Tesco Marketing

Page4: Introduction, Objectives

INTRODUCTION

Tesco is one of the best known names in the high street. It is a large public limited company (plc) with approximately 165 000 shareholders. By 1995, Tesco had become the largest food retailer in the UK, overtaking Sainsbury's. The company operates over 800 stores throughout Europe.

BUSINESS OBJECTIVES

Tesco sets objectives for the four main areas of its business:

customers operations people (ie employees) shareholders.

Figure 1: The Tesco Steering Wheel

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Page 5: Development of Tesco, Tesco’s presence in Central Europe

After serving in the First World War, Jack Cohen used his savings and started selling groceries in Londonl East End markets. Tesco was founded in 1924. The name was based on the initials of T E Stockwell, a partner in a firm of tea suppliers, and the first two letters of Cohen. In 1929, the first store was opened in Edgware, North London. The business prospered and, in 1947, Tesco Stores (Holdings) Ltd was floated on the Stock Exchange. In 1956, the first self-service supermarket was opened. Apart ftom opening new stores, Tesco has expanded by taking over other businesses. For example, in 1992, it bought 57 William Low stores in Scotland and, in 1997, it purchased 109 stores in Northern Ireland and the Republic of Ireland ftom ABF pie.

Tesco is an ambitious company with plans to open more new stores in the United Kingdom (UK). However, in recent years, a major part of the firm's strategy has been to open stores in other European countries.

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Page 6: Tesco’s stores 1998, Opening a new Tesco store

Figure 3: Tescos Stores, 1998

stores Sales (Јm)

Ireland 109 1028

France 103 644

Hungary 43 57

Poland 31 22

Czech Republic 6 84

Slovakia 7 61

United Kingdom 534 14640

OPENING A NEW TESCO STORE

Tesco's sales in Europe have risen steadily. Expansion into central European countries, such as those shown on the map in Figure 2, can be risky because sales might not be as high as expected. Average incomes and expenditure are lower in these countries, but have the potential to grow. The cost of a good site is also much lower than in the UK. The company intends to open more new stores in Europe, requiring more investment.

Each superstore contributes between Ј2 million and Ј3 million annually to the local economy, in wages and other expenditure by the store. Because of these benefits, many local authorities are keen to have a store in their area. When opening a new store, Tesco needs to decide what type of store is needed in that area. Apart from the typical superstore, Tesco has introduced three new types of store.

Tesco Metro - Introduced in 1992, the intention was to maintain a presence on the high street at a time when most developments were at out-of-town sites. The target market is people at work and those who prefer to shop in town and city centres.

Tesco Express - Launched in 1994, these stores bring together petrol stations and shops. Much smaller than a supermarket, they have a wide range of products. They are located to provide easy access for both motorists and local residents. The company continually evaluates the success of its Express stores, before deciding whether to build more.

Tesco Extra - This is Tesco's newest type of store and also its largest. Two stores were opened, the first at Pitsea in Essex and the second at Peterborough in Cambridgeshire. These stores are twice the size of a typical superstore and provide a huge range of food, household goods and clothes.

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Page7 : Tesco &ICT (Information and Communication Technology)

Tesco uses ICT in most areas of its business. Stock, distribution, pay roll and accounts are some