Marketing Mix and its Effectiveness in Tesco: A Case Study

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MARKETING MIX IN TESCO AND ITS
USEFULNESS
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TABLE OF CONTENTS:
Contents
INTRODUCTION:..........................................................................................................................................3
BODY:..........................................................................................................................................................3
MARKETING MIX OF TESCO AND ITS IMPORTANCE TO THE COMPANY:.................................................3
PRODUCT:............................................................................................................................................3
PRICE:..................................................................................................................................................3
PLACE:..................................................................................................................................................4
PROMOTION:.......................................................................................................................................5
PROCESSES:.........................................................................................................................................5
PEOPLE:...............................................................................................................................................6
PHYSICAL EVIDENCE:...........................................................................................................................6
CONCLUSION:..............................................................................................................................................6
REFERENCES:...............................................................................................................................................7
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INTRODUCTION:
The marketing mix is described as one of the widely discussed marketing philosophies. There
are several numbers of elements namely product, price, place, promotion, process, people, and
physical evidence which constitutes together to form marketing mix. This is basically a set of
actions that any business organization develops and implements in order to make product and
service promotion to the target audience. The main motive of this essay is to provide a brief
analysis of the marketing mix (7Ps) of Tesco and its importance to the organization. Tesco is the
giant supermarket of the UK and has developed itself as the leading supermarket chain in twelve
different nations across Europe and Asia.
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BODY:
MARKETING MIX OF TESCO AND ITS IMPORTANCE TO THE COMPANY:
PRODUCT:
Tesco provides its consumers with a huge variety of products catering from clothing, food,
electronic goods, financial services, etc. The huge product category of the company, matches
with all the needs of the consumers. Tesco has also diversified into online marketing sectors.
Apart from its huge product range that the stores provide, the organization is also offering
grocery delivery service as well as free music downloads. In addition to that, within each of the
categories, the organization is also providing a wide range of choices across different brands,
regional produce, and other variants that satisfies the consumer’s satisfaction level when it
comes to buying different items. With making the product diversification it became easy for the
organization to make new market entry and this extension of the company’s product portfolio
has supported Tesco to combat with the financial downturns (Ibrahim et al. 2017). For example,
the Tesco Bank with around 6.5 million consumers is a lateral diversification made by Tesco that
provided new possibilities for the organization beyond groceries. Moreover, when a consumer is
making an access of the financial products the consumers profiles gets recorded which identifies
their shopping behavior.
PRICE:
In this regards, Tesco makes an attempt to maintain the strategy of lower pricing as much as
possible without making any compromises in the quality of the products or running in loss. The
company makes use of several measures with regards to economies of scale in order to provide
its customers with all cost advantages so that consumers are happy. This cost leadership strategy
of Tesco had made possible for the organization to surpass all expectations and consumer’s first
preference thus becoming the leading supermarket brand in the UK leaving behind some reputed
brands like Sainsbury and Aldi and Lidl. In this regards, it can be said that Tesco follows the
strategy of “every little count”. Tesco has large retail outlets where prices are lowered further
and in the case of smaller outlets, the cost of the product is slightly higher because of the higher
overhead costs. Moreover, Tesco has also introduced the system of “club card” which makes it
possible for the consumers to collect points on every single purchase that can be changed into
monetary value in future. This is actually a strategy of good price-promotional scheme which
provides extra discounts to loyal consumers (Nguyen et al. 2017). This strategy further reduces
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the product price which, in turn, makes an increase in sales without affecting the profit margin.
With this facility of “club card”, Tesco is capable of managing valuable consumer data
effectively and making a measurement of the consumer loyalty factor with regards to value,
frequency, and recency. This concept of “create value for the customer” had allowed the
organization to segregate the customers into fifteen different segments attached to another six
higher level segments that will actually allow the organization to deliver personalized messages
to the groups inside each segment.
PLACE:
Tesco has its headquarters in Chestnut, Hertfordshire, UK. The retail outlets are spread far across
and also in other nations in Europe and Asia. Tesco involves two major channels of distribution
with regards to its products and services that involve both online and offline. The offline part
constitutes of retrial outlets which are again segregated into six different categories namely
Tesco Express, Tesco Superstore, Tesco Homeplus, Tesco Compact, Tesco Metro, and Tesco
Extra. Since all the consumers are at all not comfortable with big stores and also it is not possible
to set up many such big stores, Tesco has introduced smaller outlets in order to provide easy
accessibility. The online forum constitutes of its official website called www.tesco.com and the
online business is known as Tesco Direct. Moreover, the competitive advantage gained by the
organization has made it possible to settle in certain best locations with various expansions in
store formats as mentioned above. This plan of different store formats included in the marketing
mix has helped Tesco to develop a better organization and making an improvement of the
methodologies for new development and refreshing the existing outlets. In addition to that, the
company website also serves as the platform for certain new ventures and innovative service
experiences like “click and collect” which is making online shopping with the facility of picking
the things from store. The website also allows the consumers to remain informed regarding
various loyalty schemes (Ramanathan, Subramanian, and Parrott 2017).
