Project- CONSUMER CONCERNS (TARGET MARKETING)
Assignment – Research and Inquiry (Individual)
Name – Aman Mittal
Student Id – 1000052304
Submission Date – 29-04-2018
Course – Post Graduate Diploma in Applied Management
In this report the methodologies employed by various organisations to target the customers and try to gain access to their data has been focussed upon. With the help of studying research papers I will try to figure out whether its important for retail business to collect customer data and do customer-oriented marketing. The research studies share the concern of consumers and what should be kept in mind before collecting customer data. The company that I will focus upon will be ‘The Warehouse Group’ and will answer a research question whether brand products manufactured under its own name should be a good idea for the warehouse group and collect the reactions of customers regarding this step by the group. I will try to answer what are the ethical considerations that should be taken care of while market your product and try to know their preferences and is that a profitable step for a business. In this the interesting thing about one research papers ‘The Privacy Dyad’ and ‘Data warehousing does not support customer relationship management’ says that trust not the most important factor that in data collection about the customers needs and preferences. The important thing is what type of information you want from the customer and to make sure that businesses marketing team do not make customer doubtful about their security. The Warehouse Group has long maintained a reputation of being a good company since it started its operations in 1982. The warehouse group because of its reputation of being a good company does not use the concept of digital marketing as effectively as compared to its competitors like Farmers, K mart, Briscoes etc. The EDLP (everyday low prices strategy) of the warehouse group has not turned out to be effective so after collection of customer data ethically they can easily mix the concept of digital marketing with effective service to have an edge over its competitors. CITATION Yeo181 l 16393 (Yeoman , 2018) Since Brand Reputation is one of the most important factor for data warehousing and CRM (customer relationship management) the group can easily understand consumer concerns. CITATION Lwi15 l 16393 (Lwin, Wirtz, & Stanland, 2015) By knowing its customer chain better the group can have an advance knowledge of customer reaction towards that step. The Group should also start taking customer feedbacks in the store after purchasing and know what makes this retail chain a good place to buy and what are your future expectations or what’s changes you want from them. The communication quality is also one of the most important source that makes customer provide data that means the group needs people that are committed and can convince people to fill a simple questionnaire that can make its customer aware of technologies this group will employ in future and what’s customer reaction towards that change.
Table of Contents Page
Executive Summary 2
Introduction and Background information 4
Literature Review 5
Conceptual Framework 8
4.1 Knowledge Gap 9
4.2 Future Work 10
2. INTRODUCTION AND BACKGROUND INFORMATION
In this research project the marketing methodologies of retail stores is taken into consideration. Today retail marketing is all about serving your customers in the most efficient way possible and try to fulfil their demands keeping the operating costs your business as low as possible. Although, we all know that retail industry is either customer driven and product driven but there are certain aspects that should also be considered before preparing a marketing plan for the business. One of the most important factors includes, a proper government structure, which should encourage business workforce to give their best. CITATION Ger94 l 16393 (Gereffi, 1994) In this research I am going to put focus on Data Warehousing and how it can be used as a tool for advertising and making your loyal customers as your brand advertisers and provide opinion from the customer point of view whether its ethical to collect data and what are the concerns that can customers may have while sharing that information. Whether brand name effects the quality of data customers share with the business and what are the code of ethics that should be followed before using that information for a gain? The firm that I will be focusing on will be “The Warehouse Group”. The investment in data warehousing helped in making a strategic vision for business which helped in making better investment decisions. CITATION Bri00 l 16393 (Cooper, Watson, Wixom, & Goodhue, 2000) Retail Industry is one of the most competitive industries in business world. In this research I will discuss whether collecting customer data and getting feedback from the customers about the product experience will make them feel more connected to the brand or it can put customers data at risk and breach their trust towards that business and effect business. Data Warehousing is about focusing on the value customers and how data warehousing can be helpful in obtaining the value of every customer and how important