The Tesco Importance Of Innovation In Marketing

The importance of innovation in modern society cannot be negated. There has been a lot of research for various kinds of innovations. Innovation in marketing strategies is one type of innovation which has been studied often by the researchers. According to Halpern, marketing innovation may be defined as novel methods through which businesses can promote their product to their customer base. (Halpern, 2010). The focus of this thesis is the importance of innovation in marketing strategies keeping in view the innovative strategies conceived and implemented by Tesco. The research questions are: Is Tesco employing the traditional marketing practices or it has incorporated innovation in its marketing strategies? What is the current marketing innovation strategy employed by Tesco? Is Tesco’s marketing innovation strategy successful? Did the company gain any competitive advantage over its rivals through the use of marketing innovation strategies?

Table of Contents

1. Chapter 1: Introduction

In the modern society, innovation is considered a burning issue (Bessant and Tidd, 2007). According to Bessant and Tidd, innovation can be defined as the method of conversion fresh notions into helpful exercise and employ them, in terms of innovative products, strategies and facilities. Various researches can be found on the topic of management of innovation which in turn presented many theories regarding innovation. These include but are not limited to theories which pertain to types of innovation, tools available for assessment of capability which a corporate has regarding innovation, the innovation process etc. Although various types of innovations exist today, research has mostly kept its focus on innovation of process or product (Brown, 1995). Among the various types of innovations, Marketing innovation is considered an important type (Halpern, 2010). As defined by Halpern, the novel methods by which businesses tend to reach its customer base is called market innovation. However, sometimes, marketing innovation is considered as a sub-part of product innovation (Tidd and Bessant, 2009) however, hypothesis and information concerning marketing innovation is deficient in prose. The focus of this thesis is importance of innovation in marketing strategies.

Organizations and nations have advanced on the basis of innovation; therefore one can’t deny the importance of innovation. Advancements in technology and innovation have become an important aspect of success which is usually referred by firms, policy-makers and researchers on day-to-day basis. The governments have increased their focus on innovation and the topics on innovation are mentioned frequently by the governments (Swedish Government 2008).

The term innovation is generally defined differently by different authors and is classified in various types. Schumpeter (1934), an Australian economist and also the pioneer of innovation management described innovation as creative destruction. Five aspects of the terms were given by the author. Firstly, the introduction of new commodities in which either the customers are not familiar with the product or the quality of the product is enhanced. Secondly, for the production of the product new method or technology is announced and it also includes the new way of handling the product commercially. Then moving on, the third aspect involves the product market is enhanced in which new enterprises enters the market. Lastly, new sources of raw materials for the production of the product are improved.

Tidd and Bessant (2009) presented a representation of the process of innovation comprising of four stages: generation of fresh thoughts or ideas, selection of the best possible idea, implementation of the selected idea, capturing the advantage intended from the idea.

Tesco was established in 1919 by Jack Cohen when he made a profit of £1 by selling surplus groceries worth £4, kept on a stall in London. Five years later, Tesco appeared as a brand name when Cohen imported tea shipment from Mr T E Stockwell in 1924. The name Tesco originated by combining the initial letters and just five years later, Mr Cohen was able to open a retail store named Tesco in North London. Tesco kept grasping the UK’s market and by 1990’s Tesco was a household name with a reputation of aggressive marketing and a tough competitor of UK’s foremost grocery retailer Sainsbury.

In the year 2000, the official website of the company, Tesco.com was uploaded on World Wide Web, giving Tesco a global presence. The company continued to open new ventures and introduced new products every now and then which included electrical items, clothes and options for personal financing. In the year 2004, Tesco opened its first twenty four hour store and also opened ventures into other countries including Czech Republic and Poland.

US market was the next target of Tesco where the company opened a new venture by Tesco the name of “Fresh & Easy”. Moreover, Tesco also made its presence felt in more than thirteen countries worldwide. The wide network of Tesco in UK can be imagined by the mere fact that all except one postcode in the country have Tesco’s presence. Therefore, Tesco is undoubtedly the largest retailer belonging to UK with profits of more than three billion pounds. Globally, after Walmart and Carrefour, Tesco is considered the 3rd largest retailer on revenue base and 2nd largest on profit base. The magic of Tesco’s global success is sometimes attributed to its diversified consumer products which include clothing, electronics, software, dental services, groceries, internet telecoms etc.

Tesco is one of the largest UK supermarkets and is known for its quality and innovation. The organization has its food businesses as well as non-food businesses which have proven to be successful. The organization has initiated an online business and recently, the company has invested in banking and mobile industry. The expansion has led to Tesco mobiles and Tesco banks in the United Kingdom and its loyalty scheme was a good portent for CRM program which was launched in 2009 (Marketing week 2012).

