tesco marketing strategy case study

Tesco Marketing Strategy 2024: A Case Study

Tesco, a global retail company specializing in groceries, serves millions of customers worldwide. In line with their commitment to providing exceptional shopping experiences, Tesco has developed a comprehensive marketing strategy for 2024 that encompasses various key elements, including customer segmentation, brand positioning, promotional campaigns, and an omnichannel strategy. By incorporating these strategies, Tesco aims to remain at the forefront of the retail industry and continue to meet the evolving needs of its diverse customer base.

Customer segmentation plays a crucial role in Tesco’s marketing strategy . By understanding the unique preferences and behaviors of different customer groups, Tesco can tailor its offerings to cater to their specific needs. This approach allows Tesco to create personalized shopping experiences that resonate with customers and foster long-term loyalty.

Brand positioning is another essential aspect of Tesco’s marketing strategy. By positioning itself as a reliable and customer-centric brand, Tesco aims to differentiate itself from competitors and establish a strong presence in the market. Tesco strives to be synonymous with quality, affordability, and convenience, ensuring that customers choose Tesco as their preferred shopping destination.

Promotional campaigns play a vital role in Tesco’s marketing efforts . By offering special discounts, promotions, and incentives, Tesco can attract new customers and retain existing ones. These campaigns are carefully designed to align with Tesco’s brand image and provide customers with added value, enhancing their overall shopping experience .

An omnichannel strategy is a crucial component of Tesco’s marketing approach. Tesco recognizes the importance of reaching customers through multiple channels, both traditional and digital. This comprehensive approach allows Tesco to engage with customers on various platforms, including TV and radio ads, social media, email marketing , and online advertising. By utilizing these channels effectively, Tesco ensures that its marketing messages are delivered to a broader audience, driving customer engagement and sales.

Key Takeaways:

• Tesco has developed a marketing strategy for 2024, focusing on customer segmentation, brand positioning, promotional campaigns, and an omnichannel approach.
• Customer segmentation allows Tesco to tailor its offerings to different customer groups, enhancing personalization and loyalty.
• Brand positioning ensures Tesco’s differentiation in the market through a strong focus on quality, affordability, and convenience.
• Promotional campaigns attract new customers and retain existing ones, providing added value and enhancing the overall shopping experience.
• An omnichannel strategy allows Tesco to reach customers through various channels, encompassing traditional methods and digital platforms.

About Tesco: A Brief Overview

Tesco, a retail giant in the grocery sector, has established itself as a leading supermarket in the United Kingdom. With a market share that speaks volumes about its dominance, Tesco operates a vast network of over 7,000 stores globally, catering to the diverse needs of its customers.

What sets Tesco apart is its extensive product range, which goes beyond groceries to include clothing, household items, and electronics. The company’s commitment to quality and choice is evident in its private labels, such as Tesco Finest, Tesco Everyday Value, and F&F, which have garnered the trust and loyalty of consumers.

Tesco’s success is not solely attributed to its product offerings. The retail giant has developed an effective loyalty program called Clubcard, which rewards customers with points for their purchases. These points can be redeemed for discounts on future shopping, offering customers tangible benefits and incentives for remaining loyal to Tesco.

As a responsible corporate citizen, Tesco strives to become a zero-carbon business by 2050 through its sustainability initiatives. Alongside its commitment to the environment, the company has consistently demonstrated strong financial performance, focusing on cost-saving measures and delivering consistent revenue and profit growth.

To expand its operations and maximize its potential, Tesco has made strategic acquisitions, including the renowned UK food wholesaler Booker Group and the convenience store chain One Stop. These acquisitions have strengthened Tesco’s market position and enhanced its ability to serve customers effectively.

Tesco’s marketing mix, consisting of the 4Ps – Product, Price, Place, and Promotion, has proven to be instrumental in developing and implementing effective marketing strategies. By offering own-brand products at various price points and frequently employing price promotions and discounts, Tesco ensures that it caters to the needs and budgets of its diverse customer base.

In an increasingly competitive retail landscape, Tesco recognizes the importance of utilizing digital channels to engage with customers effectively. The company employs social media platforms, email marketing, and online advertising to connect with its audience and provide a seamless shopping experience in both physical and digital spaces.

With its extensive store formats, including Extra, Superstore, Metro, and Express, Tesco is equipped to cater to different customer needs. Whether it’s the convenient one-stop-shop or the quick grab-and-go, Tesco ensures that customers have a variety of options to choose from.

In conclusion, Tesco’s dominance as a retail giant can be attributed to its commitment to quality, extensive product range, effective marketing strategies, and customer-centric approach. With its strategic acquisitions, sustainable initiatives, and a strong foothold in both physical and digital spaces, Tesco continues to set industry standards and thrive in the grocery sector.

Tesco’s Marketing Mix

Tesco, one of the largest retailers in the UK, implements a comprehensive marketing mix strategy to drive its success in the competitive retail market. The company focuses on four core elements: product, price, place, and promotion.

Product Strategy: Tesco offers a diverse range of products, catering to the needs of its customers. In addition to groceries, Tesco provides clothing, household items, electronics, and more. This extensive product range showcases Tesco’s commitment to diversification and meeting the varied preferences of its customer base.

Pricing Strategy: With its wide market reach and massive customer base, Tesco leverages competitive pricing strategies to attract price-conscious customers. The company offers price promotions and implements dynamic pricing for online shopping, ensuring that customers can find value and affordability in their purchases.

Place and Distribution Strategy: Tesco operates various store formats, such as Extra, Superstore, Metro, Express, and One Stop, strategically located to ensure easy accessibility for customers. This diverse store network allows Tesco to cater to different customer needs and preferences, providing convenience and seamless shopping experiences.

Promotional Strategy: Tesco engages in targeted advertising through multiple channels, including television, radio, print, and online media. By reaching its target audience effectively, Tesco promotes its products and offers to drive customer engagement and sales. Moreover, the company runs in-store promotions, such as special offers, discounts, and multi-buy deals, incentivizing customer purchases and enhancing the overall shopping experience.

Tesco’s marketing mix strategy enables the company to effectively position itself in the market, attract customers, and maintain a strong competitive edge. By offering a broad product range, implementing competitive pricing strategies, strategically locating its stores, and engaging in comprehensive promotional campaigns, Tesco continues to thrive and meet the evolving needs of its diverse customer base.

Tesco’s Buyer Persona

Understanding customer needs is a crucial aspect of Tesco’s marketing strategy. To ensure that they deliver a seamless shopping experience, Tesco creates buyer personas, such as John Smith, a representative customer. John Smith values speedy service, quality products at good prices, and savings. Tesco’s buyer persona strategy enables them to personalize their offerings according to the specific needs and preferences of their customers.

By focusing on personalization, Tesco caters to the unique requirements of its diverse customer base. Whether it’s providing convenient store formats, offering a wide range of high-quality products, or ensuring competitive prices, Tesco prioritizes customer satisfaction. Their commitment to savings is evident through their loyalty program, Clubcard, which rewards customers with personalized discounts, exclusive access to discounted products, bonus points on purchases, and redeemable rewards for future purchases.

The buyer persona approach allows Tesco to understand its customers on a deeper level, offering products and services that are tailored to their individual needs. In doing so, Tesco provides a shopping experience that is convenient, personalized, and focused on delivering the highest quality products, all while helping customers save.

Tesco’s Digital Marketing Strategy

Tesco, a leading global retailer, understands the significance of digital marketing in today’s competitive landscape. With a comprehensive digital marketing strategy, Tesco harnesses the power of online platforms to effectively reach and engage with its customers.

One key element of Tesco’s digital marketing strategy is its website. With an authority score of 75, Tesco’s website serves as a central hub for customers, offering a seamless online shopping experience. The website attracts a significant amount of organic search traffic, with 31.5 million monthly visitors. Additionally, Tesco employs targeted search engine advertising, with 14.4K visitors coming from paid search, to further enhance its online presence.

Social Media

Recognizing the power of social media in the digital age, Tesco leverages platforms like Instagram and Facebook to engage with customers, build brand awareness, and promote its products and services. Through strategic social media marketing campaigns, Tesco effectively targets its audience and fosters meaningful connections.

Email Marketing

Email marketing plays a crucial role in Tesco’s digital marketing strategy. Through personalized and targeted email campaigns, Tesco maintains a direct line of communication with its customers, keeping them informed about exclusive offers, promotions, and new product releases. This not only boosts customer engagement but also drives sales and enhances brand loyalty.

Search Engine Advertising

Tesco understands the importance of search engine advertising to increase its visibility and drive traffic to its website. By strategically bidding on keywords relevant to its products and target market, Tesco successfully attracts potential customers and directs them to its online platform. This helps drive conversions and boosts overall sales.

Tesco’s digital marketing strategy encompasses a multifaceted approach that utilizes its website, social media platforms, email marketing, and search engine advertising to create a comprehensive and cohesive online presence. By leveraging these channels effectively, Tesco enhances its brand visibility, engages with customers, and drives business growth in the ever-evolving digital landscape.

Tesco’s Customer Loyalty Program

Tesco’s customer loyalty program, Clubcard, is a key component of the company’s marketing strategy. With over 19 million members, Clubcard offers a range of benefits that foster customer loyalty and enhance the overall shopping experience.

Through Clubcard, customers earn 1 point for every £1 spent at Tesco stores or online. This incentivizes customers to continue shopping with Tesco and rewards them for their loyalty. In addition, Tesco provides up to three loyalty cards to customers, including small plastic keychain cards, making it easy for members to keep their Clubcard handy at all times.

One of the standout features of the Clubcard loyalty program is its personalized deals. Tesco utilizes customer segmentation and data analysis to tailor offers and rewards based on individual shopping habits and preferences. This level of personalization ensures that customers receive discounts and rewards that are relevant to their specific needs, making their shopping experiences even more enjoyable.

Clubcard members have access to a range of rewards which can be redeemed for money towards future purchases, discounts on selected products, and vouchers for various activities and experiences. These rewards not only provide added value for customers but also give them a sense of exclusivity and special treatment.

In the UK, the Clubcard loyalty program operates on a “1% getback” scheme, where participants can earn points equivalent to 1% of their spending. This encourages customers to continue shopping at Tesco and maximize their savings through the accumulation of bonus points.

Tesco’s loyalty program strategy focuses on multiple offers, saving money on grocery bills, and personalization in order to strengthen customer relationships. By leveraging the data collected from the Clubcard scheme, Tesco can better understand individual customer needs and preferences, allowing them to tailor offers and rewards accordingly.

Tesco’s Marketing through Multiple Channels

Tesco understands the importance of utilizing multiple marketing channels to reach a wide range of customers. By combining traditional marketing methods with digital strategies , Tesco effectively connects with its target audience.

Traditional Marketing

Tesco employs various traditional marketing techniques to promote its products and services. Television and radio ads play a significant role in increasing brand awareness and driving customer engagement. These forms of advertising allow Tesco to reach a large audience and convey its message effectively. Additionally, print media, such as newspapers and magazines, are utilized to target specific demographics and geographical regions.

Digital Marketing

Tesco recognizes the power of digital marketing in today’s digital age. The company leverages different digital channels to engage with customers and establish a strong online presence. Social media platforms, including Facebook, Instagram, and Twitter, are used to engage with customers, share product updates, and run promotional campaigns.

Email marketing is another essential component of Tesco’s digital marketing strategy. By sending personalized and targeted emails, Tesco keeps customers informed about special offers, discounts, and new product launches.

Furthermore, online advertising is an integral part of Tesco’s digital marketing efforts. The company utilizes display ads, search engine advertising, and remarketing campaigns to reach potential customers and drive traffic to its website.

Tesco’s multichannel marketing approach allows the company to create a cohesive brand presence across different platforms, both online and offline. By utilizing a combination of traditional and digital marketing strategies, Tesco maximizes its reach and ensures it connects with customers at every touchpoint.

Tesco’s marketing through multiple channels helps the company maintain a strong presence in both traditional and digital spaces. This multifaceted approach enables Tesco to effectively engage with customers, increase brand visibility, and drive sales.

Innovative Digital Grocery Strategy

Tesco, with over 6,800 locations across Europe and Asia, is not only focused on its physical retail presence but also on its innovative digital grocery strategy. As the company aims to become the most successful retailer in the UK and globally, it recognizes the importance of providing a seamless shopping experience for its customers through eCommerce.

Tesco’s digital grocery strategy revolves around offering customers a convenient and efficient way to shop for groceries online. With the increasing popularity of eCommerce, Tesco has invested in its online platform to expand its customer base and enhance customer satisfaction.

Customer service is at the core of Tesco’s digital grocery strategy. The company emphasizes quality, dependability, affordability, and usability to ensure that customers have a positive experience when shopping online.

By leveraging technology and data-driven insights, Tesco strives to provide personalized recommendations and offers to its customers. This not only enhances the shopping experience but also strengthens customer loyalty.

Furthermore, Tesco’s emphasis on customer service extends to its delivery options. The company has expanded its rapid delivery service, “Whoosh,” to reach around 60% of the UK population. This allows customers to receive their groceries quickly and conveniently, reinforcing Tesco’s commitment to seamless and efficient service.

In addition to its robust digital infrastructure, Tesco also focuses on collaborating with suppliers to enhance the overall customer experience. By utilizing online sponsored search functionality and leveraging digital screens in stores, Tesco ensures that customers have access to a wide range of products and promotions.

With an impressive online availability of over 97% and a significant increase in perfect orders year-on-year, Tesco’s digital grocery strategy demonstrates its commitment to meeting customer demands and expectations.

In conclusion, Tesco’s innovative digital grocery strategy combines eCommerce with a focus on providing a seamless shopping experience and excellent customer service. By leveraging technology, data-driven insights, and collaboration with suppliers, Tesco continues to expand its customer base and strengthen its position as a leading retailer in the digital era.

Tesco’s Corporate and Business-Level Strategies for Growth

Tesco, one of the leading global retailers, has implemented a range of effective corporate and business-level strategies to drive growth and achieve success in the highly competitive market. These strategies have contributed to Tesco’s strong market position and impressive financial performance.

Tesco’s Low Price Strategy and Cost Leadership

Tesco has adopted a low price strategy as a core component of its business-level strategy. By offering competitive prices on a wide range of products, Tesco attracts value-conscious customers and maintains an edge over its competitors. Through effective cost leadership, Tesco continuously strives to optimize its operations and supply chain management, allowing the company to minimize costs and deliver savings to its customers.

Customer Focus and Market Development

Customer focus is at the heart of Tesco’s corporate strategy. The company continuously analyzes consumer preferences and behaviors to understand their needs and provide tailored solutions. Tesco’s customer-centric approach enables the development of innovative products and services that meet the evolving demands of its target market. Additionally, Tesco’s market development strategy involves expanding its operations into new geographical regions, tapping into untapped markets, and reaching a broader customer base.

Product Development and Market Penetration

Tesco places a strong emphasis on product development to attract and retain customers. By offering a diverse and high-quality product range, including fresh food and Tesco’s own-branded products, the company stimulates customer interest and strengthens its competitive position. Simultaneously, Tesco utilizes market penetration strategies to drive growth within existing markets. Through targeted marketing campaigns and promotions, Tesco aims to increase its market share and gain a larger portion of customer spending.

