CHAPTER 1 – INTRODUCTION 4
1.1. Company and problem background 4
1.1. Problem statement 8
1.2. Research objectives and research questions 8
1.3. Demarcation 8
1.4. Definition of terms 9
CHAPTER 2 – THEORETICAL FRAMEWORK 10
2.1. Perceptual mapping 10
2.2. Online shopping behavior 11
CHAPTER 3 – RESEARCH METHODOLOGY 15
3.1. Research objective and research questions 15
3.2. Research approach 15
3.4. Population and sample 16
3.4.1. Population 16
3.4.2. Sample and sampling method 16
3.5. The research instrument 16
3.6. Procedure for data collection 17
3.7. Data analysis and interpretation 17
3.8. Validity and reliability 17
CHAPTER 4 – RESULTS 18
4.2. Findings 18
4.2. Analyses 19
Appendix 3 - Pre-test 24
Appendix 4 - Criteria 25
CHAPTER 1 – INTRODUCTION
This first chapter gives an introduction on the topic of this thesis. The company and problem background, the problem, the statement and objectives, the research objectives and the related research questions, the demarcation, the deliverables and the definition of terms of this research are specified in this chapter.
1.1. Company and problem background
Koninklijke Philips N.V. (Royal Philips, commonly known as Philips) was founded by Gerard Philips and his father Frederik Philips in 1891 in Eindhoven. Nowadays, it is one of the largest electronics companies in the world which was headquartered in Eindhoven till the late 90's. Currently the main office is located in Amsterdam, only Philips Lighting and Philips Research stayed located in Eindhoven. Philips is a diversified technology company that wants to improve the quality of people's life through meaningful innovations on healthcare, consumer lifestyle and lighting. The brand value is $10,933 million which places Philips on the 47th position of world's most valuable brands according to recent research (Interbrand, 2015).
The products of Philips Personal Health Benelux are grouped into four business groups; Domestic Appliances, Personal Care, Coffee and Health & Wellness. The percentage of sales for each business group within the Netherlands in 2015 are provided in figure 1.
Philips Personal Health Benelux sells their products via different distribution channels in the Netherlands. These distribution channels are divided in; food & drugstores, mass merchants, independents, electronic retailers, online retailers, loyalty & incentives and travel retailers. Another way of selling their products is via the online web shop of Philips. All these channels together created a net sales of EUR 197 million in 2015 (Philips, 2015).
Kruidvat is the most important retailer for Philips Personal Health Benelux within the food & drugstore, according to Mr. Arjan Cox, senior key account manager at Philips. This statement can be underpinned with the fact that Kruidvat generated 38.2 per cent of the total sales in the food and drug distribution channel of Philips in 2015 (Philips, 2015). Another fact is that Kruidvat, which is part of the A.S. Watson Group, is the market leader in the drugstore market in the Netherlands, it has more than three million customers per week, and more than 1,000 shops in the Netherlands (Kruidvat, 2016). Drugstores became an important sales channel for Philips according to recent strategic decisions within Philips. This is partly due to the aggregation of the divisions Healthcare and Consumer Lifestyle into ‘HealthTech' (Philips, 2015). Personal Health is still placed central within this division and drugstores can provide consumers with major needs.
Philips Personal Health Benelux generated 2.04 percent of its 2015 sales in the Netherlands via Kruidvat, which is equal to EUR 3.913 million (table 1). Table 2 presents the sales of Philips towards Kruidvat in the business group Health & Wellness, while table 3 displays the business group Personal Care.
