FEATURE
PAPER
An Investigation
of the Double Jeopardy Concept in Convenience Stores
The
following paper was presented at the 2007 Allied Academies
International Conference - Jacksonville. It was written
by Larry P. Pleshko of Kuwait University and
Nizar Souiden of University Laval.
Abstract
The
authors investigate the "double jeopardy" (DJ)
concept in the domain of convenience
store retailing. The authors find that DJ is not evident, with
none of the six loyalty indicators
showing a significant relationship with market share. DJ could
normally be a major obstacle to
small-share stores in their attempts at improving and maintaining
market share. However, the
absence of DJ is a positive aspect for small-share firms. The
prohibitive advantages of market share
leaders, derived from DJ, may not be so large in the convenience
store industry. The downside of
no DJ effect is that efforts toward increasing loyalty by small-share
businesses may not lead to
larger shares in the long run. Increased loyalty should still
result in a more successful and secure
business.
Introduction
General
business wisdom suggests a company focus at least a proportion
of marketing efforts
on the development, maintenance, or enhancement of customer
loyalty (Dick and Basu 1994). This
emphasis is important because a company with a large number
of brand loyal buyers will be more
secure in its markets and should have a higher market share
than other firms without this vital customer asset (Raj 1985;
Robinson 1979; Smith and Basu 2002). Having more brand loyal
buyers
than competitors has many advantages including a greater response
to advertising (Raj 1982), larger
purchase quantities per occasion (Tellis 1988), and reduced
marketing costs (Rosenberg and Czepial
1983). This is especially important since, as markets become
more mature, increases in share
become more expensive and improvements in customer loyalty
are a means of increasing and
maintaining share (Gounaris and Stathakopoulos 2004). However,
increasing share is not always
easily accomplished through marketing efforts, especially if
Double Jeopardy (DJ) is evident in the
industry (Ehrenberg and Goodhardt 2002).
This
study applies the ideas derived from DJ to the area of quick-stop
retailing: convenience
stores. The quick-stop industries have evolved from the small
neighborhood mom-and-pop
groceries and service stations into today's multi-purpose conveniences
stores located on nearly every
city block. This evolution has changed the way buyers shop
for repetitively purchased, inexpensive
items such as fuel, soft drinks, candy, and items for the home.
Plus, competition has increased, with
many more stores than in the past. Oftentimes these stores
are national or regional brands with large
market in each of their served markets. Therefore, the establishment
of a (hopefully) large and loyal
customer base is vital for the survival of each store. With
estimates regarding the number of 'truly'
brand loyal buyers for these and related consumer retailers
hovering around 25% (Pleshko and
Heiens 1996), the relevance of the double jeopardy phenomenon
to this industry might be critical
to the long-run survival of small and medium size stores. In
this study, the authors attempt to
identify whether the DJ phenomenon is evident in convenience
store retailers. This will be tested
by analyzing the relationship of loyalty and usage constructs
to market share.
Read
the Entire Paper...
TIP
OF THE WEEK
Local
Business Climate
• 65% of small business owners think
their local community has a favorable business climate, including
9% who think the
climate is very favorable. In contrast, 20% think their community's
climate is unfavorable, including 5% who think it is very comfortable.
• Among the characteristics of the local
business climate most valued by small-business owners are:
community support,
people working together, a strong customer base, constant growth/expansion,
a close-knit community, little interference, opportunity/potential,
diversity/variety, and quality of life. Among the characteristics
of the local business climate least valued are: government
interference/regulations, cost of doing business/taxes, no
support/encouragement, competition, closed businesses, including
those just starting.
• Two-thirds think a "real community spirit" exists
in their area. Other factors influencing the business climate
most favorably include the local business community working
closely together; cooperative relations between the public
school system and the local business community; and, local
colleges and universities, bankers and investors, and community
organizations going out of their way to help local businesses,
including those just starting.
• Half (50%) disagree with the proposition
that local governments in the area go out of their way to
create a favorable
business climate.
• Small-business owners typically assess
the entrepreneurial attitudes exhibited by people in the
community as positive.
For example, 74% believe that the local business community
is open to new-comers and 65% think that their community's
social values and culture stress the responsibility of the
individual to manage his or her own life. But more disagree
that young people in the community are encouraged to be independent
and start their own business.
• 86% own a business that was founded
by the community.
• 24% are currently planning or considering
a signficant expansion of their business. Most (69%) intend
to expand in
their community. Of those intending to locate outside their
community, business imperatives are pulling half to locate
outside it and the local business climate is pushing 25% out
of town.
• 13% are giving serious consideration
to relocating their business outside the community where
it is now located.
31% indicate that attractive conditions elsewhere are pulling
them away while 47% say local business conditions are pushing
them out.
• Most small-business owners live near
their businesses. It take almost half (47%) just five minutes
or less to commute
to their home and business. Another 20% make the trip in six
to 10 minutes.
• 78% of small-business owners have not
moved their personal residence since occupying their current
business premises.
Of those who have moved their personal residence, somewhat
over half have moved it closer to the business and somewhat
under half move it farther away.
William
J. Dennis. Jr. NFIB Natoinal Small Business Poll. Local
Business Climate
- Volume 6, Issue 2.
2006. pg.1.
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