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Unilever think they have the main negotiating power, says Prof Nick Lee of WBS

Nick Lee, Professor of Marketing at Warwick Business School, provides his expert comment on the current dispute between Tesco and Unilever:

"In a lot of ways, this is normal negotiation practice that has all of a sudden had a light thrown on it thanks to Brexit.

"On the one hand, you have a brand owner who considers itself to have the main negotiating power, since they feel consumers buy brands over categories. On the other hand, you have a powerful retailer who judges that consumers will not change behaviour simply because a selection of brands may not be available.

"In a sense, they are both right, and both wrong. Indeed, in many situations, consumers are brand loyal, and Marmite is probably one of those.

"On the other hand, Tesco is right that most consumers are unlikely to change their shopping habits just because a few non-substitutable brands are unavailable. However, the question is how many brands are in play here?

"Further, Tesco needs to realise that supermarket switching is far easier than it used to be in today's online retail environment. I think they need to be careful about influencing consumers to 'try' another provider, because if they do, they may not come back to Tesco. All around, its a somewhat dangerous game being played by both parties.

"But in essence, both realise this is a negotiation, not an ultimatum. They need each other, but are jockeying for best position in a new uncertain environment. I expect we'll see a lot of this in the coming months as players in this space look to renegotiate deals, and try to play on public sympathy to pressure their negotiation partners."


Ashley Potter - Press and PR Executive, Warwick Business School


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