1
“How to survive around the large retailers:
the case of greengrocers in Bulgaria”
By
Bianka Apostolova
University of Groningen
Faculty of Economics and Business MSc. Small Business & Entrepreneurship 21st
of February 2016
First supervisor: Dr. P.S. Zwart Co-assessor: Dr. E. P. M Croonen
b.apostolova@student.rug.nl Student number: 2710714
2 Abstract
In past research there has been no focus on the influence of the big retailers on small stores and how this harms them. To examine the influence of the large retailers on the small businesses the
following variables which are strategic actions are investigated: (1) price, (2) place, (3) people, (4) promotion, (5) product and the network of the entrepreneur, which includes (6.1) strong ties
and (6.2) weak ties. This research aims to give insight of the performance of the small greengrocers and how they are influenced by their larger counterparts. The main findings are:
the five variables from the 7P‟s framework have influence on the performance of the greengrocer. Strong ties are very important to the greengrocer, but weak ties are less important.
3 Acknowledgements
This thesis is one of the last steps for graduating the University of Groningen. This research enriched my knowledge in so many ways. For the achievement of the thesis I would like to thank several people for their feedback, support and assistance during the writing process:
4
Table of Contents
Introduction ... 6 Research gap ... 7 Research question ... 8 Theoretical framework ... 9 Strategic actions ... 11 Price ... 11 Place ... 12 Product ... 13 Promotion ... 14 People ... 15 Network of an entrepreneur ... 17 Strong ties ... 17 Weak ties... 18 Conceptual model ... 20 Research Design ... 21 Sample... 21 Data collection ... 21 Pre-questionnaire interview ... 22 Questionnaire ... 23 Case description ... 25 Data analysis ... 27Controllability, validity and reliability ... 28
Results ... 30
Discussion... 39
Conclusion ... 41
Limitations ... 42
5
References ... 44
Appendix 1: Pre-questionnaire Interview ... 52
Appendix 2: Questionnaire ... 52
Appendix 3: Case studies ... 66
6
Introduction
In many developing countries the small local stores are disappearing, but in Bulgaria they still exist among the big retailers who try to pressure them into closing on a daily basis. Many researches have focused on the way the 7P‟s framework influences businesses in different sizes, for example the research of Kushwaha from 2015, where the “primary aim of the study is to examine the effects of services marketing mix elements on Indian customer for making the appropriate marketing mix strategy in banking services context” (Kushwaha, 2015).
This research introduces the influence of large retailers on greengrocers‟ performance in Bulgaria using the 7P‟s framework, by doing a qualitative research, which will explore if the proposed propositions are plausible. The main focus of the study is on the following strategic actions: (1) price, (2) place, (3) people, (4) promotion, (5) product and the network of the entrepreneur (6), which includes (6.1) strong ties and (6.2) weak ties.
Firstly, a review of 7P‟s framework is done, after which linking the findings in the literature to the literature gap of small greengrocers, resulting in the formation of the propositions.
7
Research gap
“Literature has focused on smaller retailers who compete against the large firms face tremendous challenges” (Arnold and Luthra, 2000; Brennan and Lundsten, 2000; Darrow et al., 2001; Litz and Stewart, 1998, 2000b, d; Peterson and McGee, 2000), but there is no research and academic literature found on how small businesses, greengrocers in particular, change their behavior around the large retailers. This research focuses on the 7P’s theory and how those factors are used to improve the performance of the small business owners to survive around the constant pressure of the large retailers as in a developing country like Bulgaria.
The factors investigated are based on the 7P’s framework. From the 7P’s framework the factors investigated are Price, Promotion, Place, People and Products. This research focuses on only 5 of the 7P's because these factors are the most relevant regarding the subject. For small businesses located in Bulgaria it is also important to have a broad network to be able to improve the performance more easily, so the factors 'strong ties' and 'weak ties' are included in the research.
For accurate results 5 greengrocers agreed to participate in the research, which are located close to a large retailer. This element is important since the influence of the large retailer on the smallgreengrocer is tested and the business needs to be under its influence to obtain accurate results. This information is confirmed in the questionnaire. To investigate the greengrocers‟ behavior around big retailers, an important factor is that it is located near a big retailer. This is why the questionnaire is given to these greengrocers in particular. Additional substantial influencers are added in the section “suggestions for future research”.
8
Research question
The answers of the following main research questions aim to provide the solution the problem identified above. The sub research questions will form the propositions:
Research Question: How can the greengrocer react to the behavior of large retailers to improve performance?
(a) Does the price influence on the performance of the small business? (b) Does the location of the business have an influence on the performance? (c) Does staff have an influence on the performance of the business?
(d) Do promotions have an influence on the performance of the business? (e) Do value-added products have an influence on the business?
(f) Will the strong ties have an influence on the performance of the business? (g) Will the weak ties have an influence on the performance of the business?
9
Theoretical framework
“The 7Ps marketing mix takes into account the intangible nature of services, resulting in the additional elements of people, physical evidence and process to the traditional marketing mix” (Prapannetivuth, 2015). The traditional marketing mix consists of four elements and to those four elements adding People, Physical evidence and Process result in the 7P‟s framework.
“The Marketing Mix concept is a fundamental idea in marketing”(Prapannetivuth, 2015). “It is defined as the set of controllable tools that marketers use to determine satisfaction of its target market” (Jonathan, 2008). This mix "includes four elements namely product, price, promotion and place” (Bennett, 1997). It is considered as: “a set of tools by which entities achieve their marketing goals in their target markets” (Boekema, 1995).
