Tesco

International Case : Carrefour — Which Way to Go? Wal-Mart’s biggest global competitor is the big French retailer Carretour, a firm that has hypermarkets, big stores offering a variety of goods. It has made large investments around the globe in Latin America and China. But not all is well as competitors taking market share its home market, for instance. There has been even speculation of a takeover by Wal-Mart or Tesco, an English chain. Mr.

Barnard has been ousted after heading the company for 12 years; he was replaced by Jose Luis Durant who is of German-Spanish descent. Although the global expansion is cited by some as success, it may be even a big mistake. It withdrew from Japan and sold 29 hypermarkets in Mexico. Carrefour also had problems competing with Tesco in Slovakia and the Czech Republic. In Germany, the company faced tough competition from Aldi and Lidle, two successful discounters.

On the other hand, it bought stores in Poland, Italy, Turkey, and opened new stores in China, South Korea, and Columbia. Carrefour has become more careful in selecting markets. But. the company is eager to enter the Indian market, but found out in late 2006 that Wal-Mart will do so as well. In France, where Carrefour is well established, the company made the big mistake in its pricing policy. It probably started with the 1999 merger with Promodes, the French discount chain.

Carrefour confused the French clientele by losing its low-cost image; whether the image can be changed remains to be seen. Mr. Durant, the new CEO since 2005, embarked on the new strategy by offering 15 percent new products in its hypermarkets and 10 percent in its supermarkets. Moreover, he wants to employ more staff, extend the operating hours in certain hypermarkets, cutting prices, trying small stores, and pushing down decision making. Mr. Durant aims to stay only in countries where Carrefour is among the top retailers.

Administration:

Both organisations incorporate administration within their business to implement vital decisions, Tesco use administration to crucially administer the critical decisions and planning needed to develop the business as a whole and expand itself throughout other countries, other functions within administration can be budgeting, leadership etc. which Oxfam also uses to develop itself and budget donations that will be passed to 3rd world countries, also Oxfam uses administration can be used to assess the qualityin all areas and detects potential or actual deviations from the organization’s plan.

Administration can tie into finanace Customer Service:

Both Tesco ; Oxfam both provide customer service towards their customers, Tesco uses their customer service to either receive complaints, offer advice or information to customers or allow customers to offer their opinions about the organisation. Oxfam use their customer service to allow donations to come through or to offer advice or information about where donations will go and what will be bought with the donation made, also they give information about outlet stores as they sell goods with the money reaching 3rd world countries.

Distribution:

Both organisations use distribution but both use its purpose for different reasons, Tesco uses distribution to deliver goods to stores, deliver goods to customers who have ordered over the internet or export food to other countries, taking advantage of the functional area in an organisation such as Tesco allows the business to expand and develop while Oxfam uses distribution to export vital goods to 3rd world countries such as food and water etc., using distribution is an organisation such as Oxfam allows the charity to reach those who need basic needs fast or reach people after a natural disaster, the main priority for Oxfam in distribution is speed and efficiency.

Finance:

Both organisations take finance into careful consideration and this can merge into other functional areas such as Marketing ; Research ; Development, Tesco’ use of finance is to detail where the business is making profit or losing money, for example paying too much for stock, Tesco can also use finance to compare itself with competitors overall, tracking where they are gaining or losing to their main rivals. Oxfam use finance to fund orders of goods to be exported to 3rd world countries, though all of Oxfam’ finance comes through donations or through their stores.

Human Resources:

Both businesses use human resources as a vital functional area within their organisations, Tesco takes full advantage of human resources, employing staff, training employees to complete simple tasks such as delivering goods or developing skills in the checkout, also Tesco use HR to keep in close contact with other issues such as Industrial and Employee relations, Promotions, Personal data etc. Oxfam on the other hand use HR to hire people to work in outlet stores or work exporting goods and handing them out in 3rd world countries, also Oxfam uses HR to develop relations between other countries and donators to allow donations to come in and expand to other poor countries.

