An Investigation into the Introduction of Branded Goods In order to Reposition Store Image. ReenaMakan 2002 In Partial Fulfillment of the Requirements of the Masters in Business Administration Degree For the University of Natal, Durban Supervisor: Elza Thomson October 2002 DECLARATION I, Reena Makan declare that the work presented in this dissertation is my own and has not been submitted previously to any other university or technikon. Any work done by other persons has been duly acknowledged. ReenaMakan Masters in Business Administration Graduate School of Business University of Natal, Durban October 2002 ~~~" 096757 ACKNOWLEDGEMENTS The [mal completion ofthis disseliation can be fully attributed to the following people in my life: The staff and management of Woolworths for affording me the opportunity to conduct my research on their company and for their assistance in the collection of data for this study. My Supervisor, Prof. Elza Thomson for her advice, assistance and most importantly for providing that vital spark which gave way to the focus of this dissertation. My parents, Mac and Ramola, my sincere gratitude is extended to you for your unwavering love, support and inspiration throughout my life and for instilling in me the importance of a good education. A special thank you to my friends Rakesh and Nasen for their invaluable motivation, support and assistance during this dissertation. My most sacred gratitude to God for giving me the inspiration, strength, support and enlightenment during the challenging times in my studies and for blessing me with a spiritual base which has immortalised my soul. 11 LIST OF FIGURES CONTENTS PAGE Figure 2.1: Model of Consumer Buyer Behaviour 14 Figure 2.2: Buying Decision Continuum 16 Figure 2.3: Simplified Model of the Decision Making Process 17 Figure 2.4: Buyer Decision Process: Model and Continuum 19 Figure 2.5: The Marketing Environment 22 Figure 2.6: Simplified Decision Process Framework 23 Figure 2.7: Simplified Decision Process Framework 25 Figure 2.8: Model of the Communication Process 35 Figure 2.9: Model suggesting Marketing Actions 40 Figure 2.10: Motivation Model 44 Figure 2.11. Maslows Hierarchy of Needs 45 Figure 2.12. Diagram of the customer-brand according to Heylen 46 Figure 2.13: Brands 49 Figure 2.14: High Brand Equity 53 Figure 2.15: The Sequence of Effects in Store Choice 55 Figure 2.16: Customer Satisfaction Model 57 Figure 3.1: Woolworths Infrastructure and Interaction 62 Figure 3.2: Woolworths Business 65 Figure 3.3: Areas of Focus or Key Issues in the Woolies Business 66 Figure 3.4: Market Share of Major Grocery Stores in South Africa 68 Figure 5.1: Model for Woolworths 93 11l LIST OF TABLES CONTENTS PAGE Table 2.1: Consumer Behaviour Roles 16 Table 2.2: Categories of Adopters 18 Table 2.3 : Characteristics of Consumer Problem Solving Approaches 20 Table 2.4: Table of Communication Information Processing 36 Table 2.5: Table of Motives 41 Table 2.6: Classification of Major Motive Influences 41 Table 2.7: Formation of Goals and Actions 43 Table 2.8 : Table Detailing Heuristics, Product Choice and Purchase Behaviour 47 Table 2.9: Seven Attributes of Good Brand Relationships 51 Table 4.1: Gender 78 Table 4.2: Age in Years 78 Table 4.3: Income Levels 79 Table 4.4: How often do you shop at a Woolworths food market store? 79 Table 4.5 : Which Woolworths store do you shop at? 80 Table 4.6: Have you purchased! would you purchase any other branded food or grocery items at Woolworths? 80 Table 4.7: Does the stocking of dealer brands change the Woolworths image? 81 Table 4.8 : I purchase branded food items from Woolworths 81 Table 4.9: I purchase branded household items from Woolworths 81 Table 4.10: I purchase Coke under the Woolworths house brand from a Woolworth's store 82 Table 4.11: I purchase dishwashing liquid under the Woolworths iv house brand from a Woolworth's store 82 Table 4.12: I purchase household cleaning agents under the Woolworths house brand from a Woolworth's store 83 Table 4.13: I purchase personal toiletries under the Woolworths house brand from a Woolworth's store 83 Table 4.14: I purchase tea and coffee under the Woolworths house brand from a Woolworth's store 83 Table 4.15: I purchase dealer brand Coke from a Woolworths store 84 Table 4.16: I purchase dealer brand dishwashing liquid from a Woolworth's store 84 Table 4.17: I purchase dealer brand household cleaning agents from a Woolworth's store 85 Table 4.18: I purchase dealer brand personal toiletries from a Woolworth's store 85 Table 4.20: I purchase dealer brand tea and coffee