PROMOTION:
The biggest advantage of Tesco is its low price strategy which actually separates it from the
other supermarket chain and this actually enhances the brand image of the organization. The
main motive of Tesco has always been improving its brand value by making cost reduction and
remaining true in its words and then again making profit maximization. Tesco makes use of TV
advertisements, promotional discounts, providing sponsorships to charitable programs, use of
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point sale strategies, etc. All the advertisements of Tesco focus on a single thing that its lower
price concept. Moreover, it also provides attention to the different attractive offers to consumers
throughout the year. In addition to that, Tesco also makes use of other promotional offers like
“Buy one Get one Free” for certain product categories which strives the consumers to purchase
more as they have a feeling that they had saved a lot (Leposky, Arslan and Kontkanen 2017). In
addition to that, Tesco also makes use of the “Club card” facility to provide additional discounts
to the consumers which are already discussed above. This actually helps the organization to have
knowledge regarding the demand patterns of the customers which, in turn, helps the organization
to have a better idea of its market. This also helps Tesco in making market segmentation and
formulation of appropriate strategies. This easy accessibility has helped the organization to
acquire higher loyal consumers. The online service provided is widely appreciated (Hudák,
Madleňák, and Brezániová 2017).
PROCESSES:
This involves making the customers happy by providing fast billing facility and easy assessment
of the items in the stores as well as in the buying online. This is achieved by providing skillful
manpower and providing attention to the consumer’s complaints. The stores have two categories
of payment methods involving till payments and self-service options.
PEOPLE:
The excellent sales team of the organization is actually responsible for its huge success. Tesco
develops certain events and programs like “Save As you Earn”, “Buy as you Earn” which helps
in gaining the loyalty of the employees. The Tesco employees are competent enough as well as
they are compensated well and are provided with training and development activity for
contributing towards Tesco’s success.
PHYSICAL EVIDENCE:
The retail outlets of Tesco are not elaborates overly compared to its competitor Sainsbury and
other grocery outlets. This is because the organization does not feel important to make huge
spending on furbishing the outlets. All the retail outlets of Tesco both clean and attractive and
can be navigated easily with all sorts of products categorized well which helps the consumers in
finding their required products easily. The offers are placed in such a manner that this attracts the
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consumers easily to buy more that the actual requirement. This helps in earning a huge profit
margin. The company’s website is also user-friendly and simple to operate (Lin and He 2017).
CONCLUSION:
Thus to conclude it can be said that Marketing Mix that involves seven different elements are
quite useful for any particular business organization. The essay has illustrated that fact taking
Tesco as an example.
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REFERENCES:
Hudák, M, Madleňák, R and Brezániová, V, 2017, September, “THE IMPACT OF
ADVERTISEMENT ON CONSUMER’S PERCEPTION”, In CBU International Conference
Proceedings (Vol. 5, pp. 187-191).
Ibrahim, AA, Alkhawlani, MAA and Al-shaghdari, FM, 2017, “Customers Desires on Marketing
Mix and It’s Impacts on Tesco (Malaysia),” International Sciences of Management Journal,
vol1, no. 1.
Leposky, T, Arslan, A and Kontkanen, M, 2017, “Determinants of reverse marketing knowledge
transfer potential from emerging market subsidiaries to multinational enterprises’
headquarters,” Journal of Strategic Marketing, vol 25, no. 7, pp.567-580.
Lin, Z and He, X, 2017, “The images of foreign versus domestic retailer brands in China: A
model of corporate brand image and store image,” In Advances in Chinese Brand
Management (pp. 289-315), Palgrave Macmillan, London.
Nguyen, LTT, Jamal, A, O’Brien, J and Nawaz, IY, 2017, “The Effect of Click & Collect
Service in the Context of Retail Atmospherics on Consumer Buying Behaviour in terms of
Repurchase Intention: An Empirical Study of Tesco UK”, International Proceedings of
Economics and Development Research, vol. 87, pp.43-51.
Ramanathan, U, Subramanian, N and Parrott, G, 2017, “Role of social media in retail network
operations and marketing to enhance customer satisfaction,” International Journal of Operations
& Production Management, vol 37, no. 1, pp.105-123.
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