Marketing Mix and STP Strategies: An Exploratory Study into Grocery Retailers in Malaysia
Phang Ing @ Grace1*, Zaiton Osman1, Lim Tze-Yin2
1 Universiti Malaysia Sabah, Kota Kinabalu, Malaysia
2 Swinburne University of Technology, Kuching, Malaysia
*Corresponding Author: [email protected]
Accepted: 15 December 2020 | Published: 28 December 2020
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Abstract: The purpose of this paper is to obtain insights on the grocery retailer, by comparing across three retail formats (e.g. supermarket, minimarkets and convenience store) in Malaysia, and exploring how these local grocery retailers segment, target, position (STP Strategies) and plan for their marketing mix strategies. In order to investigate the experience shared among the retailers, the interview has been conducted, and textual analysis focused on comparing the similarities and differences in retail strategies has been adopted. The data were transcribed and analysed using content analysis with the aid of Quirkos software. The findings of the paper provide an alternative perspective for the retailers and marketers towards the importance of STP and marketing mix strategies in the grocery retail industry. The paper also demonstrates the extension in the current marketing literature, which address the crucial contribution of STP and marketing mix strategy in the marketing discipline.
Keywords: grocery retail, marketing mix, STP strategies, Malaysia
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1. Introduction
In this era, the rapid changes of retailers are always the primary concern faced by the players in the competitive industry. Hence, retailers need to address the contribution of marketing strategies and understand the current needs in the volatile market environment. In the Malaysia context, diverse retail store formats are causing the retail industry to be more fragmented, especially in developing country like in Malaysia (Euromonitor International, 2020). Besides, the more uncompromising global economic outlook forces retailers to add more retail formats (Koschmann & Issac, 2018) as a consequence of "trading up" or "trading down" their businesses. Retail consumers are frequently switching from one store to another, and also from one format to another (Cardinali & Bellini, 2014). They might perceive differences in retail format, size and layout, but not in terms of meeting shopping needs (e.g. as all of them meet food shopping needs). In other words, competition is no longer limited to intratype competition, but also in an intertype nature (Cardinali & Bellini, 2014; Foxetal, 2002; Gonzales-Benitoetal., 2005), where retailers have to compete with a different type of retailers selling similar merchandises (e.g. between supermarket and convenience store, Levy, Weitz & Grewal, 2019).
The rivalry between retail format is hence of most intense now due to differences in marketing strategies which affected the segmentation criteria and other marketing mix elements (Morschett, Swoboda and Schramm-Klein, 2006).
However, some researchers argue that "retailers who are classified within the same store format tend to be relatively homogeneous". As these stores are competing to provide benefits
to match the needs of different customers, they could be perceived to be relatively similar along with several key attributes and thought to have the same store format (Koschmann & Issac, 2018). The contradictory view of inter-format and intra-format competitions draw much industry attention; nevertheless, there are still some calls on comparing retail strategies of different retail formats, especially in a developing nation context.
Another argument is that the current literature mostly emphasises on grocery consumer shopping behaviours which measure the frequency of buying to determine the retail format (Lee, 2018; Namin & Dehdashti, 2019), and studies on marketing mix strategies are still limited in the Malaysia context. Others examine impulse grocery buying (e.g. Bellini, Cardinali &
Grandi, 2017), household characteristics, outlet selection, basket characteristics (e.g., Vartanian et al., 2007), cognitive vs. chronological age of customers and its effect on perception (Teller et al., 2013), in-store promotion (e.g., Roggeveen et al., 2016), etc.
Nevertheless, most of these studies are quantitative studies focusing on consumer perspectives.
Studies from the retailer perspective, especially the small and medium-sized retailers, are comparatively insufficient.
