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Marketing mix refers to the seven critical p(2)
1. Marketing Assessment
Hung Son Do (Ryan)-DipG class
Marketing mix refers to the seven critical P‟s of marketing: product, price, place,
promotion, physical evidence, people and process, understanding of which helps the
firm to market their products and services in an effective way.Tesco is the Britain‟s
biggest and profitable supermarket chain over the last decade. Its market share
based on consumer spend in supermarkets is in excess of 30%. A core reason for
their success is an ever expanding range of products and services in their stores.
There seems no limit what it can offer its customers. However, the “product”
therefore is not most important part of the marketing mix because all the 7Ps are
dependent each other. If the product is good but the price is so high, will customer
willing to pay for it? If the product is good and the price is attractive but the company
does not promote it how will the customer know about it? If all three product, price
and promotion are attractive but place is wrong how will the company can sell it to
the customer? ... ?
Tesco has wide range products offer and it is more and more increasing. When
customers go to Tesco‟s stores, they can have a choice of different products and
easy to get right information to help chose between them. Many of Tesco‟s stores
stoke over 40,000 products line. We can look at few examples of the diversity of
choice available through Tesco‟s food range such as: 400 “Healthy Living” products,
150 “Free From” products, 40 special Healthy Kids snacks... Individual customers
will satisfy if they have wide range products to buy, they can choose their favourite
brands, regional produce, and international cuisine, organic or healthy options to
name. Tesco is continually developing more online products and also focus on non-
food products to meet the customers‟ needs. For instance, Tesco has recently
started offering music downloads as well as a grocery delivery service that includes
wine and white goods.Tesco also identified that customer‟s demands are changing
as lifestyle change. Therefore, it also focused on development its product to satisfy
customers‟ needs. That are the advantages to help Tesco can compete with other
supermarkets in Britain.
Price plays an important role in customer‟s buying decision. It is difficult and must
reflect supply and demand relationship. Pricing a product too high or too low could
mean a loss of sales for the organisation. Price can be seen as highly important for
the success of Tesco‟s business. Look at the history, Sainsbury was the UK's
biggest grocer until 1995, but was recently relegated to third position behind Tesco
and Asda. Internal problems and strategic errors have left Sainsbury struggling. The
2. company believed it could abandon the classic focus on 'price' in favour of
refurbishing store „fascias‟ and supply-chain improvement. The fail of Sainsbury‟s
strategy is a clearly evidence can prove the important role of Price. Customers want
low price, they are very sensitive and always compare the price of all supermarkets
then decide come to the supermarket which offer same products but have cheaper
price. Tesco strives to reduce their price, even when many other aspects of
customers‟ live such as gas, electric bills, motoring... have become more expensive.
They also have to face with challenge due to rising energy prices, but last year they
still managed to reduce their price by 1.8 percent. This is the reasons why customers
come to and stay with Tesco.
Tesco has a giant store network. It is divided into six formats, differentiated by size
and the range of product sold: Tesco Extra, Tesco Superstores, Tesco Metro, Tesco
Express, One Stop, Tesco Homeplus. Tesco use this format because just only 20%
of its customers have access to a Tesco Extra- the largest stores which stock nearly
all of Tesco‟s product range, and the company is restricted in how many of its
superstores it can convert into Extras and how quickly it can do so. Tesco also
identified that it is not almost customers feel satisfy with large stores, so that they
have to divide in smaller store and customer can easy to find its store everywhere.
The price of products in Tesco Metro or Tesco Express which is in town centre
typically have higher price than larger stores outside town centre by 2-3%. The price
is higher because these stores have higher overhead costs (mainly rents and rates).
Tesco has spread their stores network though Britain with right form and right
overhead costs. It help customer can easy to approach their products and get the fair
deal with it.
