REASEARCH PROPOSAL Promotion of UK Retailer Brands through Direct Marketing: Case Study of TESCO

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PROVIS IONAL TITLE The proposed t it le of t he t hes is is as fo llo ws: Promotion of UK Retailer Brands through Direct Marketing: Case Study of TESCO

1.

Introduction A huge range of phenomena have been detected subsequent to the initiation and

expansion of the private label program in recent retailing worldwide. A great deal of different associations between retailers and manufacturers have been found out by the researchers in the academic domain (e.g. Dawson and Shaw, 1989: Segal-Horne and McGee, 1989; Davies, 1994; . Ogbonna and Wilkinson, 1998), also a relationship has been established between retailer and store perception.(Steenkamp and Dekimpe, 1997). Consumer shopping behavior has produced much literature and writings in terms of customers perception of retailer brands in contrast to national brand products and also on purchasing products of retailer brands. (Lichtenstein et al., 1993; Richardson et al., 1996a; Baltas, 1997; Grunert et al., 2006), and finally the responsibility of the retailer brands in a broader perspective ( Raju et al., 1995; Bhasin et al., 1995; Burt, 2000) Now this research has moved one step further from national view to global market perspective in the current environment where forceful worldwide expansion of retailers for instance Wal-Mart, Carrefour, Tesco and many others is under review. The latest technology has assisted them and they have enjoyed many benefits of it. In many product categories some have been providing private brands. When competing with each other these retailer brands have been

in firm position with the help of technological advantages which enables them to regulate consult and collaborate with their suppliers. 2. Literatu re Revi ew Keller (2009) and Aaker (2008) both defined the brand as one of the main essential and economical qualities. Keeping this in view this was extensively recognized, several organizations together with the retailers had made investment of a significant amount of money in making their own brand, in spite of the fact that they knew that there might be a collapse in the market even then took the risk of making the investment. As observed by Burt and Davis (1999) that during 1970s and 1980s that the escalation pace of retailers publicity surpassed the manufacturers brand in order to make a long lasting icon for the branding method. Moreover, in 1996, Hoch contended that national brands needed to carry on making investment in brand edifice. Because it has become one of the main and essential aspects including the firms economical benefits due to brand-owner perception, besides, brands plays an important part in escalating the sales capacity and incomes. King (1970) had elucidated that brands are favoured by customers since they propose additional worth and on top of it the merchandise. Hence, when the customers had acknowledged the pertinent additional worth, they are ready to pay the finest price (de Chernatony et al., 1992). By the way, this clarifies that why a company makes huge investments in developing a brand as their foremost precedence. No doubt, it might be thought that there will be no chance of getting a profit if the company does not adopt the branding method. 2.1 Retailer Brands

The brand capitulate an enormous amount of advantages. For instance, the brand becomes a blockade for the opponents. Quite a lot of investigators had believed that the use of

publicity restrain the entrance of other branded goods in the market (Bagwell and Ramey, 1988). Ultimately, it is essential to have a glance at the advantages which a shareholder gets from the brand. In harmony with the Clarksons (1995) idea which categorize investors as a principal beneficiary who is directly accountable for the handling of the company beyond advantageous or disadvantageous qualities, subsequently the beneficiaries who are related to the companies deeds indirectly instead of directly the brands execute the same function for the beneficiaries as they do for the consumers and brand owners. Alternatively if we look at the theory of own label, Roussell and White (1970) explained own label as merchandise offered for sale with a retail companys House brand

