Is it strategically viable to start a generic grocery business in the present state of economic, legal and social market conditions of UAE?
Abstract
Generic products are becoming popular in most of the Western world countries. However, in other economies the concept of generic products is new and needs more awareness about the usage and importance of these products. Considering the need of introducing more of generic products, a detailed business plan has been presented to analyse the feasibility of introducing generic grocery products in the markets of United Arab Emirates. In order to design the business plan a detailed research study in the markets of UAE has been undertaken by focusing on information related with industrial situation, analysis of competitors, consumer behaviour, lifestyle, demographics and eating habits and patterns of consumption. The data has been collected through secondary sources of study like magazine articles, market reports and Internet sources to conduct an exploratory study. The results of the study has been successful in achieving the objectives of the study and establishing the feasibility and viability of generic grocery products business in the markets of UAE under present social, economic and political situation of the region.
The products that are packed plainly and are economy oriented in nature are known as generic brand grocery products. These products were considered as low in level of quality in comparison to their branded counterparts (Prendergast and Marr, 1997). As discussed by Ober (2009) these generic products does not have any traditional brand names and the labels of the products provides information about the packaging and ingredients of the products (Findlay and Sparks, 2008). The primary salient appeal of generic brand grocery products has remained the low price at which they are sold.
It was during recession when a significant degree of popularity was gained by the generic grocery products because of offering high quality of low price in comparison to branded products offered at high price (Boone and Kutz, 2013). However, the attraction of customers have remained mainly due to high quality of these products even at a lower price. Retailers in present day situations are making sincere efforts to improve the labelling and packaging of generic products to improve the customer base and ensure long term loyalty by establishing a strong brand image (Ober, 2009). As per the view of Lamb and Hair (2012) these activities has assisted in generating a loyal customer base towards generic substitutes of grocery items even when a key position has been acquired by labelled and branded products in developed as well as developed countries.
In the Gulf region, UAE holds the position of having a mass sector of grocery retail which is expected to rise to AED 27.7 billion by the year 2015. One these figures are attained the region will comprise of 74% of overall food and drink market of Gulf (Government of Dubai, 2013). In largest emirates of Dubai there are most of the modern retail stores established as a large number of population of the region is found in this emirate of UAE.
The present study has been conducted to find answer to the following research question:
Is it strategically viable to start a generic grocery business in the present state of economic, legal and social market conditions of UAE?
Objectives of the investigation
The present study was conducted to achieve the following research objectives:
As discussed by Clifton (2010) the products of generic nature can be easily found on every shelf of American supermarkets and other stores. A minimum degree of attractiveness can be found in packaging of these products as these are sold with descriptive names. As reported by Shippey (2011) the response from consumers has remained favourable, particularly for products where the price differential is substantial and the product quality is comparable or less important. The popularity of generic products in grocery section in markets of USA makes it a viable option to study the business prospects of such products in a market like UAE. The market offers huge population and a significant level of dependency on imports from U.S. for food products. Further the study is justified in light of the current state of grocery industry and its future prospects in UAE.
The present study followed the philosophy of positivism for collecting data that is reliable helping to attain objectives of the study through analysing the collected information focused on getting clarity over real world scenario and understanding the business prospects in generic grocery business in UAE markets.
Further, qualitative information was obtained through secondary sources of information. The information collected was associated with the condition of market and industry as well as behaviour and attitude of consumers towards grocery products. The information also relate to the lifestyle and food demand among people of UAE and what different categories of food products are in high demand in the region. This data can be best analysed with the help of deductive approach to data analysis and therefore this particular approach has been used to conduct the research work and achieve the objectives of the research study.
In order to analyse the collected information and get answer to research question the models of PEST analysis and Porter’s five force have been used under the study. These methods have helped in getting an insight into the industrial situation as well as general business environment of UAE. The methodology under this particular research work followed the route of secondary method of study where the data about current situation of UAE’s grocery industry and macro environmental factors has been collected though government reports, company reports, competitors reports, magazine articles, journal articles and latest news articles along with Internet sources. However, relying only on secondary data may not prove to be appropriate at postgraduate level and therefore, various frameworks have been used in a unique way to analyse the available information about UAE’s market.
