The 4 reasons why Tesco is successful

by Ben Alford

These are the 4 main reasons I think Tesco as business are successful and are managing through these tough economic times. First of all I think the club card is a major contribution to the success of the business.

1st Club card

Tesco has one of the most advanced secondary research systems in consumer understanding with its Clubcard. It allows Tesco to see what sort of products each individual customer shopping profile, if they keep missing off essentials it is likely the customer is going elsewhere to buy that product, so Tesco can aim a promotion to that specific customer to make them buy that essential item.  The Clubcard has helped Tesco’s marketing by allowing these tailored marketing campaigns to individual consumers and target groups. It has also helped to build loyalty with is a points system where you get 1 point for every £1 you spend. These points can be exchanged for vouchers that can be spent in store or ion Tesco petrol stations. In order to keep the Clubcard from fading out Tesco have made a free Wi-Fi service available in more than 200 Tesco Extra stores around the country. The service, powered by O2 Wi-Fi hotspots, allows Tesco Clubcard holders to log on using their Clubcard number for unlimited service. This will increase the number of people who want one and therefore provide Tesco with more information. The Clubcard currently has active membership of over 15 million customers making it the most used loyally card in the UK with over 20 % if the population owning one. Tesco value consumer information enough to but a company that specialises in market research. At the start of the year Tesco bought the final 10% of the shares in a customer insight company called dunnhumby. This works in conjunction with the information obtained from the Clubcard to allow Tesco to really understand their customers. This will help them to achieve several of their aims and objectives such as “To grow the UK core” and also “To grow retail services in all our markets”. This will also allow Tesco to achieve its profit and market share objectives because of effective marketing thanks to the Club card

http://mediatel.co.uk/newsline/2012/02/29/fmcg-media-tesco-is-rolling-out-free-customer-wi-fi/

http://reinventingmarketing.marketingmagazine.co.uk/2010/04/16/why-tesco-clubcard-is-a-dead-end/

 

2nd Website

Tesco’s website is considered a separate part of Tesco’s business. It allows customers to by their grocery and Tesco Direct items online using tesco.com. The items will be delivered to the customer’s household. This expands Tesco’s market to people cannot reach one of their stores, such as people who do not have a car and the nearest Tesco is out of walking distance or a competition store is nearby as part of the place element of the marketing mix. Tesco.com also provides a good service for the elderly who may not find it easy doing a weekly shop, by Tesco delivering it maybe the easier option. Tesco.com also provides a location to advertise current promotional campaigns such as the big price drop. Almost everyone has an internet connection so this is an import way for Tesco to sell their goods. The website has enabled Tesco to launch an iphone grocery app, which has been very popular accounting for over 12% of customer traffic to the tesco.com site. The site is important as it provides a means of selling goods which contributes to the success of the business. This shows how Tesco are working towards their aim of “to be an outstanding international retailer in stores and online”. Furthermore allowing more access to more people, tesco.com will allow Tesco to increase its market share meeting its objectives.

3rd Stores (place)

New space has continued to drive sales growth for Tesco. Tesco has opened over 200 new stores in 2010/11 and have a strong opening programme for the coming year. This is one of the most important factors towards Tesco’s success as it allows them to cover a greater area, and in theory obtain a large market share. It simple the more access people have top Tesco the more products they are likely to sell. Furthermore it means Tesco has more outlets for its customers than any other supermarket in the UK. This shows how Tesco is “To grow the UK core” and achieve its aim. As long as stores continue to keep making money then the more stores Tesco open the more they will grow as a business. Furthermore Tesco has a wide variety different store from one stop to extra. This means Tesco stores are all over the country selling almost everything in store in extra stores. This allows them to dominate the market through convenience. Tesco competition don’t really have such a wide variety of shops, this allows Tesco to have access to two different markets with their one stop shops and Tesco express, they have the big shoppers in their supermarkets and the market of convenience stores. This is a way to maybe get someone who shops in a competitors shop such as ASDA to switch to Tesco because they like the little Tesco they use for convenience. The decision for Tesco to buy the one stop stores was important factor in gaining more market share by targeting a different part of the market.  Also the stores are the places where the majority of Tesco’s takings and profits are made and the stores are the basis to the whole business. One way in which Tesco could improve on the shops is maybe to make the whole experience of shopping in Tesco more pleasant as most shops don’t have a love for Tesco but go out of necessity.

4th IT

IT in supermarkets is behind the senses it helps automate stock control allowing less waste and therefore more profit. It also means the stores are well stocked so the customer can always find the product they want. This is hugely important in the success of the business as without it IT Tesco could not operate as efficiently as it can now. The computer systems reduce waste due to over ordering. The system operates by what is sold in the store, the computer knows when something has been sold and how much is left on the shelves therefore it works out how much should come with the next delivery. The efficiency of the automated stock control system is key to the success of Tesco as a business. This helps Tesco achieve its objectives on profit for each financial year.

 

And finally the Product

Tesco’s products of own brand goods both Finest and Value now sell more than £1bn each year in the UK and have over 450 F&F shops within stores. Again in the struggle to provide cost effective goods to the customer own brands are becoming very important, as we can see Tesco’s is worth £1bn. Without these products Tesco would lose customers so again it is crucial for Tesco to succeed. This shows how Tesco are achieving their aim of “To be a creator of highly valued brands”. Tesco as several different strands of own brand goods that vary in price, this allows them to appeal to a large target market from people with a low income to people with a higher income. The sales of Tesco’s own brand goods is proof that the product is key to Tesco’s success as its worth £1 billion. Furthermore Tesco’s F&F clothes shops have been expanding. And in Europe Tesco is opening up F&F stores outside their supermarkets. Furthermore Tesco has lots of services that all help towards the success of the business this include Tesco mobile and banking, although not the main part of Tesco’s business however still is important as branching into new markets is key to avoid stagnation of the product life style when a business goes from growth to stagnation. Tesco want to keep building and diversifying into new markets to stay in the growth stage.

 

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