Meeting Consumer Needs Tesco And M&S Case Study

Meeting Consumer Needs Tesco And M&S

1. Introduction - Meeting Consumer Needs Tesco And M&S

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Consumers are the most important factors of any business, which determine the revenue, growth and profitability of the particular business. The report aims to discuss the importance of consumer satisfaction in business operations. The report is going to discuss the process of meeting the needs of consumers in “Tesco” and “Marks and Spencers”. Both organisations are operating their business in the retail industry in the UK. The study is going to discuss the importance of Consumer Satisfaction and related issues. It will also compare the strategies of Tesco and M&S. However the report also consists of recommendations by identifying issues and challenges.

2. Importance of Needs of consumer

Initiation or understanding of consumers’ needs is a crucial key for the successful growth of the business. Understanding consumers’ needs are not only effective to create a stronghold on consumers but also making a competitive advantage. However, understanding is not sufficient for gaining a competitive edge in business; there is a need to meet the needs of the consumer (Hsu, 2018). Innovative and creative designs of products, which are able to meet the needs of the consumers, attract more new consumers. Customer retention has a direct relationship with marketing strategies. Consumers are the factors that illustrate the demand for products and consecutively revenue and income of the products.

Tesco is one of the largest retail sectors in the UK, which has established its business on a large scale (Tescoplc.com, 2021). Hence, consumer retention is becoming one of the major concerns of the sector. The study is going to discuss the issues in consumer retention and challenges in meeting the demand of the consumers. M&S is also one of the largest food and clothing retail sectors in the UK (Marksandspencer.com, 2021). The organisations need to meet the demand of the consumers to sustain the business growth. The emergence of the Covid-19 pandemic has highlighted the importance of understanding and meeting the demands of consumers. TESCO has an adopted a strategies known as “Clubcard Plus” strategy for scale up its business at a large scale. 

Tesco has a stronghold on its consumer base as a result the growth of the sector has been increased in the last periods. As figure 2.1 represents, the sales of Tesco have increased since 2020, due to good consumer retention strategies.

3. Theoretical perspective 

Disconfirmation paradigm model for operation

The report has considered “disconfirmation paradigm theory” for the topic of the report. The theory states that the satisfaction level of the consumers is based on the consumer's expectations and product performance (Serrano et al. 2018). That is, consumers compare products and their features with their expectations. Hence, if the features are able to meet the expectations of the consumer will increase the satisfaction level. Hence, the meeting of needs or demands of the consumer increases the satisfaction level. Increasing satisfaction level also enhances brand loyalty as well as enlarges the brand image. These two factors, directly and indirectly, influence the sales growth rate and enrich profitability. 

The theory also highlighted that there is a need for analysis of consumers’ behaviour. Consumer preference and taste are also effective to analyse its behaviours. It also facilitates the understanding of the needs of consumers. Understanding the needs of consumers is effective to meet the expectations of consumers. Moreover, consumer satisfaction level also determines consumer loyalty. An organisation with more consumer loyalty increases competitive advantages. In the competitive environment in business, consumer loyalty becomes one of the major concerns for sustaining in the market. Both Tesco and M&S can apply this theory to increase the effectiveness of the “Consumer retention policy” and business operations.

Model of Marketing Mix

The four PS of marketing mix is a model that is used by companies to develop effective marketing strategies. This model of marketing mix consists of four factors which a business must consider to be successful in their marketing approach which has been briefly explained below

Product

In order to make sure that the business of a company gets successful, the first necessity of marketing is that the product should have an existing demand in the concerned market or compel the customers to have a new product by creating a demand for it. The marketers should give due consideration to the product life cycle before the development of the concerned product or service so that it reaches out to its desired set of customers and generates expected revenue out of it. It is primarily the product that determines the profits a company will make (Al-Suraihi et al. 2020). It is the first stage of marketing mix which helps in the development of further strategies with respect to pricing of product, its placement in the market to position itself to right customers through appropriate segmentation and targeting strategy and the adoption of necessary strategies for its promotion among the desired customers in the market to generate maximum volume of sales. 

