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Tesco Internet Marketing Strategies

Marketing Strategies Introduced For Tesco

Internet Marketing

Internet marketing has emerged as a very lucrative and cost effective tool for businesses aiming to attract more customers. Online marketing strategies become even more important for businesses that have entered the domain of selling through internet. The online marketing strategies of a company play a big role in shaping consumer buying behavior. The current report takes a look into the same in the context of UK retail giant Tesco. This report will present an evaluation of the online marketing strategies of Tesco and how successful they have been in transforming buyer’s behavior in favor of the company.

The report starts with a strategic overview of the project which covers the rationale behind conducting this research and the main focus area. This is followed by the chapter of literature review which will provide a detail account of internet marketing, online marketing in Tesco, role of online marketing strategies on the customer buying behavior and impact of internet marketing strategies on overall operations of Tesco. The next section covers the research methodology part which gives an account of the various research methods employed for the successful completion of the report.

Online survey of customers of Tesco will be conducted and marketing managers of the company will be interviewed for collecting primary data. From the data analysis and findings chapter main outcomes of the research will be obtained which will demonstrate that majority of the customers prefer online shopping, internet marketing strategies adopted by Tesco are appropriate, online marketing plays an instrumental role in influencing the purchasing pattern of customers as it can change their perceptions about shopping. Hence, it has been found that the role of internet marketing is very instrumental in context of customer buying behavior.The report finally consummates with a conclusion and recommendation part. There is a self reflection report also at the end of the dissertation.

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Chapter 1 : Strategic Project Overview

Introduction

From past so many years, theories related to internet marketing and the buying behavior of consumers in online markets has been intensively observed. However, various previous researches have not comprehensively studied the role of internet marketing strategies on consumer buying behavior (Chaffey, 2008). Utilization of internet for the purpose of marketing is increasing day by day in almost every organization. Correspondingly, consumers have started using internet not only for the purpose of accumulating information but also for the purpose of purchasing goods. The very first picture of the company that operates online is displayed by the website i.e. the front page. This need to be developed effectively so as to bring the customers close to the online markets and thereby forming a good first impression of the company (Gay, Charlesworth and Esen, 2007). All across the world, internet has now become the vital marketing medium for businesses. There were many previous studies, which has examined the online consumers’ behavior. Consequently, several issues like effective online marketing strategies and websites that has a potential to satisfy the customers, their trust and commitment is becoming important (Hart and Doherty, 2000).

Rationale of the project

It is the internet that provides an information rich atmosphere to all the potential buyers in regards with the different services, suppliers and products in the market. As consumers are acquainted with complete information, it becomes very easy for them to switch from one user to another (Darby, 2006). This easiness has moved the control from brand to the buyers. There were many investigations being made regarding the various aspects of online consumer behavior such as analyzing the way consumers develop the brand attitude in relation with the e-retailers and many more (Marketing Your Retail Business on the Internet, n.d). Those factors, which identify the buying decisions of customers are altering at a fast pace.

This is because they are clinching e-commerce with expectations for service, efficiency and support. In present era of globalization and competitiveness, the preference of customers towards online shopping is increasing at a skyrocket pace (Hart and Doherty, 2000). Furthermore, in order to enhance the brand image as well as loyalty from the customers, more and more businesses are making use of internet marketing due to the rising usage of internet and technological advancement. Attributing from the above facts, the present research is prepared to evaluate the role of internet marketing strategies on consumer buying behavior. In addition to this, the report also throws light on importance of internet marketing in Tesco. The case company is the leading international food and grocery plus general commodities retailer in UK. Tesco has its headquarters in Cheshunt, UK. The company has secured second position in terms of profits, while third position in terms of revenue (Chaffey, 2008).