Given the certainty of grocery retail marketing, and its usefulness in industry, the recent studies mostly focus on issues such as omnichannel retailing (e.g. Hübner, Kuhn, Wollenburg, Towers
& Kotzab, 2016; Hübner, Holzapfel, Kuhn & Obermair, 2019), online grocery (e.g. Kureshi &
Thomas, 2019; Piroth, Rüger-Muck & Bruwer, 2020) and retail mergers (e.g. Hosken Olson &
Smith, 2018). In addition, previous literature also focuses more on sales and operation planning (e.g. Dreyer, Kiil, Dukovska-Popovska & Kaipia, 2018), distribution (e.g. Holzapfel, Hübner, Kuhn and Sternbeck, 2016; Hübner et al., 2019), merchandise management (e.g. Kiil, Hvolby, Fraser, Dreyer & Strandhagen, 2018). To sum up, there are still a handful of studies which examine how grocery retailers with different retail formats plan for their segmentation, targeting, positing (STP) as well as marketing mix strategies. It is understandable that deciding and choosing the right target markets and later position the product/services "are critical in gaining and sustaining superior business performance" (Cravens & Piercy, 2013). As such, there is a need to identify the segmentation and marketing mix strategies in order to enhance the shopping experience and to maintain sustainability in the competitive retail industry. This paper hence aims to present the empirical findings of a qualitative grocery retail study, comparing across three retail formats (e.g. supermarket, minimarkets and convenience store) in Malaysia, examining how these local grocery retailers' segment, target, position and plan for their marketing mix strategies.
2. Literature Review
2.0.1 Market Segmentation, Targeting and Positioning
According to literature, a market is heterogeneous, and the process of dividing the target customers into subgroup in order to have a better understanding on their behaviours is defined as market segmentation (Kotler and Keller, 2015; Lovelock & Patterson, 2015). Meanwhile targeting is referred to a process in "evaluating each market segment's attractiveness and selecting one or more segments to enter" (Kotler & Armstrong, 2014). In the retail industry, it is often essential to propose effective strategies to attract customers since customers respond differently to diverse marketing stimuli (Segal & Giacobbe, 1994), differentiated by their value requirements (Cravens & Piercy, 2013). Notwithstanding that most literature has defined target segments, there is still a handful of studies in providing actionable information to the user, especially in the context of retail (Finn & Louviere, 1990; Simkin, 1991). Despite its importance, the earlier literature indicates that business owners frequently lack conceptual
understanding of market segmentation (Dibb & Simkin 1994) and commitment (White 1992), and consequently do not provide adequate budgets for segmentation or its implementation (Dibb & Simkin 2001).
In order to apply an effective targeting strategy, retailers must segment their customer base since inappropriate segmenting and targeting approaches may affect the effectiveness of strategic decision and planning (Levy et al., 2019; Shapiro & Varian, 1999). As most consumers shop near to where they stay or work, geographical segmentation is a common strategy for retailers, besides demographic, lifestyle, buying situation and benefits segmentations (Levy et al., 2019). In recent years, data mining becomes a growing trend in targeted marketing. In a recent study, Yoseph, Ahamed Hassain Malim, Heikkilä, Brezulianu, Geman & Paskhal Rostan (2020) utilised three different market segmentation experiments using modified best fit regression and subsequently assessed using cluster quality assessment to test departmental store sales, churn rate and customer lifetime value. Despite the understanding of the importance of carefully defining the market opportunities and how these opportunities can be exploited comes from the further understanding of customer needs in the targeted group, the planning and implementation of STP strategies among small and medium- sized Malaysia retailers remain unclear.
Positioning strategy refers to a stage to differentiate the product range, compare to the competitors' products, in order to fulfil the customers' needs and wants (Kotler, 1994; Kotler
& Keller, 2015). The desired results of an adequate positioning strategy would be to gain a relevant, district and enduring position in the minds of the target markets (Craven & Piercy, 2013). Previous literature has addressed the importance of positioning strategy as a marketing tool in developing competitive advantage and also addressed some issues of retail positioning.