Price

The next stage of this marketing model is the determination of price of a product. The pricing of the product should be such that it is neither too overpriced that no one is willing to buy the product or service and the sales are not enough to have expected profits, nor undervalued that the product even fails to meet its involved production and distribution costs. The pricing in this respect should be such that it attracts enough customers with desired margins of profit. 

Place

Even the greatest of products can fail if the market or region they are targeting does not have sufficient demand. In order to generate sales, it is necessary for the product to have significant demand in the concerned market. Businesses thus needs to be aware of the place at which they are selling their product and choose regions that have high demand for the developed product among the concerned population

Promotion

Once the desired product has been developed with appropriate pricing and place for its sales, it is also necessary to promote it among the target population. If the prospective customers do not even know about the product then there is no possibility to generate sales out of it. This makes it necessary for companies to give importance to promotion for marketing their products.

4. Issues in services and operation 

1. Lack of understanding

Lack of understanding of the demand of the consumer is the factor behind the inability to meet consumers' needs. For example, fashionable clothing is one of the trending and most demanded products. The majority of the consumers are willing to stay fashionable. If a business organisation is avoiding the fact it will impact the growth of the business and it will also lose its consumers and market share. M&S has faced a loss and declining growth rate in sales as it has not focused on the demand of consumers, as a result, the revenue has declined and it went negative (Bbc.com, 2020). There was another factor, which were responsible for decline growth rate, the emergence of the Covid-19. It can be also argued that Tesco has faced less volatility as it was able to fulfil the needs of the consumers. Brand loyalty favoured Tesco to avoid losses.

2. Avoiding Consumer review

Avoiding consumers’ reviews also becomes an issue in consumer satisfaction. Avoiding consumer reviews increases consumer dissatisfaction which enhances the negative growth of sales. M&S has also suffered from the issues as it continuously avoided the reviews of the consumers that impacted the sales of M&S (Bbc.com, 2020). However, Tesco has enjoyed its profits by focusing on improvement according to the consumer reviews. 

3. Emergence of Covid-19

The outbreak of Coronavirus has impacted the growth of all business sectors. The emergence of the Covid-19 pandemic restricted face-to-face interaction as a result the consumer's habit and preference has also been charged over the period. It is being difficult for the business sector to track consumer preference. Hence, it becomes a challenge for the sector to understand the needs of consumers. Most of the consumers are performing online shopping rather than “High Street shopping”. Hence, business operation in digital platforms becomes one of the major concerns of the business sectors in the retail industry. If the business sectors have avoided digital business operation and face huge losses for example Marks and Spencer’s did not operate digital business as a result it faces losses as other businesses operate a business in digital platforms also reduces the market share of it (Bbc.com, 2021). 

Lean Supply chain

Lean Supply chain can be used by this organisation to reduce unnecessary processes from their overall supply-chain process, which will help to reduce expense of different resources and time. Regarding this approach it can be understood that it will help to reduce different resources, such as fuel cost, number of vehicle, and employees related to overall logistic operation (Núñez-Merino et al. 2020). This implication will help them to allocate these extra resources in other processes, which will help to improve the overall supply-chain process.

5. Strategies to mitigate issue 

Tesco and M&S are focusing on mitigating issues and increasing profitability in business and increasing competitive advantages. This section will discuss strategies adopted by these business sectors to mitigate issues and increase competitiveness. 

Tesco Club-card subscription

Tesco club card subscription is a subscription based service to the consumers. “Club-card subscription” provides its customers a range of varieties in shopping at Tesco. Consumers need to pay only £7.99 for getting subscribed for a month. It provides discounts up to £400 every year (Ft.com, 2019). It is one of the successful strategies of Tesco, which is effective to increase sales and revenue growth. Consumers are also being attracted by this offer as the gate number of a variety of discounts in shopping; therefore, the number of consumers increasing due to the subscription. Moreover, the retail sector provides discounts on various products rather than a particular product, which attracts the consumer towards shopping at Tesco outlays. Tesco provides a 10% discount on products after getting a “Clubcard plus subscription” (Tesco.com, 2021).