Personal Health Personal Health in %
AS Watson 3,913 2.04%
Other Customers 188,256 97.96%
Total 192,169 100.00%
Table 1 Total Sales Personal Health Benelux 2015 in EUR 1,000
Health & Wellness Health & Wellness in %
AS Watson 2,186 11.51%
Other Customers 16,802 88.49%
Total 18,988 100.00%
Table 2 Sales Business Group Health & Wellness 2015 in EUR 1,000
Personal Care Personal Care in %
AS Watson 1,727 3,50%
Other Customers 47,837 96.50%
Total 49,345 100.00%
Table 3 Sales Business Group Health & Wellness 2015 in EUR 1,000
Kruidvat mainly sells products from two categories within the business group Health & Wellness namely Oral Health Care (OHC) and Mother & Child Care (MCC). The products that are currently available online for Kruidvat are listed in APPENDIX. The listed products are split in the two categories and it is specified if it is online available. Not all the products of Philips are online available, this is due to the color combinations in a package, this is only the case for the MCC assortment. The OHC assortment for Kruidvat maintains three electric toothbrush handles and three brush head replacement packages. The MCC assortment contains 11 Philips Avent baby feeding bottles, 11 Philips Avent Soothers, 9 Philips Avent feeding teats and 6 other Philips Avent accessories.
In the past, Philips Personal Health Benelux attempted to help Kruidvat with improving their web shop. This was rejected by Kruidvat, because the web shop was only an extra service, it was not designed to generate as much as sales as possible. However, now-a-days Kruidvat realizes that is has a lot of opportunities by using its online shop together with their market position to create extra sales in the future. Last mentioned can be concluded from recent e-mail conversations. Another reason could be that Kruidvat notices the shift of offline to online shopping, which would be in line with the research of Rabobank (2012), where Rabobank concluded that there is a movement from traditional drugstores towards online (budget) stores since 2012, that consumer wishes change, and that the consumer never has been so unpredictable and it never had so many channels within its reach to purchase a product, to collect or share information.
The Key Account Management plan of Philips Personal Health Benelux states that successful strategic account management requires balance in the strategic intentions. The strategic intentions are stepwise divided in four different stages, which are visualized in figure 2. A new customer starts in the transaction stage and climbs up on the ladder to the cooperation-, partnership- and integration stage. Philips and Kruidvat are currently in the third stage, partnership, but moving towards the last step, the integration phase. It is important in the integration stage to balance strategic intentions. This means that Philips Personal Health Benelux and Kruidvat, should integrate their strategies in order to work on the same goals.
Figure 2 Strategic Account Management Model Philips
Mr. Ivo de Boer, Online Shop Account Manager at Philips, explained that Kruidvat has a low online market share because they lack expertise and online focus. As earlier mentioned, Kruidvat used it online web shop as an extra service because all other companies had it, but not as a tool to generate as much sales as possible.
Online drugstore giants, such as deonlinedrogist.nl and drogistplein.nl, focus on the online drugstore customer. They are dedicated to their online shop, which can explain their dominance in the market. However, Kruidvat wants to become one of the main players in the online drugstore market and wants to compete with the major online players. Therefore, this research focused on the online distribution channel of Kruidvat, because it has a great potential to grow and compete.
Kruidvat should understand their customer if they want to become market leader in the online drugstore world. Currently, Kruidvat is lacking these insights. Kruidvat already made significant progress by focusing more on the online segment. This research aims to provide Philips and Kruidvat with valuable insights in the online drugstore customer.
Philips can adapt these findings in their content packages. Philips provides Kruidvat with relevant information and pictures which is called a content package. These packages are made for each distributor, if the online customer is clearer for both parties, the content package could be more focused on the customer of Kruidvat.
1.1. Problem statement
This thesis will seek to answer the following problem statement:
“How can Philips generate more sales via the web shop of Kruidvat by optimizing the online content of Philips products on the web shop of Kruidvat?”
1.2. Research objectives and research questions
The objective of this research is to provide Philips Personal Health Benelux with valuable insights in the online behavior of Kruidvat's customers. These insights are needed for Philips Personal Health Benelux to optimize Philips product pages at the web shop of Kruidvat.
