MG624 Strategic Marketing - Tesco

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Macro environmental analysis of new product launch by Tesco

PESTEL analysis referred as marketing principle use for eradicate negative effects of factors and encourage to adopt positive effects of factors which influence in commencing of business in different arena (Kellezi2014).

Tesco launches a new product that is ethnic wear in sri lanka after evaluating new opportunities and expand its market share. It increase its market base and brand loyalty in market. PESTEL follows (Political, Environment,social, technological,Economic and Legal).

Political factors

A large no. of political factors that impacts on business of Tesco in positive as well as negative manner. Political conditions is sometimes best and worse according to political regulations of specific country such as bureaucracy and corruption. Moreover businesses of Tesco also influences with taxation and expansion permissions. While introducing a product ethnic wear faces lot of problems in sri lanka. In that country power is centred in few hands and politicians interface too much in businesses and changes policy to resist and assist to operations of organisation that is suffer by Tesco.

• Opportunities and threats :Opportunities for Tesco is low taxation and free entry and exit system in country that helps in earning huge revenue and collect large consumer base. On other hand threat is politicians restricts on organisation according to their own interest.
• Solution: To remain trouble organisation like Tesco have to frame their products and working conditions that not harmful in perspective of Sri lanka.

Economic Factors

In economic factors includes various macro economic factors that affects in revenue of organisation while entering into new market sphere. In these factors includes cost of labour, interest rates, GDP, per capita income, rate of inflation, credit terms etc. which affects new businesses which enter into sri lanka. Sri lanka's economy fluctuate a lot that hinder in economic estimation in that country and income inequality also exist.

• Opportunities and threats: There is lot of opportunities for Tesco while operating in Sri lanka that is rising GDP, Per capita income and free market economy that helps in boost market (Line and Runyan2014). In Threats include inequality in income that hinders in economic stability and a particular group become poorer day by day that hinders self interest of Tesco.
• Solution: Tesco have to launch its product for every class of society so that it occupy a large consumer base.

Social factors

Social factors involve changing taste and preferences of consumers. People become techno savvy and they upgrade their choices frequently. So keep with trend Tesco have to innovate frequently and pace with technology.

• Opportunities and threats: Tesco have broaden its product range that capture all social inflicted people and capture a large market share. And threat is newly changing demands of consumers that affect business of Tesco in sri lanka.
• Solutions: Tesco have to upgrade its serving style and become techno savvy so that it satisfy its consumer's.

Technological factors

In technology factors consist way of working, machinery, infra structure and contribution of AI in country as well as in organisation. Sri lanka is techno savvy nation. In country have large base of infra structure and they welcome outsider organisations (McDONALD, 2016).In sri lanka have access use of mobile and internet that makes life of consumers as well as to organisation.

• Opportunities and threats: sri lanka welcomes innovation due to it register a large no. of patents in some time and invite organisation from other nations to innovate something that beneficial for sri lanka masses. And threat in sri lanka is up gradation in technology is very frequent that enhance operating cost of organisation.
• Solution: Due to change in consumer needs Tesco have to adopt multi purpose machinery and AI.

Environmental factors

In environmental factors include global warming and green house effect that largely affects on performance of organisation such as Tesco in other country. Sri lanka investigates about products and services that launch by organisation while entering into their country.

• Opportunities and threats: In changing nature of countries increase demand of clothes that enhance market share of Tesco and festivals that organise in sri lanka helps in increase demand. Threat is distribution network affect natural calamities that affect working of organisation.
• Solution: Tesco have to launch e co friendly products and contributes some amount for environment protection.

Legal factors

Legal factors include rules and regulations that help and hinders while operating in businesses. Such as labour laws, environment laws, protection laws etc.. if they are in friendly nature than beneficial for organisation.

• Opportunities and threats: Laws of srilanka give understanding about different laws and set needs and wants of consumers accordingly. While operating different countries it is very difficult to match needs in varies laws. Tesco have to build products according to rules and regulations of Srilanka.

Modes of entry

While enter into foreign market an organisation have to take some decisions that are very important in expansion of business such as in which market have to enter, when to enter and at which scale operate (Najev Čačija, 2013).There are different types of entry modes such as exporting, franchising, licensing, turnkey projects, mergers and acquisitions, joint venture and wholly owned subsidiary.

Exporting

In exporting sale of goods that is produced, collect and processed in home country and then supply in foreign country after evaluating demands of potential buyers. It is best method to increase sales and revenue (Proctor, 2014). In active exporting strategies adopted according to proper strategy and functioning of proceedings.