M&S and Ocado partnership

“Marks and Spencer’s” has also made a partnership with OCADO to introduce technology in food production and food delivery (Ocado.com, 2022). Ocado is efficient in artificial intelligence and automated business process management. The partnership aims to introduce an automated warehouse that would be efficient to manage marks and Spencer's food processing outlays. It has also facilitated the food delivery system which is efficient to increase productivity and large scale operations. It has also provided an edge over its competitors as it is efficient to manage food production and delivery with automatic machines. It has increased the growth of sales in the retail industry, particularly, in the food. The sector has grown by more than 10% in 2021 (Bbc.com, 2021). Introduction of automation would also reduce cost of production. 

Tesco and “Marks and Spencer’s” both have taken strategies to recover losses and increase market share. However, the “club-card subscription” concept is not a new concept to Tesco. It was an old strategy, which was taken by Tesco earlier that was effective to increase its sales in the long run. M&S has made a partnership after facing losses in business. It signifies that Tesco has a stable business growth as it has focused on consumer retention more than M&S. 

6. Recommendations 

On analysing issues and challenges, the report has presented some strategies which would be effective in understanding the needs of consumers and meeting them.

1. Understand Trends 

Understanding trends is one of the effective ways to identify the needs of a consumer. For instance, a fashion retailer needs to identify fashion products in trend and develop its own product according to their needs. Moreover, it will facilitate the sector to understand the demand trend of the market. Demographic, geographic and other factors also need to be considered as this factor affects demand for products. M&S has previously ignored trends of fashion that impacted the sales growth rate in 2020 (Bbc.com, 2020). Hence, following trends is one of the crucial factors for product development. 

2. Develop a common platform 

The Covid-19 pandemic has highlighted the importance of the emergence of online platforms for the business operations such as sales and marketing. It has also highlighted that the change in consumers’ purchasing patterns, which is not tilted towards online shopping as an online platform effectively represents a variety of products and their details. Consumers prefer to see more products for purchasing as it increases the satisfaction level. M&S and Tesco need to develop online business operations for increasing sales of their products.

3. Reduce the cost of production 

Competition in the UK market is also higher as compared to other markets. Hence, there is a need to reduce the cost of production as the cost of production increases the prices of products. Reducing production costs would be effective to reduce prices, which will help to attract new consumers towards products. M&S and Tesco need to reduce the cost of production and operations to increase profitability and number of consumers. However, M&S has already taken a strategy to reduce the cost of production by adopting automation (Ocado.com, 2022).

4. Gather Feedback 

Feedback of services is also provided with the opportunity to make improvements and identify faulty products or services. There is a need to collect feedback from the consumers to understand consumer satisfaction levels. It would further help the organisation to improve products. Moreover, it would also help manufacturers to know which features are preferred by consumers. Avoiding feedback may lead to a decrease in competitive advantages and market share as well. 

5. Initiate Improving according to reviews

Samsung reviews are one of the important features, which help to identify weaknesses and strengths of a product. It also helps an organisation to understand potential opportunities and scopes of improvement. M&S previously did not follow and respond to the consumer reviews as a result the business faces a loss in revenue (Bbc.com, 2020). Hence, there is a need to prioritise consumer reviews for developing products and improving services. It would provide an edge to the organisation to gain competitive advantages.

6. Implementation of Lean management

Implementations of lean management will this organisation to reduce overall additional expenses efficiently and allocate these additional resources to different processes.

7. Implementation of Data technology

Implementation of data-related technology to track warehouse management activity activities will allow them to reduce additional expenses and help their supply-chain processes in a flow.

