Marketing Management Strategy in Tesco

Executive Summary

The supermarket chain of UK has evolved immensely over the past decade. With increasing demand among the consumers the supermarket chains in the UK are trying hard to meet the general requirements and preferences of the consumer to generate revenue, quality profits and market share. With enhancing competition among the domestic and foreign supermarket chains operating in UK, the management of the respective supermarket chains are emphasizing on providing consumer value, value proposition for increasing their operations and gain financial success. For completion of the particular report Tesco has been chosen and based on the aforementioned key factors i.e. consumer value and value proposition this particular report would critically analyze the importance of these factors as well provide and in-depth analysis about the consumer segment and distinctive ways the administration of Tesco considers in increasing the potential of providing more value to the consumers and capitulate on the value proposition aspect. The report would also emphasize on providing a list of recommendations based on the analysis carried out which can be taken into consideration for the overall benefit of Tesco and enhance their potential to be profitable enough and be the first choice supermarket chain among the consumers.

Introduction

Tesco is one of the most successful and popular supermarket Chain Companies of UK that operates domestically as well as in different international markets. Over the years the organization has been able to attain its objectives and become successful due to its core strategies, distinctive operations and meeting the demands of the consumers (Flint & Woodruff, 2014). Operating with the key objective to be attained i.e. ultimate satisfaction of the consumers the supermarket chain company of UK has been able to generate significant amount of profits and market share both in UK and in international markets.

Background of the Task

Tesco being a prolific organization with varied operations being carried out specifically emphasizes on two critical aspects i.e. customer value and value proposition. From an organizational point of view customer value concept emphasizes on the financial value the customer generates for the organization. In a similar manner the value proposition is considered to be a significant feature that is intended in making an organization or a product attractive to the consumers (Lindič & Marques da Silva, 2011). Based on these two critical factors this organization tries to carry out their operations so that they can satisfy the needs of the consumers as well as generate financial stability for the organization success. The entire report will specifically involve these two critical factors and provide an overview how these factors are utilized by Tesco for attaining financial success.

Purpose of the Report

As explained, customer value and value proposition are such two factors which are of great importance specifically in the retail sector where the supermarket chain organizations operate. Considering the constant increase in competition in the particular sector in United Kingdom, the supermarket chain organizations like Tesco, Aldi, Sainsbury’s and others are always focused on. Therefore the key purpose of the report is to critically analyze and evaluate the significance of customer value and value proposition. Along with that the paper would also emphasize on explaining these concepts from Tesco implementation process and find out how it influences the financial success of the firm. It would also provide an overview to have in-depth knowledge and understanding about the consumer segments Tesco focuses on for providing customer value and the distinctive ways value is delivered.

Format of the Report

• Introduction: This section provides a brief analysis about the topic on which the report is being carried out along with the task background, report purpose and report format.
• Customer Value: A full detailed explanation of customer value will be provided from different perspective.
• Value Proposition: This section will evaluate the significance of value proposition and its impact on supermarket chain organizations operating in UK.
• Concept’s Critical to a Firm’s Financial Success: This particular section will provide in-depth understanding and knowledge about how customer value and value proposition is critical enough to generate financial success.
• Supermarkets Delivering Value: A detailed analysis about how supermarkets are delivering value will be stated.
• Tesco Delivering Value to Consumers: This section will highlight how Tesco delivers value to its wide range of consumers.
• One Consumer Segment and the Value it seeks: This section will emphasize explaining one chosen customer segment at Tesco and the value the consumer segments looks for.
• Communication of Value via Supermarket’s Website: This section will basically explain how value is communicated by the prolific use of Tesco official website among the consumers and the organization.
• Recommendations: A list of recommendations would be suggested that can be implemented for enhancing the chosen concepts of value proposition and customer value.

Customer Value

Customer value is considered to be the main aim that an organization seeks to attain for achieving the outlined objectives and goals of the organization. It is defined as the level of satisfaction the consumer experiences or expects to experience by taking a certain action relative to the cost of that specific action. Precisely it can be stated that it is the satisfaction a consumer feels after purchasing any goods or services in exchange of money (Flint, Blocker & Boutlin, 2011). It can also be stated that customer value is the value that an organization provides to its consumers via the sales of goods and services in exchange of some financial forms. But, from an organization’s perspective customer value is somewhat different. This concept from the organization’s perspective is termed as the financial/monetary value that the consumer generates for the organization. Assessing the fact, it can be evaluated that the consumers opt for necessary products and services as per their demand and requirements which they purchases in exchange of money (Gallarza, Gil-Saura & Holbrook, 2011). In the supermarket chain sector, providing quality products and meeting the expectations and satisfaction level of the consumers enables them to purchase more by which the organization’s financial success is attained. Therefore from the perspective of an organization, consumer value holds the key in generating financial success for the organizations.

