Report: Product and Service Development for Tesco's New Product

This report provides a comprehensive analysis of Tesco's product and service development strategy, specifically focusing on the introduction of healthy food boxes. It meticulously outlines the new product development process, detailing each stage from idea generation and screening to concept development, business analysis, marketing strategy, product development, and commercialization. The report also delves into the product life cycle, exploring the introduction, growth, maturity, and decline phases, alongside the strategies employed by Tesco at each stage. Furthermore, it includes a company overview, a pitch for the new product, an examination of the distribution process, a SWOT analysis, and a marketing mix assessment. The report concludes with a synopsis of the competition, industry recommendations, and a reflection on the development process, offering a complete perspective on Tesco's approach to product innovation and market positioning.

Product and service
development.

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Process involved in new product and service development......................................................3
PRODUCT LIFE CYCLE........................................................................................................5
Company overview...................................................................................................................5
Pitch..........................................................................................................................................6
The development process:.........................................................................................................6
Market launch...........................................................................................................................7
Distribution process..................................................................................................................7
SWOT Analysis........................................................................................................................8
Marketing mix...........................................................................................................................9
Synopsis of the competition and industry...............................................................................10
Recommendation...........................................................................................................................12
Reflection.......................................................................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
The companies nowadays are working more and more innovatively in order to transform their
products and services so that they can suit the dynamic environment or the market. It is
important for the companies to understand the changing demands of the customer and also the
trends that are prevailing in the market (Akbar, P. and Hoffmann, S., 2020.). The cost of research
and development is high but it is essential for the company in order to survive in the market and
to achieve success. The company have to become more sustainable in order to increase their
market share as people nowadays are more attracted towards sustainable businesses. In context to
Tesco, its a British Multi National general merchandise and groceries retailers. On the basis of
gross revenue they are the third largest retailers in the world.
MAIN BODY
Process involved in new product and service development.
New product development for Tesco’s healthy food boxes.
People nowadays are more and more concerned about their health and prefer to eat healthy food
rather than junk food or packed food. It is important for the company to understand that the
current trend in the market is towards the healthy lifestyles and more focus on the good health.
The new product that the company can offer to its customers is fresh and healthy food boxes
which can work as breakfast, lunch and dinner by children, youngsters as well as aged people. It
is healthy and safe for everyone (Chen and et. al., 2020.). It can be very helpful for working
parents or for students and employees that do not have much time to cook meals early in the
morning or late at night. They can just grab their food box with any Tesco’s store and can have a
fresh and healthy meal. For the menu of the meal the company can take survey from their
customers and can also change the menu from time to time. Following are the steps that the
company follows:
Idea generation: Its the first step in the innovation of a product as the idea behind the product
comes in to the light in this step. At this step the innovative product is proposed to the company
in order to make further development of the idea. In context to Tesco, the ideas that are proposed
in front of the company will be looked by the company.
Idea’s screening: At this stage scrutiny of ideas has been done by the management of the
company. They look at the possibility about whether the idea can be converted into reality or not

(Chen and et. al., 2020.). In context to Tesco, they need to look at the options that they have and
must choose the best option available.
Concept development and testing: The third step is to start testing the product in order to
prepare some products that can help the company to achieve success through innovation in the
market. The testing is done for the purpose of whether the idea can be converted into actual
product with the existing machinery or the company needs to buy some extra, what will the cost
and what can be the suitable price, survey in order to achieve the response.
Business analysis: This stage at the product development process states the potential revenue
and projected sales that the product can achieve (Clausen, J. and Fichter, K., 2019.). It also
assess the risk and the financial feasibility that the product contains. In context to Tesco, if the
concept satisfies the objectives of the company then the company must move forward towards
the product.
Marketing strategy: It refers to the strategy that must be used by the company in order to
promote the product and to make sure that the marketing strategy is suitable for the product. In
reference to Tesco, they make sure that the innovative healthy food boxes concept reaches to the
working class people or students that most as they are demanded by them the most.
Product development- test marketing: It refers to providing samples of the developed products
to the users or customers and gather the important information or reviews provided by them.
Whether any changes are needed or not will be decided at this stage of the process (da Luz and
et. al., 2018.). In respect to Tesco, the company must look for the customers that can provide
actual reviews about the quantity of food, menu changes, packaging, etc.
Commercialization: At this stage the company actually launches the product in their market in
order to be purchased by customers. It is the step where the actually product is offered by the
company to its customers. In context to Tesco, they stack the product in the shelves of the
supermarket in order to make sure that common people have a reach to the product.
Monitoring and Evaluation: At this step the company look forwards to the reactions and
reviews that the customers provide after using the product (Donoghue and et. al., 2018, July.). If
the product is liked by the customers it will be a success, constructive feedback will also be
provided at this stage and whether the production must be continue or not will also be
determined through this step.

