Marketing mix refers to the seven critical p(2)Document Transcript
Marketing AssessmentHung Son Do (Ryan)-DipG classMarketing mix refers to the seven critical P‟s of marketing: product, price, place,promotion, physical evidence, people and process, understanding of which helps thefirm to market their products and services in an effective way.Tesco is the Britain‟sbiggest and profitable supermarket chain over the last decade. Its market sharebased on consumer spend in supermarkets is in excess of 30%. A core reason fortheir success is an ever expanding range of products and services in their stores.There seems no limit what it can offer its customers. However, the “product”therefore is not most important part of the marketing mix because all the 7Ps aredependent each other. If the product is good but the price is so high, will customerwilling to pay for it? If the product is good and the price is attractive but the companydoes not promote it how will the customer know about it? If all three product, priceand promotion are attractive but place is wrong how will the company can sell it tothe customer? ... ?Tesco has wide range products offer and it is more and more increasing. Whencustomers go to Tesco‟s stores, they can have a choice of different products andeasy to get right information to help chose between them. Many of Tesco‟s storesstoke over 40,000 products line. We can look at few examples of the diversity ofchoice available through Tesco‟s food range such as: 400 “Healthy Living” products,150 “Free From” products, 40 special Healthy Kids snacks... Individual customerswill satisfy if they have wide range products to buy, they can choose their favouritebrands, regional produce, and international cuisine, organic or healthy options toname. Tesco is continually developing more online products and also focus on non-food products to meet the customers‟ needs. For instance, Tesco has recentlystarted offering music downloads as well as a grocery delivery service that includeswine and white goods.Tesco also identified that customer‟s demands are changingas lifestyle change. Therefore, it also focused on development its product to satisfycustomers‟ needs. That are the advantages to help Tesco can compete with othersupermarkets in Britain.Price plays an important role in customer‟s buying decision. It is difficult and mustreflect supply and demand relationship. Pricing a product too high or too low couldmean a loss of sales for the organisation. Price can be seen as highly important forthe success of Tesco‟s business. Look at the history, Sainsbury was the UKsbiggest grocer until 1995, but was recently relegated to third position behind Tescoand Asda. Internal problems and strategic errors have left Sainsbury struggling. The
company believed it could abandon the classic focus on price in favour ofrefurbishing store „fascias‟ and supply-chain improvement. The fail of Sainsbury‟sstrategy is a clearly evidence can prove the important role of Price. Customers wantlow price, they are very sensitive and always compare the price of all supermarketsthen decide come to the supermarket which offer same products but have cheaperprice. Tesco strives to reduce their price, even when many other aspects ofcustomers‟ live such as gas, electric bills, motoring... have become more expensive.They also have to face with challenge due to rising energy prices, but last year theystill managed to reduce their price by 1.8 percent. This is the reasons why customerscome to and stay with Tesco.Tesco has a giant store network. It is divided into six formats, differentiated by sizeand the range of product sold: Tesco Extra, Tesco Superstores, Tesco Metro, TescoExpress, One Stop, Tesco Homeplus. Tesco use this format because just only 20%of its customers have access to a Tesco Extra- the largest stores which stock nearlyall of Tesco‟s product range, and the company is restricted in how many of itssuperstores it can convert into Extras and how quickly it can do so. Tesco alsoidentified that it is not almost customers feel satisfy with large stores, so that theyhave to divide in smaller store and customer can easy to find its store everywhere.The price of products in Tesco Metro or Tesco Express which is in town centretypically have higher price than larger stores outside town centre by 2-3%. The priceis higher because these stores have higher overhead costs (mainly rents and rates).Tesco has spread their stores network though Britain with right form and rightoverhead costs. It help customer can easy to approach their products and get the fairdeal with it.Promotion is one of 7Ps factors which help Tesco attract its customers. Tesco haveused many Television advert over the years. In July 2007 a DVD containing advertsfrom 1977-2007 was given to all members of staff. Almost of Tesco‟s adverts makethe customers focus on its price, these adverts help the company can create brandimage base on cheap price. Tesco also offer lots of in store promotions, whencustomers walk around in Tesco stores, they can easy to find some special offer likethat: “buy one get one free, half price, great offer”. It will promote customers buyproducts as much as they can and feel satisfy because they can save money. Tescohas also providing Clubcard loyalty scheme in which customers can collect twoClubcard points for every £1 they spend in a Tesco stores, or Tesco.com and 1 pointper £2 on fuel. Clubcard engages with a large number of corporate partners inrelation to the earning and delivery of rewards. Tesco allows customers to gainrewards from activities as disparate as travel, dry cleaning, and carmaintenance.Customers can convert their point to money (each point equates to 1p)and use it in the next time they go to shopping. It is not only sale promotion but italso helps Tesco collect data from customers when they purchase in Tesco‟s system.Tesco manage a portfolio of interactions that the customer has with the brand andthen can easily see the similarities and differences between each customer in termsof what they buy, how they respond to the service. Therefore, Tesco can dividecustomers in different segments and create right strategies for each segment.
