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Consumer Behavior Sample Dissertation
Consumer Behavior Sample Dissertation
Students Name:
Instructor Name:
ABSTRACT
Understanding consumer buying behaviour in recession in UK is the aim of this
research. A number of decision making processes are involved complex consumer behaviour
phenomenon related to the monetary determinants, social interactions, and market incentives.
The purchasing patterns of consumers are the focus of scholarly researches in present decade.
The complex behaviour of consumers is difficult to predict and control, but the study of this
behaviour is significant for manufacturers and retailers as consumers are main source of
revenue generation. The understanding of consumer choices, market trends, and financial
constraints is achieved through exploring consumer behaviour.
The current financial crisis has changed the consumer purchasing trends to a great `extent;
this study is focused on analysing these patterns of economic and social aspects of UK
consumers. The focus of research is to reveal the affects of present recession on the
purchasing behaviours at premium retailers outlets.
Data analysis of conducted research has put forward significant findings of recent patterns of
purchases. The secondary and primary research followed a descriptive framework to verify
the suggested propositions. These hypotheses verified the conscious behaviour of consumers
in restricting their shopping budgets, made economical choices, and trust on established price
leaders in retail business. New trends of online grocery markets have been identified and
suggestions have been forwarded to the retailers to use strategic online practices in their
business in order to reduce transaction and storages costs.
Tesco case study, the selected giant retailer of UK, has been studied in detail to identify its
strengths, opportunities, threats, competitive strategies, and criticism in domestic and foreign
4
markets. In this financial crunch, the company should integrate and diversify its marketing
strategies with more emphasis on enhancing and maintaining operations its online grocery
markets with improvements in Tesco.com. Company also has to overcome criticism by
increasing its corporate social responsibility roles in local and overseas businesses.
Table of Contents
1.1
1.2
Background.....................................................................................................................5
1.3
1.4
1.5
Research questions.........................................................................................................7
1.6
Hypothesis development.................................................................................................7
1.7
Hypotheses......................................................................................................................7
1.8
1.9
1.10
Thesis structure...............................................................................................................9
Programmed behaviour:............................................................................................12
2.2.2
Limited decision-making:..........................................................................................13
2.2.3
Extensive decision-making........................................................................................13
2.2.4
2.3
2.4
2.5
2.6
2.7
2.8
2.9
3.1
Research design............................................................................................................21
3.2
Research Approach........................................................................................................22
Sample Designing.........................................................................................................24
Data Collection.............................................................................................................26
3.8.
Questionnaire Designing..............................................................................................29
3.5
Ethical issues...................................................................................................................30
3.7
Data Analysis..................................................................................................................31
6
Summary..................................................................................................................................32
4.1
4.2
Tesco-Company Overview............................................................................................35
4.3
4.3.1
Political.....................................................................................................................36
4.3.2
Economic...................................................................................................................36
4.3.3
Social.........................................................................................................................37
4.3.4
Technological.............................................................................................................37
4.3.5 Legal................................................................................................................................38
4.3.6
4.4
Environmental...........................................................................................................38
Tescos SWOT Analysis................................................................................................38
4.4.1
Strengths....................................................................................................................38
4.4.3
Opportunities.............................................................................................................40
4.4.4
Threats.......................................................................................................................40
4.5
Competitive Strategies..................................................................................................41
4.6
5.2
7
6.1
6.2
6.3
6.3
6.4
Summary.......................................................................................................................79
7.1
Chapter I
Introduction
The onset of financial crisis resulted from the collapse of two major banks in 2007 namely
the Lehman Brothers in USA and the Northern Rock Building Society in UK (Shiller, 2008)
along with the simultaneous fall of Bradford & Bingley (B&B) (BBC News 2010). As a
consequence it leads to the widespread of financial crisis. But the question here is why it took
place to such a large extent even though there are several financial models that constitute the
control of financial risk from the early 1950s (Shiller, 2008).
In order to answer the above question, lets look on some of the major reasons for its
cause. Any large business house, consumer expenditures or governmental schemes may
borrow public money in the form of selling shares. It is the function of large financial
institutions, such as banks, to issue or generate credit transactions. A smooth inflow of credit
between the borrower and the lender is what establishes ideal market conditions. A credit
crunch occurs when there occurs a lack of obtainable credit in the market and the borrowers
cannot find adequate finance. Usually such a phenomenon happens when the creditors are
unwilling to invest more money or hike up their interest rates to such exorbitant levels that it
becomes virtually impossible for the lender to borrow.
The central question, then, is why do the creditors suddenly refuse to invest more money?
Actually, far from being an isolated fact, it is a part of a complex chain reaction. The lenders
reel under deficit money supply when they fail to realize the interest or even the actual capital
they had invested on companies or institutions, which accrued a disastrous amount of losses.
Such loss incurring companies cannot return the money they had borrowed from the creditors
and have to default payment. However, when the prices begin to fall, even the bank has to
sell out at considerably lower prices and suffer huge losses. Consequently, their ability to lend
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money is severely crippled. In certain cases, the banks are required to raise the level of capital
reserves and to comply with this have to restrict lending. Even when banks perceive a risky
market, interest rates may shoot up to discourage lending to credit crunch.
1.2 Background
There is a considerable decrease in the economic growth due to recession that aroused from
the failures in the collateralized debt obligation markets which are the sophisticated financial
tools (Kambil, 2008). The world has seen such crisis in the past and incorporated different
methods as bailout plans. The 1932-53 crises called for reconstruction of Finance
Corporation and the trigger was Great depression. The 1989-95 crises needed Resolution
Trust Corporation and the trigger was savings and loan crisis. Here 747 small companies
were affected and the cost was $300 billion where the initial cost estimation was $50 billion.
In other countries too, like Sweden (1992-96) and Japan (1996), the resolution was in form of
Bank Support Authority in Sweden and Resolution and Collection Corporation in Japan and
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in both the cases, the trigger was fallout from a real estate bubble (Reality Sandwich 2009).
However, it is an interesting aspect in this context to study the behaviour of retail business
during these recessions.
1.5
Research questions
The future research will endeavour to determine the most probable solutions to the following
research questions:
1.
What are the core challenges and practices of consumers in UK retailers during
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recession?
2.
3.
What are the most suitable marketing tools during recession used by successful
organisations to attract consumers?
4.
1.7 Hypotheses
On the basis of above research questions, following hypotheses have been developed:
1. The strategic marketing strategies are important management tools in recession in retail
chains of UK.
2. Consumers follow identical practices and face same challenges in recession irrespective of
the type of retail business.
3. Price sensitivity and economies of scale become the important elements in buying decisions
of consumers in recession.
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1.8
The present research is important for the academic learning and practical applications of the
learned concepts for the researcher. The knowledge of consumers buying decisions, the
techniques of strategic marketing planning, and retail management practices in actual mega
chains of retailers will facilitate the researcher in practical life. The processes of marketing
strategies analyses involve in influencing the buying decisions of consumers have a
significant impact on the study outcomes.
