The Impact Of Marketing Strategy Of Tesco Marketing Essay

Introduction and Background

Making a profit of £1 from £4, 25% profit, this was the first landmark of Sir John Cohen. This is a historical foot step taken over by the founder of Tesco plc. Tesco plc is a world re-known grocery and general merchandising retail chain. Its total stores only in United Kingdom consisted of 2362 and 286394 employees are working in Tesco plc. It has extended its operation in Europe and Asia. It has more than 1000 store worldwide and competing with international market through internet. Tesco plc is largest global retailer after Wal-Mart and Frances Carrefour. Initially Tesco was only dealing in food (consumable items). The motto of jack Cohen was simple “Pile them high and Sell them cheap” which explains that buy goods in bulk and sell them at cheap price that is low cost strategy adopted by Sir Jack Cohen in 1919’s. In 1956 and 1960, Tesco grows its business rapidly that was mainly through acquisition of 70 Williamson’s store, 200 Harrow’s store in 1959, 212 Irwin’s store and 97 stores of Phillips and till 1960 Tesco become chain of 600 stores. Tesco has made the world record by owning a biggest selling space store and put its name in the Guianese book of world record in 1961. The motto pile it high and sell it low had got adverse affect on its performance and the reaction of customers was adverse to this. It had created a image of cheap products. Tesco had recognised the fact and understand customer expectation and build an image of well maintained and good quality product at competitive price which has enhanced the growth of Tesco plc and it become the largest and successful chain of store in UK in 1997. Tesco approach was simple at the start which is specialising in food and drinks. Then it has diversified into other areas of retail business which includes electronics, clothing, financial services, telecom, dental, health plans, car insurance, retailing DVD’s, internet service etc. There is 470000 employees are working in Tesco and it own 4331 worldwide, tesco group sales are £ 59.4 billion in which £ 41.5 billion are coming from UK market.

Sainsbury another UK based supermarket chain is also dealing in food and non food items. Sainsbury originally sold food then it moves into non food items which includes clothing, mobile phone, DVDs, books etc. In UK, Sainsbury comes at third place after Tesco and ASDA. The formation of Sainsbury can found in 1869 when John James and Marry Ann Sainsbury started a small dairy shop. In 1882 they started selling their own brand products. In 2000 a massive restructuring was taken place which had brought big changes and it cost Sainsbury around £60 million.

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The goal of Sainsbury is simple “quality shopping experience for our customers”. It has made it clear in their value setting that they are passionate in providing quality, environment friendly product at low price to make themselves distinct from their competitors. It has made a profit 20383 million in 2009 and almost every year it has made the growth in profit.

The main focus of this research is to analyse and evaluate the impact of marketing strategy of Tesco plc and Sainsbury on their customers and how much effective their strategies are in the current competitive environment. The grocery retail business has made tremendous growth over the years. It has attracted international grocery business player to invest in the UK market e.g. Wal-Mart investment in ASDA. The UK grocery industry is monopolised by big supermarkets retail giants like Mark and Spenser and Waitrose they have focused on niche market of premium price product. Tesco, ASDA, Sainsbury, Somerfield and Safeway, the five big giants has identified and targeted mid and low market segment and prepare their marketing strategies to capture and retain customer attention which has resulted in price wars, big discounts and loyalty card schemes.

Both Tesco and Sainsbury have same target audience. They are head to head to capture market. Sainsbury has made sales of £20 billion where as Tesco has made sales of approximately £33 billion in 2009. According to Chris zook, Tesco has performed deep customer research, feedback and it has built a unique retail model.

Aim and objective

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The main aim of this study is to understand the number of factors that have contributed in the development of Supermarket in UK. The research will identify and underpinned those factors that are important for effective marketing strategy and vital for customer satisfaction. Mainly the core of study is to analysed and compare the marketing strategy of Tesco and Sainsbury and how much effective their marketing strategies are in satisfying customer needs. Finally the research will involve collection of information from customer’s satisfaction with services of Tesco and Sainsbury. The study will incorporate analysis of financial infrastructure, strategic capabilities, marketing development and environmental scanning. There are a few aims and objectives mentioned below.

Marketing strategy of Tesco and Sainsbury and how effective these are in satisfying customer needs.

Key feature of Tesco and Sainsbury marketing strategies and their implications on supermarket sector.

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To understand the success behind Sainsbury and Tesco in becoming leader of the market.

Ways to improve marketing strategy and its affect on Tesco and Sainsbury marketing mix.

The primary objective is to understand the implication of Tesco and Sainsbury marketing strategies on customers’ needs and satisfaction. The objectives of this research are as follow.

