BUSINESS ANALYSIS OF ECOMMERCE &INTERNET MARKETING OF TESCO

Dissertation submitted in partial fulfillment of the requirements for the two year full time POST GRADUATE DIPLOMA IN MANAGEMENT PROGRAMME

Submitted By: SHUBHADIP BISWAS Roll No. FT-10-948 PGDM- 2010-2012

16, KNOWLEDGE PARK II GREATER NOIDA MARCH, 2012

BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

Declaration Form
I hereby declare that the Project work entitled “Business Analysis of E-Commerce & Internet Marketing of Tesco” submitted by me for the partial fulfillment of the Post Graduate Diploma in Management Program to Institute for Integrated Learning in Management, Greater Noida is my original work and has not been submitted earlier either to IILM-GSM or to any other institution for the fulfillment of the requirement for any course of study. I also declare that no chapter of this manuscript in whole or in part is lifted and incorporated in this report from any earlier/ other work done by me or others.

Place Date

: Greater Noida :

Signature of the Student:

Name of Student Address

- Shubhadip Biswas - Kholapota 24 Parganas (North) West Bengal PIN- 743428

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

Certification

This is to certify that Shubhadip Biswas, Roll No. FT-10-948, a student of Post Graduate Diploma in Management Program has done the dissertation on the topic “Business Analysis of E-Commerce & Internet Marketing of Tesco” under my guidance. This study is carried out in partial fulfillment of PGDM Program to be awarded by Institute for Integrated Learning in Management, Greater Noida. To the best of my knowledge, the piece of work is original and no part of this report has been submitted to any other institute/university earlier for reward of any degree or diploma

Mr. Abdul Majid Khan Associate Dean Assistant Professor-IT IILM-GSM

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

Acknowledgement
It has been an immense pleasure for me to have an opportunity to be known about and gain insight about “Business Analysis of E-Commerce & Internet Marketing of Tesco” the constraints of implementing E-commerce and the assessment of probable solutions. This research has been made possible through direct and indirect cooperation of various people to whom I wish to express my appreciation and gratitude. I am deeply indebted to my Professor, Prof. Abdul Majid Khan for giving me the opportunity to work on this research and for acting as a continuous motivator in providing the various resources and guidance needed for the successful completion of the research. I am also very much thankful to all the people who took precious time out from their work schedule to help me in understanding this research domain. Without their help it would have been extremely difficult for me to carry out even the minutest part of the analysis successfully; they constantly inspired me and solved the problems whenever the need arose. Lastly, but most importantly I would like to thank my friends and family for their ceaseless understanding, backing and confidence in my abilities.

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

Preface “Experience is the best teacher”
The PGDM program is well structured and integrated course of business studies. The main objective of comprehensive project at PGDM level is to develop skill in student by supplement to the theoretical study of business management in general. This project helps to gain real life knowledge and exposure about the industrial environment and business practices. The PGDM program provides student with a fundamental knowledge of business and organizational functions and activities, as well as an exposure to strategic thinking of management. In every professional course, training is an important factor and the training which we do during summer internship helps us a lot to successfully complete the comprehensive project. It is only the training through which I come to know that what an industry is and how it works.. During this comprehensive project I got a lot of experience and exposure about E-commerce Industry. I was able to learn how business operations being performed in the industry, which would, in return, help us in the future when we will enter the practical field.

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

TABLE OF CONTENT
ABSTRACT .......................................................................................................................................................................................................... 7

INTRODUCTION ................................................................................................................................................................................................ 8

SCOPE AND OBJECTIVES ............................................................................................................................................................................... 9

LITERATURE REVIEW................................................................................................................................................................................... 10

TESCO- ENTERPRISE ANALYSIS ................................................................................................................................................................ 11

PRODUCT CATEGORIES OFFERED IN TESCO DIRECT-ONLINE TOUCHPOINT ........................................................................... 22

FINANCIAL ANALYSIS ................................................................................................................................................................................... 25

PESTEL-INDUSTRY ANALYSIS .................................................................................................................................................................... 27

PORTER 5 FORCE MODEL-INDUSTRY ANALYSIS ................................................................................................................................. 30

MARKET SHARE .............................................................................................................................................................................................. 32

COMPETITOR ANALYSIS .............................................................................................................................................................................. 34

SWOT ANALYSIS ............................................................................................................................................................................................. 36

ZACHMAN FRAMEWORK ............................................................................................................................................................................. 40

TESCO E-COMMERCE AND INTERNET MARKETING-REQUIREMENT ANALYSIS ...................................................................... 42

CONSUMER RESEARCH METHODOLOGY ............................................................................................................................................... 59

CONSUMER RESEARCH ANALYSIS ........................................................................................................................................................... 61

SOLUTION ASSESSMENT .............................................................................................................................................................................. 69

APPENDIX.......................................................................................................................................................................................................... 76

REFERENCE...................................................................................................................................................................................................... 77

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

ABSTRACT

This project is an attempt to find the variables/factors that effects online business strategy adopted by Tesco considering retail market and consumers preference. The impact of various factors like PESTEL, Porters five force factors, Promotional factors, website strategy, SEO strategy, value chain factors, critical success factors, and other important factors( timeliness, online ad, quality, variety, brand image, price, TV commercial, Reference, web friendliness, Safe transaction, web attractiveness) etc on E-commerce has been analyzed. A hypothetical model has created in this paper, which has been taken into consideration for our research work on E-commerce and internet marketing of TESCO. This study is mainly based on the primary data collected through consumer survey with the help of structured questionnaire on likert scale and website review data from Alexa.com and secondary data related to this topic. The samples were selected by Convenience sampling method in Delhi NCR. The questionnaire was developed on the basis of exploratory research. The statistical analysis method employed in this study is Factor Analysis. After the thorough analysis of the available data it has been found out that to be successful in E-commerce, one has to focus on brand image, convenience factor, communication mix and responsiveness.

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

INTRODUCTION

E-commerce has revolutionized the business operations. E-commerce prevailed with the technological advancements and the innovative methods of sales and conducting transactions over the net. With, the increase in the rivalry and due to the effect of globalization of the business process with the presence of conglomerates both at the national and international markets has originated the need for e-commerce as a substitute to leverage growth in business and generate revenue. The increase in consumers’ demand for new products as well as the flexibility for shopping online, the brick and click strategy in business has made a tremendous impact in the actual form of retailing itself. Companies like Tesco, have wide range of business operations and huge number of products, it is neither effective nor efficient for them to sell directly to the final consumers. For these reasons they have to depend heavily on the brick and click strategy and distribution partners, who play an important role in value addition of the offering and selling the products to the final consumers. There are many factors which influence E-business or online retailing and help to provide an competitive edge over others. The key elements of E-commerce and internet marketing are variety, quality, website attractiveness, brand image, online ad, TV commercial, peer reference, safe transaction, price, website friendliness, extra benefit, timeliness, which play vital role at different levels of business process. Considering the above mentioned variables and their inter relationships, we have defined the four influential factors influencing the business, these are Image, Communication Mix, convenience factor and Responsiveness. In this report, my aim is to analyze the brick and click strategy adopted by Tesco and the constraints of implementing E-commerce and the assessment of probable solutions.

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

SCOPE AND OBJECTIVES
Aim of this report to analyze the E-commerce and internet marketing process followed by Tesco and how can it be improved. Primary Objectives: 1. About Business and Company-Enterprise Analysis 2. Scope and Market Analysis 3. Business objectives and goal 4. Requirement Planning 5. Requirement Analysis and Documentation 6. Requirement Elicitation 7. Solution Assessment Secondary Objectives: 1. To know the factors behind overall satisfaction of online purchase and to change business process accordingly 2. Factors having most impact for E-commerce and Internet marketing 3. Implementation of proper value chain in e-commerce and Internet marketing

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

LITERATURE REVIEW

Marketing and consumer researchers over the period of forty years have tried to grasp the factors which affect the buying decisions. Some of the research findings are discussed here. In a research conducted by Cobb and Hoyer (1986), impulse buying was defined as an unplanned purchase and this definition can also be found in the research of Kollat and Willett (1967). In another research by Rook (1987) reported that impulse buying usually takes place, when a consumer feels a forceful motivation that turns into a desire to purchase a commodity instantly. The decision of purchase elicits various responses from consumers (for a review, see Bloch 1995). Different from previous work that addresses the aesthetic aspects of design (e.g., Hirschman 1986; Holbrook 1986; Veryzer and Hutchinson 1998) or focuses on global cognitive evaluations and their effects on consumer behavior (e.g., Folkes and Matta 2004;Garber, Burke, and Jones 2000; Raghubir and Krishna 1993; Schoormans and Robben 1997), our research focuses on generalizing consumer brand impressions inferred from online purchase behavior. So in order to know which are the most influential factors which motivate the consumers to go for a particular type of purchasing, whether it is brand of the product, or the responsiveness, or the convenience factors, which consumer derive out of just simply purchasing a product from especially in this case it is online retailing. So to find out this, will help the company to reframe its strategy in terms of creating value to the customers and if needed can go for a new market.

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

TESCO- ENTERPRISE ANALYSIS

By revenue Tesco is the third largest retailer in the world just after Wal-mart and Carrefour and from profit it is the second largest retailer, just after Wal-mart. It has presence in fourteen countries across the world whereas in UK, Malaysia, Ireland and Thailand, it is the market leader of grocery store. Tesco is listed on the LSE and is a constituent of the FTSE 100 Index. Market capitalization of Tesco is approximately £26.68 billion as of 22 March 2012, the 15th-largest company of any company which is primarily listed on the LSE. Sir Jack Cohen founded Tesco as group of market stalls by in the year 1919. The brand “Tesco” first saw the light in 1924. Business of Tesco prevailed in the market rapidly, and by 1939 there were over hundred Tesco stores across UK. The business objective of Jack Cohen’s was to "pile it high and sell it cheap", for which he added an internal precept of "YCDBSOYA" (You Can't Do Business Sitting On Your Arse) by which he inspired his sales force. The stores which it operates mainly offer food products, as well as general merchandise, clothing products, and electrical products. Apart from this the services which are provided by this company are telecom, retail banking, financial, and insurance services. In addition, it is also in data analysis, distribution, and property operations and is also indulged in selling its products through online and catalog. The company has operational units in Hungary, the Republic of Ireland, India, Japan, Malaysia, Poland, Slovakia, United Kingdom, China, the Czech Republic, South Korea, Thailand, Turkey, and the United States. It has approximately 5,000 stores. A branded club card, named as a loyalty card was introduced by Tesco in 1995 and later an Internet shopping service. At one time Tesco was the only food retailer to make online shopping profitable. Retail analyst David McCarthy said that, "It has pulled off a trick that I'm not aware of any other retailer achieving. That is to appeal to all segments of the market" One endorsed motto of this strategy has been Tesco's use of its own-brand products, including the up market "Finest", midrange Tesco brand and low-price "Value" including different product categories such as food, beverage, home, clothing, Tesco Mobile and financial services. From 1997, Tesco began marketing itself using the phrase "The Tesco Way" to describe the company's core purposes, values, principles, and goals.
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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

