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Posted on August 17th, 2012, by

Tesco is one of the largest retailers in the UK and the fourth largest retailer in the world. In such a situation, the company can occupy the leading position in the market, but, at the same time, it needs to maintain the balance of supply and demand to keep its marketing performance positive. In the current situation, when the crisis has struck, the maintenance of balance between supply and demand becomes more and more difficult.

On analyzing factors that affect supply and demand, it should be said that the company is highly dependent on the current economic situation. What is meant here is the fact that the major suppliers of the company are companies which have already proved to be reliable and the quality of their products meets standards of the company (Nash, 2006). In regard to food products, the company is mainly oriented on local suppliers that decreases costs on the delivery of products and ensures their quality. As for electronics and other products the company has to deal with producers of these products and it is the position of suppliers that determines whether the supply is stable or not.

For instance, the current economic crisis has decreased the supply because many companies suffer from financial problems and have to reduce production.

As for demand, it is determined by the buying power of customers and their preferences. In actuality, the demand steadily decreases since customers are mainly focused on the most essential products which they need daily (Simms, 2007). Therefore, Tesco needs to adapt its strategies and supply to current demands of customers.

In such a situation, the orientation of Tesco on price-elastic products can help the company minimize losses from the drop of demand. In fact, price-elastic products, it is necessary to underline that the price elasticity refers to both supply and demand. In actuality, this means that a company needs materials for the manufacturing of a commodity and, in the case of price-elastic products, the price of supplied materials should also be elastic (Case and Fair, 1999).

Otherwise, it would be quite difficult to maintain a high level of profitability if the price of supplied materials is inelastic. In such a situation, the company could not decrease the price lower than the price of supplied materials and costs of production. Similarly, it is impossible to maintain an inelastic demand price because it cannot be always high if it is a price-elastic product and similarly it cannot be always low because, in such a case, the production would not be profitable for the company.

Hence, it is possible to estimate that price-elastic products help the company to adapt to the changing business environment and vary the prices respectively to the changing situation in the market that helps the company overcome recession or crisis in the industry or economy at large (Rolf, 2000). Therefore, the company can maintain a stable position in the market, if it manages to focus on price-elastic products.

On analyzing the further development of the company, it should be said that the focus on price-elastic products should be accompanied by the larger attention to the quality of products and services delivered to customers (Simms, 2007). The company needs to supply essential products and form customers’ loyalty to the brand of Tesco by means of the high quality of services. For instance, it is possible to introduce some additional delivery services, enlarge online services, etc. in order to increase customers’ satisfaction.

In such a way, Tesco will have an opportunity to maintain a stable position in the market.

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