Tesco: Retail Marketing StrategyIntroductionTesco is in a rapidly changing dynamics of the retail industry, there are two order-winning factors that made Tesco win over other supermarkets in U. K.: cost and flexibility. For an operation such as Tesco, firstly, the cost objective can be seen as the most important objective, because all of the other performance objectives affect cost. Tesco's costs are dominated by the cost of buying its supplies. Tesco makes use of information technology running an effective supply chain to reduce cost. Secondly, flexibility is Tesco aims to be better than its competitors at this area.
That means Tesco could offer their customers a wide range of goods, Tesco has an own team who works on creating new products and they do market research, decide the most appropriate form of packaging for a product, and test the new product. Tesco uses a differentiated market strategy. The company targets several market segments with separate offers for each of the targets. Tesco targets mainly consumers living in urban and suburban areas, but also consumers living out-of-town or in edge-of-town locations. The Tesco Metro stores are modern stores designed for consumers living in the urban areas, and especially office workers who want to buy lunch or do their shopping on their way home.
These stores are located in a town centre and offer the buyers quality products. The superstores are located at the edge-of-town, usually with ease of access by car and public transport. The superstores offer the consumer both food, clothes, electrical goods and petrol. For consumers who are seeking more natural products, Tesco has a whole range of organic foods, which has lately been increased and introduced to more stores.
All Genetically Modified (GM) ingredients are also excluded from Tesco's own products. For this sub segment Tesco has a range of economy products called "Value". (Slack, R. 2004, 169-74) These products come in large, lower price format packs. Tesco has a range of premium quality foods called "Finest" for this sub segment. Although these sub segments are small individually, altogether they constitute a significant part of Tesco's total customers. Overall, Tesco's operations strategy is its long-term goal. It is important for Tesco to have an operational strategy because it establishes the types of goods and services the company will offer its target market, and how Tesco are going to get advantages over its competitors.
Tesco made good planning and control in its capacity, supply chain and quality. Besides, in order to make improvements in operation, Tesco measures quality, speed, dependability, flexibility and cost. Although they have made some improvements, there are still some disadvantages in its operation. The Retail Marketing Strategy and TescoBritain's unemployment number is as high as it was 10 years ago, the interest rates are falling and the stocks are cheap.
Food retailing is one sector that can make money on this. People do not have to travel or buy computers, but they do have to eat. Sainsbury’s, which is the second largest food retailer in the UK, might try to merge with Marks & Spencer to compete more effectively with Tesco. (Fernie, 2004, 277-80). This is a great threat to Tesco, and they will need to improve their services to keep the number 1 position in the UK food retailing market.
Tesco designs its marketing strategy; the company distinguishes between five different service types: