Customer Experience in Tesco: Value Proposition, Segmentation, and Digital Disruption

This report discusses the value proposition and customer segmentation of Tesco, and how it manifests in customer experience. It also explores the six pillars of customer experience model and how Tesco applies them. Additionally, it examines the implications of digital disruption on delivering customer experience and provides recommendations for Tesco to improve customer experience.

MG526 Customer
Experience

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Value proposition of Tesco..........................................................................................................1
Value proposition manifested in customer experience................................................................2
Customer segmentation of Tesco.................................................................................................3
Six pillars of customer experience model....................................................................................4
Applying six pillars of customer experience model....................................................................5
Implication of digital disruption on delivering customer experience..........................................6
Recommendation.........................................................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Good customer experience is essential for businesses to grow when customers are happy
they are more likely to become loyal customers for the business. Customers go through several
steps when they make a purchase. Companies try to improve customers experience on each step
because a good customer experience bring so many positives for the business (Pour and et.al.,
2021). The report will be based on Tesco which is one of the major British retailer. Tesco is a
multi national grocery and general merchandise retailer. Tesco follow a customer centric
approach and that's why the organisation always work make their efforts to provide best
experience to their customers. The report will also provide a recommendation on how Tesco can
improve the customer experience.
MAIN BODY
Value proposition of Tesco
Tesco is one of the largest super market chain in the world. Tesco was founded in 1919
and the company has created a relationship with their employees. Tesco is valuable because of
the recognition, trust and loyalty they stimulate in their consumers. The has company has always
made their maximum efforts to create and maintain their value in consumers mind. The company
understand its customers well it helps them to make effective and efficient strategies for the
market. The company reduced their monetary value which also helped Tesco to create a value
proposition. The company claimed that their prices are the lowest in the market and even after
the tough competition in market Tesco owns an value proposition of being the lowest prices
offerer in the market. Having a value proposition in the market is very important for the
companies as it help companies to grow by retaining customers (Huseynli, 2022).
Tesco is one of the organisation which is quick to adapt changes, the company has always
used latest technology and innovation to maintain their position in the market. Tesco used
ClubCard which also proved to be one of the best strategy used by them. ClubCard helped Tesco
to gain market insight. Tesco has been successful to capture the opportunities in the market their
e commerce website is one oof the example how Tesco quickly adapt required changes in the
market. Factors by which the company create a value proposition are discussed below -
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 Mission – The mission of the company is to work together and make, what matters the
most. With this mission Tesco demonstrate that they always want to thrive in the market
by helping customers to get better quality of life. The company try harder for their
customers and have a customer centric approach which creates a positive value
proposition in market.
 Vision – Tesco's vision is to become a valued organisation by their customers and to
fulfil this vision the company serve the society in the best way possible. The company
knows their corporate social responsibilities and by integrating CSR activities in their
daily operations company retain the trust of their customers.
 Strategy – Tesco have a very experienced and skilful which helped company to gain a
sustainable growth. Basic strategy of company have been to reduce the cost of products
while maintaining the standard quality. Tesco enjoy economies of scale which also
helped them to offer a very competitive price in the market. Tesco have economies of
scale advantage which helps them to maintain value proposition of providing products at
a low prices.
Value proposition manifested in customer experience
Value proposition is the statement that state the additional value of the product and
services to customers. Value proposition of Tesco plays a significant role in growth of the
organisation. If companies do not have a positive value proposition them it may lead
organisation towards poor customer experience (Dakhli and et.al., 2019). A strong and positive
customer proposition create additional value for the product and service which help company to
retain and engage more customers. It also help companies in marketing. Value proposition also
work as a differentiator for the products, customers prefer a product where they get some
additional benefits and that's how companies like Tesco gain an additional advantage in the
market.
Marketing Funnel
The marketing funnel help to understand the process in which companies turn their leads
into loyal customers. By understanding the marketing funnel of Tesco we can understand how
they interact with their customers and create a value proposition for themselves. The process in
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which companies convert new individuals into loyal customers also determines the consumer
experience. The stages of Marketing funnel are mentioned below -
 Awareness – Tesco use various channels for marketing to create awareness about their
products and services. The process of creating a value proposition starts from this step.
The company use various advertising methods and they design their ads to convey and
create a value proposition (To, Chau and Kan, 2020). When a customer see a ads stating
that Tesco is offering a particular product with the lowest price in the market it creates
awareness and a value proposition both.
 Interest – After watching the ad some individuals show interest in the product or service
offered by the company. Tesco make their efforts to engage with these customers by
sending offers through e-mails and newsletters. Tesco create personalised offer for their
customers which also increase customer experience.
