Contents

CHAPTER 1: INTRODUCTION......................................................................................................
About Tesco PLC..............................................................................................................................
About Small Retailers........................................................................................................................
Problems Faced by Small Retailers...................................................................................................
Marketing Strategy............................................................................................................................
Types of Marketing Strategies.......................................................................................................
Tesco: An Overview......................................................................................................................
Marketing Strategy at Tesco..........................................................................................................
Purpose of this research.....................................................................................................................
Scope of the research.........................................................................................................................
Research Questions............................................................................................................................
Hypothesis of the research.................................................................................................................
Structure of the report........................................................................................................................
Introduction....................................................................................................................................
Literature........................................................................................................................................
Research Methodology..................................................................................................................
Findings and Analysis....................................................................................................................
Conclusion and recommendations.................................................................................................
CHAPTER 2: LITERATURE REVIEW...........................................................................................
Introduction........................................................................................................................................
The problems that are caused by large retailers such as Tesco.........................................................
Size of large retailers.....................................................................................................................
Buyer Clout....................................................................................................................................
Loss leading...................................................................................................................................
Store format and location of large retailers...................................................................................
Marketing Mix...............................................................................................................................
Focus of Marketing Strategy.............................................................................................................
Summary............................................................................................................................................
CHAPTER 3: RESEARCH METHODOLOGY...............................................................................

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Introduction........................................................................................................................................
Qualitative approach to research.......................................................................................................
Advantage and limitation of the research..........................................................................................
Introduction to Primary Data.............................................................................................................
Primary Data Collection Methods.................................................................................................
Questionnaires...............................................................................................................................
Implemented Research Strategy........................................................................................................
Introduction....................................................................................................................................
Overview........................................................................................................................................
Research Methodology..................................................................................................................
Quantitative Approach.......................................................................................................................
Advantages and Limitations..........................................................................................................
Qualitative Approach to Research.....................................................................................................
Advantages and Limitations..........................................................................................................
The Research Strategy Applied.........................................................................................................
Population and Study Sample............................................................................................................
Data Collection..................................................................................................................................
Reliability and Validity......................................................................................................................
Limitations of the Research...............................................................................................................
Ethical issues incorporated in the Research.......................................................................................
Potential Risk of the Research...........................................................................................................
Strategies Applied for Dealing with Ethical Issues.......................................................................
CHAPTER 4: RESEARCH RESULTS.............................................................................................
CHAPTER 5: DISCUSSION............................................................................................................
CHAPTER 6: CONCLUSION AND RECOMMENDATIONS.......................................................
Conclusion.........................................................................................................................................
Recommendations..............................................................................................................................
Summary............................................................................................................................................
Appendix A: Questionnaire...............................................................................................................
References..........................................................................................................................................

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 CHAPTER 1: INTRODUCTION

About Tesco PLC

Tesco PLC is one of the leading retailers in the world and is cited as the third largest UK

based grocery retailer with over 4330 supermarkets in Europe (United Kingdom, the Republic of

Ireland, Hungary, Poland , the Czech Republic , Slovakia , turkey), South East Asia (Thailand ,

South Korea, Malaysia , Japan , China ) and the United States (Silo Breaker 2009).

Tesco PLC has interest in grocery, non food-food items, financial services and

telecommunication. Its worldwide sales were 59.4 billion in 2009 and over 470, 00 people

employ across 14 countries in 4330 stores (JPS 2009).

Tesco is one of the biggest and leading supermarket retail chains in the UK. It operate

2,306 stores and employ more then 286, 394 people. In UK Tesco sales have increased every

year, for 2009 sales were 41.5bn relatively compare with previous year (37.9bn) sales has

increased by 9.5%. Tesco has widely spread and being close to the customer in the UK, Because

Tesco has developed range of different concept of stores. Which are Tesco extra, Tesco, Tesco

metro, Tesco express, Tesco one stop, Tesco home plus. These different types of store formats

strategy of Tesco has been influenced to obtain some of the best retail positions. According to

market analysts CACI Tesco controls more than 36% of the overall UK grocery market share; it

was 30.6% in 2006 according to Defra Economic and Statistic (TNS 2009).

Further DATAMONITOR had revealed Tesco has largest market share in 84 out of 121

postal districts around the country in 2009, and it was 87 in 2008. These figures indicate

Tesco is the dominant supermarket in more then 70% of the UK 121postcode areas. Other

3
supermarket grocery chains dominant are relatively not significant, namely Asda only control 23,

Sainsbury’s only 14 and Morrison’s only 13. Even though in areas where Tesco is not in control,

it has typically secured the second- highest market share. For example in 14 districts Tesco has

more than 40% of market, further 45% of market in more then five towns (Datamonitor 2009).

Even Tesco has wide spread of dominant regions; its further expansion strategy of retail

supremacy at local level is very forceful. According to the Times Tesco have approximately 76

outstanding planning applications, from convenience stores to hypermarkets; most of them have

been logged past year (Datamonitor 2009). This most dominant force and aggressive further

expansion strategy of Tesco is controversial. Some research suggests, becoming pre-eminent in a

growing number of areas across the UK.

About Small Retailers

For the purposes of this paper a small retailer is defined as a retailer that employs

between zero and 10 employees. As per this definition, in London in 2004 there were 34,763

small retailers with a total of 104,154 employees. Employing this same explanation, in Great

Britain (Great Britain) in 2004 there were a total of 243,508 small retailers employing a total of

831,099 employees. Small retailers make up 87 per cent of all retailers in London and 85 per

cent for Great Britain as a whole. London consists of approximately 14 per cent of all small

retailers in the whole of Great Britain.

During the years 1998 and 2004 the number of small retailers reduced by 4 per cent (a

full amount of a little over 10,000 small retailers) in Great Britain, and by 2.3 per cent (a little

more than 800 small retailers) in London. During the same duration of time the number of large

retailers (defined as those employing 10 or more employees) heightened by 9.5 per cent in Great

4
Britain, and by 13 per cent in London. On the other hand, carefulness is required when utilizing

such figures to form an opinion on differences in the number of different sized retailers across

time. This is due to the fact that the number of small retailers as explained by the number of

employees can be distorted by a number of elements. First of all, the number may be increased

by a rise in the quantity of new retail business that have sprung up. On second count, the quantity

may be reduced by a number of small retail organizations exiting the industry. In addition to

these factors the quantity of small retailers may rise if several medium-sized retailers decrease

their employees and downsize (and as a result be re-categorized as small retailers). And last of

all, the quantity of small retailers may reduce if several small retailers increase in size and turn

into medium-sized retail businesses. For this reason, even as there has been a smaller decrease in

the quantity of small retailers in London as compared to the UK, over the past few years it is

hard to be accurate about the causes for this discrepancy.

As has become obvious from other research on the retail industry, and as the small

retailer firms revealed to us during the course of this study, it is hard to acquire data from

retailers themselves. For this reason most of the data acquired for this paper ha to be obtained

from interviews with small retailer firms, instead of from straightforward responses from small

retailers themselves

After a study of the literature and the resulting study, this dissertation then examines a

few of the possible steps small retailers might execute in order to alleviate the harmful effects of

some of these problems and ends by summarizing the main results of the paper and discusses the

suggestions for retailers to take.

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 Problems Faced by Small Retailers

Throughout at least the past two decades the market share of large retailers, including

Tesco PLC has increased considerably. This increased size has led to increased buyer clout for

large retailers and has consecutively led to large retailers being able to sell their wares at

decreased prices as compared to small retailers in several cases. This has led to a type of

honourable circle for retailers such as Tesco whereby the economies of enhanced buyer clout can

be spent in superior customer services or lower prices which then lead to increase sales and so

even more buyer clout and so on an so forth. As long as this progression does not lead to extreme

market power, a matter which the national competition authorities would have to take into

account, it is expected to be advantageous to consumers by resulting in lower cost goods.

Supposing that large retailers are not big enough to employ market power (i.e. to increase prices

without dread of corrective proceedings from competitors) then putting a ceiling on the increase

and growth of large retailers, in order to amplify the number of small retailers will lead to

increased prices to consumers (as the capacity for retailers to take advantage of increased buyer

clout will be restricted).

Limiting the development and progress of large retailers, because of its impact on

restricting cost reductions, might also lead to restraining the number of regions in which retailers

work. This means that reducing the expenses of operation is apt to imply that regions which until

that time were not economically feasible become more feasible and so competitors enter into the

region. Limiting the expansion and development of retailers such as Tesco is apt to decrease

economies of scale and, as a consequence, may restrict the number of regions retailers operate in.

These consequences are motivated mainly by the buying clout enjoyed by large retailers.

Independently, small retailers are unable to attain any considerable buyer clout. On the other

6
hand, to the degree that they create buying faction, small retailers may be able to tackle some of

the competitive return of large retailers with respect to buyer clout and so likewise tackle some

of the consequences outlined above.

The latest attempt by retailers, principally Tesco, to set up small format outlets in high

street sites along with increased operating hours has resulted in smaller retailers lose a great deal

of their earlier unique selling point of handiness (when it came to site and operating hours).

Similarly as the case with the increase in buyer clout, these adjustments are the consequence of

market forces and imply that no public policy interference is needed on the pretext of economic

efficiency (except that believed to be necessary by national competition authorities to tackle any

competition problems that may result as a consequence of these changes).

While the expenses of setting up shop in London, as weighed against the remainder of the

country are greater for all retailers, there are some expenses that influence specifically on small

retailers. The expense of retail felony seems to impact more heavily on small retailers as

measured up to large retailers. Into the bargain, the expenses of acting in accordance with

government laws, such as the Disability Discrimination Act, fall unreasonably on small retailers.

Local Authorities and other organizations such as chambers of commerce or trade associations,

could offer backing and/or counsel to small retailers on observance of rules in order to decrease

the expenses of putting into practice legislation.

The ease of access of retailers to customers is a problem for all retailers in UK,

nevertheless a few of the problems of availability influence more severely small retailers than

Tesco. This is due to the fact that Tesco operates on a scale that allows it to extend the expense

of interference to customer availability over a higher level of sales (typically in a larger number

of outlets) in contrast to small retailers. For this reason it is critical that the effect on small

7
retailers of possible changes to means of transportation is taken into account by the authorities

concerned.

Whereas several of these elements, along with elements such as the problem of ancestry,

have led to a number of small retailers shutting shop, there are methods by which small retailers

can compete more efficiently with Tesco. These consist of heightened specialisation and

competing on the basis of customer service among other factors

Marketing Strategy

Marketing strategy is the process though which organisations use their scarce resources to

achieve competitive advantage in an industry through creating opportunities for increased

revenues by applying various methods and techniques (Baker 2008). According to Ferrell and

Hartline (2007) the strategic planning process involves an in depth analysis of an organisation’s

internal and external environment and implementing tools and techniques to gain a competitive

advantage within this environment. The strategic planning process is also referred to as a

situational analysis where the situation and environment is evaluated and marketing techniques

are implemented through a specific marketing strategy. Implementing a marketing strategy is not

only important to gain a competitive advantage but also for the long term survival of an

organisation especially in the retailing industry. According to Lamb, Hair and McDaniel (2008)

implementing a marketing strategy in any type of retailing company are very important and lead

to strategic competitive advantage within the retailing industry.

8
Sethi (2009) described ten methods of improving a marketing strategy in the current environment

which include new strategies for new times, segmentation and decision, search for newer

markets, emphasis on value and brand portfolio, updating distribution channels, helping the

consumer through various techniques, providing state of the art products and services for

consumer convenience, applying effective communication techniques, going digital and using

various Information Technology tools and techniques and analysing the changing patterns of

consumer demands and behaviour.

