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E-Business Systems (Analysis of capturing customer data in Tesco and ASDA)

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EXECUTIVE SUMMARY

Electronic business is the complex fusion of business process, enterprise applications and organizational structure necessary to create a high-performance business model. The report is based on capturing the customer’s personal data in Tesco and ASDA by electronic data capture (EDC) system.

 Electronic data capture system is utilised for obtaining important data of the customers for future business. The management adopt various marketing tools to attract the customers for repetitive business, as well as the potential ones. The management considers the preferences and purchasing power of the customers from the pre acquired data before setting its Strategic, Tactical and Operational decisions.

Later report discusses the ethical issue that arises due to the application of electronic data capture system on the customer’s data. If those are ignored they could stand as major challenges and could constrain the progress of retail business. The organisation must face such challenges and introduce relevant software to protect the data from being misused or theft or lost.

TABLE OF CONTENTS

PAGE NO

  1. INTRODUCTION                                                                3
  2. ELECTRONIC DATA CAPTURING AND PROCESSING

 BY TESCO AND ASDA                                                        4

  1. EVALUATION OF ELECTRONIC DATA CAPTURING

IN EFFECTIVE BUSINESS MANAGEMENT                                 6

  1. DRAWBACKS                                                                 9
  2. RETAILING AND THE INTERNET : ETHICAL ISSUES
  1. RETAILING ON THE INTERNET                                10
  2. IMAPCT ON INDIVIDUAL                                        12

5.2.1 PRIVACY                                                        12        

5.2.2 TRUST                                                        13

  1. IMPACT ON ORGANISATION                                        13        
  2. IMPACT ON SOCIETY                                                14
  1. OTHER CHALLENGES                                                        14
  2. CONCLUSION                                                                15
  3. REFERENCES                                                                16
  4. BIBILOGRAPHY

1.0 INTRODUCTION

E business seems to be the topic of conversation, wherever a business person turns today. Retailers small and large are creating websites, and business-to-consumer e business is expanding exponentially. Fay Hansen reports that “global B2C e-business revenues will reach $1.41 trillion this year (2008)” and “worldwide B2c e-business will reach $2.37 trillion in 2009” (Hansen 58).

This business report on electronic business system is based on the facilitation of capturing customer’s data and the ethical challenges of its application for protection of such data in Tesco and ASDA. Capturing the customer’s personal data, their preferences and history of transaction electronically is more reliable and time saving. At the same time, company’s offers better discounts and many other promotional offers to its customers. This helps the company to retain its customers.

Tesco uses loyalty club card, a CRM tool which allows the customers to shop within fraction of seconds and Tesco to capture and process its customer’s data. ASDA uses RedEye software to capture its customer’s personal data.

Having known their customers preference of shopping online, these grocery retailers provide discounts and many other offers to retain and to have repeat customers.

This extraordinary growth brings with it new challenges as well. While much attention has been paid to the technological challenges, most companies have not taken the time to reflect on the new ethical challenges that accompany e business.

This course work identifies possible ethical and social impact of eBusiness on individual, organization and on the societies in which they operate and offers executive and managers a decision- making model to assist them in resolving these challenges.

2.0 ELECTRONIC DATA CAPTURING AND PROCESSING BY TESCO       AND ASDA

One of the positive attributes of grocery stores is the convenience it offers to the public. The customers must be able to shop all the things needed in just one-stop. This surely attracts the consumers. This is not the only concern of the retailers these days. In order to compete with its rivalries, one must find a better ways to maintain their customer database, customer retention before trying to attract the new ones. In order to achieve their goals, managers use the concept of customer satisfaction by providing their customers a total shopping experience and pleasing them with various offers on the products.

The rapid growth of internet has had a great impact on the retail industry in recent years. The business of the retail industry and the recognition on the services provided by the retailers has a rapid growth; more and more potential customers are buying services online, being aware of different offers and special prices through easy access and advertisements online. The retailers have started keeping and maintaining customer’s transaction history or records  to know more about the individual customer and their spending power and to market their products to different class or category of customer differently to earn maximum profits.

 Therefore, the Electronic Data Capturing system is considered to be the best           electronic business system to store, capture and to generate reports on    customer’s transactions.

