TABLE OF CONTENTS

1.1 1.2 2.1 2.1.1 2.1.2 2.1.3 3.1 4.1 5.1 6.1

INTRODUCTION........................................................................ 1 OVERVIEW OF TESCO ................................................................1 PROMOTIONAL TOOLS..............................................................2 SALES PROMOTION ....................................................................2 ADVERTISING .............................................................................3 DIRECT MARKETING .................................................................4 TARGET STAKEHOLDERS ..........................................................5 ANALYSIS OF THE TOOLS IN IMC PLAN ...................................7 ANALYSIS OF POSSIBLE EXPENDITURE .................................8 CONCLUSIONS AND RECOMMENDATION ....................................9

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MARKETING COMMUNICATIONS 1.1 Introduction Marketing communications is a management process through which an organisation engages with its various audiences (Fill, 2006). Marketing communications are

important in achieving the objectives of an organisation. It plays a major role in the existence of any organisation be it profit or non-profit one as it helps in creating awareness of the organisation and the products or service it deals in. To do this effectively, there are a number of techniques and tools which organisations can employ to achieve the objectives. The discussion in this report is based on Tesco and the communication tools it is using with reference to sales promotion, advertising and direct marketing. There is brief background information about the organisation with critique of the theories. There is also information about the additional stakeholders that can be targeted by the organisation with these promotional tools and a discussion of the tools in the context of intergrated communications plan. The expenditure involved in the implementation of these communications tools have been considered after which conclusions are drawn and recommendations made to ensure the efficiency of the implementation of the tools. 1.2 Overview of Tesco Tesco is one of the leading and profitable supermarkets in the UK. It was founded in 1924 and has a market share of 12% of the total UK grocery market. The supermarket is still working hard towards increasing of its market. It overtook Sainsbury as the leading supermarket in UK in 1995. In April 2004, Tesco made a profit of 1.6 billion. It
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has 83 Tesco extra, 447 Tesco superstores, 161 Tesco metro stores, and 277 Tesco express stores (Tesco, 2008). The supermarket has grown UK core and rapidly developed international stores and built good non-food sales; expanded into retailing services and exploited e-commerce successfully according to Data monitor (2008) food retailing analysts. Tesco has positioned itself strongly in the food retail sector and has won a credibility of being a best value retailer. Tesco deals in different kinds of products which serves different purposes at home and outside the home. They include grocery, clothes, furniture, mobile phones, toys, games and insurance. Each of the products is target at different consumer segment and specific promotional messages are designed to create demand for them accordingly. This means the organization uses a range of promotion strategies and tools in reaching its target market. The most common tools being used by tesco at present are advertising, sales promotion, public relations, exhibitions, direct marketing, internet marketing and packaging. These strategies are targeted at existing and potential customers. For example toys and games are targeted at young people whiles wine and insurance are targeted at drivers and adults in general. This means the accompanying messages for the range of products are more specific and the organization includes category of people from the target market in delivering their messages. 2.1 Promotional tools Tesco uses a range of promotional tools of which some have already been mentioned above. For the purposes of the report the focus will be on sales promotion, advertising and direct marketing.

2.1.1 Sales promotion Sales promotion is a promotional strategy which is used by organisations to boost sales. According to Fill (2006), sales promotion offers buyers additional value as an inducement to generate an immediate sale. The purpose of sales promotion is to make the product or service more attractive to customers than competitors brand so as to give them reason to purchase. The most common types are price deals coupons and rewards. Doyle observed that, the amount spent by companies on sale promotion now exceeds that spent on advertising and it is growing faster (Doyle, 2002). This is true with Tesco as it is constantly involved in sales promotions than advertising. The basic types of sales promotion are trade promotions, consumer promotions, retail promotions and sales force promotions. Customers of Tesco are constantly offered economic incentives in the form of price reductions, free goods and deals that allow them to have a third free when they purchase two. In addition, every purchase made by customers are rewarded with club points which can be used to reduce the cost of the purchase. However, sales promotion can affect the organisation if competitors in the same industry begin to adopt similar strategy. If this happens, Tescos may have no choice but to continue to reduce their prices which could affect returns on investment. 2.1.2 Advertising Advertising is the most traditional method of marketing. Its main purpose is to create awareness of the existence of an organisation or a brand. It is defined as any paid non personal communication through various media by business firm, non profit organisations, and individuals who are in some way identified in the advertising
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message and who hope to inform and/or persuade members of a particular audience (Pelsmacker et al, 2004 and Bovee, 1992 in Taflinger 1996). Fill (2006) argues that the main roles of advertising are to build awareness, induce an engagement and to position or reposition brands (p.510). Advertising medium helps organisations to present and announce their offering to the target market thereby offering the audiences the opportunity to make a product or service choice (Taflinger 1996). Despite all these benefits, there is a high cost involvement in advertising and this has resulted in organisations cutting down on the advertising medium by using other promotional tools mainly below the line techniques. The existence of various technologies described as media fragmentation by Fill (2006) which allows customers to have many choices when spending their leisure time makes advertising less attractive and difficult to target customers through the medium. Tesco uses advertising but a minimal rate compared to sales promotion and direct marketing. Advertising is usually governed by regulations which limit organisations to the level and nature of information they can present in the media. 2.1.3 Direct marketing Direct marketing refers to the engagement of organisation in direct communications with their customers with the intention to boost sales. It is defined as a term used to refer to all media activities that generate a series of communications and responses with an existing or potential customer (Fill, 2006 p.735). It also involves contacting customers and prospects in a direct way with the intention of generating an immediate and measurable response or reaction according to Pelsmacker, (2004). With direct