Boom in his article of 1981 proposes a framework for service marketing, “where the additional
3Ps (People, Physical evidence and Process) were introduced” (Prapannetivuth, 2015). The new framework of the 7P‟s is known as the service marketing mix and “involves the 7Ps of marketing i.e. product, price, place, promotion, people, physical evidence, and process” (Kushwaha, 2015).
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Element Description Reference
Product “Product is all necessary components and elements (Davis, 1997) to do a service which generate value for customer”
Price “Price represents the monetary expenditure that (Ailawadi, 2004) the consumer must incur in order to make a
purchase”
Place “Place is the managerial decisions on where (Davis, 1997) customers should be provided with services”
Promotion Promotion “represents the communications that (Kushwaha, 2015) marketers use in marketplace including
advertising, public relations, personal selling and
sales promotion”
People People “refers to the customers, employees, (Lin, 2011) management and everybody else involved”
Process Process “is availability and sustainable/proper (Davis, 1997)
quality of services”
Physical evidence Physical evidence “refers to the experience of (Lin, 2011)
using a product or service”
11 “7Ps of services marketing as being wide in scope and it encompasses all of the dimensions, some dimensions are of more importance than others” (Kushwaha, 2015). In regards to the small businesses like the greengrocers in Bulgaria I chose to investigate the influence of five out of the seven elements from Table 1. Those elements are Product, Price, Place, Promotion and People.
Those elements are chosen because of their importance in relationship with performance to small businesses in Bulgaria as they may be more important to small businesses as the other two P's (Physical evidence and Process) which are left out. This will be investigated and confirmed with the study. The elements of the 7P’s investigated are called strategic actions. Those group of factors include – Price, Place, People, Promotion, Product. The second group of factors is the network of the entrepreneur – strong ties and weak ties, as extra elements, which will show the importance of a network to a small business.
Strategic actions
Price
Ailawadi (2004) defines price as “the monetary expenditure that the consumer must incur in order to make a purchase” (Ailawadi, 2004). In the article of van Herpen. al. (2012) discusses that “the effect of the variables differs between organic versus fair trade products, as buying motives might differ, organic buyers tend to be more loyal, and price is a more informative signal of quality for organic products”. This signal of the price is associated with the greengrocer and will be tested in the research to see if it applies to small greengrocers as proposed.
12
Higher price can be associated with organic products or higher quality products in large retailers and small stores. The “price can act as a stimulus for recategorization, whereby organic products are more likely to be perceived as a health food when a price premium is attached” (Wathieu and Bertini, 2007). Customers see price as “a key part of the costs they must incur to obtain wanted benefits” (Zeithaml, 1988). The greengrocers creates the emotion in the customer, that the greengrocer produces healthier, organic products as it will be investigated in the research. This effect can create loyal customers and create competitive advantage over the large retailer, improving the performance. “Price is then used as a signal of product quality” (Erdem et al. 2008). Van Herpen finds in her research that “for organic products, price does not significantly affect market share”. The price level is analyzed to see if it has an effect on the performance.
Proposition 1: A higher price of the product does not have an effect on the performance.
Place
13 greengrocer aims to be closer to the customers to influence the store choice decision by its location – being more convenient than the competitor. Analyzing the influence of the location to the greengrocer to the performance will clarify how the above described factor influences Bulgarian greengrocers.
The fact that “small businesses are heavily dependent on a single customer or a small group of customers” (Storey and Greene, 2010) the location of the greengrocer and the convenience to the customer are very important key factors to the performance.
Proposition 2: When the greengrocer is located closer to the customers than the large retailer this has positive effect on the performance.
Product
“Product is anything which is offered to the market for exchange or consumption” (Kotler, 2000). “Product is all necessary components and elements to do a service which generate value for customer” (Davis, 1997). Product gamma is essential to small greengrocers, since they focus on a unique quality of their products to gain competitive advantage over the large retailers. This unique quality can be a bio product, a home-grown product, a rare product or a better quality product that the one offered with the competition. “Since, customers are generally willing to pay more if their needs are better satisfied, the value-added in product and service operations can be enhanced through implementing mass customization” (Jianxin Jiao a, Qinhai Ma b, Mitchell M.
Tseng c, 2003).
14 marketing mix which respecting it in cooperatives leads into the satisfaction of members and customers.” (Jain, 2013). The value-added products aim to satisfy the needs of the customers.
The greengrocers focus on products, which are rare, new or/and higher quality than the products offered by the retailer. This “involves introducing new products or improving the existing products” (Lin, 2011). This relationship to the influence on the performance is investigated. “In traditional marketing the product plays a central role in the marketing mix” (Enache, 2011). This makes the investigation of this element of the 7P‟s (Product) important for the greengrocer‟s performance, when being under the influence of the large retailer.
The above discussed factors that will be explored to influence the performance are the quality of the products and it's special features. Quality of the products include: bio product, home-grown products, rare products or better quality product that the one offered at the competition. We are focusing on home-grown products.
Proposition 3. Value-added products (home-grown products) improve the performance of the greengrocer.
Promotion
15 Previous studies say that “even if consumers will pay a premium for organic or fair trade
products, studies that examine this willingness to pay consistently show that the percentage of consumers who want to buy these products increases sharply when price premiums are smaller” (Wier and Calverley, 2002). The interest to products on promotion is higher to the products which are not on promotion. Another study finds that promotions on different products “decrease brand switches, and increase repeat purchases, all of which increase the market share of the promoted product” (Ailawadi et al., 2007).
