Nicola Kaminska Unit 3: Introduction to marketing P4: Use marketing research for marketing planning. P5: Explain how and why groups of customers are targeted for selected products.
Tesco was found in 1919 by John Cohen. Throughout the years it has grown to one of the largest market across the Europe and world. Tesco offers a range of different products. The core activation is grocery, however, the company also sail cosmetics, RTV and AGD, clothing and much more. As one of the biggest market, Tesco has to use different types of market techniques. The expectations of the customers are higher and higher. To stay on the top, the company has to be better than its competitors. P4 One of the most important thing in the marketing is its planning. It means that the company establishing objectives and goals, use different type of resources and setting up the clear plan of action. Usually, the marketing planning process involves: SWOT analysis, implementation of strategy and tactics, a PESTLE audit and evaluating effectiveness of marketing activity. PESTLE analysis One way of the marketing planning is the PESTLE analysis. PESTLE stands for: political, economic, social, technological, legal and environmental influences. Tesco to create a good market plan has to be aware of the all external factors around it. PESTLE contains all of the external factors which the company has to be aware of. Political factors The examples of political factors could be the roles set up by the government, the change inside the government. Political factors also include the tax policies, fiscal policies etc. The political factors could affect Tesco in many different ways. The great example at this time is the referendum which involving the UK to leave the EU. This may affect Tesco’s storage and offices allocated in UK. For example, the company will be not able to gain same amount of the products from different suppliers from EU countries. Thus the company will be force to looking for new local products what may be not easy as the demand of those products will increase in general for every single company. Tesco also would be not able to transfer its employees across the Europe, so their experience could be worst. Economic factors The other example of external factors is those which involving economy. The example of economic factors are: inflation rates, interest rates, foreign exchange rates, economic growth patterns etc. All of those economic factors may affect Tesco in different ways. For example, in the situation where
the rate of interest would increase, many of customers would spend less money and buy inly base products instead of buying many of them. They would also go for cheaper options. In this situation the company would has to thing about new products which would be cheap but in the same time the company’s profit would stay almost the same. Social factors Social factors are things like: cultural trades, population analytics, age, gender and ethnic groups. Is also very important for Tesco to be aware of the social factors. The company should always be able to use social factors to decide what is the demand for particular products what kind of society is leaving in the particular area and what kind of products could be useful for them. Tesco has its storages in many places across the UK, very important for the company is to remember that the products which works for one area might be completely useless for the other ones. Technological factors The other factors which may influence the company could be technological factors. Technological factors involve anything what is linked to technology. Thus innovations in technology that may affect the operations of the industry. One of an example of the technological factors are the self-scanners which allows the customers to scan their products themselves. All of the bigger market use it now. It means that Tesco had to introduce them to do not stay behind. Sometimes, technological factors could be used in different way. For example, Tesco may see if it is able to introduce particular products and what kind of technologic the company will need to do it. Legal factors Legal factors are the policies set up by the government. So, Data Protection Act 1998, Freedom of Information Act 2000, Computer Misuse Act 1990 etc. All of those policies should be kept by the company. Legal factors are important in marketing planning as company has to see if the products or service which it wants to introduce is legal and if is not against any policies and law. Environmental factors The last factors which are included in PESTLE are the environmental factors. Environmental factors are things like: weather, tourism, farming, agriculture, geographical location etc. Tesco has to know everything about its environmental factors to be able to produce a successful market planning. An example of this could be the fact that the company may use the local farming to supply very fresh products every day which are going to satisfied the customers. PESTLE in the market planning
PESTLE is very useful in the market planning. When Tesco wants to introduce brand new products, it is easier do to do it with the PESTLE. So, the company wants to introduce the new types of fruits and vegetables which are good on summer time. Some of those products are from UK and some of the not. Tesco has to use the market planning to evaluate which products are going to work well and which not. Tesco also has to see if this kind of products will be profitable for it. For this Tesco might use PESTLE analysis. So, in the political factors Tesco has to see if is likely for the UK to leave UE. If yes, then it might be hard to supplier all of the products which company wants to introduce. Then Tesco has to see how the economic factors are going on and if the customers will have enough money to buy those products. The social factors will show Tesco if people would be interested in this kind of products. Technological factors are not that much involve in this particular products. With legal factors Tesco has to check all of the policies which the particular products and check how it is going to affect them. Lastly, environmental factors which show if which products are available in the local are, which one Tesco has to gain from another country etc. SWOT analysis The other useful technique which is going to examine the relationship between Tesco and its marketing environment is the SWOT analysis. SWOT stands for: strengths, weaknesses, opportunities and threats. Strengths and weaknesses are internal and might include things like buildings, IT system, qualification of employees etc. The external part is related to opportunities and threats. The main point of the SWOT is to match business’s weaknesses and strengths with external forces. Strengths Strengths are those things which the company doing well. An example of it in Tesco’s situation could be the prices of company’s products, quick online shopping and much more. Weaknesses Weaknesses are those things which Tesco should improve and those thing which the company is not doing well. In Tesco situation many of the customers thinks that customer’s service for this company is poor according to its competitors. Opportunities The opportunities focus on events and developments external to the business. For example, new market, new products or new territories. Threats Those are things outside the organisation which might damage its performance. For example, new policies from government, increase of competitors’ profit etc. Tesco may use SWOT analysis in many ways. Its allows the company to evaluate its main strengths and weaknesses. The second one is very important as Tesco may evaluate what is not good and try to change it. The opportunities show what company may do to improve its performance and increase profit, where the threats are about the risk and different factors which are not good for Tesco. SWOT analysis is important in market planning, because Tesco may evaluate if there is any