Overall, Tesco’s comprehensive corporate and business-level strategies, including its low price strategy, customer focus, cost leadership, market development, product development, and market penetration, have consistently delivered positive results. These strategies have contributed to Tesco’s strong market share, increased revenues, and continuous growth. As Tesco continues to refine and adapt its strategies, the company remains well-positioned for sustained success in the dynamic retail industry.

The Power of Market Research and Competitive Analysis

Market research and competitive analysis play a crucial role in the success of Tesco’s marketing strategy. By understanding the market trends , consumer behavior, and competitive landscape, Tesco can make well-informed data-driven decisions and stay ahead of the competition in the highly competitive retail industry.

Market research provides valuable insights into customer preferences, purchasing habits, and emerging trends. Tesco utilizes market research to identify new opportunities, develop effective marketing campaigns, and customize their product offerings to meet customer demands. By conducting comprehensive market research, Tesco can better understand customer needs and preferences, enabling them to tailor their marketing strategies to target specific market segments .

Competitive analysis allows Tesco to assess the strengths and weaknesses of its competitors. By understanding the competitive landscape, Tesco can identify key areas where they can differentiate themselves and gain a competitive edge. This analysis helps Tesco identify market gaps, improve their product offerings, and develop strategies to position themselves as market leaders.

Tesco’s commitment to market research and competitive analysis allows them to make data-driven decisions and stay ahead of the competition. By leveraging the insights gained through these practices, Tesco can anticipate market trends, develop effective marketing campaigns, and deliver tailored experiences to their customers.

Market research and competitive analysis are essential tools for Tesco to stay competitive and achieve their goal of maintaining a 5% extra competitiveness in marketing. These practices enable Tesco to make informed decisions, adapt to changing consumer preferences, and drive growth in the retail industry.

Tesco’s Commitment to Sustainability

Tesco, as a global retail company, is dedicated to sustainability and focuses on implementing various environmental initiatives. Their commitment stems from their understanding of the importance of protecting the environment, engaging with the community, and prioritizing employee welfare as part of their corporate social responsibility efforts.

One of Tesco’s notable achievements is their commitment to sending zero food waste to landfill in the UK since 2009. They have achieved this by implementing effective waste management strategies and partnerships with organizations that help redistribute unsold food safe for human consumption. In fact, in 2022/23, Tesco redistributed 88% of unsold food, surpassing their 85% target set in 2016.

In addition to tackling food waste, Tesco has made significant strides in reducing overall food waste by 45% since 2016. As part of their ambition, they aspire to halve food waste by 2025 and have committed to achieving this goal five years ahead of the global target set by Champions 12.3 and the UN Sustainable Development Goals.

Beyond their food waste reduction efforts, Tesco demonstrates their commitment to sustainability through investments in renewable energy and sustainable sourcing. They have set ambitious goals to reduce their carbon footprint and increase the proportion of sustainable and fairly traded products in their stores.

Tesco’s commitment to sustainability is not without its challenges. The company faces competition from discount retailers, needs to adapt to changing consumer preferences, and comply with regulatory issues. However, they have shown resilience and adaptability by diversifying into financial services and insurance while maintaining their focus on customer service, innovation, sustainability, international expansion, diversification, and cost management.

With a market share of over 27% in the UK’s grocery retail sector, Tesco’s commitment to sustainability shines through their actions. They were the first FTSE100 company to commit to science-based targets aligned with the Paris Agreement’s 1.5°C target. Tesco aims to achieve carbon neutrality in their operations by 2035 and be net-zero across their entire footprint by 2050.

Through their initiatives, Tesco has achieved significant milestones, including a 52% absolute reduction in emissions from their operations in 2022 compared to a 2015 baseline. Over 90% of Tesco’s emissions footprint is captured by scope 3 indirect emissions within their value chain, giving them a clear focus for reduction efforts.

To support their sustainability goals, Tesco launched a revolving credit facility of 2.5 billion GBP tied to key performance indicators (KPIs), including greenhouse gas (GHG) emissions reduction. They also issued sustainability-linked bonds to finance their efforts, demonstrating their commitment and holding themselves accountable for meeting emission-reduction targets.

Tesco acknowledges the importance of collaboration in achieving their sustainability ambitions. In 2021, they initiated a supply chain finance initiative to help suppliers contribute to lower funding costs and align with Tesco’s environmental, social, and governance (ESG) priorities, with a focus on addressing scope 3 emissions.

These sustainability initiatives have garnered recognition, with Tesco receiving awards such as the Association of Corporate Treasurers Deals of the Year Awards and the Finance for the Future Awards. These accolades highlight Tesco’s dedication to sustainable practices and their positive impact on both the environment and society as a whole.

Sustainability Initiatives at Tesco

Table: Tesco’s Sustainability Milestones

Despite the challenges they face, Tesco remains committed to sustainability, continually striving to reduce their impact on the environment and make a positive difference in the communities they serve. Through their comprehensive sustainability efforts, Tesco sets an example for other companies in the retail industry and beyond.

Tesco’s marketing strategy case study exemplifies its commitment to customer loyalty, digital outreach, and innovative retail campaigns. The company’s successful implementation of its marketing mix, understanding of buyer personas, and comprehensive digital marketing strategy have positioned Tesco as a leading retailer in the ever-evolving industry. By prioritizing customer loyalty programs, Tesco ensures a personalized shopping experience for customers, building trust and fostering long-term relationships.

Recognizing the importance of market expansion, Tesco has introduced same-day delivery options, emphasizing its commitment to market development. The company’s product lines, Everyday Value and Finest, have become the largest food brands in the UK, solidifying Tesco’s market presence. Despite facing competition from rivals with a wider product range, Tesco’s brand image centered around low prices reinforces its cost leadership strategy, attracting value-conscious customers.

However, Tesco’s journey towards a fully functioning social media marketing system is yet to be completed. Challenges include improving its digital presence, revamping outdated apps, and addressing functionality gaps, such as scheduling orders. To further enhance operational efficiency, a focus on subscription-based services is recommended, aligning with Tesco’s cost leadership strategy by improving planning and logistics.

With a strong financial performance, an extensive online customer base, and a positive brand image among customers, Tesco continues to thrive. As a retail giant offering more than 40,000 products across various store types, Tesco maintains its competitive advantage through strategic promotional offers, loyalty programs, and price strategies, enabling continuous growth and customer satisfaction.

What is Tesco’s marketing strategy for 2024?

How many stores does tesco have globally, what is tesco’s marketing mix, how does tesco understand its customers, what is tesco’s digital marketing strategy, what is tesco’s customer loyalty program, how does tesco market through multiple channels, how does tesco approach digital grocery shopping, what are tesco’s corporate and business-level strategies for growth, how does tesco utilize market research and competitive analysis, what is tesco’s commitment to sustainability, related posts:.

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Nina Sheridan is a seasoned author at Latterly.org, a blog renowned for its insightful exploration of the increasingly interconnected worlds of business, technology, and lifestyle. With a keen eye for the dynamic interplay between these sectors, Nina brings a wealth of knowledge and experience to her writing. Her expertise lies in dissecting complex topics and presenting them in an accessible, engaging manner that resonates with a diverse audience.

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How Tesco Became The Biggest Retailer In The UK

Table of contents.

There are certain brands that always seem to attract global attention and one of those is Tesco. It’s one of the largest grocery store chains in the world and over its 100-year history, it has gone through a rollercoaster of ups and downs that have brought it to where it is today.

• Stores: 4,673
• UK Employees: 336,392
• The top retailer in the UK
• Ranks 17th in NRF Top Global Retailers for 2021 
• Q1 2021 Growth in Online Sales: 22.2%
• FY21 Sales: £53.4 bn

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The Origin Story

The giant corporation that we know today had some very humble beginnings. The idea found its roots back in 1919 when Jack Cohen, the son of Polish immigrants, decided that he was going to sell groceries from a stall in East London [1] . For the first few years, that is all it was – a market stall run by a man with a big dream. But over time, as he gained confidence in what he was doing, he began to think that maybe he was destined for something bigger.

To dip his toe in the water, he opened up the very first Tesco store in 1929 in a small town in Middlesex. The brand took off almost immediately, much to the surprise of Cohen, and he realized that there was room for growth. He had stumbled onto a rather simple premise, in terms of providing food and drink in a very affordable and approachable way, and quickly started to work on expanding the concept as far and wide as he could.

Cohen’s unique personality and selling style was something that he engrained in those early sales teams, pushing them further than they ever thought they could go. He was someone who valued hard work above all else and believed that if you were out there working to make things happen, things would conspire for your benefit. This ethos is something that still lives in the company today.

In the years that followed, Tesco grew from strength to strength until it got to a stage in 1947 where it was large enough to list on the London Stock Exchange. In the two decades that followed the listing, the company continued to grow organically but it also made some aggressive acquisitions that rapidly increased the organization’s footprint. At the end of the 1960s, there were around 800 stores in operation, all maintaining healthy profitability and a growing customer base.

The strong brand was then leveraged to venture out of food and beverages specifically, and into a range of other areas including clothing, electronics, financial services, telecoms, media, internet services, and software. They also expanded geographically into the rest of the UK, Europe, and a brief but ultimately unsuccessful time in the USA.

The Tesco of today is a corporation much bigger than Cohen could have ever imagined, and that’s a testament to the company that he was able to build and the business philosophy that still undergirds their success to this day.

Creating Their Own Brands

We’ll start this strategy study properly by diving into what is widely considered the most important part of the Tesco strategy – which is the creation and scaling of their own in-house brands. When the company started they acted simply as a retailer, buying products from suppliers and then controlling the end-user buyer experience and distribution thereof. However, as they began to grow they came to the same realization that is so common for these massive product curators.

They realized that they could compete and win against these other brands because they had access to invaluable sales data, a loyal customer base who was tied into their stores, and the distribution required to bring their own brands to a mass market almost overnight. All of this while regaining a significant portion of the margin as they did so.

This is a key trend that we’ve seen across major retail conglomerates, but it’s received even more attention in the online era as Amazon has taken it to the next level. Especially in the case of common household goods where it is quite difficult to differentiate the product itself, brand and price become all that matters.

Tesco’s clothing line and their food brands provide high-quality items at prices that undercut the other 3 rd party brands that are trying to win shelf space in the stores. This makes it abundantly clear that by owning the customer relationship and the distribution, you have an immense amount of control in the value chain. Manufacturers are dependent on retailers like Tesco because they need to access the consumer market, and this places all the power in the hands of the retailer.

This business model has been incredibly successful over the past 50 years. Tesco has grown a substantial business that customers trust and whenever they want to win back margin, they can create their own white-label brand and use their pricing power to whittle away at the market share built up by other brands. The big question here though is how long will this last? [2]

In modern times we’ve seen a drastic shift away from brick-and-mortar retail and into online shopping. This was obviously accelerated by the COVID-19 pandemic, but it was something that was coming inevitably anyway. As we move to a future of online shopping, Tesco’s early advantage in terms of distribution becomes less relevant. Manufacturers and suppliers can start to build online presences that give them direct access to the consumer market and thus they can eliminate the Tesco leg entirely, provided they have the brand strength to do so.

This is where the world is moving towards, where the middlemen are eliminated over time and we see a rise of direct-to-consumer brands. This is not to say that Tesco is going to disappear. In fact, their online shopping sales have been incredibly impressive. But they have to think differently about the company they are going to be as we shift into this new paradigm.

It’s definitely something on their roadmap and they are making a lot of investments in this vein, but it’s going to be challenging to transform such a large company with so much tied up in the brick-and-mortar of retail stores. Their ability to adapt and adjust will determine whether they remain a force to be reckoned with in the years to come.

Key Takeaway

• If you control the direct relationship with the customer, you have tremendous power in the value chain that allows you to win market share and margins much more efficiently.

Horses for Courses

The next piece of the Tesco strategy that has proven so valuable for them has been their ability to adapt their value proposition for different contexts. When it comes to retail, you have to have a very good understanding of what your customers in that location are looking for, so that you can tailor your offering accordingly.

It’s tempting to think that you can copy-paste a winning formula wherever you want and scale quickly and easily – but that couldn’t be further from the truth. Even with a simple concept like a grocery store, there is a range of different nuances that determine how the store should be set up, what should be stocked, and how they should craft the buying experience.

Tesco operates 5 different types of stores:

• Tesco Extra
• Tesco Superstores
• Tesco Metros
• Tesco Express
• One Stop Shop

Each of these stores has a different use case, and it targets a unique subset of their customer base. The company has worked very hard to identify the specific items, and setup that is best suited for each one. For example, the Tesco Extra stores and the Tesco Superstores are the biggest ones in terms of size and aim to carry as much as possible so that customers can do all their shopping in one place. This is in sharp contrast to the Tesco Metros and the Tesco Express stores which are focused on convenience and speed, rather than a variety of choices.

Every part of the experience for each category is intentional and fit for purpose. Even the training that the staff will go on differs depending on the type of store that they’re going to be working in. What remains consistent is the brand, the product quality, and the prices. Everything else varies according to what that particular customer is looking for.

It’s also interesting to note that these store categories have different trajectories and trends. If you look at the last couple of years (ignoring the pandemic), the big retail outlets have been struggling for growth, while the convenience stores are growing rapidly. This shows a clear trend in terms of consumer behavior and because the stores are all set up differently, the company can respond to these changes.

Essentially, each category of store can be thought about as a different company entirely – allowing lots of flexibility to adapt and adjust accordingly. If they didn’t have this clear separation, it would be difficult to understand the data they were receiving, and they would have less chance of successfully diagnosing the nature of changes in customer behavior.

Taking this one step further, it’s clear that their online shopping vertical is a new type of store and will have unique aspects that set it apart from the rest. As Tesco follows the growth of online shopping they’ll be able to shift their efforts to these new channels because they have the data that they need to be able to do this with confidence.

• Context is everything in business. By separating your operations into subsets that cater to different contexts, you’ll have the data you need to adjust and adapt to changing trends as they arrive.

Sustainability

A key component of Tesco’s forward-looking strategy is to become as sustainable and environmentally friendly as possible. This is not too out of the ordinary in the modern context as companies around the world work towards mitigating climate change, but Tesco has really gone above and beyond to make this a part of their company DNA.

The biggest offenders in their value chain are the delivery vans which are constantly transporting goods from suppliers to warehouses and then eventually to the stores themselves. These vans number in the thousands and they are running almost 24/7 ensuring that stock levels are where they need to be at all times.

Tesco announced recently that they have begun to transition all those vans to electric vehicles in an attempt to minimize the carbon footprint and work towards a more sustainable goal. Their plan is to have their entire delivery fleet transitioned to electric by 2028 which is a very ambitious plan indeed [3] .