The formulated statement is divided into the following research questions:
1. Which brand perceptions do customers have about Dutch online drugstores, especially Kruidvat?
2. In which stage of the (online) decision making process is the online customer when visiting Kruidvat's web shop?
3. Which factors influence the customer to buy a product online at Kruidvat?
This research is, because of the practical relevance, demarcated to only one distribution channel of Philips; the Dutch drugstores. The potency of Kruidvat's online growth strategy can provide a substantial contribution to the growth of Philips Personal Health Benelux. Within Kruidvat the focus is going to be on their online web shop. The persuasive to focus on Kruidvat is that they are the most important drugstore for Philips Personal Health Benelux in the Netherlands. Other Dutch drugstores, such as DA and Trekpleister, do not have, or have limited Philips products in their assortment. Another reason is that Kruidvat, with 900+ shops, is the largest drugstore in the Netherlands and it covers more than 25 percent of the total drugstore shops in the Netherlands (ABN AMRO, 2016).
1.4. Definition of terms
CHAPTER 2 – THEORETICAL FRAMEWORK
This chapter is going to discuss for this research relevant literature. The first topic is perceptual mapping. Followed by literature on the (online) consumer decision and the Dutch drugstores. At last the way of measuring brand identity will be explained.
2.1. Perceptual mapping
A perceptual map is a graphical representation of observations based on two variables that have a joint relationship. Often the perceptual map is a two dimensional plot, therefore it also known as a bi-plot (Ganguly, 2011). Perceptual maps are easily interpreted and give good insights in a group, but are less valuable when looking at the perceptions of an individual, due to the fact that the perceptual map is based on the average of many individuals (Johnson, 1998). Figure 2 represents a typical used version of a perceptual map. This perceptual map is based on two factors, namely price and quality.
Bhatnagar and Gose (2004) stated an example that is related to this thesis:
For example, if consumers believe that online stores do poorly on quality of information, but it is of high importance for them, then Internet stores can redesign their web sites and increase the quality of information. On the other hand, if consumers are more interested in obtaining lower prices, then resources allocated for web development can be reduced and the resultant saving applied towards achieving price reductions. (p. 759)
A perceptual map is a widely used tool, originated from marketers that attempted to visually display the perceptions of customers. However, now-a-days it is used for a broader range of intentions. It can be used to discover insightful strategies. Bhatnagar and Ghose (2004) used the results of a perceptual map to segment the behaviour of online customers. Vanlaar, Simpson and Robertson (2008) used the perceptual map to visualize unsafe driving behaviors concers.
The perceptual map was suitable for this research, because it created an understandable figure of the analyzed results. This research focussed on the expectations of Kruidvat's customers regarding the online webshop of Kruidvat. Do Kruidvat's customers give an higher value to information or do they prefer a lower price? The last sentence allready reveals the two variables used for this research, information and price. It is not enough to provide Philips with the information that customers prefer information above price or vice versa. Therefor, this research used also an other model. Namely, the (online) consumer decision journey.
Figure 3 Perceptual map. Source: https://rockstarsbm.wordpress.com/2014/11/23/perceptual-maps/
2.2. Online shopping behavior
The amount of internet users around the world grew with 262% during the last decade. This is due to the increased acceptance of consumers for searching information and/or buying product and/or services (Kilzer, 2013). The growth of the worldwide internet usage and technical developments led to a significant change in the consumer behavior. As a result the online sales of retailers significantly increased more than offline sales during the past years (CBS, 2016). Online consumers tend to buy at the online shop or brand that offers the best deal, however a recent study showed that online consumers prefer “decision simplicity”, which is the easiness of collecting trustable information about a product and the weighing of purchase options confidently and efficiently (Spenner & Freeman, 2012).
Online consumption, online shopping and online purchasing is a process that refers to the consumption process of consumers to gratify their personal needs (Shengmin, 2004). The business dictionary describes online shopping as the act of purchasing a product or service over the Internet, people find it convenient and easy to shop from the comfort of their home or office. In this thesis online shopping is referred to as the act of purchasing a product in an online located shop.