Types of Marketing Strategies

There are several types of marketing strategy as described by many researchers and

practitioners which are based on various concepts and frameworks. According to Christ (2009)

the types of marketing strategies applied by companies are market leader, market challenger,

market follower, market niche and alliance marketing. Turnbull and Valla (1986) presented five

types of marketing strategies which include technical innovative strategy, product adaptation

strategy, availability and security strategy, low price strategy and total adaptation or conformity

strategy. Companies implement one of these types of marketing strategies or a mix of these

strategies to gain competitive advantage within an organisation.

Tesco: An Overview

Researchers and strategists actually claim that Tesco actually works on the principle of

aggressive marketing techniques that are applicable in both the short and the long run. It is the

strategy of Tesco that have actually made Tesco the best retailer in the world. Their retail

strategy is quite distinct with other retailers. Tesco is considered as a champion retailer and they
9
have shown greater energy and responsiveness to certain volatile marker places and that is the

reason why different retailers and have felt this pressure of the champion. Their strategy is

actually the core power of this mega brand. The main strategy of Tesco is that they focus on

scenario of customers and that is the reason why they have excelled in both the short and the

long run. They also work with the simple strategy that is what you actually see in the shops is

what you exactly get in the stores (Heller 2005).

Marketing Strategy at Tesco

The market orientation is one of the greatest factors in the development of the strategy

and the management of Tesco plays an important role and their philosophies is based on the

scenario that no one tries harder for customers and treat people how we like to be treated. The

values of this organisation are actually created because of the internal marketing strategy of this

organisation and this also includes the distribution of newspaper to the employees (Anthony

2008). Different schemes of this organisation are viable in both the short and the long run and the

employees kept in their mind that they are working for the biggest retailer that is the reason why

the strategies that are created should be viable in both the short and the long run. The staff of this

organisation is briefed about the importance of Clubcard and that is the reason why internal

launch was initiated with the internal marketing (Humby and Phillips 2004).

Purpose of this research

The entire research is focused on the scenario that what is the actual impact of Tesco

Marketing Strategies on small retail outlets that are operating in the United Kingdom. In the

10
similar manner emphasis is laid on the scenario that how these small retail businesses adopt

strategies in order to face the mammoth marketing strategies of retail giant Tesco. Emphasis is

laid on the core marketing strategies of both Tesco and several small retail outlets. The research

is based on qualitative analysis and the strategy of questionnaire is used extensively to check the

hypothesis. In the similar manner it can be said that the core purpose of this research report is to

identify the marketing and strategies decisions that are taken by Tesco and other organisations.

However, it can be said that the core aim of this research is based on the scenario that what are

the short and the long term effects of the 4P’s of Tesco on other small retailers in north London

UK.

Scope of the research

The scope of the research is limited towards the marketing strategies of Tesco and certain

other small retail outlets that are operating in the United Kingdom. In order to evaluate their

effectiveness emphasis is laid on the secondary research and that s the reason why it can be said

that emphasis is laid on the secondary research and qualitative data is analysed in this research. It

can also be said that in order to check the effectiveness of this research this research will

incorporate the primary data and responses of retailers will be analysed. However, it can also be

said that the scope of this research is limited to North London UK.

Research Questions

There are certain research questions that are be analysed in the dissertation and these

research questions are answered in the findings and analysis chapter of this dissertation. The

research questions are listed below:

11
 1. What are the effects of Tesco’s price marketing strategy on small retail businesses that

are operating in North London?

2. What are the effects of Tesco’s product marketing strategy on small retail business that

are operating in North London?

3. What are the effects of Tesco’s promotional marketing strategy on small retail business

that is operating in North London?

4. What are the effects of Tesco’s Place marketing strategy on small retail business that is

operating in North London?

Hypothesis of the research

The hypothesis of the research is Tesco’s marketing strategy is creating difficulties for

small retailers of United Kingdom and they are unable to target the customers in an effective

and an efficient way. The hypothesis will be tested through both secondary and primary

researches and through proper research the hypothesis will either be accepted or rejected.

Structure of the report

The research report will incorporate certain chapters and these the description of these

chapters are listed below:

Introduction

This chapter will incorporate the basic marketing terminologies that are related with this

research and it would also include the background of the research. In the similar manner it can

12
also be said that this section set up the scene for the dissertation and gives the general context

that is used during the whole discussion.

Literature Review

This chapter would focus on the literature analysis that is closely related with Tesco and

other small retail outlets operating in United Kingdom. Emphasis is laid on the marketing

strategies and terminologies that are closely related with the aspect of marketing. This chapter

will incorporate the secondary sources and these secondary sources will give abundant

knowledge so that the hypothesis can be accepted or rejected.

Research Methodology

Emphasis is laid on this chapter because this chapter will discuss that what research

strategy will be used to carry out the research. This chapter will focus on different areas of

research and incorporate the benefits and limitations of the research. In the similar manner the

primary research analysis is also incorporated in this research.

Findings and Analysis

This chapter would focuses on the results and the findings of the research. The findings

would primarily focus on the secondary and primary sources. In the similar manner it can also be

said that empirical findings and results are actually analyzed in this section.

Conclusion and recommendations

This will be the final chapter of the dissertation this section presents the conclusion of the

entire thesis and recommendations following references and bibliography, appendix,

abbreviations used in this report

13
 CHAPTER 2: LITERATURE REVIEW

Introduction

The literature review chapter covers review of data collected from various secondary

sources such as books, articles, reports and websites for understanding and analysing the

marketing strategy at Tesco its implications on the company itself and other companies in the

industry. The different sections of this chapter incorporate previous researches and studies

performed in marketing management, marketing strategy and the importance of marketing

strategy in an organisation and its impact on other companies in the industry.

The problems that are caused by large retailers such as

Tesco

A frequently occurring theme in the literature and from the interviews is the problem of

competition from large retailers. A few of the problems that pertain to the competition small

retailers are subjected to because of large retailers are summarized below.

Size of large retailers

Large retailers have drastically enhanced their market share over the preceding few years.

For example, in food retailing in 1976 large retailers (defined in terms of turnover as those with

14
revenues of over £5 million) consisted of 50 per cent of all retailing revenue. By 1991 the ratio

covered by large retailers had increased to about 79 per cent. In addition to this, McGoldrick

discovered that among the most important aspects of the retail sector has been the rising market

share of the larger retailers at the cost of other types of retailer.

To achieve this one of the small retailer firms articulated its worries about Tesco’s

acquisition of Adminstore Limited (Adminstore) in 2004. This acquisition covered 43 small

stores (of less than 280 square metres in size) situated mainly in central London. Their worry

was that the acquisition would raise Tesco’s market share to a position where it would be out of

the question for small food retailers to stay in the industry.

The Office of Fair Trading (OFT) looked into Tesco’s acquisition of Adminstore but did

not consign the case to the Competition Commission. The OFT decided that the acquisition by

Tesco of Adminstore would not lead to a considerable reduction of competition within the

industry, or industries, in the United Kingdom. One of the chief explanations for the OFT’s

conclusion is due to the fact that it concluded that the obstacles to establishing small grocery

stores are very slight. The line of reasoning is that if Tesco attempted to increase prices in its

small outlets then other players could, very easily, establish small grocery outlets in order to

compete, which would force Tesco to sustain its price, or more credibly, dissuading Tesco from

ever starting the price increase.

Buyer Clout

One impact of the better market share of large retailers is that they have more buyer clout

than small retailers and can secure lower prices from its suppliers. As a result large retailers are

able to sell their wares at prices that small retailers usually find it hard to contend with. For this

15
reason the prices charged by small retailers seem uncompetitive and they lose business because

of it.

The small retailer firms divulged during the interviews that in some situations large

retailers are able to purchase wares for such a low price that they are able to sell their wares for a

lower price than small retailers who have to purchase them at higher prices from the wholesaler.

Without a doubt in its report on improving shopping availability for people residing in deprived

regions the Department of Health discovered that in many situations the average person on the

street could purchase goods at lower prices from several retailers than small shopkeepers could

from wholesalers.

The higher buyer clout of large retailers as opposed to small retailers is a major

competitive edge for large retailers such as Tesco. In addition, it is expected to be a competitive

edge that adds force to itself. Dobson (2003) introduces the concept of a virtuous circle for the

very largest retailers through which size and market share result in bargaining discounts from

suppliers. This results in a cost saving for large retailers over small retailers which enables them

to spend in either better customer services or decreased prices. This raises the attractiveness of

large retailers as opposed to small retailers and as a consequence this results in even greater sales

for the large retailers which also highlight their buyer clout and so the cycle continues once

more.

In addition, it may be possible that cost decreased obtained through greater buyer clout

(as well as other aspects) makes it possible for large retailers to spread out into more areas. That

is, by decreasing costs, regions that up to that time were not served may become financially

feasible and so would be served by large retailers. This shift of large retailers into formerly

underserved regions may make the region more feasible for other retailers because of the effect

16
large retailers have on footfall in the area.

Loss leading

Affiliated to the buyer clout of large retailers is the tradition of below cost selling or loss

leading. There is proof to imply that some retailers sell wares at lower than cost in order to

increase market share.

The custom of loss leading by large grocery retailers was examined in the Competition

Commission’s 2000 supermarket report. Small retailer firms are worried about the custom of loss

leading by large retailers over extended periods of time, because small retailers are not able to

compete in this manner for an extended period of time. The firms said that due to the fact that

small retailers do not compete on the basis of price they lose market share to large retailers

whenever below cost selling or loss leading customs are employed.

The custom of ‘predatory pricing’, in which a company sets its price below cost for a

period long enough to force its competitors out of the market, is forbidden by competition law.

On the other hand, as pointed out earlier, the buyer clout of large retailers is apt to be such that

even without selling at lower then cost, the prices that are charged by large retailers are apt to be

unfeasible for small retailers. As a consequence the prices charged by small retailers will appear

uncompetitive when opposed to large retailers. For this reason, it is possible that due to the buyer

clout possessed by large retailers, even without selling at prices lower than cost, the prices

charged by large retailers will be so low that small retailers will find it very hard to match them.

Store format and location of large retailers

Out of town versus town centres

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 Competition between large retailers and small retailers is usually categorized as being

between out-of-town stores and town centres. It has been claimed that shopping centres in out-

of-town areas have attracted customers away from more conventional high streets. The preceding

few decades have seen a rise in shopping in large, out-of-town stores and shopping centres,

which it has been claimed has hasted the downfall of local shops.

The shifting dynamics of retailing, in the grocery sector as a notable example, is shown

by an investigation of the different categorizations in the Yellow Pages over time. In the period

between 1992 and 2002 there was a rise of 8 per cent in the quantity of retailer entries in the

Yellow Pages. During the same period there was a decrease of 20 per cent in Bakers and

Confectioners, 40 percent in Butchers, and 59 percent in Greengrocers and Fruit Sellers.

As well as this, retailers, and specially grocery retailers, have increased the range of

goods and services they offer. Indeed McGoldrick (2003) discovered that one of the causes that

grocery retailers have increased the range of goods they offer is because consumer spending on

food has not risen in comparison to expenditure on other items. Items such as CDs, books,

clothing, kitchenware, and electrical goods are more and more being sold by large grocery

retailers as well as services for instances insurance and banking. As a consequence of these

alterations it has been stated that local centres have become delicate and are becoming smaller.

Calculating the impact of these alterations on small retailers (or town centres in general)

is hard because of the scarcity of data. Other researchers have tried to examine the effect of large

grocery retailers by examining their effect on employment. One research proposes there has been

a long-term fall in full-time retail employment in spite of substantial increase in the level of retail

sales (whether measured in real or volume terms). Nevertheless, examining at the period between

1982 and 2003 in London, though full-time employment in the retail sector reduced to some

18
extent, part-time employment rose quite drastically. For this reason though full-time employment

has reduced to some extent over time, part-time employment has risen which has left total retail

employment in London higher in 2003 than in 1982.

