Introduction

To explore has E-Commerce affected the sales strategy of supermarket one must focus on types of e-commerce, impact of such e-commerce on sales strategy and the interrelationship between sales strategy and e-commerce. The aim of this research study is to focus on the relationship between e-commerce and its implementation in super markets via the following objectives:

  1. To explore the key challenges that are involve during the e-commerce strategy formulation process in Tesco direct.
  2. To understand the benefits & opportunities that e-commerce gives to create an efficient sales strategy of Tesco direct.
  3. To discover the importance of relationship between e-commerce and sales strategy for the sustainable growth of Tesco direct.
  4. To inside into how e-commerce may give competitive advantages to Tesco Direct.
  5. To generate the possible reasons behind the adoption of e-commerce of Tesco Direct.
  6. To explore whether any problem is faced by Tesco direct for the implementation of e-commerce based on SWOT analysis.

The Context(s):

As the research will be intend to identify the impact of e-commerce on the development of sales strategy and its impact on supermarkets, it is important to define the terms. The goal of e-commerce strategy and formulation lies in gaining an understanding of different strategy options and their implications, and then iteratively evaluating arguments in favor or against these options. The research should focus on Tesco direct and its major competitors.

For this research Tesco direct has been chosen. Tesco, well known as Britain's leading food retail group with a presence also elsewhere in Europe, Asia and the United States has also been a pioneer online. Tesco opened its first store in Edgware, North London in 1929. Now Tesco direct has more than 8000 products. The major part of this study should include a valid attachment; the relationship between e-commerce adoption and the sales strategy on supermarkets, more specifically on Tesco direct.

According to Bocij, (2005) E-commerce means selling products online via the Web. Likewise, Whinston, (1997) defines the term e-commerce more clearly. Whinston said, depending on whom you ask, electronic commerce has different definitions.

  • From a communications perspective, electronic commerce is the delivery of information, products/services, or payments via telephone lines, computer networks, or any other means.
  • From a business process perspective, electronic commerce is the application of technology toward the automation of business transactions and workflows.
  • From a service perspective, electronic commerce is a tool that addresses the desire of firms, consumers, and management to cut service costs while improving the quality of goods and increasing the speed of service delivery.
  • From an online perspective, electronic commerce provides the capability of buying and selling products and information on the internet and service delivery.

Likewise, Bocij (2005) another writers Thill, J & Bovee (2008) in their books 'Excellence in business communication" mentions that to identify the relationship between e-commerce and sales strategy and how it may create competitive advantages in supermarkets, a SWOT analysis with the evaluation of product ranges, competitors, promotion strategy of online product strategy and its current market share may be helpful. Due to the high degree of uncertainty regarding future developments, especially in the e-commerce environment where technologies and business models change rapidly, making long-term commitments to a strategy is a difficult challenge. Furthermore, there are usually numerous, different and frequently contradicting decision criteria that need to be evaluated during strategy analysis and formulation. For instance, in the case of Tesco direct a crucial strategic issue was to choose between two different fulfillment approaches for online orders in-store-based fulfillment versus warehouse-based fulfillment.

All the above definitions and concepts may be valid. It is just a matter of which lens is used to view the electronic commerce landscape. This study is to find out total market scenario of e-commerce and its impact of the sales strategy on supermarket specifically on Tesco direct.

Research design (including methods) or critical approach:

Type of Research

This research is qualitative in nature. The research have developed conclusion based on collected data.

Sources of Data

Both primary and secondary data should use in this study.

Primary Data:

  1. Survey on employee of Tesco direct: To do so a permission with the negotiation of different outlets of Tesco direct already been taken and they have assured to provide best support, as the research is for academic purpose only.
  2. Survey on Customers: For primary survey on customers structured pre-designed questionnaires (contained open end, semi open and close end questions) may administer through face-to-face interview (FTF) with respondents and this should consider significant time implication. Multilevel sampling procedure (Stratified + Convenient) should be use for this study. In the procedure of primary data collection, two approaches may be considered. They are:
  1. Personal interview by questionnaire
  2. Oral conversation

Secondary Data:

  1. Annual Report of concerned supermarkets
  2. Different articles published in Journals

Sample Design

Multilevel sampling procedure (Stratified + Convenient) will follow in drawing the sample for primary survey.

Population: Grocery and general merchandising retail chain

Elements: Tesco direct.

Sampling Unit: Employees of Tesco direct and their customers.

Sample Size: For the Tesco direct the sample size is 20 and for customers the sample size is 30. Sample size was determined based on the judgment sampling by considering the time and cost and some other factors.

Sampling Area: London.

Expected Findings and analysis:

After gathering the data by questionnaire, data will be analyzed with different statistical techniques and tests. Findings of the study will be presented by relevant tables, graphs, and charts.

Ethical issues:

This research should be qualitative in nature and the nature of this research is to serve the educational purpose only. So, specific point of view no ethical issues i.e., harm to a participant, lake of informed consent, invasion of privacy, deception should not be involve here.

