Segmentation in Food Retail: Tesco and Muslim Loyalty - Case Study Example

Segmentation in Food Retail: Tesco and Muslim Loyalty YOUR FULL YOUR INSTITUION OR SCHOOL   Segmentation in Food Retail: Tesco and Muslim Loyalty TABLE OF CONTENTS Research Question and Objectives 3 Research Hypothesis 3 Background and Literature Review 3 Research Methods 7 Project Structure 9 Project Management Plan 10 Segmentation in Food Retail: Tesco and Muslim Loyalty RESEARCH QUESTION AND OBJECTIVES The central research question for this project will be “What steps should be taken by management at Tesco to secure and maintain Muslim customer loyalty?” The objectives for this research will be to identify current customer loyalty schemes used by the company to target specific market segments, to determine what issues are most important in the Muslim community with regard to retail grocery services, and formulate a strategy to advise the process of successfully targeting the Muslim market segment. RESEARCH HYPOTHESIS I believe that while Tesco currently has several different customer loyalty schemes, the company can do more to secure the loyalty of the Muslim market segment. I believe the outcome of this research will demonstrate that if Tesco will focus on providing halal food products, it will succeed in reaching the Muslim market and securing their loyalty. BACKGROUND AND LITERATURE REVIEW Given the trend toward globalization and international expansion of markets, modern retailers are faced with increasing competition as well as the need to expand their products and services to appeal to broader market segments. This process is requiring retail grocers to identify and target specific ethnic market segments. In the same way that US retailers have successfully targeted Hispanic consumers, international retail grocery companies such as Tesco must focus on diversifying their product line and successfully marketing to significant segments such as the Muslim community. According to the company, Tesco is one of the worlds leading international food retailers with over 2500 stores worldwide and a commitment to long-term growth (Tesco: At a Glance, 2006: 1). In fact, it has been called the “success story” of British supermarket retailing whose industry leadership has been widely accepted (Kacker & Sternquist, 1994: 202). This places the organization at the forefront of market development because its broad reach locates it’s outlets in many different markets with an extremely diverse customer base. In those areas which have high concentrations of devout Muslims, this means offering a product line that comports with the strict dietary laws known as Halal. There is no doubt about the fact that the Muslim community has significant economic power; in France, it is estimated that if the 60 million Muslims who reside there would consume and purchase only Halal meat, the product could account for 10% to 15% of the French national meat market (Kutschera, 1996: 40). Given Tesco’s stated corporate responsibility policy, which notes the organization’s intent to appeal to customers across many social and economic ranges as well as use their size and success as a force for good in playing an important role in local communities, Tesco has given itself no choice but to develop products that will appeal to this constituency (Tesco: Corporate Responsibility, 2005: 1). The concept of Halal, which means “acceptable," is to the Muslim community what Kosher is to the Jewish community. It is a set of dietary laws which prescribe the manner in which foods are processed prior to being consumed, and there is increasing Muslim demand for the provision of these products (Haddad & Lummis, 1987: 20). In fact, making acceptable food available to devout Muslims is so important that many European countries are now including it as part of the food services available in public institutions such as schools and hospitals; and if they cannot find it elsewhere, many Muslims will purchase their meat from Jewish shops because of the similarity between Halal and Kosher process requirements (Haddad, 2002: 8). In response to this increased demand, many retail food companies are seeking to gain a competitive edge in the marketplace and are responding to Muslim consumers who, in the past, have not used large corporate grocery chains as their source for Halal foods (Chaudry & Riaz, 2004: 29). While much of the demand for these products is coming from first-generation Muslims, their children and grandchildren are demonstrating cross-cultural influences; they want products like Halal pizza (James, 2004: 2). This represents a major opportunity for companies like Tesco. If Tesco was able to successfully target the Muslim market, they would have the opportunity to introduce new and innovative products and, given the companys significant resources, beat out the competition. To successfully