this case the Tesco Organic Brand is targeting customers who want a healthier choice of brand or customers who are maintaining/ trying a healthy lifestyle. This then shows that Tesco’s are caring for the needs of their customers and the customers would take note of that – this in-turn contributes to the success of Tesco’s achieving their Aim “To be the most highly valued business in the world” because the customers will highly value Tesco’s because they are happy that Tesco’s listens to the needs of their customers so then the customers.
Tesco’s sells more than just products; they also specialize in a range of services to meet the needs of certain customers. Tesco’s offers services such Finance (Loans, Overdrafts), Petrol, Telecommunications (Broadband, Mobile), and a lot of kinds of insurances including car, pet, health, home, travel, life, dental and so on. These services are put in place to meet the increasing number of needs from Tesco’s loyal customers.
For example: Tesco Bank and Tesco Mobile make significant contribution to the company’s sales and revenue as they are the most popular service that is used by Tesco’s customers as these days money is very valuable as the economy has recently come out of economic recession and Tesco’s are offering value in their deals in finance (they offer Great rate of 6.4% APR representative on loans from £7,500 to £14,999), they also offer value deals on their mobile phones as they offer the latest models/ handsets at reasonable prices or affordable contract, also to meet certain needs of customers – Tesco’s now offers Capped Contracts on their mobile phones, what this means is customers can create their own tariff so they can set their minutes, texts and data and use them. This helps Tesco’s in achieving their aim “to be a modern & innovative company” because Tesco’s are introducing new ways for customers to save money from the use of their services for example: for Tesco’s capped mobile contracts customers just set their limit for minutes/ text/ data so they can save money from purchasing a normal fixed contract.
Tesco’s sells a range of products from recognized brands such as Coca-cola, Walkers, Nestle, Kellogg’s etc. But they also have a portfolio of their own innovated brands such as F&F, Tesco Organic, Tesco Value, Tesco Mobile.
Brand (F&F, organic, Value, Mobile, and Bank)
Packaging (caring for environment, )
Task 4: Promotion
In this task I will explain the range of promotional methods that Tesco uses to promote its products. I will discuss what advertising methods Tesco’s issues, what sales promotion’s Tesco’s uses, how they use merchandising and how they use public relations. I will explain how this promotional activity contributes to the success of Tesco and link your answer to the aims and objectives.
Promotion is a series of marketing activities designed to make consumers aware of products, also to persuade them to buy the products. It’s considered as an important part of the marketing mix. Business’s such as Tesco’s use different types of promotion. There are four types of promotion and they are advertising, sales promotion, merchandising and public relations.
There are two ways of how business advertises their products. The two techniques of advertising are Above-The-Line promotion and Below-The-Line promotion. Above-the-line promotion is direct advertising through media such as TV, Internet, Newspapers, Billboards, magazines and radio. Below-the-line promotion is all other forms of promotion it includes promotion methods which are more personal & traditional. This can include: public relations, Sales promotions, Sponsorship, merchandising, direct sales and competitions.
Tesco uses much of the advertising methods mentioned, but their most popular method of adverting is using Above-the-line promotion. Tesco may use below-the-line promotion as it’s not very costly, but it wouldn’t be effective in their case as they are big company that needs to make profits and below-the-line promotion wouldn’t make all their customers aware as they have millions of customers, so if the customers aren’t aware then they’d be making less profits.
It makes sense for Tesco’s for using above the line promotion as they are a big business and they are able to afford to have Television Adverts, Newspaper ads, Billboards magazines, radio etc., as it costs a lot to do so. Tesco is a nationwide supermarket in their UK market and they have to advertise in a way that the whole country is aware – e.g. by advertising on TV the whole nation is watching as most households have access to television, also a lot of people purchase newspapers everyday – this is beneficial for Tesco’s as they can implement their adverts inside the newspapers so it would bound to be noticed when people flick through the pages, most importantly It will make them aware. An example for TV adverts may be the one below; it shows a TV that is on offer as the price has dropped by 200, some consumers who see this on TV may find that this is a bargain and as they are aware that it’s on offer, they may consider purchasing it while stock lasts.
