Online Food Service Applications-an Investigation Of Thai . - Tu

3 CHAPTER 2 REVIEW OF LITERATURE This proposal is a contemporary topic in applied marketing to study the Thai’s consumer behavior in online food service application usage and implications for marketing strategy development. This section will be an overview of the food delivery business and an analysis of the consumer’s behavior toward this particular service. This section will be divided into two parts, as follows: 1. Business overview of the online food delivery service in Thailand 2. Consumer behavior towards online food delivery service 2.1 Business Overview of the Online Food Delivery Service in Thailand Regarding to the report, Thailand’s 100% home delivery/takeaway registers current value growth of 10% to reach THB29.2 billion in 2017. (Euromonitor International, 2018A) The increase of the internet has been created because of the higher usage of smart phone and tech devices, for instance tablet and computer. Consumers use these devices not only to communicate but also seek for physical services, which also covers food delivery application service. These applications provide convenient and transparent. Consumers have the ability to order food from a variety of restaurants and have it delivered hastily. These applications gradually gain popularity in Thailand. They provide speed and convenience, and even offer promotion code discounts. Other than the taste and price of food, this new experience of using mobile applications was a key contributor to growth in the category. (Euromonitor International, 2018A) Small and large-sized, chained and independent restaurant operators in Bangkok have started turning to this new distribution channel, looking to expand sales revenue. (Euromonitor International, 2018A) The scope of this study will focus on the three main players in the market of 2018, which are LINE Man, Grab Food, and Food Panda. Ref. code: 25616002040241VHJ

4 2.1.1 LINE Man LINE Corporation has been an intrinsic part of Thai culture, with their leading service LINE chat application that has the number one chat app in Thailand which is not a coincident that LINE Man is an additional service that adds additional value to the total LINE Corp. digital ecosystem. LINE Man is comprised of five main services which comprise of Food delivery service, Taxi service, convenience store delivery service, messenger delivery service, and parcel delivery service. Within these five main services, Food delivery service contributes 70% of the total business portfolio while all other services contribute 30%. (Positioning, 2018) LINE Man main strength is the variety of promotion that collaborates with some of the most renowned restaurants in Thailand. Furthermore, LINE Man has the most restaurant and street vendor directory within their database. 2.1.2 Grab Food The second player in the market is Grab Food. Grab Food is actually not an application but an additional service under Grab Thailand. Grab application comprise of Grab Car, Grab Taxi, Grab Bike, and GrabFood. GrabFood is a new player in the Southeast Asian market, especially fully focus on the Thai food delivery service market. GrabFood has been launched since May, 2017 while initially focusing on the CBD area of Bangkok to address the needs of city dwellers that has time constraints, for instance, ones who live in Silom, Sathorn, Siam Square, Sukhumvit, Rachadapisek, Aree, Yaowarat, and Wongwianyai. (Positioning, 2018) Grab Food focus on early finished food, focusing on food within the user’s vicinity of 5 kilometers to ensure the food is right to the user’s hand within 30 – 35 minutes and with the delivery fee of 30 baht. (Positioning, 2018) In year 2018, Grab Food has merged with Uber Eat which increased their restaurant directory to 4,000 stores which also expand the area of service towards Greater Bangkok. The strategy of Grab is to make Grab Food and all their other service an ecosystem that makes consumers more convenient in their everyday lives. 2.1.3 Food Panda Food Panda is one of the first players in the market with a reputation simple service, easy to use user interface, focus on restaurant that are prominent (not Ref. code: 25616002040241VHJ

5 street vendors), and focus on a variety of delicacy. Food Panda main strategy is their “40-baht delivery fee, at any distance”. (Positioning, 2018) From all 3 main competitors, each of the brands come with different business strategy. LINE Man focus mainly on the amount restaurant directory with over 40,000 restaurants within their database and a large population from LINE Corp. Grab Food focus on everyday usage from their core competency of their commuting service. A large fleet of motorcyclist makes Grab Food a strong competitor in the industry. Last but not least, Food Panda strength is their consistent price and strong interface. This research will look into both the consumer’s brand preference and what are the key trigger that keeps the consumer with the brand. Furthermore, the research also looks into which attribute is important to the user and which attribute is least important. 2.2 Consumer’s behavior towards online food delivery service From the arising of the internet, consumer’s behavior has changed drastically and lots of lifestyle has been change because of the internet. According to Euromonitor International’s 2018 Global Consumer Survey, 28% of Thai consumers purchased prepared food for take-away or delivery on a weekly basis, and 26% of them purchased 1-3 times a month; and about one third of Thai consumers ordered food online. (Euromonitor International, 2018B) In a fast-paced metropolitan city such as Bangkok, consumers increasingly look for simple and convenient services that will save time, and mobile technology has opened up a new channel. (Euromonitor International, 2018B) 2.2.1 E-Commerce changes the landscape of demand and instant gratification To achieve high expectation has been harder to achieve these days, for example the change in the e-commerce landscape makes the consumer more demanding, which most causes are created by the variety of the product and instant gratification that most e-commerce services creates. According to (PLS Logistics Services, 2015) sources, same-day delivery trend had being demanded as well. There are e-commerce providers such as Amazon, Google, and Uber who are aware of their role as a mediator Ref. code: 25616002040241VHJ

