Impact of Internet Marketing on Business - Research Proposal Example

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Executive summary

There is no doubt that the internet has been an important platform for many businesses, regardless of their size. It influences businesses in various ways including advertisement and promotion. However, it can also impact them negatively especially when it comes to customer satisfaction. Using Tesco as the case study, the paper has conducted research on the impact of internet marketing on small businesses.

Research objectives: measuring customer satisfaction;

Statement of problem: the internet can affect business both negatively and positively.

Summary of findings: positive reviews can help in portraying a company image

Positively. Tesco’s failure is attributable to a failure in the utilization of internet marketing especially in understanding client preferences.

Conclusions and recommendations: customer feedback- whether negative or positive-

Is essential in internet marketing. Tesco has to work on gaining positive reviews.

1.0 Introduction

The internet has undoubtedly transformed the business world in various ways one of which selling goods or services to people in other regions. Many business owners can now sell their products and services to customers far away from the business location. Secondly, the internet has been instrumental in the reduction of marketing and promotional costs. The traditional media comprising of TVs, radios, and newspapers are usually more expensive than the internet. Even more importantly, the internet is critical in analyzing and understanding consumer trends. Nonetheless, there are other ways the internet can affect a business negatively. When not satisfied, clients can give a negative review about a company. Consequently, a company is likely to suffer in perception, and this can translate into poor sales. In this research paper, the focus is to measure consumer satisfaction using Tesco PLC as the case study.

1.1 Statement of the problem and background

Tesco PLC is a multinational merchandise and grocery retailer hailing from Britain. In terms of profits, the company is ranked third largest in the world. It dominates the UK grocery market and is found in other continents including Asia and some other parts of Europe. Despite the success achieved by Tesco Plc, the company has been struggling lately. In fact, its ambitions to expand into the US markets have hit a snag despite its high ranking. It entered the US market in 2006 and was expected to bring competition to the then rivals (Birchall, 2007). However, a few years later, the company was reeling from the loss it incurred Bradshaw, 2013). Ironically, the company had performed tremendously in other markets including outside the UK.

However, its approach to the US market was inadequate as it did not focus on the customers. Despite the use of internet platforms such as the Facebook, Pinterest, Google+, and Twitter, Tesco still grappled with sales. Many of its clients were dissatisfied, but Tesco somehow did not understand this fact. It was an intriguing fact because the company had all along utilized the internet to its advantage. Many people used and still use the internet to order for the company’s products. As a matter of fact, even today, Tesco remains dominant in making the highest sales via the web (Deane, Meuer, & Teets, 2011). In light of these intriguing facts about the internet, this research paper attempts to analyze this problem and offer relevant recommendations.

1.2 Research objectives and information needs

Tesco’s unsuccessful stint in the US has been discussed severally by economist and business analysts. Many have sought to identify the reasons that led to the failure of the company in a country where most businesses thrive. Regardless of the opinion given by the analysts, one fact evident from this failure is that Tesco did not understand customer needs. Additionally, the company did not measure customer satisfaction with their products. In fact, this observation has been shared by Zhao (2014) who noted that Tesco came with a plan as opposed to coming with an analysis of the US market. First, the company’s hiring process was somewhat flawed as it did not include top executives from the US. As a result, the company could clearly understand the needs of its US clientele.

Therefore, this paper aims at tackling two main objectives concerning Tesco. First, it seeks to investigate the satisfaction of its clients. Thus, it aims at answering the question, “how can Tesco measure consumer satisfaction?” Secondly, it will measure customer satisfaction with its brand and services by attempting to respond to the question, “how satisfied are Tesco’s customers?’. As noted above, Tesco did not include top managers in its US branch, and this may have created a negative perception (Zhao, 2014). Subsequently, its sales would inevitably suffer since customers’ perception plays a key role in purchase decision (Samson, Mehta, & Chandani, 2014). In answering these questions, this paper employs the causal studies approach.

1.3 Research methods

For this paper, the primary research method will be secondary data collection whereby the researcher will use existing data. Since Tesco’s entrance into the US market was widely publicized, the information pertaining to its performance is readily available in many sources. The paper will derive this information from various sources including The Midlands Tech Library, the internet, books, and journals. Further, the paper will analyze any causal trends both at Tesco and in other companies. The approach will examine Tesco’s performance both in the US and other parts of the world in a bid to understand the discrepancies. Additionally, it will assess how the internet has impacted other companies in a similar or different way.

2.0 Data analysis and findings

One thing coming out clearly from the research being undertaken is that Tesco’s customers in the US were dissatisfied with the company. Sadly, the company failed to recognize this important fact in the early stages. It continued using the internet to market its products and expected the success in other regions to be replicated in the US. In the findings, it is apparent that Tesco ignored consumer perception as crucial in marketing. The mistake Tesco made was to assume that the use of internet would automatically attract the US users. Because of not knowing these perceptions, the company failed to tailor their products to the users’ preferences.

