Differentiation in the Oil Marketers in the United Kingdom - Essay Example

“Research Proposal Written to Determine the Added Value and Differentiation in the Oil Marketers in the United Kingdom” Instructor’s Name Course University Submission Date: Introduction In economics and marketing, it is normally assumed that both product differentiation and value addition plays a significant function in competitive advantages of the product. The goal of any venture particular amongst companies that produce closely related products (substitutes), in theory, must align themselves with added value and product differentiation so as to achieve competitive advantages. Adding value to a product superficial meaning refers to the situation where a product(s) have advantages attached to them while product differentiation refers to the effort by a company to separate (sic) its products from those of close competitors. Product differentiation is the situation whereby two or more products are considered by consumers as being close, but not perfect substitutes (George, Joll & Lynk, 2000: 215). This proposal shall seek to determine the dynamics of value added amongst oil marketers in the UK within the downstream market, and shall focus on a select number of marketers as well as their products. In recent years, competition has increasingly been stiff in the United Kingdom on oil marketers amid growing oil barrel prices as well as the unpredictable movements of the sterling pound. In this research proposal, the researcher attempts to study added value and product differentiation as they are key to not only customer service, but also in general business strategy. However, the major aim of this research study will be to develop an understanding on the manner in which firms become competitive and sustainable from product differentiation and value addition. Further the objectives of the research shall be; to learn to significance of differentiation amongst oil marketers, to evaluate the impact of differentiation and value addition on consumers and to investigate consumer feelings on value addition and product differentiation. Literature Review Value addition and product differentiation is awash with varying number of literature items written and studied on them, particularly in business and in economics. It is always important to establish a meaning to a concept before researching or studying such concepts. Often this is not followed as most writers work on a topic and later fall folly of a weak comprehension of the concept they are writing about. Leslie et al (2000) evaluated the concept of value addition, and attributed varying definitions and means to the concept widely used in literature. Added value is a concept with varying angles of analyses, as well as, multifaceted meanings and connotation, and Barnes & Blake (2009), as being practically to consumers while other writers think that it is closer to the business, while the third group places it in the middle between business and consumers. Added value is very interactive, and it entails a relationship that exists between a consumer and a product (Barnes & Blake, 2009). Consumers have been observed to employ value addition both before and after consumption (Velamuri, 2012). A number of factors seemly play important roles during the different stages in the consumption process of a product, and in recent years brands, consumer values, customer satisfaction and service quality have incorporated into the package of value addition (Velamuri, 2012). Value addition involves the use of innovation to enhance customer experience, and the move by customer to exchange their money for the price of the product, could be simply understood as acknowledging the value of the product. Product differentiation offers consumers a variety of products within a specific industry instead of a monotonous product that describes purely competitive markets. Firms practice differentiation to make their products better so that customers would rather buy their products than their rivals’. When differentiation is perceived as a method to enhance products rather than just making them look different, it emerges as the driver of economic development (Cohen, 2013:54). In contrast to the traditional applications and perceptions where differentiation creates an expense on the economy in return for more product variety, differentiation reduces costs, inspires economic development, and creates better products in reality. In the neoclassical approach, differentiation improves consumer welfare by providing consumers with a greater field to choose from. According to Cohen (2013:54), that reward is countered by the increased average cost of production for firms that are monopolistically competitive (Cohen, 2013:54). In the neoclassical system, the only advantage of differentiation is the increased variety of products offered. Studies have shown that most scholars have accepted the rewards brought by differentiation in terms of more variety, but they have not acknowledged the role that the differentiation process plays in driving economic growth. The neoclassical theory of the firm distinguishes monopolies from competitive companies (and takes into account many variants in between), but presumes that the industry structure is exogenous, even when it is showing the rewards to firms of having a greater market power. In contrast to this theoretical approach, real-world companies can take measures to generate market power for themselves, so that the market’s makeup is not exogenous The best competitive strategies for companies involve seeking ways to differentiate their products and give themselves some element of market power, not reducing the cost of producing one product. Thus, this is the entrepreneurial aspect of a competitive company, which is vital for it to survive, is absent from the neoclassical framework. The profit-maximising strategy described for competitive companies by neoclassical theory does not do this in the real world competitive arena. Looking for economic profits by increasing market power is the real profit-maximising strategy. This has been accepted and acknowledged in managerial economics literature since, but differentiation as a competitive approach has not shifted into the hub of neoclassical microeconomics. Managerial economics concentrates on profit-maximising strategies for companies instead of the effects on the economy as a whole. In microeconomic literature, pure competition, which is the market model that maximises social welfare, eliminates the possibility of differentiation by assumption. Modern economics recognises the benefits of the variety that differentiation provides, but also states that markets with differentiated products do not generate at least average overall cost, and there is a trade-off of increased costs for greater variety. Companies need to recognise the benefits of increased variety that the process offers, and use such benefits to gain