Research focus

Although there have been several researches being conducted on the topic “buying behavior of customers” and “online marketing”, the evaluation of role of internet marketing on consumer buying behavior is of immense importance. Marketing activities are directly related with the technology (Walter, 2012). As the technology grows, marketing activities also alters simultaneously. It is quite significant on the part of management to know what satisfies their customers and how online marketing affects their buying behavior. Keeping all these factors into consideration, the current research report identifies the role of internet marketing strategies on perception of consumers towards online purchase of goods and services. The case company taken under this study is Tesco. Further, the research would also be going to examine different perception of consumers in regards with the online marketing of Tesco (Marketing Your Retail Business on the Internet, n.d).

Chapter 2: Literature Review

Internet and competitive advantage

All human beings can certainly claim that they live in the age of internet i.e. the golden age of technology. According to Hamill, the internet is nothing but the network of inter-connected computer throughout the world operating on a standard protocol, which helps in transformation of data from one incompatible machine to another (Hamill, 1997). This is being used by millions of people because of its countless benefits such as media streaming, file sharing and collaboration. Today, in this dynamic and ever changing world, the use of internet is at boom. There are countless people who are making use of internet in order to get their work done better. Through internet, it becomes possible for the organization to sustain a reasonable competitive position in the market (Darby, 2006).

According to porter, a precise definition of the term competitive advantage is being defined as that thing, which takes into consideration any offensive or defensive action in order to create a defendable position in an industry (Michael, 1985). Through this, company can also cope up successfully with competitive forces and can generate a superior return on investment. Moreover, according Barney, sustained competitive advantage is achieved by the organization when any business concerns employs a strategies that are not executed by other rivalry firms in the market (Barney, 1991). When the benefits of this strategy cannot be implemented by other firms in the market, it is quite essential to be on the top of competition. As per the porter, organization can achieve sustained competitive advantage in two ways.

The very first way is through operational effectiveness and the second one is strategic positioning. Operational effectiveness is being defined as the way in which the firms perform the same things that their competitors are performing, however in a better and effective way (Hart and Doherty, 2000). Seeking help from the internet, information can be transferred easily and quickly, which ultimately enhance the operational effectiveness as well as improves the way business carry out their functions (Barney, 1991). As an alternative, strategic positioning is being defined as an ability of the business to carry out things differently from their rivalries and helps in providing a unique type of value. Strategic positioning of each and every firm is being affected by internet, by facilitating the company to offer different features and services. From the last two decades, astonishing alternations in the information technology have been observed. In present scenario, most of the organizations are making use of internet-connected high-powered workstations, servers, notebook computers with integrated wireless and dozens of other smart devices (Gay, Charlesworth and Esen, 2007).

Those organizations who are forward-looking can significantly gain a real competitive edge just by effectively utilizing the new information technology opportunities. By making use of technology, firms can gain privileged and higher profits by establishing long-term strategic advantages (Chaffey, 2008). However, Nicholas Carr in one of his piece of writing being titled as “IT Doesn’t Matter” has argued that since the use of information technology is now becoming a routine input, firms will no longer be able to achieve a strategic advantage (Nicholas, 2003).

Thus, investment in regards with the information technology will prove a poor strategy for the company. There were many disagreements between Carr and the economists. All these were the resultant of their diverse perception and values. Economists were of the view that and has provided evidence that information technology creates value when exploring data across hundred of firms or in other words the entire economy (Nicholas, 2003). On contrary, Carr was highly interested in the ability of information technology in order to alter a sustainable competitive advantage for an organization. Nevertheless, by combining with the other technology software, internet has provided a supporting hand to information technology to become a powerful tool for business strategy. In addition to this, internet is being considered as the massive strategy medium, which can provide a business with highly integrated systems that reinforces the sustainability of the organization (Michael, 1985).

