This study will investigate, discuss and analyse the reasons behind consumer purchases of supermarket own-brand labels relative to manufacturer brands, in order, to gain a deeper understanding of consumer motivations in relation to this.
Chapter 1
INTRODUCTION
CONTEXT
The economic basis of the study is the umbrella branding theory used in supermarkets, where a firm seeks to transfer a consumer's quality perception from one product to another through the use of the same brand name.
Market Size
The food retail market is the largest sector in the UK retailing industry. In 1999 it accounted for 48% of all retail sales in the retail market, representing a market growth of 40% from the period 1992 to 1999. In 2001, UK grocery market was valued at an estimated £103.4bn. (Source: Institute of Grocery Distribution.)
Market Structure
The food retail industry in the UK is an oligopoly that is a select few supermarkets dominate a highly competitive and dynamic market. It is estimated that the leading four supermarket chains - Tesco, J.Sainsbury's, Safeway and Asda account for 60% of all grocery sales in the UK. In 2000, food sales through supermarkets reached £76.78bn - a growth of 4.5% over 1999. The retail sale of food through supermarkets is estimated to increase by 16% between 2001 and 2005. The food industry structure can be broken up into four main areas: the major multiples, convenience stores, co-operatives and other retailing outlets (such as dis-counters), representing 60%, 20%, 5% and 15% of the market share consecutively. (Source: Institute of Grocery Distribution.)
RATIONALE
Branding is a key strategic tool, which is used by all types of business organisation's to build a strong, positive and powerful brand personality for a product or service in the minds of the consumers. (Rooney 1995.)
Current research into branding acknowledges that British retailer's are at the forefront of own brand development, particularly within the food retail industry. The report author will attempt to identify the reasons behind customer motivation and interest in supermarket own brands.
PURPOSE
The main purpose of this study is to investigate, discuss and analyse the reasons behind consumer purchases of supermarket own-brand labels relative to manufacturer brands, in order, to gain a deeper understanding of consumer motivations in relation to this.
OBJECTIVES
? To analyse and assess the concept of the ontology of supermarket own label branding relative to manufacturer brands.
? To analyse and assess the different marketing strategies, in particular, advertising and sales promotion techniques employed by two of the UK's leading supermarkets.
? To discuss and evaluate the effectiveness of the supermarket loyalty card and the innovative new concept of the 'virtual shopper' in obtaining information about consumer buying habits.
METHODOLOGY
The following research methods will be employed in order to achieve the objectives of the project:
* Questionnaires
* Observation/Field notes
* Photographic evidence
TYPES OF FINDINGS
This section of the project will include the raw data obtained from carrying out the research project from the methods used as mentioned in the methodology section above.
TYPES OF ANALYSIS
This section of the project will analyse the findings of the investigation. These will be recorded in the form of bar graphs, pie charts, and by photographic evidence.
CONCLUSIONS/RECOMMENDATIONS
This section of the report will draw conclusions from the investigation and make possible recommendations.
Chapter 2
Literature Review
The ONTOLOGY of RETAILER OWN BRANDS
Private labels, store brands, own labels, retailer brands; own brands are all brands, which are owned, controlled and sold exclusively by retailers. (Hereafter referred to as own brands.)
De Chernatony & McDonald (1992) define the term brand as: "an identifiable product, service, person or place, augmented in such a way that the buyer or user perceives relevant unique added value which match their needs most closely. . .its success results from being able to sustain these added values in the face of competition."
The nature and role of own brands have changed dramatically from their original position as a product alternative to now being considered as a brand alternative. (Burt & Davies 1999.) Burt (2000) supports this by stating that retailer brands are no longer viewed by consumers as less expensive or lower quality alternatives to national brands. They are now perceived as being equal to manufacturer brands. In order to discuss the concept of own branding within the UK grocery sector, it is necessary to appreciate its evolution.
Own label products can be traced as far back as the late nineteenth century. In North America, grocery retailers and wholesalers created their own brands to ensure quality products to their customers and to build a strong store image to secure customer loyalty.
The first foodstore to introduce own-label brands was the Great Atlantic and Pacific Tea Company, which established it's own grocery tea, brands: the 'Eight O'clock Coffee' and 'Our Tea,' in 1882. (Fitzell & Kinock 1998.) Although this is a clear example of own-label branding it was not a conscious use of a brand name.
According to De Chernatony & McDonald (1992) interest in own brands, in the UK, can be linked to resale price maintenance (RPM.) This mechanism forced retailers to follow manufacturer's rules regarding selling prices. Hankinson & Cowking (1993) state that prior to the abolishment of the RPM in 1964, the manufacturer held the balance of power in the distribution channel. Consequently it was they who had control over who developed the brands, as well making decisions regarding advertising and pricing. However, this situation has now been turned around with the retailers gaining increasing power and being able to state their own product specifications and prices. Hankinson & Cowking (1993) conclude that this was achieved through bulk purchasing, zero to low advertising and a clear product quality, which was lower than that of the national branded lines.
Fitzell & Konick (1998) report that increased competition among the major food retailers and consolidation of their activities combined with an increase in efficiencies of scale had induced a greater need for the stores to differentiate themselves. This is primarily achieved through the introduction of retailer own brands in the stores alongside manufacturer brands. Similarly, De Chernatony & McDonald (1992) state that the increasing concentration of multiple retailers can be best described under the concept of the wheel of retailing. In simplistic terms, McGoldrick (1990) describes the wheel of retailing as conveying that retailers commence as cut-price, low-cost, narrow margin operators which subsequently 'trade-up.' He argues that improvements in premises, advertising costs, the provision of credit and other customer service all result in increased expenses, margins and prices. This results in a sales policy, which is based on quality goods and services rather than focused primarily on price. Inevitably, this opens up the opportunity for the next low-cost retailer to become established and thus the wheel continues to revolve.
Many authors have discussed the advantages and disadvantages associated with retailer brand product ranges for both the retailer and the manufacturer. McGoldrick (1990) has summarised the main rationales under three headings: store image/consumer loyalty, competitive edge/extra turnover and higher/better profit margins.
A common issue that all writers discuss in relation to this is the competitive threat to manufacturer brands. This highlights power relationships within the grocery channel between the retailer and the manufacturer.
Many authors (Fitzell & Kinock 1998, Burt 2000, & Dawson 2000) have talked about the shift in channel power from the manufacturer to the retailer As retailers grow in size they control floor-space, shelf-space and consequently sales. By doing so they take advantage of excess capacity in manufacturing sectors. De Chernatony & McDonald (1992) state the reason behind manufacturers fall from power is as a result of failing to acknowledge the retailers increasingly innovative stance, customer-driven approach and their commitment to developing their own brands. Instead, manufacturers decided to focus their strategy on cutting back on advertising their brands and pursuing the strategy of buying more shelf-space. De Chernatony & McDonald (1992) comment that retailers became more efficient through centraslised buying and warehousing. This is supported by Burt & Davies (1999) who state that the centralised nature of management decision making has played a major role in the development of own brands. McGoldrick (1990) concludes that as retailers seek to achieve higher quality and distinctiveness in their own-brand products, it is vital for a successful relationship to be formed between the retailer and the supplier. Burt & Davies (1999) support the view that changing perceptions of the relationships of the roles and functions of the different players in the distribution channel have helped to shape retailer brand development. The recognition of this channel power of the retailer has placed greater emphasis on the need to differentiate product offerings in the market.
Retailers have gone from being the distributors of brands to selling their own brands. Fitzell & Konick (1998) state that the retailers themselves are increasingly becoming more like brands. This makes it increasingly difficult for the consumer to distinguish clearly between a national brand and a retailer's own brand products.
One product positioning strategy as identified by McGoldrick (1990) is that of generics. Generics are a form of retail branding with place an emphasis on basic 'economy' principles. That is an unbranded or brand-free product, which is marketed using plain, unsophisticated packaging with a variable quality range, and perhaps most significantly, with prices up to thirty per cent lower than comparable brands. (Burt & Davies 1999.) Generic products were first introduced onto the consumer market in the 1970s. During this period the brand product range comprised of a three-tier structure of leading manufacturer brand, the retailer brand and the generic brand offering. McGoldrick (1990) observes that this structure complied smoothly with the marketing segmentation principles of providing for the upper, middle and lower end of the market.
McGoldrick (1990) argues that although generics enable retailers to build a significant market share, there were risks associated with this type of strategy. The retailers branded the generic range themselves, as a low, down-market range. This affected consumer's perception not only of the retailer's image and reputation but also of the price and quality associated with these ranges. This is supported by other authors such as Burt & Davies (1999) and De Chernatony & McDonald (1992.) Primary emphasis is given to the contents of the product rather than its appearance or retail name. Therefore, consumers perceived this product range not as an additional tier in own brands but as an alternative to the current own brand range. (Burt & Davies 1999.)
