Case study 19 Research Paper Example | Topics and Well Written Essays - 750 words

Case study 19 - Research Paper Example In a free market, lower priced products are likely to attract more customers compared to those with higher prices. In most cases, customers are very sensitive to prices and some organisations have capitalised on this where they lower the prices while at the same time trying to retain value. Mr Herrera is therefore reluctant to put higher price mark-ups as these would scare away his loyal customers which may result in loss of sales and ultimately loss of profits. However, his stance on the issue of pricing almost destroyed his business in that the revenue generated could not offset the cost of maintaining the buildings as well as high budgets on advertising. It can be noted that the total operational costs are slightly higher than the revenue generated though the customers still believe that he offers good quality on his project. Noble as it is to retain the loyal customers, it is also important to ensure that that the business is also able to sustain itself for long term benefits. Essentially, business is meant to generate profits which can cover all the operational costs. 2. The concepts of demand, price and profits are interrelated in various ways. Demand refers to the number of customers willing to purchase a product. â€Å"Marketing’s main thrust and skill is demand management, namely to influence the level, timing and composition of demand in pursuit of the company’s objective,† (Kotler 1999 p.46). The major objective of business is to satisfy the needs and wants of the customers profitably. However, in some instances, there may be over demand of goods and there is need for the marketers to try to reduce demand or change its timing. Demand affects the pricing of the product in different ways. There may be need to increase the price in order to offset the imbalance in revenue generated which may be recorded. An upsurge in demand where the price remains

Corporate Strategic Review on TESCO Essay Example | Topics and Well Written Essays - 1500 words

Corporate Strategic Review on TESCO - Essay Example In 1964, Tesco's innovativeness was put to a challenge when the British government imposed the Resale Price Maintenance System, a law that mandates all retailers to charge a set price for their products. However, Tesco found a way through it and introduced trading stamps so that it could bring lower prices to its customers. Customers collected these stamps as they purchased groceries and other items. By 1960, Tesco was in control of 212 store chains in north England, and 144 more in 1964 and 1965. By 1970, Tesco was a household name, known for its grocery products at very competitive prices. It was at this time when Tesco decided to broaden its customer base and make its stores more attractive to a wider range of customers. Tesco decided to concentrate on developing bigger superstores at the outskirts of the town, on selling a broader range of goods, and on providing quality shopping environment and customer service. Tesco likewise ventured into selling petrol at very competitive rates in 1974, opening its first filling station at its major sites. These changes earned more customers and greater profits for Tesco, and in 1979, its annual turnover reached 1 billion for the first time. Tesco has built its 100th superstore by 1985, and in 1987, it announced a 500 million plan to build 29 more stores. By 1991, the success of its petrol filling stations earned for the company Britain's biggest independent petrol retailer. In the 1990s, the company built on its success by developing new store concepts and new customer-focused initiatives. Tesco broke new ground in food retailing by introducing, in 1995, the first customer loyalty card, which offered benefits to regular shoppers whilst helping the company discover more about its customers' needs. Other customer services followed, including grocery home shopping, Tesco Direct for catalogue shoppers and the Tesco Babyclub for new parents, as well as the launch of Tesco Personal Finance a joint venture with the Royal Bank of Scotland. Tesco continued its winning streak in the new millennium. In January 2003 Tesco completed the acquisition of 870 T&S Stores in the UK; 450 of these stores will be converted to Tesco Express in the next three to four years. Moreover, Tesco opened in Taiwan in 2000 and, in May 2002 its first store in Malaysia in a joint venture with Sime Darby Sdn Bhd. In July 2002, Tesco acquired the "HIT" chain of hypermarkets in Poland. This acquisition added 13 hypermarkets to the Polish business, giving it a market leading position. By the end of 2002/03 Tesco had 45 percent of its space overseas, market leadership in 6 of its 10 countries, and was profitable in 8 out of 10 markets. Porter on Tesco Using Porter's Generic Strategies, this approach of Tesco shall be evaluated and assessed. It will also be subjected to the five industry forces such as: Entry Barrier, Buyer Power, Supplier Power, Threats of Substitute and Rivalry. Tesco can be categorized in Porter's Generic Strategies as belonging to the Broad Industry- as it targets an economy of scale whose product line is extensive (Reichheld and Sasser, 1990). Moreover, the standard