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Pricing Strategies of Tesco and Waitrose

   

Added on  2019-09-18

14 Pages4505 Words598 ViewsType: 598
Finance
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Pricing Strategies of Tesco and Waitrose_1

Executive SummaryThis report covers external & internal environment, resources surrounding Tesco& Waitrose Company. The core emphasis lies in the strategy planned& marketing mix involved key analyzing company’s strength & competence.Both Tesco PLC&Waitrose are the leading companies in retail segment particularly in super market stores especially in food & drink industry. With know how techniques of handling resources in manufacturing, management of supplies, trained staffs which becomes important essence of retailing industry. IntroductionAs a background Tesco is a leading food & drink retailer with a 2,319 stores & employed a workforce of over 325. While talking about Waitrose, as per February 2015 sources, it holds an "upmarket" reputation & has a 350 branches across the United Kingdom which includes 30 convenience stores. Among the four leading UK retailer stores comes Tesco with a 28.1% share of market & then remaining grocery market share is shared with other three which is Sainsbury's,Asda and Morrisons which is approximately 28% of the UK grocery market. Waitrose comes a way back at sixth largest market share & capturing only a 5.1% share of the market in the UK.Tesco caters in various divisions such as it has a range of 40,000 food products which includes its own labels from normal to finest levels, independent Britain’s largest gas stations & then other categories includes ,non-food items, clothing, etc. While, Waitrose is a biggest employee owned operated by JLP &opts for a different market strategy with Price commitment & delivering best products to customers with a high grade quality. To optimize this strategy, Waitrose has merged convenience supermarkets with best technical service and shop management.
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Marketing Plan Tesco PLC is a third major global general merchandising company as per its revenue & second largest in terms of profitability. It has diversified its business into six divisions which is Tesco Extra, Tesco Superstars, Tesco Metro, Tesco Express, One Stop and Tesco Homeplus (Tescoplc 2009). Additionally, Tesco PLC also provides online services by the name of Tesco.com which is also its subsidiary& its other retailing services Tesco Personal Finance. Apart from the home shop supermarket experience in grocery & food/beverages division it also utilizes its know how services & expanded in various non-food segments such as gas stations, consumer electronics, clothing, telecoms, financial services, health, home and car insurance, dental plans& other miscellaneous such as CDs, music downloads, retailing and renting DVDs, software and Internet services operating globally. While Waitrose is a food retail division of John Lewis Partnership parent company & a sixth-largest grocery retailer in the UK with a gross sales in 2010 of about11.3%& profitability rose to +28.0% due to the restructuring & introducing fresh patterns in sales. (John Lewis Partnership Reports, 2010) whereas speaking about TESCO it held a 30.7%share of the UK grocery retail market & profitability of 14.9 % in the year 2010 (Euromonitor, 2010).Waitrose optimization strategy is to that allows it to target customers with specific, tailored experiences. Waitrose also operates online business through Waitrose Deliver, Waitrose Cellar and Waitrose Florist.Objectives The objective of Tesco is to expand globally & diversify, promote more of nonfood section/divisions, while that of Waitrose is to provide quality groceries, wine, and spirits at a lower price & maintain a customer loyalty. Both the companies’ objectives are suitable as per theindividual orientation.PORTER competitive analysis for Tesco plc & WaitroseThese can be distinguished & analyzed on the basis of below points-:Threat of new entrants: New entrants in various sectors delivering products & services at a cheaper prices, breaking market share of Tesco PLC. While for Waitrose it is able to sustain in the market & capture share since it provides better crème class products & services at same priceSainsbury charge its customers. Waitrose unique essence of its product is high quality products which keeps it class apart from other competitor M&S.Rivalry among the existing players: For Tesco, Constant competition between Wal-Mart, Carrefour, J Sainsbury, ASDA, and K-Mart & thinking of new strategies & techniques to keep rivals at bay. (Peter & Donnelly 2002) while Waitrose competitors are M&S & Sainsbury need of middle class delivering products with freshness & crème upmarket products.Threat of substitute products:For Tesco, cheaper substitutes products are readily available in the market while Waitrose caters to a specific domain of retail market hence levels of substitutes are quite low. For Tesco. some existing players are big & dominant in the market hence entering intoa completely new domain will result in resistance & forces. Also, if Waitrose wants to enter in a new market they should have a hands on experience & market knowledge (John Lewis, 2012).
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Bargaining power of suppliers: Low specific suppliers dealing in the market & price rise in inputs result in producing products at higher costs while for Waitrose switching to the alternativesuppliers due to cheap supply are low since margin are quite low.Bargaining power of buyers: Since companies like TESCO exists in a perfect market hence their end products should be of same price while for Waitrose switching costs are readily available due to many options available (Davey and Laurance, 2008).Comparative SWOT Analysis of Tesco & WaitroseA strengths, weaknesses, opportunities and threats (SWOT) analysis of Tesco & Waitrose has been provided below.StrengthsTESCO caters in various divisions & sub segments & has a 4,331 stores in the USA, Europe and Asia. After Walmart & Carrefour, Tesco captures a third largest grocery retail market share in the world (Euromonitor, 2010).Strong strategy adopted is the customization to products & services as per market demands & customer needs. Tesco introduced a loyalty scheme card as a ‘Tesco Clubcard’ for the regular customers. While Waitrose main strength lies in-:Waitrose Company has an exclusivity supply to Prince Charles.With a 300 stores it’s able to capture 1/6th market share in UK.Marketing & through strategy promotion of ‘upmarket’ it has penetrated into the minds of consumers & proved to be a strong competitor.myWaitrose loyalty card launch resulted in customer retention scheme.Employee strength of 1,00,000 & got appreciated with many rewards & recognition for best quality products.WeaknessesCut throat competition resulting in changing alternative strategies & cost cutting.Due to the tough competition certain Tesco products could not survive with peers competitors& had to be recalled due failed strategies & losses. It deeply affected brand image of the Tesco as they opted for the using cheaper alternatives with high quality.
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