Another factor which will be investigated is the influence of the advertisement on the performance. In this factor the in-store displays are investigated. Lemon and Nowlis (2002) show that “when used alone as a promotional device, in-store displays have a greater effect on the purchasing”. This factor is investigated to show if the in-store advertisement have influence on the performance.
People
Judd in his work from 1987 emphasized the importance of P for People in the 7P‟s framework. He stated that “Judd's argument was that it is the employees of an organisation who represent the organisation to the customers” (Judd, 1987). This element of the 7P‟s is important due to the fact that “if these employees are not given training in how to go about face-to-face customer contact, the entire marketing effort may not prove to be effective” (Salloum and Ajaka, 2013), where the
Proposition 4: Sales of products on promotion do not influence the overall performance.
16 performance will decrease instead of increase, harming the business rather than helping it improve. Support is given from Stoke in his work from 2000 that “people are an important factor for small businesses because they deliver personal relationships and interpersonal communication with customers, which often provides unique selling points and competitive advantages for these businesses” (Stoke, 2000).
Berry and Parasuraman (1991) for example suggested that “a service firm can be only as good as its people”. Support of the importance of well trained staff is given in the article of Sapre from 2009 where he states that “the training and empowerment of the employees have become very important” (Sapre, 2009). In a small business the way the staff influences the performance of the business is investigated, to see if the behavior has influence on the performance. “It includes attitude, behaviour, expertise, confidence, courtesy, and willingness to help of the employees toward customers” (Bitner,1990).
“A service is a performance and it is usually difficult to separate the performance from the people” (Shanker, 2002). Another study says that “the way service is delivered by the people can be an important source of differentiation” (Lovelock et. al.,2007). This element from the 7P‟s framework (People) is investigated to show how the performance of small businesses varies where the staff cover or do not cover the criteria mentioned before.
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Network of an entrepreneur
Another important factor for the small businesses are the networks the entrepreneur has. The network of the entrepreneur are all the connections he has, which includes family, close friends, known under strong ties and acquaintances as former colleagues, friends of friends, etc. The importance of the network will be investigated to show its importance to the small businesses.
“The value of networks as an integral part of the explanation of entrepreneurial success is widely
acknowledged”(Elfring, Hulsing, 2003). Network theory suggests that “the ability of owners to
gain access to resources not under their control in a cost effective way through networking can influence the success of business ventures” (Zhao and Aram, 1995).
“Networking can provide the means by which small and medium enterprise (SME) owners can tap needed resources that are „external‟ to the firm” (Jarillo, 1988). Given the significant financial and human costs that inevitably follow a business failure, researchers have long been interested in the factors associated with firm performance” (Watson, 2007).
“Both strong and weak ties are argued to be positively related to performance” (Rowley et al., 2000, p. 369) but “strong ties are considered a disadvantage rather than a benefit” (Gargiulo and Benassi, 1999) in specific cases. In his work Uzzi concludes that “the ideal entrepreneurial network includes a particular mix of strong and weak relationships” (Uzzi, 1996).
Strong ties
18 “Strong ties are associated with the exchange of fine-grained information and tacit knowledge, trust-based governance, and resource cooptation” (Krackhardt, 1992; Starr and MacMillan, 1990; Rowley et al., 2000). “Their advantages are different from the benefits generated by weak ties”
(Elfring, Hulsing, 2003). Strong ties in small business are family and close friends, which are the people that the entrepreneur can trust.
For example as Elfring and Hulsing continue in their article stating that the “strong ties are more likely to be useful to individuals in situations characterized by high levels of uncertainty and insecurity. In such complex settings, individuals rely on close friends and family members for protection, uncertainty reduction and mutual learning” (Elfring, Hulsing, 2003).
In academic literature there are also some disadvantages found with strong ties, for example “the risk of overembeddedness of stifling economic performance” (Uzzi, 1997). But a big advantage of the strong ties is that “network members representing strong ties are more motivated to help the entrepreneur than those with whom the entrepreneur has weak ties” (Elfring, Hulsing, 2003).
Proposition 7: Strong ties have a positive effect on the performance of the greengrocer.
Weak ties
The second element in the networking is the weak ties. In literature weak ties are defines as “business associates from other companies, acquaintances or people who are less well known to the individual” (Harvey, 2008). Those ties are also known to “provide access to (new) industry information and to new business contacts, strong ties are relations one can rely upon both in good times and in bad times” (Elfring, Hulsing, 2003).
19 Weak ties are “the weaker links, corresponding to acquaintances” (Easley et. al. 2010). The network created outside the family area. Those weak ties are created during previous jobs and recommendations.
Other literature states that the “weak ties are supposed to lead to a more varied set of information and resources than strong ties can” (Bloodgood et al., 1995), but here is no literature found on how the weak ties, nor strong ties affect the small Bulgarian greengrocers, neither of the effects on their survival and performance or whether it harms or helps them to develop. Literature also says that “weak ties are beneficial as they provide access to novel information as they offer linkages to divergent regimes of the network” (Burt, 1992).
20
Conceptual model
In Figure 1 the conceptual model is presented. As it can be observed in the conceptual model there are five strategic actions and the network of the entrepreneur. The strategic actions are based on the 7P‟s framework and the network of the entrepreneur is based on the necessity of building a network to be able to increase the performance of the business through the help of acquaintances, friends, family that have helpful connections.