The research report will be divided into following five chapters:
Chapter 1: Introduction
This chapter will provide a background to the research along with providing a justification for the study, providing the research question and a brief about methodology of the study.
Chapter 2: Literature Review
This is the second chapter of research study where various theories associated with research objectives will be discussed.
Chapter 3: Methodology
In this third chapter the details about data to be collected for analysing the market situation in UAE, industrial condition in grocery industry of UAE, information required about consumer behaviour and attitude, demographics and lifestyle of people in UAE and political, legal, social and economic conditions of the region will be provided. The details about the way of collecting required data and models used to analyse the collected information will also be provided.
Chapter 4: Findings
This chapter provides secondary data collected through various sources of information.
Chapter 5: Analysis and Conclusion
This is the final chapter that presents a detailed analysis of secondary data on the basis of literature review presented in second chapter of the study. The focus will be on providing conclusions in relation to each research objective and that with research question.
Generic Brand: It is a product lacking widely recognised name as it is not advertised and sold at a comparatively lesser price as to branded products.
Viability: It refers to the capacity of operating or being sustained.
Grocery: Non-perishable food stuff sold by retail stores
UAE: United Arab Emirates (UAE) is a country that is the federation of seven emirates and is located in the southeast end of the Arabian peninsula on the Persian Gulf.
The report presents the detailed study conducted to understand various strategic, managerial, and legal, market related and economic factors that can affect the viability of a generic grocery business in UAE. A method of secondary study has been followed to collect the required data and results have been analysed by benchmarking with the detailed literature review provided in relation to overall objectives of the study.
There are several ways to classify brands and can be categorised as private, manufacturers or national, family and individual (Clifton, 2010). Whiel taking any decision associated with brands and branding there is a need for the firms to understand the merits and demerits associated with each brand (Lamb and Hair, 2012). However, some companies are selling their products without putting much effort on branding and these products are known as generic products. Key categories of generic grocery include food and household staples. These products were introduced originally in Europe and were priced as much as 30 per cent less in comparison to the branded products in same category. Originally the strategy of these products was introduced in the United States around 3 decades back and there has been a considerable rise in market share of these products even after improvements in economy. As argued by Clifton (2010) there is a wide range and variety of consumers demanding for generic products and prefer these in comparison to branded substitutes whenever available.
As discussed by Martha and Hawes (1984) the high rate of inflation during 1970s in USA posed new challenges that made manufacturers to think of new opportunities. These opportunities and challenges resulted in a major development on strategic level where the generic products were developed and introduced in markets of USA. These products were terms as being no frills consumer products. Several practitioners and scholars can be found debating on long term success of these products in a market. However, there are success reports from American markets where the one-third of supermarkets can be found offering these products since the inception of the products in 1979. The distribution of generics continued to expand, and, by 1980, 51 percent of the supermarkets of the United States were selling generic groceries (Denis, 1984).
In modern grocery retailing, private labels are playing a key role and includes the products developed and marketed by retailers running various retail formats (Findlay and Sparks, 2008). There are certain specific occasions when these products are sold as premium products but the modern grocery have started leveraging on these private labels for generating huge revenues as these products can offer better margins to the retailers (Boone and Kutz, 2013).
The Modern Grocery Retailing market of USA reported that the demand for convenience foods is growing in the category of generic products (PR Newswire, 2014). Foods that can be prepared easily or are ready to eat in nature are considered as convenience foods. As pointed out by Ober (2009) with people’s life becoming busier and they require ample time for leisure there is a growing demand for food that is conveniently available and healthy in nature. Apart from such a need the requirement of keeping a control over budget of household and with more women coming in working sphere along with changing nature and demographics of the countries, the demand for generic products is bound to rise (PR Newswire, 2014).
Some important academic theories associated with the aims and objectives of the present study can be considered here. These theories have relevance to the research objective where the industry and market analysis of generic grocery business of UAE has to be conducted. These theories are also relevant to third research objective where the sales and marketing strategies to be adopted for target market are required to be examined.
