Principles and Practices of Marketing: A Case Study of Tesco

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PRINCIPLES AND PRACTICES OF
MARKETING
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Contents
Introduction................................................................................................................................3
TASK 1......................................................................................................................................4
Marketing of the organisation –.............................................................................................4
Promotional techniques use by TESCO.................................................................................5
TASK 2....................................................................................................................................11
Application or model by retailing companies......................................................................11
Conclusion................................................................................................................................13
References................................................................................................................................14
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Introduction
Marketing plays a vital role in the growth and success of business organizations as it assists
in attaining and retaining customers' for the long run. In order to ensure effective marketing,
managers intend to acquire various principles and practices of marketing which helps them to
attain and retain a wide range of target audiences. In the retailing sector, marketing principles
and practices are based upon providing quality products or services to customers' to satisfy
their needs or wants in the best possible manner (Armstrong, et. al., 2014). There is an
intense market competition in the retailing sector thus it is essential for companies like
TESCO to acquire new and innovative practices of marketing. As TESCO is the largest
retailing organisation which operates in the UK, it always emphasis on acquiring the best
promotional strategies to attain and retain customers. The report is going to define literature
of effective marketing solutions including different tactical plans or policies. Application of
the AIDA model applied by retailing companies will also discuss later.
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TASK 1
Marketing of the organisation –
TESCO is one of the largest retailing and grocery company across the world by having 2400
stores as well as employee range of 350000 employees. It has overviewed that grocery and
retail market in Britain is classified between few competitors, namely – ASDA, Sainsbury,
TESCO, Safeway etc. In this sense, the long term marketing strategy of TESCO is to an
emphasis on becoming an international retailer, further enhancing its market share in the UK.
As the firm starts its operation in 1914 as a small enterprise and expands its business in all
areas as per the time passes. Along with this, TESCO has a different market strategy for
different markets thus while developing its marketing strategy the company understands the
needs or demands of the market in which it wants to penetrate itself. In this sense, the
organisation emphasis on selecting the best location for its outlets and offer local clients the
right products. The objective behind this is to generate awareness as well as understand the
political condition of the nation and further laws or legislation (Gordon, 2012). TESCO is
focusing on penetrating in the international market through strategic alliances, joint ventures,
mergers or acquisitions of local retailers. It makes easier the entry of the company in foreign
markets, adapt the needs of local markets and use local partner’s experience in the
international market. For example – the use of club cards helps TESCO to gain a remarkable
knowledge of purchasing behavior of customers. It involves the where and when customers'
will shop, where they will spend money, rate of consumption and at last their commitment
towards the brand. By considering the present business environment which is full of intense
marketing competition, marketing manager of TESCO has decided to build up customers’
trust or faith towards the brand as they couldn’t easily switch the brand. In past years, the
organisation was blamed for the quality of products; it represents poor publicity of the brand
from the horsemeat scandal to large corporate fines. Therefore, in order to overcome the
situation, the organisation changed its marketing methods or practices by fixing up problems
faced by the customers daily. After conducting market research, management has realized
that people will no longer respond to mass marketing campaigns. It gets to know that
customers want to see real people and stores in marketing processes instead of weekly
bargains.
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By considering this perspective in mind, the chosen organisation TESCO has decided to
improvise its marketing campaigns named – “Tesco food love stores” in this the most
noticeable thing was “Alice’s peacemaking cupcakes”. Under this campaign, the banner
represents how TESCO's products can resolve family problems which bring the brand right
direct in people hearts. Users can watch this video on the given link -
https://www.youtube.com/watch?v=SAlJLthbeHg. Hence, this unconventional marketing
technique allows the organisation’s customers to reflect this on their own situations.
In order to obtain a high competitive edge, TESCO has strained several tactics in past years
with an aim to engage customers; the reason behind this customers' focus marketing supports
the company to generate higher profits and revenues. It has truly understood that TESCO is
enough capable to restore its market reputation, enhance market share and build up its brand
equity (Patil and Pradhan, 2014). It created marketing communication messages which speak
and influence directly to customers; it leads to improving sales in a certain time period.
Furthermore, the marketing strategy of TESCO also intends to make regular innovations and
satisfy customers' needs in the best possible manner. In this sense, the organisation uses
several techniques to produce new or innovative products; it also emphasis on identifying the
needs or wants of the target and potential customers. This marketing strategy of the company
assists it in to achieve long term goals and objectives in the required manner.
