Tesco: Analyzing the Market Environment and Customer Needs

This report provides a comprehensive analysis of Tesco's market environment and customer needs. It begins with an introduction to Tesco, including its business model and target market. The report then delves into a PESTLE analysis, examining socio-cultural, political, economic, technological, environmental, and legal factors impacting Tesco's operations. It also discusses consumer behavior in the UK market, emphasizing the importance of brand image and customer satisfaction. The report concludes by suggesting strategies, such as digital marketing and discounts, that Tesco can implement to effectively cater to its target market and enhance its market share. Desklib offers a wealth of similar resources for students.

Tesco

Tesco
Table of Contents
Introduction......................................................................................................................................2
Analysis of the market environment................................................................................................2
Pestle analysis..............................................................................................................................2
Consumer behavior in the market....................................................................................................4
Ways that can cater the particular market........................................................................................5
Conclusion.......................................................................................................................................5
References........................................................................................................................................6
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Introduction
Tesco is one of the British Multinational company and headquarter is situated in Welwyn
Garden City, United Kingdom. The CEO of the company is Dave Lewis and the subsidiaries of
the company are Tesco Bank, Tesco Mobile and Londis. The company was established in 1919
and there are more than 476,000 employees who are managing the overall operations of the
company. There are more than 3,400 stores, in which the services are offered to the customers in
the market. Tesco focuses on maintaining the satisfaction level of the customers and they
emphasizes on considering the set values (Tesco, 2018).
The business model of the company is to organize the three pillars of customers, product
and channels. The company maintains the activities in a simple and clear way. Tesco focuses on
maintaining the little things to make a big difference. The customers are considered as the
priority for the company and they emphasize on maintaining the shopping experience of the
customers. The company has the aim to serve the customers and the business model has the
customers as its core. Tesco have the strategy to listen to the customers, so that the shopping trip
can be maintained with best service and price. The target of the Tesco is on the “Everyday
people”. The company launched the everyday value range so that it could be easy to refresh the
basic range of the supermarkets. Tesco also sell products by its own brand label which was also
launched 20 years ago (Tesco, 2018).
Analysis of the market environment
Pestle analysis
Socio cultural factor
It is observed that the society shapes the beliefs, values and also norms that define the
preferences. Tesco also focuses on the various factors that satisfy the wants and requirement of
the customers. The company has also boosted the number of non food items offered to the
people. It has been seen that if the company is not able to fulfill the customers need, then it
impact the success of the company. One of the major factors is quality of the food which is
important to be considered by the company so that it could be easy to boost the image in the
highly competitive market (Evans & Mason,2018).
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Political factor
Tesco is managing the activities in 12 countries such as in Asia and Europe. The factors
that impact the activities of the company are tax rates, political instability and economic
condition. This forces impact the ability of the company as it has been seen that due to these
factors, Tesco has to consider the different policies of the government which sometimes impact
the overall success of the company in the highly competitive market (Jenkins & Williamson,
2015).
Economic factors
Labor cost is one of the aspects of the economic factor that also impact the UK
supermarkets. There are various different factors that impact the company such as cost, prices
and profits. Tesco should emphasize on enhancing the borrowing cost in UK. It also impacts the
costs and prices and also reduces the entire profits. Due to this the impact can also been seen in
the brand reputation and cost leadership strategy. This also impacts the ability of the company,
as due to this the labors are not able to give their best towards the overall operations of the
company in the competitive market.
Technological factors
One of the major issues faced by the company is related with poor customer experience
and horsemeat scandal. To resolve this issue, the company focused on considering the RFID
technology which easily counts the overall sales of the company. It is seen that the factor related
to latest technology impact the success of the company, as there are many competitors in the
market and it is important to consider the latest technology so that growth can be attained in the
highly competitive market. The latest technologies are considered as it helps to boost the market
share (Alexander, 2015).
Environmental factor
The market environment could be analyzed through the environmental factor. It is seen
that the companies face immense pressure just because of the government agencies. This force
impact the ability of the company to attain success in the industry sector. It has been seen that if
the company does not focus on maintaining the environment then it could negatively impact the
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overall image of the company in the market. This force helps to maintain the customer base and
if it is not maintained then the negative impact could be seen on the goodwill of the company