Ascertain theoretical knowledge of marketing strategy.

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Tesco and Sainsbury marketing strategy

Key critical success factors of Tesco and Sainsbury marketing strategies.

Comparison of both superstore marketing strategies.

Ways to improve the strategies.

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Literature Research

In simple words Marketing is building relationship with customers by providing value in product and services and making profit in return of value. In developing marketing strategy organisation put emphasis on Customers, Values, product and profit. The marketing strategy depends on organisation understand the customer’s needs. An organisation marketing strategy is based on two factors, firstly the type of customer it is serving and secondly how can it serve them. The first factor help organisation in identify the segments that it want to serve, as Tesco and Sainsbury has identified mid-market segment, secondly position marketing mix to satisfy the needs of target audience.

Paul Rose (1984) Marketing, it is management to achieve organisation objectives by satisfying customer’s needs, wants and demands at optimal level. Marketing is embodied in overall organisation strategies and objectives.

John stepleton, Michael J. Thomas (1971) expressed a different view over marketing which is marketing creates bridge between opportunity and purchase. Organisation produce product and customer buy brand. Marketing plays as an intermediary role in creating brand image for company and persuading customer to buy this product. Tesco and Sainsbury is working on it, they have produced own products along with maintain alliance with other producer and prepare their marketing strategy to attract customer to buy them.

Philip kotler (1996) states in his book that organisation prepares it marketing strategy according to its target market. A selling organisation needs a massive promotional effort to make large scale sales. However a sustainable marketing concept involves that organisation should meet the needs and requirement of customers without conciliation of future generation to meet their own. An organisation marketing strategy is subject external environment which involves competitors marketing strategy, Government policy, geographical condition etc. Philip Kotler and Gary Armstrong states in their book that Organisations prepare its marketing strategy by dividing the mass market into different segments and positioned themselves. Which involves organisation identifies different segments in the market and prepares its marketing mix according to the requirement of those segments to target those specific segments. As Tesco and Sainsbury has identified a segment of mid-market or Mark and Spencer identify and target high market segment.

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As Dibb (1998) states that segmentation provides a better understanding of needs and wants of customers. That allows management to produce better product or offer quality service according to those needs. Such tactics improves competition in the market and organisation put more effort in satisfaying customer needs and obtains competitive advantage. It also improves the quality of planning and decision making process as it highlight market requirement of specific group of people.

Nirmalya Kumar, Jan Benedict E. M Steenkamp states in their book that Tesco is entertaining 3 different segment, price, category and benefits. It has identified different price segmented market. Tesco value caters price conscious customers where as Tesco provide standard quality or medium quality conscious customer and Tesco Finest is for premium price customers.

Identification of segments is very tough as market consist of different buyers; they have different needs, different lifestyle, and different family background which affect their buying practice. So an organisation needs to understand the market structure and detail research plan has to put in place to understand those behaviours. There are different variable that are used to highlight market segment such as geographic, demographic, psycholograhpic and behavioural variable which influence buying practice. Segmentation allows management to prepare its marketing mix after identifying the suitable, measurable, achievable, profitable and sustainable segment. O.E Jerome McCarthy developed the 4ps in 1950. Each element of marketing mix has detrimental impact on organisation overall marketing strategy, if organisation put emphasis on one element it will affect the element e.g. add too much value in a product could not be sold at low price or a low quality product at premium price unless customer is blind. Marketing mix is customer oriented approach. There is strong link between organisation generic strategy and product mix.

The extended market mix has incorporated three additional factors in preparing marketing strategy; people, process and physical evidence. Tesco and Sainsbury, both provides product and services.

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Organisation use balance scorecard to measure customer satisfaction that allows evaluating the overall performance of marketing strategies. The only focus of this analysis is to understand the customer retention rate, customer satisfaction, customer profitability and its share.

Kotler (2000) states that Organisation take different position to maintain or to compete over its competitor. Tesco and Sainsbury are competing to maximise their market share and improve their profitability. Their target audience are mid-market of both superstores.

Questionnaire

What is marketing strategy? Explain marketing strategy of Tesco plc and Sainsbury?

Explain impact of marketing strategy of Tesco plc and Sainsbury on customer?

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How much effective is the marketing strategy of Tesco plc and Sainsbury in satisfying customer’s needs?

Explain the marketing planning and process?

Explain the impact of research and development on marketing strategy of Tesco and Sainsbury?

What is marketing mix and evaluate the marketing mix of Tesco plc and Sainsbury?

