Introduction to Fundamentals Of Marketing
Marketing plays the most important role in the enterprise as it supports the enterprise to attract a large number of customers and in turn, supports the accomplishment of desired objectives. In the present era, the marketing environment where the company carries out its operations is very complex and various hurdles are present that prevent the firm from operating efficiently in the market and lead to a decline in efficiency level (Bowersox, Closs, and Cooper, 2002). So it has become necessary to consider such issues for the welfare of enterprise. In the present report organization chosen is Tesco which operates in the retail sector and is well known for the range of products it offers to its target market. Furthermore, the marketing environment of the company has been analyzed in the study to know the major forces for the next five years. Furthermore, the environment of the firm has been analyzed with the help of PESTLE analysis as all these forces are effective and badly affect the firm.
Description Of Major Forces In the Marketing Environment
An environment where Tesco carries out its operations is complex and changes take place rapidly. Such force badly affects the overall efficiency of the enterprise and in turn, leads to a decline in overall performance. The major forces present in the marketing environment of Tesco are political, economic, social, technological, legal, and environmental. Such forces have a direct impact on the overall operations of the entity and it becomes difficult for the firm to increase its overall efficiency. A firm like Tesco carries out its operations in a market where changes take place rapidly and the firm has to modify its services accordingly (Butscher, 2002). Furthermore, the entity can't ignore such forces as they are present in the external environment and they are effective too. To operate efficiently in the market firm must have effective strategies so that all these forces can be coped up easily. Political forces are linked with the laws and regulations that are developed by the government of the country which the firm has to follow strictly. Furthermore, Tesco carries out its operations in different markets so political influence is very high and management has to strictly comply with the guidelines developed by regulatory authorities. Furthermore, economic factors are linked with the economic condition of the country as in case if situations like inflation, and recession are not present in the market then consumers can buy costly products from Tesco, and in turn organization can earn large profits with the help of this. The economic environment has a direct impact on the operations of an entity and prices are set by the company keeping in view the purchasing power of consumers (Proctor, 2000).
Social forces are linked with the tastes and preferences of the target market and this force is also effective as due to changes in the requirements of customers firm has to modify its products accordingly to satisfy the needs of its customers efficiently. Technological forces are linked with the adoption of more advanced technology in production and another important process. The timely firm has to adopt the latest technology to provide more convenience to customers this requires a large investment. Legal factors are linked with rules and regulations that are developed by the government like payment of duties and taxes on time. Environmental forces are linked with the issues that arise due to the exploitation of surroundings and in this regard, policies have been formed that affect the firm. These are some of the major forces that are present in the marketing environment (Laudon and Laudon, 2004). These forces have a direct impact on the operations of Tesco especially competition as the market where the company operates is full of competition due to which the organization is not able to earn profit as expected. Furthermore, marketing is the only tool with the help of which Tesco can share important information with its target market so it is necessary to consider all these forces for the welfare of the company.
Introduction To The Chosen Business
For analysing the forces that are present in the marketing environment Tesco has been chosen as one of the organizations that operates in the Retail sector. The firm was founded in the year 1919 by Jack Cohen and is a multinational grocery and general merchandise retailer. Operations of the firm are diversified and deal in all kinds of products such as clothing, electronics, toys, financial services, and telecom as well as internet services. The firm hired 597,784 employees and earned a profitability of 970 million in the year 2014. Presently firm operates in different countries and the customer base is very strong which supports gaining a competitive advantage (About us., 2015.). The main competitors of the firm are Asda, Sainsbury, etc. which also operate in the same market and sell substitute products. Furthermore, the marketing strategies developed by the firm are effective and the firm relies on social media and other advanced tools with the main purpose of promoting its products. The main objective of an entity is to satisfy the needs of its target market efficiently so right products are offered to them. The range of products offered by Tesco is highly differentiated and in turn, supports increasing the satisfaction level of the consumers.
Business enterprise serves millions of customers through its stores and by providing online services. This directly supports increasing profitability and overall sales. The market size of the firm is very large and changes take place rapidly in the entire retail industry. So firm has developed various strategies in this regard that provide support and help to retain its existing customers. Prices are set by the firm keeping in view the purchasing power and income level of its target market. This directly attracts customers to the products as they are affordable and assist in facing competition in the market (Hennig-Thurau and Hansen, 2000). Presently Tesco operates in 13 countries out of which major stores are located in the UK and the firm is getting good response from the present market. Main operations are in India, China, Turkey, Taiwan, South Korea, the United Kingdom, the United States, Poland, Japan, Malaysia etc. For each market, different strategies have been formed and with the help of a strong financial position enterprises can enter into the new market. Furthermore majority of the customers of the firm are brand loyal as they are highly satisfied with the present services and this allows the firm to serve them better by introducing new products. Timely feedback is taken from the target market to know whether they are satisfied with present products or not and based on response products are modified.
