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Marketing plays most important role in the enterprise as it supports enterprise to attract large number of customers and in turn supports in the accomplishment of desired objectives. In the present era the marketing environment where company carries out its operations is very complex and various hurdles are present that prevents the firm from operating efficiently in the market and leads to 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 that operates in retail sector and is well known for range of products its offers to its target market. Furthermore marketing environment of company has been analysed in the study so as to know major forces for the next five years. Furthermore the environment of firm has been analysed with the help of PESTLE analysis as all these forces are effective and badly affects the firm.
Environment where Tesco carries out its operations is complex and changes take place rapidly. Such force badly affects overall efficiency of the enterprise and in turn leads to decline in overall performance. Major forces present in the marketing environment of Tesco are political, economic, social, technological, legal and environment. Such forces have direct impact on the overall operations of the entity and it becomes difficult for firm to increase its overall efficiency. Firm like Tesco carries out its operations in the market where changes takes place rapidly and firm has to modify its services accordingly (Butscher, 2002). Furthermore it is not possible for entity to 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 government of the country which firm has to follow strictly. Furthermore Tesco carries out its operations in different market 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 economic condition of the country as in case if situations like inflation, recession are not present in the market then consumers can buy costly products of Tesco and in turn organization can earn large profits with the help of this. Economic environment has direct impact on the operations of entity and prices are set by company keeping in view the purchasing power of consumers (Proctor, 2000).
Social forces are linked with the taste and preferences of the target market and this force is also effective as due to change in requirement of customers firm has to modify its products accordingly so as to satisfy need of its customers in an efficient manner. Technological forces are linked with the adoption of more advanced technology in the production and other important process. Timely firm has to adopt latest technology so as to provide more convenience to customers this requires large investment. Legal factors are linked with rules and regulations that are developed by government like payment of duties and taxes on time. Environmental forces are linked with the issues that arise due to exploitation of surroundings and in this regard policies have been formed that affects firm. So these are some of the major forces that are present in the marketing environment (Laudon and Laudon, 2004). These forces have direct impact on the operations of Tesco especially competition as market where company operates is full of competition due to which 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 company.
For analysing the forces which are present in the marketing environment Tesco has been chosen as one of the organization that operates in Retail sector. Firm was founded in the year 1919 by Jack Cohen and is a multinational grocery and general merchandise retailer. Operations of firm are diversified and deal in all kind of products such as clothing, electronics, toys, financial services, and telecom as well as internet services. Firm hires 597,784 employees and has earned profitability of 970 million in the year 2014. Presently firm operates in different countries and customer base is very strong that supports in gaining competitive advantage (About us., 2015.). Main competitors of the firm are Asda, Sainsbury etc that also operates in the same market and sells substitute products. Furthermore the marketing strategies developed by firm are effective and firm totally relies on social media and other advanced tools with the main purpose to promote its products. Main objective of entity is to satisfy need of its target market efficiently so right products are offered to them. Range of products offered by Tesco is highly differentiated and in turn support in increasing satisfaction level of the consumers.
Business enterprise serves millions of customers through its stores and by providing online services. This directly supports in increasing profitability and overall sales. 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 provides support and helps to retain its existing customers. Prices are set by firm keeping in view the purchasing power and income level of its target market. So this directly attracts customers towards the products as they are affordable and assist to face competition in the market (Hennig-Thurau and Hansen, 2000). Presently Tesco operates in 13 countries out of which major stores are located in UK and firm is getting good response from the present market. Main operations are in India, China, Turkey, Taiwan, South Korea, United Kingdom, United States, Poland, Japan, Malaysia etc. For each market different strategies have been formed and with the help of strong financial position enterprise is able to 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 firm to serve them better by introducing new products. Timely feedback is taken from target market in order to know whether they are satisfied with present products or not and on the basis of response products are modified.
Market where Tesco carries out its operations is full of challenges and many hurdles are present that have direct impact on the operations of entity (Ranaweera and Prabhu, 2003). Through PESTLE analysis major forces affecting company can be known easily and it can be determined how it will affect the firm in upcoming 5 years. Forces present in the marketing environment affects every operation of organization and it is necessary for management to develop effective plans so as to cope up with such challenges. Major forces present in the marketing environment that affects Tesco are discussed below:
Political: It is considered as one of the major forces that affect Tesco in every market as policies developed by government has direct impact on the performance of entity. This takes into consideration the acts of legislation, laws and stability of the country. Due to 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 major role in creating more employment opportunities and in turn it is leading to rise in demand of its products and services. On the other hand presently government of UK has adopted 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 company. Furthermore this is increasing government revenue and leading to declining in sales of enterprise. So, in this way political factor is acting as force in the marketing environment of company.
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Economic: It is another force affecting overall performance of the company in the market where it operates. Presently the countries where 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 have declined and it is not possible for them to spend more on the products offered by Tesco. So this force is not in favour of company due to 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 it is necessary for organization to be aware about the policies as they directly affects the availability of finance. Firm is expanding its operations at international level but it is still dependent on the UK market with a share of around 30%. Further due to 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 force for the company (Kotler, 2011).
Social: This factor directly affects overall operations of Tesco as changes in taste and preference of target market influences firm to bring changes in its major operations. Furthermore, market trends are changing rapidly where 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 firm have to offer products that are hygienic. Furthermore, products are purchased by firm as per their taste, preference, religion, age etc (Ismail, 2011). So firm has to consider these factors and it is necessary to analyse their perception and attitude so as to sell them products.
Technological: This force is also effective and affects overall performance of the entity. Rise in level of technology have provided many opportunities to Tesco like 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 labour cost of the firm. So the advancement in technology improves overall performance of the company and helps to gain competitive advantage. By adopting latest technology Tesco can easily become leader in the market and can create positive impact on the overall operations (Jasperson, Carter and Zmud, 2005).
Legal: This factor is linked with polices and laws developed by government that affects overall performance of the entity. Food retailing commission recommended a code of practice which firms must introduce by banning current practices such as charging price without providing notice. So to facilitate this policy Tesco provides fuel at reduced price in accordance with the amount invested on grocery stores. Furthermore the rise in tax rates and other duties have negative impact on the operations of Tesco as it increases overall expenditure level. So it directly acts as force.
Environmental: Operations carried out by Tesco have adverse impact on surroundings so in this regard government has introduced environmental laws with the main purpose to save environment. So, in this regard organization has adopted recycling methods and environment friendly products are offered to consumers. Furthermore in this regard firm has done partnership with suppliers and they are supplying eco - friendly products (Jiang, Klein and Carr, 2002).
So these are some of the major forces present in the marketing environment of Tesco that have 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 overall impact on marketing forces on operations of Tesco and this is affecting performance of the organization. Such forces are effective and it is necessary for Tesco to develop effective strategies for every market so as to sustain easily in the competitive environment. Furthermore, it is important for company to consider impact of these forces as they are linked with operations that are carried out by 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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