According to Krish (2009), the marketing of Tesco is all about innovation and how to associate or create bond with the target market. The primary focus of the company is to satisfy the needs and wants of the target customers. The innovations of the company included own-label product lines: centralizing and computerizing distribution systems. The organization developed shopping centres outside the major cities to provide needs of all the customers. Tesco introduced in-store television advertisements of the products in which suggestions were provided to the customers. According to the statistics, around 70% of the purchase decisions are made in store. The marketing innovation strategy was successful as it got customers where they were most vulnerable.

Current Issues

Tesco directed its efforts to improve marketing as in the first three months of the financial year (2012) the sales fell by 1.5% in the first thirteen weeks. A plan was made to build a better Tesco by Philip Clarke (CEO of Tesco) in April 2012 which was responsible for the £1 billion. It has come to the understanding of the company officials that the marketing of the firm was unclear, irrelevant and not successful. The plan had six points among them were improvements in marketing, products as well as stores. For that matter, the company hired additional 4300 staff at the United Kingdom shops, innovated more than 100 stores to improve the store experience of the customers and gave training to the increased staff. The effort led to increase of 2.2% in the group sales which includes Tesco’s international businesses during the three months. The company experienced a robust performance in the Asia (Baker 2012). The tastes, preferences and lifestyles of customers have altered over time which can act as a threat and opportunity for Tesco. There are other retail stores such as Sainsbury, Morrison’s and Sweden national stores that can act as a threat to the sales and growth of the company (Finne 2008).

Prior Issues

In June 2002, the company was charged as well as found guilty of charging slotting fees to transmit manufacturer’s products. Tesco along with other supermarkets was responsible for charging entry fees to suppliers, product display fees and advertising fees. The Tesco Lotus started to display own manufactured brands next to the similar products with different brands. The company was charged with the case of exploiting suppliers and was also accused of contempt of selling whale, porpoise and dolphin meat in 200. The research indicated that the meat contained toxins for customers.

1.1 Research Question

The focus of this study will remain on the subject that is the importance of innovation in marketing strategies keeping in view the strategies employed by Tesco, the extent of their implementation, the success of the implemented strategies and the competitive advantage gained by Tesco over its rivals in the same field. Tesco prides itself with innovative marketing strategies employed and the benefits gained through such implementation. This “claim” of the company makes it a prime corporate for research and study in this area. The success and loss stories associated with Tesco are perfect examples for comparing the theoretical knowledge associated with innovative marketing strategies and their implementation in the real life context.

In order to explain the importance of innovative marketing strategies by studying Tesco as an example, the thesis structure will be formulated in such a format so as to answer following research questions:

Is Tesco employing the traditional marketing practices or it has incorporated innovation in its marketing strategies?

What is the current marketing innovation strategy employed by Tesco?

Is Tesco’s marketing innovation strategy successful?

Did the company gain any competitive advantage over its rivals through the use of marketing innovation strategies?

1.2 Research Aims and Objectives

The aim of the study is to analyse the current situation of Tesco and whether the company has employed the use of marketing innovation techniques. The company is currently facing a strong competition from Morrison’s, Asda, Sainsbury, etc. The research will indicate the competitive advantage the company has over its competitors and whether it has adopted appropriate marketing strategies which are based on innovation to sustain this competitive advantage. There have been alterations in the lifestyle and consumer tastes which can affect the retail industry. The research will determine the effects it had on Tesco’s sales and growth.

1.3 Rationale of the study

In the earlier times, researchers and theorists considered innovation simply as generation of novel ideas. However, with more research in the field, many models of innovation have been presented which explicitly argue that generation of new ideas is only one tread of the innovation process. Such models include Development funnel by Wheelwright and Clark (Wheelwright & Clark, 1992), the Innovation pentathlon framework by Goffin and Mitchell (Goffin & Mitchell, 2005) and a general model of innovation process presented by Tidd and Bessant which describes innovation to consist of four steps divides the innovation process into four phases; generation of fresh thoughts or ideas, selection of the best possible idea, implementation of the selected idea, capturing the advantage intended from the idea. During the innovation process the company should have complete information about their marketing position and thereby, the resources should be allocated properly to gain absolute advantages. The advantages help the organizations in the realizing the objectives of the marketing innovation. Therefore, it is imperative to concentrate on the importance of innovation in marketing and keep focus on how innovative marketing ideas and techniques can be implemented in order to better serve the customers and the market. Mostly, big businesses have shifted from traditional styles of marketing and are more focused on the ways by which novel marketing strategies can be implemented in order to gain benefit from the market. It is a known fact that the organizations which implement innovative marketing strategies are able to sustain competitive advantage over their competitors. Therefore, this study has been carried out in order to discover how businesses are implementing innovative marketing strategies and what kinds of benefits are being enjoyed through this implementation. Moreover, the drawbacks of such kind of implementation have also been studied in order to give a true picture of the situation in hand. A special case of Tesco has been studied to evaluate the importance of innovation in marketing strategies. Moreover, the thesis aims to study the novel inclinations of businesses in terms of market strategies with main focus being on innovation.

