The Marketing mix of Tesco analyses the 7Ps of Tesco, which includes the Product, Price, Place, Promotion, People, Physical Evidence, and Process of Tesco. The Tesco marketing mix framework has helped the company to gain so much consumer popularity that it has resulted in a strong brand image and loyal customers.
The marketing strategies cover the product offering, the place and distribution strategy of the supermarket chain, physical evidence, pricing, the strategy of Tesco itself, and the promotional mix to know the everyday value and the market share of the brand in the target market.
Tesco’s marketing mix and strategy have laid a solid groundwork for the brand to capitalize on the primary brand value and achieve desired marketing and business goals.
Table of Contents
- Origin Country: United Kingdom
- Founder: Jack Cohen
- Founded: 1919
- Headquarters: Welwyn Garden City, England, UK
- Employees in 2023: 354,744
- Annual Revenues in 2023: 73.89 billion USD
- Net Income in 2023: 2.031 billion USD
- Market Cap in 2023: 17.23 billion USD
The British retailer of supermarket chains Tesco Plc has the distinction of being one of the major retail brands in the world of general merchandise and groceries. Based on gross revenues and revenues, it was the 3rd largest supermarket chain and 9th largest retailer in the world in 2011. Since 2021, Tesco has been the 16th most valuable retail brand globally.
The leading retailer deals in general merchandise and grocery items and sells products like beauty, home, electrical, entertainment, food items and regional produce, books, home appliances, baby products, furniture, products for toddlers, garden toys, DIY, non-food items, software, petrol, apparel, car accessories, gaming, health, and luxury homeware. The company also has retail stores and offers insurance, internet, telecom, and banking services.
In the initial years, Tesco was positioned as a low-cost, low prices only, high-volume retailer with its Tesco Value range. However, with time, it expanded its product categories to include the Tesco Finest premium range and became one of the strongest brands in the world.
Tesco Product Strategy
The product strategy in Tesco’s marketing mix focuses on product lines, product innovation, leading brand names, and product categories. The strategy of the Tesco brand caters to the customers’ needs in almost all the product segments of the market and ensures that its product offering is the best quality-wise.
The product and online business mix of Tesco, a leading retail chain, can be categorized into several key areas:
- Grocery: Fresh Food: Includes fruits, vegetables, meat, dairy products, and bakery items; Packaged Food and Beverages: Encompasses a wide range of packaged goods like cereals, snacks, canned goods, frozen food, soft drinks, and alcohol.
- Non-Food Items: Clothing and Apparel: Tesco offers a variety of clothing for men, women, and children under its brand. Electronics and Appliances: Ranges from small kitchen appliances to more oversized electronic items like TVs and computers; Home and Garden: Includes furniture, gardening tools, and home decor items; Health and Beauty: Offers personal care products, cosmetics, and pharmacy goods.
- Tesco-Branded Products: Tesco Value Line: A budget-friendly product line covering various categories; Tesco Finest: Premium range of food products; Tesco Organic: Organic food products; Tesco Free From Products catering to dietary restrictions like gluten-free and lactose-free.
- Specialty Sections: World Foods: Offers a selection of international cuisine and ingredients; Baby and Toddler: Includes baby food, clothing, and accessories; Pet Supplies: Offers food, toys, and pet accessories.
- Services: Pharmacy: In-store pharmacies providing prescription services and health advice; Optician: Eye care services, including eye tests and selling eyeglasses and contact lenses; Banking and Insurance: Financial services like credit cards, loans, and insurance products.
- Online and E-Commerce: Online Grocery and Merchandise Shopping: Website and app for online shopping with delivery and ‘Click and Collect’ services.
- Seasonal and Promotional Items: Seasonal Products: Items specific to holidays and seasons, like Christmas decorations or summer BBQ gear; Promotional Offers: Regular promotions and discounts on various product categories.
- Tesco’s Unique Selling Propositions (USPs): Clubcard: A loyalty program offering points and rewards; Diverse Store Formats: Large superstores to smaller express shops catering to different needs.
Tesco’s product mix is designed to cater to a wide range of customer needs, providing convenience and variety across its many store formats and online platforms.
Tesco Pricing Strategy
Tesco’s pricing strategy is a sophisticated blend of techniques designed to keep prices competitive and position the brand in the market with competitive prices while catering to a diverse customer base. Let’s delve into the critical aspects of their approach:
- Competitive Pricing: Tesco employs a competitive pricing strategy to remain on par with or lower than its competitors. This is particularly evident in markets where it competes with discount chains like Lidl and Aldi. Tesco strategically adjusts prices to offer better value to its customers while maintaining profitability.
- Price Discrimination: The pricing strategy may vary in different store formats like Tesco Express and Tesco Extra. For instance, convenience stores like Tesco Express often have slightly higher prices due to the added value of convenience and accessibility for urban customers.
- Promotional Pricing: Tesco frequently uses promotional pricing strategies, such as discounts, ‘buy one get one free’ offers, and seasonal sales. This approach not only drives sales but also helps to clear inventory, especially for perishable goods.