This phrase became the standard marketing pitch for Tesco as it enhanced its business domestically and internationally, implying a shift by the company to focus on both interactive and internal marketing. Stores Six formats are there in the context of Tesco, differentiated by size and the range of products sold. These are shown below: Tesco Extra Tesco Extra stores are huge, mainly out-of-town hypermarkets that stock nearly all of Tesco's product ranges. Exceptions include Trowbridge, Stafford, Hexham, Kingston upon Hull, Stevenage, Chesterfield, Clay Cross, Leigh, Wigan, Grimsby, Bulwell, Galashiels, Cumbernauld, Slough, Bradford, Eastbourne, Yeovil, Cradley Heath, Nottingham Beeston Burnley, and Leyland, which are in the heart of town centers. Cardiff (Western Avenue) and Cardiff (Pengam Green), Warrington and Walsall College are located in inner-city locations. The first Extra opened in 1997 in Pitsea and more recently in 2009 Maldon. The 100th store opened on 29 November 2004 in Stafford. The number has been continuously increasing by about 20 a year, mainly by transformations from the second category. The largest store in England by floor space is Tesco Extra in Walkden, with 185,500 square feet (17,230 m2) of floorspace. In November 2011, a Tesco Extra opened in St.Helens adjacent to the new St.Helens RLFC Stadium, but only as a one floor store. The largest in Scotland is the Silverburn store. The largest in Wales is at Parc Fforestfach, Swansea, which is 112,000 square feet (10,400 m2) constructed in 2003. The 200th Extra store was opened in October 2010 in Bishop Auckland. Other large stores are Bar Hill, Cleethorpes, Newcastle upon Tyne, Milton Keynes, Stockton-onTees and Watford, which are in the 120,000 square feet (11,000 m2) area range. Newer stores usually have two floors, with the ground floor mainly for food and the first floor for clothing, electronics and entertainment. The stores which were not having the second floor have been converted to this format in recent years. Most Tesco Extra stores have a café and as of October 2009, all stores have a Tesco Tech Support Team.

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

Tesco Superstores Tesco superstores are standard large supermarkets, stocking groceries and a much smaller range of non-food goods than Extra stores. The stores have always previously been branded as simply 'Tesco', but one of the new store in Liverpool was the first to use the format brand 'Tesco Superstore' above the door.

Tesco Metro These are the stores which are sized between Tesco superstores and Tesco Express stores, with stores averaging 11,000 square feet (1,000 m2). These stores are mainly in city centers, the inner city and on the high streets of towns. It was 1980, when first Tesco Metro was opened in Neston. And from that time, all Tesco branches with a high street format, including those that opened before the Covent Garden branch, are continuously being rebranded from Tesco to Tesco Metro. The Tesco store in Devizes was the last store to finish rebranding, in September 2006. And no store has been renovated for over 20 years. Tesco Express Tesco Express stores, which are neighborhood convenience stores are sized around 2,200 square feet (200 m2), and to stock mainly the food with an emphasis on higher-margin products (due to small store size, and the necessity to maximize revenue per square foot) alongside everyday essentials. The stores of Tesco are found in busy city centers, small shopping precincts in residential areas, small towns and villages and on Esso petrol station forecourts. The 1000th Tesco Express site opened in July 2009. And now Tesco has started creating the Tesco Express stores with only 'Assisted-Service' tills, in which the customer scans all their own shopping and packs it, with the help of supervising staff when required.

One Stop One Stop are those stores which are smaller than Tesco Express, is the only Tesco store format in the UK that does not include the word Tesco in its name. The brand, along with the original stores, formed part of the T&S Stores business but, unlike many that were converted to Tesco Express, these kept their old name. Similarly other stores which were bought by Tesco have been converted to the One Stop brand. Some have Tesco Personal Finance branded cash machines
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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

There is some controversy as well, as grocery prices in these shops, often situated in less well-off areas, can be higher than nearby Tesco branded stores, highlighted in The Times 22 March 2010: "Britain’s biggest supermarket uses its chain of 520 One Stop convenience stores—which many customers do not realise it owns—to charge up to 14 per cent more for goods than it does in Tescobranded stores." Tesco responded to the article stating "It is a separate business within the Tesco Group, with its own supply chain and distribution network. The operating cost of One Stop stores differs than that to Express stores. One Stop’s price strategy is to match its nearest competitor Cost Cutter and is frequently cheaper." Tesco Homeplus Only food are offered in warehouse-style units in retail parks, otherwise all other product are offered in Tesco’s stores. The reason behind using this formats is only because 20% of its customers have access to a Tesco Extra, and the company is restricted in how many of its superstores it can convert into Extras and how quickly it can do so. There are large units for nonfood retailing much more readily available. Currently there are 13 Homeplus stores nationwide, and the newest Homeplus store opened in Chester in July 2009. Two more stores were due to open in the first half of 2009 at sites around the country. All of these were to feature the Order and Collect desk where customers can purchase and collect most items straightaway.

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

Store facts As of 26 February 2011, at the end of its 2010/11 financial year, Tesco's UK store portfolio was as follows.
Format Number Total Total Mean Mean Percentage +/- Stores area (m²) area (sq ft) area (m²) area (sq ft) of space 2010/11 1,400,885 15,079,000 6,608 71,127 41.08% 22 1,297,112 13,962,000 2,760 29,706 38.04% 15 194,632 2,095,000 1,046 11,263 5.73% 5 272,392 2,932,000 212 2,282 7.99% 155 74,044 797,000 142 1,530 2.04% 8 51,468 554,000 3,790 42,615 1.53% 0 121,053 1,303,000 4,323 46,536 3.57% 3 208 3,411,586 36,722,000 1,257 13,526 100%

Tesco Extra 212 Tesco Superstores 470 Tesco Metro 186 Tesco Express 1,285 One Stop 599 Tesco Homeplus 13 Dobbies 28 Total 2,815

Banking There is Tesco bank, which is banking arm of the Tesco is formerly a 50:50 joint venture with the Royal Bank of Scotland. The products include credit cards, loans, mortgages, savings accounts and several types of insurance, including car, home, life and travel. And the way to promotion these products are through leaflets and its website. The business made a profit of £130 million for the 52 weeks to 24 February 2007, of which Tesco's share was £66 million. This move towards the financial sector diversified the Tesco brand and provides opportunities for growth outside of the retailing sector. On 28 July, 2008 Tesco announced that they were buying out the Royal Bank of Scotland's 50% stake in the company for £950 million. In October 2009 the name of Tesco Personal Finance was changed to Tesco Bank Other businesses Garden centres Tesco announced its intention to purchase Dobbies Garden Centres for £155.6 million on 8 June 2007. 28 garden centres are operated by Dobbies.

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

Technika Technika is a brand name for electronic products which are sold exclusively through Tesco Stores. And it includes range Televisions, MP3 Docking Stations, Computer Peripherals, DVD and Blu-ray Players, DAB Radios. To follow the market trends, the range is modified time to time. The Technika brand is managed in-house by Tesco alongside its other brands, such as Tesco and Tesco Value. Tesco Electrical Helpline or in-store through Tesco Tech Support offers the Customer Support services. Telecoms Tesco operates in mobile phone, home phone and broadband businesses. And the availability is there to residential consumers in several countries and are sold via the Tesco website and through Tesco stores. Tesco has not purchased or built a telecoms network, but instead has pursued a strategy of pairing its marketing strength with the expertise of existing telecoms operators. Mobile In late 2003, Tesco Mobile was launched as a joint venture with O2. In November 2009 Tesco announced over 2 million UK customers were using this service. In Ireland and Slovakia, a similar O2 based service has since been launched ISP In August 2004 Tesco broadband, an ADSL-based service delivered via BT phone lines, was launched in partnership with NTL. In November 2009 Tesco announced a new partnership with Cable & Wireless, and a fresh focus on this business area. VoIP In January 2006, Tesco Internet Phone, a Voice over Internet Protocol, VoIP, service was launched in partnership with Freshtel of Australia. This service was shut down in 2010. Phone Shops In November 2009 Tesco has announced, it now has 100 Phone Shops embedded within larger Tesco Extra stores, and stated an intention to open up to 500 such shops across the UK in the medium term. In April 2010 the first Tesco Phone shop opened in Slovakia.

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

Fuel Tesco first started selling petrol in 1974. Tesco sells 95, 97 and 99 RON (a fuel developed by Greenergy of which Tesco is a shareholder) petrol from forecourts at most superstore and Express locations. Diversification into other fuel products has been done recently by Tesco, these are bio fuels, offering petrol-bio ethanol and diesel-biodiesel blends instead of pure petrol and diesel at their petrol stations, and now offering Greenergy 100% biodiesel at many stores in the southeast of the United Kingdom. It was 28 February 2007 in South East England when motorists reported that their cars were breaking down. This was due to petrol sold by Tesco and others being mixed with silicon, Tesco has been criticized with claims that they had been alerted to the problem as early as 12 February 2007. On 6 March, Tesco offered to pay for any damage caused by the faulty petrol, after printing full page apologies in many national newspapers. Tech support Tesco acquired a small I.T. Support company called The PC Guys in 2008, and were able to launch Tesco Tech Support in December. The teams of advisors were given the role of answering the technical questions on Tesco’s range of electrical products, and they are also responsible for advising customers on extended warranties, electrical returns and a range of payment plans on all electrical goods over a certain amount. Through the Cardiff Customer Service Centre in the United Kingdom, Tesco Tech Support provides UK and Ireland with technical support via telephony system on the electrical products sold in their stores. Film making In 2010, the beginning of a small firm studio was done by Tesco to produce Tesco exclusive directto- films. The first film comes out on 6 September and is called Paris Connections. In 2010, the formation of their own record label was announced by Tesco, with notable signings since including Mick Hucknall and Nadine Coyle. Tesco records will be exclusive products to Tesco stores. Video-on-demand On 20 April 2011, Tesco acquired a 80% stake in Blinkbox from Eden Ventures and Nordic Venture Partners, it intends to use the company to boost its digital entertainment offering.
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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

Gold Exchange In 2011, Tesco launched postal gold service with the brand name Tesco Gold Exchange, offering money for gold, as well as offering clubcard points to customers via their website. Tesco Tyres In 2011, Tesco launched tesco-tyres.com in association with Blackcircles.com, offering a choice of over 1,200 fitting partners across the UK as well as offering clubcard points with purchases. Your Beauty Salon Tesco launched Your Beauty Salon, in Tesco in February 2011, and planning to open 70 over the next year, offering services like haircuts, leg waxing, manicures and eyebrow.