Special resources required:

This research is qualitative in nature and special resource like audio visual, video recorder may be needed. As well as some technical skills i.e., SPSS, Microsoft Excel should add additional value. However, it is expected all resources including above technical skills should be acquired properly on time. For data collection and for focus group interview audio visual format should be indispensable and for this research all necessary resources are fully available.

Timetable of main stages of the study:

The table below indicates the suggested timeframe for the research work. This meets the deadline set out in brief. When the project is underway, I will send weekly progress report in the form of emails at 12 noon every Friday. This will allow us to summarize the week's work and gives us the opportunity of the weekend to put into place any modification you might suggest.

Chapter 02

Literature Review

Literature review:

Background:

As the research intends to identify the impact of e-commerce on the development of sales strategy and its impact on supermarkets, it is important to define the terms. The goal of e-commerce strategy and formulation lies in gaining an understanding of different strategy options and their implications, and then iteratively evaluating these options. The research will focus on Tesco Direct and its major competitors.

For this research Tesco Direct has been chosen. Tesco, well known as Britain's leading food retail group with a presence also elsewhere in Europe, Asia and the United States has also been a pioneer online. According to Clark T. (2008) Tesco started life in 1919 when Jack Cohen started selling surplus groceries from a stall in the East End of London. Mr. Cohen made a profit of £1 from sales of £4 on his first day. The Tesco brand first appeared five years later in 1924 when he bought a shipment of tea from a Mr. T. E Stockwell. The initials and letters were combined to form Tesco and in 1929 Mr. Cohen opened the flagship Tesco store in Burnt Oak, North London. The brand continued its rise in the 1930s when Mr. Cohen built a headquarters and warehouse in North London and in 1932 Tesco became a private limited company. In 1947 Tesco Stores (Holdings) Ltd floated on the stock exchange with a share price of 25p. Tesco showed its expansionary zeal early on by buying up rival shops. In the 1950s the retailer bought 70 Williams stores and 200 Harrow stores, followed by 97 Charles Philips stores and the Victor Value chain in the early 1960s. During the 60s supermarkets started to expand rapidly by selling more products in ever larger stores. In1961Tesco Leicester entered the Guinness Book of Records as the largest store in Europe and in1968Tesco opened its first 'superstore' in Crawley, West Sussex. Supermarkets revolutionized the way people shopped and by the 1970s Tesco was building a national store network to cover the whole of the UK, which it continues to expand to this day, while also diversifying into other products. In1974Tesco opened its first petrol stations, and would become the UK's largest independent petrol retailer. By1979total sales topped £1bn, and by1982sales had doubled to more than £2bn. In1987Tesco successfully completed a hostile takeover of supermarket rival Hillards for £220m. In the 1990s Tesco continued to tighten its grip on the UK with more store openings and an aggressive marketing campaign in an attempt to overtake Sainsbury's as the UK's leading grocer. In1992, the company launched is slogan 'every little helps', followed by the Tesco Value range in1993. This was followed by the launch of the Tesco Club card scheme in1995, helping Tesco to overtake rival Sainsbury's as the UK's largest food retailer. 1996saw the retailer introduce its first 24-hour store while it also expanded overseas opening shops in Poland, the Czech Republic, and Slovakia. In1997 Tesco appointed Sir Terry Leahy as chief executive. Tesco.com was launched in2000and the supermarket continued to expand its range of products, which now includes clothes, electrical and personal finance products. In2004Tesco entered the broadband market. Three years ago, in2006, the retailer announced ambitious plans to open stores in the US under the name 'Fresh and Easy' and funded by existing resources. Tesco now operates in 13countries. Today it reported that group sales were £51.8bn in the year to February 23, 2009. Pre-tax profit rose to £2.8bn. In2009the retail giant took its conquest of the UK one step further by buying up some rival Somerfield stores on remote islands in Scotland, giving Tesco a presence in every single postcode area in the country. As it stands there is only one postcode in the UK - in Harrogate in North Yorkshire - which does not have a Tesco. Now Tesco Direct has more than 8000 products.

What is E-commerce?:

According to Bocij, (2005) E-commerce means selling products online via the Web. And he defines the e-commerce from different perspectives.

  • From a communications perspective, electronic commerce is the delivery of information, products/services, or payments via telephone lines, computer networks, or any other means.
  • From a business process perspective, electronic commerce is the application of technology toward the automation of business transactions and workflows.
  • From a service perspective, electronic commerce is a tool that addresses the desire of firms, consumers, and management to cut service costs while improving the quality of goods and increasing the speed of service delivery.
  • From an online perspective, electronic commerce provides the capability of buying and selling products and information on the internet and service delivery.

