‘What Makes Tesco Successful? Place or Price Strategy?’ Essay

1421 Words Dec 2nd, 2012 6 Pages
‘What makes Tesco successful? Place or Price strategy?’

Company Background
Tesco was founded by Jack Cohen, who sold groceries in the markets of the London East End from 1919. The Tesco brand first appeared in 1924. He started by buying 30 pounds worth of army surplus rations. On his first day of selling this stock at the market he made a profit of one pound. After selling all of this he had made himself some money to work with. He used this money to buy goods, which other stores would not sell. By 1939, his empire had grown and he had opened up one hundred stores. Jack then went to America for a holiday. Where he found the stores out there were all self-service, he thought this idea was great and could save him a lot of money in shop
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It has been exceptionally successful at international business development, as is the market leader in five of its twelve international market areas (Tesco).
It has also lived up to their advertising motto of “Every little helps”, consumers have flocked to their stores for not only well-stocked, cheap provisions, but an increasing number of goods and services – from TVs to insurance, deckchairs to mobile phones in the right kind of store, under the same roof. They have also taken their local community into consideration, by providing food commonly eaten in the areas. For example, the retailer is surprisingly sensitive to specific regional demand. Its outlet in Brixton – a part of London with a high level of immigrants – has a strong offer of Afro Caribbean and Asian produce. (Manfred, 2008) This reflects the company’s positional strategy of being all things to all consumers. The company is, by a distance, the leading retailer in the UK. Its 11% value share of the market in 2006 is almost double that of the 6% generated by J Sainsbury Plc, its nearest rival. (Thomas, 2007)

Price
Tesco strategy is subsidising cheaper products to make up the numbers of products they sell cheaper than the competition, and make up the profits on higher value items, like brand names. Tesco’s aim is to offer our customers the same great quality, price and

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