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Table of Contents
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Chapter 1. INTRODUCTION
1.1 Introduction (Overview and Background)
Traditionally it has been seen that the marketing has been aimed at increasing the share
in the market and in attracting the new customers other than the retaining the customers
who are already the customers of the organisation(Kotler 2003).the organisation strive
to achieve an increased market share and in attracting the customers for their
organisation has been losing its status as most organisation will enter in a competitive
field (Baker,2000).So for countering these changes the one of the way is to make the
existing customers stay with the organisation and getting more benefits from them
rather than attracting the customers newly. This has made this strategy as an effective
one and the organisations have been using this more frequently these days (Sharp &
Sharp, 1997).
In the feb 1995 the Tesco stared a new era in the retail sector by the change of the
business way of operations and it has been seen in the Tesco till now too. The change in
the decision has changed the structure of the Tesco and the way it makes the decision,
the way in treating the customers etc.This was due to the introduction of the Tesco
loyalty card in the year 1995 as a part of their customer loyalty programmes. As a
retailer in the UK supermarket industry there will be a significant need to increase the
loyalty of the brand. The customer loyalty schemes has not been so familiar during the
time when the Tesco introduced the loyalty card but it has changed the concept as the
customers are attracted towards the Tesco loyalty card. In the current business sector
the Tesco loyalty card has been one of the few customer loyalty schemes that has been
running so successful fro its incorporation.th Tesco loathly card has been a key
ingredient behind the success of the tesco.The Tesco understood the behaviour of the
customers and framed strategies based on it so that the customers will remain loyal
with the Tesco. By understanding the needs of the customers and delivering service to
meet their wants will create value in the customers mind and the Tesco will earn their
life time loyalty. Before the cub card introduction the Tesco was the second among the
Uk retails sector and
now the Tesco holds the major portion of the Uk retail market
and it is one of the worlds fastest growing supermarket and it is also among the
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To analyse the concept of the loyalty and its relationship with the loyalty and
customers
To review the Tesco loyalty scheme as a corporate strategy for the Tesco
1.4 Research objectives
The questions of the research needs o be answered and this is the starting point of a
research. It will generally acts as the basics of the research and will guide the research
during its journey. The research questions has been given below
Do there is any relationship between the customer satisfaction and the loyalty?
What is the impact of the customer loyalty on the organisation profitability
What is the role of the loyalty in building effective relationship with the
customers?
Do the Tesco loyalty scheme is a corporate strategy for the Tesco?
The introduction about the Tesco loyalty aspect has been discussed and the
background also has been stated with the support of the intended research
objectives and the questions.
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The literature was constructed across the loyalty aspect and the true
meaning of the loyalty has been explored too. The loyalty has been studied
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LITERATURE REVIEW
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been
defined
as
the
being
faithful
or
the
steadfast
in
In the retailer view of the loyalty aspect the Bergeron (2000) has defined the loyalty
across the following aspects in the case of the transactional loyalty. The behaviour of
the customers will be altered or can be altered and the reasons for the alteration are
generally unclear. The change can be due to the any of the following mentioned factors.
In the case of the supermarket it has been seen that the main purpose will be the
transactional loyalty. In the Tesco the transactional loyalty can be encouraged by using
the emotional aspects. So the retail sector will deal basically deal with this type of the
loyalty. The other loyalty has been the perceptual loyalty in which the key elements are
the opinions and the perceptions of the customers but its effect on the purchasing has
been unclear. But this type of loyalty has gained importance sometimes as this type of
the loyalty can predict the behaviour of the customers. The complex loyalty has been
the combination of the transactional and the perceptual loyalty.
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Uncle (2002) has put forward three loyalty concepts on the basis of the customers view
point and the three aspects are the aspects that can create brand relationship (model 1),
the loyalty associated with the revealed behaviour(model 2),and the buying decision
associated with the individual characteristics(Model 3).This model of the uncle has
been associated with the one of the purpose of this research as the loyalty meaning in
the attitudinal and the behavioural aspect can be analysed. It has been seen that the
loyalty definition has been done either on the behavioural aspects or the attitudinal
aspects. It has been named as the stochastic and the deterministic approach respectively.