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Research Design
Sample
To analyze if the hypotheses proposed are plausible (the influence of different factors on the performance of the small greengrocers) a survey was distributed to 5 owners. The survey was given personally to the 5 business owners after they were interviewed. The interview consists of six short questions, which aim to classify the owners and to see if they cover the criteria to fill in the survey.
The target of the survey are greengrocers that are managed by the owner, which means the owner makes the decisions. The owners need to live in the area where the business is located, so they are familiar with the customer flow, which is typical for Bulgaria and will help answer some of the questions. Respondents, which did not cover all criteria were excluded, after selecting the needed responses in the first section of the survey. In total 18 business owners were contacted, from which 11 covered the criteria, but 5 out of 11 agreed to participate in the survey. It may be considered as a pitfall that only 5 respondents have agreed to participate and more accurate answers would have been obtained if there were more respondents to the research. For the research to be valid the business owners need to be an owner of the business for at least one year, which was checked before the survey was done.
Data collection
22 asked to participate, some refused to participate (this is explained in the section above). The owners that agreed to participate were 5. They participated after they were interviewed (pre-questionnaire interview). After that they were handed out the (pre-questionnaire to fill in.
Pre-questionnaire interview
Firstly a pre-questionnaire interview was made before the actual questionnaire. The point of this interview is to find out if the participants cover the criteria to continue with the questionnaire. They were are asked basic questions which aim to gather the needed information to continue with the questionnaire. The interview can be seen under Appendix 1. It consists of 6 questions in total.
The checklist for the preparation of the interview can be seen in Appendix 4. The interview is prepared according to the 'Emans' guide for preparing interviews.
Step 1: Defining the goal of the interview – the goal of the interview is to find out if the respondents cover the criteria for the survey
Step 2: Information needs / conceptual variables – this step is skipped since there are no variables introduced at this point.
Step 3: Indicating the variables – this step is skipped since there are no variables introduced at this point.
Step 4: Raw variables - this step is skipped since there are no variables introduced at this points.
23 Step 6: Instructions for asking the questions – a short introduction to the type of the interview are given and the participants are told that they can quit any time if they feel uncomfortable. The purpose of the questions and the structure are explained.
Step 7: Order of questions – the order of the questions is from broad to narrow. From more general questions to more narrowed down questions, which aim to exclude the participants that do not qualify.
Step 8: Introduction, conclusion and layout – this step is skipped, since this is a pre-questionnaire interview, which aims to provide general information about the participant and see if the participant covers the criteria.
Step 9: Test out the first draft of the interview guide – This step is skipped.
Step 10: Completed interview guide.
Questionnaire
Part I asks the respondents a set of questions which aims to find out the influence of the value-added products, on the performance of the business. The next parts of the questionnaire followed the logic of Part I, aiming to find out the influence of the other factors – price, promotion, place, people and network. All questions in the questionnaire are based on theory and are created for this research, none were adapted from previous researches.
The questionnaire contains five types of questions – YES/NO questions, questions with a scale of 0 – 5, TRUE or FALSE, open questions with free text and questions to mark the answer that applies the best to them.
24 on the scale shown. Some questions with the scale need to be graded with 0 for “does not influence” to 5 for “has big influence”, in the middle of the scale is “somewhat influenced”, as it can be figured out, the same logic follows for the next types of questions. The next group of questions with a scale are graded with 0 for “not true” and 5 for “very true”, where in the middle applies partially true. The next questions with a scale is 0 for “not satisfied” and 5 for “very satisfied”. Another group of questions is graded with 0 for “not dependent” to 5 “very dependent”. The last group of questions with a scale is grade with 0 for “less likely” to 5 “very likely”.
In the questions where answers YES / NO and TRUE / FALSE apply only one answer is valid. Only one answer applies to the questions with the scale as well.
There are questions with free text. On those questions the respondent can answer freely about the subject. This answer must be short and concise.
Part I has the aim to find out the influence of the price and the performance of the greengrocer. Part I consists of seven questions. All except two are questions to rate the answer in a scale 0 – 5. One question is YES / NO and one is with a choice of All / None / Most / Some.
Part II has the aim to find out the influence of the greengrocers‟ location and convenience on the performance of the greengrocer. Part II consists of eight questions. All except one are questions to rate the answer on a scale 0 – 5. The last question is to be answered with TRUE or FALSE.
25 down their own answer freely and there is one question with a couple of options to choose from.
Part IV has the aim to find out the influence of the promotion on the performance of the greengrocer. This part consists of twelve questions. Six of those questions are YES / NO questions, two of them have the option “sometimes”. Three questions with a couple of options to choose one answer from. As in the previous section there are two questions where the respondent can write their own answer with free text.
Part V has the aim to find out the influence of the staff on the performance of the greengrocer. This part consists of eight questions. This section is divided half YES / NO questions and the other half questions where free text can be written.
Part VI has the aim to find out the influence of the greengrocers’ network on the performance of the greengrocer. This last part consists of fifteen questions. This section has a big variety of questions. Six of these question are YES / NO questions, seven questions use the scale of 0 – 5, two questions use True / False answers and there is one question with free text.
The link between the questions in every part and the hypothesis will be clear in chapter 4 (Results).
Case description
26
Code Name Description
GC ET “Gustav – A. Chiflidganova” The owner of the business is 43 years old. He started the business 8 years ago. He has previous experience as a cashier at a big chain, and was then promoted to assistant manager, where he learned how to operate a business. He decided to start his own business so he can manage his income and be independent. The company is run by himself. He has hired 2 more people – his daughter and his wife. In total the business ismanagedby family members.
