Tesco Brand Extension Report: Market Analysis and Strategy

This report provides an in-depth analysis of Tesco's brand extension strategy, focusing on the introduction of a new chewing gum product. The report utilizes secondary research methods to gather data and includes an executive summary, introduction, methodology, findings, and conclusion. The study identifies the target market using the STP model, segments the population based on demographics, and positions the product with free samples and taste tests. Furthermore, the report employs PESTLE and Ansoff matrix analyses to evaluate the external environment, including political, economic, social, technological, legal, and environmental factors, and to determine the product development strategy. The report highlights the competitive landscape, particularly the rivalry with Wrigley's, and emphasizes the product's natural flavor and sugar-free composition. The conclusion summarizes the key findings and reinforces the product development strategy for Tesco's brand extension.

MG412 CW2 Brand Extension
Report
1

Executive summary
The assignment is describing about brand extension of Tesco. Here, a new product has been
developed to earn more revenue. moreover, method taken to collect data is secondary. Then, the
outcomes are obtained by evaluating data. Besides that, target market is identified with help of
STP model. In addition to it, pestle and Ansoff matrix is done to identify strategy.
2

Table of Contents
Executive summary.........................................................................................................................2
INTRODUCTION...........................................................................................................................4
Methodology....................................................................................................................................4
Findings...........................................................................................................................................4
Target market...................................................................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7
3

INTRODUCTION
Every business needs to expand in different market to compete with rivals and gain
competitive advantage. In this brand extension is process of using a brand name to launch new
products. The aim is to attract new customers and increase sales. This also enables in improving
brand image and creating positive image in mind of customers. Tesco is retail brand that operate
at global level. it provides various products. The market share of company is 28.4% in UK. Also,
the market value of Tesco is 22.2 billion. Now, they are introducing new flavoured chewing
gum.
Figure 1 Tesco market value
Methodology
The research was conducted through secondary method. The data was gathered from old
articles, journals, etc. and analysed. (Fang and Lin, 2017)
Findings
By collecting secondary data, it is evaluated that many times company opt for brand
extension to increase sales and attract customers. In this new product is launched into either
existing or new market. Brand extension is process of using a brand name to launch new
products. But a little difference is product is sold in different category. However, branding refers
4

to doing marketing of a logo, symbol, etc. in order to generate awareness. This make it easy for
people to differentiate it from competitors. Thus, Kapferer prism is applied which enable in
building a brand and creating identity. there are six factors considered in it which is as follows :
Brand physique- it is brand physical qualities and specifications. Also, it includes product
features.
Brand personality- it shows the way in which product or service reflect what kind of person
Brand culture – it reflects the ethics and values that brand shows. Moreover, what type of
population or culture does brand target.
Relationship – this factor depicts relationship that allow people to engage with brand.
Reflection- it is related to views and perception of people towards brand. A strong reflection of
people will allow buyer to recognise it. (Miniard and et.al., 2018)
Self image - As stated self image is reflection of target customer. It reflects their internal
feelings and thoughts.
Target market
It is important for Tesco to identify their target market so that product can be developed
and marketed accordingly. For this STP model is used that is as :-
Segmentation– Here, segmentation refers to dividing population on basis of factors that are
demographic, geographic, behavioural, etc. the segmentation is demographic means on basis of
age and gender.
Targeting – it is done after segmentation. The target market is both male and female and of age
between 15- 30.
Positioning – here, positioning refers to placing product or service in the market. the product
will be offered to people as free samples. Also, with certain retail items it will be offered free to
taste. It will be available in different flavours. (Moon and Sprott, 2016)
As Tesco operate in fluctuating business environment, there are several factors that can
impact on emerging markets. Also, changes can be observed in market trends as well. Therefore,
with help of pestle and Ansoff matrix new market is found out.
Political – the change in government will impact on product. Defra has said that chewing gum
must be classified as litter.
Economic- it refers to change in GDP, inflation rate, etc. of UK. But it has been identified that in
UK inflation rate is 0% and people disposable income is more.
5

Social- It is related to change in trend and taste of consumers. However, in UK people are now
becoming health conscious. So, they prefer to buy sugar free gum.
Technological- The change is related to technological advancement is quite high. UK is a
developed country where people uses high and advance technology. Thus, tesco can use social
media and other digital platforms to market and advertise its product.
Legal- Here, changes are related to employment and health and safety. Thus, ingredients used in
chewing gum has to be tested and verified by government regulations ( Prajapati and Bhatt,
2019)
Environmental – In this factors are related to change in environmental laws and CSR policies.
so, if there occur any change in environment laws will impact on Tesco operations.
From above data, it is stated that Tesco have selected the product development strategy.
In this they will develop a new product that is chewing gum and sell in existing market. Through
it, they will be able to attract more customers and generate more sales and profits. The chewing
gum will contain natural flavour. It will be sugar free and no chemical or flavours will be added
to it. Alongside, new flavours included in it are lime, mint, mango, raspberry, chocolate, etc. but
on other hand, company will face competition from Wrigley’s (Tripathi, Rastogi and Kumar,
2018)
Sugar free gum Wrigley’s
It is under brand name of tesco. The chewing gum is sold under Wrigley’s
No existence of market share. Its overall market share is 87% in UK.
No sour flavours, it includes only sweet one Both sour and sweet flavours gum.
CONCLUSION
From report it is summarised that sugar free gum is launched by tesco in existing market.
This is because they want to earn high profits and sales. the gum contains natural flavour and is
sugar free. Target market is both gender but between age 15-30. However, product development
strategy is followed. The firm major rival is Wrigley’s
6

7

REFERENCES
Books and journals
Fang, X. and Lin, S., 2017. The influence of status differentiation on vertical brand extension:
Intercultural and intracultural comparisons. Nankai Business Review International, 8(4),
pp.404-423.
Miniard, P.W., and et.al., 2018. What brand extensions need to fully benefit from their parental
heritage. Journal of the Academy of Marketing Science, 46(5), pp.948-963.
Moon, H. and Sprott, D.E., 2016. Ingredient branding for a luxury brand: The role of brand and
product fit. Journal of Business Research, 69(12), pp.5768-5774.
Prajapati, K. and Bhatt, V., 2019. A Study on Perception of Brand Extension by FMCG
Consumer in Ahmedabad. Research Journal of Humanities and Social Sciences, 10(3),
pp.747-753.
Tripathi, V., Rastogi, P. and Kumar, S., 2018. Direct and Moderating Influence of Perceived Fit,
Risk and Parent Brand Trust on Brand Extension Success of a Personal Care Brand in
India. Global Business Review, 19(6), pp.1681-1692.
8