that client is for the business (especially retail business) and how a brand can make customer use its more profitable products. CITATION Bri00 l 16393 (Cooper, Watson, Wixom, & Goodhue, 2000) The discussion regarding using AI (artificial intelligence) in the retail industry and how it can used as effective tool for marketing and cutting operating costs of your business will be discussed. The consumer reaction towards these technologies (like artificial intelligence and data warehousing) will be reviewed. ‘Blockchain’ as we all know is used to collect the transaction records of the customers. This concept is mainly used for cryptocurrencies and I will research this concept whether this concept can be applied in the retail sector. In ‘Warehouse Group’ CITATION Bri00 l 16393 (Cooper, Watson, Wixom, & Goodhue, 2000) The Technological advances have made business more aware about the customer preferences and their knowledge, which made customers worried whether their data is used securely by companies. Blockchain, which is a concept which is used to track the transaction activities of customers and is used in buying and selling cryptocurrencies has made people more uncertain about their assets and the social scandals in media has led to distrust of consumers towards business in retail sector. Consumers have basically weigh their privacy and social security above their convenience and to give their data to the companies. This is known as “Behaviour Paradox”. CITATION Lwi15 l 16393 (Lwin, Wirtz, & Stanland, 2015)3. Literature Review
In today’s world, Almost, all the business that we come around are customer-oriented businesses and they are mostly driven by the customers. All businesses are trying to find new ways to promote and trying to gain as much market share in this competitive world. To gain customer attention businesses are implementing latest technologies and making customer purchasing simpler and more convenient. In that process the businesses try to collect the data of their customers to know their customer chain better and gain more business. Sometimes data collection becomes so personal that make customer insecure about their privacy. Tailored Client Solutions (TCS) is about knowing your customer better and collect data of clients to do business with them. CITATION Bri00 l 16393 (Cooper, Watson, Wixom, ; Goodhue, 2000) Customer relationship Management is the main tool that businesses use to gain access to client data. The globalisation of large retail stores has put increased focus on sales promotion for attracting and retaining customers. CITATION Pay03 l 16393 (Payton, Zahay, ; Debra, 2003) The ‘Warehouse Group’ is a group of retail stores that contains The Warehouse, Noel Lemming, Warehouse Stationary and Torpedo7. The Warehouse has been founded by Mr Robert Stephen Tindal in 1982. CITATION Blo18 l 16393 (Bloomberg, 2018) The Warehouse has been one of the dominating retail industries in 2000 and warehouse market share was near about 41 percent in 2000. CITATION Bow031 l 16393 (Bowden, 2003) In figure 1, market share of The Warehouse was near about 41 percent and it was given tough competition by farmers which is 26 percent. K mart is an Australian company, which has strong foothold in the Australian retail sector. As we can see that Warehouse Group has outperformed K Mart in market share and other important aspects like operating margin, same store growth and Return on Assets (ROA). CITATION Bow031 l 16393 (Bowden, 2003)
In recent years, Warehouse Group financial performance has declined because of the competition from other retail stores in New Zealand like Farmers, Walmart. Retail Industry has become so much competitive that retail industries do not want to lose customers and want to know their needs so that they can serve them effectively. Recent reports of 2018 suggest that only Noel Lemming was one that outperformed in the group and rest of the brands did not show any considerable increase in their margins. CITATION Noe17 l 16393 (Noel Lemming, 2017) Marketing sector has become so intense that it is difficult for a new retail business to survive in that environment. The research conducted in the paper “Why does not marketing use the corporate data warehouse and the role of trust and quality and trust in adoption of data warehousing technology for CRM applications” has took one health organization into its account and did not provided any quantitative analysis to support their argument and that research study may or may not be applied to USA health sector. I am going to conduct the research on the New Zealand retail sector, taking into consideration the customer reviews about their data being gathered for business purposes, what is their reaction towards it and Is that a destructive or constructive step for businesses. This Research says that trust is an underlying factor for data gathering with data quality on the top for marketing strategy. The sample taken that is focus groups is small to get on a confirmed opinion. Since the ‘The Warehouse Group’ is a retail sector so ‘customer opinion’ matters the most in this case. This research is mostly based on in depth interviews and instead its customer chain decides whether collecting data and their