Comparative Analysis Of Price And Quality Of Two Major Retail Supermarkets

How the prices, quality of products and services helps to achieve competitive advantage?

Overview /Summary

This proposal carries out the comparative analyses in the use of price and quality strategy to control competition in the supermarket industry, this study will be conducted using two major supermarket retailers. The primary purpose of this study is to understand the importance of pricing and quality strategy in the retail industry, and how organisation’s use these to gain the competitive advantage. In addition, this study will help us understand the factors which influence the pricing and the quality and how to sustain competitive advantage.

Introduction            

The retail market of the UK has become very competitive in the past years and because of that they are too much of competition in the market if we take a look at some of the major retail organisations and their growth in the market share has fallen down. In order for businesses to keep up with the market and have a decent share in the market the companies needs to be very competitive to gain any advantages over their competitors. 

The growth in the retail industry has expanded in the United Kingdom, with the two big names in the retail industry (Sainsbury, 2014) and (Tesco, 2014b). but because of many organisation’s available to the customers it has become harder for everyone and tighter, so everyone is offering a better value for money.

(Rego, Morgan, and Fornell, C, 2013).ü

 

In comparison to 1993 to 2013, it has been reported that the retail has grown by 313%, since the retail industry has grown so much and competition increasing this is why organisation are driving the concept of niche market, differentiation with stores and the brands are becoming a main method of differentiating and marketing. The main concept which is expressed as the primary benefits for the organisation’s which is involved in the retail trade. (Delliote, 2014)ü

Because of the increased pressure in the market, this has resulted organisation to choose pricing and quality or both, as an important aspect to deal with customer’s requirement and pricing has been chosen as one of the main method to handle competition and competitive pressure.

 

 

The intense competition will lead to a price war as most of the supermarkets are using price as a fundamental method of gaining the market share. This means that organisation are willing to suffer on their margins and it will lead to the main question if the strategy of low pricing is effective or not.

 These big organisations have to make sure that they provide good quality and services, because if they do not keep up with it then their rivals will drive them out them from the market. (Telegrpah.co.uk, 2015)

The focus of this study is to analyze the factors behind the success of a supermarket to be competitive and gain the share of the market. üThe research proposal will be conducted on two major retail organization and attempt to find out that why is one gaining more share in the market than another and why they are selling their products and services cheaper than the other one. In this research proposal I am hoping to find out if goods and services are sold cheaper to the consumer are they same standards as anywhere else or if not does this bother the customers.ü

I have decided to do my research proposal on this particular issue because the researcher wants to find out if one of the organisation is selling their products cheaper than the other is the quality of the products the same as the other organiastion or is the business making profit if they are selling their products for less. The other reason is to find out since there is too much of competition in the retail industry in the UK are these big businesses still making any profit or just surviving. When I have completed my project on this issue I will be able to understand because of the competition in between these major retail organisation are the small local businesses getting affected by this as well and if yes then how are they dealing with it in order for them to survive and run their businesses smoothly what steps are their taking.

The reason behind why I have chose to do my research on this particular issue, Is that recently I have been watching news on television about the competition in the UK between supermarkets in the retail industry. In addition, I have been reading news article, which are also talking about the raise in the UK supermarket. So this got me curios that if they are that much of competition how are the suppliers provide them with the goods they need. I was reading an article on the guardian.com that suppliers and farmers are struggling to provide goods to their customers so this is why I decided to do my project on this particular issue. (Rupert Jones (2016) theguardian.com)

One of the main reasons, behind the supermarkets success is the ease of opening new stores rather than big, out of town supermarket. (BBC, 2016) Main reasons to stay competitive are to achieve economies of scale where the availability of cheaper products from countries such as China, India, Bangladesh and Europe, as well as distribution and marketing. (Tejvan Pettinger, 2014)ü

Another major reason to stay competitive is because of the recent recession in 2007-2009, the rate of inflation of consistently been higher causing the fall in the income of British consumers as a result people are more conscious to buy the product from cheaper supermarkets and budgets shops, most of the people are less conscious about the brand of the product. (Anthony Reuben, 2009)ü

Aims

The aim of this research proposal is to carry out comparative analysis of two major supermarkets and how the prices, quality of products and services helps to achieve competitive advantage over their rivals. This research sheds perspective in to the outlook and dynamic from the viewpoint of the consumer’s, as to the effectiveness of having a strategy that is pricing or quality led, and the reliance of pricing as the sole form of communication. In this research there will be an investigation on the factors to achieve the comparative advantage and to sustain it.

