Market Products

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Marketing is the term where companies create their products or services awareness into the market. This goes ahead with identifying the customer’s needs and then working on purpose. The customers found to be in the centre of the whole process as they help in profit making. Marketing techniques can be defined in to different strategies which are: Growth strategies – It is the strategy which always aims high and tries to get as larger shares in the market as it can. Diversification is when a business introduces a new product to a new market. It is one of the great ways to seek the profit by introducing new products and hoping to sell. Diversification is part of the four main growth strategies defined by the Product/Market Ansoff matrix. The matrix is shown on the right hand side of the paper.

Market penetration is attracting more and more people from market. The companies enter the market in the aim to conceive more customers from their chosen segments to buy certain products/service.

Survival strategies: This comes under the situation where companies consider the daily needs without making long term goals. Branding – It usually consists of a brand name (such as Tesco), a logo (word TESCO in red colour with five blue lines underneath), a slogan (‘Everylittlehelps’) and guidelines for how the branding can be used. Most of these elements might be trademarked by the organisation and this is for the reason that the Tesco is preventing competitors from using the similar branding. In some instances, the branding will dictate colours and shapes that should be used; in other instances, the brand can be used more flexibly. A brand can be a powerful selling tool and can help achieve marketing objectives such as gaining market leadership and raising customer awareness.

The importance of branding influencing buyer behaviour –Branding can exert a considerable influence over buyer behaviour. Buyer behaviour is how the people behave in certain ways before and when making a purchase. A strong brand can stick in a customer’s mind and help to link products with a particular supplier or manufacturer.

Brand building and positioning – enhancing a brand’s equity directly through advertising campaigns and indirectly through promotions such as supporting causes or event sponsorship. It takes time, effort and investment for brand building and maintenance. A business must first identify its brand values – the central messages that it wants its customers to implicitly understand when they think of the brand.

Brandextension – A marketing strategy in which a business marketing a product with a well-developed image uses the same brand name in a different product category. Once a brand is established, a business might reduce the risk associated with developing a new product by brand extension. For the purpose of this coursework, I have chosen to use Tesco PLC and Amazon.com as case studies.

Tesco PLC and marketing techniques it uses
Tesco is the UK’s biggest food retailer offering a variety of services for food and non-food products which include insurance, entertainment, electrical goods and many more. Tesco sells about 40,000 food products in its stores, including clothing and other non-food lines. The business has its own own-label products: everyday value, normal and finest. Their own-label production includes about 50% of their sales. Tesco employs over 440,000 people around the world with over 280,000 in the UK. It has over 2,000 stores in the UK and a growing number of stores abroad in countries such as Thailand, China, Hungary and the United States. Tesco PLC is a British multinational grocery and general merchandise retailer. Tesco was found in 1919 by Jack Cohen. Tesco brand first appeared in 1924. The name came about after Jack Cohen bought a shipment of tea from Thomas Edward Stockwell. He made new labels using the first three letters of the supplier’s name (TES), and the first two letters of his surname (CO), forming the word TESCO.

Nowadays Tesco is the second largest retailer in the world measured by profits. Also it is the third largest retailer in the world measured by revenues. Also Tesco’s strengths are increasing market share, wide food and non-food choice, insurance, online retailing, and its high quality and low price own-brand products. Tesco is a Public Limited Company. This business is owned by more than one or a group of people – shareholders. Shareholders are usually a group of people or an organization that owns shares in a business. Also Tesco owns around 6,351 stores worldwide in 14 countries. At the moment Tesco is using these growth strategies:

In these new product segments Tesco heavily built its skills in private labels, It introduced brand”Cherokee” and F+F brand of clothing. Tesco used its food brand “Finest” and “Value” to non-food brands also like electronic stores,Finest health and beauty. In Thailand, Tesco Lotus has spent £3.1 million on energy conservation at 49 stores over the last three years, which has resulted in energy savings of approximately £2 million so far. At their new flagship ‘green’ store in Bangkok, solar panels the area of three football pitches cover more than half of the roof. These provide 12.5% of the store’s energy consumption and save 400 tonnes of carbon dioxide. It is the largest rooftop solar energy system in the region. Even the benches at the front of the store are made of photo-voltaic panels. Tesco Lotus is evaluating the success of this scheme and hopes to introduce similar measures in new stores.

Market penetration is attracting more and more people from market. The companies enter the market in the aim to conceive more customers from their chosen segments to buy certain products/service.

Tesco uses market penetration by selling same products as Asda or Sainsbury’s but at a lower price. Or providing customers with Tesco ClubCard, where customers can get products cheaper and adding special offers like double points E.g.1.5kg of Tesco plain flour costs less

than Asda or Sainsbury’s.