1.4 Research Methodology

In this chapter, the methodological considerations of the researcher are being displayed. In order to obtain an in depth background knowledge, the importance of innovation in marketing strategies is to be used as a communication tool, a literature analysis will be carried out. The secondary sources of information in literature analysis will initially provide information about what innovation is and how it has gained significant importance in the 21st century. Furthermore, the literature will provide the required knowledge about the innovation, marketing management, innovation implementation and how these strategies have been helping the organizations to achieve the desired results.

However, a literature review alone will not serve the main purpose of this research which is to determine the importance of innovation in marketing strategies. Hence, as a means of primary data collection, in-depth interviews would be conducted of Tesco managers from three different Tesco stores located in different areas. Both primary and secondary data is of qualitative nature as innovation in marketing strategies can be seen as a philosophy rather than a formula that provides solution based upon certain components.

The chosen approach is justified through the investigation of advantages and disadvantages of the different research methods. Further, limitations of the chosen research method will be stated.

1.5 Organization of the study

This dissertation comprises of a total of five chapters. The organization of these chapters is as per following scheme:

1.5.1 Chapter 1: Introduction

In this chapter, the purpose of the study is briefly touched upon and the readers are familiarized with the term innovation process in marketing and its steps as elaborated by researchers. The aims and objectives of the study are also elaborated in this chapter which is followed by a brief rationale for the study and the research methodology.

1.5.2 Chapter 2: Literature Review

In this chapter, past literature pertaining to the topic is reviewed. This review is structured under different topics and headings for easy understanding. The previous research work pertaining to innovation, market innovation and implementation of marketing innovation are discussed at length.

1.5.3 Chapter 3: Research Methodology

This section comprises of the research methods adopted and a brief discussion on research objectives. Moreover, research techniques, research methodologies and research procedures have been explained.

1.5.4 Chapter 4: Analysis and Discussion

In this chapter, the data which is gathered through various research techniques, is analyzed which is followed by discussion of the data. The information gathered through various sources is also analyzed with regards to literature review. In the end of this chapter, pertinent findings based on the research results are presented.

1.5.5 Chapter 5: Conclusion and Recommendations

The concluding chapter also concludes the research by adding all the findings and describing the limitations of the study. Moreover, in the light of findings mentioned in the previous chapter, pertinent recommendations are also forwarded.

2. Chapter 2: Literature review

Around 80 years ago for the first time the theory of innovation was presented by Schumpeter (1934) and it is still considered the basic theory of innovation whose rationality is widely known. Today, the five aspects of the theory is divided into five types of innovation such as organization innovation, resource allocation innovation, process innovation, product innovation and marketing innovation (Xi 2005).

2.1 Defining Innovation

Many definitions of innovation were given by researchers such as Bessant and Tidd (2007) defines the process of innovation as the translation of innovative ideas into useful practice and therefore, use them for the introduction of new products, services, etc. the study considered that the generation of new ideas can’t be considered as innovation. The focus was on distinguishing between innovation and innovation. The major difference described by the author was the placement of the ideas into useful practice.

Joseph Schumpeter is considered the founder of management innovations. He was an Austrian economist who defined innovation in a new and novel way by describing it as creative description (Joseph Schumpeter, 1934). Schumpeter further went on to describe innovation from five different facets:

Introducing such a product in the market which is unfamiliar to the customers. Or introducing a product with renewed quality.

Introducing a novel technique of production which includes latest technology and novel techniques to manage the product in the market.

New market opening. The opening of new market does not only refer to a market which did not exist in the past but it also means a market which does exist but the ventures have not been introduced earlier.

Discovering a fresh resource to form raw material for the product. Similar to the new market for the product, fresh source does not only mean that the source should first be created but also means such resources which did existed but were never used as a raw material.

Re-organizing an industry for example creating or ending the domination of an industry.

The theory presented by Schumpeter is still considered the fundamental innovation theory due to its own consistency, even after a lapse of more than seventy years. However, later on researchers have presented the abridged version of this theory by defining innovation into five basic steps namely: innovation of product, innovation of process, innovation of marketing, innovation of resource allocation and innovation of organization (Xi, 2005).

Four types of innovation were stated by Tidd and Bessant (2009) and are also known as 4p’s of innovation such as product innovation, position innovation, process innovation and paradigm innovation. Every researcher has presented his definition and type of innovation but there are two types of innovation: process and product innovation, which are almost stated by every researcher (Johne 1999; Propris 2002)

2.2 Marketing Management and Marketing Innovation

The scholastic purview of innovation does not frequently describe the term marketing innovation. Therefore, prior to delving into the discussion of marketing innovation, it is considered prudent to discuss the notion of marketing management. Information about marketing management will assist us in appreciating the concept of marketing innovation and its importance in today’s business.