ICT:

Other companies use ICT to further themselves in vital aspects such as communications ; the internet (websites etc.). Tesco uses ICT to keep in touch with the customer, offering information on their website about products and the business but also allowing customers to order goods via the internet to be delivered. Oxfam use ICT to communicate to people who wish to donate money, these donation can be made via the company’ website, also Oxfam use the internet to broadcast to other people the poverty that is taking place within 3rd world countries. Using ICT can relate into aspects such as marketing and customer service allowing both company and customer to either promote goods or allow customer to voice complaints etc.

Marketing:

Both organisations use marketing to promote their respected businesses, both businesses’ use specified aspects of marketing such as advertising and branding, retailing ; market research to fully make use of the functional area, Tesco use these aspects to promote themselves and sell products and goods to customers, also using marketing to form marketing plans to develop themselves within international countries. Oxfam use marketing to allow people to donate money to themselves or to promote the purpose of their outlet stores, within marketing both organisation use aspects such as TV, Flyers ; billboards to promote themselves.

Research ; Development:

Both organisations use research ; development to either increase business profit, proportion market or expanding the business into other countries, Tesco use R ; D to keep up with public demand thus increasing profit, this could mean introducing a new product with less packaging etc, Tesco also use R ; D in other aspects such as training employees or innovating new ideas into the business, Oxfam use R ; D to fully make use of their expanding charitable throughout the world, making sure that they continue to generate donation and provide basic needs for people in 3rd world countries, also training staff to work in either their high street stores or working in exporting goods throughout the world. Read also about functional areas of McDonald’s

Purposes Of Functional Areas:

The purposes of functional areas within both Tesco & Oxfam is to support business purpose, aims & objectives etc, the functional areas allow businesses to merge these together producing better results as more resources are used to achieve these results, also functional areas are used to develop new markets, using functional areas such as marketing, advertising etc. to advertise business. creating new markets with both customers and suppliers, this also ties in with continuous professional development, which is put in place to continue the professional development within a business, using this allows to develop both business and the functional areas in these businesses.

Tests and Coca Cola Tax policies: Tests has to make sure that they are paying their taxes and making sure that their staffs are also paying their taxes. Trade restrictions: Tests also have to make sure that they adhering to any trade restrictions in place in the United Kingdom. Economic climate: Because of the economic climate Tests could be struggling to give out Jobs to people which means less stores across the I-J and even stores having the possibility of being closed down to reduce spending.

Interest Rates:

As interest rates go up so do the cost of items that Tests might be buying for instance in January 2011 The VAT is set to rise to 20% making goods more expensive. Exchange Rates: Exchange rates changing mean that importing and selling goods becomes different each time as the supply of importing goods changes. Cost of capital: The cost of capital allows Tests to see if their business is doing well and if it can be changed. New businesses: this as it allows new businesses to expand whilst also introducing new products to the supermarket chain. A good example of this is the new microwavable meals.

Changes in Fashion:

Changes in Fashion means that Tests needs to change their products this can be bad but it can also be good depending on how fast it is seen. This also relates to trends.

Immigration:

with a lot of immigrants from Eastern Europe there is a lot of demand for new goods to be put into the stores.

Rate of change:

The rate of which technology changes is fast at the current time which means Tests have to keep in with it all.

Training:

Without the relevant training f staff they can’t use the machines properly

Online Shopping:

Online shopping has made Tests extremely popular whilst also making it possible to have fewer stores around the I-J and making them able to deliver to places where people may not be able to get to the stores.

Health and Safety Laws:

This restricts to the things that Deco’s can do within their stores. Data Protection Act: They have to keep all data they take of their customers protected.

Age Restriction Limits:

They have to make sure that all the workers in their stores are not selling age restricted items to under age people.

Pollution:

They have to make sure that they are protecting the environment in such ways of not producing a lot of pollution Recycling: They have to have policies in place about how products are recycled such as their carrier bags.

