Environmental analysis of UK:
In order to achieve success in implementing some marketing plan, PEST analysis plays a major role because it allows the organizations to do a complete analysis of political, economic, social and technological aspects of the organization and the evidence can be taken from the example of Tesco UK. The success factor of Tesco can be analyzed from the marketing strategy it has assumed in order to deal with the potential customers of United Kingdoms. However, this company has taken all the basic concepts of marketing under consideration while making its strategic plan. Here is the PEST analysis of Tesco UK.
The organizations which have political backup and keeps the political aspects under consideration while marketing its service get promulgation within no time. For instance, Tesco is an international supermarket; its policies are always compatible to the regions in which it provides its services. In UK, it has also kept this thing under consideration and that’s why, got exceptional response from the customers. In this regard, following steps have been taken: •It has fulfilled legislative requirements of United Kingdoms •There is no violation of Labor law, environmental law, trade law, health and tariff restrictions •Policies have been developed keeping the political scenarios under consideration •Tesco has also developed its own ethical and sustainability policy keeping the national ethical policy of UK in view
Since UK market is one of the most sensitive markets of the world, economic sustainability is another factor that needs thorough analysis in order to deal with any marketing situation. Most of the consumer within UK requires a product that suits not only their lifestyle but also their budget. Though brand loyalty and trust is also a positive factor that can be regarded as a strong reason for the success of this organization, still some consumers find it difficult to buy costly products. Tesco UK has also kept this thing in view and provided different solutions in the form of competitive prices and sales. However, the economic analysis of Tesco indicates
•Potential investment of company authorities within UK
•Payment of taxes on each product
•Adoption of sensitive price strategy
•Paying interest rate
•Extensive participation in regional economic growth
The analysis of social factors of Tesco UK is as followed:
•Targeting young people for product marketing
•Increasing demand of the international products due to increasing migrants
•Bargaining power of customers
•Safety issues like inability of customers to understand product precautions
As far as technological factors are concerned, Tesco has also kept this aspect under consideration while marketing its services in United Kingdoms.
•Automatic payment system
•Auto-checking while entering and exiting from supermarket
•Use of electronic system for cash and balance
•Implementation of safety cameras in supermarkets
Control of Tesco over environmental factors:
As far as the environmental factors that are beyond the control of Tesco UK are concerned, it is the competitive forces, suppliers, customers, inflation ratio and technological advancement which have affected sustainability of Tesco in one way or other.
Potential competitors of Tesco UK are as followed:
As far as online competitors are concerned, they involve
Another aspect that is beyond the control of Tesco UK is bargaining power of customers. The demands of customers vary with the passage of time and Tesco UK has to assume change management strategy keeping the changing demands of the customers. In this regard, the factors that can affect Tesco directly involve
•Bargaining power of customers
•Limited budget of customers
•Changing requirements according to the trend
Inflation ratio is another aspect which is beyond the control of Tesco UK since there are several factors which contribute in such cases and if this supermarket gives potential discounts on each product that threats the sustainability of their relation with suppliers. However, this thing is controlled to a small extent through providing different packages and sales in low seasons,
Since with the advancement in technology, consumers are also attracting towards online shopping, online platforms have taken the position of strong competitors. A consumer seeks ease through purchasing products from online portal that can deliver the objects at home. Though Tesco also has its own web portal yet the technological advancement makes it complex for this organization to adopt appropriate strategy in each country. However, through adopting timely change management strategy, this organization can deal with such situation.
Creating and sustaining competitive advantages:
Tesco is the third largest grocery store of the worlds and there are ample potential competitors which can be regarded as the core competent of this organization. However, still this organization has been gaining competitive advantages through sustaining and assuming competitive advantage strategy.
As far as the core competitors of Tesco in this industry are concerned, Wal-Mart and Carrefour are two leading organizations that compete with Tesco on global level. The reason why it had remained on third position is that it had initiated its service after a long time. However, it is the competitive advantages which it has sustained in regional as well as global competitive market that it has been positioned on third rank among all supermarkets of the world.
As far as the strategies in order to gain competitive advantage are concerned, there are several creative and sustainable competitive strategies which can be developed in order to gain competitive advantage in this industry. In this regard, Porter’s generic strategies can be utilized because all the successful organizations like Wal-Mart and Carrefour have gained such position only through assuming exceptional competitive strategy. The first strategy that can be promulgated in this regard is cost leadership strategy which would enable Tesco to offer its services and products to not only national but international consumers and markets in lowest cost. For this purpose, they would also have to control the overall cost of the operations so that they can easily maintain investment and this price control strategy never affects this organization in one way or other.
