Essay: Competitive strategies employed by giant supermarkets in the UK

Module: Business Research Methods

1. Title

Competitive strategies employed by giant supermarkets in the UK- a critical comparative study.

2. Research background/ context

This research proposal aims to research on the competitive strategies which the main supermarkets of UK are employing in different ways. The previous literature on this topic mainly focuses on the different strategies and its impact on the business or firms. Competition among the supermarkets on the basis of quality, customer service and low price strategy are some examples. For instance, to compete with Asda, Tesco also started to reduce their prices. (Souvik Dhar.2005). Similarly another competition strategy employed by Tesco and Asda are sales promotion. (Riley.J, 2009). This type of sales promotion helps supermarkets to achieve competitive advantages.

Strategy is the complete plan or policy of an organization to achieve the highest goals or objectives. In this sense competitive strategy helps the firms to become different in terms of goods and services from the competitors. The main supermarkets of UK have also become highly competitive. They all wish to achieve the maximum goal on their investment and for the existence in competitive business environment; they employ different type of competitive strategies. So the leading supermarkets are improving and developing their infrastructure, improving the quality of goods and services, increasing the product range etc to win the shoppers and to face the competition.

So this research aims to find out the competition between the giant retailers of UK and their activities to attract the customers. In this research, UK’s two leading retailers Tesco and Asda will be made subject to compare and contrast their competitive strategies.

3. Research questions

This research raises some important questions: what are the different competitive strategies being used by the leading supermarkets of UK? Other additional questions are: why are the competitive strategies important for the supermarkets? How these supermarkets are attracting and stealing the customers? Are customers really satisfied by the goods and services of these supermarkets? How they are satisfying the needs of customers and the society? How the competitive strategies benefit the supermarkets? Which of the competitive strategy is followed by which supermarket?

4. Research objectives

The main objective of this research is to evaluate and analyze comparatively about the competitive strategies being followed by the giant supermarkets of UK and to get the information about the competition between these leading supermarkets such as Asda, Tesco. Similarly this research purposes to describe the different competitive strategies which the leading supermarkets are employing to draw the attraction of customers. To analyze and describe the different activities of these supermarkets to steal the customers. Another objective of this research is to obtain the information about the various competitive strategies and how these firms are benefitted from this and to analyze the long term existence.

5. Literature review

Michael Porter is the scholar to describe and define the theory on competitive strategy. Competitive strategy according Porter (1996) is to become different from the competitors, choosing the different activities to create a unique mix of value. From this view we can perceive the idea of making oneself different from the competitors, to show the customers that they are doing things differently from the others companies. According to Porter there are four generic strategies which are cost leadership, differentiation, cost focus and differentiation focus. A company or a firm can get competitive advantages by following any one of these strategies. And this theory seems appropriate in case of Tesco which has adopted the cost leadership strategy and enjoying the advantage from this.

An academic paper The Times (2008) presents the competition between the Tesco, country’s largest retailer and its follower Asda. Their main competition strategy is based on price. Both retailers are using different strategies compete with each other. In this way, it can be seen that the competitive advantages can be achieved by the reduction of the price. This academic paper suggests that all the leading retailers are reducing their prices so that they can compete with others rivals. So it can be seen that these two retailers have the similar strategy of reducing the prices to get high market share.

Tesco and Asda are highly competitive retailers. Tesco, as a dominant retailer reached 29.1% UK market share from 26.8% in the 12 weeks. And Asda, owned by Wal Mart had a 17.1% share. (Desjarding, 2005). This proportion also shows that Tesco is moving towards the success and getting the high market share and in the same way Adsa is following it. These retailers are promoting their business through different types of advertisements. They are investing significantly in advertising their products. (Thomas 2009). There is also similarity between these supermarkets in competitive strategy of price and their sales promotion through advertisements.

Tesco is adopting the customer oriented strategy because it considers customers as the main source for their success. According Porter, when the market price is equal or nearly the same as average market price, the minimum cost producer gets the highest advantage or profit. This is the strategy of cost leadership. This cost leadership strategy is being followed by Tesco, Nissan and Dell computers. (http://tutor2u.net/business/strategy/competitive_advantage.htm).

Tesco has some basic competitive strategies to compete with the rivals. According to the needs and desire of the customers, they make their business strategy. They have some strategies like making their shopping journey easy so far as possible, decreasing their prices to help the customers spend less, offering the convenience of either large or small stores and bringing simplicity and value to complicated market.(Tesco preliminary Results 2004/5). So through these literatures, it is obviously seen that these competitive retailers are focusing on low price and customers focused policies to gain the high advantages. Tesco has another business strategy like online shopping which is very effective because it saves time and effort of the consumers.

Asda, on the other hand is focusing on ‘everyday low price strategy’ instead of loyalty. (Corporate Watch, 2004). Because it is owned by Wall Mart which is considered as the ruthless employer. Asda also adopts the same strategy of getting the high profitability instead of the trust of the customers.

According to a website (Thinking Made Easy) Asda is making its competitive strategy differently. It is mainly concentrating on marketing campaign. Its two popular marketing campaigns are: Asda “price campaign” and smiley face “rollback campaign”. Likewise this retailer is employing so many competitive strategies. It is emphasizing on the long term existence policies such as recycle of the waste, fair trade, environmental awareness, waste management, carbon minimization, and priority to local suppliers etc. like Tesco; it has also the online shopping strategy. So we can see these two organizations going head to head on competition.

So this research aims to find out more about the competitive strategies which are still not found completely. These literatures related to the topic are not sufficient to know the strategies competitively adopted by the giant supermarkets of UK. By selecting two supermarkets as the sample, this research will try to seek the overall results.