This research would help academicians, students, and corporate managers to understand the
role marketing activities in retail and consumer patterns. The usefulness and demerits
identified in the upcoming chapters will establish the practical implications of the effective
strategic marketing. The case study analysis of the mega retail stores chain Tesco will help
managers to understand the mechanism of consume decision-making in recession. Thus this
study will provide the basis for further research in this area, and will provide the necessary
details of consumer behaviour in recession.
1.9
The present study will emphasise on the extensive use of primary research based on surveys,
interviews and secondary research based on material retrieved from free available scholarly
journals. The detail case study analysis of UKs largest retail stores chain Tesco is done in the
study to analyse practical behaviour of consumers. The data retrieved from company site and
other reliable online sources.
13
This thesis is divided in many chapters in a sequential order to explore the issue under study.
The organisation of the study is as follows:
First chapter is the introduction which is used to initiate the topic of research and its
proceedings. The contents included in this section are purpose of the study, background,
problem statement, research objectives, research questions, hypothesis, studys significance,
scope and organisation of the research.
The second chapter presents an extensive literature review of the consumer behaviour
theories and the implications of the marketing tools in consumers buying decisions. The
literature review in this chapter is composed of journal, books, and case study reference
related to the topic.
Chapter three is the research methodology which deals with the research approaches,
methods, and theoretical approaches to be used in the present research. Ethical
considerations, limitations, and resources and planning are the other main components of this
section.
Chapter four presents the detailed analysis of the selected company and its specific consumer
buying situations. Companys history, products, management, and other significant details are
included in this section. The consumer behaviour and marketing policies are the vital
components of case studies analysis.
Chapter five focuses on the case study analysis, research findings, and interpretation of
results of hypotheses testing. The research objectives would be achieved and the significance
of marketing tools in buying decisions will be analysed in this chapter.
14
Chapter six draws the conclusion and derives the recommendations to the specific analysis of
the selected case study of TESCO.
Chapter seven is the personal reflection to the present research project and focuses on the
researchers learning from the proceedings of this research.
CHAPTER 2
LITERATURE REVIEW
15
The present literature review is focused on the study on the consumer behaviour and its
various aspects, different theories categorises this behaviour in many classes and forms. The
processes involved in offline and online buying at stores is mainly considered in this review.
Perner (2008) described consumer behaviour as a cognitive and perceptive that is used by
individuals or consumer groups to select and/or buy a service or product in order to satisfy
their physical or psychological needs. Presently, consumption frequency and selection played
a key economic factor in organizational and public development; therefore the consumer role
is significant at both macro and micro levels of businesses. This vital importance of the role
of consumers is also because of the amount of wealth and time spend by the modern
consumers at buying offline or online. The buying behaviour become more complex and can
be recognised from the fact that most contemporary consumers spend a great amount of time
and energy on buying behaviour and decision-making activities. Hansen et al. (2004)
recognized consumer behaviour as a process comprised of the activities like information
search, product selection, purchase decision, and consumption of the tangible or intangible
products. This phenomenon has declared it as a complex behaviour which became the
challenge for marketers and policy makers to explore, so that the potential of individual or
business consumer markets.
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internal attributes like their demographics, psychographics, behavioural, and life styles. These
factors define the various purchasing characteristics posses by the particular consumer
segments. In contrast, the external factors affecting buying behaviour include macro and
micro environmental determinants like economic and market conditions, advertising and
promotions, customer services, strategic management policies etc. Dawson et al. (2006)
proposed in this respect that the internal consciousness of consumers and external motives are
responsible for a particular buying behaviour.
2.2.1
Programmed behaviour:
Habitual purchasing behaviour of low involvement products is included in this group. The
routine purchases of low cost goods like tea, bread, tooth paste, newspapers etc. involves less
search time, fixed vendors, regular frequency of purchases, and little product information
search. Learn Marketing (2008) concluded that this process of repetitive purchases involves
relatively simple decision making and least purchase risk.
2.2.2
Limited decision-making:
This buying behaviour involves medium levels of decision making skills with less
information and search time for purchases. East (1997) suggested that in this mode of
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purchasing behaviour, information is easily available in little or no time requirements, as the
purchases largely dependent on consumers life style and product preferences. The purchases
of clothes, shoes and other personal accessories choices can be characterized in this form.
2.2.3
Extensive decision-making
In comparison with above two behaviour patterns, an extensive decision making criterion is
related to complex decision making of high involvement (Foxall and Goldsmith, 1994). High
purchase risk is involved with extensive information search and more time requirements.
Peter and Olson (2007) proposed that expensive and less frequent buying decisions of houses,
jewellery, university admissions, and automobiles are included in this behaviour pattern.
Higher levels of financial and psychological constraints are essential elements of these
decisions.
2.2.4
Cobb and Hoyer et al. (1986) defined impulse buying as an unplanned purchase decision
under the influence of external stimuli and inner motives. Ferrell (1998) also proposed that
this behaviour resulted in an instantaneous purchase which has no previous objective. It has
less perceived risk, less time for decision making, and irresistible motivations to close the
purchases instantly. The purchases of fashion goods, perfumes, cosmetics etc. are most of the
time under the influence of surrounding factors and moods. Babin (2001) suggested that the
purchases intentions in mega stores and in shopping malls are triggered by consumers
emotions. These emotions characterized the type of items, quality evaluation, and
significance of purchase by consumers.
18
19
20
the arousal of positive emotions like joy, cheerfulness, and pleasure due to ever expanding
display of products. These stimuli evoked the consumers to satisfy their urge from
surroundings. Impulse purchases resulted from these positive reinforcements of the lucrative
ambience and store settings. On the other hand, if the cause of arousal remains unexplored,
than these stimuli can create negative impacts also.
21
they can be noticed only when they reached a negative threshold of consumers psychological
barriers (Mizerski 1982). For instance, change of temperature is noticed only if it is
unbearable for the absorption capacity of consumers body. In contrast, the designing factors
of store (interior decoration, colour, furnishings etc.) noticed when they positively impacted
on consumers perceptions. Stores lay out and purchasing comfort can also increase the
pleasure levels and makes shopping more interesting to the consumer, online purchases also
depends of products layouts and website designs and consumer friendliness (Allan 2008).
22
23
closures of luxurious buying houses. This severe crisis has increased the economical
hardships of both common and business consumers (The Economist, 2008).
Consumers are facing job cuts, un employments, less disposable income, least credit
financing, and high products and services charges (Allen and Gale, 2007) Th retail sector of
UK has also been severely affected from this worst financial crunch, less buying and cost
cutting approaches have been adopted by consumers to meet the challenges of low incomes
(Gramley, 2008). Low consumption trends have been observed accompanied with extensive
search for good quality and cheap products. More inclination of consumers has been
identified in discount options, clearance sales, and leasing options in purchases.
24
problems of cash acquirements at ATMs. Taylor and Todd (1995) have identified four
attributes of technology dependence of customers during buying processes; these include
frequency, degree, diversity, and duration of usage. The recent advancements in technology
have driven consumers to become more sophisticated and experimental towards new self
service mechanisms.
