2013

Assignment Proposal MKT214 Carrefour and Alfamart

Maximillian Adrian Hadiputra ICI 011201529 20.01.2013

Maximillian Adrian Hadiputra Kebon jeruk no 61 West Jakarta 25 January 2013

Mr Andi Halim Inti College Indonesia Jln Arjuna Utara no 31 Duri Kepa, west Jakarta

Dear Mr Andi,

My name is Maximillian Adrian Hadiputra from BSP students, Inti College Indonesia. In order to accomplish my research assignment on Alfamart and Carrefour. I would like to identify the Alfamart and Carrefours customer preference level for the research purpose. Hoping the assignment will provide us information about the comparison of the customer preference level between both of the company and further more to find out whether the massive existence of convenience stores affect hypermarkets revenues in general. I would like to ask permission to accomplish my marketing research for the academic purposes.

Finally thank you very much for helping and leading us to finish the assignment project.

I hope the proposal will be accepted as the assignment project.

Yours truly,

Maximillian Adrian Hadiputra

1. Research Background 1.1. Company Profile Alfamart Indonesia Established in 1989 by Djoko Susanto and Family, the Company started as a consumer goods trading and distribution business, then in 1999 entered into retail sector. In 2002 the Company started an exponential expansion through acquiring 141 Alfa Minimart stores and bring a new name, i.e Alfamart. Alfamart is currently one of the Indonesia leading retailers, serving more than 2.1 million customers daily, with approximately 6,000 stores across Indonesia. Alfamart provides affordable prices, high quality basic daily needs with friendly services, clean and comfortable shopping atmosphere which is easily accessible. With more than 60,000 employees, Alfamart is one of the largest employers in Indonesia.

Alfamart is essentially a community store, therefore it is important that we actively participate in growing our surrounding community through our Corporate Social Responsibilty (CSR) programs that are divided into Alfamart Care which helps the community through social activities, Alfamart Smart which support the education, Alfamart Sport which sponsors sport activities, Alfamart Clean and Green to keep a healthy environment, Alfamart SMEs helps the small and medium entrepreneurs in the surrounding areas where Alfamart stores operate and Alfamart Vaganza which actively involves in arts and entertainment.

Alfamart is awarded with many prestigious awards from reputable institutions, such as Top Brand Award Superbrands Indonesia Awards, Service Quality Award Best Brand Award Indonesias Most Admire Company . Alfamart has also success in gaining the highest Store Equity Index by Nielsen Research for 5 consecutive years.

Vision To be Indonesias largest and globally competitive widely owned retail distribution network that empowers small entrepreneurs and fulfills customer needs and expectations(ALFAMART, 2012)

Mission To satisfy customer needs and expectations by focusing on high quality products and services. To implement ethical business practices, to be the best in all of our actions. To develop entrepreneurial spirits and skills in the Company and the society. To develop a reliable, healthy and growing organization which benefits all stakeholders.(ALFAMART, 2012)

Carrefour Indonesia Carrefour is present in Indonesia since 1996 with the first outlet opening in Cempaka Putih in October 1998. At the same time, the Continent, the French retailer, opened its first outlet at Festival Market. In 1999, Carrefour and Promodes (as the main shareholder of the Continent) incorporates all retail operations throughout the world under the name Carrefour. It makes Carrefour the second largest retailer in the world.

As part of the global company, PT. Carrefour Indonesia strives to provide worldclass service standards in the retail industry in Indonesia. Carrefour Indonesia introduced the concept of hypermarkets and provide a new shopping alternative for customers in Indonesia Carrefour Indonesia. Carrefour offers the concept of "OneStop Shopping" that offers a diverse product selection, low prices, and also provide the best services that exceed customer expectations. Currently, Carreour already operating at 83 outlets and spread across 28 cities / regencies in Indonesia. As one of the leading retail players, Carrefour Indonesia is committed to providing the best service to customers Carrefour in Indonesia. 72 million customers have visited Carrefour in 2010, up from 62 million subscribers in the year before. Carrefour cares for the needs of customers by offering more than 40,000 products, so customers can obtain a complete selection of day-to-day needs are good quality at a discount in the convenient shopping environment.