This has contributed to the success of Tesco’s in achieving their objective “to grow the UK core”, as Tesco’s uses various methods of advertising to make their products and services aware to consumers across the country, when customers are aware of what products are on offer at Tesco’s then they will know that it should be available at their local store/ outlet, also if a certain product advertised that is popular/favourite of a customer, then that individual would consider going to local store and purchase it – this helps Tesco’s gain revenue and then they can use these profits to re-invest into the business and expand their UK market.
Sales Promotion is a selling method which is used to make goods more appealing/ attractive to customers by providing them with incentive’s to buy the product e.g. buy one get one free (BOGOF), free gifts and other types of discounts. Tesco’s Tend to use Sales promotions a lot as usually most of their popular products have price off offers, or buy one get one free offers on selected products.
Tesco’s most popular and arguably successful sales promotion is their innovative Club card membership scheme. The club card works by having the customer collect points on any of Tesco’s products or services that they purchase, customers then use these points to obtain vouchers – the amount of money on the voucher depends on the amount of points a customer has – e.g. if a customer has 150 points on their club card then they can get a voucher worth £1.50.
This particular sales promotion contributes to the success of Tesco’s in achieving their aim “To be the most highly valued business in the world”, because Tesco’s are providing their customers with the means of money saving offers which they can benefit from, so when customers use their club card they use points they obtain from items they buy which can turned into vouchers that they can use on purchasing the same/ other products in the future without using money, customers would highly value Tesco’s as it shows that Tesco’s knows that some of their customers aren’t in the situation where they can purchase Tesco’s products/ services without hesitation as they may have money troubles so Tesco’s are providing support so that customers are able to purchase products/ services at Tesco’s so they can make some money out of it.
Merchandising is covers a range of tactics that are used by a business at the point of sale to achieve high sales figures. Merchandising can be important when customers make decisions at the point of sale, when a variety of rival products are on display in stores or when rival products have only minor differences.
Tesco’s uses merchandising in their stores so promote certain products e.g. when a James bond film comes out on DVD they’d have a Display stand stocked with the DVD’s to encourage customers to purchase it if they are interested. Tesco’s also uses their own Merchants/ Merchandisers to encourage customers into buying their products/ services. This helps Tesco’s in achieving their objective “To be as strong in everything we sell as we are in food”, because Tesco’s is trying to sell all their products confidently by having their merchandisers to recommend other products that may be of interest to customers, also to assist customers in which product to buy e.g. when a customer cannot decide on Coca cola or Tesco Value coke, the merchandiser can help/ assist the customer in making a decision.
Public relations are designed to improve the image of a business in the eyes of their customers and other groups as business such as Tesco look to receive good publicity. Big business’s such as Tesco’s has its own Public relations department that organises and engages in activities such as charity events, sponsoring sport/ culture events etc. this method of promotion is expensive.
Tesco’s uses Public relations as they support and sponsor charities. Tesco’s has its own charity of the year initiative that is dedicated in helping charities, since 1988, Tesco chose a different charity each year where they raise money through staff fundraising. Over £55 million has been raised since its inception for a lot of charities such as British Red Cross, Alzheimer’s Society etc.
Tesco’s most notable public relation is with Cancer Research’s Race for life. Tesco and Cancer Research UK's Race for Life is the UK's largest women-only fundraising event. Women of all ages and fitness levels come together to walk, jog or run five/ ten thousand miles to raise money that can be put forward to researching a cure for cancer. Tesco’s has been sponsoring the race for life event for ten years now and they have helped raise over £362 million for the charity.
This has contributed to the success of Tesco’s in achieving their objective “To put our responsibilities to the communities we serve at the heart of what we do”, as Tesco’s help organise these events across the country they are showing that not only do the care for their customers but they also care for the well-being of other people regardless of whether they are Tesco customers or not – this is good publicity that many customers would see and therefore would highly value Tesco’s which in turn contributes to the success of Tesco’s in achieving their aim “To be the most highly valued business in the world”.