2.2.1 Marketing Management

Marketing management is defined as procedure of defining the marketing ambitions for a business organization and stakeholders by the According to the definition given by American Marketing Association (2004), marketing management is the process of setting marketing goals for an organization and its stakeholders by allowing for the resources available with the organization and keeping in view the market opportunities. Moreover, preparation and implementation of activities in order to accomplish the ambitions, and gauging improvements towards the achievements of goals is also a part of marketing management. Marketing management is a cyclic process in order to allow the organization to revise its strategies according to the changing market requirements.

A famous expression known as marketing mix was coined by researchers who considered the sellers as objects of research. McCarthy refers to the rudiments of marketing mix as product, price, place and promotion (also known as the Four P’s) (McCarthy, 1975). In later stages, the customers became the research objects instead of sellers and the rudiments of marketing mix came to be known as Four C’s (Lauterborn, 1993): consumer, cost, convenience and communication.

Li, C.J. (2006) classified the activities of marketing discipline into three diverse categories:

High-end market which focuses on marketing brand, design of the product and offer manufacturing in accordance with the demands of the market. Moreover, it also comprises the Make forecast and advertising of the product in order to gain customer base, customer loyalty, promote awareness regarding the brand and institute the image of brand. In short, high end market is the brand strategy of the company.

Mid-market focuses on execution of the brand strategy of the company. The main emphasis of the mid market is on the production of consumer item, its sale to the customer and the services provided to the customer.

Terminal market completes the transaction of the product which is delivered to the customer. Terminal market is in fact the finish line of the sales channel where the manufacturers show the finish product to the customers. At times different brands of the same item are displayed in a terminal shop for given more options to the customers to choose from. Therefore, terminal market is the place where different brands struggle to get the required customer attention; which in turn increases the sale of the brand.

CRM or customer relationship management is another term widely used in marketing management. It depicts the customer focused business strategy which is used to gain customer base and retain customers by providing them fringe benefits e.g discounts through loyalty cards etc. CRM requires the involvement of staff, technology and processes to initiate good customer relationship which in turn improves the brand image.

2.2.2 Marketing Innovation

There isn’t a lot of literature on the marketing innovation and researchers didn’t focus on the marketing innovation strategies. The research on marketing innovation began in 1980’s though the primary focus was on the practical aspects of the theory and no standard theory was formed for the concept (Qin 2008). Various researchers have given different theories and opinions about the marketing innovation concept. According to Johne (1999), marketing innovation focuses on augmenting the mix of target markets and tries to find how chosen market could be served effectively and efficiently. The primary application of the concept is to identify the new potential markets and the ways through which the new markets could be served. The marketing innovation is responsible for identification of the potential markets by using the market segmentation which in marketing is liable for the dividing the potential markets into manageable and smaller chunks. The secondary purpose of the marketing innovation focuses on serving the potential markets in the best manner possible for which the buying preferences of the customers are pre-requisite.

The author stated that for the marketing innovation to be successful the suppliers in every industry should comprehend the altering needs of the customers and then, concentration should be dedicated on bringing innovation. The innovation in marketing can help the suppliers in merging product line management with respect to market opportunity analysis. The innovation in marketing not only helps the development of the business but also ensures the performance of the existing business.

2.3 Arguments for innovation

As per Halpern’s(2010) definition and understanding of marketing innovation, it is process through which companies can market as well as represent themselves in the potential markets to probable or existing customers. It complements the activities of the enterprises who try to enter in the new market and therefore, innovation gives them competitive advantage over businesses. The author stated that marketing innovation was different that market innovation and both should not be considered similar.

On the contrary, Zhang (2006) described the theory as the process that promotes the alterations in the market structure. It spots the new potential markets for the product or services that can satisfy the demand and needs of the customers as well as consumers. The author divided the contents of the marketing innovation into two segments: firstly, the inauguration new potential market and other being the creation of new combination of market factors. In the first the new markets was inaugurated on the basis of different areas, products or demands while the other focuses on the combination of factors such as new market segments, new marketing concepts, new products and new marketing methods. The understanding of Zhang (2006) was dissimilar to Halpern’s (2000) understanding of marketing innovation.

Chen (2006) through his research in marketing innovation formed an economic analysis. According to the researcher, innovations in commodity and production processes as well as marketing innovations are extremely important for a market economy. The development of new marketing methods and tools play a key role in the evolution of the industries. These new techniques of gathering information about customers through the use of innovative marketing technologies and programs have permitted firms to reach customers as well as consumers more efficiently and effectively. It has enabled the use of various pricing strategies that were priory not feasible.

A few set of rules and principles are required to be followed by businesses while applying market innovation (Li, S.L. 2009). The first principle states that market innovation should be a tool for providing customer value. If market innovation fails to gratify customers and does not provide customer value, the implementation of innovation is considered a failure. The second principle of market innovation states that as a result of its implementation, a healthy competition should emerge among the brands. The third principle denotes that innovation implementation should not be done just for the sake of innovation. Its implementation should bring surplus to the company immediately or in future. And fourthly, the business companies should keep innovating and implementing novel strategies even in the wake of fierce competition in order to survive.

