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BUSINESS ANALYSIS OF E-COMMERCE &INTERNET MARKETING          OF TESCO  Dissertation submitted in partial fulfillment of th...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                                          Declaration FormI h...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                                             CertificationThi...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                                       AcknowledgementIt has ...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                                                 Preface“Expe...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                                                             ...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                                            ABSTRACTThis proj...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                                       INTRODUCTIONE-commerce...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                                SCOPE AND OBJECTIVESAim of th...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                                   LITERATURE REVIEWMarketing...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                            TESCO- ENTERPRISE ANALYSISBy reve...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCOThis phrase became the standard marketing pitch for Tesco as ...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                                         Tesco SuperstoresTes...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCOThere is some controversy as well, as grocery prices in these...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                                              Store factsAs o...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                                              TechnikaTechnik...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                                                  FuelTesco f...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                                           Gold ExchangeIn 20...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCOoperations in the Republic of Ireland and South Korea. And at...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                                           Promotion MixTesco...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCOIn June 2011, Tesco announced that it was working with 2degre...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO   PRODUCT CATEGORIES OFFERED IN TESCO DIRECT-ONLINE TOUCHPOI...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                                        Home and BathBathroom...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                                            Toys and GiftsAct...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                                   FINANCIAL ANALYSISThe figu...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO  52/3 weeks     Turnover     Profit before tax    Profit for...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCODespite recession, Tesco made record profits for a British re...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCOeffective demand for many goods, oppositely effecting the dem...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO•      Self check-out machine•      Radio Frequency Identific...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                 PORTER 5 FORCE MODEL-INDUSTRY ANALYSISThe Po...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO(3)   Threat from Substitutes: Substitutes are firms that do ...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                                       MARKET SHARE          ...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCOWhile consumer spending remains squeezed, many other grocers ...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                                    COMPETITOR ANALYSISTesco ...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCOHowever, major concern is the growth in the international mar...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                               SWOT ANALYSIS                 ...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO The company has the largest market share in the grocery mar...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO   that the delivery charge to customers covers the costs of ...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO Other supermarkets are there which though are not big but d...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                                      ZACHMAN FRAMEWORK      ...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                   Access and            individual          ...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO TESCO E-COMMERCE AND INTERNET MARKETING-REQUIREMENT         ...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                                              PAGE VIEWSEstim...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                                   PAGEVIEWS PER USEREstimate...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                               BOUNCE RATEEstimated percentag...
BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO                                         TIME ON SITEEstimate...
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
Business analysis of e commerce and internet marketing of tesco-shubhadip
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Aim of this report is to analyze the E-commerce and internet marketing process followed by Tesco and how can it be improved.

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  1. 1. BUSINESS ANALYSIS OF E-COMMERCE &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
  2. 2. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO Declaration FormI hereby declare that the Project work entitled “Business Analysis of E-Commerce & InternetMarketing of Tesco” submitted by me for the partial fulfillment of the Post Graduate Diploma inManagement Program to Institute for Integrated Learning in Management, Greater Noida is myoriginal work and has not been submitted earlier either to IILM-GSM or to any other institution forthe fulfillment of the requirement for any course of study. I also declare that no chapter of thismanuscript in whole or in part is lifted and incorporated in this report from any earlier/ other workdone by me or others. Place : Greater Noida Date : Signature of the Student: Name of Student - Shubhadip Biswas Address - Kholapota 24 Parganas (North) West Bengal PIN- 743428 2
  3. 3. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO CertificationThis is to certify that Shubhadip Biswas, Roll No. FT-10-948, a student of Post Graduate Diplomain 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 forIntegrated Learning in Management, Greater Noida. To the best of my knowledge, the piece ofwork is original and no part of this report has been submitted to any other institute/university earlierfor reward of any degree or diploma Mr. Abdul Majid Khan Associate Dean Assistant Professor-IT IILM-GSM 3
