Economics

Tesco sprung a major price-cutting strategy. on thoughts would be that Tesco would be the long-term beneficiary promoting savings up to 35% on 3000 items and their advertising promotions states a “never ending “ discounts in a move that could have serious effects for the supermarket sector as it tries attract customers (http://www.telegraph.co.uk/financr/retailandconsumer/8780284/Tesco-to-start-supermarket-price-war.html).However this strategy has been seen by others perceive it as a way of manipulating prices to enhance promotions as Tesco appears to have raised the price of hundreds of items in the weeks before the promotion, perhaps to make the subsequent offers look more attractive (the times October 17, 2011 Monday Edition 1;Alex Renton NEWS; Pg.3)the strategy has its impacts on many other competitors especially Ocado which recently announced to set its prises on matching to Tesco but overall It will not be Ocado, Tesco, Asda or Sainsbury's who take the biggest hit It will, as usual be the suppliers whatever the result of Tesco's move and it is described by its rivals as "classic smoke and mirrors giving with one hand and taking away with the other" it will still make a profit. Compare this with its suppliers (the Grocer01 October 2011) In conclusion I think the introduced price and strategy implemented by Tesco will increase its profitability and this will be the main benefit on the other hand Tesco need to consider their suppliers and customers when overtaking a strategy similar to this as it has some effects on this particular stakeholders but overall it is a good strategy to overcome their competitors.