Tesco Clubcard Customers can collect one Clubcard point for every £1 (or one point for €1 in Ireland and Slovakia) they spend in a Tesco store, or Tesco.com, and 1 point per £2 on fuel (not in Slovakia). Customers can also collect points by paying with a Tesco Credit Card, or by using Tesco Mobile, Tesco Homephone, Tesco Broadband, selected Tesco Personal Finance products or through Clubcard partners, E.ON and Avis. Each point equates to 1p in store when redeemed or up to 3 times their value when used with clubcard deals (offers for holidays, day trips, etc.) Clubcard points (UK & IE) can also be converted to Airmiles. Tesco have recently announced a partnership with Virgin Atlantic whereby you can convert clubcard points into frequent flyer miles. Holders receive Clubcard statements 6 times a year, which often feature extra point coupons and money-off coupons. These can be spent in-store, online or on various Clubcard deals. Tesco was cited in a Wall Street Journal article as using the intelligence from the Clubcard to thwart Wal-Mart's initiatives in the UK. Internet operations Tesco operates a grocery home shopping service, as well as providing consumer goods, telecommunications and financial services online. Tesco has been operating on the internet since 1994 and was the first retailer in the world to offer a robust home shopping service in 1996. Tesco.com was formally launched in 2000. It also has online
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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

operations in the Republic of Ireland and South Korea. And at every selected stores, grocery sales is available within delivery range, goods being hand-picked within each store, in contrast to the warehouse model followed by Ocado. In 2003, tesco.com's CEO at the time, John Browett, received the Wharton Infosys Business Transformation Award for the innovative processes he used to support this online grocery service. On 1 October 2007, Tesco declared that it will be selling six own-brand budget software packages for under £20 each, including office and security suites, in a partnership with software firm Formjet. As Formjet is exclusive distributor for Panda Software and Ability Plus Software, packages from these companies are likely to feature. An internet-based DVD rental service, which is operated by LOVEFiLM and a music download service is also a part of Tesco. International operations Tesco's international expansion strategy responded to the need to be sensitive to local expectations in other countries by joint ventures with local partners, such as Samsung Group in South Korea (Samsung-Tesco Home plus), and Charoen Pokphand in Thailand (Tesco Lotus), appointing a very high proportion of local personnel to management positions. It also makes small acquisitions as part of its strategy for example, in its 2005/2006 financial year it made acquisitions in South Korea, one in Poland and one in Japan. Tesco announced that it was selling its operations in Taiwan to Carrefour and purchasing Carrefour's stores in the Czech Republic and Slovakia in September,2005. And also both the companies had declared that they were concentrating only those markets which they have strong positions in.

India In India, if we talk about Tesco has a limited presence with a service centre in Bangalore. In 2008 Tesco announced their intention to invest an initial £60m ($115m) to open a wholesale cash-andcarry business based in Mumbai with the assistance of the Tata Group.

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

Promotion Mix Tesco has been using several television adverts over the years. In July 2007 a DVD containing adverts from 1977–2007 was given to all members of staff. Early advertising stressed cheap prices and how to keep "The cost of living in check." In 1977 an advert was made where a till showed the prices to many items such as "baked beans 121/2p". The most famous advert was "Checkout 82," which was made in 1982, where a till would have a receipt coming out of it with the prices on. This advert had synth pop music as the backing and people singing "Check it out, check it out". Adverts in the late '90s had Prunella Scales as Dotty Turnbull, arguing about Tesco prices. In 2003, adverts showed items and shopping trolleys talking about Tesco. Many celebrities such as The Spice Girls and the voice of actors James Nesbitt and Jane Horrocks were included into their adverts in 2000s Corporate social responsibility A commitment to corporate social responsibility in the form of contributions of 1.87% in 2006 of its pre-tax profits to charities/local community organizations was made. This compares favorably with Marks & Spencer's 1.51% but not well with Sainsbury's 7.02%. "Computers for schools scheme" was started by Tesco in 1992, offering computers in return for schools and hospitals getting vouchers from people who shopped at Tesco. Until 2004, £92 million of equipment went to these organizations. The scheme has been also implemented in Poland. During the Football season 2005-06, the company sponsors the Tesco Cup, a football competition for young players throughout the UK. In 2009 Tesco used the phrase, “Change for Good” as advertising, which is trade marked by Unicef for charity usage but not for commercial or retail use, which prompted the agency to say, "It is the first time in Unicef’s history that a commercial entity has purposely set out to capitalize on one of our campaigns and subsequently damage an income stream which several of our programs for children are dependent on.” They went on to call on the public “...who have children’s welfare at heart, to consider carefully who they support when making consumer choices”. The own labels for personal care and household products are moreover cruelty free - this means, they are not tested on animals.
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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

In June 2011, Tesco announced that it was working with 2degrees Network to create an online hub as part of its target to reduce its supply chain carbon footprint by 30% by 2020. In September 2011 a Greenpeace report revealed that Tesco supermarkets in China were selling vegetables that contained illegal pesticides or at levels exceeding the legal limit. A green vegetable sample from Tesco turned up methamidophos and monocrotophos, the use of which has been prohibited in China since the beginning of 2007.

Litigation Tesco is involved in litigation, usually from claims of personal injury from customers, claims of unfair dismissal from staff, and other commercial matters. Two notable cases were Ward v Tesco Stores Ltd, which set a precedent in so called 'trip or slip' injury claims against retailers; and Tesco Supermarkets Ltd v Nattrass, which reached the House of Lords, in which Tesco was cleared of responsibility for a staff member's failure to correct a misleading advert.

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PRODUCT CATEGORIES OFFERED IN TESCO DIRECT-ONLINE TOUCHPOINT

Computers, Photography, & Gaming All Accessories, Apple Mac, Cameras, Camcorders Drives & Storage ,Desktops & Monitors, Digital Photo Frames, Book, readers, Electrical Trade, Fitness & Outdoor, GPS Gaming, Home & Wireless Networking, iPad, Laptops, Netbooks, Printers, Ink & Paper, Photo Prints & Gifts, Projectors , Shredders & Laminators, Software, Tablet PCs, Laptop/Console Repair

Phone Pay as you go Mobiles, Pay as you go SIMs, Pay monthly Mobiles & SIMs, Mobile Accessories. IPhones, Telephones, Broadband, Mobile Broadband, International Calling Card, Mobile Recycling Clearance Home Electrical Washing Machines, Vacuum Cleaners, Home Appliances, Built-In Appliances, Coffee Machines, Dishwashers, Fires, Freestanding Cookers, Fridges & Freezers, Heating & Cooling, Ironing & Sewing, Kettles & Toasters, Microwaves. Personal Care. Small Kitchen Appliances, Tumble Dryers, Vacuum & Steam Cleaners, Washing Machines, Steam Generators & Vacuums

Sound and Vision Televisions, TV Installations, TV Stands, Brackets & Accessories, Projectors, DVD, Blu-Ray & Home Cinema, Digital TV Boxes & Media Streamers, AudioiPod, MP3 & MP4 Players, Headphones, Audio & iPod Accessories, Musical Instruments Furniture and Kitchen Beds, Mattresses & Divans, Bedroom, Conservatory, Dining, Home Office, Kids Furniture, Kitchen, Living Room, Modular Furniture, Outdoor, Sofas & Armchairs, Top 20 Offers, Clearance

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

Home and Bath Bathroom Accessories, Bathroom Suites, Bathroom Textiles, Bedding. Bins, Carpets, Cookware, Curtains & Blinds, DiningFloorcare & Kitchen Essentials, Home Accessories, Home Furnishings, Kids Bedding, Laundry Care, Lighting, Pet Care, Storage & Shelving DIY and Car Care Batteries, Bike Carriers, Carpets, Car & Scooter Accessories, Car Travel & Touring, Decorating, Electrical Accessories, Garden. Home Improvements, Homebrew Kits & accessories, Ladders, Power Tools, Pressure Washers, Roof Boxes, Satellite Navigation, Scooters, Security Tools, Torches, Tyres, Tesco Cars, Windows and Doors, Utility Storage & Shelving.

Clothing and Beauty Shop Clothing Womenswear, Menswear, Kidswear, School Uniform, Occasionwear, Character & Fancy Dress, Sale Shop Beauty Skin Care, Make Up, Fragrance, Gift Sets, Shop Jewellery Gold Jewellery. Silver Jewellery, Charms & Beads, DiamondsJewellery, Boxes, Watches, Jewellery Clearance Sports and Leisure Bikes Accessories, Bikes, Camping & Hiking, Equestrian, Fishing, Fitness, GolfLuggage & Sports Bags, Racket,Sports Nutrition, Street Sports, Swim & Triathlon, Table Games & Darts, Team Sports, Water

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

Toys and Gifts Action Figures & Playsets, Animal Playsets, Arts, Crafts & Science, Dolls & Playsets, Fancy Dress, Gadgets, Gifts & Robotics, Games & Puzzles, Gift Experiences, Infant & Pre-School Toys, Kids Bedroom, Kids Bikes, LEGO & Building Blocks, Music, Online Photo Centre, Outdoor Toys, Party, Pretend Play, Soft Toys, Vehicles Baby and Toddler Bathing, Changing & Nappies, Bouncers, Toys, Walkers & GymsCar Seats, Carriers & Accessories, High Chairs, Feeding & Sterilizers, Maternity Mattresses, Nursery Furniture, Nursery Interiors & Bedding, Pushchairs, Buggies & Travel Systems, Stair Gates, Playpens &

Garden BBQs, Blowers/Vacs, Cabins and Summerhouses, Chainsaws, Garden Accessories, Garden Care, Garden Furniture, Garden Sheds, Garden Storage, Gates & Fencing, Gazebos, Greenhouses, Landscaping, Lawn Mowers, Lighting/Heating, Outdoor Toys, Playhouses, Pressure Washers, Trimmers & Cutters

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

FINANCIAL ANALYSIS

The figures below are the Tesco's financial years, which run for 52 or 53 week periods to late February. Up to 27 February 2007 period end the numbers includes non-UK and Ireland results for the year ended on 31 December 2006 in the accounting year. The figures in the table below include 52 weeks/12 months of turnover for both sides of the business as this provides the best comparative. By the 2006 year end, Tesco was the fourth largest retailer in the world behind Wal-Mart, Carrefour and Home Depot. Tesco was better than Home Depot during 2007, following the sale of Home Depot's professional supply division and a decline in the value of the U.S. dollar against the British pound. METRO was only just behind and might move ahead again if the euro strengthens against the pound, but METRO's sales include many billions of wholesale turnover, and its retail turnover is much less than Tesco's. The equity figure on the balance sheet is understated since the property assets are shown at purchase cost less accumulated depreciation, as mentioned below, whereas in reality these assets have shown the increment greatly in value. Taking into consideration that Tesco is now, year by year, gradually divesting this property, with large gains compared to book value, these property assets provide a buffer to the current leverage position.

Finally, since the company has very reliable and predictable earnings, because the major products sold are consumer staples like food and personal goods, it is unlikely that even a major recession will seriously affect sales and profits. The company should therefore, have no difficulty making interest payments even under quite adverse conditions.

S & P rates Tesco long-term debt as A-, outlook stable.

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

52/3 weeks ended 26 February 2011 27 February 2010 28 February 2009 23 February 2008 24 February 2007 25 February 2006 26 February 2005 28 February 2004 22 February 2003 23 February 2002 24 February 2001 26 February 2000 27 February 1999 28 February 1998

Turnover (£m) 67,573

Profit before tax (£m) 3,535

Profit for year Basic earnings per share (£m) 2,671 33.10 (p)

62,537

3,176

2,336

31.66

54,300

3,128

2,166

28.92

47,298

2,803

2,130

26.95

46,600

2,653

1,899

22.36

38,300

2,210

1,576

19.70

33,974

1,962

1,366

17.44

30,814

1,600

1,100

15.05

26,337

1,361

946

13.54

23,653

1,201

830

12.05

20,988

1,054

767

11.29

18,796

933

674

10.07

17,158

842

606

9.14

16,452

760

532

8.12

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

Despite recession, Tesco made record profits for a British retailer in the year to February 2010, during which its underlying pre-tax profits increased by 10.1% to £3.4 billion. Tesco is now planning to create 16,000 new jobs, of which 9,000 will be in the UK. In 2011 the retailer reported its poorest six-monthly UK sales figures for 20 years, as a result of consumers' reduced non-food spending.

