The competitive strategies

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Abstract ::

In research statement, looking interested in the competitive strategies employed by the giant supermarkets in the United Kingdom and will do a comparative study base ahead the research proposal made earlier. Retail Business have developed to fresh height in the United Kingdom and due to that convenient is massive quantity of competition in the United Kingdom market. The giants superstore such as ASDA, Sainsbury's, Tesco, Morrison's, Marks and Spencer's, Etc are creating a lot of returns and struggle to establish themselves in the eyes of the consumers by introducing changed offers and which leads to the struggle between the rival.

The FMCG (fast moving consumer goods ) is a place where the purchaser can approximately find all under one cover, opening from vegetables to groceries, fruits and also electronic goods, day to day use goods. Every consumer, particularly in the United Kingdom aim to keep away from wasting of time by selecting for the goods by going away to different Superstores, so this idea of retail supermarkets is success and where a purchaser spend less time to choose their products and complete their shopping as quickly as possible. Moreover the supermarkets also attract the customers with the setup of their shops, the ambient and the atmosphere, quality of goods present with reasonable price.

Introduction:

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FMCG (Fast Moving Consumer Goods) is at a boom because of that there is a massive amount of competition to attract the consumer due to which law of Retail business chain come of their own plans on the competition level of measurement . giant superstores like TESCO, ASDA , Sainsbury's , mark & Spencer's etc leads each others with mutually different offers and schemes .The present survey concern a different additives with indebt analysis and methodology

The main purpose of the study is to realize the strategies developed by the giant supermarkets in getting better their sales and how much effect it has on the customers by implementing the competitive strategies. It also gives a broader picture of how the supermarkets run and what future does it have in the UK, and how better it can be improved to give the business a new path towards the strategically development and how the companies can make profit and increase the economy of the UK.

Without competition there is no business as we know, so it becomes important for the supermarkets to employ the competitive strategies to gain the customer's attention and to attract them towards their business and make it profitable and have future in its field. Company's goodwill lies in its product quality and the loyalty of the customers, it is said that ,if one customer is not satisfied, he/she can influence 10 other potential customers, so as to make the customer happy these kind of strategies have to be implemented by the supermarkets and survive in the high streets. A company employs few strategists to study the market, check with the strategies employed by the other supermarkets and based on those lines introduce the main strategic plan and execute it to gain the maximum benefit and increase the sales criteria. In this way we well have an in depth analysis of the competitive strategies and its implementation and later we will study the after effects.

I intend to choose this topic and the reason why I am rationale to the topic of competitive strategies is only because of the current situation in the UK and of course the whole world which has started to enter the recession, where there is a credit crunch and economy is stagnant. In this kind of environment its interesting to analyse how such huge UK market reacts to it and introduces new policies and strategies to regain the economic growth and stability and survive in such a situation.

Back Ground ::

In UK, there are lot of retail supermarkets, the major ones are Tesco, ASDA, Sainsbury's, Woolworth, Morrison's, LIDL, Marks and Spencer, etc. Among them Tesco and ASDA are considered as the big giants of supermarkets. We see that every now and then these supermarkets come up with new strategies and plans to improve their businesses and to capture the maximum business by implementing the competitive plans and strategies. According to the Euro monitor International(2004), the increase in the competition in the retail market in next five years may lead to mergers in both small scale and large scales, and the take over of the convenience retailers by the hypermarket chains wishing to strengthen their presence in the UK's High streets .These strategies are implemented depending upon the location of a particular store, the age group residing their, the income levels and the cost cuttings. As we all know that customers satisfaction depends on the quality of the product and the price. For Example, the retail director of TESCO says that "in order to get good business it is important to know what the customer wants and deliver it at cheaper prices" (John Ibbotson),he goes on to say that Tesco now is among the best two retail supermarkets in UK, rising from 1970s grow to sales over £41.5 billion with profit of £2.2 billion, by implementing the best practices of retail strategies. Retail supermarkets first study the market and then check with the new schemes and strategies which the other supermarkets uses and later try to give them a competition by bringing in the new offers which can attract the customers and leads to the improvement of sales.