25
Chapter III
Research Methodology
This chapter of the thesis report discusses the methodology implemented in this research
assignment. This methodology consists of the research design, research approach, sampling
frame and procedure, data collection methods and description of dependent and independent
variables used in the survey questionnaire with a thorough description on the arithmetical
techniques engaged for data analysis. The present study is based on a descriptive research
structure; information is collected through 60 self administered questionnaires from
consumers visiting shopping malls especially in TESCO.
The present study is mainly based on quantitative investigation with the assistance of
series of theoretical findings in associated academic literature. The appropriate primary data
demonstrations in the form of graphs and tables will also be used. The special concern is
given to the independence of collected data from customers who shared their personal
consumption experiences. The quantitative research instruments used to recognize the
consumption patterns of consumers in recession and the response of mega stores management
to facilitate them in this period of financial crunch.
3.1
Research design
The research design is the blueprint for the data collection, classification, measurement,
analysis, and presentation for a research study. As a result, the research design is an action
based on time based plan which assists in solving the defined problem (Hussey and Hussey,
1997). Furthermore, this design directs the assortment of type and sources of information and
26
describes the association between the dissimilar variables by illustrate a structure and
demarcation the measures.
There exist diverse research designs based on many parameters, such as purpose of research,
data collection, purpose, significance, scope of the research and environment of study
(Saunders et al., 2003). Therefore, on the bases of scope and nature of the issue under
consideration, research can be exploratory, descriptive, and/or of causal nature. Clear
definition of problem and its nature is normally not known in an exploratory study, the
researcher has to design a framework to explore the missing parameters of problem at hand.
The problem has to be clearly defined in the beginning and then the main concepts developed
by exploring the general criteria of the topic. The second approach is causal research design,
deals with the notion of reason. They reveal the cause and consequence association in
between two or more variables. Causal research is very much similar to that of descriptive
study design, but interrelate the variable in a more precise and appropriate ways (Blumberg,
et al., 2005).
In contrast to the above forms of research, descriptive studies display an obvious
organization with precise hypotheses and well defined research problems. Hence, descriptive
researches approximate the scope of a population and disclose associations between the study
variables (Shield et al., 2006). The present research is to be based on the research design of a
descriptive design. In this study, explicit hypotheses have been developed to investigate the
buying behavior of UK consumers in recession. The study has a foundation of precise
hypotheses and extends a relationship between dissimilar variables. More precisely a
relationship need to be established among consumer purchasing behavior and price, type of
goods, and on demographic and socioeconomic variables.
27
28
adopts top down approach in confirming the collected data with the help of established
theories. As the concepts of consumer behaviour have already been well established in
western organizations, their application will show appropriateness in UK businesses. On the
other hand, inductive approach adopts the bottom up approach. It begins with working on the
data that is being collected based on the observation. As a consequence, it starts from a
specific area of interest and ends to a generalised theory. This approach constitutes a degree
of uncertainty; hence inductive approach is not applicable to this study (Burney, 2008).
Another feature of the study is the assessment of social constructionism. This premise deals
with the fact that the civilization realism is specific to framework used and shows high levels
of assurance on the variety of understanding of consumers in dissimilar economic interactions
at the shopping venues. Therefore, the descriptive approach and the use of quantitative
technique go well with the study.
3.3
The appropriate choice of data variables and their suitable assessment is necessary for the
internal validity of quantitative study (Venkatraman and Grant, 1986). To test the
recommended hypotheses, the study is focused at the conclusion about consumer purchasing
trends in recession. Some important variables used in this study are price sensitivity, brand
loyalty, online service quality, and lifestyle factors. In order to test the suggested hypotheses,
this study is focused on the changes in consumer buying behaviour in post recession period.
29
population. These parameters included specification of relevant population; sampling frame,
the sampling method, and the sample size have been finalized before conduct of actual
survey.
30
3.6
Data Collection
In order to implement the research design data collection is required. There are two types of
data exist which are defined as following.
Secondary data is data provided to a researcher through former studies done by other
researchers for other research objectives. In this study, secondary literature is widely used in
order to review the existing research in the respective field and to build the conceptual model
as well as developing the hypotheses.
Secondary data is collected in this study through extensive literature review,
comprised of vital aspects of theoretical framework. Previous research studies have used to
describe their significant contribution in development of consumer buying behaviours. This
review provides a complete picture of the technological, human, cultural and organizational
perspectives of the consumer behaviour in recession. These scholarly journal articles,
researches, online sources, and books provided the background of this study and facilitated
31
the survey questionnaire formation. It shows the general information perspectives, cannot use
as a primary information source, but it affects the parameters of primary information
collection.
On the other hand, primary data is the new type of data researchers need to collect in order to
study an explicit ground of concentration. In this study, primary data is collected via self
administered questionnaires with consumers. This data collection serves to relate the selected
variables to assess consumer purchasing behavior and to provide first hand knowledge into
this particular area of research.
According to positivist approach, the data collection in present study has been done thorough
a questionnaire survey. The information about the variables already described is collected
through number of questions in the survey. Rosnow and Rosenthal (1996) proposed that in
the collection of quantitative data, generalisation should be ensured through various groups of
settings, times, persons etc. The survey has been administered in about 60 consumers living
in cosmopolitan regions of UK, working full-time or part time in local and multinational
organizations and includes non working house wives also. A special case of the TESCO chain
of stores is used as a main venue of survey conduct. Also, TESCO has been selected as it
comprises of large number of stores chains in all cities of UK, and being the market leader for
many years. This stratified sampling will generate the desired representation of sample, and
will permit better measurement validity.
In the present situation, each respondent was interrogated for about 20 minutes in a separate
place after the completion of their grocery purchases. The interviewer explained the nature
and scope of research and took the consent of consumer to participate in the research.
Interviewer also gave 15 minutes time to consumer before start of survey to fully relax from
the hassle of shopping and top concentrate on the questions. The responses were recorded on
the questionnaire by using a black pen. Each interview comprised of about 20-30 minutes, in
32
which interviewer had focused on collecting accurate information for each structured
question. The pattern of survey was formal but casual conversation was also used to guide the
respondents and provide them friendly environment.
Collected responses from survey have been documented to record those in simple way on
excel spread sheets. Through the method of structured questionnaire there is a possibility of
collection of different opinions producing an in-depth and non biased comparison. The
biasness in responses has been minimized by using personal survey technique. The
anonymity of respondents was assured to gather accurate responses.
33
in question formation and content validity is assured by appropriate sample selection and
proper survey procedure.
The last measure of triangulation in this research is transferability. It explains as the extent
to which the outcomes of quantitative investigation can be generalized in other frameworks.
Transferability is the extent to which the present study can be generalized; in this case the
transferability can be achieved if the same study can extend to larger population of UK
consumers in diverse shopping locations.
The present study accomplished reliability and validity by the application of many
approaches. Firstly, research variables are clearly outlined with greater transparency and
internal consistency. Secondly, a contextual framework has been used by the help of already
established theories to assure the external validity for the research. Finally, reliability and
credibility has also been achieved by discussions with academic specialists in context of
consumer behaviour. Key research themes have been addressed and used by the researcher in
this study extensively.