name, are being sold entirely by that retail companys selling points. What is significant here is that this description included the idea of naming a brand and the places where the merchandise is put for sale to Schuttes (1969) explanation. Though it did not indicated that it had been manufactured by the retailer or not. Meticulous concentration must be given on the restrictions on the vicinity of sales since the perimeters differentiating the business regions of retailer brand merchandise has turned out to be vague in the current periods. The symbolic instance is Spar in the grocery section in Europe. Its retailer brand merchandises are being sold in autonomous retailers supplies. Moreover, Tesco has exported its retailer brand merchandises to their non rivals retailers in Europe (McGoldrick, 2002). Similarly, the policy of naming a brand has turned out to be a launch pad branch out retailers brands into an assortment of market sections. Further than the past environment of retailer brand appearance, retailer brands had sustained to progress as per the different aims of retailers, and about 35 percent had been professed in a different way by unlike customers, countries, producers and retailers. Especially, retailer brands are classically more multi-sensory in character than producers of product brands

and can depend on well to do customers perceptions to influence on their even-handedness (Ailiwadi and Keller, 2004)

By a case study we will substantiate the fact that with information technology at disposal, retailer brand failure is an impossible to occur and in contrast to suppliers they are more firmly placed in expanding and supervising their respective brands. Information technology has played a key role in this case. The retailer has to subsist in the market with their own ideas with the help of enhanced administration skills and a aggressive retail atmosphere. These plans include low cost operation policy, marketing tactics should be employed, for producing more efficiency information technology should be employed, the layout of store would be renewed, improvement in services, and further expansion of retailer brands especially. In England now the grocery retailer have applied a new technique whereas they have now opened up a lower cost lower quality product store and also they have opened high money high quality store. The leading manufacturers still reign supreme but these stores are only a little behind them (Burt and Davis, 1999). . The academics and practitioners find private brands a very interesting area of research because all of this above given information. Both positive and negative aspects are associated with retailer brands. The profitability of the manufacturers suffers a setback with a rise in retailer brands (Narasimhan and Wilcox, 1998) and a plus point is that they have greater gross margins as compared to national brands (Hoch and Banerji 1993). The retailer brands have now begin to focus more on these retailer brands as they are productive in terms of profit and generating

competiveness. Now the center of attention of the retailer is retailer brands (Narasimhan and Wilcox, 1998). 2.3 Direct Marketing Direct marketing is relatively a new technique, strongly supplemented by the exponential growth in information technology sector. Though, it means to address the customers personally thorough mails, telephones, or even person al visits, cost more per customer communication, but it is proved helpful in establishing accurate data bases if customers and their needs. Also, long term client relationships and their frequent feedback not only help to widens the customers base but also to develop the product regularly. For a manufacturing company, marketing products directly to consumers minimizes the marketing distribution channels and introducing more sales force top handle the customer calls. Also, technical and managerial staffs with market researchers are also needed to make, maintain and extend the customer data base (Kotler et al 2009). Financial viability of these marketing options is needed to work out efficiently to maintain the cost benefit ratios (ibid). Companies which are unable to be competitive in mass markets due to less advertising and marketing budgets and small capital investments can thrive in the business through direct marketing attempts. This labor intensive and technology oriented field of marketing is based of the creativity, sales team potential, and interpersonal skills of customer relationship managers (keller and Kotler 2006). 2.3.1. Consumer Focused Marketing The main attribute of direct marketing is that it is customer focused, the efforts of marketing are not started after the production of goods or services bit it starts right from the designing processes (Kotler et al 2006). This customer focused strategy has given customer the

central position in enterprise decisions. Research studies have shown that it is one of the most important drivers in direct marketing that constitute the success of the marketing strategy (see Harsh 2003; Kotler et al 2006). This strategy is focused on the needs, wants and feedback of consumer that is determined by the attitudinal factors and factors affecting on the buying decision of the consumers. The product, pricing, distribution, and promotion activities are totally dependent on the customers feedback and market demands. 2.3.2 Target market Haines (1999, p.27) declared that a marketing strategy is a function of selected target market and all strategic decisions follow the preferences of this market. The company either targets the whole market of current and potential consumers or the segment of this market. The designed marketing mix and promotion offers should match the various needs of the target customers in a specific segment. Therefore, companies effort to identify, locate, and target the profitable segments in the consumer and business markets. According to Haines (1999, p.30) .it is generally assumed that it is better to identify an under served segment rather than to confront existing competition on its own ground. Also, in agriculture sector, companies and manufacturers need to focus on customer needs and do the required market research to explore the consumer behaviour and attitudes, this can be achieved through effective marketing intelligence and communication only (Martin 2005: 124) 2.4 Direct Marketing Mix In direct marketing, the marketing mix elements are designed in the same way as in traditional marketing communication. The elements for manufacturing sector marketing are as follows: 2.4.1 Product