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Here we are trying to have a close look into the retail supermarket competitive strategies specially in the UK, and we would also try to analyse how successful these strategies are and what impact does it have on the future of the retail industries. Retail industry not only consists of the large supermarkets but also of the small retailers such as the convenience stores, who also make good profits and depending on their location and the kind of customer satisfaction they provide to the customers. Most of our report will be based on the facts and the previous reports and case studies from the present supermarkets.

As we know now what is the competition strategy in the retail supermarkets we will have an overview of the literature and the methodology, Later we can conclude by giving the exact idea of the reason behind implementation of the competitive strategies.

In this research report we try to focus mainly on the competitive strategies of the supermarkets to make good business and flourish in the UK. Firstly here we look into the different strategies employed with some examples, and later try to analyse how successful the supermarkets are in employing their strategies. We also look at the standards and the ways to measure the success rates of the competitive strategies employed, how the decision making is done, how the data is collected and data is analysed by the strategists of the company to make it better than their rivals in the High street. We also will be looking the aspect of the customer satisfaction and the surveys related to the customer satisfaction which can clearly help us understand the research topic and ultimately leads to the betterment of the retail industries in the UK.

We also try to focus our attention on the ill effects and few disadvantages of the competitive strategies which effect the customers and may lead the customer to change their minds depending upon the age and the income of the customers. We will try to make it as simple as possible and keep our focus on the related topic in order to cover all the aspects in the most best possible ways we can.

Methodology ::

To study the methodology of competition in retail supermarkets, we have to consider many factors such as the income of the person, per capita income of the state, age group of people residing in particular locality, demographic profiles, private label shares which are the characteristics of the consumers and also price format and the number of stores .

Data analysis is done either by quantitative or qualitative approach, keeping in view of the variables such as the income of the customers, his/her age group, private label shares, number of stores in the location and the price format, considering each individually ::

  • If the person's income is high, he/she is less worried about the pricing, and whatever changes the retailers do, does not effect much to this category of people, so these kind of consumers are time constrained and use the advertisements on television and other media or the in store displays
  • Depending on the age, consumers of old age have time and they try to get the best deal in lower prices products and offers, but due to physical constraints rely again on advertisements of particular super market.
  • The higher the private label share, higher is the price sensitivity, and simultaneously higher will be the price reduction
  • Similarly the price format of the retail chain and the number of stores also effect the competition in retail supermarkets.

Here the data is collected by following techniques and is formulated to get the strategies and the pattern of the customer purchasing ::

  • Information from the sources from namely books, newspapers, trade Journals, and white papers, industry portals, government agencies, trade associations, monitoring industries, news and developments, and through access to more than 3000 paid databases.

Surveys are carried out, by asking the consumers about the details of their shopping patterns related to clothing, groceries, etc. and where they do their shopping frequently, in this way we can know abut the competitive strategies developed and how effective its been in the UK market.

  • The other way is by using the new technique here in UK, where the customers are given points in using a particular card, and they get bonuses as well, but in reality the Supermarket takes in the details about their shopping behaviours and patterns so that they need not spend money on surveys and which is the accurate method to find out the customers details. This kind of strategy is employed by TESCO, Sainsbury's and Marks and Spencers which helps to find out if the promotional offer or the advertisement is effective or not. In this way the information can be gathered and the above methods can be used to find out the customers behaviour to the particular supermarket which can later be again checked by the competitive strategy as well .
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Later the data is also analysed by using the tools such as Ratio-Analysis, Historical Trend Analysis, Linear Regression Analysis using software tools, Judgemental forecasting and Cause and Effect Analysis. In this way the market can be studied and the data can be collected analysed and the retail supermarkets can come to the strategies to be implemented, either by advertisements using the media or in store displays to attract the customers.