  4. 4. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO AcknowledgementIt has been an immense pleasure for me to have an opportunity to be known about and gain insightabout “Business Analysis of E-Commerce & Internet Marketing of Tesco” the constraints ofimplementing E-commerce and the assessment of probable solutions.This research has been made possible through direct and indirect cooperation of various people towhom 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 acontinuous motivator in providing the various resources and guidance needed for the successfulcompletion of the research.I am also very much thankful to all the people who took precious time out from their work scheduleto help me in understanding this research domain. Without their help it would have been extremelydifficult for me to carry out even the minutest part of the analysis successfully; they constantlyinspired me and solved the problems whenever the need arose.Lastly, but most importantly I would like to thank my friends and family for their ceaselessunderstanding, backing and confidence in my abilities. 4
  5. 5. 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 mainobjective of comprehensive project at PGDM level is to develop skill in student by supplement tothe theoretical study of business management in general. This project helps to gain real lifeknowledge and exposure about the industrial environment and business practices. The PGDMprogram provides student with a fundamental knowledge of business and organizational functionsand 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 duringsummer internship helps us a lot to successfully complete the comprehensive project. It is only thetraining 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-commerceIndustry. 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. 5
  6. 6. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO TABLE OF CONTENTABSTRACT .......................................................................................................................................................................................................... 7INTRODUCTION ................................................................................................................................................................................................ 8SCOPE AND OBJECTIVES ............................................................................................................................................................................... 9LITERATURE REVIEW................................................................................................................................................................................... 10TESCO- ENTERPRISE ANALYSIS ................................................................................................................................................................ 11PRODUCT CATEGORIES OFFERED IN TESCO DIRECT-ONLINE TOUCHPOINT ........................................................................... 22FINANCIAL ANALYSIS ................................................................................................................................................................................... 25PESTEL-INDUSTRY ANALYSIS .................................................................................................................................................................... 27PORTER 5 FORCE MODEL-INDUSTRY ANALYSIS ................................................................................................................................. 30MARKET SHARE .............................................................................................................................................................................................. 32COMPETITOR ANALYSIS .............................................................................................................................................................................. 34SWOT ANALYSIS ............................................................................................................................................................................................. 36ZACHMAN FRAMEWORK ............................................................................................................................................................................. 40TESCO E-COMMERCE AND INTERNET MARKETING-REQUIREMENT ANALYSIS ...................................................................... 42CONSUMER RESEARCH METHODOLOGY ............................................................................................................................................... 59CONSUMER RESEARCH ANALYSIS ........................................................................................................................................................... 61SOLUTION ASSESSMENT .............................................................................................................................................................................. 69APPENDIX.......................................................................................................................................................................................................... 76REFERENCE...................................................................................................................................................................................................... 77 6
  7. 7. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO ABSTRACTThis project is an attempt to find the variables/factors that effects online business strategy adoptedby Tesco considering retail market and consumers preference. The impact of various factors likePESTEL, Porters five force factors, Promotional factors, website strategy, SEO strategy, valuechain factors, critical success factors, and other important factors( timeliness, online ad, quality,variety, brand image, price, TV commercial, Reference, web friendliness, Safe transaction, webattractiveness) etc on E-commerce has been analyzed. A hypothetical model has created in thispaper, which has been taken into consideration for our research work on E-commerce and internetmarketing of TESCO.This study is mainly based on the primary data collected through consumer survey with the help ofstructured questionnaire on likert scale and website review data from Alexa.com and secondarydata related to this topic.The samples were selected by Convenience sampling method in Delhi NCR. The questionnaire wasdeveloped on the basis of exploratory research.The statistical analysis method employed in this study is Factor Analysis. After the thoroughanalysis of the available data it has been found out that to be successful in E-commerce, one has tofocus on brand image, convenience factor, communication mix and responsiveness. 7