Internet marketing

According to Chaffey, marketing is being defined as the management process, which is responsible for determining, anticipating and satisfying the requirements of customers profitably (Chaffey and Edgar, 2000). As per the customer-centered perception being proposed by Smith and Chaffey, “Internet Marketing can be used by making use of three steps i.e. identifying, satisfying and anticipating. In the first step by utilizing internet for the marketing functions, needs and wants of the customers can be identified, which can then be addressed properly (Smith and Chaffey, 2005). The second step is satisfying the customers. The most significant factor in internet marketing is to accomplish customer satisfaction. And the final step is anticipating. Here, consumers make use of internet in order to gather data and information and make necessary purchases. The level at which the organization is related with customers is considered as the main element of the online marketing (Hofacker, 2000).

Internet marketing is also being known as the e-marketing, online marketing and web marketing. It is generally being referred as the marketing of products and services over the internet. According to Hofacker, promoting and marketing goods and services by making use of internet also has a huge scope (Hofacker, 2000). This is because of the fact that it not only involves marketing via internet, however it encompasses marketing undertaking through e-mails and wireless media. Digital customer data and Electronic customer relationship management systems are also often grouped mutually under internet marketing (Chaffey and Edgar, 2000).

In regards with the impact of internet marketing strategies on buying behaviour of customers, Korgaokar has studied the demographic variables of customers in the year 1999. The result of this study shows that age, sex, income, gender, work, family and geographic distribution might affect the online purchasing behaviour of buyers (McDonald and Wilson, 1999). Another researcher Bellman has conducted research on online clients. He founded that information in regards with the rich commodities could greatly influence the online shopping.

Further, as per the study being carried out by Lin and Lu in relation with the perspective of quality of website, it was determined that quality of website to have impact on the buying behaviour of consumers. He conducted a survey of 139 online buyers and after analyzing the feedback of these responses, Lin and Lu ended with this (Turban, Lee, King and Chung, 2000). In addition to this, in the year 2001, Lijun Wu have studied the subject on the basis of theory of customer behaviour and has made the conclusion that there are mainly two factors, which highly influence the online buying behaviour of customers i.e. internal and external factors. The internal factors encompass the economic conditions, age and gender. On the other hand, the external factors include network infrastructure, trading reliability, quality plus the prices of the commodity (Donthu, 1999).

In the same year i.e. 2001, Xixi Wang has developed a conceptual model of analysis in order to influence the factors of online buying behaviour. The investigation being conducted by the author was mainly focussed towards the impact of four factors on buyer’s online purchasing activities, along with transactions features, demographic factor, online customer’s characteristics and characteristics of online retailers such as Tesco Plc (Turban, Lee, King and Chung, 2000). In the year 2005, Ji Li has carried out the research in relation with the customer buying behaviour. He has targeted the college students and performed an experiential learning on influencing factors of online purchasing on the basis of innovative diffusion theory. The outcomes of this experiment reflected that the fundamental factors that have significantly influenced the online buying behaviour of students are innovation, network, online time, disposable income and time pressure (Donthu, 1999). Furthermore, on the basis of research being conducted by Swami Nathan with the perspective of website technology on various factors that affects the online buyer’s shows that, by offering competitive prices as well as quick cancellation of orders are considered as the most positive factors for customers while making online purchases of goods and services(Hofacker, 2000).

Internet marketing in Tesco

According to Smith and Chaffey, there are 5s of internet marketing. All these S’s proposes five benefits to Tesco to implement the internet marketing and these are as follows:

Sell

Most of the customers make use of internet to accumulate information in regards with the products and services. They approach internet as a medium to browse online prices or any special offers prior visiting the store. For the purpose of achieving the wider variety of customers, it becomes important for the companies to offer both offline and online experience of shopping to their potential customers who visit the store as well as for those who prefer to shop online (Donthu, 1999). Tesco has also adopted the same strategy. Through their websites such as Tesco.com, company sell wide range of products and services online and offer a good experience for customers who shop online. Earlier, Tesco use phone to sell products and services to their customers, however after converting its marketing strategy to online selling through websites, the sales of the company has been dramatically changed (Darby, 2006).