This is but one of their sustainability initiatives that are at the forefront of the company they want to become in the future. They are working tirelessly to integrate this into their corporate ethos for a few reasons:

• Sustainability matters. We all have to be more thoughtful about what we’re building because the impact we’re having on our planet is significant. So, from pure self-interest, a company needs to embrace this value if they are to be robust and to last over the next hundred years. Without this focus, we might find ourselves in a very dangerous position in a generation or two’s time.
• Customers demand it. Building on the point above, there is tremendous social pressure for corporations to become more sustainable because of the heightened awareness we now have of the problems that face as a species. Customers are placing sustainability and environmental concerns as key factors in their purchasing decisions and Tesco knows that. So, they are leaning into this as a key value for the future so that they can continue to build the strong brand trust that they have with their existing consumer base.
• Prices are trending downward. As we shift away from fossil fuels and towards renewable energy, the relative prices will come down and that can have a significant impact on Tesco’s profitability. It might require a lot of investment in the short term, but that will pay off by orders of magnitude as the world shifts and economic incentives work their magic.
• Competitive Advantage. Getting in on this early and working to build this into the future of the company could prove to be a significant competitive advantage for competing against their competitors. This is a clear trend that everyone can see, so those companies that get ahead of the curve will be able to leverage the early momentum to capture more and more of the market going forward.
• Opens up opportunities for innovation. Whenever there is a radical shift in thinking, it creates an opportunity to go back to the first principles. For large companies, these moments are few and far between so it’s important to use these natural breakpoints to re-examine your strategy and plot the best path forward. Tesco is definitely trying to do that so that they can remain relevant as we move beyond pure retail and into a hybrid model where you need to serve customers in-person as well as online.

Those are just some of the reasons why Tesco is giving so much credence to how sustainable their operations are. It’s also important to note that they are thinking beyond their direct circle of influence. Another significant contributor to carbon emissions is their customers who drive to the stores themselves. To mitigate this, they’ve begun to roll out thousands of charging points to their larger retail stores to support customers with electric vehicles and encourage more people to move in this direction.

This is something we’ll see a lot more of going forward, and Tesco remains one of those leading the charge, at least in the European context.

• Sustainability is a key value and operational principle that must be at the forefront of any company looking to remain relevant going forward.

The Clubcard Loyalty Program

It seems that every company these days has some form of loyalty program where they try to reward repeat purchasers in exchange for valuable sales data – but Tesco was one of the first to go this route. Their Clubcard program allows regular shoppers to benefit from automatic discounts that are applied at check-out and it makes the already-low prices even more beneficial. This obviously creates loyalty for their key customers who will use the card to get better prices for their groceries, but the more interesting aspect is what it allows Tesco to do with the data.

Before loyalty programs, large retailers like Tesco were unable to tie specific purchases to specific customers. They would be able to access aggregated sales figures about the sorts of items that were being purchased, and they could use that information to adjust their offering accordingly, but you were limited in terms of how useful it could be. Any granular demographic data had to be assumed based on the store itself and this didn’t allow for much nuance.

The modern loyalty programs, like the one that Tesco runs, offer a much more sophisticated set of data that is incredibly valuable for product development, planning, and demand forecasting. By tying each purchase to a specific customer’s card, Tesco gains a range of new insights into purchasing behavior and they can arrive at a much more granular understanding of what is actually happening in their stores.

Here are some of the ways that they can use this data:

• Demographic Analysis. Tesco can identify specific segments of their customer base and analyze purchasing habits in these unique categories. For example, they can compare their male base to their female base. They can look at how age affects the sorts of items that are purchased. They can look at ethnicity and how that impacts the brands that are most in-demand. All of these slices help to break a massive consumer base into smaller segments that can be more effectively sold into. This affects the marketing messaging, the placement of goods in the store, the outbound sales efforts, and much more.
• Lifetime Value Analysis. When you’re able to track specific customers over time, you gain a lot of insight as to how they engage with your brand and how that plays out over time. Through a more nuanced calculation of a customer’s lifetime value, it informs how they invest time and resources going forward – to maximize this value and build a strong core of loyal shoppers. This is also vital in the other direction when looking for red flags that might point to something that is going wrong along the way. When you can track this effectively, you’re in a much better position to make long-term strategic decisions that are data-driven and attached to the real-time data on the ground.
• Shopping Cart Make-Up . If we move up one level of abstraction, we can analyze the make-up of a customer’s shopping cart to understand the relative associations of different items in the store. When Tesco tracks this over time and matches it to key demographic information, they can start to understand the different use cases and common groups of items that are purchased – allowing them to adjust their offering and store placement accordingly.
• Track the performance of marketing campaigns . When Tesco undertakes various marketing initiatives, it can be difficult to track how well they perform in terms of driving sales in various target markets. The Clubcard loyalty program gives them the data that they need to do this effectively, allowing the company to track whether the marketing message is working with their target audience or if things need to be changed. Once they’ve found a winning formula, they can quickly scale that out across the rest of their stores with a lot more confidence that their investment is going to pay dividends.

Those are just some of the ways that Tesco uses this data to inform their business decisions but hopefully, it gives you a sense of why it’s such an important part of their strategy. The data alone is much more valuable than the discounts that they offer in exchange, making it one of the most impactful revenue generation mechanisms that the company has at its disposal.

• Granular customer data is worth its weight in gold and anything you can do to gather and process it effectively, should be a priority for your organization.

The Price Match Guarantee

The world of grocery stores is incredibly competitive and unless you have a specific niche focus, there is going to be a lot of competition around price. In 2014, Tesco was going through a difficult period and found itself losing ground to some up-and-coming chains that were doing anything they could to undercut Tesco’s prices and win customers away from the incumbent. Tesco realized that they couldn’t afford this to happen for very long and so they came up with what they call the ‘Brand Guarantee Scheme’ to try and mitigate against this trend.

The idea was that if a customer got to the check-out and their basket of ten or more branded items was more expensive than what could be found at a rival store, customers would receive the difference as a discount when they paid. These prices were independently verified on a daily basis and gave customers the confidence that there were no better deals out there.

This simple psychology was enough to retain the vast majority of their regular customers and removed the one major objection that might convince someone to switch to another brand. It didn’t matter whether the amount was large or small, it provided peace of mind that when you bought at Tesco, you were getting the best deal that there was.

What makes this more interesting though is that this wasn’t the first time they had tried to implement a price match system to enable this sort of deal. Previously, they would go through the same process of matching prices but instead of giving the discount right away, they would offer a gift voucher to the value of the difference between the Tesco price and what it cost at another store.

It wasn’t until they listened to customer feedback and heard that many shoppers never got to use those benefits because they forgot about the vouchers, did they realize that they needed to remove the friction entirely [4] . Creating vouchers just added another step into the process that actually was a point of potential error. And even though it was completely within the customers’ control, the impression was that they were losing out.

When the company took that away and chose to implement the discount immediately as they paid, this completely disappeared and customers found the process quite magical. They didn’t have to do anything, yet they knew that if there were savings to be had, Tesco would make sure that they got them.

Achieving this took a lot of technological investment and considerable expense to do the requisite daily market research, but it made the purchasing experience a delight and that’s what keeps customers coming back time and time again. It sends a signal to customers that you’re looking out for them and will do whatever it takes to make their grocery shopping a breeze. To this day, the Tesco Brand Guarantee is one of those components that is severely underrated in terms of the company’s success up to this point.

• The more friction you can remove from the customer journey, the more magical the experience becomes, and the more likely customers are to return.

Aggressive Acquisitions

Another key strategy that typifies who Tesco has been as a company has been its track record of large international acquisitions which looked somewhat impulsive in retrospect. They bought a wide range of different brands in countries like Poland, Japan, India, Malaysia, the Czech Republic, Hungary, Slovakia, and more [5] . In each case, they were hoping to grab a piece of the local market and then apply their technology, data, and operational know-how to rapidly scale the operations.

In most cases, they left the brand as is rather than applying the Tesco name to it, giving them diversification but also underplaying the role that they would play in those specific regions. If you look at their growth over the past few decades, a lot of it can be attributed to these deals – though it’s difficult to know exactly how much value was added in the process. Once each acquisition was absorbed under the umbrella, there are just too many variables to make an educated statement on the overall success rate.

What cannot be denied is that this was a very intentional strategy on their part. By taking the financial power that they had built up in the UK, they were able to go into new markets and take risks on brands, knowing that any losses would be subsidized by the market-leading position back home. This might not be the most efficient way to grow, but it does give you scale and speed when certain acquisitions do provide the value you were expecting.

There is lots of debate about the pros and cons of a strategy like this, but Tesco have stuck with it for their entire history and this land-grab mentality rings true today. It’s only possible when you have a significant war chest and an existing set of operations that can sustain the shocks that come with potential market failures, especially when you are moving as fast as they do.

In the next section, we’ll look at an example of where things went wrong and see what we can learn from it.

Aggressive acquisitions should only be considered when you have a large war chest and you can manage the downside risks as they present themselves.

The Failed US Expansion

Tesco hasn’t always got it right and we can often learn as much from the failures as we can from the success stories. Back in 2006, the company decided that they wanted to enter the United States and try to replicate some of the success they had found in the UK. The strategy was to open a chain of small-format grocery stores in a few states in the West of the USA, specifically Arizona, California, and Nevada. These stores wouldn’t carry the Tesco name but instead were branded as ‘Fresh and Easy’.

In the first five months they opened 60 stores, they had 150 by the end of the first year, and over the next 6 years, they expanded to have over 200 at their peak. However, they found it much more difficult to get a foothold in the market than they had originally anticipated.

It’s not entirely clear as to why the stores failed but it’s likely due to a combination of these factors [6] :

• Unfamiliar Shopping Experience. The Fresh and Easy concept was to mimic the small convenience stores from the UK – offering people a shop where you should shop daily for the food and drinks that you needed. This was a stark contrast to the typical American shopping experience which was to purchase groceries in bulk and shop much more infrequently as a result. This difference in culture meant that they could never really get the traction they wanted, and it didn’t seem to fit the buying patterns of American consumers.
• Economic Recession. The timing of this expansion was really unfortunate because it happened in the middle of the worst economic crisis that the USA (and the world) had seen for a long time. As the sub-prime mortgage crisis took hold, unemployment soared, and the purchasing power of the middle class was significantly harmed. This effect was further concentrated in these Western states and so there was a disproportionate impact on the overall demand. This was not something Tesco could have predicted or planned for, but it’s a good reminder that you don’t operate in a silo. You’re reliant on economic conditions around you to sustain whatever operations you’re involved in.
• Misaligned Product Offerings. The one common criticism that the roll-out faced was that the store focused too much on ready-to-go, microwaveable meals – something that was very popular in the UK but had less buy-in across the USA. When it came to convenience food, the US market was much more comfortable with fast-food outlets and that meant that the demand for the Fresh and Easy offering wasn’t as strong as it could have been.

As always, these reasons are purely anecdotal and it’s not entirely clear what role they played, but the key learnings were that you need to deeply understand the psychology and the buying behavior of a new target market before you enter it. If you don’t, you place the entire project at risk and this can have drastic consequences financially as well as from a reputational perspective.

Tesco had reportedly lost around $2bn when they decided to pull out of the country in 2013 and they’ve never gone back. They continue to focus on the UK market which they know very well and select other European and Asian customer bases which provide some diversification.

• When you’re entering a new market, it’s critical that you understand the nuances and psychology of the customers in that new segment. Without this, you might miss the mark and suffer significant financial damages.

Tesco remains one of the most well-known grocery store brands worldwide and their ability to combine retail dominance, strong logistics capabilities, and sophisticated use of customer data is what will be the foundation that they build their future on.

They face many challenges in the year to come as more and more customers shop directly from brands, but the company is well aware of that and is doing all that they can to pivot the company effectively for this modern paradigm shift. In this strategy study, we’ve aimed to highlight some of the key areas that they’re focusing on with the hope that you can learn from them and apply them to your own context.

As a quick refresh, here are those main takeaways from the Tesco story:

• Aggressive acquisitions should only be considered when you have a large war chest, and you can manage the downside risks as they present themselves.

Remember to take the necessary time to understand the customer context, leverage the power of data, and invest in sustainability so that you can remain relevant for decades to come.

TESCO – British Retailer that redefined Grocery Shopping

The first time I visited a ‘Tesco Extra’ store was at midnight, making an emergency run for next morning’s breakfast. The store seemed to occupy the area of an entire football field in Ashby-De-La-Zouch, UK. Even at an ungodly hour, Tesco was well-lit with visiting customers.

Inside, there were never-ending aisles lined up with groceries, food items, clothing, electronics, and whatnot. It was easy to lose way and lose track of time in the colossal supermarket.

I thought to myself that this would be the only store of its kind in the county, but I was wrong.

Tesco has 4008 stores across the UK and Republic of Ireland , with 7005+ stores and franchises across the world. In Europe, Tesco has established itself in Hungary, Slovakia, Czech Republic, Poland and Turkey. In Asia it has stores in Thailand, South Korea, Malaysia, Japan and China.

TESCO is much more than a chain of supermarkets selling a million products. It’s a giant conglomerate, spanning across so many verticals. It’s the equivalent of one of the FAANG companies but in the Grocery & Retail sector. It becomes imperative for business enthusiasts like you and me to understand the business model of this retail giant called Tesco.

It’s considered a part of the ‘Big Four’ supermarkets alongside ASDA, Sainsbury’s, and Morrison’s in Europe.

The Birth of Supermarkets in Britain

Founded in 1919 by a war veteran – Jack Cohen , Tesco began as a grocery stall in the East End of London, making a profit of £1 on sales of £4 on day one. Tesco’s first store was launched in 1929, selling dry goods & its own brand of Tesco Tea. A hundred more Tesco stores were opened in the next 10 years.

With 100+ mom-and-pop stores in Britain, Jack wanted to expand his product range. He traveled to the US in 1946 and noticed the self-service system, where customers would select different products on the shop floor and finally checkout at a counter. Jack brought this concept back to Britain, giving birth to Tesco Supermarkets and changing the face of British Shopping. His motto was to “stack ‘em high, and sell ‘em low (cheap).”

Tesco has a wide range of supermarkets depending upon their size, range of products, and location. This also helps regulate their Supply Chain to reduce wastage.

Tesco Business Model is based on various verticals

Tesco has deep-rooted its businesses in the European market so well, it’s difficult to miss out on the Tesco hoarding anywhere. Its Businesses and subsidiaries are:

A glimpse into the Complex Supply Chain

A supply chain is one of the critical aspects of the business model of a giant retailer like Tesco. Tesco has its priorities set when it comes to procuring products from different parts of the world:

• Use expertise to offer a better range of products at reasonable prices
• Use economies of scale to buy more for less
• Leverage and maintain relations with global branded suppliers
• Grow the brand

It procures goods from over 44 countries, majorly China. A stock of up to 90,000 different products (30% are food & beverages) is transferred via the global sourcing office located in Hong Kong. Keeping wholesalers out of the loop, Tesco procures directly from suppliers. The conglomerate has developed and maintained long-lasting relations with suppliers’ world over—the main ones being General Mills, Kellogg, Mars, and Princes.

Tesco has set up a separate division to regulate its supply chain, “the machine behind the machine” – Tesco International Sourcing (TIS). It can be compared to the East India Company of the 18 th -19 th Century, catering to only one customer – Tesco.

TIS is connected to over 1000+ suppliers across 1200+ factories . It’s responsible for over 50,000 Tesco product lines in terms of quality control, sourcing, production, designing, timely delivery, and sorting trading/customs documentation.

All activities are coordinated centrally at TIS, with just 533 staff members. These staff members undergo rigorous training to detect & analyze Supplier-violations and conduct Auditing.

Tesco coordinates with TIS on a daily basis to procure products in the following ways:

• The local team uses customer insights to create a Product Brief (new or modified) specified for each region.
• TIS analyzes the product brief and develops a Product Sourcing Plan depending upon – stores that need this product and figuring out minimum transport time and cost, as per the region.
• The Plan is executed, and specific demands are handed out to Suppliers all over the world. Expert TIS Buyers make sure the best deal is made.
• Inbound logistics are consolidated at specific Tesco Depot to receive the product efficiently from Suppliers.
• Local teams then make sure the product is distributed to different Tesco stores from the Depots.

