The food retail industry is also one which is characterised by tight profit margins as customers in this industry are constantly on the lookout for value for money in terms of prices offered.
This has resulted in food retailers adopting various promotion strategies in a bid to control customer behaviour, and the bulk of the promotion strategies seem to have focussed on loyalty. Other promotion strategies that have been used include blanket couponing and one-to-one marketing (Peppers and Rogers 1997). These strategies have also relied on recording customer shopping behaviour, and the information collected is often used to ascertain what customers' buy, the frequency with which they buy these products and when they buy it. This information is then used to give the customer coupons or vouchers that are specific to their frequent purchases.
Some food retailers like Aldi's and Lidl's have not adopted any promotional strategies and instead they have gone for low pricing on the basis that it introduces stable pricing to customers. Ortmeyer, Quelch and Salmon (1991) have stated the benefits of stable pricing over promotional strategies like in the ability to differentiate customer service and product assortments as this will increase customer loyalty, and stable pricing will also improve inventory management, reduce labour and advertising expenses. This suggests that promotional strategies flood customers with unnecessary or even too much information, which could possibly contribute to the lack of loyalty to a food retailier. On the other hand, Blattberg, Briesch & Fox (1995), Kumar and Leone (1988) and Mulhern and Leone (1991) disagree with these claims and suggest that a stable pricing strategy may not be appropriate for all in the retail industry. This requires an in-depth understanding of both forms of strategies for influencing customer behaviour, as the industry standard is considered to be working well. For instance, food retailers engage heavily in advertising to attract customers, time-limited offers, buy one get one free offers, and high margin items (Voss and Seiders 2003).
Therefore by understanding the reasons behind selecting promotional strategies over stable pricing strategies, the researcher will be able determine if promotional strategies have made an impact on customer behaviour in the UK. The data collected for this research would have to collected from either the management of the individual retail stores and/or customers. This will ultimately require a large sample size, however, data can also be collected from the general public as they will have a preferred food retail store that they frequent.
Outline Literature Review
Retail promotion strategies are said to be driven by the competitive position of the organisation, and this in turn affects the nature of the promotional strategies employed in the industry (Lal and Rao 1997). The main themes to be discussed in the literature review will therefore concentrated on the main components of