The author of Marketing Fundamentals, describes the consumer purchase decision process as a theory that divides the purchase process of a consumer into five phases. These five stages are; Problem recognition, Information gathering, Alternative Evaluation, Purchase decision and Post-purchase evaluation. The process begins long before the consumer decides to purchase a product, and it will not always lead to a purchase (Verhage, 2010). Other authors add to last mentioned definition that the final choice is based on a complex interplay of psychological, personal, social and cultural factors (Kotler, Wong, Saunders, & Armstrong, 2011).
The process begins with problem recognition, this step is influenced by internal and external factors (Fagerstrom & Ghinea, 2011). This is probably the most important step during the process, since the consumer will only continue if he recognizes a need or a problem.
The second step in this process is information gathering. In this step the consumer starts with a cognitive internal search. The consumer is rarely aware of this step when they go through this process, especially with a frequent purchase. The consumer will extend their research externally if not enough information is acquired during the first memory scan. External information sources are grouped in four clusters. Personal sources, public sources, commercial sources and experiential sources. A recent study showed that online customers are more active when they are shopping online, due to less costs, unconstrained time, place and availability of information (Wolfinbarger & Gilly, 2016).
The alternative stage, also referred to as comparison and selection, is the third stage of the process. In this stage the consumer collects information on the brands that the consumer prefers. This set of brands is often referred to as evoked set. This evoked set is normally ranked from preferred brand to least preferred brand based on choice criteria which are set by the consumer.
The fourth stage is the purchase decision. In this stage the consumer decides if the purchase is going to be continued or not. And if it is going to be continued which brand is going to be picked. When the consumer purchased the product, the consumer will start to use and evaluate the product. Does it meet the expectations is the main question during this last post-purchase evaluation stage.
However, the recent changes, available information, in the online environment had a tremendous impact on the customer behavior. The original purchase funnel, or purchasing funnel, is not relevant anymore. The original purchase funnel concept was used in marketing to help promotional campaigns target customers in different stages of their purchase. It is a five step model in which the customer flows from the first time it hears from a product or service to the actual purchase of the product. It became a more and more complex path from awareness to prospect to sale. Modern shoppers jump in and out of different channels, read reviews, view alternatives and search for the lowest price (John, 2016).
McKinsey's consumer decision journey
Figure 4 McKinsey\'s consumer decision journey model
For customers, the purchase funnel is not relevant, they shifted to a more circular approach which consist out of four stages namely: initial consideration; active evaluation, closure and post purchase (Court, Elzinga, Mulder, & Vetvik, 2009). The consumer decision journey model of McKinsey is a four staged model that represents the journey of a consumer when buying a product.
The model starts with the initial consideration set: this is the first step of the consumer decision journey in which the consumer decides to buy a specific product. The consumer is already able to make a set of brands that the consumer recognizes, this set is called the initial consideration set.
The active evaluation stage the consumer evaluates his preferences, this became easier with the current digital environment. Product review sites, social network sites and available online information are tools that a consumer now-a-days can use to add or subtract brands while comparing. Contradicting with the original sales funnel, in which the customers decrease the amount of candidate brands, now-a-days the customer often adds brands to its selection.
During the moment of purchase stage, the customer buys the product based on the performed evaluation. In today's decision journey, the consumer decides which information it “pulls” from their available resources in order to help them make the decision. The loyalty loop is based on the experiences the customer had with the initial purchase. It uses it experience as extra information to inform during the next decision journey.
The consumer purchase decision and McKinsey's consumer decision journey were relevant for this research, because it is important for Kruidvat and Philips to identify in which stage of the process the online customers are. These insights will help Philips providing the right content package for Kruidvat.
CHAPTER 3 – RESEARCH METHODOLOGY
This section describes the methodology used to address the research problems and their related research questions as mentioned in chapter 1.
3.1. Research objective and research questions
The objective of this research is to find opportunities for Philips Personal Health Benelux to generate more sales via the web shop of Kruidvat by optimizing the online content of Philips products on the web shop of Kruidvat.