  8. 8. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO INTRODUCTIONE-commerce has revolutionized the business operations. E-commerce prevailed with thetechnological advancements and the innovative methods of sales and conducting transactions overthe net. With, the increase in the rivalry and due to the effect of globalization of the businessprocess with the presence of conglomerates both at the national and international markets hasoriginated the need for e-commerce as a substitute to leverage growth in business and generaterevenue. The increase in consumers’ demand for new products as well as the flexibility forshopping online, the brick and click strategy in business has made a tremendous impact in theactual form of retailing itself.Companies like Tesco, have wide range of business operations and huge number of products, it isneither effective nor efficient for them to sell directly to the final consumers. For these reasons theyhave to depend heavily on the brick and click strategy and distribution partners, who play animportant 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 ancompetitive 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, safetransaction, price, website friendliness, extra benefit, timeliness, which play vital role at differentlevels 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 constraintsof implementing E-commerce and the assessment of probable solutions. 8
  9. 9. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO SCOPE AND OBJECTIVESAim of this report to analyze the E-commerce and internet marketing process followed by Tescoand 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 AssessmentSecondary 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 9
  10. 10. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO LITERATURE REVIEWMarketing and consumer researchers over the period of forty years have tried to grasp the factorswhich 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 unplannedpurchase 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 aconsumer 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 theireffects 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 generalizingconsumer 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 aparticular type of purchasing, whether it is brand of the product, or the responsiveness, or theconvenience factors, which consumer derive out of just simply purchasing a product fromespecially in this case it is online retailing. So to find out this, will help the company to reframe itsstrategy in terms of creating value to the customers and if needed can go for a new market. 10
  11. 11. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO TESCO- ENTERPRISE ANALYSISBy revenue Tesco is the third largest retailer in the world just after Wal-mart and Carrefour andfrom profit it is the second largest retailer, just after Wal-mart. It has presence in fourteen countriesacross the world whereas in UK, Malaysia, Ireland and Thailand, it is the market leader of grocerystore.Tesco is listed on the LSE and is a constituent of the FTSE 100 Index. Market capitalization ofTesco is approximately £26.68 billion as of 22 March 2012, the 15th-largest company of anycompany 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 therewere 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 addedan internal precept of "YCDBSOYA" (You Cant Do Business Sitting On Your Arse) by which heinspired his sales force.The stores which it operates mainly offer food products, as well as general merchandise, clothingproducts, and electrical products. Apart from this the services which are provided by this companyare 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 andcatalog. 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 Internetshopping 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 Im not aware of any otherretailer achieving. That is to appeal to all segments of the market" One endorsed motto of thisstrategy has been Tescos use of its own-brand products, including the up market "Finest", mid-range 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 thecompanys core purposes, values, principles, and goals. 11
  12. 12. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCOThis phrase became the standard marketing pitch for Tesco as it enhanced its business domesticallyand internationally, implying a shift by the company to focus on both interactive and internalmarketing. StoresSix formats are there in the context of Tesco, differentiated by size and the range of products sold.These are shown below: Tesco ExtraTesco Extra stores are huge, mainly out-of-town hypermarkets that stock nearly all of Tescosproduct 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, whichare 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 1997in Pitsea and more recently in 2009 Maldon. The 100th store opened on 29 November 2004 inStafford. The number has been continuously increasing by about 20 a year, mainly bytransformations 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 thenew St.Helens RLFC Stadium, but only as a one floor store. The largest in Scotland is theSilverburn 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 BishopAuckland.Other large stores are Bar Hill, Cleethorpes, Newcastle upon Tyne, Milton Keynes, Stockton-on-Tees and Watford, which are in the 120,000 square feet (11,000 m2) area range. Newer storesusually 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 beenconverted to this format in recent years. Most Tesco Extra stores have a café and as of October2009, all stores have a Tesco Tech Support Team. 12
  13. 13. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO Tesco SuperstoresTesco superstores are standard large supermarkets, stocking groceries and a much smaller range ofnon-food goods than Extra stores. The stores have always previously been branded as simplyTesco, but one of the new store in Liverpool was the first to use the format brand TescoSuperstore above the door. Tesco MetroThese are the stores which are sized between Tesco superstores and Tesco Express stores, withstores averaging 11,000 square feet (1,000 m2). These stores are mainly in city centers, the innercity 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 beforethe Covent Garden branch, are continuously being rebranded from Tesco to Tesco Metro. TheTesco store in Devizes was the last store to finish rebranding, in September 2006. And no store hasbeen renovated for over 20 years. Tesco ExpressTesco Express stores, which are neighborhood convenience stores are sized around 2,200 squarefeet (200 m2), and to stock mainly the food with an emphasis on higher-margin products (due tosmall store size, and the necessity to maximize revenue per square foot) alongside everydayessentials. The stores of Tesco are found in busy city centers, small shopping precincts inresidential areas, small towns and villages and on Esso petrol station forecourts. The 1000th TescoExpress site opened in July 2009. And now Tesco has started creating the Tesco Express storeswith 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 StopOne Stop are those stores which are smaller than Tesco Express, is the only Tesco store format inthe 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 convertedto the One Stop brand. Some have Tesco Personal Finance branded cash machines 13
