Tesco Bank Marketing

The research draws attention to the fact that the filchical harvest manner rhythm of Tesco cant is in the Maturity phase angle. And presently Tesco trust is a question mark according to Bostons Matrix. The patsy grocery store of Tesco affirm includes Tesco Clubcard holders, families with children, coddle and car. By Geographic segmentation, Brislington in the wedlock East, Coventry in the Midlands and Blackpool in the northerly West are its posterior merchandise. By Demographic segmentation, the age should be tar deceaseed from 18 to 50 and all e actuallyplace 50s. By Behavioural segmentation, its loyal guests are identifyed.Further investigations reveal that the Tesco Clubcard realisation shakes position in the market is not enough intelligent and the dislodge makes this harvest-feast become to a greater extent emulous in the market. The of import determine st enume lay outgy is competition-based set. A new Good-value pricing system is make for the r epositioning reaping. More all all over, an A3 size poster for Tesco Clubcard opinion banknote is designed for give notice (of)ment. It is recommended ? The next market strategy of Tesco curse should focus on strengthening its guest base and service improvement. Innovation of growths is grand. * Tesco supermarkets are good platforms for Tesco bank to force itself. TASK 1 AREA OF STUDY Tesco entrust is a hyponym company of Tesco (the UKs largest supermarket) in the UK. This bank was ever named Tesco personalised Finance. Initially, Tesco Personal Finance (TPF) was a joint venture business between Tesco and the empurpled hope of Scotland (RBS) (Datamonitor, 2011). Then, Tesco took full control of Tesco Personal Finance, by an agreement with RBS to subvert its 50% shareholding in TPF in 2008 (Sky recents, 2008).TPF was renamed Tesco border in 2009 and it was a foreshadow that Tesco would like to join into the high street banking sector (The Telegraph, 2009). Tesco Bank has unceasingly made good progress in 2011. For example, savings, the number of attribute cards and insurance sales have pie-eyedly increased (Tesco plc website, 2012). As a new freshman with great brand awareness that was untainted by the banking crisis, Tesco Bank has great potential to boost sales in the UK beca enforce the current customer dissatisfaction with banks is serious in the UK (MarketWatch, 2009).However, it is necessary to focus on this bowl for improvement because the infrastructure of Tesco bank is not enough and it should have a better market strategy to decoy more customers as a new entrant. TASK 2 PLC STAGE Kotler and Armstrong (2012) define product life cycle (PLC) as a development trajectory of a product based on its sales and simoleons over its life time. The five unmistakable stages (product development stage, introduction stage, ontogeny stage, maturity stage and decline stage) of PLC take up how products and markets work.The Figure 2 shows t he sales and profits of Tesco Bank from 2002 to 2010 (See Appendix 1). It is laboured to analyze the trend of sales from 2009 to 2011. The sales fluctuated during this period. The profit increased promptly from 2002 to 2005, then declined gradually due to the possible reasons of the bad global parsimoniousness situation and the financial crisis. After Tesco Bank was entirely owned by Tesco, the profit boosted remarkably again such as the egression rate was 65. 625% in 2009 and the average growth rate of profit from 2008 to 2011 was 29. 72%. However, the growth rate declined year by year.Based on the evidence above, it can be inferred that Tesco Bank is now at the maturity stage. According to the trend of profit, the product achieved acceptance by customers for a period of time, then the big qualify in 2008 led to rejuvenation of its business. At the same time, the sales growth was s scurvydown unless it seems to increase in the futurity. These points match to the characterist ics of maturity stage (Kotler and Armstrong, 2012). Bostons Matrix is a chart to evaluate a companys market strategy and situation according to its congeneric market share and market growth rate (Kotler and Armstrong, 2012).It can be described as Figure 3. The market growth rate of Tesco Bank was high in recent years but the relative market share is still low based on the data above. Pettinger (2011) states that Tesco Bank is a smaller bank in the UK which ranks 10th of 10 Largest UK sell Banks. Question marks means a company has relative low market share and high market growth rate (Kotler and Armstrong, 2012). Thus, now Tesco Bank should be a question mark. It is time to think close to the in store(predicate) direction of Tesco Bank.Datamonitor (2010) reveals that the current consumer dissatisfaction with banks is a good chance for Tesco Bank to gain market share by the mistakable way Tesco is lucky in the grocery sector. Tesco Bank announced it has targeted to win 10% marke t share of the UKs financial services market in the future (Halime, 2010). It seems that Tesco Bank is expected to be a star in future years. TASK 3 TARGET MARKET Target market is defined as a set of customers who have common require or characteristics that companies would like to give service to (Kotler and Armstrong, 2012).Now All Tesco Bank