"The biggest challenge is to keep the players focussed. Of course, confidence is low," Parker told reporters ahead of Tuesday's away game. "It's been a really tough year, and there are scars.
"We need to win, really. Performances have progressively got better, but we understand the result is key.
"It (relegation) doesn't play a role for me. I think it should play a role with the players because if you're a player here and the team get relegated, things change."
The club spent an estimated 100 million pounds on new players in the close season after gaining promotion to the top flight but have failed to click as a team with Parker being named the club's third manager of the season.
"There's no hiding from the fact this club's been backed immensely by the owners," Parker, who replaced the sacked Claudio Ranieri in February, added.
"There have been mistakes made, but the one finger that can't be pointed is that money's not been spent to try and improve and establish this club in this division."
Parker was appointed ahead of a tough run of fixtures which included games against three 'top six' sides -- Chelsea, Liverpool and Manchester City -- and Ryan Sessegnon believes they can learn from those defeats when they take on Watford.
"With Scott, he was unlucky to come in at a time where you play against three top sides so you can't really judge us on those," Sessegnon told Standard Sport.
"On Tuesday, it'll be a test where we have to show ourselves. We need to keep doing the things we've been doing well, especially against the top six teams.
"A little message I'd say is to start better. We've started first halves too slow and we've been punished."
(Reporting by Rohith Nair in Bengaluru; Editing by Christian Radnedge)