Tesco adding eCommerce to the mainstream business model

Being in the Top 50 retailers globally as of 2021 , Tesco’s annual revenue worldwide in 2020 was £58.09B , a 9.1% decline from 2019 (due to the Pandemic & disposing of its Asia operations , to focus on the core business in Europe).

It shifted from Brick & Mortar to Brick & Click stores. The Click+Collect functionality on its website accounts for 43% of E-grocery sales in the UK. The Click+Collect concept enables customers to place their orders online and collect their orders a few hours later at the nearest Tesco Depot. Tesco created these specialized Depots for online orders only.

Despite shutting down most its mall operations, Tesco survived 2020 through its online retail store Tesco.com , with double the orders. Its E-commerce net sales had shot up by 31% from 2019-2021.

A Global Operations & Technology Center in Bengaluru was also set up in 2004. This center serves as the backbone of distribution operations for Tesco worldwide. Its business functions are- Finance, Property, Distribution Operations, Customers & Product. The employees at this Center are Engineers, Analysts, Designers, and Architects.

Tesco’s Marketing Strategy

Tesco has always believed in acquiring loyal customers and regaining stakeholders’ trust. It aims to reach customers from all financial backgrounds. So it launched 2 of its own sub-brands – Tesco finest for the affluent customers and Tesco Everyday Value for the rest of the crowd.

Tesco also launched the Club Card in 1995 as a Membership card, to maintain customer loyalty and keep them coming back. The Card operates on a point-based system with discounts on products, & other subsidiaries like double data on Tesco Mobile. With 5 Million subscribers in the first year , Tesco finally overtook its competitor – Sainsbury’s to become No.1 in the UK.

The Club-card strategy was used to obtain customer data and observe buying habits. This data was analyzed, allowing Tesco to put the right products on shelves while eliminating unpopular ones. Tesco realized that the Club Card isn’t just a quick fix & temporary promotional tool; it’s a promotion in itself. This made the Tesco Club Card unique and long-lasting.

Tesco also realized that spending Billions on traditional marketing efforts and maintaining a ‘one-size-fits-all’ brand image wouldn’t work. It decided to hyper-target specific customers and to earn their trust. For starters, thousands of head-office staff and senior executives were sent to work in stores – to demonstrate how Tesco values its customer. Customization became key for its new marketing strategy; sending out discounts on birthdays via Emails and campaigning from door-to-door.

Tesco also made a partial shift to Digital Marketing which costs much lesser and has a wider outreach. It created well-tailored profiles on all social media platforms. On Twitter, it has more than 15 accounts, separate for each of its business units. The online customer care account on Twitter is active 24-7.

All supermarkets commonly advertised themselves to have quality products at a reasonable cost; Tesco wanted to differentiate itself as a unique brand. It introduced step-by-step Recipes prepared from ingredients available at any Tesco store, with Chef Jamie Oliver as its Health Ambassador . Tesco Food and its variety of recipes were a massive hit. Later on, the monthly Tesco Magazine as a food & lifestyle magazine was also launched, with 4.65Million readers worldwide.

The beginning of the pandemic in March 2020 left people apprehensive about visiting a physical store to buy groceries. To deal with customers’ concerns, Tesco came up with an instructional advertisement in April ‘20. With crisp instructions similar to that of an in-flight safety video, this ad showed customers how to physically shop and behave at Tesco stores. It was considered to be the most effective advertising and communications campaign of 2020 as per YouGov BrandIndex .

Competition

Tesco’s earliest competitor has been Sainsbury’s since the 70s. The Tesco Club Card strategy in 1995 helped it overtake Sainsbury’s to become the No.1 Retailer in the UK, but not for long. The ‘Big Four’ supermarkets in Europe have been in close competition throughout the years. Tesco has acquired a 28% majority stake in the UK market.

The horse meat and accounting scandals were a real setback for Tesco, letting competitors take over the European market. The newest German entrants – Aldi and Lidl had caught customers’ attention and market share in a short span of time.

With a combined market share of 12%, these German retailers posed a threat to Tesco. So much so that Tesco began the ‘ Aldi Price Match ’ campaign to curb the growth of the German discounter and win back customers. Tesco started price-matching thousands of its products with that of Aldi, offering better quality and branded products at Aldi’s prices.

Tesco has a majority market share in Britain, with Sainsbury’s and ASDA in tow:

Tesco Adding Sustainability to its business model – The Little Helps Plan

It’s a well-known fact that giant conglomerate retailers are one of the major causes of rapid climate change and increasing carbon footprints. Tesco realized its impact on the planet and launched the Little Helps Plan as a core part of business in 2017. This plan serves as a framework to attain long-term sustainability. Its four Pillars – People, Products, Planet, and Places are aligned with the UN’s Sustainable Development Goals.

Until now, the Plan has enabled Tesco to:

• Permanently remove 1 Billion pieces of plastic from its packaging
• Redistribute 82% of unsold food, safe for human consumption
• Remove 52Billion unnecessary calories from foods sold

Apart from this, it also aims to increase sales of Plant-Based Meat alternatives by 300% by 2025. At present, it has 350 plant-based meat alternatives on the shelf.

Apart from partnering with various other organizations, Tesco entered a 4-year partnership with World Wide Fund for Nature (WWF) to address one of the biggest causes of wildlife loss – the global food system. It aims to eliminate deforestation from products, promote recyclable/compostable packaging and minimize food waste.

Tesco is one of the few successful retailers in the world, with a compelling history. Tesco has overcome numerous issues across its supply chain, faced global criticism, and still stands undeterred in the European market with its rock-solid business model. It has always adapted to its unpredictable consumers and continues to do so while caring for the planet.

The business is healthy. We said we would rebuild the relationship with the brand and consumers; you will see that in every measure of customer satisfaction we do that. The business is healthy, vibrant and there is a lot of optimism of what we can do going forward. CEO Dave Lewis, who took over Tesco in 2014 (during the struggle years) & stepped down in September 2020

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An Engineering grad, currently working in the fields of Big Data & Business Intelligence. Apart from being immersed in Tech, I love writing and exploring the business world with a focus on Strategy Consulting. An ardent reader of Sci-Fi, Mystery, and thriller novels. On my days off, I would spend time swimming, sketching, or planning my next trip to an unexplored location!

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Tesco: Lessons in customer centricity

Tesco: Lessons in customer centricity is part of a series of brand strategy briefings examining the marketing strategies and tactics of the most popular and searched-for brands. As part of this series, Econsultancy curates a selection of brand case studies and stories to help you improve your modern marketing efforts.

Tesco is one of the largest retailers in the world, but faces mounting competition from discounters, including Aldi and Lidl. In this briefing, we explore how the supermarket has been putting the customer at the heart of its marketing strategy, an approach that has coincided with six consecutive months of sales growth.

What you’ll learn

• Tesco’s shift towards ‘inside out’ marketing
• The evolution of the Clubcard loyalty scheme
• Tesco’s wine-centric approach to experiential marketing
• The brand’s trial of digital receipts

• Digital Marketing Strategy and Planning
• Content Marketing
• Digital Experience Management (Desktop/mobile website)
• Email Marketing
• Google Analytics
• Marketing Campaign Planning
• Search Engine Optimisation (SEO)
• Social Media Marketing
• Agency growth
• Business-to-Business
• Charity and Not-for-profit
• E-commerce / Retail
• Managing Digital Teams
• Managing Digital Branding
• Managing Digital Transformation
• Managing Lifecycle Marketing
• Managing International Marketing
• Startup and Small Businesses

How Tesco refreshed their marketing strategy to get back on track

A case study showing how marketing helped this global retail brand move from struggling to surviving and prospering

Even the most successful brands occasionally face choppy waters. One wrong move, or more likely, a succession of poor moves as competitors 'up their game' can lead to decline. When this happens, not only is the brand's reputation threatened, but its bottom line as well.

The Tesco brand is synonymous with shopping in the UK . After questionable investment decisions and multiple scandals rocked the business in 2013 and 2014, the company began facing unprecedented quarterly losses. Consumer confidence in the brand plummeted and sales began to reflect that new reality.

Yet the commerce giant managed to turn things around and has been posting financial gains over the past year. How did it manage to do this? As it turns out, a lot of it had to do with improved marketing. Let's review one of the best case studies out there for salvaging brand reputation.

Tapping into relevant humour

The Tesco brand has historically had a very stable, recognizable, but corporate marketing strategy known by it's 'every little helps' strapline. It's success meant stagnation in engagement and lack of agility to deviate from the formula in previous years. This fear – due to the fact that Tesco's super-power status didn't really justify any changes – became quite obsolete.

In the wake of the horse meat and accounting scandals that plagued Tesco's reputation in 2013-14, changes had to occur. The company then began to try out a new form of marketing – humour – in its Christmas commercial campaigns. By using previous commercial actors in a new setting, the business was able to keep a familiar spirit around a new concept.

The head of marketing at Tesco, Robin Terrell, noted that many lessons in humour were learned from the campaign. The biggest of all – that humour is a medium not everybody appreciates – helped the business adapt its future plans. Many companies prefer to avoid humour in profitable times, due to it being a risky gambit that doesn't resonate with everybody.

"We are trying to approach things in a very different way. If you look at the market generally there’s a lot of sameness out there. Even in terms of media mix, execution, style, tone, it’s all the same."

Tesco's marketing gamble helped pay off in the end, by and large.

Creating new product lines

Reviewing the marketing mix  was also required and one of the steps Tesco took was to launch a new line of new farm brand products. This dramatic rebranding of products such as beef, fish, pork and fruit allowed the company to appeal to cost-conscious consumers who didn't previously value Tesco's offerings. Prior to the rebranding, Tesco's basket of farm-style products was about 15% more expensive.

The brand understood the need to compete in this category and prices were reduced. The result was a dramatic increase in farm and fish sales at the new price point.

Shifting toward digital marketing

A tried and true mega-business in any market would be expected to invest billions in marketing. Many businesses that enjoy the market share that Tesco has, invest heavily in TV, press, radio and cinema. Tesco realized, however, that changes in this particular marketing strategy had to occur.

In 2013, Tesco spent approximately £110 million on marketing efforts in traditional outlets. By 2014, that number had declined by about 10 percent. In 2015, Tesco's ad spend declined sharply to less than £80 million, marking a huge shift compared to just two years prior.

While specific figures are not available, it is reported that a 1:1 shift in ad spend from traditional marketing tactics to digital marketing efforts has occurred. This means that the company is now spending at least  30% of its marketing revenue on digital marketing. This allows the business to reach highly-targeted individuals in methods that traditional marketing simply cannot provide.

Overhauling product packaging

Another huge shift at the grocery giant involved repackaging many of its high-quality offerings in higher-quality packaging. Much like what the brand did with its farm and fish products, the company took a good look at its sales and preferred items. From there, it determined which items were suffering the most from consumer drop-offs in demand and which were performing just fine.

With this information, Tesco was able to devise new packaging designs and branding campaigns for items in need of assistance. Many of these new rebranding efforts revolve around connections to farms, ranches and other elements that elicit imagery of home-grown atmospheres. Because of the challenges the brand faced, giving shoppers a more organic and locally-sourced feel in products was a smart move.

Competing with smaller chains

In years past, Tesco didn't have to worry much about competing with smaller chains. Today, however, those worries are a necessity. With chains such as Aldi now encroaching more and more on market share, Tesco has been left with no other choice than to fight back.

One of the biggest challenges of the past few years has been to stabilize market share. Fortunately for Tesco, its market share stabilised in 2016 – the first time following the scandals of 2013-14. The company's shift from traditional marketing to a digital marketing effort across all channels has made this possible.

Chains such as Aldi continue to compete on social media and beyond, Tesco has found a way to promote and attract customers from outside its realm. With new value items and advertisements featuring substantial deals, the giant is once again luring shoppers back into its stores.

Customising media

The brand sees a huge need for focusing on “the individual experience” in its resurgence. Tesco's marketing team has come up with a variety of great marketing ideas for this approach. From deep discounts delivered by email on birthdays to print campaigns delivered directly to the door, customization is key in the new world of marketing.

Marketers with the company report that instead of maintaining a big, generic image, its goal is to hyper-target specific shoppers and earn their trust. Much of this will be done through direct customised marketing approaches that appeal to specific shoppers' desires.

The reinvigoration of Tesco's strategies – and subsequent financial rebound – is a testament to the power of marketing. As businesses continue to feel the strain of competition both domestically and internationally, these entities will need a response plan.

In the wake of multiple scandals and plenty of competition, Tesco has managed to deliver both to its shareholders and shoppers. This truly successful and innovative resurgence is a far cry from such a horrible slump that haunted the company just a few years prior.

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How Tesco virtually created a new market on a country's lifestyle

Executive Summary

South Koreans have amongst the longest working hours in the world, with young, upwardly mobile executives often too busy to go shopping for grocery at a traditional store. The UK's giant retailer, Tesco, sought to turn this disadvantage to its benefit. It introduced "virtual stores", which are essentially a display of products on walls of metro stations and bus stops. Commuters, especially the tech-savvy, ultra-busy lot, could scan the QR codes of the products on display with their smartphones, and place their orders even as they waited for their trains or buses. This case study looks at how Tesco "virtually" created a new market based on a country's lifestyle.

In 2011, when domestic sales of the UK's retail giant Tesco slumped, it fell back on its second-largest market, Asia, which accounted for 30 per cent of its total profit. Tesco's success in Asia, and specifically in South Korea - currently its largest market outside the UK - is based on its ability to adapt to the local consumer.

Tesco's expansion into Asia has been an important focus for the company since the late 1990s. Following its acquisition of Thailand's Lotus in May 1998, the company announced a 142-million investment in South Korea in March 1999 by partnering with Samsung to develop hypermarkets. Through its tie-up with Samsung, Tesco made a localisation effort to adapt its Homeplus stores to the local consumer.

The latest example of this localisation was the launch in 2011 of its first virtual store, located in a Seoul subway station, an idea based on the observation that the typical Seoul commuter did not have the time to shop at her nearest brick-and-mortar Homeplus store.

The Virtual Store

The virtual stores are set up in public spaces, most often in subways and bus stops with high foot traffic and frequented daily by tech-savvy commuters. This is how such stores work:

- Interested customers download the Homeplus app into their smartphones.

- They then use their smartphones to scan the QR codes of the products they want to purchase. The posters in the virtual stores are designed to resemble the actual aisles and shelves of a regular Tesco store, making the experience very user-friendly.

- The scanned products are stored in the customers' online shopping basket, who pay online once their order is completed. Homeplus reported that the majority of the orders are placed at 10 am and 4 pm, when people are commuting to and from work.

- Customers schedule a time for home delivery. Same-day delivery is the norm, so that customers can get their products by the time they get back home from work.

The virtual store has been a huge success with commuters and drove over 900,000 app downloads in less than one year, making the Homeplus app the most popular shopping app in South Korea. Online sales increased 130 per cent since the introduction of the virtual stores and registered app users increased by 76 per cent. In February 2012, Tesco Homeplus announced it was extending the virtual store concept to 20 new locations across the country. Today, there are 22 Homeplus virtual stores in South Korea, and the brand is the country's No. 1 online retailer.