3.4
In this study, collected data has been analysed by using simple mathematical procedures
provided in Microsoft Excel. Various mathematical tools are suited for the purpose of the
detailed quantitative analysis. Data analysis included generation of data comparison tables,
percentage analysis, mean, graphs, and charts. Findings of the conducted research have been
analysed by categorization, classification and analysis of data (Yin 1994).
The numeric tool to be used in the present study is explained below:
The simple percentages are used to analyse the demographics of target population. The trends
in the sample and the weight ages of various factors like age, sex, marital status, experience,
and qualification will be calculated in percentages. These percentages will be helpful in
34
analysis and interpretation of data collected from respondents.
The formula used in simple percentage analysis is as follows:
Simple Percentage = (Actual value or number/ total value or number) x 100
behaviour researches used to list important factors and variables Buhalis et al, (2000). The
vital attributes of consumers buying behaviour and choices during purchase process are
important foundations of questionnaire designed for this research.
35
3.5
Ethical issues
Even though ethical concerns in descriptive research are not as serious as in qualitative
exploratory research, the minor concerns cannot be over looked in the present study. The
administration of the organizations used in survey research is properly informed about the
nature and goals of the research, questionnaire contents, and assurance of the secrecy of
company information. A proper cover letter is to be written to the concerned authorities
explaining the anonymity of respondents identities, confidentiality of data, surety of the use
of organizational information solely for academic purposes, and the process of dissemination
of analysis results.
The questionnaire has been designed to ensure maximum response rate, to avoid content
validity issues, and to facilitate the mathematical problems in analysing the data. A funnel
design is used by asking more general questions in the beginning, such as consumers
demographics, gender, age, nature of job etc. This personal information is followed by more
specific questions relating to the research hypotheses. Care has been assured in paraphrasing
the questions such that no ambiguity might be generated. No leading, threatening, double
barrelled, lengthy, or/and ambiguous questions are included in the questionnaire.
3.7
Data Analysis
Scores from the three scales will be analysed separately to see if there significant differences
and correlation. Some scholars suggest the analysis of the data is divided into four steps:
(Leedy and Ormrod: 2005 p136) - (1) CategorisingFinding some common themes, (2)
Unitising- The date gathered can be allocated and coding to some different schemes, (3)
Identifying themes and patterns, and (4) Interpreting the issues.
The analysis of data can be done using mathematical procedures suitable for quantitative data
analysis. The data collected on important variables first need to be tested for percentage
analysis, some statistical measures such as mean, median etc can also be used to determine
36
data descriptive. The results will be used to test the hypotheses and to discuss the results in
relation to previous theory.
Summary
In this research methodology, the application of Positivism research philosophy is the most
suitable approach selected in the present study of consumers living in UK.
Though,
exploratory research strategy through literature review and grounded theory is adopted to
determine the hypotheses, the primary data will be collected and analysed through descriptive
approach. Graphs, charts, and tables will be used to present the findings of the study.
37
Chapter IV
Company Analysis
This chapter covers latest trends of consumer behaviour in UK during recession. The
motives behind recent purchases of consumers are also discussed in detail to understand the
background of present study. A brief company overview and strategic analysis of Tesco is
also included in this chapter to analyse the current situation of the company.
38
financing (Welle 2008). The indirect challenges are faced by the organizations to produce
economical products with credit financing facilities in order to attract the deprived customers
again for purchasing (Economist 2008).
The main research question of the present study is to evaluate most common consumer
buying behaviours in this period of recession in UK, the research is outlined on this
parameter and specific attributes of consumer perceptions have been identified in this
research.Though, the signs of recovery have been observed in global economy, 2010 is still
the recovery period for UK economy. The main reason is the prevailing downturn of UK
economy which has raised the unemployment and decreased the disposable income of UK
consumers (Datamonitor 2010). Similarly, companies in retail industry have increased their
lucrative offers, online sales, low cost food products and discount coupons have become the
latest trends in retail industry of UK.
The present recession has affected retail industry of Britain very badly in 2008 and 2009.
According to Euromonitor (2010), The GDP of UK fell by about 5% in 2009 with a reported
rise in inflation was 2.2%. Also, the unemployment rate has grown at the rate of 7.7%,
approximately 2% higher than that of figures in 2008. Another impact has been seen on the
decrease in value of currency, British Pound became almost equivalent to Euro in 2009.
39
40
4.3
41
4.3.1
Political
New framework of WTO and entrance of China in open tariff policy had opened new venues
for Tesco in international operations. It has signed agreements in 2009 to open mega malls
and hypermarkets in China (Straits Times, 2010). Another vital element in global expansion
of Tesco is governments promotion of liberated trading blocs in every part of the world
(Lynch, 2003). The strong position of Euro and expansion of European Union also played a
major part in expansion of Tescos retail network across Europe.
4.3.2
Economic
The major economic factors for Tesco in UK was recession since 2008, but decrease in
interest rates by UK government has helped huge organizations to facilitate new capital
expenditures, it also slows down increase in unemployment in 2010 (Euromonitor 2010).
Also, the spending power of UK consumers is on the steady rise now, and positive trends are
observed in buying behaviour. There is still a certain level of financial uncertainty, which
holds the consumer to avoid spending on luxury goods (Keynote, 2010). According to
Guardian (2010), retail stores like Tesco are benefitted from the preference of customers to
prepared meals at home rather than eating out. The spending on grocery shopping has been
shown a steady rise irrespective of the financial constraints in 2010.
4.3.3
Social
The main trends in social contexts of UK are ageing population, health conscious new
generation, and infusion of immigrants. The ageing population is a challenge for food
retailers as their food consumption is less. Also, they avoid travelling to supermarkets due to
their age, home deliveries in small amounts is valid strategy of Tesco for these types of
consumers. Another important trend is health consciousness and preference of organic foods
in young population. Tesco has accommodated this need through new assortments of organic
foods. The inflow of immigrants in UK has created new demands of Asian and African
42
oriental food; Tesco needs to meet this challenge of importing food items and groceries for
this increasing population of immigrants in UK.
4.3.4
Technological
Technology has a great impact on supply chain, processes and operations of Tesco. Online
grocery retailing is the new section added in services by making the effective use of internet
technology. Loyalty cards, and online subscription programs are successful due the latest
information technology, they keep the customer away from switching the grocery store (Sun
2009). Tesco is also using mobile technology to keep in touch with large customer data base,
the new Wine App developed in Tesco to facilitate the purchase of wine through mobile
phones only (Tomlinson & Evans, 2010).
4.3.5 Legal
High percentage of VAT (value added tax) would affect the non food section like clothing and
furnishing of Tesco. Also, the increase in minimum wage rate buy 15.5% by the new
government would in crease the operating costs of Tesco.
governments and strict monetary policies in America and Asia will affect on the world wide
operations of Tesco in general.
4.3.6
Environmental
The rise in demand of environmental friendly, degradable and reduced packaging has made
Tesco to cut down plastic bags and to introduce reusable bags. It has increased the social
responsibility corporate image of Tesco. Another mile stone is the addition of carbon foot
printing in the displayed products like potatoes, dairy and on juices (Wood 2009). Greener
Living Scheme by Tesco gives advice to consumers on major environmental issues like
proper waste management, and reduction of carbon foot printing (Yuthas 2009).