  14. 14. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCOThere is some controversy as well, as grocery prices in these shops, often situated in less well-offareas, 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 manycustomers do not realise it owns—to charge up to 14 per cent more for goods than it does in Tesco-branded stores."Tesco responded to the article stating "It is a separate business within the Tesco Group, with itsown supply chain and distribution network. The operating cost of One Stop stores differs than thatto Express stores. One Stop’s price strategy is to match its nearest competitor Cost Cutter and isfrequently cheaper." Tesco HomeplusOnly food are offered in warehouse-style units in retail parks, otherwise all other product areoffered in Tesco’s stores. The reason behind using this formats is only because 20% of itscustomers have access to a Tesco Extra, and the company is restricted in how many of itssuperstores it can convert into Extras and how quickly it can do so. There are large units for non-food retailing much more readily available.Currently there are 13 Homeplus stores nationwide, and the newest Homeplus store opened inChester in July 2009.Two more stores were due to open in the first half of 2009 at sites around the country. All of thesewere to feature the Order and Collect desk where customers can purchase and collect most itemsstraightaway. 14
  15. 15. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO Store factsAs of 26 February 2011, at the end of its 2010/11 financial year, Tescos UK store portfolio was asfollows. Total Total Mean Mean Percentage +/- Stores Format Number area (m²) area (sq ft) area (m²) area (sq ft) of space 2010/11Tesco Extra 212 1,400,885 15,079,000 6,608 71,127 41.08% 22Tesco Superstores 470 1,297,112 13,962,000 2,760 29,706 38.04% 15Tesco Metro 186 194,632 2,095,000 1,046 11,263 5.73% 5Tesco Express 1,285 272,392 2,932,000 212 2,282 7.99% 155One Stop 599 74,044 797,000 142 1,530 2.04% 8Tesco Homeplus 13 51,468 554,000 3,790 42,615 1.53% 0Dobbies 28 121,053 1,303,000 4,323 46,536 3.57% 3Total 2,815 3,411,586 36,722,000 1,257 13,526 100% 208 BankingThere is Tesco bank, which is banking arm of the Tesco is formerly a 50:50 joint venture with theRoyal Bank of Scotland. The products include credit cards, loans, mortgages, savings accounts andseveral types of insurance, including car, home, life and travel. And the way to promotion theseproducts are through leaflets and its website. The business made a profit of £130 million for the 52weeks to 24 February 2007, of which Tescos share was £66 million. This move towards thefinancial sector diversified the Tesco brand and provides opportunities for growth outside of theretailing sector.On 28 July, 2008 Tesco announced that they were buying out the Royal Bank of Scotlands 50%stake in the company for £950 million. In October 2009 the name of Tesco Personal Finance waschanged to Tesco Bank Other businesses Garden centresTesco announced its intention to purchase Dobbies Garden Centres for £155.6 million on 8 June2007. 28 garden centres are operated by Dobbies. 15
  16. 16. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO TechnikaTechnika 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-rayPlayers, 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 andTesco Value. Tesco Electrical Helpline or in-store through Tesco Tech Support offers the CustomerSupport services. TelecomsTesco operates in mobile phone, home phone and broadband businesses. And the availability isthere to residential consumers in several countries and are sold via the Tesco website and throughTesco stores. Tesco has not purchased or built a telecoms network, but instead has pursued astrategy of pairing its marketing strength with the expertise of existing telecoms operators. MobileIn late 2003, Tesco Mobile was launched as a joint venture with O2. In November 2009 Tescoannounced over 2 million UK customers were using this service. In Ireland and Slovakia, a similarO2 based service has since been launched ISPIn August 2004 Tesco broadband, an ADSL-based service delivered via BT phone lines, waslaunched in partnership with NTL. In November 2009 Tesco announced a new partnership withCable & Wireless, and a fresh focus on this business area. VoIPIn January 2006, Tesco Internet Phone, a Voice over Internet Protocol, VoIP, service was launchedin partnership with Freshtel of Australia. This service was shut down in 2010. Phone ShopsIn November 2009 Tesco has announced, it now has 100 Phone Shops embedded within largerTesco Extra stores, and stated an intention to open up to 500 such shops across the UK in themedium term. In April 2010 the first Tesco Phone shop opened in Slovakia. 16
  17. 17. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO FuelTesco first started selling petrol in 1974. Tesco sells 95, 97 and 99 RON (a fuel developed byGreenergy of which Tesco is a shareholder) petrol from forecourts at most superstore and Expresslocations. Diversification into other fuel products has been done recently by Tesco, these are biofuels, offering petrol-bio ethanol and diesel-biodiesel blends instead of pure petrol and diesel attheir petrol stations, and now offering Greenergy 100% biodiesel at many stores in the southeast ofthe United Kingdom.It was 28 February 2007 in South East England when motorists reported that their cars werebreaking down. This was due to petrol sold by Tesco and others being mixed with silicon, Tescohas been criticized with claims that they had been alerted to the problem as early as 12 February2007. On 6 March, Tesco offered to pay for any damage caused by the faulty petrol, after printingfull page apologies in many national newspapers. Tech supportTesco acquired a small I.T. Support company called The PC Guys in 2008, and were able to launchTesco Tech Support in December. The teams of advisors were given the role of answering thetechnical questions on Tesco’s range of electrical products, and they are also responsible foradvising customers on extended warranties, electrical returns and a range of payment plans on allelectrical goods over a certain amount. Through the Cardiff Customer Service Centre in the UnitedKingdom, Tesco Tech Support provides UK and Ireland with technical support via telephonysystem on the electrical products sold in their stores. Film makingIn 2010, the beginning of a small firm studio was done by Tesco to produce Tesco exclusive direct-to- 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 signingssince including Mick Hucknall and Nadine Coyle. Tesco records will be exclusive products toTesco stores. Video-on-demandOn 20 April 2011, Tesco acquired a 80% stake in Blinkbox from Eden Ventures and NordicVenture Partners, it intends to use the company to boost its digital entertainment offering. 17