Market development – is when a business introduces the same product/service to a different market. An example for this can be Mega bus start running in Laos. Nothing is changed about the service but it’s just extended to different county. Tesco uses market development for a long time now and this can be proved by the following facts: In 1994 Tesco caught the Scottish supermarket chain Williom LowIn. In 1997 Tesco purchased a group of food retail chain consisted of Stewarts, Quinnsworth and crazy they have a business in Ireland and Northern Ireland(www.acadimia.com) Tesco purchased C Two -Network in Japan in June 2003. In mid-2006 Tesco purchased Casinos Leader price supermarkets in Poland, which were subsequently reconfigured as small Tesco stores Tesco regularly continues to make small changes to diversify its businesses. For example, in the2005-06 fiscal year, changes were made in Asian and European countries like Japan, Poland, and South Korea.

Product development – This is the certain situation when a company introduces a new product to the same market. So for example, the business might sell same product in the different country where it was not sold before. Product Development is the heart of any industry 25% of things and services are dependent on it Tesco provides their customers credit cards loans, Mortgages, Insurance, Saving schemes, electronics and also working to increase the life of the food. They have already introduced the bio fuel instead of diesel and petrol and still working to improve its quality. They are now working to expand in the mobile sector as earlier told you they got a big profit in Asian Market so they are expanding and try to launch there telecommunications products and electronics.

Survival strategies: This comes under the situation where companies consider the daily needs without making long term goals. Branding – It usually consists of a brand name (such as Tesco), a logo (word TESCO in red colour with five blue lines underneath), a slogan (‘Every little helps’) and guidelines for how the branding can be used. Most of these elements might be trademarked by the organisation and this is for the reason that the Tesco is preventing competitors from using the similar branding. In some instances, the branding will dictate colours and shapes that should be used; in other instances, the brand can be used more flexibly. A brand can be a powerful selling tool and can help achieve marketing objectives such as gaining market leadership and raising customer awareness.

Brand extension – A marketing strategy in which a business marketing a product with a well-developed image uses the same brand name in a different product category. Once a brand is established, a business might reduce the risk associated with developing a new product by brand extension.

Amazon
Amazon.com is an American international electronic commerce company with headquarters in Seattle, Washington, United States. It is the world’s largest internet company. Amazon.com started as an online bookstore, but soon diversified, selling DVDs, VHSs, CDs, video and MP3 downloads/streaming, software, video games, electronics, apparel, furniture, food, toys, and jewellery. The company also produces consumer electronics—notably, Amazon Kindle e-book readers, Kindle Fire tablets, Fire TV and Fire Phone — and is a major provider of cloud computing services. Amazon.co.uk is a subsidiary of Amazon.com, a leading online retailer of products that inform, educate, and inspire. The Amazon group also has stores in the United States, Canada, Germany, France, and Japan. Because we exist “virtually” on the Web, they have unlimited shelf space and can offer a selection of over 10.5 million titles including over 9 million Book titles and over 1.5 million music titles. Compare that to a typical physical-world book superstore, which carries around 170,000 books, or a typical physical-world music superstore, which carries around 34,000 CDs. At the moment Amazon is using these growth strategies:

Diversification is when a business introduces a new product to a new market. It is one of the great ways to seek the profit by introducing new products and hoping to sell. Diversification is part of the four main growth strategies defined by the Product/Market Ansoff matrix. Under market penetration companies increase market share in existing markets utilising existing products. Amazon has adopted number of strategies on market penetration, where it takes time to discuss all. The important strategy according to my perspective under market penetration is “Offer to send gifts to promote products during special occasions”. This is where Amazon can extremely increase its existing market. Say for example if a person purchase a high-fi setup in the charismas season Amazon will give him/her free five audio or video CDs. This motivates the online consumers of the Amazon dot com and they’ll tend to purchase more goods & services. Amazon’s revenue growth in the recently reported quarter stood at 22%. Although the figure came down compared to last year, it is still impressive for a company that’s garnering $16 billion in quarterly revenues.

There is no doubt that the overall e-commerce growth is propelling revenue growth for Amazon, but there are other finer points to consider. The company has been pushing its Kindle tablet which can act as a catalyst in promoting its merchandise sales. In addition to this, Amazon’s management seems clear about its focus on absolute cash flows rather than percentage margins. This strategy implies that the company will continue to offer deep discounts to push its sales. As far as margins are concerned, growth in Amazon’s Web Services business should help support the company’s profitability.

Market penetration is attracting more and more people from market. The companies enter the market in the aim to conceive more customers from their chosen segments to buy certain products/service.