Total employees: 3
Hi “Hiron 888” EOOD The owner of the business is 39 years old.
He has started the business 4 years ago. He has previous experience in a large company. He has a master degree in Business Administration. He took over the business from his parents. His parents help him run the business, by giving him advice. He manages the business with his older sister. They have hired two young women as cashiers.
Total employees: 4
Nip “NiP Trade” EOOD The owner of the business is 54 years old.
She started the business at the age of 41. She has previous experience at a big retailer, where she started as a cashier and slowly became the manager of the store. Her previous experience is based on that retailer. She manages the store with her two sisters. They have hired three people to work as cashiers and staff.
Total employees: 6
GS ET “GeorgiSergiev” The business owner is 29 years old. He
took over the business of his parents at the age of 25. He has previous experience at the same store, being introduced into the process. He has a degree in Financial Management and Marketing. In the
27 Total employees: 3
AF “Arena Fresco” The business owner is 34 years old. She
started the business at the age of 27 (7 years ago). Her previous experiences include a Master's degree in Accounting, Bachelors in Finance, with a minor program in Marketing and Advertising. During her studies she worked as a cashier in a store. Building experience and
becoming the store manager. She manages the business with her husband. They have hired a young man, who works as a cashier.
Total employees: 3 Table 2. Case description
Data analysis
The research is a qualitative research, where an in-depth interview and questionnaire are distributed to a target group of 5 business owners to investigate if the proposed hypotheses are plausible.
28
Controllability, validity and reliability
Controllability
“Controllability is the prerequisite for the evaluation of validity and reliability” (van Aken et al.,
2012). To make the results of the research controllable, the way in which the study was conducted needs to be disclosed – the way the data was collected, the method on the selection of the respondents, types of questions and the data analysis. A detailed description is provided above, answering all the points mentioned, making the research controllable.
Reliability
“The results of a study are reliable when they are independent of the particular characteristics of that study and can therefore be replicated in other studies” (Yin 2003). Four types of biases can be recognized in reliability: “the researcher, the instrument, the respondents and the situation” (van Aken et al., 2012). To avoid the biases on the part of the researcher a printed out copy of the questionnaire was handed out to the owner and translated into Bulgarian if there was a language barrier. Secondly to avoid 'instrument bias' the questionnaire was distributed in the form of an interview, explaining the questions and what is meant by those questions, so that the respondent can give the most accurate answer.
Validity
29 “Construct validity is the extent to which a measuring instrument measures what it is intended to measure” (van Aken et al., 2012). Ensuring construct validity the following criteria were covered as described by van Aken: “the concept is covered completely, there are no measurements that do not fit into the meaning of the concept”.
“The results of a study are internally valid when conclusions about relationships are justified and complete” (van Aken et al., 2012). This kind of validity is ensured by giving justified and complete results of the study after an in-depth analysis.
30
Results
This part presents the results obtained in the study and the link between the literature, propositions and results from the questionnaire. Firstly the results are presented graphically after that there is a short discussion of the results after which the results of the propositions are discussed. Each variable is discussed separately presenting the results and discussing them. The questions which are answered on a scale from 0 to 5 in the column “Average” are calculated on an average for more clear view on the results.
Price
Question Answer Average
GC Hi Nip GS AF
Q1 Yes No No No Yes
Q2 - Yes Yes Yes
-Q3 3 4 3 3 2 3
Q4 0 3 4 2 0 1.8
Q5 0 3 2 2 0 1.4
Q6 Some Some Most Some Most
Table 3. Price
31
obtained from the study and stated above support proposition 1. This is supported since all the respondents say that price has an influence as discussed above.
Place
Question Answer Average
GC Hi Nip GS AF Q1 4 4 4 3 5 4 Q2 4 4 4 4 4 4 Q3 4 4 4 4 4 4 Q4 5 5 5 5 5 5 Q5 4 4 3 4 5 4 Q6 4 5 4 4 5 4.4 Q7 5 5 5 5 5 5
Q8 True True True True True
Table 4. Place
This part of the questionnaire has the aim to investigate if the location and convenience have influence on the performance of the greengrocer. All respondents, except one, answered that they
32 positive influence on the performance, complemented by the average 4.4 from question 6 (Q6), where they are asked if the location has a positive influence on the overall performance of the store. The last two questions of this part are complementary to importance of the convenience of the store. Overall the respondents agree that the location is more important to the performance of the store. These results discussed above support proposition 2.
Product
Question Answer Average
GC Hi Nip GS AF
Q1 Yes Yes Yes Yes Yes
Q2 Yes Yes Yes Yes Yes
From time From time to I add a new From time to I add a new to time, time, when I find time, when I find when I find product to the product to the Q3 an interesting an interesting an gamma every gamma every product that can product that can interesting year year
be sold be sold product that
can be sold
Last thing I I added a A sort of
apples, Pink tomatoes added were new type of Q4 which I didn’t
A sort of
pears from different
melons
from tomatoes sell before regions South “devils‟
Bulgaria heart”
Q5 3 3 4 4 3 3.4
Q6 4 3 4 4 3 3.6
Q7 Yes Yes Yes Yes Yes
Q8 4 5 4 4 5 4.4
Q9 Yes Yes Yes Yes Yes
Table 5. Product
33 value-added products. All respondents sell home-grown products (bio products) (Q1), which was a core question to continue with this part. They all improve the product gamma by adding products (Q2). As examples of such products they give tomatoes, pears, melons, etc. as an answer. Those products show slight increase in the profit and clients are interested in trying the new products (Q5, Q6), but this has negative effect on the purchasing of the other products (Q7). In question 7 shows that the newly introduced products are sold more, which means that they leave out the shopping basket another product to try the newly introduced product. Customers are satisfied with the quality of the products (Q8) and this leads to more visits to the store (Q9).The result of the satisfaction of the value-added products created in the customer is positive – rated with three “4” and two “5”. These results support proposition 3 as obtained above.
