How relationship marketing can be applied to Tescos

This report will explain how relationship marketing can be applied to a selected business, the selected business that has been chosen is Tesco PLC Introduce your selected business and outline its strategic aims and objectives: Tesco has stores in 14 countries across the world. In the UK it is the grocery market leader it has about 30% of market share. This means that Tesco is the main supermarket leader in the shores of the UK, they also offer many other products and services such as, Tesco mobile, click and collect, Tesco own branded products, Tesco bank.

The key purpose of Tesco is to make profit. Tesco as of 2007 is third largest retailer in the world measured by revenues and is the second largest in the world measured by its profit. Tesco is in the tertiary sector. This is because its sells the products, it doesn’t manufacture or directly get the product from its primary sector. Tesco’s has millions of shareholders which the majority shareholder only has around 3% of the shares. This just shows the vast amount of shareholders that Tesco’s has because the majority shareholder only has 3%.

It is PLC in the private sector. Tesco PLC is a business to customer business as its main customers are the general public Tesco PLC strategic aims and objectives include:

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1. To be strong in selling of everything, as strong as they are in their food industry
2. To be the retailer in the world, in store and online retailer
3. To put their communities to be priority and keep them in their hearts
4. To grow their retail section in all their markets

Describe the marketing mix elements in your selected business:

Tesco prices have been perceived not value for money by the which? Survey, their customers believe that the prices for the products are not value for money, opposed to Aldi as their customer believe that their products are value for money Tesco have many promotions such as buy one get one free, 3 for the price of 2, they have many promotions that are very useful to their customers. Tesco PLC is only able to use the 4p’s for transactional marketing, if they want to achieve loyalty they will also have to have use people, physical evidence and process effectively.

One of the main reasons why Tesco haven’t achieved loyalty is because their physical evidence has not been effective enough, e. g. the which? Survey stated that the Tesco PLC customers rated the store environment 2/5 stars, which means that Tesco physical evidence, (store enviroment) was very poor. In order for Tesco PLC to achieve loyalty they have get the 7p’s right to achieve relationship marketing Tesco PLC distribute their products, prices, promotion in their supermarkets, they use people, process and physical evidence in order to offer a ‘total product’.

Tesco PLC has over 6,351 stores in which they are able to distribute their products, they have Tesco extra, Tesco supermarkets, Tesco metro etc. Tesco PLC also sells their products and services online on their websites Describe how you selected business might apply the principles of ladder of customer loyalty: The principle of ladder of customer loyalty is also used by Tesco PLC, the ladder of loyalty include prospect, customer, client, supporter and advocate.

This would be used more locally rather than national, this would be used to attract new groups or encourage increased usage by minority groups The image helps Muslims customers to know the deals that are up for offer by Tesco PLC in the Ramadan period, this promotion will not be relevant to other non-Muslim customer as they don’t participate in Ramadan, but the might be intrigued to go and buy products as they are on sale and they would save money, the different segments of customers will understand it in different ways Tesco PLC would first try to get a person to use their organisation through targeted advertisement and marketing, and also through special offer so you go and try their services and products. Tesco PLC will then try to the make the person a customer through trying to make them regularly shop at Tesco PLC, they will do this through personal promotions and emails, this would only occur if the customer gets a loyalty card, another way they will try to make it personal, is through impressing customers with their good customer service.

Tesco PLC will then try to make the customer a client through making the customer a client, they will do this through making the customer use the organisation services such as telecommunication, banking etc, by buying in to such services makes it harder for customers to exit. After creating the client Tesco PLC will then try to make the client a supporter, the supporter will encourage and approve of Tesco PLC saying that they are the best and they will also refer their friends and family to Tesco PLC so they regularly use Tesco PLC.

After the customer becomes a supporter Tesco PLC will try to make them an advocate, this is because they will publically support and recommend Tesco PLC, the reason why Tesco plc will try so hard in order to get people up to the top and be a partner. Getting customers to the top of the ladder of loyalty has great rewards i. e. lifetime value of customer is because this will create Tesco PLC guaranteed sales, and they will know that those customers won’t go to their competitors to shop Explain how your selected business seeks to differentiate itself through application of the total product concept:

Tesco PLC thinks they offer it all but customers clearly don’t, the which? Survey states that Tesco PLC don’t offer it all, because if they did they would not be the worst supermarket in the UK. Tesco PLC need to offer price, place, promotion, physical evidence, people, product, and processes to get people up the ladder of loyalty, if Tesco PLC only use the 4p’s they will only get people on the ladder of loyalty, they must offer the total product concept, the reason why Tesco PLC are not superior to others in the industry are because they are not offering the 7p’s correctly.

An example is if Tesco PLC and Aldi are selling the same product such as shampoo Aldi will differentiates itself from Tesco, the way that this will be done is that they will have different prices or offers, they will also offer, they may also have a buy one get one free offer in order to encourage customers to buy from them instead of Tesco, the promotions help but they can be easily copied so Aldi give offers (the total package). Due to Tesco bad customer services (which survey states that Tesco customer service is poor) it has led to Tesco losing shares in the market and also customers Outline the importance of relationship marketing and brand building: Relationship marketing is very important for Tesco PLC as it helps them create a bond with their customers. Through the use of relationship marketing Tesco PLC will also be able to improve loyalty between the business and its customers, this will also ensure that Tesco PLC sustains growth in the long term branding building is important as it enhancing the reputation of a brand. This is done through advertising campaigns and promoting or indirectly such as sponsorship. The reason why this is important to Tesco PLC is because this will then increase sales of branded products for Tesco PLC Relationship marketing increases trust so when a business launches a new brand they are more likely to work, such as when Cadbury release a new product it usually works as it is built on the Cadbury’s name, this also is the same when a brand is extended e.g. when iPhone released iPad, McDonalds released Mccafe. When Tesco PLC create a new brand or brand extension it will be highly likely to be successful as they are a trusted brand, they are trusted as Tesco finest, when they launch new products they are likely to work as Tesco finest is trusted. Before Tesco PLC does brand extension or creates new brand they do research to make sure it will work an example of this is Technika, this is a Tesco electrical brand

Conclusion:

This report has explained how relationship marketing can be applied to a selected business, the selected business that has been chosen is Tesco PLC. The report also outlines its strategic aims and objectives and has described the marketing mix elements in Tesco PLC. It also describes how Tesco PLC applies the principles of the ladder of customer loyalty

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