preferences can affect their trust positively or negatively I will analyse whether ‘The Warehouse Group’ should apply these latest technologies to its business and gather information about customers to gain market share in New Zealand. What’s the customer perspective towards implementation of these technologies and gathering data and try to know their customer chain better and Sales Force Automation will dilute customer thinking. The factor that can make an organisation to implement new technology to its business is push and pull factor. This include increased pressure from the stakeholders and economic benefits that can be achieved with that technology implementation. The Quality of information is the most important method that predicts the success of the business model CITATION Pay03 l 16393 (Payton, Zahay, & Debra, 2003) Privacy concern increases because consumers usually forget what information they have provided to the business. Internet self-efficacy is defined as a belief in one’s ability to achieve certain tasks on the internet. Internet involvement is defined to what extent the internet is used as your personality equivalent. CITATION Akt14 l 16393 (Akther, 2014) Privacy is the most important issue almost every online shopper worried about and his transaction details should not be kept in the company system without his/her consent. CITATION Akt14 l 16393 (Akther, 2014) In recent Cambridge Analytica scandal in which Facebook was involved is selling data of millions of American users has also add to the worries of consumers. The firm takes personality quizzes and tries to compare your personality with others. Cambridge Analytica was able to gain real names and profiles these people with the help of Facebook. In this scandal they came to know the preferences of consumers like their voting habits, their contacts, personality, future needs and other databases. CITATION Fun16 l 16393 (Funk, 2016) The targeting and customization of digital marketing is often against the customer privacy. CITATION Lwi15 l 16393 (Lwin, Wirtz, ; Stanland, 2015) The Warehouse Group is considered as one of the reputable company that has bagged the social media marketing award in 2017 and that signifies that customer chain of “The Warehouse Group” trust them with their data and reputation and communication quality are considered one of the main drivers of trust and privacy concern. Consumer willingness to share the information is more for their personal lifestyle rather than sharing their financial transaction information and repeatedly asking personal information can create a doubt in consumer mind. Defensive behaviour of customers is considered as a threat to customer privacy. CITATION Lwi15 l 16393 (Lwin, Wirtz, ; Stanland, 2015) In the research paper “The Privacy Dyad” the sample take in the research was only undergraduate students and there isn’t any other age group involved to confirm the regulatory focus theory or target-based marketing. (RFT) Clearly today businesses want to reduce the customer privacy concerns and want to maximize the communication quality. The ‘Privacy Dyad’ research did not take any sample company or an industry in which this can be implemented upon because digital marketing strategy is different for every business and it does not provide the collective or generic reaction of population towards privacy concerns of consumers.
4. COCEPTUAL FRAMEWORK
After considering some of the research publications I got an idea that in some cases trust can be underlying factor for the digital marketing of retail business. The information quality is an important tool that concerns the customers most. If the needs a sensitive information like which company products you use? What makes you spend your money and where you spend your money the most and on which products etc questions like these create second thoughts in customer minds and they feel insecure to reveal that information straight away. The communication quality is very important like if you want to know about the lifestyle then businesses should make sure that they should not be entirely promotion focused. Since each human and their behaviour is different firstly you make sure to decrease their privacy concern and then make that relationship with customers more promotion focussed by increasing the communication quality. There isn’t any specific way to gain a consumer trust and decreasing privacy concern. The retail business like the ‘The Warehouse Group’ can apply a technology called ‘biometric data’ like the Singapore airlines have implemented in 2011. In this technology they introduced a smart check in system that allows passengers to check in, select their seats and clear immigration in lesser time. Biometric data of the customer is stored in a smart chip of the smart and can used for check in process CITATION Lwi15 l 16393 (Lwin, Wirtz, ; Stanland, 2015) The retail ‘Warehouse Group’ can apply self-check counters technology and biometric data but to make sure that consumer data should not be compromised. Since ‘The Warehouse Group’ is known for its reputation and their customers are connected to the brand they have maintained a trust factor with their customers to make adaptable to any change in their service.