Promotion
Question Answer
GC Hi Nip GS AF
Q1 Yes Yes Yes Yes Yes
Q2 Yes Yes Yes Yes Yes
Q3 No No Yes No Yes
Q4 No No No Yes Yes
Q5 Price Price Price promotion Price promotion Price promotion
promotion promotion
Q6 - - -
Q7 Yes Sometimes Yes Yes Sometimes
Q8 Both Both Both Both Increase another
factor (profit)
In different Different seasons
periods of In the have different
Autumn and
the year summer, for customer flow.
Spring are the
people visit example During the summer I have a
strongest
more, in people eat there is less established
seasons where
others less. less food customer flow than customer flow
people buy most
In the due to the in winter. So, in network, due to
34 Q9 periods heat, to summer to be able the convenience
increasing the
when they encourage to survive we make of my location. I
performance
visit less sales we promotions on tend to increase
(profit) in those
we make promote for seasonal products the profit, so I
periods, to
more example and in winter we can grow.
balance with the
promotions, watermelons try to increase the
weak seasons.
to attract or melons profit, to balance
more visits the annual balance
Q10 True True True True True
Q11 Yes Yes Yes Yes Yes
Q12 1 1 1,2 1,3 2
Table 6. Promotion
The aim of Part IV is to find out what influence the promotion has on the performance of the greengrocer. In this part the focus is on the sales promotions and in-store advertising. All respondents do promotions and they all notice increase in sales of the product in promotion (Q1). This leads them to answering the next questions. Not all respondents have constant promotions (Q3). Three of the respondents answer that they do not promote the products that are sold less, but two answered that they do (Q4).
All respondents do price promotions, none answered they give discount coupons or “Buy a certain amount on the price of less” (Q5). They all see increase in sales of the products in promotion (Q7). All respondents except one answered that they do promotions to survive and to increase performance (Q8). They all respond that they have strong and weak seasons and this influences the performance (Q9). The AF answered that he has a “well-established customer flow network, due to the convenience of my location. I tend to increase the profit, so I can grow”.
35 advertisement attached to the promotion (Q10). Proposition 4 is supported based on the combination of the answers of all questions in part IV. The last question gathers three elements of in-store promotion (Q12). The respondents are asked to mark the ones they use or leave it blank if they do not use any of these. Surprisingly all respondents had used at least one of the mentioned. The most popular is the different color price label on the product in promotion. Very common is having a bigger price label. This concludes that the promotion has influence on the performance. Depending on the season the influence of the promotion has more (strong seasons) and less influence (weak seasons). Proposition 5 is supported based on the combination of the answers of all questions in part IV.
People
Question Answer
GC Hi Nip GS AF
Q1 Yes Yes Yes Yes Yes
Q2 Yes Yes Yes Yes Yes
Introduction
I provide basic training
The training is
Training training, which - Knowledge of
one week
before starting is around 2 to 3 the system,
where the new
Introduction I provide a weeks where
hired
training training where they learn the -product range,
employee
Basic the person is product codes,
works together
Q3 knowledge of taught the the system we -product prices,
with me or
the system and system, the work with and
another
way of products, the how to behave -barcode
colleague,
working prices, how to around the scanning,
where they
work with the customer and
introduce them
machines obtain bigger -basic
to the process. profit behavioral skills
Q4 Yes Yes Yes Yes No
1.Learning the 1. Behavioral 1. Knowledge
skills
system of the product,
2. Knowledge 1. Product
2.Learning the system
1. Product of the products range
product 2.
Q5 2. Price 3. Knowledge 2. System
gamma Communication
3. System of the system learning
3.Learning the skills,
36 skills Q6 No No Yes No No Complaint Q7 - - book, regular - -meetings every two weeks Experience, skills, ability to
Vision, Skills, work with Vision,
Skills, different experience, Previous Q8 previous experience systems,
ability to work experience
experience behavioral under pressure skills, education
Q9 Yes Yes Yes Yes Yes
Table 7. People
All store owners have hired people to work for them and they all do a training for the personnel before they start working on their own (Q1, Q2). All respondents do introduction training (Q3) where the personnel is taught the process of working, the system and product gamma (Q4). Only one of the respondents does regular trainings where the skills of the personnel are improved.
One of the other respondents has a system of controlling the personnel under the form of a complaint book (Q6, Q7) and regular meetings every two weeks (Q7). Respondents say they focus on the skills, previous experience before they hire new people (Q8). All respondents agree that if they didn’t focus on those factors to maintain and improve the service the performance would have been influenced negatively (Q9).