Electronic Data Capturing system is a way to raise service standards;the system also includes e-marketing promotional messages. These can be used to contact existing customers with special offers and personalised greetings and occasional souvenirs being sent out helping the retailers to retain loyal customers and to get repeat business from them. Electronic Data Capturing system tracks daily customer feedback to increase revenue by solving any problem or short come overnight. It simplifies the way of data mining which enables to define the questions and tailor the survey to meet business objectives and decision making by managers, the issues are quickly and clearly identified through feedback provided by EDC’s and actions are taken immediately improving revenue. (Sanders, R.2008)

TESCO, a largest supermarket in Europe, offers a loyalty culbcard which stores the customer personal data and their shopping habits. ASDA, a second largest supermarket in Britain uses RedEye Software solution to capture its customers personal details. ASDA is known for low priced items.

Tesco with its clubcard has earned the global admiration demonstrating how the customer data from the clubcard has contributed to effective business process. The information collected by clubcard is now virtually embedded in all process that Tesco carries, discounts, pricing, promotions, store locations and many more.(marketingweek,2008)

ASDA uses the RedEye’s web analytics technology to capture its customer’s personal details. RedEye provides the best quality data so that the managers can take appropriate decisions regarding their marketing, promotions, pricing. The data it collects is a combination of information submitted by the visitors or the first party data collected by the cookie. (redeye)

3.0   EVALUATION OF ELECTRONIC DATA COLLECTION IN                                      EFFECTIVE BUSINESS MANAGEMENT:

Electronic data capturing system, effectively assist the business operations and managerial decision making by combining data collected, sophisticated analytical models and marketing tools, using  software’s  like DSS(Decision Support Systems),TPS(Transaction Processing System),MIS (Management Information Systems), CRM (Customer Relationship Management)   (Laudon & Laudon, 2006. O’Brien,2006)

The following diagram shows how EDS facilitates in processing specific roles, decision making and responsibilities at different levels of management in  retail-

Figure 1: Showing application of EDS on different managerial decision making                      

The customer data which is collected through electronic data capturing machines contributes effectively for the purposes of business management by the retailer on Strategic level, Tactical and Operational.

Strategic -Electronic data capturing system can contribute in  several strategic decisions for effective business management  as shown in Figure 1,such as opening a new branch  after considering and analysing customers preferences and demand. It becomes convenient to understand the spending power of the customers and accordingly the market could be segmented firmly to attract the existing customers and potential customers from different segments in order to enhance the revenue and reach the targeted goals of the retail business.

Moreover, on a strategic level of  processing guests data through electronic Data Capturing system the retailers work on accumulated feedback from existing customers and their likes and dislikes to make sure that the suggestion and recommendation of the customers are taken care of ,if needed introduction of new services and facilities are done.(Alter,S. 2002 )

Tactical- An effective business management depends on the tactical decisions taken by an organisation, these decisions could be arrived at only after accumulating detailed knowledge of data as stored in databases generated by transaction processing systems.(O’Brien,2006) The entire customer experience can be evaluated and benchmarked, enabling improvements to be quickly made if necessary. Negative responses can be tagged and the front of house manager immediately alerted to take action. (Keany R.2004)

The decision making here on tactical level includes (shown in Figure: 1) careful assessment of every data available, factors like business forecasting, budgeting, pricing tariffs and customer retention planning done here but every decision making on this level involves critical evaluation of customers transaction records and on the strategies of the marketing department of the retailer to bring business from the existing and potential customers (Sanders R.2008).

Operational- The customer data contributes to allocate operational or short termed day to day decisions which are inevitable for a successful business management. The reporting operational data can include daily reports per location, weekly server reports and a monthly summary report. The daily activities includes stocking products, staff availability, pricing. Moreover, by taking the help of attractive advertisements and other marketing tools, the products could be sold out to the customers who visit the stores. (Alter, S. 2002)

As per the Business week ‘Best performers 2007’ survey, the winning criteria for any business is better understanding of their customers (dailyrecoking, 2007).

Tesco uses the marketing data specialist Dunnhumby, which analyses the sales data and develops complex marketing strategies and promotional offers. Thus, in recent years, the information of actual buying behaviour of the customer has enabled the Tesco’s management to take most of the key decisions.

Tesco knew that loyalty clubcard not only allows the customers to collect the loyalty points by using it whenever the shopped at Tesco, also allows Tesco to collect customers personal data and their shopping habits.

As many of other retailers launched their own loyalty programmes, Tesco soon realised that just collecting the data does not make any sense. All the success of attracting the customers and retaining them lies in the fact that how they act upon the customer data.