Value Proposition

Similar to customer value, value proposition is also a significant factor that drives the satisfaction level of the consumers and the success of a certain, product, service or an organization. A value proposition can be referred to as the value an organization promises on delivering to the consumers should they opt to purchase their product. Precisely, value proposition is also considered to be the declaration of a statement or intent that introduces an organization’s brand to the consumers by providing them what the organization stands for, how it operates and the reason behind deserving their business (Osterwalder et al. 2014). A quality value proposition specifically demonstrates what a certain brand needs to offer to the consumers that no other rival organizations can, and how the product or service fulfils the demand that no other rival product or service can. Just like consumer value, value proposition also impacts the financial success of the organization as it provides value to the organization in generating quality revenue by delivering the consumers with the promise for opting their products or services (Sengupta, Bamel & Singh, 2015). Value proposition enhances the potential of an organization to generate profitability by emphasizing on the promise to deliver quality products or services compared to the other competitors in the market.

Concept’s Critical to a Firm’s Financial Success

The concept of customer value and value proposition is quite important for both organization and the customers. Development of both these concepts is considered to be an integral part of an organization’s business strategy. In the same time, since the customer value and value proposition provides the organization with the key method for influencing the decision making process of the consumers, it is constantly displayed on the marketing materials of the organization like website (Covin et al. 2015). Both these concepts are referred to as the most significant tool that drives the sales and helps in building a wide consumer base. Additionally, a compelling and perfect customer value and value proposition can advance the efficiency level of the organization’s marketing strategy that positively impacts in attaining the financial success of the organization (Hassan, 2012). Generally, these two key factors are regarded as the wide reaching activity of marketing which is most effective.

Customer value and value proposition enables an organization to research on the consumer needs and requirements which enables them to ultimately satisfy their needs and wants. Based on these two aspects, organizations focus on producing and delivering the necessary products and services which are demanded by the customers which provides them with satisfaction. This specifically enables them in purchasing these products and services which ultimately enhances the potential for the organization to generate more revenue and profitability (Martelo Landroguez, Barroso Castro & Cepeda-Carrion, 2011). The more products and services with higher customer value and value proposition are sold; the organizations are able to gain more profits which impact the overall financial boost of the organizations. It has also been observed that an organization that lacks customer value and value proposition aspects fails in generating the financial success that it seeks for. Therefore these two aspects are quite necessary to be delivered to the customers as it provides an organization with the financial success in exchange of customer demands and satisfaction.

UK Supermarkets Delivering Value

The UK supermarkets chain sector over the years has become a competitive one. The cut-throat competition among the competitors has enabled them to implement wide range of strategies that would enable not only their loyal consumers to provide consumer value and value proposition but would also help the organization in enhancing further and accumulating quality profits for better operations. Thus, the UK supermarkets deliver value by emphasizing on the following aspects which has been the most integral part of attaining the core objectives and success.

• The UK supermarkets specifically analyze and understand the choices of the consumers which enable them in providing consumer value and value proposition to its consumers by the sales of the products and services (Kumar, 2010).
• Every supermarket chain opt for market segmentation and based on the consumer segments they emphasize on providing satisfaction by delivering the demandable goods and services.
• The UK supermarket chains have enhanced the competitive options for instance offering more products in the products range which provides value to the consumers.
• Enhancing on the success of the brand has been another key way the supermarkets deliver value to its consumers (Chen & Hsieh, 2011). Improvising the brand success has enabled them to provide quality service and goods to the consumers which enhance the potentiality of providing value to the consumer base.
• Lastly, emphasizing on what is needed and meaningful to the consumers has been most prolific way in delivering value to the consumers. The UK supermarkets specifically engage in market research to understand the types of products and the features that are required by the consumers (Noyan & Sinsek, 2014). Providing consumers with these kinds of products and services has been the key way to delivering value to the consumers.

Tesco Delivering Value to Customers

Tesco being a multinational organization emphasizes on providing value to the consumers and based on that it has developed certain intriguing aspects which enable them to provide value and satisfaction to the customers.

