Even though Tesco has the highest marketing share Tesco is still trying to increase their percentage to add even more increase their barrier. Tesco try to succeed in keeping their marketing share higher then their rival businesses.
Expanding an already existing store is one way to increase the percentage. If the store is bigger then there will be more stock and produce to sell therefore the store can increase sales and their Marketing share. This is what has been done to the Tesco’s store in North Bracknell (Warfield).
Task 3
There are many problems that may occur within Tesco. Both internally and externally.
MARKET SHARE
- Constraints, Tesco can only expand to a certain point before the it is forced by law to be broken down into little sections but the company can expand internally which can therefore reach a higher level.
- Increase globally and locally by attracting more people could mean increase in profits.
- Internal constraints. Sometimes the space provided internally might not be able to support internal expansion.
- Staff employed have correct / trained staff means that Tesco offer better services,
- Local communities might not like the idea of expansion due to more traffic etc this could stop expansion.
Local government might not want expansion meaning Tesco can’t really do anything but grow internally.
FINANCE
- A decrease in sales from lack of customers could mean that expansion could be slowed down if the sales were to increase from more customers being attracted by more advertisement expansion could be speed up.
- If shares increase then it will show that is more interest in the company, if they decrease it will show people are losing interest in Tesco PLC.
- Decrease in value of company could mean less investors.
- It could become harder to reach aims and objectives
- External – changes in law i.e. tax increases / interest rates etc could mean that Tesco profits will fall.
- Internal – some departments might need more money to improve or expand.
PRODUCTION CHANGES
Own branded products and international branded products: some companies may not allow Tesco to sell there own brand and Tesco brand (e.g. Kellogg)
Now they have diversified in to Tesco’s Value / Tesco’s Finest And diversification in to household products (TV/ dvd players / clothes) this means that that more market is taken up by Tesco.
Internal – some products there won’t be space for and some products can’t come in contact with each other.
External – Tesco main income is from food they may lose focus on this if they expand which could lower they’re food standards and then they will lose market share.
Licensing stops Tesco from selling prescription drugs etc.
There services will increase and provide better quality for the customer.
Motivation And Changes in Work Practices.
Maslows hierarchy (internal and external)
Higher Pay means more motivation.
Working Directive – how many legal working hours a person can work
Internally – Staff, patterns / training / assessment
QUALITY CONTROL
QC on food products – (store, layout, staff training to aid customers, customer services, desk enables you to return goods, food products- quality) means that people will keep coming back if this is maintained knowing they will always get a good deal from Tesco.
EPOS – ordering systems (order of stock) is used with the checkouts so that Tesco don’t ever fall short of a certain product.
If the supplier’s products aren’t satisfactory this could mean a loss in market share for Tesco.
If clean stores aren’t maintained people aren’t going to want to revisit.
Safety and security should always be kept high up in priorities.
Task 4
Staffing the Expansion
Whenever Tesco opens a new store or expands its current ones, like the expansion in North Bracknell, they face problems with the recruitment process.
The problems that Tesco face when recruiting are:
- The area may currently have a low unemployment level – meaning less people from the local community would join.
- The area may have a skill shortage – this would cause Tesco to spend money on training costs.
- Many people may have a certain attitude towards working at Tesco. They may believe it too not be “cool” especially young people looking for Saturday jobs.
- They may not want low level workers, e.g. shelf stacker, but instead people with managerial skills – this would link in with the skill shortage in that there may be perfectly enough people to stack shelves but few people with the skills to manage people and parts of that store.
- The age of the local community – since Tesco wish to set up different stores to suit different people they may face problems if they set up a small Tesco metro in a relatively old community, obviously they would most likely wish not to take on that burden.
Due to the expansion of this local Tesco store there would be a staff shortage. This would mean Tesco would use internal and external ways to recruit workers. One way to recruit workers would be to advertise for staff. It would be most likely that there would be a space in the local store for recruitment at a low level. For example the new space in the store would be selling space as part of a JIT system, which would mean an increase of shelf stackers. This sort of job does not require any major skills so this vacancy would most likely go to a local teenager looking for a Saturday job. How ever Tesco might also have to use advertisement within the local paper for a more senior position.
How ever Tesco could decide to use internal employment. This would mean promoting staff to a higher level within the business. The advantage of doing this would be that you know who your worker is and you know all about them and whether they are reliable or not. Although it still means you need to recruit the same amount of people to fill in the spaces.
For the new recruits Tesco would need to draw up a Job description. For the shelf stackers Tesco would be looking for young teenager kids who would work for small amounts. Although the problem with young teenagers is that they would only work at the weekend which would mean you would have to find older people who are willing to work during the week.
The interview methods would be most likely a face to face interview. The advantages of doing this would be that the employers can see who they are employing and see their reaction to certain questions, whereas if they did an interview via the phone it may be more convenient although it may mean you can not see how they are reacting an they may also have a piece of paper with a script of what to say.
Due to the expansion the current staff will have to deal with doing overtime for some time until the employers can employ some new staff. This will cause some unease for the workers and they may become de-motivated and not work to their full potential. If Tesco do decide to use internal employment it might also mean that some workers will need to go on new training courses to understand the way they need to work. This would cause disruption and mean more people may have to do overtime and again create a de-motivated environment. Although this may give young people the opportunity to do overtime and get more money so it depends on the workers who you are going to have to cover until new staff. If the after the expansion of the store the local Tesco does not see an increase in profit and notice those goods now on sale are not selling they may have to decrease the Tesco size and maybe lay off workers.