Retailers saw generics weakening their profitability and tarnishing the quality image associated with their other product lines. De Chernatony & McDonald (1992) argue retailers had misjudged the consumer's needs by assuming that low prices were the key determination factor for driving consumer choice.
This view is supported by Hankinson & Cowking (1993) who state that manufacturer brands were considered superior to own brand and generics both of which are associated as being of a lower standard of quality. McDonald (1990) states that the major advantage of generics is the ability of retailers to gain economies of scale in cost reductions related to buying power. He concludes that price is not the only determining factor when choosing brands. Retailers eventually realised that consumers were seeking value for money without having to compromise on quality issues.
Retailing branding has moved through several stages of development, from generics to own-label, un-supported retail brand and now currently into a fourth stage as identified by Laaksonen & Reynolds (1994,) in Dawson (2000.) That is the extensive innovative product development and sub-branding stage. They identified that each stage of retail branding has different product characteristics, production technology input; market position and consumer motivations associated with it. These stages overlap and not all companies follow the same sequence. Wileman & Jary (1997) as noted in Burt (2000) suggest a similar sequence with five stages of retail branding: generics, cheap re-engineered low cost par quality and leadership. Burt (2000) suggests that what both these schemes illustrate is that different forms of the retail brand exist in the marketplace.
McGoldrick (1990) the central objective of own branding is to achieve and maintain competitive advantage. Although price is the main way of gaining competitive advantage and distinguishing a retail brand from a manufacturer's brand, McGoldrick argues that it is not the only way.
He notes other important factors, such as quality, design, convenience, assortment and innovation as playing a vital part in the process of brand development. By considering these other 'product pluses' Fitzell & Kinock (1998) state that in recent years own brand products have significantly improved in quality and packaging enhancements, making them comparable to the national brands. McGoldrick (1990) argues that retailers must develop a strong role in product innovation and development, as competing on a price only basis is a difficult competitive positioning strategy to maintain in the long-term. Hankinson & Cowking (1993) support this by adding that retailer's can establish a secure presence in areas, which have not previously been explored or failed by national brands through innovation. Burt (2000) supports McGoldrick's views on innovation and quality as being major positioning elements of an own-brand strategy.
Hankinson & Cowking (1993) place emphasis on quality products, which represent value for money to consumers as being the key to own brand success and gaining customer loyalty. Burt & Davies (1999) also recognise the importance of moving away from price competition and instead focusing on establishing innovative product ranges.
McGoldrick (1990) argues that the perceived risk associated with own brands depends on the length of time that it has been established, the marketing support by retailers and consumer's perceptions of the retailers overall reputation. Consumer perceptions of quality are a key determinant of own brands positioning in a market. Livesey & Lennon in Burt (2000) find that the highest purchasers of retail brand products were the younger more affluent consumers who were more willing to take risks with new products. While the bargain conscious consumers would choose to buy the 'regular' 'choice of brand. In a recent study by Dick et al (1996) as noted by Burt (2000) they recognise that the factors which influence product quality are attractive packaging, labelling and brand image. These are strong influencing factors in retail brand success.
According to Hankinson & Cowling (1993) own brands have traditionally focused on their functional attributes, such as performance at lower prices. They argue own brands based on such attributes lack any symbolic values. If brands are to be successful, they must convey other differentiating factors. De Chernatony & McDonald (1992) conclude that brand availability, price and point-of-sale displays influenced consumer choice. They also state that strong brands lie in communicating added value to the consumer through packaging and other such measures. These clues help consumers to build up their perceptions to brands and associate values to them. They comment that packaging design can communicate the characteristics of the own line products and reinforce the store's overall image. They describe this as the 'silent persuader' of own brand products.
Recent developments in the UK grocery sector have seen the extensive use of brand extensions which have opened up new opportunities in new market sectors, most notably into previously untouched, non-food areas: financial services; customer-care services and travel services (Dawson 2000.)
The central aim of such a strategy is to create and promote a single brand, which has universal wide applicability. Hankinson & Cowking (1993) describe this type of retailing as a one-stop retailing experience. They state that this makes it difficult to define the nature and characteristics of a retail food outlet. The extension of brands is supported by other authors such as Burt (2000) who says that brand names now extend beyond the core product offer, confirming the central role that retail brands now play within the corporate strategy of an organisation.
One of the most innovative concepts in retailing has been the explosion of e-commerce. This will become an important concept within the food retail industry. Dawson (2000) and other authors suggest that e-commerce represents the first paradigm shift in retailing for over 50 years. Another key development in food retailing is the concept of the store loyalty card. Although the idea of a store card is to make existing customers more loyal, the primarily concern of loyalty cards is to obtain valuable customer information about their shopping profiles (Burt 2000.) Another recent issue to take into consideration as identified by Davies (1999) is the theft of brand identity. This refers to the passing off or copycatting of branded products by retailers. Burt & Davies (1999) refer to the Asda/United Biscuits case in which Asda was accused of copying United Biscuits packaging. When the case went to court both sides claimed victory. Although Asda's packaging could lead to confusion it did not violate United Biscuits registered trademarks. Clearly, this case raises many questions about brand identity. Finally, an interesting issue as identified by Burt & Davies (1999) is the concept of the internationalization of the grocery market. Recent events, such as the taking over of Asda by the American giant Wal-Mart raises many important questions about food retail and its impact on the international arena.
As Dawson (2000) states, retailing is an evolving industry, which requires constant exposure to innovation. Burt & Davies (1999) conclude that retailer brands are seen as broadening product ranges, enhancing product markets and providing unique products rather than just simply replacing existing manufacturer brands. They key variables to achieve this are through innovation and new product development. De Chernatony & McDonald (1992) support this by emphasising the importance of providing consumer-relevant added value and not just focusing on low prices as a key-differentiating tool.
Today's own brands are turning into well-established retailer brands. They have higher margins, which strengthen the retailer's bargaining power relative to the manufacturer's. (Fitzell & Kinock 1998.) Own brands are backed with significant corporate promotional campaigns, which reinforce their personalities and convey clear values to the consumer (De Chernatony & McDonald 1992.) Hankinson & Cowking (1993) also support this. They talk about the personality of the brand in communicating values to the consumer. Originally own brands were introduced onto the market as a cheap alternative to more prestigious manufacturer brands, with an inferior quality emphasis placed upon them. Burt & Davies (1999) state that they are now universally accepted as a brand alternative offering the same quality of products and product innovation as manufacturer produced brands. According to Burt (2000) changes in attitude and behaviour in the use of market power, the management and of image and a greater understanding of the core principles of brand management have all contributed to the development of the retailer as a brand.
(Please refer to Appendix A for further background information about 'Retailing.')
Chapter 3
METHODOLOGY
What is Research?
Howard and Sharp discussed the issue of research in the management of a student research project. They defined research as "seeking thorough methodological processes to add to ones own body of knowledge and, hopefully, to that of others, by the discovery of non-trivial facts and insight." Drew (1980) also agrees that "research is conducted to solve problems and to expand knowledge . . .research is a systematic method of enquiry."
The Difference between A Method ...
This is a preview of the whole essay
(Please refer to Appendix A for further background information about 'Retailing.')
Chapter 3
METHODOLOGY
What is Research?
Howard and Sharp discussed the issue of research in the management of a student research project. They defined research as "seeking thorough methodological processes to add to ones own body of knowledge and, hopefully, to that of others, by the discovery of non-trivial facts and insight." Drew (1980) also agrees that "research is conducted to solve problems and to expand knowledge . . .research is a systematic method of enquiry."
The Difference between A Method and A Technique
A methodology requires both a method(s) and technique(s) instrument for the purpose of enquiry and analysis, which are most appropriate to answer the research question.
Method
Jankowicz (1991) states that a method is "a systematic and orderly approach taken towards the collection of data so that information can be obtained from those data." He distinguishes between data and information. Data is raw, specific, undigested and therefore meaningless, in contrast, information is when data has been arranged in a way in which uncertainty is lessened and queries and questions can be answered more effectively. In order to carry out a research project various techniques will have to be employed. The methods employed by the researcher in this project include the use of both the survey and the observation method. (This will be discussed in further detail below.)
Technique
Jankowicz (1991) describes techniques as "particular, step by step procedures which can follow in order to gather data and analyse them for the information they contain." In other words, as Bennett (1986) notes, they tell you how to do something rather than what you are doing or why you are doing it.
The technique employed by the researcher in this project includes the fully structured technique - the structured questionnaire. (This will be discussed in further detail below.)
Methods of Inquiry: Positivism and Phenomenology
There are two approaches to research: positivism and phenomenology. Positivism is the belief that there is a definite (external) reality 'out there,' which is capable of objective description and measurement based upon facts. Phenomenology, on the other hand, is the belief that whilst what we describe as 'reality' may have some basis in an external set of immediate facts. The only 'reality' we can actually know is mediated by the way we interpret our expectations. Quantitative research methods are based on positivism whereas qualitative research methods are based on phenomenology; these two approaches are not mutually exclusive; we can combine them. (Oppenheim 1966.)
