The Articles of Confederation

The Articles of Confederation did manage to successfully handle the new west erne lands which were acquired by America after the war. Following the war America gag Ned new lands and the government needed a system to divide and govern these new lands. Many of the larger colonies claimed to own these western lands due to their original charters.B t, in order for the Articles of Confederation to be ratified and to pay off the debt from the war, t he states needed to give up their land to the national government, so that it could be sold in order to pay off the country's debt. The large states did give up their lands to the central govern .NET (Document E). In order to govern these new lands the government needed to make new law s. One of the laws passed was the land ordinance of 1785. This new law divided up the land in the e new western territories into sections which could be sold to individual citizens.The money received from the people who bought this land helped to pay off the debt . The land ordinance al so promoted republican ideals by providing a school for each of the new territories that we re created. Providing a school in each town allowed all people to be educated which pro meted equality. The northwest ordinance of 1 787 was passed to set up government in these n ewe territories. The Northwest Ordinance stated the requirements for any of the new territories t o become a state. In order for one of the new territories to become a state they were required to r each a given population and create their own constitution.The Northwest Ordinance man aged to abolish slavery in the new states as well. Although the Articles of Confederation were e effective when it came to creating new states, they were not very effective at anything else. The Articles of Confederation were highly ineffective when handling commerce e. Under the Articles of Confederation it was difficult for the national government to cool elect taxes from states. When the central government atte mpted to place a tax on Rhode island d, they refused to pay the tax and claimed the national government did not have the right to tax them (Document A).It was reported that the national government was only able to collect one fourth of the taxes they requested from the states. The government only received very few taxes from the states because they could not force the states to pay the taxes, and states obviously did not Want to pay taxes that were not required. Not being able to collect taxes had many negate eve consequences for the government. The government was not able to pay soldiers who fought in t he revolutionary war because they didn't receive enough tax money from the states (Document t C).The government owed money to the soldiers who fought in the revolution but the could not afford to pay them. Financial problems also affected the farmers of Massachusetts. As a response to crop prices decreasing and the amount Of farm foreclosures increasing Daniel Shah yes led Shay's re bellion. Shay's rebellion was when the Massachusetts farmers refused to p ay taxes and resisted foreclosures. After America gained independence they were no longer trade Eng as much with Britain. (Document B) prior to the war Britain had been America's most lucubrate vive trading market.After the war America's population increased but the value of their ex ports to Britain did not. Generally when the population off nation increases the value of their ex ports increases because they are able to produce more and their population gives them more military power. Under the Articles of Confederation collecting taxes and trading became much h more difficult for America. America was not respected by other nations and struggled with foreign affairs under the Articles of Confederation.After the war America gained a large amount of Ian d in the west that Britain had previously restricted from them. However the Americans were not able to access all of their new land due to occupied British fort s in the west (Document D). The Americans wrote a letter to Britain requesting that the forts be vacated but the British refused. The British refused because they didn't think the Americans were strong enough to remove them Because the Articles of Confederation did not have the power to raise an army it was imp Seibel for America to force Britain out of their land.America also wished to gain access to the M sipping river in order to trade more efficiently. Unfortunately Spain controlled the Mississippi river and did not allow the Americans to use the river at all. America requested that Spain grant t them access to he river but they refused because they did not believe America was strong en ugh to resist (Document F). Due to the weakness of the Articles of Confederation Spain did not respect America enough to give them access to the river.America was unable to effect Tivoli deal with foreign affairs because their government was not respected other countries. The Articles of Confeder ation were unable to control the common people who o W ere given too much power. After the war America struggled to keep both wealthy elites and the common people loyal to the government. John Jay believed that the wealthy c redirectors of the action world begin to lose faith in the new government (document G). A cried tort is someone who lends money to someone else in order to be bayed back in full with inter est..A debtor is someone who owes money to others. In this situation the creditors are the w lately elites who helped find the war, and the debtor is the US government, who cannot afford to pay back the creditors in full. America cannot pay back its creditors because the Articles of Confederation were unable to collect enough taxes. The wealthy creditors began to lose faith in the government because they did not believe they would ever be bayed back. Losing support f the wealthy was devastating for America because they were needed to fund the nation.One A intermediaries claime d that the Articles of Confederation should be refused or fixed rather t Han replaced. An analogy was used which said if a building has a problem people do not tear d own the whole building, they fix the building (document H). He argued that the Articles of C infiltration had very few flaws and they could be fixed easily. However this was not the case. The Articles of Confederation had many small problems which weakened its effectiveness. T here was also one assistant problem which was the over Reliance on civic virtue.The Articles of Confederation c could only be effective if the states and the people demonstrated civic virtue and paired their optional taxes. However human are naturally not virtuous, but more interest De in their own self interests. For this reason the Articles Of Confederation were ineffective at con trolling the people. The Articles of Confederation were unable to control the people because of the e over reliance on civic virtue and the creditors loss of faith in the government. The Articles of Confederation were a highly ineffective first attempt at go verging the new United States.

Lemon Max

Market Analysis Dishwash market of Pakistan is a bar driven market. Vim’s major competitor is Max while the rest of the brands like Safoon, Anna Bar are very small in size. Price Price is very important for this category. In order to market share, competitors use price as a unique selling point (USP). Max is a price leader in dish wash market. Max and Vim are price tag parity and both are price premium. Vim is low grammage and high price although it is not a noticeable difference. Price comparison of Bars between Vim and Max according to SKUs are as follows.Max Bar| Vim Bar| Small Bar Pack (110 grams) cost Rs. 12| Small Bar Pack (110 grams) cost Rs. 12| Number of SKUs| Bar (200 grams) cost Rs. 22| Long Bar Pack (330 grams) cost Rs 32| Long Bar Pack (300 grams) cost Rs. 33| Product Portfolio Max Protfolio includes Max Bar, Azadi Dish Bar, Max Sourers, Max Liquid and Max Antibacterial. Max Bar is targeting urban area while Azadi dish bar is targeting rural area. Lemon Max Bar In troduction Lemon Max Bar is a quality washing bar. Lemon Max Bar is a with leadership among dish wash segment of FMCG in Pakistan.Lemon Max Bar is product of Colgate Palmolive which was launched in 1982 with scourer embedded tagline â€Å"Hara Kaam Maun Khara Nimbo Ki Taqat Say Bhara†. Lemon Max Bar Consumers Primary shoppers of Max Bar are women and housewives and secondary are men purchasing household items. Brand is used for dish washing at home with the essence of lemon in it. Many year of sale and consumption at home consumers have approved Max Bar is a high quality product with many benefits. Lemon Max Growth Period Max Bar with strong, lemon-like, grease cleansing action and name that gave impression of foreign brand.Brands pass through ups and down then got stabilized and become market leader in terms of sales and Brand name. In 1985,brand manager learnt that consumer perceive that scourer damaged the dishes then they launched max liquid to overcome this perception. A t the same time Unilever Pakistan ,the mega corporate giant of FMCG’s , launched its brand under the name of â€Å"Rin† in dishwashing segment of FMCG. The competition become aggressive in terms of promotion, retails distribution and event placement. But according to market experts, consumer used brand for cleaning their quality dishes utensils.Due to heavy advertisement and erroneous branding decision Rin brand got positioning problems , product colour confusion among the consumers. Taking advantage from that opportunity, revelry brand â€Å"Max Bar† makes aggressive movements by heavy promotions. Soon Mac brand takes the game by kicking Rin Brand out of market form distribution to media promotion and become market leader. In 2001, Rin brand repositioned himself and change to â€Å"vim† and entered in to the market . Competition again got fierce between max bar and Vim due to heavy marketing budget form unilever gain to pull the max bar from market.In th e end of 2004, Rin vanish from the market and max become the leader in the market. After that many brands emerge on the competition arena like Safoon and Aana bar ,raising competition with the Max bar with relatively low price. For tackling this Max Bar launched 200 gm and sachet in that brand to gain an edge in the competition. But still Max Bar got 60 percent of the market share. In 2011, Unilever has relaunched Vim in dishwashing category. Vim gives a fierce competition to Lemon Max and start gaining market share from lemon max and other small players in the market.Lemon Max Liquid Liquid dishwash is targeted at urban upper middle class home makers and here the users are home maids rather than home makers. It will be difficult to teach house maids to use the liquid efficiently. People perceived both the liquid brands same. Although, Vim is a concentrated gel while Max is a dilute liquid. Concentrated gels are used less as compare to dilute solution. Gels are more efficient in dis h wash. Max Liquid Bottle| Vim Liquid Bottle| 275 ml cost Rs. 65| 250 ml cost Rs. 115| 475 ml cost Rs. 95 rs| 500 ml cost Rs. 190| Distribution of Lemon MaxLemon Max distribution is very strong. They are available and visible in almost every store. TRENDS * Economic growth during the early part of the review period encouraged new trends in dining, with these continuing to spread at the end of the review period. There was for example strong growth in the number of restaurants in the country and also the widening use of feasts to celebrate weddings. The serving of meals became more elaborate, with consumers using a growing number of dishes. These trends continued to support growth in dishwashing at the end of the review period. COMPETITIVE LANDSCAPE Unilever was the leading player in dishwashing in 2010 with a value share of almost 18%. The company benefits from a strong advertising presence, with its Vim brand thus enjoying widespread awareness and loyalty. The company also benefits from the widespread availability of Vim, which is prominently displayed in most outlets that offer hand dishwashing. The company also offers the premium Persil brand in hand dishwashing, which appeals to many mid- and high-income consumers. PROSPECTS * Hand dishwashing is expected to benefit from economic growth and urbanisation in Pakistan during the forecast period.As consumers move to cities and experience higher disposable income levels, their habits are likely to change. A growing focus on hygiene will encourage many to trade up from bar detergents to hand dishwashing when washing dishes. Lemon Max Bar Product History: Lemon Max Bar is a quality is washing bar with leadership in dish wash segment in Pakistan. Lemon Max Bar is product of Colgate Palmolive, which was launched in 1982 with scourer embedded. Primary shoppers of Max Bar are women/housewives that use brand for cleaning their household dishes. The consumers have approved high quality standards and benefits offered by Max Bar.Max Bar with strong, lemon-like, grease