products have a common characteristic that both product purchased can get points and snub with a Tesco Clubcard. This is not only a fantastic way to attract customers, but too all Tesco customers who have a Clubcard have been targeted. Tesco states that the about loyal shoppers (15 million Tesco Club card holders) are initially targeted by Tesco Bank (Aldrick, 2009). Credit cards and loans are only lendable to UK residents and over 18s. All Tesco Banks products such as home insurance, pet insurance, travel money and credit card are relative to the needs of families and daily life. Geographic segmentationThis segmentation divides market into several geographical areas. Tesco plan to chip in Tesco Bank branches in 30 of its stores in the UK in 2009 and branches would open in Brislington in the North East, Coventry in the Midlands and Blackpool in the North West (Clews, 2009) Demographic segmentation This segmentation divides market into segments such as age, family, income, occupation, religion and nationality. According to banks insurance classification (car, home, pet, travel, life, over 50s, health, dental, breakdown), credit cards and loans condition, the age should be targeted from 18 to 50 and over 50s.Tesco Bank also has child trust fund, Tesco Baby & toddler club and Tesco Child Health Plan, so the target of family life cycle should be families with children, pets and cars. Behavioural segmentation This segmentation divides market into segments such as knowledge, attitudes, uses, or responses. As Tesco Banks products can all be linked to its Tesco Clubcard, loyalty status should be strong in this case . Consumers are loyal to Tesco brand for its great brand awareness. On the other hand, the Clubcard get ups the loyalty of consumers with its benefits. TASK 4 PRODUCT REPOSITIONINGProduct positioning means products are considered by consumers when purchase, consumers pass on identify the products compared with competing products (Kotler and Armstrong, 2012). This assignment will choose Tesco Banks Clubcard credit card as master(prenominal) product compare with its competitors by perceptual map, then reposition this credit card to a more competitive position. The Figure 4 shows a positioning map for quaternion types of credit cards from Tesco Bank, Sainsburys Bank, Halifax and HSBC on two dimensions months of end pitchs for 0% and months of purchase for 0% (See Appendix 2) (Tescocompare, 2012).Thus, customers view of Tesco Clubcard Credit post-horse is very different from others. Its 15 months of purchase for 0% is significantly more than others, but the months of offset tran sfers are the least of all cards. The main(prenominal) advantage of Tesco Clubcard Credit Card is that customers have a very long length of time for 0% use up rate credit so that the fewer months of dimension transfers for 0% is acceptable. By contrast, the credit cards of Sainsburys, Halifax and HSBC focus on the months of balance transfers for 0%, but there is a transaction fee when customers transfer the debts.However, Tesco Clubcard Credit Card has the lowest fee (2. 9% fee) compared with others (Sainsburys 3% fee, Halifax 3% fee, and HSBC 3. 3% fee) (See Appendix 2). In prescribe to reposition Tesco Clubcard Credit Card to a more competitive position, it is better to extend the months of balance transfers for 0% as the figure 5 shows. Now Tesco Clubcard Credit Card is more attractive to customers. Beside its advantage of purchase, its balance transfers aspect is no womb-to-tomb weak compared with others. Tesco Bank may generate fewer profits from this product due to its lo ng period of time for zero interest rate and less transaction fee.However, this change will attract more customers to enhance its customer base in the short-term. The strong customer base will increase total consumption and is good for entire business functioning in the long-term. TASK 5 PRICING STRATEGIES Pricing strategy is that a company sets a right price strategy in order to generate profits and be successful in the market. The main pricing strategies are customer value-based pricing, cost-based pricing and competition-based pricing (Kotler and Armstrong, 2012).Competition-based pricing means the price is set based on competitors pricing strategies, cost, and marketing offering (Kotler and Armstrong, 2012). The main pricing strategy of Tesco Bank is competition-based pricing. Because most of the retail banks offer the similar products such as loans, credit cards, savings and insurance, Tesco Bank set a more competitive price to attract customers according to its Tescocompare. com organization (a system compare Tesco Banks products with other banks products). For example, the interest rate of loans and credit cards is second lowest of all the similar products (See Appendix 2 and 3).The reason may be that Tesco Bank is a new entrant and faces numerous experienced competitors setting slightly high prices relative to the value they deliver, charging a relative low price would be better for Tesco Bank to attract customers and gain more market share. In addition, Tesco Bank also uses discount pricing and promotional pricing. For example, new customers could save up to 20% with a Clubcard when they buy car insurance online. New customers with a Clubcard who advert and buy a Tesco Bank Pet Insurance policy straight off from Tesco Bank between 12 April and 22 May 2012 can get a free ? 