Nonetheless, there is an extreme lack of research in literature, especially in the context of retailing. In the context of retail, positioning can be referred to designing and implementing a set of instruments used in order to create a particular image of the retailer in the customer's mind in relation to the competition (Walters & Laffy, 1996; Devlin et al., 2003; Oppewal &
Timmermans, 1997), emphasis on how retailers could be distinctive from one another. With an aim to create points of differentiation, positioning strategy is "the combination of marketing mix strategies used to portray the positioning desired by the marketers to the target markets"
(Cravens & Piercy, 2013), namely the most suitable product/services, price, distribution channel and promotion strategies designed to serve the needs of the target markets.
2.0.2 Marketing Mix Strategies
According to literature, marketing mix strategies refer to the level of satisfaction when someone describes the results of a comparison on the performance of products and or services received and expected (Kotler, 1997; Kotler & Keller, 2015; Syapsan, 2019). In the retail industry, past studies highlighted price, product and services as the attributes which could differentiate retailers from their competitors (Oppewal & Timmermans, 1997). Hence, selling the right product at the right time, and the right price is critical and demonstrated the appropriate use of marketing mix might influence the choice of customer selection towards the grocery retail.
Product
Product is defined as a tangible product or services offered to customers based on the amount that is willing to be paid by customers (Sudari, Tarofder, Khatibi & Tham, 2019). Berman &
Evans (2010) stated that product or merchandises (in the case of retail) are the core business of retailers to compile and ensure availability for consumers to satisfy their wants and needs. As
retailers usually do not sell their products/brands, the choice of merchandise is essential (excepts some with private brands). Negotiation with suppliers or vendor is a critical issue in merchandise planning (Levy et al., 2019). The merchandise planning process could be the responsibility of the buyers, divisional or even general merchandise managers.
Place
Place refers to distribution activity which involves the delivery of products to the customers or to reach the consumers (Paniandi et al., 2018). Previous literature has argued on the importance of location-based on consumers' store choice decision, in which closeness of a store location to consumers' home or workplace as the primary consideration (Blut & Floh, 2018; Levy et al., 2019). Besides being risky and costly, a strategic location could be a sustainable competitive advantage which can't be copied by competitors. In addition, a partnership between suppliers and retailers has been argued to be the "key to improving the efficiency of satisfying customers whilst minimising stocks and costs" (Dennis, Fenech & Merrilees, 2006).
Price
Previous literature indicated consumer demonstrated diverse expectation on the price paid for the actual product and expected to pay a higher price for products sold in any convenience store, compared to those in the supermarket (Koschmann & Issac, 2018). Price can be described as the exchange value of the product. Price is the primary criterion for product evaluation, and any firm should have price management strategy (Sudari, Tarofder, Khatibi & Tham, 2019).
Retailers hence have to select the most appropriate pricing strategies ranging from cost-based, market-based on customer perceived pricing. Pricing bundling, loss leaders pricing, odd and even pricing techniques are also standard grocery pricing techniques. Nevertheless, the extent of operational utilisation is still unclear in the local business context.
Promotion
Promotion is one of the marketing mix elements that include the activity of offering, informing, influencing and acknowledging the products to the customers (Sudari, Tarofder, Khatibi &
Tham, 2019). Retailers regularly communicate with customers through communication mix to encourage favourable perceptions of the store and retail organisation (Berman & Evans 2010).
The competitive retail market has forced retailers to explore new media platform, while some still depend on traditional sales promotion tools such as samples, point of purchase, events, coupons, rebates and premiums (Levy et al., 2019).
2.0.3 Retail Marketing
Despite its long tradition, the literature on retail marketing instruments is fragmented, and empirical evidence on various instruments are often inconsistent between studies, making it challenging to offer retail managers concrete guidance on when to employ the different marketing mix strategies in what contexts (Pan & Zinkhan 2006). Historically, retail marketing is defined as an activity and process in distribution. Thus, review of retail marketing research indicated the importance of research topics such as store location, retail assortments, geographical area and other marketing mix elements (Mulhern, 1997).