• Cutting down the Price: According to Tesco price can be the most significant factor which can bring customers to them. Therefore, Tesco emphasizes on maintaining the quality along with cutting down the prices of the services and products offered. Tesco makes sure that no competitors in the market can beat their pricing of the products and services (Ma, Ding & Hong, 2010). Thus, they have introduced larger packs which represent quality value on wide range of products. They have also added more products in the value range and promise the customers that the prices of the company cannot be beaten.
• Using Club Cards: One of the key aspects of providing value to the customers by Tesco is understating their wide range of consumers. This has enabled them to introduce club cards for stealing away consumers from other competitors operating in the market. The Tesco club cards provide the consumers with frequent shopping experience (Orel & Kara, 2014). The organization via the club cards gets all information about the consumers like what they shop, what they like shop, how much they spend and what products they emphasizes on buying. These enable Tesco to know their consumer better and provide them with valuable offers on such products.
• Capturing the Internet: Considering the modern day fact that many consumers shops online, the organization has also used in providing values via internet. Tesco has also started delivering the products and services to the door of the consumers. The customers using the website and ordering things like books, groceries, furniture, home ware and other items are provided with personnel finance (Covin et al. 2015). All these products are provided with great value at cheaper rates which has enhanced the customer range of the organization. This is one of the key strategies opted by Tesco in providing value to its customer base.
• Private Label Success: For enhancing the sales and providing value to the consumers, Tesco emphasizes on providing more to the existing consumers in existing stores. The organization has started using private labels for selling products with almost same quality of top brands at lower price (Osterwalder et al. 2014). Thus is considered as “Tesco Value” which provides the customers to get access to grocery products, home ware stuffs, bakery items, meat, dairy items, wine, and non-food stuffs. This has significantly enhanced the satisfaction level of the consumers providing value to the regular items purchased by the consumers.

One Customer Segment and the Value it seeks

Tesco opts for the most efficient and effective combination of operational resources in the targeted market segments which enables in getting quality return investments. The organization focuses on geographic segmentation, demographic segmentation, psychographic segmentation as well as behavioral segmentation which enhance the possibility of selling more products and services increasing the possibility of financial success. One such customer segment that Tesco emphasizes on are the repeat or the loyal consumers.

Loyal consumers are the ones that visit the Tesco supermarket almost every time and thus the management focuses on this particular segment for selling most of their products and the value this segment seeks. This consumer segment regularly purchases the products or uses the services. Thus this segment is considered to be the lifeblood for Tesco and hence is respected immensely. This consumer segment seeks certain key values in their products and services which satisfies their needs and demand.

• The loyal or the repeat customer segment seeks for ultimate satisfaction for each and every time in visits the stores. Considering the fact they were satisfied the first time, they returned for more products and services and therefore they seek the same satisfaction level as the first time.
• Secondly, the loyal or the repeat customer segment needs to be valued and therefore they seek for various sorts of offers and discounts being offered to them on the products and services they purchases (Schmitt et al. 2011). They seek to be respected by being provided with additional benefits which makes them to stay loyal towards Tesco and the products and services the organization offers.
• The repeat customer segment seeks for quality customer service and assessing the scenario of Tesco it can be stated that the loyal customers along with loyalty programs wants enhanced level of consumer service and consumer value (Schmitt et al. 2011). As loyal consumers advocates the brand, this segment specifically looks forward being treated gracefully and needs some additional advantages during their purchasing experience.

Communication of value via Supermarket’s Website

In the modern day, technology and innovation has become the trademark for achieving success in the international market and considering the significant increase in supermarkets chain sector globally, the organizations operating in this sector has opted varied digital marketing ways to gain competitive edge over it rivals. Assessing the significance of consumer value and value proposition Tesco focuses on communicating regarding value via its supermarket’s website. The organization has captured the internet by starting delivering products to the doorsteps of the consumers. In fact, the supermarket chain has started providing products and services at quality value compared to the other competitors who are performing their operations via their website (Ballantyne et al. 2011).

In regards to value being communicated via the supermarket’s website Tesco has provided a section to get feedback from the consumers based on the consumer value and value proposition of the products and services being offered. The feedbacks are reverted back by the consumer support and are communicated to understand what the specific needs of the consumers are and what changes are wanted in the products and services offered by Tesco (Orel & Kara, 2014). Most specifically the “Tesco Value” products and services are emphasized on and communicated upon so that proper alterations are made to meet the demands and requirements of the consumers. In fact the club card owners are also sent with various offers and feedback statements via the website to understand whether the consumer value and value proposition are being achieved to attain the overall financial success of Tesco.

Recommendations

Analyzing and evaluating all the key aspects based on the UK supermarkets chain sector and the chosen organization Tesco, the following recommendations can be taken into consideration in regards to enhancement of the customer value and value proposition.

• The first and the foremost strategic measure that can be taken into consideration by Tesco in regards to value proposition and customer value is proper market research. It is essential for the management of Tesco to carry out market research to analyze and evaluate whether the products, services and brands offered by Tesco are considered by consumers as valuable. Moreover, emphasis must be given on the key strategies opted by the competitors for consumer value and value proposition as it can help Tesco in generating unique strategies to gain a competitive edge over others to continue attaining the financial success.
• On the other hand, Tesco also needs to continue adding new products and services in the products range which enhances the customer value and value proposition for the consumers and the organization too. Constantly monitoring the goods that has higher consumer value and value proposition which are being purchased by the consumers at regular periods needs to be available so that the organization can keep hold on to its priced consumers directly impacting their satisfaction level as well as generating quality revenue and profitability.