PESTEL-INDUSTRY ANALYSIS

Factor-Political

Business in Europe and in addition to the UK; the Republic of Ireland, Hungary, Czech Republic, Slovakia, Turkey and Poland are the six countries, where Tesco has its operational units. Tesco also has presence in Asia), Political and legislative conditions of these countries have high correlation with the performance of the Tesco. Retailers or dealers are inspired by government to offer a mix of job opportunities from flexible, less-paid and locally-based jobs to highly-skilled, higher-paid and centrally-located jobs (to meet the demand from population categories such as students, working parents and senior citizens, due to employment legislations factor. Tesco realizes that talent retention has a great effect on people and job, factors (new store developments are often seen as weakening the situation other jobs in the retail sector as the traditional stores are forced to go out of their business and are forced to lessen the price of the products to compete, being primarily local and labor-centric sector. Tesco gives opportunity to a large numbers of students, disabled and elderly workers, mostly paying them lower wage rates. These workers often show a higher level of loyalty, as these people are well motivated by the better salary. Hence they become desirable employees . Factor-Economical

This is one of the major concern to Tesco, because this factor affect the costs, prices, demand and profits. High unemployment is one of the most important factors of economy, which reduces the
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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

effective demand for many goods, oppositely effecting the demand required to produce such goods. And these factors are out of the control of the company, but they have profound effects on the marketing mix and performance. Though international business is still expanding, and it is expected greater amounts of Tesco's profits in near future would be contributed by international business; still the company is based on and dependent on the UK market. Hence, Tesco would be badly influenced by any slowdown in the UK food market and are shown to market concentration risks.

Factor-Social Current trends show that British customers have moved towards ‘one-stop' and ‘bulk' shopping, which is because of a variety of social changes. Tesco have, therefore, increased the amount of nonfood items available for sale. There are demographic changes such as the aging population, an increase in female workers and a decline in home meal preparation which means that UK retailers are also focusing on value added products and services. Apart from this, the focus is now towards; the own-label share of the business mix, the supply chain management and other operational improvements, which can drive costs out of the business. The function of their social conditioning and their attitudes are demanded by the consumers. And nowadays, the consumers are becoming more and more aware of health issues, and there is change towards food. One example of Tesco adapting its product mix is to accommodate an increased demand for organic products. Allowing the customers to pay in cheque and cash at the checkout was the strategy, which was firstly implemented by Tesco.

Factor- Technological

Major macro-environmental variable is technology usage in the business, which influences the development of many of the Tesco products. The use of new technologies will benefit both customers and the company: customer satisfaction rises because goods are provided to the consumers at time, services can become more personalized and shopping more convenient. The launch of the Efficient Consumer Response (ECR) initiative provided the shift that is now clear in the management of food supply chains. Tesco stores utilize the following technologies: • • • Wireless devices Intelligent scale Electronic shelf labeling
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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

• •

Self check-out machine Radio Frequency Identification (RFID).

The use of Electronic Point of Sale (EPoS), Electronic Funds Transfer Systems (EFTPoS) and electronic scanners have provided the Tesco, a great opportunity to improve on its efficiency of distribution and stocking activities, with needs being communicated almost in real time to the supplier Factor- Environmental

Pressure is there on many companies and managers to realize their responsibility towards society, and act in a way which benefits society overall. The major societal issue threatening food retailers is environmental issues, the key area for companies to act in a socially responsible way and to produce and opt for ethical ways. Hence, by realizing this trend within the broad ethical stance, Tesco's CSR is concerned with the ways in which an organization moved ahead to the minimum obligations to stakeholders specified through regulation and corporate governance. There are clear intentions of government to launch a new strategy for sustainable consumption and production to cut waste, lessening consumption of resources and to minimize environmental damage. The so-called ‘fat tax' directly affects the Tesco product ranges that have subsequently been adapted, and also affecting relationships with both suppliers and customers

Factor-Legal

There is direct impact on Tesco business, because of several government policies. For instance, the Food Retailing Commission (FRC) suggested an enforceable Code of Practice should be set up banning many of the current practices, such as to demand payments from suppliers and to change the prices which were agreed between. The powerful players who are present with established brands, creating a threat of intense price wars and strong requirements for product differentiation. Policy from govt. side can limit entry to this sector with such controls as license requirements and limits on access to raw materials. While prices are less on promoted goods, prices elsewhere in the store are raised to compensate.

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

PORTER 5 FORCE MODEL-INDUSTRY ANALYSIS

The Porter’s 5-Force Model (developed by and named after Michael Porter) helps identify the external forces that act upon and influence a company’s competitive position and strategy. These are: (1) Inter Firm Rivalry: The biggest threat a company faces is from rival firms in the same industry and product category. They compete for the slice of the same market share and for the same spot in the consumer’s perceptual map. Very less growth is there in case of Tesco, because now large players are also entering to this market, with greater store size, increased retailer franchisees, and the utilization of a range of formats, which are now prominent characteristics of the sector. As it was mentioned above, the purchasing power of the food-retailing industry is mostly in the hands of a relatively small number of retail buyers. Operating in a mature, flat market where growth is difficult (a driver of the diversification into non-food areas), and the demand is there from the consumers side, large chains as Tesco are accruing large amounts of consumer information which can be utilized to communicate with the consumer in their terms. This highly competitive market has boosted an accelerated level of development, consequence of a situation in which UK grocery retailers have had to be innovative to maintain and build market share. The dominant market leaders have responded by refocusing on price and value, whilst reinforcing the added value elements of their service (2) Threat from New Entrants: A firm not only faces competition from existing companies in the industry but also potential entrants. If a new entrant is successfully able to grab a foothold in the market, the slice of the pie gets reduced for all the other companies as well. Over the last 30 years, as we know that the grocery market has been transformed into the supermarket-dominated business, Majority of large chains have built their power due to operating efficiency, one-stop shopping and major marketingmix expenditure. This powerful force had a great impact on the small traditional shops, such as butchers, bakers and etc. Therefore, nowadays there is a strong barrier for new companies who desire to enter the grocery market. For example, it is difficult for new companies to raise sufficient capital because of huge fixed costs and higher developed supply chains. Other barriers include economies of scale and differentiation (in the provision of products or services with a higher perceived value than the competition) achieved by Tesco and Asda seen in their aggressive operational tactics in product development, promotional activity and better distribution.
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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

(3)

Threat from Substitutes: Substitutes are firms that do not belong to the same industry per se but address the same consumer need or want. They also attempt to satisfy the same consumer need as the other firms- though through a similar and not same product offering. In the grocery industry this is seen in the form of product-for-product or the substitute of need and is further the things look weakened by new trends, such as the way small chains of convenience stores are emerging in the industry. ASDA and Sainsbury's are trying to acquire existing small-scale operations and opening Metro and Express stores in local towns and city centers and therefore are threatening to the Tesco.

(4)

Pressure from Suppliers: With increasing bargaining power of suppliers, the firm is forced to accept their terms and conditions. With a strong supplier, the company is compelled to accept the price and other terms as dictated by the suppliers. The bargaining power of suppliers is get influenced by major grocery chains and that fear of losing their business to the large supermarkets. Therefore, this helps in retaining the leading positions of stores like Tesco and ASDA in implementing better promotional prices from suppliers that small individual chains are unable to match. In return, UK based suppliers are also feared by the growing ability of large retailers to enable their products from abroad at cheaper deals. The forces of competitive rivalry have reduced the profit margins for supermarket chains and suppliers Increasing Pressures from Buyers: with the increasing power of consumer – both in terms of bargaining power as well as awareness and exercise of choice, the firm has to be in a position to respond to consumer needs and strive to satisfy the consumer in a speedy, reliable and cost effective manner. By differentiating its product offering, effective positioning and promotion, and cost leadership, Tesco has been able to retain a large share of the consumer’s mind and recall. Clubcard of Tesco remains the most successful loyalty card which also had increased the profitability of Tesco's business. In satisfying customer needs and wants, customizing service according to the customers, ensuring right prices, better options to the customers, constant promotions in stores, enables brands like Tesco to have the control and to retain their customer base. In recent years, the change in food retailing has happened due to a large demand of consumers doing most of the shopping in supermarkets this shows a huge need for supermarkets to sell non-food items. Now Consumers are also aware of the issues surrounding fairer trade and the influence of western consumers on the expectations and aspirations of Third World producers. Consumer produce such as tea, coffee and cocoa is viable, and at the majority of large chains, these products are available.
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(5)

BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

MARKET SHARE

Supermarket

Market share August 2011

+/- from August 2010 0.3% 0.5% 0.0% 0.1%

Tesco Asda Sainsbury's Morrisons Others

30.5% 17.1% 16.1% 11.7% 24.6%

According to new research published in March-2012, Tesco has realized its share of the UK grocery market dropping down to a seven-year low of 29.7 per cent this month-march,2012,. Data from Kantar World panel shows that May 2005 was the last time that Tesco’s market share was as low as it is currently, with trading continuing to prove difficult for the retail giant following a disappointing 2.3 per cent drop in like-for-like sales it posted for the recent Christmas trading period. The overall grocery market grew 4.5 per cent during the 12 weeks to February 19th 2012, today’s report reveals, which is huge in the sector’s performance over the past six months. It is the question to Tesco, that although over market growth is still below Kantar’s measure of grocery price inflation, many of its competitors are seeing their slice of the market hit all-time highs.
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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

While consumer spending remains squeezed, many other grocers stores have managed growth in recent months, with ASDA strengthening its position as the second biggest supermarket chain with 17.5 per cent of the market and rival Waitrose reporting a record share in this latest report. Edward Garner, Director at Kantar World panel, said: “While the growth rate remains lower than grocery price inflation, currently at 5.5 per cent, the gap between the two measures is narrowing – meaning pressure on household budgets, while still strong, is not getting any worse. “Its consistently strong performance shows that it is a mistake to talk about the ‘average’ UK shopper. Some consumers clearly value good service and in-store experience when shopping, which Waitrose claims to provide.”

Due to an aggressive store expansion, Waitrose has also experienced a climb in share. The other big grocers have also been expanding but to varying degrees of success; while Sainsbury’s upped their market share to 16.6 per cent in the period, Morrisons saw its fall from 12.3 per cent to 12.2 per cent.

At the value end of the market Aldi, Lidl and Iceland all saw good amount of growth in till sales during the period, with rises of 23.5 per cent, 10.5 per cent and 10.9 per cent respectively, to help them all hold on to record share of the market.

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

COMPETITOR ANALYSIS

Tesco is the leader in the UK in terms of market share. This pattern is repeated online. The Nielsen/Netrating audience panel for the top UK supermarkets shows the leadership of Tesco, offline market share is in brackets from TNS which monitors the household grocery purchasing habits of 25,000 demographically representative households in the U.K.: • • • • • Tesco.com (5.2. million unique users, , 30.9%) Asda (1.4 uniques users, 16.9%) Sainsburys (840,000, 16.4%) Waitrose (332,000) Morrisons (225,000).