Explanation Of Major Forces On The Company In Next 5 Years
The market where Tesco carries out its operations is full of challenges and many hurdles are present that have a direct impact on the operations of the entity (Ranaweera and Prabhu, 2003). Through PESTLE analysis major forces affecting the company can be known easily and it can be determined how they will affect the firm in the upcoming 5 years. Forces present in the marketing environment affect every operation of the organization and management must develop effective plans to cope with such challenges. Major forces present in the marketing environment that affect Tesco are discussed below:
Political: It is considered one of the major forces that affect Tesco in every market as policies developed by the government have a direct impact on the performance of the entity. This takes into consideration the acts of legislation, laws, and stability of the country. Due to the presence of financial instability in the entire world regulatory authorities are encouraging retailers to create more jobs for the local people and domestic population (Reinartz, Thomas, and Kumar, 2005). So, in this regard, Tesco is playing a major role in creating more employment opportunities, and in turn, it is leading to a rise in demand for its products and services. On the other hand, presently government of the UK has adopted a tax measure where tax rates have been increased from 17.5% to 20% so this represents that customers will prefer to spend less on the products offered by the company. Furthermore, this is increasing government revenue and leading to a decline in sales of the enterprise. So, in this way, political factors act as a force in the marketing environment of the company.
Economic: It is another force affecting the overall performance of the company in the market where it operates. Presently the countries where the firm carries out its operations are facing issues of inflation and financial crisis (Sabherwal, Jeyaraj, and Chowa, 2006). Due to this purchasing power of consumers has declined and they can't spend more on the products offered by Tesco. So this force is not in favor of the company due to the presence of financial crisis etc. Furthermore, growth in the economy can positively affect enterprise. So to face this force firm has to set prices low so that more customers can be encouraged to buy them. Whereas an organization must be aware of the policies as they directly affect the availability of finance. The firm is expanding its operations at the international level but it is still dependent on the UK market with a share of around 30%. Further due to the decline in disposable income and household income firm has started to focus more on advertising its value brands rather than luxurious commodities. So in this way, economic factor acts as a force for the company (Kotler, 2011).
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Social: This factor directly affects the overall operations of Tesco as changes in taste and preference of the target market influence the firm to bring changes in its major operations. Furthermore, market trends are changing rapidly and customers have started to move towards bulk and one-stop shopping. Products and services are demanded by customers that are directly affected by their values and beliefs. Presently it has been found that customers are focusing on health issues due to which firms have to offer hygienic products. Furthermore, products are purchased by firms as per their taste, preference, religion, age, etc (Ismail, 2011). So the firm has to consider these factors and it is necessary to analyze their perception and attitude to sell them products.
Technological: This force is also effective and affects the overall performance of the entity. The rise in the level of technology has provided many opportunities to Tesco like the firm has introduced online shopping with the main motive to provide more convenience to its target market. Secondly self-service concept has been introduced which decreased labor cost of the firm. So the advancement in technology improves the overall performance of the company and helps to gain a competitive advantage. By adopting the latest technology Tesco can easily become a leader in the market and can create a positive impact on overall operations (Jasperson, Carter, and Zmud, 2005).
Legal: This factor is linked with policies and laws developed by the government that affect the overall performance of the entity. The food retailing commission recommended a code of practice that firms must introduce by banning current practices such as charging prices without providing notice. So to facilitate this policy Tesco provides fuel at reduced prices by the amount invested in grocery stores. Furthermore, the rise in tax rates and other duties has a negative impact on the operations of Tesco as it increases the overall expenditure level. So it directly acts as a force.
Environmental: Operations carried out by Tesco have adverse impacts on the surroundings so in this regard government has introduced environmental laws with the main purpose of saving the environment. So, in this regard, the organization has adopted recycling methods, and environment-friendly products are offered to consumers. Furthermore in this regard firm has partnered with suppliers and they are supplying eco-friendly products (Jiang, Klein, and Carr, 2002).
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These are some of the major forces present in the marketing environment of Tesco that have an adverse impact on the entity and in this regard firm has taken various actions so that its overall performance may not be affected by these forces in the next 5 years (Keh, Nguyen and Ng, 2007).
The present study has shown the overall impact of marketing forces on the operations of Tesco and this is affecting the performance of the organization. Such forces are effective and Tesco must develop effective strategies for every market to sustain easily in the competitive environment. Furthermore, a company needs to consider the impact of these forces as they are linked with operations that are carried out by the organization and if such factors are ignored then it can benefit competitors of the enterprise. By dealing with these forces Tesco can easily retain its existing customers.
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