But the main suggestion was that the loyalty has to be understood in both the aspects
and the main argument will be there when the measurement comes (Rundle-Thiele,
2001).So it will be noted that the arguments is still be going on which has been
started 30 years above by Kyner (Rundle-Thiele, 2001).The researcher who favour
the stochastic approach will argue that that the customers will be loyal when the
customers purchases the brand repeatedly. The loyalty like other aspect cant be
measured. Related to the customer loyalty the factors that can be measured is the
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and will purchase the product and the risk involved is very less. The
Loyalty has been one of the elusive concepts that have a presence on the
marketing field and it has been discussed by a lot of researchers in the past. The
loyalty cannot be measured and it cannot be blue printed. The loyalty cannot be
manufactured and it can be constructed only for the customers. It is a force which
leaps into being only when conditions are exactly right for it, and it is a force very
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A critical evaluation
Gronroos (19994b, p9) described the objectives of relationship marketing as being
to identify and establish, maintain and enhance and, when necessary terminate
relationships with customers and other stakeholders, at a profit so that the
objective of all parties involved are met, and this is done by a mutual exchange
and fulfilment of promises.
According to Payne(2002) the loyalty will deal with strategic approach by which
the shareholder value can be improved by developing effective relationships
between the customers who are very key for the organisations. This will be done
through the focusing on the physiological relationship and this can be done by
analysing the customers behaviour (Brown 2000; Pearson 1996). The researchers
has argued the fact that the loyalty whether its attitudinal or the behavioural will be
passive in nature. In the case of the individual customers the loyalty will be done to
increase the value of one brand and reduce the sensitivity of the price and to increase
the popularity and to avoid the customers from using the other brands and by this a
large number of the customers can be attract ted towards the organisation ( Bolton et
al., 2000).
There are basically two aims for the loyalty programmes and the one important one is
to generally increase the sales and the usage of the products or to increase the range of
the products. The second is very much related with a defensive approach in which a
bond will be created between the customers and the brand and so that the customers
will be loyal and remain with the brand and the customers base can be increased. The
one notable feature is that by the fulfilment of nay of these aims the profit can be
increased a lot. The companies in todays economic scenarios are trying to increase the
loyalty aspect to the employees. The organisations are trying to give some kind of
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The five main elements that can have an influence on the Tesco loyalty
programmes are the following like the cash value, the choice of the redemptions,
the rewards aspiration value, perceived rewards receiving and the ease of the
adaptability.To deliver an effective CLP programme the managers have to choose
the suitable CLP model and which can be divided into different models like the
behaviour-based models, attitude-based models, hybrid models and relationshipbased models (Morgan et al.,2000).In general most of the organisation CLP will of
the behaviour model and it will focused to get the results like the repeated
patronage and want immediate response to the organisation strategy. But this has
been not seen convenient and suitable like the long term relationship marketing
aspect and so that is the reason why the behavioural model has been criticised a
lot by the lot of the researchers. The behavioural model will be like dressed up
model and there will not ebb any involvement of the relationship between the
initiatives (Tynan,2000).According to Dowling and Uncles (1997), behavioural
based models might well stimulate sales for the duration of the promotion but do
not have any long-term behavioural after-effects.
2.7 Tescos CLP-Mix
The one of the notable feature of the loyalty programmes of the modern business
is the ease of the programmes and the sue of the technology in the customer
loyalty programmes. But the intention of the customer loyalty programme will be
the same as that of the building the relationship with the customers and the
organisations that the frequent customers will be loyal with the organisation. The
CLP will be designed to rewards the customers which are loyal with the
organisation so that they will be retained effectively.\the main purpose of every
CLP is to make the operations of the organisation more better(Stauss 2001).the
organisations will consider the profitability only as a secondary goal and this can
be achieved only when the customers will get strong customer base and for this
strong customer base the loyalty has to be increased(Butscher 2001).The loyalty
cards can be used as a technique for increasing the loyalty and this has been
considered as a new modern CLP strategy.
