Rex Research Proposal

The effectiveness of marketing segmentation strategies in British supermarket chain: the case of ASDA
Table of Contents
1. 2.
Background of the research ............................................................................................................... 4 Rational of the research topic ............................................................................................................ 4 3.1. 3.2. 3.3. Aim ............................................................................................................................................... 5 Objectives of the research .......................................................................................................... 5 Research questions ...................................................................................................................... 5
4.
Literature review ................................................................................................................................ 6 3.1. 3.2. 3.3. 3.4. Effectiveness of the segmentation strategy ................................................................................... 6 Key success factors of the business .............................................................................................. 6 Factors those provide the competitive advantage ......................................................................... 9 Impact of environmental factors on ASDA's segmentation strategies .......................................... 9 Impact of external environmental factors ........................... Error! Bookmark not defined. Impact of internal environmental factors ............................ Error! Bookmark not defined.
3.4.1. 3.4.2. 5.
Research methodology ...................................................................................................................... 11 4.1. 4.2. 4.3. Research design .......................................................................................................................... 13 Research methods ....................................................................................................................... 14 Research instrument .................................................................................................................... 14
6. 7. 8.
Ethical consideration ........................................................................................................................ 14 Research limitation ........................................................................................................................... 14 Time plan ........................................................................................................................................... 15
References ................................................................................................................................................... 16
1. Background of the research The research idea on which the research will be done is the effectiveness of marketing segmentation strategies of ASDA. The researcher here will try to evaluate the effectiveness of the marketing strategies of the chosen firm especially its segmentation strategies to find out the key factors responsible for its performance. Asda is a British supermarket chain which retails food, clothing, toys and general merchandise. It also has a mobile telephone network, Asda mobile. It has its head office in the Asda House in Leeds, West Yorkshire. This company is performing well but not as well as Tesco did. In the following figure the scenario is showed.
Figure 1: MARKET SHARE OF TOP THREE in the supermarket chain in UK (source: http://www.coriolisresearch.com/pdfs/coriolis_tesco_study_in_excellence.pdf )
2. Rational of the research topic Now a day, marketing is very influential and dynamic in different business. In the supermarket chain market, marketing is as important as it was before. In this industry, many companies set highest annual expenditure on their marketing activities. For instance for drinks companies like Diageo or Pernod-Ricard, marketing and promotional budgets run at more than 15% of total revenue. For these companies that means marketing expenditure of more than $500m per year across the globe (Dobney.com 2011).
Segmentation of markets is part of marketing activities and the success and profitability of a business has dependence on effective segmentation largely. So in the marketing point of view, segmentation is important as important as whole marketing activities. 3. Research aim, objectives and research questions To start a journey, it is important to decide a path to go. In a research, aim, objectives can be that path to start a research. This section delivers the aim, objectives and research questions of the proposed research. 3.1. Aim Aim of this research is not that broad, but specific to research interest of the researcher. The aim of the research is to measure the effectiveness of marketing segmentation strategies of ASDA, a British super market chain 3.2. Objectives of the research To make the aim fulfilled, there are some objectives of this research for the more specification research coverage. The research objectives are as follows: To investigate the effectiveness of the segmentation strategy of ASDA To examine the initiatives taken by the firm to make its segmentation strategies effective To pinpoint the key success factors of the business To locate the factors those provide the competitive advantage for the firm To assess the impact of the external and or internal environmental factors on ASDA's segmentation strategies 3.3.Research questions As written in the previous section, the objectives are used as the source of research question. The research question based on the topic of the research is given below: How effective is the market segmentation strategy of ASDA? What are the KSF of Supermarket chain businesses?
4. Literature review
What are the sources of competitive advantages? What are the impacts of environmental factors on ASDA?
Literature review is an essential part of this proposal. This section discussed on various issues related to research topic and objectives. The discussion covers market segmentation effectiveness, key success factor of business, factors of competitive advantages, environmental impact on segmentation strategy etc. 3.1.Effectiveness of the segmentation strategy A segment of market can be defined as a part of a market, which is made up of some people who has some common taste, characteristics which lead to similar product choice of product. A marketer can segment market based on various criteria, such as gender, price, Interests,
Location, Religion, Income, Size of Household etc. (Kotler and Kevin 2006). Yankelovich (1964) did a research to find out new criteria for market segmentation. He described three findings from the research analysis. The three points he had stressed are A marketer should reject that demography is always the best way to segment markets. Strategic choice concept of segmentation is favorable for established product and new product both for positioning in the market. As the market becoming very dynamic, a marketer must have his own theory for interpretation of market dynamic in the industry and should not borrow it from others.