7. Conclusion 

It could be concluded that consumer satisfaction is a result of meeting consumer expectations. Customer satisfaction determines sales of products as well as revenue. A consumer is purchasing a product when it meets consumers’ expectations. The study has reflected strategies of Tesco and M&S and analysed the issues in strategies and provided recommendations. The recommendations are aiming to fulfil the gaps. Collecting feedback, understanding trends and initiating amendments as per review of consumers helps consumers to build consumer loyalty. It increases brand image as well as competitive advantages. Tesco has initiated a “Clubcard plus” subscription which is efficiently increasing the shells of Tesco as the subscription offers its consumers a 10% discount at a £7.99 monthly subscription price, whereas, M&S is providing automated food production and delivery services through a partnership with Ocado. It can be stated that consumer satisfaction is one of the essential factors that determines market share, profit, revenue and others. 

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 Appendix

Journal 1

Customer’s need is an important factor for a company to help to understand different needs of customers that provide them various ideas related to competitors, preferences, changes in customer’s taste and also it helps to develop their business to establish in a competitive market. Moreover, this need for customers enhances the product quality of a company to maintain their trustworthiness for customers and establish their position in the market. This journal is focused on their current customers and potential customers by producing innovative products to satisfy their customer’s needs.

This journal is based on taking customers' strategies and orientation to enhance their performance. Their strategy regarding customer service is customer-focused “Research & development (R&D)” that helps them to shorten their time in the market and enhance their cash flow to decrease the rate of risk. This R&D strategy is based on customers' strategy and their proper orientation (Choi, 2019). The main purpose of this study of customers regarding R & D is to understand the company's offers that can fulfil customers' needs and that are supported by customers' strategy and orientation.

This journal provides a quantitative survey of 292 customers of different companies to understand whether companies provide effective offers and services to meet their expectations or not. Moreover, this journal helps to produce effective strategies for companies to enhance their product quality and services to meet their customers' needs by analysing their market through the R & D process. In Addition, this helps to drive their existing customers as well as their potential customers towards their company.

R & D is incorporated into the core part of a business that helps to analyse the competitiveness of a company in this journal. This R&D research provides information about the competitiveness of a company that is based on their value production. This value production consists of several services related to products and services that satisfy the customer’s needs. This helps to analyse the market of a company and their “business to business (B2B)” customers relationship. B2B helps to enhance their relationship with other businesses in competitive markets that help them to better understand their customer’s demand and that will be easy for them to take necessary measures for their company. Moreover, this journal provides a concept of customers strategy that is over several strategies and methods to drive the attention of new customers and also retain the interest of existing customers. On other hand, customer orientation refers to the interaction process of a company by providing proper pricing, products and services related to offers with customers. Lastly, this research concluded that customers strategy and customer orientation, that help to provide effective data about their products and services. Moreover, this R&D process helps them to identify their competitive markets to enhance their products' quality and provide effective offers to their existing and current customers to avoid any challenges related to their establishment (Mäntyneva, 2020).

Journal 2

Customer loyalty is an important factor that helps to sustain a company in a competitive market. The competition also helps the company to understand their competitors and their products and services that help them understand their gaps to enhance their productivity and services to maintain the trust of customers. This journal provides the importance of customer loyalty and strategies related to engaging customers in the developmental process of the company to meet customers' needs and avoid competitors. Customers have the best knowledge about their needs and their preferences. This data helps the companies to produce effective and innovative products to meet their customer’s needs.

This research provides necessary information about customers' engagement to enhance their “Co-creation values”. This journal aims to build customers' loyalty to engage them in the Co-creation process of the company through social media. According to the concept of Co-creation value, this engaged both customers and company directors in the development of the strategy to enhance the productivity of the company to satisfy their current and existing customers.