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4.4.1
Strengths
According to Datamonitor (2010), Tesco is third largest grocery retail chain globally,
with highest share of 30.7% in UK retail sector.
Tesco has shown a steady strong financial performance over many decades as a result
of effective strategic policies, the turn over is 54billion has shown a boost of 14.9% as
compared to the last year figures.
High level of customization in services and products match the latest needs of
consumers of digital age.
High customer retention through its loyalty cards Tesco Clubcard, enabled the
organization to collect enormous amount of customer data, which is well utilized in
promotion and advertising like direct marketing.
The performance of Tesco in last decade can be shown in the following key growth indicators
(Fame 2010):
44
Fig
4.4:
4.4.2
Tesco
Yearly
Growth
in
Key
Performance
Indicators
Weaknesses
The performance of Tesco was not competitive in last year 2009-2010; the recalled products
in 2009 have drastically impacted the sales and brand image of the company (Mintel 2010).
Another important weakness was the concentration UK retail sector as compared to other
global destinations, 75% of revenues was earned fro UK retail in 2009 (Tesco 2010).
The lack of diversification and global expansion strategies have drastically impacted Tesco in
international market and made it more prone to systemic risks of UK retail market.
4.4.3
Opportunities
45
customers is opening new business opportunities. (Guardian, 2010), also reduced the
operating cost for the company.
Rise in global expansion to China and India will improve the world ranking of Tesco,
and the food crisis in developing countries increases the chance of exports in these countries.
Tesco can expand the in store brands, and overseas export of food items to gain new markets
in Asia and Africa.
4.4.4
Threats
46
Expansion of new online ventures to expand UK and overseas shopping markets. Cost
saving, less investment, and time saving are main advantages of this form of purchases.
Tesco.com is providing online grocery shopping facilities to the consumers and becoming a
leading grocery supplier to online consumers in UK. Market efficiency is increased by
reduction of labor and transaction costs.
Decline of profit margins in food products pressurized the company to increase the product
range in non food market like home products, technical gadgets, and financial services. Tesco
Direct is the division of company which deals with management of these divisions. More
than 8000 products are available online through Tesco Direct ( tesco.com 2010)
Membership cards and loyalty programs offers on Tesco website increase the values of
business in regular consumers.
Strong supply chain management in food items is a competitive feature for the company, but
establishing the same level of supply chain in non food items is a real challenge for the
company.
Unique offers, flexibility, and adaptation to the local culture are main challenges faced by
Tesco in overseas markets. Adjustments with consumer purchasing powers and their
47
expectations also pose great tasks for the company management in China, Japan, Korea, and
other Asian countries. Another key element in overseas markets is establishing the new brand
names in consumer minds in presence of their strong local store brands.
The allegations of boiling competition in local markets due to the immature Land Bank
(Islam 2006).
The cases of failures in delivering supplies in online transactions like case of failure
delivering goods in Sussex university campus in 2007, generated backlash when Tesco
refused to offer apology or refund.
The Grocer (2006) has done a research on superstore checkout, found that Tesco has slowest
checkout among six major competitors with Somerfield had the fastest check out queues. The
same research had nominated ASDA as the cheapest super market chin in UK, Tesco received
the second status in low prices.
Tesco has always been criticized on fat expansion and market dominance by journalists and
consumer groups (Mirror 2008). For instance, the residents of Hall green in Birmingham
have raised a strong protest against the opening of new Tesco store in their locality as the
local business found it a threat to their survival. Though, Tesco got permission of opening up
48
the store in 2008 but local residents have boycott the store and the store deliveries have
created major traffic problems in suburbs. In the same year, company has faced opposition on
expansion of its stores in Coventry (Coventry Telegraph 2008).
A famous campaign No Mill Road Tesco against Tesco had been run by Cambridge
residents to protect famous Mill Road from crowding and traffic issues. The city council had
supported the residents verdict and Tesco ended up in a small store with no alcohol license or
external refrigeration facilities (Cambridge Evening News 2009).
In US, Tesco and other European concerns have faced a severe scrutiny and allegations fro
Human rights Watchdog. The main allegation was about not approving workers union in
Tesco Fresh and Easy store chains of USA, regard less of the local laws of labor rights. The
workers faced immediate firing in case of union formation (Thompson 2009).
The start of Tesco Lotus operations in Thailand in 1998 had received a severe criticism from
local residents and competitors. The regular violent threats from local protesters have made
the job of workers very difficult in these stores (Evans 2008). The grenade attacks, gun fires,
and rocket attacks have targeted lotus stores by local groups. The local oriental culture had
not accepted a foreign intruder against their local businesses. The legal offence and journalist
encounters by the company were the attempts to restore integrity of the organization in
Thailand. These attempts were strongly condemned by the local groups as the corporate
culture was against their local deep rooted businesses culture. The local politicians in
Thailand also supported the protestors and threatened company officials.
49
Despite the open door policies of local governments in developing Asian and African
countries, Tesco have always faced the protests from local competitors and consumer groups.
Continuous struggle with image building marketing efforts, huge charities and corporate
social responsibility causes in local communities have done by the company to reduce
misinformation and criticism.
Severe criticism have also been raised against the Steering Wheel policies of Tesco,
strict work rules and rigid policies are the main claims against the HR procedures of
the company in overseas operations. For instance, company had denied to pay medical
for the first three days of sick leave have decreased absenteeism but has invited huge
criticism also.
Conclusion
In view of above analysis of Tesco, it is concluded that The Company has top position
in UK retail market and third position in global retail sector. In this period of recession, the
retail market is highly turbulent and variable as per change in the consumer perception. Tesco
has been achieved its market leadership in UK but has to introduced more global
diversification and competitiveness to meet new political, economic, and environmental
challenges. The company has faced strong criticism in local and foreign operations, and
required to adopt sustainable policies to meet these allegations tactfully. The recent strategy
to meet with the changed needs of financially deprived customers has shown the agility and
proactive attitude of Tesco.
CHAPTER V
50
51
Over all behaviour of respondents was cooperative and positive; they took personal
interest in answering all the included questions. During the survey, different questions were
asked to further elaborate some questions. They were properly briefed by the researcher about
the nature and scope of the research, and took their consent of voluntarily participating in the
conducted research. The questions and their background were also properly explained before
the start of response collection. The anonymities of participants were confirmed and they
were assured that results and findings of this research would purely be used for academic
purposes.
The results of this investigation are discussed in detail below:
52
53
No. of Respondent
11
9
12
17
15
13
14
4
3
15
Percentage
8%
7%
9%
13%
11%
10%
11%
3%
2%
11%
54
klm-
Total
6
9
4
5%
7%
3%
132
100%
Which
Qualities are importantStore
for you
while deciding about the
Place
Highest
quality
promotions
low
pricesfor Shopping?
