The overall benefits, challenges and opportunities to new businesses using internet marketing
Task 1

Access * More frequent individualization and communications to build relationships
The main benefits and opportunities of using the above are as follows. When you have a customer’s information you can work out what they might like. With this information you can send them relevant product information and special offers instead of sending everyone the same e-mails which they might get sick of and completely disregard or even choose a different business. Using the information correctly will build a relationship with the customer which in turn will build customer loyalty which is a very important benefit considering the amount of competition. Amazon is good example of a business using customer information correctly and individualization for customer relations. They build relationships with customers by monitoring and collecting a customer’s purchase history and sending out personalized advertisements via e-mail, social media and as soon as a customer logs in tin the website. This makes it more personal.

* Use of communications to promote e.g. Special offers, product launches
The main benefits and opportunities of using the above are as follows. The use of online communications can save a lot of money in advertising new products and offers which if it is not done online then it would need to be done using leaflets and flyers which need to be delivered as well, which is another expense which is unnecessary online. Altogether leaflets are not cost effective; they can also lead to unexpected fines by the Local Authorities because of people throwing them away whether it is the leaflet deliverer or the person who has received them. Another benefit is that any information Online can be changed at any time anywhere unlike leaflets and flyers, which would need to be thrown away, which is a waste of resources. Amazon and Tesco both use social media and e-mail to promote special offers and product launches. Also, when a customer logs in they receive personalized adverts, special offers and product launches, this applies to both Tesco and Amazon.

* New Services
The main benefits and opportunities of the above are as follows. The implementation of New Services such as banking, insurance, mobile phones, pharmacies, photo shops and opticians are really quite simple. If a supermarket offers everything under one roof customers who don’t have time to shop around for the best offers are forced to go the easy option and go for the closest vendor available to them. New Services also give them advantage over rival supermarkets that may not have those services. Because Tesco is a Brick AND Click it means it has buildings in which to place these services. The benefits of offering new services to customers are that it gives it an advantage over companies that do not offer the same services.

* Use of purchase history to tailor offers to individuals
The main benefits and opportunities of the above are as follows. Using a customer’s purchase history to group together a number of products that the customer may like may be very beneficial to a business. If a business sends out random advert and offers to random customers then the likelihood of them disregarding them or even choosing another supermarket is quite high. Doing this may be cheaper than other ways such as leaflets but it is not free so it is always best to save money where you can. Also with personalized communications based on the information based on past purchases it can build a relationship with the customer, which in turn builds loyalty. Tesco and Amazon both use customer purchase history which they then use to send them personalised e-mails which contain offers on products based on the gathered information. They use this to send personalized advertisements via e-mails, social media and on the company website when a customer logs in, this is all based on a customer’s purchase history.

* Easier and cheaper to alter adverts
There are many ways to advertise things such as new products and special offers. This can be done using leaflets which is quite expensive compared to doing it online because it requires glossy paper, ink, a photographer, perhaps a model and someone to deliver them to selected places. And it will take quite some time to get them everywhere in the local area (I talk from personal experience as a leaflet deliverer). If any even slight mistakes are made with a batch of leaflets then they are worthless and an expensive waste which any professional company would properly and legally dispose of. However advertising online is different and much better for reasons that I will now explain. You will still need a photographer, perhaps models but that is it, which compared to the leaflets is much cheaper. And if any mistakes are made when advertising all it takes is a few clicks and it is resolved which is of course cheaper than throwing everything away. Tesco and Amazon both advertise online because of the cheap cost compared to leaflets but still use leaflets occasionally.

* Quicker response times to changing markets
Most Internet businesses hire people to keep tabs on changes and occurrences within the market because it is constantly changing. For example new products could be products such as new video games or new consoles. A change in the market could be a large influx of a new product, which could devalue them; a business could use this information to sell their existing product to get as much money as possible. Tesco and Amazon have used this to buy large amounts of new products such as games and consoles as soon as they were introduced to the market. The benefits of being able to change your market are as follows, some products are extremely popular and customers want it as soon as possible. If a company fails to get the product before or at least at the same time as its competitors then they will lose customers. The benefit of keeping up to date with the markets is that a company can keep and even gain customers.

* Better information to guide stock holding
Nearly all businesses use the Internet to guide stock holding because it can be constantly kept up to date which is good for keeping track of it all and avoid any confusion, for example the over selling of the product which could lead to disgruntled customers who have paid for a product but have to wait for it because there are none in stock. Amazon being an entity completely reliant on the Internet uses it also to oversee their stock. On their website it tells you the exact amount of selected products. Amazon shows its stock numbers next to the price of the product on the website.