Carrefour Indonesia has around 28.000 employees directly and indirectly as Spgs, cleaning service, etc.. Carrefour Indonesia has partnered with about 4,000 suppliers that nearly 70% are SMEs (Small Medium Enterprises). In addition, the presence of Carrefour in Indonesia, Carrefour could help related industries such as transportation,

logistics, construction, warehousing will also be developed to grow with Carrefour to build the country. (CARREFOUR,2012)

In line with the Government's program on Corporate Social Responsibility (CSR), Carrefour Indonesia continues to develop a comprehensive, integrated and sustainable, the "People's Corner" which is fully supported by the Ministry of Commerce, Ministry of Cooperatives and SMEs and the Ministry of Fisheries and Marine Resources of the Republic of Indonesia. Carrefour Indonesia allocates "Corner of the People" in a special location at 14 outlets spread across 7 cities (Jakarta, Palembang, Surabaya, Makassar, Bandung, Medan and Yogyakarta. Carrefour also provide market access and promotion activities to ensure that the product is successful.(CARREFOUR, 2012)

Carrefour Indonesia to grow and develop together with our customers, the environment, communities, employees (associates), business partners, the agricultural sector and related industries. Carrefour Indonesia has also contributed to creating employment opportunities directly and indirectly for more than 28,000 people and emphasize the use of local produce, which in turn will create more employment opportunities in each region which will reduce the urbanization of the city.

Carrefour Indonesia has also made a contribution and participate actively in regional development in the agriculture sector by buying 95% of the product of the domestic market, improving farmers' lives by maintaining long-term relationships and expand market access in Carrefour Indonesia, promote the development of quality local products with the introduction of farming methods modern and safer, for example, actively developing the use of natural fertilizers, and implement water management control system. This year, the 13-year presence in Indonesia, Carrefour continues to develop ways to contribute in a consistent and sustainable economic growth in Indonesia. Carrefour Indonesia has contributed to an increase in national tax revenue, by offering tackle inflation and widening public access to products that are more affordable, which in turn increase the level of domestic consumption and purchasing power of customers.

1.2. Problem Definition The first step in marketing research process is the problem definition which means define the problem wed like to research further. In defining the problem, the researcher should take into account the purpose of the study, the relevant background information, the information needed, and how it will be used in decision making. Problem definition involves discussion with decision makers, interview with industry experts, analysis of secondary data, and perhaps some qualitative research such as focus groups. Once the problem has been precisely defined, the research can be designed and conducted properly. (Malhotra, N. (2010) Marketing Research. 6th ed. New Jersey: Pearson. Pg.68)

The theme and purpose of this research is to describe the competition between Carrefour Puri Indah and the convenience stores in Puri Indah area. The researcher believe that there is a stiff competition between foreign hypermarkets and local mini markets (Yahoo! Finance) which caused, in some percentage, reduction of consumers in the once very popular hypermarkets, in this case Carrefour Puri Indah. There are also particular problem for hypermarkets are especially happening in cities like Jakarta which affected by heavy traffic jams and occasional floods in the rainy seasons which are reducing access to big stores in strategic places. In order to find things out, the researcher plan to narrow down the representative area into the area in Puri Indah which is consist both Carrefour and convenience stores competing each other. Other main problem that need to be questioned is why people prefer to buy in Carrefour Puri Indah? Is it because of price, promotion, place, or product? The researcher assume that people in Puri Indah are high income people, so that price difference is not a problem, and also most people have a car so place is not a problem here. So the rests lay on the promotion and the product.

1.3. Situational Analysis The researcher believe that the revenue of big supermarkets or hypermarkets are declining while at the same time the revenue of convenience stores are increasing. The researcher believe this is because of the massive amount of convenience stores in Puri Indah which is taking indirectly the target market of hypermarkets. The reason of the existence of the massive amount of convenience stores is the easiness of

goverment regulation and also the franchise system of one of the convenience store Alfamart. Hypermarkets also facing an access problem which is caused by traffic jam and flooding in Jakarta which reduces the marketscope of the bigger supermarkets and increase strategicness of smaller supermarkets. The researcher have to find out how an access problem affect the buying decision of a potential consumer. There are also some other problems like the high product variety of a hypermarket which reduce the effectiveness of a shop itself because the researcher believe that there is some waste of space in the organization of the core business model. The researcher believe that people who come to hypermarkets buy mainly convenience products and daily necessities, not necessarily electronics or other big equipments because its also, on the other side, difficult to carry. People are also dont seem to be looking for a one-stop shop but rather a decent store and look for another type of products on other shop or shopping centre. The researcher believe that they have to find out the consumer buying behaviour on this case. There are some options to open a new line of Carrefour in form of a convenience stores (mini Carrefour) but rather than to do that, they sold the Indonesian stake to CT Corp in Indonesia which obviously shows the worsening prospect of taking leadership in the middle- or long term. (The Wall Street Journal. Aug 31, 2012). The researcher believe this is because of a problem in the core of hypermarkets business model and also the competition from other retailers. To survive in highly competitive market, organization need to provide goods and services that yield highly satisfied and loyal customer when customers are satisfied (Gilbert, G Ronald 2000).