(Mylan, Geels, Gee, McMeekin & Foster, 2015).
Legal factor
In the market environment, legal aspect is one of the aspects that impact the overall
performance of the business and also its objectives. In 2016, the employees of Tesco considered
the legal actions against the employers on the basis of age and gender. The employees at that
time were extremely frustrated after the notice related with the low pay rate for the nights. The
company also faced the legal action in relation to accounting and misleading the investors. So,
this factor impacts the ability of the company to attain success. It has been seen that certain laws
and regulations are followed which hinder the operations of the company in the highly
competitive market (Grundy, 2017).
Consumer behavior in the market
The customer behavior in the UK market is related with different factors. It is seen that
brand image is one of the important factor that cones in the mind of the customers. The customer
focuses on the brand image and prefers the services and products of the company if the brand
image is maintained. The behavior of the customers first depends upon the image of the company
(Wood, Coe & Wrigley, 2016). Therefore, it is necessary for organization to maintain image of
company as it could assist in enhancing profits in the highly competitive market. The needs and
wants of the customers should be fulfilled of the consumers, as it can assist the company to
attract towards the products provided in the market. If the company focuses on the fulfilling the
needs of the customers then it will help to attain the profits in the competitive market (Donnelly,
Simmons, Armstrong & Fearne, 2015).
Tesco focuses on satisfying the customers, by offering effective services. The services
provided by the customers are quick and also reasonable. This strategy is effective as it helps to
boost the image in the highly competitive market. It depends upon the services and products
offered by the company in relation to behavior of the customers. Tesco maintains the customer
behavior by setting up the loyalty back in its store. The company focuses on maintaining the
brand loyalty, promotions and products quality, so that the behavior of the customers can be
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boosted and also it will help in creating image in the mind of the customers (Tse, Zhang,
Doherty,Chappell & Garnett, 2016).
Ways that can cater the particular market
There are many ways that should be considered by the company as it helps to boost
demand of the customers in relation to the products provided by the company. The strategies that
should be considered by the company are:
Digital marketing
To cater the market, it is important for the company to promote its services on the digital
platform. Through digital platform it would be easy for the company to give accurate
information to the customers. The customers can be catered easily, by promoting the products on
the social media platform. Tesco should focus on posting the pictures on the social media sites as
it can help in boosting the awareness of the customers. Through social media strategy, the large
customer base can be boosted as it is platform that helps the customers to interact with the
customers. The company should also introduce the new applications so that it could be easy to
manage the overall operations of the company. Applications can help to boost the market share
and can also assist in maintaining the large customer base (Quirke, 2017).
Discounts and offers
To cater the customers, it is important to focus on giving discounts to the customers so
that they can choose the product of the company in comparison with the other competitors
present in the market. By providing discounts, the company can easily focus on attracting the
customers towards the products and services of the company in the market. The products should
be offered in fewer prices as compared with the competitors as it can assist in enhancing the
market share (Witek-Hajduk & Grudecka, 2018).
Conclusion
Therefore, it can be concluded that it is necessary for the organization to emphasize on
the marketing environment so that growth can be attained. Also, behavior of the customers
should be analyzed so that products can be offered according to the demand and it will help in
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boosting the profits. The company should focus on considering the strategies to cater the
customers such as digital marketing and discounts and offers. These factors will help in
evaluating growth in the market and will boost the goodwill of the company.
References
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Alexander, A. (2015). Decision-making authority in British supermarket chains. Business
History, 57(4), 614-637.
Donnelly, C., Simmons, G., Armstrong, G., & Fearne, A. (2015). Digital loyalty card ‘big
data’and small business marketing: Formal versus informal or
complementary?. International Small Business Journal, 33(4), 422-442.
Evans, B., & Mason, R. (2018). The lean supply chain: managing the challenge at Tesco. Kogan
Page Publishers.
Grundy, T. D. (2017). Dynamic Competitive Strategy: Turning Strategy Upside Down.
Routledge.
Jenkins, W., & Williamson, D. (2015). Strategic management and business analysis. Routledge.
Mylan, J., Geels, F. W., Gee, S., McMeekin, A., & Foster, C. (2015). Eco-innovation and
retailers in milk, beef and bread chains: enriching environmental supply chain management
with insights from innovation studies. Journal of Cleaner Production, 107(8), 20-30.
Quirke, B. (2017). Making the connections: using internal communication to turn strategy into
action. Routledge.
Tesco.(2018).Tesco activities: Retrieved from : https://www.tescoplc.com/
Tse, Y. K., Zhang, M., Doherty, B., Chappell, P., & Garnett, P. (2016). Insight from the
horsemeat scandal: Exploring the consumers’ opinion of tweets toward Tesco. Industrial
Management & Data Systems, 116(6), 1178-1200.
Witek-Hajduk, M. K., & Grudecka, A. (2018). Positioning strategies of retailers’ brands in the
emerging market–a cluster analysis. International Journal of Emerging Markets, 13(5),
925-942.
Wood, S., Coe, N. M., & Wrigley, N. (2016). Multi-scalar localization and capability
transference: exploring embeddedness in the Asian retail expansion of Tesco. Regional
Studies, 50(3), 475-495.
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