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Promotion is one of the market mix elements which is used to spread information about products or services to customers, business partners and mass public. It also helps in attracting new customers towards brands. In cut throat competitive market, retail and other sector companies are focusing towards successful implementation of promotional strategies to raise customers awareness of products or brand loyalty (Thor, n.d.).
Consumer buying behaviour is a decision making process and act of people who are involved in whole process (Smith and Sinha, 2000). For any enterprise, it is essential to understand factors that influence customers and their buying behaviour. By understanding these factors, it will be able to develop quality of products and fulfil needs of customers in appropriate manner (Tanskanen and Yrjölä, 2002). Consumer behaviour is mainly described as the study of different individuals, groups or organizations and the different processes they used to select, secure, use, etc. products or services so that all their needs can be fulfilled in appropriate manner. The report compares the promotional strategies of two retail brands and analyse the best suitable among them in the long run.
Tesco is a British multinational grocery and it's headquarters is located in Hertfordshire, United Kingdom. It has stores in 12 countries and is the grocery market leader in the UK. Tesco has supermarkets, stocking groceries and a much smaller range of non-food good around the world. Enterprise operates a home-shopping service and introduce club card that fundamentally changed the country's supermarket business.
The current easy focused on the promotional strategies used by retail giant and their impact on customers buying behaviour. M&S has focused on both traditional and modern media marketing tools to promote its brands and increased awareness among customers towards brands (Uusitalo and Rökman, 2007). Most of the customers of UK are tech savy and they are associated with social media networking sites, company was taking advantages of it as well as it can attract new customers and retain existing one for long time period.
Mark and Spencer group has provided various unique and lucrative incentives to its consumers such as easy shopping, ease access of products information, enough choice of price, efficiency of staff members and delivery fulfilment on time etc. (Market and Spencer strategy, 2014). These services are influenced purchasing decisions of customers and they motivate to continuous use of products and services of same brand. Organization has able to understand the changing mood of the UK consumer and for that it provides various offers to them on special occasions such as Christmas and new year. Retail giant has emphasized on advertisements on television, internet and social media and appoint celebrity to promote its brands (Palla, Boutsouki and Zotos, 2010). According to Marks and Spencer report, customers of UK has positive perceptions and they were satisfied with services offered by retail giant and they want to associate with the firm for long time period.
Tesco introduces new change in its business through introducing Homeplus food stores for offering offer a robust home shopping services to its customers. To compete with M&S, Tesco has launched customer loyalty club card in which customers can get points by paying money with a Tesco Credit Card. It has also prepared store developed programme to increase retail floor space by 830,000 sq ft for careful consultation with local people. When Tesco policies are compared with M&S, it is found that Tesco is most forward and more successful in term of launching new products and generating new ideas for business expansion and capture wide market segment around the world.
This essay has been written in different steps as it has started with the general description and theories related to promotion, consumer behaviour, importance of these terms, etc. In the next part consideration has been made to M&S in order to tell how the company is using promotional activities in order to attract people towards them and how well it can use this technique to persuade customers and increase both its market share and sales.
It is a fact that Promotion has became one of the most important marketing tool among all the businesses that are operating in today's world. Because of the increase in globalization, competition among industries has increased significantly as more and more companies are starting their businesses in different fields. Sometimes a business can easily get success with the help of effective promotional strategy (Coulter, 2013).
It has been seen that different advertisements and promotional activities have vital impacts on the purchasing behaviour of consumers. Role of the promotion activities has completely changed from the past as previous companies used to conduct this activity for the purpose of brand awareness, product loyalty and corporate image. There are different factors that affects the behaviour of consumers like personal, psycho-graphic, etc. (Hill, 2006).
The consumer buying behaviour begins with need recognition for a product or service. The buyer follows a step by step approach to make final buying decision. This decision making process is hugely impacted by the promotional and marketing strategy of brands. The promotional performs an important roles of informing and assisting customers with the selection of alternatives (The 4 factors influencing consumer behaviour, 2014). There are mainly four factors which affect the behaviour of consumers and promotional strategies of retail sector that are covered in the best possible ways (Tanskanen and Yrjölä, 2002).
Cultural Factors - It is one of the most important factor that can easily affect the behaviour of consumer towards any company. It is a fact that individual from their very beginning are directly influenced by family, friends, society, etc. So it becomes very important for companies to understand this factor (Paswan, 2000).