Task 5
First I decided to collect some primary research. I have constructed a questionnaire and collected some of the data, which would be helpful towards making the decision on whether to build the expansion and on what products the customers would want to buy there.
This is my Questionnaire
As well as the questionnaire I am using desk research to try and understand how the major supermarkets shape out.
As you can see Tesco are way ahead of the rest in the market share. It is actually over the amount allowed by the competition commission agency although why nothing is being done is unknown. This data also shows that consumers do have a considerable preference to Tesco. The data shows that it is not only price that does affect why people shop at Tesco. I can say that confidently due to the fact that if people wanted rock bottom prices they would go to Asda, where prices are in fact cheaper – due to the fact they are owned by Wal-Mart, an international company willing to sell at low prices with low profit. The reasons for this could be due to the ideology that goes with the name, in that it seems ‘cheap’.
Some other interesting points gained from this research is that you can see how the number of stores that company have does not necessarily change the total profit or place in the food market the company is. For example Safeway has around double the amount of stores to Asda yet they are lower in market share and other aspects. Tesco on the other hand has the most stores in the UK and has the largest market share and profit. This tells me that Tesco has cracked the ideas on how to sell their products at a good price for them and the consumer while still making the store appeal to the consumer in other ways.
You will also notice on the research that Tesco sell a huge variety of products in their different stores. It shows how Tesco is trying to get people to do all their shopping under 1 roof instead of going to local small shops to provide them with items such as papers and flowers. I am sure supermarkets such as Asda sell more items than it says on the sheet although I have had problems gaining the information so I could not do it. The fact that Tesco has so many other products allows the customer to do so much shopping at one time while at the same time taking advantage of several services the company offers, such as loyalty schemes and financial advice.
Task 6
Marketing
The expansion in the local Tesco store is planning to be selling a new product. The management have decided to diversify, such as other stores have done, into the electronics, to be more specific the television market. Tesco can not just decide to do this straight away, out of the blue. It takes a long time for Tesco to make the decision to sell a new range of products. They start by using market research.
In market research Tesco will be hoping to find out facts about the local area, such as the average wage/salary, the things they want to see in a new store (mostly the things that were asked in the questionnaire when doing Field research) By doing this they would find out what the local area wants and why. It will also them reasons why they shop at Tesco, this could tell the company their strengths and the weaknesses that they face. The market research that the company gain also allows them to segment the market.
The market research told Tesco that the local area would like to see new products such as TV’s in the stores. Once noticing this Tesco looks at the average wage/ salary and notice it falls in the middle of the spectrum. This tells Tesco that if they did decide to sell TV’s they would sell the cheapest TV’s to quite expensive TV’s but not too much. By selling them too high they risk loosing high amounts of profit. Tesco also notice that it is mainly men who want to see TV’s in the shops. This provides Tesco with an excellent opportunity of maximising profit in that while the women do the shopping they draw the men in so that they can look at TV’s instead of sitting outside. It means men will consider the option of purchasing a TV – hopefully from Tesco itself. To encourage the purchasing of TV’s at Tesco it self they will plan to use an effective marketing campaign so as that they can persuade buyers that purchasing at Tesco is much more easier and hopefully cheaper.
To promote and launch these new products Tesco will have to decide on how to advertise to the local community. There are a number of ways in which Tesco can tell the local community of this new expansion although it is essential that Tesco target the right people, it would be a waste of money to advertise at a time when adults are not around. Tesco could decide that they want to advertise on the local radio at around 6 or 7 when male workers get in from work so that Tesco catch them as they come in or in fact also advertise at an early morning time such as rush hour. Tesco could also use a sky writer to advertise the local stores new expansion for the local community, as well as this it would allow visitors to at least do their shopping there if only staying in the area for a short time. Tesco could also decide to use big banners on cars which drive around the local community, this catches the person’s eye as they wonder what it says on the banner and notice it is for Tesco. Another way in which Tesco could advertise is to use leaflets through peoples doors. The problem with this is that the person may throw it straight in the bin since it is junk mail. Tesco could also advertise by introducing a 2 day sale of their new TV’s by 20% so as to get many customers in and at the same time introduce them to the food section of the store. This would also make people choose Tesco over specialist suppliers of electronics.
Tesco need to decide how much money they are going to spend on marketing before they actually start. This is so that they have a clear budget and do not spend furiously on ways of advertisement that may not even work. They way in which Tesco would measure the success of the marketing campaign would be to ask people as they came into the new store how they heard about it. The person who is asking the questions would then record the results and then the data would be shown to the manager who would then interpret which method was the best and which one to use in the future. From this the management would decide on new objectives for the expansion. Such as they would decide on how much they want to have sold by a certain time and how much they are willing to reduce prices by before stopping.
Conclusion
Tesco needs to expand the store in north Bracknell, as it will attract more customers, they need to also offer more facilities as it will offer more customers, Tesco will also then be able to offer a wider range of goods which means they can attract a lot more customers,