Energy:

They have to make sure that they are not using a lot of energy

PESTLE analysis for Coca Cola

Political Economic Social Technological Legal Environment Government standards:

If Coca Cola doesn’t mean the government’s expectation then the company can get a fine which can range from a small price to a big price for the

PESTLE Analysis Of Tests And Coca-Cola By Harriet-Sings company.

International laws: As a global company Coca Cola needs to be careful to the changes in things such as accounting and taxation as if they get this wrong it could ruin their international status.

Global company: This is a good thing as if they are lacking in sales in one or two countries they could be making it up in different countries meaning that they arena losing money all the time whereas they would if only operating in one country.

Interest rates: As rates go up it costs more to produce he Coca-Cola as the price for the ingredients of which they need increases.

Economic Climate: Due to the economic climate when it crashes it means that things like Coca-Cola do not get as much money as people cannot afford to spend money on buying these drinks in bulk nor singular as the price of them rises whilst the client will be struggling with money.

Budget cuts: This means that Jobs will become cut and that people will become UN-employed leaving fewer Jobs in the industry and less chances to open more locations around the world.

Nutrition and health: When people get to he age of about 37 they start to worry about their health more which means the demands for carbonated drinks from companies like Coca Cola decrease alongside their revenues.

Diabetes: Some people with diabetes cannot drink sugary drinks such as Coca-Cola therefore having the ‘Diet’ version of the drink helps as this allows them to have more of it increasing sales.

Underage drinking: When teenagers get to around the age of 1 5 they start to drink underage this stems the sales in companies like Coca Cola as it means they arena getting as many sales.

New flavors: As technology advances this allows Coca Cola to try new flavors such as the Cherry Coke and Coke with lemon. This allows the Coca Cola’s revenue to go up and people want to try these different flavors.

Training: due to the complexity of new technology some staff will require training to operate machines or will require experience this means that less Jobs can become available.

Machines over humans: As machines get more complex which allows them to do more things more humans are becoming redundant due to machinery taking their position.

Read also Business Article Summary

Tesco has a longstanding history of success in business since it was founded in 1919 by Jack Cohen. During this time Cohen sold surplus groceries from a stall in the far east of London. The company produced its first brand in 1924 after Cohen bought tea shipment from T. E. Stockwell, a supplier whose initials and the first two letters Jack’s surname form the company name. However, it was not until 1929 when Tesco opened its first store in Burnt Oak, Middlesex. Available information indicates that the company was first listed on the London Stock Exchange in 1947 under the name Tesco Stores Limited. In addition, Tesco limited moved ahead to open its first self-service store and supermarket in St Albans (1951) and Maldon (1956) respectively. True from available literature, Tesco gained much business advantage by opening numerous stores and business acquisitions, a move that saw an increase in the number of stores to 800 during the 1950s and 1960s. The quest for competitive advantage in the marketplace prompted the company to diversify its business from the original food and drink to other products and services.

Currently, the organization’s business covers areas like clothing, electronics, financial services, and insurance cover services for home, health, and cars. Still, the company engages in other businesses such as the renting and retailing of telecommunication, DVDs, and Internet services as well as music downloads. Since the 1980s, Tesco Stores Limited has evidently expanded its business holdings to become the largest retail company in the UK as well as gaining significant business dominance in over 13 countries across the globe. In 1987 for example, the company managed to turnover Hillard’s chain of supermarkets. Moreover, it gained a competitive business presence in Scotland after acquiring William Low chain of supermarkets. Other competitive business moves by the company include its success in introducing loyalty cards, Clubcard. Just to note is the fact that Tesco Company was the first retail store to make online shopping profitable. The company started its operations in the US after acquiring a 35% stake in GroceryWorks in 2001.