Cardinali & Bellini (2014) argued that there are more small and medium-sized retail store formats (e.g. convenience store, small/medium supermarket and discounters) compared to the larger-scale format (e.g. hypermarkets and supermarkets) causing the retail industry to be more fragmented, particularly in developing country like Malaysia (Euromonitor International, 2020).
2.1 Research Proposition
The current study aims to identify the STP strategies and marketing mix strategies in order to enhance the shopping experience for their customers and to maintain sustainability in the competitive market in the context of Malaysia. Accordingly, two propositions are formulated in this exploratory study. The first proposition is developed as follows:
Proposition I: Grocery retailers are aware of the segmentation, targeting and positioning strategies in their business operation.
Secondly, in the retail industry, past studies highlighted marketing mix strategies as the attributes which could differentiate retailers from their competitors. Hence, the second proposition is as follows:
Proposition II: Grocery retailers are aware of the marketing mix strategies in their business operation.
3. Methodology
3.1Research Design
Due to the nature of the research problem, this study adopts a qualitative research design to explore the marketing strategies adopted by grocery retailers in the context of Malaysia.
Grocery retailers chosen include supermarkets, minimarkets and convenience store. It was addressed by previous literature that a qualitative study is appropriate to explore the interaction and experiences among a group of people or to obtain insights into particular social processes and human phenomena that exist within a specific natural setting and context (Connolly, 1998;
Creswell, 2012). Analysis and discussion were focused on comparing the similarities and differences in retail strategies adopted by these grocery retailers.
3.2 Data Collection
The current study utilised face-to-face and semi-structured interview approach to obtain insights from the grocery retailers. Open-ended and probing questions have been employed during the interview session to enhance the flexibility in generating additional information on the grocery retail marketing strategies as well as their challenges and opportunities. The multi- lingual ability of the interviewers allowed the interviews to be conducted in the native languages (e.g. Malay, Mandarin or English) most convenient and comfortable to the interviewees. One of the crucial criteria for participant selection in qualitative research is the willingness to share truthful information and experience with the researchers (Denzin &
Lincoln, 1998). The referral is considered to be the most effective approach to secure an appointment. Three industry experts who have more than 10 years of working experience in the retail industry assisted the researchers in approaching the prominent industry players in three main cities around Malaysia, namely Kuala Lumpur, Kuching and Kota Kinabalu. The capital city of Malaysia (Kuala Lumpur) is chosen based on a large number of grocery retailers in the Klang Valley area, while Kuching and Kota Kinabalu were chosen as the representative of the states in Borneo. To encourage participation, several emails were sent to grocery retailers, and follow-up telephone calls were made.
3.2.1 Sampling
A purposive sampling strategy was utilised to sample the participants throughout Malaysia, involving the selection of individuals with predetermined criteria who could offer (Patton, 2014). The smaller sample size is sufficient in conducting a qualitative study since the intention
of qualitative research is to gain useful and relevant in-depth information to assist the researcher to understand the complexity of human experiences and interactions, rather than to represent populations (Corbin & Straus, 2014; Johnson & Sohi, 2016). A total of six retailers participated in this study, representing different grocery retail formats: 4 supermarkets, 1 minimarket and 1 convenience store operators. These retailers were also differed in term of operation size, in which most of them were chained store. The study was purposely sampled from the top or middle management level (e.g. owner, general manager or chief operating officer) as they are the representative for retail grocery strategies. All interviewees were male and had an experience ranged from 5-20 years working for the company. Altheide & Johnson (2011) 's argument on the sample size was adopted in this study, in which the determinant of the adequate sample size should be "the evidence appropriate for a specific taste and uses" and not the number of participants.
3.3 Data Analysis
In this study, the open-ended interviews provide rich insights into the retail grocery strategies implemented by different retail formats and size of the operation. Textual data has been transcribed verbatim, translated into a single language (English) and uploaded into the Quirkos analytical software for searching, coding, information organisation and comparison (See Figure 1.0).