cleansing action and name that gave impression of foreign brand. In 1985 the brand manager learnt that consumer perceive that scourer damaged the dishes then they launched max liquid unilever launched their Rin in this dishwashing segment. The competition become heat up but according to survey consumer used brand for their quality dishes utensils. Heavy promotion started between these two brands. Rin got positioning problems and product color confusion among the consumer taking advantage from that opportunity max take the game by heavy promotion and positioning of lemon power.In 2001, Rin was change to vim and gave a challenge to the max bar and again competition starts. At the end of 2004 Rin vanish from the market and max become the leader in the market. Advertising Strategy: An advertising strategy is a campaign developed to communicate ideas about products and services to potential consumers in the hopes of convincing them to buy t hose products and services. Execution: The overall creativity of the dishwasher bar is good and is highly acceptable in the Pakistan’s existing market people having different income level can purchase it and it is available in every departmental store with a reasonable price.The packaging is in green and yellow color with largely written MAX in the middle of the bar. The bar is not just limited to clean the utensils it also gives the fragrance of lemon. Creative idea: The company board made these question within them and find the solutions for right promotion and media the task is to choosing the media through which the customers and viewers perceive what the company to make them aware about the product and they have a brand loyalty about it after watching and using it. 1. Who is our audience? 2.Where are we now in the minds of our target audience? 3. Where are our competitors in the minds of our target audience? 4. Where do we want to be in the minds of our target audience? 5. What is the consumer promise or the big idea? 6. What is the supporting evidence? 7. What is the tone of voice of the ad? Strategy: Max's marketing strategy is a notable example of successful frontal attack. The brand was able to find a credible and sustainable differentiator against Vim. Max took the position of an Antibacterial dish wash bar to fight Vim.Max was Pakistan's first Anti-bacterial dish wash bar. As usual, the germs were at the receiving end. Max positioned itself as a dish wash bar that killed all the bacteria in the utensils. The positioning was very smart since Vim was positioned based on cleanliness. Max is innovative in creating awareness about the possibility of germs in utensils. There was also another smart idea from the brand. In theory, we often say that the differentiator should be relevant, sustainable and not easily copied by competitors. Communication Media:The characteristics of the target consumer need to be consider as an advertiser decides what med ia to use. The types of media categories from which advertisers of choose include the following: * Print—Primarily newspapers (both weekly and daily) and magazines. * Audio—FM and AM radio. * Video—Promotional videos, infomercials. * Outdoor advertising—Billboards, advertisements on public transportation (cabs, buses). USP of MAX is†¦ â€Å"Hara Kam Main Khara† In addition, the other one is â€Å"Ghulae Kam Zayada Chalae† AD Type:The Ad, which I presented, is the persuasive.

E-Retail Industry – The Uk Internet Grocery Market

This study aims to understand the competitive environment of some of the main retailers within the UK market and to demonstrate the different elements of the e-environment that impact on the retailer's business and marketing strategy. Furthermore this study will assess the impact of many factors and constraints surrounding the e-retail industry and specifically the grocery sector of the retail industry. It is known globally that the UK has the most developed grocery e-tailing sector in the world and that is increasingly appearing specially after the failure of many business models which have adopted the internet for distributing and selling there products This study will exclude B2B sector and will focus on B2C sector in the retail market I will be focusing on the online grocery market and the main British players leading this market. I have selected this industry because recently, it has caused a noise globally, and many interested people are wondering whether this industry has reached the mature level or it is still growing or it is only a noise which will lose its importance later. The UK Grocery Market it is estimated that à ¯Ã‚ ¿Ã‚ ½105 billion of groceries are sold in Britain each year, (MINTEL Nov, 2002) , that shows a noticeable increase in sales over the period since 1999 until the end of 2002. The Total retail sales through specialist and non-specialist food retailers were worth some à ¯Ã‚ ¿Ã‚ ½90 billion in 1999 and many specialists predict this market to continue growing to reach 120 billion by 2005 (MINTEL, Nov. 2000) Within the food market itself, fruit and vegetables represent the largest market, with high demand within the sector for fresh produce. Convenience foods – fresh and frozen ready meals – are also highly demanded, as are products which generally fit well with the needs of the much maligned ‘cash rich and time poor' consumer. Key debates within the market surround the use of genetically modified (GM) produce, and this has helped to create niches in the retail market for suppliers of GM-free or organic ranges. The major supermarkets have been moving quickly into the organic sector, in which higher margins can be found. (Key Note) The UK grocery market is driven by economic factors, population structures, household size employment pattern and lifestyle patterns whose impact is shown below as macroeconomic factors: Economic factors – Although consumer expenditure is predicted to continue to grow by 12.6% to 2004, with personal disposable