Thus, Tesco is attaining its mission “Creating value for customers, to earn their lifetime loyalty”. (Tesco plc)

On the other hand, ASDA used Every Day Low Price (EDLP) strategy. And it believed that low prices will attract the most customers. Now it has realised, low price cannot attract customers and it has to become more customer focused.

The RedEye technology store level analysis includes information on the availability of deliveries, sales reports and identifies the under-performing stores. The data collected by redeye is also used to analyze the effectiveness of launching new stores, customer data and the transactional data which helps the management to take effective marketing decisions. (redeye)

Garry Lee, Head of Client Services, RedEye says, ASDA using RedEye technology, will be able to drive automated e-mail and banner campaigns, delivering target messages to the customers based on their shopping habits.(redeye)

4.0 Drawbacks

There are a few drawbacks experienced while using and storing data of the customers by retailers-

1.Data Theft:

The customer account consists of personal details and their spending power, thus utilised for repeating business with the help of marketing tools. If such details are misused or comes in the hands of the competitor, the customers could be approached accordingly at competitive rates. So the retailers must keep the data collected safe and secure otherwise they would lose their customers to its rivals.( Alter, S. 2002).

2.Skilled Personnel’s:

 The employees must be properly trained of accessing the internet, electronic data capturing system, and other CRM, TPS tools in order to implement business strategies for effective management which is expensive. The EDC comes with a package which includes the data processing, installation, training, software upgrades and maintenance, therefore it is expensive to afford for all retailers.(Sanders,R. 2008)

3. High Dependence:

The data could not be accessed if the server goes down or internet connection is disrupted. The retailers must have back up facilities, in order to protect the information and avoid delays. (O’Brien, 2006)

5.0 RETAILING AND THE INTERNET: ETHICAL ISSUES

5.1 RETAILING ON THE INTERNET

For retailers, the Internet presents new, widely debated and perhaps even over-hyped opportunities (Rowley, 1996; Doherty et al., 1999). For some, it threatens fundamental changes in retailing's role (Alsop, 1999); for others, implications extend far beyond the Web itself (Gurley, 1999).Several examples of major retailers publicising their ‘‘good works’’ and ‘‘good intentions’’ through Web sites were identified in 1997 (Whysall, 1997).

Clearly, though, many retailers see internet as a medium for the promotion of a socially responsible image, they should be aware of internet attacks and criticisms. Nonetheless, the reach, scope, and user profile of the Internet, together with the anonymity of retail cyberspace, create ethical challenges and attract activities that are likely to continue to promote calls to restrict and regulate its content and activity.

Several issues of an ethical nature continue to cast a shadow across the development of e-business, issues which may take on an enhanced significance if, as has been suggested (Donthu and Garcia, 1999), Internet shoppers are less risk averse than non-Internet shoppers. Among these, mention can be made of:

  • Customer concerns about the security of Internet transactions.  (Fram and Grady, 1997).
  • Conversely, retailers need to protect themselves in areas of data integrity, confidentiality, and authenticity of data (Forcht and Wex, 1996).
  • Concerns for the apparent lack of a legal framework for e-business (Richards, 1997), especially in an international perspective.
  • The use of Internet cookies, whereby visitors to Tesco/ASDA site have electronic data placed on their computers which record the user's e-mail address, which parts of a site were visited, and so forth. While companies may argue that this assists them to understand their customers better, and is thus a step towards better service, for others it represents a threat to individual privacy (McCune, 1999).
  • Worries that the ease by which a user may ‘‘subscribe’’ to an offer on the Internet may make it easier for personal details to be collected, and potentially exploited in unwelcome and intrusive ways (Warner, 1999).
  • The need for clear distinctions on Web pages between ‘‘editorial’’ content and advertising content (Berry, 1997).
  • Concerns that some segments of consumers may be disadvantaged by relatively lower levels of Net access: example rural areas of the USA may suffer from a lack of affordable access to high-speed, or broadband, networks (Lerner, 2000).
  • Worries that apparently unbiased Net searches may in fact be dominated by paid advertisers (Wolffe, 1999).
  • Matters of intellectual copyright, including the use of ‘‘pirated’’ names of well-known brands and companies like tesco,asda,amazon.com,  misspellings of leading brands, and registration of names in foreign domains (Abel, 1998).
  • The view that speeds of change in fields like e-business is such that moral reflection is unlikely, and thus standards of corporate morality may be allowed to slip.  (Useem, 2000).
  • The existence of fraudulent ‘‘Internet offered scams aimed at consumers’’ (Bowe, 2000).