In relation to this project, the researcher has employed both quantitative (the personal observation technique) and qualitative (structured questionnaires) methods of inquiry. These will be discussed in detail further on.
Research into Branding
Research into branding employs both qualitative and quantitative methodologies, each using a variety of techniques to reveal the 'truth' about a brand's perceived personality and positioning.
Qualitative research is exploratory; it seeks to understand how consumers perceive a brand; how they experience a brand and most importantly why they choose some brands and reject others. It aims to identify consumer attitudes towards a brand's functional attributes and symbolic values. Such research focuses on small samples of consumers and open-ended questioning. (Hankinson & Cowking 1993.)
Qualitative brand research techniques include group discussions, which involve seven or eight consumers to exchange their views, perceptions and experience of several brands within a product category; Extended Creative Groups, which builds on this process by using a variety of projective techniques such as word association, collage and bubble cartoons; Synthetics, which focuses on creating problem-solving and brand development; the repertory grid, which is a method of accessing the brand personality and the relevant consumer language used to describe that personality, using a card sorting technique to elicit brand values and attributes.
In contrast, quantitative research is evaluative and statistically based. It provides hard data to measure those attributes and values. Such research focuses on large samples, which may be drawn on a random or quota basis. It employs highly systematic procedures for sample design, data collection, and questionnaire design and data analysis.
Quantitative brand research techniques include brand mapping, which measures a brand's similarity to others and represents them graphically using statistical methods; Brand Personality Inventory, which uses a 41 item questionnaire to measure the brands personality of any brand across four dimensions: extroversion, potency, virtue and social acceptability.
Tracking studies provide a continuous measure over time of factors such as brand awareness, trial usage and brand personality; finally Brandworks, a technique which aims to access the brand quantitatively using the five qualitative measures of user image, occasion image, product image, brand personality and salience. (Hankinson & Cowking 1993.)
Therefore, the quantitative research quantifies in an objective way what the qualitative research seeks to reveal in a subjective way.
(Please refer to Appendix B-1 to see 'A Table to Show the Contrast between Qualitative and Quantitative Research.')
The Chosen Methodology
In order to conduct this project successfully, it was necessary for the researcher of the project to select the most appropriate method and techniques to use. The aim of this project was to discover consumer motivations behind the purchase of supermarket own label brands in relation to manufacturer brands. The nature and scope of this topic area will therefore dictate, to some extent, the types of techniques that will need to be adopted.
Institutional Background
In order to discover consumer motivations behind supermarket own label brands, the researcher of this report has investigated two supermarket chain stores: Tesco and J.Sainsbury's both located in Wrexham, North-East Wales.
(It must be noted that the conclusions made in this report are not applicable to all Tesco and J.Sainsbury store customers nor to all these specific stores within the UK.)
The Primary Research Procedures
The primary research procedures, which the researcher undertook, included the use of the personal observation technique and field notes. The researcher adopted a personal observation technique to watch consumer behaviour in both of the stores, in order, to observe the effect of various promotional techniques, which were used in the store to generate consumer interest; field notes were also kept to keep a diary of the events which occurred. The main benefit of this technique is that first hand information can be studied more conveniently by the researcher, since s/he can observe those variables relevant to the research question. Also, observation can give a clearer image of what is happening and it can act as an aide-memoir.
Quantitative techniques involve research using pre-set questions among a large representative sample of the population to provide statistically valid data. This is usually administered through the use of questionnaires. The quantitative research techniques employed in this research included the use of questionnaires.
(Please refer to Appendix B-2 (i) (ii) and (iii) for detailed information about the 'Research Procedures' mentioned above.)
The Secondary Research Procedures
The secondary research methods, which have been used in this research project, include the use of both internal and external data sources. The internal data sources, which were consulted, included the use of both supermarkets own company literature, such as company reports, sales figures; Internet sites. The external data sources, which were consulted, include a wide range of sources ranging from commercial sources (Nielson and Keynote Reports), to Government sources and literature from professional/trade organisations, such as the Chartered Institute of Marketing (C.I.M)
Although it may be an unconventional research method, the author of this project has also used photographs to provide visual evidence related to the promotional activities of both the supermarkets under investigation in the project. This photographic evidence will provide the most effective medium to show how promotional activities are used in the stores.
(Please refer to Appendix B-3 (i) and (ii) to see detailed information about 'Primary and Secondary Research Methods.')
Summary
The following research methods will therefore be employed:
? Questionnaires
? Observation/Field notes
? Photographic evidence
A number of factors have influenced the researcher's choice of methodology. The survey method allows the researcher to establish people's views of what they think, believe, value or feel in order to support an argument or to enable the researcher to make conclusions about a particular issue more widely. The use of questionnaires is an appropriate technique to achieve this data in a cheap and efficient way. Observation and field notes will help the researcher to focus on particular issues and help reflect general impressions. Finally, photographic evidence will provide the most appropriate and effective medium for the researcher to show the different types of promotional techniques, which are employed at the supermarkets under investigation.
The Survey Method
A survey is a research technique where information is gathered from a sample of people by use of a questionnaire.
In order to draw meaningful conclusions from the collected data, the researcher administered 50 questionnaires to the participants of the research: 25 questionnaires were administered to those customers who shop at Tesco's and 25 questionnaires where administered to those customers who shop at J.Sainsbury's. These were handed out randomly to passing customers. Although conducting research on a larger sample size would probably produce more conclusive data, the researcher of this project, due to time and financial constraints was limited to conduct her research on a sample size which, although relatively small, would provide adequate data on a representative sample of the population.
The questionnaire contained a wide range of different types of questions, relating to measuring consumer attitudes using a variety of attitude and ratings scales, which attempted to depict various aspects about grocery shopping and in particular attitudes towards customer motivation in relation to supermarket own brands.
(Please refer to Appendix B-4 (i) and (ii) to see 'Questionnaire' and 'Questionnaire Design.')
The main vehicle, which is used to discover consumer motivation, attitudes, beliefs and values, is usually conducted through qualitative research techniques (as described above in the 'research into branding' section), although various quantitative methods are also employed. The researcher of this project was constrained by various factors, mainly time and cost, which would prevent most of the mentioned techniques above to be employed. However, a combination of both primary and secondary research methods were used in order to achieve the objectives of this research project and the desired outcomes. These are described below.
The Sampling Design
Sampling is a procedure, which uses a small number of units of a given population as a basis for drawing conclusions about the whole population, as it would be impossible to conduct research on every individual in a given population. A sampling unit is a single element or group of elements subject to selection in the sample.
A non-probability (convenience) sample was taken of those customers who shop at Tesco and J.Sainsbury's in Wrexham - representing the sampling unit. A non-probability sample is selected on the basis of the personal judgement of the researcher. This particular sampling method was chosen as it best suited the researcher's purpose of identifying a specific group of customers i.e. supermarket shoppers, who shop at the supermarkets under investigation. In contrast, a probability sample is defined as a sample in which every member of the population has a known, non-zero probability of selection. For example, in a random sample each member of the population has an equal probability of being selected. This technique was not chosen as it would be impossible for the researcher to conduct an analysis on consumer motivation on the whole population of the U.K as well as being a highly expensive and time consuming process.
Reliability and Validity
Measuring instruments are evaluated in terms of their reliability and their validity. Reliability refers to the ability of a measure to produce consistent results. Validity indicates that a measure in fact measures what it purports to measure. It is anticipated that the methodology, which the researcher has chosen, has lead to conclusions, which are valid, reliable, reproducible, not obvious or trivial, public and useful. The researcher feels that the methods chosen are appropriate to the investigation of the research inquiry and that they embrace these two concepts. (Chisnall 1986.)
Recording the Results
The collected results will be explained through descriptive terms and in the form of graphical representations of data (bar graphs and pie charts) and by photographic evidence.
Conclusion
The choice of research methods mentioned above will allow a wide range of evidence to be collected and subsequently help answer the objectives of the investigation.
FINDINGS
The author of the report has broken down the findings of the investigation into four sections, which correspond to the purpose and objectives of the research project.
These are as follows:
? SUPERMARKET OWN BRANDS
* IN-STORE PROMOTIONAL CAMPAIGNS
* THE CONCEPT of THE LOYALTY CARD
* THE CONCEPT OF E-COMMERCE and FOOD RETAILING
Chapter 4
SUPERMARKET OWN BRANDS
The rise of the strength of retailer own brands demonstrates the power of the major chains. The nature and role of own brands have changed dramatically from their original position as being perceived as inferior low-end products to now being considered as being equal to manufacturer brands both in terms of quality perception and value. Today's own brands are now universally accepted as brand alternatives offering the same quality of products and product innovation as manufacturer produced brands. (Burt & Davies 1999.) The latest research by the I.G.D. showed that the UK market for own brands was worth an estimated £57.4bn in 2000 and sales have increased annually since 1996, by a total of 18.6%.
