Managing Customer Relationships

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Electronic Commerce

Electronic commerce (e-commerce) is generally referred to as the process of buying and selling using Internet as the platform that connects the consumer and the seller (Chaffey, 2015). However, Chaffey (2015) states that e-commerce should include non-financial transactions as well. Non-financial transaction may be activities such as customer support. Kalakota and Whinston (1997) identified four possible perspectives to view the scope of e-commerce. Firstly, through a communications perspective, where focus lies on delivering information, products, services or payments through electronic means. Secondly as a business process perspective, emphasising how technology is used in business transactions and workflows. Thirdly as a service perspective, which concerns how information technology is used to enable cost cutting, increase speed, and the quality of service delivery. The final perspective concerns the actual buying and selling of products through the Internet and is called the online perspective (Kalakota & Whinston, 1997).

Electronic Grocery Retailing

In the late 1990s and the beginning of the 21st century, attempts of implementing e-grocery stores failed (Johnsson & Jönson, 2006; Taskanen, Yrjölä & Holmström, 2002). It was mainly in the United States that the first e-grocery stores were developed, but they encountered difficulties from the beginning and most firms within the new industry went bankrupt within a span of five years. Companies that were involved in the first attempts in the e-grocery industry invested vast amount of money, without considering the costs. Additionally, the failing companies overestimated the interest from the customers and the possibilities for growth in the market. Furthermore, difficulties with the distribution logistics were not dealt with properly in the process, and resulted in another underlying factor for failure. (Taskanen, Yrjölä & Holmström, 2002). The online grocery market has since the beginning of the 21th century redeveloped. The market is becoming economically viable and is growing steadily. The online egrocery stores are becoming a threat and the already established firms on the grocery retail market need to go online. Many new actors are interested in investing in the market and that makes the growth rapidly accelerate (Oliver Wyman, 2014).

Swedish Grocery Market

The grocery market in Sweden accounts for 52 percent of the total turnover of 250 billion SEK of the total retail industry (Statistiska Centralbyrån, 2015; HUI Research & Handelns Utvecklingsråd, 2015). The four biggest food companies in Sweden are ICA, Coop, Axfood and Bergendahls (Statistiska Centralbyrån, 2015). In 2014 ICA had approximately 51 percent of the market shares in the Swedish food market, followed by Coop with around 21 percent, Axfood with approximately 16 percent and Bergendahls with 7 percent (Delfi, DLF & HUI Research, 2015). The average Swede spends around 12 percent of the total household budget on groceries. This is a lower percentage spent on food, compared to thirty years ago, but that does not mean Swedes are spending less money on food, rather that the Swede’s financial situations have improved. The price sensitiveness on food is usually low, but it is highly dependent on the product category. When Swedes earn less money some products get prioritised over others. The Swedish consumers are more aware regarding price in times of crises and chose low price alternatives in higher extent. (Lööv, Sköld & Widell, 2010).

Pre-Packed Grocery Bags

The pre-packed grocery bag is a meal concept where customers purchase pre-planned dinners. The bags include pre-decided groceries and prepared recipes, which is usually delivered to the customer’s home. In 2011, sales of the pre-packed grocery bags grew significantly in the Swedish market and were the same year appointed as Christmas Gift of the Year due to its innovative solution and high popularity. It is further suggested that consumers are becoming increasingly more willing to pay for the comfort and convenience brought by the service of purchasing a pre-packed grocery bag (HUI Research, 2011). The most usual method of purchasing the pre-packed grocery bags is through starting a subscription to a desired prepacked grocery bag offered by the firm. Customers can usually choose from different standardised bags, and adapt to the number of dinners and portions that will be included in their subscription (Matkasseguiden, 2016a). Actors in the market worth to be mentioned due to popularity among customers are; Linas Matkasse, Matfrid, and City Gross (Matkasseguiden, 2016b).