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now the Tesco holds the major portion of the Uk retail market
and it is one of the worlds fastest growing supermarket and it is also among the
valuable Europes organisation list. The Tesco is one among of that organisation that
uses effectively the CRM tool. In the UK the Tesco club card is an example of the best
CLP and it has been used by almost all household and around the eighty percent of the
Tesco turnover has been associated with the club card ( Humpy et al. , 2004). The
success of the Tesco has been built around the Tesco loyalty card (Mason, 2003 cited
in Humpy et al.)By the use of the club cards the Tesco used a personal approach to treat
the customers effectively as an individual. The Tesco can be flexible to suit all kinds of
the customers needs and can satisfy them. All organisations will state the importance
of the customer centred but the Tesco has made this into practise.
2.8 Loyalty as strategy
There are basically two aims for the loyalty programmes and the one important one is
to generally increase the sales and the usage of the products or to increase the range of
the products. The second is very much related with a defensive approach in which a
bond will be created between the customers and the brand and so that the customers
will be loyal and remain with the brand and the customers base can be increased. The
one notable feature is that by the fulfilment of nay of these aims the profit can be
increased a lot. The companies in todays economic scenarios are trying to increase the
loyalty aspect to the employees. The organisations re trying to give some kind of
personal service to the customers by which there will be increased loyalty and this has
been focused by the organisations like the Tesco (Seybold, 2001).by the loyalty the
organisation can increase the purchases and can also increase the employee trust and
will also help in the promotion of the product (McAlexander,2002).in the loyalty
schemes the research will involve taking the individual customers and find way to
increase the loyalty. The most of the research has been focusing on the loyalty
scheme and is exploring the ways to make the business transformation more
effectively and to play a role in the business decisions of the organisation. The
loyalty has been more significant because if the company lose one customers then
they are losing not only some sale but a lot of potential purchases. The customers
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Induction
The other form available is the inductive and in this the development of the theory has
been done. The study does not contain any hypothesis and the primary data has been
used in the theory formulation at the end. The inductive from will help in the collection
of the qualitative data and the interpretivism studies will suit the inductive form.
Compared to the deductive method the inductive is very flexible and helps in analysing
the emotional feelings and the attachment (Saunders et al., 2007). The findings will not
be so generalisable and there is a chance of the bias too.
Combined Approach
The another approach is the combined approach and this will be suited in some from of
the research only. The name refers to the combination of two forms like the inductive
and the deductive forms. The combined approach will be selected in the studies where
the researcher experiences doubts in the choosing of the research approaches as
sometimes pure inductive or deductive can be selected (Saunders et al., 2007).the
triangulation of the results will also be there by using the combined approach.ths
research needs the qualitative and te quantitative data and so the deductive and the
inductive from sis needed in this study. This shows that the combined approach will be
more suitable.
3.5 Research Design
The research design deals with which type of the study has to be done and the main
three designs are the exploratory, explanatory and the descriptive forms. The research
in which there is no vast knowledge about the topic is available then the design suited
will be the exploratory. The research which is relatively unexplored will seek the help
of the exploratory study (Saunders et al., 2009).the explanatory design deals with
exploring why a phenomenon is occurring and what is the reason and so on. The
variables in the study and the relationship will be collected by using the explanatory
design.th descriptive from will give descriptions of research and it is not so adopted in
the management research. By the descriptive the analysis cant be done as it only gives
the description (Saunders et al., 2009; Tharenou et al., 2007).here the exploratory will
be used in the Tesco loyalty cars scheme and the analysis of the customer perceptions.
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DATA ANALYSIS
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Age
male
female
The age is one among the demographic aspect that can have an influence on the validity
and the reliability of the research. The sample respondents of this study include the
customers of the Tesco in the UK and the samples were generally selected on the basis
of the convenience aspect. The 60% customers were the females as the day to day
activities and the shopping will be done mostly by the females. But the 40% customers
were male too as they will also depend upon the Tesco stores for satisfying their needs.
2. Are you a club card member?
Club card
yes
no
.