In the communication field, Tesco purchased the C Two-Network in Japan and launched mobile and home phone services as well as internet services in the UK during 2003. The company is constantly engaged in innovative business as can be evident from its 2009 announcement that it had created a super tomato. Tesco stores limited have adopted two structures of corporate management to ensure its management efficiency. The first structure is the executive arm of the organization as a whole. This structure is comprised of the board of directors who oversee the process of monitoring the performance of stores and making executive decisions. The other structure is localized management which deals with ensuring the realization of division objectives. Through this structure, the company enjoys the advantage of promoting effective employee and customer engagement practices at the individual stores. In addition, the structure has been praised for ensuring that employees and customers can easily gain access to relevant departmental assistance thus promoting efficiency in service provision.

Terry Leary was born on 28 February 1956 in the Belle Vale district of Liverpool. His career with Tesco started early in his life when he was attending St Edward’s college. During this time, Leahy used to work in the Wandsworth, London-based Tesco branch over the holidays; stacking shelves and washing floors. In 1977, he graduated with a second upper-class honors degree in management science from UMIST. He joined Tesco as a marketing executive in 1979. In this position, Leahy appreciated that the success of Tesco in the market was limited by its marketing strategy. According to available information the company engaged in following the business strategies of two major brands of the time; Marks & Spencer and Sainsburys, most profitable retailers of the time. This prompted his decision to influence Tesco in implementing the Tesco Clubcard loyalty program. True from available literature, Leahy was the driving force to the success of the program. This was executed through his effective strategy for monitoring the shopping habits of Tesco Clubcard holders.

In 1992, he was appointed to the company’s board of directors was he played an influential role which saw Tesco grow to become the biggest retailer in the UK in 1995. Leahy becomes the chief executive officer of Tesco in 1997 following the retirement of the then CEO Lord MacLaurin. Since his promotion to the CEO position, Tesco has strongly defended its stand as the largest and most profitable retailer in the UK as well as making numerous business expansions into the international market, a move which saw its profit margin hit the ? 2 billion mark in April 2005. His success as the CEO of Tesco can be asserted from the numerous honors he has received. In 2003, he was declared the Britain’s “Business Leader of the Year”. In 2004, he was selected as the Fortune European Businessman of the Year followed by the move by the Management today terming Leahy the most admired business leader in Britain in 2005. In addition, Leahy was elected a co-chancellor for the University of Manchester in 2004 and given a doctor in science honor in 2007 from the Cranfield University. Though planning to retire as the CEO of Tesco in 2011, Leahy will go in historical records as the most influential in the success of Tesco both locally and internationally.

Reference

1. Alan, M 2009, “There Is More in Store for Tesco with T&S Buy,” Marketing Week, vol. 32, pp. 30-34. Clark, T 2008.
2. A history of Tesco: The rise of Britain’s biggest supermarket, viewed 19 August 2010, http://www.telegraph.co. uk/finance/markets/2788089/A-history-of-Tesco-The-rise-of-Britains-biggest-supermarket. html>
3. Lauren, M 2004, “Terry’s All Gold at Tesco,” In-Store, vol. 38, pp. 15-19. Strategic Planning: Tesco – Activity, <http://www.bized.co.uk/educators/16-19/business/strategy/activity/strategic1. htm> Vallely, P 2009.
4. <http://www.independent.co.uk/news/people/profiles/tescos-finest-sir-terry-leahy-1804379.html>

Overview: Tesco is the largest chain of superstores in Britain; it has grown from a local market to an international brand. It has started a number of operations around globe, including China and Eastern Europe. Initially it ranked (in term of sales) as the 3rd in its domestic market, which later swelled to being the third largest in the world.

Tesco plans to play all its card right the first time so that there wont be any hick-ups which can do harm to its plan, i. e. get into the newer U. S market so secretly that none of the competitors notice and then start off big, this way the competition will have no way to copy Tesco’s idea which is to get hold of the middle income section of the U. S. market, as this section is left uninhabited by the competition.

