BUMKT5902 Marketing Management: Customer Value And Value Proposition Of Tesco

Answer :

BUMKT5902 Marketing Management

Individual Assignment—Customer Value and Value Proposition

i. Executive summary

The paper deals in evaluating the customer value and value proposition of Tesco that it presents to its customers. The main objective of this paper is to understand the different aspects of the value chain management for Tesco. The report describes the value proposition and the significance of the concept for the success of the Tesco. 

The website acts as a medium of communication providing significant information on the products, its price and quality which sets up the value of the supermarket. Thus, the website of Tesco is the mirror of its brand value which the company has been flaunting for its customers. The management of website optimisation can also act as a useful tool to induce value in the customers.

For the betterment of the business performance and brand value of the company, the online social platforms can be effectively used to advertise the supermarket to increase market exposure. A reward system for regular customers can be introduced by the establishment to encourage customers to shop more at the supermarket. These recommendations would enable the supermarket to enhancing the brand value and attracting the customers at the same time.

1.0 Introduction

Tesco is one of the well-known food retailers with a revenue of £54 billion per year (Tescoplc, 2019). The current numbers of employees working in the organisation are 470,000. The organisation has its presence over 14 countries in the world. It is a UK based company, and its head offices are based at Hertfordshire. 

In order to run this business in a proper way, the organisation has to maintain proper value chain management.  The main concept of the value chain management is to connect the groups and the departments in the organisation to create value by producing quality products and services. In order to maintain the proper value chain management in the business, Tesco has to undertake some of the initiatives (Morschett, Schramm-Klein & Zentes, 2015). Apart from that the scopes for maintaining the value chain in a proper way, there are creating factors needed to be considered.

The main objective of this paper is to understand the different aspects of the value chain management for Tesco. In order to do this, the report has followed a certain structure. At first place, it describes the value proposition and the significance of the concept for the success of the Tesco. After that, the concept is specified based on the UK’s market condition. The conclusion is drawn on the basis of the findings from the discussion.

2.0 Customer value:

Customer value can be defined as the satisfaction of the consumers while receiving the services from the organisation.  The evaluation of the consumer's value is important as it will help the organisation to get feedback regarding the products and the services they are providing. On the basis of the feedback, certain improvements and the innovations can be carried out. In this context, Tesco is operating over 14 different countries (Genovese et al. 2017).  People from different countries have different choices and preferences. In order to understand consumer preferences, it is important for Tesco to maintain customer value. In order to know customer preferences, the surveys can be done by this organisation. It can be said the maintaining of the proper value management will help the organisation to gain the goodwill. This will also give the organisation a competitive advantage. 

3.0 Value proposition:

There are different definitions of the value propositions those can be applied for different situations. In general value proposition can be defined as the promise that has been made by the organisation to the customers that it will deliver a particular branch of the value-creating benefits through the services. The creating of the value proposition by the organisation can affect the buying behaviour of the consumers and the decision making the process of the consumers in the context of choosing the organisation. 

The values can be seen from the two perspectives- internal value and external value. Internal value is regarded as the shareholders perspective that is profit. On the other hand, external value is seen from the customers' perspective. In order to gain the best value proposition the combination of these two values are essential.

Consumers can cultivate the value in different ways compared to the corporate world. The corporate world evaluates the value of the business through the return on investment. On the other hand, the consumers assess the value through the functionality of the products and services. If the product or service is useful, it is said to have created value.

4.0 Significance of this concept in firm’s financial success:

The value chain management and the value proposition is important for financial success at Tesco. It has been seen that maintaining the value proposition in a proper way, Tesco can maintain its goodwill among its consumers (Scholtens 2016). This will give this organisation a competitive advantage. Apart from that, the quality and the service of the products manufactured by Tesco can be improved significantly. This will help the organisation to expand the business. In order to implement the value proposition, the organisation has to maintain the consumer value (Chen, Preston and Swink 2015). In this context, Tesco can get feedback from the consumers regarding food products. This can be achieved through the surveys (Ayers and Odegaard 2017). From this Tesco can get the review of the consumer behaviour along with the dynamic demands of the consumers which will help this organisation to do proper modifications in the productions. Apart from that the innovation of the new food items on the demand of the consumer surveys can be adopted by this organisation.