income expected to also grow steadily, it is unlikely that this will impact strongly on spending on food for in-home expenditure; As personal wealth has grown, spending on food has decreased as a proportion of total expenditure, with leisure activities, including eating out, taking most of the surplus. Some premium categories of food, such as organic produce, will benefit. As a result the focus of promotional strategy is moving away from price competitiveness towards other aspects of the retail offer. The population structure – Food expenditure and the overall market size is directly related to the size of the population but the long-term outlook for the British population is for very low growth, implying that the food retailing sector is likely to find domestic profits hard to grow. Household structure – Over the period 1999-2004, an increase of 830,000 (3.4%) (MINTEL, Nov 2000) household is anticipated. This is due to factors other than an increase in population; the growth is coming from one- and two-person households, due to rising divorce and separation rates, getting married later or not at all and the elderly living longer These trends disrupt the economic logic of the superstore model which is designed to offer large families convenient means to buy large volumes of food in one place, relatively infrequently, during the daytime, and to transport that shopping home by private car. Yet only 20% of adults have children under 16 living at home with them. All the major grocery retailers are competing to grow their share of this crucial segment of the population. Smaller households equate to more frequent shops for a few items at a time, often at unsociable hours, a considerably more expensive retailing proposition. Changing employment patterns and practices, with increasing frequency of part-time working, mean there are fewer families in which one partner has the time to shop at relative leisure during the day, and more for whom shopping is a shared duty, carried out whenever busy schedules will allow. In turn, time-pressured shoppers will often want to use a variety of shopping patterns according to circumstance, with retailers being required to offer more channels to market in order to compete. This cannot be done without cost implications. Changes in consumer tastes and lifestyles have an influence on grocery demand patterns. Healthy-food fashions and food-safety scares cause people to change what they eat, while there is a strong trend towards snacking and convenience eating – which involves an increasing proportion of food being bought through channels other than grocery retailers.(MINTEL) Internet adoption in the UK retail Sector Retailers generally begin on-line activities by providing information and interactive communication. Their site may develop into an electronic shop almost mirroring their offline activities A study by the department of trade and industry (DTI) called, ‘E-Commerce Impact Study: Retail Overview' (www.dti.gov.uk 29 July 2002) shows that: More than 75% of retailers are adopting e-business technologies, Nearly a quarter of retailers surveyed, and more than 56% of micro firms in the convenience store sector, have not thought about the benefits of the e-commerce. This report provides a detailed look at a number of key retail sector, and shows how UK retailers are getting to grip with e-commerce and that modern technologies are helping to change the way they do business. The report mentioned that: – 77% of companies are adopting e-commerce technologies – 71% of businesses use external e-mail – 53% of firms have a website More British food shoppers have converted to online grocery shopping than in any other country. However, Internet sales still represent a tiny, although growing, percentage of the overall UK grocery market. Most people use the Internet as a way of gathering information on products and making price comparisons before visiting their local store.(Key Note) Despite these statistics are showing quite positive numbers, some experts and specialists state that this field needs further research to determine the extent to which the web is likely to promote long term changes in the retail sector . Table 1 A classification of online retail activit 1 Food and consumables: Grocery, including supermarkets and hyper-markets 2 Convenience stores 3 Specialists food retailers, e.g. bakers and confectioners 4 Alcohol retailers, including off-licences 5 Clothing and accessories: Clothing retailers, including female, male and children 6 Footwear retailers, including fashion and work wear 7 Jewellery retailers, including accessories 8 Home: Furnishings retailers, including hard and soft furnishings and Textiles 9 Electrical goods, including brown and white goods and Computers 10 DIY, including gardening 11 Leisure and entertainment: Sports retailers, including sportswear and equipment 12 Toys retailers, including games, hobbies and crafts 13 Books, music, stationery and video retailers 14 News, including newsagents and CTNs 15 Health and beauty: Health and beauty, including chemists and opticians 16 Home shopping: Home shopping, including catalogues and mail order Directories 17 Mixed stores: Mixed stores, including department stores and variety retailers Source N.F. Doherty, F. Ellis-Chadwick and C.A. Hart. 1999 .Cyber retailing in the UK: the potential of the Internet as a retail channel Online Grocery UK Market In the UK online market there are four main grocery retailers dominating the market those are (Tesco, J Sainsbury, Asda, and Iceland.co.uk) According to the researchers the UK leads the world in online grocery shopping. â€Å"Chains like Tesco and Iceland have been much faster than their US counterparts in exploiting the immense potential of new virtual shopping markets.† They estimate that the online grocery market is already worth à ¯Ã‚ ¿Ã‚ ½200m a year and will reach à ¯Ã‚ ¿Ã‚ ½1bn within two years.