37 Networking
Question Answer Average
GC Hi Nip GS AF
Q1 Yes Yes Yes Yes Yes
Q2 3 3 2 2 3 2.6
Q3 The people The people The people from The people who The from who I who deliver who I get the deliver the products people provide the the products home-grown who
products products deliver
the products
Q4 5 5 5 5 4 4.8
Q5 4 4 4 4 5 4.2
Q6 Yes Yes Yes No Yes
Q7 Yes Yes Yes No Yes
Q8 True True True True True
Q9 Yes Yes Yes Yes Yes
Q10 5 3 4 4 4 4
Q11 5 5 5 5 5 5
Q12 5 5 5 5 5 5
Q13 Yes Yes Yes Yes Yes
Q14 2 2 2 4 4 2.8
Q15 True True True True True
Table 8. Networking
38 part VI.
39
Discussion
The main research questions focuses on the way greengrocers can react to the behavior of the large retailers so they can improve their performance. All variables have influence on the performance. When the small business is price pressured they tend to reduce the price to stay competitive. It is also observed that the location has a very big influence on the performance.
The respondents agree that the location has influence on the business and the more convenient it is to visit, the more visits it gets. If they were in a place which is not so close to the customer they agree that they would have needed to exit the market.
A very big influence on the performance is the staff. When being trained they can improve the performance. The respondents say they focus on the communication skills, overall behavior among others.
Price promotions like having a lower price tend to increase the purchases of the products, but the increase of the profit as noticed is not increasing very much. Products which are on promotion are sold more. This is done with the help of in-store advertisement. Regarding the product range, the stores focus more on value-added products or product with higher quality. Those products are of interest to the customer which results in an improvement of the performance on a daily basis.
40 weak ties which relate to acquaintances. They improve the performance as the business owners can rely on both kinds of ties.
41
Conclusion
All variables in the study are supported as they are discussed in previous literature for different businesses. From the theory of the 7P‟s the variables used are Price, Place, Product, Promotion and People. All propositions are supported and they can be related to other small businesses as well.
42
Limitations
The main limitations to this research were that there was no previous research on greengrocers in Bulgaria, leaving the gap completely unexplored. A starting point was conducting a survey which was hard due to the language barrier. This meant a complete translation for the survey from Bulgarian to English, with additional comments on the questions.
Internal validity was limited due to the nature of the study – qualitative research with in-depth interviews. I tried to limit the internal validity by giving a full explanation of the questions. The perception of the business owners varies from person to person which limits the internal validity.
43
Future research
A couple of questions raised during the conduction of the research give the possibility of future research. Firstly, due to the single geographical area of the study, the same study can be repeated but in another area. This could give more insight on the influence of different factors. Since this research was conducted in the capital of Bulgaria (Sofia), the effects could be different in smaller cities in the country.
During the conduction of the research another question is raised: "Is it possible to investigate if the development of technology has a significant effect on the greengrocers with limited financial resources?"
Additionally, will they be able to survive around the multi-channeling of the big retailer?
Adding this as a variable will give a better insight of the fast development of technology and use of internet, for example to browse through the different channels.
Third possibility which raised during the conduction of the research was investigating the services offered by the retailer and in comparison the services offered by the small greengrocer and the effects the retailers‟ services have on the small greengrocer, and how they can be overcome.
44
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52
Appendix 1: Pre-questionnaire Interview
1. Age: ______________ 2. Gender: Female Male 3. Previous experience 4. Previous education
5. When did you start the business/ when did you take over the business:
______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ 6. How many employees are there in the business:
a) family members: _____________ b) others: _______
Appendix 2: Questionnaire
The influence the big retailer has on the greengrocer
This questionnaire has the objective of investigating the effects that big retailers have on small greengrocers (owned and managed by the same person). I investigate different factors that influence that effect on the greengrocer – market, customers, advantage over the competitors, the ties. You canquit any time you feel uncomfortable or do not wish to continue.
In the questionnaire there are three types of questions: 1) Yes/ No – where you can answer only one
2) Statement – where you are given a statement and you should answer on the scale 0 to 5 3) True/False – where you answer if this is true for you or not true
4) Open questions – where you can answer with free text
53 1. Is this business your own? (are you the business owner) Yes No
2. Do you manage the business? Yes No
3. Is your business a single location? Yes No
4. Are other members of your family involved in the business? Yes No
5. For how long have you had the business? _________________
6. I live in the neighborhood where my business is located True False
54 Part I: This part has the aim to find out the influence of the price on the performance of the
greengrocer.
For each question mark the answer that best applies to you.
1. Do you maintain the price, even if the big retailer close to you lowers it in order to pressure you?
Yes No
2. If you answered “No” on question 1, answer this one, if not skip:
Statement: I lower the prices, so they are competitive to the retailer, because I think my customers will switch to the retailer if my prices are higher.
0 1 2 3 4 5
3. Statement: Higher price (compared to the retailer) for a product with high quality does not have a negative influence the sales.
0 – does not influence 5 – has big influence
0 1 2 3 4 5
4. Statement: I lower my price to stay competitive and not be forced to exit the market 0 – does not influence
5 – has big influence
0 1 2 3 4 5
5. Statement: The higher price (compared to the retailer) does not have a negative influence the customer flow.
0 – does not influence 5 – has big influence
55 6. Are your prices higher than the ones’ at the retailer?
56 Part II: This part has the aim to find out the influence of the greengrocers’ location and
convenience on the performance of the greengrocer. For each question mark the answer that best applies to you.