Understanding the Consumer

South Korea, a country of around 50 million people, is the fourth-largest economy in Asia and the 12th largest in the world. Compared to other Asian countries, South Koreans generally have higher levels of education, higher average household income, and better living standards. Over the past few decades, the country has built itself up with its largest resource - people - and has achieved rapid economic growth through exports of manufactured goods. It is now a major producer of automobiles, electronics, steel and high-technology products such as digital monitors, mobile phones, and semiconductors.

Over the past decade, South Korea has advanced tremendously and has been shaped by constant innovation, technology and westernisation. In today's world, shopping habits and behaviour of South Korean consumers are impacted by several key factors.

Extensive use of technology/connectivity: According to a report by McKinsey & Co., South Korea is one of the most advanced countries in terms of broadband penetration, and has more than 10 million smartphone users. In other words, one in five South Koreans use a smartphone. Additionally, according to Nielsen, households in South Korea are making six per cent fewer shopping trips. When they do shop for products, an increasing number of South Koreans go online.

Long working hours/busy lifestyle: Although the average annual hours worked per person in South Korea is declining, the country still comes out top among OECD countries with 2,193 hours. This is perhaps unsurprising, as the work ethic and lifestyle of South Koreans get shaped at a young age. According to the BBC, South Korean parents spend thousands of pounds a year on after-school tuition on an industrial scale. There are just under 100,000 hagwons or private academies in South Korea and around three-quarters of Korean children attend them.

Travel time on public transportation: South Koreans spend a significant amount of time on public transportation, predominantly between home and work. What has helped is that public transportation is reliable and inexpensive, and is the fastest and most efficient way to get around.

The introduction of Tesco's virtual stores in subways made use of time spent by commuters waiting for public transportation, allowing buyers to use the little time they have available for grocery shopping. Not only did this change the way buyers shopped, it also increased the potential market for Tesco. These buyers may not have otherwise had time to go grocery shopping between their personal and professional lives, opting to buy take-out instead.

All of this implies that grocery customers in South Korea are more time-poor and less price-sensitive. They value convenience and technology to accommodate their busy lifestyle.

Tesco's Value Proposition

Customer segmentation: When you enter a new market/geography, companies need to understand and analyse consumer behaviour trends, including shopping habits and purchasing behaviour, to identify who the valued customers are and how they behave.

Adaptation of value proposition: If the needs, attitudes and lifestyle of the company's "value customer" are different in the new market/geography, the company needs to adapt its value proposition and value network across the entire supply chain.

Power of technology in traditional industries: Technology has a disruptive power in traditional industries, such as retailing. In this case, the predominance of smartphones in Korea allowed Tesco to boost its revenues through an innovative approach.

Innovative marketing: The way marketing can be used innovatively to target captured audiences (such as commuters waiting for the next train in a station).

Brand Extension: One option that Tesco Homeplus may have considered in order to take advantage of is to create a new brand for the virtual stores that would have remained independent from the Homeplus brand and, therefore, limited the risk to the Homeplus brand by increasing prices.

EXPERT VIEW

RETAILERS STRUGGLING TO DEVELOP COMPETENCIES TO SUCCEED GLOBALLY

Despite the popularity of globalisation in retailing, most retailers are still struggling to develop competencies to succeed in global markets. To what extent should the "original" format and merchandise be adapted is a major issue. Walmart learnt this the hard way when its initial entry into China had the wrong merchandise. On the other hand, Mexican customers were disappointed when they did not find enough imported US merchandise in the Walmart stores. Toys R Us has learnt that there are differences in consumption patterns. The Japanese demand electronic toys, other Asian consumers demand educational toys, Europeans favour traditional toys, while American kids prefer television- and movie-endorsed toys.

The Tesco case in South Korea demonstrates that despite the company's many problems, it has been a leader in developing multichannel solutions. With consumers preferring the convenience and selection of e-commerce, traditional brick-and-mortar retailers are challenged to address how to serve this customer profitably. The home-delivery option is much valued by consumers but cannot be as profitable as the traditional store. Therein lies the dilemma.

VIRTUAL STORES COULD SEE ACCEPTANCE LARGELY FOR TOP-UP OR IMPULSE PURCHASES

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‘We had to make sure it didn’t fall on its arse’: How Tesco revolutionised loyalty with Clubcard

The Inside Story: In the first of a new series, Marketing Week looks at how Tesco Clubcard transformed retailing, shopping and marketing forever, as told by the people who were there at its conception.

However, Tesco would in fact need a lot of help and over the course of the next 16 years the duo would be central to building the UK’s first supermarket loyalty card, Clubcard, which would irreversibly change the marketing landscape for retailers, brands and customers.

But first the couple got to work with their data analysis company of 30 people, Dunnhumby, crunching the numbers. In three months they had a quote: £250,000 over 10 weeks would be all they needed to run the trial – significantly less that Tesco’s own £50m in three years estimate.

They presented their case to Tesco’s Grant Harrison, who was leading on Clubcard, but before they’d finished the meeting it became clear they were going to have to take it to the top.

The day they presented to the board has now become a legendary moment for Dunn and Humby. After they had finished a “deathly hush” descended on the group of executives.

Humby recalls: “Everyone was waiting to break the silence and suddenly Tesco’s chairman, Lord Ian MacLaurin, said, ‘Well, this really worries me because you seem to know more about my business in three months than I’ve learned in 30 years’.”

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Case Study: Tesco

Celebrating 3 years of Goat x Tesco

Over the last three years, we have collaborated on truly groundbreaking campaigns, driving results at every stage of the funnel using a data-led, integrated approach to influencer marketing. We’re excited to continue our relationship as their influencer agency of record!

Among our best work is the Stronger Starts campaign, an initiative launched to donate £5m worth of healthy food and activity to 5000 children’s groups by July 2024. 

The Challenge

Community remains at the heart of Tesco’s core values, and it’s something that we relay throughout all of our influencer campaigns and strategies. Tesco approached us with the challenge of amplifying this message of community spirit through a multi-channel influencer campaign across Instagram and TikTok.

We were tasked with driving emotional engagement, audience participation, and to reflect Tesco’s dedication to its local communities.

The Solution

We sourced 6 micro and macro parent influencers that aligned with Tesco’s values and target audience demographics, then had them film  an experience of going to Tesco as a family . 

The brief was clear but not strict, allowing our creators to tell the story as they saw fit. This kept it very natural and authentic, with audiences responding extremely positively. We then reinforced the content with paid media, continuously testing and optimizing to the best performing, and building ongoing engagement with different audience groups. 

We out-performed on impressions by 214% and engagement by 121%, not just meeting but exceeding our targets, and fostering audience participation and emotional connections through an impressive 9.9% engagement rate.

We also achieved an impressive CPM of £8.10, far surpassing our estimated £17.35.  Stronger Starts boasted a net sentiment score of +87, with an astounding zero negative comments, which embodies our challenge of cementing Tesco as a brand that genuinely cares and fostering a true sense of community.

@olkafiolka65 AD @Tesco Stronger Starts aims to fund £5m worth of healthy food and activities to 5000 children’s groups by July 2024. Funding will support children’s health and mental wellbeing, such as breakfast clubs or snacks, and equipment for healthy activities. Pick up a blue token at the till in-store to see the children’s groups you can help in your local community. ♬ Happy Summer – Vin Music

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Do you need social media for your business but are finding the fast-changing industry daunting? Get in touch, Goat can help.

THE RESULTS

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The Goat Agency has over 8 years experience, specializing in social media marketing powered by influencers. To find out more about how we launch industry-leading campaigns across the world, contact us below.

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Step-wise Marketing Mix of Tesco with Complete 4Ps and Overview

By Aditya Shastri

Tesco is a leading brand of supermarkets in Britain. It has managed to garner so much consumer popularity that its stores have crossed the boundaries of the United Kingdom and reached 12 other countries across Europe and Asia. 

Thus this makes us interested to know how they have attracted soo many customers and what is their marketing mix?

In this blog, we will discuss the marketing mix of Tesco in detail. Covering the product, price, place and promotional strategies that it has used to overshadow its competitors. 

Before we start with the Marketing Mix of Tesco let us know about it as a company.

About TESCO

Tesco was founded in the year 1919 by Jack Cohen. It was initially a group of market stalls in Hackney, London. Its market share is around 28.4%. It is the 3 rd largest retailer in the world measured by gross revenue.

Tesco Provides a wide range of products that include clothing, electronics, food beverages, financial services, etc. This ever-growing, product line caters to every potential need of its customer.

 It has expanded into the online marketing sector and has been offering delivery services and music downloads besides the other 40,000 or more product lines that are retail stores exhibit.

Now that we know about it as a company, let us now take a look at the Marketing Mix of Tesco.

Marketing mix of Tesco

The concept “marketing mix” refers to a business foundation model, which is focused on the product, price, place, and promotion. The marketing mix is described as a group of marketing techniques that a firm uses to achieve its marketing objectives in the target market.

It thus holistically cover the marketing and business strategies surrounding a business. Let’s dive deeper into Tesco’s Marketing mix.

Let us first start by knowing the product strategy of Tesco.

1. Product strategy

Within every category, Tesco provides a huge range variety of choices ranging from brand, regional produce, type, and international cooking in food that don’t leave the customer lacking when it comes to choice. It has its product too. It gets rid of great brands in almost every product line.

Everyday value, Tesco lotus, Tesco value, and F&F are some of Tesco’s brands. However, it is worth mentioning that ability of a range of product classes depends on the types of leads visits.

• Tesco Everyday value : Tesco is launching a new range brightly- package and brightly-priced food Under a new brand. It will contain no hydrogenated fats, no artificial flavours or colours, and no genetically modified ingredients.
• Tesco lotus : Lotus is a supermarket retail chain in Thailand since 2003. They offer food and sundry items.
• Tesco value : Tesco’s value brand originally began in 1993. Which distinctive blue and white striped packaging.
• Tesco F&F : F&F at Tesco is a fast-fashion brand. It is a Supermarket chain principally based in the UK. Tesco offers a Line of clothing within its stores, originally called Florence and Fred, and now called F&F. 

 The following products can be purchased from the supermarket chain likewise:

• Clothing & jewellery
• Technology & gaming
• Health & beauty
• Home electrical
• Entertainment & books
• Home appliances
• Baby & toddler
• DIY & Car accessories

Let us now look at the Pricing Strategy of Tesco.

2. Price Strategy

Source- Here

Tesco’s pricing strategy can be described as cost leadership. Its management aims to reduce the cost of purchase and operational costs through Economics of scale and a set of other measures to pass the cost advantage to customers as the main brand value.

In addition to this, uses a club card system to allow its customer to gather points of its purchases, which can be converted, to money at a later stage. This serves as the best price-promotional strategy of providing loyal and good customers with additional discounts. This kind of pricing master plan helps reduce prices further, thus increasing sales without affecting profits much.

Let us now see the Place Strategy of Tesco.

3. Place and Distribution Strategy

It has headquartered in Chestnut, Hertfordshire, England. Its stores are widely available in the world. It employs two main channels of distribution for its products and services with online and offline services. However, the favour for online sales channels in contrast to offline sales channels has been constantly increasing for the last few years. 

Tesco’s study shows that all customers are not comfortable with big stores like Tesco extra nor it is possible to set up so many of them. Thus, it makes use of little stores for easier availability.

Now lastly we will see the Promotional Strategy of Tesco.

4. Promotions Strategy

        Source- here

Tesco is the gold standard in terms of advertising and branding. Its biggest advantage is its low prices, and this makes it different from other supermarkets chains. It has made use of TV advertisements, sponsors charitable events, offers propagative discounts, and many more.

From all these things they just focus on only one thing that is- its low prices. And it also provides attractive offers to the leads thus it is very easy for customers to find offers like “buy one get one free” or half price, etc., and feels like they saved so much money. 

However, online purchases are cheaper than offline ones. But it doesn’t provide choices what they want. It becomes difficult to tempt customers into buying more stuff if they can’t see their choices.

Tesco has branded its company as a go-to shopping station for its customers. Tesco applies contrasting strategies in the organization to make their business grow. It provides a wide range of products to serve its customers and get all its necessities in one palace. Its main aim is to attract customers and keep the loyal leads attached to the company by giving them points which they can claim later as money. 

It has distributed its branches in a wide area and has been controlling it efficiently. It uses two-channel distribution for its product supply. Tesco has invested a large amount of money in its information technology improvement due to which it has helped to improve its sales and get an advantage over its competitors. 

Wasn’t it interesting to know Tesco’s marketing mix? Learn how to market your brand online using digital marketing check our website for more information . Also, you can check out Free Digital Marketing Masterclass by IIDE to understand what digital marketing is all about.

Thank you for taking the time to read this case study and learning about Tesco’s marketing mix. Let us know your thoughts on this blog in the comment section below. If you like our blog then do share it with your friends.

Author's Note: My name is Aditya Shastri and I have written this case study with the help of my students from IIDE's online digital marketing courses in India . Practical assignments, case studies & simulations helped the students from this course present this analysis. Building on this practical approach, we are now introducing a new dimension for our online digital marketing course learners - the Campus Immersion Experience. If you found this case study helpful, please feel free to leave a comment below.

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Aditya Shastri

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Leads the Learning & Development segment at IIDE. He is a Content Marketing Expert and has trained 6000+ students and working professionals on various topics of Digital Marketing. He has been a guest speaker at prominent colleges in India including IIMs...... [Read full bio]

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Tesco’s Digital Marketing Strategies: A Detailed Case Study

• August 16, 2022

Table of Contents

The corporate philosophy of Tesco is primarily one of cost leadership with a focus on accessibility, choice, and customer satisfaction. Tesco is well-known both domestically and abroad for emphasising cost, comfort, and value. The supermarket chain’s continued prosperity depends on the Clubcard since it attracts repeat customers who increase sales. 

This case study will discuss Tesco’s digital marketing strategies and how they are working to increase sales and customer retention.

About Tesco

Tesco is an English-headquartered retailer. The corporation serves tens of millions of clients each and every week, has 7,000 locations worldwide and employs over 500,000 people. Although grocery retail is the company’s main line of operation, it has expanded into the retail banking and assurance sectors.

In 1919, Jack Cohen established Tesco as a collection of market stalls in London’s Hackney neighbourhood.

After Cohen bought a cargo of tea from T. E. Stockwell in 1924, he initially used the moniker Tesco by combining those three initials with the first two letters of his last name. The first Tesco store opened in Burnt Oak, Barnet, in 1931. His company quickly grew, and by 1939, he owned over 100 Tesco locations nationwide. 

Since the early 1990s, Tesco has expanded internationally, operating in 11 different nations. The business left the US in 2013, but as of 2018, it is still expanding overseas.

Tesco has expanded its business since the 1960s, entering new markets like books, apparel, electronics, furniture, toys, gasoline, software, financial services, telecom, and internet services.

Tesco’s SEO Strategies

Tesco’s website strategies.

All companies today need to make sure their websites are optimised for search engines. Let’s take a look at how Tesco does in search engines and the outcomes they can expect.

Tesco’s website has an authority score of 75, receives 31.5 million visitors from organic search , and 14.4K visitors come from paid search.

www.tesco.com

Below, you can see some of the tools they use for website analytics and tracking. 

On a website’s main server, an SSL certificate file is installed. It is simply a data file that contains the public key, the owner’s name, and other information. Without an SSL certificate, TLS is unable to encrypt website traffic.

The SSL Certificates that Tesco installed are listed below.

