MBA RESEARCH PROPOSAL “UK RETAIL SECTOR” A study on Tesco Plc. Prepared by: Sadia Riasat Submitted to: Dr. Parvez Dabir Elahi Date: 30th Nov, 2007 RESEARCH PROPOSAL INTRODUCTION AND BACKGROUND The retail industry is a business at the sharp end. Fast moving and complex, high profile and constantly changing, it is an environment where only the best managed and most innovative organizations can succeed and thrive. Strong competition, changes in consumer lifestyles and extended opening hours are all helping to change the face of retailing.Retail must be innovative in control of the retail environment, making sure it is appropriate to their customer profile, and taking the initiative in local marketing activity. Such organizations are responsible for ensuring the delivery of the very highest standards of customer service by recruiting, training and developing their staff.
Good retailers are flexible and have the mental agility to switch between day – to – day decisions and strategic issues such as competitor analysis and market research. Tesco was founded by Jack Cohen in London’s East End.From a modest background, the son of a Polish tailor, he began selling groceries in Well Street market, Hackney in 1919 after World War I. At this time rations and supplies were low, so he would buy damaged goods from other businesses, reselling them at reasonable prices. The Tesco brand first appeared in 1924.
The name came about after Cohen bought a shipment of tea from T. E. Stockwell. He made new labels using the first three letters of the supplier’s name (TES), and the first two letters of his surname (CO), forming the word “TESCO”.The first Tesco store was opened in 1929 in Burnt Oak, Edgware, Middlesex. Tesco floated on the London Stock Exchange in 1947 as Tesco Stores (Holdings) Limited. The first self service store opened in St Albans in 1947 (still operational in 2007 as a Metro), and the first supermarket in Maldon in 1956. Tesco plc is a UK-based international grocery and general merchandising retail chain.
It is the largest British retailer by both global sales and domestic market share, is the world’s third-largest grocery retailer, behind Wal-Mart of the United States and Carrefour of France.Originally specialising in food, it has diversified into areas such as discount clothes, consumer electronics, consumer financial services, selling and renting DVDs, compact discs and music downloads, Internet service, consumer telecoms, consumer health insurance, consumer dental plans and budget software. Tesco’s sparkling growth has come at the expense of rivals, especially Sainsbury and Safeway, both of whom are battling to keep customers. The other UK supermarkets simply cannot compete on both price and range of different store formats.
Sainsbury was the UK’s biggest grocer until 1995, but was recently relegated to third position behind Tesco and Asda. Internal problems and strategic errors have left Sainsbury struggling. The company believed it could abandon the classic focus on ‘price’ in favour of refurbishing store ‘fascias’ (their own term for aesthetic design) and supply-chain improvements. Its loss of market share illustrates that price is still the key for many consumers. 2004 has also seen shareholder unrest for Sainsbury’s.Unpopular board appointments were compounded by the news that Chairman Sir Peter Davis received a massive bonus despite the firm’s poor performance.
He resigned in July 2004. Morrisons has currently absorb Safeway and in 2004, issued its first profit warning in 37 years, leaving Asda as Tesco’s only really credible UK rival. Asda, owned by US Corporation Wal-Mart since 1999, is the only supermarket with the potential to become a thorn in the side for Tesco. Wal-Mart, with global sales of $256bn in 2003, is the biggest company in the world with annual sales eight times bigger than Tesco’s.Asda is rumoured to be about to acquire Matalan, the giant discount clothing and home furnishing store. Already, Asda’s George range of clothing is the best selling brand in the UK. Two million of its ? 4 pairs of jeans were sold during 2003-4.
Interestingly, many industry insiders believed that the only way to tackle Tesco’s dominance in the market would have been for the competition authorities to have allowed an Asda/Safeway merger, as this would have created a credible rival.In the event, out of the major supermarket chains competing, Morrisons acquired Safeway, although remarkably, Tesco has been allowed to buy 10 of the 52 Safeway stores which Morrisons was obliged to sell off for a rumoured ? 120m. Asda showed a slight slow down in growth in the period to September 2004. This is probably in part due to the planning restrictions on large supermarkets which wouldn’t affect Tesco and other supermarkets concentrating on smaller store formats. Asda had tried to get around these restrictions through a planning loophole that allowed them to build mezzanine floors.Asda have also been affected by the Safeway store conversions by Morrisons. Tesco used to be considered a cheap supermarket, compared to the more ‘up-market’ supermarkets like Waitrose and Marks & Spencer.
However, in recent years, with the ‘Finest’ range, it has moved to capture that market too. RESEARCH QUESTION What are the critical factors in success of Tesco? RESEARCH AIM This research is designed to test critical success factors of Tesco and its impact upon Customer behavior. Additionally it will aim to evaluate the implications to the future opportunities.This research will also fulfill all objectives.
