Tesco Case Study

Tesco PLC, the largest retailer in UK and third-largest in the world has developed an impressive market sensing capability. Sales in 2006 (year ending 2/25/06) were $79 billion, up 17 percent for the year. Net income was $2.96 billion, also up 17 percent. Tesco's Club Card generates valuable information for use in market segmentation and targeting and positioning strategies and tactics. The information is also very useful to the retailer's suppliers in guiding their product strategies. Tesco's performance against Wal-Mart has been very strong around the globe. The UK based retailer has developed four store formats: large superstores, large stores with limited non-food offerings, regular supermarkets, and Tesco Express convenience stores. Tesco will enter the US West Coast market in 2007 with its convenience store format. The Club Card is more than a basis for tracking purchases; it provides an effective means of communicating with customers and building relationships.

MAJOR ISSUES IN THE CASE

• Illustrates the critical importance of real-time market sensing

• Shows how customer information provides essential guidelines for marketing strategy initiatives

• Considers the challenges of competing in mature retail markets

• Illustrates global expansion initiatives

• Shows the importance of matching new product initiatives with customer value requirements

DISCUSSION QUESTIONS

1. Wal-Mart's Asda executives observe that Tesco's databases have little to do with its strong performance. Discuss.

2. Critically evaluate Tesco's targeting and strategy of appealing