Segmentation and Tesco

1153 words 5 pages
Segmentation and TESCO Case: Segmentation is essentially the identification of subsets of buyers within a market who share similar needs and who demonstrate similar buyer behavior
Using segmentation analysis helped Tesco PLC, Britain's largest retailer stores to decide on their future marketing strategy and to appraise their competitive strengths
Tesco realized the requirements for effective segmentation and that it must be Measurable, accessible, Differentiable, Substantial and Actionable
To measure the size, purchasing power and characteristics of each segment Tesco used Club card program, giving cardholders discounts in exchange for their name, address and other personal information and optional questions about the size of their
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-They analyzed data on 15 million Tesco shopping baskets every week to use a loyalty-card program.
Each product is scored on 50 dimensions such as price and the size of the package. The computer looks for customers whose shopping baskets have similar combinations of scores. And identified each segment and classifies shoppers in six segments this segmentation is based on actual customer behavior toward products and Usage rate. The "Finer Foods" segment, for example, is made up of affluent, time-strapped shoppers who buy upscale products. "Traditional" shoppers are homemakers with time to buy ingredients and cook a meal.
-They used mix strategy including product and promotion by sending coupons and send coupon package to customers includes three coupons for products they regularly buy and three for goods that they might like, or that Tesco wants them to try so segmentation helped them in determining their advertising and selling strategy. Because they succeeded in there positioning strategy Tesco percent of coupons redeeming (15% to 20%) exceeded the percent of all coupons ever get redeemed (1% to 2%)
The package also includes vouchers through which Club card members can redeem their accumulated points. Due to the effectiveness of their strategy 95% of these vouchers are redeemed.
-Tesco use Psychographic segmentation to better understand customers

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