Promotional techniques use by TESCO
Since past decades, TESCO has become the first brand which uses promotional and
advertisement strategies in the UK market. It has acquired several promotional and
advertisement campaigns which boosts up its creativity and convince others to purchase its
products or services. As the main objective of online and offline campaigns is to inspire
shoppers by using integrated videos, images as well as also allows users to flick through
shareable content (Tournois and Aoun, 2012).
Promotional mix techniques
 Direct marketing – The organisation also uses direct marketing of products or
services, in this sense it acquires effective advertisement channels, i.e. print and media
ads systematically check on the ground of whether or not they are delivering a
marketing message to existing and potential customers. Furthermore, direct marketing
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channels also assist in attaining and retain target audiences for the long run towards
the brand.
 Media campaigns – Like its core competitors, Tesco also need huge capital
investment in media campaigning as it's market presence is humongous. In this
competitive era, media is the most powerful and decisive tool which strengthen the
promotional strategy of the company. Media likewise – TV commercials and
interactive websites assist to highlight the key features of the product of the
organisation; in this sense, TESCO is emphasizing on increasing its network
accessibility (Michaelsen and Sweet, 2012). Tesco has its own webpages, such as -
Tesco Apps, Tesco Diet, and Talking Tesco etc. Links to these webpages assist in
capturing the eye of target audiences,
 Sales promotions – As the retailing industry in the UK is facing cut-throat market
competition and thus it is essential for companies to have innovative or effective
promotional strategies in order to signify customers' needs as well as offer them a
pleasurable shopping experience. For example – club cards are sales promotional
techniques which enhance the shopping experience of customers'. In club cards,
rewarding points are gathered by shopping via an online website that can be accessed
through shopping from the website.
 Mobile apps – In past decades, TESCO has introduced its own mobile application
which enables customers to shop grocery and retailing products from anywhere
through downloading the application their mobile phones. Furthermore, online
shopping provides a great experience to customers as it allows them to access the
products easily. Hence, TESCO’s apps are a pioneering promotional technique which
assists to attain and retain a wide range of target audiences.
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When it comes to digital aspects, TESCO believes to use its official website where it provides
information about attractive discounts or offers to customers. When people visit its website
they also get to know about new offers and purchase the same at lower rates. There is a
separate section mention on its website named – daily promotion offers. In which, people can
best deals on grocery products. In addition to this, TESCO also uses social media channels,
i.e. Facebook, Twitter, Instagram, LinkedIn for promoting itself in global markets; from these
social media platforms the organisation provides direct access to people as they can gain
detailed information about specific product or service (Vos, 2015). Social media sites also
render people to give reviews or feedbacks on product quality; it helps the organisation to
recognize what people think towards the product or service and how they can improve it to
meet buyers' needs in a best possible manner.
Newspaper sayings – According to BBC news, TESCO’s sales are increasing ever than faster
in comparison with its competitors and in turn market share of the company is also
increasing. The supermarket’s sales raised by 5.6% in 2017; the reason behind is the constant
expansion in international markets. In addition to this, reporters also stated that the brand is
emphasizing on acquiring effective raw materials and new technologies; all the ingredients
are well-tested and evaluated before using in production. Among the big four supermarkets,
TESCO comes on the second number after ALDI the reason behind it cut its prices in last
year ahead of rivals for rising in sales; resulted in 2.5% rise in annual sales or revenue.
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Furthermore, in order to strengthen its business operations or activities, TESCO also uses
several approaches, such as – customers’ relationship management, Porter’s strategy,
segmentation, targeting and positioning all these activities to play an extensive role in
attaining and retaining customers by managing the healthy and positive relationship with
them (Goworek, et. al., 2012). Following are the strategies which are also used by TESCO to
promote its products or services, such as –
Porter’s five forces –
 The intensity of competitive rivalry – In retailing market of UK, the intensity of
competitive rivalry is very high; here it can be said that TESCO is facing intense
competition from direct competitors, i.e. ASDA, Sainsbury, Morrison’s etc.
Therefore, in order to gain a high competitive edge and ensure long term market
success, it is the retailing giant is focusing on acquiring social media promotional
campaigns to capture maximum share from the global market.
 Bargaining power of buyers – In the context of TESCO, bargaining power of buyers
is quite high so that products have separate set sail; it carry out more standards.
Although, the cost of change is very low so that customers’ can easily switch from
one brand to another. Having effective promotional mix techniques aid customers to
compare the prices and choose the best one (Dubuisson-Quellier, 2013).
 Bargaining power of suppliers – In case of TESCO, the power of suppliers is low;
providers incline towards the retailing sector is low as there is a fear of losing
commercial contracts with supermarkets.
