Academic Master

Business and Finance

Descriptive Study On The Customer Satisfaction Of Tesco After Losing Market Share

Introduction:

The purpose of writing this paper is to examine the issue of expired products in Tesco. Tesco is famous not in the UK only, but it has maintained its image across the world. Tesco is known as the first retail grocery out of ten in the United Kingdom. The store is also famous, as it achieved profits of 2 billion pounds in early 2005. News about the store is that it has ranked as the third largest store in the world in terms of higher revenue earnings.

Background Of The Topic:

Being the largest grocery store in the UK, it has a variety of products, and the store has developed its reputation by selling fresh and pure items in the country. It has been observed that the biggest grocery stores sell those products at low prices with a near-expiration date. This means that when the date of expiry is near, the store prefers to sell it at a price, and if the stock is still left, it throws it in the trash.

Reasons For Selection The Topic:

The reason for selecting this topic is to study the issue that has affected Tesco’s reputation across the globe. In order to maintain its image, the companies work on its R&D and quality standards. However, Tesco’s reputation has been badly affected by the selling of expired products in the market.

Aim Of The Work:

The aim of the work is to research Tesco and find the reasons that have affected its rating of best-selling products in the market. The literature review will explain the depth of the topic and relate the study to different past analyses. The aim can be achieved by identifying the customer needs and the methods that can increase Tesco’s market share.

Literature Review:

Customer satisfaction and market share:

The key performance indicator used in the markets is customer satisfaction and market share (Swan, Bowers & Grover, 2002). The store is famous not only for selling food and drinks but also for its range of different products such as electronics, telecom, retailing, and clothing. The fact that the external environment has an influence on business cannot be ignored because the rapid change in customer taste and demand has made the country’s economy complex (Essays, 2015). To reach the level where the company is known to its competitors as the global leader in the retailing business is not as easy as it looks. It is the hard work of the entire team that has made the company reach the level that was ever desired. In this paper, we will be discussing the reasons for selling expired products in the market. To prove the authenticity of this blame, it is necessary to provide logical proof so that people can believe it rather than only consider a rumor to damage the brand repute. There was also news that told the media about Tesco selling outdated products, and people complained. There is no harm in selling food items that have short selling dates, but if a trolley is full of items that expired 2 or 3 days ago, then it could be a sign of alarm because it has now become injurious to health (Boards. IE, 2007). Customers also complained to the staff about the expiration date of the products, but on the other hand, it was observed that the next day, more stuff with past use dates was placed on the shelves.

News reports have reported that a heavy fine was charged to Tesco for selling outdated products because one of the girls fell ill after eating chicken pasta (Get Reading,2011). This means that such sales result in losing customers, which could create a negative image in the market. Moreover, selling expired products is an illegal matter that can be taken to court. In addition to this, a complaint was forwarded to the council of Bracknell Forest to investigate the matter. Later on, it was discovered that 127 outdated were, and the trading standard officers declared it the “worst case that has ever come across.” Moreover, the good action that was taken by the Bracknell magistrates was that the court fined Tesco 12,000 pounds, and they were also ordered to pay the legal fees of 15,000 pounds. They also fined the store 15 pounds of the victim surcharge, and these charges were related to around 88 items discovered in the store.

This news was shocking for the consumers because they had lost their trust in the best quality providers in the country. This has also affected the brand’s repute badly, and different competitors took the benefit as they started selling their products by slightly lowering their rates. The story did not end here as the competitors became efficient in throwing the expired products into the trash bins to attract more customers. They did so to grab customer attention and trust in their brands. After the legal action against Tesco, the representative of the store assured the media and court that they had started to retrain their staff and assured them that no compromise could be given on such action in the future. The owner of the company called it shocking for him because it happened in the past as well by the negligence of his staff. He stated that in 2009, the company was fined pounds 18,000 and pounds 13,500 for the same offense. According to him, this is happening only to damage his business because he cannot bear such negligence. Human life is very important, and nobody can compromise.

The spokesperson also said to the media that it is our duty to ensure fresh products to our customers, which is why we deliver clear and accurate price labels for our customers. This is because it informs the customer to make the right decision before buying the product. The company is striving hard to remove the errors because health is life, as we all know it (Gibson, 2017). After facing challenges that resulted in the decline of Tesco, the company has decided to facilitate their customers at any cost, and they have a right that after selling the product, if they have the receipt, then the company will refund them.

The Chartered Management Institute of the UK has released a report that showed a record loss of 6.4 billion pounds due to many scandals that came forward (Haughton, 2015). Many reasons were discovered for the decline of Tesco’s profits, and according to a few analysts, recovery from brand name damage is difficult and requires a lot of effort. The suppliers complained that the company is paying them late, and it has also affected its reputation. Moreover, customers are known as assets of any business, and if they are lost, it means the entire business is going to decline. Companies work to build strong customer relationships so that consumer buying power increases, and they even refer people to their buying places. Customers and the quality of any business are interlinked. If the quality of any product goes down, then the customer will stop buying from that place and switch to another brand. Similarly, if the quality of the products is improved, then more customers will buy from that place.

Sainsbury’s, Marks, and Spencer are in the loop to compete with each other after Tesco’s profits have declined. They have promised their customers to provide quality services and products. Moreover, Tesco customers switched to Aldi and Lidl for the cheapest products, but the choice was limited (Sheffield, 2015).