6 between local stores or restaurants and their customers. These changes in behavior were created by the changes in the internet. The traditional outlet-based model driven by suppliers nowadays will be replaced by a demand-driven model, where the customer takes well informed decisions (Walter, 2016). 2.2.2 Service Quality SERVQUAL had been developed by (Parasuraman, Zeithaml, & Berry, 1988), a method to assess customer satisfaction for service industries, which started a research on service quality measurement. The measurement creates a different belief between the consumer perception and the expectation of the consumer based on five generic dimensions: tangibles, reliability, responsiveness, assurance and empathy. 2.2.3 Food Quality The quality of food or the restaurant within the directory is also undeniably point an important aspect that defines the food delivery service. As known that service marketing deals with intangible activities, the food delivered and the restaurant that could be delivered is one of the most important differentiation points. In line with this observation, according to Kotler, Saliba, and Wrenn (1991), service also means an intangible activity or benefit provided by the services provider to customer, which can be a tangible product and something that is added to intangible service, or in an independent form. 2.2.4 Price Price plays a crucial role in all marketing scheme and directly effects the consumer behavior. So if it is affordable, then customers satisfy it and willing to purchase the product again and again in future (Gustafsson et al., 2005). Price fairness The price of the items on the menu can also greatly influence customers because price has the capability of attracting or repelling them (Monroe, 1989), especially since price functions as an indicator of quality (Lewis & Shoemaker, 1997). As the food delivery service monetize from delivery fee, the fee should be justified by the benefit the customers get from the price of the food. Ref. code: 25616002040241VHJ

7 CHAPTER 3 RESEARCH METHODOLOGY This research is designed to explore the factors that could affect the consumer’s behavior of using food service delivery in order to achieve the study objective. 3.1 Primary Research With the background information from the literature review, primary research will be conducted through in-depth interviews and focus group to seek for more academic findings that effect the consumer’s behavior and perception towards brands. 3.1.1 In-depth Interview The in-depth interview will be conduct to identify the difference and similarity of food delivery usage behavior between the age of users. A total of 16 in-depth interviews will be conducted; four interviewees for each age range, and within the four interviewees – two interviewees will be non-food online delivery application user and two interviewees will be food online delivery application user. The research will be conduct into four sets of age range. 1. 15-24 years old 2. 25-34 years old 3. 35-44 years old 4. 45-54 years old Non-food online delivery application user: An interviewee that have never used a food online delivery application. Food online delivery application user: An interviewee that have used a food online delivery application in the past six months. 3.1.2 Focus Group Interview Furthermore, the research will use focus group to explore deeper consumer behavior insights that are based on the main brand in the market: LINE Man, GrabFood, and Food Panda. Each application user has to at least once use the application Ref. code: 25616002040241VHJ

8 in the past six months. Therefore, three focus group will be conducted which consist of four interviewees each at a total of 12 interviewees in all. The four focus groups will consist of: 1. LINE Man current user 2. Food Panda current user 3. Grab Food current user 3.2 Data Collection Due to the time constraints, the researcher will only collect data within Bangkok, Thailand and will employ convenience sampling method. 3.2.1 In-depth Interview The interviewee will be recruited by the researcher personal connection or social media (i.e. posting a request on personal Facebook, Twitter, or LINE). The research will both collect interview data through face-to-face interview and telephone call. 3.2.2 Focus Group Interview The interviewee will be recruited by the researcher personal connection or social media (i.e. posting a request on personal Facebook, Twitter, or LINE). The research will both collect interview data through face-to-face interview and telephone call. 3.3 Identification of Key Research Variables The research is identified into three main dependent variables and five independent variables in order to achieve the main objective of the research. Each variable is explained in detail below: Ref. code: 25616002040241VHJ

9 3.3.1 Dependent Variable: 1. Online delivery service perception: This variable is the consumer perception towards using online delivery service. The research will explore the root causes of the perception based on demographic, geographic, psychographic, and behavioral lifestyle of the test sample. 2. Intention to purchase: This variable is to identify the intention to purchase of the test sample of the intention to buy. 3. Brand Preference: This variable will look into brand preference that triggers usage. For this research the brand preference will be focused on the 3 main brands: LINE Man, GrabFood, and Food Panda 3.3.2 Independent Variable: 1. Application user interface quality: This variable will focus on the understanding the different aspect is affected by the application user interface qualities that would satisfy the consumers. 2. Delivery service quality: This variable will focus on the online food service qualities that would satisfy the consumers. 3. The quality of restaurant in the directory: This variable will focus on the category of restaurant people most prefer for online food ordering and the reason of this behavior. 4. The amount of restaurant in the directory: This variable will focus on the quantity of the restaurant effects the intention to buy. 5. Price of service and promotion: This variable will focus on the price of service and promotion effects the intention to buy. 3.6 Data Analysis Plan In order to analyze the qualitative data as effective and efficient as possible, the data analysis planning will be as the following below. 1. Organize the data: After all interviews have been made both in-depth interview and focus group, the field data will be converted from video recording and sound recording into transcription. Ref. code: 25616002040241VHJ