Social Factors - These are the different factors that affect the consumer behaviours significantly and it basically falls into three categories which are reference groups, family, social roles and status. M&S has a philosophy that wherever it starts its business, first thing that it do is to understand the local market of the place so that different perception and values of people can be understood in different ways (Lee, 2005).
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Personal Factors - These are most important factors and affect the consumers on regular basis. Personal factors includes different variables such as age, life cycle, occupation, economic circumstances, lifestyle, personality and self concept (Aggarwal, 2000).
Psychological Factors - These are some other factors that affect the consumers on the regular basis. It generally includes the sub factors like motivation, perception, learning and attitudes. Companies should use this as their promotional techniques in order to mould the behaviour of people towards it (Wang, 2012).
Mark and Spenser is focusing towards the use of different marketing channels and media such as direct marketing, social media and branded promotional gifts and conducting after sale customer survey to attract and retain existing customers. Strategies used by M&S can be understood with help of marketing mix elements (Belch and Belch, 2003).
Product: Organization is famous for its product uniqueness, reliability, style and variety. Besides that firm never compromised with these factors and always emphasized on increasing customers loyalty and satisfaction around the world in a proper way.
Price: For its garment products, it charges a medium to high prices from its customers. As well as for targeting upper class people its charges premium prices on the other side for attracting low or middle class people it charges reasonable price (Shane and Delmar, 2004).
Place: In the whole UK and other nations, M&S has more than 600 retail stores. In addition to this, it is also using Internet and online shopping portals, like Amazon.com and its own website to promote products in the cities and towns of UK as well as other developing countries.
Promotion: UK based retail giant has used both traditional and modern media marketing techniques such as television, broacher, major newspaper, fashion magazines, radio and internet and social media. The earlier strategies of M&S have been majorly failing because its existing products were not attracting customers. The brands' new clothing launch also failed as it made little effort to convince customers. The clothing sales of M&S decline 0.4% in the first six month on 2014 which result its market share to go down to 10.4%. It has also faced criticism of cutting back on promotions and high product prices. In a move to gain customer interests, the retail giant is coming with some new strategies (Butler, 2014). The enterprise is using own M&S app to enhance customer engagement. The retail has increased its focus and using online and social media contests to engage with customers. The brand is using contests promotion strategy in such a way that it does not even requires a purchase. From the very first day of launch, it has noticed increased participation of consumers because no such requirement of purchase and any limitation are asked from their side (Lohse, Bellman and Johnson, 2000). The idea behind this strategy is to see the customer engagement in brand and not earning money through direct selling. The brand noticed that people like to take part and win prizes. Even when consumers do not win, they still like to try for other contests instead of quitting.
Another notable strategy using by the organisation is product giveaways. M&S has launched many new product into organic food category and giving away sample to regular customer for free trial. It may be an extra cost in initial days but since the campaign has started, the sales for this product have also increased. This method seems effective because many a times consumer hesitate to buy a new product when they are not aware of its results (Kacen and Lee, 2002).
In contrast, with this, M&S is using multiple and more effective promotional strategies to attract customer and generate interest. It is using mobile app, social media contests and free sample of new products. The higher cost involved in these promotional tactics can be considered as demerit. But still the brand has the opportunity to earn profit in the long term. The contests and free sample keep customers engaged with as it is offering value at no cost.
The disadvantage of the promotional strategy of M&S is that it requires substantial investment at the initial level.
The marketing mix strategies of Tesco is formed in such a way that it offers competitive benefits to target consumers to have increasing returns.
Product - Tesco has been continuously expanding its product line from the last several years. It offers varieties of products and services that includes food, clothing, consumer electronics, financial services, etc.
Price - Tesco offers competitive prices for its products and service line to provide value over price paid. It aims to reduce the cost of purchase through economies of scale and other efficient ways to pass more benefits to its target market.
Place - Tesco offers two main channels to sell its product and services - offline and online. Offline sales are structured in four basic formats - Tesco Metro, Tesco Superstore, Tesco Express and Tesco Compact. Online sales are channelised through its own website - www.tesco.com.
Promotion - The brand is using point of sale promotion and end cap strategy to sold items more quickly. In this method, featured products in a store are placed at convenient location where it can be easily visible and within reach of customers. The brand is promoting its new and low selling products in a move to attract and clear the old stock (Koran and et. al., 2006). In another move it is also giving away branded gifts to their customers that mentions the brand's name and logo. This is also considered as effective way of promotion that draws attention of new customers. A customer referral incentive program is also recently started by Tesco to encourage existing customers to refer new consumers and earn rewards. The retail giant is giving away free products, cash rewards and big discounts through incentives.