Serve

In order to improve the experience of customers, website should serve or add value. Tesco has set up their websites in such a way that increases the value among the customers. Further, websites of Tesco are customers oriented and employs various ways that provides extra benefits and values to them. Say for example, Tesco makes use of data and facts in regards with each registered customer and personalizes the content as per the needs and preferences of the individual (Chadwick, Doherty and Anatasakis, n.d). Website provides supporting hands to the users by providing recommendations on relevant products as per the browsing history of each visitor. In other words it can be said that Tesco was successful in enhancing the experience of customers by offering personalization and at the same time helping them in gathering information required very quickly and easily (Walter, 2012).

Speak

One of the important benefits of internet marketing is speak. It is defined as the way of communicating and speaking with the potential customers. Tesco has used the chat rooms, forums and questionnaires in order to communicate with their consumers as well as to enhance their relationships. Customers will be more satisfied if organization speaks to customers, recommend them various products and appropriately answer their all queries. Tesco generally makes use of discussion forums in order to help their customers in searching information in regards with the products, prices and answer some of their queries (Gay, Charlesworth and Esen, 2007).

Save

For each and every organization along with Tesco, saving time as well as money is considered as the indispensable issue. Savings of the company emerges in printing, customer service and distribution. Company should have good system in place that enables the consumers to help themselves. This will in turn going to save the precious time as well as money of the company. Tesco has also estimated that they will also going to save time and big amount of money, if they serve their potential customers through websites (Our Strategy, n.d). Thus, Tesco has made use of online marketing in order to serve more customers. Seeking help from the online help functions like FAQ’s, people can be self-serviced. As a result, in fewer time company will be going to serve more customers than ever before. Furthermore, by sending annual reports, special offers and promotions through e-mail, Tesco was successful enough in saving both their time and money (Chadwick, Doherty and Anatasakis, n.d).

Sizzle

Internet marketing offers countless opportunities and advantages, which should be taken by each and every organization. Tesco has also significantly used internet marketing and strategies as a medium to add some ‘sizzle’ to their brand. Internet marketing has helped the business in improving their image by adding some new unique services. Further, it supports the company by building its value and in turn formulates an unforgettable experience to customers through offering interactive facilities (Turban, Lee, King and Chung, 2000). Along with Tesco, this concept was also being used pop band Oasis many times ago. They have offered a free CD to the customers being attached to “The Sunday Times newspaper”. Four new tracks were included in the CD, which can be played on a PC for only four times. After that time, customers were automatically directed to the website of HMV in order to buy that particular album (Walter, 2012).

Thus, from the above facts and discussion, it can be said that by implementing online system in its marketing channels, Tesco has gained significant advantage in recent years (Marketing Your Retail Business on the Internet, n.d). Seeking help from their organizational websites through internet, company is providing information in regards with the organization, products and services to their potential customers. Through these sites, Tesco is facilitated towards measuring the overall customer’s base of the business. It also helps in targeting the most valuable clients group of the company. In addition to this, seeking help from the effective internet marketing, firm was able to provide quick response to its buyers. Internet marketing offers many benefits to each and every company (Our Strategy, n.d). As compared with the other marketing activities, online marketing demands less money, this in turn significantly increases the profit margins of the organization. Moreover, through internet marketing, it becomes feasible for the organization to provide 24 hours service to their potential customers, which in turn helps in creating loyalty of the brand (Turban, Lee, King and Chung, 2000).

Through internet marketing, Tesco was able to find new customers base as well as to attract them to avail the services of the company (Donthu, 1999). Thus, from the above facts it can be attributed that internet marketing has adequately supported the Tesco in many saves such as lowering the costs, saving time, money and efforts and many more. All these were made possible due to the implementation of quality websites being created by the company. Tesco is a multi-national and huge retailer of food and grocery products and is one of the leading retail firms of United Kingdom. The company has well-designed their websites with inclusion of effectual photographs of wide range of products plus a well written, concise and useful text that helps in pulling different customers every month to the company (Chadwick, Doherty and Anatasakis, n.d).