QUESTIONNAIRE FINDINGS
The following analysis has been made from the data obtained from the 50 questionnaires, which were administered to 25 shoppers at Tesco and 25 shoppers at J.Sainsbury's in Wrexham, North-East Wales.
Figure 1 relates to
'The Number of Shoppers Purchasing Supermarket Own Brands.'
The bar graph below illustrates that a high proportion of both Tesco and J.Sainsbury's customers purchase supermarkets own brands. The results indicate that 19 out of 25 (76%) of Tesco customers purchase Tesco own brands and 21 out of 25 (84%) of J.Sainsbury's customers purchase J.Sainsbury's own brands. The results also indicate that just 6 out of 25 (24%) of Tesco customers do not purchase the stores own brands and 4 out of 25 (16%) of J.Sainsbury's customer's also do not purchase the stores own brands.
Figure 1
Conclusion
The following conclusions have been made with reference to figure 1:
The results obtained in figures 1 and 2 clearly show the growing interest shown by customers in purchasing supermarket own brands. The results indicate that own brand popularity is higher at J.Sainsbury's than at Tesco, with 21 out of 25 (84%) of shoppers purchasing J.Sainsbury's own brands compared to 19 out of 25 (76%) of shoppers purchasing Tesco own brands.
However, it must be noted that the figures do not show a huge difference between the number of customers who purchase J.Sainsbury's own brands or the number of customers who purchase Tesco own brands. Overall, the results indicate that, over half, 40 out of 50 (80%) the shoppers surveyed purchased supermarket own brands. The results indicate that just 10 out of 50 (20%) of shoppers compared to did not purchase supermarket own brands. The results obtained here correspond to recent empirical research undertaken by authors, such as Baltas (1997) and Burt (2000) who explore and support the growing escalation of interest in supermarket own brands.
Figure 2 relates to
'Customer Familiarity with Supermarket Own Brands.'
The bar graph below illustrates that a high proportion of customers at both Tesco's and J.Sainsbury's are familiar with the stores own brands. The results indicate that 11 out of 25 (44%) of Tesco customers are very familiar with the Tesco own brands, 8 out of 25 (32%) of Tesco customers are somewhat familiar with the stores own brands and just 6 out of 25 (24%) of Tesco customers are unfamiliar with the store's own brands.
Figure 2
The results obtained at J.Sainsbury's indicate that 14 out of 25 (56%) of J.Sainsbury's customers are very familiar with the stores own brands, 9 out of 25 (36%) of J.Sainsbury's customers are somewhat familiar with the stores own brands and just 2 out of 25 (8%) of customers are unfamiliar with the J.Sainsbury's own brands.
Conclusions
The following conclusions have been made with reference to figure 2:
The results obtained indicate that overall, over half, 42 out of 50 (84%) of the shoppers surveyed are very familiar and somewhat familiar with the supermarkets own brands. However, the results indicate that J.Sainsbury's customers are more familiar with the J.Sainsbury's own brands than are Tesco customers with the Tesco own brand ranges. The results indicate that 23 out of 25 (92%) of J.Sainsbury's customer's are very familiar and somewhat familiar with the stores own brands, compared to just 19 out of 25 (76%) of Tesco customers. The results suggest that perhaps, J.Sainsbury's are doing more to promote their own brands and therefore securing more brand awareness than Tesco, since, more J.Sainsbury's customers are familiar with their own brands than are Tesco customers. Overall, only 8 out of 50 (16%) of the shoppers surveyed were unfamiliar with the own brand ranges at the supermarkets under investigation.
Figure 3 relates to
'The Number of Shoppers Purchasing other Supermarket Own Brands.'
The bar graph below illustrates the number of customers at Tesco and J.Sainsbury's who purchase other supermarket own brands.
Figure 3
The results indicate that 11 out of 25 (44%) of Tesco customers purchase other supermarket own brands and 8 out of 25 (32%) of J.Sainsbury's customers also purchase other supermarket own brand ranges. However, the results also indicate a relatively strong preference and loyalty to the Tesco and J.Sainsbury's own brand ranges by their customers, with 14 out of 25 (56%) of Tesco shoppers not purchasing other store brands and an even higher percentage 17 out of 25 (68%) of J.Sainsbury's customers remaining loyal to their store by not purchasing other supermarket own brands.
Conclusions
The following conclusions have been made with reference to figure 3:
The results obtain show that customers at both stores do not shop exclusively for own brands at Tesco's or J.Sainsbury's. The results indicate that overall 19 out of 50 (38%) of the shoppers surveyed, purchased other supermarket own brands. This suggests that these shoppers may be motivated by the value proposition offered by other supermarket own brands. However, the results indicate that over half of the shoppers surveyed, 31 out of 50 (62%) remained loyal to their first choice supermarket own brand ranges and bought the Tesco and J.Sainsbury's own brands exclusively.
Figure 4(a) relates to
'The Frequency of Tesco Own Brand Product Purchases by Tesco Shoppers.'
The stacked column bar graph analysis below illustrates the popularity and frequency of Tesco's five own brand product ranges: the Tesco Standard Range; the Tesco Value Range; the Tesco Finest Range, the Tesco Healthy Eating Range and the Tesco Organic Range.
Figure 4(a)
(Please see Appendix C-1 (i) for detailed information about the 'Tesco Own Brand Ranges.')
Conclusion
The following conclusions have been made with reference to figure 4(a):
The results indicate the popularity of the 'lifestyle' own brand product ranges at Tesco. That is the Tesco Organic Range and the Tesco Healthy Eating Range. The Tesco Organic Range is always purchased by 10 out of 25 (40%) of shoppers, followed by Tesco's Healthy Eating Range which is always purchased by 7 out of 25 (28%) of Tesco shoppers. Overall, the results indicate the popularity of these ranges being purchased on an 'always' basis as 17 out of 25 (68%.) Although, these product ranges tend to be slightly more highly priced than the other own brand ranges, the results indicate that shoppers are purchasing them more frequently than the other own brand ranges at Tesco. This trend corresponds to research undertaken by leading academics in this field, who suggest that changing customer lifestyles and an increasing emphasis on healthy eating, demands food retailers to establish such lifestyle ranges, such as the Tesco Organic Range and the Tesco Healthy Eating Range. The results also indicate that the Tesco own brand ranges are well established in the consumer's minds with 19 out of 25 (76%) Tesco customer's showing strong brand awareness for Tesco own brand ranges. The results indicate that only 6 out of 25 (24%) of Tesco customers expressed a 'don't know' level of awareness for the Tesco own brand ranges.
Figure 4(b) relates to
'The Frequency of Own Brand Product Purchases by J.Sainsbury's Customer's.'
The stacked column bar graph below illustrates the popularity and frequency of J.Sainsbury's four own brand ranges: the J.Sainsbury's Standard Range; the J.Sainsbury's Be Good to Yourself Range; the J.Sainsbury's Economy Range and the J.Sainsbury's Taste the Difference Range.
Figure 4(b)
(Please refer to Appendix C (ii) to see detailed information about the 'J.Sainsbury's Own Brand Ranges.')
Conclusion
The following conclusions have been made with reference to figure 4(b):
The results indicate that the most popular own brand ranges at J.Sainsbury's were the J.Sainsbury's Taste the Difference Range and the Be Good to Yourself Range, with 22 out of 25 (88%) of shoppers purchasing food products from the Taste the Difference range regularly (always/sometimes.) Similarly, 23 out of 25 (92%) of J.Sainsbury's shoppers purchase food products from the Be Good to Yourself Range on a regular basis. These results lead the author to believe that the customers surveyed at J.Sainsbury's are health conscious and perhaps have more to spend on groceries, since both these own brand ranges are significantly more highly priced than the lower end J.Sainsbury's own brand ranges, such as the J.Sainsbury's Standard Range and the Economy Range.
The results also indicate a very strong brand awareness for both the exclusive brands at J.Sainsbury's, that is the Taste the Difference Range and the Be Good to Yourself Range with 100% brand awareness. The results indicate that 5 out of 25 (20%) of the customers surveyed at J.Sainsbury's were unaware of their Economy Range and the Standard Range.
Figure 5 relates to
'The 'Regular' Frequency of Own Brand Products across A Range of Categories.'
The clustered bar graph below illustrates the results obtained at both stores with regard to the popularity of own brand products across a wide range of supermarket product categories.
Figure 5
The results clearly indicate the popularity of ready meals with 39 out of 50 (78%) of shoppers purchasing food products from this category on a regular basis. This was closely followed by the frozen foods sector with 35 out of 50 (70%) of shoppers purchasing food products from this category on a regular basis. These results are congruent with recent research, which emphasis the changing lifestyle of consumers who have little time to prepare cooked meals and therefore the increased demand for what is termed 'convenience foods', such as ready meals and frozen foods.
