TABLE OF CONTENTS

1.0 Executive Summary ........................................................................................................... 2

2.0 Introduction ........................................................................................................................ 2
3.0 Company Analysis ............................................................................................................. 3
4.0 Analysis of customer relationship marketing strategies................................................. 4
4.1 Companys value proposition ........................................................................................ 4
4.2 The customer centric organization ............................................................................... 5
4.3 Four Tier Customer Pyramid ........................................................................................ 6
4.4 Customer Relationship Management ........................................................................... 7
4.5 Processes of customer complaints and gaps in the market ......................................... 9
5.0 Conclusion .......................................................................................................................... 9
6.0 Recommendations ............................................................................................................ 10
7.0 References ......................................................................................................................... 12

1.0 Executive Summary

The main purpose of this report is to make aware the customers, who are the onlookers of this
report to understand and identify the relationship marketing and how it works for the
organisations to achieve their main goals and objectives. Further, examines the relationship
between the customers and the organisations due to their incredible relationship marketing
strategies. So in order to identify the customer relationship marketing strategies, I have
chosen TESCO as one of the largest retailer in the world to offer best customer services. And
also this report has covered the companys current market situations and the competitive
advantages. Hence, the report includes many aspects of relationship marketing such as value
proposition of the company, how far the company has created customer centred, process used to
convert potential customers to loyal customers, customer relationship programs by the organisation and
mainly, how the company solve customers issues comfortably making them satisfied with what they get.
Further at the end the report is concluded through identifying the major finding of the organisations
relationship marketing and its shortcoming. Moreover, it is highlighted the strategies and improvements to
overcome the shortcomings that were emphasized in my analysis.

2.0 Introduction
In todays highly competitive business environment, managing customer relationships and
effectively interacting with your customers are critical to an organisations success. By
enhancing the customer experience, organizations can develop a strong relationship between
the customer and the organisation. In order to do this organisations are striving for their
relationship marketing strategies that will enhance their business operations as well as the
current market growth of the business. According to American marketing association
Marketing is an organizational function and a set of processes for creating, communicating,
and delivering value to customers and for managing customer relationships in ways that
benefit the organization and its stakeholders (PALMATIER, ROBERT W. 2008).
The main objective of the report is to select any service organisation and to analyse how it
conducts its relationship marketing and finally suggesting recommendations to improve the
relationship marketing strategies Thus, the scope of my report is to identify a retailor as my
organisation and to analyse on it. So for this I have chosen TESCO as my organisation and
the report will be analysing many aspects of the relationship marketing.
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3.0 Company Analysis

Tesco was established and founded by Jack Cohen in 1919. Tesco has a history of more than
90 years of business (1919-2014). Over the years Tesco has emerged as a best market retailor
who is the only company to deliver products to our door steps. Eventually, has grown one of
the best service providers around the world in grocery shopping service that successfully
operates in more than 12 countries in the world, employ over 530,000 people and serve tens
of millions of customers every week. Hence, Tesco has been always been committed to
provide the best shopping experience in the past years until now. Moreover, Tescos main
core purpose and the objective are to create value for the customers to earn their lifetime
loyalty (UKessays, 2015).
So the main focus of the Tesco is to achieve these aims and objectives through promoting
deals and making higher sales of their products through direct marketing and emailing
customers. The second main point is to understand the customers and Tesco will be the first
one to meet their needs. So Tesco has created a better society through its achievements.
Those can be identifies as, Tesco has sponsored sustainable consumption institute at
Manchester University, Tesco has managed to remove over 2500 tonnes of saturated fat and
3000 tonnes of salt from their products since 2005, Also Tesco has helped over 4.5 million
people around the world to get active- over 2millio in Thailand alone, Tesco has created more
community champions in the UK, and introduced them in Malaysia, Korea and China. Finally
Tesco has come up with a plan to launch their community promises to make sure their staffs
understand how they can make a difference and raised a record 6.2 million for our UK
Charity of the Year, Marie Curie Cancer Care (Files.investis.com, 2015).
Actually the current market situation of Tesco is bit weird that the company is suffering a loss
situation due to certain complications and it is said that Tesco revels the biggest market loss
from its operations for the past years. But on the other hand still Tesco has a strong market
position in grocery home shopping. According to Mr Lewis, the chief executive of Tesco,
said that large supermarkets were not the dinosaurs that they have been painted to be and
moreover he said their performance was improving as the company lower its prices, improves
the availability of the key products, and increase the staffs (Ruddick, G. 2015). Also the
Tesco boss insisted that the fundamental core of our business is still really strong as he was
reassuring the investors that retailor can turn around its performance (Ruddick, G. 2015).
Although Tesco has a experiencing a tough situation, many even say this is the darkest part of
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the Tescos growth, Tesco will be able to maintain their business operations for certain extent
in future years.
Apparently, when examining the competitive advantage, Tesco has many advantages over its
competitors; those were by offering consumers greater importance in terms of value, lower
prices and by providing greater benefits and quality service that justifies higher prices.
Moreover, inbound and outbound logistics, services, sales and marketing, services and
technological development has driven the way for Tesco to be the market leader and to
achieve competitive advantage over its competitors (UKEssays, 2015).