The first research question of this thesis is: Which brand perceptions do customers have about Dutch online drugstores, especially Kruidvat? It is from outermost importance to understand what the customer feels or thinks of the online web shop of Kruidvat. Therefore, the participants of this research were asked to give their perceptions of the web shop of Kruidvat.
The second and third research question focussed on the online decision making process of the online customer and the factors that influenced their decision. This is important to identify, because of the online shoppers are in a different stage the content should be changed or improved. The customer requires different content when it is in the information gathering phase or in the purchase decision phase.
3.2. Research approach
This research used the positivism paradigm with a quantitative approach. A quantitative approach is useful for this research, because the research aimed to identify the main characteristics of the online drugstore consumer in general. A qualitative approach would not be appropriate, as this research wants to find the main characteristics of a group and not of an individual.
The role of the researcher was delimited to the collection and interpretation of the data, with an objective approach based on observable and measurable data (Bryman & Bell, 2015). These factual knowledge is in line with the positivism approach, which was used during this research.
3.4. Population and sample
The theoretical population of this study are all the customers of Kruidvat' web shop. However, the study population, or accessible population, was delimited to customers that bought products at an offline shop of Kruidvat. The reason was that it was not possible to distribute the questionnaire via Kruidvat's web shop. A solution to this problem was to distribute the questionnaire via Philips, but this method would exclude a large part of the target audience. Therefore, the study population for this research are all the offline customers of Kruidvat. This decision was made with the consultation of senior account manager A. Cox.
3.4.2. Sample and sampling method
This research made use of quota sampling and probability sampling. The goal was to collect in total 100 respondents via quota sampling. In the end a total of 127 filled in questionnaires were collected. The 127 filled in questionnaires were collected via the private social media account of the researcher on the social media platform Facebook. The invitation to take part of the research is located in appendix >>>. Three filters were included into the questionnaire to ensure that the right consumers were participating in the research. These filters are: 1) the visit frequency to a drugstore, 2) the online purchasing frequency and 3) it needs to be a customer of Kruidvat. More information in appendix >>>. A pre-test (n68) was conducted to test the effectiveness and efficiency of the digital questionnaire. The most important findings of the pre-test are in appendix >>>. The final digital questionnaire, executed via SurveyMoney, was launched in week 44 via Facebook, the digital questionnaire is added to appendix >>>
3.5. The research instrument
The main research instrument for this research was a questionnaire, the questionnaire which was distributed via the social media account of the researcher can be found in appendix >>>. The first page of the questionnaire was the introduction, in which a short description about the researcher was given and a short description on the topic of the research. The second page contained a set of 5 questions, these questions were used to get insights in the shopping behaviour of the interviewees and the questions were also used to filter the interviewees based on the earlier mentioned criteria. The third page only contained one question, this question is the main data provider for the first research question. The second and third research questions are answered by the remaining questions on the fourth page of the questionnaire.
The last page is designed to express gratitude towards the participants. Furthermore, the participants had the option to fill in their personal information, which would subscribe them for the lottery of the incentive, a Philips Sonicare HealthyWhite+ worth €69.99. The reason for working with an incentive was that research showed that incentives can boost the response up to 150% on average, due to the fact that persons like to get something for the time spend (Hanna, 2016).
3.6. Procedure for data collection
This research made use of one data collection method in order to address the research questions, namely a questionnaire. The questionnaire was created via the website surveymonkey.com, Survey Monkey is a web based supplier of survey solutions, which has a lot of possibilities to design and create personalized surveys. The online survey was distributed via the private social media account of the researcher in week 44, to be more specific the survey was launched on the 31st of October and closed on the 6th of November.
3.7. Data analysis and interpretation
3.8. Validity and reliability
CHAPTER 4 – RESULTS
A total 128 respondents filled in the survey, but only 87 respondents met the criteria mentioned in Appedix >>>. The results of the respondent qualification process are described in figure 5. This figure represents the amount of qualified respondents for each criterion.