1. Statement: I am closer to the target group of clients than the big retailer. 0 – less likely
5 – very likely
0 1 2 3 4 5
2. Statement: It is more convenient for the client to stop by my store than to go to the big retailer. 0 – less likely
5 – very likely
0 1 2 3 4 5
3. Statement: The convenience of my store increases its performance. 0 – less likely
5 – very likely
0 1 2 3 4 5
4. Statement: If the big retailer was closer to me I would probably have been forced to exit the market.
0 – less likely 5 – very likely
0 1 2 3 4 5
5. Statement: I am located on a place where a lot of people pass. 0 - less likely
5 - very likely
57 6. Statement: My location increases the overall performance of the store. (easy access for many
customers) 0 – less likely 5 - very likely
0 1 2 3 4 5
7. If I was not located in such communicative spot I would have exited the market until now. 0 – less likely
5 – very likely
0 1 2 3 4 5
8. Statement: Accessible location is a big advantage for me. I am located conveniently close to the home of a big part of my customers and the travel distance is small.
58 Part III: This part has the aim to find out the influence of the value-added products on the
performance of the greengrocer.
For each question mark the answer that best applies to you.
1. Are there products you sell that are home-grown? Yes No
2. Do increase the product gamma of value-added products (home-grown products)? Yes No
3. How often do you add new products to the product gamma?
Every season I add a I add a new product to From time to time, I do not add new new product to the the gamma every year when I find an products
gamma interesting product
that can be sold
4. Please give an example:
______________________________________________________________________________ ______________________________________________________________________________
5. Statement: When I introduce a home-grown products I notice an increase in my profit. 0 – does not influence
5 – has big influence
0 1 2 3 4 5
6. Statement: When I introduce a new product, clients are curious to try it – they buy the product. 0 – not true
5 – very true
59 7. Statement: Home-grown products are sold more than the rest of the products.
Yes No
8. Statement: People are satisfied with the quality of the home-grown products 0 – They are not satisfied at all
5 – They are very satisfied
0 1 2 3 4 5
9. Do the value-added products increase the visits in your store?
60 Part IV: This part has the aim to find out the influence of the promotion on the performance of the greengrocer.
For each question mark the answer that best applies to you.
1. Do you do promotions in the store? Yes No
2. Do you notice an increase in sales of the product in promotion? Yes No
3. Do you always have a product on promotion? Yes No
4. Do you promote products that are usually sold less?
Yes No Sometimes
5. What kind of promotions do you do? (More than one can be answered) Price promotion Discount coupon for Buy a certain amount Other
next visit on the price of less Ex.: Buy two kilos, pay for one
6. If you answered “Other in question 5”, please specify:
_____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________
61
Yes No Sometimes
8. Do you do a promotion in a situation when you need to increase your profit in order to survive or when you want to increase another factor like store visits, attract new clients, maintain old clients?
In order to survive Increase another factor Both (performance)
9. If you answered “Both” please specify what influences the promotion frequency:
______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ 10. Statement: Promotions increase the profit on a daily basis. (Every day of the promotion has
increased profit compared to every next day). True False
11. Do you do advertisement when doing a promotion?
Yes No
12. Do you recognize any of the following elements? Have you used any of the following elements in advertising? Mark all answers that apply*
Different colour label on product on promotion
Bigger label on product on promotion Separate position of the products in promotion, where they are promoted
62 Part V: This part has the aim to find out the influence of the staff on the performance of
the greengrocer.
For each question mark the answer that best applies to you. 1. Do you have other people work for you except you?
Yes No
2. Do you provide training for the staff before them being hired? *
Yes No
*If you answer “NO” skip to question 8
3. If you have answered with “Yes” to the previous question answer this one. If you answered with “No”, please skip this question.
What kind of training do you provide to the staff?
_____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________
4. Do you provide entry level training or do you have regular trainings?
If you have answered with “Yes” to question 2 answer this one. If you answered with “No”, please skip this question.
Yes No
5. What factors do you focus on in the trainings?
_____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________
6. Do you have any way to control the change in the behavior of the staff? (Ex: complaint book, weekly meeting, surveys to customers)
63 7. Please list the ways you control the behavior of the staff.
If you have answered with “Yes” to the previous question answer this one. If you answered with “No”, please skip this question.
_____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________
8. What factors do you focus on when you hire new people?
_____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ 9. Do you think that if those factors weren’t leading there would be influence on the performance of the store? (If you had other criteria there would be negative influence on the performance)?
64 Part VI:
This part has the aim to find out the influence of the greengrocers’ network on the performance of the greengrocer.
For each question mark the answer that best applies to you. 1. Do you have weak ties?
Yes No
2. Statement: I am very dependent on my weak ties. Without them I would need to close down. 0 – less likely
5 – very likely
0 1 2 3 4 5
3. Give an example of weak ties you are very dependent of:
______________________________________________________________________________ ______________________________________________________________________________ 4. Statement: I can rely on my weak
ties. 0 – less likely 5 – very likely
0 1 2 3 4 5
5. Statement: The weak ties I have created are useful to the better quality of the products delivered. (connected me with companies for example)
0 – less likely 5 – very likely
0 1 2 3 4 5
65 7. My weak ties helped the development of my business.
Yes No
8. Some of my weak ties have their own company, who delivers products/goods? True False
9. Do you have strong ties? Yes No
10. Statement: I am very dependent on my strong ties. Without them I would need to close down. 0 – less likely
5 – very likely
0 1 2 3 4 5
11. Statement: The strong ties I have are useful to the better quality of the work process. 0 – less likely
5 – very likely
0 1 2 3 4 5
12. I can rely on my strong ties 0 – less likely
5 – very likely
0 1 2 3 4 5
13. My strong ties help the development of my business.