(Guardian Friday February 4, 2000 ) The online grocery market is characterised by many of the features of the traditional grocery market. Big supermarkets have woken up to the Internet as a distribution channel and are gearing up to dominate the market. Smaller suppliers, using the Web as another side of their portfolio, are sure to lose out in this area. Smaller niche suppliers make up a large element of the market in terms of numbers of firms. In fact, there are so many companies, many of which operate on a very local delivery basis, that it is almost impossible to calculate their actual number. MARKET SIZE Online shopping grew 19 times faster than traditional brick-and-mortar retailing in December 2002, and increased a further five percent in January 2003 to represent six percent of all UK retail .(www.nua.com) Various reported predictions suggest the online grocery market will be worth around up to 10 % of 120 billion which is the predicted grocery market size by 2005 (MINTEL Nov, 2000) The current size of the UK online grocery market has been estimated to be worth à ¯Ã‚ ¿Ã‚ ½1.2bn. (Key Note 2001), while Tesco reported 446 million sales during 2003. Sainsbury's the second market leader announced annual sales of à ¯Ã‚ ¿Ã‚ ½110 million during 2002 (MINTEL Mar 2003) More than half the UK population will have bought something online by the end of 2003. Online shopping will represent 7% of all retail sales in the UK, accounting for à ¯Ã‚ ¿Ã‚ ½2 billion a month.(MINTEL Apr 2003) The total size of the UK grocery market has been estimated at à ¯Ã‚ ¿Ã‚ ½100bn per year. To support the market, the UK has 5.9 million online shoppers, growing to a predicted 8.5 million over the next 5 years à ¯Ã‚ ¿Ã‚ ½500m of turnover, that suggests that average spending per user in 2000 was in the region of à ¯Ã‚ ¿Ã‚ ½83 per head, suggesting that the Majority of users are not regular consumers of online services.(Key Note) Market size is difficult to determine, as figures for turnover from Internet sales are often included in total sales figures. Companies that are struggling to perform in the market may be taking a rather flexible view in how they present figures that may disappoint shareholders. However, Key Note's assessment is that the size of the true online market is currently à ¯Ã‚ ¿Ã‚ ½465m (lower than many estimates suggest). Within this, Tesco claims 64.5% of the market, Sainsbury's 9%, ASDA 7.5%, Iceland 4.7%, , with the balance held by a range of independents, small suppliers and niche companies. Table:2 The UK Online Grocery Market by Online Sales by Supermarket (à ¯Ã‚ ¿Ã‚ ½m and %), 2000 Online Sales (à ¯Ã‚ ¿Ã‚ ½m) % of Total Tesco 300 64.5 J Sainsbury 42 9.0 ASDA Wal-Mart 35 7.5 Iceland.co.uk 22 4.7 Others 66 14.2 Total 465 100.0 Source: Key Note Macro Environment To understand the macro-environment a technique called a PEST (Political, Economical, Socio-cultural, and Technological) analysis is usually undertaken. The PEST analysis identifies all external factors that affect the way a business can operate. What follows is a PEST for the E-grocery industry PEST ANALYSIS POLITICAL FACTORS The UK government sets itself as the target of making the UK the world's best place for e-commerce by developing public internet access and e-commerce awareness among UK businesses To trade in the UK there are 40 different laws that a company may be subject to (chaffey) Stephen Timms, e-commerce Minister, said: â€Å"The UK's retailers are making progress in adopting e-commerce and developing e-business solutions. But there clearly is room for improvement, and we cannot afford to be complacent. â€Å"E-business technologies offer a wealth of benefits. In order to exploit these we must help create the right culture throughout the business community so that UK firms of all sizes can seize the competitive advantage. â€Å"UK online for business is leading the way in getting business online, and the Government's aim to make the UK the best place in the world for e-commerce.†( http://www.gnn.gov.uk) The first Annual Report on the strategy was launched in September 2000. The UK strategy for online development is laid down in the UK Online Action Plan, which details 94 recommendations for action in 25 areas of priority. One specific goal is to develop the UK as the world's best environment for electronic trading by 2002. This, it is stated, will be achieved in four specific ways: * Encouraging competition in Internet access markets * Establishing a new regulatory framework for converging telecommunications and broadcasting markets * removing regulatory obstacles to electronic ways of working * Co-operating with international partners to develop a ‘global framework for e-commerce'. Oftel (Office of Telecommunications) is one of the tools for achieving this strategy, and, as such, has been charged with driving competition in the areas of dial-up access and delivering high-speed access routes to the Internet , specifically the encouragement of adoption of Broadband technology, and NPD (new product development) in the mobile-phone and fixed-wireless markets. Government strategy is to put as many UK consumers as possible online. Those responsible for driving this strategy are aware of consumer concerns about the Internet that must be addressed if the Government's objective is to be secured.