According to Kotler et al. (2004, p.8), product is termed as anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. Also, another management scholar Dunne (1999, p.61), defined product as the physical form of a tangible product or service with its functional characteristics (features) and non functional attributes like appearance and packaging. Designing and developing the individual or series of products should be consistent with the business philosophy and brand promise. The decision about product determines the future market, revenue and profitability of the firm. 2.4.2 Placement

Placement of the product/s depends on the distribution channel and marketing strategies followed by the company. In direct marketing strategy, products are not only made available on the point of sales but are directly provided to consumers through personal selling, exhibitions, sampling, or testing of product. The important decision is the channel of distribution, if company is directly involves with customer than minimum intermediaries are involved in product distribution (Keller and Kotler 2009). 2.4.3 Pricing The pricing strategy of the company is the determinant of its competitive position in the market. The appropriate amount of money needs to be charged in accordance with the price perception of the target consumer or the price set by competitor. The value associated with the price charged is also the determinant of brand premium and status of the company in eyes of consumer. In agriculture sector, prices are determined by the commoditys elasticity of demand and supply. Pricing objectives of the producer, competitors price strategy and market dynamics decide about the pricing strategy (Minton 2005). The objectives of the manufacturer could be of

business survival, cost leadership, profit maximization or some combination of these objectives (Haines1999, p.115). 2.4.4 Promotion Kotler et al (2004, p.110) declared promotion activities are the means to communicate the benefits and promises of the products to the target market. Promotional activities make the product or service visible to the consumer, tempted them to purchase it, and reinforce the repurchases of the products. In mass marketing, advertising and publicity are major means of promotion, whereas in direct marketing, personal selling and customer relationship management are the major means of communication. As Giera (1999, p.113) stated that motivated direct, marketing techniques and promotions normally increase profitability and monitoring efficiency at a higher rate that the traditional promotion methods. Also, through direct marketing, middlemens share in profit decreases, in turn, company earns more in profits and long term customer relations.

3.

UK Retail Industry Background The signs of recovery have been observed in global economy, 2010 is still the recovery

period for UK economy. The main reason is the prevailing downturn of UK economy which has raised the unemployment and decreased the disposable income of UK consumers (Datamonitor 2010). Similarly, companies in retail industry have increased their lucrative offers, online sales, low cost food products and discount coupons have become the latest trends in retail industry of UK.

Fig 4.1: UK Spending on Food as % of Overall Consumer Spending 2004 to 2008

Source: Euromonitor (2010) The financial slump in the UK that happening from middle of 2008 has affected on spending manners and retail expenses with insightful allegations for UK retail sector. Many large retailers like Woolworths have closed down, and empty retail stores were a common sight in cities and towns in this period. The other retails have faced a decrease in consumer assurance and purchasing power. Retail sector is extremely significant in UK economy, the superstore chains alone accounting for more than 10% of GDP and contain over 11% of the labour. Fig. 2: Food stores market share in England

Courtesy: Euro monitor (2010)

4.