As we know that Tesco operates in 13 international markets in addition to the core UK market, it is not possible for me to go into the competitive conditions in each market. I will limit this section to a brief consideration of the UK market and the Thai market as an example of one of the emerging markets Tesco serves.

If we talk in UK, Tesco's key competitors are Asda (a subsidiary of Wal-Mart), Sainsbury and Morrison. In March, 2011 the respective market shares were:

Tesco 30.3% Asda 16.9% Sainsbury 16.5% Morrison 12.3%.

In recent years, Sainsbury is the notable winner in the UK market with consistent increment in market share. Over the last year (to March, 2011) Tesco has lost ground slightly, as mentioned below under headwinds.

However within the UK, Tesco has been the dominant player with the market share almost doubles its nearest rival. I believe this dominance provides economy of scale advantages and a competitive challenge difficult to duplicate.
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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

However, major concern is the growth in the international markets (and especially the emerging markets) since this is where future value lies. In terms of the UK, I believe future growth in earnings is likely to come by development of the financial services, non-food and on-line retailing operations.

The Thai market where Tesco is the market leader, illustrates Tesco's approach to international markets. The Thai operation was set up as joint venture with leading Thai food company, CP Group in 1998 and has expanded to become the market leader in Thailand. The two key competitors in hypermarkets in Thailand are Carrefour and the Big C chain which is owned by Casino of France. Recently the Carrefour Thai operation, consisting of around 42 stores has been bought by Casino which puts Big C in a position to challenge Tesco's market leadership.

In managing the Thai stores Tesco applies strategies and technologies developed in the UK, such as Clubcard, and then adapt them to the Thai local conditions. Thai consumers have very different tastes in food which is of course reflected in the product range offering. In addition the prices of many items, such as clothing items, are very much cheaper than in the UK, although of equal quality, which reflects the lower income level of the average Thai consumer.

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

SWOT ANALYSIS

Strengths  Tesco has made its strong position being third largest grocery retailer in the world., following the Wal-mart and Carrefour.  The company has the special status in United Kingdom by being the largest supermarket chain there.  The company is diversified as it presents in fourteen countries not only cornering North America, Asia and Europe but also with a large market share of 30 percent in Ireland, Malaysia and Thailand.  The company has marked in the product range, a good growth which are related to music downloads, Petrol, clothing, books, furniture, DVD rentals, financial, internet services, and telecom services.  There are 4,811 localities, in terms of their stores.  The very important is their brand name especially in cotton fair-trading around the world.  The revenue of the company is £62.54 billion which is increasing every year along with addition of new stores in the supermarket chain.  The human aid of the company is very high that is 472,000 and is providing lots of employment opportunities around the world.  The best technology usage enhances sits marketing power with a praising increase in online sales.  The diversity can be seen in the formats of the stores having divisions like Tesco Homeplus, Tesco Extra. One stop, Tesco Metro, Tesco express and Tesco Superstores.  The supply chain is very efficient in case of cost that helps to boost the confidence of suppliers association with the brands of the company.  Tesco have also extended its stores into different markets which were proved successful. As well as food and accessories, they are now also into insurance, mobile phone services and home related wares. As a result, the extension into these markets has made them more competitive and yes, their strong customer's strong brand loyalty, they may well stay with Tesco with the different services they provide. And other incentives such as their reputation of affordable prices will only strengthen if their position will be strengthened.
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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

 The company has the largest market share in the grocery market in the UK. Tesco's innovation such as the club cards and the kind of attitude towards its workforce has made it very successful over the years. "The UK's largest retailer accounted for 30.7% of UK grocery sales”  Tesco also knows how to efficiently and effectively use their technology. It has utilized the internet so that so that shoppers can buy their products online, which is quick and sufficient.  Tesco also has been appreciated for cutting down on climate change relation. The introduction of a new concept i.e., 'bag for life', a strong and larger bag that can be used over and over again. They are also thinking to cut down on the amount of plastic used on their products.

Weaknesses  A very strong dependency on the revenues generated by its U.K chain and decline in its market there can weaken the overall scenario for the company.  The business model followed by Tesco is similar everywhere, however the amendment are needed according to the different geographies where it has the presence, in accordance with the culture.  The bad debts have shown the financial disturbances.  Lack of focus is there on the specific markets because of embarking all markets at the same time.  Tesco has always done well to keep ahead of Asda. However, due to the current recession in the UK, Tesco has seen that price becomes more and more significant for a growth in the number of consumers. A large number of consumers are switching to hard discounters, for example Lidl and Aldi. Tesco has launched a ‘Discount Brands’ promotion which offers prices similar to hard discounters  The UK has over 80% of all European sales, as a result Tesco’s European market share is negatively impacted when the pound weakens against the Euro.  The European area of Tesco’s business has seen the most affects of the recession, seeing a slowdown in sales and the growth in the profits continuing from 2008. The recession is one of Tesco’s main problem with Tesco in most of the businesses in the UK.  Because customers are restricted sometimes to purchase a lump sum amount of products from a single store, so Online shopping can be a weakness for Tesco. It isn’t favorable
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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

that the delivery charge to customers covers the costs of running the website, sorting the products and finally distributing them. Online shopping is also a disadvantage for the company, as it is hard to browse and find products. It seems to be a long and boring task. It also lowers the chance of opportunistic purchases, shopping in-store gives Tesco a better chance of a customer seeing and purchasing a product that at first they didn’t intend to look for.

Opportunities

 Online scope for the products to be sold out without massing the outlets.  New outlets planned for different countries along with the strategic alliance of the company.  Analyzing Tesco's opportunities in the current external environment look very promising as Tesco can explore more different markets they have not explored fully yet. Tesco ability to gain a very strong brand image has allowed them to capitalized on this as this has lead to them having a strong position in their native country and globally. Globally Tesco has huge opportunities of expanding their business according to the International Data Group (IDG) Tesco is expected to grow and expand it business.  Operating in such large scale, and being the UK market leader and a potential Second Global leader shows that Tesco has a very well known brand image that will be in favor to Tesco as this shows that they are very well established in the United Kingdom and globally. Potential growth opportunities indicates that they are trying to create more awareness in Central Europe, the United States and Asia and are investing £30bn in return to double their turnover

Threats  The competitors like Wal-Mart and Carrefour have very well execution in performance. Especially at the time of acquisition of Asda by Wal-Mart.  Change in government strategies in terms of taxation.  Unpredictable increase is there in operational cost because of increase in raw material costs.
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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

 Other supermarkets are there which though are not big but do cover the market share to the level best extent.  One of the biggest threats Tesco has faced recently is the recession as this leads in worrying about their money in public and they are therefore careful on how they spend it.  This can be easily seen in cases like, why stores such as Aldi and Lidl have received significant growth over the past year as good amount of customers are trying to save money by shopping at cheaper supermarkets. The key threat for Tesco is their neighboring competitors who are all shouting about the lowest prices and are trying to attract the customers. A retail specialist from Verdict Research has said that price is replacing convenience as the key battleground. The battle for supremacy seems such a foregone conclusion that even Sir Peter of Sainsbury’s has declared that “it is unlikely they will ever be number one again”.  City experts predict that this is due to Tesco’s attempt to repel Aldi and Lidl by offering more discount brands which backfired to eat into their profit margins.  The fact that this is Tesco’s biggest threat and the company’s planning to hire around 10,000 people to help with the unemployment crisis shows how well they are doing. Tesco are still on track to deliver pre-tax profits of around £3 billion.  Another possible threat to Tesco is government intervention, in recent years the government has had to take a keener eye on the operations of large supermarkets. As they need to ensure what goes on is legal and to stop any one individual firm becoming too powerful. Though Tesco has won one of the latest appeals in which the Competition Commission attempted to introduce a competition test.

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

ZACHMAN FRAMEWORK

ABSTRACTIONS[COLUMNS]

NETWORK-ZACHMAN FRAMEWORK SCOPE (Contextual) Planner –Capability Enablers – Change Cases – Process Identification DATA What (Things) FUNCTION -How (Process) Where (Location)

PEOPLE Who (People) – Current Organization Description – Future Organization Scope and Requirements – Stakeholder/Pa rticipation Management Plan – Communicatio ns Plan -Lists organizations, roles, and relationships among organizations -Details the activities performed and their interrelationshi ps, including input/output relationships

TIME When (Time)

MOTIVATION Why (Motivation)

-Capability Enablers – Change Cases – Enterprise Information Model

– Business Roles and Locations --- List of Locations in which the business operates

List of Events Significa nt to the Business

Details scope, purpose, environment, and other summary-level formation for an architecture description.

BUSINESS MODEL (Conceptual) Owner

-Traces actions in a scenario or sequence of events. – Process Definition – Business Structure – Process Gap Assessment – Enterprise Information Model – Knowledge Gap – Architecture Overview Diagram – IT Management Requirements – Process/Data Usage – Data Stores

– Business Event List – Principles – Policies and Guidelines – Capability Description – Capability Model Definition – Capability Model , – Capability Scenario – IT Management Requirements – Future Business Environment – Industry Environment Analysis – Decision Model – Process Enablers Business rule model-VA policies, standards and procedures associated

Lists systems, system components, and their interconnections . identifies system communications

PERS PECTI VES (ROW S)

SYSTEM MODEL (Logical) Designer

Identifies sequencing and timing of activities – Data Stores – Process/ Data Usage – Data and Function

Provides detail of data moving between systems.[Systems Data Exchange Matrix] -Lists performance characteristics of

– Network Requirements – Data and Function Access and Placement – Enterprise Technology

. -Work Flow Model -human interfaces

-Logical represent ation of the distribute d system architect

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

Access and Placement – Enterprise Technology Framework.

individual systems[Systems Performance Parameters Matrix].

Framework

ure for VA locations Describe s systemspecific requirem ents on critical event sequence s.

TECHNOLOG Y MODEL (Physical) Builder -Lists systems, system components, and their interconnection-Lists technologies and products that are expected to affect systems. -Describes emerging or evolving standards that might apply to the architecture.

-Presentation Architecture -Specification of access privileges to specific platforms and technologies

-Control Structure -Timing definitio n

– Enterprise Technology Framework – Technology Scan – Non-Functional Requirements – Current IT Environment – Infrastructure Gap Analysis

-System Design -COBRA,EJB,NET -Lists connections between individual systems in a group. -Maps systems information back to the operational view. -Lists migration plans for systems.

-Describes constraints on system operation imposed by design or implementation. – Standards –Technology Scan –NonFunctional Requirements –Current IT Environment -Infrastructure Gap Analysis – Transition Management Strategy

DETAILED (Out-ofContext) Sub-Contractor Data DefinitionData definitions constrained by physical data models

Programs coded to operate on specific technology platforms

Network ArchitectureNetwork devices configured to conform to node specifications

Security Architecture -Access privileges coded to control access to specific platforms and technologies

FUNCTIONIN G ENTERPRISE (FUNCTIONAL ) User & service provider

Functioning computer instructions Data values stored in actual databases

Sending and receiving messages

VA personnel and key stakeholders working within their roles and responsibilities

Timing Definitio n -Timing definitio ns coded to sequence activities on specific platform and technolo gies Timing definitio ns operating to sequence activities

Rule SpecificationVA business rule s constrained by specific

Operating characteristics of specific technologies constrained by standards

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

TESCO E-COMMERCE AND INTERNET MARKETING-REQUIREMENT ANALYSIS
TRAFFIC RANK

Traffic rank for tesco.com: Traffic Rank Change 21-march 1,681 7 day 1,370 +513 -137 +85 +230

1 month 1,478 3 month 1,357

AVERAGE LOAD TIME FOR TESCO.COM Average (1.36 Seconds), 52% of sites are slower.