marketing the process of marketing is direct which usually begins the communication process between the organisation and its customers. Using direct means such as mails both electronic and hardcopy, catalogues, brochures, telephones, the organisation designs direct messages for specific customer segments to begin the sales process. Direct marketing provides organisations with customer information which can be used to segment and target customers. When using direct marketing, organisations can cut down on the cost of using middle men and agents, as well as sales staff whose services may be quite expensive. Direct marketing is interactive and allows for individualised messages which encourages customers to respond and assures them of immediate feedback as it enhances two way communications unlike other communications tools such as advertising which is mass one way communication. Direct marketing has gone through a series of troughs and peaks over the past fifty years and it is believed that its golden age was the 1950s in the form of mail-order catalogue selling in the USA as a post-war boom (OConnor et al 2004). This shows that, direct marketing is an old strategy which has changed slowly over time. Tesco uses direct marketing most often through their seasonal free catalogue which gives customers over one thousand five hundred price cut and a number of options from which customers could make a purchase. Within the catalogue the organisation

continues to emphasise on its market position as a best value dealer and encourages customers to order products online, by telephone together with delivery options. Catalogues appears to be expensive as huge sums of money is spent in printing. It may not be possible to recover the cost. As these materials are free most customers may
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want to have a copy without necessary it being able to indolence their purchase decision. 3.1 Target Stakeholders Each of the promotional tools used has specific consumer segment targeted at. However, there are other additional stakeholders which could be targeted with these promotional messages. In the first place, sales promotions can be initiated by both the manufacturer and the retailer and can be aimed at distributors, the sales force and the end consumer (pelsmacker, 2004). In practice, the main target of retailer sales promotions is the end user, the customer. Organisations usually target their sales promotional activities at profitable segments predominantly, regular visitors of their outlets and potential but profitable customers. Tesco sales promotions such as discount sales, club card points and offers are targeted at both loyal and regular customers. However, additional stakeholders such as non-regular customers can also be targeted due to the attractive nature of the sales promotions available. Secondly, advertising is created usually to build brand image, provide information, persuade and to support marketing efforts (Clow and Baack, 2007). This means the advertising message should be able to fulfill these purposes and the medium selected send this message should be that used by the target audience. For example the use of Spice girls in tescos 2007 Christmas advert could appeal to many young ladies within the age group.

Tesco advertisements are target at specific consumer groups depending on the products being shown in the advert and the attached message. Most of tesco advertisements feature quality but low price message which is likely to appeal to other non-tesco customers. Most of the information given on products such as components and price allows customers to compare the offering with other competitors from which potential customers can make decisions based on the level of income and health related issues. Continuous advertising with focus on cheaper prices and regular price cuts for quality product normally attracts new customers to Tescos. Finally, direct marketing is another communication tool used in engaging in interactive communications with the customers. Direct mails are usually targeted at customers with whom the organisations have access to their mailing address. Occasionally, junk mails are used to target potential customers but it is not always effective because many customers do not read such mails. The selection of the direct marketing medium is normally done by knowing the characteristics of the target audience such as media consumption in order to be able to target them through the medium. Tesco direct marketing strategies such as direct mail and telephone calls are targeted at loyal customers with whom they have access to their details. This makes it easier to design specific messages for the customers which help in cost reduction unlike junk mails which are sent to every available address but with low turn out. On the other hand because catalogues are free and are displayed at the disposal of every customer, it can be used to target different customers who ma visit the store.

