Tesco's Pricing Strategy: A Marketing Mix Analysis Report

This report provides an analysis of Tesco's pricing strategy, focusing on its application within the marketing mix framework. The introduction highlights the importance of the marketing mix, particularly the 'pricing' element, in achieving competitive advantage. The main body delves into Tesco's cost leadership pricing strategy, emphasizing its ability to expand market share through lower prices and efficient operations. It discusses the company's use of economies of scale, its strong distribution channels, and its focus on customer loyalty through programs like the Brand Guarantee. The report also considers the potential negative consequences of incorrect pricing strategies. The conclusion emphasizes the significance of the marketing mix in guiding companies toward optimal pricing strategies that cater to customer preferences and ensure product appeal. References include books and journal articles on marketing mix and pricing strategies.

MARKETING MIX

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................2
REFRENCES...................................................................................................................................3

INTRODUCTION
Marketing Mix emphasize on placing right product at right place with desirable price and
promotional technique. Marketer basically focuses to prepare actions or tactics for these four P's
of marketing before launching an innovative product in the market to gain competitive advantage
over its rivalries (Fan, Lau and Zhao, 2015). For better understanding Tesco company has been
selected which is one of the leading supermarket chains of UK. It provide various types of
commodities such as electronic item, grocery, furniture, clothing and so on under one roof. Here,
discussion is made on one of the four P's of marketing that is pricing strategy of Tesco.
MAIN BODY
Pricing is one of the essential component of marketing mix which refer to the amount at
which customer gets the product and fulfil their desire (Stead and Hastings, 2018). The company
has the authority to determine right price of the product based on competition rate, customer
base, market share of company, demand of product ans so on. In context to Tesco company has
adopted cost leadership price strategy, within such strategy company tend to expand the market
share of product by reducing the price and well as per unit profit margin of company.
Additionally, Tesco has utilised the advantage of its economies of scale in order to expand its
market reach. Thus, company has received huge advantage of setting stable as well as low price
as it has enhance the huge customer base of loyal customer. Along with that company has
strengthening its distribution channel, formed good supplier company relationship so that
customer does not find shortage of inventory. Moreover, company run attention seeking
programme such as Brand Guarantee programme. Within this programme if customer gets any
branded product at other place then Tesco matches lowest price. Hence, through these types of
programme company translate the message to the customer that they serve best quality product at
a reasonable price. Such promotional program does not incur much expense of company but
receives huge applause from the society. On contrary there are very negative circumstances of
choosing wrong price strategy such as company can loose their existing as well potential
customer, gives the advantage to their competitor to capture huge market, decrease in loyalty and
trust of customer for respective brand. Further, in order to reduce the dissonance of customer
Tesco has maintained its low price even it launches new category say new food brand. Therefore,
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company keeps on restructuring its offering to bring most suitable offers for the customer
(Thompson, Strickland and Gamble, 2015).
CONCLUSION
From the above report it has been concluded that marketing mix assist the company to
gain the insights about marketing condition as well as preferences of customer. It makes the task
easier for company by placing right product at optimum price so that the offering can appeal the
interest of customer. Moreover, as there are various price strategy such as penetration or
skimming among them company must select best pricing strategy so that customer find worth
paying the amount.
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REFRENCES
Books and Journal
Fan, S., Lau, R. Y. and Zhao, J. L., 2015. Demystifying big data analytics for business
intelligence through the lens of marketing mix. Big Data Research. 2(1). pp.28-32.
Stead, M. and Hastings, G., 2018. Advertising in the social marketing mix: getting the balance
right. In Social Marketing(pp. 29-43). Psychology Press.
Thompson, A., Strickland, A. J. and Gamble, J., 2015. Crafting and executing strategy: Concepts
and readings. McGraw-Hill Education.
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