The Evaluation of the Tesco Distribution Channels

Tesco is a British multinational grocery and general merchandise retailer, which is the third largest retailer in the world measured by profits (Potter, 2011). The main purpose of Tesco is to earn a customer’s lifetime loyalty. In order to achieve this goal, the company has done various things. Its success mainly comes from the merchandising and pricing strategy. It expands its items range of products and services to almost everything and even expends overseas. According to this article, the multi-channel marketing plays an important role in the Tesco’s success.

Tesco

The Effectiveness of Multichannel Marketing

A distribution channel is the chain of businesses or intermediaries through which a good or service passes until it reaches the end consumer. A distribution channel can include wholesalers, retailers, distributors and even the internet (Szopa & Pękała, 2012). Distribution channels can be also defined as marketing channels or market channels. The functional aspect of the distribution channel is seen as a way to connecting and ordering of agencies and intermediaries through which one or more streams are flowing.

Then the Tesco applies the multichannel marketing (distribution), which uses many different marketing channels to reach a customer. That is to say, each channel targets a different segment of buyers, of different need states for one buyer, and delivers the right products in the right places in the right way at the least cost. According to the Tesco, the multichannel marketing has successfully applied to its marketing strategy.

 

Customer Relationship Management

We can see that Tesco treats its more valuable customers different to the others. Those customers who frequently buy products or services have the higher expenditures. It began a Customer Relationship Management Program in 1995 by introducing Clubcard. The Clubcard could offer customers points on purchases and small rebates. Tesco can capture valuable information by swiping the card and build a powerful customer database. According to this database, the company can know what products the customers often buy so it will give them those vouchers for items they specifically liked to buy and these vouchers only provide for the customers who have a Clubcard. Those cardholders will receive more direct feedback on products, price, quality, service and company’s role within the community. Moreover, Tesco also offers different lifestyle magazines for different customers. In addition, the store managers will also call high-value shoppers, valet parking for them, and provide others privileges.

https://www.youtube.com/watch?v=8syrWqxMtQw

How to exchange your points for rewards | Tesco Clubcard Rewards

The Convenience of Tesco Stores

Moreover, the stores are designed based on consumers’ needs. Tesco built “Express” sell grocery and food items. They also built “Home Plus” sell non-food items. In 1999, it opened online store and online banking initiatives. In 2000, it opened Tesco.com. What’s more, it established Tesco Direct to sell non food products online and can deliver next-day for store pick-up. In addition, it has “drive-thru” supermarket service which can order previously and grab items without getting out of their cars.

tescoexpress11.02.11-006

In the meanwhile, Tesco has analysed customer needs, for instance, the importance of convenience. Then the company creates telephone channel for providing customer convenience. In 2009, Tesco launched three different applications for iPhone. In 2010, it created new mobile Web site to facilitate easy shopping for non-food and household items.

 

That is to say, best management of distribution channels is one of factors providing the success of products sold by the company in the market. In conclusion, it suggests that Tesco has successfully created multichannel system for their customers. These distribution channels allowed every customer in anywhere and at anytime to buy items from Tesco.

 

 

Reference List

Amato, L. H. and Amato, C. H. 2009, “Changing Retail Power and Performance in Distribution Channels”, International Journal of Retail & Distribution Management, Vol. 37 No. 12, p.1057-1076.

Klein, S. and Wehmeyer, K. 2004, “Developing A Framework for Multi Channel Strategies – An Analysis of Cases from The Grocery Retail Industry”, 17th Bled Electronic Commerce Conference, p. 33.

Kotler, Philip, and Kevin L. Keller. 2012, “Marketing Management (14th edition)”, Frenchs Forest, p.108.

Potter, M. 2011. “Tesco to outpace growth at global rivals – study”, Reuters, p.12.

Szopa, P. and Pękała, W. 2012. “Distribution channels and their roles in the enterprise”, Polish Journal of Management Studies, p. 2-4.

 

 

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