Marketing Research on Tesco Plc-Free-Samples-Myassignmenthelp.com

Question: Discuss about the Market Conditions, Key Competitors, Customer Segments and Demand Conditions of Tesco Plc. Answer: Introduction In the modern era, evaluation of business environment has become essential for the growth and success of the organization. Nowadays, intense competition has resulted in creating various obstacles for businesses in terms of achieving higher sales and profits(Aaker McLoughlin, 2009). Furthermore, organizations are required to think big and innovative to a gain competitive advantage over the other companies operating in the industry. The present research report is based on Tesco Plc which is UK based international supermarket retailer. The study highlights market conditions, key competitors, customer segments and demand conditions of Tesco Plc. Apart from this; a detailed description of the brands products, services, and business model is also mentioned in this report. Context and background It can be stated that over the past few years, the supermarket retail industry of UK has grown well and it has also provided companies with potential opportunity to attain a higher volume of sales and profitability (Thompson Martin, 2010). However, it can be critically argued that the industry is dominated by few supermarket retailers and for other businesses it has become very complicated to sustain the market. Tesco, Asda, Sainsbury are considered as the king of UKs retail supermarket industry. The industry has become more like an oligopoly market wherein few sellers are dominating the entire market. Other than this, the government of UK has developed strict rules, regulations, competition policy and it is required by the retailers to follow the same in the best possible manner. In terms of market condition, it can be asserted that at present, the market is highly competitive and at the same time the demand of products and services is increasing. In the last few years, the market player such as Asda and Tesco has started facing very tough competition from retailers such as Aldi and Lidl. The customer segment which has been targeted by companies such as Sainsbury, Tesco, and Asda generally includes people which belong to middle and higher income group. In addition to this, internet savvy and married individuals are also targeted by businesses in retail supermarket industry of UK(Frow, Nenonen, Payne, Storbacka, 2015). The demand of products and services delivered by the industry is increasing day by day and it has provided adequate growth opportunities to all market players. At present, the demand within industry is more than what the experts were expecting. The key competitor of Tesco includes Asda, Sainsbury, Lidl and Aldi. Further, brands such as Asda is making use of multiple communication channels to stay connected with all its customers. Such practices contribute in success of brand as the company is always aware of changing customer need and demand. Innovative marketing campaigns can be termed as the biggest strength of Asda. On the other hand, competitor such as Sainsbury focuses on offering wide range of services and products at low price and this strategy has supported in attracting customers. Experienced leadership team and highly skilled staff members can be termed as the major strength of Sainsbury(Hubbard, Rice, Galvin, 2014). Other competitor of Tesco includes brands such as Aldi and Lidl which are German based discounted retailers. These competitors have adopted discounted pricing strategy to attract customers and accomplish their business objectives. Tesco was founded in the year 1919 by Jack Cohen and during the initial stage, Jack Cohen used to sell the surplus of grocery from a store. In the year 1924, Mr. Cohen purchased tea shipment, and this was the time when Tesco came into limelight. After, five years, the first store of Tesco was opened in Burnt Oak, North London. It can be stated that it was the period of 1960s when the retail supermarket industry of UK witnessed rapid growth and Tesco became the largest supermarket retailer in the entire Europe. After this period, the brand has witnessed constant growth, and in 1974, it diversified its range of products, services and opened its petrol station in the country(Clark Chan, 2014). In 2008, the brand acquired its rivals such as Somerfield store and this was done to ensure the effective presence of Tesco all across the nation. However, it was the year 2013, when the selected business enterprise witnessed the first drop in the volume of sales and profits since its establishme nt. Description of the business It can be stated that in order to deal with intense competition in the retail industry, Tesco Plc. has developed and implemented various strategies. The brand relies heavily on its market activities to attract new customers and retain the old ones. The evaluation of strategy can be carried out by using models such as SWOT, PEST and ratio analysis. Tescos SWOT analysis STRENGTH The biggest strength of Tesco can be termed as its strong presence in market such as Europe, Asia, America and North Africa Effective operations because of products which are sourced locally The club card offered by Tesco is another major strength of the brand WEAKNESS Over the past few years, the brands financial performance is poor Negative media coverage and publicity has affected the brand image of Tesco Strong dependency on European and UK market OPPORTUNITY Tesco has a potential opportunity to form strategic alliance with other brands in the market Entering new and developing markets is another opportunity present in front of Tesco Plc. The brand also has potential opportunity to increase its sales and profits by focusing on private label brands THREATS Increasing cost of raw material has affected the sales and profits of the brand Intense competition is another threat which has created obstacles in growth and success of the brand. Currency fluctuation is another threat present in front of Tesco Plc. Tescos PEST analysis Political factors The performance and business operations of Tesco have been affected by political environment existing in a nation(Jenkins Williamson, 2015). The sales and revenues are directly affected by Taxes such as fat tax which has been implemented by the government of UK. Economical factors The economic factors affect areas such as cost of operations, demand in economy and price of products and service. It can be stated that unemployment has affected the demand of Tescos services and products to a great extent. On the other hand, the economic stability in the past has supported the brand to carry out smooth flow of all its operations, activities and attain desire profits Social factors The business operations of Tesco are also affected by changing demand and need of people in the market. Furthermore, the brand is also required to invest a large amount of resources in conducting market research to identify changing customer demand. Nowadays customers are also becoming conscious about their health and well being and this has affected business practices of the brand(Keller, Parameswaran, Jacob, 2011). Technological