PESTLE Analysis of Tesco Plc
Marketing is a process or series of activities by creating and delivering value to fulfill the needs of the customers. Marketing is done to understand the pain points of the customers and deliver the right value to the target customers (Stadnyk et al. 2020). The process of marketing comprises advertising and selling the final products to the end customers. Here the chosen organization for this assignment is Tesco Plc. Tesco is one of the British multinational retail organizations that operate in the grocery and general merchandise section. It is considered as 3rd largest retail organization by the revenue earned. The headquarters of the organization is situated in Welwyn Garden City, in the United Kingdom. They are operating in the retail industry and earned revenue of 5,788.7 crores GBP as per the data of 2021 (Awadari and Kanwal 2019). The organizational objective is to provide the best value to its customer group. The core value of the organization is to provide a better lifestyle and provide value to the shoppers. Tesco targets its customers and tries to gain customer attraction by delivering a low pricing strategy. Tesco, in its marketing strategy, takes advantage of print and media advertisements to reach its potential customers. The organization tends to focus on promotional activities to gain more customers attractions and retain the customers and makes a repeat purchase.
Pestle analysis has been done to understand the market trend and the external market environment so that company can take leverage from the market. PESTLE stands for political, economic, social, technological, legal, and environmental. PESTLE analysis has been done in the below table:
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Political |
· As the company represents a global brand, the global political atmosphere can impact the performance of the organization. · The tax rate and an inflation rate of the United Kingdom are much-controlled to help the organization operate in the market. · The organization is also creating employment opportunity that enhances the demand for the brand’s products. |
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Economic |
· The prime concern point for Tesco is the cost, market pricing, and demand so the certain changes in taxation policies that have a direct connection to finance can impact the organization. · The organization is having 30% of the market share in the UK market due to the stability of UK economics (Adamyk 2019). · Industrialization and product diversification can be one reason for the success of the organization. |
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Social |
· The customer preferences have been changed and the UK shoppers have focused on bulk shopping and also on one-stop shopping solutions so Tesco has focused on non-food items (Samdani 2020). · The customers are becoming more concerned about their health so the organization is adapting to the organic food products. |
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Technological |
· The organization is taking leverage from the technological advancement of the United Kingdom. They have updated their online shopping model and also instant home delivery service (Collin-Lachaud et al. 2018). · A self-service checkout point has been adopted to make it easy for the customers. · Technology-based energy efficiency project has been undertaken to put down the carbon footprint. |
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Legal |
· Government policies and legal legislation can have a great impact on the organization. Food Retailing Commission (FRC) has introduced a code of conduct that needs to introduce in the business. · Tesco has reduced their pricing for the customers of their essential commodities and also applied several promotional offers to cut down their prices (Rosnizam et al. 2020). |
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Environmental |
· Tesco has already taken a target to lessen its carbon footprint by 50% by 2030. · They have also reduced their waste caused by production to value the customer’s conscience. |
SWOT analysis can be interpreted as the internal environment analysis. SWOT analysis has been done to understand the organization’s strengths, weaknesses, opportunities, and threats. Here the SWOT analysis for Tesco has been presented in the below table.
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Strengths · Tesco has been considered one of the biggest retail organizations in the United Kingdom. · The number of stores has increased from 2008-to 2019 and the number reached 3751 to 6800 (Kar, Bansal and Mishra 2021). · The great business model is to reduce product pricing by efficient usage of waste management (Soegoto 2021). · They have a great bonding with the suppliers so it makes them unable to deliver the end product on time. · They are having the highest market share of 30% across the UK market. |
Weaknesses · The announcement of the club card without informing the customers made the customer furious about the brand. · Brexit has largely affected the growth of the organization and it has affected the profit percentage of the organization and it lessens by 9%. · The low-cost strategy of the organization is affecting the low profit of the organization. |
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Opportunities · Tesco has opened a new discount in the name of Jack that has earned a good profit (Hamilton et al. 2019). · They can make business in emerging markets like Turkey, South Korea, and Indonesia. · Tesco can ally with another brand to propose better products in the market. |
Threats · Tesco has been accused of promoting fake farms and misleading customers has affected the image of the brand. · Market competition is rising due to the supermarket giants like Walmart and Aldi and other stores. · The volatility of the taxation and government rules can be a potential threat to the organization. |
The marketing mix is considered one of the strategic tools in marketing that denotes the 7P’s of marketing such as product, price, place, promotion, process, people, and physical evidence.