RESEARCH OBJECTIVES: 1. Analytical study of Tesco market share in UK. 2. Research will include if it is about meeting the needs of customers by constantly seeking, and acting on, their opinions (Club card) 3. Observation of Tesco’s Innovation & product quality 4. Choice of customers, store facilities and good customer service.
5. Is it the investment in efficient stores and distribution depots and new technology? 6. How does Tesco’s marketing strategies help them achieve their aims and objectives . A comparative study of Tesco with its rival retailers like ASDA and Sainsbury’s and also what could be its impact on new entrants in market.
8. Is Tesco a monopolist? What are threats Tesco facing being a largest retailer? LITERATURE REVIEW It is an accepted axiom that any solid research program is based upon a thorough understanding of the prime subject domains covering your topic. Philip Kotler & Gary Armstrong, Prentice Hall 1998 comments in The Principle of marketing: retail stores come in all shapes and sizes.And new retail types keep emerging. The most important types are specialty stores, department stores, supermarkets, convenience stores, superstores, discount stores, off- price retailers. These can be classified in terms of several characteristics, including amount of service they offer, the breadth and depth of their product lines and the relative prices they charge. They have also commented on micromarketing for small convenient retailers and direct marketing concept for non store retailing.Jim Erickson, 2002 comments on attack of superstore Hypermarkets have already changed the retail landscape in their homelands by being brutally efficient, selling a mind-boggling range of products from groceries to pharmaceuticals to clothes to big-screen TVs at cut-rate prices.
Shoppers, however, don’t seem to care. “Because of economic globalization, it doesn’t matter if you are a foreign store or a domestic store,” says Wu Ping, a Beijing businessman who shops at a Carrefour on the city’s outskirts. “What’s important is that you provide what local customers really need at a price that most people can afford. If the invaders can continue to do that, it will take more than rocket attacks to stop them.
Edward Landry, Wendy Millan, Thomas Ripsam, and Bart Sayer, “The Adaptive Sales Force: Five Steps for Staying Aligned with Customers,” Booz Allen Hamilton white paper, February 2007: The piece on which this article is based goes into more detail for industry leaders and Making the Perfect Marketer,”;have focused on adaptive sales force and comment: Multinational companies spend billions of dollars each year compensating their salespeople and sales management, and for good reason: A sales force is among a company’s most critical assets.The role of the sales force is becoming increasingly important as markets become more competitive, products commoditize, and companies focus more on organic growth. Yet at the same time, it is increasingly difficult to maintain a high-performing sales force, especially if an industry or a company is undergoing significant change. Retail Impact assessment: a guid to best practice by John England, 2000 defines types of location which are also important in policy terms: edge of centre, out –of-centre, and out of town. ‘edge-of-centre’ for shopping purposes is taken to be a location within easy walking distance (200-300 eters) of the primary shopping area. He also defines the vitality and viability, major or large-scale retail development, cumulative effects, linked trips and sustainable development. He also comments on retail impact with relevance to urban planning by giving five principal reasons; understanding the effect of change, control of public costs, the efficiency argument, the equity argument (the degree of accessibility of different types of retail outlet and of shopping centers directly affects the standard of living of all consumers) and finally the quality of life argument.Concerns have been expressed that online retailing is likely to generate more transport and impose a heavier burden on the environment than store-based retailing (Hesse, 2002).
Research by Mathews, Hendrickson and Soh (2001), however suggest otherwise. The main advantage of store based fulfillment is that it minimizes the amount of speculative investment in new logistical facilities for future demand is uncertain. In Winning At Retail: Developing a sustained model for Retail success Neil Z.Stern Publisher: John Wiley & Sons, Inc ,2005 described the customer’s definition of service as: 1) knowing what I want and having it in stock; 2) helping me find the product I’m looking for easily without wasting my time;3) providing information to answer my questions and assist me in making an intelligent choice-with signs, brochures, a salesperson, or via the internet; and after you’ve done the first three right; 4) having friendly , knowledgeable people. After reviewing and studying retailers that win because of their exemplary customer services.
Clear theme emerged –ease of use for customer. • Customer wants an experience that makes shopping easy and hassle-free. • They want an experience that makes it easy for them to solve whatever problem they have, from something as mundane as buying gas to something as complex as actually purchased a car. • They want an experience that enables them to easily choose the available options that is right for them. • They want a solution proposed by retailer who know their stuff and who understand customer’s need, wants, and aspirations.
Planning products ranges and selecting products are central tenets of retail products management. Variety, depth. Price level and availability are variables that need to be combined in order for a retailer to achieve a balanced product assortment. A product range is the total product offering expressed in terms of width and depth of a product range depends on the variety, or number of different types, of product category. Depth, on the other hand refers to the amount of choice offered in terms of product and brand variation within a product category.Increased depth will allow a retailer to cover a number of different price levels, should this be the part of their overall product strategy. A product range within the large retailer may include many thousands of single product items, and so in order to mange them effectively, the total range is subdivided. Although the common way of managing product groups, product similarity, however, is not the only basis upon which total product offers can be divided.