However, it is probably on aspects of privacy that most concern has been focused.

5.2 IMPACT ON THE INDIVIDUAL

Technology is changing the way that individual conduct business. There are benefits, such as shopping at home via internet, but there are also aspects of eBusiness that have less desirable consequences.

This section will discuss two of these issues:

  1. Reduction of individual privacy
  2. Decrease of trust in business environment

5.2.1 Privacy

Privacy is an important ethical issue defined as the claim of individuals or group to determine for themselves when, how and what extend information about them is communicated to other. Richard Mason (1986) argued that two forces threaten the individual’s privacy:

  1. Enhanced capabilities of information technology
  2. Disseminate information

ASDA’s RedEye and Tesco’s loyalty card gather the information; however ebusiness mainly demands gathering and sharing of these information to increases their business profit. The organizations gather information in different ways:

  1. Information given by individual
  2. Information gathered without knowledge of customer
  3. Information unlawfully gathered about the individuals

Information given by individual

During online shopping, customer provides data such as email address, contact details etc all these data makes the greater expansion of e business possible. Thus the customer data is captured online with the knowledge of customer.

Information gathered without knowledge of customer

Cookies are used to store information regarding user that cannot otherwise be remembered, due to the stateless nature of the internet. For example user name and password of the customer who registered online might be stored in cookies.

5.2.2 TRUST

Trust can be defined as the factor that moderates the use of verifiable attributes to form beliefs about the unverifiable attributes (Donna, 2002). When it comes to online shopping, since communication is through the electronic mail via internet, to fulfil the agreement, a level of transactional trust is required.

5.3 IMPACTS ON ORGANIZATIONS

The e-business revolution is dramatically changing the competitive landscape in which corporation operates, particularly in the area of competition (Fortcht, 1996). Three aspects of the e-business trend impact on retailer’s competitive environment:

  1. Increased competitors access to current markets
  2. Increased consumer access to competitor’s product
  3. Enough resources to compete effectively

Internet ignores the barriers to entry such as geographic, national, and political and cost these results in customer access to a greater number of organization’s competitors. Main competitors of Tesco and ASDA are Sainsbury’s, Lidl, Morrisons, so online business increases competition purely price basis for standard products. The opportunity to compete in e–business exists for those companies that have the necessary resources in this terms, Tesco and ASDA regularly make a note on stock levels and updates the stock for good competition.

5.4 IMPACT ON SOCIETY

The greatest impact of the technology will be true globalization of not only business, but of culture. Technology allows for the almost costless reproduction and distribution of intellectual property that moulds a culture.

6.0 OTHER CHALLENGES

According to O’Brien, there are other challenges which could be faced by the management these are-

Unauthorised Use of Computer at work-The unauthorised use of computer systems and network by the employees of a hotel may kill time and important information can be misused, thus Network monitoring software, called “sniffers”, are frequently used to monitor network and detection of improper use .

        Computer Viruses and Worms- Important data and information could be lost           if      computers and software are affected by Viruses. They often destroy the contents of computer memory, hard disks, and other storage devices. Copy routines in the virus or worm spread the virus and destroy the data and software of many computer users. This could erase out the systematic records of guests data. Thus, the computers used in hotels for storing business information must be protected from such unpredictable virus attack by installing Fire wall and other relevant software which controls the movements of data for a secure and reliable data storage.

7.0 CONCLUSION

In the age of globalisation it is inevitable to adopt electronic business for making a sustainable position in the Global market. The Electronic Data Capture (EDC) System used by Tesco and ASDA  helps to extend its business and keep a systematic track of its former customers which not only brings business in future  but also attract potential customers. The management maintains such data and adopts various marketing tools to impress the customers by offering various attractive discounts with an urge of have repeat business. Thus, it is clear that EDC plays an important role in retail business, but at the same time, the management has to confront several ethical challenges and if such challenges are ignored the progress of business could be constrained

Many businesses and organizations may simply act on the profit intention, with little consideration of the long-term ethical consequences of their actions. The advance technology made easy for online transactions but hides the impacts of new technology which reflects on the absence of knowledge of social and ethical issues on both customer and business.  Hence forth organizations must avoid the vast attraction to rush into a seemingly profitable further without first considering the ethical issues that may be created by e-business technology.