3.2.Key success factors of the business KSF was first mentioned by Daniel (1961, p.111). Daniels main thrust was the need for the elimination of issues not directly related to the success of the firm in the planning process of management information systems. In 1970s, Anthony, Dearden and Vancil (1972) pointed out that the management control system, in addition to measuring profitability, identified certain key variables (also strategic factors, key success factors, key result areas and pulse points) that significantly impact profitability. Further, they explain that these variables are important
determinants of organizational success and failure; they are subjected to change and this is not always predictable. Therefore, some definitions of Key Success Factor are presented by several following authors. Hofer and Schendel (1978) suggest that the critical success factors concept could be used to analyse the relative competitive positions of the firm in an industry. Their definition reflects this expanded view: Key success factors are those variables which management can influence through its decisions that can affect significantly the overall competitive positions of the various firms in an industry. These factors usually vary from industry to industry. Within any particular industry, however, they are derived from the interaction of two sets of variables, namely the economic and technological characteristics of the industry involved . and the competitive weapons on which the various firms in the industry have built their strategies.(Hofer & Schendel 1978, p.77) This definition introduces the key feature that makes business strategy different from other kinds of business planning the focus on competitive advantage. Another important aspect of this definition is the acknowledgement that the characteristics of the industry affect the critical success factors of the firms in that industry.
Rockart (1979) takes this further and uses the idea of identifying the information needs of the executive manager based on the critical factors for success, suggesting that the critical success factors concept would be useful as an information systems methodology. Rockart (1979, p.85) uses the ideas from Daniel (1961) and Anthony et al. (1972) and defines critical success factors as follows: Critical success factors thus are, for any business, the limited number of areas in which results, if they are satisfactory, will insure successful competitive performance for the organisation. They are the few key areas where things must go right for the business to flourish. If results in these areas are not adequate, the organisations efforts for the period will be less than defined. Consequently, Rockart (1979) stresses that these particular areas of activity should be constantly and carefully managed by a company. The theme of both Daniel and Rockarts approaches is the provision of better information to management for more effective planning and control. The important contribution of their works is the focus on critical areas, rather than a vague attack on all problem areas. Aaker (1991) claims that a key success factor is any competitive asset or competence that is needed to win in the marketplace, whether it is an SCA
(actually representing a sustainable point of advantage) or merely a point of parity with the companys competitors. In this sense, brands can be one of the key success factors that help differentiate and position a companys products. They also help a company establish and/or maintain a stable relationship with its consumers (Kotler 1997 and Aaker 1991). Moreover, brands provide a launching pad for new products (Tauber1981).
As new product failure remains high (Urban and Hauser 1993) and increased competition in distribution channels and rising advertising costs have made the launches of new brands more difficult, using a familiar brand name to generate new product acceptance is an increasingly popular growth strategy (Buday 1989 and Tauber 1988). A range of brand leverage strategies exist, varying from line extension to brand extension. Line extensions involve the launch of new products from the same product category or product class under the familiar brand name. Brand extensions stretch the brand franchise beyond the current product class (Tauber 1981 and Aaker and Keller 1990). To quote from Leidecker and Bruno (1984, p.24), Critical success factors are characteristics, conditions, or variables that, when properly sustained, maintained or managed, can have a significant impact on the success of a firm competing in a particular industry. In this definition, a critical success factor can be a characteristic such as price advantage; it can also be a condition such as capital structure or advantageous customer mix; or an industry structural characteristic such as vertical integration. Also, Lynch (2003, p.102) reports that critical success factors are the resources, skills and attributes of an organization that are essential to deliver success in the marketplace. While the definitions and views provided by the above authors differ, there appear to be a few common characteristics that help to explain the nature and extent of critical success factors.
First, critical success factors are the sub-goals and success outcomes that are directly related and critical to the attainment of the vision, mission and long-term goals of the organisation.