Task 5: Enterprise skills
In this task I will be using the research that I have obtained in Task 3, I will explain how enterprise skills have contributed to the success of Tesco’s. I will clearly relate my answer to the aims and objectives of Tesco.
Enterprise skills are the skills and personal characteristics possessed by successful business people or entrepreneurs. Enterprising behaviour happens when business owners or their employees show enterprise skills, such as when taking profitable risks or inspiring co-workers to achieve aims/ objectives; enterprising behaviour is an absolutely necessary tool for any successful business and it helps businesses to respond to actions of their competitors quicker.
There are six factors in enterprise skills and they are Risk taking, Ability to identify and take advantage of marketing opportunities, Ability to innovate, Leadership in the market, Self-confidence and motivation.
In Enterprise, businesses such as Tesco’s are always taking risks such as moving into new product areas. These product areas such as clothing (F&F brand) have been great for the customers whether they are rich or poor as they sell high quality, in-fashion style clothing for reasonable prices that customers can afford. Tesco’s have also taken their business into telecommunications with their dedicated mobile network Tesco mobile, This has contributed to the success of Tesco’s in achieving their objective “To be a creator of highly valued brands”, as Tesco’s are producing brands that are increasingly becoming popular and successful, this is the risk that Tesco has taken as originally they were only in food retailing, but then they expanded into other areas in retailing whilst still retaining their status as a food’s retailer. With their Telecommunications service, Tesco’s has made a risk as this could have been a serious loss in profit because this market with serious competition as they are a lot of mobile network providers such as Orange, 3, Vodafone etc. But Tesco has made the risk and operates their own mobile network using Telefónica UK Limited (trading name: 02) as its network carrier, and this mobile network has generally become successful.
Tesco’s have made a lot of risk taking in order to get where they are today, originally their business covered the UK but since then they have expanded their business across the globe. E.g. Tesco’s has taken their businesses into the USA, Europe and Eastern Asia, Tesco’s took the risk by setting stores in these countries, the reason why this was risky is because the Tesco brand is not well known in these countries. This risk had ensured that Tesco’s is successful in achieving their objective “To grow retail services in all our markets”, as Tesco’s are taking their business into other countries to try and make a success and achieve profits, they make risks by bringing their business abroad as they don’t know whether their enterprise in other countries will be successful but in order for them to be very successful company then they need take risks such as expanding their operations into other countries.
At Tesco’s, they have a staff promise: Our people promises which states that Tesco’s want’s their employees to feel that Tesco is a good place to work at. They aim to ensure that their employees: are treated with respect, have an opportunity to get on, have a manager who helps them, and have an interesting job. For Tesco’s to be able to have all this success Tesco’s needed the ability to inspire the staff
This has helps Tesco’s in achieving their objective “To build our team so that we create more value”, because if Tesco’s is to inspire their staff then they must abide by their promise’s, if staff are respected equally and receive help from colleagues then they’d be more motivated to work, When shopping at Tesco’s it is clearly seen that there is good relationship between each employee. And if staffs at Tesco’s are motivated to work then they can improve the work efficiency at Tesco’s.Tesco use’s motivation & confidence to make sure their company meets all their objectives. Tesco’s expand its business by building & setting up new stores/ outlets. But without confidence Tesco might be scared to move out of town or build new stores, this could result in loss of profit or this will result in them losing a per cent of the market. An example of this would be the fact that Marks and Spencer did not have the confidence to move out of town, which did cause them getting a loss in profits. This has contributed to Tesco’s in achieving their aim “To remain a growth company”, because to remain a growth company, Tesco’s need’s to be confident and motivated to expand their business so then they can make more profits that can be used to further expand the business.
As part of enterprise, Tesco’s has the ability to innovate new products or services. By having this skill Tesco’s are able to be successful in coming up with new ideas of products/ services that may be essential to customers. For example Tesco’s has innovated a new service idea where customers shop through the method of drive-thru. This enterprise skill has contributed to the success of Tesco’s in achieving their aim “be a modern and innovative company” because this shows that Tesco’s are continuingly developing/ innovating new point-of-sale where customers can buy products so it can meet certain customer needs such as for customers with disabilities who are unable to travel to a Tesco store. Tesco’s has highlighted this issue and has responded to this by providing these services like drive-thru, home delivery etc.
