Tesco Segmentation Targeting Positioning

3313 Words May 4th, 2015 14 Pages
B) Produce an individual report which sets out a market strategy for a new market (segment) for Tesco to enter. This should be fully justified. (50% of overall marks and due by 3pm Thursday of week 8)
Executive Summary:
After analysing the changing habits of UK consumers, it is seen that consumers begin to shape the industry in the sense of “health consciousness” and “awareness of product quality”. Starting from this point, this report aims to suggest new segment for Tesco which gathers all its organic and health related products under the one brand/label, called “Tesco Wellness”. The launch of this new segment will be cost approximately £12.5 million which return on investment will expected as £60.5 million. Nowadays, this segment is
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Tesco Wellness will give offers under “Tesco Wellness” brand which will be Tesco own-label products and enable customers to find organic related products. It is estimated that Tesco Wellness has 40% of market share in the wellness market as a starting point. So, the objective of this new segment is to put all organic and health products under one label and by expanding product lines, reach to 45% of market share. The expected net profit margin from 5% increase in the market share is £60.5 million.
Macro-Environmental Analysis
To be aware of any change in macro-environment which will affect the strategies or objectives of Tesco Wellness in the future, Pestle analysis outcomes should be taken into account. Important outcomes of this analysis are; outperformance of convience stores, the growth in online market, need for customer service orientation and trend of healthy and sustainable living (Fig.1). On the basis of the framework of Porter’s five, there are some forces that could affect the strategy of Tesco Wellness (Fig.2). The bargaining power of buyers is high. The solution of this would be providing enhanced customer service. Also, the rivalry of existing competitors is high. In this case, Tesco Wellness should be clearly differentiated through products. Considering macro and micro environment effects, the outcomes of Swot analysis are crucial (Fig.3). The key
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