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What is extended market mix and explain the extended marketing mix benefit to Tesco and Sainsbury?

What are external market factors and how external environmental impact on Tesco and Sainsbury marketing strategy?

Explain the customer behaviour?

What is buying behaviour? How it can affect the marketing strategy?

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Explain segmentation and segmentation criteria used by Tesco plc and Sainsbury?

What are the competitive edge of Tesco and Sainsbury?

Explain the critical success factors of marketing strategy?

Explain balance scorecard and how well it can contribute to measure the effectiveness of marketing strategy?

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What are the key factors in grocery shopping to satisfy customer needs?

Research Methodology and Research Plan

Qualitative and Quantitative research

Generally there are two types of research methods to collect data which is called qualitative and quantitative approach. Normally in qualitative research is like informal research. In which we do not collect the data formally in term of figures and facts. However in quantitative approach we formally collect the data in terms of figures and facts. This is one of the important approaches to conduct the research. During my research I will conduct both qualitative and quantitative approach for collection of data.

Here is the list of different approaches or methods which I will use to conduct the research.

Experiments

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Essentially this method is a group based method which is widely used. In this method peoples are divided into different groups and then they will be treated differently. The basis of this experiment is to collect the data. some time a special group will treated specially and this group will called a experimental group other groups will known as a control groups. This is very important and easy to understand method. In which data will be collected on the basis of facts. This approach will come under the heading of quantitative approach.

Interviews

This is a very common method to conduct the research. Actually this is an important part of the research method. I will conduct the different types of interviews. These interviews will includes structured interview, semi structured interviews and informal interviews. I will conduct the interviews from the people who are actually related to the organizations like workers at low level management and top level management from both Tesco and Sainsbury. I will also conduct the informal interviews from different stakeholders like customers, shareholders and suppliers etc. interviews is also one of the important method of research. I will conduct the interviews within one week. First two weeks I will conduct the formal or structured interviews from the management of both organizations then after remaining four days I will conduct the informal interviews especially from customers. During the interviews question will be open ended, allowing interviewee to speak rather than forcing him/her to come at my point of view to exclude biasness.

Questionnaire

This is also the important part of the primary research. I will develop a comprehensive questionnaire, in which different types of questions will be asked. Some questions would require more detailed answers and some are multiple choices. A questionnaire will provide reliable and effective data for the research objectives. the questionnaire will be performed after conducting the interviews.

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Quasi experiment

This is the third method research through i will collect the data. Firstly I will divide the people into different groups according to their age, education, sex and social status. this method is look likes the experiment method. But in experiment method we divide the group generally but in quasi experiment we will divide the groups specifically. the characteristics in which I will found a link between the characteristics of different group people.

Case study

This is the part of the secondary research. I will select multiple case studies through which i could collect data and the information of pervious works. Such case studies provides a depth of analysis and assessment on a particular case

Co-relational study

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This is another method to collect data. This is not very important and famous method but for the depth analysis and research I will also collect the data under this method. In co relational study I will judge different behaviours and identify the correlation among two variables. In which I will find the direct, indirect and negative or positive relationship among the variables. I will spend three days on this method.

Surveys

This is another very important method under the heading of quantitative research. I will perform different types of surveys on stores and head offices of both organizations. In survey I will include questionnaire informal and short interviews and opinions of different people. I will also survey the general market and collect the data. The data which I will collect from this method is not very much reliable. Because people have different attitude and opinions at different times.

Cross Sectional study

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A cross sectional study will involve the examination of group of people from different age group to understand their behaviour and development in their total life span. It is quickest and easiest means to understand consumer behaviour but it might be brought forward lower quality of data. The cross sectional approach is help full in dividing and examining different segments of market based on age, lifestyle, educational background, cultural background or living style. I will perform cross sectional study after getting basis information of Tesco and Sainsbury segmentation basis.

Sample size

The sample size will vary according to the type of research method I will use. For sampling I will select people of different gender, background, culture, financial structure to grasp in depth understanding to satisfy research objective. The level of sample size will set according to the situation. Consumers are indifferent at buying and it is hard to predict their behaviour.

Conclusion

The research is focused on following` areas,

To build understanding of key features of marketing strategy and how it contribute in customer satisfaction.

To identify success factors of Tesco and Sainsbury

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What are key factor of marketing strategy Tesco and Sainsbury?

Looking into customer behaviour and customer satisfaction

What they need to improve their respective marketing strategies?

At the end of research the researcher will provide a number of recommendations to improve the quality of marketing strategy and ways to improve customer satisfaction.

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