Interaction with customers to get information about their needs is not so easy for a company. Customers are the main element in a business that provides effective information about products, their preferences, about their needs and to choose others over this company. Customer interaction is an unimportant factor to enhance this process, companies need to interact effectively with their customers to understand their needs (Assiouras et al. 2019).

This process helps to increase interaction, companies need to implement technologies and various social media platforms in their communications process. Nowadays, social media is an important way to communicate with various customers for a company. This helps to engage themselves in several reviews and rating processes that help to provide effective data about their products. Moreover, this engagement of customers through social media helps them to enhance their co-creation values by getting suggestions about needs and facilities that need to be implemented in the service and productivity of the company. Moreover, this customer engagement proves effective comments about their products and helps to drive current and potential customers towards their company.

In this journal to get effective information and valuable resources from customers, the concept of customer relationship management ( CRM) is provided here. This management process helps to engage Human resources, business processes and technologies to enhance the effectiveness of customer engagement through social media. Moreover, this journal provides the effectiveness of co-creation values by engaging customers in various activities of the company. This co-creation helps to provide appropriate data about the customer's needs that help to produce an effective strategy for the company.

In this process of co-creation, companies interact with customers through various social media and technologies by which they can gather lots of information related to their gaps and their competitors. This process will help to develop creative and innovative products by taking suggestions and preferences of customers to prevent challenges regarding competition in competitive markets. Moreover, this engagement of customers in several stages of business enhances the loyalty of customers towards the company. This would be effective for companies to sustain for a long time by fulfilling customers' needs (Hidayanti et al. 2018).

Journal 3

Sustainability is an important aspect for a company by providing proper product development and longevity of products. This proper supply of products helps to enhance the interest of customers towards the company and increase the rate of sustainability of the company for a long time in a competitive market. Products are the main factors that help to extend sustainability by building trust and loyalty of customers over the company.

This journal is focused on the clothing industry of the UK that faced issues related to their implementation of newly developed products in the market that affect the longevity of products and their uses. It can be seen that new product development creates issues of acceptance of customers that make a negative impact on business. In the UK, the clothing sector is a major sector that has a large competitive market and also has a major effect on society and the environment. This processing and production of new development in clothing made an impact on the environment. This journal stated about the challenges faced by the environment due to change in their product quality due to satisfying customer's needs. A high amount of waste occurred that directly affected the resources. Fast fashion in the UK, creates issues related to waste management. This journal focused on the strategies to produce quality products that have a less environmental impact and can be reused to manage the impact of this fashion industry on the environment.

As per the journal, several challenges arise in the way of the development of a new product that affects their sustainability in the UK competitive clothing industry. Customers mainly prefer fast fashion to enhance their fashion statements. That is why companies need to change their products to satisfy their customers' needs. This new product development process is quite long due to proper checking and changes that take a long time to reach the hands of customers (Goworek et al. 2020). This directly affects the sustainability of the company. Moreover, they faced issues related to their supply chain management for immediate changes in their production and resources. This creates challenges related to supply chain management. Furthermore, due to the introduction of new materials in their products. It sometimes failed to satisfy customers' needs and their preferences related to new trends. Customers started to avoid this company due to providing inappropriate products that directly affect the growth of the business and its sustainability over the market.

After analysing various data and challenges regarding NPD and loathing longevity, this study helps to provide effective strategy related to sustainable products development related to customers' needs. Moreover, companies need to develop proper management for their supply chain by effective communication and providing clarity about their plan to get proper resources. This also helps to minimise the rate of waste of the clothing industry and provide proper products to their customers while maintaining longevity. These proper approaches help to enhance the growth of a company in the competitive market of the UK by satisfying their customer’s needs (Goworek et al. 2020).

Journal 4

Marketing analytics is an important tool that helps to produce effective information regarding business by properly reviewing data of various sectors and helping to strategies new implementation in business to fulfil customers' needs. Proper market analysis helps the business to understand their gap and the areas that need to be changed to enhance their market to sustain in a competitive market. Customer's need is an important factor for any business sector that need to be followed to increase their growth and help the business to sustain itself in the market. Moreover, customers provide necessary information related to their demands and preferences that they expected from the company and their products. This need of customers also provides information related to competitors and their products that can drive their customers easily.