The author formed a model in which there were two key elements: γ states when a new marketing technology or program that enables a firm to acquire consumer information more efficiently but there is a possibility that the benefits of the technology might hurt some of the consumers while σ stands for a new trading method in which there are reductions in consumer transaction costs but it doesn’t benefit’s the organization due to the strategic reaction of the rival.

As the elements were observed and equilibrium between them was analysed, it was found that the effects and incentives of marketing innovation vary from those of process or product innovations. The author stated that the marketing innovation happens only if the organization benefits from the innovation which is sometimes not possible if there is an adequate delay for imitation. The researcher focused on the importance of marketing tools, cost, consumer information and imitation.

2.4 Implementation of Marketing Innovation

The implementation of a marketing innovation technique or strategy requires few principles that an organization needs to follow which were summarized by Li (2009). Firstly, the process of the marketing innovation should provide value to the consumers as well as customers. The success of the marketing innovation is determined by the satisfaction it provides to the customers and if the innovation fails to deliver the satisfaction, it is not considered an effective marketing innovation. Secondly, the marketing innovation should be in bringing competition to the potential market. Thirdly, the marketing innovation should be effective as well as fruitful to the company. The focus of the company should not be on the innovation but on the marketing innovation which means that the innovation should reap profits for the organization at present and moreover, in the future. Lastly, the process of marketing innovation should be sustainable. The altering fierce marketing competition, dynamics and rapidly changing market condition force the companies to keep innovating so that the survival is feasible.

Jiang (2008) considered strategic choice was important for the marketing innovation. For the attainment of the expected objectives, the firm should create series of associated policies which can help in the management of the marketing innovation and will also help in the minimization of the strategic risk. The major reasons for the strategic mistakes of various firms were the failure to withstand marketing innovation. To form an effective strategy the firm must understand its marketing position, the availability of resources and competitive advantage/ innovation advantage.

Tian (2007) mentioned strategies for the marketing innovation in his study. He concluded that the markets consist of three primary elements which included the individuals with demand, paying capacity and purchase desire. Therefore, the marketing innovation can be carried through these three elements. The author formed a comprehensive study on the marketing innovation in which five aspects of the theory were focused. The first aspect contains the innovation of the product itself. Secondly, objectives of the innovation should be made that entails the marketing position of the innovation. Thirdly, the new geographical position of the innovation should be spotted which will ensure the location of a potential market. The position is an important aspect i.e. if a market is saturated or faces a competition then it allows the organization to alter the geographical position for the product which is more suitable for the sustainability of the commodity. Thus, the company’s future development is guaranteed. The fourth aspect entails the innovation of the distribution channel. According to the author, the aspect has always been ignored by the companies. The aspect includes the quality and types of distribution intermediaries and channels that assist the process of the marketing innovation. Lastly, the innovation sales promotion is an important factor for the sustainability of the innovation process which is a widely discussed and implemented innovation area amongst various firms. The area includes the innovation of marketing price strategies, promotion, and promotion programs.

The focus of the author’s study was on the analysis of the company’s situation. The companies can chose innovative individually or simultaneously. The position and process innovation needs to be included in the marketing innovation but usually the companies are not able to distinguish between both aspects. It’s a fact that a market cannot exist without the presence of a commodity but the study didn’t focus on the position, product and geographical aspects of the marketing innovation. According to the researches, the author’s last two aspects were more useful in comparison to the other three aspects of the marketing innovation field.

Du (2008) like Tian (2007) also presented some important marketing innovation fields. Although aspects like channel, distribution, promotion and product were considered important but the emphasis of the public relations. The public relations strategy also needs to be innovative for the sustainability of the firms. The augmentation in the public relations can enhance the marketing innovation programs as it leads to the cooperation between governments, community, enterprises, media and middleman. The most important part of the public relation strategy is the emotional marketing feature which tries to customize the marketing plan according to the needs and wants of the customers. It results in the consumer purchase of the products through the use of emotional demand tactic. The study also focused on the organizational innovation. The feature is responsible for the effective environment of the marketing innovation which sometime alters the organizational structure as well as human resources. Thus, the outcome is efficiency and innovation effectiveness.

According to Li (2005), the marketing innovation strategies were considered important but the major focus was on the strategies that dealt with the resource allocation for the marketing innovation. During the innovation process the company should have complete information about their marketing position and thereby, the resources should be allocated properly to gain absolute advantages. The advantages help the organizations in the realizing the objectives of the marketing innovation. Duke (1990) stated the importance of customers as their behaviour in the marketing innovation aid organizations in learning and understanding their preferences. The complete understanding of the customer behaviour can be a success factor for organizations.

Yong and Zhao (2004) gave several suggestions to the Chinese companies which could enhance the implementation of the marketing innovation. Firstly, the competitors should be studied properly. Secondly, there needs to be imitation and augmentation but the innovation strategy of an organization should not be copied. In addition, effective ideas and techniques must be implemented and should not stint the investment. Lastly, the system should be enhanced and integrated with the marketing thinking. Tang (2008) with the research on pharmaceutical industry make to the conclusion that if the companies wish to enhance their core competitiveness than the marketing innovation technique should be employed as it leads to profit as well as competitive advantage.

