Markeing Analysis Of Tesco’s Online Delivery Strategy

While the food industry has been serving consumers for centuries, modern technology consistently challenges the status quo, and firms have to evolve to changing consumer preferences in order to stay competitive. The first major shift in this space was the emergence of supermarket chains in the early part of the 20th century, which offered consumers a degree of place utility by carrying a wider range of products than the previously popular specialty stores. In today’s world, the average working person lacks the time to purchase groceries, as they would prefer to spend their free time with friends and family. To better satisfy their busiest customers, supermarket chains like Tesco have begun directly to home food delivery programs.

Tesco is a large international chain of British grocery stores, with a footprint of 3, 433 storefronts in the UK. Tesco carries a wide variety of products, including both fresh and frozen food, beverages, health and beauty products, pet products, and baked goods. In addition, Tesco’s delivery service can reach over 98% of UK households, allowing them to reach markets inaccessible by many of their London-centric competitors. This is especially important because 76% of UK citizens have either ordered groceries to their home or are interested in doing so. Tesco has identified young professionals and families as making up their core target market for the delivery program. Their new advertisements are squarely aimed at building rapport with young people and trying to reestablish trust after a series of health scares. Both of these groups have limited amounts of time to spend grocery shopping and are comfortable with the idea of grocery delivery. Tesco’s current marketing plan centers around what can be made with their products and avoids the traditional path of offering discounts and coupons.

Tesco’s delivery strategy is somewhat differentiated, as it offers different plans with different delivery rules. Tesco differs from Brandless in a number of significant ways, but the firms do have a bit in common as well. They target a similar segment of the market, with the key difference being that Brandless specifically reaches out to price-conscious people with a preference for organic and vegan staples. Both firms target a similar age group through generational marketing strategies aimed at Gen Y, though they take different approaches. Tesco focuses its advertisements on how its products are a building block for great meals. For example, they make short profiles on individual customers to show the interesting types of food that can be made from Tesco products.

Brandless, on the other hand, pushes the fact that its products are both high quality and relatively inexpensive. This can be seen through taglines like “Everything $3” that Brandless proudly displays on its American website. In addition, labels like organic and vegan are prominent on packaging materials, allowing consumers to quickly recognize these marks of quality. Regarding Tesco’s marketing plan, the firm should aim to bring consumer attention to pricing. Considering that the target market is composed of mostly young individuals and families, these consumers tend to be price conscious, as they lack the higher incomes that older customers might have. Tesco is generally known as a grocer that provides good value for money, so the firm should use this perception to its advantage by doubling down and showing consumers how much they can buy for less when compared to more upmarket chains like Sainsburys or Waitrose. For Brandless, they should focus on crafting a lifestyle that compliments their products, so consumers can visualize how Brandless’ products would be used and how it would make them feel.

In order to grow its delivery service, Tesco has to ensure its program is better than its main competitor, Sainsbury's, through market penetration. To accomplish this, the firm has made its program slightly different, but in very compelling ways. Tesco advertises delivery times between 7:00 AM and 7:00 PM, while Sainsbury's schedules deliveries between 10:00 AM and 10:00 PM. For most consumers within the target market, getting a delivery of groceries before they have to leave for work is preferable to waiting after they get home for groceries to arrive before they can start cooking dinner. Additionally, Tesco’s delivery payment plan encourages consumers to remain loyal, as the longer the delivery contract, the lower the cost per month, and the lower the cost per delivery. This is in contrast to Sainsbury's, which charges fees based on the size of the order. For Brandless to grow its presence in the UK, it first needs to establish itself through a market development growth strategy. Taking cues from the firm’s success in the American market, Brandless will offer free shipping on any order above £29 and will not require consumers to be home to receive their orders. The best course of action for Brandless is to largely stick with what works, so a product adaptation strategy and delivery service should be appropriate. This is because consumers in the US and the UK value similar aspects of Brandless’ service, namely reasonably priced vegan and organic staples delivered to your door, but there are a few changes that need to be implemented. Firstly, the prices should be changed from $3 per product to £3 per product, and that free shipping should be on orders of £29+ instead of $39+. Also, Brandless will source its products from UK companies rather than US ones to keep costs low. To properly assess Tesco’s current position, the firm’s strengths and weaknesses must be taken into consideration. The fact that Tesco has a large store footprint is helpful for being able to fill orders quickly.

Additionally, this network allows Tesco to reach a wider variety of consumers across the country. They have intelligently designed their delivery service to be available in the mornings when customers are home and able to receive deliveries before going to work. However, Tesco has been in a negative spotlight recently, due to health concerns about certain products and subsequent recalls. This negative press has hurt public opinion of the brand, and consumers may be pushed to companies that have been able to avoid such scandals.

Tesco’s online delivery service poses strong competition to Brandless in the UK, as they offer a wider variety of products, convenient delivery times, and reasonable prices across the board. That said, they are embattled from recent health concerns and have an average reputation among their target market. Looking solely at Tesco, there does seem to be room in the market for another delivery service that offers reasonably priced, high-quality goods and has a solid reputation among consumers.