All the new product/ service ideas they come up with. For example moving their company into other retail areas (Such as clothing, technology etc.) allows Tesco’s to be a lot more successful and control a large percentage of the market.
Tesco’s is the market leader for supermarkets in the UK. They have maintained their status as the top market leader for the past decade, what has kept them at that level is their drive to differentiate from their competitors and introducing revolutionary services that no other supermarket has done before. For example Tesco’s was the first supermarket to introduce online shopping for groceries; they were also amongst the first supermarkets to offer the self-checkout service – other supermarkets followed thereafter. This has contributed to the success of Tesco’s in achieving their aim “be a modern and innovative company”, because they have offered innovative services it has led them to being the top market leader for supermarkets in the UK, because they have introduced new services such as their club card scheme (Tesco’s was the first supermarket to offer a loyalty card scheme), if Tesco’s continues to innovate new services then they can stay on the top of the market for years to come.
Task 6: Teams
In this task I will be using the research I had obtained in Task 3, to explain how teams have contributed to the success of Tesco’s. I will relate your answer to the aims and objectives of Tesco’s. I will also explain whether I think that team working has contributed to the success of Tesco or not and I will give my reasons.
At Tesco/Sainsbury’s teams are structured by functional area e.g. operations’, marketing etc, below is the organisation chart for a Tesco’s Business headquarters:
As you can see, Board of directors are at the peak of the business, and the entire departments below report to the board of directors. The product team works will the production of Tesco’s products, the finance team deals with financial aspects such as profit/ loss, income & expenses etc., the sales team works with. Teams are groups of people working alongside each over with clear objectives. In a team the individual members of the group work together and support each other. Team members usually adopt different roles – people within a team behave according to certain personal characteristics.
Team-working is present in all aspects of Tesco’s day to day operations, such as when Tesco’s are creating a new product/ service idea. Tesco’s would have Teams from different departments in the organisation to work on a project of creating a new product/ service.
When Tesco’s are creating a new product, they need to come up with a design for the new product, so the design team are put to work by producing sketches or early concepts for the product. As soon as the design team have produced a final design for the new product they pitch it forward to the marketing team, at this stage the marketing team evaluate the product concept and to see whether it will make the company money if it were to sell, once they come up with the decision to sell it Tesco’s then gets the Accounts team to produce a report on how much it will cost Tesco’s to produce this product and how much recommended money they should charge for the buying of this product. Once that is out of the way, the product is sent to the production team and is set to produce physical batches of the product so then it is ready to ship out to Tesco’s stores across the country.
Tesco’s take the necessary measures to maintain their level of team-working in the business. Tesco’s set up teambuilding days for every employee across all of their departments so that they can gain/ improve Team-working skills.
Each of Tesco’s departments work on a different aspects of the business, such as for the Human Resources department, each employee within that department deal with recruitment of the business – in this department people work in teams to produce job descriptions, adverting and during recruiting process at Tesco’s, a group of people work as a team to interview candidates. In the finance department, employees from this department would be involved in financing the advertisements that Tesco’s place in their newspapers and marketing journals.
Tesco’s main purpose is to serve its loyal customers. Tesco's organisational structure has the customer at the top as they are their top priority. Tesco has fully skilled people at each level of their organisational structure. There are six work levels within Tesco’s organisation structure. This gives a clear structure for managing and controlling the organisation. Each level requires particular skills and behaviours from staff.
Work level 1 is about frontline jobs working directly with customers. Various in-store tasks, such as filling shelves with stock. Requires the ability to work accurately and with enthusiasm and to interact well with others.
Work level 2 is about leading a team of employees who deal directly with customers. Requires the ability to manage resources, to set targets, to manage and motivate others.
Work level 3 is about running an operating unit. Requires management skills, including planning, target setting and reporting.
Work level 4 is about supporting operating units and recommending strategic change. Requires good knowledge of the business, the skills to analyse information and to make decisions, and the ability to lead others.