  18. 18. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO Gold ExchangeIn 2011, Tesco launched postal gold service with the brand name Tesco Gold Exchange, offeringmoney for gold, as well as offering clubcard points to customers via their website. Tesco TyresIn 2011, Tesco launched tesco-tyres.com in association with Blackcircles.com, offering a choice ofover 1,200 fitting partners across the UK as well as offering clubcard points with purchases. Your Beauty SalonTesco launched Your Beauty Salon, in Tesco in February 2011, and planning to open 70 over thenext year, offering services like haircuts, leg waxing, manicures and eyebrow. Tesco ClubcardCustomers 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). Customerscan also collect points by paying with a Tesco Credit Card, or by using Tesco Mobile, TescoHomephone, Tesco Broadband, selected Tesco Personal Finance products or through Clubcardpartners, E.ON and Avis. Each point equates to 1p in store when redeemed or up to 3 times theirvalue 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 convertclubcard points into frequent flyer miles. Holders receive Clubcard statements 6 times a year, whichoften feature extra point coupons and money-off coupons. These can be spent in-store, online or onvarious Clubcard deals. Tesco was cited in a Wall Street Journal article as using the intelligencefrom the Clubcard to thwart Wal-Marts initiatives in the UK. Internet operationsTesco 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 arobust home shopping service in 1996. Tesco.com was formally launched in 2000. It also has online 18
  19. 19. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCOoperations in the Republic of Ireland and South Korea. And at every selected stores, grocery sales isavailable within delivery range, goods being hand-picked within each store, in contrast to thewarehouse model followed by Ocado. In 2003, tesco.coms CEO at the time, John Browett,received the Wharton Infosys Business Transformation Award for the innovative processes he usedto support this online grocery service.On 1 October 2007, Tesco declared that it will be selling six own-brand budget software packagesfor under £20 each, including office and security suites, in a partnership with software firmFormjet. 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 downloadservice is also a part of Tesco. International operationsTescos international expansion strategy responded to the need to be sensitive to local expectationsin 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 veryhigh proportion of local personnel to management positions. It also makes small acquisitions as partof its strategy for example, in its 2005/2006 financial year it made acquisitions in South Korea, onein Poland and one in Japan.Tesco announced that it was selling its operations in Taiwan to Carrefour and purchasingCarrefours stores in the Czech Republic and Slovakia in September,2005. And also both thecompanies had declared that they were concentrating only those markets which they have strongpositions in. IndiaIn India, if we talk about Tesco has a limited presence with a service centre in Bangalore. In 2008Tesco announced their intention to invest an initial £60m ($115m) to open a wholesale cash-and-carry business based in Mumbai with the assistance of the Tata Group. 19
  20. 20. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO Promotion MixTesco has been using several television adverts over the years. In July 2007 a DVD containingadverts from 1977–2007 was given to all members of staff. Early advertising stressed cheap pricesand how to keep "The cost of living in check." In 1977 an advert was made where a till showed theprices 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 areceipt coming out of it with the prices on. This advert had synth pop music as the backing andpeople 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 TheSpice Girls and the voice of actors James Nesbitt and Jane Horrocks were included into theiradverts in 2000s Corporate social responsibilityA commitment to corporate social responsibility in the form of contributions of 1.87% in 2006 ofits pre-tax profits to charities/local community organizations was made. This compares favorablywith Marks & Spencers 1.51% but not well with Sainsburys 7.02%."Computers for schools scheme" was started by Tesco in 1992, offering computers in return forschools and hospitals getting vouchers from people who shopped at Tesco. Until 2004, £92 millionof 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 competitionfor young players throughout the UK.In 2009 Tesco used the phrase, “Change for Good” as advertising, which is trade marked by Uniceffor charity usage but not for commercial or retail use, which prompted the agency to say, "It is thefirst time in Unicef’s history that a commercial entity has purposely set out to capitalize on one ofour campaigns and subsequently damage an income stream which several of our programs forchildren are dependent on.” They went on to call on the public “...who have children’s welfare atheart, to consider carefully who they support when making consumer choices”. The own labels forpersonal care and household products are moreover cruelty free - this means, they are not tested onanimals. 20
  21. 21. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCOIn June 2011, Tesco announced that it was working with 2degrees Network to create an online hubas 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 sellingvegetables that contained illegal pesticides or at levels exceeding the legal limit. A green vegetablesample from Tesco turned up methamidophos and monocrotophos, the use of which has beenprohibited in China since the beginning of 2007. LitigationTesco is involved in litigation, usually from claims of personal injury from customers, claims ofunfair dismissal from staff, and other commercial matters. Two notable cases were Ward v TescoStores Ltd, which set a precedent in so called trip or slip injury claims against retailers; and TescoSupermarkets Ltd v Nattrass, which reached the House of Lords, in which Tesco was cleared ofresponsibility for a staff members failure to correct a misleading advert. 21