The results indicate that own brand soft drinks is the next most popular own brand category with 31 out of 50 (62%) of shoppers regularly buying from this category. The leading supermarket chains are now moving into what used to be considered the exclusive domain of branded manufacturer areas. For example, J.Sainsbury's Classic Cola is an attempt by J.Sainsbury's to launch itself into the highly competitive soft drinks market.
The results indicate that the next most frequented product category for own brands was household goods with 28 out of 50 (56%) of shoppers regularly purchasing from it. Again, J.Sainsbury's have attempted to secure a large share of the detergents market by launching its highly successful 'Novon Range' of detergents.
This was followed by the tinned foods and preserves category with 24 out of 50 (48%) of shoppers placing it as the as the next most frequented product category. This was followed by crisps and confectionery with 22 out of 50 (44%) of shoppers purchasing from this product category on a regular basis. The drinks, beers, wines, beverages and spirits product category represented 18 out of 50 (36%) shoppers purchasing from this category on a regular basis. This was followed by tea, coffee and breakfast cereals with 15 out of 50 (30%) of all shoppers purchasing food products from this category on a regular basis.
The remaining results indicate the popularity of the following product categories: fruit and vegetables with 14 out of 50 (28%), dairy, milk and eggs with 13 out of 50 (26%), meat, poultry and fish with 11 out of 50 (22%), health, beauty and baby with 10 out of 50 (20%), rice, pasta & dried food and bread, bakery and cakes both representing 8 out of 50 (16%) each.
Figure 6 relates to
'Customer Satisfaction with Supermarket Own Brands at Tesco and J.Sainsbury's. '
The bar graph below illustrates the level of customer satisfaction with supermarket own brands at Tesco and J.Sainsbury's. The results for Tesco indicate that 12 out of 25 (48%) of shoppers are very satisfied with the stores own brands; 6 out of 25 (24%) of shoppers are quite satisfied, 4 out of 25 (16%) of shoppers are neither satisfied nor dissatisfied and 3 out of 25 (12%) of shoppers are somewhat satisfied with Tesco own brands.
Figure 6
The results obtained at J.Sainsbury's indicate that 16 out of 25 (64%) of shoppers are very satisfied with the stores own brands; 6 out of 25 (24%) of shoppers are quite satisfied, 3 out of 25 (12%) of shoppers are neither satisfied nor dissatisfied and 1 out of 25 (4%) of shoppers are somewhat satisfied with J.Sainsbury's own brands.
Conclusion
The following conclusions have been made with reference to figure 6:
The results indicate a generally strong level of customer satisfaction for supermarket own brands, with 27 out of 50 (54%) of the shoppers surveyed very satisfied with supermarket own brands. The results show that 18 out of 25 (72%) of the Tesco customers indicated a strong level of satisfaction for Tesco own brands (that is very satisfied and quite satisfied) The results obtained at J.Sainsbury's show that 21 out of 25 (84%) of J.Sainsbury's customers had indicated a strong level of satisfaction for the stores own brands. This suggests that supermarket own brands are increasingly being perceived by customers as being of equal standing relative to manufacturer brands in terms of satisfaction. Only 7 out of 50 (14%) of shoppers at both stores expressed a neutral feeling of satisfaction for own brands and 4 out of 50 (8%) of shoppers expressed a negative feeling of being somewhat satisfied with supermarket own brands. Overall, the results indicate that 39 out of 50 (78%) of the shoppers surveyed expressed a strong feeling of satisfaction for supermarket own brands.
The results indicate that in neither of the stores were shoppers very dissatisfied with supermarket own brands.
Figure 7(a) relates to
'The Importance of Attributes when Purchasing Supermarket Own Brands at Tesco.'
The stacked column bar graph below illustrates the importance of five attributes: Price, Quality, Range, Perceived value and Store reputation when selecting own brand ranges at Tesco. The analysis has been broken down according to the level of importance of each attribute: very important, fairly important, neutral and not so important.
Figure 7(a)
Level of Importance - Very Important.
The results indicate that perceived value is the most important attribute at Tesco with 14 out of 25 (56%) of shoppers emphasising it as a very important attribute. This was followed by price and quality with results indicating 13 out of 25 (52%) and 12 out of 25 (48%) of shoppers placing these attributes as very important consecutively. Tesco customers placed range as the next most important attribute with 11 out of 25 (44%) of shoppers indicating it as very important. The least most important attribute within this category of importance was store reputation with 10 out of 25 (40%) of shoppers rating it as a very important attribute.
Level of Importance - Fairly Important.
The results indicate that price and range are of equal importance within this category of importance, with 18 out of 25 (72%) of shoppers expressing these attributes as fairly important. This was followed by perceived value, with 8 out of 25 (32%) of shoppers rating it as fairly important. Shoppers rated quality as the next most important attribute within this category, with 7 out of 25 (28%) rating it as fairly important. Only 4 out of 25 (16%) of shoppers placed a fairly important emphasis on store reputation.
Level of Importance - Neutral.
The results indicate that 9 out of 25 (36%) of Tesco shoppers placed a neutral level of importance on store reputation. This was followed by quality and range with 8 out of 25 (32%) of shoppers emphasising a neutral level of importance for these attributes. 2 out of 25 (8%) of shoppers emphasised price as being the next attribute of neutral importance and just 1 out of 25 (4%) of shoppers placed perceived value as being of neutral importance.
Level of Importance - Not So Important.
Only 8 out of 25 (32%) of the shoppers surveyed at Tesco expressed a not so important rating for the attributes. The results obtained indicate that 6 out of 25 (24%) of shopper's placed quality, perceived value and store reputation as being not so important. This was followed by price and range with just 2 out of 25 (8%) of those surveyed expressing a not so important rating for these attributes.
Level of Importance - Not at all Important.
Of all the respondents surveyed at Tesco none expressed a not at all important level of rating for any of the five attributes. Thus, indicating some degree of importance of all attributes.
Figure 7(b) relates to
'The Importance of Attributes when Purchasing Supermarket Own Brands
At J.Sainsbury.s'
The stacked column bar graph above illustrates the importance of the same five attributes: price, quality, range, perceived value and store reputation, when selecting own brands at J.Sainsbury's. Again, the analysis has been broken down according to the level of importance of each attribute.
Figure 7(b)
Level of Importance - Very Important.
The results clearly indicate that price, quality and perceived value are of equal importance for customers at J.Sainsbury's, with 12 out of 25 (48%) of shoppers each emphasising these three attributes as being 'very important.' This was followed by the range, with 10 out of 25 (40%) of shoppers placing it as very important. The results indicate that 8 out of 25 (32%) of shoppers place store reputation as the least most important attribute within this category.
Level of Importance - Fairly Important.
The results again indicate the importance of perceived value, with 10 out of 25 (40%) of shoppers placing a fairly important rating on it. The results indicate that price and range are the next most important attributes with results indicating 9 out of 25 (36%) shoppers rating both these attributes as being fairly important. The results indicate that quality and store reputation are of equal importance with each representing 7 out of 25 (28%) of shoppers placing these attributes as being fairly important.
Level of Importance - Neutral.
The results indicate that store reputation was perceived by 6 out of 25 (24%) of shoppers as being of neutral importance. This was followed by range and quality with both representing 4 out of 25 (16%) of shoppers placing these attributes at neutral level of importance. The results indicate that 3 out of 25 (12%) of shoppers expressed a neutral level of importance for price and 2 out of 25 (8%) shoppers a neutral level of importance for perceived value.
Level of Importance - Not so Important.
The results indicate that 10 out of 25 (40%) at J.Sainsbury's expressed a not so important level of importance on the attributes. The results indicate that store reputation was the least most important attribute for customers when choosing own brands with 4 out of 25 (16%) shoppers expressing a not so important level of importance. This was followed by quality and range, with 4 out of 25 (16%) of shoppers expressing a not so important level of importance for these attributes. The results indicate that price and perceived value were considered to be the most important attributes with just 2 out of 25 (8%) of shoppers expressing these attributes as being of little importance.
Level of Importance - Not at all Important.
Of all the respondents surveyed at J.Sainsbury's none expressed a not at all level of importance for any of the five attributes. Thus, indicating some degree of importance of all attributes.
Conclusion
The following conclusions have been made with reference to figures 7(a) and 7(b):
The results obtained at both stores show a clear focus on the importance of perceived value, quality and price of own brand products. The results indicate that 26 out of 50 (52%) of the shoppers surveyed, placed a very important rating on value. This was closely followed by price, with 25 out of 50 (50%) of the shoppers rating it as very important. Quality was seen as being very important for 24 out of 50 (48%) of the shoppers. This was followed by range with 21 out of 50 (42%) of the shoppers rating it as very important. The results indicate that 18 out of 50 (36%) of the shoppers rated store reputation as very important.