2. Research Objectives 2.1. Specific research objectives Our specific research objectives are to prove that the franchise system of convenience store or alfamart is really affecting the whole revenue of big hypermart. It is also to be proven that the massive amount of convenience stores are shifting the buying behaviour of the consumers. To be more precise is that whether the young consumers buy the products only because of the location or because of its variety of product.

Therefore the specific objectives are: 1. To prove that there is a stiff competition between hypermarkets and convenience stores 2. To prove that flooding and traffic jams has reduced the marketscope of Carrefour Puri 3. To clear about customer preference in Carrefour Puri Indah 4. To find out about what people usually buy in Carrefour Puri Indah 5. To find out about Carrefours core business problem and its competition with Alfamart 2.2. Research Questions Who are the target market of Carrefour Puri Indah and convenience stores? What are people buying in Carrefour Puri Indah or convenience stores? How many reduction/increases of customers happen in the hypermarkets industry? Why people prefer to buy in Carrefour Puri? Is traffic jam / flooding affecting people buying behaviour in Puri Indah? Descriptive questions regarding surveys: What information should be obtained from the respondents When should information be obtained fro the respondents Where should respondents be contated to obtain the required information Why are we obtaining information from respondents? Why is the project being conducted In what way are we going to obtain information from the respondents?

2.3. Research Hypotheses The researchers want to prove that the statements: The stiff competition between hypermarkets and convenience stores affect hypermarkets customers in general Flooding and traffic jams has reduced the marketscope of Carrefour Puri. People buy in Carrefour Puri because of promotion and product.

are correct.

Therefore it is to be proven that there is a correlation between: The amount of convenience store and the reduction of hypermarts customers in general. The access problem and the decision to buy somewhere else The promotion and product in Carrefour Puri and its customer preferences

2.4. Key Variables on which data must be collected convenience stores located in Puri Indah The yearly/ monthly customers of Carrefour Puri Indah Whether Carrefour Puris customers affected by traffic jam/flooding or not The size of the consumer market in Puri Indah What people buy in Carrefour Puri The general promotions and products in Carrefour Puri Carrefour Puris customers preferences

3. Research Benefits The research benefits are mainly for useful for decision makers for example the decision makers of the hypermart or the convenience store. This is designed to increase the general competitiveness against other competitors in the market and analyse many othe aspects/ problems that may affect a companys revenue in general. Usually after a company become a market leader, it has to analyse and summarize many factors of social behaviour especially consumer buying behaviour in a macroscopic point of view to ensure that the existence of the company holds relevant in the market/ public.

4. Research Methodology 4.1. Type of research Research design is a framework or blueprint for conducting the marketing research project. It details the procedures necessary for obtaining the information needed to structure or solve marketing research problem. Athough a broad approach to the problem has already been developed, the research design specifies the details of implementing that approach. A research design lays the foundation for conducting a project. A good research design will ensure that the marketing research project is

conducted effectively and efficiently. (Malhotra, N. (2010) Marketing Research. 6th ed. New Jersey: Pearson, p.102)

There are three types of research design that is descriptive, exploratory and causal research design. In our project, the researchers decided that the type of the research is descriptive research design because the objective is to describe market characteristics. Its characteristics is marked by the prior formulation or specific hypotheses and preplaned and structured design. Its methods are quantitative analysis, surveys and panels.

4.2. Type of data Data preparation and analysis Data preparation includes editing, coding, transcription, and verification of data. Each questionnaire or observation form is inspected or edited and corrected. Number or letter codes are assigned to represent each response to each question in the questionnaire. The data from questionnaires are transcribed directly into computers. The data are analyzed to derive information related to the components of the marketing research problem and thus provide input into the management decision problem. (Malhotra, N. (2010) Marketing Research. 6th ed. New Jersey: Pearson, p.350)

4.2.1. Secondary data Secondary data are colected for some purpose other than the problem at hand. Secondary data include information made available by business and goverment resources, commercial marketing research firms, and computerized databases. Secondary data are an economical and quick source of background information. Analysis of available secondary data is an essential step in the problem definition process: Primary data should not be collected until the available secondary data have been fully analyzed. (Malhotra, N. (2010) Marketing Research. 6th ed. New Jersey: Pearson, p.41-45) Our secondary data are mostly from the internet and the book Marketing Research by Malhotra. Most of them are complimentary to our research as it provides addtional proper data and methods needed to conduct a better structured research.

4.2.2. Primary data Primary data are originated by a researcher for the specific purpose of addressing the problem at hand. The collection of primary data involves all six steps of the marketing research process. Obtaining primary data can be expensive and time consuming. (Malhotra, N. (2010) Marketing Research. 6th ed. New Jersey: Pearson, p.41-45) Our method to gather some information is through spreading questionnaires to the people around us. The total would be 100 questionnaires. The reason the researchers chose survey/questionnaire method is because most of our journals are also gathered information through questionnaires. The researcher also believe that the method is the most time and cost efficient to the current researchers capability.