Hindle, K.G and Rushworth, S.M (2008) mentioned that, to identify the relationship between e-commerce and sales strategy and how it may create competitive advantages in supermarkets, a SWOT analysis with the evaluation of product ranges, competitors, promotion strategy of online product strategy and its current market share may be helpful. However, Chaffey, D. and Wood, S. (2005) stated that due to the high degree of uncertainty regarding future developments, especially in the e-commerce environment where technologies and business models change rapidly, making long-term commitments to a strategy is a difficult challenge. Furthermore, there are usually numerous, different and frequently contradicting decision criteria that need to be evaluated during strategy analysis and formulation. For instance, in the case of Tesco Direct a crucial strategic issue was to choose between two different fulfillment approaches for online orders in-store-based fulfillment versus warehouse-based fulfillment. However there are other retailers who have a different way to fulfill order from customer, for example Ocado uses the warehouse based approach in order to fulfill customer request received through online. All the above definitions and concepts may be valid. It is just a matter of which lens is used to view the electronic commerce landscape. This study is to find out total market scenario of e-commerce and its impact of the sales strategy on supermarket specifically on Tesco Direct.

Why is E-commerce important?

According to Housel. T and Arthur .A (2007) in the face of strong market forces created by electronic commerce and mounting competition, corporations can no longer move along historical tracks or seeks the preservation of the status quo. Companies are discovering that old solutions do not work with new problems. The business parameters have changed, and so have the risk and payoffs. However, in order to figure out the answers, we need to understand why, where, and when electronic commerce is important. According to McKeon, P and Watson, R. (2007) Electronic commerce in becoming critical in three interrelated dimensions: customer-to-business interactions, intra-business interactions, and business-to-business interactions.

Fingar, P and Aronica, R (2005) defines the three terms in a broader way. In the customer-to-business dimension, electronic commerce is enabling the customer to have an increasing say in what products are made, how products are made (movement from make-to-stock to a build-to-order model) and how services are delivered (movement from a slow order fulfillment process with little understanding of what is taking place inside the firm, to a faster and more open process with customers having greater control). Electronic commerce is also a catalyst for dramatic changes in internal organizational functioning, as evidence by the rapid proliferation of intranets. It is facilitating on organizational model that is fundamentally different from the past, one that is characterized by the shift from a hierarchical command-and-control organization to the information based organization. The emerging forms of techno-organizational structure involve changes in managerial responsibilities, communication and information flows, and work-group structures. Electronic commerce is also impacting business-to-business interactions. Electronic commerce facilitates the network form of organization where small flexible firms rely on other "partner" companies for component supplies and product distribution to meet changing customer demand more effectively. Hence, an end-to-end relationship management solution (often called integrated or extended supply-chain management) is a desirable goal that is needed to manage the chain of networks linking customers, workers, suppliers, distributors, and even competitors. The management of "online transactions" in the supply chain assumes a central role. In the face of market changes, corporations can no longer be insular in nature. In the order to be successful, management has to come to grips with the changes taking place in the various market spaces. In the same vein, managers cannot operate effectively without some major regaining of mindset, attitudes, skills, and knowledge.

Types of E-commerce:

Lawrence, E. et al. (2008) mentions that there are nine segments of e-commerce: Business to consumer (B2C), business to business (B2B), business to government (B2G), consumer to consumer (C2C), consumer to business (C2B), consumer to government (C2G), government to government (G2G), government to business (G2B), and government to consumer (G2C). The e-commerce matrix is set out in table 1. Although an organization may implement a solution in one segment of e-commerce, the same solution also may be applicable to other segments.

Tesco Direct is a business entity which mainly interacts with Consumer and Business, so this paper will concentrate on C2B, B2C and B2B model of E-Commerce.

C2B (Consumer to Business) E- Commerce: According to Laudon, K.C & Laudon, J.P (2006) in electronically facilitated consumer-to-business transactions, customers learn about products through electronic publishing, buy products with electronic cash and other secure payment systems, and even have information goods delivered over the network. From the consumer's perspective, electronic commerce facilitates the following economic transactions:

  • Social interaction: Electronic applications enable consumers to communicate with each other through electronic mail, videoconferencing, and news groups.
  • Personal finance management: Electronic applications like quicken enable consumers to manage investments and personal finances using online banking tools.
  • Purchasing products and information: Electronic applications enable consumers to find online information about existing and new products/services.

Liu, C and Nye, A (2005) states that Consumers consistently demand greater convenience and lower prices. Electronic commerce provides consumers with convenient shopping methods, from online catalog ordering to phone banking, both of which eliminated the cost of expensive retail branches (or Bricks and Mortar). Electronic commerce facilitates factory orders by eliminating many intermediary steps, thereby lowering manufacturers' inventory and distribution costs, and indirectly providing consumers with lower prices.

B2C (Business to Consumer) E-Commerce: Likewise Maddox, K (2007)mentions that, B2C refers to the selling and buying of goods and services via the web from web retailers to web customers. This really is the same thing as B2B E-Commerce with one key exception. With B2B implementations, the parties are "Trusted Business Partners" who have an established working relationship. With B2C E-Commerce, the retailer is often selling to unknown, un-trusted strangers. Therefore extra effort must be made to capture customer and payment information. Further, this data is typically verified before orders are fulfilled. In this respect, B2C is a tougher solution to provide than B2B. However, B2C almost always involves customer typing information into an order screen; there is no need to link together two complex accounting systems. In this respect, B2B is a much tougher solution to deliver.

