Promotion of service As with other online retailers, Tesco.com relies on in-store advertising and…

Promotion of
service

As with other
online retailers, Tesco.com relies on in_store advertising and marketing
to the supermarkets Clubcard loyalty schemes customer base to persuade
customers to shop online. New Media Age (2005c) quotes Nigel Dodd, marketing
director at Tesco.com, as saying: These are invaluable sources as we have such
a strong customer base. However, for non-food goods the supermarket does
advertise online using keyword targeted ads.

For existing
customers, email marketing and direct mail marketing to provide special offers
and promotions to customers are important.

Promotion of
service

As with other
online retailers, Tesco.com relies on in_store advertising and marketing
to the supermarkets Clubcard loyalty schemes customer base to persuade
customers to shop online. New Media Age (2005c) quotes Nigel Dodd, marketing
director at Tesco.com, as saying: These are invaluable sources as we have such
a strong customer base. However, for non-food goods the supermarket does
advertise online using keyword targeted ads.

For existing
customers, email marketing and direct mail marketing to provide special offers
and promotions to customers are important.

According to Humby
and Hunt (2003), e_retailer Tesco.com uses what they describe as a
commitment- based segmentation or loyalty ladder, which is based on recency
of purchase, frequency of purchase and value which is used to identify six life
cycle categories which are then further divided to target communications:

_ Logged_on

_
Cautionary

_
Developing

_
Established

_
Dedicated

_ Logged-off
(the aim here is to win back).

Tesco then uses
automated event-triggered messaging to encourage continued purchase. For
example, Tesco. com has a touch strategy which includes a sequence of follow_up
communications triggered after different events in the customer life cycle. In
the example given below, communications after event 1 are intended to achieve
the objective of converting a website visitor to action; communications after
event 2 are intended to move the customer from a first-time purchaser to a
regular purchaser and for event 3 to reactivate lapsed purchasers.

_ Trigger
event 1: Customer first registers on site (but does not buy) Auto-response
(AR) 1: 2 days after registration email sent offering phone assistance and 5
discount off first purchase to encourage trial.

_ Trigger
event 2: Customer first purchases online AR1: Immediate order confirmation.

May2005,
Tesco.com had 30,000 customers signed up for DVD rental, through partner Video Island (which runs the rival Screenselect service). Over the next year, Wade-Gerys
target is to treble this total, while also extending home-delivery services to
the likes of bulk wine and white goods

Wade-Gery looks
to achieve synergy between the range of services offered. For example, its
partner_ ship with eDiets can be promoted through the Tesco Clubcard
loyalty scheme, with mailings to 10 million customers a year. In July
2004, Tesco.com Limited paid 2 million for the exclusive licence to eDiets.com
in the UK and Ireland under the URLs www.eDietsUK. com and www.eDiets.ie.
Through promoting the ser_ vices through the URLs, Tesco can use the
dieting business to grow use of the Tesco.com service and in_store sales.

To help keep focus
on home retail delivery, Wade- Gery sold womens portal iVillage
(www.ivillage.co.uk) back to its US owners for an undisclosed sum in
March2004. She explained to New Media Age:

Its a very
different sort of product to the other services that were embarking on. In my
mind, we stand for providing services and products that you buy, which is slightly
different to the world of providing information.

The implication is
that there was insufficient revenue from ad sales on iVillage and insufficient
opportunities to promote Tesco.com sales. However, iVillage was a useful
learning experience in that there are some paral_ lels with iVillage,
such as message boards and commu_ nity advisers.

pay_as_you_go
venture with O2 which is mainly ser_ viced online, although promoted in_store
and via direct mail. Tesco also offers broadband and dial_up ISP ser_
vices, but believes the market for Internet telephony (provided through Skype
and Vonage, for example) is not sufficiently developed. Tesco.com have con_
centrated on more traditional services which have the

figures in
brackets show market share for traditional offline retail formats from the
Taylor Nelson Softres Super Panel (see http://superpanel.tns-global.com).

1 Tesco
Superstore, 27.28% (29% of retail trade)

2 ASDA, 13.36%

3 ASDA@t Home,
10.13% (17.1%)

4 Sainsburys,
8.42%

5 Tesco Wine
Warehouse, 8.19%

6 Sainsburys to
You, 5.86% (15.9%)

7 Waitrose.com,
3.42% (3.6%)

8 Ocado, 3.32%
(owned by Waitrose, 3.6%)

9 Lidl, 2.49%
(1.8%)

10 ALDI_UK,
2.10% (2.3%).

Some companies are
repeated since their main site and the online shopping site are reported on
sepa_ rately. Asda.com now seems to be performing in a consistent manner
online to its offline presence. However, Sainsburys online performance seems
to be significantly lower compared to its offline performance.

AR2: Five days
after purchase email sent with link to online customer satisfaction survey
asking about quality of service from driver and picker (e.g. item quality and
substitutions).

AR3: Two weeks
after first purchase direct mail offering tips on how to use service and 5
discount on next purchases intended to encourage reuse of online services.

AR4: Generic
monthly e_newsletter with online ex_ clusive offers encouraging
cross-selling. AR5: Bi_weekly alert with personalised offers for
customer

AR6: After two
months 5 discount for next shop. AR7: Quarterly mailing of coupons
encouraging repeat sales and cross-sales.

_ Trigger
event 3: Customer does not purchase for an extended period

AR1: Dormancy
detected reactivation email with survey of how the customer is finding the
service (to identify any problems) and a 5 incentive. AR2: A further discount
incentive is used in order to encourage continued usage to shop after the first
shop after a break