factors Technology has supported Tesco Plc. in carrying out the smooth flow of all its business operations and activities. It can be expressed that through technological advancements, the brand is able to deliver better and satisfactory services, products to all its customers. However, it can be critically argued that upgrading technology at regular intervals affect the overall profitability of the brand. Ratio analysis Ratio 2016 2015 Gross margin 5.27 (3.87) Operating Margin 1.99 (10.10) Asset turnover 1.24 1.32 Above shown is the ratio analysis of Tesco where the gross margin of business has increased in the year 2016 as compared with 2015. It is indicating that revenue of Tesco is rising at faster pace and company is financially strong. Operating margin of Tesco has also increased which indicates that companys pricing along with operational strategies are effective(Woods, 2007). Apart from this, asset turnover ratio of business has declined which indicates the efficiency of the organization to utilize its assets has declined in the year 2016 as compared with 2015. Description of the business Tesco offers a wide range of products to its target market with the motive to satisfy need of its target market in an efficient manner. Further, all the products and services rendered are efficient enough to satisfy need and requirement of the target market. The key products involve groceries, consumer goods, financial services, telecom and other type of goods. Commodities are offered with the help of company operated stores which provides base to the business in serving its target market in an efficient manner. Further, it is well-known fact that Tesco operates in the market where level of competition is quite and this has acted as a major challenge for the business(Keller, Parameswaran, Jacob, 2011). In the grocery area key players are Sainsbury, Asda etc where all these firms are offering same type of products in the market. Apart from this, products of Tesco are differentiated where some sort of unique features are present in the products which influences purchase behavior of target market. Grocery products of Tesco involve the entire range of commodities which consumers prefer to purchase. Apart from this, company also renders financial services which takes into consideration loan, mortgage, credit cards and different type of insurance(Peppard Ward, 2016). Tesco operates different type of mobile phone businesses in the market of Ireland, United Kingdom, Hungary etc. The grocery business of Tesco is most profitable and well known in the market. Above shown is the Business model of Tescos online groceries (Warren, 2008). This business model focuses on providing convenience to the customers and attracts them towards the range of products offered. Company offer products with the help of online medium also as nowadays due to busy schedule it is not possible for them to approach physical stores. So, this is also one of the strategies employed by Tesco for attracting customers in the market. The business model of Tesco stands of three significant pillars which involve customers, products, and channels. The main priority is customers where firstly actual need of the target market is identified to deliver a best possible experience. The second important element is the channel where best approach is undertaken for providing products to target market such as mode of an online and physical store (Rosenbaum-Elliott, Percy, Pervan, 2015). Last key element is the product where a team works with suppliers with the motive to deliver the best product to the target market. Apart from this, the entire business model of Tesco is flexible where the company brings best possible changes in its model to serve customers in the better manner. In every type of market technological advancement is taking place at the faster pace and due to this reason, Tesco has adopted online tools for serving customers. It has allowed the company to sustain in the market for the longer period and has acted as an instrument of development also (Van Weele, 2009). In short, it has been identified that Tesco business model is innovative which encourages business to indulge into new activities and brings favorable results for the company. Moreover, it is efficient enough to deal with the market challenges such as competition, legal, political and technological barriers. Summary of the key points To operate efficiently, in the long run, it is necessary for Tesco to modify its business model as per the changing market conditions. Further, one of the most important aspects of business model is the customer who is an integral element (Varley, 2014). The entire model has been developed by target market, and different modes are undertaken for serving them such as online, physical store, etc. Apart from this, with the changing need and requirement of the target market, this model needs to be developed as it can ensure business success in near future also. Conclusion The entire study carried out has supported in understanding about the strategies employed by the business for sustaining in the market. Further, porter five forces, swot, and ratio analysis are representing that business is operating efficiently. Apart from this, the business model has identified the key elements or pillars on which business operates, and it involves customers, channels, and products. References Books and Journals Aaker, D. A., McLoughlin, D. (2009). Strategic market management: global perspectives. New Jersey: John Wiley Sons. Clark, T., Chan, P. S. (2014, October 4). A history of Tesco: The rise of Britain's biggest supermarket. Retrieved August Saturday, 2017, from The Telegrah: https://www.telegraph.co.uk/finance/markets/2788089/A-history-of-Tesco-The-rise-of-Britains-biggest-supermarket.html Frow, P., Nenonen, S., Payne, A., Storbacka, K. (2015). Managing co?creation design: A strategic approach to innovation. British Journal of Management , 463-483. Hubbard, G., Rice, J., Galvin, P. (2014). Strategic management. Australia: Pearson Australia. Jenkins, W., Williamson, D. (2015). Strategic management and business analysis. Thames: Routledge. Keller, K. L., Parameswaran, M. G., Jacob, I. (2011). Strategic brand management: Building, measuring, and managing brand equity. New Delhi: Pearson Education India. Peppard, J., Ward, J. (2016). The strategic management of information systems: Building a digital strategy. New Jersey: John Wiley Sons. Rosenbaum-Elliott, R., Percy, L., Pervan, S. (2015). Strategic brand management. England: Oxford University Press, USA. Thompson, J. L., Martin, F. (2010). Strategic management: Awareness change. Massachusetts: Cengage Learning EMEA. Van Weele, A. J. (2009). Purchasing and supply chain management: Analysis, strategy, planning and practice. Massachusetts: Cengage Learning EMEA. Varley, R. (2014). Retail product management: buying and merchandising. Thames: Routledge. Warren, K. (2008). Strategic management dynamics. New Jersey: John Wiley Sons. Woods, M. (2007). Linking risk management to strategic controls: a case study of Tesco plc. International Journal of Risk Assessment and Management , 1074-1088.