• Advantages of Exporting: Exporting is less expensive mode of entry in comparison of other mode of entry. Company selects a product to supply goods in foreign country. It considered as less risky because it understand culture and traditions of that particular country gradually. It has motivation which helps in expanding market share of business.
• Disadvantages of Exporting: There are some disadvantages of exporting while operating in different country that is it incurs high cost in case of direct exporting. Exporter has less control on supply of products and export through intermediaries increase cost.

Licensing

In this mode of entry domestic organisation gives right to avail intellectual property rights, technology and brand equity, copy rights etc. to foreign marketers in regard of fee. In that case producer in domestic country called licensor and manufacturer in alien country called licensee (Sargean tMACQUILLIN, 2016). This mode of entry is comparatively less costly in comparison to others modes. Any organisation by choosing alien destination and avail advantages without any responsibilities of management, investment etc.

• Advantages: There are many advantages of licensing that it cost effectively in side of licensor and low financial risk. Easy information can gather by not much investment of other country and licensor escape from risk of product failure.
• Disadvantages: In licensing opportunities for both licensor and licensee reduce and harms to them. In this process both parties have to promote product it incurs cost from both sides and misdeed from any side affects both of them. It increase misunderstanding between parties.

Joint venture

In joint venture two or more than two firms join each other to create new business opportunities that are different from each other in case of legal and patents. In JV both share joint ownership (Shank and Lyberger, 2014). In this process factors such as political,social, economical and legal factors jointly contribute to form join venture. In JV latest and upgraded human technology is require and helps to lessen risk while deal in foreign market. It acts improves image in both local and foreign market.

• Advantages of Joint venture: joint venture provides huge funds for projects. It divides risk among partners. It provides skills that remain in few hands like technical,human skills.
• Disadvantages: It arise a lot of conflicts and enhance time when conflicts arises. It has a long life cycle and it takes a long time in decision making process.

Tesco have to adopt entry mode in sri lanka is exporting because there are many advantages in comparison to other methods as explain earlier and easy to adopt also.

Concepts of market segmentation and targeting and evaluation of potential target market.

A market consist of people and organisation who have ability to purchase a product and services (Brower and Smith, 2012). As people have one or more characteristics that eager them to have same products and services. It is important for an organisation to successfully reach their precious customer, accordingly need to divide market into similar or identifiable segments through market segmentation.

Market segmentation is process of dividing a market of potential customer into groups, or segments, based on different nature of consumption of consumer. The main reason companies divides market into identifiable groups so that marketing team are able to create a custom marketing mix to specific groups of consumer. Its importance is that it allows a business to precisely reach a customer with their specific needs and wants. Moreover it is also beneficial for company because they are able to use their corporate resources more effectively and efficiently. With proper strategies and marketing decision of expanding new product in market. Further, a market segmentation strategy organizes its customer base on demographic, geographic, behavioural and psycho graphic segmentation (Thrassou and Yahiaoui, 2012). TESCO is coming up with its new product that is ethnic wear with retailers, wholesaler and manufactures primarily focus on demographic, personalties and need of consumer in Sri Lanka. It will allow them to reach their specific consumer through adverting its products through various marketing efforts and strategies. TESCO has segmented its product through different market segmentation that are mention below:

Gender Segmentation: Clothing market generally use this segmentation as it deals for both men and women (Tsiotsou and Goldsmith, 2012 ). TESCO is coming up with its ethnic wear products for both men, women and children that suits according to their age and personality. Moreover they are targeting customer on different occasion of festivals such as Vesak Poya, Person Poya festival and Sinhala etc.. of Sri Lanka.

Ethnic Segmentation: Sri Lanka is a multi cultural society, where customer are located in geographic location but their needs and wants are different. TESCO has segmented its product in culture diversity of Sri Lanka. As to satisfy the need and wants of ethnic wear of customer.

Psycho graphic Segmentation: Lifestyle, social class and personality are basis for psycho graphic segmentation market. TESCO has segmented its product on the lifestyle, different class of people, personality etc.. They are basically focusing on different class people of Sri Lanka. That enables customer to maintain their status symbol, royal look that suits personality.

A target marketing consist of group of potential costumer to whom a company or an organisation sell its product and services. The targeting strategy involves segmenting market by choosing appropriate customer, determining need and wants of product offered in each segment. It is important because it help to focus on potential consumer having common interest of product and services they are offering.