Second, critical success factors can be internal areas like resources, skills, competences, attributes, conditions or market related areas like product features and profitable market segments.
Third, critical success factors are limited areas of success that will ensure that successful competitive performance of the organization. Finally, critical success factors are result areas in which success can be measured. Critical success factors are normally determined by two distinct levels: the industry level and the organizational level (Rockart 1979, Leidecker & Bruno 1984 and Lynch 2003). Each industry, by its very nature, has a set of critical success factors determined by the industry itself. Each organisation in the industry will pay attention to these factors and use them as benchmarks for competitive performance. Organisations in the sameindustry would however, have different critical success factors as a result of differences in geographic location, strategies, product features and internal resources and competences.
3.3.Factors those provide the competitive advantage Johnson and Scholes (2002, p. 108) define competences as those competences that critically underpin the organisations competitive advantage. They argue that critical success factors are underpinned by core competences. These competences are essential in gaining competitive advantage in each of the critical success factors. Critical success factors refer not only to the factors that are critical for success in the external and internal environment, but also the competences that are needed for this success. Johnson and Scholes (2002) argue that critical success factors are underpinned by core competence. For example, if speed to market with a new product launch is a critical success factor, it may be underpinned by core competencies in the logistics of knowledge development and product design with key investment banking. Critical success factors and core competences change over time as the basis of the competitive advantage of the industry changes. According to Kaplan and Norton (1996), there are twelve critical success factors that should be discussed as below: Teamwork: Works cooperatively with all staff for the greater good of the team. Communication: Effectively uses written and oral communication skills to deliver messages in a clear, concise and understandable way.
Customer Service: Exhibits a positive attitude while striving to understand and meet customer requirements. Learning Orientation: Actively seeks and applies new knowledge, learns from experiences, seeks and accepts feedback from others. Initiative: Demonstrates a bias for action, works independently to exceed expectations and actively tries new ideas. Job Knowledge: Demonstrates an understanding of relevant job knowledge and responsibilities. Management Skills: Utilises budgets and staff to effectively manage projects and programs. Strategic Thinking: Considers a wide range of options and makes decisions that have the greatest impact on long-range goals. Leadership: Has a compelling vision and influences staff to accept and support that vision. Developing Others: Actively provides support and feedback to staff about current performance as well as future opportunities. Dependability: Can be relied upon to meet commitments and demonstrates reliable work progress. Multitasking: Handles multiple activities and recovers quickly from disruptions or interruptions.
3.4.Impact of environmental factors on ASDA's segmentation strategies Environmental scoring, econometric models, socio-political consulting services and
governmental affairs departments are a few of the diverse approaches used to monitor and assess environmental impact on the industry and the firms comprising that industry (Leidecker & Bruno 1984 and Lynch 2003). The major advantage of the environmental analysis is the breadth of the analysis as the scope goes well beyond the industry interface.
This is of particular importance to those industries whose survival is dependent upon forces outside the control of the industry environment. The external environment comprises economic, social, political, technological, ecological and legal factors that originate beyond, usually
irrespective of any single firms operating situation (Pearce & Robinson 1991, Shirvastava 1994 and Wright et al. 1996). As the world economy and political factors change and ecological factors become more important, critical success factors will also change for different industries and organisations. The environmental scan is based on the identification of those critical success factors considered to be the central determinants of attractiveness of a particular industry (Hax & Majluf 1996). The success of a particular industry is therefore influenced by the current and future impact of external factors.
5. Research methodology In this section, the research mechanism is discussed. The research methodology part is containing three different parts, which are research design, research methods and research instruments. These aspects of research methodology are discussed below.
Research design: In research design, the planning of data collection and use of different methods are decided. The aim of this research is to measure the effectiveness of segmentation strategy of ASDA. This research will be more qualitative in nature. There are several reasons for making this research qualitative. In a qualitative research, it is telling a researcher about how and what etc about the research topic (Cooper and Schindler 2008).