point in starting any new things. The company is able to evaluate if it is ready to implement anything new or of it should focus on internal factors. It is also helpful as in the situation where there is to many threats, Tesco might wait with any change in its market. The good thing about SWOT analysis is that it also helps to set up smart objectives. Smart objectives are thing which Tesco set up for its employees as a main aim. Those objectives hat to be sensible and not too hard, also the period of time shouldn’t be too long or to short. SWOT analysis helps to set up them as company may see what kind of mistakes it is doing and introduce the plan to change it.
P5 To be successful company, Tesco has to use a range of different market techniques. All of them are important as they covering different areas of marketing. In 21st century the demand for products is very different. There are thousands different group who has different needs. Is not easy for the company to be able to satisfied all of the customers. However, Tesco offers a range number of products what means that its target market is not a particular group of people or few of them, but almost whole society. I will talk about five different marketing techniques which are used by Tesco and different companies. I will explain how those techniques are working, describe them and explain how Tesco uses them. There is a lot of different marketing techniques which help the company in making profit and in discovering of costumers’ needs. However, some of them are more popular than others. The most common market techniques, also those which are very effective are: branding, relationship marketing, segmentation, targeting and positioning. Branding Branding is one of the most important marketing technique. Branding is almost everything. Without good brand many of customers would not trust the company. Also most of the customers will pick popular brand instead the unknown one. Branding different speaking is logo, slogan, colours and everything else similar to above what can be linked to the particular company. The main purpose of branding is to create a strong image of business which is known by many people, which is also trustful and which persuade people to buy products from it. There is a lot of things related to the branding. For example, branding building and positioning and brand extension. Brand building is a process of building new brand. The company set up its logo, slang, main values and colours. The next step is brand positioning. This is very important part as
business has to advertise its brand and make people to know about it. Brand positioning may take even few years. If the brand will be known by many people and most of them will like it and trust it, then the company might decide to expand the brand which involves introduction of new products, new target market or new areas. However, the main thing about brand is that it very often influences the buyer behaviour. How said before, people will usually use known brand which is popular. Tesco as every other company use branding. Tesco brand is very strong so far and is getting even bigger. The colours used by Tesco are blue and red. The slogan ‘every little help’ is also known by everyone. Tesco storages are allocated in many places in UK and across the England. Tesco is known as a quite cheap market which sells good quality products. This kind of branding helped the company to gain thousands of customers every day and made Tesco one of the market leader. Additionally, Tesco wants to be perceive as company which is friendly to families whose are main target of it. Relationship marketing Relationship marketing is where a business focuses on the relationship with its customers. This kind of marketing is used by many big companies similar to Tesco who wants to make their customers familiar with their brand. The situation where the particular customers is ‘loyal’ to the one brand happens very often. Relationship marketing means that a company will give different types of rewards and bonuses to the customers who are coming regularly. This benefits both sides as the customers comes and spending money which gives Tesco profit, where customers may get some products for free or cheaper, because they coming regularly and spend their money in that particular company not in the other. Tesco as one of the marketing technique, uses the relationship marketing. Tesco understand that the good and ‘loyal’ customers are important and that they should get benefits that they choose Tesco over any other company. The main thing which Tesco uses to build relationship between the company and its customers is Tesco’s club card. Every time when a customer purchases any kind of products from company, Tesco gives points on her on his club card. After some time, when there is enough point on card, they can be transferred in different type of vouchers. So, the customers could pay less for particular products or do not pay at all. But Tesco club card also offers different types of service. For example, the voucher could be used in ZOO, some restaurants and much more. This kind of marketing helps Tesco to build a relationship with its customers and make them to come back and buy more. Segmentation Segmentation is the other example of marketing technique. All markets can be divided up into different segments. All segments have its own distinct profile. A market segments include different groups along the market, with similar wants, purchasing power, buying habits and geographical location. Segmentation marketing allows the company to group different types of customers and meet their criteria and wants. It also helps the company in implementation of products and in set up
the prices. However, many of the companies do not have enough resources to target all of the segmentations. In this situation business is choosing those one which are the most profitable and easy to the company. Segmentation is mainly about meeting the needs of customers and offers the products which they are going to actually buy. There are no limitations how the market can be segmented. However, there is a typical pattern how the companies may segment its markets:
Geographical
The geographical segmentation is about the location of the companies’ customers. This may be divided up in national or regional boundaries. Or if the customers live in rural or urban areas.
