Analyzing Customer Loyalty in a Competitive Market: Woolworth

This report examines the issue of declining customer loyalty at Woolworth Limited, a major retail firm in Australia, due to increasing market competition. The research investigates the factors contributing to this decline, including the strategies of competitors and evolving customer preferences. The report identifies the problem, sets research questions and objectives, and reviews relevant literature on customer loyalty, business performance, and the impact of competition. It outlines the research methodology, including the research design, approach, philosophy, data collection techniques, sampling, and ethical considerations. Additionally, the report discusses the need for Woolworth Limited to implement strategies to improve customer loyalty, focusing on understanding customer needs, offering competitive pricing, and developing innovative products to retain market share and increase profitability. The report concludes by emphasizing the importance of adapting to market changes and maintaining strong customer relationships in a competitive environment.

MANAGING RESEARCH

Table of Contents
AIM: ................................................................................................................................................1
1 INTRODUCTION........................................................................................................................1
1.1 Background of the research problem................................................................................1
2 Problem identification...................................................................................................................2
2.1 Management decision.......................................................................................................2
2.2 Research question.............................................................................................................3
2.3 Research objectives and issues.........................................................................................3
3 LITERATURE REVIEW.............................................................................................................3
3.1 Customer loyalty..............................................................................................................3
3.3 Effect of competition on business performance and customer loyalty.............................5
3.4 Methods to improve customer’s Loyalty..........................................................................5
4 RESEARCH METHODOLOGY..................................................................................................6
4.1 Research design: ..............................................................................................................6
4.2 Research approach: ..........................................................................................................7
4.3 Research philosophy: .......................................................................................................7
4.4 Data collection technique:................................................................................................7
4.5 Data Sampling:.................................................................................................................7
4.6 Ethical consideration: ......................................................................................................8
5 ADDITIONAL ISSUES...............................................................................................................8
5.1 Ethical issues ...................................................................................................................8
5.2 Limitations of the research...............................................................................................8
5.3 Gantt Chart.......................................................................................................................8
5.4 Budget...............................................................................................................................9
REFERENCES..............................................................................................................................10

AIM:
Reduction in customer loyalty due to increase in competition: A case study on
Woolworth Limited.
1 INTRODUCTION
Customer loyalty plays very significant role for the success of organisation, by which
they can earn high profitability and increase revenues. It is both behavioural and attitudinal
which helps the customer to favour a single brand over the others. It always occurs when
customer is highly satisfied with the products quality, price, distribution channel and promotion
as well as other services. When ever client feel comfort and convenience with the organisational
performance, at that time customer loyalty occurs (Chang and et. al., 2012). It is highly
important for every venture in order to retain customers so that they can generate high profit and
serve large products and services. Day by day competitors are coming in the market which are
serving goods and services at low price with more specification and features which attract large
customers. This is how old organisation are not able to grab large market share and their market
share is spreading towards different new competitors. This is how customer loyalty towards the
single brand and product is decreasing. Different ventures are designing innovative aim and
objectives by which they are effectively completing all their business operations to achieve
success. Various firms are dealing in similar business operations thus, it gives rise to increase in
competition and there is reduction in loyalty factors of customers (Han, Kim and Kim, 2011)..
1.1 Background of the research problem
The key issue which the business is facing is related to the customer loyalty which is
decreasing day by day due to increase in market competition. Large competitors are adopting
price penetration strategy where they are reducing price of their products and serve high features
as compare to old organisation. This helps them to grab large market share and old organisation
are not able to serve loyalty to the customers (Hollebeek, 2011). The key objective of the venture
is to gain maximum profit which can be done with the help of customer loyalty. High
profitability can be achieved when Woolworth will able to understand their customers and
deliver them high quality services. There are many new companies that are coming to the market
which deliver similar set of products and services and this is the key reason customer's loyalty is
decreasing. Other than that customers have become variety loving, most of the new competitors
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are serving variety products which attract them, this is how old venture are losing their market
share. Marketing conditions are becoming hight competitive which have decrease in customer
loyalty and this have become big problem for the branded organisation. There are many rivalry
business operating in economy thus, different plans and policies should be developed by firms
which are effective in order to retain customers (Kim and Mauborgne, 2014).