6. Methodology

This research will be the combination of exploratory and explanatory research approach which help to find out the new information and provides new insight. (Robson, 2002:59, cited in Mark et.al 2003) and help to define and explain the things. Exploratory study helps to discover new things and it also can be linked with the traveler and explorer (Adams and Schvaneveldt, 1991 cited in Mark, S., et. al. 2003). This research also uses the qualitative and quantitative research approach. Qualitative approach helps to understand the inner view, opinion and understanding of the related issues. Like the customers opinion about the service and quality of Tesco and Asda, their competition strategy. This research will be conducted through in-depth interview, focus group interview.

On the other hand, quantitative research is related to the information of numeric data, statistical analysis of the obtained information. This research uses survey and observation method to get information. Survey helps to gather a large number of data and information in highly economical way. (Saunders, Lewis and Thornhill 2003). This proposed research will use this technique to collect data with the help of questionnaires. Likewise structured and unstructured interview will be used to get the information and the interviewee will be encouraged to express their opinions without any hesitations.

7. Data collection methods.

This research in the beginning will collect primary data from focused group interview. In this unstructured interview, shoppers will be interviewed and they will be asked to give their inner view about the performance and the services of the supermarkets. Questions will be asked in very casual way so that the interviewee will feel comfortable to express their view-point easily.

In the next phase of this research, there will be an hour interview with the director of Tesco and another an hour of interview with the director of Asda to get the information of their competitive strategies and the performance for customer satisfaction. This interview will be structured where questionnaire will be based on predetermined and standardized. (Saunders, Lewis and Thornhill, 2003).This interview will be taken from telephone because it saves the time and access. The interaction will be recorded in tape. Participant observation method will be conducted to get the information about the strategies in these giant supermarkets; Tesco and Asda.

Survey will be conducted by observing the company’s documents, memos, publications of company, newspapers to collect secondary data.

8. Data analysis

The data available from quantitative research approach like survey, observation which is numeric and statistical will be analyzed by Statistical Package for Social Science (SPSS) software available from online tutorial. For free text analysis, NVIVO software will be used.

To analyze the qualitative data, grounded theory of Strauss and Corbin (1998) will be used. This approach of data analysis enables to develop the concept and expressed views in to the conclusion. This theory follows many procedures while analyzing the data. This type of data analyzing technique becomes the less formal and systematic. (Saunders, Lewis and Thornhill, 2003). This technique of analyzing data will assist to develop and discover the new ideas and theory.

9. Competence

Activities

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Apr 06

W/K commencing

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Collect and read literature

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Set objectives and questions

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Read methology literature

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Prepare Proposal

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Literature review

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Make schedule for interview with Tesco and Asda’s director and Customers

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Plan access to interview with customers

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Checking the proposal

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In-depth interview with the director of Tesco

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In-depth interview with the director of Asda

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Participant observation in Tesco and Asda

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Interviews with customers of two retailers about the competitive strategy and their satisfaction

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Doing survey

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Collect data

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Analyze data

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Recheck the task

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Print, bind

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Submission

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10. Research schedule/ timescale

Research Gantt chart (week commencing 5th January 2010)

11. Research ethics or ethical concern

It is true that all the research will impact the lives of people directly or indirectly. This research aims to avoid these disturbances to the people in large extent. This research will be guided by a code of ethics (Saunders, Lewis and Thornhill, 2003). My appearance, behavior, attitude and relation with those people who are made subject in the research will be very positive and I will be very passionate. I will be very sensitive towards my works and its effects on other people or organization. (Saunders, M., et.al 2003)

12. Conclusion

I this way, by applying all these steps, this research will find out its objective and it is expected to build new concept or new knowledge about the topic. This research will address all the research problems and questions.

References

Adams and Schvaneveldt (1991) cited in Mark, S., et. al. (2003) Research Methods for Business Students

Third edition, FT Prentice Hall

Dough desjarding(2005)

http://findarticles.com/p/articles/mi_m0FNP/is_4_44/ai_n13248624/[online]

(Accessed 25th December, 2009)

Mintzberg H, (1994), The Rise and Fall of Strategic Planning [3],

http://home.att.net/~nickols/strategy_definition.htm [online]

(Accessed 28th December 2009)

      Porter, M. (1996) Harvard Business Review article [5] and in an earlier book [6],

      URL http://home.att.net/~nickols/strategy_definition.htm [online]

(Accessed 28th December 2009)

       Riley, J., (2009)

URL:http://209.85.229.132/search?q=cache:3KXZr5O0pOMJ:tutor2u.net/blog/index.php/business-studies/comments/sales-promotion-tactics-change-at-tesco-and-asda/+tesco+and+asda+competitive+strategies&cd=9&hl=en&ct=clnk&gl=uk

Saunders, M.,et.al.(2003) Research Methods for Business Students

Third edition, FT Prentice Hall

Sushma, Souvik Dhar(2005)

http://www.ibscdc.org/Case_Studies/Strategy/Competitive%20Strategies/COM0055.htm[online] (accessed 25th December, 2009)

       Tesco Preliminary Results 2004/5

http://www.bized.co.uk/educators/16-19/business/strategy/activity/strategic1.htm

Thomas J, 2009

http://www.marketingmagazine.co.uk/news/924604/Supermarkets-stick-comparison-strategies/

(accessed 28th December 2009)

       http://tutor2u.net/business/strategy/competitive_advantage.htm[online]

(Accessed 29th December 2009)

The Times (2008)

http://www.timesonline.co.uk/tol/money/consumer_affairs/article4222239.ece[online]

(Accessed 28th December 2009)

Thinking Made Easy: ASDA COMPRTITORS AND THREATS/p>

http://ivythesis.typepad.com/term_paper_topics/2009/11/asda-competitors-and-threats.html[online]

(Accessed 29th December 2009)