Case Study Description The company selected for this study is Tesco, biggest retailer of UK. Fifty percent of the

grocery market comes under their radar. The secret behind the success of Tesco is their target of selling products for everyone. The products needed by people in all places whether national or foreign. Sainsbury has had a hard time keeping up with Tesco in this domain. Sainsbury has items for people who come from middle class background whereas Tesco has broadened this perspective and has items for class of people encompassing all. Tesco sells it all at low prices which the consumers find hard to ignore. Tesco has gone much further as apparent by the spirit of competition that they have initiated to capture all domains of business not just food and grocery domain. What ever the customer needs they have decided to provide like telecoms, apparel, furniture, DVDs, even credit cards too. But this is working in their favor too as consumers can get everything all in one place rather than different places. The home appliances, electronic equipment, clothes and monetary

services are being provided too. More over Sainsbury is working in retail, banking and property domains too. 5. The purpose of research Acquiring an organization, supplier growth, affiliation with contractors, item choices circulation, labeling the brand, casings, the style of product display and many other factors influence the market shares of the retail brands. Not much literature has been produced on the aspects of retailer expansion. The retail sector has observed a huge amplification in internationalization; a connection must be present that defines the supervising and expanding the retailer brands and their method and retail internationalization. Now this area of research should be the centre of concentration as to how the expertise of retailer brands has given their knowledge and expertise to local and overseas markets. Then the second area of research is how consumers perceive and treated retailer brands.

6.

The Aims and Objectives of research We should think of retailer brands identical as other brands as well to study its

distinctiveness. Why do the owners of the brands make its brand profitable? This topic has been the centre of attention of researchers. Only investigating retail brands deeply will provide the answers required. The main objectives of the research are as follows: y y Evaluating theories of direct marketing related to the fertilizer sector marketing. Identify and evaluate the farmers and land owners attitudes and buying behaviors in agricultural products in rural areas of Pakistan.

Discuss the policies and techniques used by Fauji Fertilizer to market its products in rural areas of Pakistan.

To identify the suitable mediums and channels can be used by Fauji Fertilizers to reach target consumers through direct marketing.

The research must cover all the aspects. Once we understand the mechanism behind these retail brands then we better understand their response in consumer perceived value of brands. 1.5 Research Questions The proposed research questions for this study are: 1) What are the affects of workforce diversity on firms performance in recession? What are the initiatives and challenges faced by Starbucks employees due to work force diversity 7. Research Methodology Research and methodologies used in research determine the true criteria that a research study is based on. This interpretation is important to be rightly taken to make a research successful. The process of research describes that how a specific criterion is determined. This research studies is a comparative analysis of the two UK based stores Sainsbury and Tesco where the understanding will be further enhanced by considering them for research. In this research study, case study method is implemented. The case study refers to the three criteria 1) Determining mathematical aspects, 2) validating the present theories, and 3) establishment of new theories. In a research study, case study can be used to understand the information that is determined by the practitioners (Cepeda and Martin, 2005). According to Flyvbjerg (2006) this is one of the effective tools where researches are further validated by

hypothesis and research techniques. Some other practitioners prefer case study method due to its property that it can be verified on hypothesis production. 7.1 Research Approach

There are two types of researches which can be put apart and those are qualitative and quantitative studies. According to Saunders et al (2009), quantitative study entails mathematical statistics or imperfect facts that can be advantageously measured and can fluctuate from easy calculations, for instance the rate of happenings, to more compound figures for example test scores or prices. Qualitative study had been defined as the chance to examine a topic as genuine as feasible. 7,2 Sample Designing

Sample design has to be finalized before gathering the primary data. In research, sampling is performed to augment the accurateness of outcomes, raise accessibility of population essentials, and for a better pace of data-collection phase (Saunders et al., 2003). Therefore, only few population parameters are chosen to carry out the survey on selected part of population. These parameters included specification of relevant population; sampling frame, the sampling method, and the sample size have been finalized before conduct of actual survey. 7.3 Sample selection and size

The generalization is possible by the use of suitable sampling method. Probability and non-probability sampling are two major forms of sampling. The primary data collection for the present thesis is based on non-probability sampling which is also termed as judgmental sampling. This method of sampling is a suitable choice in the descriptive context of this study. The selection of representative sample is necessary to assure the measurement validity, over presentation of data is possible with overlapping samples. The proposed sampling technique for

this research is stratified random sampling which is used for the random selection of consumers to analyze their purchasing behaviors. The applicable sample population is noticeable from the investigation of problem statement. In order to explore the consumption behavior of consumers in recession, all consumers are member of appropriate sample population (Blumberg, et al., 2005). British native consumers are selected for the survey along with a group of immigrants and other ethnic groups living in the metropolitan areas of the country. In present study, the population consists of all included consumers, who contributed in survey research and purchase commodities from mega malls (Blumberg, et al., 2005). .

