Marketing Activity in Service Organisations

This report will investigate the provision of services and marketing activities in Tesco. The aims of this report are:

* Look at Tesco's market position and its competition

* Identify the services they provide

* How Tesco use the marketing mix and keeping

* What Tesco is doing for innovation

Market Position and Competition

Tesco is currently the largest and most successful supermarket chain in Britain and operates in ten countries across Europe and Asia. It was founded in 1919 by Jack Cohen, and in 1929 the first store opened. Today, Tesco has a variety of different store layouts: the 'Tesco Extra' hypermarket style stores provide a wide range of food and none-food products, of which there are 194 internationally, which are generally large out of town supermarkets, several of which are now twenty-four hour stores. The 'Tesco Express' stores combine a petrol filling station with a local convenience store. The 'Tesco Metro' chain is on a national scale and is a series of small high street stores. This chain has been specifically successful in the south of the country, where the quality convenience food range 'Finest' has attracted customers at the higher end of the market. 'Tesco Direct', is Tesco's online shopping approach (Tesco.com), it is now the largest grocery home shopping business in the world, and has a 65% share of the United Kingdom's (UK) Internet grocery market. It operates nationwide and has been very helpful in drawing in new customers to their customer base, as 40% of shoppers prior to using Tesco Direct, were not customers of Tesco. Tesco has been able to broaden its customer base, and make its stores more attractive to a wider range of customers by diversifying the products offered to its customers. Tesco's operations include convenience and gasoline retailing ("Tesco Express"), small urban stores ("Tesco Metro"), hypermarkets ("Tesco Extra"), financial services, car insurance and a telecoms business.

Today Tesco has 1,878 stores with the U.K still remaining its core. They have four strategies which they focus on:

* Strong UK core business:

Their main strategy involves centring the U.K: 'Our strategy of providing customers with exceptional value and choice continues to drive our growth.' (www.Tesco.com, 2004)

* Non-Food:

Tesco's non-food business is becoming more popular with customers as it increases it size, together in the UK as well as in the international operations.

* Retailing Services:

As customer lifestyles change they continue to supply a variety of new products and services, including Tesco.com, Tesco Personal Finance and Tesco Telecoms.

* International

Tesco currently operate 440 stores in 11 international markets, with total sales of Ј33.6 billion. Within these countries they employ 326,000 people world-wide, working in 2,318 stores.

Market share is an effective way to measure how successful a company is against its competitors.

Things are looking very bright for Tesco's market share. Out of the 12 supermarkets operating in the U.K, Tesco are currently the leading supermarket in terms of market share. They have seen their market share of UK grocery sales grow to record levels in November 2004. The latest till roll figures compiled by TNS Superpanel (www.theretailbulletin.com) show Tesco consolidating its number one position with a 28.3 per cent share of UK grocery sales. They have an 11.6% lead over their nearest competitor Asda and a 12.8% lead over Sainsbury's. In all they dominate in the grocery market share. The rest are shown in the table below:

Share of UK Grocery Market: 12 weeks to November 7 2004

Tesco 28.3%

Asda 16.7%

Sainsbury's 15.5%

Morrison's/Safeway 13.2%

Somerfield/Kwik Save 5.7%

Co-ops 5.1%

Waitrose 3.6%

Aldi 2.3%

Iceland 2%

Lidl 1.9%

Netto 0.7%

Budgens 0.4%

Source: TNS Superpanel

Tesco's target markets, in terms of socio economic class, are aimed at the A, B, and C1 groups. It's these upper classes which have the most disposable income who can afford the more expensive 'finest gold' items. In many of their adverts, the high quality products are advertised in a humorous and classy way. There is less emphasis on price but more on the quality of the product.

In order to continue ahead of its competitors, they face a tough challenge.

Tesco face a lot of competition from their competitors, the main four being Asda, Sainsbury's and Morrison's/ Safeway. To continue as a successful business, they must offer consumers new products and services to stay ahead in the game. They have done it a variety of ways.

Asda, their main rivals in terms of market share, are in a fortunate position. As they have been taken over recently by international company Wall- Mart, they are able to take advantage of economies of scale. This means that they can bulk buy on an enormous scale, saving them money which the customers can then reap the benefits of reduced priced products. Tesco are aware of this so they to have introduced 8 different product ranges in terms of quality,