Tesco's customer database strategy and competitive advantage against Walmart

Tesco PLC Case

The Tesco Plc.Case

Case Synopsis

The case commences with Wal-Mart's penetration of the British market which, despite expectations, has not managed to consolidate a competitive position. Tesco on the other hand was thriving. One particular source of success is constituted by the firm's interest in its customers, which has helped the company increase its market share considerably. This particular model of attracting customers through client knowledge has also constituted the primary component of the competitive strategy against Wal-Mart, which has focused on offering the lowest retail price.

Wal-Mart's role as a competitor is fluctuating. In the U.S., the market is saturated and the organization is looking for expansion opportunities in foreign markets, posing as such competition for Tesco. Through today however, the international success of the American retail has been restricted. In the U.K., Tesco responded to the American competition by identifying the price sensitive shoppers and lowering the prices for the commodities their mainly purchased. Aside this however, the company also ensured to target its less price sensitive shoppers and strived to satisfy their needs by introducing several fine line products. Both bargain as well as affluent shoppers are attracted through the Clubcard.

Tesco is the largest United Kingdom retailer and its impressive size is even raising antitrust concerns.

2. Analysis

a) the Tesco database

The Tesco database is an indubitable source of organizational success. The company has managed to gather extensive information on its customers in exchange for promotional and discount prices. The information collected and managed through the database is used to create special customer offers, constructed in such a means that they satisfy the particular needs of the diverse clients. Specifically, the database allows the company to follow through the actions of a customer, understand his behavior and his demands and then present him with a personalized offer which best satisfies his needs.

b) Attracting customers

Tesco's primary strategic aim is that of attracting customers. Unlike Wal-Mart, which focuses on attracting price sensitive customers, Tesco has strived to serve the needs of both bargain as well as affluent customers. At the basis of the customer attraction endeavors sits the organizational efforts in collecting and using customer data to create more satisfactory offers for the customers. Aside customer data collection and integration, the company is also focusing on serving multiple and diverse needs and better applying to the specific needs of markets and individual customers.

c) Club Card information to providers

The data collection and management process reveals not only the direct benefit of satisfying customers, but also the indirect benefit of allowing producers to themselves satisfy the customers. The most relevant example in this sense is offered by the case of producers who sell their products in the Tesco stores and which implemented a certain change in their operational processes. The access to the Clubcard information allows the producers to perceive the responses of the customers to the product itself, to the change it has suffered, the loyalty of the client as well as other elements which can help the manufacturers better understand and serve the needs of buyers.

d) Ethnic food line

The ethnic food line was yet another strategic endeavor aimed at serving the customers and constructed itself on the information collected. As the managerial team at Tesco observed the different culinary preferences and habits of the population in the local markets, they developed their product offering in order to better serve the need for those specific items. As a result, customer satisfaction increased and the organizational sales also grew.

e) Quarterly coupon distribution

Relative to this final elements, it has to be noted that it is too part of the strategy of applying customer data to better satisfy the buyers. These coupons reveal the fact that the retailer values the loyalty of the shoppers and rewards it. The levels of customer satisfaction are as such increased and the performances of Tesco are further sustained.

4. Future prospects

Relative to the future, it is yet unclear what this would bring about. Given the current conditions in the contemporaneous society however -- of a more sedentary life style and inadequate nutritional habits -- it is expected that positive change be required. This means that Tesco would be expected to focus more on high quality products, eco and bio and in this endeavor, it should collaborate more with local providers.

Tesco has already established itself as an innovator and it as such expected to maintain this feature by continually adapting to emergent requirements. Particularly, it is possible for the company to put its technological applications and its logistics capabilities to an interesting use and allow customers to shop online and then have the items delivered at their desired destinations. Such a strategy would further satisfy the customers by offering them more assistance in a busy schedule and by better allowing them to serve the combined needs of the personal and professional life.

References:

Capell, K., 2008, Tesco: "Wal-Mart's worst nightmare," Business Week, http://www.businessweek.com/globalbiz/content/dec2008/gb20081229_497909.htm last accessed on July 7, 2010

Duff, M., 2010, Walmart vs. Tesco: why the odds favor the British retailer, BNet, http://industry.bnet.com/retail/10009350/walmart-vs.-tesco-recovery-conditions-favor-the-british-retailer-much-as-they-do-target / last accessed on July 7, 2010

Goodall, C., 2007, Tesco vs. Wal-Mart vs. carbon emissions, Carbon Commentary, http://www.carboncommentary.com/2007/10/01/20 last accessed on July 7, 2010

2010, Tesco Plc.Website, http://www.tesco.com / last accessed on July 7, 2010

Case 3-4, Tesco Plc.