Large retailers moving into high street locations

In the past few years large retailers, and especially grocery retailers, have been more and

more going back into small format stores in high street locations. For example Ruston (1999)

discusses large grocery retailers investing resources back into town centres after years of growth

in out-of-town centres.

The small retailer firms showed their worried about large retailers of late moving into

high street areas. The firms are worried because they suppose that, particularly with regard to

grocery retailing, that small retailers may be incapable to compete with the smaller format stores

operated by the large grocery retailers. Without a doubt the New Economics Foundation (2003)

comments that Tesco Express stores have supposedly caused reductions in business of 30 to 40

per cent for other local shops. While this number is improbable to be completely strong for every

local store going through the opening of a Tesco Express it seems rational to deduce that the

move by large retailers will have some effect on the small retailers already on the high street.

One of the small retailer firms informed the researchers that the brand strength of large

retailers was a specific concern for small retailers. The firm said that because customers tend to

be more accustomed with the goods sold by large retailers, this creates some loyalty to them as

compared to small retailers. On top of this, large retailers have loyalty programs, such as loyalty

cards, that are developed to enhance customer loyalty. What this implies is that when large

retailers set up a small format store on the high street they by now have a specific amount of

19
customer loyalty and as a consequence an edge over small retailers in the area.

Even though it is possible that small retailers that compete directly with large retailers

will confront very hard conditions when a large retailer come into their area, because of the

expenses and brand advantages of large retailers, it is possible that other small retailers in the

area may profit, with respect to enhanced sales, due to enhanced footfall caused by the large

retailer. This means that it has been contended that when a large retailer comes into an area it

brings with it a greater level of footfall to the location. Other retailers in the neighbourhood of

the large retailer will profit from this increased footfall because of increased sales. On the other

hand, another consequence of this increased footfall is possible to be higher rents – as more

retailers see the location as feasible enabling landlords to raise rents. For this reason, other small

retailers in the location that do not compete directly with the large retailer may find

circumstances harder if their sales, which will profit from the increased footfall, are not enough

to cover the higher rental, which also is a consequence of the increased footfall. All the same,

even though the entry of a large retailer to an area may have an effect on a number of retailers in

the location– both because of direct competition as well as through their impact on rental levels –

it is possible that other retailers will come in as a consequence of the greater footfall thus

preserving retail (even though not the same retail as previously) in the location.

Some have contended that this alteration in the organization of the High Street should be

opposed, stating that small retailers offer variety of choice for consumers, supply goods and

services that might not if not be offered by the large retailers and usually result in a more socially

agreeable environment. Despite this, proof that small retailers do result in about such an

environment is not strong. Indeed, it can equally be stated that if there is a demand for a specific

good or service then the large retailers will acknowledge the consumer demand and cater to it;

20
that is having small retailers is not a compulsory stipulation for offering diversity and choice in

goods or services. Apart from in the case of retailers that offer very specialised goods or services,

it is possible that large retailers will typically offer goods and services wherever there is enough

consumer demand for them.

Planning policy

One cause for large retailers entering into high street locations could be the consequence

of changes to the Office of the Deputy Prime Minister’s planning policy in the shape of Planning

Policy Guidance 6 (PPG6) Town centres and retail developments, in 1996. The main provision

of PPG6 included:

• A focus on a plan-led approach to leading development in town centres

• A focus on the chronological method for selecting sites for development

• Backing for local centres.

A revised Planning Policy Statement (PPS6), which replaces PPG6, was in print in early

2005. Roughly speaking it keeps the focus on in-town development.

Changes in consumer demand patters

In addition to planning policy, alterations in consumer demand may have led to the rise in the

number of small format stores of the large retailers. For example it could be contended that in

recent years while consumers’ disposable income has risen, the amount of time that they have for

21
shopping has decreased. These alterations may have led to a rise in demand for longer operatng

hours and increased convenience both with respect to location (therefore more high street stores)

and with respect to the goods that are wanted (for example more ready-prepared foods).

The large grocery retailers have modified according to the fluctuations in consumer

demand patterns by offering ‘fresh and chilled’ food and by increasing their opening hours, with

some offering 24-hour operating times. Besides this, many stores of the large grocery retailers

(including large and small stores) are now operative on a Sunday, subsequent to the easing of the

Sunday Trading Laws. This is a noteworthy issue for small retailers because in the past, longer

operating hours tended to act as a comparative edge for small retailers over large retailers. As

more large retailers utilize longer operating hours this comparative edge is eaten away. Certainly

there is proof in the literature to imply that small retailers have observed a reduction in their

earnings since the move towards Sunday Trading. The London Chamber of Commerce in its

investigation of the independent retail industry set up that just over 80 per cent of respondents to

their survey (of small retailers) said that the letting of Sunday Trading Laws had led to a

reduction in their revenues.

Small retailers have also discovered that it is harder to modify according to these changes

in consumer demand patters. Part of the cause for this is due to the expense involved in adapting

to the changes. For instance, in comparative terms, it is more costly for small retailers to stay

open for longer hours than it is for large retailers. The logic for this is that large retailers are apt

to have some staff working 24 hours a day (for instance people stocking shelves) and for this

reason it does not raise their costs by the same proportion to stay open longer.

In addition in many cases small retailers will not have the floor space needed to offer

‘fresh and chilled’ foods or other products demanded as a consequence of changes in consumer

22
behaviour. In addition, in instances where floor space is not a problem small retailers may find it

difficult to obtain the capital to make the required changes to their store to be able to adapt to

consumer demand, for example for buying the fridges and cabinets required for ‘fresh and

chilled’ foods.

It can be deduced that competition from large retailers, specially in the grocery sector,

has affected greatly small retailers. Probably most significantly, the greater buyer clout that the

scale of large retailers delivers enables them to be much more competitive in terms of price (in

their large or small format stores) as opposed to small independent retailers. The trend of the

large, particularly grocery, retailers towards offering a greater range of goods and services in

addition to small format stores in high street locations will raise the competition that many small

retailers have to face. As a consequence of these changes and other elements such as alterations

in operating hours for example a tremendous amount of small retailers’ former comparative edge

in terms of convenience has been eroded.

Marketing Mix

Market direction is the crux of marketing. It explains how to satisfy the needs of the

market through an understanding and reaction to local needs, which cover those of final and

intermediate customers, competitors and the external environment and results in to superior

performance (Narver & Slater, 1990). Because of the retail industry’s close contact with the

market and customers, it makes sense to examine market direction as a tool to judge the

accomplishment of Tesco. Market direction is of even greater consequence when entry into

emerging industries is carried out by a Western retailing firm, which shows that a familiar

23
understanding and response to customer needs is important.

Tesco’s management puts a focus on customer needs because of the ‘Tesco Values’

attitude, which is stated as two values – “no one tries harder for customers; treat people how we

like to be treated.” The values are distributed by an internal marketing plan, which covers

dissemination of company newspaper to employees. In spite of this, these values originate from

the UK and acknowledgment of a requirement for country-specific ways and local can be less

important then corporate unity.

Tesco has a name for creative information solutions, and its ‘Clubcard’ loyalty scheme

and web sites are critical to this. Tesco is the UK’s largest retailer and due to this has a

noteworthy customer base on which evaluation can be performed. Due to the fact that many of

those customers come back at weekly or similar intervals, Clubcard data and ties are both deep

and wide. Appropriately, Clubcard has great promise to influence consumer behaviour in the

UK. Employees are trained on the value of Clubcard, and the first opening was preceded by

enthusiastic internal marketing. Clubcard is not only closely connected with business processes,

but supports with the brand and brand strategy as the active manifestation of the brand’s

personality and its values (Humby, Hunt, & Phillips, 2004).

There are various proportions of Tesco’s online customer experience, counting convenice

of use, rate of site, significance, value, service, and product development. Tesco is consistently

creating more online products to satisfy the needs of the customers. For example, Tesco has of

late started offering music downloads in addition to a grocery delivery service that covers wine

and white goods.

Tesco utilizes this product range to develop a robust customer experience as a customer

can do a one stop shop rather than purchasing products from numerous vendors. For the online

24
customer, convenience of operations is a key factor in their purchasing decisions. Hard work has

been carried out to reduce the amount of time it requires a customer to carry out their first order.

The time has reduced considerably from one hour to 35 minutes. This offers a much more

enhanced customer experience.

There are three aspects to Tesco’s utilization of technology in marketing information

gathering and planning. The first dimension is data collection, of which the Clubcard that could

be examined at the till is a key basis. After this, ‘EPOS’ tills were mounted that could gather

information from every transaction. Clubcard connects with a considerable number of corporate

partners with respect to the dispersion and delivery of rewards. Tesco permits customers to

obtain rewards from transactions as unrelated as travel, dry cleaning, and car maintenance. In

addition, several of these activities will be carried out in the locality of the Tesco store that the

customer usually uses, and from a customer experience point of view increases their relation

with the local retailing community. From a customer data point of view, the chance to earn

Clubcard points through partner organisations means that Tesco is able to increase its customer

profiles relating to their purchasing activities to realms beyond supermarket shopping. For

instance, a customer who gains points though the utilization of Auto centre is offering the data

that makes it achievable for Tesco to gather data about the model of car that their customers

drive.

The second dimension is customer interactions – customers can accumulate points

through the scheme because of activities with different partners, and because of their online

purchases. Tesco is responsible for a diversity of relations that the customer has with the name,

and attempts to reward every relation. Clubcard creates a strong bond between the ‘click and

brick’ (online and in-store) aspects of the business. By gathering data through both media, Tesco

25
can without difficulty see the resemblance and discrepancies between online and offline

customers, with respect to what they buy, how they react to the service and how they mix media.

In addition, data gathered through customer interactions with one media, such as in store

can provide precious ideas for potential new customers, and methods to make better operations

related to the creation of other media or services. Other then the basic direct marketing methods,

Tesco also offers special offers to its most loyal customers. These unique offers help to tie the

customer to the firm. An extended emphasis has been how to raise the frequency of customer

visits. Tesco tackles this problem by sending incentives to all customers deemed dormant. The

company also offers more deals to the customer ‘after the first shop after a break’ (Chaffey,

Ellis-Chadwick, Johnston, & Mayer, 2008). Tesco has thus used comprehensive customer

information to go further than others whose loyalty schemes only present the customer a

decrease of the price paid at the checkout.

The third dimension is data evaluation. Tesco have paid meticulous heed to the design of

data evaluation. They have taken pains to ensure an appropriate database, data currency, data

quality and tight control of data evaluation costs. A supplementary refinement was to attempt to

comprehend why customers behaved in certain manners. This method began with profiling the

characteristics of products, then creating groups on the basis of customer’s product purchase

profile and using these product characteristics to profile and segment customers described in

terms of the ingredients in the Tesco shopping baskets. Each of these divisions had broad

resemblance but with a size that made them worth looking into(Humby, Hunt, & Phillips, 2004).

Evaluation of the UK database has allowed Tesco to take advantage of benefits in

creative ways. For example, when evaluation showed that customers were not buying diapers,

investigation showed the products were being bought at Boots pharmacies, in spite of a 20%

26
higher price. As a consequence, Tesco made a baby club providing advice on pregnancy and

motherhood. In two years the company had gained almost 25 per cent of the mother and baby

market (Strategic Direction, 2008).