advantages over their rivals, and differentiation is a vital strategy for companies in competitive industries. While the rewards are recognised, the critical role of differentiation in the facilitation of economic development has been ignored in most literature. Differentiation is a vital competitive strategy; one that firms employ to gain a competitive advantage over their rivals. The process makes markets more, not less, competitive. In a market with homogenous goods or services, all firms have to do to stay competitive is minimise their costs. Firms will also lose a lot of revenue and profits until they learn to use differentiation effectively and challenge their rivals However, even if they do recover ground, they will once again only be making normal profits. This is not a long-term strategy for success; it only leads a business into a cul-de-sac from which it may never emerge. According to Raddats and Burton (2009:34), such firms will either be making normal profits when they have matched their rivals or less than that if they are still trying to gain ground. As a result, they will always be lagging behind their rivals and may not be able to stay in the industry because they lose ground every day and making progress becomes an impossible dream. In the actual world of competition, a competitive company will always be seeking ways to make its outcomes more appealing than those of other companies (Raddats and Burton, 2009:36). Differentiation helps it do this and more; it can stay ahead of its rivals and record profits. Research Strategy and Methodology This report proposes the use of qualitative research methods for analysis, and qualitative Research study things naturally and it attempts to interpret the meanings of information in terms of the responses. It is intended to discover the deeper extent of the subject being searched as it focuses more on interpreting the subject matter and give priority to the existing information, and one important method used in Qualitative Research Is the in-depth interviews. A qualitative research interview seeks to describe the meanings of the central theme of the life of the subjects as it primarily focuses on the meaning of what the interviewees answer. It seeks to cover a factual level as well as a meaningful level and it is particularly useful when the researcher seeks to find the experience of the participants. In depth interviews are followed up by certain levels of questionnaires asked to the participants for any kind of further investigation purposes. Interviews are completed by the interviewer based on what the respondent says (Snieder, 2009). It is more time consuming in nature and often carries a personal touch as the interview needs to contact the interviewees directly in a more personal manner. This method can be done by using online surveys too that follows a questionnaire to answer. In this research, unstructured interviews of focused groups are conducted to collect the data from marketing executive of oil marketing firms within the country. Further, this report proposes the use of secondary sources of data for qualitative analysis. The secondary data shall be analysed in respect of the topic on value addition and product differentiation amongst oil marketers in the United Kingdom. Logistical and Ethical Consideration Ethical and logistical issues that may arise in the course of data collection shall be handed through a well developed logistics plan. These issues that comprise; confidentiality, privacy, voluntariness, reduction of errors, working with the instructor to review the work, assistance by enumerators and their qualifications if any, and virtually the methods of data collection. To achieve privacy, a letter of would be sent to the would-be participant outlining the research, and an official request to participate, hence allows respondents to consider the research before hand before the date with the researcher. To ensure confidentiality of the research process from the respondents their names, addresses and other personal information shall not be included in either audio, text or video materials that will be used in data collection. Informed consent demands that when seeking data from the respondents it is imperative that the researcher discloses information to the potential respondents, ensuring that the pieces of information is understood, and they take part in the process voluntarily. Errors can occur during data collection when the instrument of choice ends up misrepresenting the information collected, and this shall be abridged through the use of backup instrument such as the tape recorder. To ensure that the research work is moving in the right direction, the researcher will regularly seek the auspices of the instructor for additional guidance. The researcher will coordinate with other people to assist in performing functions which include collection of primary data and transcription of information in the backup audio file to text. Outcomes At the end of the process, the research shall help in the understanding of the twin concepts of added value and product differentiation. A deeper knowledge of product differentiation within the oil marketing downstream industry shall be expected to be horned as well. An academic argument versus the empirical evidence on the real significance of both value added and product differentiation. Time Table Task Start Date Duration (Days) Collection of secondary data 12-01-15 14 Collection of primary data 19-01-15 7 Data Analysis 02-02-15 7 Report Writing 09-02-15 7 Gantt chart Reference List Barnes, C. & Blake, H. 2009. Creating and delivering your value proposition managing customer experience for profit, London, Kogan Page. Cohen, A. 2013. Finance and economics discussion series: competition, product differentiation and... S.l, Bibliogov. George, K. D., Joll, C., & Lynk, E. L. 2000. Industrial organisation: competition, growth and structural change. London [u.a.], Routledge. Leslie De chernatony, Fiona Harris, & Francesca Dall&Rsquo;Olmo Riley. 2000. Added value: its nature, roles and sustainability. European Journal of Marketing. 39-56. Raddats, C. & Burton, J. 2009. Differentiation through services in product-centric b2b companies, Manchester, University of Manchester. Snieder, R.Larner, K. 2009. The art of being a scientist. Cambridge, Cambridge University Press. Velamuri, V. 2012. Hybrid value creation, Wiesbaden, Springer Gabler. Indicative Bibliography Collins, J.C. & Porras, J.I. 1996.  Built to Last, Century, London. This book explores the value of value addition in brands that last long at the top of the food chain. Greenaway, D., Hine, R., & Milner, C. 1995. Vertical and Horizontal Intra-industry Trade: A Cross Industry Analysis for the United Kingdom. The Economic Journal : the Quarterly Journal of the Royal Economic Society. 105, 1505. This journal explored both horizontal and vertical differentiation of products across industries in the united kingdom. Read More