The promotional strategies adopted by Tesco is advantageous in clearing out the new as well as old stock. Placing the stock in easy reach attract more customers and generate interest for the purchase. The referral program is also effective inn increasing the customer base and revenue of the organisation. The free gifts will stimulate customers to visit stores and buy products.
But the disadvantage of this promotional strategy is that many consumers were already aware of old products and will not even consider looking for new products. Also, the gifts ad referral program is only running for short duration which will have minimal effect on longer term objectives of the brand.
The close competitor of M&S i.e. Tesco are also using several marketing and promotion strategies to attract customer and generate higher sales.
Taking into account all above strategies of rival in comparison with Marks and Spencer, it can be concluded that M&S is putting more efforts to grab attention of consumers. The gifts strategy of Tesco is not effective and consumer engaging because giving away gifts does not mean that it will be used in the same manner as expected. Moreover, the strategy does not provide a measurement criteria to assess how many consumers are attracted by it (Park and Jun, 2003).
Overall it is concluded that M&S is following a better and profitable strategy as compared with Tesco. M&S is considering a long term profit and growth in customer base at an initial cost in present time while Tesco may benefit with the short term sale of new and old stock. The promotional strategies of M&S will have higher impact on overall consumer behaviour because the strategies are designed in way to drive impulsive behaviour in consumers to consider buying its products. The contests and free samples will engage consumers on continuous basis which translates into consumer loyalty in longer duration.
The promotional strategies of M&S are offering gifts and rewards to consumers without any purchase. The strategies are developed in a way to inform customer about the benefits of purchasing of M&S. The retail market is highly competitive and is important that marketers develop a distinct strategy to encourage customers. It is also important that marketers must not look for short term gains and success stories (Wessley, 2012).
The online and social media contests are effective tool of engaging customers for long time. The tool is also effective for new product promotion strategies which does not require additional efforts from the marketing team. Any new product launch can be easily promoted through social media tools (Park, Young Kim and Forney, 2006).
The product giveaway method is an effective tool in generating interest for new product. For example, many consumers are still not aware of the benefits and use of organic food. Due to lack of information they may not take initiative to use it. But when same product are giveaway as free, it helps develop a positive image of the brand and food in consumer mind. This method can be considered as perfect way of generating need and interests even when the consumer does not have any need for the product. Usually the buying behaviour starts with need identification and until there is need for any product, nobody will buy it (Faber and Vohs, 2004).
The effectiveness of promotional strategies determines the impact on buying behaviour and influences the final buying decision of consumers. The current practices of M&S into marketing and promotion of brand will have higher impact on its revenue and customer base. In case of product giveaways, the brand can easily measure the increase in sales and customer base it gained with the strategy (Shoham and Brencic, 2003). This will also support future strategies to be developed in the same manner. Overall the practices puts customer at its centre and efforts are surrounding them. The team running online and social media contests are fully trained to reply and converse in a well mannered way with potential consumers. During the second stage of information gathering in buying decision, potential consumer sources many ways to collect information about the products that can satisfy their needs (Teo and Yu, 2005). And usually they contact customer representative through email and phone support to help solve their queries. It is here important that if sales representative have information, he will inform the seeker in well mannered.
The practices of M&S are appreciated from the aspect that it is following a consumer oriented and open minded approach in the highly competitive and global marketplace. The consumer may not purchase the products instantly but the efforts in promotion and marketing campaign will no doubt generate long term benefits (Shah and Wolford, 2007). Moreover M&S is following two approach - one is product focused and another is brand focused. The distinct approaches are very placed in the market in the same time. These efforts will generate significant benefit for M&S in terms of minimising dissatisfaction and targeting huge base of potential customers (Cho Cho and Kim, 2005).
The promotion strategies of M&S are employing more effectiveness in their efforts. The reason behind this is that brand is following multiple strategies of distinct types in order to attract, gain and engage with customers (Billieux and et. al., 2008).
It can be concluded that some improvement is still required in existing system of M&S to improve promotion strategies. By emphasizing on modern media marketing firm can reduce cost as well as able to increase profit margin also. Essay explores that promotional strategies used by organization positively influence the company as well as create great impact on buying behaviour of company. Most of the customers were buying new products by reviewing online comments and through influencing by techniques. Tesco has launched new lucrative strategies and products to attract customers towards products. While on the other hand, promotional strategies of M&S will have higher impact on overall consumer behaviour because the strategies are designed in way to drive impulsive behaviour in consumers to consider buying its products.
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