Work level 5 is about responsible for the performance of Tesco as a whole. Requires the ability to lead and direct others, and to make major decisions.
Work level 6 is about creating the purpose, values and goals for Tesco plc. Responsibility for Tesco’s performance. Requires a good overview of retailing, and the ability to build a vision for the future and lead the whole organisation.
Many businesses such as Tesco’s organise themselves in a hierarchy with teams structured according to functional areas/ departments such as production, finance, sales, marketing and human resources. Tesco’s structure their teams on a project-by-project basis and select team members from across the organisation. E.g. when developing a new service they would involve people with different backgrounds and expertise such as accounts, design and marketing.
Below is the organisational chart which shows the hierarchy structure for a typical Tesco Store, as you can see all of the department manager’s report to the store manager who reports back to the store director.
This has helped Tesco’s in achieving their objective “To build our team so that we create more value”, because they have created an efficient workforce through their six work levels, as they have
Tesco’s say that their stores don't manage themselves but every store is run like a business in its own right - a busy, fast-moving, high-achieving, high-rewards business full of people who are dedicated to providing great customer service. For employees to reach their full potential Tesco’s provide great leadership to their employees so then they can reach their full potential.
Tesco’s believe that Flexibility is key. Their management teams ensure that their stores deliver to the crucial, customer-driven values that have made them a success. It's a simple but challenging philosophy that unites every part of the business. They call it “Every Little Helps”, and their stores are at the very heart of it. Because Tesco’s is customer-driven, their view on leadership doesn't involve sitting in an office issuing instructions all the time.
Task 7: Evaluation
In this task I will make a judgement of what have been the key factors in helping Tesco’s in achieving their aims and objectives. I will need to consider from which of the activities – marketing, enterprise and teams has been the key factor in helping in helping Tesco’s to achieve their aims and objectives – I shall rank which activity is considered to be the most influential factor. I will then write an evaluation where I will make a judgement of how marketing activities, enterprise skills and teams have contributed to Tesco’s success.
The activities that I think that have been key factors for Tesco’s in achieving their aims & objectives are Marketing Activities, Team working and Enterprise Skills. On a rank of 1-3 (1 being the Highest and 3 being the lowest), here is what I think are the most important factors:
- Marketing Activities
- Enterprise Skills
- Team working
The reason why I consider that Marketing Activities is the most important factor for Tesco’s in achieving their aims & objectives is because Marketing activities is important as it helps boost Tesco’s sales, and increase’s their profit. The four P’s in marketing Activities (Product, Price, Place, Promotion) all contribute to the success of Tesco’s as they each play a role.
Product is important as it is what Tesco’s specialize in and that it is selling food products and other retail products, price is just as important as it is used to set prices to their products in which they need to sell at a price in which they can make a profit. Place is a factor that is taken into account because Tesco’s will need to sell their products/ services at place where it can be available to customers, and promotion is an important factor as it helps make Tesco’s products & services more aware to the customers so that they can make their decisions in buying them.
And Enterprise Skills are important factors as it allows Tesco’s to expand their business, e.g. risk taking allows Tesco to make risks in order to make more profits. Team working is considered to be an even more important factor as it helps improve efficiency and sustainability as staff must work together to meet customer needs such as communicating with customers to satisfy their needs.
Marketing activities has been a most in influential factor as helped Tesco’s in achieving their aims “to remain a growth company” & “to be a modern and innovative company”, one reason why it has helped remain a growth company is because they have produced a lot of profits from the products & services they sell, also the fact that they had innovated product ranges (F&F, Technika...) and branched into other areas of retail has contributed to the success of Tesco’s in achieving their aim “to be a modern and innovative company”, this is one of the reasons of why marketing activities is considered to be an important factor in Tesco’s achieving their aims and objectives.