TESCO are using experimental positioning mainly to target their customer for its launching its products in the market of Sri Lanka. They are basically target both male and female and children toward their ethnic wear. With best quality of cloth material and new adoption of traditional technology equipments for trendy and fashionable ethnic wear.

Moreover they are specifically targeting customer who are more concern about their class, personality, royal look of attire. According TESCO need to focus on their product so meet up expectation of customer in market of Sri Lanka. As Sri Lanka is a multi diversity country with culture and customs.

Application of porter's generic strategy to gain competitive advantage in market.

Porter's generic strategies basically describe a firm's relative profitability position in market (West and Ibrahim, 2015). Weather the organisation is able to sustain in competitive advantage for long run. The competitive advantage of a firm combined with scope of activities for which a firm seeks to achieve them. TESCO has adopted this strategy to know its competitive position of its product that is ethnic wear in Sri Lanka. There are three generic strategies for achieving the performance of product in market. They are cost leadership, differentiation, and focus which are determined below:

Cost leadership: In cost leadership strategy, a firm set to produce low cost producer in industry. This is the traditional method to achieve market and to produce low scale which enables business to exploit economic of scales. It is usually associated with large scale business offering standard class product with relatively little differentiation. So that product is easily acceptable by customer. TESCO has adopted this strategy, a low cost leader to achieve command over its product in market. Such as high levels or productivity with good quality of product, effective use of cloth material and technology in production process. Moreover, having significant cost advantage over competition and able to increase market of their new product that is ethnic wear. Further, they are also providing discounts and other scheme to attract consumer.

Differentiation: In differentiation strategy a firms seeks to be unique in industry with some dimension that widely value to customer. It attracts consumer by uniquely positioning its product to meet the specific needs. Its objective is rewarded for its uniqueness with premium price of product. For this adoption of strategy, TESCO firstly need good examination of market of ethnic wear such as its needs and demand among customer. As this this strategy, requires proper research and development , innovation and ability to delivery high quality of products. They need effective marketing so as to understand benefits of their product that satisfy customer. Further, they have to flexible by nature to adapt changes according to demand of customer. TESCO need to keenly focus on the exact requirements of their respective customer as to create a creative approach.

Focus: In this strategy, a firm focus on choice of narrow competitive scope within an industry. This approach look towards appeal, instead layering efforts towards niche marker. It is deliberate risky that other strategies. On the other hand, a company is able to attain competitive advantage by focusing on loyal customer. The focus strategy has two variants:

Cost Focus leadership: A cost focused leadership strategy needs to completely evaluate the price based on target nice market. Companies are following this strategy to remain competitive in current scenario of market. TESCO are charging low product foe their ethnic wear to attract consumer towards it a gain market share in clothing sector in Sri Lanka. Moreover ,TESCO will able to charge high price for their premium quality in ethnic wear if they are able to gain competitive advantage in the market of Sri Lanka. Further, it will also have disadvantage if they are served well to their target market then its expansion will grow in the same product. It can be diluted or taken over by large players.

Cost differentiation strategy: This strategy provides unique features that fulfil need and demand of narrow segmentation of market. TESCO is focusing on consumer so that they are able to meet their demand that suits personality, royal status. They are coming up with wide variety of products in ethnic wear (Wilson and Gilligan, 2012). To meet the wide multi culture traditions people of Sri Lanka.

From the above discussion of porter's generic strategies. TESCO should adopt Cost Leadership strategy as they are coming up with new product that is ethnic wear into new market of Sri Lanka. They able to sustain in market of with the adoption of low cost price as are new in this clothing market. More over, they will need to research market of Sri Lanka keenly as to know what attires the customer are looking forward according to occasion of different festival seasons.

Read also:
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CONCLUSION

From the above conclusion it has been conclude that, TESCO will be able gain sustainability in the market of Sri Lanka. With their launch of new products that is ethnic wear. They are able to target their specific potential customer such as both male and female as well as children. Moreover, consumer who are concern about their looks, personality, help in maintaining royal status. TESCO has also adopted porter's generic strategy to know its implication in their business. Weather they would able to gain sustainable environment in the market of Sri Lanka. They have also adopted cost of leadership strategy to provide their product at low cost price. So that they are able to attain the large market share in the market of Sri Lanka. Instant Assignment Help Uk is a leading company providing online assignment help in the UK. Our writers have completed 1000+ assignments and are well known for every aspect of assignment writing. We guarantee 100% plag-free assignments and provide on-time delivery along with 24*7 assistance at cheap rates.

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