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

PAGE VIEWS

Estimated percentage of global internet users who visit tesco.com: Reach Change 23-Mar-12 0.063 -25% 7 day 0.075 +10%

1 month 0.0684 -5% 3 month 0.0744 -12.9%
The number of global users visited Tesco website has decreased recently. That is a concern for Tesco. In my opinion it is due to effect of recession in UK market. But if we see the graph and compare it with 2011, there is a stability in numbers of visitors of Tesco website. Whereas number of visitors in Wal-mart website is always higher than Tesco website.

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

PAGEVIEWS PER USER

Estimated daily unique page views per user for tesco.com: Page views/User 23-Mar-12 7 day 1 month 3 month 9.3 9.4 9.84 9.68 Change -14% -1% -4% -5.1%

If we compare daily page views per user of Tesco, Walmart and Carrefour, pageview per user of Tesco is clearly higher than other two competitors. Number is higher for Tesco is probably due to complexity in navigation of website. Contents of website should be arranged according to viewers’ preference.

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

BOUNCE RATE

Estimated percentage of visits to tesco.com that consist of a single pageview: Bounce % Change 23-Mar-12 32.9 7 day 30.8 +29% +1% +4% +2%

1 month 29.9 3 month 29.4

Bounce rate is high for Tesco website. It is happening because there is no spontaneity in writing and the information flow is not proper, after viewing the first page viewer would think “what to view next?” This is the main criteria they bounce off Tesco site. Tesco should ensure that content is presented well and provide prominent clues to visitors as to what is the next step. A/B testing can be most useful to decrease bounce rate and to modify contents properly.

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

TIME ON SITE

Estimated daily time on site (mm:ss) for tesco.com: Time on Site 23-Mar-12 07:17 7 day 07:03 Change -12% -3% -6% -5%

1 month 07:23 3 month 07:23

Time on site has decreased recently. But for Tesco time on site is higher than its competitors. Showing most viewed product/page/content should be good strategy and collecting feedback from viewers should be primary objective for Tesco. Website content should be made more attractive.

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

SEARCH VISITS

Estimated percentage of visits to tesco.com that came from a search engine: Search % Change 23-Mar-12 12.7 7 day 14.2 -24% -16% -24% -11%

1 month 19.4 3 month 24.2

Percentage of visitors to tesco.com from search engine decreased in comparison with previous year. It signifies that Tesco should implement better SEO technique.

WHERE VISITORS GO ON TESCO.COM Sub domain Percent of Visitors 65.01% 39.93% 18.45% 7.10% 1.73%

tesco.com direct.tesco.com secure.tesco.com phone-shop.tesco.com cn.tesco.com

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

Among the sub domains Teco.com is most popular website.

AUDIENCE Based on internet averages, tesco.com is visited more frequently by users who are graduate school educated.

UPSTREAM SITES

Which sites did users visit immediately preceding tesco.com? % of Unique Visits 40.76% 7.32% 3.48% 2.96% 2.46% 2.33% 2.24% 2.22% 1.52% 1.47% Upstream Site google.co.uk google.com facebook.com yahoo.com amazon.co.uk ebay.co.uk live.com hotukdeals.com asda.com argos.co.uk

Most of the users came from googl.co.uk. It clearly shows the main customer base of Tesco is UK. Only 1.52% came from asda.com. To capture international market proper SEO technique in google should be implemented.

DOWNSTREAM SITES

Where do visitors go after leaving tesco.com? % of Unique Visits 32.98% 6.76% 5.46% 3.22% 3.04% 2.80% 2.65% 2.46% 2.22% 1.61% Downstream Site google.co.uk google.com facebook.com ebay.co.uk clothingattesco.com amazon.co.uk live.com yahoo.com tescobank.com hotukdeals.com
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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

After visiting Tesco website most users went back to google to find something else. That shows that they did not get relevant information from Tesco website. So Tesco should try to put relevant and simple information which will be easier to process information for visitors.

TOP QUERIES FROM SEARCH TRAFFIC The top queries driving traffic to tesco.com from search engines.. Query 1 2 3 4 5 6 7 8 9 10 Tesco tesco direct tesco mobile tesco clubcard tesco uk 乐购 tesco shopping tesco online Tescos tesco store locator Percent of Search Traffic 31.84% 6.54% 2.75% 1.42% 0.58% 0.57% 0.57% 0.51% 0.44% 0.36%

SEARCH ADVERTISING METRICS HIGHLIGHTS Data provided by iSpionage Last Month Stats PPC Budget Last Month Clicks Avg. Ad Position Google PPC Keywords Yahoo PPC Keywords (Estimated) $16 - $30 23 – 34 4 19 1

Tesco should invest on testing of website to make content more relevant.
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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

HIGH IMPACT SEARCH QUERIES FOR TESCO.COM Popular queries that are important to this site and are strongly targeted by competitors advertising on search engines. Query Tesco tesco mobile Direct tesco direct recycle inkjet cartridges bedroom furniture tesco clubcard buy now pay later store locator tesco broadband 乐购 tumbler drying machine tesco mobile phones dining tables tesco vouchers pressure washers tesco shopping tesco store locator Tescos wireless headphones Kindle garden furniture tesco uk mobile phones tesco groceries online blu ray player vacuum cleaners christmas tree tesco online tesco rewards Impact Factor 35.92 4.21 3.23 2.49 1.51 1.50 1.25 0.81 0.77 0.67 0.65 0.65 0.63 0.59 0.57 0.57 0.56 0.54 0.50 0.48 0.47 0.45 0.44 0.43 0.42 0.42 0.41 0.39 0.39 0.38 Query Popularity 65 44 43 51 32 42 42 26 29 26 45 29 26 32 29 32 29 30 38 38 62 40 37 43 24 44 36 48 35 29 QCI 15 20 26 16 100 62 11 63 43 53 22 100 41 65 34 63 13 20 16 57 34 64 13 62 45 53 62 48 20 20

This queries provide chances for Tesco site to advertise through Search Engine Marketing (SEM) to get more are more customer visit. They are famous queries that are relevant to the site, and have low competition in search engine marketing

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

SEARCH ENGINE MARKETING (SEM) ACTIVITY BY TESCO.COM Ads for tesco.com have appeared on the biggest search engines when people performed the queries below. Query 1 2 3 4 5 6 7 8 9 10 tesco direct Tesco tesco mobile toys r us Ipad ipod touch Laptop samsung galaxy s2 Laptops Wine SEM Actitivy High High High Medium Medium

Medium Medium Medium Medium Medium

HIGH IMPACT SEARCH QUERIES FOR TESCO.COM Query 1 Tesco 2 tesco mobile 3 Direct 4 tesco direct 5 recycle inkjet cartridges 6 bedroom furniture 7 tesco clubcard Impact High Medium Medium Medium Low Low Low

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

REQUIREMENT REVIEW

With such a huge remit covering everything from cheese to laptops, Tesco offers customers with the number of options to buy almost anything they want online, yet strangely as one of the many who inevitably shop at Tesco every week for groceries they’ve yet to make the jump.

These are some of the examples:

So as Christmas looms and the temperature plummets, thoughts of walking the streets of Edinburgh

understandably loses its appeal.
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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

First impact is suitably seasonal with Tesco making good use of the carousel to showcase specific offers in relation to their associated “tabs”. Additionally and possibly unique to Tesco, is their understanding of the Carousel tabs and their use of them as global navigation.

This is a particularly elegant answer and the best solution for a site that points towards so much information, providing customers with clear beginning points which clearly segment the main categories whilst relating to special offers directly.

Clearly the seasonal theme is in full swing with almost every graphic displaying some form of ornamentation creating an overall appeal of seasonal sparkles however, fuzzy, low resolution images permeate the site and erode confidence in reassuring quality which could have a large impact on those concerned with big ticket items such TVs or computers.

As curser hovers over the tab the content in the carousel changes and update quickly with an offer for Club Card points exchange which is handy and at this stage compelling considering the recent vouchers mailed through customer’s door suggesting the similar thing.

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

The links which are attached to each category within Tesco directly allows users to quickly drill down to their desired destination. Not sure whether to go for an LCD, LED, or Plasma viewer may scan down the left hand filter options for a “Buying Guide” but in the absence of a definitive heading it takes some extra time to find the link he is looking for.

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

Upon selection of the buying guide viewer is directed to the appropriate section from where it is easy to select the specific “TVs” option.

The TV buying guide shows the possible links to information further down the page allowing customers to quickly jump to areas of interest but without any direct reference to LED and its obvious omission in “LCD v Plasma”.

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

Clicking the link jumps down to the particular section but it is clear that this is not where viewer can find the info he needs and so he begins to read other sections quickly exhausting the relatively short list of information.

Viewer would finally realize that the left hand navigation options that he initially missed and he may find a link to “led backlight tv guide”, which could easily be missed by users scanning for info as the link does not contain the expected LED capital letter abbreviation normally used.

Confirming viewers interest towards an LED unit viewer feels confident to proceed via the TV section of the Sound & Vision drop down in the global navigation. Assessing different viable options against size, brand, and price. Let’s assume he plumps for a Toshiba 32inch 1080p LED TV and add it to his basket.

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

At this point of time before progressing to check out he’s stuffed by the cross sell options above to add some stocking fillers from Entertainment and Books and so select the tab above. Disappointingly he would be directed back to the Tesco.com homepage and not to either the Entertainment or Books store.

This may lead to frustration if user’s expectations are not met and they are required to do more work which inevitably deviates them from the conversion funnel at what is a crucial point in the checkout process.

The fact that if the link does not direct users to related goods could lead to abandonment whereas the likelihood is only increased by any subsequent selections resulting in the opening of an entirely new browser window without warning. This could lead to significant disorientation apart from the nightmare prospect of having numerous separate checkout processes on the go at one point of time.

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Each separate site requires its own registration, meaning the creation, memorization, or securing of storage of multiple passwords which is off putting for most consumers and even for those who are committed to the creation of multiple accounts it means an equal multiplication of the work load.

This result is far from convenient and far removed from the first expectations set by the Tesco.com homepage as an e-commerce destination for the entire retail item conceivable. As we know that it is possible to find and purchase from an extraordinarily wide selection of items it may be likely that customers’ intent on shopping for the types of items that span the Tesco online presence will find it more convenient to do so elsewhere

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CONSUMER RESEARCH METHODOLOGY
MARKET SURVEY A market survey of the consumers or respondents is done to thoroughly understand the insights of real picture and to come up with a necessary observations and recommendations. The respondents in the market survey were end consumers and targeted especially internet savvy people to know what a customer look while buying online and the motivational factors which affect their decision. Designing of the questionnaire was done especially for the end consumers which include both Open and Closed ended questions. Questionnaire Design: This research is essentially a descriptive research that was carried out. It answers questions like who, how, why and why not etc. Research Plan:Data Sources: The process of Data Collection for this study was primary survey and Secondary data from the different websites or sources. Research Approach: The approach was in the form of a direct survey of the respondents. This direct survey is also called the person administered survey where the surveyor personally interviews the respondents and takes down any other relevant information which is not a part of the questionnaire. Instruments for the Data Collection: For the purpose of the data collection, two types of questionnaires are designed i.e., open ended and closed ended. The focus of the open ended questions was to know about the viewpoints of the respondents..