This journal is based on the importance of marketing analytic tools to enhance activity by analysing different data and helping to implement new technologies and theories to achieve their success by fulfilling their customer's needs. Moreover, these market analytic tools help to develop new products to enhance their performance and prevent their competitors by providing effective products to their consumers. According to this journal, they provide a dynamic capability view of this market analytic tool that can assess different competitive advantages by analysing the strength and weaknesses of a business. These market analytic tools are mainly based on the activity of customers and competitors that help to assess different challenges regarding business sustainability (Cao et al. 2019). In addition, these tools help to analyse various threats and opportunities regarding business and help to develop their process and implicate new technologies that help to enhance productivity by getting proper information related to the customer's needs. Furthermore, this analytic tool enhances the "sensing" and "seizing" capacity of businesses that help them to analyse markets and threats that can directly affect their business growth and sustainability in a competitive market. Moreover, this journal stated the importance of market analytic tools in the analysis of customers' demands and development of products to enhance to compete with other companies in the UK.

In this journal, the data are collected from several famous companies of the UK to understand their effectiveness in products and services after implementing market analysis tools in their business. These produce several hypotheses in this journal and provide data about the effectiveness of market analytic tools to enhance the decision-making ability of a company by gathering information from different sectors of business. Effectiveness of market analytic tools in the development of products to meet their customers' needs and proper management of their business.

In this journal, primary data collection methods are used to identify and collect several data from different companies in the UK through surveys. This data provides effective information about their uses and benefits regarding market analytic tools. Moreover, this journal stated about the changes in their strategy related to customer satisfaction and developing new products to establish their company in the competitive market of the UK (Cao et al. 2019).

Journal 5

Loyalty programs are other important factors that help to retain existing customers for a long time and drive potential customers by enhancing their products to meet customers' needs. The main purpose of this program is to enhance sales and customers engagement towards the company by valuing their customer's needs. This helps to make an emotional bridge between companies and their customers that help them to gather information about different demands and expectations of customers regarding their products and services. This approach of loyalty programs helps to build the trust of customers through various promises to provide innovative products. This helps retain customers' loyalty towards the company and about their products. Hence it helps to develop some community and culture in their products to interact with customers emotionally. Furthermore, companies provide much cost over their existing customers to satisfy their needs by developing their suggestions and demands in their products rather than focusing on their new customers. Loyalty is an important factor that engages customers for a long time and also helps to drive new customers by involving various reviews and ratings in their purchasing process. This helps to build trust in the company by providing proper information related to their products. In this process of enhancing loyalty towards the company, they implement various social media to advertise their new products and also these sites help to share the experience of existing customers with new customers to build their trust over the company.

This journal is focused on the loyalty programs that are used as a tool of customer relationship management tools to enhance relations with customers. This loyalty program also helps to develop the quality of products through a proper understanding of the needs of customers and the company. According to this journal, loyalty management is a marketing technique that helps to retain their customers for a long time to enhance the sustainability of a company for a long period in a competitive market. This journal is focused on the actual reason behind the pitfalls of loyalty programs and several loyalty programs to get a proper understanding of drawbacks related to aim, planning, budgeting and employee engagement. This study helps to get an idea about the failure of this management process in several businesses in the UK.

This research is based on a primary data collection method in which 161 employees of different companies are engaged to provide data related to the pitfalls of loyalty management in several companies in the UK. Moreover, this journal provides effective suggestions related to loyalty management and its effectiveness to future implications in several businesses to satisfy their customer's needs. This journal provides proper guidelines for loyalty management programs and the necessary rules that might be useful for the companies to prepare loyalty amendment design for their company (Alshurideh et al. 2020).