(Key Note) ECONOMICAL FACTORS The innovation in information technology (IT) and new business practices facilitated by IT are forming a â€Å"new† economy, Electronic commerce and the IT innovations fuelling it are supposed to be fundamentally changing the logics of business practice, forming new social realities, and new business models. Traditional â€Å"old economy† firms and organizations are busy building bridges to the new economy. A stable rate of economic growth is one way in which the Government hopes to guarantee macro-economic stability, which can assist firms when assessing the risks associated with innovative practices. This, combined with the factors outlined below, has an influential effect on the rate of growth of the online grocery market. Low Cost of Internet Access One of the main drivers encouraging the use of Internet access and e-grocery in the UK is the relatively low cost of time spent online. The UK is the cheapest off-peak location in the world from which to surf the Internet, peak rates have has been dropped. This advantageous position benefits consumers, and the state of competition within the market is strong, with a large number of good quality Internet service providers (ISPs) available and eager to serve the public demand. Levels of Disposable Income The greater the levels of PDI consumers have, the more likely they are to be tempted towards higher margin products. Such high-margin products can make the difference between a profitable online transaction and a loss-making one. Table: 3 Index of Personal Disposable Income (1995=100 and %), 1995-2001 1995 1996 1997 1998 1999 2000 2001 Disposable Income index 100 106 113 116 122 127 132 % change Year-on-year – 6.0 6.6 2.7 5.2 4.1 3.9 Source:National Statistics Table 3 shows that levels of disposable income are rising, and have risen by 32% since 1995. The indications are that the upward trend will continue to apply, suggesting that this economic indicator will contribute to growth within the market in the short term. Rate of Change of Prices The change of prices gives a good sign of the stability of the economy. The UK has a low rate of inflation, and this is confirmed by an assessment of the RPI in Table 4 Table 4: Retail Price Index for All Items and Food(1995 =100 and %), 1995-2000 1995 1996 1997 1998 1999 2000 RPI (all items) 149.1 152.7 157.7 162.9 165.4 170.0 % change Year-on-year _ 2.4 3.3 3.3 1.5 2.8 RPI (food) 151.4 154.9 160.5 166.5 169.4 175.2 % change Year-on-year – 2.3 3.6 3.7 1.7 3.4 RPI – retail price index Source: National Statistics It can be seen from Table: 4 that the rate of change in the price of food between 1995 and 2000 has been roughly in line with the general rate of change in the RPI. Similarly European Currency and Simplification O European Trading Laws The advance of the European currency and the simplification of European trading laws will mean that Consumers will find it increasingly easy to trade with European retailers. The Internet offers International retailers a great opportunity to attack the UK marketplace. British shoppers are already prepared to go Euro to get what they want online. â€Å"Big brand names are in the best position to immediately exploit e-commerce but if they don't start moving soon the threat from foreign competition is real.† (Jolanta Pilecka, E-commerce Marketing Manager, Hewlett-Packard). In future a number of important factors might affect the economic state of the UK and inevitably supermarkets. The first is the possible introduction of the Euro. The Euro has been introduced in various European countries, but most notably France. The introduction of the Euro in France has pushed up weekly shopping bills for the average French household by 10 per cent. Could the same be expected to happen in Britain should the Euro SOCIAL FACTORS To know the barriers to consumer online purchasing adoption it is useful to understand the different factors that affect the level of internet access. Value proposition ease, Security and fear of unknown are the main factors affecting the internet adoption (Chaffey) Over the period July to September 2002 an estimated 11.4 million households in the UK could access the internet from home, that amount 46 percent of all households. This is over twice the number three years earlier and is an increase of 7 percent from 39 percent reported in the third quarter of 2001. (www.nua.com ) Evidence suggests that household formation will continue to grow, but that the profile of home size as mentioned at the first of this paper will stay strongly biased towards homes with one or two people. Table 5: Changing Household Numbers in the UK (million and %), 2000 and 2005 2000 2005 Million % of Total Million % of Total One person 7.3 29.1 8.0 31.1 Two persons 8.9 35.5 9.0 35.0 Three persons 3.7 14.7 3.5 13.6 Four persons 3.5 13.9 3.5 13.6 Five or more persons 1.7 6.8 1.7 6.6 All households 25.1 100.0 25.7 100.0 Source:National Statistics An estimated 62 %of adult in the Great Britain have accessed the internet some time according to figures from the October 2002 national omnibus survey. This is equivalent to approximately 28.6 million adults in Britain having accessed the internet. In the month prior to the survey 52 per cent of adults had accessed the internet. Differences between the countries and regions of the UK Levels of access vary greatly between different parts of the UK. In October 2001 to September 2002 the proportion of households with access was lowest in Northern Ireland (30%), Wales (31%) and the West midlands (34%). It is noticeable that the proportions were highest in the East of England (52%), London (50%) and the South East (50%) were around half of households had access to the internet. Table:6 Households with home access to the Internet by Government Office Region & UK country: October 2000 to September 2001 and October 2001 to September 2002 Oct 2000 Oct 2001 to to Sep 2001 Sep 2002 Per cent North East 26 36 North West 35 41 Yorkshire and the Humber 32 39 East Midlands 40 46 West Midlands 35 34 East 40 52 London 46 50 South East 46 50 South West 38 41 England 39 44 Wales 27 31 Scotland 30 40 Northern Ireland 26 30 United Kingdom 37 43 Source: national statistics According to International Telecommunication Union (ITU) (www.itu.int ) it is shown that in the UK 36.62 per 100 own a PC Table 7: Internet Estimated PCs Hosts total 2002 Hosts per 10`000 inhab. 2002 Users (k) 2002 Users per 10`000 inhab. 2002 Total (k) 2002 Per100 Inhab. 