While interacting with the participants those who will take part in my project through several different methods, I will be hoping to get genuine answers from them because after all those are the people who I am relaying on. Moreover, with the genuine answers, I will be able to get to the end of this particular issue.

Rationale

There are many literatures which is available on this particular on this particular subject. From the viewpoint of accounting on pricing literature is available by (Mac Goldbrick 1990), according to him “price is a cost plus profit added to the overall price”. The accounting way of looking at a business could be known as normal way of running a business (Kotler,2012) this method could be expressed to be out of line in the modern world because the pricing has emerged as a marketing tool and it is known by many famous such as (Holdershaw2007) (Jones et al, 2007) and (Verhoef, 2003).ü                                                                                                                                                                       An effective marketing tool to be able to encounter the pressure from the market and also the marketing requirement effectively and be able to overcome the pressure and the requirements of the market more effectively and efficiently.

In the retail sector, because of the progress of marketing it has often avoided the price war between organisation. Since we know and understand because of price war and competition in the in retail industry between eight organisation it’s going to head to a market which will be unique as an oligopoly, where it will affect the whole process and the efficiencies that are to be delivered in the market.  (Deloitte, 2014). ü                                                                   

Competition arises and why prices go up and down in this case, prices are down because there are so many options available to the consumers. For example, now days there are more than enough retail supermarket available to the customers to do their shopping at and more still opening.And comparing to the past some of these major retail giants, there are opening these mini market and new local businesses are opening. Some of the local businesses are offering lower prices than these major retail supermarkets, which also can be a bit of competition for these big organisations. (Emma Monbodh, Mirror.co.uk, 2016)  

The reason behind why these small businesses has started offering lower prices on their products because since these major supermarket has opened to many supermarkets the small businesses were running out of business and they had no other choice but to lower their price in order to attract customers towards them. Online availability of a supermarket and delivery of products to customer doorstep is one major aspect of winning over your rival, now a day’s majority of people are busy and they find it easy to shop online. If you have a delivery service available, you are most likely to attract majority of the customers towards your organisation. Customers will pay extra to do their shopping online because it time saving and you get fixed time so the customers do not have wait at home for their delivery to arrive.

Recent experiences show’s that people can’t be asked going in to supermarket and walking around in the store and picking up the items they want but they much prefer to do this anywhere they want  because shopping online is just a click of a button and they are willing to pay extra for the delivery cost. (Emarketer, 2016)            

(Finne and Sivonen, 2008) Describe the retail industry as one of the important element in paradigms, where businesses are constantly on the move and driving a format which best fits the requirements of their organisation. The retail industry provides a scheme which is willing to a comprehensive value for money concept. The changing idea lets value for money and pricing more chances in a scenario that provides for an in competition more chances on the pricing.            A business model where private sector is focus on a unique retail outlook and public sector is focus on capturing the market share significantly affects the business. Except for Morrison’s whom is a family business, most of the other organisations directed towards the public sector share to gain the major consumer proposition. We can conclude here, that the respective of companies such as Tesco and ASDA are hugely influenced by the corporate strategy of gaining more share form market rather than quality.