The theory of product differentiation applies to the generic category of products as retailers can achieve a competitive advantage through providing products that are new and unique but available at low price in comparison to branded products and also act as a major source of fighting the competition posed by foreign food products.
2.2.1 Product Differentiation
Product differentiation is represented in a number of different ways. In particular, economic models distinguish between vertical product differentiation and horizontal product differentiation. With vertical differentiation, all consumers have the same preferences and thus agree that some products are better than others and this can be referred to as product quality. With horizontal differentiation, consumers can have differing preferences and thus some may like one product while others prefer another and this can be called as product variety. The generic products lies in this category of vertical as well as horizontal differentiation where consumers get a choice of selecting between branded and generic products that are being offered at a price lower but having high quality characteristics than the branded products.
Through product differentiation, market power is gained by firms enabling them to transcend the Bertrand Paradox for pricing of homogenous products whereby some identical products are sold by two or more firms and these products are perfect substitutes of each other (Bazdresch, 2011). Therefore, it is not possible for one product to carry a premium price and retain positive sales. Here it is assumed that marginal costs of both products are common and are kept constant while market demand has a finite price intercept. This paradox is naturally resolved by product differentiation. Here products become imperfect substitutes and firms have some market power because of special features of the products and are able to set prices without a completely elastic response by consumers (Tirole, 2012).
However there are some models of product differentiation where choice if not treated explicitly and is assumed as a framework generating a demand system (Tirole, 2012). One such model is discrete choice model where structure of product differentiation is considered critical for predicting results. As per this particular model the idea that product differentiation softens price competition fits well with the observation that firms often search for market niches when positioning their products (Dirisu, Iyiola and Ibidunni, 2013). However, there are limits to differentiation. Fixed prices, discrete concentration of demand in the product space, and cost of demand gains from the agglomeration of firms all may foster product homogeneity. It is also important to understand that actual differentiation is multidimensional and not limited to any single dimension, i.e. vertical or horizontal. There is a limited research available explaining the issue of demand complementarity and substitutability of various product characteristics and of the optimal strategic mix of these characteristics (Tirole, 2012). This multidimensional nature of product differentiation is clearly visible in case of generic grocery products that are produced ensuing high quality but sold at relatively lesser price by avoiding the cost of advertising these products in general market.
This differentiation theory is linked to the business plan as the focus is on identifying the scope of introducing a generic category of food products through large retail chains in a new market of UAE. The business plan is directed to introduce generic grocery products that are new for market of UAE and are required to be sold at a price lesser than the branded products of same category.
2.2.2 Theory of Comparative Advantage
The theory of comparative advantage is also a key theoretical foundation that can be applied to a situation where the opportunity lies in ability of a party to offer particular product or service at a lower marginal and opportunity cost over another (Tayeb, 2009).
Theory of comparative advantage focused on the major foundation of trade that is found in differences in comparative cost. The theory of comparative cost suggest that one party or country may be more efficient than another, as measured by factor inputs required to produce one unit of each commodity (Mukherjee, 2011). But so long as it is not equally more efficient in the production each there will always exist a basis of trade between them from the supply side. It will pay the country of the produce to produce more of those goods in which it is relatively more efficient and export those in return for goods in which it is relatively inefficient Comparative cost advantage refers to differences in relative efficiency between two countries in the production of two commodities (Warf and Harrington, 2010).
2.2.3 Theory of Competitive Advantage
The concept of competitive advantage was provided by Michael E. Porter through his five force model and generic competitive strategies. Porter has argued that in present business environment, it is possible to gain a competitive advantage through the use of different models and methods.