Of the 50 shoppers surveyed, none expressed a 'not at all' level of importance for any of the five attributes. This suggests that all five attributes: price, quality, perceived value, range and store reputation are see as having varying degrees of importance attached to them.
The results obtained indicate the importance of the value proposition offered by supermarket own brands as being of great importance to customers when selecting store brands over manufacturer brands. Supermarket own brands are perceived to offer customers good quality products, which represent value for money. Own brands were initially launched as inferior product ranges, which were, marketed as lower value products with lower quality standards than the well-established manufacturer brands. However, the results indicate those supermarket own brands are now perceived by customers as having equal substance to that of manufacturer brands
Chapter 5
PROMOTIONAL CAMPAIGNS - INSTORE PROMOTIONS
The purpose of branding is to cement a positive image in the minds of the consumers. Branding is used essentially to build the product's image; this image will influence the perceived worth of the product and will increase the brand's value to the customer, leading to brand loyalty (Rooney 1995.)
It is imperative to support a brand name through advertising and other means of communication. It is through advertising that marketers expose the potential customer to the brand and give them the opportunity to accept it. In an increasingly competitive marketplace, advertising, marketing and promotion may be the only things that differentiate extremely similar products. (Rooney 1995.)
QUESTIONNAIRE FINDINGS
The following results have been obtained from the questionnaires.
Figure 8 relates to -
The customer level of agreement towards the following statement:
"In store promotional offers are effective in attracting consumer awareness."
The pie chart analysis below illustrates that 27 out of 50 (54%) of those surveyed strongly agreed with the above statement, 17 out of 50 (34%) of the shoppers agreed with the statement and just 6 out of 50 (12%) of the shoppers expressed a neutral feeling towards the statement. The results indicate that none of the respondents surveyed indicated any negative feelings of disagreement with the statement. The results indicate that in-store promotions are a key strategic tool when promoting supermarket offers to customers.
Figure 8
Figure 9(a) relates to
'The Popularity of In-Store Promotions at Tesco.'
The bar graph below illustrates the popularity and frequency of the purchase of in-store promotions at Tesco. The findings have been broken down into the frequency of purchase of in-store promotions: regularly, occasionally and hardly ever.
Figure 9(a)
Frequency of Purchase - Regularly.
The bar graph clearly illustrates the popularity of 1/2 price promotional offers at Tesco with over half, 22 out of 25 (88%) of shoppers regularly purchasing these offers. This was closely followed by the buy one get one free offers, with 19 out of 25 (76%) of shoppers purchasing these offers on a regular basis. The results indicate that extra 50% promotional offers was the next most popular promotion within this category of purchase, with 18 out of 25 (72%) shoppers buying it frequently. This was followed by extra card point offers, with 17 out of 25 (68%) of shoppers purchasing such promotional offers on a regular basis. The least regularly bought promotional offers with 14 out of 25 (56%) shoppers purchasing it on a regular basis was the special value pack promotional offers.
Frequency of Purchase - Occasionally.
The results indicate that the most popular promotional offer in this frequency of purchase category was the special value pack offers, with 9 out of 25 (36%) of shoppers purchasing such packs occasionally. This was followed by the extra card point offers with 6 out of 25 (24%) shoppers occasionally purchasing products with such offers. The buy one get one free promotional offers and extra 50% promotional offers both represented 5 out of 25 (20%) of shoppers purchasing such offers on an occasional basis. The 1/2 price promotional offers were the least frequented in this category with just 3 out of 25 (12%) of shoppers purchasing such offers occasionally.
Frequency of Purchase - Hardly Ever.
The results indicate that just 7 out of 25 (28%) of all shoppers surveyed at Tesco hardly ever purchased any of the five in-store promotions. The results show that 6 out of 25 (24%) of the shoppers surveyed, hardly ever purchased special value pack offers, extra card point offers or extra 50% offers promotional offers. Only 1 out of 25 (4%) of shoppers hardly ever purchased the buy one get one free promotional offers.
Figure 9(b) relates to
'The Popularity of In-store Promotions at J.Sainsbury's'
The bar graph below illustrates the frequency of customer purchases of in-store promotions at J.Sainsbury's. The findings have been broken down into frequency of purchase of ins-tore promotions: regularly, occasionally and hardly ever.
Figure 9(b)
Frequency of Purchase - Regularly.
The results indicate that the most popular promotional offers purchased by J.Sainsbury's are the special value packs promotional offers, with 19 out of 25 (76%) of shoppers purchasing these packs on a regular basis. This was followed by 1/2 price reduction offers with 18 out of 25 (72%) of shoppers purchasing such offers on a regular basis. The results indicate that 17 out of 25 (68%) of shoppers placed extra 50% promotional offers as the next most frequented promotional offer category. This was followed by the buy one get one free offers with 16 out of 25 (64%) of shoppers buying products with such promotional offers on a regular basis. The least regular bought promotion offers at J.Sainsbury's is the extra card point offers with 15 out of 25 (60%) of shoppers purchasing such offers on a regular basis.
Frequency of Purchase - Occasionally.
The results indicate that 6 out of 25 (24%) of shopper's purchase the buy one get one free promotional offers occasionally. This was followed by the special value pack offers and extra 50% offers with 10 out of 25 (40%) of shoppers occasionally purchasing such offers. The results indicate that 1/2 price reduction offers and extra card point offers are both purchased by 8 out of 25 (32%) of shoppers occasionally.
]Frequency of Purchase - Hardly Ever.
The results indicate that least purchased in-store promotion on a hardly ever-purchased basis is the extra card point offers with 6 out of 25 (24%) of shoppers hardly ever purchasing such product offers. This was followed by the buy one get one free, 1/2 price reductions and extra 50% offers with 9 out of 25 (36%) of all shoppers hardly ever purchasing such promotional offers Just 1 out of 25 (4%) hardly ever purchased the special value pack promotional offers at J.Sainsbury's.
Conclusion
The following conclusions have been made with reference to figure 9(a) and (b):
All 50 of the shoppers surveyed at both Tesco and J.Sainsbury's looked for in-store promotions when shopping. This suggests that most shoppers are strongly motivated and influenced by the various in-store promotions found in supermarkets. Both the stores offered the same in-store promotions. The ones which have been analysed in this research include the following: buy one get one free, 1/2 price reductions, extra card points, special value packs and extra 50% promotional offers.
The results indicate a very strong frequency of in-store promotion purchases by both store customers. The results indicate that the most popular in-store promotional offers at both stores were the 1/2 price reduction offers, with 47 out of 50 (94%) of the shoppers surveyed purchasing such offers on a regular basis. The results indicate that special value pack offers were equally popular, again, with 47 out of 50 (94%) of shoppers purchasing such packs on a regular basis. The results indicate that the next most popular in-store promotional offer was the buy one get one free promotional offers, with 46 out of 50 (92%) of the shoppers purchasing such offers on a regular basis. The results indicate that 45 out of 50 (90%) of shoppers placed extra 50% offers as the next most popular promotional offer. The least most popular promotional offer bought by customers on a regular basis was the extra card point offers with 42 out of 50 (84%) of shoppers purchasing such promotional offers. (These figures have been calculated by adding the values of the 'regular' and 'occasional' frequency of promotional offer purchases.)
The results obtained for those customers who hardly ever purchased in-store promotions clearly support the popularity of promotions. The results indicate very low levels of none commitment to in-store promotions. The results indicate that 8 out of 50 (16%) of shoppers hardly ever purchased extra card point offers. This was followed by extra 50% promotional offers, with just 5 out of 50 (10%) of shoppers hardly ever purchasing such offers. The results indicate that the buy one get one free promotional offers were hardly ever purchased by just 4 out of 50 (8%) of shoppers. This was followed by both the 1/2 price promotional offers and the special value pack offers with 6 out of 50 (12%) of shoppers hardly ever purchasing these promotional offers.
These results clearly suggest that customers are strongly motivated by value for money propositions and in-store promotions play a vital role in securing customer loyalty to the store. By offering customers superior value for money as well as quality products, supermarket will secure greater customer life-long loyalty to the store.
PHOTOGRAPHIC EVIDENCE
(Please see Appendix D for 'Photographic Evidence' of in-store promotions)
Photographs D (i) and (ii) show examples of 'BUY 1 GET 1 FREE' promotional offers. The results obtained in the investigation indicate that this was the third most popular promotional offer purchased by 46 out of 50 (92%) shoppers on a regular basis. As the photographs illustrate, this type of promotion is offered across a wide category of products, from household detergents to deserts.
Photograph D (iii) shows an example of a '1/2 PRICE REDUCTION' promotional offer. The results obtained in the investigation indicate that this was a joint most popular promotional offer purchased by, over half, 47 out of 50 (94%) of shoppers on a regular basis.