Tesco’s trading attitude revolves around the ‘Steering Wheel’. This consists of a

Customer Plan, Operations Plan, People Plan and Finance Plan. Marketing information systems

have an important role in the creation of these plans as they are based on information obtained

from customers through the ‘Brand Review’. Information obtained from the Brand Review is

offered to the board of each country and the central board. Each country conducts individual

Brand Reviews and the results are integrated for the central board. This lead to a Customer Plan

looking to serve customer needs related ti price, service and quality. The Operations Plan

attempts to reduce costs by gaining better margins from suppliers because of operational

efficiencies. Examples of this are the assignments of new ordering or stock replenishment

systems.

From 1999 and later, Customer Panels have been working in most countries where Tesco

has operations in order to allow intelligence to be told to Head Office. Tesco also evaluates

brand share and has a weekly sales report. Image research is conducted over each country and a

brand image evaluation is carried out every six months. Questions think about observations of

price image, quality image, service, range and promotions. These large-scale surveys are

disseminated to catchment regions of their own and competitors’ outlets. Since 2002, methodical

investigation has been conducted examining the market’s largest competitors in each country.

Local investigation is emphasized on stores in particular areas of each country and looks at

differences. Cross-sections of customers meet with store management to explain their

experiences at Tesco, with respect to price, quality, products, departments and customer services.

27
Every year for one week each store inquires every tenth customer about their postcode at the

checkout. The funds invested and time/date of buying is also evaluated. Cross border

investigation in landlocked regions such as Hungary and Slovakia examines how more

commerce can be made from over borders. Customer complaints are noted down with the

numbers of issues in each area under analysis. Seasonal and pre/post advertisement investigation

is usually carried out through qualitative methods to assist the marketing planning process.

Tesco has started on a programme of development pan-regional information systems

infrastructures since 1998, informing about operational capabilities for each country. In spite of

this, most information in developing markets will still be disseminated through informal

networks including face to face meetings and emails. Tesco has a UK-based International

Commercial team that liaises with individual country borders and in 2004 the International

Support Office Marketing Team was set up. This makes sure that all countries Tesco operates in

use the same plans about how marketing research is utilized and managed, expediting

comparable results and actionable planning suggestions. The Process team liaises with the

Support Offices in each region to create their own talents and solve their own retail problems,

giving a localised perspective to the using of marketing information. These offices assist central

operations to liaise with stores, and they gather market research information from independent

parts of the business.

Tesco keeps an emphasis on innovation in products, placing a focus on added value for

the consumer. For example, in 2006 Tesco began to offer a new line of dairy products

manufactured with Reducol, a phytosterol-based chemical proved to decrease cholesterol. The

product range has since increased, allowing the retailer to become a perceived leader to help

elevate its image above those of the competition.

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 The plan of developing market share for goods external to the usual supermarket arena

has resulted in Tesco excedding Sainsbury’s to become the biggest supermarket in the UK, and it

now holds over a quarter of the market (Strategic Direction, 2005). In 2008, Tesco began to offer

its first in-store order-and-collect service as it tries to compete with Argos, the current leader the

catalogue sector. The new service was evaluated at Tesco’s Cribbs Causeway store (which is

utilized as a laboratory store for testing new products and services) and has since been extended

to other locations as well. Tesco has also begun to offer a collection of software products for

home or office use that competes directly with offerings from Microsoft. Tesco Complete Office

comprises two security/antivirus products, a personal finance program, a DVD-writing tool, and

a photo-editing application and is sold for less than £20 compared to Microsoft Office 2007

which sells for £45.

Tesco has in the recent past begun to offer the ‘Discounter’ product range to be able to

compete with the supposed threat of Aldi and Lidl. The discount supermarket sector has

benefited from recent economic havoc as increasing food costs have brought more people to their

stores. 80% of Tesco’s sales come from regions in which Aldi and Lidl are not to be found.

Commercial director Richard Brasher recognizes the “centre of gravity in the marketplace” has

shifted (Ritson, 2008). The test in the future is to stay away from the problem of becoming stuck

in the centre of the market when consumers are trading down. However, it might be argued that

fighter brands produced to cater to a specific competitor tend to fail as they take over the owner’s

higher-priced products instead of taking share from their intended target. Of course it is uncertain

how successful this product range has been at stopping customer switching away. In the past

three months, £22m of spending shifted from Tesco to Asda, with another £10m moving to

Morrisons (Wearden, 2008).

29
 Tesco has also recently carried out substantial social marketing initiatives, such as the

opening of a flagship environmentally friendly supermarket in Wick, which has wind turbines, a

mechanism to collect and use rainwater, energy-saving cooling and cooking equipment and low-

energy lighting. The store is made to produce half the ‘carbon footprint’ of comparable sized

traditional supermarket. Examining the value in environmentally conscious initiatives can

decrease costs and make customers happy. However, as Tesco tries to form a name as a solidly

price-conscious retailer the choice to chase green initiatives may send out confusing messages

and this strategy should be investigated when the majority of its customers are lower middle to

middle class and are altering their concerns in the current economic situation.

There are three aspects that guide Tesco’s strategic behaviour with regardi to

internationalisation. First, purchasing successful companies is key to their scheme of overseas

expansion, with greater progress into growing markets from the 1990s onwards. Tesco entered

Asia in 1998 with the buying of a majority stake in Lotus hypermarkets in Thailand, and more

developed operations in the area when they entered Malaysia in 2002, Japan in 2003 and China

in 2004. The Malaysian operation was set up as a joint venture with a local company Sime Darby

Behad. Tesco owns 70% of the shares, but the concernis under local control. In China, Tesco

entered a similar contract with Shanghai Hymall. Tesco purchased into successful companies

with local operational knowhow and set up market share and its expansion strategy hope for

eventual market domination.

The second aspect relates to market selection. Tesco opted to enter into markets (Eastern

Europe and South East Asia) where local competition was malleable, away from other increasing

giants such as Wal-Mart. Tesco also adapted to opportune events, and took on different entry

modes in order to create knowledge.

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 The third aspect was that acknowledgement that learning wouldn’t be possible until some

kind of outlet was opened, despite the consequences of ultimate success of the venture. Tesco

were relatively weak internationally as compared to more knowledgeable rivals, but still decided

on an aggressive expansion plain in its target markets with a weak period seen as a requirement

for long-term growth in the world. Small experimental or pilot stores were for this reason a

crucial component of the initial learning phase of growth. These stores afterwards might be seen

as excess to needs and consequently separated. International retailers regularly emphasise the

cognitive dimension of the retail internationalisation process. Tesco took a creative approach to

accumulate marketing knowledge to assist its expansion and one example of this was the use of

embedded research teams within Japanese families to observe consumption behaviour before

their acquisition of the Japanese C2 chain.

Tesco also started a energetic public relations exercise to get shareholders on board with

a chancy internationalisation plan. Finally, Tesco guarantee it had the best human resource to

steer its growth, with financial capital and marketing expertise considered very important to

structure of accurate strategies in foreign markets. This was most important as growth can be

seen as an incursion by those in the targeted country. The acceptance of a concentrated PR

campaign once business success started to expand overseas highlighted the requirement for an

evolutionary marketing strategy.

Growth into the US under the Fresh & Easy banner, however, has followed a diverse

model. The US market is characterized by extremes with luxury wares at one end and

inexpensive products at the other. Force from both parts has resulted in the near removal of the

mid-market expert. Aiming straight at this segment would therefore appear irresponsible

However, economist Frank Badillo explains the wisdom of their plan, suggesting “It would be

31
hard for Tesco to take on Wal-Mart head-on in the U.S. Instead they’re targeting a format that

Wal-Mart isn’t strong in, but one that Wal-Mart is looking to get more into – smaller,

convenience-driven stores.” Tesco is “beating Wal-Mart to the punch,” because the British

retailer will have the ability to get bigger faster than Wal-Mart (McTaggart, 2006). Tesco’s

admission plan is to focus on a section of cash-rich, time-poor customers, offering brand new

products. The name ‘Fresh & Easy’ underscores the effort to appeal to this segment.

The idea is a convenience arrangement that emphasises straightforwardness from

merchandise displays to the checkout (customers at Fresh & Easy can employ ‘assisted self

checkouts’ or do it themselves). Most persons in the US live close to a big supermarket. On the

other hand, Tesco think many will favour the convenience of a smaller store if the store caters for

their needs. though relatively undersized, the stores are large enough to store a much wider

product range than is the standard for similar US outlets, many of which don’t look further than

convenience store stronghold such as alcohol, frozen foods and snacks.

Tesco has also capitalised on anxiety about obesity levels and the rising attention in

healthy eating. Fresh & Easy offers a variety of additive-free ready meals familiar in the UK but

relatively unprecedented in many parts of the US. in spite of this, Tesco has been able to

maintain expenses relatively low, at around 20% less than the major supermarkets. Tesco

commenced its growth into the market in California, as marketing research point to a large

number of health-conscious shoppers. With respect to experiential marketing, Tesco has meant to

hire local people so customers feel secure in the new surroundings.

Most retailers aspire for a certain demographic section in the market, chiefly in the UK.

For example, Sainsbury’s targets middle-to-upper-income customers, while ASDA aspires for

lower-to-middle-income clients. Tesco’s aim, however, is more comprehensive and they stay

32
dedicated to a broader spread. This has been achievable through creative segmentation and

targeting. The most current instance of this has been the beginning of the ‘Discounter’ range of

products to attract to customers at present shopping at Aldi and Lidl. Since Wal-Mart acquired

ASDA in 1999, Tesco has broadened its market share benefit over ASDA by 2.5%. This is

accredited to a strategy opposing ASDA’s perceived price advantage. At the same time, Tesco

augmented its food benefit in terms of depth of range, quality, perception, and other

characteristics.

Tesco is also the world’s most important internet grocer, and it operates a very thriving

financial services arm in the course of a joint venture with the Royal Bank of Scotland. In

distinction, Wal-Mart has been ineffective at entering the banking industry in the US. Beyond of

the UK, Tesco’s most market charisma is influential among developed countries is in Thailand,

South Korea, Hungary, Czech Republic, Slovakia and Poland. A plan of entering markets where

opposition is feeble or disjointed and there is no presence of recognized global retail giants such

as Wal-Mart has been a factor to the accomplishment of Tesco’s internationalisation. Tesco has

revealed great flexibility. For example, it’s highly flourishing Clubcard system was not set up in

the US because research demonstrated consumers there to be sceptical about the idea and already

sensed they had too many loyalty cards.

Tesco has also shown shrewd response to apparent opportunities and threats. For

example, Tesco stepped in the UK convenience market with the Express arrangement in 1995. In

1999, after cultivating the arrangement, Tesco began opening a new invention of Express units,

which included some prefabricated amenities (prebuilt and simply let down onto the site). In

2003 Tesco purchased the T&S chain of around 2,000 convenience stores. Even though it later

sold various, it changed many others to the Express standard. Even though investors were at first

33
cynical about Tesco entering this market, Express now has a higher profit on outlay than other

Tesco arrangement. Tesco’s immediate understanding of ideas such as this, driven by the

apprehension of imitator ventures, gives it first mover lead.

Focus of Marketing Strategy

The brand focuses on the internal products that are actually prepared by Tesco itself. It

can be said that this brand is so powerful that more than 1,600 trucks criss-cross UK everyday to

supply at 800 plus stores in the United Kingdom. The researchers actually depict that this

organisation was formed on the basis of pile it high and sell it cheap however, the current

scenario is that they have actually changed their strategy and they have focused on the word

value in their strategy (Johnson 2005). However, certain researchers explain the scenario that the

marketing of this organisation is related with certain other retailers that are working in the

marketing. However, Tesco focuses on the aspect of organisational change and development of

the brand. In the similar manner it can be clearly said that there are certain broad marketing and

strategic issues that are associated with the brand like: development of new business strategy in

the retailing business, creation of a value proposition, repositioning as a major food retailer, etc.

