Tesco Segmentation Targeting Positioning

Topics: Organic food, Organic farming, Marketing Pages: 10 (3306 words) Published: April 27, 2015


B) Produce an individual report which sets out a market strategy for a new market (segment) for Tesco to enter. This should be fully justified. (50% of overall marks and due by 3pm Thursday of week 8) Executive Summary:

After analysing the changing habits of UK consumers, it is seen that consumers begin to shape the industry in the sense of “health consciousness” and “awareness of product quality”. Starting from this point, this report aims to suggest new segment for Tesco which gathers all its organic and health related products under the one brand/label, called “Tesco Wellness”. The launch of this new segment will be cost approximately £12.5 million which return on investment will expected as £60.5 million. Nowadays, this segment is really attractive for retailers to get in because the consumer demands and growth of market are increasingly getting higher. As Tesco being focused on consumer demands, this segment will be sustainable for them to offer products in wellness market. Introduction:

UK consumers are becoming increasingly health conscious. They are looking for healthy products in the markets so, retailers must take into account consumer's changing behaviours. Three important retailers of UK which are Tesco, Sainsburry’s and Waitrose, give consumers opportunities to find wide range of organic products.Tesco, Sainsbury’s and Waitrose have the highest market share of organic food sales in the supermarket sector (International Business and Cooperation, 2009). According to Soil Association Report 2014, sales of organic products in the UK increased by 2.8% in 2013 which is a decisive return to growth after four years of market shrink. It may be suggested that Tesco should focus on this segment which will open more growing in the future. The Market Overview

Tesco Wellness will include four sub-segments like organic foods, vitamins and supplements, sports nutrition, the beauty and personal care products. All these sub-segments have a growing market and the UK consumers have an great attention on organic market. According to International Business and Cooperation 2009, the organic food market solely is, worth €2.3 billion. Further, it is estimated that the rapid growth in the number of consumers aged 25-34 of 8% may also provide a rise to organic food and drink sales in the next five years(Mintel,2013). The vitamins and supplements market has seen a steady rise in value in the period 2010-13 (Mintel, 2014). Consumers show a higher interest in demographic-specific products, with sales of vitamins and supplements aimed at men and women rising in value and it is stated that 55% and approximately 24% of these consumers are young people (Mintel,2014). Sports nutrition continued to be very dynamic, growing by 16% in current value terms and reaching value sales of £301 million (Euromonitor, 2014). In the UK, the key demography of sports nutrition indicates mostly men including in their teens to late midthirties yet the category is still expected to reach strong growth and introduced to new demographics, including women and active baby boomers (Euromonitor, 2013). The beauty and personal care products segment, it is stated that the UK has one of the largest markets for natural and organic personal care products in Europe (Organic Monitor, 2013beauty). The Soil Association Report 2014 calculates that UK sales of certified organic beauty products increased by 17% in 2013, to £37.2 million. The prediction of the market’s future share of natural and organic products is to reach 5% of total personal care product sales (Organic Monitor, 2013). Taking into account market sizes of each sub-segment, it is sustainable for Tesco Wellness to get into that new segment in its existing stores and online stores. Further, this new segment will be highly supported by the consumers’ increasing demands on wellness market. Objective of Tesco Wellness

As being aware of new trends of UK consumers, health-conscious,“Tesco Wellness” may be...

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