The three approaches to competitive advantage has been defined by Porter (1998) comprising of cost leadership product differentiation and focus. He has also advocated the application of both the strategies in a simultaneous manner so as to attain a competitive advantage in a short duration of time. There are some key approaches to achieve competitive advantage that are discussed as follows:
2.2.4 Porter’s five force model
Under this particular model, Porter focused on five major forces operating in every market. These forces include bargaining power of suppliers, bargaining power of consumers, threat of new entrants, threat of substitutes and the rivalry among existing competitors (Mukherjee, 2011). A focus on these market conditions help in making decisions in relation to viability of a business opportunity in a particular market as under each heading of the model it is possible to develop complex analysis of competitive position for creation of strategy, designing plans or making investment decisions (Figure 1).
Figure 1: Porter’s five force model
Porter’s generic strategies
The second most important determinant is the position of any firm within industry. Even is the industry is operating at a low profit, a firm can create superior returns is it is well positioned in the market. It has been argued by Porter (1998) that the strength of any organization depends upon its cost advantage and differentiation. With the help of these strengths the firm can follow three generic strategies namely cost leadership, differentiation and focus. These strategies can be applied at business unit level and are known as generic as they are not dependent on any industry.
Unlike Porter’s five forces model, which is often used for situational analysis, his Generic Competitive Matrix, which consists of three strategies, is mainly used for describing that the business can achieve and maintain competitive advantage, based on its market scope and competency (Figure 2).
Figure 2: Porter’s Competitive Strategy Matrix
The three different kinds of generic strategies are:
While these strategies are not mutually exclusive, it is not common to see successful companies utilizing these strategies in a combined manner within a specific timeframe.
Ansoff product matrix
A major marketing tool as developed by Igor Ansoff is the product or market matrix offering strategic choices for achieving the goals and objectives. There are four major categories of selection namely market penetration, market development, product development and diversification.
Diamond Model of Porter
Michael E. Porter provided a Diamond Model that explains the advantage offered by nation helping us to understand the comparative position of a nation in global competition (Tihanyi and Pedersen, 2012). Porter argued that the competitive environment of a country determines the success of any industry in the country. Therefore the focus should be on studying the general business environment and general environment of the nation. This is determined by some key factors that take the form of condition of factors, industries supporting and related with each other, demand conditions, and firm strategy, structure and rivalry. Additionally, there are some key factors that shape the nation’s competitive environment and there are two factors as emphasized by Porter (Reinert and Davis, 2011). The first factors refers to the role played by chance events such as an invention, shortage of key inputs, a sudden rise in the costs of inputs, or the political decision of government. The second is government policy’s role having the power of influencing the organizations of any industry in a positive or negative manner. The extent to which government intervention has contributed to the emergence of a national competitive advantage in particular countries is hotly debated (Reinert and Davis, 2011).
An important aspect of the phenomenon of national competitive advantage is that it is an evolving process, in which all the factors interact, with each determinant influencing the others (Pitts and Traill, 1998). This process of interaction is as important as the presence or absence of each of the factors viewed separately.
This model provided by Porter is also associated with the need of sustaining a competitive advantage. The firms operating in international destination are required to gain a competitive advantage, but also needs to sustain such an advantage through processing of widening and upgrading. As discussed by Tallman (2010) factors giving rise to competitive advantage are necessary for ensuring sustainability too. Such factors comprise of investing in institutions undertaking the work of research and generating ideas, the composition of demand and the intensity of domestic rivalry, and the extent to which the different factors in the diamond interact (Pitts and Traill, 1998).
This particular model will help in studying the international business scenario to identify the reasons of attractiveness of UAE on a global level in comparison to other foreign destinations.
A healthy environment for foreign business is provided in UAE through its friendly political, economic and technological environment. As discussed by Geeta (2012) in UAE there is an easy accessibility to markets, ownership and a strong legal framework influencing the dealings in a free and protected manner. In UAE the strategy of economics says that financial resources and legislative powers are deployed in a manner that it creates first world infrastructures, thoughtful legal, thoughtful legal underpinnings, and living conditions to attract business flow. This has resulted in a strong position within the region as well as on global level in various industries including the retail and mass grocery industry of UAE (Geeta, 2012). Similarly a conducive environment is available for small and medium business sectors as well as least restrictions to market accessibility for foreign players in the region.