10 2. Connect the data with the research objectives: The data will be organized by mapping the response with the objective and the question section that covers the topic. This research will organize the data by placing the transcript into tables that are arranged by the question guide. 3. Interpreting the data: In order to interpret the data, the researcher of this independent study will look through similarity and difference of each data in order to see a pattern within the response. Key themes will be investigated from the response in order to find a linkage between the objective, the question guide, and the response. Furthermore, the data also seek to highlight new interesting stories and hidden insights that are unknown for the researcher and the public. 4. Form a verifiable conclusion: The conclusion is the summary of all finding that has been interpret from the data. This step will be an interpretation of the data into a final report. Ref. code: 25616002040241VHJ

11 CHAPTER 4 RESULTS AND DISCUSSION 4.1 Key Findings from In-Depth Interviews With Non-Users In-depth interviews will be conducted to identify the differences and similarities of food delivery usage behavior amongst different age ranges. A total of 8 in-depth interviews for non-users will be conducted; two interviewees for each age range. A non-food online delivery application user is defined as a person that has never used food online delivery application. The age ranges will be divided into 4 groups: 1. 15-24 years old 2. 25-34 years old 3. 35-44 years old 4. 45-54 years old Table 4.1 Key Findings from In-Depth Interviews with Non-users Objective: 1. To understand the attitudes and usage behavior (including purchase intentions) of Thai consumers towards food delivery. Topics Online Delivery Service Key Findings Majority of the respondents are aware of online Perception delivery services. They mainly associate online 1.1 What do you think delivery service with popular food companies that about online delivery have been using delivery services, particularly by service? food chains such as pizza company and KFC. For non-users, they find the service interesting, however they never or rarely use the service themselves because they do not see the need of using it. Ref. code: 25616002040241VHJ

12 Table 4.1 Respondent’s demographic and geographic (cont.) Topics Key Findings 15-24 years old: “I know the service and have seen some of my family members and relatives use it to order food as it is convenient. However, I still don’t see the need to use online delivery services.” - Akenut, 20. 25-34 years old: “My sister uses the service, but I do not use it. However, I do believe that it opens more options for us to get food other than picking it up directly from the restaurant.”- Chayuthkawat, 29. 35-44 years old: “I know the service and I actually have the delivery application just in case I need it. However, so far I have never used the service.” - Thiti, 39. 45-54 years old: “I heard the brand from my son. I think that the application is too complicated to download and use.” - Pisit, 52 1.2 When do think you’ll The majority of the non-users are reluctant to use the use an online delivery application based on 2 main factors: service? Firstly, the dining behavior as seen in the younger generation is usually based on a routine. This is caused by work or school schedules that make online delivery pointless. In order for them to use online delivery applications, there should be a change in their routine. Secondly, the older generation finds technology and their usage complex. Most of them are also reluctant to learn and prefer to use traditional ways they are familiar with such as telephone delivery. Ref. code: 25616002040241VHJ

13 Table 4.1 Respondent’s demographic and geographic (cont.) Topics Key Findings 15-24 years old: “I usually have lunch at the university and dinner at some restaurant or at home.” - Atithep, 22. 25-34 years old: “I have meals at the office and dine outside at night.” - Tissana, 30. 35-44 years old: “I don’t like the system. I prefer a more traditional approach to having food delivered, for example, phone call delivery.” - Thiti, 30. 45-54 years old: “I mainly only use LINE Chat, Facebook, and YouTube on my phone. I think I am not interested in learning how to use other applications.” Kelwalin, 50 1.3 How do you think online delivery service change your lifestyle? For non-users, they still do not find a change in their lifestyle. Moreover, one non-user found that due to online delivery services, the restaurant has to handle both online and dine in customers. This causes the overall service to slow down. 1.4 What are the key Top 3 attributes that has been mentioned by non-users are: qualities you seek from an 1. Accessibility: For most respondents, channel is the online delivery service? most important factor for them to consider. In order Name the top 3 attributes. for them to use the service, they mentioned that it should be readily available for them to use at any moment of time. “Currently, I’m not interested in using the service. However, if some time at night if I really need a late-night meal, I would consider the most accessible application and service available.” - Tissana, 30. Ref. code: 25616002040241VHJ

14 Table 4.1 Respondent’s demographic and geographic (cont.) Topics 1.4 What are the key Key Findings 2. Service fee: Even though the respondents did not qualities you seek for from explicitly mention cost and promotion, 5 out of 8 an online delivery service? mentioned that the services fee is one of the factors Name the top 3 attributes. that hinder their decision to use online delivery services. “I actually tried opening the application and tried ordering something one day. However, the service fee made me change my mind.” - Akenut, 20. 3.

2.1 Business Overview of the Online Food Delivery Service in Thailand 3 2.1.1 LINE Man 4 2.1.2 Grab Food 4 2.1.3 Food Panda 4 2.2 Consumer s behavior toward s online food delivery service 5 2.2.1 E-Commerce changes the landscape of demand and 5 instant gratification 2.2.2 Service Quality 6 2.2.3 Food Quality 6