B2B (Business to Business) E-Commerce: According to Butter, M & Richmond, C (2006) from the inter-organizational perspective, electronic commerce facilitates the following business applications.

  • Supplier management: Electronic applications help companies reduce the number of suppliers and facilitate business partnerships by reducing purchase order (PO) processing costs and cycle times, and by increasing the number of Pos processed with fewer people.
  • Inventory management: Electronic applications shorten the order-ship-bill cycle. If the majority of a business's partners are electronically linked, information once sent by fax or mail can be instantly transmitted. Business can also track their documents to ensure that they were received, thereby improving auditing capabilities. This also helps to reduce inventory levels, improve inventory turns, and eliminate out-of-stock occurrences.
  • Distribution management: electronic applications facilitate the transmission of shipping documents such as bills of lading, purchases orders, advanced ship notices, and manifest claims, and enable better resource management by ensuring that the documents themselves contain more accurate data.
  • Payment management: Electronic applications link companies with suppliers and distributors so that payments can be sent and received electronically. Electronic payment reduces clerical error, increases the speed at which companies compute invoices and lowers transaction fees and costs.

Manage Brands:

Dann, S and Dann, S (2001) mentioned online brand management as an exciting area of retailing management. Fill, C (2005) distinguished the major difference between online and off-line branding as the context in which the brand associations are developed and sustained. Retailers know that consumers adopt a brand, and make it part of their lifestyle; they remain loyal and purchase the brand again and again. The adoption decision is preceded by a number of other steps: unaware, aware, interested, knowledgeable, positive attitude, experience, trial, repeat, and adoption.

However, according to Fill, C (2005), Purchase behavior in electronic markets differs from traditional retail settings in two ways. First, a retailer is concerned with simply inducing purchase through the use of marketing mix variable (retail and/ or manufactures rebates, list price discounts, trade-in-allowances). Second, a retailer is interested in inducing purchase now, rather than later. There are various reason for this, including present value consideration and uncertainty of making the sale at some future date. Thus online coupon books and other tools likely to include a consumer to make decisions quickly can have important implications on purchasing process.

Electronic commerce and retailing:

Kalakota, R and Whinston, A.B (2007) mention that, retailing is expected to change with the rapid development of new online sales and distribution channels that literally can be used from anywhere, anytime-from work, school, a hotel, car, or airplane. These developments should impact retailing as much as the advent of shopping malls, catalog retailing, and TV based home shopping.

On the other hand McWilliam (2006) states that almost every retailer is reevaluating every aspect of its operation from customer service to advertising, merchandising to store design, and logistics to order fulfillment. Furthermore, reacting to the pressure of retailers, suppliers are assessing technology-based solutions to drive down costs (labor, delivery, and production) and become more efficient producers of goods.

According to Kalakota, R and Whinston, A (1997), online channels such as online services and the web are also impacting traditional retail business models. He insisted that the retailers need to consider the following issues in developing a business model:

  • Product/content: what kind of products is suited for online re-tailing?
  • Software interface issue: what kind of features will constitute an effective interface? What features make it easy to find and select items for online purchase?
  • Process issues: What are the specific steps in the shopping process from a consumer's perspective? What kind of processes should companies develop to fulfill orders efficiently?
  • Pricing issue: How much will consumers be willing to pay for convenience?
  • Payment issues: What payment methods would consumers use for online purchases?
  • Market penetration issues: Would an online channel be popular with consumers? How long will such a system take to attract a critical mass and become profitable?

Understanding these issues will help companies formulate a merchandising strategy-and build a merchandising mindset-from what they sell to how they sell it; from pricing to timing; from product development to sourcing; from their choices of electronic media to how they integrate them; and from customer payment alternatives to shipping procedure. We need critical analysis of these questions in order to maintain the proper perspective on online retailing. The potential is serious, but so are the problems that lie ahead.

Before examining the implications of changing consumer behavior and online retailing in the existing retail business, let us step back for a moment and ask the question: why should retailers consider the online environment as a way of doing business? The answer lies in understanding the market changes that effect retailing and that will continue to affect it in the future.

E-commerce and sales strategy of Tesco Direct:

According to Institution of Direct Marketing (2009) Tesco used two direct media (e-mail and direct marketing) and two passive media (in-store promotions with advertising, and web advertising). For the first two, many different lists were tested. Cold lists (list of stuffs which sales is slow and not important enough to keep on first page) were profiled against Club card data (which includes transactional, life stage attitudinal and geo-demographic information) to identify potential dedicated customers. Tesco Direct have different strategy. In case of conversion many customers register but don't shop online immediately. A special communication programme was devised for these persons, to help them over any barriers they may perceive which prevent them from taking the plunge. This programme can be conducted by e-mail and/or direct mail, and includes relevant offers and information. Moreover, when a registrant does come to conduct a first-time shop, the system recognizes the situation and produces a personalized home page to guide the user through this new experience.