It has been seen that with the improvement of the overall functionality of the Tesco can be achieved through the value chain management. With the improvement of the services and the products, the acceptance of the products from this organisation can be increased to the consumers. This will help Tesco to gain more revenue or profits. It can be said that the external value that is customer value can influence the internal value that is the profit of the company. 

It has been seen that Tesco has already gained the value proposition and it has helped the organisation to gain financial success. Considering the strategy and the marketing approach of the Tesco the products and the services it delivers have satisfied the consumers. Apart from that, it has been seen Tesco has dedicated consumer base, and most of the consumers are very loyal to this brand that has added extra advantage for this organisation. Apart from that, the organisation has adopted a different loyalty scheme card for the consumers so that they can get extra benefits on their purchasing. This makes effective consumer relation for Tesco. The consumers taking the services from Tesco are feeling values, and this is leading them to stay connected with the brand.

5.0 UK’s supermarket delivering the values:

It can be said that the supermarkets of UK are providing the values in a proper way. The overall growth of 14.8% in the supermarket business in the UK supports the statement (Qualityfoodawards.com, 2019). The supermarket includes food and grocery business.  The main reason behind this improvement is that the UK has its brand of food delivering organisations like Tesco those are famous names and have a large base of the consumers.

Apart from doing business in the UK, these organisations are also expanding their business throughout Europe and the other continents. This business strategy is bringing revenues to the organisation. Apart from that, the consumers in the UK are responsive to surveys. In this case, it has been seen that the proper improvements are helping the organisation to make modifications of the products and the innovation of the new food products (Fredendall and Hill 2016).

The retail food products organisations like Tesco in the UK are concerned about maintaining the quality of the food products. The ingredients used for the manufacturing of the food products always keep the permitted limit. Apart from that, it has been seen that maintaining the quality of the product is also contributing to the value proposition of the Tesco. This is improving the overall, value chain management in the organisation. 

Moreover, government support and business policies are helping these organisation to mitigate the spending of the capital. This helps the organisation to make a smart pricing strategy. The smart pricing strategy is helping Tesco to compete with the other well-known brands in the market. 

6.0 Statement delivering the values:

It can be said that Tesco is delivering the value to its customers as the quality products from the supermarket fulfil all the requirements of the consumers (Tescoplc, 2019). On the other way, it can be said that the supermarket is capable of providing values to its customers, which is enhancing its consumer satisfaction level.

It has been seen that the consumers in the UK are very responsive to the surveys. According to most of the consumers, the services they are getting is satisfactory; however, they think there is a chance for further improvements. Most of the consumers are happy with the quality of the products they are getting at a reasonable price (Glassdoor, 2019).  Apart from that, the organisations operating in the supermarkets are also providing excellent customer service, and after sale services those make the consumers feel valued. This makes the large base of the consumers to the food organisations like Tesco running the supermarkets (Bustinza et al.2015). It has been seen that Tesco has already gained the value proposition and it has helped the organisation to gain financial success. Considering the strategy and the marketing approach of the Tesco the products and the services it delivers have satisfied the consumers. Apart from that, it has been seen Tesco has dedicated consumer base, and most of the consumers are very loyal to this brand that has added extra advantage for this organisation. In general value proposition can be defined as the promise that has been made by the organisation to the customers that it will deliver a particular branch of the value-creating benefits through the services. The creating of the value proposition by the organisation can affect the buying behaviour of the consumers and the decision making the process of the consumers in the context of choosing the organisation.

The main concept of the value chain management is to connect the groups and the departments in the organisation to create value by producing proper goods and services. In order to maintain the proper value chain management in the business, Tesco has to undertake some of the initiatives. Apart from that the scopes for maintaining the value chain in a proper way, there are creating factors needed to be considered. From the overall discussion, it can be said that the service which is provided by the companies in the supermarkets in the UK are doing good in the business. They are making a profit along with maintaining both internal and external values. Apart from that, the consumers are getting the priority, and their demands are fulfilled through the services and the products they are getting. In this context, it can be said that the supermarkets are delivering the proper values.

7.0 One customer segment at your supermarket and the value it seeks

The entire market can be divided into various segments depending on factors and variables. They are- demographics, geographic, psychographics and behavioural. The need for the segmentation is important because to understand the basic necessities of the customers and deliver those demands. The supermarket understands the demographic segmentation to understand which products are preferred by the consumer group or which group likes what kind of products and buys them. So, the supermarket stocks up on those specific products (Payne et al.,2017).