Amazon uses market penetration pricing and has found it useful for products targeted towards price-sensitive consumer groups, like the middle to low-income classes, as these groups are more likely to respond to low introductory rates. Revisiting our Amazon Prime example, student members receive a 180-day free trial, not just a 30-day trial. Amazon is clearly accommodating university students, who are typically low-income and price sensitive, and a logical customer base for Amazon (stereotypically making frequent textbook and online purchases). Penetration pricing can grow their product line and sales more quickly. Low introductory prices convert customers to their product at an accelerated rate, the greater the price difference, the faster the customer conversion. Market penetration’s rapid growth allows Amazon to place larger raw material orders — allowing for bulk discounts — while also allowing for greater cost-spreading across more transactions.

Market development – is when a business introduces the same product/service to a different market. Nothing is changed about the service but it’s just extended to different county. Amazon doesn’t just ship content like books and videos, it streams content on its Amazon Prime Instant Video streaming service. And it the same way Amazon developed the Kindle in order to have a more direct route to market, it has now released the Amazon Fire TV in USA, UK and EU . The small set top box delivers streaming Amazon Prime Instant Video, streaming movies and television, but also plays apps based games, and provides an interface to Amazon’s own retail products.

Product development – This is the certain situation when a company introduces a new product to the same market. So for example, the business might sell same product in the different country where it was not sold before. Amazon Fresh is Amazon’s free same day delivery of fresh groceries and local produce. Order your milk by 10 am, and have it delivered by Amazon to the office before you go home. Available only in limited areas of California, you can order from more than 500,000 different items that include local and regional produce. Amazon is making huge investments in its delivery operation and fulfillment centers and this is what is differentiating it from other internet retailers. Its fast, free delivery is keeping it ahead of the competition. Amazon knows that great delivery service leads to a jump in sales. The internet may give businesses international reach and worldwide opportunity, but Amazon recognises customers also want to work with local producers and get local service. And by working in partnership with local food producers and providers, the international giant, Amazon, is now becoming our local provider of choice.

Survival strategies: This comes under the situation where companies consider the daily needs without making long term goals. Branding – It usually consists of a brand name (such as Amazon), a logo (word Amazon written in black with the amber arrow starting from the A and ending at the Z, the message is that Amazon sells everything from A to Z, even though some people see it as a smiley face), a slogan (‘Work Hard. Have Fun. Make history’) and guidelines for how the branding can be used. Most of these elements might be trademarked by the organisation and this is for the reason that the Amazon is preventing competitors from using the similar branding. In some instances, the branding will dictate colours and shapes that should be used; in other instances, the brand can be used more flexibly. A brand can be a powerful selling tool and can help achieve marketing objectives such as gaining market leadership and raising customer awareness.

Brand extension – A marketing strategy in which a business marketing a product with a well-developed image uses the same brand name in a different product category. Once a brand is established, a business might reduce the risk associated with developing a new product by brand extension.

M1 – Compare marketing techniques used in marketing products in two organisations. Tesco and Amazon use Ansoff’s Matrix strategy. As explained in P1, the Tesco uses market penetration by using their ClubCard and adding special offers like double points; whereas Amazon used discounts and promotions to increase their market share. Both companies used market development by expanding to other countries. Both companies expand their businesses by opening new branches and selling products in more rural areas. By doing this they expand their pool of customers and gain more profit. However as Amazon doesn’t have branches they will be able to sell their products online throughout their Amazon web pages so this is the main difference between these two companies. Tesco uses market development more than Amazon because Tesco has wider network worldwide. Also, both companies use product development by developing new ranges of products from time to time.

Tesco has different ranges of products which include Tesco Value and Tesco Finest. By creating new products they meet customer needs and expectations, thus increasing their profit and getting loyalty of their customers. Amazon has products like ‘Amazon Kindle’ and ‘Amazon Fire Phone’, which were developed so that it would be suitable for people with different interests. Both companies also use diversification; although Tesco is using it more this is for the reason that Tesco has developed financial services, launched Tesco Bank, went into telecommunication market, invented Tesco insurance and petrol. This shows that they are really diversifying into different markets, whereas Amazon only sticks to selling products and services. Tesco’s survival strategy is to offer promotions to keep the existing customers and attract the new ones. Amazon’s survival strategy is to change with the times, to satisfy customers’ needs. They are both similar because both companies want to keep their customers loyalty but also, to attract as many other customers as possible.

