D3. Evaluate how changes in the market have impacted on a given business
and how this business may react to future changes.
In this assignment I am going to evaluate how changes in the market have impacted on
my chosen business and how this business may react to future changes.
TESCO
Tesco plc, trading as Tesco, is a British multinational groceries and general merchandise
retailer with headquarters in Welwyn Garden City, Hertfordshire, England, and United
Kingdom. Tesco is the largest British retailer and is also the world’s third largest retailer in
the world. Tesco’s original product range of grocery and general merchandise has diversified
to include banking, insurance services, electrical goods as well as telephone equipment and
airtime.
DIFFERENTIATION
Product differentiation is essential in today's financial climate. It allows the seller to contrast
its own product with competing products in the market and emphasize the unique aspects
that make its product superior. Tesco differentiates through their products and services – with
unique features, great quality at affordable prices, and a unique Tesco offer – and through
customer experience, for example by simplifying their systems for ordering online, and
delivering consistently great service in store. Tesco will be able to create brand loyalty for
their offerings, and thus, price inelasticity on the part of buyers. Breadth of product offerings,
technology, special features, or customer service are popular approaches to differentiation.
One of the currents changes in the market that would be affecting Tesco would be Brexit,
which is the withdrawal of the United Kingdom from the European Union and the European
Atomic Energy Community at the end of January 31, 2020. Many supermarkets will be
affected and Tesco preparing to respond to this change. Tesco could sign contracts and
agreements with European suppliers and retailers so they can benefit and get the products
easily and legally. For example, Tesco signed a buying agreement with Carrefour, which is
Europe’s largest retailer. The partnership means they can exert more pressure on their
suppliers, giving it greater ability to force them to burden any cost increases from Brexit.
Tesco could purchase the stuff they need to make their own-label produce under the
partnership, allowing them to offer products that can rival those offered by the likes of
Unilever in an attempt to cut out the middleman. With a Brand Guarantee, customers would
not have to worry about the price of branded products – which they could get from other
retailers – and Tesco own-label products become the point of differentiation, with a unique
and helpful offer which could give customers a reason to choose Tesco.
PRICING POLICIES
Pricing decisions can have very significant consequences for the organization. It is one of the
first considerations for many customers and it determines the profit margin on products.
Pricing is an important decision-making aspect after the product is manufactured. Price
determines the future of Tesco’s product, acceptability of the product to the customers and
return and profitability from the product. It is a tool of competition. Tesco pricing strategy
, can be described as cost leadership. The pricing policy is developed according to Tesco
policy and the pricing strategy contributes to its competitive advantage. Furthermore, it
helps in determining return, determines demand, sales volume and market share,
countering competition, builds product image and a tool of sales promotion. Tesco
management aims to reduce the cost of purchase and operational costs through economies
of scale and a set of other measures in order to pass the cost advantage to customer as the
main brand value. The company also uses economy pricing, psychological pricing, product
line pricing and geographic pricing strategies. Due to the covid-19 pandemic, many
companies have been affected because their customers had to stay at home either to avoid
getting infected or to quarantine themselves and the people started to spend only what was
necessary since some of them lost their jobs. To cope with swelled demand for online
grocery, Tesco has mobilised its logistic network in the UK and increased the number of
delivery slots it offers. Tesco’s performance will be similar to its rivals, with all supermarket
chains benefiting from the rise in demand for food & groceries. This change made Tesco to
increase the price of some of their products but at the same time let Tesco know and see
that customers were still buying products per the same price from home and that their
online sell increased so Tesco could be using this method of sale and offering some products
on sale but just by online shop so the new price would attract more customers.
MARKET LEADERSHIP
Market leadership is the universal aspiration of venture funded companies. Most pitches
include a claim to leadership even if the defined market is narrow or the claim tenuous.
Market leadership is particularly important in winner-take-all or winner-take-most markets
common among mobile or Internet consumer markets. The benefits of market leadership
within a sector are well understood as market leadership confers many advantages. It allow
Tesco to hire better staff, access lower cost of capital, secure volume price discounts, engage
with partners on a preferential basis and ultimately consolidate the market. Tesco and
Sainsbury's had the largest share over the period under consideration, holding 41.8 percent
of the market together as of October 2020. In March of 2019 Asda's share surpassed
Sainsbury's which could recover the second position on the market in the following month.
Prior to the popularity of the discounters, the grocery retail market was dominated by the
'big four' supermarkets: Tesco, Sainsbury's, Asda and Morrisons. However, the impact of
Brexit still affecting Tesco because the growing inflation, so the consumer behaviour has
shifted in favour of cheaper alternatives such as Aldi and Lidl. This result could make Tesco
to enter 'price wars' by lowering their prices. Crucially, this has caused increased volatility in
the grocery retail market and, as of January 2017, Aldi overtook the Co-operative to become
the fifth largest supermarket in the United Kingdom. After a period of intense competition
Lidl overtook Waitrose and is now poised to likely overtake the Cooperative in the coming
year. Tesco would need to reduce some price of their products to retain customers and
attract new customers. Also, it can offer some coupons, offers, and make sales on their
products.