Literature Review ::

In this part of the research report we will try to collate the data from the literatures, journals, etc. and will try to compare with the competitive strategy employed in the retail supermarkets in UK. Firstly let us co-relate the competitive strategy of the retail supermarket to the Porter's Five Forces of Competitive Position model.. This model provides a simple perspective for assessing and analysing the competitive strength and position of a Retail Supermarket. This theory was developed by Michael Porter who was born in 1947, who studied Economics Doctorate at the Harvard University. and was subsequently awarded the professorship at the Harvard Business School. According to Michael Porter every company has to go through the five forces to stay in the market that are:

  1. Threat of the new market Entrants,
  2. Existing Competitive Rivalry between supplier
  3. Bargaining power of buyers
  4. Power of suppliers
  5. Threat of substitute products

Considering the research report regarding the Competitive strategies employed by the retail supermarket, one of the main forces that effects the market is the existing competitive rivalry between the suppliers ie the supermarket. And in order to succeed every retail supermarket has to employ this strategy and prosper the business to gain the profits. In this way competitive strategy plays an important role for the

All the forces are inter related and mainly Competitive rivalry in the market controls all of the above to a certain extent. In this way we can co-relate the Michael Porter's principle to the competitive strategy in the retail market in the UK, and if these strategies are not involved then there will not be the competition in the market.

If we also observe the other concept of Porter, the genetic structure, it also indicates that be it a big firm or a small firm, the market is ruled either by the cost differentiation or the cost leadership. For Example, in Marks and Spencers, lot of people from UK do their shopping for their garments or for their grocery even though the prices are high, That is because it offers high quality at higher cost, and therefore the consumers give importance to the quality rather than price.

If we take the example of ASDA, there the products are at a reasonable rate but still to some extent does not meet the quality levels of Marks and Spencer, in this way we can understand the Porters concept and we understand that the customers finally have to compromise on prices depending on the quality offered.

Another example which we can consider on this occasion is the Green revolution which has been introduced these days by the retail supermarkets in the UK, all the supermarket Giants are now concentrating on reducing the polythene usage in the stores and are selling recycling bags to break the habit of the customers for going for the plastic bags, be it ASDA, Tesco or M&S, everywhere there is a revolution for this and it is also implemented as the competitive strategy to save the environment and do the business in much eco friendly manner as instructed by the UK government. So these strategies are not only implemented to improve the sales and the growth in the market but also to make sure that the supermarkets are functioning in the eco friendly atmosphere with a health competition amongst each other.

We can also use the tool that everyone is familiar with that is SWOT Analysis Tool, in which the Strengths, Weaknesses, Opportunities & Threats are analysed before making the strategies to be implemented by a company, same lies with the Competitive Retail Supermarkets, we can co relate by knowing the strengths and weaknesses of the organisation and later the opportunities it can utilise to grow within the market place. Opportunities are considered to be the major factor in the competitive environment and depending on these opportunities changes are made in the competitive strategies and implemented for better sales and results. this leads to the improvement in the relationship between the buyers and the suppliers as well. Threats on the other hand, though they are the external factors that are out of control, for example the credit crunch and the recession in the UK market, it is vital to be prepared for it even in the good times in the company. In this scenario, we would also include the threats from the new competitors and the strategies which they involve to attract the loyal customers from the existing supermarkets. In this way the SWOT Analysis helps us identify the threats and the opportunities missed and avoid the same mistakes in future, so it is considered to be a good tool to analyse our businesses and stay alive in the competitive environment. However the SWOT Analysis has some disadvantages as well, it is sometimes trivial or the output is relatively meaningless with regards to the actual marketing decisions.

In this report we also look into another tool to understand the competitive strategies of the retail supermarkets in the UK, and that is Pest Analysis, which is the abbreviation for Political, Economical, Social &Technological Analysis. Under the political aspect it means the following of the government policies to have a healthy competition and good environment where the supermarkets are competing with their new strategies. Economical means the strategies involved to control the inflation, import/Export policies, etc, Social means, demographic (Age, Gender)living standards, earnings, fashion, etc and technological means the researches, new technology,etc.In this way the PEST Analysis can also help to understand the competition in the retail market and helps in the economy growth .