An Analysis of Tesco's Pricing Strategies and Competitive Advantage

This report examines the pricing strategies employed by Tesco, a major retail organization. It delves into various pricing models, including cost-plus, competitive, value-based, price skimming, and penetration pricing. The report emphasizes the importance of pricing within the marketing mix, highlighting how strategic pricing can contribute to profitability. It discusses the different elements of pricing, such as list prices, discounts, payment periods, and credit terms. The report recommends a competitive pricing strategy for Tesco, suggesting that this approach enables the company to maintain a strong market position. Overall, the report provides a comprehensive overview of pricing strategies and their application in a real-world business context.

Price
INTRODUCTION
Marketing activities are carried out
by an organization to ensure that their products
and services reach the target market without
problems and issues. Tesco is required to adopt
the right pricing strategy for making sure that it
achieves its goals and objectives and can
maximize its profits.
MAIN BODY
Price is an important component in
Marketing Mix of an organization. It helps the
organizations as by setting a right price higher
level of profits can be earned. The Pricing
Strategies which Tesco can consider are as
follows-
Cost-Plus Pricing- In this, cost is
determined and profit is added.
Competitive Pricing- In this
strategy, prices are determined on the basis of
prices charged by the competitors in the market.
Value-based pricing- In it, a price is
set according to the value determined of it by
the customer.
Price skimming- In it, a high price
is set and then it is lowered as the market
evolves.
Penetration pricing- In it, a low
price is set initially to penetrate the market
and the prices are increased later on to earn
more profits.
There are various elements related
with price. These are as follows-
•List prices- This means the price which is
listed for a particular product. It is usually
before discount.
•Discount- This means the amount which is
deducted from the list price to give a final
price to the customer which has to be paid.
•Payment period- This refers to the period
in which the payment has to be made.
•Credit terms- These are terms and
conditions on which a credit agreement is
done.
Justification- Tesco should make
use of competitive pricing strategy because
this will ensure that it is able to set price
according to the competitors and sustain in
the market without problems and issues.
CONCLUSION
From the above discussion, it
can be said that marketing activities are
required to be carried out by an
organization for making their products
and services reach the intended
customers. A right pricing strategy can
be selected by an organization to make
sure that it earns higher profits in the
future time period.