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Sampling Plan:Sampling Unit: As mentioned above, the sampling unit was the end consumers. Sample Size: The sample size for the research was 50. Sampling Procedure: The type of sampling followed was Convenience Sampling. Contact Method: The process followed during the survey was a mix of appointments with the respondents and Cold calling. In case of certain additional information ( if needed), the respondents were contacted by Phone. During the interview, the questionnaire was not being handed over to the respondents and the responses were noted by myself, to avoid any misconception.

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CONSUMER RESEARCH ANALYSIS

From the above Pie-chart, only 14% is very much aware about Tesco, whereas a most of the respondents were aware about Wal-mart. It is due to following reasons: 1. Tesco’s promotional activities are less than Wal-mart 2. Tesco has concentrated mostly in UK, so consumers of rest of the world are not aware about brand-“Tesco” 3. In India Tesco’s business is still in starting phase

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

From above Piecharts it is clear that most of the consumers prefer Kirana store or Branded store over online retail stores. Women and Old men are most preferring online shopping. Out of the total respondents 72% did not prefer e-retail of the following reasons:-

1. Lack of awareness among the customers about the online retailing

2. As shopping online required connectivity of internet and a computer so it is not always available to the customer.

3. Traditional shopping is more convenient than online shopping

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FACTOR ANALYSIS As I mentioned in the “research methodology” , that two statistical techniques would be used to analyzing the data and those are: - 1.Factor Analysis & 2.Multiple Regression Analysis.
KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Bartlett's Test of Sphericity df Sig. Approx. Chi-Square 110.1 68 66 .001 .581

From the above Table, it can be derived that the null hypothesis, that the population correlation matrix is an identity matrix, is rejected by the Batrlett’s test of sphericity. The approximate chisquare statistic is 110.168 with 65 degrees of freedom, which is significant at the 0.001 level. The value of Kaiser-Meyer-Olkin measure of sampling adequacy is larger than 0.5, which is 0 .581. So factor analysis is the appropriate technique for analyzing the data, among the two basic methods of factor analysis, for the purpose of this study principal component analysis has been used. Because in this case, the objective is to determine the minimum number of factors that will account for maximum variance in the data for using in the subsequent multivariate analysis. In this study the number of factors has been decided on the basis of the eigen values of the factors. According to this method, only factors with eigen values, greater than 1.0 are retained. The other factors are not included into the model.

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Total Variance Explained Extraction Sums of Initial Eigenvalues Compo nent 1 T otal 2. 332 2 1. 848 3 1. 592 4 1. 225 5 1. 059 6 .9 56 7 .7 89 8 .6 16 9 .5 79 10 .4 44 11 .3 11 12 .2 50 2.084 100.00 0 2.589 97.916 3.702 95.327 4.822 91.625 5.130 86.803 6.576 81.674 7.970 75.097 % of Variance 19.43 3 15.39 7 13.26 3 10.21 0 8.824 67.127 58.303 48.094 34.830 Cumul ative % 19.433 Squared Loadings To tal 2.3 32 1.8 48 1.5 92 1.2 25 % of Variance 19.43 3 15.39 7 13.26 3 10.21 0 58.303 48.094 34.830 Cumul ative % 19.433 To tal 2. 120 1. 920 1. 602 1. 355 Rotation Sums of Squared Loadings % of Variance 17.66 5 16.00 3 13.34 6 11.28 9 58.303 47.015 33.668 Cumul ative % 17.665

Extraction Method: Principal Component Analysis.

By the above table, it is clear that the eigen value greater than 1 results in four factors being extracted. The “Extraction Sums of Squared Loadings” give the variances associated with the factors that have been retained. It is important to note that these are the same as under “Initial Eigenvalues.” This is always the case in principal component analysis. Factor 1 account for a variance of 2.332, which is (2.332/12) or 19.433% of the total variance. Likewise the second factor accounts for (1.848/12) or 15.397% of the total variance. Thus the first two factors together accounts for 34.83% of the total variance and so on.

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Component Matrix

a

Component 1 VARIETY WEBSITE ATTRACTIVENESS BRAND IMAGE QUALITY PEER REFERENCE ONLINE AD TV COMMERCIAL PRICE SAFE TRANSACTION WEBSITE FRIENDLYNESS EXTRA BENEFIT TIMELINESS -.613 .409 -.057 .471 -.470 .202 -.212 .347 .169 .442 -.253 .381 .785 -.623 .573 -.177 -.252 -.155 -.055 -.045 -.018 .405 .025 .034 .049 .801 .515 -.476 -.285 -.290 -.100 .145 -.290 -.366 .131 -.057 .278 -.283 .673 .532 .689 .662 2 .138 .404 3 .318 -.149 4 .100 -.229

Extraction Method: Principal Component Analysis. a. 4 components extracted.

The above Table is showing the un rotated “component matrix” where factor 1 is somewhat correlated with 6 variables (variety, website attractiveness, quality, online ad, website friendliness and timeliness). That means these five variables have high loading on factor 1. Factor 2 is correlated with 4 variables (website attractiveness, quality, Peer reference and TV commercial,). Factor 3 is correlated with 4 variables (variety, quality, price, safe transaction,) and factor 4 is correlated with only 2 variables (Extra benefit, and timeliness. Although the initial or un rotated component matrix indicates the relationship between the factors and individual variables, it seldom results in factors that can’t be interpreted because the factors are correlated with many variables. Through rotation, the factor matrix is transformed into a simpler one that is easier to interpret. In rotating the factors, we like each factor to have nonzero or significant loadings or coefficients for only some of the variables.

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

Rotated Component Matrix

a

Component 1 VARIETY QUALITY WEBSITE ATTRACTIVENESS BRAND IMAGE ONLINE AD TV COMMERCIAL PEER REFERENCE SAFE TRANSACTION PRICE WEBSITE FRIENDLYNESS EXTRA BENEFIT TIMELINESS .024 .240 -.043 .117 .010 -.126 .750 .690 -.616 .097 -.094 .308 -.073 .392 .013 -.061 .843 -.741 -.609 .032 .254 .375 .175 -.066 .054 -.306 .666 .638 -.555 -.189 -.143 -.090 -.381 .020 -.302 .045 .742 .663 .647 2 .191 -.160 .044 3 .086 .180 -.504 4 .100 .008 -.041

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a. Rotation converged in 6 iterations.

After rotation, it is observed from rotated component matrix table that factor 1 is correlated with four variables (Variety, Quality, Website attractiveness and Brand Image).Factor 2 is correlated with three variables (Online ad, TV commercial and Peer reference) that have high loadings on it. Factor 3 is correlated with three variables(safe transaction, Price and website friendliness) which have high impact on this factor. And, factor 4 is correlated with two variables (Extra benefit and timeliness) that have high loadings on it. After rotating the factors, the four factors can be named as Image, Communication Mix, convenience factor and Responsiveness.

Component Transformation Matrix Compon ent 1 2 3 4 1 .802 .452 .389 .036 2 .485 -.835 -.008 -.258 3 -.260 -.284 .828 .407 4 .231 -.132 -.403 .876

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization.

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REGRESSION ANALYSIS

Model Summary Mo del 1 R .308
a

R Square .095

Adjusted R Square .014

Std. Error of the Estimate .836

a. Predictors: (Constant), REGR factor score 4 for analysis 1, REGR factor score 3 for analysis 1, REGR factor score 2 for analysis 1, REGR factor score 1 for analysis 1

The result is showing that R² = .095 ,which implies that 9.5% of the variance in the dependent variable is explained by the identified independent variables which is too much low.
Coefficients
a

Unstandardized Coefficients Model 1 (Constant) B 3.840 Std. Error .118

Standardiz ed Coefficients Beta t 32.49 0 Sig. .000

REGR factor score 1 for analysis 1 REGR factor score 2 for analysis 1 REGR factor score 3 for analysis 1 REGR factor score 4 for analysis 1 a. Dependent Variable: OVERALL

.143

.119

.170

1.200

.236

-.200

.119

-.238

-1.677

.100

.008

.119

.010

.071

.944

.080

.119

.095

.673

.504

From the above table of Regression analysis, it is identified that the partial regression coefficient for Image is .143, for Communication Mix is -.200, for Convenience Factor is .008, and for responsiveness is -.080. Therefore, the estimated regression equation is: (Ŷ) = 3.840 +.143 (X1)+( -.200) (X2) +.008 (X3) + .080 (X4) Here, Ŷ = Overall satisfaction; while, X1 = Image, X2 = Communication Mix, X3 = Convenience Factor, X4 = Responsiveness

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

According to this equation Overall satisfaction of the online retailing is expected to change .143 unit by one unit change in “Image factor” when the rest of the variables (Communication Mix, Convenience factor and Responsiveness) are held constant or otherwise controlled. In case of Communication Mix the result shows that it is inversely related to the overall satisfaction of consumers. It may be assumed that Communication mix to some extent may have negative impact on overall satisfaction. On the other side Convenience factor and Responsiveness have positive impact on overall satisfaction but the impact is low. That means these two independent variables are most important in explaining the “overall satisfaction” of the Indian Consumers towards online retailing.

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SOLUTION ASSESSMENT
VALUE CHAIN Activities (signs used, value addition (+V), value depreciation (-V), potential of value addition (+PV)) Inbound logistics Inbound logistics are in the first stage of the value chain as they possess the preliminary opportunity to obtain the value. Hence, the elements of this stage are considered to be upstream activities. The logistical activities, in this stage, consisting the receipt of goods from suppliers, storage of goods, handling & transportation of goods internally and placing the products on the shelves, are the main elements of the logistics. Tesco always try to maintain the level of consumer options in store (+V), whilst improving and maintaining the efficiency of distribution system (+V). By implementation of a quality control measures concerning spoilt goods and products, it offers a superior chance to mitigate extra costs unfairly incurred by the company, hence rectifying these costs being passed on to the consumer (+PV). Operations The production process of Tesco’ activities are mainly service orientated. Therefore, operations could be the second upstream that enables services and products to be provided, tasks such as opening every day in accordance with trading hours, maintaining the shelves, and the stock (+V). To achieve the competitive advantage, Tesco should consider expanding further in terms of operating hours in those parts, where it is not active or opening new Metro and Express stores (+PV). There is a probability that there can be restriction by law or planning councils, which might affect competitive advantage (-V). Outbound logistics The third stage of the value chain is the outbound logistics which deals with delivering the product to end point. In present Tesco is adding value through its home delivery service (+V). But, other tangibles that have to be improved are those of parking facilities, trolley collectors, staff and systems to gain competitive advantage, if implemented more efficiently than competitors, those will add value by saving the time of customer (+V), while increasing the turnover (+V). Value addition could be achieved through the insertion of a trolley deposit system, keeping them safe, convenient

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and enabling customers to get to and from the stores quicker, as well as making these facilities readily available and quicker to obtain (+PV). Marketing and sales These are placed under downstream elements of the value chain. Clubcard provides further discounts and loyalty for the customers (+V). Tesco may also try to attract more customers by advertising via T.V commercial, national and regional news papers and online ads. for example. the “lower prices” advertising campaign or more discounts offers (+V). With a more customer sophistication and their consciousness of ethical business practices, it may provide Tesco some constraints in terms of selling environmentally friendly products (-V). However, Tesco can take it as an advantage and provide customers with more of the recycling points and include information in their promotions, adding value for customers who will be aware that by choosing to shop at Tesco, they are helping the environment (+PV). Support Activities Company Infrastructure Planning and control functions are the ones which account to provide the continuous focus on the costs and transaction control of the company’s operations (+V). And departments such as profit protection whose main responsibilities are to reduce over flow. The company should focus to increase its staff count who are involved in upgrading its anti-fraud security

system(infrastructure/technology, interdependence), and installation of new security systems which target to mitigate internal theft, an expense the customer will now not have to pay in the price of their purchases (+V). Human resource management HRM consists of both up and downstream activity, integrating everything from recruitment to management development. The company targets to increase the number of training schemes and further develop its recruitment programs so to pass on to the customer the benefits of a well recruited, well trained employee, not the costs (+V). Tesco continues to invest in customer service (+V), where training is also attached with direct payment, so the employees are motivated to learn, and are inspired to enhance their CRM skill and service provision quality. (+PV). Technology development It is the factor to provide new creative product/service ranges/ solutions that properly understands customer needs and can be called as downward stream activities. It is a key competitive advantage, adding value, as Tesco’s brand name gives the product a proper value (+V). Whilst, installation and capital investment can be seen as long term process and has a need of 100% commitment of the

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employee. Now the question arises that who will be responsible for the service and the floor staffs? (-V).