2.5 Evaluation of Innovation Capability in a Business Venture

How a company manages innovation is referred to as innovation capability (Tidd & Bessant, 2009). Many different types of tools are available in order to assess the innovation capability of a company for example, Gartner Research (2002) presented scorecard assessment and Gatignon (2002) presented the structural approach. Another simple but effective tool for the assessment of innovation capability is provided by Tidd and Bassant and is named as self assessment tool. This assessment tool uses the human resource of the company and gets feedback from a specially designed questionnaire. Different aspects such as strategy, processes and learning are used to analyze the answers provided by the employees. The employees are asked to answer each question between a score of one to seven where seven means very true and one means not true at all. The results are then plotted in shape of a pentagon and the resulting picture will clearly show the existing innovation capability of an organization.

2.6 Avoidance of Risk in Marketing Implementation of Innovation

For commercial activities, risk awareness and risk management recognition are of paramount importance (Essinger, 1991). Generally, researchers attribute risk and ambiguity as probable causes of poor implementation of innovation (Ghadim, 2005). Mainly, the universal perils in innovation are caused by factors e.g. employees distrust, leakage of information, market uncertainty and inability of leaders to support (Hoecht, 2006). Tian (2007) summarized different types of perils regarding marketing innovation which are as follows:

The divergence from the demand of a customer;

Market entry in an inappropriate time;

Faulty of channels of distribution;

Irrational strategy for price;

Asymmetry in information;

Substandard services;

Misjudge the complexities;

Alteration in policies of government.

During the implementation phase of marketing innovation, the abovementioned facts should be given due consideration in order to avoid them. Sufficient groundwork in this regards can cut costs levied by perils and risks to some extent.

3. Chapter 3: Research Methodology

This chapter elaborates the chosen methodology most suited for carrying out the research of this study. Advantages and disadvantages of the research tools are discussed. According to Creswell (1994), the choice of research methodology depends on the nature of the area of research. It is important to state the purpose of the research, the research question and objectives before heading on the research approach being adopted.

3.1. Research question

The research is based on answering the question “What is the importance of innovation in marketing strategies?” keeping in view the strategies employed by Tesco.

3.2. Research Objectives

The primary objective of this research is to examine factors responsible for successful and unsuccessful implementation of innovative marketing strategies. Moreover, this research also investigates how companies use innovation in marketing strategies and to what extent this concept is successful in providing and retaining the competitive advantage of a company. The researcher aims to analyze the extent of innovative strategies being implemented by Tesco, the current innovative strategy being employed and the benefits achieved by the company in implementation of these strategies.

3.3. Research Paradigm

A paradigm is a set of beliefs which deals in explaining that how the world works and the individual is situated in (Guba and Lincoln (1994)). Any particular research methodology is grounded in its research philosophy, which provides a theoretical basis for conducting the research. Often the academics make a distinction between two of the most important research paradigms: Positivism and Interpretivism.

The paradigm which would be chosen by this particular research is Interpretivism which is also known as social construction.

While the positivists take an objective approach towards the realities of the world and tend to ignore the context in which the subjects are operating in, the interpretivists form a more liberal and sociology-based thinking. According to positivist, everything could be analyzed in a scientific context and any finding could be obtained by forming a hypothesis about it. However, this paradigm is not suitable for this particular study which tries to find out about the marketing innovation strategies which are adopted by Tesco in order to retain its position in the market and serve its customers in all possible ways. While the positivists approach fails to comply with the requirements of this study, the interpretivist approach serves the purpose well.

Any particular research methodology is grounded in its research philosophy, which provides a theoretical basis for conducting the research. In considering the research philosophy and approach, a distinction is often made between positivism and interpretivism (Travers 2001).

3.4. Positivism vs. Interpretivism

According to the positivist research philosophy, the researcher adopts a scientific approach while observing the social behavior and conducts the study in an objective manner (Travers 2001). Usually the positivists philosophy is based on a deductive reasoning where in order to test a claim, a hypothesis is presented followed by an empirical verification which validates the claim (Babbie 2005). However, Bryman and Bell (2007) also note that in some circumstances, inductive reasoning can be seen within the positivist research where knowledge about something is acquired by gathering facts, which provide the basis of law.

In order to carry out a positivists study, considerable amount of data is required as this particular research philosophy favor the used of quantitative methods in order to analyze a large scale phenomenon (Travers 2001).

The view which is inherent in this overall approach is that it is possible to measure a certain social behavior without considering its context and that while studying social phenomena, the researcher can take an objective view (Hughes & Sharrock 1997). However, innovation in marketing strategies is a complex and multi-faced concept which cannot be studies without studying it in its context.