Figure 1.0: Data Analysis using Quirkos
The coding process required careful examination of the qualitative data by paying particular attention to the underlying codes, concepts and categories of concepts (Polit & Beck, 2017).
Open coding is the first step in the current study in which the coders have read and investigated the transcripts using line by line and word by word reading approach. In the second stage of the coding process, the coders have built the relationship between categories and subcategories in order to define the properties related to the centre of the study (Saldana, 2008). The
independent coders were asked to code the transcripts and performed cross-checked after the coding process. Any discrepancies will then be dissolved by the discussion and agreement among the coders. The codes will be uploaded through Quirkos for further comparison (See Figure 2.0).
Target Market
I think to the whole market is targeting local people especially the Muslim.
Source: interview_01
…but mainly Bumiputera.
Source: interview_01
Even though they try to buy cheap, they want a cheaper product, but they want it to be good quality, and then they are very choosy.
Source: interview_01
Depend on the area. City Mall will be Chinese. Semporna will be mostly Malay. To us, we don’t target which ethnic we want. We want to sell everyone product.
Source: interview_02
Middle-aged, 30-40 years old, family with kids. They mostly shop once a week.
Source: interview_03
Figure 2.0 Text Sorted by Theme (Quirkos)
3.3.1 Quirkos Analysis
In this stage, the data has been reviewed and arranged by using Quirkos aid, and themes have emerged (See Table 1.0). Quirkos enable researchers to generate links among codes, memos by displaying the resulting framework or network (Weitzman, 2000).
Table 1.0 Quirkos Summary
Quirk Title Parent Grandparent Coder Description Total Codes
Target Market STP Strategy 1 10
Segmentation STP Strategy 1 4
Positioning STP Strategy 1 16
STP Strategy 1 1
Marketing Mix 1 6
Product Marketing Mix 1 23
Price Marketing Mix
1 13
Place Marketing Mix 1 27
Promotion Marketing Mix 1 19
Omnichannel Place Marketing Mix 1 4
Strength SWOT 1 10
Weakness SWOT 1 11
Opportunity SWOT 1 5
Threat SWOT 1 6
Competitor External 1 17
SOCIAL External 1 8
SWOT 1 0
External 1 0 TOTAL NUMBER OF
CODES
180 TOTAL NUMBER OF
QUIRKS
18
3.4 Consistency and validity
Multiple coders have been employed to conduct cross-checking to avoid bias on the researcher’s perception and background. Previous literature has also suggested having multi coders to perform coding in order to enhance the intercoder reliability toward the data obtained from the interviews (Kurasaki, 2000). As such, the coders have reviewed the transcripts and explored related codes and categories until the agreement has been achieved among the coders.
Coders identified personal codes for the same set of data and crossed check with each other in every session. There is no basic requirement of the percentage of agreement among team members in the procedure of team coding (Saldana, 2008).
In line with another qualitative study, validity and reliability were replaced with trustworthiness and authenticity (Altheide & Johnson, 2011; Lincoln, Lynham, & Cuba, 2011; Neuman &
Robson, 2014), which can be evidence by the personal observations of the researchers on the grocery retail outlets and the descriptions from the interviewees, detailed description of the methodology process and procedure as well as the long direct quotes from interviews to preserve the originality of ideas.
4. Findings & Discussion
To address the research purpose, two interwoven themes generated from the analysis include (i) adoption of segmentation, targeting and positioning strategies; (ii) marketing mix strategies Proposition I: Grocery retailers are aware of the segmentation, targeting and positioning strategies in their business operation.
The findings of the textual data analysis addressed that regardless of the types of retail format, retailers can easily define and understand the needs and wants from their target markets.
Despite reported to carry no market survey, the retailers were depending on their years of experience in conducting their business. According to one of the supermarket operators:
"We don't have to determine… so many years we have been running this business… we know what they need" (Supermarket-C).