Availability * Increased range of customer buyer menus resulting in more accurate responses to customer needs and wants
This is personalized advertisement based on information gathered from a customer’s purchase history. On the Tesco website it allows one to purchase products and make a basket filled with somebody’s weekly shopping to save them having to find and buy each item individually. Tesco uses this information to offer other similar products, for example cheaper products, special offers, etc. Benefits of using this are as follows; reduced marketing costs and more customers who can’t be bothered or don’t have time to shop around. Also when a customer logs into the company website they receive advertisements regarding new products and special offers based on their purchase history.

* Use of internet information to identify product development opportunities
Most large businesses hire people to research and identify new product development opportunities which if the information is applied correctly can make a company a lot of money. The benefits of using the internet are that all the information is up to date however a major disadvantage is that the information is available to everyone, whether they are a rival company or single people looking to make some money. Amazon uses internet information to purchase in large quantities popular products in anticipation of high consumer demand. In the event of a new product launch a company’s timing is essential. * Opportunities for immediate sales of products e.g. music, films , radio and TV programmes
The benefits of using the internet are the opportunities for immediate sales of products. When a customer purchases something online they receive immediate confirmation via e-mail as proof of it. Also there is also option to download products such as music, films, radio and TV programmes which means there is no need for any room to be taken up by physical products. Tesco and Amazon both have immediate sale confirmation and Sainsbury’s allow customers to buy and download music straight from their website.

* Podcasts
Podcasts are audio files that people and organisations use to allow people who have missed a radio show or other similar item such as the news to listen to them at later time or date. This allows people to keep up to date on the latest events. Tesco has podcasts available from its radio shows. The benefits of using the internet are that these podcasts are available to everyone. * Market development, ability to expand markets more cost effective
Because Tesco is so big, it has many aspects to it and is involved in many markets. For example it has expanded into the opticians sector, medicine sector and it has also expanded into banking and insurance each of which it has expanded until they were no longer an extra service but an entirely different branch of the same tree (Tesco). Tesco has also expanded into the fuel sector which it sells to its customers. Tesco is a shareholder of the company that provides the fuel so they will probably receive a discount and also they could perhaps have a say on how much they charge other supermarkets for fuel. One of the benefits of using the internet is that customers who don’t have enough time to shop around for the best deal will have no choice but to go for one of the most prominent supermarkets there and use their website to do a variety of things quickly on one website that would take them much longer to do if they had to visit several others to access services like pharmacies, opticians and banking.

* Lower entry costs for small businesses
The internet helps new people who want to set up their own business and also helps online businesses expand by having lower set up costs. This helps new people set up their business as they don’t have to have as much money as they would need to if they were going to set up a brick store. There are different packages you can choose from online with websites that are priced different. For example it could be dependent upon how much data would be used with the business. The benefits of Tesco using this would be reduced costs in the brick stores as they become more reliant on the internet. It’s cheaper to set up and the costs are lower as they may not have to pay for others things for example renting a shop space, buying stock for shelves, paying rates. * Opportunities to offer services virtually e.g. virtual tours
Tesco have launched an interactive virtual grocery store at Gatwick Airport to help holidaymakers shop for their return home using their smartphones. Tesco built the facility after a successful pilot in Seoul, South Korea, which allowed commuters to shop in subways and at bus stops by pointing their mobile phones at posters and billboards. This can save the supermarkets money with their energy bills because if there are fewer perishable products that need refrigerating or need to be frozen then less electricity will be required. The benefit of using the internet for this is that less space will be required therefore costs incurred when renting space could be significantly reduced.

* Operating 24/7 e.g. Internet Banking
Because Tesco has expanded into the banking industry and is in charge of looking after other people’s money and with plenty of competition, Tesco needs to give its customers all over the world access to their money and offer more financial services to catch up to the standard banks. For example; Mortgages, all types of Insurance. All major banks give customers access to their money 24/7 so to keep up Tesco also do the same, via phone, internet. The benefits of this are that customers who don’t have time to shop around go for the easy option and choose them. And the benefits of using the internet are that staffing costs can be kept to a minimum. * Ability to link traditional methods with online marketing ( bricks and clicks )
The ability to link traditional methods with online marketing (bricks and clicks) is very important because it uses both shops and the internet and so have all the benefits of both (and the negatives). This will be good for dealing with people who don’t have access or do not know how to us the internet. One of the benefits of linking Brick and Click is that all offers, stock and general information is completely up to date in store as well as online.

* Market diversification opportunities
Tesco started as a standard merchant company in London but now it is one of the largest retailers in the world. It has come this far because it has diversified its market; it started with general groceries and now deals with things such as consumer electronics, clothing, financial services, telecoms, home, health and car insurance, dental plans, internet and software. The main benefits of marketing diversification such as the above is that if a company such as Tesco has almost everything under one roof a customer who doesn’t have much time might feel as if they have no choice but to use their store or website as an easy option.