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Social Marketing Strategies and Activities of Tesco

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Introduction

Like human generation, itself, marketing has enormously evolved over the past few decades and has taken new forms and ideologies. From the production concept that emphasized on mass production and inexpensive products to the product concept that made marketers direct all their energies on improving the performance, quality, and features of the product. From the selling concept that forced organizations to engage in aggressive selling and promotion of the product to the modern marketing concept that focuses on the “sense and responds” strategy and asks the marketers to build long term relationships by creating value for the customer. However, marketing has even gone a step ahead then all these concepts.

Today, marketing departments and activities are focusing only on the profits generated for the company but also on the contributions made to the welfare and development of the society. More and more companies are now taking a holistic, humanistic, or socially responsible approach in their marketing activities and understand the fact that they must return something to the society and people in exchange for the stream of profits that it has been generating from them. Moreover, customers today are more aware, knowledgeable and have serious concerns over the social and environmental problems. They prefer giving their share of the purchases to marketers and companies that are ready to show that share the circumstances of their customers. An example is the rising ethical market for consumerism. The proper consumerism market has risen from 13.5 billion pounds in 1999 to 36 billion pounds in 2008 over the past decade (Kotler & Armstrong, pp. 187-189, 2010). Consider the examples that follow.

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One hundred per cent organic jeans made from organic cotton and natural compounds were crafted by Levis (DuBrin, pp. 364-369, 2008). Finally, Viva’s animal rights organization succeeded in convincing Waitrose to encourage her ducks to swim and reduce their flock sizes to save these ducks from eye infections, blindness, dirty and messy feathers, and other diseases. “None of the 19 million ducks sold in the UK every year used to have the ability to paddle their feet in the water before this announcement in 2007” (Humby, Hunt & Phillips, pp. 56-69, 2007). Sony decreased the number of heavy metals. In its electronic goods, mercury, zinc, aluminium, and cadmium are the same. Nike is now making more and more attempts to manufacture PVC-free shoes and directs its activation to educate individuals about the same (Andreasen, pp. 269, 2006).

Finally, UPS has discovered cleaner and more environmentally friendly trucks that have replaced the old diesel trucks with smoke-belching. “Xerox has launched the recycling and conversion of end-of-life goods initiative for Xerox Corporation Equipment Remanufacture and Parts Reuse” (Kotler & Armstrong, pp. 187-189, 2010). In this way, Xerox avoids the disposal of more than 120 million pounds of discarded products, saves resources to manufacture new ones, and also saves the company’s costs. For 40 hours per year, Timberlake offers his employee a paid leave to do volunteer work. Somewhat understandably, the order of the day is becoming social marketing (Kotler, Roberto & Lee, pp. 163-168, 2002).

This paper, however, would only focus on the social marketing activities of Tesco over the past years. A large part of the report would be presenting examples of social marketing activities of Tesco, however, at the same time; the paper would also look at the darker side of the picture since it has to take a critical approach. The report would end by comparing Tesco with its competitors, followed by presenting suggestions on how it could gain a sustainable long-term advantage.

Discussion

Without ay doubts, Tesco is one of the biggest giants in the retail industry. In terms of revenues, Tesco occupies the third position in the global market, just behind Wal-Mart and Carrefour. Nevertheless, important here to note is that the same list in terms of profits puts Tesco at the top, only Wal-Mart is ahead of Tesco. However, in the host market of the United Kingdom, it has been able to outclass all its competitors and is ruling the industry as the leader. Founded in 1919 by Jack Cohen in East London, Tesco has now spread to more than 4800 locations worldwide. Over the past few years, Tesco has seemed to understand the need and importance of social marketing or corporate social responsibility. The company has been doing considerable work and efforts in this regard.

By official reports and published materials, Tesco repeatedly has identified that their philosophy is of “every little help” (Crane, McWilliams & Matten, pp. 291-298, 2008). Customers are at the heart of everything that they do and earning the trust of their customers is one of their prime goals since the same can help them lifetime loyalty (Daft, pp. 36-39, 2007).