7.4

Triangulation of study

In order to increase the credibility and authenticity of the data, various ways of data collection are used to achieve the triangulation of research. This triangulation includes achievement of validity, reliability and transferability of data. According to Patton (2001), triangulation functions to strengthens a study by combining methods, this can mean using several kinds of methods or data, including using both quantitative and qualitative approaches (p. 247). 7.4.1 Reliability The first angle of present research is reliability which can be fulfilled by the inner uniformity of the responses and accuracy of respondents. Proper collection of responses and careful explanations of questions have increased the reliability of the collected data. 7.4.2 Validity

The validity of a survey is the degree to which variations in responses reveal disparities in the calculated attribute. In this research construct validity has been assured by using priorly established consumer behaviour theories in question formation and content validity is assured by appropriate sample selection and proper survey procedure. 7.4.3 Transferability The last measure of triangulation in this research is transferability. It explains as the extent to which the outcomes of quantitative investigation can be generalized in other frameworks. Transferability is the extent to which the present study can be generalized; in this case the transferability can be achieved if the same study can extend to larger population of UK consumers in diverse shopping locations. The present study accomplished reliability and validity by the application of many approaches. Firstly, research variables are clearly outlined with greater transparency and internal consistency. Secondly, a contextual framework has been used by the help of already established theories to assure the external validity for the research. Finally, reliability and credibility has also been achieved by discussions with academic specialists in context of consumer behaviour. Key research themes have been addressed and used by the researcher in this study extensively.

7.5

Data Collection

The proposed research will be conducted in two different phases, phase one will largely be collecting quantitative data, and will employ the methodology of questionnaire surveys to collect data from a range of audience. Phase two will involve two case studies in which the data are expected to be more transient, which can be understood only within the context.

The present study will revolve around two stages. The first stage is to gather quantitative data using survey and questionnaire flare technique. The second stage will revolve around case study method where the details of the study will be analyzed using case study description and the methodology will remain persistent throughout the study. The research question will be answered in a detailed manner by studying the Tesco and Sainsbury case study. The staff and employees of both the organizations will be interviewed and various aspects of retail brands will be analysed. 8. Work Plan The project will be stared in August, this will continue with hypothesis development and later on literature review will be done. During this one month period retailer brands will be determined. Also, covering letters will be send to Tesco and Sainsbury team and the organizations will be visited for this purpose to gather data later on.

Work plan

August

September

October

November

Dec

Compilation of aim and objectives Search Literature review Selection of methodology

Collection of data Prepare questionnaire, interview Analysis of data Compilation of information and recommendations. Revision and editing Binding and submission of dissertation

Limitations

The main issue that this research confronts with is the resources and time issue. Since, it will take six months for this research to be completed; it will require great effort for this to accomplish it. Quantitative data will comprise more than 100 but below 150 samples which is not sufficient to draw proper results. Therefore, it cannot be said that the research will provide results which are 100% valid.

Chapter IV: Conclusion The proposed study discussed above is related with the discovery of direct marketing opportunities of direct marketing to the rural sectors of the Pakistani market. In this proposal, topic is introduced and reviewed with the help of academic journal articles and marketing text books in corresponding area of study. The scope of this research is quite significant as agriculture is the major sector of Pakistans economy and new marketing models for fertilizer business will surely add up the knowledge base about consumers attitudes and perceptions

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