 Threats of new entrants – The entry barriers are low in the retail industry but the
TESCO does not need to worry as it has already achieved huge market share and
brand value. Hence, presently the management only intends to acquire effective
marketing practices to let maximum people know about the brand.
 Threats of substitutes products or services – Small departmental or convenient stores
are opening in the UK at a fast pace; they might be enabled to attract customers.
Although, due to having extensive marketing strategies, this threat is low for TESCO.
Customers’ relationship management – This is the further approach of the promotional mix
as the term CRM entails with managing a healthy, positive, strong and friendly relationship
with target audiences. The CRM strategy enriches and improves the relationship of an
organisation with its target audiences by understanding and knowing them more, their needs
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and behavior towards purchasing habits. Under its CRM strategy, TESCO ensures that its
customers’ are receiving magazines which encompass material matches with their lifestyle.
The company had worked out a mechanism for determining the advertisements and
promotional coupons that would go in each of the over 150,000 variants of the magazine
(Delai and Takahashi, 2013). In addition to this, Club cards help Company to formulate these
strategies which offered customers’ personalized services in a cost-effective manner. Hence,
the successful implementation of CRM approach helps in reducing marketing efforts, this
outcome will be beneficial for the entire organisation and appreciated as well. In the context
of TESCO, media effectiveness towards club cards programs permits it to save money and
time on promotions and in turn, it increases sales. The tech support division of the
organization is liable to ask customers' queries or issues which they may face while buying
products online and offline. On the time solution helps in building up customers' trust or faith
towards the brand as well as also assist to understand what and how customers' think, feel and
act.
Therefore, it has been overviewed that TESCO has successfully implemented CRM strategy;
it the result will gaining maximum market share in the global environment. The buyers’
facilities, c social concerns and convenience which helps the organisation to store in raising
profits, stretch market customers’ base and even popularity over customers. A well-managed
customers’ relationship management aids to increase the brand image and revenues of
TESCO in a certain time period.
Segmentation, positioning and targeting – There are several macros and micro
environmental factors which affects marketing decisions of the company in a direct and
indirect manner. In order to overcome these factors, the organization has engaged itself in
marketing segmentation and targeting practices. Marketing segmentation is based upon the
product which is not homogenous towards needs and wants. On this basis, TESCO has
classified its markets into different segments, such as – geographic, psychographic,
demographic and behavioral basis (O'brien and Harris, 2012). Moreover, the organisation has
targeted geographical regions for selling its products or services; under this customers’ are
divided on the ground of age, gender, income, occupation and social status. These are the
people who never compromise with quality and value.
Apart from this, the positioning of products encompasses elements of the marketing mix that
deals in order to attract customers' segment in an imperative manner. In this sense, TESCO
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uses functional and price positioning in its promotional strategy; among which functional
positioning links with enhancing range and value of functionalities of products or services.
For example – the organisation sells its value-added products under the TESCO's finest range
of products as it is the main point of advertisement for the selected customer segment. The
basic range of the products of the company ensures its quality and increase functionality for
accomplishing additional cost.
Promotional technique from which TESCO stay away –
From all these promotional channels, generally TESCO does not prefer direct marketing
channels; customers' already visit its stores on a regular basis. To make people update about
new offerings or discounts, the organisation uses social media campaigns on social
networking sites, i.e. Facebook, Twitter etc. Here, customers' can easily get entire
information about the firm's new offerings.
This is an example of marketing promotional technique which represents that the organisation
provides an attractive offer to its customers which influence their interest and retain them for
the long run. This image represents that the TESCO values' its customers and for the same, it
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turns out to offer products at a lower rate in order to capture large market share in a certain
time period.
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TASK 2
Application or model by retailing companies
In order to ensure effective marketing approaches, TESCO acquires some applications or
models which strengthen marketing processes and helps the company to gain a high
competitive edge.
AIDA Model – This application is an acronym which stands for attention, interest, desire and
action; basically the model is used in marketing processes. AIDA model defines steps which
a consumer takes while purchasing products or services (Nguyen, 2013). There are focus
aspects of AIDA model, such as –
 Attract customers – It refers that the product should be able to attract consumers; it
can achieve via advertising materials. For example – most of the products of TESCO
are an eye-catcher.
 Maintain interest – In this first stage, the attention of customers is indignant so that
this interest needs to be aroused on a regular basis. For this purpose, organisations can
provide very detailed information to target audiences.
 Create desire – after arousing the interest of potential customers, it is essential for the
seller to persuade customers. In this sense, effective advertisements help in
developing individuals’ desires to buy.
 Take action – As soon as desire will be stimulated, it has to be transferred into an
action which is purchase.
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Attenti
on
Interest
Desire
Action