The focused price cuts made it possible for Tesco to attract more customers with Lower price than other supermarket. Tesco provide endless good deal placing in core good around non-foods to undercut levels of competition which actually Tesco marketing with good deal. Tesco make an effort to develop powerful relationships with his suppliers to get the best worth for our customers. Tesco is already set the prices according to the income of the demographic area of the store. Specifically, Tesco pricing strategy is based on its marketing message of ‘Every Little Helps’.
Tesco management aims to reduce the cost of purchases and operational costs through and a set of other measures in order to pass the cost advantage to customer as the main brand value. Most of the products available in Tesco are also available in other retailer store too. To compete with other organizations, cost-plus pricing is the most suitable pricing strategy for Tesco. Cost-plus pricing is the pricing strategy that adding a standard markup to the cost of product. For example, Supplier sells a soup powder at RM20 to Tesco, Tesco may sell for RM30, its means a Profit of on cost.
Type of pricing strategy Tesco using now is cost-based pricing .Cost-based pricing affected the prices based on the costs for producing, distributing .Cost-based pricing only suite for Tesco own label products instead of national brand product .This is because Tesco set its own brand products price based on its production cost. Last pricing strategy Tesco adopted is Good-value pricing. An important type of good-value pricing at the retail level is everyday low pricing .Everyday low price with few or no temporary price discount. In Tesco case, they charge different products at promotional price in everyday basis. For example, Tesco sell fish cheap on Monday, but charge lower price at vegetable on Tuesday.
Activity-based costing (ABC) is a cost management approach that identifies the processes involved in supplying a product or service and the resources that these processes consume. It uses this information to assign costs, eliminate waste, and improve processes. ABC is a powerful tool to understand the components of a company's costs and their underlying causes. By focusing on the causal factors or ...