Tesco Case

TESCO CASE: What do you think is the IT-generated competitive advantage at Tesco:

Innovative:
Throughout its history, Tesco demonstrated its capacity to innovate. The Green coupons is a very good example on how Tesco was thinking one (or several steps) ahead of competition. They once again stroke with the first reward card in the industry.

Audacious:
Not only they had the ideas, but they had the guts to realize them, despite the mockeries of the rest of the industry. They definitely took risks in investing several hundred millions in a computerized system to manage their reward program.

In advance:
The first two qualities gave them two main advantages on their main competitors: Time and Experience, which, if used efficiently, can make a significant difference. How?

Database size:
First, by having a richer database, constantly enriched through new subscribers coming either from Tesco, or from partnerships in other industries. When you’re the first on the market, you can choose the best partners in each sector. These partnerships give a huge advantage to Tesco, increasing the access to new customers and providing them with higher adavantages.

Database exploitation:
Having a database is good, but exploiting it in a very accurate way could be great. 90% of the Job is the way to exploit the database, which is the case of Tesco. Many improvements were made through advertisement, direct marketing operations and other actions, giving a highly personalized service for customers (personalized letters, magazines,…).

E-commerce:
Once again, being the first gives often a significant advantage on your competitors. Even though sales through internet does not exceed 1,5% of the total sales, this distribution channel is the fastest growing, and with 50% market share, Tesco earned a significant competitive advantage.

Tesco reward and CRM systems and early arrival in the Internet offer, definitely gave a huge competitive advantage. I a world in which speed is a major component of success, Tesco arrived the first in this field, allowing it to improve significantly many fields before its competitors. The most important is obviously a huge improvement in the knowledge of customers’ needs and behaviors, allowing Tesco to use much more efficiently all the traditional marketing actions (advertisement, direct marketing,…).