Woolworth Limited are one of the largest firms who are executing their business in retail
sector in Australia. There main aim is to maintain strong relations with clients in order to gain
loyal customers. They are facing issues as sales rates are highly declining. This is executing
because customers are buying goods from rivalry firms.
This investigation helps the researcher to analyse their competitors with the helps of
internal and external environment analysis. With the help of research, organisation can frame
different strategies and tactics which helps them to attract and retain customers by which they
can earn high revenues and high rate of return on their investment. The limitations of the study
was the researcher was not having good amount of time, fund and resource in order to conduct
the research on customer loyalty and reason behind decrease in customer loyalty (Kirzner, 2015).
2 Problem identification
The organisation is facing very biggest problem that is customers loyalty where they are
not able to retain their customers due to increase in competition in the market place. The main
aims of each firms is to earn high profitability which are valuable for them in order to expand
their business activities. This can be achieved if Woolworth Limited will recognize and
understand the taste and preference of their clients which helps them to deliver goods and
services according to their needs and wants (Kim and Mauborgne, 2014). Customers needs and
wants plays significant role customers loyalty, it can be stated that organisation will able to
retain their customers if their fulfil their expectations in every purchase. Woolworth Limited are
one of the largest firms who are executing their business in retail sector in Australia. They are
facing issues as sales rates are highly declining. This is executing because customers are buying
goods from rivalry firms.
2.1 Management decision
 Woolworth Limited should plan strategies and tactics in order to gain customer loyalty so
that there will be increase in profitability and sales of the venture.
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 Woolworth Limited should develop innovative and variety products for the variety lovers
which help them to satisfy customers and gain customer's loyalty. This helps in
establishing a positive image of business in the marketplace as well as in the eyes of
rivals.
Aim:
To evaluate Reduction in customer loyalty due to increase in competition A case study
on Woolworth Limited.
2.2 Research question
 What is the meaning of customer loyalty?
 What are the different factors which leads to decrease in the customer loyalty?
 What is impact of increase in competition on customer loyalty?
 What are the strategies that can be implemented by Woolworth Limited in raising
customer loyalty?
2.3 Research objectives and issues
Different types of research objectives are described below as:
 To explore the concept of customer loyalty
 To identify the different advantages that firms can have from loyal customers.
 To analyse the different factors which leads to decrease in the customer loyalty.
 To evaluate the impact of increase in competition on customer loyalty
 To find different the strategies that can be implemented by Woolworth Limited in raising
customer loyalty
3 LITERATURE REVIEW
3.1 Customer loyalty
According to the view of Ghorban and Tahernejad (2012) Customer loyalty is the
ultimate rewards attain by the organisation for his efforts which is acquired by the customers or
target market. Sometimes customers loyalty will not be acquired by the best products and
services, but from the customers who regularly come for the same product and brand. It might be
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possible that the organisation may not have the best product and services or the customer may be
having some problems with the venture in respect of his supply of the product. But the customer
likes to ignore other options and prefers to continue with the same venture as the customer thinks
they provide him more value and benefit than others. In the contrasting view of Hafeez and
Muhammad, (2012) Loyalty always demonstrated by the different action taken place by the
customers. Customer's loyalty does not mean their satisfaction whereas it is the basic aspect for
the organisation in order to retain customers. A customer will be satisfied for the venture but he
or she may not be loyal for the organisation. On the other hand it does not consider or attached
with the client attitude whereas it can be directly attached or influenced by the firm's financial
position. On the other side customer loyalty can also be influenced by the competition, if it is
higher, then customer loyalty will be lower. Thus, it is said that customer's loyalty have indirect
relationship with the competition.
According to the view of Hafeez and Muhammad, (2012) Firms can retain their loyal
customers, if they adopt best pricing policies and serve quality of products to the customers
which are better from their rivalry firms. Business should focus on analysing the needs and
wants of customers and then develop products which are beneficial for clients in order to satisfy
their needs and wants. The key problem which is faced by the organisation is gaining loyal
customers and retaining them. This is very significant for the firms to adopt effective
communication with their loyal customers so they will not switch towards their rivalry business.