from a Woolworth's store 85 Table 4.21: Reasons for purchasing branded goods from a Woolworths Food Market 86 Table 4.22: Courtesy of Woolworths Sales Staff 86 Table 4.23: Friendliness of Woolworths Sales Staff 86 Table 4.24: Attractiveness of Woolworths Advertising 87 Table 4.25: Advertising 87 Table 4.26: Product Variety 87 Table 4.27: Product Variety 88 Table 4.28: Product Reliability 88 Table 4.29: Store Cleanliness 88 v Table 4.30: Store Temperature 89 Table 4.31: Store Layout 89 Table .10: Gender 79 vi TABLE OF CONTENTS CONTENTS PAGE Declaration 1 Acknowledgements ii List of Figures iii List of Tables iv CHAPTER 1 1 1.1. Introduction 1 1.2. Background 2 1.3. Motivation 3 1.4. Value/Benefit ofthis Study 3 1.5. Problem Statement 4 1.6. Objectives of the Study 5 1.7. Hypotheses 6 1.8. Research Methodology 6 1.8.1. Data Collection Methods 6 1.8.2. Questionnaire Design 6 1.8.3. Pilot Test 7 1.8.4. Sample 7 1.8.5. Sample Size 8 1.8.6. Data Analysis 9 1.8.7. Nature and Form of Results 9 1.9. Definition of Concepts 10 1.10. Structure ofthe Project 10 1.11. Summary/Conclusion 12 vii CHAPTER 2 13 2.1. Introduction 13 2.2. Marketing and Consumer Buyer Behaviour 13 2.3. Market Segmentation 22 2.3.1. Geographic segmentation 23 2.3.2. Demographic segmentation 23 2.3.2.1. Segmentation according to Age 24 2.3.2.2. Segmentation according to Sex 24 2.3.2.3. Segmentation according to Marital Status 24 2.3.2.4. Segmentation according to Income, Education and Occupation 24 2.3.3. Segmentation according to Psychological and Psychographic Characteristics 25 2.3.4. Segmentation according to Sociocultural Characteristics 26 2.3.5. Use Related Segmentation 27 2.3.6. Use- Situation Segmentation 27 2.3.7. Segmentation according to Benefit 28 2.3.8. Hybrid segmentation 28 2.4. Criteria for Effective Targeting of Market Segments 29 2.5. Target Market Selection 29 2.6. Marketing Mix 30 2.6.1. The Product 30 2.6.2. The Price 32 2.6.3. The Place 34 2.6.4. The Promotion 34 2.7. Conclusion 58 VIII CHAPTER 3 3.1. Presenting the Organisation 59 3.2. Woolworths Today 59 3.3. Franchise Operations 60 3.4. Competitor Analysis 68 3.4.1. Pick In Pay 68 3.4.2. Shoprite Holdings Limited 69 3.4.3. Spar 70 3.5.1. Woolworths Financial Statements 71 3.5.2. Share Composition 73 3.5.3. Management Composition 74 3.5.4. Employee Composition 74 3.5.5. Intellectual Property Right & Investments 74 3.5.6. Financial Statements 74 3.5.7. Fixed Assets Schedules 74 3.5.8. Liabilities Schedules 75 3.5.9. Debt to Equity Ratio 75 3.5.10.Inventory Turnover Ratio 75 3.5.11. Subjective Risk Assessment 75 3.5.11.1.The Macro Environment 76 3.5.11.2. Micro Environment 76 3.6. Conclusion 77 CHAPTER 4 78 4.1. Evaluation of the Questionnaire 78 4.2. Conclusion 89 ix CHAPTER 5 91 Recommendations & Conclusions 91 5.1. Recommendations based on Research Findings 91 5.2. Conclusions 96 BIBLIOGRAPHY 99 APPENDIX Questionnaire I Coded Questionnaire III Woolworths Financials VI - Balance Sheet VI - Income Statement VII - Cash Flow Statement IX - Statement of Changes in Ordinary Shareholders Interest X x 1.1. INTRODUCTION The Woolworths brand represents clear value, and they have always maintained the quality of their products. Consumers have come to see this brand as a product of quality and consistency. So when Woolworths decided to introduce approximately 300-dealer brand items into their stores, it was not viewed as a threat. In fact Woolworth's feel that they endorse those dealer brand products as being worthy of being on their Woolworths shelves. There is defmitely a certain amount of brand equity transferal that takes place here. Woolworths communicates an unambiguous message to its consumers and a message of quality and peace of mind is what is being conveyed. Customers are aware that they are purchasing a product of quality with the freshest and most nutritional ingredients that have been prepared in the safest, most healthiest and hygienic way possible. This will enable them to still maintain a healthy lifestyle whilst enjoying good quality, innovative food. Woolworths - the brand differentiates its offering. This is helpful as consumers often choose not to choose when they are faced with excessive choice, unless there is a vehicle available to facilitate what they believe is an informed choice. Often that vehicle is simply a brand name, which is a strong one like Woolworths, one a consumer has learnt to trust. A brand is a promise offered by the manufacturer to the consumer and the product or service is nothing more or less than the evidence of the truthfulness of that promise.