- Psychological Pricing: Using psychological pricing tactics, such as pricing items slightly below a round number (e.g., £9.99 instead of £10), Tesco taps into customer psychology to enhance its products’ perceived value and affordability.
- Private Label Pricing: Tesco offers a range of private-label products across different price tiers – from budget options like Tesco Value to premium lines like Tesco Finest. This strategy allows customers to choose products that fit their budget, enhancing Tesco’s appeal across various income segments.
Tesco Place Strategy
- Global Presence with Local Adaptation: Tesco operates in over 15 countries, including the UK, Ireland, Hungary, Slovakia, and France. Each store is tailored to meet the local market’s needs, ensuring relevance and customer satisfaction.
- Diverse Store Formats for Different Needs: Tesco has a range of store types – Tesco Metro, Tesco Express, Tesco Extra, and Tesco Superstore. This variety caters to customer needs, from quick convenience shopping at Express stores to comprehensive shopping experiences at Extra and Superstore formats.
- Strategic Location of Stores: Tesco’s stores are strategically located to maximize accessibility. Large superstores are typically found in suburban areas, while Metro and Express stores are located in city centers and neighborhoods for easy access.
- Online Store and E-commerce Platforms: To cater to the growing demand for online shopping, Tesco offers a robust online platform. Customers can shop for groceries and other products online, with the convenience of home delivery or ‘Click and Collect’ options.
- Partnerships for Expanded Reach: Tesco collaborates with various retailers and delivery services, including a notable collaboration with Amazon through Amazon Fresh. This expands their distribution network and accessibility, especially for online grocery deliveries.
Tesco Promotion Strategy
Tesco’s marketing mix and strategy are centered around its low products to maintain low prices and the various deals and discounts the brand offers to maintain its customer base. Tesco uses aggressive marketing strategies to attract customers and boost its brand image. Its ad campaigns and TV advertisements directly target both potential and existing customers.
The promotional strategies in the marketing mix of Tesco include.
- Traditional Advertising Mediums: Tesco uses conventional advertising mediums to advertise its products. These include TV advertisements on different channels and other mediums like radio, newspapers, leaflets, hoardings, and magazines.
- Slogans: The brand uses slogans like “Every Little Helps” as part of its promotional strategy to boost its image in the market.
- Sales Promotion: As part of its sales promotion activities, the brand organizes charitable events to distribute free products, incentives, and discounts to attract customers.
- Corporate Social Responsibility: The brand contributes to the local community and charity organizations through its CSR activities. 1992, it offered computers under the “Computers for Schools’ scheme.” The company has ensured its label household and personal care products are cruelty-free.
Some Recent Video ads and Print ads for Tesco are:
Tesco People Strategy
When discussing the “People” element of the Service Marketing Mix for Tesco, it’s essential to consider how employees, customer service, and overall customer interaction shape the customer’s perception of the brand’s primary brand value and experience. Here are some points highlighting the role of “People” in Tesco’s service marketing mix:
- Employee Training and Development: Tesco invests significantly in training and developing its employees to ensure high-quality customer service. This includes a range of training programs to enhance skills, knowledge, and customer-handling capabilities.
- Customer Service Excellence: Tesco strongly emphasizes delivering exceptional customer service. Employees are trained to address customer needs effectively, handle complaints gracefully, and ensure a positive shopping experience.
- Employee Engagement and Satisfaction: Tesco recognizes that satisfied and engaged employees are more likely to provide better customer service. Therefore, it focuses on creating a positive work environment, offering competitive salaries, benefits, and opportunities for career advancement.
- Diverse and Inclusive Workforce: Tesco is committed to promoting diversity and inclusion. This approach enriches the company culture and ensures various perspectives in addressing customer needs and preferences.
- Role of Staff in Brand Representation: Employees at Tesco are considered vital brand ambassadors. Their interactions with customers, their professionalism, and their ability to embody the company’s values play a crucial role in shaping Tesco’s brand image.
- Feedback and Continuous Improvement: Tesco values feedback from both customers and employees. This feedback continually improves service delivery, employee training programs, and customer satisfaction strategies.
- Technology-Enabled Service Delivery: While not directly a part of the “People” element, Tesco’s investment in technology also empowers its staff to provide better service. For example, self-checkout systems and mobile apps improve customer experience and allow staff to focus on more value-added services and customer interactions.
- Community Engagement: Tesco’s staff actively participate in community engagement activities, reflecting the company’s commitment to social responsibility. This enhances the company’s image and builds a strong, positive relationship with the communities it serves.
- Customer-Oriented Culture: At its core, Tesco fosters a customer-oriented culture among its employees, encouraging them to put the customer first in all their duties. This culture is crucial for retaining customers and ensuring their satisfaction with the service provided.
- Cross-Functional Teams: Tesco employs cross-functional teams to solve complex problems and improve the customer shopping experience. This collaborative approach ensures that different departments are aligned in serving customer needs effectively.