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Product |
Tesco deals with a wide range of products and a diverse product portfolio extensively covers such as clothing, stationery products, groceries, cosmetics, and other financial services (Pheunpha 2021). Tesco does have its brand products such as Tesco Lotus, Everyday Value, F&F Clothing, and Tesco Value. |
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Price |
Tesco deals with a low-cost pricing strategy and they have applied cost leadership to promote the low-cost product with the best quality. As a consequence, Tesco asserts economies of scale and has great bonding with the suppliers for price reductions. Aldi and Lidi have been constant competitors for Tesco in terms of pricing. |
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Place |
Tesco is operating both online and offline stores. For particularly offline places, Tesco has different types of stores such as Tesco Express, Tesco Metro, Tesco Extra, Tesco Home plus and Tesco Compact, Tesco Superstore and for the online medium, they have another spectrum of business named Tesco Direct. |
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Promotion |
Tesco has used several mediums to reach its customers. They have to use print, TVC, newspaper, and other mediums to spread brand awareness and promotional offers to the customers. They have another facility of Club card for premium customers because they can avail of discounts by redeeming the coupon. |
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Process |
To describe the process that Tesco uses in their business is that, customers can pick the products and respond to the customer service for purchasing the product, and apart from that, customers can avail of self-service to get the payment done independently. |
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People |
Tesco has almost 420000 employees in its workforce. The customer support of Tesco Plc. is highly efficient and it helps the brand to secure success in the retail industry (Karim et al. 2021). Moreover, Tesco made a huge investment in the training and development process of Tesco. |
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Physical Evidence |
The offline stores of Tesco are highly well constructed and it makes it easier for the customers to get assistance for product purchases. And for online purchases, the website of Tesco is highly maintained and optimized so that customers can easily navigate certain product selections (Brand, Schwanen and Anable 2020). |
There are certain skills required for sales and negotiation and I have learned some of the skills that are mentioned below.
Communication skills are one of the most important skills that are essential to get a good sales profile. Communication skills are one of the foundation strategies to start making a relationship with the customers. Being a salesperson, I have developed good communication skills so that I can start profiling the customers throughout the sales funnel end process.
Sales prospecting is one of the skillsets that I have learned from the course. To become a good salesperson, I need to develop a strategic plan to develop a new customer base and find the market opportunity. It specifically refers to the process to reach customers, conducting cold calling, and researching for specific customers’ needs identification.
After making the prospecting of the customer profile, the salesperson needs to have negotiation skills to make and engage in professional communication with the potential client base (Amor 2019). I have learned the proper extract of the negotiation skills and I have to have enough knowledge of the negotiation skills as this may lead to a risk to the company due to high discounted value offers.
SWOT Analysis of Tesco Plc
Here the chosen organization is Tesco has certain sales and negotiation activities to attract the customer base. From the above discussion of the marketing mix of Tesco, it can be stated that they have followed the discounts methods to attract the customers to avail of the company’s products and services. Being in the supermarket business, the organization has applied a low-cost strategy to offer its products to the customers (Burt, Coe and Davies 2019). In the past few decades, the company has developed a different way of approaching suppliers. They had always been fair with the suppliers to bring the best deal for their customer segment. The organization has used extensive promotional activities through print media, TVC, and other advertisement mediums to represent its brand to the customers.
From the above analysis on Tesco, it can be stated they are dealing with various product categories and have taken several initiatives to improve their business strategies. Here are some suggestions based on the above analysis.
- The suggestions would be to make more promotional activities on the own brand’s products of Tesco so that they can make strong customer relationships and make them stay and spend more time at their departmental store.
- Tesco needs to adopt product penetration so that they can invest more in products and hence would be able to gain more profitability (Gölgeci, Malagueno and Fearne 2021).
- Tesco needs to focus on its logistic management and also enhance the visibility of the supply chain management. It would help them to focus on their sale and demand forecasting process.
Conclusion
Lastly, in the conclusion, being in a supermarket retain segment, Tesco has applied all possible ways of marketing activities to reach their customer and not merely reaching the customers but also maintaining the mission statement and organizational objective the same. They have acknowledged certain technological development in their system so that customers can easily avail the of customer support. They have also enabled online service through their highly optimized online application so that customers can purchase the product and gets the home delivery options. Apart from that, the organization has also enabled their service as per their service categories which are divided into six types.
References
Adamyk, K., 2019. PESTLE Analysis on Tesco PLC.
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Karim, R., Latip, N.A., Marzuki, A., Haider, S., Nelofar, M. and Muhammad, F., 2021. The Impact of 4Ps Marketing Mix in Tourism Development in the Mountain Areas: A Case Study. International Journal of Economics & Business Administration (IJEBA), 9(2), pp.231-245.
Pheunpha, P., 2021. The Influence of Corporate Image and Marketing Mix on Consumer Motives: An Empirical Study of MK Restaurants. ABAC Journal, 41(4), pp.43-66.
Rosnizam, M.R.A.B., Kee, D.M.H., Akhir, M.E.H.B.M., Shahqira, M., Yusoff, M.A.H.B.M., Budiman, R.S. and Alajmi, A.M., 2020. Market opportunities and challenges: A case study of Tesco. Journal of the Community Development in Asia (JCDA), 3(2), pp.18-27.
Samdani, T., 2020. Impact of Tesco’s Private Label brands on buying behaviour of Millennials in terms of brand preference in Irish market (Doctoral dissertation, Dublin, National College of Ireland).
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Stadnyk, V., Pchelianska, G., Holovchuk, Y. and Dybchuk, L., 2020. The concept of marketing of balanced development and features of its implementation in the food market. Agricultural and Resource Economics: International Scientific E-Journal, 6(1868-2020-1687), pp.80-95.
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