Main Topic: When right is wrong: Chinese customer differentiation through service

Hosts: James Stanworth and Clyde Warden

Our observations showed that the market was dominated by three large hypermarket retailers: Carrefour, RT-Mart and Tesco.  When we shopped in store the differences between the formats was also clear.  Carrefour, in partnership with local conglomerate President Enterprises, focused on aggressive promotions with a scattering of foreign products.  RT-Mart, originally locally developed had a disorganized feeling, with heavy price promotion, a focus on fresh and a service staff promoting products.  Tesco, had modern, Western feel with friendly staff to guide customers around the store.  

This all begged the question as to Chinese customers' reactions to these visibly different approaches. We used an existing measure of retail service quality (From Prof. Dabholkar ) and looked at the impact of service quality on referral intention (see Reicheld's work on this ). Referral intention is often considered by be an observable behavioral intention that reflects positive/negatively on service quality provided.  Since services are often selected through word-of-mouth this factor can be considered critical for retention and loyalty.

Our results showed that whilst customers rated the quality of service high in Tesco referral intention was suprisingly lower than the other stores.  It was markedly so in the case of RT-Mart i.e., comparatively low perceptions of quality but referral intention was higher than the other stores.  We believed that RT-Mart was better able to tune into customers' local preferences than the other stores. 

The Show:

Multinational managers are challenged with the right is wrong mindset in an exotic setting.

Length: 34 minutes. Download MP3 15.71MB (Right click->Save As).

Photos:

• (1) A mountain of fresh Chicken wings, feet and breast. This stall just on the edge of the market. (1) A mountain of fresh Chicken wings, feet and breast. This stall just on the edge of the market.
• (2) A big range here of loose, fresh vegetables. (2) A big range here of loose, fresh vegetables.
• (3) Stalls spill out on to the street. Prices are posted but regulars may get a big extra. (3) Stalls spill out on to the street. Prices are posted but regulars may get a big extra.
• (4) Young, old alike are here. Note the meat being butchered fresh on the left. (4) Young, old alike are here. Note the meat being butchered fresh on the left.
• (5) Bright lights make it easy to see what you are buying. (5) Bright lights make it easy to see what you are buying.
• (6) A big range of pre-packed meats in RT-Mart. See the big glass window that shows preparation and sends a message that all is fresh. (6) A big range of pre-packed meats in RT-Mart. See the big glass window that shows preparation and sends a message that all is fresh.
• (7) Narrow isles barely let two carts pass. (7) Narrow isles barely let two carts pass.
• (8) Products are chaotically displayed that encourages shoppers to browse and hunt for the potential bargain. (8) Products are chaotically displayed that encourages shoppers to browse and hunt for the potential bargain.
• (9) RT-Mart has a huge fresh area. (9) RT-Mart has a huge fresh area.
• (10) Products are piles high and fill all available space. (10) Products are piles high and fill all available space.
• (11) A clever strategy of pre-packed and loose. Customers can assess freshness and choose how much and what they want. (11) A clever strategy of pre-packed and loose. Customers can assess freshness and choose how much and what they want.
• (12) Basic ranking displays the goods... (12) Basic ranking displays the goods...
• (13) with mist spraying on the vegetables. It has a real wet market feel to it. (13) with mist spraying on the vegetables. It has a real wet market feel to it.
• (14) RT-Mart have completely connected with this - all these familar 'wet market' aspects make it comfortable and match Chinese expectations of freshness and value. (14) RT-Mart have completely connected with this - all these familar 'wet market' aspects make it comfortable and match Chinese expectations of freshness and value.
• (15) Price discounts are big and visible. (15) Price discounts are big and visible.
• (16) Carrefour has a much more typical Western hypermarket feel. (16) Carrefour has a much more typical Western hypermarket feel.
• (17) They have added gondolas at the end of the isles to cram in more products here. (17) They have added gondolas at the end of the isles to cram in more products here.
• (18) Narrow isles are clear here. The staff wait to weigh and price produce on the left. (18) Narrow isles are clear here. The staff wait to weigh and price produce on the left.
• (19) Carrefour's fresh range is visibly smaller than RT-Mart but they go for basic display racks. (19) Carrefour's fresh range is visibly smaller than RT-Mart but they go for basic display racks.
• (20) Here a demonstrator, with microphone, attracts two customers. (20) Here a demonstrator, with microphone, attracts two customers.
• (21) The opportunity to taste let's the customer judge freshness and quality. (21) The opportunity to taste let's the customer judge freshness and quality.
• (22) Quick, healthy meals, are an attempt to draw time-pressed customers. (22) Quick, healthy meals, are an attempt to draw time-pressed customers.
• (23) Take a look in the cart. Absolutely typical. Soap, tissues, canned foods, noodles and little or no fresh. (23) Take a look in the cart. Absolutely typical. Soap, tissues, canned foods, noodles and little or no fresh.
• (24) More cleaning materials here too. (24) More cleaning materials here too.
• (25) The Duracell demonstator has lots of energy - note the microphone. (25) The Duracell demonstator has lots of energy - note the microphone.
• (26) Oil along with the TV to attract attention. (26) Oil along with the TV to attract attention.
• (27) Carrefour's new strategy to import foreign products into a special section. (27) Carrefour's new strategy to import foreign products into a special section.
• (28) Flags create a sense of busyness, attract attention and show the product origin. (28) Flags create a sense of busyness, attract attention and show the product origin.
• (29) Another typical end of isle demonstator. Kettles and other hardware is all ready in the background. (29) Another typical end of isle demonstator. Kettles and other hardware is all ready in the background.
• (30) This girl is hooked. Staff are about to engage with the customer, whilst broadcasting on the mic. (30) This girl is hooked. Staff are about to engage with the customer, whilst broadcasting on the mic.
• (31) Tesco mixed foreign and local products together. Here a range of crunchy cookies to eat with tea. (31) Tesco mixed foreign and local products together. Here a range of crunchy cookies to eat with tea.
• (32) A much more conservative style of merchandising. With... (32) A much more conservative style of merchandising. With...
• (33) plenty of room to move carts and people around. (33) plenty of room to move carts and people around.
• (34) A big in store bakery. Here features discrete price labels. (34) A big in store bakery. Here features discrete price labels.
• (35) In some cases products didn't have Chinese labels which is surprising since many are not typically found in the Far East. (35) In some cases products didn't have Chinese labels which is surprising since many are not typically found in the Far East.
• (36) Many UK service systems were imported - like this 'you told us-we did it' - notice board. (36) Many UK service systems were imported - like this 'you told us-we did it' - notice board.
• (37) This notice tells customers about low price and good value. Discrete and out of the customers sight it was easy to overlook. (37) This notice tells customers about low price and good value. Discrete and out of the customers sight it was easy to overlook.
• (38) Tesco look after their staff well so the vacancy board was rarely full. (38) Tesco look after their staff well so the vacancy board was rarely full.
•  

ConsumerCam:

Vid. 1) Here is an example of service for weighing vegis at Carrefour.

{embed_uri}carrefour_vegi_checkout{/embed_uri}
 

Show Links:

• Information on the growth of Tesco.
  
• The growth and development of Carrefour.
• Corporate information on RT-Mart

Bottom Line:

• Tesco is service orientated and stock more exotic products, they also offer spacious parking lot that is operated 24hrs.
• RT-Mart is more sales promotion orientated and focuses on domestic products.
• The major hypermarket shoppers are aged between 30-45.
• The perception of quality of Tesco is reasonably higher compared to RT-Mart and Carrefour.
• The willingness to refer by consumers was the exact opposite, low for Tesco and higher for RT-Mart and Carrefour.
• The willingness to refer for RT-Mart and Carrefour is influenced by the relatedness factor that is enjoyed by the consumers. E.g. Demonstrators high interaction with shoppers.
• Carrefour presents a central position in the retail setting.
• Multinational managers are challenged with right is wrong mindset in an exotic setting.