Psychographic
This is about lifestyle and beliefs. So, the company has to look in environment and what kind of products will be appropriate for this area.
Socio-cultural
The socio-cultural is about classes and the level of education of the customers. So, the company has to see what kind of qualification its customers has, what kind of food they may like, what kind of magazines they can read etc.
Demographic
Demographic is about sex, age and anything similar to this. So, in this situation Tesco has to see what kind of customers it has, what is their age and gender, what they might be interested in and so on. The other way of segmentation is uses of geo-democratic system. Geo-democratic system helps the company to identify and reach targets groups. There are two organisations used by companies ACORN and MOSAIC. ACORN is a geo-democratic tool that business use to identify UK population and the local demand for particulars products. ACORN gives the business the main idea of what kind of products each demographic areas has. MOSAIC is a system that gives information about households in UK into 12 mosaic groups and 52 sub-groups called Mosaic Types. Those group and types have their own characteristics. A business may use this information to identify what kind of customers the company has in different areas and what kind of needs those areas has. This is also good as company may decide to operate just in few areas as it could be not possible to fully satisfied all of them. Tesco as every other company use segmentation. However, in Tesco case is could work different. Tesco is not afraid of any type of segmentations and offers products which are meet the criteria of many different groups. Tesco has its storages in many different places, where the demand for products is different. To deal with it Tesco put different types of products in different area. In every
Tesco’s storages we can find the products typical for particular area. For example, in London the segmentation is very huge as there is a lot different groups who wants to buy really different products. So, most of the storages offers the products which are from different places on the world. This is very good as everyone will find something good. This kind of marketing makes that people wants to come and buy products from company. They see that Tesco is aware of their needs and try to fully satisfied everyone. Another very good example is products sale by Tesco which are healthy and appropriate for diet. This us created for the particular group of people who wants to eat healthy or who wants to lose weights. I was a great set which Tesco has taken as ‘being on diet’ and healthy food is very popular and trendy now. Targeting The next stop after the segmentation is marketing targeting. This process involves evaluate the potential and commercial benefits of each segments and pick the one which are the most appropriate. There are many reason why the company could select the one group from the other. There a few examples: the accessibility of each segment, the current of future prospect of the segment, the profit which company will get from the particular group, the match between particular group and business main mission and much more. All of this factors helps the business to pick the particular segmentations and implement its products in them. How said before, Tesco has a lot of different groups. The company offers range of different products and those goods are usually fits most of the segmentations. However, the main segmentation which Tesco want to attract are families. Tesco presents its brand as one which wants to satisfied families and offers all of the products which this particular group may needs. Positioning Positioning is the step which the company is taking after targeting. In this stage the company develop the particular products to make it appropriate for the particular segmentation and also create the marketing mix for each marketing segment. In this stage the company focus only on the segmentations which it has previously choose. The market research here is very important as company has to gain all information about the segment and them be able to develop a product which the customers are going to buy. The positioning is key thing here as without good development and research the company will be not able to sell its products and make profit. Tesco use positioning all the time as company introduce new type of products and services. An example here could be the new option which Tesco offers: pet insurance. Pet insurance is intended only for people who has a pet. The segmentation here are people who has a pet and who needs to get insurance for it. In the beginning Tesco had to evaluate if this particular segmentation will be profitable for the company and if its meet is main activities. Is good to say that company had to also used the PESTLE analysis here, as there are many external factors related to this. For example, legal factors.
