Analysis of The Marketing Strategies of Tesco

Introduction

In this essay I will be discussing the way in which Tesco use relationship marketing to achieve there strategic aims and objectives and how this can be applied to a company such as the Range who although have a quite a few stores around the UK were Tesco’s is a much larger company who has the money to invest into research and therefore has a much clearer vision for how they use there relationship marketing.

Aim/Objective: To make shopping cheaper for the average household

To make shopping cheaper for a company such as Tesco’s they where one of the first to introduce a loyalty car system which was called the Club card which allow customers to get money of there shopping as well as receiving free days out for the family as a reward for shopping with them. Tesco’s have all made a add campaign demonstrating that they are better value then there competitors such as saying “At Tesco’s this pint of milk was 50p but at Asda its 65p,” these sort of adverts littered the TV channels for long periods of time so that now it has become synonymous that Tesco is one of the cheapest places to shop for groceries in the UK but still remaining that it has the same quality as everywhere else as it is the same product which they are selling.

Aim/ Objective: To build our team so that we create more value

The training of staff is incredibly important for any company to do as this means that the customer see’s what the company is all about as the staff reflect the company. This means in Tesco’s they want to make sure that there staff are polite and informed about the products and how the customer should be treated, however due to the size and the training infrastructure in place this is harder said then done for Tesco as they have built there brand about delivering decent service but the employees will must likely not no much about the products, compared to another supermarket such as Waitrose who have much higher prices for each product but the employees know everything about the product and deliver huge amounts of customer service, for a company such as The Range they need to find a happy medium between the two. They need to deliver a higher level of customer service then Tesco but don’t need to train the staff the quality of Waitrose as they will not have customers that require the knowledge required of Waitrose staff.

Aim/ Objective: act responsibly for our communities

Tesco have said they are all about sponsoring and helping local communities and this is why they give there store managers independence when it comes to handing out free food and sponsoring events and this means that they can build a image around helping local people so that they are more likely to shop there but also so that if they were to want to open another near by the less likely they are to get as many rejections and people contesting it as they usually do because most people don’t want a supermarket opening near them due to the large footprint they bring with them especially with the traffic, however if that supermarket has already contributed a lot to local events and funded local charities they are more likely to be accepted and allowed to open more stores locally.

The effectiveness of Tesco’s relationship marketing

Positive effects

The first positive effect of the relationship marketing for Tesco’s is that they are to offer something that no one else can really compete with and this is there Club card, this due to the fact that it is the first of its kind and therefore it was the one to have the most members it is the same with technology as Apple had the first real smartphone and therefore they have control of there whole market and with the card memberships there has been rip-offs such as nectar that actually offer more features but because Tesco were the first to release there’s it still has the most members as people are loyal to brands and also don’t want the hassle of signing up and changing to a new card. The club card was affectively was what brought Tesco to bringing It to a household name according to the telegraph because they could compete with other supermarkets as they were a small business and therefore couldn’t get the same prices from the suppliers they needed to offer the customers something so they would be more willing to shop at there stores, so they made deals with other business’s to offer Tesco’s customers discounts at offer stores which bring business to other companies meaning they are willing to offer larger discounts the more results they see from the promotion.

Another advantage to relationship marketing that Tesco deploys is the way in which they collect data on there customers such as using the club card to seeing what the customer usually buys and then offering the coupons on things they are likely to buy in the future or like and this means they may add it to there regular shopping list after using the coupon which means that they have gained a lot more sales of product that otherwise wouldn’t sell as well. It also means that the customers feel like the brand is interested in what they are interested in and also that Tesco’s know them well so that they can trust them with there money and that all of there purchases aren’t going unnoticed, although some customers wouldn’t like the feeling of being watched on there every purchase and feel uncomfortable the majority will realise that this is a huge positive for them and that it is worth the money they are saving.

Negative effects

One of the negative affect of the club card system is that it has become so successful that there has no started to be competition and because Tesco want to keep increasing there profit margins they are slowly bringing back the majority of club card points which are being given out and therefor people are being given less even though there prices haven’t change and therefore people are now looking for other alternatives to the club card scheme and this is why many people are moving over to the nectar card system because they know that they will spend the same amount in Sainsbury’s as they would in Tesco’s but will receive more money back then they would from the Tesco scheme and this was shown by chose.co.uk saying that the Tesco scheme is no longer what it was and therefore people should be looking for alternatives and that nectar was better money for value as it can be used on Ebay, as well as many other sites and stores, were the Tesco scheme cannot.

Another negative affect is that Tesco only allows people to gain money back on there shopping and also receive tailor made coupons were some people like to have privacy and although they would like to receive free days out because of the points they have collected on there shopping they don’t like the fact that Tesco can see everything the buy and also thought of someone going through everything they buy, Tesco could fix this by allowing more transparency with there customers so that people can have options at how much data is collected on them.

Conclusion

So in conclusion the relationship marketing that Tesco has put into place is the only reason why there brand is such as a house hold name and this is because they were the first to come out with the club card system but if they were in the same position as they are in now and were to release the club card system it wouldn’t make a big difference because they were only successful because the system was in head of its time but also because they are now trying to increase there profits they are offering the same deals they once were. Overall they have also had a very successful campaign on TV which has made them known for selling the same products as everywhere else but for the same price.