REPUTATION
and how this business may react to future changes.
In this assignment I am going to evaluate how changes in the market have impacted on
my chosen business and how this business may react to future changes.
TESCO
Tesco plc, trading as Tesco, is a British multinational groceries and general merchandise
retailer with headquarters in Welwyn Garden City, Hertfordshire, England, and United
Kingdom. Tesco is the largest British retailer and is also the world’s third largest retailer in
the world. Tesco’s original product range of grocery and general merchandise has diversified
to include banking, insurance services, electrical goods as well as telephone equipment and
airtime.
DIFFERENTIATION
Product differentiation is essential in today's financial climate. It allows the seller to contrast
its own product with competing products in the market and emphasize the unique aspects
that make its product superior. Tesco differentiates through their products and services – with
unique features, great quality at affordable prices, and a unique Tesco offer – and through
customer experience, for example by simplifying their systems for ordering online, and
delivering consistently great service in store. Tesco will be able to create brand loyalty for
their offerings, and thus, price inelasticity on the part of buyers. Breadth of product offerings,
technology, special features, or customer service are popular approaches to differentiation.
One of the currents changes in the market that would be affecting Tesco would be Brexit,
which is the withdrawal of the United Kingdom from the European Union and the European
Atomic Energy Community at the end of January 31, 2020. Many supermarkets will be
affected and Tesco preparing to respond to this change. Tesco could sign contracts and
agreements with European suppliers and retailers so they can benefit and get the products
easily and legally. For example, Tesco signed a buying agreement with Carrefour, which is
Europe’s largest retailer. The partnership means they can exert more pressure on their
suppliers, giving it greater ability to force them to burden any cost increases from Brexit.
Tesco could purchase the stuff they need to make their own-label produce under the
partnership, allowing them to offer products that can rival those offered by the likes of
Unilever in an attempt to cut out the middleman. With a Brand Guarantee, customers would
not have to worry about the price of branded products – which they could get from other
retailers – and Tesco own-label products become the point of differentiation, with a unique
and helpful offer which could give customers a reason to choose Tesco.
PRICING POLICIES
Pricing decisions can have very significant consequences for the organization. It is one of the
first considerations for many customers and it determines the profit margin on products.
Pricing is an important decision-making aspect after the product is manufactured. Price
determines the future of Tesco’s product, acceptability of the product to the customers and
return and profitability from the product. It is a tool of competition. Tesco pricing strategy
, can be described as cost leadership. The pricing policy is developed according to Tesco
policy and the pricing strategy contributes to its competitive advantage. Furthermore, it
helps in determining return, determines demand, sales volume and market share,
countering competition, builds product image and a tool of sales promotion. Tesco
management aims to reduce the cost of purchase and operational costs through economies
of scale and a set of other measures in order to pass the cost advantage to customer as the
main brand value. The company also uses economy pricing, psychological pricing, product
line pricing and geographic pricing strategies. Due to the covid-19 pandemic, many
companies have been affected because their customers had to stay at home either to avoid
getting infected or to quarantine themselves and the people started to spend only what was
necessary since some of them lost their jobs. To cope with swelled demand for online
grocery, Tesco has mobilised its logistic network in the UK and increased the number of
delivery slots it offers. Tesco’s performance will be similar to its rivals, with all supermarket
chains benefiting from the rise in demand for food & groceries. This change made Tesco to
increase the price of some of their products but at the same time let Tesco know and see
that customers were still buying products per the same price from home and that their
online sell increased so Tesco could be using this method of sale and offering some products
on sale but just by online shop so the new price would attract more customers.
MARKET LEADERSHIP
Market leadership is the universal aspiration of venture funded companies. Most pitches
include a claim to leadership even if the defined market is narrow or the claim tenuous.
Market leadership is particularly important in winner-take-all or winner-take-most markets
common among mobile or Internet consumer markets. The benefits of market leadership
within a sector are well understood as market leadership confers many advantages. It allow
Tesco to hire better staff, access lower cost of capital, secure volume price discounts, engage
with partners on a preferential basis and ultimately consolidate the market. Tesco and
Sainsbury's had the largest share over the period under consideration, holding 41.8 percent
of the market together as of October 2020. In March of 2019 Asda's share surpassed
Sainsbury's which could recover the second position on the market in the following month.
Prior to the popularity of the discounters, the grocery retail market was dominated by the
'big four' supermarkets: Tesco, Sainsbury's, Asda and Morrisons. However, the impact of
Brexit still affecting Tesco because the growing inflation, so the consumer behaviour has
shifted in favour of cheaper alternatives such as Aldi and Lidl. This result could make Tesco
to enter 'price wars' by lowering their prices. Crucially, this has caused increased volatility in
the grocery retail market and, as of January 2017, Aldi overtook the Co-operative to become
the fifth largest supermarket in the United Kingdom. After a period of intense competition
Lidl overtook Waitrose and is now poised to likely overtake the Cooperative in the coming
year. Tesco would need to reduce some price of their products to retain customers and
attract new customers. Also, it can offer some coupons, offers, and make sales on their
products.
REPUTATION