The loyalty has been playing as an important role among the retail stores as the success
of an organisation depends upon the customers. The Tesco loyalty cards are one of the
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Budget
Axis Title
40
35
30
25
20
15
10
5
0
The customers data about the monthly budget has been explained with the help of the
chart. The customers purchase decisions and the loyalty will be based on the amount
they want to spend in every time of their purchase. The customer mostly spends less
than25 pounds as they always depends upon the Tesco for the day to day activities.
Around 40 percent customers spend less than 25 pounds while 25 percent of the
customers spend less than seventy five pounds. This customers will be monthly
oriented or weekly oriented as they will do purchase only on bulk at weekends or once
in a month.
Visit
50
45
40
35
Axis Title
30
25
20
15
10
5
0
Daily
weekly
Monthly
The frequency of the customers visits s very important aspect in this research. The
customers loyalty and the satisfaction only can be analysed effectively if the customers
visits the stores frequently. In the sample customers 50% customers are the daily
shoppers of the Tesco for the purchase of day to day products.15% customers will shop
at weekends and the remaining 10% will only shop at once in a month. The most of the
customers frequently visits the Tesco and so the customers will possess enough
knowledge regarding the research topic.
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factors
35
30
25
Axis Title
20
15
10
5
0
Location
brand
Convenince
Price
others
The Uk retail sector is very competitive in nature due to the presence of a lot of the
retail stores. The customers will value the retail stores based on their needs and the
customers will choose the stores that suit them. The convenience and the price are the
two important factors that will affect the customers in depending a store.35% of the
customers has used the price as factor in the selection of the supermarket while 20 uses
the convenience factor. The location, brand mane and the quality and the quantity also
has been playing a major role. So most of the customers satisfaction and the loyalty
will be influenced by the price and the convenience of the product.
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Satisfaction
30
25
20
15
Axis Title
10
5
0
7. I
The loyalty has been an influentials factor behind the customers retention and their
repurchase behaviour. The loyalty customers will remain with the organisation and they
will not leave and depend on the competitors products. The Tesco loyalty card is one of
the schemes introduced by the Tesco for increasing their customers loyalty. The most
customer in the study has been satisfied with the loyalty scheme of the Tesco.Infact
35% strongly agree that they are very much satisfied with the Tesco loyalty cards. The
10% customers are very much dissatisfied due to the loyalty cards as it does not meet
their expectations.
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7. I will recommend the Tesco club card scheme to my friends and others
Series 1
50
45
40
35
Axis Title
30
25
20
15
10
5
0
Will recommend
No
May be
.
The loyalty card scheme focused on the customers loyalty and the loyal customers can
act as a word of mouth for the organisation. The customers will recommend the service
to their friends and relatives and this can increase the market strength of the Tesco. The
customers in this study are recommending the service to the friends and the relatives.
Around 50 percent of the respondents in the study are recommending the service while
20 percent does not recommend as they personally dissatisfied with the loyalty scheme.
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Satisfaction
30
25
20
15
Axis Title
10
5
0
The loyal customers will be satisfied with the services of the organisation and the use
of the loyalty schemes can increase the customers satisfaction rate. The Tesco loyalty
cards and the increase in the level of satisfaction has been analysed and the results
shows that the half of the respondents are very much satisfied with the introduction of
the loyalty schemes.30 percent customers strongly agree that they will be satisfied with
the loyalty card scheme while 15 strongly disagrees that the loyalty card scheme can
increase the satisfaction level.
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Series 1
30
25
20
15
Axis Title
10
5
0
The customers buying decision will be influenced by a lot of factors and it depends
upon the needs of the customers. The customers in this study have agreed that their
decision has been influenced by the loyalty cards as they can save some money. The
30% customers strongly agree that the Tesco card influence them in the buying decision
where as 15 percent disagree that their decisions has not been influenced by the Tesco
loyalty card.