2002 2`865`930 485.03 24`000.0 4`061.74 22,00 36.62 table 7 , shows that a large proportion of the UK population own a PC that makes accessing the internet easer than going to the work place or other places Legal and ethical concerns It is argued that people do not change as quickly as may be believed. They still do not like parting with personal details, especially to those that they do not trust. Firms that request data from consumers need to make supplying information optional and allow users to change and delete the information provided. Crucially, they need to convince consumers that they will treat all information confidentially. Firms that are recognised as ‘good citizens' and with a high reputation in this regard are well placed to ease the anxieties of consumers scared of fraudulent use of details. Smaller companies with an Internet-only presence will find it hard to build up this trust. TECHNOLOGICAL FACTORS E-retailing can be seen as an innovation in retailing that in turn is built around a technological innovation Many reports have summarized technological problems as: The complexity of the user interface bandwidth restrictions and access connection speeds and security concerns A wide range of new technologies have enabled companies to create better and more efficient relationships with consumers as e-retailers: – provide more information in the pre-shop experience; – increase the number of access points to meet customers needs; – offer a wider choice of products than can be held in-store; and, – improve the overall service provision, for example through better stock management. www.gnn.gov.uk Technological breakthroughs are some of the key drivers in building the right conditions for online grocery to thrive. The main technological factors influencing the market include: à ¯Ã‚ ¿Ã‚ ½ The expansion of broadband Internet à ¯Ã‚ ¿Ã‚ ½ The introduction and growth of DTV (digital television) à ¯Ã‚ ¿Ã‚ ½ M-commerce (mobile-commerce) and WAP (wireless application protocol) phones à ¯Ã‚ ¿Ã‚ ½ Automated reordering systems à ¯Ã‚ ¿Ã‚ ½ Systems offering defence against fraud à ¯Ã‚ ¿Ã‚ ½ Automated customer service. (Key Note 2001) Broadband Internet One of the problems many consumers have when dealing with the Internet is the speed of access. Many consumers connect using 56K modems, although the majority never achieve this speed, perhaps because they live a great distance from the central phone-exchange routes or because their phone lines are too old. Broadband connections can alleviate this problem. Broadband connections come in two basic types: digital subscriber line connections (DSL) and cable modem connections In the first quarter of 2001, the number of DSL lines grew by 90% in the UK This market is likely to experience high growth in the coming years.(www.itu.int) Digital Television Advancements in television are running parallel to other Internet-enabled technologies 4.4 million households had DTV in 2000, and the figure is now probably in excess of 5 million. Not all DTV services are fully Internet-enabled, but there are plans to achieve this. The growth rate in subscription to DTV services is believed to be higher than the rate of new subscribers to ISPs. It has been suggested that more than 45% of homes will have digital satellite TV by 2008 (generating revenues for the communications companies of à ¯Ã‚ ¿Ã‚ ½2.4bn per year). One of the major barriers to e-grocers is the high costs charged to the suppliers by the DTV companies. Tesco reported to have found Open Digital's charges too expensive to make a venture worthwhile, however, the majority of the large supermarkets are signing up to the service may have very severe consequences in the long term. M-Commerce and WAP Phones M-commerce for all markets in Europe is forecast to reach levels of around $38bn by 2004.(Key Note) with over half of European companies planning to offer some form of service via mobile phones (particularly in the banking and service sectors). Major multiples are increasingly active in the service sector, and their online successes in other areas could well spill over into m-commerce activities, Mobile communications company Ericsson has estimated that, by 2004, there will be more than 600 million people using mobile Internet services in Europe. In 2000, the market for subscriptions to mobile-phone services grew by 67% and by 84% in 2002 .(www.itu.int ) However, WAP phones, currently the only method of accessing Internet via a mobile, have been relatively slow to catch on in Europe and make up only 15% of overall handset sales globally. Automated Re-ordering Systems All the technologies so far discussed require a conscious effort on the behalf of the consumer. In the future, it is possible that automated re-ordering systems will mean that the retailer is automatically notified when products are being used up within the home and need replenishing. There are two enabling technologies currently under development that may make this less fictional and more everyday. Vendor managed inventory (VMI) is one of these technologies. Another enabling technology in the same area is radio frequency identification technology, also known as RFID. This improves on VMI by using radio waves to scan all products in the fridge at any one time. Those kinds of technologies build and grow up the relationship between the consumer and the supplier learns more about the consumer behaviour to satisfy his demand Also they can create a competitive advantage for the business Systems Offering Defence Against Fraud Concern over fraud continues to scare many consumers away from using the Internet as a route for purchasing items and services. Credit-card companies are already making changes to their services to ease these concerns, but longer-term solutions may be found in encryption technology. Technology is being developed that adds digital signatures to a purchaser's Web browser which may help fight fraud. Such services can only be developed and provided by strategic partnerships between online retailers and Web security corporations such as Inktomi, Ariba, Broadvision, Vignette and