Organisation offer lower prices and prices go up and down because the consumers are much aware of prices of the products because of the technology available to consumers. Majority of the public have internet access so they could go online to look at the prices of individuals and whichever supermarket sells their products cheaper than the other the customers will go to them for the purchase of the goods they want. (Tesco.com, 2016)

The other reason behind competition is marketing because some of these organisation has cut back on advertisement so the other organisation who are spending more on advertisement this way who advertise more and advertise accurately to their target customers will be get more customers in to their stores because they will know about you. (Sara Spray, July 2015)

The reason for a swift change is that the consumers are also less fussy about the brands of the products they are purchasing comparing to the past customers that wanted branded goods. Another reason is the availability of the products under one roof. Customers will go to one place where they could get everything they need rather than spending more time and going to several different places for their shopping. Now a days this is the reason why these major retail supermarkets are introducing house hold goods, cloth ware and etc to their store in order to get more customers in their stores, because if you can fulfil the customer needs then they are most likely to get more customers.(Cathy Bussey, 2016 PRweek.com)

So called big four retailers in the United Kingdom such as Tesco, ASDA, Salisbury and Waitrose- have been facing intense competition from Aldi and Lidl because they have cut into their market share with no frills shopping and that is making a huge shift in retail shopping. (Peter Shadbolt BBC, 2015). üPeople behaviour and buying habits has been changed dramatically as, it has been experienced in the past, middle classes for Marks and Spencer, for upper middle class Waitrose and for lower middle class its Morrison. The reason for this swift change is that people behaviour and habits have been changed from buying an expensive product to getting a better deal, sometime quantity instead of quality off course the availability of products plays a massive role.

Methodology

This section is about research methodology which includes a research philosophy and paradigm, discussion on both qualitative and quantitative methodologies, data collection i.e., reliability, validity and triangulation (Healey, 1996). The main purpose of this section is to explain the resources in which the researcher will collect the data and the methods and approaches used to collect the information. ü

Research is a systematic, methodical and ethical process of inquiry and investigation. This can help to solve practical problems and increase knowledge. The purpose of this research is to review existing knowledge, to investigate existing situations or problems and to provide the solution to problems. Research explores and analyses issues that are more general and create new procedures or systems. It explains new phenomenon and generates new knowledge. (Collis, 2003).

For this research I will be using quantitative and qualitative research approach, the kind of research I will be is going to be a case study, the case study will provide a detailed qualitative information, provide insight for further research.

For this research, self-administered questionnaire will be used and personal delivery as method of delivery. The reason why this method is used is that questionnaire-based research has advantages like relevant findings, accuracy and wide scope. Moreover, customer personal questionnaire gives good grounds to justify background literature and can be used as an effective tool to gather data to base on specific and realistic recommendations. (Bates, 2004)questionnaire are often used by big multinational corporations to look for major trends in customer’sbehavioural factors like engagement while buying, buying preferences, product satisfaction, return policies. Effectiveness of questionnaire is the one that leads to specific action plan resulting in more rewarding experience for organisations. ü

However, the disadvantages of survey would be limited sample size and limited questionnaire 8-10 questions. Another disadvantage is people’s opinion could be biased. However, questionnaires are the most frequently used in researches as they provide variable specific to that study or research.

Exploratory research will be used and it will be the strategy that the research will be applied. Because this kind of research will help the researcher to look at the issue in descriptive and as well as exploratory way. This could be done by looking in to the problem and analysing the views of different people and also by exploring and understanding different literatures which are related to this study.

Questionnaire is more appropriate to understand because it causes and affects relationships as per (P Ghauri, 2005). Questionnaires are used as a method of data collection for this research and to evaluate/ analyses the factors that may affect the prices, quality of products and services and helps to achieve competitive advantage.

Ethical Issues

For this research, several ethical considerations are required to be taken into consideration. Ethical aspects like privacy, anonymity and confidentiality of participant of questionnaire or survey will be maintained. Purpose of the study will be communicated to participants and data collected will be solely used for purpose of this research. Besides this, no other ethical issues are perceived. Results of the study can be communicated to respondents subject to approval of management.

Research Limitations

 

There are many factors which could affect the research and quality of findings that will be collected. (Newman, 2008) describe that research is known to have limitations, which are expected to overcome. First of all, when understanding the sample size, it will be chosen to be statistically sufficient at 30; however, this does not represent the larger scale and number of customers held by each supermarket.  The location and sample size will be selected from Leeds. Again, this could be biased, as the share of each supermarket in each region is different. At last, the foundation and literature of the research will relay on the secondary data, which is available from various sources.

 

 

 

 

 

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