4.1 Analysis of the tools in IMC plan Integrated marketing communications is a specialist approach which encourages the integration of various marketing communications tools. It is defined as the the concept of marketing communication planning that recognises the added value of a comprehensive plan that evaluates the strategic roles of a variety of communication desciplines e.g. general advertising, direct response, sales promotion and public relations - and combine these disciplines to provide clarity, consistency and maximum communication impact (Shultz et al, 1996; in Pelsmacker et al 2004). According to Fill, (2006), IMC has emerged partially as a reaction to the structural inadequacies of the industry. This means that communications objectives of organisations can best be realized when two or more communication tools are combined in designing and delivering the communication messages. Such messages could have a good impact on consumers compared to the tools used individually. The essential steps in communication plan are situational analysis and marketing objectives, target groups, communications objective, tool techniques and media, budget and measurement of results (Pelsmacker et al, 2004). These issues need to be considered critically by marketing communicators before an effective communication can strategy can be developed to meet the requirement of the organisation. The organisation need to consider why it has to undertake integrated marketing communcations which will help to identify the rationale for the communication project. In order to achieve an efficient result from integrated communications plan, the organisation need to know about the target audience profile, hobbies, interest and many more. After this has been considered, the organisation must consider it expect to
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achieve from the integration communication plan. The organisation needs to consider the tools and techniques and the media vehicle which can help in achieving the communications objectives. After these have been decided, there is the need to consider the budget requirement and how the results of the integrated communications plan can be measured. Tesco promotions toos in the context of IMC, discussed above could be combined to some extent to help in achieving company objectives and reducing cost. Advertising could be combined with direct marketing and sales promotion. With IMC the advertising message meant for creating the awareness of the product can also have information of available offers and discounts which will serve the purpose of sales promotion. The same can be done with catalogues by displaying the product information to create awareness, prices and discounts for sales promotion, and detail information on how customers can buy the product to encourage interaction from the customers. Advertising on the nternet can also be done with product information as well as awareness message together with information on offers and detailed information of how the organisation can be contacted. 5.1 Analysis of possible expenditure The use of each of the promotional tools separately costs the organisation some amount of money and combining them together saves cost and also have greater impact on customers which is one of the objectives of IMC. Sales promotion costs the organisation some amount of money as it continuously has to reduce prices and reward customers with points and coupons which cut down on the
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cost consumers may have to pay. It is mainly done to attract both new and existing customer. This may be expensive in the long run when the organisation finds it to be non profitable and wish to withdraw it. Advertising cost far exceeds the cost of the other communications tools ad has low effect on customers due to lack of trust on the part of the customers which leads to the advertising messages being ignored of not taken serious. A marketing communicators objective will be to deliver a cost effective, efficient and high impact messages to consumers in order to influence their decision about the organisation or its product. If advertising is proving ineffective compared to other promotional tools such as direct marketing and sales promotions, then, the organisation need to cut down on advertising spending and redistribute it on to other promotional tools which seem more effective. Direct marketing especially the use of print media and brochure are quite expensive but much effective and convenient for customers. On the other hand, the use of interactive marketing strategies such as the internet, and telephone services are much cost effective as in most cases the costs are beard by customers. As most of these are automated and runs on twenty-four hour bases customers finds it convenient as they could visit company website at anytime to make a purchasing order. Each of the tools when used individually has its own advantages and disadvantages and cost involved in implementing them are high although some may be higher than others. The best practice in this strategy is for the organisation to adopt the integrated communication strategy whereby any numbers of the communication tools it wants to use can be combined in order to make it more cost effective and efficient in order to

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achieve the communications objective. Return on investment will be high when integrated communications are used effectively as it will take the cost of one to e.g. advertising to implement about five integrated communication tools. 6.1 Conclusions and recommendations There is an indication that the best and efficient communication can be achieved through proper planning and implementation of the communication messages. When integrated, the communication messages can be used to target different customer segment resulting positive returns. It has become clear that, no one communication tool is sufficient to deliver an organisations message to the audiences it aim to attract and serve. The selection of audience and promotional tools are always characterised by the segment quality and the financial strength of the organisation to be able to deliver. In order to deliver effective communications messages and to cut down on cost, Tescos need to adopt the integrated communications strategy in order to combine sales promotions, advertising and direct marketing messages to appeal to the customer segments they serve.

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References: Claw, K. E and Baack, D. (2007) Integrated Advertising, Promotion, and Marketing communications. Prentice Hall, London Corporate watch (2008) http://www.corporatewatch.org.uk? /lid=252(Accessed on 16th November 2008). Data monitor (2008) http://www.marketlineinfo.com/library/default.aspx (Accessed: 20th November 2008) Doyle, P. (2002) Marketing Management and Strategy. Harlow Prentice Hall, London Fill, C. (2006) Marketing communications. Engagement, strategies and practices. Fourth edition. Pearson Education Limited, Essex OConnor, J, Galvin, E. & Evans, M. (2004) Electronic Marketing. Theory and Practice for the Twenty-first Century. Pearson Education Limited, Essex Pelsmacker, P, Geuens, M, & Bergh, J. (2004) Marketing Communications. A European Perspective. Prentice Hall, London Taflinger, R.F. (1996) A Definition of Advertising. http://www.wsu.edu/~taflinger/addefine.htm (Accessed: 20th November 2008).

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