The rising interest in UAE as a business destination is justified by the stable political and positive economic outlook of the region. Also, the early recovery of the region from global recession is a major factor attracting foreign investors in the region. It has been reported that the region will grow at a rate of approximately 4 per cent every year. The initiatives and support provided by the government of the region attract strong investments in UAE acting as a regular source of diversification of the economy that will be continued over a long duration in future (Davidov, 2013).
The retail sector of the region is on rise and a continuous growth is reported by the sector supported by the regular up-gradation of retail stores and the state of the art mega stores upcoming in the region. A diverse base of consumers is found in UAE and a majority of consumers coming from high income group (Aruvian’s Research, 2013). An aggressive growth is being reported by the food retail sector of the region where more of large scale stores are being introduced for and several local and multinational operators like Carrefour have entered the retail industry with a focus on food products at several locations across the UAE (ibid.). The consumer ready products are generally imported in UAE and the major source of U.S. food and agriculture industry. The high quality image of these products from U.S. is a major source of popularity of the food products and the inability of UAE to fulfil its food demand due to unfriendly weather conditions have resulted in dependency over imported goods for food (Kamle, 2013).
A touch competition is still being faced by the foreign brands as the government of UAE promotes local retail sector and they are into an expansion mode presently. The supermarkets and hypermarkets of the region are motivated to fulfil the changing demands of a diverse population of the region by making an effort to fill particular market niche of premium food products.
Despite of the economic downturn of 2008-2009, the economy of UAE has reported a strong performance in recent years (Food Export Association, 2013). The increasing disposable income of people in the region is another attraction to start a grocery business in the region as this will have an impact on demand side of grocery products in UAE.
The reason for these characteristics lies in the rising population of the region demanding more of grocery products. The fulfilment of this growing demand is dependent upon imports resulting in high priced grocery products being offered to general public of UAE. The government of the region along with local manufacturers is making sincere efforts to improve the ability of local markets to fulfil the growing demand (Food Export Association, 2013). Such conditions presents an opportunity for UAE markets to introduce products in the generic grocery section that have the ability of meeting the demand locally through high quality low priced products.
The above literature review suggests that UAE markets presents an attractive opportunity for marketing of generic grocery products in through supermarkets. Generic products may have east acceptability in UAE’s markets because of the low price and high quality of generic food products to be sold through super markets. The food products to be offered through supermarkets will prove to a good source of income as the markets of UAE are presenting strong business opportunities through positive economic prospects and rising income of middle class of the region. There are several different theories that can help in analysing the current industry and market situations and explore marketing and sales strategies to ensure success in the target market among various groups of consumers.
Chapter 3Methodology
Before going into an in-depth discussion over research methods and methodology there is a need to understand the difference between the two terms. Research methods refers to various methods or techniques used in order to conduct the research. In other words, it refers to methods used by the researcher used during the course of studying his research problem (Bjerke, 2010).
On the other hand, methodology of a research work represents the systematic way through which the issue under study can be solved. As per Bjerke (2010) we can understand methodology of research as a science to study the way research is conducted in a scientific manner. Here the focus of study is on all steps required to conduct the study and understand the issues under study. As per the view of Bjerke (2010) the researcher is required to understand the way of developing the methods or techniques to be adopted for study and also the methodology to be followed for answering the research question.
It is also necessary to understand that research methodology is somewhat different from preparing a business plan. The present study has followed a business plan method to collect the information related with present situation of grocery industry of UAE, the state of competition in the industry and policies of government that can have an impact on business of the firm. Further the information related with attitude of consumers towards grocery products, the present and expected demand for these product in future and expected consumer behaviour towards generic grocery products has been collected and analysed under the research methodology of the study.
Saunders. Lewis and Thornhill (2009) has provided a research model termed as research ‘onion’ that helps in explaining the methodology of the research study. The model comprise o six different layers explaining the major philosophies of the study explained under layer one. The second layer explains the research approaches and third layer talks about the research strategy. Further there is fourth layer that discuss the methods and choice of methods followed by the next layer explaining time horizons. Then the final layer represents the techniques and procedures.