4.0 Analysis of customer relationship marketing strategies

4.1 Companys value proposition
When defining value proposition, its defines that all the advantages and benefits that
customers get from an offer of the company. Due to this, it will enable the company to make
different offers to compete with other rivals (Murphy and Narkiewicz, 2010). Fresh &
Easy Keeps it Simple and Keeps Prices Low Tescos value proposition title in a press release
(Easy Buzz, 2008).
So Tesco should be aware of the needs of the customers and they should know, what are the
strategies to attract customers and treat them in a better manner. Tescos value proposition
"Companies that offer outstanding value turn buyers ("tryers") into lifetime customers"
(Weinstein and Johnson 1999, p.4). Hence, some of the value driven strategies can be
o Understanding customer choices
o Increasing competitive options
o Improving service quality
o Improving brand success
o Identifying customer segments

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When you see how Tesco steal customers from other UKs leading hyper markets, is because
of its value proposition. That understands that the customers are the key factors in business
nowadays. Customers do not buy because of the features, products or services but solutions
for their problems. So in order, Tesco has undertaken many tools to make the customers feel
relaxed

4.2 The customer centric organization

Tesco and customer centric has linear effect, it is because that Tesco gives the best to their
customers other than its competitors. Tesco maintains the core value script that is Put your
customers at the heart of your company (Sir Terry Leahy, 2010). This phrase is enough to
show that Tesco has already made their own way to treat customers and give them the best of
all. According to Sir Terry Leahy, chief executive of Tesco has revealed this as an incentive
for their customers that are When our customers change, we change with them. So it is not
easy for a company to change with customers as consumers needs are becoming increasingly
diversified and retailors need new formats to keep up. Hence, Tesco has managed to do that.
Some of the key steps of Tesco towards customer centric management (Leahy, 2010),

Define customer segments

Create store clusters

Define target customer segments

Optimize pricing strategy

Optimize the range

Implement change management process

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4.3 Four Tier Customer Pyramid

Figure 1: Four Tier Customer Pyramid

In this part will be discussing about four tier of company that can be divided into four types
which are Platinum segment, Gold segment, Iron segment and Lead segment. Therefore,
Tescos platinum segment and gold segment are described on individual of customer needs so
it can be develop the customer profile of each customers history, their preference and usage
and also their expectations. Where by Iron segment also focus on preference and perception
of customer that usually adequate. But lead customer is on different purposes which examine
ways to be served in less cost.
From the context of the customer pyramid increasing the sales made to good customers is
referred to as customer alchemy (converting iron and gold customers into platinum
customers). Thus, the best way to achieve customer alchemy is through add-on selling, which
involves offering and selling more products and services to existing customers and increasing
the retailers share of wallet with these customers. So Tesco involves in customer alchemy to
create potential customers to loyal and profitable customers. Tesco, the king of retailors in
UK, added second tier to its frequent shopper program to uplift its share. The first tier has a
traditional design to gather customers data. The second tier targeted at its better customers, is
more innovative. Tesco allow customers to earn a key when they spend $38 or more in a
single transaction. Fifty keys make the customer a key holder, 100 keys a premium key
holder. When customers achieve these higher levels, they get discounts on popular
entertainment events, theatre tickets, sporting events, and hotel vacations. The key program
seeks to convert iron and gold customers into platinum customers. A retailers customer
database also reveals opportunities for add-on selling. Therefore, Tescos process on
converting potential customers into loyal customers is based on these benefits that the
company provide for their customers (Harlam, n.d.).