take advantage of this opportunity, the company will have to specifically target the Muslim market segment by engaging in social marketing; and social marketing programs have been proven to be very effective on an international scale when focused upon ethnic cultures (Fishbein, Middlestadt, & Goldberg, 1997: 149). Since this type of marketing strategy is based on understanding the nature of the market and its specific segmentation(Badaracoo, 2004: 48), Tesco would do well to make the effort to understand the Muslim culture so that it could offer appropriate products. Understanding the ethnic identification and lifestyle preferences of the intended market segment is the best way to ensure positive product performance (Haugtvedt, Lee, & Williams, 2004: 9). Given the fact that Tesco consistently seeks a competitive edge by producing local product offerings that appeal to the local customer, the idea of focusing on the needs of the Muslim community by providing Halal foods fits neatly within the already-established corporate strategy (Child, 2002: 137). In fact, Tesco’s practice of offering incentives to its customers could be easily leveraged into a product offering for the Muslim market segment (Bailey & Schultz, 2000: 41). Once this strategy was embraced by management, the company would be in a position to effectively secure a significant presence within the Muslim market segment and maintain customer loyalty by incorporating it into other incentive programs. That is not to say that this marketing strategy is completely problem-free. As Tesco seeks to reach this particular market by providing Halal foods, it is going to find itself in a cultural dilemma of its own. Tesco is involved in the formulation of national food industry policies such as animal welfare (Kacker & Sternquist, 1994: 205). In Britain, there have been multiple campaigns in the public sector against animal cruelty and Tesco, as a matter of policy, has been a willing participant. The ethical issue for the company is that the slaughter of animals prescribed by Halal dietary laws is considered inhumane by most standards; the animal’s throat must be slit while it is conscious and aware of its surroundings (Mepham, 1996: 134). Accordingly, the company is going to have to delicately maneuver around its animal cruelty position in order to provide these products to its Muslim market or face charges of hypocrisy. The research proposed herein is relevant to both the corporate practices of Tesco and the increasing economic power represented by the Muslim market. In seeking to determine what steps management should take to gain and retain the loyalty of its Muslim customers, including offering a line of products that comport with the Halal dietary laws, I expect this research project to ultimately provide a clear strategy for Tesco to secure its competitive edge and take advantage of this strong, growing market segment. RESEARCH METHODS The proposed research methods for this project will include a combination of primary and secondary sources. The primary research will be conducted through a series of surveys and interviews with two categories of individuals. First, managers and employees of Tesco will be interviewed in order to obtain a thorough understanding of the companys current customer loyalty schemes. The interview methodology is the most practical and direct way to obtain the required information. As the companys current customer loyalty philosophy is understood, a platform for extending that mindset into the Muslim market segment can be constructed. It is anticipated that the personal interviews will be conducted with members of Tescos marketing department, in an effort to understand the central corporate strategy. These interviews will be supplemented, however, with a survey of selected store managers so that an understanding of how the central strategy is being implemented directly with customers can be obtained. The second category of inquiry will be focused within the Muslim community itself. This methodology will include personal interviews with those members of the community who are most knowledgeable regarding Halal dietary requirements. I expect these interviews to inform the research process regarding suitable potential product lines for promotion. A survey questionnaire will be distributed within at least one targeted Muslim community to determine the extent to which current product offerings are meeting the needs of this market. A second set of surveys will be conducted on-site at a Tesco supermarket in order to obtain direct information from the consumers who do the actual purchasing of the products. Taken in combination, the information obtained through the interviews and the tabulated data from the surveys are expected to present a clear picture of how Tescos current customer loyalty scheme and product offerings are meeting Muslim