Like wise for Retention Tesco uses a classic 'Regency Frequency Value' model to classify customer commitment on six levels. These are: 'Dedicated', 'Established', 'Developing', 'Cautionary', 'Logged-on', 'Logged-off'. One of the problems is that a customer's first shop can take some time, while the customer becomes conversant with the layout of the site, and, in some cases, with the technicalities of the medium. Tesco.com is careful to point this out at the outset, and for all shops after the first provides a short-cut in the form of 'My Favorites' - a list containing all items from previous shops, both on and offline. This allows customers to tailor their baskets without starting from scratch each time, and, together with increasing familiarity, ensures that the customer's time is not wasted.

The Institute of Direct marketing (2009) also mentions that Tesco Direct developed a sound strategy to meet its goals and sales target. Tesco Direct introduced E-commerce as a corporate culture as a top down led management initiative. This may require education and training of managers in the first instance so they understand the benefits (and risks) associated with e-commerce introduction. The SWOT analysis should have identified the company's strengths. An e-commerce initiative needs to build on these strengths. The cost benefit analysis enabled managers to set targets and prioritize e-commerce activities to give the greatest opportunities for the earliest financial return with the minimum risk. The SWOT analysis has identified strengths within the company of Tesco Direct that may be usable in the e-commerce project. For example, Tesco Direct already has a good distribution network this may be the foundation for developing the e-commerce distribution. To take advantage of the on-line customer community Tesco Direct developed a web centric marketing strategy alongside the technical developments. Even if the current marketing strategy has taken the Internet into account, it is necessary to develop a marketing strategy that clearly targets the Internet as a primary marketing channel. And Tesco Direct successfully developed this strategy.

E-commerce: the sales strategy assessment of supermarket 2009

Raisch, W (2009) state that, The Internet grocery market is an extension of the home-shopping philosophy. It is a sector that has already demonstrated considerable growth and that promises further substantial increases in the future. Internet sales across many product sectors have achieved — and continue to achieve — high annual growth rates in the UK. Indeed, consumers' passion for and propensity towards purchasing items online show no sign of abating.

Source: E-commerce, Information Technology and The Arts 2008, Shopping on the Internet: Facts for consumer # 4, last updated 28th April, www.dcita.co.uk, accessed January 2010

According to the Institute of Direct Marketing (2009) The Internet or online grocery market in the UK is dominated by four of the UK's major supermarket chains — Tesco, Sainsbury's, ASDA and Waitrose — and by a fifth supplier, Ocado, which is a warehouse-based online operation and a partner distributor to Waitrose. Outside of these

five major suppliers, the market is mainly populated by a wide range of niche, specialized retailers, many of which offer products that are not always available in the major supermarkets. Apart from the five leading online suppliers, no other supermarket chains in the UK operate in the online grocery market — not even Morrisons, which is the fourth-largest supermarket chain by market share. The costs and complexity of establishing an online service `from scratch' appear to be a significant obstacle for many of these chains. The recent focus of the five major online grocers has seen them expand their distribution networks, improve their stock availability levels and enhance the functionality of their websites. However, in the current recession, other factors such as price competition may get more attention than ever.

Newton, S (2005) mentions that electronic commerce allows businesses to do the things they currently do, but to do them better. The simplest example - and where many businesses start their exploration of "e-commerce" - is that of companies using web sites to provide information about products and services. This information has traditionally been transmitted via printed brochures or via mass media advertising. However, the excitement also stems from the fact that electronic commerce (in the sense of e-commerce i.e. business to consumer) allows businesses to do things that were not previously possible. One obvious way that electronic commerce does this is by providing a number of new routes or channels through which goods or services can be sold. These additional channels are likely to give the company access to new consumers and business customers. Companies must therefore learn how to communicate with their customers in this way and also to act on what they learn, tailoring their communication, products and services offered to each customer.

Research currently being undertaken by Daniel, E. (2009) has highlighted the main challenges that managers face when considering electronic commerce developments. The key issues they raised included:

  • Raising the internal understanding of electronic commerce, particularly at senior management levels.
  • developing a coherent e-commerce strategy across the organisation
  • understanding and providing a true value proposition for customers
  • understanding the impact on the supply chain
  • developing an agile supply chain to support the electronic commerce strategy
  • building a business case for electronic services

E-commerce and sales strategy of online retailing:

According to Thill, J & Bovee, C (2008), while changes in retailing may be driven by technology, managerial vision is required for successful implementation. Traditionally, retailing has been a low-tech environment in which retailing executives often relegated technology issues to back-room operators. These managers are most at risk, as they do not have a clue that a major revolution has begun. Most of them have been never used a computer (or had to), never been on an online service, and do not know what the internet is or what it can do. The winners will be the players who understand how to leverage the unique capabilities of the online medium to effectively meet the changing needs of the consumers.

Likewise Timmers, P (2006) mentions that while the technology required to implement online retailing is maturing, many management issues remain unanswered. No one really knows yet how to build and run a successful, mass-market online mall. The sales medium is new, the technology is new, and retailers have a lot to learn about tricky technology, customer behavior, and management issues. But one thing is clear: for online retailing to succeed, online technology must complement management and operational strategy.