Besides, for extracting, motivating, seeking perceptions etc qualitative research is appropriate in favor of the researcher. But in a quantitative research, the concentration is given on to measure something by answering how many, how much. This research will measure segmentation strategy effectiveness in a qualitative way. important is the primary distinction of qualitative is related with understand and interpret while quantitative has its primary focus on describe, explain and predict. (Cooper and Schindler 2008). As consequence of the research methodology elected is involved the way to achieve the answers. For
that we could use two main ways: deductive and inductive. Inductive is the way which are directly connected with qualitative method because of induction draw a conclusion from one of more particular facts of piece of evidence which is different of deduction where is characterized for the strength of relationship between reasons and conclusions. (Cooper and Schindler 2008). In that case, it will be collected data from different sources in order to build up some conclusions. The final step in order to precise the research design is choosing between exploratory or conclusive research. Due to our study the most suitable way to manage it is through conclusive research. This method will be useful because includes one characteristic which is to understand the characteristics of organizations that follow certain common practices. (Sekaran 2003) This is one of our objectives in that study. Exploratory research method are undertaken to better comprehend the nature of the problem since very few studies might have been conducted in that area (Sekaran 2003). Research methodology: Sampling: The method followed in order to get the right sample it will be probability sample, to be specific stratified sample. Some of the reasons because of this method is chosen is according with Cooper and Schindler (2008) in order to gain efficiency and to provide adequate data for analyzing the various subpopulations or strata. (Cooper and Schindler 2008). Within food industry there are some subsectors which require a stratify sample in order to have a whole picture about food Industry.
Once the stratify sample are defined, them will proceed to do a simple random sampling choosing one company of each sub-sector in order to get a whole picture of the food industry. Data collection: It would be carried on eight different interviews. Three of them will be for experts and around five will be for companies. The duration will be hopefully around one hour. The idea is to have an interview with different sectors within food industry in order to get as big picture as possible of the industry. Data analysis: It will be follow the analysis which is usual when it is used un-structured interviews as research instruments. It will be used Content Analysis which according with Krippendorff (2004) includes the following steps: 1. Identify the main themes. 2. Assign codes to the main themes. 3. Classify responses under the main themes. 4. Integration of the themes and the response in the report. In order to help with this analysis and to find out the right conclusions, it will be used Nvivo data Analysis which it will be very helpful in order to develop content analysis. Research instrument: The main instrument in order to develop the primary data in will be un-structured interview with owners or managers of small Spanish companies which are already doing international business and on the other hand with experts in that field. According with Saunders et al. (2009) these are often referred to as qualitative research interviews. In this kind of interview, you have a list of themes to cover but you can manage them with flexible order or way. Other important reason to justify the choice of this kind of instrument is according with Saunders et al. (2009
4.1. Research design
4.2. Research methods
4.3. Research instrument
6. Ethical consideration
This study will maintain highest ethical standard. This research will not do anything which can be ethically harmful on any element. To ensure the ethical standard, some guidelines will be followed throughout the research and in its data collection procedure. The guidelines include the following The participants in this research will participate willingly, they will not be forced or pressured to participate. The participation is totally voluntary. The response of the participant will be kept in safe and secret If a participants want to stay anonymous, it is allowed The data will be presented as it found in the response, no manipulation and no bias
7. Research limitation
To conduct this research, some limitations can be faced by a researcher. In this section, these limitations are highlighted. Firstly, time constraint allows spending only one month to data collection, which not adequate. But the research will try to manage more time to get for data collection.
Secondly, budget constraint, to conduct a research is becoming expensive. As the researcher has limited income sources, the budget for research is limited as well.
Thirdly, access to the participants in the interviews, are not available everytime. Sometimes appointments are made but participants are not available for their business.
Fourthly, Supermarket chain industry is a very large industry in the world, and in UK it is large enough to cover. In this research, it may not be possible to cover all over the industry in UK.
8. Time plan
Activity Identifying research topic Proposal Form Completing first draft of LR Completing LR Methodology 1 draft Completing Methodology Collecting primary data Analysing primary data Writing results and st analysis 1 draft Completing results and analysis chapter Writing introduction and conclusion Full write-up of major st project 1 draft Full write-up of major project Completing appendix and references SUBMITTING Major Project to Sunderland
st
January
February 01-28
March 1-31
April 01-15
April 16-30
May 01-15
May 16-31
June 01-30
July 01-14
July 15-31
References
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The effectiveness of marketing segmentation strategies in British supermarket chain: the case of ASDA

4.2. Research methods

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