In the contradicting view of Ghorban and Tahernejad (2012) Venture should conduct market
research in order to find out the different policies adopted by rivalry and then frame their own
policies in order to attract large group of clients and create customer loyalty. This is very
significant for the organisation to retain their loyal customers who will increase their sales and
profitability margin. This helps the venture to achieve strong positions of business at
international levels. The firm should adopt different measures in order to keep their customers
happy by giving them quality products and within the specified time frame. The products should
be effective in meeting different expectations of customers so that clients will not buy goods
from the rivalry firms who are operating their activities at market places.
3.2 Business performance and impact on their performance due to entry of new rivals.
According to the view of (Han, Kim and Kim, 2011) Business performances can be
evaluated from the output the organisation are receiving in term of sales and gaining loyalty of
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customers. If firms want to monitor their performances at market places then they have to
evaluate three areas that are shareholders, financial performances and product portfolios. These
three factors are essential component for business to know about their current market positions
against their competitors. In the present era firms are more focused towards using score cards in
order to monitor growth level and track their performances. This can be one method to gain loyal
customers and increase their performance from rivalry firms. In the contradicting view of
Hollebeek, (2011) There are several difficulties faced by the venture while they are focused in
retaining loyal customers from competitive edge. Thus, it is very important to analyse all the
factors which are valuable in gaining success for firms. If all difficult factors are identified then
it results in solving all types of research questions in effective and effective way. Firms can
focus on adopting best and effective strategies which are valuable for them in order to increase
their performance level at market places. They should adopt those strategies which are helpful
for them in order to gain strong positions which helps them to enhance their profitability and
productivity.
3.3 Effect of competition on business performance and customer loyalty.
According to the view of Sufrin, (2016) In today's ear there are large number of rivals are
increasing day by day which are grabbing market share of old organisation. Competition has
huge impact over the performance of organisation as well as it have great influence over the
loyal customers. It is very significant for Woolworth to focus on adopting best and effective
strategies in order to increase their performance level at market places. They should adopt those
strategies which are helpful for them in order to gain strong positions at market places in order to
increase their productivity and profitability. In the contradicting view of Chang and et. al.,
(2012) Woolworth Limited should adopt effective strategies and tactics such as strong
communication, rewards to customers, effective promotion strategies and pricing strategies
which helps them to fight with their competitors. This helps them to gain strong market
positions and retain loyal customers.
3.4 Methods to improve customer’s Loyalty
According to the view of Hafeez and Muhammad, (2012) There are different tools used
by the organisation in order to gain loyalty of customers which helps them to achieve
competitive advantages. Customer loyalty is the essential factor which helps firms to make their
customer base stronger. Woolworth Limited should conducted internal and external research in
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order to analyse differential needs and wants of customers. This helps them to manufacture
products according to customer choices in an effective and efficient way. In the contradicting
view of Sufrin, (2016) the factors which helps the organisation to retain customer loyalty are
Reward to customers, The firms can achieve loyal customers if they apply innovative tools and
techniques in order to gain loyalty factors of clients. This helps them to attract large group of
customers who will purchase their products and increase their profitability. Rewards can be
given by developing value packs or giving discounts etc. other than that Increase the friendliness
of staff, Woolworth Limited are dealing in retail business so they should behave in friendly way
with all of their customers in order to make their presence for long time at work place.
Employers should focus on delivering quality products on proper time in order to achieve loyal
customers. So that customers will not buy goods from rivalry firms. Employers should serve
their customers with smile on their faces in order to earn respect and friendliness from
customers.
4 RESEARCH METHODOLOGY
It is described as the process which are used by business in order to gain all their
predetermined goals and objectives in effective and planned ways. This is used as base in order
to resolve all types of difficulties that are faced by researcher in gaining loyalty of customers
from high competition in economy. Different factors are contributing in selection process
(Kirzner, 2015). It is main responsibilities of firms is to analyse the needs of customers and
provide them products which can easily satisfy them (Chang and et. al., 2012). This is valuable
in retaining their loyal customers so that they will not buy products from other rivalries which
are operating at market places. Different factors have to be analysed by researcher in order to
achieve their overall aims and objectives. There are various tools and techniques related with
research methodology which are described below as:
4.1 Research design:
The researcher have used effective research design in order to analyse different tools
which are used by their rivalry firms so that they can use more effective techniques in order gain
loyalty of customers. There are different types of research design that are analytical, descriptive,
correlation etc. These research design are the best tools which are used by firms in order to make
integration among different elements which are related with logical and coherent terms (Smith,
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2012). Exploratory research design are always based on new and innovative ideas and these are
used by researcher in order to carry out research activities in new formats. Experimental design
are different they are always based on mathematics tools thus they are providing best and
effective results which are useful for business to achieve loyal customers. In this report
Descriptive research is used as it helpful in doing detail study and collecting relevant
informations which are helpful in providing success for business operations.