However, there are certain relationship marketing issues that are closely associated with the

brand and these issues are: the introduction of loyalty card, the use of loyalty card as an

instrument of customer bonding, strategic and tactical issues in the use of loyalty card schemes

(Peck, Clark, Payne and Christopher 1999).

34
 Summary

The literature review chapter covered the basic concept of marketing strategy along with

the implications of a marketing strategy and the types of marketing strategies available at the

disposal of organisations. The overview of Tesco was also presented in this chapter along with

the marketing strategy implemented at Tesco and the focus of the Tesco marketing strategy. The

literature review chapter provided the basic concepts related to marketing strategy in context of

Tesco and the United Kingdom retailing industry. The research methods available to the

researcher and the research methods applied by the researcher in the current research for analysis

and observation of primary and secondary data are covered in the next chapter.

35
 CHAPTER 3: RESEARCH METHODOLOGY

Introduction

Research methodology consists of two parts: namely, research and methodology which

will be applied simultaneously in order to successfully complete the research. The research will

not just be about interpreting data from other sources and presenting it. It will consist of

evaluating the data, which may be obtained from books and other sources, and then following

this up by primary research which will be used to reach an original conclusion which would

contribute to the advancement of knowledge. This can and will be accomplished in a variety of

ways including the study of and interpreting studies conducted from other sources in order to get

a general idea of the details of the research conducted in the past. This will then be used as the

basis of new ideas which will provide the conclusions and recommendations presented in the

concluding chapters of the research. The main purpose of the research methodology and the

subsequent research is to enhance human knowledge about a known situation (in this case the

impact of Tesco’s marketing strategies on small retailers) and use this knowledge to develop new

ideas and facts, which in this case would be an action plan for smaller retailers to be able to

compete better.

Research for this report will not be conducted by just collecting data and interpreting the

results. To be able to conduct effective research, appropriate methods for collecting data,

analysing that data and presenting results should be known and employed effectively. The

research would consist of the study of what is known to reach a conclusion which would be in

36
the shape of new ideas and new products. This chapter outlines the research methodology that

will include a description of the methods that are applied to collect data, analyse the data and

perform analysis in a particular field of study. In order for a person to perform a proper research,

the various methods, tools and techniques for research should be known; otherwise the

researcher may face many problems in collecting data and interpreting results and conclusions

from that data.

Qualitative approach to research

The research approach employed describes and gives meanings to the data under study and the

interpretation will offer insight on different issues that will be uncovered as a result of the study.

The research method used will study the depth, intensity and density of the phenomenon of how

small retailers have been impacted by the problem. After the process of gathering the data is

complete, the researcher will apply qualitative approach to conduct the interpretation of this data

using creative thinking skills in order to propose how this problem may be solved. The

qualitative approach and creative thinking skills used for the research are typical for research

conducted in social sciences as well as in finance and economics. The qualitative approach to

research, in contrast to the quantitative approach, hinges strongly on the analytical and thinking

of the researcher as well as how attuned the researcher is with the actual research. The central

approach of the qualitative method is the personal perception of the researcher, and makes

significant use of his or her ability to think creatively and draw logical conclusions. This is the

main reason why the qualitative approach is applied in researches in the fields of social sciences,

finance, economics in which quantitative research would not yield the desired results.

37
 Advantage and limitation of the research

There are some advantages and disadvantages inherent in all methods of research and

qualitative method is no different. These advantages and disadvantages will be a crucial part of

this research as well. Unlike the quantitative approach, the qualitative approach allows for more

flexibility and allows for a change according to the situation. The researcher’s critical and

analytical skills play a more critical rule as compared to the quantitative approach. The

qualitative approach also uses research tools such as an open ended questionnaire which allows

for more participation and input on the part of the participants, whose explanations and answers

result in creativity and the creation and generation of knowledge. The qualitative approach will

not only involve a review of samples, it also utilizes the knowledge and input of the researcher

and the participants. Because the research tools employed are more open ended and descriptive

in nature, the participants are provided with a greater opportunity to be more comprehensively

involved in the research process. The disadvantages, and subsequent limitations, of this approach

include the bias of the researcher as well as the participants towards any of the questions or the

situation. For instance, in this situation, since the participants are retailers directly impacted by

the marketing strategies of Tesco, we can expect exaggeration and overstatement, which would

create a worse picture than the situation actually warrants.

Introduction to Primary Data

For the purpose of this research, primary data is defined as data which was collected

specifically for the purposes of the current research and which has not been obtained from other

38
sources. Because of these characteristics, the primary data has certain advantages as compared to

secondary data, or the data obtained from other sources. Because the primary data has been

collected specifically to solve the current problem, it would have the highest level of bearing to

the problem at hand than data collected for any other purpose. The primary data collected in this

manner would be quite relevant for the purposes of the research as it would focuses only on the

issues relevant to the research and avoids any generalised issues which may lead the researcher

out of context of the current research. Due to time constraint, it is acknowledged that a

significant amount of research may not have been carried out due to the time that would

otherwise have been involved. For this reason, it has been assumed that the primary data

collected through this research is enough and sufficient for the researcher to reach the

appropriate conclusions. The time that would have been required to collect primary data, and

interpret this data according to the situation arrive at a logical conclusions would take up a large

amount of time that was not available to the researcher and therefore has been supplemented

with the use of secondary information in order to complete the research in the time frame

provided. The second limitation of gathering primary data, which is also reflected in the

subsequent report, is the high cost factor, which has precluded a comprehensive study. In order

to collect primary data the researcher was required to prepare questionnaires which entail

enlisting the help of a professional researcher to design and implement an effective

questionnaire. Other costs were also incurred to collect primary data such as travelling and

transportations costs, telephone bill expenditure, faxes to participants and other costs related to

the collection of primary data.

39
 Primary Data Collection Methods

In order to gather primary data, various methods may be employed. The two most

prominent methods to collect primary data cover research using surveys and personal

observation. Research using the survey method is further subdivided into two main methods

namely questionnaires and interviews. The questionnaires and interviews can be conducted using

a variety of techniques such as mail questionnaires, online questionnaires, personal interviews

and telephonic interviews. Personal observation, as the name implied, is carried out using the

personal observation of the researcher which is used to analyse the cause and effect relationships

between a set of variables in a natural or controlled environment depending on the situation and

scenario at hand. The observation method is based on and utilises focus group discussions to

collect primary data. However due to the costs and time involved in conducting research using

this method, it has not been employed.

Questionnaires

Questionnaires are a collection or list of open ended or closed ended questions that have

to be answered by participants or respondents in a research. These questionnaires can be mailed,

delivered by hand, filled out using telephonic conversations, posted online on a website or some

other relevant source. As both questionnaires and interviews seem similar due to open ended and

closed ended questions they need to be distinguished. The main difference between the

questionnaire and the interview is that the questionnaires are not filled out or answered at the

spot but can be filled out at a later time depending on the respondents. The questions in an

interview on the other hand have to be answered spontaneously when the interviewer or

40
researcher asks the question. The questionnaires used for this purpose are listed in Appendix A.

Implemented Research Strategy

Introduction

The methods implemented to study and assess the data collected for research are

examined and analysed in this chapter. The concept of research methodology, various paradigms

and methods used in research and explanation of these methods and paradigms is covered in this

chapter. The qualitative and quantitative approaches to research along with data collection

techniques are also discussed in this chapter. The case study approach utilised in the current

research for analysis of primary and secondary data to arrive at logical conclusions is explained

with the advantages and limitations of this approach. The data collection techniques utilised for

primary and secondary research are also analysed in this chapter.

Overview

A qualitative research strategy will be used in this research in which emphasis is laid on the

questionnaires. Qualitative research is considered to be especially effective in this research

because it will examine the problem from the perspective of the local population it involves,

which is not conducive to quantitative research. The main quality of qualitative research that

makes it suitable for this research is its ability to provide complex textual descriptions of how

people experience in given research issue. Qualitative research will offer information about the

“human” perspective of an issue – and would provide insight into the behaviors, beliefs,

41
opinions, emotions, and relationships of individuals.

The qualitative approach also allows for more flexibility and would also provide for

greater spontaneity and adaptation of the interaction between the researcher and the study

participant. For example, a qualitative method asks mostly “open-ended” questions that are not

necessarily worded in exactly the same way with each participant. With open-ended questions,

participants are free to respond in their own words, and these responses tend to be more complex

than simply “yes” or “no”.

Research Methodology

The process of assessing past data from previous researches, books, articles and other

sources while carrying out personal research in order to present original ideas which increases

human knowledge on a specific topic is research methodology. It also includes the examination

and analysis of a specific part of a discipline to provide a fresh and new viewpoint (Kumar

2002).

It is not possible to carry out an effective research just by collecting and interpreting data.

This analysis should be backed by conclusion from other researches as well. The methodology in

a research describes the methods through which data is collected, interpreted and analysed to

form a conclusion in a particular area of study (Goddard and Melville 2004).

Quantitative Approach

The quantitative approach is most commonly applied to various scientific areas such as

psychology to test research hypotheses after evaluation of data obtained from various sources.

The similarities and differences present in the numerical and statistical data are demonstrated

42
through the research based on this approach. The components and data of the research cannot be

tampered by the researcher and if another research is conducted using the same data and similar

statistical and mathematical methods it should yield the same results. The relationship among the

variables of the collected data in a population is tested by applying statistical methods such as

regression and correlation (McNabb 2002).

Advantages and Limitations

The quantitative approach to research has various advantages and limitations. The time

taken to collect, evaluate and present data of quantitative nature is quite minimal and if there are

any changes in variables of the data they can easily be identified and measured. The results

obtained from a research using quantitative approach may only be relevant for a specific research

and would be difficult to utilise in generalised conditions. The specific variables of a situation

are focussed in this approach and some other important variables may be ignored (French,

Reynolds and Swain 2001).

Qualitative Approach to Research

This approach is usually applied to research studies involving social sciences, finance,

economics and behavioural studies. The qualitative approach emphasises the abilities of the

researcher and the interaction of the researcher with participants involved in the whole process

while the quantitative approach puts emphasis on data and interpretation of data in a research.

This approach implies that the personal beliefs, knowledge, abilities and perception of the

researcher play a very important role in the outcome of the research. Researches performed in

43
areas of finance, economics, social sciences and other areas of study where numerical and

statistical data is not available and quantitative approach to research cannot be applied, the

qualitative research approach is applied (Burns and Grove 2004).

Advantages and Limitations

The qualitative approach also has its advantages and limitations just like the quantitative

approach. This approach is more flexible and can be moulded according to changing situations

and scenarios. The limited scope and emphasis on subjectivity is another disadvantage of this

approach because when the same sample is used for another research in the same area it may

produce different results. The amount of time spent on qualitative approach is quite higher than

quantitative approach while analysis and evaluation of the data in this approach is also

complicated (Harrison 2001).

The Research Strategy Applied

The research strategy used in the current research is qualitative methodology with a case

study approach to research. The case study of Tesco in the context of the United Kingdom

retailing industry has been selected. The data for current research is collected from both primary

and secondary sources which will be analysed and observed in the next chapter to answer the

research questions and accept or reject the research hypothesis. The secondary data is collected

from various sources such as books, journal articles, articles from periodicals and websites. The

primary data is collected from survey questionnaires. The questionnaires will be distributed to

44
the owners of retail stores that are located in the United Kingdom and whose sales are affected

by the marketing strategies of Tesco. The questionnaire will help in the research and through the

combination of both the primary and secondary sources the hypothesis will either be accepted or

rejected. The primary data collected through survey questionnaires and secondary data collected

from various sources such as books, journal articles, articles in periodicals and websites is

analysed in the current research through inductive method of research in the qualitative paradigm

and using a case study approach to research.