In contrast to the positivism approach, the interpretivism approach takes a completely different look at the world, eliciting a different response from the researchers. The interpretivists are of the view that the subject matter of social sciences including the people and their institutions is unlike that of the natural sciences (Veal, 2006). Thus, for studying the social world a completely different logic of the research procedures is required (Bryman and Bell 2007).

Because of the need for a different logic for taking an interpretivist stance, there is a prompt need on part of the researcher to use inductive theory construction which reverses the process of deductive process by utilizing the data to generate themes. While the deductive approach relies on theory to test hypothesis and validate the findings, the inductive approach uses data or observation to form patterns and generate themes. Thus, it can be said that while the deductive process moves from the general to specific, inductive moves from specific to general.

Hence in the case of inductive reasoning, the researcher observes certain aspects of the social world and then discovers patterns, which are used to explain the wider concepts (Babbie 2005). Furthermore, it is perceived that there is not a single reality; rather the reality is based on a person’s perceptions and experiences (Robson 2002).

While relating to this claim, another argument can be presented which suggests that the facets of the world which are clearly human, vanish when they are analyzed and expressed in form of interaction of variables i.e. from an objective view (Hughes & Sharrock 1997). For this particular reasoning, the role of the researcher should be focused towards analyzing the various meaning that the actors, related to a particular phenomenon, attach to their experiences (Easterby-Smith et al. 2002).

For this study, an interpretivist approach is adopted in order to carry out the research. The rationale behind this choice is that it is considered that there are manifold realities that pose difficulties in making measurements and thus, we can only understand a real world phenomenon by studying them in relation to the context in which they occur.

An interpretive and inductive approach proves to be more appropriate when the research is of reflective nature and concerned with analysing reasons for success of an event marketing campaign in the past and using consumer and participant feedback as primary data.

The biggest weakness of a positivist approach is that it is more difficult to analyse a social phenomenon by taking an objective approach. It is therefore essential that interpretivist philosophy along with inductive reasoning is adopted in order to consider event marketing from a subjective viewpoint. This approach is seen as applicable for this research as the potential of a future event marketing campaign is being investigated. Innovative marketing strategies are largely based upon assumptions. Marketers often refer to John Wanamaker’s quote “I know half of my advertising dollars are wasted, I just don’t know which half” (Wanamaker, n.d. cited in Luo & Donthu 2005) to describe the situation that the effectiveness of marketing efforts is almost impossible to determine. Self-explanatory for this situation is the fact that implementation of marketing innovation is categorized within the field of experiential marketing. This calls for a need for adopting such an approach which tries to capture the complex social realities underlying a phenomenon which is innovation in marketing strategies in this case.

3.4.1 The Interpretivism Approach

While the positivists take an objective approach towards the realities of the world and tend to ignore the context in which the subjects are operating in, the interpretivists form a more liberal and sociology-based thinking. According to positivist, everything could be analyzed in a scientific context and any finding could be obtained by forming a hypothesis about it. However, this paradigm is not suitable for this particular study which tries to find out about the marketing innovation strategies which are adopted by Tesco in order to retain its position in the market and serve its customers in all possible ways. While the positivists approach fails to comply with the requirements of this study, the interpretivist approach serves the purpose well.

For Interpretivists the subject matter of social sciences including the people and their institutions is unlike that of the natural sciences. Thus, for studying the social world a completely different logic of the research procedures is required (Bryman and Bell 2007 p.17).The interpretivism paradigm suggests that the facets of the world which are clearly human vanish when they are analysed and expressed in form of interaction of variables (Hughes &Sharrock 1997: 102). According to Interpretivists, reality can only be understood through a subjective interpretation and the study of phenomena in its natural environment is the main focus of the interpretivist philosophy

As explained by to Carson et al. (200l), interpretivism is majorly based on qualitative concepts and when considering in broader terms, it takes into account the important characteristics of the research paradigm as opposed to positivism. Thus, it allows a focus on the context in which the subject area is operating.

For this study, an interpretivists approach would be chosen as it allows the multi facets of a reality to be observed. While the positivism philosophy ignores the studying of social context the interpretivist’s philosophy allows this. This is essential for this particular research as here the research is concerned with analysing the different strategies which are used by Tesco. This is not an objective but a subjective concept and thus is not quantifiable. Thus, in relation to the interpretivist paradigm, the study would rely on Inductive approach and qualitative techniques. Adopting an inductive approach would support the Interpretivist approach as according to the approach researcher observes certain aspects of the social world and then discovers patterns which are used to explain the wider concepts (Babbie 2005). Furthermore, it is perceived that there is not a single reality; rather the reality is based on a person’s perceptions and experiences (Robson 2002). In case of inductive approach, theory is initially used to develop the central research question however, unlike deductive approach the idea is not to test the theory, rather, to collect data first and then form theoretical ideas from it. Once the data is collected, theory is developed to explain findings.

These methods are also more suitable as the study is concerned about an organisation and it can be well stated that organizational as well as social reality is extremely complex (Yin 2003), and can only be studied partially and understood in an imperfect manner (Perryet al. 1999), thus, a need arises to investigate the different perspectives of one single reality.