PRODUCT LIFE CYCLE
Introduction: At this stage the product is launched in the market and the company is trying to
market and promote the product as much as possible. It is important for the companies to use
effective marketing techniques at this stage in order to increase the awareness of the product
(Guo, S., Choi, T.M. and Shen, B., 2020.). In Tesco, at this stage the company makes sure that
marketing and promotion are attracting the potential customers and encouraging them to try the
new product which is capable of satisfying the needs and wants of that customers.
Growth: This is the stage where the product has been already launched and the marketing
activities are already performed. At this stage the product is already successful and is analyzed
with the help of growing demand, expansion in its availability and increase in production. In
context to Tesco, they make sure that their product is available at all the stores and are attracting
as much customers as possible.
Maturity: It is the stage where the product is at its maximum popularity and demand. The most
successful period of the product is this. The cost of marketing and promotion is very less and
which is why it can be said that this is the most profitable stage of the product life cycle. In
reference to Tesco, they make sure that their product and its production is working properly and
according to the demands of the consumers. The company make sure that the product reaches to
each and every potential customer.
Decline: At this stage the products has substitutes available in the market that are provided by
the competitors of the company. The competitors or the substitutes may have less prices as
compared to the product of the company (Hendler, S. and Boer, H., 2019.) . It will get attention
of the customers and will divide the market of the product. In context to Tesco, it is important for
the company to make sure that they provide some innovation or slight changes in the product at
this stage so that it can retain its customers and can also attract new segments of the market.
Pitch for new product
Company overview
Tesco is one of the largest British Multinational grocery and merchandise retailers. The company
was established in the year 1919 by Jack Cohen. The company is headquartered in Welwyn
Garden City, Hertfordshire, England, UK. The company is operating in more than 11 countries
and are famous for affordable products. The company offers wide variety of products such as
clothing, books, electronics, furniture, petrol, telecom, financial services, etc.

Pitch
The development process:
In context to Tesco, the company is launching a completely new product in the market and are
trying to capture the market segment that are looking for healthy meals instead of junk food.

Market launch
Distribution process

SWOT Analysis
STRENGTHS WEAKNESSES
One of the major strength of Tesco is it market
share as the company has approx 26.9% share
of groceries market.
The company has delivered a strong
performance during the pandemic as the
company has registered a growth of 10.5%
from boosting sales online (Ho-Dac, N.N.,
2020.). The company is in profits right now
and are doing really good in the online market.
The company is continuously moving towards
innovation and are able to accept innovation
effectively and efficiently. The company will
easily involve any innovation in their workings
and are always find new technologies in order
to improve their workings.
The biggest weakness of the company right
now is its change in leadership (Kawakami, T.
and Hamdi-Kidar, L., 2020, November.). As
Dave Lewis was the CEO of the company until
September 2020 but Ken Murphy took the
CEO post and now are in pressure because of
the pandemic and new online sales options.
The company has paid a fine of 175000 euros
as the company was displaying product past 15
days of its expiry. Its a mistake by the
company and in order to avoid any such
mistake in the future the company has
launched a system which can help the company
in identifying the items that are needed to be
removed from the stack.
OPPORTUNITIES THREATS
The biggest opportunity that the company has
is to boost its online sales. Due to the pandemic
the people are trying to buy things online as
much as possible and the company can boost
its online sales by providing attractive offers,
promotional codes, discounts, etc(Kono and et.
al., 2018.). It will help the company in
attracting lots of customers.
The plant based protein is high in demand and
are also sustainable. The demand is estimated
to be of 4.1 billion euros. The company by
launching healthy food boxes an capture this
market and can also add protein based plants
The biggest threat in front of the company is of
the Brexit policy as it has affected the supply
chain of the company severely. The company
needs to find solutions of this as soon as
possible. It is important for the company to
find alternatives for the product that were
imported before Brexit by the company as
those products will now be costlier.
The UK is facing economic recession currently
because of the pandemic as it has decreased the
purchasing power of the consumer and also
leads to unemployment (Liu, Z. and Ming, X.,
2019.). It is important for the company to look

instead of meat. for these aspects in order to avoid losses.
Marketing strategy proposed
Marketing mix
Product: The focal point of any marketing activity mus be the product that the company
is offering and because of which the marketing campaign has been launched. This segment of
marketing mix must state the satisfaction that the product is providing to the customers. In what
ways the product of the company is fulfilling the needs and wants of the customer. In case of
Tesco, the product that requires the center attention is the healthy food boxes, these boxes are
filled with ready to eat healthy foods which has a high level of nutrition. It is fulfilling the needs
of people with busy lifestyle and also to the people who want to replace junk food with healthy
food.
Process: It refers to the equipment hat are used by the company in order to ease the
processes of the stores. The self checkout machines that were launched by the company helped
the customers in speedy billing process (Marić, J., 2020.). The employees of the company are
also very efficient in solving the queries and grievances of the customers in order to make sure
that the customers are satisfied with the services.
Place: The company is headquartered in England. They are the third largest retailers in
the world and are serving in more than 11 countries. The company has a wide reach and are
popular because of affordable prices and high quality products. The company has smaller stores
in order to have an easy access to the product as according to the research of Tesco, most of the
customers are not comfortable with large stores.
Price: The price of the product must be decided after analyzing the preference of the
customers and according to the prices that are based on what the consumer can pay easily. It is
important for the company to make sure that the prices are according to the targeted customer
base (Melander, L., 2019.). If the prices are too high, it will not be an affordable option for
customers and if the prices are too low then the quality of the product cannot reach up to the
expectation. In case of Tesco, they make sure that whatever the prices are the quality of the
goods must be optimum.
People: The company has a highly skilled staff and sales assistants which makes the
company successful.the company uses various programs that helps them in attracting large