Photograph D (iv) shows an example of a 'REWARD POINT OFFER.' The results obtained in the investigation indicate that this was the least most popular promotional offer with 42 out of 50 (84%) of shoppers purchasing such offers on a regular basis.
Photograph D (v) and (vi) show examples of '3 for 2' promotional offers. These promotional offers are also offered across a wide range of categories, from breakfast cereals to hair and beauty products.
Photographs D (vii) and (viii) show examples of 'EXTRA VALUE PACK' promotional offers. The results indicate that these promotional offers were joint first popular with 1/2 price reduction offers, with 47 out of 50 (94%) of shoppers purchasing such offers on a regular basis.
Chapter 6
SUPERMARKET PATRONAGE - LOYALTY CARD SCHEMES?
Since 1995, the strategies of the major food retail chains have switched from a focus on intense price competition to loyalty schemes. It is a key strategic tool, which is used by supermarket operators, to retain customer loyalty, mainly through initiatives such as the loyalty card schemes, which represents an adaptation of the Green Shield stamps scheme, which was popular in the 1950s and 1960s. Tesco pioneered the modern day version of this, with the launch of their Clubcard in 1995. The use of barcodes and loyalty cards has allowed supermarkets to gain very detailed knowledge of customers' shopping patterns. This enables them to undertake highly focused promotional campaigns, targeting the preferences of individual consumers. (Clark 1997.)
According to the 1997 edition of The Customer Loyalty Report:
"A supermarket's most loyal customers are around 1,000 times more profitable that it's least loyal customers,"
The report defines a customer loyalty scheme as:
"a programme designed to improve the long-term relationship between provider and user to the extent that extra, profitable business is extracted."
The importance of maximising customer lifetime value is now widely recognised and loyalty initiatives have developed from simplistic incentive-based points (or coupons) schemes to highly sophisticated database driven relationship-marketing programmes. (Clark 1997.)
Figure 10(a) relates to:
'The Number of Shoppers who own a Loyalty Card.'
The bar graph below illustrates the number of shoppers who own a supermarket loyalty card. The results indicate that 19 out of 25 (76%) of Tesco shoppers own a loyalty card compared to 14 out of 25 (56%) of J.Sainsbury's shoppers. The results show that only 6 out of 25 (24%) of Tesco shoppers do not own a loyalty card, compared to 11 out of 25 (44%) of J.Sainsbury's shoppers.
Figure 10(a)
(Please refer to Appendix E(i) to see examples of 'Supermarket Loyalty Cards.')
Figure 10(b) relates to:
'The Number of Shoppers who also own other Store Cards.'
The bar graph below illustrates the number of shoppers who also own other supermarket loyalty cards. The results indicate that 11 out of 25 (44%) of Tesco shoppers own other supermarket loyalty cards compared to just 8 out of 25 (32%) of J.Sainsbury's shoppers. The results also show that over half, 14 out of 25 (56%) of Tesco customers do not own other supermarket loyalty cards compared to 17 out of 25 (68%) of J.Sainsbury's customers.
Figure 10 (b)
Conclusion
The following conclusions have been made with reference to figure 10(a) and (b):
The results indicate that, over half, 33 out of 50 (66%) of those surveyed own a supermarket loyalty card. Only 17 out of 50 (34%) of the shoppers surveyed did not own a Tesco or J.Sainsbury's store card. The results indicate that 19 out of 50 (38%) of those surveyed owned other supermarket store cards and 31 out of 50 (62%) did not own other store cards. These results suggest some degree of store loyalty for customers at both Tesco and J.Sainsbury's. This leads the author of the report to believe that supermarket loyalty card schemes are gaining prominence with the major food retailers in securing customer life-long loyalty. This is achieved by offering customers sophisticated incentives which encourage them to continue to shop at their stores and therefore remain loyal.
Figure 11 relates to the following statement:
'Supermarket loyalty cards collect excessive amounts of customer information.'
The bar graph below illustrates customer responses to the statement.
Figure 11
The results indicate that 16 out of 25 (64%) of Tesco customers agreed with this statement and 18 out of 25 (72%) of J.Sainsbury's customers also agreed with this statement. The results indicate that only 16 out of 50 (32%) of those surveyed disagreed with the statement. The results indicate that, over half, 34 out of 50 (68%) of the shoppers surveyed are concerned about the level of intrusion that such schemes invade. The implication for retail operators is to gather customer information without causing anxiety or customer hostility to such powerful incentive schemes.
OBSERVATION
FINDINGS
Both the Sainsbury's Reward Card and the Tesco Clubcard are well established at the supermarkets. The results indicate that overall, 33 out of 50 (66%) of the shoppers surveyed owned a supermarket store card.
The following observation findings of the research have focused on the J.Sainsbury's Public Access Kiosks.
J.Sainsbury's Public Access Kiosks are a new way of using loyalty cards. Norris (1994) as cited in Rowney (2000) claims that multi-media kiosk is the marketing organisation's opportunity to regain control over the ultimate stage in the marketing cycle - the point of sale decision. It is a medium through which it is possible to train, educate, inform, persuade or perform information-based transactions by providing shoppers with access to coupons and promotional offers based on the basis of their past behaviour.
The J.Sainsbury's kiosks involves the following stages:
? Viewing the options available on the screen
? Choosing offers and options and printing coupons and other information
? Tendering coupons at the check out
? Swiping a reward card through in order to validate entry
Rowney (2000) concludes that loyalty kiosks present an opportunity to retailers to offer a customised service in the form of special discounts and information to individual groups of customers depending on their previous purchasing habits. In order for this to be effective, the loyalty card needs to be an integral component of the relationship between the customer and the retailer and not just another marketing gimmick.
Chapter 7
The Concept of
E-COMMERCE in FOOD RETAILING
Although, Internet food retailing in the U.K. is in the very early stages of development, it represents an exciting era for both retailers and consumers. It also represents some fundamental challenges in the way that business is conducted.
Internet ventures can cost between £20m and £100m. Therefore, Internet grocery shopping has been more feasible for the larger multiples, since they are more likely to carry the economies of scale and sheer resources required to successfully launch a web site. Internet grocery shopping is most prevalent among British food shoppers; with Tesco.com now being the world's biggest Internet grocer. Most people use the Internet as a way of gathering information on products and making price comparisons before visiting their local store. (Rowney 1998.)
However, a note of caution. The highly publicised failure of US-based online grocery trader Webvan, despite strong leadership and backing, serves as a warning to firms that overstretch themselves in the new cyber grocery market. Although, growing interest has been shown in on-line Internet shopping, it still only represents a tiny percentage of the overall UK grocery market. Further developments in this field with no doubt ensure that 'virtual' grocery retailing on the Internet will soon be a commonplace activity. (Taylor 2001.)
OBSERVATION
FINDINGS
The following observation findings of the research have focused on the Tesco on-line shopping experience.
According to Sleight (2001) part of the rationale for Tesco.com can be seen in Tesco's group strategy "follow the customer." This is achieved by embracing new products and services and responding to changing consumer shopping habits. Tesco.Com identified that there was clearly a segment of the UK shopping population that was interested in home shopping and the most efficient way to do this was to offer them home shopping concept via the Internet. The second most important rationale for developing Tesco.com was the opportunity e-commerce presented in terms of diversifying into the non-food platform without the need to build more stores in the short to medium-term. (Sleight 2001.)
WEBSITE
Tesco.com was formed in April 2000. Tesco.com is an informative site, which is uncluttered with a great deal of promotional offers, identical to those that can be found in-store and it is very easy to navigate. Customers have the option to utilise a free CD-ROM disk, which enables their orders to be filled off-line before sending the order to the web site. (Sleight 2001.)
The Tesco product/service offers includes:
? Grocery (over 20,000 products available)
? Books (over 1.2 million titles available),
? Entertainment (over 160,000 CD's, plus a wide range of videos, computer games and DVD's),
? Electrical's (over 1,000 white and brown goods)
? Clothing (a range of sportswear, workwear and leisurewear for adults and children)
? Home products (from furniture to drinks accessories)
? Gifts
? Mother and baby
* Personal finances (a range of loans, mortgages, credit cards, savings products and insurance policies.)
(Source: Sleight 2001)
THE TESCO SHOPPING EXPERIENCE
The Tesco on-line shopping experience can be broken down into four parts:
Browsing and Product Identification.
This involves identifying the products and perhaps making price and product range comparisons with other food outlets. Also, the availability of special offers and promotions can be seen.
Selecting and Ordering
This is a straightforward process, which involves selecting the desired item and then simply adding it to the shopping basket. Customers also have the option of seeing customised lists of the products, which they have purchased or purchase frequently. A central issue regarding shopping on-line is that of security and payment. Rowley (1998) states that the ability to keep monetary information secure as it passes across the Internet and the need to authenticate the status and the identity of the sender is crucial for effective on-line shopping transactions. Consumers are also concerned about the potential misuse of personal information. They demand privacy safeguards.