consumer expectations. Finally, secondary research will be conducted using both scholarly journals and information available on the Internet to supplement the raw data. The purpose of the secondary research sources will be twofold; to compare Tesco’s customer loyalty program with companies of similar size and international distribution, and to verify that the survey data relative to the Muslim community comports with the findings of previous scholarship. Once Tesco’s philosophy and implementation of customer loyalty methods is established, and the Muslim communities product preferences are clarified, a strategy will be crafted that seeks to tailor current customer loyalty efforts to the expressed needs and desires of the Muslim consumer market segment. The specific interview questions and the composition of the surveys will be developed during the preliminary project phase. PROJECT STRUCTURE The structure of this research project will be four distinct phases. The first phase of the project will be the preliminary design chapter. During this period, academic and Internet secondary sources will be used to construct a framework upon which the interview and survey questions can be built. This chapter will be completed once the interview scripts have been written, and the survey questionnaires designed and completed. The second phase of this research will be the primary research chapter where the interviews are conducted and the survey data is collected. Once the interview transcripts have been obtained, and all survey questionnaires collected, this chapter of the research project will be closed. The third phase of this project will be the analysis phase. The interview transcripts will be reviewed and the current customer loyalty schemes of the company will be clearly expressed. The survey questionnaires will be tabulated so that the responses can be quantified and Muslim consumer preferences identified. Secondary data sources will be consulted to confirm the findings. This chapter of the research project will be complete once the data has been analyzed, compared with the results of the secondary research, reconciled, organized, and laid out in such a way that it can inform the final phase of this project. The final chapter of this project will take the data analysis from the third phase and develop a cohesive strategy to assist Tesco management in the implementation of a Halal product line that meets the needs and expectations of the Muslim market segment. This chapter, and the entire research project, will be complete once that strategy is articulated and presented. PROJECT MANAGEMENT PLAN The detailed project management plan demonstrating the key phrases and timeline for this project is presented below: INSERT YOUR PERSONAL TIMELINE HERE. I RECOMMEND ALLOWING ONE MONTH FOR THE PRELIMINARY DESIGN, TWO MONTHS FOR THE DATA COLLECTION, THREE TO FOUR WEEKS FOR THE ANALYSIS, AND AT LEAST TWO MONTHS FOR THE STRATEGY DOCUMENT AND FINAL RESEARCH REPORT. OBVIOUSLY, SINCE I DO NOT KNOW YOUR SCHEDULE, I AM UNABLE TO COMPLETE THE DIAGRAM FOR YOU. References Badaracoo, C. (2004). ‘Affinity Marketing and Religion in a Therapeutic Culture.’ Public Relations Quarterly 49, (4) 46-51 Bailey, S. & Schultz, D.E. (2000). ‘Customer Brand Loyalty in an Interactive Marketplace.’ Journal of Advertising Research 40, (3) 41 Chaudry, M.M. & Riaz, M.N. (2004). Halal Food Production. Boca Raton, FL: CRC Press. Child, P.N. (2002). ‘Taking Tesco Global: David Reid, Deputy Chairman of the United Kingdoms Largest Grocer, Explains the Companys International Strategy.’ The McKinsey Quarterly 135-145 Fishbein, M., Middlestadt, S.E., & Goldberg, M.E. (Ed.) (1997). Social Marketing: Theoretical and Practical Perspectives. Mahwah, NJ: Lawrence Erlbaum Associates Goh, C. & Kates, S.M. (2003). ‘Brand Morphing: Implications for Advertising Theory and Practice.’ Journal of Advertising 32, n.p. Haddad, Y.Y. (2002). Muslims in the West: From Sojourners to Citizens. New York: Oxford University Press Haddad, Y.Y. & Lummis, A.T. (1987). Islamic Values in the United States: A Comparative Study. New York: Oxford University Press Haugtvedt, C.P., Lee, W., & Williams, J.D. (Eds.) Diversity in Advertising: Broadening the Scope of Research Directions. Mahwah, NJ: Lawrence Erlbaum Associates James, R. (2004). ‘Introduction Halal Pizza: Food and Culture in a Busy World.’ The Australian Journal of Anthropology 15, (1) 1-13 Kacker, M. & Sternquist, B. (1994). European Retailing’s Vanishing Borders. Westport, CT: Quorum Books Kutschera, C. (1996). ‘Murky Business Behind the “Halal” Label in France.’ The Middle East 258, 40-44 Mapham, B. (1996). Food Ethics. New York: Routledge Tesco (2006). At a Glance [online] available from [5 December 2006] Tesco (2005). Corporate Responsibility [online] available from http://www.tescocorporate.com/society.htm [5 December 2006] Read More