Case Study Analysis Of Tesco.Com Success

Tesco is one of the largest multinational groceries and merchandise retailer from Britain with several shops/ branches located in seven countries cut across Asia (Ireland, Hungary, Thailand) and Europe with its headquarters in Welwyn Garden City, Hertfordshire, England, United Kingdom. Founded from selling groceries form a stall in East London, Tesco was established in 1919 by Jack Cohen. The name was gotten through the initials of TES Stockwell (the firm’s suppliers partner) and the first two letters (CO) from Jack’s surname and thus, opened its first store in 1929 located in Burnt Oak, Edgware, north London selling dry products which included its first branded product, Tesco tea.

In the course of time, Tesco’s business was and is built on a robust customer base enjoying first movers’ advantage. Its key goals and success for the business are; customer engagement, customer experience, customer loyalty and the use of incentives in-order to motivate customers (whether in stores or online). Via diversified strategies’ Tesco expanded its distribution channel, mounting on its online and offline services to its fullest measures thus attaining more customers in return, setting high standards, transparency and always aiming for the best. Coupled with the modern-day approach of achieving reach to enhance brand awareness, favorability and purchase intent through ads and sponsorships on third-party sites. Identifying this as a more effective strategy for low-involvement FMCG brands where it will be difficult to encourage visitors to the site. The objective being to encourage potential customers to use online channels, i. e. visit web site and transact where relevant.

Product range and development

Product growth has been stressed to be a vital and significant tool for product success of any company. nBased on Tesco. com’s observation towards its customer needs and its skill at being knowledgeable in the market, Tesco. com develops, improves and strengthens its current and upcoming products and stayed persistent regarding its products and services upgrade. Tesco. com’s products, as stated in the case study consist of various non-food ranges, Personal Finance, telecoms businesses, music downloads, gas, electricity and DVD rentals. Subsequently over the years, Tesco. com has expanded to “personal, home and kitchen, fashion and accessories”, capitalizing on its present products and services, expanding and developing innovative ways to improve those products and services. Below are a few key accompaniments over the years (2005 – 2018);• Tesco under its personal finance scheme became Tesco bank, building a full service retail bank. • Became the first zero-carbon supermarket to operate globally. • Services of the Tesco bank extended to cover mortgages. • A 7-inch tablet was launched called the Hudl, tailored to customers’ needs providing a source of entertainment and a means of connection. • Joint venture expansion• Merger with Booker Group (retail & wholesale) with the aim of becoming the leading food business in the UK.

Competitors

Tesco has several competitors in the retail industry both locally and internationally based on location, pricing, incentives, innovation, services, to mention a few with the aim of attracting and satisfying old and new customers. Tesco. com’s main advantage in the industry is its applied strategy (understanding what attracts its customers). Nevertheless, its competitors (such as Asda and Lidl) have understood this strategy and are aggressive about it which poses a threat, leading Tesco. com extending its opportune online presence (customers conveniently shopping online rather in-store) with the aim of enhancing sales and reducing costs.

According to the 2018 Kantar Worldpanel grocery market figures, published for the 12 weeks of 2018, the report confirms that supermarket sales have risen for 25 consecutive periods and presently positions its self at 2. 1% compared with 2017 12 weeks last year, with a decline last recorded in June 2016. The top big supermarkets are Morrisons, Asda, Sainsbury and Tesco. In this report,

1. Morrisons was slightly the fastest growing in the market as a whole, having favorable sales (increase) of 1. 9%. This was due to the positive feedback from customers to its “wonky fruit and vegetable line” and its online sales and attaining a market share of 10. 5% of the overall market.

2. Asda’s performance during the year (2018) revealed a vast attraction of new customers. Increasing Asda sales by 1. 8% and further, broke the record since 2014, of sustaining the position (for 16 periods). Resulting a market share of 15. 1% of the overall market.

3. Sainsburys on the other hand had an unfavorable outcome, experiencing a decrease in sales 0. 2% regardless of its 159,000 new customers and its online sales. Attaining a market share of 15. 6% of the overall market.

4. Tesco is yet still leading in the market. Having the strongest performance with its sales growing by 1. 4% regardless of a decrease in the overall market share over the previous years of 27. 7% from 27. 9%. Having 27. 6% market share of the overall market.

While other retail supermarket had results of:

• Co-op, had its strongest growth since October 2011 by 2. 4%, and placing itself in the market (share) by 0. 1%.
• Waitrose, had an increase of 0. 1% in its sales and a market share of 5% of the overall market.
• Lidl had a 9. 7% growth in sales and a market share of 5. 4% while Aldi also had a 10. 9% growth in sales and a market share of 7. 5% and together, having a market share of 13% in the overall market.