Tesco has built a good buying process for its customers. Customers can go to storesto buy or buy online in Tesco‟s website (Tesco.com). Customers can easily findTesco stores in everywhere. In the store, customers have two options to check outtheir product: till payment or self-service, it helps customers pay easily and moreconvenient. For the online customer, efforts have been made to decrease theamount of time it takes a customer to complete their first order. The time hasdropped significantly from one hour to 35 minutes. This provides a better customerexperience. Online shopping price is also quite cheaper than offline becausecustomers do not have more opportunities to choose product. It may not as good asthey expected.Physical evidence is an essential ingredient of the service mix; consumers will makeperceptions based on their sight of the service provision which will have an impacton the organisations perceptual plan of the service. Although Tesco has not chosento spend lots of money on store-design, but the stores is not noisy and aggressively.It is always kept in clean and attracted. Each kind of product is divided in differentareas to help customers easy to find products and get around stores. The websitewhere customers can buy online is also designed simply and friendly with customers.It help customers can find products easierAn essential ingredient to any service provision is the use of appropriate staff andpeople. Tesco‟s purpose is to serve customers and make them feel satisfy with itsproducts. Tesco has divided its staff in six levels and in each level requires particularskills and behaviors. This helps employees understand whether they have the rightknowledge, skills or resources to carry out their roles. All Tesco‟s customer facingpersonnel are to be trained and developed to maintain high quality of personalservice. When customers have problems, they always get help from staff with asmile.In conclusion, Tesco is success in recent years. The reasons is that it know how tomake customers feel satisfy and attract them come to buy its products. Tesco will notbecome more successful if it only focuses on development its product and forgetsother factors of marketing mix. All of factors are not independent but always supportfor each other. The important is how to control and develop on the factor that is theadvantage of company in the industry.Reference:Talking Tesco: How we compete. Lower price (updated 7 march 2011) Availableathttp://www.tesco.com/talkingtesco/lowPrices/Wikipedia. Tesco (updated 7 march 2011) available athttp://en.wikipedia.org/wiki/TescoTalking Tesco: How we compete. Product choice (updated 7 march 2011) Availableat http://www.tesco.com/talkingtesco/productChoice/
Corporate watch. September 2004.Tesco profile (updated 7 march 2011) Availableat http://www.corporatewatch.org/?lid=252Business teacher. Marketing mix (updated 7 march 2011) Available athttp://www.businessteacher.org.uk/marketing/marketing-mix/Thetimes100: Tesco case study. Recruitment and selection (updated 7 march 2011)Available at http://www.thetimes100.co.uk/case-study--recruitment-and-selection--132-323-3.phpDavid Anthony March 7 2009. Archive for retail: Tesco marketing mix (updated 7march 2011) Available at http://davidanthonysiddall.wordpress.com/category/retail/