Tesco Retailing Marketing

Retail Marketing

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Retail Marketing

Introduction

Tesco is a British multinational retailer that has its headquarters Hertfordshire, England. It is the third largest retailer in the world profit-wise and the second largest retailer in the world in terms of revenues. Tesco has operations in 12 countries in Europe and Asia. It is the market leader in several of the countries in which it operates. The retailer was first founded in 1919 as a group of market stalls by Jack Cohen. Tesco was initially a grocery retailer. However, in the 1990s, it diversified into other areas such as electronics, clothing, furniture, financial services, and telecommunication services. Tesco has operations in China. The retailer formed a joint venture with China Resource International, which owns one of the major retailers in the country, Vanguard. Tesco has a 20% stake in the new chain whereas Vanguard has an 80% stake.  

Merchandise Range and Assortment

Tesco merchandise range comprises of up to 90,000 different products. These products are referred to as stock-keeping units (SKU). The pack size and flavour of one brand is a single SKU (Bakker, 2014). Tesco has 228 different SKUs of air fresheners alone, which range from the Tesco gel air freshener, the retailer’s own brand, to Glade sense and various Chinese brands (Wood & Buttler, 2015). The retailer stocks 98 types of rice. These include Tilda steamed wholegrain basmati rice and Yutaki steamed rice. Tesco stocks 60 options of coke. These include Diet Coke, Coca-Cola Life, Citrus Zest, and various Chinese brands. Tesco also offers 28 options of ketchup. These include Granovita organic ketchup, which is its own brand of ketchup. Tesco offers 283 types of coffee. These include Nescafe and Taylors of Harrogate. Tesco stocks 26 types of dishwater tablets. These include Tesco everyday value dishwasher, the retailers own brand, Finish Quantum Powerball Tablets, and various Chinese brands (Varley, 2014).

Retailer Communications

Tesco uses both in-store and market based marketing promotional methods to improve its competitiveness. Some of the in-store promotional methods that the retailer uses include POS display, personal selling, in-store sales presentation, in-store advertising, and retail sale. POS display involves presentation of products to customers whereas personal selling involves the interaction between customers and the store personnel. In-store sales promotion helps in inducing shoppers to purchase the specific product. Finally, retail sale involves the use of promotional prices for certain duration to increase the sale of the product.

Sales promotion, direct marketing, advertising, sponsorship, exterior design, and public relations are some of the market-based promotional methods that Tesco uses. Sales promotion provides inducements that encourage customers to make the purchase. Advertising provides relevant information to shoppers to encourage them to purchase a certain product. Direct marketing involves direct contact between the retailer’s employees and shoppers. The exterior design also helps in attracting customers into the retail store. Tesco also manages information on the company from various sources to help maintain its image.  

Tesco uses the Tesco Supplier Network to communicate with its suppliers (Buttle & Maklan, 2015). The network enables the suppliers, who are more than 5,000, to communicate with the retailer on various issues. They may use the network to air their grievances on how the company treats them. The retailers can also use the network to communicate with each. The creation of the network was prompted by the retailer’s slump in sales and the revelations of a £263m accounting scandal (Ruddick, 2015).

Various players in the industry used to criticise Tesco heavily due to how it handled its suppliers. The network would help in improving the relationship between the company and its suppliers. The new communication network would improve communication between the retailer, suppliers, and producers in various locations across the globe. As such, the network plays a vital role in the partnerships between the retailer and its suppliers and the delivery of products to its customers. Improving communication with its suppliers enabled the retailer to improve the availability of certain core products. It also enabled the retailer to rationalise the range of products its offers and improve the services it offers its customers (Ruddick, 2015).

Technological developments in the recent past have led to the increase in the number of people who have smartphones. Smartphone shoppers present a huge opportunity to organizations. The smartphone creates a market that can help in reaching more than 1 billion people across the globe. Therefore, it is vital for organizations to ensure that they embrace this opportunity to increase their competitiveness. Customers use their mobile phones to undertake various activities that range from managing their shopping lists and making price comparisons to making online purchases. Tesco has taken advantage of this by developing a mobile optimised website and developing new apps that target mobile users (Dixit & Sinha, 2016).

The retailer ensures that it focuses on its customers first before developing technological solutions that target customers. The retailer uses mobile phones to communicate with its customers and provide them with updates. The retailer engages with its customers using QR codes to improve customer experience and its marketing efforts (Wisner, Tan & Leong, 2014).

Store Layout, Design, and Visual Merchandising

Store layout, design, and visual merchandising are some of the factors that make a store unique. A store's exterior and interior convey certain messages on the store to its customers or potential customers. The exterior design of the store and the building where the store is located are factors to consider when setting up a store. The height and size of the building, the display window, walkways, and colour of material used in the building are some of the major factors that influence customers’ perception of a store. As retail store may use three types of layouts. These include the race track layout, the freeform layout, and the grid layout.

Tesco acknowledges the importance of layout in improving its competitiveness. According to the retailer, the first principle of layout is circulation. The retailer arranges products in such a manner that it can control traffic flow of customers in the supermarket. Tesco also ensures that high-draw, high impulse items, which make customers to make purchases they did not plan to make, facilitation circulation of customers in the store. The service rooms and restrooms in Tesco are placed in a location that enables customers to walk past certain items which helps in creating extra purchases. Tesco has located basic items such as bread and milk at the end of the store. This enables the store to increase customer’s start of circulation. The cashiers’ desks in the store are also located in a position that enables the store to increase circulation. Entrances in Tesco’s stores are located in the right hand side. This is due to the fact that research shows that consumers who shop while moving in a counter-clockwise direction spend more time in store and consequently make more purchases (Arthur, 2014).