3.5. Research Type and Strategy

An academic research can be said as being exploratory, descriptive, or explanatory (Yin 1994). However, to which category a particular research belongs to depends on the knowledge and information available within the research area (Wallén 1996). The exploratory research aims to unveil the basic knowledge within a specific area (Wallén 1996) and is undertaken to explore an area about which little information is previously available (Dawson 2002). It is more appropriate when a specific problem is hard to define and also when the relevant theory is unclear. Exploratory studies aim for basic knowledge within the problem area (Wallén 1996). These studies are suitable when a problem is hard to demarcate and when relevant theory is unclear. They are also appropriate when important characteristics and relations are hard to determine (Eriksson & Wiedersheim-Paul 1997).

In contrast, descriptive study seems more appropriate when the problem seems to be clearly structured and the intention is not to form a connection between causes and symptoms. In this case, the researcher is aware of the problem that needs to be investigated but simply does not know the answers (Eriksson & Wiedersheim-Paul 1997). On the other hand, explanatory research appears to be useful when a study is concerned about the causes and symptoms (Eriksson & WiedersheimPaul 1997). Here the research tries to identify the factors which, when combined cause a certain phenomenon (Lundahl & Skärvad 1992).

This particular research is partially explanatory and somewhat more exploratory. This is because while analysing influential factors and explaining their relation to a potential outcome describes explanatory research. However, a weakness of explanatory research within the leisure industry is that the responding variables being investigated are human. While the results of the research will help to predict the most likely outcome of importance of innovation in marketing, the results cannot be guaranteed.

According to Veal (2006, p. 4):

“Human beings make their own decisions and are far less predictable than non-human phenomena.”

The main objective of this paper is to make informed decision on importance of innovation in marketing strategies, with a practical demonstration for the retail store Tesco. The actual outcome of the research is dependent on such high amount of variables that it cannot be guaranteed. Factors such as customer loyalty, type of product being introduced or individual customer experiences could influence the success of the campaign just as well as unforeseen actions and reactions of competitive brands. For this reason, the research tends to be exploratory in nature as this kind of research would enable the researcher to investigate about the various possibilities that may be driving the innovation in marketing.

3.6 Research method

3.6.1. Quantitative vs. Qualitative research

Quantitative research method is a research approach which is based on objective, formal and systematic process which uses the numerical data to quantify and present findings. It usually examines the cause and effect relationship (Burns & Grove 1987). In contrast, the qualitative research methods are based on subjectivity, reasoning and tends to describe certain aspects of a phenomenon (Cormack 1991) by adopting an idealistic or humanistic approach (Leach 1990).

According to Denzin and Lincoln (2005), qualitative research examines the socially constructed nature of reality and generates an intimate relationship between the researcher and the subject or topic being studied along with the circumstantial constraints. This particular research method seeks to answer those questions which stress how social experience is created and given meaning. On the other hand, quantitative research is more focused on measurement and analysis of variables that are involved in the causal relationships and does not gives importance to the processes that are being involved in the relationship. Therefore, it can be well said that while qualitative methods constitute a humanistic element to them, the quantitative research is grounded in the mathematical and statistical knowledge (Gephart 2004).

While making a comparison between the two another interesting difference could be highlighted. The quantitative research technique involves the stating and verifying of the hypothesis and reducing the large units into simple variables that are easy to understand and generalize. In addition, it assumes that all the events are independent of the surrounding environment.

On the other hand, qualitative research is aimed at describing certain aspects of a phenomenon with maintaining a view to explain the subject of the study. Thus, qualitative research is also known as phenomenology (Duffy 1985). It also believes that all the occurrences or events have a connection or are affected by the surrounding event (Easterby smith et al. 2002).

As this study has taken an inductive approach along with interpretivism, choice of qualitative methods seem more suitable to this study. This is because of the features associated with qualitative research. It has been established that this study is based on a phenomenon which needs to be studied in a social context. The quantitative methods are based on measurement and statistics however the objective of the research is to analyse the effectiveness of marketing events to elicit brand awareness. This implies that quantitative methods are not suitable for this study.

While prior researches have been trying to prove innovation in marketing as a one-fits-all solution along with others who focused on quantitative data, this study has recognized the gap in the literature for not opting for the qualitative techniques. Hence, by considering the gap in the literature and making a further contribution to the existing study, this research has adopted a qualitative approach. This enables the researcher to take a more forward looking rather than a simple reflective approach.

3.7. Research Design

According to Bryman and Bell (2007, p.40), “Research design provides a framework for the collection and analysis of data.”

To collect data, Social scientists make use of a number of different data collection strategies (Hox & Boeije 2005). Generally, data collection can be done by two main sources:

Primary Sources

Secondary Sources

This study utilizes both of the data collection techniques in order to provide a large amount of data. Both techniques are analyzed separately with the advantages and disadvantages associated with them.