The plan that Tesco has been following is simple: they have conducted a major research into the market, which shows that in the U. S there are markets for upper class people (whole foods markets) and for the lower class who want to buy cheap (wal-mart), therefore they have come up with a brand “Fresh & Easy” especially for the middle class consumers, which would allow them to buy products that are not too high or low priced and still have the convenience of availability. Target Market:

The target market for Tesco has been well defined, it simply the middle market, people who want to shop with convenience and who know what to buy, this is the idea Tesco has come up with, because most stores in America are way too big, which actually makes the finding of the products the customer wants too hectic, and others are too small, where the customer just cant find what he’s looking for. The idea is to provide the customers what they want in a not-so-big store.

But the idea does not just end here, there’s more to it, Tesco also believes that there is a need in America for close to home stores and that’s where they want to get. The bigger Picture: Everybody knows what Tesco is all about, and what they have been doing for years in Britain, but according to recent sales figures, the sales of Tesco (in Britain) have dropped mainly due to decreased sales and the customers willing to spend less.

Tesco has now planned to move on, and what other place would be better than America itself, Though according to analysts what Tesco is experimenting in America is nothing for it, its just a tip of the iceberg investment for Tesco, if they loose, it would obviously be big, but not for Tesco, if it actually works, the idea will be transformational not just for Tesco but also for the way Americans have shopped for years. The Game Plan:

If one looks at what Tesco has been doing one can easily figure out Tesco wants to do, it has chosen to enter the markets that no big store has made its way into, mainly because no store wanted to open after the 1992 riots in South Los Angeles. People in southern Los Angeles were more than excited to hear about Tesco’s new plan as fresh grocery was among those items that had stopped to be available as stores closed down after the 1992 riots.

Here it can be seen clearly that Tesco is already playing its cards right, not only will they be opening up Fresh & Easy stores to increase their sales but also creating rapport with their customers as they’d be opening up stores in areas that are termed to as underserved, people there dot usually find stores packed with items they want, therefore the Tesco experience for them could come as a life-changing experience.

Another reason for Tesco to venture in these markets is that already in the American market the labor force is cheaper than Britain, moreover in the underserved areas the labor is even cheaper and this way Tesco can get cheap labor to reduce their costs and provide more to their customers. Tesco; the leader:

Tesco not only knows what it is doing, it also plans ahead, long before the sales figures came down and questions were raised as to how has Tesco become so successful in a short p of time, Tesco was already planning to move further and expand into the international market, they had been studying the markets for more than a year before they actually went into phoenix to start their retail chain.

Tesco is known to have the fastest and one of the vastest databases in the world, with the data of millions of people from across the globe, the idea behind this is to get knowledge of the customers and from that help get closer to them without them actually knowing it. Another first by Tesco will be achieved with its preservatives free ready meals, they problem with American stores is that they use preservatives in food and that reduces the average shelf life of the products. Tesco plans to have preservative free long lasting ready meals prepared in a central place and distributed to all Tesco outlets.

In Britain the space of a store is very limited and that’s exactly hat Tesco will do in America, it will have one warehouse that can take care of the supplies for up to 350 – 400 stores in one area. Tesco has had a history of understanding and responding to the latest trends of the market, it has always been innovative and fast in whatever it does to keep its customers happy, for example it started to have ‘partition trucks’ which have separate partitions for food items and general items in one truck only in the food items there is space for cold items.

All in all Tesco is the best thing that would happen to American shoppers, while the future of Tesco still depends on the result it gets from shoppers it is expected that it will make it big. Conclusion: Tesco is doing whatever it can to capture the newer market and get a strong share of the new market it is about to enter, from opening up stores in underserved areas to opening up stores that are run by solar energy to show how socially responsible they are, and also using led lights which consume lesser energy, Tesco plans to get a higher market share so that it not only makes customers but also gets the economies of scale.

For now all eyes are stuck on what Tesco’s next step would be, will it be able to cope up with the competition of big American store chains, and have the ability to attract customers for its ready meals when so many fast food chains are already available at every roadside. If Tesco’s experiment fails it would surely be embarrassing for Tesco.