 Intent – This step is when people show intent for buying the product. Companies can
understand this by surveys and products demonstrations. This stage of marketing funnel
is best for companies to create a additional value for their product. Once a customer show
intent then it provide clarity to the company that which product's value can help them to
retain that customer. This stage also help company to gather market insight by which
Tesco increase their consumers experience.
 Evaluation – In this stage consumers make their final decision to buy or not to buy the
product. Sales department of the company cater customers in a very effective manner,
Tesco have a very trained and skilled staff which help customer on every step of their
shopping. If consumers experience in this stage is positive then it is ore likely that they
make a purchase and visit again for further needs (Meyer, 2019).
 Purchase – This is the last stage, after making a purchase consumers may need a after
sales service and support for some products. The company make sure that they provide
these services because it create better customer experience.
Customer segmentation of Tesco
Tesco offer a variety of products and services and the value and need to these products
can not be same for everyone. That's why businesses engage in market segmentation and
consumers targeting practices. The market is not homogenous as needs and wants of consumers
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are not fixed. Customer segmentation can be divided into various bases like demography,
psychography and geography. Tesco can do segmentation, targeting and positioning for their
brand in general and for a particular products or service. Demographics segmentation of
customers in Tesco is mentioned below -
 Age – Tesco sell products for every age group so every age category can be considered as
their customers.
 Income – Tesco try to provide lowest possible price to its customers, the strategies do not
primarily focus on rich peoples who seek for rich and very high quality products. Hence,
they target customers with low or middle income category.
 Occupation – People with every occupation can purchase Tesco's products. Students,
employees and professionals is Tesco's customers segment.
 Family Size – Everyone need daily use products not matter they are living with family or
not. Tesco potential customers can be individuals nuclear families and extended families.
The value proposition to Tesco has set a customer segment for them which is cost
conscious individuals. Tesco is working in the industry from so many years and their value
proposition is strong that people in UK now have created a perception about Tesco that it is a
supermarket that sell low cost products (Kahraman, Onar and Oztaysi, 2019). To enhance the
experience of its broad customer base the company keep improving their operations and process.
Six pillars of customer experience model
Integrating – Companies should act with integrity because it help companies to demonstrate
trustworthiness.
Personalisation – Individualisation can help companies to create a emotional connection with
each customers. This can enhance customer experience if company can understand each
customer's specific need.
Expectation – Meeting customers expectations is a must for all businesses because it sets the
foundation for strong customer experience.
Resolution – Every business should focus on solving customers problems with urgency. If
companies can turn customer's negative experience in to a positive one then they can retain the
customer.
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Time and Empathy – Creating a easy and smooth shopping process is required for creating
positive customer experience.
Empathy – Understanding customers situation can help companies to create deep rapport. By
this businesses can demonstrate that they care about well being of their customers (Vidili, 2021).
Applying six pillars of customer experience model
Integrity – Customers should perceive a company as a safe and trusted entity. Tesco perform
various activities to gain customers trust. The company have a different price integrity
department which make sure that they are charging the right amount from their customers.
Personalisation – Customers wants to feel that they matter to the organisation no one want to
feel like another face in the crowd. By their Club Cards and online marketing campaigns Tesco
collect their customers information that they need. By using this information and insight Tesco
create personalised ads and offers for their customers.
Expectations – Every customer have some expectation when they make a purchase from the
store. Tesco understand and fulfil these expectations which give excellent results to the
company. Customers expect low price and standards quality from Tesco and to meet these
expectation Tesco use their economies of scale advantage.
Resolution – Tesco have a customer feedback process by which customers can raise their
problems. The company make their efforts to resolve these problems. When consumers problems
are resolved effectively they may feel a good for the organisation even after a negative
experience at first (Dennis, 2020).
Time and effort – Tesco value their customers time and and try to satisfy their needs as soon as
possible. Tesco introducing self service kiosk is an example of Tesco's effort for enhancing their
customer's experience.
Empathy - This can be described as a process of understanding customers and creating a strong
relationship with customers.
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Implication of digital disruption on delivering customer experience.
When a industry face digital disruption than it mean that customer needs in the industry
are shifting. It can impact on delivering customer experience and there are many factors by
which impact customer experience.
 Awareness – Competition in UK retail market is very tough and Tesco's target customers
are also in target of many other retailers. Every one in the industry have similar digital
resources and technology and they use these resources to create awareness for their
brand. So many companies run digital marketing campaigns by forming strategies to help
their respective organisations. With the rising horizon of digital marketing so many
companies use digital marketing strategies to generate more leads and sales. This create a
lot of pressure on other organisations like Tesco to maintain the awareness of their brand.