Figure 5 Respondents selection process results
The average age of the qualified respondents was 35 and 54 per cent of the interviewees was a female. All the 87 respondents gave in total 365 associations for the web shop of Kruidvat, this was an average of 5.4 associations per respondent. Three groups were created based on the associations; these groups could categorize all the associations given by the participants. These categories were price, products and service. A distinction between positive and negative association was made in the price and service category. Table 4 specifies the amount of associations given per category. The most associations were given for the category products, namely 172, followed by price with 95 positive and 5 negative associations. The most occurring association of this research was “goedkoop”. The labelled associations can be found in Appendix>>>
Table 4 Association distribution per category
Table 5 represents the distribution of the given answers on question 7 of the survey.: How important do you find the price if you buy a product online?
Table 5 Distribution question 7 survey.
Figure 6 displays the determining factor if a consumer purchases a product online, 62 per cent of the interviewees find price the most determent factor, followed by service with 14 per cent and information with 12 per cent
Figure 6 Determining factors when purchasing online
ABN AMRO. (2016). Visie op drogisterijen. Amsterdam: ABN AMRO Insights.
Bhatnagar, A., & Ghose, S. (2004). A latent class segmentation analysis of e-shoppers. Journal of Business Research, 758-767.
Bryman, A., & Bell, E. (2015). Business Research Methods (4th ed.). Oxford: Oxford University Press.
CBS. (2016). Opgeroepen op September 15, 2016, van https://www.cbs.nl/nl-nl/nieuws/2016/24/steeds-meer-webwinkels-in-detailhandel
Court, D., Elzinga, D., Mulder, S., & Vetvik, O. (2009). The Consumer Decision Journey. McKinsey Quarterly, pp. 96-107.
Fagerstrom, A., & Ghinea, G. (2011). On the motivating impact of price and online recommendations at the point of online purchase. Internation Journal of Information Management, 103-110.
Ganguly, I. (2011). An analysis of the us decking materials market: perceptual mapping approach. Canadian journal of forest research, 669-681.
Hanna, J. (2016, 9 20). www.surveymonkey.com. Opgehaald van https://www.surveymonkey.com/blog/2012/04/13/10-online-survey-tips/
Interbrand. (2015). Best Global Brands 2015. Interbrand Releases 2015 Best Global Brands Report. New York: Interbrand Rel. Retrieved September 9, 2016, from http://interbrand.com/best-brands/best-global-brands/2015/ranking/
John, J. (2016, March 29). In today\'s digital world, the sales funnel is dead. Opgehaald van Advertising Age: http://adage.com
Johnson, R. (1998). Product mapping with perceptions and preferences. Sequim: Sawtooth Software, Inc.
Kilzer, C. (2013). The internet a decade later. Opgeroepen op September 13, 2016, van http://www.dailyinfographic.com/the-internet-a-decade-later-infographic
Kotler, P., Wong, V., Saunders, J., & Armstrong, G. (2011). Principles of Marketing. Essex: Pearson Education Limited.
Kruidvat. (2016). Opgehaald van http://www.kruidvat.nl/winkelformule
Philips. (2015). Annual report 2015. Amsterdam: Philips.
Shengmin, H. (2004). The process of institutionalization of internet consumption. Journal of academic exchanges, 41-47.
Spenner, P., & Freeman, K. (2012). To keep your customers, keep it simple. Harvard Business Review, pp. 110-114.
Vanlaar, W., Simpson, H., & Robertson, R. (2008). A perceptual map for understanding concern about unsafe driving behaviours. Accident Analysis and Prevention, 1667-1673.
Verhage, B. (2010). Marketing fundamentals. Groningen: Noordhoff Uitgevers.
Wolfinbarger, M., & Gilly, M. (2016). Shopping Online for Freedom, Control, and Fun. California Management Review, 34-55.
...(download the rest of the essay above)