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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.
Recently I have noticed that Aldi have started diversifying in their
product range slightly. They now have their own sporting make and sell
camping equipment, sporting equipment and electrical appliances etc.
This will increase their market share and make them more competitive.
Tesco have now set up their own mobile phone networks, bank, insurance
company and clothing company. Asda and Sainsbury's are now attempting
to follow in Tesco's footsteps in order to continue competing with
Tesco. The smaller discount companies would also have to invest in
these services if they wanted to compete with them.
Another reason why Tesco consider their competitors to be Asda and
Sainsbury's and not Netto and Aldi is that the two supermarket groups
aim their products at different people. Netto and Aldi are renowned
for being 'Discount...
... middle of paper ...
...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
café's and newsagents to make extra money on top of the money made
inside the main store.
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