Population and Study Sample

A research population is the entire group of person or objects that are of interest to the

researcher. In this case, the target population of this research will be small retail business

operating in North London region. As it is often impossible to study the whole population,

researchers make use of a sample to select research subjects who would represent the whole

research population. A sample is therefore a subset of a population selected to participate in a

research study (Polit and Hungler 1995: 445; Polit et al 2001; 234). This refer to the sum of those

individuals within a specific territory, or a small portion of a population, a smaller representation

of a larger whole, intended to reflect and represent the character, style or content of a population

from which it is drown (Brink 1996:133).

In this case, the researcher has used a method of sampling called “Judgement Sampling”.

This method makes the selection of retailers who are in the best position to offer the required

information. They are realistically be expected to have proficient information because they have

considerable experience that may be of benefit to the researcher.

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 It was convenient and economical as the researcher was the only one involved in the

selection (Polit & Hunger 1992, Polit et al 2001). To examine the actual impact of Tesco

marketing strategy on small retail business in north London, in total 50 retail business will be

selected using the judgement sampling method. The basis of selection was proximity to Tesco.

However, after shortlisting the list of possibilities, 50 retailers were selected at random.

Cost and time constraints prevented a study of the entire population. The sample size of

50 is considered sufficient to draw projections regarding the rest of the population. A sample size

smaller than 50 would not provide accurate results. Retailers have been selected since they are

the ones who are directly impacted by the marketing strategies of Tesco, and they would be the

ones to provide the most relevant response.

Data Collection

The primary data collection tool used for this research consisted of open ended questions.

These questionnaires were distributed to the owners of retail stores that are located in the United

Kingdom and whose sales are affected by the marketing strategies of Tesco. The retailers were

limited to the retailers who have an outlet in the vicinity of Tesco to be able to obtain a more

appropriate response. Using the questionnaire and through the combination of both the primary

and secondary sources the hypothesis will either be accepted or rejected.

46
 Reliability and Validity

Polit and Hunger (1999: 246) states that reliability refers to the stability, or dependability

of an instrument. An instrument, which is reliable measure accurately and reflect the time score

of the attribute under investigation. Reliability will be ensuring of this research by using one

research instrument which is questionnaire. The reliability of the instrument will be ensured by

choosing range of questionnaire which is enabling to find answers to the research questions. This

means that no matter how many times the research will be repeated using the same questionnaire,

the same or similar results will be obtained. To ensure reliability, only one questionnaire was

prepared and administered to all the retailers, so that comparable answers would be obtained.

The concept of validity is described by a wide range of terms in qualitative studies. This concept

is not a single, fixed or universal concept, but “rather a contingent construct, inescapably

grounded in the processes and intensions of particular research methodologies and project”

(winter, 2000, p, 1).

Validity refers to the degree to which an instrument what it is supposed to measure, and

therefore an unreliable instrument cannot be valid (Polit & Hunger 1999: 246; Polit et al 2001:

308). The validity of the methodology of this proposed research has been established by pilot

study. The pilot study has been carried out by using 10 small retail businesses in north London

region. Generalizability of this proposed research has been established by selecting the sample

population and well designed questionnaire. Further, reliability and validity of this research will

be reflecting to the generalization. “Generalizability” is defined as the degree to which the

findings can be generalized from the study sample to the entire population (Polit and Hungler,

1991, p.645). Due to time and cost constraints it will be assumed that the results of the study can

be applicable to the whole population, since a survey of the entire population is not possible.

47
 Judgement sampling may restrain the generalizability of the result because the researcher

utilizes a sample of retailers that is accessible to the researchers. However it is the only feasible

sampling method since there has to be some criteria for selecting the retailers, and for this

purpose judgement sampling needs to be used

Limitations of the Research

There are various limitations of the current research with reference to time, resources and

research methodology implemented. To examine the actual impact of Tesco marketing strategy

on small retail business in north London, in total 50 retail business will be selected using

purposive sampling method. Cost and time constraints prevented a study of the entire population.

The sample size of 50 is considered sufficient to draw projections regarding the rest of the

population. A sample size smaller than 50 would not provide accurate results. Retailers have

been selected since they are the ones who are directly impacted by the marketing strategies of

Tesco, and they would be the ones to provide the most relevant response.

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 Ethical issues incorporated in the Research

Several risks are involved in the present research as the research will utilize data obtained

from both primary and secondary sources. The potential risks of the research and the strategies

applied to deal with these risks are mentioned below.

Potential Risk of the Research

The potential risks of the proposed research include but are not limited to the following

♣ The danger of respondents being named.

♣ The risks of confidentiality and privacy being breached regarding companies and

individuals involved in the proposed research.

These risks can be minimized by not revealing names and preserving privacy as much as

possible unless it is important to the discussion. However, where it has been revealed, it is only

for sake of discussion and it will be presumed that the names will not be made public.

Strategies Applied for Dealing with Ethical Issues

All data acquired from primary and secondary sources will be acknowledge in an

appropriate manner through proper citations and referencing while extreme care will be taken to

keep all information related to respondents from different companies anonymous. The evidence

collected and analysed for the proposed research will be destroyed once the research has been

completed and finalised. The questionnaires and interviews will be designed in a manner that the

49
respondents and participants do not feel that their privacy is being attacked and only information

relevant to the proposed research will be included in the data gathering methods. The above is

done to preserve the participants’ right to privacy and the confidentiality of the information

gathered.

50
 CHAPTER 4: RESEARCH

RESULTS

In order to analyse the primary sources the methodology of questionnaires are used.

However, through the analysis of both secondary and primary sources the hypothesis is either

accepted or rejected.

The questionnaires will be distributed to the owners of retail stores that are located in the

United Kingdom and whose sales are affected by the marketing strategies of Tesco. The

Questionnaire will help in the research and through the combination of both the primary and

secondary sources the hypothesis will either be accepted or rejected. The answers of different

questions are analysed below:

1. How you use marketing strategies to market the products to the customers?

Different retailers believe that merchandising and providing extra benefits to the customers gives

them an edge over the competitors. However, they firmly believe that generic strategies are

adopted by most of the retailers around the United Kingdom. To achieve this, many retailers

have adopted similar strategies to larger retailers such as Tesco in order to attract their business.

For example, if Tesco comes up with a promotion announcing a discount of 5%, retailers

announce a discount of 10%. This has the adverse effect of creating a price war, which Tesco

ultimately ends up winning.

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 2. What is the usual response of the customers towards the marketing strategies?

Customers usually respond proactively to these strategies when something extra is given to them

and sales of the organisation increases when these marketing strategies are implemented in an

organisation. Generally, it can be said that sales are directly affected by the proactive strategies

of the retailers. However, the customers who switch are attracted by the better offer. There are

still some customers who do not make a shift for price based factors simply because they are

attracted to the friendly environment provided by the smaller retailer. These customers do end up

shifting when a non-price based promotion is offered, such as free goods.

3. What marketing strategies are effective in the retail business?

The managers of different small retailers responded this question in a similar manner by saying

that a customer centric approach is the core marketing strategy of the retail

business. Similarly, some of the retailers believed that merchandising activities can also be

considered as an important strategy. In the case of price based promotions, customers typically

do not make a shift. Customers however are attracted to a bigger range of goods provided at

Tesco.

4. Are you aware about the marketing strategies of Tesco? If yes, then do you know that

what are their strategies?

Nearly all the managers of small retail outlets of the UK commented that Tesco’s marketing

strategy is purely based on the conventional marketing mix and strengthening the marketing mix

is their core strategy. However, their core focus is on price and quality. Generally, it can be said

that sales are directly affected by the proactive strategies of the retailers. Tesco is able to bigger

52
range of discounts, in order to attract customers. There are still some customers who do not make

a shift for price based factors simply because they are attracted to the friendly environment

provided by the smaller retailer. These customers do end up shifting when a non-price based

promotion is offered, such as free goods.

5. The price and the promotional war is created by Tesco do you agree to this? Elaborate

Managers gave mixed responses to this question and only two to three managers believed that

the price and the promotional war in the retail industry are created by Tesco. However, many

retailers believed that the big five companies (retailers) has started this. It can be concluded that

competition is necessary to survive in the industry, and no matter who has created the price war,

in the end it is up to the smaller retailers to come up with strategies to save their business.

6. How Tesco is using different marketing strategies to target customers?

Tesco is focusing in the basic marketing approach and with a blend of online, telemarketing and

conventional marketing approach they are slowly and gradually curbing the market share of

other retailers. The details of this can be found in Question number 7.

7. What are the effects of Tesco’s marketing strategies on the marketing of small retailers?

Different managers of retail stores stressed on the idea that the marketing strategy of Tesco is

affecting the marketing share of small retails because they offer low prices to the customers and

when customers buy products in bulk then in this scenario they achieve a hefty price benefit.

Further, competitive marketing strategies adopted by Tesco are also affecting small retailers.

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 Whether it’s pinching suppliers or pricing shops out of commerce, small businesses are

exasperated with the bully-boy devices of the big supermarkets. The owner of a food retailer has

observed personally the destruction of his local high street in Norfolk because of a large

supermarket. ‘Tesco basically sucked the life out of the town,’ he says.

In 2002, Tesco released its doors after a extended fight with local businesses and

residents, and he declares that inside a week, his income jumped down by more than half, with

many shops afterwards closing down. In addition to the autonomous bodies, these also

incorporated the Co-op and Somerfield, which he had happily struggled with for years.

‘The impact of Tesco devastated the high street footfall. We managed to survive by

moving a lot of our stock between our two shops and by having a fighting fund in place. And

when the other shops closed down, we got some of our turnover back. We’ve also been very

proactive in our criticism, and that also seemed to pick up the anti-Tesco vote,’ he announced.

But he is concerned about the prospect of the high street in Stalham, as Tesco plans to

develop its store even further.

‘The size is far too big for the town already. Instead of complementing the high street,

they have dwarfed it. They just go for the biggest size they possibly can, and if they get turned

down in their planning applications they go for the next biggest. They’re not bothered about the

high street, all they are interested in is profits.’

The owner of a school uniform shop has also been influenced by the powerful methods

employed by the supermarkets, and says over the last four to five, years they have begun to wage

a price war.

‘I do believe that people should have a choice, but supermarkets are not making their

prices fair. It seems that school uniforms in supermarkets are being sold as loss-leaders. They are

54
not making a profit, it’s just something they are using as a way of getting more customers

through the door.’

Stephen Alambritis, chief spokesperson of the Federation of Small Businesses, concurs

that supermarkets have a huge gain because of the method they can control their products.

‘Below-cost pricing is illegal in France. I don’t see why that’s not something we could

have here. There are a number of MPs who are trying to get supermarkets to put the cost of

alcohol up, where they are selling it at a loss. But this should be something to campaign for on

all products.’

On the other hand, it is not just retailers who are affected by hostile pricing tactics. The

chief of the food and agribusiness recovery group at Grant Thornton, says that supermarkets are

able to keep their prices down at the cost of the supply chain.

He says: ‘I have seen a number of small businesses affected by unreasonable buyer

behaviour on the part of the supermarkets. They often demand that contract terms be changed

retrospectively and will cancel suppliers at short notice, or delist their items without warning. In

some cases, these factors are a direct cause of business failures.’

Unrecorded contract conditions between supermarkets and suppliers are widespread, he

adds. ‘It would be far easier to achieve a financial turnaround for companies in this sector if the

key trade terms were known.

‘All too many businesses we deal with fall over the [supermarket] buyer’s whims, and

don’t understand that a proportion of the products they will be supplying will actually be causing

them a loss. For certain businesses, it would be better not to trade with them at all.’