Tesco and Amazon are one of the most well-known retailers worldwide. However, I think that Amazon is more known around the globe whereas Tesco is most known in the United Kingdom. Transactional marketing is used by both of the companies because Amazon and Tesco are both focused on selling their products. However, Amazon only uses transactional marketing because they know they are a big brand and they can gain customers; whereas Tesco uses both, transactional and relationship marketing. It is because one of the Tesco’s survival strategies is to gain customers lifetime loyalty. Therefore, they use ClubCard to monitor customers buying habits and send special offers made especially for them. This is because Tesco focuses not just on attracting new customers, but on keeping their existing customers and having as many loyal customers as possible. This means that Tesco is focused on a long-term value of a customer whereas Amazon only wants to sell as much of their products as possible.

D1 – Evaluate the effectiveness of the use of techniques in marketing products in one organisation.
One of the marketing techniques used by Tesco is market penetration. Tesco used ClubCard double point scheme in order to increase its market share at the expense of its competitors. I think it worked quite well because Asda’s shares fell from 17.2% to 17% where Tesco made a gain of 0.3% by raising its market share from 30.1% to 30.4%. Another technique Tesco used is market development. Tesco expanded abroad and in my opinion, this is one of the best marketing techniques as they gain a lot of new customers. However, there is always a risk of failure when expanding into new areas because people might not like the new shop. As Tesco is a known brand, their stores are less likely to bankrupt. For example, in 2012 Tesco moved into giant Indian market after their government allows foreign superstores. Tesco teamed up with Tata Star Bazaar and has started to roll out a series of Tesco-style hypermarkets, branded Star Bazaar, under a franchise arrangement. This was a successful market development as the store is booming.

Product development was also used by this company. Tesco has effectively used this marketing strategy to maintain competitive over other competitors such as Asda, Sainsbury’s and Morrison’s. The product development has enabled Tesco to provide different ranges of products. They have range of products called ‘Tesco Value’ which are aimed at lower income earners. Also, they have luxurious line of products called ‘Tesco Finest’ which is aimed at higher income earners. These different ranges lead to wider customer choice of products and increase in sales. Thereby, increase customer satisfaction. Another marketing technique used by Tesco is diversification. Tesco developed financial services and launched Tesco Bank as a joint venture with RBS. The initial products included credit cards, savings, loans and home insurance. This technique was used very effectively as of February 2014 – the bank has around 7 million customer accounts and policies. Tesco has a very strong brand.

They logo is easily recognised in the UK and many other countries worldwide. Tesco has a slogan “Every little helps” which proved to be useful because whenever people hear this phrase, they think of Tesco. Strong Tesco brand is a powerful selling tool because people are more likely to buy products at Tesco than at the shop they haven’t heard of or from the shop with a weaker brand. Tesco was the first supermarket to launch a Value range in 1993 and over the years have continued to drive the pace of innovation. Finest and Everyday Value are now the two largest food brands in the UK. Overall I think that branding is the most effective marketing strategy. The reason for this is that because of branding they can diversify successfully, because their brand is known and recognised, therefore it increases the number of customers in the new area and there are less chances that they will fail. Also, because of branding, they can use product and market development for the same reason they can diversify successfully.

People know Tesco in many countries worldwide and especially in the UK because it is based here, and it is also one of the biggest supermarkets in the country. People trust the company they know about, the company they’ve heard of, therefore they are more likely to try other products of the brand they already know. For example, people trust Tesco Insurance as they already know this brand, even if they never heard of their insurance. This is why branding is important when developing products and market. Tesco really uses branding effectively as they try to move into as much different markets as possible, varying from telecommunication to petrol and finance, and they use their brand name as their biggest strength when starting something new.

As Tesco has already used all of the techniques successfully, covering the superstores, finance, petrol and technology market, there’s not much they could improve. My only recommendation for Tesco is that they could open even more stores in more different countries thus expanding even more and gaining more of the worldwide market. They could do this through their strong brand name and the profit they gain. They could open up a lot of new stores even in the smallest countries, thus becoming not just one of the biggest supermarkets in UK, but becoming one of the leading supermarkets worldwide.

Information sources:

www.tescoplc.com
http://en.wikipedia.org/wiki/Tesco
http://businesscasestudies.co.uk/tesco/vision-values-and-business-strategies/introduction.html#axzz3DO9M7vRH http://www.edrawsoft.com/ansoff-matrix.php
http://en.wikipedia.org/wiki/Amazon.com
http://www.tescoplc.com/plc/about_us/tesco_story/#
http://www.tesco.com/csr/p/p6.html
http://www.academia.edu/4574511/tesco_assignment
http://www.forbes.com/sites/greatspeculations/2013/05/15/how-amazon-plans-on-driving-future-growth/

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