Some immediate strategy questions that need to be addressed include: how can the company generate pull forces that attract people to the online store? How can the company leverage on established brand names? How can the company utilize features of a product or service to signal value or quality to an online customer?

Retailing strategy:

Hoffman, D & Novak, T (2007) states that strategy is needed to address the whole retail process. The steps involved in retailing strategy include: prospecting for potential customers, qualifying a customer, learning the customer's needs, understanding the customer's purchasing process, selecting the presentation to be made, making the presentation, adapting the presentation based on consumer reaction, handling objections, negotiating with the customer, closing the sale, and building an ongoing relationship through service. Each of these steps needs to be rethought and reexamined in the online environment. Strategy also deals with stimulating demand. Retailers have not learned how to stimulate online demand, something that will become increasingly important. To stimulate demand, retailers must get out ahead of consumers by anticipating shifting attitudes and lifestyles, and must use marketing methods that trigger traffic and sales. Marketing triggers need to resonate with the targeted consumer, which today simply cannot be every one. Retailers need to be finding a unique voice and image. Words, images and merchandise connected to lifestyle and consumer trends can stimulate demand, even in this difficult climate.

Deliver a satisfying shopping experience:

According to Macpherson, A (2005), It is true that by being online there's no traffic issue, no waiting in line, and no wasting time in sales pitches, but will the consumer be able to find the products he or she wants quickly, make selections, and enjoy the whole process? Management needs to learn how to make a monitor or web page deliver at satisfying shopping experience. The challenges are to build technology that entices consumers and helps them find their way through the virtual maze. Online retailer often find that they are dealing with different set of customers than they had expected, or with customer attitudes that are incompatible with this new market. Many firms discovered that the limited product selections and canned presentations that work on television do not appeal to the individuals who are using PCs; consumer interface needs to include text, graphics, stimulated 3-D and actual virtual reality.

Designing the layout of an online Store:

Pretty, C & Sweeney, A (2002), mentions that creating a virtual store that consumers will like is not easy. The virtual store will have to have a greater impact on the consumer's value equation. To significantly alter consumer buying behavior, virtual retailing will have to provide better, faster, cheaper, or more entertaining shopping experience. The layout of the store also depends on manufacturer incentives to retailers such as slotting allowances. Slotting allowances are lump-sum advance payment made by manufacturers to retailers for stocking their new products. In exchanges for slotting allowances, the retailers make an agreement with the manufacturers to place the product in a high-traffic area for promotional purposes. Slotting allowances can be used by retailers to determine how to design their user interface, namely, what products appear visually closer to customers, and also what products are found when search criteria are specified.

Create the Right incentives:

According to Weill, P & Vitale, M (2008), the right incentive can influence consumer acceptance. However, incentives design for online retail markets is fairly new and well understood. The question here is: How can coupons, discounts, or other incentives are used by online merchants to build and retain shopper royalty.

On the other hand Bayles, D (2006), commented that incentive are so basic to traditional retailing that one can only marvel at the myopia among some only retailers that technology can conquer all. Retailers need to think about different incentives strategies for different types of online products/services. For instance, how do you influence consumers to download a file? By charging a low price, by offering value, or by offering frequent flyer miles. One may argue that these are basic questions that have been addressed in regular retailing. That might be the case, but online retailing is subtly different on many planes and requires merchants to rethink their incentive mechanisms.

E-commerce has changed the business parameter a lot considering the risk and payoffs. Hence, an end-to-end relationship management solution (often called integrated or extended supply-chain management) is a desirable goal for Tesco Direct to maximize the market share through managing the chain of networks linking customers, workers, suppliers, distributors, and even competitors. According to Lawrence, E. et al. (2008) there are nine segments of e-commerce but Tesco Direct needs to focus on only three of them such as C2B, B2C and B2B model of E-Commerce as business and consumer are their key concern. And strong distribution network of Tesco have given them an advantage to beat the competitors. Moreover they have also developed a marketing strategy clearly targeting the internet as a primary marketing channel. Now Tesco Direct needs to think about different incentives strategies for different types of online products/services. For instance, how do you influence consumers to download a file? By charging a low price, by offering value, or by offering frequent flyer miles.

Chapter 03:

Methodology

Methodology:

In broader perspective research can be considered as gathering information to answer of a question that drives to solve a problem (Booth et al 2008). Mokwa, M. et al (1980) have specified research as a systematic process of gathering, analyzing and interpreting all relevant data and information which helps for decision making. 'Systematic Process' refers to the approach of research will follow a system which is consist of a series of steps. From here we can understand that we need to gather all required data or information initially through one or several techniques. Then all these data or information must be analyzed to find an outcome. And the next step will be interpretation of the outcome. Thus we may conclude from Kothari, C. R. (2009) research is an art of scientific investigation.