Studying the needs, problems, and opportunities regarding the famous superstore of the UK, it has been noticed that the problems have become the weakness of the business, whereas the needs have become the important constituent for running the business. The business environment of the superstore was affected by the sale of outdated.

In order to study the company’s needs, problems, and opportunities, it is necessary to conduct a SWOT analysis because it can give a clear picture. The following diagram describes the actual situation of the superstore;

The above table states that, initially, TESCO maintained its strengths by developing brand value and acquiring a high market share. The company has made its position in the market by offering value for the money and a wide range of products with highly skilled management. The best strategy adopted by the superstore was to buy the products in bulk to benefit the economies of scale. Discussing the weaknesses of the company, it has been observed that the profits of the company were affected due to bad debts from the credit cards and the insurance that was claimed by the households. In addition to this, Sainsbury, Asda, and other stores are in the competitive chain, and they are finding ways to take the Tesco position. Regarding opportunities, it has been noticed that market expansion through digital entertainment can be done because this investment is useful in the long run.

Effects of buying behavior:

Customer tastes change with the change in the market and demand. When products are changed through innovation and new products with attractive packaging and affordable prices are introduced in the market, then customers will prefer to try that product. If the quality and taste are according to the consumers, they switch to that. The buying power of the customer is directly related to their expectations, and if the product does not meet their expectation, it lowers the buying behavior, and the consumer finds new alternatives.

Role of customer needs:

It is very important for any business to keep updated about the needs of their valued customers. Customers always demand products according to their purchasing power, but it does not mean that they will compromise on their quality. Quality is the utmost priority, and no one compromises on it. The following diagram illustrates the concept of customer understanding at Tesco;

It means that the business needs the following things to survive in the competitive market;

  • It is important to understand the current customer issues and use appropriate measures that work for the customer.
  • Analysis of business performance and customer behavior is important to be maintained.
  • Tesco has worked hard to research customer needs and lifestyles and has reached a level where the store reflects this clearly.

Recommendations:

To survive in the market, it is very important to provide quality goods at reasonable prices. Tesco has lost many of its customers because of the sale of outdated products to its valuable customers. The importance of customers in any business cannot be neglected because they are the actual source running the business. Moreover, keeping their tastes and preferences in mind, the marketing department of the superstore has to work. It is very important for the brand to keep itself aware of its rivals and include the cardinal element, i.e., customer orientation can be added to enhance the business.

In order to develop good relationships with the suppliers, it is necessary to pay the suppliers on time with the payment terms and conditions. Unilateral deductions are avoided. Transparency and dealings with the suppliers must be met accurately. Working on customer services has become an essential element of running a profitable business. Tesco can offer more online delivery services to avoid scandals about expired products in the future. The online products will inform the customers about the manufacturing and expiry date, and it would become easy to buy from there. If the online order is placed, then it does not suit the superstore to change the price of the product because it will create a bad image for the customers. Training has become an important part of the process because trained staff can entertain customers better.

Many external factors affect the business and its image. Sometimes, new entrants in the market give a red alert to the company, but for Tesco, this time, their growth and repute are under pressure, and it can be overcome with innovation and creativity in the business. It means without adding value to the business, Tesco can never stand again in its old position.

Conclusion:

Businesses always run successfully when they are able to understand market demand. For Tesco, there is a chance that its reputation was affected by some of its internal environmental issues. When the staff is not working in a friendly environment, then their disputes start, which badly affects the entire performance. To resolve this issue, it is important to build a friendly relationship between the supervisor and the subordinates. Concluding the topic, it has been observed from the research that the repute of the superstore was adversely affected after selling the expired products. The company paid heavy fines in the past to avoid this issue again, but it happened later on. Due to this, the company’s overall performance and finances were affected. No business is allowed to lose its customers, and TESCO did this. There are many ways and strategies to overcome different issues, and again, the superstore can achieve its market position and customer trust, but for that, efforts are required.

References

Essays, U. (2015). Business Essays – Tesco Retail BusinessUKEssays. Retrieved 20 February 2018, from https://www.ukessays.com/essays/business/tesco-retail-business.php

Gibson, J. (2017). Tesco promotions short-change shoppersBBC News. Retrieved 20 February 2018, from http://www.bbc.com/news/uk-england-birmingham-38893887

Haughton, J. (2015). Tesco: five reasons it went so wrongManagers.org.uk. Retrieved 20 February 2018, from http://www.managers.org.uk/insights/news/2015/april/tesco-five-reasons-it-went-so-wrong

Proud, A. (2018). The decline of Tesco is a good old-fashioned morality taleTelegraph.co.uk. Retrieved 20 February 2018, from http://www.telegraph.co.uk/men/thinking-man/11351115/The-decline-of-Tesco-is-a-good-old-fashioned-morality-tale.html

Sheffield, H. (2015). These are the five reasons Tesco’s £6.4 billion losses were so badThe Independent. Retrieved 20 February 2018, from http://www.independent.co.uk/news/business/news/tesco-results-the-five-reasons-behind-tescos-historic-64-billion-loss-10194620.html

Supermarket selling out of date produce – advice please. (2007). Boards.ie. Retrieved 20 February 2018, from https://www.boards.ie/b/thread/2055198719

Swan, J., Bowers, M. and Grover, R. (2002). Customer involvement in the selection of service specifications. Journal of Services Marketing, 16(1), pp.88-103.

Tesco admits 15 charges of out of date food. (2011). getreading. Retrieved 20 February 2018, from https://www.getreading.co.uk/news/local-news/tesco-admits-15-charges-out-4213416

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