The promotion part of the marketing mix has been essential for Tesco’s in achieving their aims & objectives as most of Tesco’s awareness has been produced by their advertising. Tesco’s has done a lot of effective advertising (T.V., Internet, Newspapers, Billboards..) over the years and it has proven to be successful, it has allowed them to increase awareness amongst most of their products and services and has led to an increase to the level of competition Tesco’s has towards its competitors (Asda, Sainsbury...). This has helped Tesco’s in achieving their aim to “remain a growth company”, because in order for Tesco’s to have grow as a company they needed to make a lot of sales, they have the products & services all they need was the means to get them out there to the customers, make it more available to them and increase awareness.
The Product part of the marketing mix has also been influential for Tesco’s in achieving their aims & objectives because in the past decade they have introduced a new line of product ranges such as their F&F clothing brand, Tesco Value products and their Tesco Finest foods range. This has helped Tesco’s in achieving their Objective “to be a creator of highly valued brands” Because they have produced product ranges that are developed to tailor different customers segments and to meet their customer needs. Tesco’s has also innovated services that are unique as they have been introduced and used well before their competitors introduced similar services, the services include their own Club card Membership scheme, their self-service checkout . This has Helped Tesco’s in achieving their aim “to be a modern and innovative company” Because Tesco’s have provided new ways to improve their customers shopping experience and it has proven to be very successful as many customer’s repeatedly return to use these services and sign up for their club card scheme.
The Place part of the marketing mix isn’t considered to be the most influential factor but is has had an effect on Tesco’s in achieving their Aims and objectives. Place is where a business distributes its goods and services, without place Tesco’s wouldn’t be that successful as they wouldn’t have a place to sell their goods and services, place not only defines where the business carry out their day to day operations but it’s also about availability to the customers as there are different Tesco outlets all over the UK such Tesco Metro, Tesco Extra, Tesco Express, Tesco One Stop and Tesco Superstore, Statistically –Tesco’s have 5,380 stores. This has helped Tesco’s in achieving their objective “to grow the UK core”, because having all these outlets is very important for Tesco’s as it helps make Tesco’s products and services more available to Customers and to people that are not more accessible to Tesco’s because of where they live, or their region.
The Price part of the marketing mix is one of the most influential factors for Tesco’s in achieving their aims & objectives because Tesco’s has a history of changing their prices rapidly to keep up with competition from their competitors as they are in constant Price wars with other leading supermarkets such as Asda’s and Sainsbury’s, this is the one factor that keeps Tesco’s above its competitors and this has proven to be successful as they have remained at the top of the market for years. But at the same time Tesco’s had to keep their products at a price where they can pay for cost of making their products. This has helped Tesco’s in achieving their objective “to grow the UK core”, because of Tesco’s competition it has allowed them to make cost saving measures and sell products at the right prices so that they can offer great value and at the same time they can come up for money to pay for the cost of the product and above all that the competition is aggressive and Tesco’s always seem to come out on top as they have a huge customer base and they have a lot of loyal customers that continue to shop at Tesco’s and pay for their goods and services – this then leads to an increase of revenue and therefore Tesco’s can use this money to re-invest into the company and grow the UK core. Their pricing strategies contribute to achieving this objective because when they set their prices to their products, they aim to put it higher than the cost to produce it but slightly lower than the price charged by competitors.
Team working is considered to be quite important factor for Tesco’s as it has helped Tesco’s as it helps work efficiency and sustainability within the business. As staff must work together to meet customer needs as they communicate with customers to help with any Q&A, help make decisions on purchases and assist them in any after sales. This has helped Tesco’s in achieving their objective “To be an outstanding international retailer in stores and online”, this shows that to be an outstanding retailer Tesco’s staff do what they can to improve customers shopping experience and this leads to customer satisfaction and customer loyalty – this can then lead to attracting more customers and lead to more sales & revenue.
