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Why Tesco consider their competitors to be Sainsbury's or Asda and not Aldi or Netto.

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Introduction

Why Tesco consider their competitors to be Sainsbury's or Asda and not Aldi or Netto. Tesco, Asda and Sainsbury's are much bigger stores than the discount stores like Aldi and Netto. This means the bigger supermarkets will be able to sell more goods and gain a bigger profit. If Aldi and Netto were to make their stores bigger they would be able to compete with Tesco, Asda and Sainsbury's in the sales department. This will mean that they will be able to contain more goods and sell more to gain a larger profit. It will give them the opportunity to sell more different types of foods and different brands. The larger supermarkets are now using diversification and sell more different types of products e.g. electrical goods and clothing. Expansion of the smaller supermarkets would also give them the opportunity to diversify their product range and start competing with the bigger ones. ...read more.

Middle

They would also need to start selling branded goods, this is because the majority of people prefer to buy branded goods because they fell that they are guaranteed high quality goods. The bigger supermarkets are located in easy accessible, popular shopping areas and get a lot of people shopping there. They are accessible for most types of transport. Some of the smaller supermarkets do not have very big car parks and are not situated in very popular, upmarket areas. If they wanted to start competing with the bigger supermarkets then they would have to situate the supermarket in more popular 'richer' areas that has good access. Aldi and Netto do not really have a good reputation for being high quality supermarkets unlike Tesco, Sainsbury's and Asda who all have reputations for being high-class supermarkets. In order to compete with these large supermarkets, Aldi and Netto need to gain a good reputation for being a high-class supermarket that sells high quality goods. ...read more.

Conclusion

This princing stratergy will make people visit the supermarket in the first place. I would suggest that the smaller supermarkets use the consumer value pricing stratergy on a premium range of goods or on high quality branded goods. This will allow them to charge high prices for the prestige goods, therefore make a large profit on them. The large supermarkets use going rate pricing, this means that they are immediately competing with the other supermarkets with a certain type of product. The large supermarkets use loss-leading pricing to make the customers look around the supermarket. The smaller companies should use this if they want to compete. The supermarket staff should put certain objects in popular places to make them buy them while they are buying the chosen cheap product. The large supermarkets use this effectivaly. The larger companies have extra facilities (that you have to pay to use) in the supermarkets to gain extra profit. They have things like caf�'s and newsagents to make extra money on top of the money made inside the main store. ...read more.

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