Tesco’s On-page SEO Strategies

They post around five blogs every month which is majorly written by their employees.

Tesco’s Off-Page SEO Strategies

Off-site ranking factor optimization refers to improving how search engines and users perceive a site’s popularity, relevance, trustworthiness, and authority.

The website of Tesco has 22.7 million monthly visitors and prioritises 2.8 million keywords.

In the table given below, you can see that Tesco’s backlinks have increased since March 2022, after a sudden and drastic dip in Jan-Feb 2022.

Tesco has always gained more backlinks than they have lost. 

Business and industry as well as arts and entertainment , are the two key sectors that make up the majority of Tesco’s backlinks. Others include the internet and telecom, news and people and society.

Tesco’s Social Media Strategies

Tesco has multiple profiles on Facebook and Instagram. They have a separate Instagram account for each of the different categories and countries that they exist in.

Tesco’s Google Ads Strategies

Tesco also employs many Google Ads strategies to get more traffic from the online medium. They have 1 paid keyword that brings them 1.6K worth of traffic and costs $435.

As you can see below, their estimated traffic has increased from May 2022.

The graph below shows the trends in paid keywords. They experienced traffic in their keyword in January, June, and July.

Tesco’s Target Audience

Tesco’s target demographic is those who are interested in deals and sales, value variety and are cost-conscious. Tesco originally positioned itself as a high-volume, low-cost retailer with the goal of catering to all socioeconomic groups. However, later in the 1990s, it changed its positioning to one that not only offers low-cost “Tesco Value” items but also premium range products under its “Tesco Finest” range.

Tesco’s Best Campaigns

#foodlovestories.

#FoodLoveStories acknowledges the social and emotional components of eating, which are now more important than ever for so many people. It offers solace. You have some power over it (assuming everything works well!). It’s safety. We are all brought together by it.

That theme has been continued in the most recent #FoodLoveStories instalment, which highlights the pandemic’s ability to bring people together via food.

After the shutdown began, @Tesco swiftly released a number of advertisements depicting lockdown victims. One was a family cooking their beloved grandma’s lamb meal in each member’s home using a video messaging app. After that, they all gathered for a virtual supper and sat down to eat. Of course, the concept was that they could maintain a connection through food even if they were physically apart.

The advertisement was produced in four days using the same video-call technology as the commercial. That is pretty amazing for a TV commercial that was of broadcast quality. Because of its quickness, @Tesco was able to hold a mirror up to numerous individuals as they prepared for lockdown.

The more quickly businesses grasp our reality and take action, the more memorable and powerful their message will be. This is where brands can stand out.

These tactics were employed by Tesco to safeguard and enhance its standing in the digital market. If you want to create a digital marketing strategy for your business, you’ve come to the right place.

The first agency-style training facility, Digital Scholar, offers online digital marketing courses to aspirational marketers, company owners, students, and other people who are interested in excelling in the field of digital technology. Call Digital Scholar right away at +91 9513632705 to find out more and discuss your options.

What do you think of Tesco’s web marketing tactics? Please share with us in the comments.

Written By Digital Scholar

Digital Scholar is a premier agency-styled digital marketing institute in India. Which offers an online digital marketing course and a free digital marketing course worldwide to elevate their digital skills and become industry experts. Digital Scholar is headed by Sorav Jain and co-founder Rishi Jain, who are pioneers in the field of digital marketing. Digital Scholar’s blogs touch upon numerous aspects of digital marketing and help you get intensive ideas of different domains of digital marketing.

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Tesco Segmentation, Targeting and Positioning

There is a set of macro and micro environmental factors that affect marketing decisions of Tesco marketing management in direct and indirect manners. Macro-environmental factors impacting Tesco marketing decisions are identified through the process of environmental scanning and they include political, economic, social, cultural, technological and legal factors. Micro-environmental factors, on the other hand, relate to the impact of internal and external organisational stakeholders, and the extent of competition in supermarket industry in general.

Products and services offered by Tesco and other businesses cannot be attractive to all people in equal terms, because differences in needs and wants among people. Therefore businesses do engage in market segmentation and targeting practices.

It can be specified that “market segmentation is based on the generally true concept that the market for a product is not homogenous to its needs and wants” [1] . In simple terms, market segmentation is dividing population members into groups according to their needs, wants and other criteria and developing products and services that aim to satisfy needs and wants of particular groups.

Segmentation can be divided into geographic, demographic, psychographic, and behavioural bases. Segmentation, targeting and positioning can be implemented in relation to Tesco brand in general, as well as, its individual products.

The Table 2 below specifies target customer segment for Tesco’s own brand TV – Tesco 19-230 18.5 inch Widescreen HD Ready LCD TV DVD Combi with Freeview:

	Region	UK, and 13 other countries
	Density	Rural and urban
	Age	All age categories
	Gender	Males and females
	Income	Low and middle income category
	Occupation	Students, employees, professionals
	Education	High school, technical, Bachelors,
	Social status	Working class, skilled working class, lower middle class, middle class
	Family size	Single individuals, nuclear and extended families
	Lifestyle	Traditionalists, contended conformers
	Personality	Easy-going, determined
	Occasions	Regular
	Benefits sought	Cost advantage, variety
	User status	Active user
	Attitude	Sceptical, positive

Tesco segmentation, targeting and positioning for Technika TV

The table above illustrates target customer segment for a specific product – Tesco Technika TV. However in general, target customer segment for Tesco products and services represent cost-conscious individuals who are interested in bargains and sales and value variety of choice.

Other customer segments in the UK are targeted by different supermarket chains. For example, target customer segment of Waitrose supermarket chains represent individuals within higher income range that prioritise quality of products over their price. Accordingly, Waitrose stores are more spacious compared to many other supermarkets and this space comes for an extra price for consumers.

Lidl and ALDI, other popular supermarket chains target different customer segment than Tesco and Waitrose. Specifically, Lidl strategy is focused on cost-effectiveness to a greater extent compared to Tesco, and accordingly, Lidl target customer segment include individuals that may choose to compromise on quality because of price.

Buyer behaviour has direct implications on marketing activities in a wide range of buying situations. For example, recent global financial and economic crisis had certain implications on consumer buyer behaviour in the UK, reducing the levels of consumer spending. This specific change in buyer behaviour has been addressed by Tesco marketing management through emphasis on cost-effectiveness within integrated marketing communication practices.

Positioning of a product involves dealing with individual elements of marketing mix in order to attract target customer segment in the most efficient manner. Tesco uses a wide range of positioning strategies in order to attract target customer segment.

Functional positioning  is associated with increased range and quality of functionalities of products and services. For example, Tesco sells its  Tesco Finest  range of products through functional positioning. Accordingly, the quality of this range of products is serving as the main point of advertisement for selected customer segment. Products sold via functional positioning are generally more expensive compared to Tesco’s basic range of products, since higher quality and enhanced functionality can only be achieved for additional costs.

Symbolic positioning  is subjective is based on values and aims and aspirations of customers. This type of positioning is utilised by Tesco in relation to its Fair Trade range of products in food and grocery sector. Symbolic positioning is used by Tesco in relation to clothing products as well by refusing the use of cotton grown in countries where child labour is used in cotton production. In this case the company makes an appeal to concerns of a narrow customer segment in a physiological and emotional levels. Specifically, Tesco sells Fair Trade product range to a narrow customer segment for higher prices so satisfy their self-perception as responsible buyers.

Price positioning  is applied by Tesco in relation to a wide range of its own brand products including its 19-230 18.5 inch Widescreen HD Ready LCD TV. The company employs price positioning in order to attract specific customer segment that are more concerned with the price of the product or service compared to other components of the marketing mix.

Experiential positioning , as the name implies relates to the provision of sensory or cognitive stimulation to customers. Tesco uses experiential positioning mainly to target its customers for its health and beauty range of products.

Multi-segment positioning is an alternative type of positioning used to target several segments at the same time with different products. Tesco makes an extensive use of multi-segment positioning. To use the same example above, while Tesco Technika TV is positioned to target customer segment that are highly cost-conscious, the supermarket chain also sells Samsung 48 Inch Smart Curved WiFi Built In LED TV with Freeview HD to target a different customer segment who are willing to pay more for more quality product.

There are additional positioning strategies used by Tesco such as user positioning, product class positioning, competitor positioning etc. however, all of these methods can be specified as different variations of four broad positioning methods discussed above.

Tesco PLC Report constitutes a comprehensive analysis of marketing strategy and business strategy of Tesco . The report illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces, Value Chain analysis and McKinsey 7S Model on Tesco . Moreover, the report contains analysis of Tesco ’s leadership and organizational structure and discusses the issues of corporate social responsibility.

[1] Chandraserkar, K.S. (2010) “Marketing Management: Text & Cases” Tata McGraw-Hill Education

Tesco Corporation’s Internationalization Strategy Case Study

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Introduction

Analysis of the existing strategy, costs and benefits of the strategy, environmental challenges, resources/capabilities, new strategic directions.

Tesco is one of the leading UK retailers that started its international expansion in the 1990s. The company’s focus on internationalization was a successful strategy that led to remarkable growth in many regions and considerable profits that reached $3.8 billion in 2011 (Wrigley, Lowe, & Cudworth, 2013). However, success in some regions was accompanied by major failures in other areas, which led to significant losses, both financial and reputational. This paper includes a brief analysis of the company’s strategy, as well as challenges the company faces and new strategic directions to adapt to address these challenges.

The focus on international expansion was determined by the growing regulatory and competitive pressures Tesco had to handle in the domestic market. The first areas of expansion were countries of Central Europe that were undergoing major transformations in the 1990s after the collapse of the Soviet Union. Regulations in those countries were minimal, and competitors were also quite a few, which enabled the company to earn a significant share of the market (up to 27%) in 2011 (Wrigley et al., 2013). At that, Tesco experienced the most unprecedented growth in Asia, specifically in South Korea. The company is now the second-largest retailer in the country, with revenues of over £5 billion (Butler & Neville, 2013). The company is successfully penetrating the markets of India and China.

Nevertheless, the expansion into the US market that started in 2007 proved to be a failure as the company announced that all the stores would be closed and sold in the near future (Ruddick, 2013). It is noteworthy that Philip Clarke, the company’s CEO, understood the complexity of operating in the USA as the market was saturated, and the competition was rather fierce. However, the decision was to enter the American market with a focus on fresh food (which was quite expensive).

The internationalization of Tesco has a number of peculiarities. First, the company made some partnerships. One of the most successful partnerships was implemented in South Korea (Wrigley et al., 2013). Tesco and Samsung collaboration was successful as Tesco managed to address various issues associated with operating in new markets. First, the retailer managed to learn the peculiarities of the country’s legislation and regulatory policies.

Customers’ needs and characteristic features were also acknowledged. Tesco also managed to establish a retail chain that seemed fully domestic. Another peculiarity of Tesco’s expansion was the focus on its private labels rather than manufacturers’ products. The company also tried to be customer-oriented. However, in many regions, Tesco failed to achieve this goal, which led to failures and losses (Yoder, Visich, & Rustambekov, 2016). The company did not meet the needs of customers in the USA, Japan, and other regions.

It is necessary to note that internationalization is often an effective strategy used when the competition in the domestic market becomes too fierce, or other environmental challenges come into play (Wrigley et al., 2013). The expansion to other markets allows companies to improve profits through the increase in sales. The company can allocate funds wisely and invest in profitable projects. Operating in new markets helps companies become more flexible and innovative.

On the one hand, businesses learn about different regulatory policies and laws. On the other hand, they learn how to adjust to such environments. This flexibility is essential in the contemporary globalized world as regulations and norms existing in some countries tend to be adopted in other regions as well. There are chances that the norms and regulations existing in a foreign market will be used (with some differences) in the domestic market as well.

Nonetheless, the costs associated with the use of this strategy are also substantial. First, any expansion requires significant financial investments (related to acquisitions, alliances, construction of facilities, and so on). For instance, Tesco invested £1.25 billion to enter the American market (Wrigley et al., 2013). Clarke stated that this kind of investment was affordable for the company, and it could become transformational for Tesco in case of success. The CEO also stated that the major reputational loss in case of failure was associated with his name, not the company. Nevertheless, the reputational loss is apparent, and its negative effect can become visible soon. Unsuccessful expansion can come at a high cost, and Tesco’s failures in some regions can be seen as illustrations of these costs.

Tesco’s failures are associated with a number of wrong decisions as well as environmental challenges. First, the company entered the American market a year before the global financial crisis of 2008 (Butler & Neville, 2013). The environmental factor was accompanied by the inability to adjust and the inability to address customer needs (Yoder et al., 2016). For example, Fresh & Easy stores offered high-quality products, but they became unaffordable for price-sensitive Americans.

Furthermore, the focus on private labels was also ineffective in the US market. Martinez-Ruiz, Gonzalez-Gonzalez, Jimenez-Zarco, and Izquierdo-Yusta (2016) stress that American customers often become loyal to particular brands. People’s needs and preferences were not addressed, which resulted in failures. Customers’ peculiarities were not taken into account in other regions as well. For instance, in Poland, people prefer convenience stores to large hypermarkets while Tesco focuses on this type of retail units in that region (Ruddick, 2013). Apart from the inability to identify people’s needs, Tesco also faced issues related to the introduction of new regulations.

For instance, the changes in the Indian legislature has a negative effect on the development of the company and its further expansion in the region (Butler & Neville, 2013). Finally, many countries are trying to address serious financial issues and introduce new taxes, which also has an adverse impact on the company’s growth.

When discussing the resources and capabilities of the international retailer, it is necessary to note that Tesco has substantial funds to invest in numerous projects. The company’s billion profits show that significant funds can be allocated to innovate and expand. Apart from the obvious financial resources, the company also has other resources and capabilities. For instance, Tesco has a positive experience associated with the collaboration with companies operating in new (for Tesco) regions (Wrigley et al., 2013).

This experience can be helpful when expanding to new markets (in India and China). Tesco’s experience in collaborating with other companies can generate value as the company will be able to employ it in other regions (collaborating with other companies). The use of this strategy can help the company reduce costs, understand new markets better, and develop a proper image in the new market.

The company also tries to innovate and come up with new products and services. The development of private labels is one of the areas where Tesco has succeeded in many regions. For example, its tablets have acquired significant popularity (Warman, 2013). Hence, the development of private labels can help the company meet the existing and potential customers’ needs in a more efficient way.

The company is also expanding its e-commerce operations. Tesco’s management claims that being online is one of the major competitive advantages in the retailing industry (Warman, 2013). The company has quite effective information systems that can be used to implement marketing research, share knowledge within the company, and so on. The data obtained can help the company create value-added products and services that can attract more customers and meet the needs of the existing customers.

It may seem that the most appropriate strategy for Tesco is the focus on the domestic market and the most successful foreign markets (such as South Korea). However, the UK market is saturated, and the competition is very serious. The company needs to expand, but the expansion strategy should be based on the lessons learned from previous years. First, Tesco should launch large-scale market research with a focus on customers’ characteristic features (profile).

It is essential to understand what people need and want. One of the successful methods to learn more about new customers is the development of partnerships and alliances. Tesco can collaborate with local businesses to develop a successful marketing strategy.