He considers that the government has failed SMEs in this segment ‘It seems there’s a

55
reluctance on the part of the Office of Fair Trading to do anything. I’d like to see a supermarket

ombudsman, but that is something which appears to be painfully slow to implement,’ he adds.

The public affairs director of the Association of Convenience Stores concurs: ‘If SMEs

are in a position where they are unable to compete, that’s bad news for the consumer because it

means less choice. In a monopoly situation, supermarkets should be monitored – that’s why we

need an ombudsman.’

A representative from Tesco said: 'We depend on good and strong relationships with our

suppliers, both large and small and we work hard to strike the right balance between getting the

best possible price for consumers whilst ensuring that our supply base remains sustainable in the

long term.

'We remain to be convinced of the case for a supermarket ombudsman, as they are

usually there to protect consumers. It is also difficult to see what additional benefits an

ombudsman would have over the Office of Fair Trading, which currently provides effective

independent scrutiny of the industry.'

The 74-strong assembly of MPs has asked scores of concerned groups, from Tesco to the

Women's Institute, on their idea of what a shopping trip in Britain in 10 years' time might

include. It plans to donate its result to Alan Johnson, the Secretary of State for Trade and

Industry, in December.

It was the turn of small shopkeepers to contest their grounds against what has been called

the "creeping centralisation" by retailers such as Tesco of the UK's high streets, in the first of

four trials. The big boys, who have determined the booming convenience stores segment

provides easy proceeds, are suitable to put their side of the story next week, together with the

British Retail Consortium and the British Chambers of Commerce.

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 David Rae, the chairman of the Association of Convenience Stores (ACS), painted a

depiction of districts with their hearts pulled out if the Government continues to pay no heed to

the troubles of local stores in favour of the Big Four (Tesco, Asda, J Sainsbury and Wm

Morrison). "The Office of Fair Trading is content that competition means competition between

the four major grocers in any one area," he told the hearing.

57
 CHAPTER 5: DISCUSSION

The strategy of Tesco gives them a managerial advantage to them in both the short and the long

run. Tesco’s marketing and retailing strategy is quite distinctive from other small and general

retailers of the United Kingdom. This strategy of Tesco is directly affecting the sales of small

retailers because they are unable to cope with the rapid growth of Tesco. Their operational

excellence is so high and there prices are low that is the reason why small retailers are unable to

attain customer satisfaction in the short run (U Talk marketing 2010). However, experts and

analysts actually believe that price can not be considered as an influential factor because the big

five retailers have attained excellence in the scenario of price and they are now fighting for the

contents of housewives purses. The experts actually believed that in the scenario of Tesco there

are two major strengths of this organisation that are creating problems for small retailers. These

two major strengths are enormous value of the brand and market leadership of this brand can be

considered as strength. However, the major difficulty small retailing brands are facing as based

on the scenario of prices because the prices of Tesco are extremely low and customers prefer this

brand.

An individual who operates the Landmark group of wholesalers, branded the Big Four a

"cartel" for the way they have free rein to divide the grocery market among themselves. His

members are concerned they will have no shops to serve if small convenience stores persist to

close at the current rate of 2,000 a year.

Bob Russell, a Liberal Democrat on the All-Party Small Shops Group, compared the high

street to the Premier League. "There are lots of teams but only the top four compete," he said.

Demanding policies to encourage "greater fairness" in the grocery marketplace, the ACS

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requested the committee to advocate a ban on below-cost selling. As the mananger who runs the

North Yorkshire-based, five-strong Proudfoot chain of supermarkets, said in his submission,

small shopkeepers are unable to compete below-cost selling. This is when big factions –such as

Tesco - make use of their buying influence to present considerable discounts in specific areas to

endorse a new store.

Early last year, Tesco gave £8 money-off vouchers for every £20 spent in their latest

Withernsea store near Hull - a 40 per cent discount across a variety of products. "Whereas we

used to be a thriving part of the high street, we are now a marginal business," the owner of

Proudfoot said. "My predicament is caused directly by Tesco using their scale - something I am

unable to match - directly against me."

Professor Alan Hallsworth, an authority in retail management, at the University of

Surrey, who is due to give proof next week, said: "My concern is whether you should use your

buying power in one sector - the supermarket sector - to give low prices in another sector - the

convenience sector." The big groups supply directly from abroad, rather than rely on home

wholesalers, and so they can charge customers not as much for products than a smaller

competitor pays a wholesaler to supply them.

But Professor Hallsworth is concerned that the investigation is too little, too late. "The

horse may have bolted. There was a lot of variety 25 years ago but a lot of names on the high

street have already disappeared." A recent survey by the New Economic Foundation, an

autonomous think-tank, discovered almost half of UK high streets have been "cloned" by a

handful of retailers.

For proof, MPs need look no more than across the road at the Tesco Express that has

taken the place of Cullens above Westminster Tube station. Tesco's acquirement two years ago

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of Adminstores, the owner of Cullens and Europa, increased its existence radically in central and

west London, making it impracticable to avoid the chain in certain well-heeled areas.

Tesco's deliverance, as a spokeswoman repeated yesterday, is that competition authorities

are content to look upon the grocery sector as two separate markets: for "one-stop" and "top-up"

shopping. This means that even though on some processes it has more than a 30 per cent share of

the grocery market, it has "just 6 per cent of the convenience sector". She added: "Previous

competition inquiries have found the market is fiercely competitive."

Mr Rae wants the all-party group to advocate the beginning of incentives to support

budding retailers starting out, such as a level tax rate for the first year. He also wants better help

for retailers that wind up as the sole enduring shop in a region. The ACS recently stepped up its

battle against the main supermarket groups, taking their argument to the Competition Appeal

Tribunal after failing to persuade the Office of Fair Trading to examine the grocery market.

The Federation of Small Businesses, which put its case at yesterday's trial, wants the

Government to re- investigate supermarket business practices. Although a current OFT enquiry

concluded the active code of conduct that rules relationships between suppliers and supermarkets

works perfectly, hardly any industry insiders believe this to be so. John Murphy, the chief

executive of the Federation of Wholesale Distributors, said: "The word in the trade is it's a joke.

It has no teeth."

But high streets have more to be anxious about than stores. The propagation of retail

estates and edge-of-town shopping centres is also enticing shoppers from their old plodding

grounds. Nick Bubb, a retail market analyst at Evolution Beeson Gregory, said: "Consumers

want the ease of car parking that you get from out-of-town shopping centres." He said the

innovative Westwood Cross centre in Thanet, Kent, will make Margate's high street pretty much

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outdated. Attach in the rising internet threat and you begin to appreciate why, according to the

IGD, an industry think-tank, the number of self-governing convenience stores has fallen 11 per

cent since 2000.

While Mr Dowd's all-party group is sure to generate painful headlines for Tesco and its

like, in the end it has no control over government rule. And as shopkeepers in Gerrards Cross,

Buckinghamshire, who have applied pressure cruelly against the opening of a contentious new

Tesco in the centre of the town, know all too well, painful headlines are not sufficient to

discontinue the supermarket giant from putting their stores out of business by 2015. Small

traders living in the darkness of a new multi-million-pound superstore say they are being put out

of industry.

The Tesco Extra at Failsworth has been proclaimed by Oldham Council and the

Government as providing a new daylight for the region – transforming a run down district centre,

and regenerating the financial system with jobs. But bakers, florists, opticians, grocers and

sandwich shops in the direct vicinity have this week spoken out to declare that from the time

when the store opened a month ago, the only alteration has been for the worse. Many dread that

they face a miserable future – and perhaps ruin.

Although a direct challenger of these industries, Tesco says it will act with small retailers

to assist them expand their businesses and that it is too early to judge the supermarket’s

influence.

But for Nigel Fay, the boss of Ashton’s Snax Bar, the 88,000-sq-ft department store has

had an instant impact.

"I’ve run my sandwich shop for five years but never experienced a summer like it," he

said. "I know all about the school holidays and we lose about £60 per day from the kids, but we

61
are losing £180 per day.

"There was and is no strategy to help local businesses. It’s ‘wait and see’, but by then it’ll

be too late. The florist around the corner doesn’t know if she’ll be open next week and I don’t

know how long we can last. Tesco are wiping us off the map."

Tesco has fended off disapproval that it is not a local company boasting that

approximately 40 per cent of 390 staff at the new store are Failsworthians, with a further 50 per

cent from within a three-mile radius.

In a nasty turn, Tesco has a recruitment centre at the end of a line of businesses in

Partington Street who are severely against to it.

One of these is Harry Panchani, proprietor of Mace All in One shop, who says his

earnings are losing by 30 per cent. "Tesco made out that it would bring jobs to local people but

the jobs lost by local businesses counter this," he said.

Grocer Matthew Tunaley remembers a period when he shared clientele with three

greengroceries, but when Morrisons arrived they slowly closed. He asserts Tesco has all but

killed off his passing trade, but continues resolute to stay.

"My regulars are my bread and butter and they have been very loyal," he said. "I am really up for

a good fight. I am still here for the people of Failsworth."

Also in the lead for the brawl is Rodney Harrop, whose bakery in Dunkerley Avenue has

served three generations. "It’s unfair competition and it’s making life really hard," he said. "I

expected a little difference but it’s been much bigger. We have lost 10 customers a day and a

massive chunk of profits. We can’t afford to keep doing that."The frame of mind among the

traders appears divided between acceptance and a strength of mind to stay on and fight.

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 Although Tesco upholds that it is resolute to work with the traders – even offering to link

a local business medium and assist train staff and perk up marketing opportunities – chat among

small traders has turned to setting up their own organization, giving them a greater say and the

opportunity to flex their collective might.

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 CHAPTER 6: CONCLUSION AND RECOMMENDATIONS

Conclusion

The thorough analysis of the primary and secondary sources in the previous chapters has

enabled the researcher to arrive at a valid and logical conclusion to the research while answering

the research questions and accepting or rejecting the research hypothesis. Thus it can be said that

through the analysis of secondary and primary sources the hypothesis can easily be accepted that

Tesco is affecting the small retailers of United Kingdom and the marketing strategies of this

brand is directly and indirectly affecting the small retail brands in the United Kingdom.

Therefore, it can be said that small retailers should adopt different and non-conventional

strategies to attract customers.

Marketing strategies plays a very important role in the development of an organisation

whether large or small and customers usually prefer organisations especially in the retail

businesses that offer best quality with reasonable prices. The marketing strategy is applied within

an organisation to gain a competitive advantage in the industry through increased sale of goods

and services. In industries where competition is very high and industry giants are present smaller

organisations need to implement effective marketing strategies in order to survive. The strategy

of Tesco is based on the conventional marketing strategies and in order to attract new customers

local retailers should go out of the box and adapt modernised marketing strategies.

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 Recommendations

There are certain recommendations that are associated with this research these recommendations

are listed below:

1. Small retailers should develop their own niche through relationship building with the

customers and through this approach they can improve their sales trends.

2. Retailers can adopt out of the box thinking by offering certain discounts and packages

to customers in order to build their loyalty.

In the similar manner another important strategy in this scenario is that they can merge with

other retailers and enhance their market share.

So far this manuscript has reflected on the major concerns facing small retailers. This segment

considers a variety of actions that may assist small retailers to contend more successfully in the

retail sector.

Buying groups/franchises

One of the major problems for small retailers pointed out in this paper is the buyer clout of large

retailers. One strategy that small retailers have is to offset the buyer clout of large retailers is to

form buyer groups to discuss with suppliers. For example, one of the small retailer associations

told this researcher about a group it had developed, which was able to bargain prices on

insurance as well as prices with wholesalers.

One type of buying group that a number of retailers form is called a symbol group. With

65
symbol groups members disburse a fee and are usually required to acquire a specified quantity of

their goods from the symbol groups wholesaler. In reply retailers obtain benefits from being

associated with the symbol group including group buyer clout and so better prices and in a

number of cases loans and financial support to make bigger or renovate retail units.