The geographic segmentation is a process of dividing the consumers on the basis of the location of the business like state, country, city, village etc. This segmentation helps in getting an idea about the varying necessities of the different localities. The supermarket in A metro city will not have the same range of products as a supermarket in a village. The demands of the customers differ from region to region according to their needs. So, the supermarkets must also keep different inventories (Alt et al., 2017).

The psychographics segmentation is on the basis of characteristics, behaviour and usage pattern of the customers. The idea of the psychographic segmentation is required to understand the frequency of buying by the customers. This helps to replenish the stock regularly to maintain a smooth flow of products to the customers.

The behavioural segmentation is done on the basis of preference of the customers of a product over the other. This segmentation helps to narrow down the in-demand brands of the products. The preferred brands are supplied by the supermarket to their customers.

The demographics segmentation is used by Tesco in which the market population is divided on the basis of sex, age, income, educational qualification, family members etc. (Tescoplc, 2019). This has been instrumental in profiling the customer base to sense the nerve of them.

8.0 How value is communicated via your supermarket’s website

The website of the company acts as an effective tool for communication and spreading the message to the target customers (Tesco, 2019). The website of the supermarket acts as a pool of information about the various products offered by the establishment. The various offers and discounts offered by the establishment can also be effectively spread and customers can be reached through the publication on the website. The company is, therefore, responsible for establishing a value of their brand which they want to achieve and deliver on the basis of their strategies and shareholder values. The value of the supermarket is created through multiple factors like quality, price and location of its stores. The communication of these values can be effectively done through the website which enables it to reach a wider audience. Implementing the marketing strategies and aligning them with the common goals and objectives can be pushed through the websites. The website of the company acts as a bridge to take the intended strategies to the customers for implementation. Thus, the website acts as a medium of communication providing significant information on the products, its price and quality which sets up the value of the supermarket. The competitive advantage of the products of the supermarket is easily displayed through the website which has been be instrumental in building a loyal customer base and inducing value to the supermarket (Jarach,2017). The loyal customers spend their money and also preach for the supermarket for adding value to the company. The website also acts as a medium of communication for any potential grievances and customer complaints (Malik et al, 2019). This method directly brings to the notice of the relevant authorities which helps them in taking prompt action. Thus, the website of Tesco is the mirror of its brand value which it has been flaunting for its customers.

9.0 Recommendations

The company can undertake various steps to ensure customer value optimization. While not one of them ensures or guarantees success but they tend to have a positive impact on the customers. All of these in combination would instil value in the customers. Some of them are:

1. The supermarket can provide various products such a much lower price while maintaining premium quality. They can associate with the local producers to get the products at a much lower price so that they can offer the discounts. They can also buy the products at a much larger volume to decrease the effective price of them.
2. The supermarket can also check the products for quality assurance. The establishment must not compromise quality for a lower price. Standard quality of the products must be maintained to increase consumer trust in the establishment and thus inducing value in them. Quality of the products can also be controlled by associating and communicating the desired product quality to the local producers.
3. The website optimization can also act as an effective tool to induce value in the customers. They can display various discounts and offer on the websites for the customers to take advantage of and also be able to compare the original price with the discounted price which would increase the dependability of the supermarket.
4. The online social platforms can also be effectively used to advertise the supermarket to increase market exposure. Aggressive marketing strategies can also be instrumental in increasing the popularity of the supermarket and become a common destination for shopping.
5. A reward system for regular customers can be introduced by the establishment to encourage customers to shop more at the supermarket. This would instil loyalty and value of the supermarket will increase manifold.
6. New varieties of products should be offered by the supermarket. The customers should have a variety of products to choose from at their disposal. This would encourage a wide contrast of consumers to shop at the same location.

10.0 Conclusion

It is very much clear from the article that there is no single effective way of promoting values to the customers. A combination of the various tried and tested strategies could be simultaneously applied by the supermarket to increase profitability and grow a sense of value in the customers at the same time. In this context, the use of online platforms, website optimization, social media platforms as well as the use of reward system for regular customers would be of great help to create and deliver value the loyal customers of the company.