Store loyaltycards and schemes
store timings
large selection of products/brnads
availability of cash machines
location of retailer
5% 7% 3% 8%
7%
11%
store
organization
9%
2%
3%
13%
availability of public
transport
11%
11%
10%
convenience
availability of recycling facilities
online ordering/delivery scheme
55
as their sources of incomes are not fixed or these consumers never keep a record of their
purchases and do shopping without any planning. Non interest of consumers in this question
can also be the cause of missing values.
No. of Respondent
7
9
7
4
4
9
40
Percentage
18%
23%
18%
10%
10%
23%
100%
0%
18%
23%
23%
18%
No.of Respondent
10%
10%
56
57
Options
a- Asda
b
No. of Respondent
12
Percentage
19%
- Cooperative
c- Lidl
d
1
4
2%
6%
- Morrisons
e- Sainsbury
f- Tesco
g
3
13
28
5%
21%
44%
- Waitrose
Total
2
63
3%
100%
3%
Asda
Coperat ive
Lidl
19%
Morrisons
44%
2%
Sainsbury
6%
T esco
Waitrose
5%
21%
58
The response of this question revealed that about 33% respondents participating in at least
50% buying of the above items, 23% are responsible for buying all items for their house hold,
and about 18% are involved in more than 50% buying of these items. This response has
shown the validity of the sample to facilitate the prediction of consumer behaviour in UK
consumers. 28% missing values indicate that a considerable percentage of respondents did
not want to share the information or they were not sure about the purchasing behaviour of
their family which could be multiple that every family member participated in the buying
process.
28%
Nearly all
atleast 50%
18%
23%
Greater than 50%
Missing
33%
59
of UK economy discussed in chapter 4 have shown a recovery in the last six months of 2010;
this trend has been shown in consumer responses in this study also. 23% participants
succeeded in saving more amounts this year i.e. they are in better financial condition, where
as 33% have felt no change in the saving pattern or their income and expenses are not
changed in the current year. Only 18% have reported a decline in saving pattern as they are
still not able to come out of the financial depression of the last two years. Though the saving
patterns show a positive trend and stability, the consumers in UK are still cautious and are not
willing to increase their spending on luxury and premium products in near future.
28% missing values in this question again show the unstable consumer behaviour of a large
segment of population that they have no fixed pattern of saving or expenditure. Some
respondents have discussed that their income is not constant through out the year, therefore
they cannot decide about the frequency and amount saved in a particular period. Also, high
rates of unemployment and increased inflation are still the major challenges for government
and consumers in 2010. The coming year is expected to show better saving patterns due to
decreased interest rates by government and increase in economic activity in UK. Table 5.4.5
below shows the findings of this question.
Percentage
23%
18%
33%
28%
60
Total
40
100%
23%
28%
Missing
33%
61
supported by the response of large decrease in shopping trips, this trend has decreased the
options of impulse buying and window shopping that tempt unnecessary buying in prosperity.
Table 5.4.6 Change in Shopping Habits
Options
a- No of shopping trips
b
Less
10
More
5
Same
9
6
9
11
8
8
8
5
7
37
11
6
41
9
9
43
More
Same
No. of Respond
multiple in each category but showing a same trend of cutting down expenses on luxuries and
keep them constant on necessities.
Casual dining either remains constant or become less along with the same trend in fine
dining, as consumer preferred more to eat at home rather than going out for eating. It has
62
increased the opportunities for ready made meals and ready to cook food in retail stores to
meet an increased need of consumers. An increasing trend of expenses on apparel and
clothing has been reported in this study shows a positive change in consumers incomes, but
expenses on entertainment has been considerably decreased as people prefer to stay at home
now to use cheap entertainment media like TV or internet.
The expenses on kids accessories have shown a mixed trend as no specific manner is not
reported in this category, respondents treated it as an essential part of routine expenses.
Expenses on groceries have shown either an increase or stability, which confirms the fact that
despite of recession, expenses on grocery have been increased in past two years in UK
(Datamonitor 2010). This trend has supported by the expansion of retailers chains in the
country irrespective of the downsized economy. Table 5.4.7 shows the results of this question
below.
Less More
9
5
Same
11
- Fine dining
c- Apparel/ Personal accessories
d
9
6
8
11
5
9
10
7
8
5
7
8
9
7
5
- Groceries
Total
0
49
5
49
8
54
63
M ore
Same
No. of Respond
Percentage
43%
15%
10%
10%
10%
3%
64
gMissing
4
10%
Total
40
100%
The graphical interpretation of above findings are illustrated in following fig.5.4.8
Fig. 5.4.8 Cut down in Multiple Expenses
Possible Reason, If you cut your expense in last 6 months
As a preacution
Missing
Unemplyoment
3%
10%
10%
10%
Health issues
10%
Family chages
43%
15%
Respondent
11
of
Percentage
24%
65
Proper budgeting/
List
making
before
b- shopping
c- Wait for sale/ discount/ coupons
d- Festivals/ Events/ Occasions
e- Shop whenever needed
f- Shop without any plan
Total
7
7
4
12
5
46
15%
15%
9%
26%
11%
100%
15%
9% 15%
66
option of online shopping; the trend is largely limited to information gathering and brands
comparisons only.
Still a large percentage of consumers never opted for online purchases (15%) due to lack of
online resources or lack of medium trust. Missing values are also considerable (18%) in this
question, reflected those people who either not known much about this medium or did not
have any interest in online shopping offers. Retailers are required to increase the awareness
level of common consumers about online groceries or household shopping if they want to
increase the market share of online selling.
Table 5.4.10 Online Shopping Behaviour
Options
a- Internet purchases are preferred
b- Search on internet but purchase from store
c- Purchase online if not available on stores
d- Never does online purchases
e- Missing
Total
No. of Respondent
6
13
8
6
7
40
Percentage
15%
33%
20%
15%
18%
100%
Statements Best Describe your interent use When decided for household, gift or personal shopping
Internet purchases are preferred
18% 15%
Purchase online if not available on stores Never does online purchases
15%
33%
Missing
20%
67
of Percentag
Options
a
Respondent
Newspaper ads
23%
TV commercials
20%
20%
11
28%
Radio ads
0
Not preferred any of the
f- above
0%
10%
68
Total
40
100%
% of Res pondent
Retailer bes t way to reach you for s ales , events & goods
28%
23%
20%
20%
30%
20%
10%
0%
No.of Respondent
-10%
10%
69
relatively new promotion tool, their awareness to internet applications is a big challenge for
retailers and manufacturers.
of
Respondent
Percentage
11
28%
b- purchases
10%
c-
20%
23%
e-
20%
40
100%
a-
collection
for
future
Missing
Total
Reason best describe the type of communication you have selected in Q#12
50%
41%
40%
30%
% of Respondent
17%
20%
12%
17%
12%
10%
0%
Online retailers
Phy sical location M
retailers
alls/ shop ping
Catalogue/
centresmarketing comp
None
anies
of the above
70
5.4.13
In this question, respondents were asked to identify most appropriate organization to the
online communication. 41% respondents favoured that online retailers need to use internet
communication with prospective and existing customers. The other suitable companies are
shopping malls (17%) and catalogue marketing companies which sell products through their
available catalogues. As the online shopping trend increases, customers also become more
aware about the type of products and/or services they can get from internet. Retail chains
like Tesco can improve its online grocery marketing through online communication channels.
