Tesco Marketing Essay
1. Evaluate the strategy pursued by Tesco both before and after the review in 2012 and, in doing this, show how the company has redefined the markets in which it operates and patterns of marketing thinking across the retail sector. From the beginning of Tesco’s operations, the company was following a price leadership strategy accompanied by low cost and pricing. Furthermore, as customers began to be more and more demanding, the company started doing new investments, especially on its physical stores. By this way, Tesco aimed on creating a better shopping experience to its customers either by improving the ambience of its stores, or by introducing new or diversifying its products. To continue with, Tesco also aimed on capturing all the UK market, by various store types. During the past Tesco made many expansions even abroad and most of the times, except the case in the USA, there were very successful. However, as time was passing, the company realized that it was very important to shorten the gap between its customers, and in order to accomplish this it introduced a very innovative loyalty program, the Clubcard, aiming to create a long-term relationship with them. The company faced many difficulties after 2012. Despite all the efforts that the company did to stay close to its customers, people considered that the company was failing on this aspect. Tesco reacted by a new customer focused strategy, and introduced new human force in its stores, specialized in customer relationships and communication. Finally, Tesco’s strategies through out all of these years caused many changes in the way that supermarkets operate, especially regarding CRM programs and the way that companies now collect and process customer data.
2. The majority of CRM programs fail to deliver what is promised or expected when they are introduced. Why was the Tesco scheme been so successful when so many others have failed to meet expectations? The difference that Tesco’s CRM had compared to other programs was that except giving privileges to its Clubcard holders, it also used the customer data in order to create information useful for its company’s processes. Starting form the customer’s side, the company created a personalized relation with its customers by increasing tremendously their loyalty. By this way, the company managed on optimizing its segmentation strategy and adopting it to its various types of stores depending their type and size. Moreover, by using the customer generated data, the company managed to optimize various categories of expenditures such as the marketing ones. The company also was always updating and re- launching the program in order to keep track of its customer’s evolution pace. Finally, we have to admit that Tesco occurred an exceptional data management strategy by taking into consideration and into advantages even the smallest records in order to optimize both its performance, as well as its customers’ experience.
3. Given how the UK grocery retailing market has changed and is continuing to change, what role do you believe should be played in the future by loyalty based schemes such as Clubcard? From this case study we understood that even being a leader in a market, even an innovator, is not enough to be sustainable and profitable. We have of course to admit that the Clubcard and the CRM strategy of Tesco was very successful, however that doesn’t mean that there is no more space for changes. Taking a look in today’s markets and society, and especially targeting to the younger customers that could be the long-term customers of a company, companies have to be up to date and to follow all technological developments. To be more specific, I believe that Tesco should totally digitize its Clubcard, and its experience. To be more specific, Tesco has to go mobile, and introduce its Clubcard in a way that customers can benefit by using their mobile phone. Except the traditional applications, that are more or less a mobile database, Tesco should introduce unique features in its potential application in order not only to reward its customers (and also gain fro the generated data), but also initiate them to use them in store also while shopping. For instance they could check the prices of the products by using the camera of their phone, or navigate through a mobile map into the store. Moreover, referrals should be introduced. The idea of a social network of Tesco clients, sharing their in and out-store experiences would strengthen the company’s presence and also urge the customers to be more and more active.