In the present research study the research has followed the philosophy of positivism for collecting the data that is reliable in nature and achieve the objectives of research based on data analysis so as to have an understanding about real world experiences about prospects of business in UAE especially in the area of generic grocery products.
The objective of applying the positivism approach has been to discover the external reality and not limiting only to creation of the object of study. The approach of interpretivism was rejected here as we need a rational and consistent approach to reach the objectives (Gilmore and Carson, 2010). Additionally, the research under this study was required to take the position of an external observer to understand the viability of a new business in a new location while in case of interpretivism there is a need of full involvement of the researcher to experience what is being studied (Gilmore and Carson, 2010). Additionally, the route of positivism has helped in maintaining a clear distinction between facts and value judgements.
The data to be collected for analysis of UAE’s grocery sector and understand the feasibility of generic grocery products in the region, will take the form of economic, political, legal and technological conditions in the region. Further, the details about social classes, lifestyle of people, income patterns consumption and expenditure patterns and attitudes and consumer behaviour towards food and beverages and various brands available in this product category in UAE.
Further the information about demographics of the region along with changing lifestyle of people and expected change in consumption and eating patterns of food products has also been collected for analysis.
The present study has followed the route of secondary method of study and no data has been collected through primary methods of interviews, and questionnaires. Here the data about current situation of UAE’s grocery industry and macro environmental factors has been collected though government reports, company reports, competitors’ reports, magazine articles, journal articles and latest news articles along with Internet sources. A wide variety of sources chosen to collect the required data helped in considering various factors from different perspectives before moving on to the analysis part of the research work. This ensured validity of results obtained from the study at the final stage of the research work.
Therefore, the focus of the present study has remained on collection of details about marketing, political, economic, social, technological, legal, sales, operations customer service and quality standards in relation to grocery markets of UAE and the qualitative data has been collected through secondary mode of data collection.
In order to conduct the analysis of the food and beverage sector if UAE a detailed analysis of the industry and markets of the region will be undertaken. Such an analysis will be conducted through Porter’s fiver force model and PEST analysis. The study of PEST analysis will help in analysing the political situation, economic factors, social conditions and technological developments in the region. Further Porter’s five force model will help in identifying the current situation of industry in terms of threat of new entrants, rivalry among competitors, bargaining power of suppliers and that of buyers along with threat of substitutes available in the industry.
3.3.1 Justification for the selected paradigm and methodology
The present study has selected the secondary method of research due to three major reasons. First, it is practically not possible to collect the primary data from customers in UAE about the concept of generic groceries as the product is very new for the markets. People may not have reached the maturity of using the generic grocery products and thus may be unable to provide a real picture of the scenarios in relation to these products. Secondly, it is practically not possible to gain information about market and industrial situation, government policies and legal formalities from primary sources like government officials, big industrial house owners and existing generic grocery products manufacturers in UAE markets.
Secondly, secondary research allows the researcher to explore existing data using a different form of analysis than previously conducted. Third, as a youth practitioner it is not possible to engage in a study to cover a big region like UAE through primary mode of study which calls for great amount of money and time. Furthermore, the secondary research will contribute to the research process as it will help in illustrating the context for primary research, providing a description of the people, places, events or trends that can further be explored through primary research in future studies (Punch, 2010). It can also help in justifying primary research and makes comparisons possible.
Further, the present research has selected and followed the operative paradigm focusing on qualitative study which is based on the philosophy of interpretive paradigm supporting the view that there are several truths and multiple realities (Trainor and Grauge, 2011). The focus of such a paradigm is on following a holistic approach about the issue or the environment (Trainor an Grauge, 2011) and suits the present research work as it allows us to consider a holistic view of whole grocery industry as well as the region of UAE before making a decision to avail a business opportunity.
It is to be noted that the present study is entrepreneurial in nature where qualitative paradigm is appropriate for its framework that can be used to discover new unknown dimensions associated with the entrepreneurial world (Johnson, 2009). The study of success factors in entrepreneurial world is new to the field of scientific study, and therefore has much potential of latest discoveries and opportunities making qualitative phenomenology appropriate (Punch, 2010). Thus, this particular approach or paradigm will prove to be more productive as compared to quantitative or triangulation paradigm to research work.