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4.4 Customer Relationship Management

Customer relationship marketing, the new concept has directed the attention towards various
aspects, including the necessity of relationship marketing between customers and the
marketers, it is important to keep the current customers and the business should build a long
term relationship with those customers to sustain in the market successfully (Sayed Soliman,
2011).
Tesco tries to use Relationship Marketing to achieve this aim by advertising their latest deals
to new and existing customers online e.g. 'save twenty pounds on Nokia phones' this helps
Tesco to gain higher sales and profit in their Telecoms/Phone Shop from their customers.
Also Tesco club cards are known as one of the worlds most successful loyalty schemes,
these will help the users or the customers to earn more points and those points were later
discounted with products and services offered by Tesco. Moreover Tesco has created
different schemes for different family members like Tesco Kids Club, Tesco Baby Toddler
Club, Healthy and living Club, World of wine Club. Thus, these are some of the attractive
way of Tescos Customer relationship behaviour. Even comment cards are used, that
customers question time session are held twice a year this makes Tesco to gather more data
on customer views on product, price, quality, service, and community involvement. Tesco
provide customers coupons, so that the customers can give those coupons with their club
cards to run attractive points for further purchase. Hence, these can be some of the best
fascinating

tools

to

maintain

loyal

customers

for

the

future

(Crmsystems.expertmarket.co.uk, 2015).

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TESCO CLUBCARDS

Facts:

Launched in 1995

Cost 300Mi in the first year (approx. 4.5% sale)

Update POS & Software

How it worked:

Like a general loyalty card

Multi partners, Multi-channels

How it done:
Psychological lens:

Low fat & high fat

Low price& high price

Fresh

Exotic

Needs preparation

Ready to eat

Segmenting
Outcome:

Only two months to become a market leader in UK.

Half of UK households hold club cards.

Figure 2: Functions of club cards

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4.5 Processes of customer complaints and gaps in the market

Every company that is successful doesnt mean those companies do not have complaints and
gaps that are affect the customer base. Hence, these types of gaps occur due to many reasons
while the business operations are undertaken. Tesco processes its customer complaints
through undertaking data collection methods and data analysis and results method, so this
will be one of the best solution for the company to identify what customers think about their
business (Ma and Ding, 2010).
In addition Tesco come up with several plans like customer plan, operation plan, people plan,
and finance plan and so on. However, these plans can be a source to fill the gaps in the
markets by fulfilling customer complaints. In research results, 67% of customers take Tesco
as their favourite supermarket (Ma and Ding, 2010). Also Tesco gives questionnaires to their
customers and get their feed backs as soon as possible and try to develop what they are really
lacking in. So these can be the process of Tesco that convert customer complaints into
customer loyalty.

5.0 Conclusion
In order to conclude, lets identify what are the major findings of our analysis on the
companys relationship marketing. To support this statement, lets discuss some of the factors
that Tesco uphold to make its business successful. According to Jim Barnes, Executive Vice
President of Bristol Group, a Canada-based Marketing Communications and Information
firm, and a CRM expert "They (Tesco) know more than any firm I have ever dealt with how
their customers actually think, what will impress and upset them, and how they feel about
grocery shopping." (Icmrindia.org, 2015).
Furthermore, Tesco issues magazines that will reach a wide range of customers by
determining the advertisements and promotional coupons that will go in each of the over
150,000 variants of the magazine. This had been made possible by its world-renowned
customer relationship management strategy. On the other hand there can be seen some
shortcomings, those can be said that, Tescos online webservers can be sometimes really slow
for the customers to purchase products online and when there is plenty of people in the store
people would have to wait for long time to get to the cashier.

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6.0 Recommendations
I would like to give my opinion and recommend on how the company should improve in
order to meet with customer satisfaction.
Primarily, Tesco can maintain a good and an effective web server that each and every
customer will not have to wait until the page is loading. When comparing the website of WalMart Tescos website page loading rate is slow, because Wal-Mart has an effective website
that is repositioned by several professional web programmers (Corporate.walmart.com,
2015). So now Tesco has to evaluate the speed of their website page that can be viewed by
the customers in a quick second. For this they can hire some professionals in IT field (Web
developers) to solve this or give to any firms that develops software programs
Secondly, Tesco can install most recommended firewall to its website to make customers
believe that this website will be safer to deal with higher monitory values. So far many
retailors around the world has not mentioned their security and policies and the company or
the software installed in those webservers, So Tesco can take as that an advantage to mention
their web security services and licensed companies or any franchisees. This would definitely
make the customers to believe and keep trust on the online purchasing though Tescos
website.
Third one can be said that Tesco will have to expand its physical store to welcome more
customers without making the place congested, also it can increase the cashiers to serve more
customers at a time. Moreover, every retail stores have got different retailing process

Producing

Purchusing

Selling

Delivering

Supporting

Hence, these retailing process normally all retailors do not hold every process. For an
example, Wal-Mart involves in Producing, Selling and Supporting. On the other hand Tesco
involves in Selling, Delivering and Supporting. Therefore, as a recommendation, Tesco can
involve in other processes that have been left in the retailing process, this will make the
customers bond more solid and realistic (Ngoc, 2008).