So many similar and personalised ads can put customers in confusion. Companies use
repetitive ads to maintain their brand awareness these repetitive ads creates a negative
impact on customer experience (Micu and et.al., 2019).
 Findability – Tesco's competitors like Sainsbury's, Morrison's and ASDA also invest a
big amount on digital platforms which can impact Tesco's findability. When customers
can find the information easily on the website of Tesco it can create a good customer
experience but due to competitor's digital strategies customers can divert to their websites
which can impact on Tesco's performance.
 Reputation – Companies content on their advertisement and websites make their image
in the market and this help companies to make a value proposition for them. Due to the
digitalisation information spread so fast and even a small mistake done by the company
can harm their reputation. Tesco operates in different nations and if it fails to follow the
rules and guidelines of a particular country then it can crates a damage for their
organisations in the market. Even some competitors can use Tesco's damaged reputation
as an advantage to drive more customers in their businesses.
 Purchase – Digital disruption can influence customers purchase decisions, every
company collect their customer's data and information and creates a personalised
experience for them. Many companies are trying to make personalised experience by
collecting customers data which can lead customers to think that their data is not secure.
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 Experience – Due to the rise of digital marketing the marketing strategies of Tesco are
exposed to its competitors who can use these strategies to support their business (Batat,
2022). Due to online shopping apps and platforms customers do not visit physical stores
and because of that businesses face problems in creating relations with customers.
Recommendation
Recommendation to reduce the implication of digital disruption to the delivery of customer
experience.
 Tesco should hire skilled and experienced individuals who can use latest technology and
and create brand awareness for the company. Tesco should create maximum awareness
for their companies with optimum utilisation of resources they should also make their ads
less repetitive and more impactful.
 Tesco should maintain their brand image by using various digital platforms which can
help them to gain a competitive advantage in the market. They also need to promote their
premium products as customers have a perception that Tesco only offer low cost
products.
 The company should provide content which can help its customers to gather the
information they are looking for. The content is also important because it can attract
target customers.
 By investing in right tool the company can create a better web presence. By investing in
right tool company should look for a solution that is secure and scalable as it can support
the growth. Relying on old legacy systems cab restrict Tesco to gain real customer
insights.
CONCLUSION
From above file it is concluded that positive consumer experience is important for businesses to
grow in the market. In this file we discussed value proposition of Tesco and how it manifest in
delivering the customer experience. We have also discussed marketing funnel to understand the
customer loyalty and how Tesco create a positive customer experience. This file also provide a
understanding about Tesco's customer base based on demographics. Further after understanding
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how digital disruption is effecting customer experience, file provide a recommendation for Tesco
to improve their customer experience.
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REFERENCES
Books and Journals:
Batat, W., 2022. A holistic disruption strategy to create unique customer experiences in the
phygital era. In Strategies for the Digital Customer Experience (pp. 230-242). Edward
Elgar Publishing.
Dakhli and et.al., 2019. Tesco in China: How Could Things Go So Wrong?. In SAGE Business
Cases. NeilsonJournals Publishing.
Dennis, S., 2020. Remarkable Retail: How to Win & Keep Customers in the Age of Digital
Disruption. LifeTree Media.
Huseynli, B., 2022. Digital Transformation for Improving Customer Experience. In Handbook of
Research on Interdisciplinary Reflections of Contemporary Experiential Marketing
Practices (pp. 78-100). IGI Global.
Kahraman, C., Onar, S.C. and Oztaysi, B., 2019, July. Customer segmentation method
determination using neutrosophic sets. In International conference on intelligent and
fuzzy systems (pp. 517-526). Springer, Cham.
Meyer, D., 2019. The marketing funnel versus the flywheel: Generating consistent leads through
a new model of engagement. Journal of Digital & Social Media Marketing, 7(2),
pp.106-114.
Micu and et.al., 2019. Online customer experience in e-retailing: implications for web
entrepreneurship. International Entrepreneurship and Management Journal, 15(2),
pp.651-675.
Pour and et.al., 2021. Gamification and customer experience: the mediating role of brand
engagement in online grocery retailing. Nankai Business Review International.
To, C.K., Chau, K.P. and Kan, C.W., 2020. The logic of innovative value proposition: A schema
for characterizing and predicting business model evolution. Journal of Business
Research, 112, pp.502-520.
Vidili, I., 2021. Customer experience: the new competitive advantage for companies that want
their customer at the center of their business. In Handbook of Research on User
Experience in Web 2.0 Technologies and its Impact on Universities and Businesses (pp.
183-209). IGI Global.
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