This finding is consistent across other supermarket and minimarket retailers, in which market sensing is mostly done by their observations and experiences, with minimal market comparison study. This could be due to the smaller size of the market, which enables them to access and monitor their competitors easily. In addition, geodemographic segmentation approach has commonly adopted by retailers regardless of the retail format. Even though some retailers claimed that they are selling to everyone; ethnicity is used as a segmentation variable to determine the types of merchandise carried by a particular store. The multi-racial and multi- religion nature of the Malaysian society implied a particular residential area could be highly populated by a specific ethnic group, the location of a retail store hence highly relates to the ethnicity variable. Attractively, retailers view these customers from different ethnic backgrounds differently. For instance, Chinese customers are perceived as 'more price- sensitive' and 'demanding' compared to the other segments. The Bumiputera consumers demonstrated a less demanding attitude and represent a bigger population size hence a more lucrative market segment. Nevertheless, the application of STP strategies is not apparent between the minimarket and supermarket retailers who would encourage for more intertype competition. Here are some quotes from the participant:
"I think to the whole market is targeting on local people… especially the Muslim…"
(Supermarket-C)
In opposed to the supermarket and minimarket operators, the convenience store emphasises on creating a convenient shopping experience for its customers, while applying the geodemographic segmentation strategy. Contradictory to the previous literature, the current study explicates that the small and medium-sized grocery retailers generally do not strategically plan for their segmentation, targeting and positioning strategies. They depend on their market sensing ability and industry experience. Collection and analysing of the customer data are infrequent, particularly among supermarkets and minimarkets.
Although convenience store retailers use ‘convenience’ as one of their unique selling proposition, they still depend on geodemographic segmentation criteria to segment their target markets. Such findings are in line with the arguments by Kotler & Keller (2015) in which market segmentation theory is essential in dividing the target customers into subgroup in order to have a better understanding on their customer behaviour. Retailers have employed a hybrid segmentation approach to serving their customers better. Below are some said for the segmentation approach:
“Based on our observations and some of the statistics, we are actually targeting at 18 – 35 (years old), most of this group are white-collar, young working adults, and we found out that this kind of group of people that they come to buy…” (Convenience-E).
The current findings also indicate that these small and medium-sized grocery retailers are well aware of their competitors in the dynamic retailer market. Despite the lack of clear market information, they know the more prominent players or even newcomers in the industries. They also acknowledge their weaknesses in comparison to the bigger players, which usually are larger in size and scope of business. In order to better position themselves, they would focus on price, people and servicescape strategies:
"We are serving the people that we are hiring" and aims to be "a true local store"
(Supermarket-C).
The other retailer agrees that price is necessary; however, it is subjectively perceived by consumers. This is interesting as there is no proper market survey conducted to reflect consumer perceived levels of willingness to pay the price, yet some claim "reasonable price"
is their ultimate aim. The convenience store operators are found to utilise more market-based pricing. Below quote indicated the concern on pricing method from one of the participants:
“…selling price we usually do a market survey. We will have a constant team, we go around and see the market because we been reminded so many times, even our customer like ‘hey! You are selling higher” so we got a few sources that tell us that we are selling at what price”
(Convenience-E).
The retailers also claim on the important of product quality in positioning themselves against their competitors. Such findings are consistent with previous literature which addressed the importance of positioning strategy to enhance customer experience and influence consumer behaviour (Kotler, 1994; Kotler and Keller, 2015).
Proposition II: Grocery retailers are aware of the marketing mix strategies in their business operation.
Contradictory to most of the retail literature and textbooks, the interviews found out that pricing strategy was frequently mentioned as the most crucial marketing mix strategy rather than location strategy, particularly among the supermarket retailers. Supermarkets and minimarket attract price-sensitive local customers with competitive prices. They utilised various types of pricing techniques such as bundling, loss leaders, odd and even pricing techniques. These techniques are found useful to attract local customers. See the quote from retailers:
"The important thing is…can help customers to save a lot…" (Minimarket-A).