Differentiate Customers Based on Their Value

Through evaluating the value of a customer’s current behaviour and future possible behaviour, that is a result from the firm’s strategic activities, the most profitable customers can be identified and resources can be allocated accordingly. What is currently known or predicted about a customer’s behaviour is often referred to as actual value. While what the firm could represent for a customer, if it changes some aspects of its business strategy, is called potential value. It is near impossible to accurately determine a customer’s actual and potential value, but to get an estimate of these for each individual customer is valuable, because every customer has some impact on the firm’s financial situation. In order to determine which customers are the most valuable many businesses use what is called the RFM model. The model aids firms in ranking their customers based on the most recent transaction, the frequency of past purchases and the monetary value of the customer’s purchases during a specified period. Based on the RFM model, the firm can develop a predictive plan of action. (Peppers & Rogers, 2011).

Table of Contents :

• 1 Introduction
  • 1.1 Background
    • 1.1.1 Food Culture in Sweden
    • 1.1.2 Electronic Commerce
    • 1.1.3 Electronic Grocery Retailing
    • 1.1.4 Swedish Grocery Market
    • 1.1.5 Pre-Packed Grocery Bags
  • 1.2 Problem
  • 1.3 Purpose
  • 1.4 Research Question
  • 1.5 Definitions
  • 1.6 Delimitations
  • 1.7 Disposition
• 2 Theoretical Framework
  • 2.1 IDIC-Methodology
    • 2.1.1 Identify Customers
    • 2.1.2 Differentiate Customers
    • 2.1.2.1 Differentiate Customers Based on Their Value
    • 2.1.2.2 Differentiate Customers Based on Their Need
    • 2.1.3 Interact with Customers
    • 2.1.4 Customise the Customer Experience
  • 2.2 Consumer Decision Process Model
    • 2.2.1 Need and Opportunity Recognition
    • 2.2.2 Information Search
    • 2.2.3 Evaluation of Alternatives
    • 2.2.4 Purchase
    • 2.2.5 Post-Purchase Behaviour
  • 2.3 Word-of-Mouth, Referrals and Social Media
  • 2.4 Bundling Theory
  • 2.5 Customer Involvement
  • 2.6 Electronic Commerce
• 3 Methodology
  • 3.1 Research Philosophy
  • 3.2 Research Purpose
  • 3.3 Research Approach
  • 3.4 Research Method
  • 3.5 Data Collection
    • 3.5.1 Primary Data
    • 3.5.1.1 Selection of Participants for Company Interview
    • 3.5.1.2 Selection of Participants for Consumer Interview
    • 3.5.1.3 Interview Guide
    • 3.5.2 Secondary Data
  • 3.6 Interpretation of Data
  • 3.7 Quality of Data
• 4 Empirical Findings
  • 4.1 Interviews with Company Representatives
    • 4.1.1 City Gross
    • 4.1.1.1 The Swedish Grocery Market
    • 4.1.1.2 City Gross’ Role on the Market
    • 4.1.1.3 Areas of Development
    • 4.1.1.4 Customers and Customer Relationships
    • 4.1.2 Gastrofy
    • 4.1.2.1 Gastrofy’s Role on the Market
    • 4.1.2.2 Customers and Customer Relationships
  • 4.2 Interviews with Consumers
    • 4.2.1 Customers Who Have Bought Pre-Packed Grocery Bags
    • 4.2.1.1 Freedom of Choice, Variety, and Product Quality
    • 4.2.1.2 Time-Saving
    • 4.2.1.3 Convenience and Simplicity
    • 4.2.1.4 Inspiration
    • 4.2.1.5 Price
    • 4.2.2 Customers Who Have Never Bought Pre-Packed Grocery Bags
    • 4.2.2.1 Freedom of Choice, Variety, and Product Quality
    • 4.2.2.2 Time-Saving
    • 4.2.2.3 Convenience and Simplicity
    • 4.2.2.4 Inspiration
    • 4.2.2.5 Price

• 5 Analysis
  • 5.1 Identification of Customers
  • 5.2 Recognition of Needs
  • 5.3 Food Trends and the Quality of Goods
  • 5.4 Evaluation of Product Benefits
  • 5.5 Customisation
  • 5.6 Properties of Variation and Customers
  • 5.7 Referrals
• 6 Conclusion
• 7 Discussion
  • 7.1 Limitations
  • 7.2 Further Research
• References
  • Appendices
  • Appendix 1 Questions prepared for interviews with companies
  • Appendix 2 Questions prepared for customer interviews
  • Appendix 3 Questions prepared for non-customer interviews

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