Verisign (all leaders in secure-payment processing solutions). INDUSTRY ENVIRONMENT Porter's 5 forces analysis Michael Porter's five forces is The model that widely used for competition analysis in business strategy formulation, states that an organisation exists within an industry. To succeed it must deal with the competitive forces that exist within that industry: (1) Entry of new competition. (2) Threat of substitute products. (3) Bargaining power of buyers. (4) Bargaining power of suppliers. (5) Rivalry amongst existing competitors. THE GROCERY E-TAILING MARRET As an industry in the early stages of its life cycle, the online grocery market is currently very fragmented, with a growing number of competitors. The reasons for this fragmentation lie in several factors: relatively low entry barriers, high transportation costs, the perish ability of grocery items, nontradable goods and services industry, and the ability to specialize in geographic regions and reap the benefits of economies of scale. Much like traditional bricks-and-mortar supermarkets, online grocers are highly localized except for a few that operate nationally or internationally by delivering only non-perishable goods. (Success factors) Barrier to entry Compared to building traditional supermarkets, the barriers to entry in the online grocery market are relatively low, since most online grocers are localized. Set-up costs include establishing the computer system, creating logistics and warehousing capabilities, building brand awareness, and having the necessary alliances with local grocers in place. Many online grocers have already established partnerships or alliances. Entry into the industry is currently relatively easy, because no one has inherent advantages. Innovation and competitive moves, which can be easily replicated, have not prevented new firms or substitutes from entering the market. However, entry barriers may rise in the future as consolidation likely occurs. Market such as groceries, barriers must be built on differentiation through brand recognition by achieving superior customer service and responsiveness. One attraction for the recent surge of Internet startups in the grocery business is that online grocers require less capital and have lower variable costs than bricks-and-mortar stores. Fixed costs are high, but the potential for big returns is great if a large sales volume can be generated. Exit barriers can be moderate to high, depending on the amount invested in logistics and warehousing, the Web site, computer systems, and marketing. PPOWER OF SUPPLIERS Retailers have high bargaining power when they purchase a large volume of goods from their suppliers. Unlike huge supermarket chains, the smaller online grocers typically possess a lower level of bargaining power than their suppliers. But traditional grocers that decide to branch out onto the Net have the advantage in this regard, buying in bulk and enjoying established relationships with suppliers and customers. This allows them to price their goods competitively, deterring new entrants or forcing inefficient incumbents out. POWER OF BUYERS The bargaining power of buyers or consumers is very high in this industry. With many substitutes and competitors to choose from, dissatisfied customers can simply switch to a competitor. Groceries are commodities, so consumers can be sure to purchase the exact same products elsewhere. THREAT OF SUBSTITUTE PRODUCTS The threat of substitutes is undoubtedly high for two reasons: Firstly, the products and services offered online to customers are extremely similar. So similar in fact that supermarket' often have to lower their prices to give them more appeal. Secondly although there is a certain degree of brand loyalty, it can't be relied on, as customer loyalties tend to change when they find they can obtain better value for money elsewhere. E-grocers understand that the threat of substitutes is high, and this then is the main reason for supermarkets branching out and pursuing a broader product line, as a means of calming the intense competition with their competitors. However, in pursuing broader product line grocers open themselves up for further competition from experienced players in other non food retail markets. RIVALRY AMONGST EXISTING COMPETITORS Competitors will do everything in their power to increase their market share. Supermarkets also have high fixed costs due to the sheer number of stores they have open. They must make a sufficient amount of sales to cover their costs and generate profit. As discussed earlier there are a variety of substitute products and services that are becoming increasingly difficult to differentiate thus custom is very much determined by price. This situation is further aggravated because switching costs are difficult to impose, as food is an everyday necessity, many customers will happily forget any loyalties if they really need to obtain it. Conclusion The environment in the online grocery industry is growing more and more competitive as new firms continue to enter. Grocers which established its online purchasing site first is gaining the benefits of the first-mover advantages such as Tesco.com E-grocery has become a considerable industry sector each main player in this industry is trying to create a competitive advantage to attract more numbers of spoiled customers trying to satisfy there demands. The UK e-environment is one of the best e-environments globally that ease the entrance to this industry and generate the potential for more and more customers to buy grocery on line. This industry sector is a quite new industry that makes the flow of information about its success and pitfall factors relatively not enough to know every factor influences this industry We can't say that e-grocery sector has reached the mature level since there are more and more numbers of customers and rivals are entering this sector.

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