Delivery
Tesco's grocery fulfillment is in direct contrast to its competitors who all follow the more usual practice of picking orders from warehouses as oppose to picking up orders from stores which is Tesco's more pragmatic approach to grocery fulfillment. According to Tesco, this approach to order fulfillment gives the company twin advantages of speed to the market and no need to construct huge purpose-built warehouses until demand proves a need for this. Delivery slots are available from 8.00 am to 10.00 p.m. seven days a week and orders are normally processed within 2-3 days. Also substitutes are offered if particular chosen slots are unavailable. (Sleight 2001.)
MARKETING
Promotional leaflets for Tesco.com are inserted in quarterly Clubcard mailings. These explain how easy it is to shop on-line. Special offers from each of the departments are also promoted in the leaflets. Clubcard points can also be gained by shopping at Tesco.com so regular shoppers can continue to earn points. (Sleight 2001.)
Tesco have launched a new distribution deal with both MSN.co.uk and Yahoo.co.uk This will allow Tesco.com to be featured on ads on MSN and Yahoo both of which are two of the most visited sites on the Internet. This will not only raise Tesco's profile but also the range of Tesco.com's products will be promoted on both sites. On-line links with established sites like those mentioned above will draw consumers towards Tesco.com. The latest marketing initiative from Tesco.com is a link with i.Village.co.uk It is a parent company of i.Village.com which is an American based woman's portal. This 50:50 joint venture will place Tesco at the forefront of a completely different kind of 'content' skill - a virtual women's magazine with strong editorial content and a strong sense of community. This latest development highlights Tesco's continual emphasis on being innovative.
The main motivators of Internet shopping as identified by Sleight (2001) are the speed of transaction, convenience (24 hours 7 days a week accessibility), selection and price factors as well as the immediate delivery of information and net shoppers like the interactive aspect of net shopping. One of the strength's of Internet shopping is the ability to enhance the experience for each individual shopper by tailoring different software for different consumer requirements. The major problems concerned with on-line shopping are related to transaction issues, lack of credit card security, difficulty in locating products/services and technical problems in software/slow interface. These issues must be dealt with if the consumer shopping experience is to be satisfactory.
The key success factor of Tesco as identified by Sleight (2001) is its pragmatic approach to business. By being, what Sleight has termed, a 'bricks and mortor' operation first, Tesco's brand, product offer and consumer franchise were already developed and hence minimum capital was spent on advertising its internet venture. The Tesco Clubcard also helped to secure a strong on-line presence via cross selling. By fulfilling grocery orders from stores, Tesco cuts down on warehousing costs and is able to deliver more rapidly than its rivals. Finally, by partnering with Otto Versand, (Grattan) and i.Village.com Tesco is being innovative and in head of its rivals. To conclude, it can be argues that Tesco.com has fundamentally changed the competitive structure of the grocery industry.
QUESTIONNAIRE FINDINGS
Please refer to Appendix F (i) (ii) and (iii) for detailed information regarding E-commerce and food retailing.
- OVERVIEW -
FINAL CONCLUSIONS
SUPERMARKET OWN BRANDS
Supermarket own brands have experienced phenomenal growth and popularity since the late 1980s. The results obtained in this research are congruent with similar research undertaken by leading academics in the field of own branding.
The results indicate that both Tesco and J.Sainsbury's have well established own brand ranges, which are popular and highly successful with shoppers at both stores. However, the results indicate that customers did not buy own brands exclusively at these two supermarkets, since, other supermarket own brands were also purchased by some of those surveyed. This suggests that customers are motivated and attracted by the possible value propositions offered by other supermarket own brands. The results do, however, indicate a strong level of customer loyalty to the customer's first choice of supermarket own brands, with over half of those surveyed purchasing either the Tesco or J.Sainsbury's own brands exclusively.
The results indicate that own brands are now firmly embedded in the minds of the consumers with a strong brand awareness associated with the supermarkets own brand ranges that were investigated. This is a key ingredient in making consumers want to purchase such brands. Similarly, the results indicate that most of the shopper's surveyed were familiar with the supermarkets own brand ranges.
Interestingly, the results indicate a very strong preference for what is termed the 'lifestyle brands' at both the stores under investigation as oppose to the standard own brand ranges at these supermarkets. Both the Tesco lifestyle ranges - the Tesco Organic Range and the Tesco Healthy Eating Range were purchased by, over half, of those surveyed at Tesco on a regular basis.
Similarly, the J.Sainsbury's lifestyle brands - the J.Sainsbury's Taste the Difference Range and the J.Sainsbury's Be Good To Yourself Range were also purchased by over half of those surveyed at J.Sainsbury's. These results indicate that as customers are increasingly becoming more health conscious, supermarket retailers are responding to this by the development of these lifestyle ranges.
The most popular product category for the purchase of own brands with over half, of all the shoppers purchasing from it on a regular basis was the ready meals sector. This was closely followed by the frozen foods sector. These results reflect changing consumer lifestyles (people are working longer hours and lead more hectic lifestyles and therefore, have less time to spend on preparing meals), which demand quick, easy and convenient food such as those, mentioned above.
Supermarket own brands were initially perceived as being of an inferior status to established manufacturer brands and most significantly in terms of quality perception. However, the results obtained in the investigation indicate that customer satisfaction with supermarket own brands is strong.
The results indicate that the key factors determining customer motivation in purchasing supermarket own brands were perceived value, price and quality. The results indicate that both supermarkets offer high quality own brand ranges, from the exclusive own brand ranges, such as the Tesco Finest range and the J.Sainsbury's Taste the Difference range to the more standard own brand ranges, which represent value for money. Although, store reputation and range were also considered to be fairly important contributing factors for customers when choosing own brands, the results indicate that perceived value, price and quality were the most significant factors at both the supermarkets.
If the economy remains strong, own brands will continue to be marketed and developed as premium product ranges. However, if decline occurs, as De Chernatony & McDonald (1992) state, they can easily revert to their former position as value-for-money products.
IN-STORE PROMOTIONS
All 50 of the shoppers surveyed at both stores looked for in-store promotions when shopping. This suggests that the shoppers are strongly motivated and influenced by the various in-store promotions found in supermarkets. The research shows that both stores offer exactly the same promotional offers: buy 1 get 1 free, 1/2 price reductions, extra card points, special value packs and extra 50% promotional offers. As the photographic evidence illustrates, these offers are not confined to just food products but are offered across a wide range of categories including non-food ranges, such as hair and beauty products at both the stores.
The results indicate a high frequency of purchase of in-store promotions at both supermarkets. The most popular in-store promotional offers at both stores were the 1/2 price reduction offers and the special value pack promotional offers with over half of those surveyed purchasing such offers on a regular basis. These results suggest that shoppers are strongly motivated by value for money propositions. By offering consumers high quality products, which represent superior value for money, supermarket retailers will ensure that consumers remain loyal to that store through repeat purchase.
SUPERMARKET PATRONAGE - LOYALTY CARD SCHEMES
The results indicate that over half of the shoppers surveyed owed a supermarket loyalty card. However, this was not exclusive to the supermarkets under investigation as some of the shoppers also owed other supermarket loyalty cards. These results suggest that consumers are motivated and encouraged to be involved in such (reward) loyalty schemes. The implication for supermarket retailers will be focused on how to differentiate their reward offers from their competitors as most of these loyalty cards offer similar benefits to the shopper, such as money off the final shopping bill, coupons and discount links to other organisation's, such as leisure complexes and hotel breaks.
The central aim of loyalty cards is to obtain valuable customer shopping profile information. Some may argue that a stores interest in their customer is purely one-dimensional. That is to secure a greater share of their spending with not much else. (Dawson 2000.)
The results indicate that over half of the shoppers surveyed were concerned with the level of perceived intrusion that such loyalty cards obtained about consumer shopping profiles. The implication of this for the retailers is to obtain this information without causing anxiety or negative feelings of hostility towards such potentially powerful incentive schemes.
E-COMMERCE and FOOD RETAILING
One of the most innovative concepts in retailing has been the explosion of e-commerce. This will become an important concept within the food retail industry as the Tesco.com venture has illustrated.
Although, the majority of the shoppers surveyed have not experienced on-line shopping, the results indicate a generally positive attitude towards on-line shopping by those who have experienced it. These results suggest that on-line shopping will be explored further by both customers and retailers alike in the future and no doubt, on-line shopping will become commonplace.
Dawson (2000) notes that senior retail executives must consider several key questions in their enthusiasm to implement e-retail into their operations: what are the product and service areas in which e-commerce will grow first? Then they must identify likely consumer groups and likely access points to the shopping sites, as well as logistic support needed for this new channel link. Other factors which managers will have to consider is the possibility of inter-firm competition. The key factors in securing customer loyalty will be an emphasis on price, delivery, security, and brand integrity.
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