Another method small retailers can get into the benefits of a large buyer group, without

the difficulty of setting one up, is to become a member of a franchise. There are a variety of

types of franchise but the most commonly linked with franchising is the business format

franchise where the franchisor gives authorization for the franchisee to sell the franchisors

products or services. The franchisor offers a demonstrated method of trading in addition support

and advice in setting up and operating the business. While there is a price involved, if small

retailers turn out to be part of a franchise they obtain the benefits of being part of a large

association such as bigger buyer clout and brand identity (which was also a matter pointed out

previously in this paper).

Franchises can also put forward potentially additional benefits over a simple buying

group, these benefits might include:

• A common store frontage

• Common prices on certain goods

• Deals with delivery companies

• Brand identity.

So it is significant, for example, that business backing agencies are conscious, in their

business support agenda and services, of franchising/buyer groups as a way of easing some of the

issues faced by small retailers in comparison to their competition with large retailers.

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Competing on the basis of quality

Another method small retailers can vie with large retailers is on the quality of service they offer.

In particular small retailers, because of their size, may be in a superior situation than large

retailers to offer a personalized service to customers. For instance small retailers will on the

whole tend to serve fewer, but more confined, customers and use the services of fewer staff

compared to large retailers, which gives them more chance to get to know their customers and to

use this to their benefit.

Specialization

Another method that small retailers can vie in the retail market is by providing a very focused

service or by catering to a niche market. When considering obstructions to change for small

businesses, it is possible that small retailers may be in a superior situation to specialize, than

large retailers, because of their size. This is since large retailers tend to cater to the largest

possible quantity of people and consequently do not focus on specific markets.

Measures to increase footfall

Increasing footfall may assist to augment the sale of other goods by small retailers at the same

time as customers are in the shop. Certainly there is proof in the literature to propose that some

shoppers do change their loyalty in favor of shops that have a lottery terminal for example.

There are a variety of methods in which small retailers can boost the footfall in their stores such

as selling tickets for the National Lottery and for the congestion charge for instance.

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Other forms of assistance

Sketched above are actions that small retailers themselves can take to contend more efficiently

with large retailers. Set out underneath are some actions where the public sector or other

organizations may be able to help perk up the competitiveness of small retailers.

More assistance for, or the setting of, trade associations and chambers of commerce may

assist small retailers. Trade associations facilitate information sharing, lobbying of national and

local government and can expedite items like buying groups (mentioned above as being of

prominence to small retailers). Chambers of commerce assist to connect retailers with other local

traders, and can offer a method of lobbying local authorities on items like transport and public

realm works. They can also assist to create the local focal point for steps like Shopwatch (to

tackle retail crime in particular centres) for example.

Local authorities and small retailers could cooperate together more proactively on town

centre plans of action and management. While distinctive retailers can vie on quality and

specialization, if all retailers in a specific centre work together to better expand the area, possibly

making the area itself into a target for niche goods, this could add to the competitiveness of small

retailers in the area. Local authorities could also assist small retailers act in accordance with

regulatory requirements more efficiently, providing counsel and help as well as examination and

enforcement. This is the tactic behind items like the Enforcement Concordat agreed between

central government and the Local Government Association for example.

Other tactics

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Management of absence

We all know how much nonattendance costs a company. Though, many businesses large and

small simply bear employees who are time and again absent. Several large organizations fail to

mange this problem efficiently and constantly.

An effective management policy could works like this. When a worker is not in attendance, on

their return their nonattendance percentage over the preceding 6 months is calculated. If they

have been not in attendance for over 3% of their contracted hours or have been off three times or

more they will be asked to attend an investigatory meeting. At the meeting they will be ased

about the cause for nonattendance, and if there are no extenuating circumstances, this meeting

will move to a punitive meeting where they may be given a warning. The worker may also be

offered assistance if they have a severe setback and this may result in a change of shifts or role

for instance.

The consequence of this course of action is that those employees who feels like `chuck a sickie`

either decides against it or ultimately get managed out of the company.

This course of action would be easy and effectual for a small business to use and the benefits for

a small business are greater as non-attendance in a small business is much more destructive.

“If something isn’t working – change it or stop it.”

Successful organizations don’t procrastinate. When a new course of action, process, or

merchandise are introduced and are knotty, they are quickly altered or removed. They are not

frightened to say ‘ok, we tried this, its not working, so we are changing it or removing it’. Too

many businesses will keep a problem under wraps and accumulate costs in lost productivity or

sales as a consequence.

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Listen to and observe your customers.

How many companies really care about their customers? Many people take for granted that if

they can’t find what they want at a retailer then that’s it. However, successful stores should alter

their range if customers want products they do not stock. Obviously if a product is introduced at

the request of customers and it is not successful, it will be removed, but usually the product will

validate its shelf space. What it means to watch your customers is watch their habits and trends.

Of course retailers such as Tesco have a huge system which performs this for them. However

most EPOS systems will follow average transaction values, number of items purchased etc. What

Tesco does principally well is act upon the inclination their database shows them. For example,

they are aware that customers who buy diapers also buy more beer! This is due to the fact that

Dad has decreased his visits to the pub since his baby was born and now drinks at home. It is not

feasible for small business to invest millions on state of the art systems, but actively inspecting

what customers purchase, with what products, and what time of day may create some

opportunities.

Recognize your competitors and respond quickly

Large retailers are good at this. They observe competitor activity very strongly and will do all

they can to beat or match prices. They think of their competition as the large stores and, with

respect, aren’t paying attention in proprietors or even the retailers who may be familiar in a local

area. This offers some opportunities for smaller firms. They should observe their local Tesco (or

other big supermarket) and you will become aware of the trends in their promotions. For

instance, Tesco promotions last for 4 weeks long and alter on Tuesdays. Their point of sale tells

you when a promotion finishes and more often than not they keep to these end dates. However,

smaller retailers have responded with similar promotions to Tesco probably they believe that is

70
the only way to them. For example, if Tesco are running a BOGOF on Nescafe at £1.99 a jar, he

will run advertising on Nescafe which reduces the price from £2.50 to £1.75. This can be

bettered by examining the end date of the Tesco promotion and start the particular promotion

then. If a business is smart it will observe that the Tesco promotions are very conventional and it

can time its offers to pick up business at an appropriate time, rather than compete with something

that cannot be sustained.

Introduce your store to Tesco staff

A representative Tesco store will provide work for from about 20 in a small express to about

1000 or more in a larger extra store. The standard for a superstore is roughly 350. With the

exemption of some of the managers, all of these employees will live in the area and know several

of their customers. If the staff are aware of your store they will be able to recommend it to their

customers and provide them with an idea of what products you have. The employees are inquired

every day if Tesco have a particular product and on hearing no, customers ask where they can

find it. By introducing a small firm to the staff the chances of referrals are increased.

Other suggestions for product offering are as follows:

1. Provide improved service. This is the advice offered by almost every book, magazine or

pundit, but it is very important. For this a self-evaluation is critical. For instance, does

staff smile when customers come in? Are they helpful and generous with their advice and

are they well mannered?

2. Change timings to accommodate customers. The large proportion of the population works

Monday to Friday 09:00 to 17:30 so it is essential to be open for business either before

09:00 or after 17:30 and not to take off for lunch. If a shop is closed on the weekend, it

71
 cannot accommodate the working population.

3. Give value added services. This could take the shape of free recipes around the shop

(This will not only provide a advantage to the consumer, but it can help to sell ingredients

that may otherwise prove difficult to sell), offer dieting assistance for those seeking to

lose weight, or advice to people suffering from with allergies or food intolerances.

4. Offer demonstrations or workshops. Provide customers with opportunities to learn an do

something interesting and new, such as how to cook or bake specialized items or how to

carve fruit.

5. Make the shopping experience a memorable one.

6. Align yourself to a social cause. Make sure that it is a cause you yourself believe in, and

that aligns with your products and your customers’ beliefs.

7. Make sure your cause is different from other others. Give customers a reason to choose

you over your competition. For instance, differentiate your offering by for example only

selling local produce or organic produce.

8. Take advantage of marketing strategies by competition. Identify weaknesses in your

competitors’ strategies, and cater to them yourself.

9. Offer choices that larger retailers can’t. Larger companies will never be able to offer

dedicated products that cater to special tranches the local markets by the personality of

being a big business it just doesn’t have the give for this. Identify niche and specialist

markets

10. Offer incentives to entice customers. There’s nothing to prevent the small retailer

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 offering inducements to get shoppers through the door, and while Tesco’s inducements

are typically restricted to price discounts, a small business can be creative. For instance a

baker could proffer to trade in old for new on a loaf of bread. They will lose on the loaf,

but they can make it up by charging slightly higher elsewhere.

Summary

The market share of large retailers has improved over the past two decades. This bigger

scale has resulted in enlarged buyer clout for large retailers, which in turn has led to large

retailers being able to sell goods at lower prices than small retailers in many occasions. In

addition, small retailers have observed their former comparative edge with respect to both

location and opening hours eaten away by large retailers (in particular grocery retailers), for

instance by large retailers moving into small format stores in high street locations and increasing

their operating hours. Whilst such changes can be worrying for the small retailers concerned, for

the most part these changes are a consequence of market forces and on the basis of economic

effectiveness should not be thwarted by government.

While the expenses of working in London, as compared to the rest of the country, are

excessive for all retailers, there are some expenses that impact particularly on small retailers. The

price of crime appears to fall more heavily on retail as compared to other sectors and on London

as compared to other areas. Into the bargain, the costs of acting in accordance with Government

regulations, for example the Disability Discrimination Act fall excessively on small retailers.

Local authorities and other bodies such as chambers of commerce or trade organization could

provide support and/or counsel to small retailers on observance with regulations in order to

reduce the costs of putting into practice the legislation.

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 Customers’ admission to retail outlets is an concern for all retailers in London, though

some of the issues of admission affect small retailers more intensely than large retailers. This is

because large retailers can extend the cost of disturbance to customer accessibility over a bigger

level of sales, (normally across a greater number of stores) when compared to small retailers.

consequently it is imperative that changes to streetscapes or changes to transport in London

consider the impact on small retailers who are prone to be unreasonably affected by any changes,

in order to contact a more ‘small-retailer friendly’ answer. The problems outlined in this working

paper, and exact issues such as succession, have led to a number of closures of retail businesses.

However there are a number of methods through which small retailers can contend more

successfully, for instance by forming buying groups, contending on the quality of service they

provide or by specializing.

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 Appendix A: Questionnaire

Name: ____________________

Age: _____________

Designation: _______________

What is the name of your retail outlet?

_________________________________

Where is your outlet located?

_____________________________________

How you use marketing strategies to market the products to the customers?

_____________________________________________________________________________

_____________________________________________________________________________

______________

What is the usual response of the customers towards the marketing strategies?

_____________________________________________________________________________

_____________________________________________________________________________

__________________

What marketing strategies are effective in the retail business?

_____________________________________________________________________________

_____________________________________________________________________________

___________________

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Are you aware about the marketing strategies of Tesco? If yes, then do you know that what are

their strategies?

_____________________________________________________________________________

_____________________________________________________________________________

__________________

The price and the promotional war is created by Tesco do you agree to this? Elaborate

_______________________________________________________________________

_______________________________________________________________________

____________________________

How Tesco is using different marketing strategies to target customers?

_____________________________________________________________________________

_____________________________________________________________________________

__________________

What are the effects of Tesco’s marketing strategies on the marketing of small retailers?

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_____________________________________________________________________________

_____________________________________________________________________________

_____________________________________________________________________________

______________

77
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