  22. 22. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO PRODUCT CATEGORIES OFFERED IN TESCO DIRECT-ONLINE TOUCHPOINT Computers, Photography, & GamingAll 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 PhonePay as you go Mobiles, Pay as you go SIMs, Pay monthly Mobiles & SIMs, Mobile Accessories.IPhones, Telephones, Broadband, Mobile Broadband, International Calling Card, Mobile RecyclingClearance Home ElectricalWashing 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, TumbleDryers, Vacuum & Steam Cleaners, Washing Machines, Steam Generators & Vacuums Sound and VisionTelevisions, 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 KitchenBeds, Mattresses & Divans, Bedroom, Conservatory, Dining, Home Office, Kids Furniture,Kitchen, Living Room, Modular Furniture, Outdoor, Sofas & Armchairs, Top 20 Offers, Clearance 22
  23. 23. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO Home and BathBathroom 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 CareBatteries, 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 ClothingWomenswear, Menswear, Kidswear, School Uniform, Occasionwear, Character & Fancy Dress,Sale Shop BeautySkin Care, Make Up, Fragrance, Gift Sets, Shop JewelleryGold Jewellery. Silver Jewellery, Charms & Beads, DiamondsJewellery, Boxes, Watches,Jewellery Clearance Sports and LeisureBikes Accessories, Bikes, Camping & Hiking, Equestrian, Fishing, Fitness, GolfLuggage & SportsBags, Racket,Sports Nutrition, Street Sports, Swim & Triathlon, Table Games & Darts, TeamSports, Water 23
  24. 24. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO Toys and GiftsAction Figures & Playsets, Animal Playsets, Arts, Crafts & Science, Dolls & Playsets, Fancy Dress,Gadgets, Gifts & Robotics, Games & Puzzles, Gift Experiences, Infant & Pre-School Toys, KidsBedroom, Kids Bikes, LEGO & Building Blocks, Music, Online Photo Centre, Outdoor Toys,Party, Pretend Play, Soft Toys, Vehicles Baby and ToddlerBathing, Changing & Nappies, Bouncers, Toys, Walkers & GymsCar Seats, Carriers &Accessories, High Chairs, Feeding & Sterilizers, Maternity Mattresses, Nursery Furniture, NurseryInteriors & Bedding, Pushchairs, Buggies & Travel Systems, Stair Gates, Playpens & GardenBBQs, 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 24
  25. 25. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO FINANCIAL ANALYSISThe figures below are the Tescos financial years, which run for 52 or 53 week periods to lateFebruary. Up to 27 February 2007 period end the numbers includes non-UK and Ireland results forthe year ended on 31 December 2006 in the accounting year. The figures in the table below include52 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, Carrefourand Home Depot. Tesco was better than Home Depot during 2007, following the sale of HomeDepots professional supply division and a decline in the value of the U.S. dollar against the Britishpound. METRO was only just behind and might move ahead again if the euro strengthens againstthe pound, but METROs sales include many billions of wholesale turnover, and its retail turnoveris much less than Tescos.The equity figure on the balance sheet is understated since the property assets are shown atpurchase cost less accumulated depreciation, as mentioned below, whereas in reality these assetshave shown the increment greatly in value. Taking into consideration that Tesco is now, year byyear, gradually divesting this property, with large gains compared to book value, these propertyassets provide a buffer to the current leverage position.Finally, since the company has very reliable and predictable earnings, because the major productssold are consumer staples like food and personal goods, it is unlikely that even a major recessionwill seriously affect sales and profits. The company should therefore, have no difficulty makinginterest payments even under quite adverse conditions.S & P rates Tesco long-term debt as A-, outlook stable. 25
  26. 26. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO 52/3 weeks Turnover Profit before tax Profit for year Basic earnings per share ended (£m) (£m) (£m) (p)26 February 67,573 3,535 2,671 33.10201127 February 62,537 3,176 2,336 31.66201028 February 54,300 3,128 2,166 28.92200923 February 47,298 2,803 2,130 26.95200824 February 46,600 2,653 1,899 22.36200725 February 38,300 2,210 1,576 19.70200626 February 33,974 1,962 1,366 17.44200528 February 30,814 1,600 1,100 15.05200422 February 26,337 1,361 946 13.54200323 February 23,653 1,201 830 12.05200224 February 20,988 1,054 767 11.29200126 February 18,796 933 674 10.07200027 February 17,158 842 606 9.14199928 February 16,452 760 532 8.121998 26
  27. 27. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCODespite 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 nowplanning to create 16,000 new jobs, of which 9,000 will be in the UK. In 2011 the retailer reportedits poorest six-monthly UK sales figures for 20 years, as a result of consumers reduced non-foodspending. PESTEL-INDUSTRY ANALYSIS Factor-PoliticalBusiness 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 alsohas presence in Asia), Political and legislative conditions of these countries have high correlationwith 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 meetthe demand from population categories such as students, working parents and senior citizens, due toemployment legislations factor. Tesco realizes that talent retention has a great effect on people andjob, factors (new store developments are often seen as weakening the situation other jobs in theretail sector as the traditional stores are forced to go out of their business and are forced to lessenthe price of the products to compete, being primarily local and labor-centric sector. Tesco givesopportunity to a large numbers of students, disabled and elderly workers, mostly paying them lowerwage rates. These workers often show a higher level of loyalty, as these people are well motivatedby the better salary. Hence they become desirable employees. Factor-EconomicalThis is one of the major concern to Tesco, because this factor affect the costs, prices, demand andprofits. High unemployment is one of the most important factors of economy, which reduces the 27
  28. 28. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCOeffective 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 themarketing mix and performance. Though international business is still expanding, and it is expectedgreater amounts of Tescos 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 badlyinfluenced by any slowdown in the UK food market and are shown to market concentration risks. Factor-SocialCurrent 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 non-food items available for sale.There are demographic changes such as the aging population, an increase in female workers and adecline in home meal preparation which means that UK retailers are also focusing on value addedproducts and services. Apart from this, the focus is now towards; the own-label share of thebusiness mix, the supply chain management and other operational improvements, which can drivecosts out of the business.The function of their social conditioning and their attitudes are demanded by the consumers. Andnowadays, the consumers are becoming more and more aware of health issues, and there is changetowards food. One example of Tesco adapting its product mix is to accommodate an increaseddemand for organic products. Allowing the customers to pay in cheque and cash at the checkoutwas the strategy, which was firstly implemented by Tesco. Factor- TechnologicalMajor macro-environmental variable is technology usage in the business, which influences thedevelopment of many of the Tesco products. The use of new technologies will benefit bothcustomers and the company: customer satisfaction rises because goods are provided to theconsumers at time, services can become more personalized and shopping more convenient. Thelaunch of the Efficient Consumer Response (ECR) initiative provided the shift that is now clear inthe management of food supply chains. Tesco stores utilize the following technologies:• Wireless devices• Intelligent scale• Electronic shelf labeling 28