Yoder et al. (2016) note that ineffective supply chain management contributed to Tesco’s failures. The company should implement research concerning the most efficient locations of stores and other facilities. This task is closely connected with another area of concern. The company should analyze the existing competition in new markets. Tesco should properly evaluate the existing competition and (based on this analysis) decide whether new Tesco stores can be set or other locations should be chosen. It is also important to identify Tesco’s competitive advantage to be able to win the competition or, at least, remain a successful player in the market.

Finally, Tesco should focus on innovation as this strategy has proved to be effective in South Korea and many other countries. The use of technology is instrumental in achieving this goal. For example, South Korean customers enjoy so-called virtual stores (Wrigley et al., 2013). These advances can be equally successful in western countries as well. The use of mobile technologies is also on the rise. E-commerce is another area to develop.

In conclusion, it is possible to state that Tesco has chosen an effective strategy that implies internationalization. This strategy is associated with numerous opportunities, including larger profits, growth, flexibility, organizational learning, etc. However, it is vital to avoid the mistakes the company has made. For instance, Tesco should reconsider its supply chain management, especially when it comes to the choice of location. The company should implement extensive research concerning customers’ needs and preferences.

It is also critical to evaluate properly the existing competition in different markets as well as environmental issues as macro and micro-economic factors affecting the development of countries and regions. Tesco should maintain its focus on innovation, but the use of advanced technologies and marketing strategies should be based on extensive market research. Although the company is still facing numerous internal and external issues, Tesco can still retain its leading position and improve its operations in different markets.

Butler, S., & Neville, S. (2013). Tesco’s empire: Expansion checked in UK and beyond . The Guardian . Web.

Martinez-Ruiz, M. P., Gonzalez-Gonzalez, I., Jimenez-Zarco, A. I., & Izquierdo-Yusta, A. (2016). Private labels at the service of retailers’ image and competitive positioning: The case of Tesco. In M. Gomez-Suarez & M. Martinez Ruiz (Eds.), Handbook of research on strategic retailing of private label products in a recovering economy (pp. 104-126). Hershey, PA: IGI Global.

Ruddick, G. (2013). Is Tesco’s dream of building an international empire unravelling? The Telegraph . Web.

Warman, M. (2013). Tesco Hudl tablet takes on Kindle and iPad . The Telegraph . Web.

Wrigley, N., Lowe, M., & Cudworth, K. (2013). The internationalization of Tesco: New frontiers and new problems. In G. Johnson, R. Whittington, D. Angwin, K. Scholes, & P. Regner (Eds.), Exploring strategy: Text and cases (pp. 657-661). Harlow, UK: Pearson.

Yoder, S., Visich, J., & Rustambekov, E. (2016). Lessons learned from international expansion failures and successes. Business Horizons , 59 (2), 233-243.

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IvyPanda. (2020, November 13). Tesco Corporation's Internationalization Strategy. https://ivypanda.com/essays/tesco-corporations-internationalization-strategy/

"Tesco Corporation's Internationalization Strategy." IvyPanda , 13 Nov. 2020, ivypanda.com/essays/tesco-corporations-internationalization-strategy/.

IvyPanda . (2020) 'Tesco Corporation's Internationalization Strategy'. 13 November.

IvyPanda . 2020. "Tesco Corporation's Internationalization Strategy." November 13, 2020. https://ivypanda.com/essays/tesco-corporations-internationalization-strategy/.

1. IvyPanda . "Tesco Corporation's Internationalization Strategy." November 13, 2020. https://ivypanda.com/essays/tesco-corporations-internationalization-strategy/.

Bibliography

IvyPanda . "Tesco Corporation's Internationalization Strategy." November 13, 2020. https://ivypanda.com/essays/tesco-corporations-internationalization-strategy/.

Tesco: A measurable marketing case study

The early ’90s was not a good time for UK grocery chain Tesco. Sales were falling, profit growth was slowing, the share price was depressed and discount food retailers from continental Europe were beginning to enter the UK market. After a cost-cutting program things became even worse as competitors grew stronger. Drastic measures would be required to save the organisation in this most cut-throat of industries. But Tesco transformed itself.

Tesco, Building a Global Retail Brand Through Sustainable Marketing , a paper by  Simon Knox , an emeritus professor at Cranfield University’s School of Management in the UK, notes that since the turnaround program Tesco has “transformed itself into a diverse international business with 65% of its selling space outside the UK. With 472,000 employees and 4811 stores worldwide, year-on-year sales have grown by over 6% in 2010. In the last six years alone, sales have more than doubled to £62.5bn, generating profits in excess of £3.39bn before tax and positioning Tesco as the third-largest supermarket group in the world.”

Expansion has involved entering new markets in central and eastern Europe, as well as China, India and the US. Store numbers have doubled and, in the UK, Tesco has more than 30% of the grocery market, Knox says, making it the market leader. What caused this turnaround was a stunning example of stakeholder management and targeted brand marketing.

“The real change agent was the Tesco Clubcard that they introduced in 1995,” says Knox, a recent international visitor to the Australian School of Business. “Tesco had developed a range of own-label products, begun in-depth market research with shoppers, improved in-store facilities – from bakeries and meat counters to baby change rooms – and rolled out a first-class training program that empowered all staff to look after customers the way they thought best. So a customer-centric culture was taking hold, but the Clubcard was the jewel in the crown, although many felt it was doomed.”

Knox reports that in a statement to the press the chairman of competing grocery retail chain Sainsbury’s, David Sainsbury, openly ridiculed the Clubcard scheme, saying: “It will cost at least £10 million just to administer. That’s wasted money that brings no benefits at all to customers. We have no plans to go down that route.”

The Clubcard would offer just 1% discount, which Sainsbury believed was of insufficient value to the consumer. The card also accrued points towards benefits for customers. But the real value wasn’t in the discount and benefits, it was in the data made available by the Clubcard.

Tesco serves an ace

A group of people within Tesco, including retail, divisional and regional managers, said they would like to be part of the Clubcard strategy development and put together a team to trial it, reports Knox.

“Tesco is very good at trialling, learning, adapting, then trialling again and moving forward. They adopted the Clubcard across a small number of stores and there was an immediate uplift in sales and commitment from customers. Suddenly everybody wanted to be part of the new regime. It moved from piloting and learning to a full-scale change management instrument, which has since been extremely successful. Six months later Sainsbury’s started playing catch-up by introducing their own card.”

Much of the success came from the wealth of information, constantly updated and refreshed as shoppers made purchases, about the supermarket chain’s customer base. “Operational benefits – such as refined stock selection, display and staffing levels – could be derived from the data, but the primary purpose of the data gathering was to facilitate future micro-marketing activities,” wrote Knox. “It would allow Tesco to gather detailed information about individual consumers’ buying habits, while maintaining feedback channels through which the company could communicate directly with its customers to build loyalty.”

One of the issues facing Tesco was how to manage all the data generated by Clubcard. To come to grips with that, a specialist marketing data analysis consultancy, dunnhumby, was brought in. “By the end of March 1995, over five million people had joined the Clubcard scheme and Tesco recorded a 7% increase in sales,” Knox notes. “Independent retail analysts AGB confirmed the impact of Clubcard on sales when they announced that Tesco had surged ahead of Sainsbury’s for the first time to become Britain’s leading retailer of packaged goods; a market position it has enjoyed every year since. One year after Clubcard’s introduction, the company also launched the Clubcard Magazine, produced in five different versions to suit different lifestyle segments.”

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More From Forbes

International market entry strategies for businesses.

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Salvador Ordorica is the CEO of The Spanish Group LLC , a first-class international translation service that translates over 90 languages.

In today's interconnected world, businesses are constantly seeking ways to broaden their horizons and enter new markets. Business leaders cannot deny the allure of international expansion, but they often encounter challenges and uncertainties on the path to success.

I’ve been running an international translation company that started operating in Irvine, California, and now we’ve entered into over 18 foreign countries. So, I will share what I’ve learned over the years, exploring the essential components of international market entry strategies, the pivotal role of cultural intelligence and some real-world case studies of companies that have triumphed on the international stage.

Market Entry Strategies

Before embarking on the journey of international expansion, businesses must first carefully assess their motivations and goals. Market entry is not a one-size-fits-all endeavor; rather, it demands a customized approach based on factors such as the industry, target market and available resources.

Are you looking to tap into new customer bases, reduce dependence on a single market or take advantage of cost-efficiency in other countries? Each objective requires a tailored market entry strategy.

1. Exporting

Exporting is a market entry strategy where a business sells its products or services to foreign customers. It typically involves shipping goods or delivering services across international borders, often through intermediaries or distributors. Exporting is a relatively low-risk option for entering international markets, as it allows companies to leverage their existing products or services without making significant investments in foreign operations.

2. Licensing And Franchising

Licensing allows businesses to grant foreign entities the right to use their intellectual property, such as trademarks or patents. Franchising involves replicating a successful business model in foreign markets. These options offer a quicker market entry but require careful management .

3. Joint Ventures And Partnerships

This strategy allows businesses to share the risks and costs associated with expanding into foreign markets. It's a mutually beneficial arrangement where both parties work together to achieve common goals while maintaining a degree of independence. However, successful execution requires careful negotiation, clear agreements and effective cooperation to navigate cultural differences and ensure the venture's success.

4. Acquisitions And Mergers

Market entry via acquisition or merger with foreign businesses offers speed and access to established customer bases and distribution networks. But it brings integration, cultural and stakeholder challenges. It's high-risk, high-reward, demanding thorough due diligence and post-acquisition management for international success.

5. Wholly-Owned Subsidiaries

This represents a market entry strategy where a company establishes complete ownership and control of its operations in a foreign market. In this approach, the business sets up a new entity or company in a foreign country, fully owned by the parent company. While this gives the parent company maximum autonomy and decision-making power, it also entails significant financial investment and higher risks. Wholly-owned subsidiaries are ideal when a business seeks tight control over operations, brand consistency and long-term market presence in the foreign market.

The Role Of Cultural Intelligence

In working with international markets, I've learned that one of the key challenges is navigating the cultural diversity of global markets.

Cultural intelligence , often referred to as cultural quotient (CQ), is the ability to understand and to be able to adapt to different cultural contexts effectively. In international business, cultural intelligence plays a pivotal role in the failure or success of market entry strategies.

• Understanding The Local Market

Cultural intelligence helps businesses understand the values, customs and preferences of the local population. Adapt services to resonate with locals to gain local market understanding, enhancing your success in market entry.

• Building Trust And Relationships

Establishing trust with local partners and customers is paramount. Hire local people to understand the culture of each place. This makes you prioritize cultural intelligence, respecting customs and etiquette, exemplified in successful partnerships worldwide.

• Effective Communication

Language barriers can be a significant hurdle in international business. Cultural intelligence involves effective communication strategies that transcend linguistic differences. To achieve this, prioritize cross-cultural training for your team, hire local experts and foster a culturally sensitive work environment.

• Adaptation And Innovation

Successful market entry often requires adapting products or services to meet local needs and preferences. Cultural intelligence implies innovation and adaptation in response to cultural insights.

To achieve a successful market entry through cultural intelligence as a company, I have focused on adapting services to local customs, languages and trends. Simultaneously, we encourage innovation in translation technology to maintain a competitive advantage across diverse markets.

Case Studies: Companies That Successfully Entered The International Market

Now, let's dive into some case studies, drawing inspiration from companies that have successfully entered international markets.

I think Apple's gradual but well-calculated entry into various international markets exemplifies "market entry success factors." Their localized approach to product launches and marketing is a masterclass in tailoring strategies to diverse audiences.

2. McDonald’s

We can see that McDonald's excels with franchising as a market entry strategy. Their ability to adapt their menu to local tastes while maintaining a consistent brand image is impressive.

3. Coca-Cola

Coca-Cola's global success underscores the significance of adapting to diverse drinking cultures. In the 1970s , the "I'd Like to Buy the World a Coke" campaign and the unforgettable jingle propelled international expansion. Coca-Cola maintained a consistent product while allowing room for cultural taste adjustments. Meticulous adaptation in advertising, promotions, distribution and pricing cemented its global triumph.

Today, international market entry is not just an option; it's a necessity for businesses seeking growth and sustainability. Expanding into international markets is a transformative experience that can propel a company to new heights. By leveraging the right strategies and a global mindset, businesses can unlock the door to global success and write their success stories in the international market.

Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?

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A Brief eCommerce Email Marketing Strategy Guide for 2024

As an eCommerce business that primarily operates online, email is your lifeline.

It’s your chance to keep your audience abreast of what your store is doing, your new products, and other fun news and tidbits. It’s also exceptionally valuable for guiding leads through the sales funnel, which means you need an eCommerce email marketing strategy.

Those are just the tips of the iceberg as far as benefits are concerned. Your eCommerce business can boost brand loyalty, elevate your sales, and help you enjoy greater customer retention rates.

With global email users continually increasing yearly, eCommerce businesses have jumped into the fray with both figurative feet first. And why not, considering eCommerce email marketing produces an ROI of $45 per $1 spent ?

Like most things in tech today, email marketing is changing, and your eCommerce business must be ready to change alongside it.

In this blog post, we’ll take a look at some of the most important eCommerce email marketing strategies to boost sales, as well as examples from top brands.

Let’s get started!

Table of Contents

Key Takeaways

• eCommerce email marketing requires you to segment your audience, build responsive and optimized email layouts, write a catchy subject line, and send messages at the right time.
• You must also study metrics, especially email open and click-through rates, to gauge the success of your campaign and improve for next time.

1. Build Your Email List

Before you can communicate with your email list , you need contacts. Obtaining them doesn’t have to be difficult. It’s all about homing in on methods that will lead to the most success. You know, like these!

Host a contest or giveaway

One of my favorite opt-in strategies is a giveaway or contest. You can promote the event on your website and social media, requiring that entrants submit their email addresses to participate.

Yes, it’s really that simple. Leads get entered to win a fabulous prize; you get their email address, and both sides benefit.

That said, I would make sure you add a short policy about what you’ll do with the participants’ email addresses so you don’t get a lot of un-subscribers or—worse yet—spam complaints.

Update your website

Your website must be a converting machine to increase your email subscribers rate and bolster your eCommerce email marketing strategy.

For one, you need landing pages for every product or service you sell. I also recommend using pop-ups and lead magnets, where you incentivize a website visitor to share their email address in exchange for quality content.

Considering you’ll make a profit of more than $40 for every dollar you spend on your eCommerce email marketing strategy, I think you can afford at least a small advertising campaign. PPC ads are a cost-effective way of getting your name out, and social media ads can be affordable if you limit the platforms you use.

Focus on content marketing

Where do the checklists, eBook chapters, and other lead magnets come from? From your content library, of course.

Quality content should be engaging, relevant, and educational. It can provide some entertainment value depending on your niche, industry, or topic, but information is always your primary goal.

The road to creating compelling content begins with keyword research. The terms your target audience searches for should inform the content you produce. That will ensure your lead magnets are incentivizing enough to your target audience that they’re inclined to subscribe to your email list.

Use segmentation

Okay, maybe segmentation isn’t technically a tactic for collecting email subscribers. But it’s still one of the most important parts of your eCommerce email marketing strategy, so it deserves some attention.

As you acquire a contact list, you must divide them into categories or buckets. Then, you can send targeted, relevant email content to each group.

There are many ways to segment an audience. Sometimes, you may use only one way, and in other instances, several. The segmentation criteria you embrace can vary from campaign to campaign.