8.0 REFERENCES

  1. Alter, S.2002. Informationsystems : foundation of e-business. Fourth edition.NJ : Prentice Hall.
  2. Sanders,R.2008. Innovative new way to raise service standards launches. Electronic data capture ltd..[online]. Available from: http://www.electronicdatacapture.co.uk/press_releases.html [Accessed on :10 July 2008]
  3. Laudon K,C & Laudon J, P. 2006.Management information systems : managing the digital firm. Ninth edition.Upper Saddle River, N.J. : Pearson/Prentice Hall
  4. O’Brien J, A.2006. Management information systems. Twelfth edition. Boston, [Mass.] : McGraw-Hill/Irwin.
  5. Chaffey D. 2007.E-business and e-commerce management: strategy, implementation and practice. Third Edition. Harlow: Financial Times Prentice Hall.
  6. Allcock S, 2007. The World Wild Web. Hospitality . Sept/Oct Issue 7. Pp.22-26.
  7. Keany R.2004. Bank of Scotland launches credit card for high net worth customers. Bank of Scotland press release. .[online]March 2004.Available from: http://www.hbosplc.com/media/pressreleases/articles/bos/2004-03-22-00.asp?section=bos  [Accessed on :10 July 2008]
  8. Marketing Week. 2008.Google gives Tesco clubcard technology lesson[online].Available from http://www.marketingweek.co.uk/cgi-bin/item.cgi?id=59367&u=pg_dtl_art_news&m=pg_hdr_art [Accessed on :21 July 2008]
  9. RedEye. Data Capture.[Online] Available from http://www.redeye.com/whatwedo/data_products/data_capture.php [Accessed on : 21 July 2008]
  10. Digital training academy. How ASDA use data to make a difference in offline decision making.[online] Available from:http://www.digitaltrainingacademy.com/casestudies/RedEye%20and%20Asda%20case%20study.pdf [accessed on : 25 July 2008]
  11. Whysall, P. (1997). Retailing and the Internet: wider perspectives. Proceedings of 31st Annual Conference. Academy of Marketing. Academy of Marketing/Manchester Metropolitan University. Vol. 2 pp.1079-89.
  12. Alsop, S. (1999).You can trust me on this really. Fortune. Vol. 139 No.5, pp.175-6.
  13. Rowley J. (1996), "Retailing and shopping on the Internet’, International Journal of Retail & Distribution Management, Vol. 24 No.3, pp.26-37.

14.Gurley, J.W. (1999), Buy.com may fail but, if it succeeds, retailing may      never be the same", Fortune, Vol. 139 No.1, pp.150-51.

 15. Donthu, N., Garcia, A. (1999), "The Internet shopper", Journal of              Advertising Research, Vol. 39 No.3, pp.52-8.

16.http://projects.bus.lsu.edu/independent_study/vdhing1/[Accessed on      

  1. July 2008]

17. Hansen, 2003 Fay. Global E-Commerce Growth. Business Credit       105.9:  58-61

18.Useem, J. 2000. New ethics or no ethics? Questionable           behavior is Silicon Valley’s next big thing. Fortune, Vol. 141 No.6, pp.82-6.

19. Abel, S.M. 1998. Trademark Issues in Cyberspace: the brave new frontier, Fenwick & West LLP [online] Available from :http://www.fenwick.com/pub/trademark_ issues_in_cyberspace.html. [Accessed on 25 July 2008]

20. Berry, J. 1997. The ethics of online publishes. Web review. [online]Available from: http://webreview.com/wr/pub/97/10/03/feature/ethics.html. [Accessed on 21 July 2008]

21. Lerner, D. 2000. Rural US may trail Web revolution. Financial Times.

22. Wolffe, R. 1999.Internet: Websites mislead shoppers, Financial Times.

23. Kelly, Eileen P. 2000. Ethical Aspects of Managing Customer Privacy in Electronic Commerce. Human Systems Management 19.4: 237-45

24.Mason,R. 1986. Four Ethical Issues of the information Age. MIS Quarterly 10:1, 5-12

25.Peeples, Donna K. 2002. Instilling Consumer Confidence in E-Commerce. S.A.M. Advanced Management Journal 67.4: 26-32.

26.Forcht, K.A. and Wex, R-A. 1996. Doing business on the Internet: marketing and security aspects. Information Management & Computer Security, Vol. 4 No. 4, pp. 3-9.

bibilography

http://www.analogstereo.com/wp/crm_customer_driven_innovation_generating_knowledge_not_just_metrics.htm

http://www.ogilvy.com/viewpoint/view_ko.php?id=12956&iMagaId=8

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