  29. 29. 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) andelectronic scanners have provided the Tesco, a great opportunity to improve on its efficiency ofdistribution and stocking activities, with needs being communicated almost in real time to thesupplier Factor- EnvironmentalPressure 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 retailersis environmental issues, the key area for companies to act in a socially responsible way and toproduce and opt for ethical ways. Hence, by realizing this trend within the broad ethical stance,Tescos CSR is concerned with the ways in which an organization moved ahead to the minimumobligations to stakeholders specified through regulation and corporate governance.There are clear intentions of government to launch a new strategy for sustainable consumption andproduction to cut waste, lessening consumption of resources and to minimize environmentaldamage. The so-called ‘fat tax directly affects the Tesco product ranges that have subsequentlybeen adapted, and also affecting relationships with both suppliers and customers Factor-LegalThere is direct impact on Tesco business, because of several government policies. For instance, theFood Retailing Commission (FRC) suggested an enforceable Code of Practice should be set upbanning many of the current practices, such as to demand payments from suppliers and to changethe prices which were agreed between. The powerful players who are present with establishedbrands, 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 andlimits on access to raw materials. While prices are less on promoted goods, prices elsewhere in thestore are raised to compensate. 29
  30. 30. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO PORTER 5 FORCE MODEL-INDUSTRY ANALYSISThe Porter’s 5-Force Model (developed by and named after Michael Porter) helps identify theexternal 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 marketing- mix 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. 30
  31. 31. 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 Sainsburys 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(5) 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 Tescos 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. 31
  32. 32. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO MARKET SHARE Supermarket Market share +/- from August 2011 August 2010 Tesco 30.5% 0.3% Asda 17.1% 0.5% Sainsburys 16.1% 0.0% Morrisons 11.7% 0.1% Others 24.6%According to new research published in March-2012, Tesco has realized its share of the UKgrocery 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 sharewas as low as it is currently, with trading continuing to prove difficult for the retail giant followinga disappointing 2.3 per cent drop in like-for-like sales it posted for the recent Christmas tradingperiod.The overall grocery market grew 4.5 per cent during the 12 weeks to February 19th 2012, today’sreport 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 ofgrocery price inflation, many of its competitors are seeing their slice of the market hit all-timehighs. 32
  33. 33. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCOWhile consumer spending remains squeezed, many other grocers stores have managed growth inrecent months, with ASDA strengthening its position as the second biggest supermarket chain with17.5 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 thangrocery 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’ UKshopper. Some consumers clearly value good service and in-store experience when shopping, whichWaitrose claims to provide.”Due to an aggressive store expansion, Waitrose has also experienced a climb in share. The other biggrocers have also been expanding but to varying degrees of success; while Sainsbury’s upped theirmarket share to 16.6 per cent in the period, Morrisons saw its fall from 12.3 per cent to 12.2 percent.At the value end of the market Aldi, Lidl and Iceland all saw good amount of growth in till salesduring the period, with rises of 23.5 per cent, 10.5 per cent and 10.9 per cent respectively, to helpthem all hold on to record share of the market. 33
  34. 34. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO COMPETITOR ANALYSISTesco 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 purchasinghabits 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 isnot possible for me to go into the competitive conditions in each market. I will limit this section to abrief consideration of the UK market and the Thai market as an example of one of the emergingmarkets Tesco serves.If we talk in UK, Tescos key competitors are Asda (a subsidiary of Wal-Mart), Sainsbury andMorrison. 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 inmarket share. Over the last year (to March, 2011) Tesco has lost ground slightly, as mentionedbelow under headwinds.However within the UK, Tesco has been the dominant player with the market share almost doublesits nearest rival. I believe this dominance provides economy of scale advantages and a competitivechallenge difficult to duplicate. 34
  35. 35. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCOHowever, major concern is the growth in the international markets (and especially the emergingmarkets) since this is where future value lies. In terms of the UK, I believe future growth inearnings is likely to come by development of the financial services, non-food and on-line retailingoperations.The Thai market where Tesco is the market leader, illustrates Tescos approach to internationalmarkets. The Thai operation was set up as joint venture with leading Thai food company, CP Groupin 1998 and has expanded to become the market leader in Thailand. The two key competitors inhypermarkets 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 Casinowhich puts Big C in a position to challenge Tescos market leadership.In managing the Thai stores Tesco applies strategies and technologies developed in the UK, such asClubcard, and then adapt them to the Thai local conditions. Thai consumers have very differenttastes in food which is of course reflected in the product range offering. In addition the prices ofmany items, such as clothing items, are very much cheaper than in the UK, although of equalquality, which reflects the lower income level of the average Thai consumer. 35