4.1 Knowledge Gap
The most common methodology critique I found in the research papers was most of the research were carried out on the financial sectors, health sectors and the research that is carried generic “The Privacy Dyad” includes only the graduates in its research. Although, the graduates might have sound understanding of technology but still if a business want to know the consumer concerns about their data being collected then they must include actual consumers of that service also. Some of the research were carried out on one industry and in a specific country and those findings may be subjected to that country or nation but might not be generic. The retail sector is a different a totally different sector and the information or data required for business purposes is entirely different from the health sector or the financial sector. In that sector, businesses want to know their eating, wearing and daily usage of products data which is not directly related to their personal lives. For addressing the consumer concerns the research publications should include consumers not just the students or any specific age group. The proper research methodology should include person from every age group and end user of that product to come to an opinion. Our group project is about if “The Warehouse Group” starts exporting its own brand label products is that a profitable step? Will that reduce the costs and make a decrease in their cost of doing business. My individual focus is what should be the customer reaction towards that step and for gaining idea about that “The Warehouse Group” needs its customer data to know their preferences and what should be the target market of the warehouse brand products.
4.2 Future Work
The retail businesses should make use technological advancements and try to implement it soon as possible to make customer purchasing convenient. “The Warehouse Group” should introduce self-check counters to know about the opinion of customers about their purchases. The retail businesses should make sure that quality communication and information without compromising their security can be achieved on the goodwill of the business. If retail businesses have proper information about their customer base before making any change then might have an idea what’s the consumer reaction towards that change. If the warehouse group launches its own in store brand product then they have an idea how much profitable that step would be for the businesses. Now the warehouse latest strategy is to transform its information technology systems to modern cloud systems to become more customer centric business. CITATION Yeo181 l 16393 (Yeoman , 2018) For implementing cloud technology and to find potential customers or existing customer you should know them better and make changes according to the customer needs.
BIBLIOGRAPHY Akther, S. H. (2014). Privacy Concerns and Online Transactions: The Impact of internet self efficancy and internet involvement. Journal of Consumer Marketing, 118-125.
Bloomberg. (2018, April 18). WHS:NZ Warehouse. Retrieved from Bloomberg: https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=881748
Bowden, S. (2003). Warehouse Group Entry Into Australia. Journal of the Australian and New Zealand Academy of Management, 58-68.
Cooper, B. L., Watson, H. J., Wixom, B. H., & Goodhue, D. L. (2000). Data Warehousing Supports Corporate Strategy. MIS Quarterly, 544-567.
Funk, M. (2016, November). Cambridge Analytica and the Secret Agenda of the Facebook Quiz. Retrieved from The New York Tomes: https://www.nytimes.com/2016/11/20/opinion/cambridge-analytica-facebook-quiz.html
Gereffi, G. (1994). The Organisation of Buyer Global Commodity Chains. Commodity Chains and Global Capitalism, 97-98.
Lwin, M. O., Wirtz, J., & Stanland, A. J. (2015). The Privacy Dyad. Emerald, 919-940.
Noel Lemming. (2017, March 21). Our CEO- Tim Edwards. Retrieved from Noel Lmming: https://www.twgcareers.co.nz/noel-leeming/
Payton, F. C., Zahay, & Debra. (2003). Understanding why marketing does not use Corporate Data Warehouse for CRM Applications. Journal of Database Marketing , 315-326.
Yeoman , M. (2018). Market Information Servises Section. Auckland: The Warehouse Group .