Ansoff Matrix in Tesco
This article explores the application of Ansoff Matrix in Tesco. It examines how Tesco has implemented market penetration, market development, product development, and diversification strategies over the years to expand its operations. Tesco is one of the largest retailers in the world. It is headquartered in Hertfordshire, the UK.
Market penetration strategies of Tesco
By using market penetration strategies i.e. selling existing products to existing markets, Tesco has been able to expand its business well since its inception. This strategy has helped it increase its market share and the usage of products by existing customers. Competitive pricing strategies, and ad campaigns, have been very useful to help Tesco implement the market penetration strategies efficiently. Tesco also often comes up with special offers on many products with a view to increasing the sales (Tesco, 2020). However, it should be mentioned that while special offers increase sales, they may also squeeze profit margins.
Market development strategies of Tesco
Tesco has implemented marketing development strategies i.e. selling existing products to new markets or regions very well. From the UK, it has expanded to many countries around the world. It announced in July 2019 to open 750 new stores in Thailand over the next three years (Andrews, 2019). It is worth mentioning that Tesco’s market development strategy has failed in some cases e.g. its stores closed in the US, China, South Korea and Japan; however, Thailand is proving to be a different and successful story.
Product development strategies of Tesco
Tesco has developed over the years a very good number of its own label products to sell to its existing markets. Like many products from top brands, Tesco has its own and sells both versions to cater to different market segments. This product development strategy has been very useful for Tesco. If it did not come up with its own versions of products, suppliers of top brands would have had more power in any negotiations. However, it is also worth mentioning that developing new products is usually costly.
Diversification strategies of Tesco
Diversification strategies are usually very difficult to implement. Selling new products to new customers is not an easy thing. Tesco started as a grocery business and over time it diversified into many areas. Credit cards, mortgages, and insurance products are some of the notable examples.
However, it is worth noting that Tesco failed in some of its diversification strategies. For instance, it bought Giraffe restaurants in 2013 for £48.6m. However, it did not work out and eventually Tesco sold it with a loss in 2016. Likewise, it bought 80% stake in the online video shop Blinkbox Entertainment in 2011. However, the business made heavy losses and it was sold to TalkTalk in January 2015 (Morris, 2016).
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Last update: 16 January 2020
Andrews, J. (2019) Tesco to open incredible 750 new stores creating 10,000 new jobs – in Thailand, available at: https://www.mirror.co.uk/money/breaking-tesco-open-incredible-750-17490441 (accessed 16 January 2020)
Morris, B. (2016) Tesco: Business hits and misses, available at: https://www.bbc.co.uk/news/business-36025373 (accessed 10 January 2020)
Tesco (2020) Special offers, available at: https://www.tesco.com/groceries/en-GB/promotions (accessed 15 January 2020)
Photo credit: Pixabay
Author: Jo David
Jo David has years of experience both in the UK and abroad. He writes regularly online on a variety of topics. He has a keen interest in business, hospitality and tourism management.