Alternatives ways of sub-dividing product range includes: end use, price, brand, core and non core products.RESEARCH METHODOLOGY: Research is the application of systematic techniques and methods in pursuit of answers to questions. These questions and answers can be highly specific, or abstract and general, depending on the type of research being undertaken, from basic to apply. The two generally defined types of research methodology are those that use quantitative or qualitative techniques to collect and analyse data.
To enhance my study, I shall be using Quantitative, Qualitative and deduction methods. Deduction method would help analysis of Customer & Strategic approach of Tesco.Qualitative method would provide relevant first hand, error free information through interviews and personally-administered questionnaire. The aim of qualitative analysis is a complete, detailed description. No attempt is made to assign frequencies to the linguistic features which are identified in the data, and rare phenomena receives (or should receive) the same amount of attention as more frequent phenomena. Qualitative analysis allows for fine distinctions to be drawn because it is not necessary to shoehorn the data into a finite number of classifications.Ambiguities, which are inherent in human language, can be recognised in the analysis.
The main disadvantage of qualitative approaches to corpus analysis is that their findings can not be extended to wider populations with the same degree of certainty that quantitative analyses can. This is because the findings of the research are not tested to discover whether they are statistically significant or due to chance. In quantitative research I will classify features, count them, and even construct more complex statistical models in an attempt to explain what is observed about Tesco.Findings can be generalised to a larger population, and direct comparisons can be made between Tesco & its competitors as long as valid sampling and significance techniques have been used. Thus, quantitative analysis allows me to discover which phenomena are likely to be genuine reflections of the behaviour of a customer or a strategy of Tesco, and which are merely chance occurrences. However, the picture of the data which emerges from quantitative analysis is less rich than that obtained from qualitative analysis. For statistical purposes, classifications have to be of the hard-and-fast (so-called “Aristotelian” type).
An item either belongs to class x or it doesn’t. So in case of Tesco I would have to decide whether to classify choice of store location against Sainsbury’s locations or just an available location. Quantitative analysis is therefore an idealisation of the data in some cases. Also, quantitative analysis tends to sideline rare occurrences.
To ensure that certain statistical tests (such as chi-squared) provide reliable results, it is essential that minimum frequencies are obtained – meaning that categories may have to be collapsed into one another resulting in a loss of data richness?Quantitative has lots of advantages, but qualitative delivers the best results for the least money. Furthermore, quantitative studies are often too narrow to be useful and are sometimes directly misleading. A RECENT TREND From this brief discussion it can be appreciated that both qualitative and quantitative analyses have something to contribute to corpus study. There has been a recent move in social science towards multi-method approaches which tend to reject the narrow analytical paradigms in favour of the breadth of information which the use of more than one method may provide.SAMPLING: Sampling is something that I will consider, sampling techniques help reduce the amount of data collection. As the total population of the research is huge so it is likely to reduce the number via application of sampling techniques, and will intend to claim any statistical presentation in the sampling adopted. Study suggests that if objectives are “concerned with what people do and obvious way to discover this is to watch them do it. ” Essentially observation focuses on the systematic observation, recording analysis and interpretation of people’s behaviors.
The effective sampling of the overall population to be studied will help ensure reliability in the data. The overall population is; Tesco staff that are presently working in various areas of London, and customers of various age and income groups. Effective retail research requires interviewing the right customers. But traditional screening is inefficient and slow. Collection of pre-screened customers allows me to conduct study quickly while using established research methods. In order to identify customers of major retail brands including: • Electronics stores Department stores • Big-box retail stores • Home improvement stores • Apparel and clothing stores • Grocery stores • Sporting goods stores I will also identify the Tesco’s different format of retail units. Such as; • Express stores • Metro stores • Extra stores • Superstores DATA COLLECTION TOOLS The data collection methods will be guided by the research strategy and research objectives. After considering the various data collection methods the key data collection methods will be observation of publicly available information.
PRIMARY DATA:Primary data would be the data obtained by me during my research by carrying out researches, surveys through questionnaires and interviews of the customers. The questionnaires would include several open-ended and close-ended questions that will help me build up an image of Tesco as perceived by the customers. QUESTIONNAIRE: As noted , this research takes a predominately deductive investigation and the particular method adopted for the research will be a self-administered questionnaire; attitude survey, that will ask the participants to either agree or disagree with statements.
The questionnaire will be geared towards testing OPINION as noted by Dillman, 2000 as being one of the three measurable variables tested via questionnaire. Opinion variable test how the respondents feel about something what they think or believe if true or false. In doing this a rating scale method will be utilized; the most common approach being. Summate e. g. Likert-style rating scale (1932). However, for the questionnaire to be stimulating and hence engage the participants a variety of rating scales may be utilized including semantic scales, (Osgood et al, 1957).