Promotion of services

As the norm with online retail stores, Tesco. com counts on its clubcard loyalty scheme in-store advertising and marketing to influence, encourage and motivate customers shop online. While incentives, e-mail and direct mail marketing are carried out towards its existing customers. According to Humby and Hunt (2003), e-retailer Tesco. com uses what he describes as a ‘commitment- based segmentation’ or ‘loyalty ladder’ which is based on:

1. Recency of purchase
2. Frequency of purchase
3. Value which are analyzed to identify six lifecycle classifications and further categorized into segments, target communications;

• Logged-on: Customers who have visited Tesco. com
• Cautionary: Customers who have visited possibly more than once but are yet to make a purchase.
• Developing: Customers who have logged on and made a purchase.
• Established: Customers who have logged on and made several purchases.
• Dedicated: Frequent customers who make regular purchases.
• Logged-off: the aim here is to win back a customer. These events include incentives at certain stages and are automated in-order to encourage continued purchase.

Online product strategy

Through the means of product diversification, Tesco. com has accomplished piercing through various markets and attaining huge market shares in the UK. This was due to primarily focusing on its services and products rendered/ provided to its customers through the Tesco. com platform. “For instance, customer can reload their phones, subscribe for broadband, rent movies, download music and read e-Diet articles then finally shop for their groceries at Tesco. com. This provided convenience to the customers thus making their loyal and satisfied”.

Means of digital communication (marketing automated tools)

Tesco. com’s use of automated event-triggered messaging, designed to encourage continued purchase. This is one of the key strategic approaches that aids Tesco. com’s success online. A convenient and cost effective medium, which is a formidable way to attract a customer and convert the customer to a regular Tesco. com user.

Improved customer experience online

The online experience has been proven important as it provides fast communication, reduced cost, convenience and as well, entertaining which in return/ result to a wider range of customers willing to embark on the online experience. Tesco. com took advantage of making the online experience (due to its major advantages) a priority, a success for itself and its customers’. Tesco. com achieved this by improving time management (reduction) in concluding transactions from an hour to 35 minutes through usability work culminating in a major site revision. Tesco. com service delivery and its customer relationship management system also improved verifying a competitive adage over their competitors.

Making home delivery part of Tesco. com's DNA

Laura Wade-Grey, CEO of Tesco. com adapted this business model which also improved on its customer relationship management. This model offered home delivery, as part of Tesco’s DNA to enhance sales and customer service through setting up various delivery points to safeguard effective and efficient service with opportunity for impromptu feedbacks from customers via Tesco’s delivery staff. Furthermore, giving Tesco a competitive advantage in the market.

Intangible Offerings

Tesco offers a wide range of diversified products and services to its customers, offering constant improvement on its range, from home deliveries to intangible offerings such as the eDiet and music download.

Incentive Offerings

Incentives are intended for continued purchases, used as a medium to encourage and motivate customers to frequently make purchase(s).

Partnerships

Tesco is known for strategically acquiring or partnering with companies, obviously primarily due to growth. The licenses of eDiets. com in the UK and Ireland under the URLs www. eDietsUK. com and www. eDiets. ie was acquired by Tesco. com paying a sum of £2 million with the aim of growing the Tesco. com service in addition to its in-store trades via the URLs.

Supporting Communities and the Environment

“In 2010, it opened the world's first zero-carbon supermarket in Ramsey, Cambridge shire and was awarded Green Retailer of the Year at the Annual Grocer Gold Awards 2012. Tesco aims to be a zero-carbon business by 2050”. Tesco’s ‘Every Little Helps’ philosophy puts customers, communities and employees at the heart of everything it does. It prides itself on providing a great shopping experience for every customer it serves, whether in stores, online or in its many other service provisions. - The Times 100, 20.

Conclusion

The case study has tried to discuss and research the approaches applied by Tesco. com which directed them be successful online. The trade/ retail industry continues to develop and grow where businesses operates both in the conventional way and online.

The primary subject here is the online presence which has proven to be rewarding (assisting and empowering companies to eliminate geographic areas that were unreachable, providing options and convenience to customers).

The e-business model has proven to be the best strategy applied by Tesco. com in improving, enlarging their market share, its product and service diversification. This model has positioned Tesco. com to re-evaluated their existing products and services, appropriately applying and fitting it into the business model and hence, offering better products and services. This resulted in attaining new customers and piercing the market. As highlighted in the case study analysis, Tesco. com is an existing success story of just how online presence can lead to business success. Though, with Tesco. com’s big appetite for opportunities internationally, holding up to 27. 6% market share of the overall market in the UK, this could pose as a threat to losing control in the industry.