4.2.2.1.

Population

The population would be mostly people in Puri Indah consist of students, middle aged workers, labourers, and people from other segments based in Puri Indah.

4.2.2.2.

Sampling plan Sample size

4.2.2.2.1.

The sample size will be 100. The researchers are distributing those amounts of questionnaires because the research is for academic purposes only, if the research is for business purposes, the researcher will distribute bigger amount of questionnaires. The researcher believe that the size is representative enough as it complies with the books guidance.

Sample size refers to the number of elements to be included in the study. Determining the sample size is complex and involves several qualitative and quantitative considerations. In general, more information is necessary and the information should be obtained more precisely. The sample size decision should be guided by a consideration of the resource constraints. In any marketing research

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project, money and time are limited. The sample size required should be adjusted for the incidence of eliglible respondents and completion rate. (Malhotra, N. (2010) Marketing Research. 6th ed. New Jersey: Pearson, p.374)

4.2.2.2.2.

Sampling method

The technique the researchers are using is the probability sampling because its the most efficient and cost-saving and time-saving method available to gather information. Probability sampling techniques vary in term of sampling efficiency. The researcher should strive for the most efficient sampling design, subject to the budget allocated. The efficiency of probability sampling technique may be assessed by comparing it to that of simple random sampling. (Malhotra, N. (2010) Marketing Research. 6th ed. New Jersey: Pearson, p.382)

4.2.2.2.3.

Sampling procedure

The researchers decided to use simple random sampling procedure because its easier and more effective to distribute the 100 questionnaires with this procedure. In simple random sampling (SRS), each element in the population has a known and equal probability of selection. Furthermore, each possible sample of a given size (n) has a known and equal probability of being the sample actually selected. This implies that every element is selected independently of every other element. The sample is drawn by a random procedure from a sampling frame. (Malhotra, N. (2010) Marketing Research. 6th ed. New Jersey: Pearson, p.382)

4.2.2.2.4.

Data collection method

The data from primary sources will be collected by self administered questionnaires (surveys), because the researcher will spread the questionnaires to the respondent without explanation to get the information.

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The data from secondary sources will be collected by reading, discussing and analyzing the journals, consumer behaviour, and marketing research text book.

4.2.2.2.5.

Data analysis method

The data that will be used to analyze are frequency, cross tabulation and chi square. To test the relationship between two variables, the researcher has to use the cross tabulation method. The frequency will be used to determine the data that are categorized in a manner. Chi square method will be used to compare the similarities on the variables with the frequency.

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5. Gantt Chart Work Activities Finding Topic Finding Information Revise Topic Submit the Proposal Starting Chapter 1 Questionnaire design Questionnaire Distribution Questionnaire Collection Loading to SPSS Starting Chapter 2 Starting Chapter 3 Starting Chapter 4 Starting Chapter 5 Revision for the Final Report Presentation Submit the Final Project . . . . . . . . . . . . . . . . . . More . . . . . . . . . . . . . . 1 2 3 4 5 6 7 8 9 10 11 12 13 14

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6.

Cost estimation Print and binding expense Internet and electricity expense Photocopy for 100 questionnaires Transportation Souvenirs Total Rp 70.000,Rp 100.000,Rp 10.000,Rp 20.000,Rp 100.000,Rp 300.000,-

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7. Bibliography Alfamart Indonesia (2013) Alfamart at a glance. [online] Available at: http://corporate.alfamartku.com/post/read/id/19/item/16 [Accessed: 20 Jan 2013]. Alfamart Indonesia (2013) ALFAMART's net profit jumps by 40%. [online] Available at: http://corporate.alfamartku.com/news/read/id/106 [Accessed: 20 Jan 2013]. CARREFOUR INDONESIA (2013) COMPANY PROFILE. [online] Available at: http://www.carrefour.co.id/shop/indonesia/ [Accessed: 20 Jan 2013]. CARREFOUR.COM (2013) Financial releases. [online] Available at: http://www.carrefour.com/cdc/finance/publications-and-presentations/financial-releases/ [Accessed: 20 Jan 2013]. Malhotra, N. (2010) Marketing Research. 6th ed. New Jersey: Pearson. YAHOO FINANCE (2013) French retailer Carrefour sells Indonesia stake. [online] Available at: http://finance.yahoo.com/news/french-retailer-carrefour-sells-indonesiastake-090059743--finance.html [Accessed: 20 Jan 2013]. YAHOO FINANCE (2013) Carrefour sees slim sales growth in 2012. [online] Available at: http://finance.yahoo.com/news/carrefour-sees-slim-sales-growth-072158641.html [Accessed: 20 Jan 2013].

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