Table 5.4.13 Online communication preference
No.
of
Options
a- Online retailers
b- Physical location retailers
c- Malls/ shopping centers
Catalogue/
marketing
Respondent
17
5
7
Percentage
41%
12%
17%
d- companies
e- None of the above
Total
7
5
41
17%
12%
100%
17%
17%
41%
12%
71
Percentage
35%
13%
18%
18%
13%
5%
100%
Sales information
Printable coupons
5%
13%
35%
18%
New products information
13%
Missing
72
No. Of Respondent
7
9
12
5
7
40
Percentage
18%
23%
30%
13%
18%
100%
18% 18%
13%
Missing
30%
23%
73
were asked to identify the impact on retailers presence on Facebook and twitter on its image
in consumers minds. 30% response was in favour of neutral impact on brand image after the
representation of retailer on social networking sites. 20% have identified a positive response
and only 10% declared negative response. Also, 20% respondents were not sure about the
answer as they are not the users of social networking circles. This factor has indicated that
utility of internet resources is not very common among the large portion of senior population
and they are not benefitted from the online campaigns and services of retailers.
Table 5.4.16 Social networking of retailers
Options
No. of Respondent
Percentage
aPositive
8
20%
b- Negative
4
10%
cNeither of the above
12
30%
d- Never visited these sites
8
20%
eMissing
8
20%
Total
40
100%
The graphical interpretation of above findings are illustrated in following fig.5.4.16
Negative
20%
20%
Never visited
10% these sites
Missing
30%
Chapter VI
Discussion on Data Analysis
The objective of this study is to investigate the affects of present financial crisis on UK
consumers. Data collected from respondents revealed some useful information about the
74
recent trends of consumers. These useful findings can be used by the academia and the
industry to devise effective market strategies to achieve, retain and increase good consumers.
This discussion on the research findings in this chapter will elaborate the implications of
theory on the real life results.
The two major buying behaviours came forward in this study are classified as planned buying
behaviour and unplanned buying behaviour. These two behaviours consisted on the various
attributes of consumers found in this study. According to Arnould et al., (2002), planned
buying behaviour has extensive decision making and programmed attributes, but unplanned
buying behaviour has limited decision making and impulsive purchasing.
Price sensitivity and economies of scale become the important elements in buying
75
trips to the discount stores have been increased along with the decrease in visits to the luxury
stores (see sec. 5.4.6).
A planned buying behaviour is prevailed among UK consumers to select best available
alternative within their financial constraints.
76
H2:
20%
consumers purchase those items regularly online which are not available on physical
locations. E mail has become a first choice for consumers in the available communication
mediums with retailers (see 5.4.11).
The seven Ps of marketing mix included product, pricing,
physical appearance, and process are required to be integrated in order to release the
consumer pressure and to exploit the demands of the market (Groucutt et al., 2004). Kotler
(2009) termed these factors as the most important in efficient marketing strategies of the
company. In present case of UK retailers and consumers the processes (online marketing,
loyalty cards, and discount packages), people (support staff) and price (lowest price for
quality products) is the most important determinants of marketing mix (see section 5.4.9 and
5.4.6).
The above selected components are most viable components which had tremendous affects
on buying decisions of consumers (Churchill and Peter, 1998). Also, hard discounters
normally have a drastic impact on consumers due to their inappropriate and low quality
services as the focus only on low pricing but not on durability of products and effectiveness
of services (Mintel Oxygen, 2008). Though, consumers prefer discount stores as compared to
luxury and high profile stores due to the circumstances of the current financial crunch and the
77
high rate of unemployment. In these crucial conditions, most companies and giant retailers
are suffering from the hindrances of capacity management and as a result badly performed in
actual delivery of the service, therefore consumers experiences are not good in transactions
with these stores.
The progress of in-store incentives to exert a pull on consumes awareness and focus on non
traditional marketing, advertising, and sales channels are suggested for retailers. The current
study also reveals that UK consumers also largely inclined towards internet shopping (section
5.4.10), and are active part of social networking online channel like Facebook and twitter.
UK retailers included Tesco should see it as an opportunity to enhance the pool of online
consumers and meet the challenges of display, availability and delivery of required online
products.
Also, online websites and portals like Tesco.com can be renowned as shopping means with
issues of failure, outdated data, and security of financial transactions. These consumers
experiences generate a negative feedback of the sites that also ultimately impacted the online
physical transactions. Prompt and reliable responses of emails, information brochures, and
updated site contents can improve the performance of online shopping websites. Though, it is
not an easy milestone to achieve in this time of recession when companies find it hard to
access enough capital to establish, operate, and maintain online supply chain management.
Another successful marketing strategy in recession to increase unplanned buying behaviour
in consumers is suggested to be innovative marketing. In order to receive the consumer
attraction and to increase the market share, new ideas of marketing like introduction of Tesco
Club Card can gain the attention of customers rapidly. In this financial constraints period,
introducing discount products, searching new niche markets, and enhancing service practices
can change the scenario for retailers after recession period. Discovering new niche markets
78
and relocation of positioning strategies can make this period fruitful for the retailers
(Hawkins 2008). In contrast, the low disposable income of UK consumers have enforced
them to restricted to only necessary purchases when needed with proper listing and budgeting
(see section 5.4.2, 5.4.9, and 5.4.12). Innovative marketing strategies can fail also in the
consideration of the financial constraints of UK consumers, but they can be used to increase
the brand awareness in new consumers.
The carried out research disclosed that the current monetary crisis has considerable affects on
consumer buying behaviour in both planned and unplanned categories. Companies need to
adopt lucrative in store marketing efforts to attract the visiting customers and generate
impulse buying. In place of a single value proposition for the products display and marketing,
number of various value propositions can gain the attention of multiple taste consumers. The
marketing efforts need to be tailored to meet the unique individual needs of financially
deprived UK consumers to drive them emotionally. Unplanned and momentous buying
decisions are largely dependent on the store attractions and lucrative offers.
79
been discussed about the use of social networking sites and their extreme popularity among
youth. The impacts of the presence of retailers and their employees on Facebook, twitter and
other online networks were explored by consumers and identified impacts of their presence
on consumers mind set. The findings have shown that 30% response was in favour of neutral
impact on brand image after the representation of retailer on social networking sites. 20%
have identified a positive response. Retailers like Tesco can enhance their presence on social
networks to communicate effectively with its consumers and to collect first hand information
about its services and products.
Another important finding in this area is the preference of purchase coupons by consumers
(see section 5.4.15), consumers preference has been increased due to the financial restrictions
in recession. Tesco can increase its lucrative sale offers through purchase coupons, e-mail and
news papers are two most preferred modes of communication for consumers for disbursement
of these coupons.
Consumers preference to select a particular store chain is an important concern for major
retailers; respondents identified the popularity of major retail stores of UK among consumers
in recession (see section 5.4.3). The results of this question show that maximum consumers
(44%) preferred Tesco in their regular visits. They shared the reasons of this high frequency
of visits as their trust on available products at the store and availability of large number of
Tesco outlets in their neighbourhood. These customers have Tescos Club card which help
them in payments of regular purchases and availing of multiple discount offers at Tesco.
