Marketing

Page4: Introduction, Objectives

INTRODUCTION

Tesco is one of the best known names in the high street. It is a large public limited company (plc) with approximately 165 000 shareholders. By 1995, Tesco had become the largest food retailer in the UK, overtaking Sainsbury's. The company operates over 800 stores throughout Europe.

BUSINESS OBJECTIVES

Tesco sets objectives for the four main areas of its business:

customers operations people (ie employees) shareholders.

Figure 1: The Tesco Steering Wheel

top

Page 5: Development of Tesco, Tesco's presence in Central Europe

After serving in the First World War, Jack Cohen used his savings and started selling groceries in Londonl East End markets. Tesco was founded in 1924. The name was based on the initials of T E Stockwell, a partner in a firm of tea suppliers, and the first two letters of Cohen. In 1929, the first store was opened in Edgware, North London. The business prospered and, in 1947, Tesco Stores (Holdings) Ltd was floated on the Stock Exchange. In 1956, the first self-service supermarket was opened. Apart ftom opening new stores, Tesco has expanded by taking over other businesses. For example, in 1992, it bought 57 William Low stores in Scotland and, in 1997, it purchased 109 stores in Northern Ireland and the Republic of Ireland ftom ABF pie.

Tesco is an ambitious company with plans to open more new stores in the United Kingdom (UK). However, in recent years, a major part of the firm's strategy has been to open stores in other European countries.

top

Page 6: Tesco's stores 1998, Opening a new Tesco store

Figure 3: Tescos Stores, 1998

stores Sales (Јm)

Ireland 109 1028

France 103 644

Hungary 43 57

Poland 31 22

Czech Republic 6 84

Slovakia 7 61

United Kingdom 534 14640

OPENING A NEW TESCO STORE

Tesco's sales in Europe have risen steadily. Expansion into central European countries, such as those shown on the map in Figure 2, can be risky because sales might not be as high as expected. Average incomes and expenditure are lower in these countries, but have the potential to grow. The cost of a good site is also much lower than in the UK. The company intends to open more new stores in Europe, requiring more investment.

Each superstore contributes between Ј2 million and Ј3 million annually to the local economy, in wages and other expenditure by the store. Because of these benefits, many local authorities are keen to have a store in their area. When opening a new store, Tesco needs to decide what type of store is needed in that area. Apart from the typical superstore, Tesco has introduced three new types of store.

Tesco Metro - Introduced in 1992, the intention was to maintain a presence on the high street at a time when most developments were at out-of-town sites. The target market is people at work and those who prefer to shop in town and city centres.

Tesco Express - Launched in 1994, these stores bring together petrol stations and shops. Much smaller than a supermarket, they have a wide range of products. They are located to provide easy access for both motorists and local residents. The company continually evaluates the success of its Express stores, before deciding whether to build more.

Tesco Extra - This is Tesco's newest type of store and also its largest. Two stores were opened, the first at Pitsea in Essex and the second at Peterborough in Cambridgeshire. These stores are twice the size of a typical superstore and provide a huge range of food, household goods and clothes.

top

Page7 : Tesco &ICT (Information and Communication Technology)

Tesco uses ICT in most areas of its business. Stock, distribution, pay roll and accounts are some of the operations which are controlled and monitored by ICT.

STOCK

Over 95% of Tesco's products in the UK are automatically re-ordered from its warehouses. The stores' computers log sales and place orders for products when necessary. In turn, computers at the warehouses then automatically re-order stocks of products from suppliers.

DISTRIBUTION

Using ICT makes it more efficient to transport smaller orders and to have more frequent deliveries. New supplies can be ordered instantly for immediate delivery. Tesco hopes that using ICT in this way will allow it to save money. It will be possible to hold lower levels of stocks in its stores and warehouses. The ultimate aim is for supplies to arrive just when they are needed.

THE TESCO CLUBCARD

This is Tesco's loyalty card. It is the largest loyalty card scheme operating in the UK. By 1998, it had 10 million members. Customers hand their card to the assistant at the cheekout when paying for their purchases. The card is scanned electronically. Customers collect points based on their purchases. The purpose of such a card is to reward customers using the stores, by giving discount vouchers which they will then use to purchase more goods at Tesco stores. It also allows Tesco to gather information on the type of products the cardholders purchase. In this way, it can build up profiles of its customers and target its advertising and promotions more accurately.

Figure 4: Example of a Tesco Clubcard and discount vouchers

top

Page 8: Home shopping

Tesco will provide a CD to customers containing the full range of its products. Customers can view