Through assuming this strategy, Tesco would be able to generate not only potential profit but also competitive advantage as well. If Tesco would use differentiation strategy as indicated by Porter, it would enable this organization to offer its products and services to its customers promulgating unique features and value added services that would attract potential customers a lot. This would also give competitive advantage in the form of brand loyalty of customers and double profit. Differentiation can be generated through assuming novel technological feature, providing value added service, exceptional customer service etc. Another option to create and sustain competitive advantage in local as well as international markets is market penetration.
For instance, for Tesco, it might be difficult to assume differentiation or cost leadership strategy since it requires price maintenance. It can also make its marketing sources exceptional. For this purpose, as indicated in Ansoff Matrix, market penetration strategy would prove ample lucrative. It means this organization can gain competitive advantages through penetrating in existing market, find potential sources for promulgating its products and services and then focusing on internal efficiencies in order to come up with the requirements of the consumers.
Nevertheless, Tesco can gain competitive advantage through assuming cost leadership and differentiation strategy in global market since it would enable this organization to compete with global giants. However, market penetrations strategy would work if this organization wants to create and sustain exceptional position in local markets like that of United Kingdoms and China. However, it cannot be stated that Tesco used to utilize such strategies without doing market analysis. In this regard, Tesco does market analysis through assessing its market position and contemporary ratio of market growth which enables it to analyze which strategy would enable it to compete on global as well as local level and in this regard, the significance of BCG matrix cannot be neglected.
Some organizations used to employ all these strategies collaboratively and consider that there will be competitive advantage that is a wrong notion. That’s why most of them stuck in the middle and ultimately find it difficult to sort out the best option. This is not the case with Tesco since it’s a global organization and its management has exceptional expertise in dealing with such kind of situation assuming the best strategy that can generate passive competitive advantages.
Hence, these are some of the potential options which an organization can utilize for competing with the strongest competitor in its relevant industry but before assuming any particular strategy, the organization needs to have its portfolio analysis as well. the examples of Tesco, Wal-Mart and Carrefour can be taken as evidence in this regard since Tesco has assumed strategic option through analyzing its contemporary position in global market and hence, gained successful position as well,
Product life cycle:
A product life cycle possesses different stages like introduction, growth, maturity and decline. However, the marketing strategies vary according to the changing stage of product life cycle and the organizations that use appropriate strategic options according to the requirements of the contemporary scenario, get success in product marketing.
On first stage, organizations used to apply marketing Mix elements in which, it suggests specifications of products, appropriate price, promotion strategies and place where it can gain successful position. Different examples can be seen in the form of Toyota motors, McDonald fast food industry and Tesco service providers in this regard. For example, Toyota wants to launch one of its product, the initial strategy that it would adopt will be determining price specifying promotion strategy and place, promulgating product specifications.
Product: design, specification, how it works, extra benefits of using it etc Price: initially the cost would be low since this new product would take time to make its position in the markets. Promotion: this section would indicate promotional strategies like launching product providing value added services Place: this section indicates the best market for promulgating new vehicle like United Kingdoms, Canada etc.
The second stage is referred to as Growth stage. At this point, the strategic plan differentiated through assuming growth strategy like market development etc. For instance, when Tesco opened new store in China, it achieved growth status through developing market and for that purpose, it affiliated itself with one of the regional supermarkets that enabled this supermarket to have potential growth in new market.
The third stage is referred to maturity stage. On this stage, the product or service got its mature status and for its sustainability, different strategies are adopted in order to maintain its position through assuming change management strategy if required. Market penetration strategy is considered the best option in such cases since through constant penetration in market, the contemporary position of the product and service is analyzed. For instance, in UK markets, environment changes are uncertain and this thing affects the requirements of consumers. So, Tesco UK constantly do market penetration in order to sustain its position and cope with competitors.
Last stage is referred to the decline stage and it is considered the death of the product. However, some companies assume differentiation and diffusion of innovation strategy in order to sustain its product and regain its mature stage. The example can be taken from McDonalds India. Its product for non-vegetarian though gained ample success in the beginning but soon, customers fed up with it. McDonalds India assumed differentiation strategy and attracted customers through introducing vegetarian burgers and deals.
Diffusion of innovation strategy:
Diffusion of innovation is one of the effective strategies that can regenerate lost position of a product. Through promulgating product marketing its innovative features, organization can easily cope with decline stage of PLC. There are several examples which can be quoted for proving the authenticity of this strategy
With the propagation of KFC and PizzaHut, customers transformed their concentration from McDonalds and this thing affected its profitability ratio badly. The management of McDonalds contemplated to regain its position and ultimately found diffusion of innovation as the best source to deal with this issue. Finally, they introduced McFlurry which attracted most of their customers back. Hence, this thing not only made it possible for the organization to get its customers back but the profitability ratio also increased simultaneously.
Hence, marketing strategy plays a major role in developing and sustaining products or services in local as well as global markets but along with using innovative strategy, the organization should also have potential to assume change management strategy according to the contemporary requirements.
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