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Role of internet marketing on buying behavior of customers in context of Tesco

According to Donal Rogan, there exist a relationship between marketing strategy and consumer behavior. Donal states that internet marketing strategy is all about increasing the frequency and probability of buyer behavior. It is required to succeed in this just to comprehend the needs and wants of the customers (Bruno, 1997).

According to Chisnall, human needs and motives are closely related to each other. They are inextricably linked with each other in such a way that it becomes difficult to determine the precise difference which may characterize them (Russell, 2012). For instance, individual may buy a piece of coat in order to protect the body against the winter, however there real dominant need can be to follow the latest fashion trend being prevailing in the market. Thus, it becomes important to understand the buyer’s theory for the purpose of explaining the way consumers interprets and receive stimuli from the advertisements (Danny, Robertson and Elizabeth, 1978). The buying decisions of consumers are highly influenced by variety of factors and individual characteristics. The features of online consumers being identified by various authors are being referred as the specific consumer traits and the way customers make use of internet is referred as the online behavior. In order to understand what is important for the online consumers, online consumer’s characteristics such as social, personal and psychological need to be identified. All these characteristics help in revealing the lifestyle of an individual as well as his attitude towards online shopping (Bruno, 1997).

According to Vesterby and Chabert, through internet it becomes easier for the companies like Tesco to have potential information regarding their products and services being available with their customers. Tesco was also able to meet the information needs and demands of the customers to a lower cost per report to the dispatch of product catalog. Further, the author also asserts that companies that have no physical presence in the market should promote themselves by both using online and offline means. This is all needed to make the potential customers remember their names (Russell, 2012).

In the present global economy, online business plays a very important role. This significance will continue to grow even in the near future as well. The most interesting aspect in internet marketing is that the image of those products and services which are capable enough to attract more and more customers to visit their websites gets the highest marks (Online buying behavior, n.d). In fact, saving valuable money is far more important than the need to view or see the picture of the product. The customer of response more is too tax saving and free delivery. With the help of information technology, customers from every part of the world can access the information regarding the products and services being offered by Tesco. They can also access these information’s through variety of sources.

Now days, almost every consumers have very limited time to shop. They have busy schedule which limits them to shop offline. Thus, the combination of these factors i.e. less time and limited information persuades the customers to switch towards online marketing and shopping of their products and services. Tesco has also used this concept. They have used various internet marketing strategies in order to attract and retain different customers towards their brand. As customers can access explosive amount of information regarding the services and products of the company on web, they are now shifting towards online marketing (Close, 2012). They have more control over the product in online means and need less effort to be devoted during the time of shopping. For the purpose of responding to the needs and desires of the customers for convenience and control, it is required on the part of the company’s web store to develop an efficient system, which enables the consumers to easily find their own needs, to learn more in regards with that needs such that they can further make or take purchase decision very quickly (Blythe, 2008).

There are many factors which influence or impact the online buying behaviour of customers. Marketing mix consist of product, price, place and promotion. Price is an important factor of marketing mix and consumer decisions are largely affected by this factor, as it is the only tool through which consumers can make comparison between different products (Buyer Behavior, n.d). Moreover, characteristics of products such as, quality and value for money also depends on price. There are some customers who make decisions based on emotional factor. For such consumers trust is an important parameter. Whenever, such customers take any purchase decision, they focus on their safety needs and product’s utility. Another important factor for consumer is Convenience. Those consumers, who do e-shopping, pay more attention to this factor, as they want best quality product by just a click. So, this factor not only benefits consumer, but also motivate them. Whenever, any consumer goes for e-shopping, the above stated factors can largely influence their shopping behaviour. In the following study we will focus on these factors any will analyze how these factors can significantly affect the consumers (Online buying behavior, n.d).