For any organization, whether it is profit or non-profit, doing research is considered as an important and reliable activity through which we may expand our knowledge or understanding of the world around us. It is important because we may use the understanding or knowledge through research for varied purposes. For example information derived through speculative research may help a business entity to develop or formulate it's strategy. Generally all organization conducts research with proper care and planning. So outcome of research is reliable because reliability depends on validity and applicability, never on what the information turns out to be. Ethridge, D. E. (2004) concluded that we affect validity of information by the process and procedures through which it is generated.

In this chapter of the dissertation on 'Has e-commerce affected the sales strategy of Supermarkets? (A Study of Tesco Direct)' we will review the methodology concentrating on how required data will be collected and analyzed to reach the purpose of the study. First of all the purpose of the dissertation will be discussed. Then this discussion will focus on the research approach followed by research strategy. Later this chapter will continue regarding method of data collection, selection of sample and finally data processing and data analysis.

Figure 1 Methodology Overview, Adopted from: Foster, T. (1998) International Marketing Communication: An Emperical Investigation of the Use of Marketing Communication Tools.

Research Purpose:

There is various purpose of research from various viewpoints. However from the view of most common uses, Saunders et al (2003) classified the purpose of research as exploratory, descriptive and explanatory. According to their argument from the view point of adaptability during the schedule of procedure exploratory research resembles 'the activities of traveler without a set of itinerary'. So it is expected that one has to be willing to adjust with potential new or unexpected findings which may or may not switch change of direction. Thus we may conclude that the exploratory research has an initial broad focus which narrows progressively throughout the course of the research. According to Wiedersheim-Paul and Eriksson (2001) descriptive research means recognizing and mapping by suggesting, recording and filing based on the investigator or researchers preference of standpoints, level of concentration and characterization. It is important to have justifiable purpose for the descriptive research to be carrying great weight. Kothari, C. R. (2009) stated descriptive research as a combination of surveys and fact finding enquiries of various kinds where the researcher has hardly any control over the variables except reporting what has taken place or what is taking place.

In order to be capable to be in motion towards the next stage, (which is widely known or categorized as explanatory stage of research) the descriptive research requires to be soundly completed. Saunders et al. (2009) stated an explanatory study intends to ascertain untailored association between or among various variables. Wiedersheim-Paul and Eriksson (2001) further states that 'to explain' means to make an analysis of cause and effect relationship, and similar to that of the descriptive level the analysis has to be founded upon a range of predestined decisive factors.

This study on Tesco Direct is mainly descriptive as data will be composed in order to describe a precise subject matter but it will also move into the exploratory and explanatory stages as an effort of the author to gain a deeper and better understanding of e-commerce within the scope of online grocery store industry of UK. In the preliminary exploration level author will develop the purpose and enormous prominence will be given on the descriptive stage while spending appropriate time and effort in the explanatory level illustrating conclusions of the research findings. This choice of give emphasis to the descriptive stage offers support for using a qualitative approach for the study.

To explore has E-Commerce affected the sales strategy of supermarket one must focus on types of e-commerce, impact of such e-commerce on sales strategy and the interrelationship between sales strategy and e-commerce. The aim of this research study is to focus on the relationship between e-commerce and its implementation in super markets via the following objectives:

  • To explore the key challenges that are involve during the e-commerce strategy formulation process in Tesco Direct.
  • To understand the benefits & opportunities that e-commerce gives to create an efficient sales strategy of Tesco Direct.
  • To discover the importance of relationship between e-commerce and sales strategy for the sustainable growth of Tesco Direct.
  • To inside into how e-commerce may give competitive advantages to Tesco Direct.
  • To generate the possible reasons behind the adoption of e-commerce of Tesco Direct.
  • To explore whether any problem is faced by Tesco Direct for the implementation of e-commerce based on SWOT analysis.

Research Approach:

Type of Research

This research is qualitative in nature. A qualitative study focuses on accepting people's behaviour patterns. According to Kothari, C. R. (2009) qualitative research is concerned with qualitative phenomenon. On the other hand according to Mujis, D. (2004) quantitative study is essentially about collecting numerical data to explain a particular phenomenon.

Patton, M.Q. (2002)identified that, qualitative findings grow out of three kinds of data collection (1) in-depth, open-ended interviews (2) direct observations (3) written documents. Interview gives way direct quotations from people regarding their practices, views, feelings and knowledge. The data from observations consist of thorough similes of people's actions, manners, measures, and the full range of interpersonal communications and organizational procedures that are part of evident human experience. Document analysis contains learning extracts, quotations or entire passages from organizational, medical or curriculum records; memoranda and correspondence; official publications and reports; personal diaries and open ended written answers to questionnaires and surveys.

Saunders et al., (2003) commented that qualitative data is categorized by its opulence and comprehensiveness based on the researcher's prospect of exploring a subject matter in its real manner. In order to capture opulence and comprehensiveness connected with qualitative data, a standardised approach of collecting data is included. Saunders et al., (2003) insisted that the non-standardized and complex data that have been unruffled has to be classified into groups earlier than they can be analyzed in a significant way. For instance, according to Kothari, C. R. (2009) when we are concerned in exploring the grounds for human behavior (i.e., why people think or do certain things), we reasonably often speak of 'Motivation Research', an imperative kind of qualitative research. This type of research plans at determining the core of human motives and desires, using in depth interviews for the purpose. This research have developed conclusion based on collected data.