number of customers such as save as you earn, colleague privilege card. In order to attain the
loyalty of their employees the company also started the program called buy as you earn which
was for the benefit of the employees.
Physical evidence: The stores of Tesco are clean and attractive. The company does not
understand the concept of overly elaborated stores that are only for the purpose of decoration.
Tesco prefer simple and smooth designs which are easy to navigate and easy for the customers to
find the location of the product they are looking for. The website o the company is also very easy
to operate so that all the segments of the consumers can easily understand it and have access to
it.
Promotion: It refers to the marketing strategy that the company is going for. The
promotion and marketing strategy of a product must be according to the specifications of the
product (Morgan, T. and Anokhin, S.A., 2020.). In context to Tesco, the company is uses
television advertisements, social media marketing, promotional discounts as the companies main
focus is on low prices and high quality products. It will help the company in increasing the brand
image and the product will have a wider reach.
Target audience
The target audience of the company must be working class parents, students, employees or aged
people who are willing to involve healthy diet in their life and wants sustainability in the
environment. People who are health conscious and wants to have a healthy lifestyle.
Synopsis of the competition and industry
Porter’s five forces model
Power of suppliers: The company has large number of suppliers to choose from so the power
lays in the hands of the company. Tesco is world’s third largest retailers and every supplier
wants to work with them. They have the option to choose the best possible supplier. Due to the
large scale of operations of the company they can easily bargain for the prices as well.
Power of customers: In case of Tesco, the power is in the hands of the customers as the
switching cost for the customers are also very low and it is easy for the customers to switch from
one brand to the other (Nakata, C. and Bahadir, S.C., 2020.). Around 80 million customers are
served by Tesco weekly and it is important to understand the power of customers in order to
sustain in the market.

Threat of substitute: The threat of substitution for Tesco is low as the main threat of company is
small convenience store but because of the large scale operations the company can provide
products and services at more affordable costs as compared to convenience stores.
Threat of new entry: High entry barriers in the industry makes this threat low for Tesco. The
retail and groceries market of UK are actually dominated by few large companies who have large
scale operations are are in the market for a along time. They have achieved the trust of people
and are now the trusted brands for consumers.
Rivalry: As the market is dominated by few large companies, their is a high level of competition
in the market as the companies are having almost same products (Peruzzini, M. and Wiesner, S.,
2019.). The rivalry of the companies are on the basis of prices, promotions or marketing
activities. The company tries to improve themselves in order to attract customers from their
segments.
Financial overview
Currently the company is having revenue of £64.760 billion in 2020 with operating income of
£3.005 billion in 2020. the estimated cost for 100000 units will be around £400000 for product
development.
Capital requirement
The estimated cost for 100000 units will be £400000. Additionally the company have to spend
£40000 for advertisement and promotions and £20000 for product testing process.

Recommendation
The company can replace meat with protein based plant which will help the company to attract a
large number of customers and will also increase the shelf life of the product. The company can
use sustainable options and eco-friendly options for packaging. It will not only help the company
in reducing waste but will also help the company in creating a good image of the company
(Pinheiro and et. al., 2019.). The company can opt for different menus according to the age group
or according to the weekly days which will help the company in providing variety to its
customers and will also help in gathering information about the food choices of the customers.
Reflection
Team work requires good communication skills, good time management skills also effective
distribution of work. The part that I have presented in the pitch was the market launch part.
According to me, my team has already made a plan of functioning and everyone has followed the
plan smoothly. Planning makes the group task really easy and efficient as everyone was aware of
their contribution and expectations. We regularly revised our plans according to our progress and
at the end of the day we have a group discussion about the problems that were faced by the team
members and creative suggestions that can improve the productivity of the tea members. Before
starting the project we had a glass breaking activity which helped all of us to interact with each
other and it makes the communication between the teams easier. The problems that were faced
by our team members was the conflict in the ideas of team members. All the ideas were so good
and creative but the team has to choose only one. It was difficult for the team to choose one
particular idea. After some time the team decided to eliminate some of the ideas and left with to
extra ordinary ideas. By voting system the team was able to decide one idea which was taken for
the project. Everyone was happy with the final presentation and they were really proud of team
members and themselves as the quality of the presentation was very good.

CONCLUSION
From the above report, it is concluded that innovation in the product and services of the company
is very essential. The company needs to understand the importance of product development and
must also analyse the life cycle of the product in order to make profit and achieve success. In this
report, pitch for the new product along with a proper strategy which can help the company in
market launch and distribution of the new product is also given. At last a reflection of team work
is provided.

REFERENCES
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