The Marketing Mix 7Ps The marketing mix is a mix of everything what is important in marketing. There are seven main principles which may help every company to make their work successful. Every single principle is very important and there should be not situation where business would forget about them. Before the company will develop a new products or put an exist product in a new market, all of this factors included in the marketing mix should be achieved. There is a diagram of a 7Ps in the Marketing Mix:
Marketing techniques are essential part of every business. There are many reason why the company use them. By it they finding what the customers want to buy, what they interested in and what kind of products the company should develop. However, the most important reason for every company of using marketing techniques is to increase demand of products and general profit of company. Relationship marketing is very popular now as people like to get thing for free. This kind of marketing benefits both of the sides and create good relationship between the company and its customers. One of the most popular way of create this relationship for Tesco is its club card. How was said before, the customers who has this kind of card main collect points every time when they going to buy something and the get something back. So how the company increase its demand and profit by this kind of marketing technique? The customers who use the club card are more likely to come often than usually as they now every time they will buy something they will get some point. Many of people will choose Tesco instead the other company as they would already have a club card and is going to be always more ‘profitable’ for them to buy there than in the place where they do not have any kind of club card. Consequently, when they coming often the demand for many products is increasing as they boy more. Also the profit for the company is higher, because there are
more products sold. The company is big and rich enough to give rewards to the ‘loyal’ customers, especially that usually they are not that much expensive. Tesco here has used the 7Ps principles very smoothly. Tesco has already the right types of products in the right places. The prices of most of them are very good. Tesco’s club card could be a great example of the promotion part of it and also the people one. The club card makes people to come back and recommended the company to their friends, neighbours etc. Tesco also takes care about people who are its customers. Is very good as many of them feel relationship with this particular company and do not want to buy in any other. Branding is another marketing technique. I would be overuse if I would say that branding is the most important and part in marketing and is the bade of every big company. Tesco’s brand is known almost by everyone. But again, how its increase its demand and profit? The answer is really easy. Brand has a very big influence on buyer’s behaviour. The brand which is known by many people will has always much more customers than one which is not as poplar. When people thing about Tesco the main thoughts which comes to their heads are that its cheap, has every type of products, the quality is satisfied enough and that it like families. This kind of thoughts are positive, so many people choose Tesco as the shop where they doing their everyday shopping. Consequently, if there are more customers, the demand for products is higher and the profit increase. In this market technique Tesco has again used the 7Ps in very good way. The promotion of whole brand is on high level as everyone knows the company. The people, so target market of Tesco is very smart as in families there are people in different age. The next marketing technique used by Tesco is segmentation. Tesco is one of the largest market in UK and Europe what means that the company may examine the environment by itself and then be able to segment it. How was said before, Tesco operates across 12 countries where most of them are in Europe. The storages in every country are different, however the main idea is the same. In segmentation technique the company used the psychographic method. It means that Tesco was looking at people lifestyles and things which every single segmentation may need and wants. The Marketing Mix is very important here as Tesco had to decide what kind of products to sell in what prices to whom, how it promote and what kind of physical environment is around. The
psychographic segmentation here was very smart as many people in Europe has similar lifestyles and their needs could be also quite similar. The next stage of segmentation is targeting. The main target of Tesco are families. This fact that Tesco has chosen this kind of segment was really good. In every country, there is millions of families whose needs are very similar. The company used the Marketing Mix here really nicely and good. All of the principles in 7Ps had been included and considered. The last part of segmentation and targeting is processing. Processing is when the company knows its target market and develop products which are going to be appropriate for it. There are many products which are similar in different countries. However, Tesco is aware of the local needs and all of the storages has things which are specific for the particular areas and for which the demand is very high. It means that Tesco has develop strategy where the types of product are directly linked to the customers. How it was in segmentation and targeting Tesco had use the 7Ps principles in very good way. Is also very good to say that the whole process and promotion foe this company is very successful. Many Tesco’s advertisements show the whole families who make shopping in Tesco. The fact that products are different in every storages means that company understand the people and physical environment. In conclusion, Tesco using different types of marketing techniques. The most common ones are: marketing relationship, branding, segmentation, targeting and processing. All of the are important as they improve the performance of the company and increase its demand and profit. Tesco uses all of those techniques in a brilliant way. Is hard to evaluate which ones are used better and which ones worst as all of them seems to me completely understand by Tesco. The evidence for it is the fact that Tesco in one of the market leader in UK and across in Europe and that its profit is higher and higher every year.
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