Evaluate the effectiveness of marketing techniques in Tescos.

by ashra007 (student)

AS and A Level Business Studies

Asid Ashraf

Unit 3 Introduction to Marketing:

D1: Evaluate the effectiveness of the use of techniques used in marketing products in one organisation.

Explain how the marketing techniques of your chosen organisation have been a success

Marketing techniques used in Tesco:

Branding
Relationship Marketing
Growth strategies
Survival strategies
Brand building and positioning

Branding:

Tesco has been particularly successful because of its powerful brand. It has a reputation for value, low prices and for being customer focused. Its brand and associations have helped the company to expand into new sectors and markets. Tesco has also been strong in public relations, advertising and building profile in catchment areas on a local level. This local approach to marketing appears to be a key driver for success. Tesco has a good range of products, including own label products. It seeks to provide excellent customer service, and ensure high levels of customer satisfaction. The own label products have helped strengthen profits for the group, and it broad appeal through good, better, best (finest ranges) caters for the widest consumer audience. Aggressive overseas expansion has helped to keep profits high. The organisation has expanded into Eastern Europe, emerging nations such as China and South Korea and even the US, through mid market supermarkets known as, “fresh and easy”. Its strategy of being close to the customer has been assisted in the UK specifically, when Tesco developed different formats for shopping (convenience, metro, express, superstores). It has been the best retailer for format delivery and obtaining some of the best retail positions.

Relationship Marketing:

In 1994 Tesco’s hired a company called Dunhumby to help them analysis their database and find the patterns in the data they would help them devise successful marketing programmes. In 1995 Tesco introduced their Tesco Clubcard and since then Tesco have become the number one retailer in the UK market with annual revenues of over £32 billion. They have successfully entered new markets including home electronics, clothing and personal finance. Relationship Marketing is a success for Tesco this is because due to the amount of profit with the loyalty Clubcard scheme. Dunhumby has had a very strong year, increasing sales and profits by over 30% with excellent growth in the UK supplier business and from its overseas joint ventures with retailers.

Growth strategies:

Over the years, Tesco has recorded growth which has been achieved through different strategies. The company has adopted its growth strategy which has been implemented in four different parts. One has been emphasis on the growth of Core UK business in order to expand internationally. This growth has allowed that company to position itself in food and non-food sectors based on retailing services. Over the years, the company has witnessed financial fortunes which have been reflected in its growing sales.

Brand building and positioning:

The benefits of a having a strong brand image is that it creates an ...

This is a preview of the whole essay

Growth strategies:

Brand building and positioning:

The benefits of a having a strong brand image is that it creates an image of an established business that has been around for long enough to become well known. A branded business is more likely to be seen as experienced in their products or services, and will generally be seen as more reliable and trustworthy than an unbranded business. Tesco have selected different use of branding such as Tesco value, Tesco standards, Tesco finest, Tesco organic and Tesco Whole foods. They are reviewing and refreshing our entire range of over 8,000 Tesco brand products starting with the prelaunch of Tesco Value as Everyday Value, with quality improvements to hundreds of products. Helping customers manage on tight budgets, Value was already growing at twice the rate of the market as a whole: these changes will further strengthen its position. They will also be comprehensively updating other Tesco ranges this year. This show they have started to build upon their brand on Tesco Value as Everyday Value.

Expansion:

Tesco has expanded by a combination of gaining new stores, retail services and by adapting to the needs of consumers. Tesco has net profits (before tax) of around £3 billion. Tesco's primary aim is 'to serve the customer'. Keeping existing customers happy is important, as they are more likely to return. This is more cost effective for the business than acquiring new ones. In the UK Tesco now has over 2,200 stores ranging from the large Extra hypermarket style stores to small Tesco Express high street outlets. Tesco's original product range of grocery and general merchandise has diversified to include banking, insurance services, electrical goods as well as telephone equipment and airtime. This move towards 'one stop shopping' means customers can meet all their purchasing needs from one place. Tesco has also expanded its customer base through its website which attracts one million regular users. As the company has grown, so has its workforce. From one man and a stall, Tesco now has approximately 280,000 employees in the UK and over 460,000 worldwide. To serve its widening markets it needs flexible and well-trained staff that can recognise the needs of the customer.

Sales:

Five year summary: The sales figures show that how Tesco have performed which is really good in terms of the hardship that they have faced during the recession.

Details of their financial performance over the last five years.

Tesco increased sales across hundreds of categories – in some cases, achieving as much as 70% growth. And with fewer designs and agencies to manage, the company saved £3 million in costs. The UK grocery retail market remains the largest source of Tesco’s sales, comprising 46% of total sales. Tesco’s total sales reached £52 billion in 2008.

Reference:

Brand recognition: Tesco’s reputation for low cost products, can gain fair-trade cotton clothing substantial market share in the UK. Tesco’s growth in the insurance sector provides financial strength to Tesco in UK. Another important factor is the increasing growth of online sales and fair-trade cotton clothing could be included in these sales. The Brand recognition of Tesco in UK is an important strength and will help fair-trade cotton clothing. The Tesco brand recognition gives it a good start for fair-trade cotton clothing in Germany. The Germans are known to avoid uncertainness, ambiguity and unquantifiable risk. In case of Tesco they are buying from a well-recognized brand. The brand value of Tesco will work very well in Germany.

Financial performance:

Tesco’s financial performance has demonstrated strong growth over the last seven years, although growth was not as strong as expected last year due to extraordinary charges totalling £35 million, resulting from the 2005 tunnel collapse in Gerrards Cross. Tesco saw a profit in 2007 of £1,881,000,000, which is significant, particularly for a low-margin vertical industry such as the grocery market (Tesco, 2008). Earnings per share (EPS) for the company were 23.84p in 2007, compared to 20.07p in 2006, demonstrating strong growth within the market. In this year, they delivered sales growth of 7.4%. Profit growth with a strong international performance largely offset by a reduction in UK profits. Trading profit grew by 1.3%, and profit before tax grew by 5.3%. Return on capital employed improved from 12.9% last year to 13.3%, and they continued our long record of dividend growth for shareholders, with the full year dividend up 2.1% to 14.76p.

Reference:

Where are Tesco placed in the Top 100 brands list?

According to a website Tesco is placed number 31 as the UK’s top 100 brands however Apple is the number 1 brand in the world.

What is Tesco’s reputation with customers in terms of reliability and confidence in the brand? Tesco’s reputation in terms of reliability and confidence in the brand is high as customers rely heavily on the Tesco brands as they believe the brand is right for example Tesco value and Tesco finest as everything Tesco include about their brands has to be right for their customers to believe them. The reliability of the brand has to be true and no false information should be provided.