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10. The Tesco understands my needs and services and iam satisfied with the
product price and the discounts
satisfaction
30
25
20
15
Axis Title
10
5
0
The loyalty car will act as a communicator for the organisation as they can know what
the customers want from the organisation. This will help the organisation to make the
customers satisfied with the product and the organisation can give discounts and the
offers. The customers agree with this aspect as 30 percent of the customers strongly
agree while only 15 % customers strongly disagree with the statement.
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now the Tesco holds the major portion of the Uk retail market
and it is one of the worlds fastest growing supermarket and it is also among the
valuable Europes organisation list. The Tesco is one among of that organisation that
uses effectively the CRM tool. In the UK the Tesco club card is an example of the best
CLP and it has been used by almost all household and around the eighty percent of the
Tesco turnover has been associated with the club card ( Humpy et al. , 2004). The
success of the Tesco has been built around the Tesco loyalty card (Mason, 2003 cited
in Humpy et al.)By the use of the club cards the Tesco used a personal approach to treat
the customers effectively as an individual. The Tesco can be flexible to suit all kinds of
the customers needs and can satisfy them. All organisations will state the importance
of the customer centred but the Tesco has made this into practise.
The most of the customers were ware of the Tesco loyalty card but the main notable
aspect is that they are unaware of the use of the club card. The employees responses in
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REFERENCES
Books
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Stone , B (1997) Successful Direct Marketing Methods (6th edn.) ,Illinois, NTC
Business Books.
Woolf,B. (1996) Customer Specific Marketing, Teal Books, Greenville
Woolf,B. (2001) Loyalty Marketing: The Second Act, Teal Books, Greenville
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Kelly J. (2002) Every Little Helps An Interview with Terry Leahy, CEO, Tesco
Long Range Planning 33, 430 439
Kim W. C. and Mauborgne Renee (1999) Strategy, value innovation, and the
knowledge economy MIT Sloan Management Review 40, 3, 41 - 54
Lewin J. E. and Johnston W. J. (1997) Relationship Marketing Theory in Practice: A
Case Study Journal of Business Research 39, 23 31
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APPENDIX 1
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female
no
26-50
51-75
75-100 100+
Weekly
Monthly
Brand
Convenience
other
Satisfied
Dissatisfied
7. I will recommend the Tesco club card scheme to my friends and others
Very much Satisfied
Satisfied
neutral
Dissatisfied
Satisfied
neutral
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Dissatisfied
APPENDIX 2
PLANNING AND EFFORT SHEETS
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Date: 02 August
Summary of Discussion: The corrected and the modified introduction section and some
draft for the literature are shown to the supervisor. The supervisor accepted the
introduction and asked to carry the literature framework.
Work required by next meeting: Literature Section
Date of next meeting: 16 August
Date: 16 August
Summary of Discussion: The literature section of about 5000 words has been shown to
the supervisor. The supervisor asked me to add some theoretical aspects to the literature
section and also asked to make the literature section on proper word count
Work required by next meeting: Completed Literature section
Date of next meeting:30 August
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Date: 13 sepetember
Summary of Discussion: The draft questionnaire has been shown to the supervisor with
the methodology section. She asked me to follow the methodology checklist she
forwarded to the students and she had given some comments on the questionnaire and the
interview questions. She granted permission to do the survey questionnaire.
Work required by next meeting: The methodology and the collection of the primary data
Date of next meeting:27 th September
Date:27 september
Summary of Discussion: The methodology section has been shown and discussed the
some issued regarding the collection of the data. The supervisor has given comments on
the primary data collection and was satisfied with the collection of data till now. She
approved the methodology and asked me to start the analysis as well.
Work required by next meeting: The analysis of the primary data
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Date: 17 october
Summary of Discussion: The conclusion and the recommendation made on the basis of
the research was shown to the supervior.She again checked the analysis and opinioned
that it was fine and she was also satisfied with the conclusion section. She asked me to
send the full dissertation by the next week.
Work required by next meeting: Completed Full work
Date of next meeting: 27 october
Date: 27 october
Summary of Discussion: The full work has been shown to the supervisor and noticed
some mistakes and asked me to correct those mistakes. She was satisfied with the work
and asked me to submit the work in the Turn it in.The supervisor approved my work.
Work required by next meeting:
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