4.2 Research approach:
This is based on time durations in which activities of business will be completed. There
are basically two type of research approaches that are deductive and inductive approaches.
Deductive research are based on new and innovative ideas are developed on the basis of
hypothetical situations whereas inductive research approach which are beneficial in executing
theories on the basis of elements which are identifies at market places. In this research inductive
approaches are used (Han, Kim and Kim, 2011).
4.3 Research philosophy:
In this part of research there are different theories used which are written by good
authors. There are two types of philosophy that are positivism and Interpretivism philosophies
(Hollebeek, 2011). In the present research Interpretivism are adopted by research persons in
order to analyse different perception of customers and qualitative aspects so that true information
can be gathered which are useful in executing research in well defined directions.
4.4 Data collection technique:
There are basically two sources of collecting the data which is referred as Primary and
Secondary sources. In primary sources the information collected is first hand. In secondary data
informations are gathered from those sources which are also mentioned in books, journals,
magazines, newspapers etc. In this research, primary information and data have been collected.
4.5 Data Sampling:
Sampling are most vital and effective terms which are used for collecting data in
effective and planned way. The researcher have collected information on the basis of samples
(Liu-Thompkins and Tam, 2013). They are preparing questionnaire and the respondents are
asked to fill the forms so that they can easily know the view points of customers. The samples
have been collected on the basis of non probabilistic technique.
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4.6 Ethical consideration:
`There are different types of issues which are faced by research person while they are
collecting data about loyalty aspects of customers while there are many competitors in economy.
While collecting informations all the difficult aspects should be analysed which are creating
problems while gathering data. There are various risk which are faced by research person like
there are large number of competitors who are running their business operations in similar fields,
thus they are not able to evaluate the best and effective methods which can be used by them
which helps in determining success of business.
5 ADDITIONAL ISSUES
5.1 Ethical issues
Potential risk that have been involved when the data have been collected from the
respondent in survey such as their emotion, dignity etc. Other than that confidentiality of
participants and feedback of results to participants (Hafeez and Muhammad, 2012). With that
ethical issues related to data collection are using inappropriate sample sizes or selecting what to
observe and failing to report negative findings
5.2 Limitations of the research
In this research descriptive forms of research are used which are valuable in finding out
solutions by which the problems can be easily solve and firms will retain loyal customers who
will buy their goods. There will not no effects on business operations from rival business if they
are able to gain trust of their customers (Kim and Mauborgne, 2014). Other than that researcher
was not having enough time, money and resources to conduct the research.
5.3 Gantt Chart
Time scale
Activities/ weeks 1 2 3 4 5 6 7
Research proposal
Research aim and objectives
Research questions
Literature review
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Judgement
Recommendations
concluding
There are different activities conducted in a week. On the first day research proposal was
designed in order to solve the issues which were faced by firms. Then aims and objectives were
designed with the help of which research can be carry forward. Then questions were prepared on
3rd day and on the basis of this Literature review was conducted. Then decision making process
was held in order to implement effective ideas and lastly future recommendations were taken to
make improvements in business operations in order to gain loyal customers.
5.4 Budget
Exploratory Stage Description
Budget
20 hours* $120 $2400
Agency for Fee, participant
recruitment
$1000 $1000
Refreshments that includes
sushi
$20 *6 times + $5*48 persons $360
Rent $120 * 6 times $720
Incentives $100 * 48 persons $4800
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Loyalty Programs on Customer's Loyalty: Evidence from Banking Sector of Pakistan.
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Jahanshani, A. A. and et. al.,2014. Study the effects of customer service and product quality on
customer satisfaction and loyalty.
Jones, A. and Sufrin, B., 2016. EU competition law: text, cases, and materials. oxford university
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