Here is a list of criteria to use when segmenting email subscribers:

• Lifecycle stage
• Engagement rate
• Nationality
• City, town, and state
• Marital status
• Number of children
• Industry they work in
• Education level
• Website activity
• Rate of abandoned carts
• Purchase history
• Technology usage
• Event attendance
• Subscription or membership type
• Email engagement rate

Read more: A Comprehensive Guide to Email Marketing for eCommerce

2. Understand the Types of eCommerce Emails

You’ve built your email list, now what kind of content will you send them? That’s a great question! I figured reviewing the top kinds of eCommerce emails would be helpful.

Transactional emails

One of the most popular types of emails for your eCommerce email marketing strategy is transactional. These are your standard order confirmations, shipping notifications, and delivery notices.

This part of your email marketing will benefit greatly from automation. Today’s consumer expects a message in their inbox when they click the button to confirm their order. If they don’t get one, they may wonder if their order went through.

Don’t purely use transactional emails to provide information. They also have hidden opportunities if you know where to look.

For example, you can send an email with an upsell or cross-sell opportunity now that you know the customer’s purchase history and interests. You can also ask them for feedback or request they leave a review in a follow-up email after their product arrives.

Promotional emails

The next type of email is promotional. These messages give you full reign to introduce new products, services, or sales/discounts. If you have a special offer that will only be live for a limited time, you can also use a promotional email to get people hyped.

Promotional emails don’t necessarily sell themselves. You need to write quality subject lines. The key to doing that is as follows:

• Keep your subject line short. It will get cut off if it exceeds 150 to 160 characters, which won’t inspire high open rates.
• Use personalization, including the customer’s name and a reference to their purchasing or browsing behavior.
• Ask a thought-provoking question.
• Use emotions, including FOMO and curiosity.
• Promote a sense of urgency with your verbiage.

You also need strong calls to action in your emails. My biggest tip for you there is to write clear anchor text, which is the text containing your hyperlink. CTA placement also matters tremendously. At least one CTA should be above the fold.

You can use tools like EngageBay to personalize your emails and measure their performance.

Lifecycle emails

Then there are lifecycle emails, an important part of your eCommerce email marketing strategy. You will send these out at various points of a customer’s journey through the sales funnel .

For instance, you’d issue a welcome email after subscribing or win-back and re-engagement emails to retain your customers.

Like transactional emails, which are largely automated, lifecycle messages benefit from a strong automation workflow.

Read also: How To Address Multiple People in an Email the Right Way

3. Personalize and Automate

You’ve already begun to realize how important personalization is in your eCommerce email marketing strategy. If you need more proof, here are some concrete numbers for you.

Emails with personalization have a higher open rate of up to 29 percent and a click-through rate of over 40 percent.

Statista found that 90 percent of consumers in the United States call marketing personalization “very/somewhat appealing.” That’s followed by only seven percent that said it’s “neither appealing nor unappealing,” and four percent that answered personalization is “not very/not at all appealing.”

Let’s first chat about how to personalize your eCommerce email marketing campaigns, then I’ll share some of my favorite email automation tools .

Personalized content

You already know why you should personalize your subject lines, but there is so much more to it than that. The customer data you receive from your CRM and email marketing tools can help you improve your personalization more and more with each campaign.

For example, if you know Customer A loves chocolate cupcakes because they’ve bought them three times in the last two months when your bakery introduced a new triple chocolate cake, you know Customer A would probably love it.

Besides recommending customers the right products, you can also tailor email content to them based on customer data . Returning to the previous example, Customer A probably wouldn’t be as interested in your pies if they’ve primarily bought cakes, so you can tailor your email content to only be about cakes and cupcakes.

Also, today’s eCommerce email marketing allows you to utilize dynamic content. In other words, you can tailor your email content to respond to each audience segment’s pain points, needs, and interests.

The email content will look different for everyone and seem personalized and customized to their needs.

This responsiveness to what a customer or lead needs will inspire more sales, loyalty, and engagement.

Automation tools

I’ve already attested to the value of email automation . Today, you can’t live without it.

Maybe it’s manageable to manually email your list when there are 50 people on it, but once you get into the hundreds or thousands of email subscribers (let alone the hundreds of thousands), you can’t do it alone.

Automation tools and workflows serve many purposes. They can send instant emails, such as welcome emails or order confirmations. Automation can take customers through behavior-triggered campaigns, follow up when you’re too busy, and get people to give your store a second look via abandoned cart messages.

There’s a reason more than 75 percent of marketers use it.

You can’t go wrong with entrusting your automation to any of these tools:

• GetResponse
• ActiveCampaign

Selecting the right email automation tool for your eCommerce needs requires you to compare the features, pricing, ease of use, and level of customer support.

Read also: 6 Stunning eCommerce Website Design Examples (2024)

4. Follow Best Practices for Effective Email Campaigns

I want your eCommerce email marketing campaign to be the most successful it can be. That’s why I compiled this handy selection of tips and tactics to follow as your campaign launches.

Focus on the user experience

The best thing you can do when designing emails is keep UX in mind. If an email is too cluttered for its good or formatted, a reader will move the message to their spam folder. They could mark your email address as spam or block you.

Even if they don’t do anything so drastic, they will certainly stop opening future emails from you.

A well-optimized email has these traits:

• Catchy subject line within the character limit
• Personalization
• Segmentation
• Calls to action
• Responsive design
• Relevant internal links
• Alt text in images
• Unsubscribe links

Wait a minute, why unsubscribe links? Isn’t the point of growing your email list through your eCommerce email marketing strategy? Indeed, it is, which is why unsubscribe links are so important.

People change their minds, and if and when they do, it’s better to give them the option to unsubscribe. This can prevent them from reporting you for spam, hurting your email deliverability .

Optimize your emails for mobile

With 85 percent of today’s internet users relying on their phones or mobile devices to check their emails, your messages must be mobile-optimized. If they aren’t, people will not bother with your emails.

How can you be triply sure your emails are optimized? It all starts with the following:

• Reduce your image sizes, compressing them so they don’t chew up reader data.
• Cut down on your subject line length so it fits within 160 characters.
• Increase the text size.
• Design your email layout to look good on landscape and portrait views.
• Skip the long paragraphs.
• Use bullet points to break up content.

Determine the right send frequency and timing

How often should you send emails to your audience? This is an age-old question for as long as email marketing has existed. That’s why there are countless studies on the subject.

CoSchedule assessed 20 such studies from Mailchimp, Crazy Egg, and SendGrid. Most sent at least two emails per week. That said, as seen below, it varies by industry and the kinds of customers you serve, such as B2B versus B2C.

The chart from CoSchedule shows that B2B and B2C businesses prefer sending emails two to three times a week.

However, that doesn’t necessarily mean this email frequency is right for you. Here’s the thing about the data and best practices we have. At the end of the day, the right number of times to send emails will vary by audience, as will the right times.

By all means, use conventional data to start with. Just don’t be afraid to tweak it if necessary. Finding the right email send frequency is not walking in the park. You might lose engagement and subscribers before you discover the right number.

Ensure compliance

So many data regulations exist these days, from CAN-SPAM to GDPR, designed to protect consumers worldwide.

If you don’t know what these acronyms mean and, more importantly, what they do, you must learn before launching your first eCommerce email marketing campaign.

Failure to comply can lead to many unsavory consequences. For example, your business could be fined substantial amounts of money. You’ll damage your reputation and could get a lot of spam complaints that hinder your email deliverability.

Besides triple-checking your compliance with data protection regulations, you can also avoid spam filters by doing the following:

• Get a business domain for authentication.
• Add an unsubscribe option to your emails, as discussed.
• Require double opt-ins for all signup forms.
• Put together a policy outlining how you use customer data.
• Only send relevant content.
• Skip the attachments.
• Gradually warm up your IP by sending bulk emails in increasing amounts.

Use your brand voice

You’ve poured hours into creating a brand voice, so why not use it in your eCommerce email marketing campaigns? The key to building a memorable brand is consistency; email marketing is one of the biggest areas where that consistency is required.

Read more: Avoiding the Spam Folder — An Intro to Email Deliverability

5. Analyze and Optimize Email Performance

And your eCommerce email marketing strategy is finished, and your campaign is live. This is the culmination of a lot of weeks of hard work. Now, it’s time to see how it will pay off.

Key metrics

Your email marketing tool should begin producing KPIs for you in real-time. You don’t have to study the numbers every minute of every day. However, at least weekly, you should check to see if they’re trending in the anticipated direction.

What kinds of metrics matter most in eCommerce email marketing? Here’s a rundown for you:

• Click-through rate
• Bounce rate
• Subscribe rate
• Unsubscribe rate
• Overall ROI
• Revenue per subscriber
• Revenue per email
• Email shares
• Domain open rate
• Domain click rate
• Conversion rate
• Mobile open rate
• Mobile click rate
• Engagement over time
• Spam complaint rate

Test everything

You must test every element of the email as your campaign gets underway, including:

• Subject line
• CTA button type, color, shape, size, and placement
• Email content

A/B testing will reveal whether certain variations of your emails are more popular with test audiences. Adjusting your email to suit audience preferences can positively impact your open and click-through rates.

Customer feedback

Remember how, earlier in this guide, I mentioned how you can use transactional emails as an opportunity for feedback? Well, whether you’re asking for it in those emails or elsewhere, you need to begin requesting feedback if you aren’t already.

Sure, it’s not always nice to hear that your email marketing isn’t hitting the mark, but it’s better to know than to keep going and losing money with each campaign.

I suggest putting together feedback forms to make it easier for customers to share their thoughts and opinions. Issuing surveys is another great way to get customer thoughts firsthand.

Read also: eCommerce Email Marketing Simplified: 15 Examples + Tips

Case Studies and Examples

Are you ready to see what it takes to drive eCommerce marketing success? I’ve got a variety of examples from some of the biggest names to help you plan your campaign. Keep reading for some missteps to avoid!

Casper – Review email

Soliciting reviews via a follow-up email doesn’t have to be stuffy or formal. Casper opened their email with a question that stops and makes you think: “So, How Did You Sleep?”

The copy below takes a relaxed attitude toward reviews.  Instead of asking outright, Casper leaves it open-ended, saying, “ If  you have any thoughts.”  They also mention how “your honest opinion will help other Casper shoppers make smart decisions.”

Revolve – Back in stock announcement

It’s always a bummer when a customer’s favorites go out of stock, but at least it gives you an excuse to send an email like fashion brand Revolve did here. Their email featured oversized text reading “Back in stock” with images of sunglasses, phone cases, shoes, watches, and jewelry.

This email is also smart because, further down below the fold, Revolve recommends a few products its customers might like, further incentivizing them to shop.

MCM – Abandoned cart email

Getting a lead or customer to re-engage after abandoning their cart doesn’t have to be tricky anymore. You can send an email like fashion brand MCM did here.

They used stark text that reads, “You left something behind,” with an emphasis on “behind,” as the word is larger and bolder than the rest of the typeface.

Below are images of the items the customer left in their cart and their subtotal, along with two buttons, one to continue checkout and the other to edit their cart. Further down the page, MCM recommends other leather products the customer might be interested in based on their browsing history.

Skillshare – Re-engagement email

If your customers haven’t opened your emails in a while, you can send them a message like Skillshare did.

They start the email by mentioning how much they miss the user, then try to lure them back by mentioning all the great services and features they’ve added in the customer’s absence.

If that doesn’t do the trick, Skillshare has a special, limited-time promo code where the user can try Skillshare for the next 30 days for $0.99. The CTA button is tailored to that offer.

Bombas – Referral email

How do free socks sound? Bombas, an apparel brand, knows it’s a tempting offer, so it’s the lead-in they use to drive more referrals. All it takes to get free socks is to refer a friend.

The email has two CTA buttons to help people get started. One reads, “Get Free Socks,” which is well above the fold. It sits on an image of two people on stairs wearing Bombas socks. The second CTA button in bright neon pink is further down in the email and says, “Refer a Friend Here.”

Since the email uses a white background, that neon pink color slaps you across the face in the best way possible.

Little MOO – Order confirmation

Print robot service Little MOO has a rather straightforward order confirmation email. It starts with a large type that thanks the customer, then breaks down the order by when it was received, how much it cost, the delivery address, and the estimated delivery date.

Several CTA buttons are further down the email in the trademark Little MOO emerald green. The first is for downloading a VAT receipt, and the second is for order management. Deeper into the email are a few educational posts designed to get readers onto the Little MOO website.

eCommerce email marketing mistakes to avoid

• Exceeding the subject line limit.
• Using spam words in your email copy or subject line.
• When sending emails with attachments, order confirmation information should be in the body of the email.
• Not segmenting your email list.
• Failing to optimize your emails.
• Sending emails without testing them.
• Putting all CTAs below the fold.
• Using spam words in your emails.
• Writing in all caps.
• Sending your emails without using marketing automation .
• Not looking at any metrics or studying the wrong ones.
• Cluttering your email layout.
• Using low-quality photos and videos.
• Going against your brand guidelines in your emails.
• Sending too many emails all at once.
• Not giving customers an option to unsubscribe.

Read also: 5 eCommerce Email Marketing Software to Help You Sell More

eCommerce email marketing strategy is the cornerstone of growth, especially a solid, well-rounded strategy. Such a strategy requires continually testing, analyzing, and refining your approach. You can expect better results, including higher ROI and more conversions.

EngageBay is an all-in-one marketing, sales, and customer support software for small businesses, startups, and solopreneurs. You get email marketing, marketing automation, landing page and email templates , segmentation and personalization, sales pipelines, live chat, and more.

Sign up for free with EngageBay or book a demo with our experts. 

Frequently Asked Questions (FAQ)

1. what are the essential components of an ecommerce email marketing strategy.

A successful eCommerce email marketing campaign includes segmentation, personalization, relevant messaging, ideal communication frequency, testing, and regular metrics reviews.

2. How often should I send emails to my subscribers?

The timeframe varies from audience to audience, but at least once a week and up to several times per week is right.

3. What types of emails should I include in my eCommerce email marketing campaigns?

Your campaigns require various eCommerce email types, from transactional to lifecycle and promotional emails.

4. How can I increase my email open rates?

You have many solutions for higher open rates, including revising your subject lines, only sending emails from a sender name your audience recognizes, adding more personalization, and timing your emails for better reception.

5. What are the best tools for automating eCommerce email marketing?

Tools such as EngageBay, Constant Contact, and Mailchimp are leading the charge, with EngageBay especially renowned for its cost-effective email marketing tools.

6. How do I ensure my emails aren’t in the spam folder?

Follow data privacy regulations and laws, authenticate all emails, and prune your email list of inactive subscribers to keep your email deliverability rate high. Additionally, it gives people the option to unsubscribe.

7. What metrics should I track to measure the success of my email campaigns?

Open and click-through rates are the two primary KPIs for campaign success, but you should also measure overall ROI, email shares, mobile open rate, and mobile click rate.

8. How can personalization improve my email marketing results?

Personalizing your eCommerce emails makes your audience feel understood and appreciated. When you continually prove that you can meet their needs, their loyalty will increase. They will also open your emails more regularly and make purchases from your store.

9. What are some effective ways to grow my email list?

Host a contest or giveaway, start a referral program, offer a webinar, and showcase your social proof to build a strong, engaged email list.

10. How do I handle unsubscribes and maintain a healthy email list?

Don’t make unsubscribing a headache. If a subscriber wants to go, let them, and continue pruning your email list of other inactive subscribers.

About The Author

Nicole Malczan

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