They will also include some personal classification questions. In order for the research to answer the set objectives it will be essential for the questionnaire to go through a testing/pilot process, which will ensure validity and sensitivity in the results. The domains the questionnaire will cover will be developed from a series of Focused Groups with the research participants; additionally, a review of others questions will be utilized. Administration of the questionnaire will be in person. This will help ensure a high rate of return, which is a particular concern for some forms of questionnaire administration.A key to the project’s success and validation process will be the return ratio; an adequate ratio will ensure ‘sizeable’ data for analysis. SECONDARY DATA: This data will be collected from sources like books, internet, previous researches on similar topics, etc, that will help me build up a base for my research for primary data. ANALYSIS OF DATA AND INTERPRETATION OF FINDINGS: Quantitative analysis is more likely to be secondary and exploratory in nature, summarizing data in the form of charts, tables and percentages.
Qualitative analysis of data is expected to be more frequently used within the research than its quantitative counterpart. ACTION PLAN – FOR 22 WEEKS Starting on: 21st January, 2008 End date: 30th April, 2008 |WEEKS |TASKS | | | | | |Introduction |Literature review Research Methods |Data Collection |Analysis |Conclusions & Recommendations |References/ Appendices | |week 1 |Tesco Intro | | | & Its Process | LIMITATIONS There is one noteworthy limitation of this study: generalizability effects. The generalizabilty of these research findings are limited because they were generated in an exploratory qualitative inquiry.The research design was not intended to produce results that account for or predict the behavior of a wide classification of people as most experimental, hypothesis-testing studies are. This liability was clear at the outset. However, because the research will be generated a relatively clear and specific grounds that can be applied to practical experiences, it should be relatively easy to design a series of focused hypothesis-testing studies to experimentally verify and expand the theory generated here.
These studies would be much more likely to produce findings generalizable to larger classifications of peopleSecondly I will use only publicly available data because of limited times scale and insufficient resources available to me. Lastly, Number fetishism leads usability studies astray by focusing on statistical analyses that are often false, biased, misleading, or overly narrow. So its better to emphasize insight and qualitative research RESOURCES: • Johannes Bussmann, Gregor Harter, Evan Hirsh, Ivan de Souza, and Vanessa Wallace, “Winning the Multi-Channel Challenge: Customers, Channels, and Marketing Management,” . Booz Allen Hamilton white paper, February 2007: There are three basic principles common to all suc-cessful multi-channel management practices across industries. www. boozallen.
com/media/file/Winning_the_MultiChannel_Challenge. pdf • Rene Y. Darmon, Leading the Sales Force: A Dynamic Management Process (Cambridge University Press, 2007): Demonstrates how to dynamically manage the sales function via an analysis of the key players throughout the process and a description of the tools available to sales force managers. Frank Galioto, Jason Kerins, Steffen Lauster, and Deanna Mitchell, “The Matrix Reloaded: The Multi-Axis Organization as Key to Competitive Advantage,” Booz Allen Hamilton white paper, December 2006: Discusses the benefits of a multi-axis organization (i. e.
, product/category, geography, function) and demonstrates how to manage this type of organization for success. www. boozallen. com/media/file/The_Matrix_Reloaded. pdf Edward Landry, Wendy Millan, Thomas Ripsam, and Bart Sayer, “The Adaptive Sales Force: Five Steps for Staying Aligned with Customers,” Booz Allen Hamilton white paper, February 2007: The piece on which this article is based goes into more detail for industry leaders. www. boozallen. com/media/file/Adaptive_Sales_Force.
pdf • Rosann Spiro, Greg A. Rich, and William J. Stanton, Management of a Sales Force (McGraw-Hill/Irwin, 2007): A soup-to-nuts textbook on sales force management. • Andris A.Zoltners, Prabhakant Sinha, and Sally Lorimer, Sales Force Design for Strategic Advantage (Palgrave Macmillan, 2004): Discusses the changing role of sales forces and describes how to optimally design them. • Booz Allen Hamilton’s Organizational DNA Web site: An online resource with further information on effective organizational structure. www.
orgdna. com/ • Forum Web site: An online management resource with numerous short articles on sales forces effectiveness. www. forum. com/sales_force_effectiveness. aspx • www. strategy-business.
comFaculty of Business and Law School of Management MGTMIM001 Research Skills Analysis STUDENT DECLARATION – Research Proposal I declare that all the work in this proposal is entirely my own unless the words have been placed in inverted commas (“ “) and referenced with the original source. A full reference section is included with this dissertation. No part of the work has previously been submitted for assessment, in any form, either at Liverpool John Moores University or any another institute. Name: Sadia Riasat Sign: Date: 30th November, 07