CRITICAL SUCCESS FACTORS

After a calculation and analysis of the grocery industry and SWOT analysis, it is important to consider internal operational effectiveness and efficiencies of Tesco in the form of identifying critical success factors or features of the company within the food retailing sector. Branding and Reputation, the companies have always known and are understood that they are selling brands than just before the product. Tesco is a brand and because of its unique features in all respect serves it as a core strategic company which provide it a competitive edge. The company was expanding its business like wildfire transforming the generic into the brand-specific, largely through its branded packaging and a friendliness environment to the customers. The company has a strong brand power, and is associated with good quality, trustworthy goods that represent excellent value. The developmental processes of the company have been substantially re-engineered or re cultivated, to facilitate better management of product lifecycles and more efficiency can be shown in delivery of wide ranges of products to customers. The enhancement has been done with the help of product related activity like improvement on its core ranges and introducing quality products. Tesco is very successful in terms of customer loyalty due to its Club card system and its general approach to customize services according to the needs and wants of the customers. This is a fact in terms of tremendous growth of on-line sales where the company has a robust platform to further enhance its revenue stream. After taking into consideration the fact that, nowadays majority of people have less time for shopping, Tesco employed this on-line systems and now became the biggest online supermarket. IT Integration As we know that Today companies act in a continuously expanding dynamic and complex environment, and giving more difficulties making forecasts and adapting themselves to the continuous changes. So, in order to be able to compete in this scenario, it is important for the companies to be innovative in their approach in every aspect of the business with an extraordinary speed, and also by making improvements in terms of the products, services and processes.
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Operations have become necessities rather than luxuries. Systems that keep an eye on stocks, deliveries records and analyze the business transactions are the lifelines of the company. It is clear and can be stated that IT has risen beyond its traditional support role and is now considered as a central role in business strategy formulation and execution. The Extranet systems which are implemented by the Tesco in its own businesses structure, enables Tesco to utilize the Internet to create proprietary and customer demanded information flows between the company and its business stakeholders. This online connection of business stakeholder especially virtual firewalls, brings more flexibility, scalability, extensibility and integration across
the distribution channels. Extranet also assists in extending the key information to business partners

throughout the supply chain and provides facilitation in collaborating relationships with stakeholders. Market exchanges hold the promise of extending Tesco's reach, delivers the products to the buyers’ doorsteps anywhere in the world. Other instances of the most efficient and effective technological tools to support daily business operations of Tesco are wireless devices, intelligent scale, self check-out machine and radio frequency identification (RFID) systems. Supplier Management Techniques: Tesco, as many other companies which are into the retail chain business, sources its products and services from other countries whose manufacturing is the most competitive on price and volumes. Having a reputation of a major retailer with its diverse product range, they work with many different suppliers around the world, with employees from many different cultures and ethnic groups. Hence, it is in the rules of the company and is company's main approach in having a unique relationship with suppliers. With the help of implementation of advanced technology in its communications and cooperation with the suppliers, the company aims to control the work of its suppliers and strongly relies on their efficiency. The suppliers which are direct to the company use a number of sub-contracted suppliers, which are best in their class in their country. Tesco has built close relationships with the contractors believing that continuous and long term orders will promote the investment which is necessary to improve conditions in the supply chain management. Having an international status, Tesco develops various supplier mgmt programs to survey and to sample the key suppliers and franchisee satisfaction. The company is also involved in taking part in the Ethnical Trading Initiative. The table given below provides a strategic comparison, comparing Tesco's successful points discussed above with the similar factors of the main competitors' in the UK grocery industry. The scores have been given with the scale from 0 to 5

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CSF Branding IT Integration Supplier Management Total

TESCO 4 4 3 11

ASDA 5 4 4 13

CARREFOUR 3 3 4 10

The consequences shows that the main problem it faced is potentially coming from ASDA's that possesses a strong brand name and is carefully selected and has controlled its suppliers. In a rapidly changing business environment with a high competitors' pressure Tesco have to adopt new expansion strategies or diversified the existing in order to sustain its leading market position in an already established retailing market. Strategy formulation should therefore be regarded as a process of continuous learning, which includes learning about the goals, the effect of possible actions towards these goals and how to implement and execute these actions. The quality of a formulated strategy and the speed of its implementation will therefore directly depend on the quality of Tesco's cognitive and behavioral learning processes.

Like as in very large organizations, where strategies are implemented at various levels, same is the case with the Tesco. These different levels of strategy should be related and mutually supporting. Tesco's strategy at a corporate level defines the businesses in which Tesco will compete, in a way that focuses resources to convert distinctive competence into competitive advantage. As with other online retailers, Tesco.com relies on in-store advertising and marketing the supermarket's Clubcard loyalty scheme's customer base to persuade customers to shop online. However, for non-food goods the supermarket does advertise online using keyword targeted ads. For existing customers, the mentioned tools are used that is-email marketing and direct mail marketing to tell the customers the special offers and promotions. E-retailer Tesco.com can use a ‘commitment-based segmentation’ or ‘loyalty ladder’ which would be based on the purchase, frequency of purchase and value which is used to identify 6 lifecycle categories which are then again divided to target communications: • • “Logged-on” “Cautionary”
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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

• • • •

“Developing” “Established” “Dedicated” “Logged-off” (the aim here is to win back)

Tesco then use automated event-triggered messaging can be created to encourage continued purchase. For example, Tesco.com have a touch strategy which includes a sequence of follow-up communications triggered after different events in the customer lifecycle. In the example given below, communications after event 1 are intended to get the objective of converting a web site visitor to action; communications after event 2 are intended to move the customer from a first time purchaser to a regular purchaser and for event 3 to reactivate lapsed purchasers. • • Trigger event 1: Customer first registers on site (but does not buy). Auto-response (AR) 1: 2 days after registration e-mail sent offering phone assistance and £5

discount off first purchase to encourage trial. Trigger event 2: Customer first purchases online. • • AR1: Immediate order confirmation AR2: 5 days after purchase e-mail sent with link to online customer satisfaction survey

asking about quality of service from driver and picker (e.g. item quality and substitutions). • AR3: Two-weeks after first purchase - Direct mail offering tips on how to use service and

£5 discount on next purchases intended to encourage re-use of online services. • • • • AR4: Generic monthly e-newsletter with online exclusive offers encouraging cross-selling AR5: Bi-weekly alert with personalized offers for customer. AR6: After 2 months - £5 discount for next shop AR7: Quarterly mailing of coupons encouraging repeat sales and cross-sales Trigger event

3: Customer does not purchase for an extended period • AR1: Dormancy detected – Reactivation e-mail with survey of how the customer is finding

the service (to identify any problems) and a £5 incentive.

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

AR2: A further discount incentive is used in order to encourage continued usage to shop

after the first shop after a break. The achieved growth is possible through a combination of initiatives. Product range development is one key area. In early 2005, Tesco.com fulfilled 150,000 grocery orders a week but now also offers more intangible offerings, such as e-diets and music downloads. Now managers have also started focusing on improving the customer experience online – the time it takes for a new customer to complete their first order has been decreased from over an hour to 35 minutes through usability work culminating in a major site revision. To help gain the business competitive edge, it has diversified into new areas: Partnership with e-Diets has been promoted through the Tesco Clubcard loyalty scheme, with mailings to 10m customers a year. Tesco.com Limited paid £2 million for the exclusive license to eDiets.com in the UK and Ireland under the URLs www.eDietsUK.com and www.eDiets.ie. Through these URLs, Tesco can use the dieting business to grow use of the Tesco.com service and in-store sales by promoting in an effective way. I-Village was a useful learning experience in that there are some parallels with iVillage, such as community boards to inform the stakeholders and the customers. Totally online, The joint ‘Pay-As-You-Go’ venture with O2 , although promoted in-store and via direct mail. Tesco also provide broadband and dialup ISP services, but believe the market for Internet telephony (provided through Skype and Vonage for example) is not sufficiently developed. Tesco.com have concentrated on more old services which have the demand, for example, Tesco Telecom fixed-line services attracted over a million customers in its first year of business. However. As the technology grows, Tesco will be able to turn Tesco.com into a digital download store of all sorts, rather than just music. Clearly, film [through video on demand] would be next.’ In 2007, it initiated its price comparison site Tesco Compare. But it has to be based strongly on analysis of customer demand. Many companies are mentioned repeatedly because both their main website and the online shopping site are mentioned separately. Nowadays Asda.com is performing in a stable manner online to its offline presence. However, Sainsbury’s online performance is not upto the mark compared to its offline performance.
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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

APPENDIX

MARKET SURVEY Questionnaire

NameGenderQ.1: What is your preference, while purchasing any thing? a) Kirana c) Online b) Branded Store d) Others

Age-

Q.2: Which retail store, you think is the best? a) Tesco c) Carrefour b) Walmart d) Others

Q.3: Rate the factors when you purchase from a online source? (Rate on a scale of 1 to 5, 1-Lowest, and 5- Highest) Factors 1 Brand Image Safe Transaction Timeliness Extra Benefits Reference TV Commercial Online Ad Website Attractiveness Website Friendliness Quality Price Variety Overall Satisfaction
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2

Scale 3

4

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BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO

REFERENCE

1. Wikipedia, the free encyclopedia, Tesco Plc 2. A Guide to the Business Analysis Body of Knowledge 3. Web.Analytics - An Hour a Day—A.Kaushik 4. Ivoryresearch.com 5. G. Noble, University of Wollongong, Sandra C. Jones,University of Wollongong,,D. McVie 6. Engel, J.F., Blackwell, R. D. and Miniard, P.W. (1995). Consumer Behavior, 8th edition 7. Philip and Kotler “Marketing Management 8. Alexa.com

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