Sainsbury gained the second rank (21%), and Asda received third preference (19%) in this
ranking from respondents. This result has shown that Tesco has established its leading
position in UK and consumers preferences have not been changed in past decade about
selection of their favourite chain of stores.
80
The saving patterns have been drastically affected by the recession in country but a recovery
has been observed in last six month of 2010; this trend has been shown in consumer
responses in this study also. 23% participants succeeded in saving more amounts this year i.e.
they in better financial condition, where as 33% have felt no change in the saving pattern or
their income and expenses are not changed in the current year. Only 18% have reported a
decline in saving pattern as they still not able to come out of the financial depression of last
two years. Though the saving patterns show a positive trend and stability, the consumers in
UK are still cautious and are not willing to increase their spending on luxury and premium
products in near future.
These results of the study have provided enough evidence to accept our hypothesis related to
the consumer preferences and choices of retailers have not been much changed in recession.
The academia and retailers can use this finding to explore new dimensions of change and to
enhance their capabilities to meet consumers responses.
response of all Tesco stores as homogeneous management and operation policies are used in
all stores located in UK (tesco.com 2010).
The interview questionnaire was composed on semi-structured questions which serve
the purpose of mixed research methodology of quantitative and qualitative data collection.
This qualitative data is based on close ended questions related to routine activities and
consumers behaviour. Where as, open ended subjective questions were included to record the
81
management perspective and analysis of visiting consumers perceptions. Researcher has
recorded the answers of management personally on questionnaire and clarified the raised
queries of respondent instantaneously.
The Findings of this interview revealed the following attributes of the store and its
loyal customers.
The most attractive features for regular customers in Tesco were their store promotions, low
prices with respect to competitors, loyalty cards and other discount schemes, convenient
locations of stores, and large selection of products available at stores. These findings are in
accordance with the consumer preferences explained in chapter 5, section 5.4.1. The average
spending of a consumer in Tesco is in range of 20-30 GBP, which matched the average
consumer buying in section 5.4.2. The recovery of UK from recession is verified by the
response of store management that average spending of consumer is better than that of last
year.
As far as classification of consumer spending is concerned, the clothes and home furnishing
purchases become less, kids purchases remained same, and grocery purchases increased.
This finding has supported the conclusion that UK consumers are still cautious in their
spending after recession. This behaviour has also verified from the response that consumers
present shopping behaviour is largely focused at sale and discount offers, occasional
shopping on events, and need based purchases only.
The online grocery market is showing a rapid growth pattern and Tesco is one of the market
leaders with their Tesco Direct online grocery stores, but still the consumers prefer to collect
information from online catalogues but purchase from stores. This result matches with the
findings of consumer survey in sections 5.4.10, 5.4.12, and 5.4.13. Consumers selection of
goods is random and highly focused at front shelves for the sake of urgency and convenience.
82
There fore, in-store marketing and national brands positioning would depend on this common
perception of consumers at Tesco. In order to showcase all brands and available line of
products, the in-store settings are changed frequently after each season. The major marketing
techniques used by management is placing high margin and profitable products in front
shelves and use banners at the entrance to announce new products arrival and stores various
schemes. Also the sales staff guides consumers about new products placements and features.
Families are the dominant group of regular customers that shows the Tescos popularity in
UK house hold. The main product categories sold in the store are grocery, kids products, and
personal care products. The main issues raised by regular customers are related to pricing,
long queues at checkout counters, and availability of stock. Though management reported
that on the average 20-30 customers cleared per hour from the tills but still they need further
improvement in this area. On pricing issue, Tesco stands second after ASDA in low prices,
but its consumers demanded more price decease.
These findings from interview also gave an answer to the devised research question that
retailers should learn from the analysis of consumers behaviour in recession. Proactive instore and online marketing is necessary to provide competitive products and services at
economical rates. The consumers in UK are financially deprived after depression, stores need
long term win/ win relationships with customers to establish the consumers trust and to boost
own sales.
6.4 Summary
The above extensive discussion has been used to relate the research findings to the
proposed hypotheses and to answer the raised questions in this study. The detailed discussion
83
combines all the important findings about the consumers preferences and choices in difficult
periods of recession. Consumers opted for big and established chains of stores, loyalty cards,
discount coupons, online communication, update information about clearance sale, and other
saving techniques. The suggestions to the selected organization Tesco also put forward in
above discussion. The proactive strategic marketing tools with in-store promotions and online
resources will certainly facilitate Tesco in gaining consumers attention and expanding market
share in UK.
The interview findings at Tesco are in accordance with the findings of consumers behaviour
survey results explained in chapter 5 of this study. These above explained results are also
validated the tested hypotheses in previous sections of this chapter. The consumers survey
and its results are justified and proved relevant after the interview of Tesco management.
Chapter VII
84
85
According to Shim et al., (2001), the efficient marketing strategies can help a company to
respond the complex behavioural changes of consumers. The suggested marketing strategies
in this research are the integration of effective marketing mix strategies to explore the hidden
potentials of retail markets, innovative online and in shop marketing can facilitate the
attraction and retaining of financially deprived and conscious customers by the retailers.
The research findings have validated the proposed hypotheses that price sensitivity and
economies of scale become the important elements in buying decisions of consumers in
recession, strategic marketing strategies are required by retailers to excel in difficult financial
conditions, and the consumers behaviour is identical and pose same challenges to all retailers
in the market irrespective of their size and market share. These findings are in accordance
with Arnould et al. (2002) and East (1997) theories of programmed and limited decision
making models of consumer decision making discussed in literature review. Therefore,
successful retailers like Tesco require a combination of inventive promotions, exclusive
selling propositions, striking in-store environment, sufficient pricing, high quality customers
service and physical confirmation for high-quality products. The most probable results of
adopting these strategies are long-term market share growth and increase in consumer loyalty.
The analysis of Tescos management interview justified and validated the findings of
consumers survey. According to the concepts of Donovan et al. (1994) and Mehrabian and
Russell (1974), stores image create limitations on buying decisions, there fore retail
environment at Tesco is acted as a stimulus of environment on consumer responses. On the
basis of interview and survey data analysis, Tesco is recommended to adopt proactive
marketing policies for both in-store and online operations. The consumers are still cautious
and demand exclusive quality at discounted rates. The establishment of trust for online sales
is necessary to ensure the customer about the quality of goods and efficiency of online
86
transactions. Better store setting to attract customers can be achieved through front shelves
display of popular and high demand products. According to Kotler (1996), retail marketing is
focused at consumers perceptions of marketing mix components; therefore Tesco has to
adopt every day low pricing strategy to become a leader in lowest price also. The customer
loyalty cards and effective discount schemes are strength of Tesco, but its global operations
demand more diversification and customized strategies suited for every culture.
87
given to the organization. The proactive strategic marketing strategies will help organization
to attract customers and increase market share.
The knowledge characteristic of this research project will facilitate the progress of my
experiences in professional life. Further research in this area can extend concepts and
applications of consumer purchasing behaviour in industry and in academia.
88
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