Enterprise Skills is considered to be important factor for Tesco’s because all four sections (Risk taking, Ability to identify and take advantage of marketing opportunities, Ability to innovate, Leadership in the market, Self-confidence and motivation) in enterprise contribute to the success Tesco’s is at today. Risk taking is a very important factor because in the past decade, Tesco’s have Taken Big risks in order to grow as a business. One of the most notable risk’s Tesco’s have taken are that they had started to move away from their original business which was to sell foods and drinks, they had started to sell electronics (Technika) and clothing (F&F), this was a huge risk as they aren’t familiar with this area of retail as they used to only sell foods. As the years went on Tesco’s had branched into more areas of retailing (Telecommunications, Petrol) and even introduced financial services (Tesco Bank, Insurances), again this was another huge risk because they have entered new area of service which is again unknown to them. This has contributed to the success of Tesco’s in achieving their aim “To remain a growth company”, because Tesco’s had taken the risk and operated into new areas of retail and they have expanded their business from what it originally was which selling foods, this was essential for them to grow their business because in this market business need to take risks and offer different products/services to meet customers need’s and retain customer loyalty, Tesco’s is a good example of this as they sell most essential and non-essential products and so on.
Ability to innovate is an important factor in Tesco’s achieving success because for Tesco’s to have the ability to innovate new products or services, they are able to be successful in coming up with new ideas of products/ services that may be essential/ non-essential to customers. This enterprise skill has contributed to the success of Tesco’s in achieving their aim “be a modern and innovative company” because this shows that Tesco’s are continuingly developing/ innovating new point-of-sale where customers can buy products so it can meet certain customer needs such as for customers with disabilities who are unable to travel to a Tesco store. Tesco’s has highlighted this issue and has responded to this by providing these services like drive-thru, home delivery etc.
Being the leader in the market is one of the most important factors to describe the success Tesco’s is at today. Tesco’s is the leader in the market of supermarkets beating other leading supermarket chains such as Asda, Morrison’s and Sainsbury’s. This has contributed to the success of Tesco’s in achieving their aim “remain a growth company” as if Tesco’s continue to remain as the market leader for the next several years, their business will have been taken to the next level, also in the next several years Tesco’s won’t need to worry about much competition because if they continue all their award winning and renowned services, they will retain customer loyalty – statistics have proven that Tesco’s are the leader in Customer loyalty amongst their competitors as 29.7% of customers are more loyal to Tesco’s than their competitors, with this amount of customer loyalty it will help Tesco’s fend off any of their competitors and any other supermarket chain out there.
Taking advantage of marketing opportunity’s is crucial for any business to make them known and aware to consumers, this enterprise skill has been crucial for Tesco’s in achieving their aims and objectives. As Tesco’s has a good history of heavy advertising, they tend to take advantage of their opportunity’s to advertise on Television. In some adverts over the years Tesco’s have had adverts with celebrity’s and sports personalities. This has helped Tesco’s in achieving their objective “To put our responsibilities to the communities we serve at the heart of what we do”, as these adverts that include all these celebrities sometimes tend to encourage things such as healthy eating, for example: there is one advert where in a Tesco store a son is playing football with a ball of cabbage and gives it to his mother and they purchase it and the advert sports personality Frank Lampard appears in the advert, Frank Lampard was purposely included in the advert to garner attention and as he is a football player it made sense for him to appear in the advert as the son was playing football, but the main point of the advert was to encourage people to eat more green vegetables (e.g. cabbages) and be more active (e.g. playing football) to be more healthier. This make’s customers feel cared as Tesco’s are encouraging healthy lifestyles.
In my point of view, I think that marketing activities is without a doubt, the most important activity that has help contributing to the success of Tesco’s over the other activities Team-working and Enterprise skills. The reason why I think this is important activity because the four aspects of marketing activities make a huge impact. Without these four aspects, Tesco’s wouldn’t be as successful as it is today. For Products, Customers need a wide range of products to choose from so they have choice. For price, price is a big factor in the customers decision in purchasing Tesco’s products and service’s because of whether the price is affordable, if customers can’t afford the products then that it will have a huge impact on Tesco’s business. Place is also a important factor in marketing activities for Tesco’s because without a place, Tesco’s wouldn’t have been able to sell their products and services, and they wouldn’t have the growth needed to build more outlets. Out of the entire factor’s in marketing activities, Promotion is the most important factor for Tesco’s because most of their awareness is produced from their advertising as their methods have made Tesco’s products and services aware to consumers, and without any of this is that without any of these promotions, Tesco’s wouldn’t have then be able to make all these sales and produce all these profits that have made them a successful business today.