0 Tesco Gift Card (Tesco Bank website, 2012). New pricing strategies for repositioned product As the Tesco Clubcard Credit Card has repositioned, it has more competitive advantage s. Then this assignment will develop a good-value pricing strategy for Tesco Clubcard Credit Card. Good-value pricing strategy means a company provides a combo of good quality and service at a intelligent price (Kotler and Armstrong, 2012). Cooperation with other retailers or restaurants in the UK to offer some benefits is a good idea to use this strategy.For example, Tesco Bank can cooperate with Zara that every purchase in Zara by only using Tesco Clubcard Credit Card can get 5% discount. Thus, more people would like to use this credit card so that it would strengthen Tesco Banks customer base. On the other hand, Zaras sales might increase because of the discount. In addition, customers get benefits. TASK 6 POSTER DESIGN FOR ADVERTISING ply It is a poster for advertising Tesco Clubcard Credit Card of Tesco Bank (See the A3 poster). In the white area, the credit card image and a red readiness with words are striking.Customers can know what the product is at the jump sight. 1 ca rd, 3 great benefits tell customers this credit card is dramatic because this card has 3 great benefit for customers if they use this card. These show the main part of poster that creates a general impression to customers and attracts them. The first deuce-ace lines of words in the blue area are the details of the terce great benefits. 0% on all purchases for 15 months and 0% on balance transfers for 15 months reflect its competition-based pricing strategy because this set of interest has an advantage compared with other products when customers make a decision. Balance transfers for 15 months shows the repositioning feature discussed above. It makes this card be more attractive to customers. Every dinky helps is the slogan of Tesco enhancing the Tesco Brand. Over 18s, UK residents shows the segments which this product is available for, reflecting its target market as well. The collecting points also reflect the Tesco Clubcard customers are included in its target segment. Ask at the customer service desk for more details is focusing for further steps if customers want to know more. CONCLUSION AND RECOMMENDATION Tesco Bank has already done well as a new entrant into bank industry.However, it still has some space for improvement according to the synopsis above. It has the potential to boost sales in the future due to its crabby advantages such as little influence by financial crisis and strong brand awareness. The low price advantage is also easy for Tesco Bank to attract customers. If Tesco Bank continues to adjust its market strategy in the future, it could give the top of UK banks. The future market strategy of Tesco Bank should focus on strengthening its customer base and service improvement. Service quality is an important factor to determine customer satisfaction (Maddern, H et al, 2007).Innovation of products is important. If the product has an available special characteristic, bank would have more power to generate profits and set slight high pric e. Tesco supermarkets are good platforms for Tesco Bank to advertise itself, and take full advantage of them. Appendix Appendix 1 offset Tesco Annual Report from 2002 to 2011 Appendix 2 Source http//tesco. lovemoney. com/creditcards Appendix 3 Source http//www. tescocompare. com/loans. shtml Bibliography Aldrick, P (2009). Tesco moves closer to full banking. The Telegraph. Online available from http//www. telegraph. co. k/ pay/newsbysector/banksandfinance/6617485/Tesco-moves-closer-to-full-banking-with-IT-system. html. (Accessed 13 April 2012) Bell, S (2010). UKs Tesco Offers 0% Interest Rate For 13 Months On Clubcard Credit Card. CardLine Vol. 10 have it away 31, p10-10, 1p. Clews, M (2009). Tesco to open bank branches in 30 stores. Marketing Week (01419285) 3/26/2009, Vol. 32 coming back 13, p44-44, 1p. Datamonitor (2010). Tesco Bank set to play with the big boys and be a top 10 bank. Online Available from http//about. datamonitor. com/media/archives/3705. (accessed 13 April 2 012) Datamonitor (2011). Tesco PLC company profile. Online Available from http//www. datamonitor. com/. (Accessed 13 April 2012) Halime, F (2010). Tesco Bank eyes 10% of UK market share. Retail Bank International. Online Available from http//www. vrl-financial-news. com/retail-banking/retail-banker-intl/issues/rbi-2010/rbi-629/tesco-bank-eyes-10-of-uk-mark. aspx. (Accessed 13 April 2012) Kotler, Pamp Armstrong, G (2012). Principles of Marketing (14th ed. ). Pearson Education. p 66-67, 224-230, 231-232, 297-303, 315-324. Maddern, H et al (2007). Customer satisfaction and service quality in UK financial services. International Journal of Operations amp Production Management. 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Credit Cards. Money. Online Available from http//tesco. lovemoney. com/creditcards. (Accessed 15 April 2012) Tesco Bank website (2012). Insurance. Online Available from http//www. tescobank. com/personal/finance/home. html. (Accessed 15 April 2012)