The price factor

Internet is the most powerful tool through which consumers can collect information about different products regarding its quality and price, and then can compare them with each other without making much effort. Thus, internet is an innovative tool which helps consumer to differentiate between different sellers and similarly, it helps seller to differentiate between different consumers (Close, 2012). Although, price of the products depends on the characteristics of the product, internet helps consumers in make comparison between different products. With internet, they can, not compare price of different products but can compare others attributes also. But while making an online purchase, most of the consumers pay more importance on the price rather than its quality or uniqueness (Chisnall, 1994). On the other hand, there is other category of consumers also who want unique products with special features which are generally not available in the market, that is, offline. For such consumers price is not primary factor rather is secondary factor. Although, internet has helped consumers to make quick comparison of products, but through it they can compare only digital characteristics (Buyer Behavior, n.d).
On the other hand, non-digital characteristics can be compared in online market only. Thus, through e-shopping consumer can better understand the quality and utility of the product. While making any online shopping, a consumer has to pay some extra amount as delivery charges. Moreover, prolonged delivery time can also influence customer to give a second thought for making any transaction online. So, in addition to low price, these factors can also influence consumers buying behaviour (Chisnall, 1994).

The trust factor

Internet provides a new shopping experience to the consumers, and many of them find it challenging and risky, thus avoid e-shopping. Moreover, while doing offline shopping, consumers are assisted by the local sales person who provides his expertise and help them in making decision quickly (Blythe, 2008). Further, they also find the sales person as a source of trust. But, while doing online shopping, sales person is removed from the picture and consumers are in direct contact with the company. So, the person whom consumers trust is removed in online shopping. Thus, it makes the internet shopping a bit riskier. On the other hand, there are some scholars who believe that although, internet doesn’t provide a chance to the consumers to check the quality of the product; it maintains complete safety and secrecy in handling database of the consumers (Holloway, 2008). So, if the safety and security features of internet shopping are properly communicated to the consumers, it can have positive impact on the buying behaviour of the consumers. Some scholars believe, trust in online shopping depends on the past experience and can largely affect the online shopping. They believe, there are three factors on which human trust depends in this computerised world. These factors are:

  • Technical capabilities of the system
  • Performance capability of the system
  • Expertise knowledge of human operator (Close, 2012)

A person’s previous experiences also help him in understanding the situation in a better manner. It elaborates his risk awareness. If a company is able to communicate to its customers that information stored in their database is safe and secure, and if the company is able to deliver proper assistance to the customers while making purchase and after the purchase has been done, the company can win the trust of the consumers regarding online shopping.

The convenience factor

Convenience can be defined as anything that saves time and frustration. Moreover, it provides better comfort with satisfying the needs. Online shopping has gained importance basically because of comfort factor. In addition to comfort, online shopping has many more advantages as compared to traditional shopping (Analyzing Consumer’s Buying Behavior, n.d). These advantages are:

  • It requires less effort for doing online shopping
  • One can shop from anywhere
  • It saves time (Holloway, 2008)
  • One can shop any time according to his or her convenience

Online shopping provides more convenience to the consumers as compared to traditional shopping in terms of saving time and efforts. But online shopping is largely dependent on how consumer perceives it (Chisnall, 1994). If they can get easy access to internet and if they find it less complex, they will defiantly go for e-shopping rather than traditional shopping. Moreover, there is direct relation between time spent, the intention to shop online and attitude towards the internet. So, on the basis of above relationship, if a person finds easy access to the internet and if he finds it less complex, he will spend more time on the internet and will access more information regarding any product or service (Buyer Behavior, n.d). And if a person spends more time on internet surfing for information, higher are the chances that he will make some purchase. So, people who find internet easy will definitely find internet shopping more convenient as compared to traditional shopping. Moreover, as internet provides easy access to the information, it can largely impact the buying behaviour of the consumers can attract large number of consumers towards it. Thus convenience factor is largely depends on the perceived easiness (Simple Solutions for Internet Marketing Success, n.d).

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References

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  • Barney, J., 1991. Firm Resources and Sustained Competitive Advantage. Journal of Management. 17. pp.99-120.
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  • Bruno, L., 1997. Working the web. Data Communications. 26(5). pp.7-9.
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