Promotion is one of 7Ps factors which help Tesco attract its customers. Tesco have
used many Television advert over the years. In July 2007 a DVD containing adverts
from 1977-2007 was given to all members of staff. Almost of Tesco‟s adverts make
the customers focus on its price, these adverts help the company can create brand
image base on cheap price. Tesco also offer lots of in store promotions, when
customers walk around in Tesco stores, they can easy to find some special offer like
that: “buy one get one free, half price, great offer”. It will promote customers buy
products as much as they can and feel satisfy because they can save money. Tesco
has also providing Clubcard loyalty scheme in which customers can collect two
Clubcard points for every £1 they spend in a Tesco stores, or Tesco.com and 1 point
per £2 on fuel. Clubcard engages with a large number of corporate partners in
relation to the earning and delivery of rewards. Tesco allows customers to gain
rewards from activities as disparate as travel, dry cleaning, and car
maintenance.Customers can convert their point to money (each point equates to 1p)
and use it in the next time they go to shopping. It is not only sale promotion but it
also helps Tesco collect data from customers when they purchase in Tesco‟s system.
Tesco manage a portfolio of interactions that the customer has with the brand and
then can easily see the similarities and differences between each customer in terms
of what they buy, how they respond to the service. Therefore, Tesco can divide
customers in different segments and create right strategies for each segment.
3. Tesco has built a good buying process for its customers. Customers can go to stores
to buy or buy online in Tesco‟s website (Tesco.com). Customers can easily find
Tesco stores in everywhere. In the store, customers have two options to check out
their product: till payment or self-service, it helps customers pay easily and more
convenient. For the online customer, efforts have been made to decrease the
amount of time it takes a customer to complete their first order. The time has
dropped significantly from one hour to 35 minutes. This provides a better customer
experience. Online shopping price is also quite cheaper than offline because
customers do not have more opportunities to choose product. It may not as good as
they expected.
Physical evidence is an essential ingredient of the service mix; consumers will make
perceptions based on their sight of the service provision which will have an impact
on the organisations perceptual plan of the service. Although Tesco has not chosen
to spend lots of money on store-design, but the stores is not noisy and aggressively.
It is always kept in clean and attracted. Each kind of product is divided in different
areas to help customers easy to find products and get around stores. The website
where customers can buy online is also designed simply and friendly with customers.
It help customers can find products easier
An essential ingredient to any service provision is the use of appropriate staff and
people. Tesco‟s purpose is to serve customers and make them feel satisfy with its
products. Tesco has divided its staff in six levels and in each level requires particular
skills and behaviors. This helps employees understand whether they have the right
knowledge, skills or resources to carry out their roles. All Tesco‟s customer facing
personnel are to be trained and developed to maintain high quality of personal
service. When customers have problems, they always get help from staff with a
smile.
In conclusion, Tesco is success in recent years. The reasons is that it know how to
make customers feel satisfy and attract them come to buy its products. Tesco will not
become more successful if it only focuses on development its product and forgets
other factors of marketing mix. All of factors are not independent but always support
for each other. The important is how to control and develop on the factor that is the
advantage of company in the industry.
Reference:
Talking Tesco: How we compete. Lower price (updated 7 march 2011) Available
athttp://www.tesco.com/talkingtesco/lowPrices/
Wikipedia. Tesco (updated 7 march 2011) available at
http://en.wikipedia.org/wiki/Tesco
Talking Tesco: How we compete. Product choice (updated 7 march 2011) Available
at http://www.tesco.com/talkingtesco/productChoice/
4. Corporate watch. September 2004.Tesco profile (updated 7 march 2011) Available
at http://www.corporatewatch.org/?lid=252
Business teacher. Marketing mix (updated 7 march 2011) Available at
http://www.businessteacher.org.uk/marketing/marketing-mix/
Thetimes100: Tesco case study. Recruitment and selection (updated 7 march 2011)
Available at http://www.thetimes100.co.uk/case-study--recruitment-and-selection--
132-323-3.php
David Anthony March 7 2009. Archive for retail: Tesco marketing mix (updated 7
march 2011) Available at http://davidanthonysiddall.wordpress.com/category/retail/