Marketing Research at Tesco

Internal and External Collection of Primary Data

The data that is collected by Tesco during primary research can come in many forms largely depending on the project or issue it wants to solve.  The majority of primary research is conducting inhouse research, which can be outsourced depending on the nature of the market research. It is often in the form of an observation format using a panel of specialist market researchers in cooperation with marketing managers and other trained specialists to identify and understand consumer behavior.  The observation method are advantageous in that they forego alot of the errors received in other less accurate methods as it collects data on what people do as opposed to what they say might happen or has happened. The disadvantage is that it is difficult to interpret what the individual or group might be doing.  The purpose for gathering this type of data for Tesco is to adjust shelf space to suit certain products , increase profitabilty of certain sectors and improve sales of product lines by giving certain products or advertisements maxmimum exposure.

What defines the success of Tesco is their superior IT infrastructure which was built up in the early 1990‘s  allowing them in collaboration with the Clubcard to maintain consistent inventory levels in a large number of small and large stores.  Their IT infrastructure is the envy of their competitors which enables them to constantly update and analyze sales resulting in a highly efficient use of shelf space. On the customer service side Tesco uses its database of customers usually sourced from Clubcard membership to participate in online, mailout or personal interview surveys The questions are usually qualitative in nature with the aim of eliciting feelings, attitudes , opinions about what their opinion is of a certain aspect of the Tesco shopping experience and may include recommendations.  The limitations to this type of survey is that Tesco often offers rewards or compensation for the time spent conducting the survey which can lead to data errors due to an unwillingness or inability to generate a response and or bias as well as the researcher and interviewee errors.  Tesco also gathers internal primary data from suggestion boxes in every store to gather customer experiences and improve service and quality.

Internal Collection of Secondary Data

One of the most effective data collection strategies Tesco has implemented is through the ongoing loyalty program Tesco Clubcard. The Clubcard offers customers reward points based on spend which they use to gain future discounts and in return Tesco use the data to improve their understanding of shopping behaviour, track purchases, customer segmentation and track customers with malilings and future  promotions.  Specifically the data gathered from the Clubcard is processed and split 27 categories based on demographics and then further reduced into  800 lifestyle groups.  The data from the Clubcard gives managers insight into products purchased and can reward customers with coupons to enable mini test markets for responsiveness to new products. Certain problem decisions such as which products to eliminate and how profitable are different product lines are passed throught the Clubcard database for analysis.  Tesco is able to solve many problem decisions using the Clubcard including product substitution, which products sell faster and even the way the store is laid out by finding the volume of purchases placed centrally to those with weaker volume higher up a shelf.  The data also enables Tesco to reduce marketing costs and fine tune how marketing material is sent to customers by understanding purchase trends Tesco can for example send brochures that identify exactly the type of goods the customer will buy in that period.

One of the central focus‘ of Tesco‘s business is to sell retail goods at low prices and to achieve this objective Tesco collects pricing data on their main competitors on a weekly basis to maintain their performance levels.  The marketing research conducted by Tesco internally matches prices of purchases made using Tesco Clubcard transactions against the prices of Tesco’s major competitors and lists these prices on their website. The purpose of the collection is for Tesco to remain competitive in the market as well as for customers to make comparisons themselves and remain responsive to price changes as well as finding value in shopping at Tesco.  Tesco uses competitor websites and marketing brochures and catalogues to source this information. The methodological basis for the collection is a one stage cluster sample by which the Clubcard purchases are representative of a sample of the total population of purchases at Tesco.

External Collection of Secondary Data

The decision problem again determines what type of marketing research will be undertaken and Tesco uses secondary external data to make a decision on potential new markets with the data gained from the National Statistics office and market research companies. Although most of external secondary data is freely available to all industry players, to gain a competitive advantage in its expansion plans Tesco needed to invest in highly specialized market analy sis.  Before expanding into the U.S Tesco acquired the services of market research company Mintel who are specialists in competitive intelligence within the retail sector.  Mintel provided Tesco with market intelligence and an analysis of the prospects with data on the industry and potential issues. Using the data analysis methodology Mintel will incorporate data mining and modelling to make predictive forecasts on the relative possibilities of approaching potential markets.  Mintel also provides Tesco with regular market reports detailing trends in certain sectors and competitive intelligence reports which can give valuable information to Tesco so it can make adjustments to a campaign or give managers assistance in making important marketing decisions. Another area where Mintel provided research was in a study they did based on the theory of „unconscious familiarity“ where they found out that using the voice overs of famous people during Tesco advertisments without making the audience aware contributed to a 32% better response rate than if they audience was made aware of who was speaking.

Conclusion

Tesco is committed to maintaining itself as a global retailing leader and its use of scientific research methods enables it to keep growing and expanding.  Scientific research methods also allow Tesco to maintain good relationships with its customers by providing them with quality goods at low costs which is the key to keeping Tesco profitable.  The variety of ways Tesco manages its data especially its IT infrastructure is what sets it apart from its competitors and having the ability to simplify its operational structure give the marketing department direction to move in.  Without overcomplicating the methods it currently implements to manage the data Tesco can do little to improve on its current platform.

Bibliography

Shukla, Paurav.Marketing Research,Ventus Publishing ApS (2008)

 

 –Tesco Overview

MMR. (2007) Volume 19 Issue 10 page 28

      Tesco price check

 The Guardian, 21 April 2009

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