Research Strategy

The research is conducted by the author by surveying randomly selected Tesco employees as well as customers. According to Creswell, J. (2003) a survey design provides a quantitative or numeric description of trends, attitudes or opinions of a population. Moreover Aliaga and Gunderson (2002) found it's helpful in explaining phenomena by collecting numerical data that are analysed using mathematically based methods. Hence, for this research topic survey is really imperative because this study requires analysis of numeric description of trends or attitudes of a population. Both primary and secondary data should use in this study. The author has decided to take direct interview of Tesco employees as well as customers at different places to collect primary data. For secondary data author will rely on books, article, journal, websites, annual reports and brochures from various writers and organisations. Books, article and journal from different authors will help to interpret the findings from analysed data as well as learning more about industry and company background. Annual reports and websites will help to collect information about competitors of Tesco Direct.

Data Collection

Primary Data:

The primary data collection method for this study is mainly one to one interviews through the author will collect the primary data both from Tesco employees and customers. Because according to (Denscombe 2000) an interview is a resolute conversation between two or more persons. Moreover an interview enables the researcher to collect convincing and consistent data which are pertinent to the proposed rationale and research questions. It is important that the environment of the interview to be consistent with the research topic, objectives and purpose.

Survey on employee of Tesco Direct: To do so a permission with the negotiation of different outlets of Tesco Direct already been taken and they have assured to provide best support, as the research is for academic purpose only. The writer will conduct a structured interview through a pre-determined questionnaire.

Survey on Customers: For primary survey on customers structured pre-designed questionnaires (contained open end, semi open and close end questions) may administer through face-to-face interview (FTF) with respondents and this should consider significant time implication. Multilevel sampling procedure (Stratified + Convenient) should be use for this study. Like the employees of Tesco, the writer will conduct a structured interview of the customers also through a pre-determined questionnaire. The questionnaire is prepared in such a way that customers can response freely and is able to elaborate their opinion within the scope of the research topic. The interviewee will be allowed to ask for any help from the writer regarding the questionnaire during the interview.

In the procedure of primary data collection, two approaches may be considered. They are:

  1. Personal interview by questionnaire
  2. Oral conversation

Secondary Data:

  1. Annual Report of concerned supermarkets
  2. Different articles published in Journals

Sample Selection

Kumar, R. (2005) defined sampling as the procedure of choosing a few (a sample) from a greater group (the sampling population). Kothari, C. R. (2009) indicated a sample design as an explicit arrangement for selecting a sample from a given population. It points to the method or the course of action the researcher would accept in selecting items for the sample. Multilevel sampling procedure (Stratified + Convenient) will follow in drawing the sample for primary survey. Kothari, C. R. (2009) stated that in order to obtain a representative sample, generally stratified sampling method is used if a population from which a sample is to be drawn does not constitute a homogeneous group. According to stratified sampling method the population is separated into few sub-populations which are more homogeneous than the whole population then the substances are selected from each different sub-population to compose a sample. And according to Fink, A. (2003) a convenience sampling consists of a group of persons who are prepared and accessible.

Data Analysis

Yin (2003) concluded that data analysis consists of probing, categorising, tabulating, testing or otherwise recombining qualitative substantiation to address the initial propositions of a study. Saunders et al. (2003) insisted that there are different strategies of how to analyze the collected data. Miles and Huberman (1994) indicated three current flows of activity known as data reduction, data display and conclusion drawing as essential tools for data analysis.

  • Data Reduction: The researcher will transform data into useful information through selecting, simplifying and summarising the field data.
  • Data Display: According to Miles and Huberman (1994) if all the data are collected in an organized, compressed, assembled way it will be helpful to draw conclusion and action.
  • Drawing Conclusions: It is the last motion surge of the researcher to choose what things mean through focusing on regularities, outlines, rationalizations, possible arrangements, connecting streams and suggestions.

In short the author will rely on the theoretical assumptions as well as propositions and analysis will follow the above three steps suggested by Miles and Huberman (1994) after gathering the data by questionnaire, data will be analyzed with different statistical techniques and tests such as arithmetic average or mean, median and mode. Findings of the study will be presented by relevant tables, graphs, and charts.

Validity and Reliability

By the term validity it refers that the author or researcher is testing or measuring what was planned to be tested or measured (Ejvegard 1996). Hence it is imperative to keep in mind that what is actually measured and consequent in the use of it carries lots of importance. Further to get a higher level of validity and reliability of the study, the result and conclusions can be compared to previous studies (if any) in the similar area. Moreover the possibility to use the research outcomes to compare with other comparable situations may also work as a way to make the study more reliable.

Chapter 05

Findings, Analysis, Discussion

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