  36. 36. 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 customers 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. 36
  37. 37. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO The company has the largest market share in the grocery market in the UK. Tescos innovation such as the club cards and the kind of attitude towards its workforce has made it very successful over the years. "The UKs 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 37
  38. 38. 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 Tescos 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. 38
  39. 39. 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. 39
  40. 40. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO ZACHMAN FRAMEWORK ABSTRACTIONS[COLUMNS] NETWORK-- PEOPLE TIME MOTIVATION ZACHMAN DATA What FUNCTION -- Where Who When Why FRAMEWORK (Things) How (Process) (Location) (People) (Time) (Motivation) SCOPE – Current (Contextual) Organization Planner – Business Description List of –Capability Roles and – Future Events Enablers Locations Organization Significa – Change Cases --- List of Scope and nt to the Details scope, -Capability – Process Locations in Requirements Business purpose, Enablers Identification which the – environment, – Change Cases business Stakeholder/Pa and other – Enterprise operates rticipation summary-level Information Management formation for an Model Plan architecture – description. Communicatio ns Plan BUSINESS -Lists – MODEL organizations, Business (Conceptual) roles, and Event Owner -Traces actions in relationships List a scenario or Lists systems, among – Principles – sequence of system organizations Policies and events. components, and -Details the Guidelines – Process their activities – Capability Definition interconnections performed and Description – Business . - their – Capability Structure – identifies system interrelationshi Model Process Gap communications ps, including Definition Assessment input/output – Capability – Enterprise relationships Model , Information – Capability Model Scenario – Knowledge Gap – IT – Architecture Management Overview Requirements Diagram – Future – IT Management BusinessPERS Requirements EnvironmentPECTI – Process/Data – Industry Usage EnvironmentVES – Data Stores Analysis(ROW – Decision ModelS) – Process . Enablers Identifies Provides detail of – Network -Work Flow -Logical Business rule SYSTEM sequencing and data moving Requirements Model -human represent model-VA MODEL timing of activities between – Data and interfaces ation of policies, (Logical) – Data Stores systems.[Systems Function the standards and Designer – Process/ Data Data Exchange Access and distribute procedures Usage Matrix] Placement d associated – Data and -Lists performance – Enterprise system Function characteristics of Technology architect 40
  41. 41. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO Access and individual Framework ure for Placement systems[Systems VA – Enterprise Performance locations Technology Parameters - Framework. Matrix]. Describe s system- specific requirem ents on critical event sequence s. -PresentationTECHNOLOG Architecture -ControlY -Specification StructureMODEL of access -Timing(Physical) privileges to definitioBuilder specific n -Describes -Lists systems, platforms and constraints on system technologies system components, and operation -System Design their imposed by -- interconnection- design or COBRA,EJB,NET -Lists implementation. – Enterprise -Lists connections technologies and – Standards Technology between individual products that are –Technology Framework systems in a group. expected to Scan – Technology -Maps systems affect systems. –Non- Scan information back -Describes Functional – Non-Functional to the operational emerging or Requirements Requirements view. evolving –Current IT – Current IT -Lists migration standards that Environment Environment plans for systems. might apply to -Infrastructure – Infrastructure the architecture. Gap Gap Analysis Analysis – Transition Management Strategy Timing Security DefinitioDETAILED Architecture n(Out-of- -Access -Timing RuleContext) Network privileges definitio Specification-Sub-Contractor Programs coded to Architecture- coded to ns coded VA business operate on specific Network devices control access to rule Data Definition- technology configured to to specific sequence s constrained by Data definitions platforms conform to platforms and activities specific constrained by node technologies on physical specifications specific data models platform and technolo giesFUNCTIONIN VA personnel TimingG Functioning Sending and and key definitio OperatingENTERPRISE computer receiving stakeholders ns characteristics(FUNCTIONAL instructions messages working within operating of specific) User & service Data values stored their roles and to technologiesprovider in actual databases responsibilities sequence constrained by activities standards 41
  42. 42. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO TESCO E-COMMERCE AND INTERNET MARKETING-REQUIREMENT ANALYSIS TRAFFIC RANKTraffic rank for tesco.com: Traffic Rank Change21-march 1,681 +513 7 day 1,370 -1371 month 1,478 +853 month 1,357 +230 AVERAGE LOAD TIME FOR TESCO.COMAverage (1.36 Seconds), 52% of sites are slower. 42
  43. 43. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO PAGE VIEWSEstimated percentage of global internet users who visit tesco.com: Reach Change23-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 myopinion 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 websiteis always higher than Tesco website. 43
  44. 44. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO PAGEVIEWS PER USEREstimated daily unique page views per user for tesco.com: Page views/User Change 23-Mar-12 9.3 -14% 7 day 9.4 -1% 1 month 9.84 -4% 3 month 9.68 -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. 44
  45. 45. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO BOUNCE RATEEstimated percentage of visits to tesco.com that consist of a single pageview: Bounce % Change23-Mar-12 32.9 +29% 7 day 30.8 +1% 1 month 29.9 +4% 3 month 29.4 +2%Bounce rate is high for Tesco website. It is happening because there is no spontaneity in writing andthe information flow is not proper, after viewing the first page viewer would think “what to viewnext?” This is the main criteria they bounce off Tesco site. Tesco should ensure that content ispresented well and provide prominent clues to visitors as to what is the next step. A/B testing canbe most useful to decrease bounce rate and to modify contents properly. 45
  46. 46. BUSINESS ANALYSIS OF E-COMMERCE & INTERNET MARKETING OF TESCO TIME ON SITEEstimated daily time on site (mm:ss) for tesco.com: Time on Site Change23-Mar-12 07:17 -12% 7 day 07:03 -3% 1 month 07:23 -6% 3 month 07:23 -5% 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. 46

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