Tesco claims that over past few years it has invested more than 40 million Euros alone in Ireland to make sure that the prices of grocery items like bread, milk, sugar, some fruits, and vegetables witness a decreasing trend (Kotler, Roberto & Lee, pp. 163-168, 2002). Statistics show that this approach has paid off, and the food inflation in Ireland has gone down as compared to the overall inflation. Alone in Ireland, from 2001-07, Tesco raised 6 million Euros and contributed the same to national charities like Irish Cancer Society (2001), Alzheimer’s Society (2002), Down Syndrome Ireland (2003), Childline (2004), Hospice (2005), MS Ireland (2006), Temple Street Children’s University Hospital (2007) (Crane, McWilliams & Matten, pp. 291-298, 2008).

Tesco deserves the credit for opening the first zero-carbon supermarket in the United Kingdom. Moreover, amongst the environmental targets of Tesco is that they have planned to become a carbon-free business by 2050. The company plans to start its efforts for the same at all levels by 2020. Additionally, Tesco also takes for reducing the total emissions of the United Kingdom by more than 2 per cent (McLoughlin & Aaker, pp. 128-131, 2010). Tesco is always making efforts to improve its supply chain. Its aims to decrease the emissions in its supply chain by 30 per cent towards the end of 2020. Moreover, Tesco is also putting its energies into finding sustainable and environmentally friendly raw materials.

For the past decade, Tesco has been donating around 1-2 per cent of its pre-tax profits to different charities and support groups (Hastings, pp. 416-422, 2007). Tesco has expressed its desire that they do not want it to fall more than 1 per cent. Tesco has recently launched a campaign with the name of “think 25” concerning the use and sale of alcohol in the UK. Moreover, Tesco now claims that it has nutrition labels for all the products of its brand line. As the current CEO of Tesco, Mr Terry Leahy puts it that “By supporting our customers and our staff, and by remaining focused on tackling the key issues that matter to our communities and society at large, we have sought to use Tesco’s size as a force for good” (Werther Jr. & Chandler, pp. 233-239, 2010)

However, as mentioned earlier, there is a darker side of the picture as well. In its attempts to bring down prices, Tesco has created problems for farmers as their suppliers. Quite understandably, farmers have faced immense pressure from these supermarkets, including Tesco, to provide higher and higher standards of quality (Daft, pp. 36-39, 2007). On the other hand, Tesco has been trying to keep the prices down to keep the inflation down and benefit its customers. However, important here to note is that that these decreased prices do not mean lower profit margins for Tesco. Reports reveal that the profit margin for Tesco has been increasing over the years; therefore, it means that the farmers have received lesser compensation for their quality products (McLoughlin & Aaker, pp. 128-131, 2010).

A careful analysis of Tesco would reveal that one of the most important reasons due to which Tesco has remained so successful is because it has left no stone unturned. In other words, it has been able to the needs of various markets simultaneously. As David McCarthy who is Citigroup retail analyst puts it that “Tesco has pulled off a trick that I am not aware of any other retailer achieving, that is to appeal to all segments of the market” (Werther Jr. & Chandler, pp. 233-239, 2010)Tesco has a board product line, both horizontally and vertically. Every item that Tesco sells would have varieties in terms of price points, quality, performance, environmental sustainability. Examples include Tesco Value, Tesco Finest, Tesco Standard Brand, Tesco Healthy Living, Tesco Organics, Tesco Wholefoods, and Tesco Kids. All that Tesco needs to do is to stick to this strategy in future as well (Banerjee, pp. 336-340, 2007).

As Michael Porter has identified that the company, in technical terms, can only adopt either the cost leader strategy or the differentiation strategy with a narrow or broad focus. All other designs are merely different forms of these two. Quite clearly, Wal-Mart has been following a low-cost plan by presenting itself with the slogan of “always low prices”. Competing with Wal-Mart in terms of price would not be the best option since it may cause a price war and erosion of profit margin. Tesco has played its cards smartly by placing itself in the box of board differentiation rather than cost leadership (Crowther & Rayman-Bacchus, pp. 174-179, 2004).

As mentioned earlier, that Tesco is the market leader in the domestic industry; however, important here to note is the fact that the market has now entered into the phase of slow growth and stagnation. Therefore, Tesco should now search for new, unexplored and untapped blue oceans, rather than to compete in the same red sea. The South Asian markets present an excellent option for the company. Factors like high population, high growth rates, growing conscious middle class, increasing purchasing power and search for more value and less competition are incredibly favourable for a retail chain like Tesco in the long term (Adkins, pp. 411-418, 1999).

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