3.3.2 Rejected methods
The method of primary research has been rejected under the present research because it was not practically possible to collect the data required to study government policies, market conditions, industrial attractiveness, consumers’ perception and economic and legal factors present in UAE’s markets through primary sources of information. As large volumes of information with several different perspectives and areas was required to analyse the market opportunity for generic grocery business in UAE, it was decided to reject the primary mode of research work.
Further, the method of descriptive research has been selected and exploratory research was rejected as the present study is concerned with questions of ‘who’ and ‘how’. The present research does not have a focus on exploring new issues or explaining why something happened. However, the focus is on identifying what is the situation in UAE’s markets, how people may react to new generic grocery products and who should be the target of these food items. Therefore, no exploration of new methods or issues was required and thus the method was rejected under the study.
As we need to discuss the present market situation and identify the business opportunity for generic grocery products in UAE’s markets in detail, it was required to study and analyse the qualitative form of information related with research objectives. It was not possible to study these situations through figures and numbers and thus the quantitative form of study was altogether rejected under the study. Rejecting the quantitative method of study and focusing only on qualitative method rejects the triangulation method automatically.
The research has been designed by following the qualitative route to study where descriptive data has been collected to conduct an analysis of available information in relation to generic grocery business opportunity in UAE. The qualitative design of research work is based on detailed information and lacks a focus on figures and statistics. The design provides the benefits of credibility, transferability, conformability and dependability along with the features of validity, reliability, objectivity and generalizability.
The research follows a descriptive design of study where the major purpose is to paint a picture using words and to present a profile, a classification of types or an outline of steps to answer questions as who, when, where and how (Punch, 2010). Such a research work presents a picture of the specific details of a situation, social setting, or relationship (Johnson, 2009).
3.4.1 Design of Instrument(s)
Documentary data is the major research instrument used to collect the required data under the present study. Documentary data both historical and contemporary is a rich source of information for social and entrepreneurial research (Karami and Rowley, 2006). Indeed, a distinguishing feature of market and society may well be the vast array of documentary evidence that is compiled routinely and retained for further research work (Karami and Rowley, 2006). Further the other sources of information available in the form of company reports, government records and other internet sources along with previously conducted research work on similar topics have been considered as the instruments to collect the required data under present study.
Saunders et al. (2009) has provided inductive and deductive method of research approach. The deductive approach is based on the data collection along with the theoretical foundations as theory helps in data collection and a new theory is developed by the researcher after consideration of collected theories. This approach to research work generally suits the quantitative form of research (Saunders et al. 2009).
On the other hand, the approach of inductive method focus on qualitative method of study as data here is collected and analysed much before finding theories. Here the results may be similar or different in relation to theories that are considered for study and analysis after the data has been collected (Saunders et al., 2009).
The present study followed the route of secondary method to focus on industrial and market situation in UAE for understanding the feasibility of introducing generic grocery products in the region. A descriptive nature of data has been collected associated with situation in market, prospects of growth in the region, acceptability of generic grocery products in the region to decide upon the appropriate sales and marketing strategy for tapping the markets of UAE. The study follows this approach as information required was of descriptive nature and depends upon current industrial conditions in UAE acting as a basis of determining future trends in demand for grocery products.
The inductive method of analysing data has been implemented for getting results and reaching research objectives. This is so as inductive approach is considered the best suited method for analysing qualitative data.
Most discussions of ethical principles focus upon primary data collection involving human participants (Gilmore and Carson, 2010). There has been far less discussion about the ethical use of documents and secondary data. However, that does not mean there are no ethical issues arising from conducting secondary research (Bryman and Bell, 2007). As secondary sources may include data that may have been collected by someone else or data not specifically generated for research purposes, we may want to be reassured that we are re-analysing data that have been collected ethically and that participants have consented to others viewing and analysing the responses (Gimore and Carson, 2010).