But for Tesco spending a few billions on a failed attempt is not a big deal, but if the experiment is a success then it’s going to be revolutionary. References: http://www. tesco. com/ http://en. wikipedia. org/wiki/Tesco http://www. economist. com/displaystory. cfm? story_id=9358986 http://articles. latimes. com/2007/nov/17/opinion/ed-tesco17

Tesco, one of the giant retailers in the UK has 2291 stores around the world and employs 296,000 people. Tesco plc group sales excluding VAT increased by 11. 3% to  26337m. Therefore, it may seem Tesco performance was good but we will discuss in this report in details about Tesco’s profitability over the last 5 years by benchmarking it against its one of major competitors Sainsbury plc,  net asset value ( NAV ) per share for 2003 by explaining why it is different to the market price of the shares and usefulness of performance graph. Profitability ratios satisfy the users of accounts by letting know how much profit a business has made comparing with previous periods. We will discuss Tesco’s profitability by using profitability ratios ( See Appendix 1 for Tesco and 2 for Sainsbury ).

Return On Capital Employed ( ROCE )

ROCE is a fundamental measure of business performance and it is the most important for measuring profitability. Higher ROCE means that management could utilize total assets efficiently to generate profit. ROCE of Tesco has been decreasing from 1999 to 2003 which is 16. 57%, 16. 17%, 16. 06%, 15. 48% and 13.85%. It means Tesco’s performance may not be effective. Although PBIT has been increasing from 1999 to 2003 that is  932m, 1032m,  1179m because capital employed has been increasing from 1999 to 2003, that is  5624m,  6382m, 7343m,  8747m and  11129m. But we will further discuss why ROCE decreased by analyzing net and gross profit margin and net asset turnover because it shapes ROCE ( ROCE = Net Profit Margin * Asset Turnover ).

Gross Profit Margin ( GPM )

It relates the gross profit for the period to the sales during that period. It decreased slightly from 1999 to 2002, that is 7. 62%, 7. 61%, 7. 57% and 7. 56%. In 2003, it increased to 7. 58%. But along with it, sales have been increasing continuously from 1999 to 2003. Therefore, Tesco can generate sales effectively by maintaining the costs of inventory and purchasing raw materials and both sales prices and goods sold prices are well managed.

Net Profit Margin ( NPM )

It gives the company to measure the net profit for the period to sales during that period. Generally the higher the margin, the better the performance. The net profit margin of Tesco has been increasing from 1999 to 2003, which is 5. 43%, 5. 49%, 5. 62%, 5. 72% and 5. 85%. It means Tesco can manage well and control finalized overall costs and administration expenses and other general expenses not to affect PBIT to decrease. So the reason why ROCE fell is not because of Net Profit Margin.

Asset Turnover

It measures how effectively the assets of the business are generating sales revenue. The improved asset turnover means each pound of capital employed produces a higher level of sales. It has been decreasing from 1999 to 2003, that is 3.05 times, 2. 95 times, 2. 86 times, 2. 70 times and 2. 37 times. As we discussed, Net Profit Margin and Gross Profit Margin did not impact to decrease ROCE. The reason why ROCE fell was because of Net Asset Turnover. Although Sales has been increasing from 1999 to 2003, it could not help to increase net asset turnover. Therefore the only reason could be because of capital employed as we discussed above. As capital employed increased, it impacted to decrease Asset Turnover in terms of increasing fixed and current assets from 1999 to 2003, again which shape ROCE to decrease.

Therefore, decreasing ROCE was because of asset turnover by making more assets investments. During these years, Tescos opened 62 new stores, acquired 1202 T’S stores ( a leading convenience retailer ), extended 2500 new product lines, and launched a fixed-line phone. Tesco also extended its market into a non-food business and already got a 5% market share. Along with it, spending on fixed assets increased from 1999 to 2003, that is 7553m, 8527m,  10,038m,  11503m, and  14061m, and debtors also increased 151m,  252m,  322m, 454m, and  662m respectively. Increasing debtors will cause capital employed to be higher and will achieve lower ROCE for Tesco. Internationally, Tesco has also plan to invest more by opening more stores in the coming year. To know whether Tesco’s performance is good, we can benchmark it against Sainsbury. Although ROCE of Tesco has been decreasing from 1999 to 2003, it was still significantly higher than that of Sainsbury, except in 1999. In 1999, Sainsbury’s ROCE was 17. 14% and only 0. 57% higher than Tesco. In terms of PBIT, Tesco was also significantly higher than those of Sainsbury for 5 years.