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Fourth one can be recommended that Tesco can increase its outlets more in rural areas of the
country. Because, mostly their outlets are in urban areas. Wal-Mart the main competitor of
Tesco has many stores more than Tesco in more than 28 Countries , Therefore Tesco also can
expand its business stores from 12 countries to higher where Wal-Mart havent put up their
business outlets (Corporate.walmart.com, 2015).
Finally, the main recommendation can be Tesco can make their customers aware of the
companys projects and other services, so that customers can have more faith towards the
company and investors can invest their money without any hesitation. Many online hyper
markets have done many community services and also involves in corporate social
responsibility. Hence, these activities make a strong belief among customers. So it can be a
strong platform for Tesco to increase its loyalty among people. Subsequently these are few
improvements on the organisation's relationship marketing strategies.

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7.0 References
Corporate.walmart.com, (2015). Walmart Corporate - We save people money so they can live
better.. [online] Available at: http://corporate.walmart.com/ [Accessed 26 May 2015].
Crmsystems.expertmarket.co.uk, (2015). Tesco CRM Case Study | Find out more. [online]
Available at: http://crmsystems.expertmarket.co.uk/tesco-crm-case-study [Accessed 16
May 2015].
Easy Buzz, F. (2008). Tesco's Fresh & Easy and it's 'Value Proposition:' We Asked, They
Answered; Discussion, Deconstruction and Fresh & Easy Buzz Analysis. [Blog] Fresh
& Easy Buzz. Available at: http://freshneasybuzz.blogspot.com/2008/06/tescos-fresheasy-and-its-value.html [Accessed 15 May 2015].
Files.investis.com, (2015). Tesco PLC - Achievements and challenges. [online] Available at:
http://files.investis.com/plc/cr/t6.html [Accessed 15 May 2015].
Harlam, B. (n.d.). Customer Relationship Management. 1st ed. [ebook] Available at:
https://warrington.ufl.edu/centers/retailcenter/docs/TeachRetail_Lev81047_ch11.pdf
[Accessed 16 May 2015].
Icmrindia.org,

(2015). TESCO

Champion|Marketing|Case

The

Study|Case

Customer
Studies.

Relationship
[online]

Management
Available

at:

http://www.icmrindia.org/casestudies/catalogue/Marketing/Tesco-Marketing.htm
[Accessed 17 May 2015].
Leahy, T. (2010). Customer-centric retailing. 1st ed. [ebook] Munich: Roland Berger
Strategy

Consultants

GmbH.

Available

at:

https://www.rolandberger.com/media/pdf/Roland_Berger_Customer_Centric_Retailing_
20100720.pdf [Accessed 16 May 2015].
Ma, Y. and Ding, J. (2010). Delivering Customer Value Based on Service Process: The
Example of Tesco.com. International Business Research, [online] Vol. 3(No. 2).
Available

at:

http://www.researchgate.net/publication/42386000_Delivering_Customer_Value_Based

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_on_Service_Process_The_Example_of_Tesco.com/links/0ffc0fef0cf255165fc70d51.pdf
[Accessed 16 May 2015].

Murphy, R. and Narkiewicz, V. (2010). Electronic Commerce and the Value Proposition. The
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http://www.hraljournal.com/Page/12%20Richard%20Murphy.pdf [Accessed 15 May
2015].
Ngoc, P. (2008). Wal-Mart and Tesco Case Study.

PALMATIER, R. (2008). Relationship Marketing. 1st ed. [ebook] United States of America:
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Science

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pp.1-139.

Available

http://faculty.washington.edu/palmatrw/docs/MSI.RM.Book.pdf

[Accessed

at:
15

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2015].

Ruddick, G. (2015). Tesco reveals biggest loss in UK retail history. The Telegraph. [online]
Available at:
http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11555979/Tescoreveals-biggest-loss-in-UK-retail-history.html [Accessed 15 May 2015].
Sayed Soliman, H. (2011). Customer Relationship Management and Its Relationship to the
Marketing Performance. International Journal of Business and Social Science, [online]
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http://ijbssnet.com/journals/Vol.%202_No._10;_June_2011/18.pdf [Accessed 16 May

2015].
UKEssays, (2015). Tesco Aims And Objectives Relationship Marketing Techniques. [online]
Available

at:

http://www.ukessays.com/essays/marketing/tesco-aims-and-objectives-

relationship-marketing-techniques-marketing-essay.php [Accessed 15 May 2015].

UKEssays, (2015). The operations and competitive advantage of Tesco. [online] Available at:
http://www.ukessays.com/essays/marketing/the-operations-and-competitive-advantageof-tesco-marketing-essay.php [Accessed 15 May 2015].
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Weinstein,A.Johnson,W,C (1999). Designing and delivering superior customer value:

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