Tesco Process Strategy
The “Process” element of the Service Marketing Mix for Tesco refers to the methods, procedures, and routines employed to deliver its services efficiently and effectively to customers. This encompasses everything from the shopping experience to checkout, customer service interactions, and online shopping facilities. Here are several key points that outline the “Process” aspect of Tesco’s service marketing mix:
- Streamlined Shopping Experience: Tesco has designed its stores and online platforms to provide a seamless shopping experience. This includes clear signage, logical product placement, and an intuitive online interface that makes it easy for customers to find what they want.
- Efficient Checkout Processes: Tesco offers multiple checkout options to reduce wait times and improve customer convenience, including self-service checkouts, traditional staffed checkouts, and scan-as-you-go technology in some locations.
- Online Shopping and Delivery: Tesco has a robust online shopping platform allows customers to purchase goods online and choose between home delivery and click-and-collect options. The process is designed to be straightforward, from selection to payment.
- Supply Chain Management: Behind the scenes, Tesco employs sophisticated supply chain management processes to ensure that products are available when and where they’re needed, minimizing stockouts and optimizing inventory levels.
- Customer Feedback Mechanisms: Tesco has established processes for collecting and responding to customer feedback, including surveys, feedback forms, and social media monitoring. This feedback informs service improvements and customer experience enhancements.
- Staff Training and Development: Processes are in place for the ongoing training and development of staff, ensuring they are equipped to provide excellent service, handle products correctly, and maintain a safe shopping environment.
- Health and Safety Protocols: Tesco follows strict health and safety protocols to ensure the well-being of both customers and staff. This includes cleanliness standards, food safety procedures, and measures to prevent accidents.
- Technology Integration: Tesco utilizes technology to streamline processes, from inventory management systems to customer relationship management (CRM) software. These technologies improve efficiency and the customer experience.
- Environmental and Sustainability Practices: Tesco has integrated sustainability into its operational processes, including waste reduction, recycling programs, and energy-efficient practices, demonstrating a commitment to environmental responsibility.
- Customer Service and Support: Tesco has established transparent processes for customer service and support, including in-store assistance, online help centers, and customer service hotlines. These processes are designed to resolve issues quickly and satisfactorily.
- Continuous Improvement: Tesco is committed to continuously improving its processes, regularly reviewing and updating its methods to increase efficiency, enhance the customer experience, and adapt to changing market conditions.
Tesco Physical Evidence Strategy
The “Physical Evidence” element of the Service Marketing Mix for Tesco encompasses all the tangible aspects that customers encounter, which can influence their perceptions of the brand and its services. This includes the physical environment of the supermarket chains, the stores, the online shopping interface, and all visual branding elements. Here are several points detailing the “Physical Evidence” aspect of Tesco’s service marketing mix:
- Store Layout and Design: Tesco stores are designed to be welcoming and easy to navigate, with clear signage, well-organized aisles, and a layout that facilitates a smooth shopping experience. The design also reflects the brand’s commitment to providing a pleasant and efficient shopping environment.
- Cleanliness and Maintenance: The cleanliness and maintenance of Tesco stores are crucial in shaping customer perceptions. Clean, well-maintained premises provide a positive shopping experience and reflect the brand’s standards.
- Branding Elements: Tesco’s visual identity, including its logo, color scheme, and typography, is consistently applied across all touchpoints, from store signage to packaging, advertising, and online presence. This uniformity helps reinforce brand recognition and loyalty.
- Online Platform Design: The design and usability of Tesco’s online shopping platform provide physical evidence of the brand’s commitment to customer convenience and innovation. An intuitive, user-friendly website and mobile app interface enhance the online shopping experience.
- Checkout Areas: The design and efficiency of checkout areas, including traditional, self-service, and scan-as-you-go options, are tangible aspects that affect customer satisfaction. These areas are designed to minimize wait times and streamline the payment process.
- Merchandising and Display: How products are displayed and merchandised in-store influences purchasing behavior and perceptions of quality. Tesco invests in attractive, logical product displays that highlight promotions and facilitate product discovery.
- Packaging: Tesco’s product packaging serves as physical evidence of the brand’s value proposition, with clear labeling, quality materials, and design that aligns with environmental sustainability where possible.
- In-store Technology: The use of technology in-store, such as digital price tags, interactive screens, and QR codes for additional product information, enhances the shopping experience and showcases Tesco’s commitment to innovation.
- Customer Service Desks: Physical customer service desks in Tesco stores provide a tangible point of contact for assistance, returns, and inquiries, reinforcing the brand’s focus on customer care.
- Environmental and Social Responsibility Initiatives: Physical evidence of Tesco’s commitment to environmental and social responsibility can be seen in-store through recycling stations, information about sustainable products, and signage related to community projects.
- Staff Uniforms: The appearance of staff, including uniforms, badges, and overall grooming, provides physical evidence of Tesco’s professionalism and brand standards.
- Signage and Informational Materials: In-store and online signage, brochures, and other informational materials not only guide customers but also convey key messages about Tesco’s values, promotions, and services.
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