Capital Employed of Tesco was also higher than Sainsbury. Therefore we can say that Tesco can make a profit more than Sainsbury but Tesco should be careful dealings with making much investment. Because in the future, if Tesco’s ROCE has been decreasing, it can get the liquidity problem. Tesco’s Net Profit Margin and sales were also higher than those of Sainsbury. Only the Net Profit Margin of Sainsbury was 0. 27% higher than Tesco in 1999. Therefore, we can say Tesco could generate sales more effectively by managing inventory cost, cost of goods sold, overall wages, and expenses.

Tesco’s Net Asset

Turnover was also higher than those of Sainsbury from 1999 to 2001. Both generated the same asset turnover in 2002, which was 2. 70 times but in 2003 Sainsbury was higher 0. 03 times than Tesco because Tesco’s capital employed significantly increased from 8747m ( 2002 ) to  11129m ( 2003 ) by making more investments. Therefore, overall Tesco’s performance was good by comparing with Sainsbury but Tesco should control its expanding programs carefully not to impact long term profitability.

Most businesses will use CAD CAM to design their products, but Tesco doesn’t produce the products that are sold in the stores. They buy the products already made and packed. The operations department also make sure that the quality of the products is all good quality. The operations department at Tesco will employ people with a large variety of specialists. If any part of Tesco’s operations department stopped it will have a knock on effect on all the other departments. This is because if they didn’t make full use of what they have Tesco will have to purchase more products including land. This will reduce the amount of income for Tesco.

The operations department for Tesco could use farmland to produce products. Marketing and sales – the marketing and sales department make sure that the managers understand what the customers want from the business. They can do this by market research, promotion and sales. Before a company can offer a new product they have to make sure that they know what the customers want and make sure that they know what the competitors are offering. They can get this information from carrying out customer questionnaires this is called market research. It will use this information to offer promotion and sales activity designed to reach the people it is aiming to reach.

If Tesco wanted to introduce a new product to the shelves they would need to ask the customers what they think first this is because they need to know if anyone’s going to buy the product and they know what to plan next. They will also need to know what similar products are Tesco’s competitors (Asda, Sainsbury) are offering this will help them gain more profit. By researching the market Tesco will try to reduce the risk of unprofitable investments in a product. This will help Tesco because they will be able to sell more products and make a higher profit.

Before fully introducing a product the company will test market the product. This is when they offer the product to only one region of the country and keep record of the sales figures. If the product is successful then they will introduce the product to all the outlets. If Tesco want to introduce a new product to their stores after all the market research they can use different sales techniques which include:  Free samples – this is when Tesco would give away small packages of the product either on the street, in the shops or house to house. The aim is, once the customer has tried the product they will want to buy more of the same product.  Free gifts – free gifts are offered to people with club cards.

Customer service – are the services that the business offers to the customer. Customers sometimes ask questions about products that the business sell, and they expect the sales staff to know about the staff. In Tesco a customer might ask about a product that they are considering buying. The aim of customer services is to welcome the customer and to make them feel valued this will create a positive image about the business and they will recommend it to their friends and family. The customer services also help the customer buy the correct product. Tesco has a customer services desk so if the customer needs help they can go and ask them.

Tesco also do home deliver. For the home delivery service do provide good customer services as well they can deliver on time and can help take the products in to the house if the person is un able to take it them self. They also need to provide a friendly service to the customers. So the customers feel welcomed and would want to come back. Tesco should provide Payment methods to suite all customers they should provide a range of different ways to pay this is because different customers may prefer to pay in a different way. For example older people might refer to pay in cash because they might not know how to use a credit card.