Even though some of them claim that consumer or market will determine the selling prices, no market survey has been carried out. They are based on their daily observation or experience in determining the prices. Some also claim they did benchmark against their competitors as consumers' perceived price value is most important. The current findings are in line with Phang
& Sim (2020) 's study that mentioned pricing strategy is viewed as an important determinant to retail buyer satisfaction, and the retailers are reported to stress on pricing strategies to attract their more price-sensitive customers. Here are some quotes from the retailer:
"Consumers can only see two lots of shop for our outlets, but we have to be supported almost by 10 departments. Market entry for the mini market is very low. So what differentiates us is convenience and price". (Minimarket-A)
Apart from this, previous literature also addressed that place, and product strategies are crucial in the competitive retail market (Dennis et al., 2006). As retailers usually do not sell their products/brands, the choice of merchandise is critical. Some of the supermarket retailers are trying to create points of difference by focusing on selling local products. While the merchandises are relatively consistent across different branches, they welcome each branch to source from the local suppliers and use it as an attraction to the customers who appreciate freshness. Retailers mostly are not earning from the customers, but from the rebates, they get
from agents or distribution channel. They mostly plan for the merchandise to be ordered two months before any festive season. Below quote indicated the importance of product strategy towards supermarket retailers:
“…you go to every outlet and not really the same thing they sell…only they branded like Unilever goods ...P&G and all this big player…we must have each product…”. (Supermarket- C)
The current findings have addressed that the merchandise planning for a convenience store is relatively consistent across branches, with slight variations due to geodemographic differences.
For instance, outlets in the airport area and tourist spots would accommodate for more local food products and snacks to serve the need of the tourists, meanwhile for outlets in shopping malls and business districts would serve more packaged food and ready to eat food.
Nevertheless, the variations are minimal due to complicacy in merchandise planning. Unique merchandise offerings are critical for them to create points of differentiation in competing with their retail formats.
Location strategy might be another crucial retail strategy to another retail format; however, to grocery retailers in Malaysia, location strategy might not be that critical. This is especially true in second-tier cities whereby the smaller size of the cities allows customers to drive around the city for grocery shopping. Accessibility is also of less concern because consumers do not mind to travel distant due to less traffic jam.
"Common for customers to go movie in the shopping mall, while grocery shopping in other places" (Supermarket-D).
Another quote to support the discussion:
“The household of an area. It must help enough people. You can see our outlets are distributed around KK and even in some rural area. As we focus on “near”, it must be convenience. Value for money. Not only the price but also the distance. It is near to you. You do not need to drive.
This is what we focus on” (Minimarket-A).
Other consumers will shop for grocery on their way home from work. Despite the contradiction to the general perception of the importance of location, the findings from the current study are in line with the literature which indicated retailers have always worked hard to establish close relationships with customers through the retail marketing mix in order to enhance customer experiences (Blut & Floh, 2018; Pan & Zinkhan 2006).
"…because that is the most important things … you can help the customer to save a lot."
(Supermarket-C).
Agency-retailer relationship is somewhat complicated in grocery retailing. In many cases, retailers have to depend on their agents' supports to earn more profit margin and other marketing supports. This result is consistent with the study by Phang & Sim (2020) in which distribution quality is perceived as less critical by the retail buyers due to the small scale of business operation which limits their bargaining power as well as ability to make a fair comparison. The uncontrollable factors such as port and customs clearance often lead to higher tolerance of inefficiency in distribution management among local grocery retailers. These agency-retailer relationships are generally long term, although termination might happen when
either party did not perform their responsibility accordingly. Some quotes to showcase the statement:
"Yes. Long term. There is also a termination. For example, I take from distributors, but principles come to us straight from KL." (Supermarket-B)
The numbers of agent used varied according to the size of the operation and number of merchandise and brands sold. The interview findings demonstrated that the retailers were rather passive in their dealings with distribution agents. See below quote from the participant:
“Yes, because some the distributors they want to fight for their target because they are the middleman, they will push us for some products, but that was like last time” (Convenience-E) This could be attributed to the fact that many of these agencies are the sole agents for established national brands. For instance, in Sabah and Sarawak, Harrison Trading has the sole distributorship for Nestle products. This limit the retailers' bargaining power, particularly small retailers. Their bargaining power grows with their size. The bigger they are, the better request that they could obtain from the agents, including special promotions, credit limits, rebates, in- store display supports and even market information. It is interesting to found out that some agents penalise retailers who jeopardise the market prices.