The present research has considered the ethics of the study so as ensure ethical conduct and avoidance of any ethical issues while conducting the research. The focus of current business plan has been in using secondary sources of information, care has been taken to ensure no changes are made to the original data collected for avoiding any bias in the information provided under the research work. Additionally, the no source of study has been used without prior permission wherever required and proper credit has been given to original authors of the source.
Proper acceptance of terms and conditions of various sources used was done to ensure ethical conduct of the study. The researcher has also taken care not to be critical about facts presented in any of the source targeted to collect the required information. Further any data related with key players of grocery industry of UAE has been presented without revealing any confidential information about the company and without naming the views of any executives or managers as available from company reports. These steps helped in ensuing an ethical conduct while the study is being undertaken in the present research work.
The present research has been conducted through qualitative research design where the descriptive method to of research has been followed. The data has been collected through secondary sources of information like journal articles, government reports, company reports, articles, magazines and internet sources. As the qualitative design of research has been followed, the collected data has been analysed through inductive method of analysis and followed the operative paradigm while conducting the research work. The reasons of selecting specific methods and rejecting others has been discussed in detail and have ensured the validity and reliability of results of the research work. It was also important to follow the ethical principles while conducting the present qualitative research and therefore proper care has been taken to avoid any major ethical concerns while presenting the data or results of the study.
The focus of this chapter is on presenting the consumer behaviour, attitudes and perception of consumers towards food products in the United Arab Emirates (UAE). A study of the attitudes of people and their behaviour towards various categories of food products will present a picture about feasibility of selling generic grocery products in the region and scope of their popularity and acceptance in the markets of UAE. The analysis will present details about global trade position, demographics, health and lifestyle, consumption and expenditure and trends in relation to consumer behaviour towards food products in UAE.
In order to foster its continued expansion, UAE is dependent on international trade. The growth in imports of food products in response to the growing demand of the economy is depicted in Figure 4. The graph also shows the growth in exports due to initiatives of the government to diversify the products. The demand presents a continues opportunity for exporters as well an opportunity to introduce more products that are differentiated in the manner that the growing demand for food products is fulfilled through high quality less priced food products (Datamonitor, 2010).
Figure 4: UAE Import and Export of Food Items from World 1970-2009
Source: Datamonitor, 2010
The Food and beverage industry of UAE comprise of two major players including the National Industries and the MNCs.
National Industries: These are the local players where the company has been established through local investments made in the region of UAE and includes the companies established within or outside the free zone. These players have been in place since 1980s in the region but have not reported any significant level of growth during the last decade. Additionally, new companies in this context have remained significantly low in the last few years (Dubai SME, 2011).
These local players generally serve local markets especially in Dubai and have a limited impetus on exports. The established players in this sector are Oasis, Al Islami, Emirates Macaroni, Dubai Refreshments, etc. The industry of manufacturing is considered as characterised with high level of employment (Dubai SME, 2011). However, in Emirates the participation in industry is limited to owners, partners and export managers and HR roles.
MNCs: The Food and beverage industry of UAE has reported growth mainly through international players in the industry that have set-up in the Free Zones and cater to the needs of local markets as well as export markets of Africa and Europe. The free zones have been used by large foreign players to leverage in the systems of transportation and storage and avail the benefits of a conducive business and legal environment (Dubai, 2011).
Additionally, there are indigenously manufacturers in the region due to availability of advanced Wholesale and Retail trade network that is supported by a strong system of transportation and storage that is highly efficient in nature. The region imports most of the products for F&B requirements from across the world and therefore the prices of grocery products is on a higher side in UAE (Datamonitor, 2010).
In order to understand the feasibility of introducing generic grocery products in the UAE, it is necessary to understand the demographics of the region. This is so as the demographics will help in presenting a clear picture about expected consumer behaviour and perception towards a new category of food products that are rarely available in the region at present.
Population
The population of UAE is expected to grow at a CAGR of 3.0% between 2010 and 2015. The 60% of total population of the region is concentrated in major cities of Dubai and Abu Dhabi while expatriates account for 80% of the country’s population in UAE (Alpen Capital, 2011).
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