Subsequently, many of the customers not only avoided buying the company’s products but also proceeded to avoid recommending the same. Often, the internet users are critical in the increase or decrease of sales as the review affect a company’s sales trend. Apparently, when clients are dissatisfied, there is a tendency to give a negative review. As a result, new customers tend to avoid purchasing these products not because they have interacted with the products but because others have given a negative feedback (Chen, Shang, & Kao, 2009). In a recent study, these observations were confirmed to be factual.

In a study of 100 participants conducted in the US comprising of respondents from the age brackets of 18 and 56, the results were evident. Out of the 100 respondents, 74 of them stated they did not purchase an item online before reading reviews. Additionally, 55 of these indicated that they always left a review every time they bought an item. All of the 55 explained that the review left is always reflective of the treatment and satisfaction attained from the product or service from the company (Chen et al., 2009). Considering these facts, it seems Tesco may have failed to notice the importance of ensuring clients left positive reviews. Also, the firm may have overlooked the need to seek customer feedback in the new environment.

Perceptions are sometimes a cause for poor sales even when the company has all the other elements. Again, the company did not realize the impact of perception on its sales. According to Silverthorne (2010) when the firm decided to include American executives in its managerial team, it created a negative perception in the eyes of the locals. Cultural factors, therefore, impacted the company without its knowledge. While hiring local managers is not prerequisite to success, it enables companies to understand the culture of the locals. As a result, the company can tailor its products to the needs of the local clients. Therefore, Tesco’s failure in the US can significantly be attributed to its decision to overlook the cultural aspect of the market.

The internet can drive sales up but can also lead to the plummeting of the same depending on the relationship a business has with its clientele. In this research, it was found that many customers relied heavily on the client preferences in developing products. For instance, companies such as Wal-mart and Boohoo engage clients in most of the activities all with an aim of understanding their preferences (Samson, et al., 2014). In contrast, Tesco entered the US market without first conducting the market needs and customer preferences. Sales increase when the company is in sync with the customer needs and buying trends. For instance, in the case of Tesco, its success in some countries has been a result of remaining aware of customer needs and meeting them appropriately.

In the instances where the internet affects sales negatively, companies are disconnected with the clients. That is to say, companies do not assess to know what makes satisfies their customers. Secondly, there is hardly any study to determine if the customers’ perceptions toward a company are positive. In this case, it has been established that Tesco failed in both areas. It neither understood if its clients were satisfied with their services nor did it know their customers’ perception of the brand. As indicated above, the customers had negative attitudes and were not satisfied with the company. Therefore, this explains the reason behind the company’s failure despite succeeding elsewhere using the same media- the internet.

3.0 Conclusions and recommendations

In light of the findings above concerning how the internet can affect a company, this section offers relevant recommendations and reaches conclusions on the same. First, it is evident that the internet has the potential to impact a business negatively or positively. As noted, Tesco has performed exceptionally well in some areas. However, it could replicate the results in the US market, and this flopping has to do the internet. To prevent a recurrence of the same the company ought to invest on customer relations especially on the internet. Rahi, (2015) recommends that businesses ought to establish a relationship with clients that encourage the latter to express their preferences freely. Therefore, Tesco can prevent similar mistakes in the future by creating a strong online relationship with its customers.

Secondly, Tesco can prevent such incidents in the future by asking satisfied clients to leave positive feedback. While this approach might seem as solicited, it is a realistic way of encouraging prospective clients. As noted, many customers in the US assess feedback and recommendations before purchasing a product. Also, Tesco suffered because some of its clients left negative feedback hence discouraging the would-be clients. The internet has a negative impact on small businesses when the feedback left is a negative one. In the era of social media whereby users can share with their friends on their ‘wall’, it has become precarious for businesses to deceive new prospects. Therefore, Tesco can counteract negative feedback by asking its satisfied clients to leave a feedback and share the same with their friends.

Thirdly, Tesco needs to devise and popularize its customer loyalty program that can be applied everywhere it seeks to expand. In such a program it would be essential to find honest reviews and feedback from the satisfied clients. Such a step would be critical in dispelling any fears that might be posed by malicious or dissatisfied customers. Still, it ought to collect the information from the unsatisfied clients and improve accordingly. It is such measures that can mitigate the inevitable malice often peddled through the internet, sometimes by rival companies.

4.0 Limitations

Notwithstanding the results availed above, the research had some limitations some of which is the lack of primary data. The study relied heavily on the secondary data. While this reliance does not imply unreliability of the data, it does limit the research in the sense that customers were directly interviewed. Secondly, it was no possible to ascertain if the negative feedback left by the supposed Tesco clients were indeed genuine. In this era of fierce competition, rival companies can deliberately hire individuals to portray a company in a bad light. As a result, it becomes somewhat hard for the prospects to distinguish between a valid review and a false one. Thirdly, this research was limited in terms of resources as it could not engage actual customers.