In term of a promotion strategy, most of the local grocery retailers demonstrated passive response concerning the e-commerce initiative, especially among the supermarket and minimarket retailers. The arguments are based on the fact that local consumers still prefer offline grocery shopping which they emphasise on sensory experiences. From their observations and experience, most of the local consumers are less technology savvy, and hence the e-commerce initiatives might not be that urgent, particularly in the second-tier cities.
“…online order…but Malaysia is difficult to monitor… yeah maybe they can ask them to pay online first/ transfer the money first … payment slip” (Supermarket-C).
Nevertheless, there are still calls for the offline and online promotion approaches such as leaflets, banners, newspaper and social media ads. Buzz marketing and words of mouth are more common strategies to the price-focused minimarkets which adopt ‘everyday low price’
strategy. These retailers are less aggressive in term of their sales promotion strategy. The convenience store retailer frequently uses social media ads to promote their stores as well as some unique merchandise offerings. Here are some said:
“When we want to promote a certain product, we will request from suppliers. We have blocks and display; we will offer more promotion to customers. We will only highlight in store. We focus on words of mouth” (Minimarket-A).
5. Conclusion & Recommendation
In the current dynamic retail market, marketers and retailers need to be aware of the volatile changes in consumer behaviour and lifestyle. With the new insights from the current study, grocery retailers can develop a strategic marketing plan to create customer values, and at the same time, enhance their shopping experiences. The practice of STP strategy must enable local grocery retailers to employ hybrid segmentation variables to serve their target markets better.
The current findings suggested each of the distinctive characteristics which can be well
addressed by the retailers in the future segmentation approach. From the services marketing perspective, retailers and marketers can further improve in terms of positioning strategy that emphasise on the current market position in the industry. In addition, location strategy is not the most critical retail strategy in grocery retail context, attributed to the unique Malaysian retail market condition, in second-tier cities whereby the smaller size of the city allows customers to drive around to city for grocery shopping. Nevertheless, retailers are expected to rearrange the price and place strategies that match the needs of the customers. Further improvement of product and price strategies can be implemented in order to cater consumer perceive value towards the product they offered.
Apart from this, the contribution of the current study is towards the agency-retailer relationship, in which agency relationships usually are long term and indicated high dependency on the channel members. Such relationship enables for long term impact in which retailers can sustain a good relationship with customers through information sharing and building of brand resonance. Customers who portray as part of the producers can increase their engagement through the purchasing activities. Finally, there are still calls for online and offline promotion strategies, although the current study did not reflect high intention to venture into the e- commerce platform. This could be attributed to the technological and financial constraints, especially toward the small and medium grocery retailers.
The findings suggested that marketers and retailers enhance the marketing mix strategies in order to develop competitive advantages in a competitive environment. Proper implementation in terms of segmentation and positioning strategies enable retailers and marketers to cater to the needs of the market due to the increasing population in the country. Market sensing from multiple sources such as customers, suppliers, competitors, other channel members would be useful for local small and medium-sized retailers. The local retailers should not ignore the potential of an E-commerce platform, which has proven to enjoy tremendous growth in Malaysia. From the perspective of integrated marketing communication, retailers are recommended to integrated communication mix to interact with diverse customers in order to enhance the customer learning experience. For instance, the integration of online marketing and viral marketing which allow for better understanding between the retailers and intended audience in the context of marketing. To sum up, this study serves as a precursor to future attempts to explore grocery retailers in other developing countries, especially those in Southeast Asia.
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