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Tesco Loyalty card

UNIVERSITY OF WALES, TRINITY SAINT DAVID

INVESTIGATING THE IMPACT OF CUSTOMER LOYLATY IN THE RETAIL


SECTOR WITH RESPECT TO THE TESCO LOYALTY CARD

Supervised by: Lipi Begum


Department of Marketing

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Table of Contents

Chapter 1. CHAPTER ONE..........................................................................................5


1.1 Introduction (Overview and Background).........................................................5
1.2 Background of the study......................................................................................6
1.3 Aims and Objectives.............................................................................................8
1.4 Research objectives...............................................................................................8
1.5 RESEARC OUTLINE..........................................................................................9
Chapter 2. Literature Review......................................................................................11
2.1 Loyalty..................................................................................................................11
2.2 Loyalty aspect category ( Retailers view).........................................................12
2.3 LOYALTY CONCEPTS (CUSTOMERS VIEW)............................................13
2.4 Loyalty Frameworks...........................................................................................15
2.5 REASONS FOR THE RAPID INCREASE IN POPULARITY OF
CUSTOMER LOYALTY.........................................................................................16
2.6 Building a CLP....................................................................................................20
2.7 Tescos CLP-Mix.................................................................................................21
Chapter 3. CHAPTER THREE..................................................................................27
3.2 The Research Philosophy...................................................................................27
3.3 Position on Philosophy........................................................................................28
3.4 Research Approach.............................................................................................28
3.5 Research Design..................................................................................................29
3.6 Research Strategy...............................................................................................30
3.6 Data Collection Techniques................................................................................31
3.7 Sampling and Population...................................................................................31
3.8 Scope and Limitations........................................................................................33
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3.9 Gaining Access and Research Ethics.................................................................34
Chapter 4.......................................................................................................................36
4.1 INTRODUCTION..............................................................................................36
4.2 Analysis of the Questionnaires...........................................................................36
4.2 DISCUSSION OF THE FINDINGS..................................................................46
4.3 Analysis of Focus group......................................................................................48
Chapter 5. CHAPTER FIVE.......................................................................................54
5.1 CONCLUSION...................................................................................................54
5.3 LIMITATIONS OF THE STUDY.....................................................................56

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ABSTRACT
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. 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 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 for its incorporation.th Tesco loyalty 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. In this study the Tesco loyalty card has been analysed to know the
customer perceptions and the data has been collected using multiple data collection
tools.

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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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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.
1.2 Background of the study
The loyalty is one of the element that has been associated by the customers with
the products and the services, sores and brands etc (Laurent, 1997) .The customer
loyalty will depend upon the attachment that the customer holds with the brand or
the product and the other dimension is the repeat patronage. The attachment
dimension has been based on the two elements like the preference degree and the
preference of the perceived product degree. The level of the attachment has been
noted a high when customers enjoy a great purchase preference attached with the
great product differentiation preference (Griffin 2005).The customer satisfaction
and the loyalty has been linked each other and this relation has been considered as
a symmetric relation where the customers are satisfied and all satisfied customers
will not be loyal (Oliver 1999). Sometimes the customers will be satisfied and
loyal and it does not mean that the customers will repeat the purchase with the
brand. For an example in the case of the automobile industry suppose the 80
percent customers are satisfied but in this 80 percent only 40 or 50 will repeat the
purchase from the same automobile. This shows that the satisfaction will not be so
linked with the loyalty
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
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increased a lot. The companies in todays economic scenarios are trying to increase the
loyalty aspect to the employees. The loyal customers will remain with the product
and will not avail the competitors products. The loyal customers will buy more
from the organisation and they will ready to pay higher prices and will also act as
a word of mouth for the organisation (Morgan et al.,2000).The profit management
has also been very influential in the recent years and sometimes the customers will
get only cheap profit from the organisation. One of the studies done by the Kumar
(2002) showed that the customers ho loyal to the organisation will get only less
profit when compared with the short term customer.
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 formulate the loyalty programmes for increasing the loyalty
aspect. The creation and the implementation of the CLP programme is not very
simple as it requires careful analyses and the implementation. The CLP has been a
resource intensive and so that the organisations have to take care while design the
CLP programme. The organisation has to be aware of the time, the effort that has
to be needed and the financial involvement too (Butsher,2001). 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 behaviourbased models, attitude-based models, hybrid models and relationship-based
models (Morgan et al.,2000).The CLP of the Tesco belongs to the category of the
integrative instruments (Stauss 2011) because of the ability to combine the
different techniques of the existing techniques. Generally the product mix of the
Tesco involves the Tesco services and its partners. The Tesco price mix will be
related with the discounts and the advantage of the organisation by using the
bonus programmes and the payment methods favourable to the customers. The
communication will also be played in the interaction of the members and the
exclusive communication has been done and will be accessible only with the
members. The one notable aspect is that the Tesco listens what the members meant
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to stay instead of taking to them (Hansen, 2000). Or this aspect the Tesco has
introduced the CLP magazines and the mailings conducted regularly and the
member events (Butsher, 2001).
1.3 Aims and Objectives
The main aim was to analyse the effectiveness of the loyalty as a strategy in the UK
supermarket industry with respect to the Tesco club card. The purpose of the study was
to understand the concept of the loyalty and the relationship on the customers and the
loyalty schemes an important strategic decision. The objectives that has been used here
are the following

To analyse the concept of the loyalty and its relationship with the loyalty and

the satisfaction of customers


To evaluate the impact of the customer loyalty on the organisation profitability
To analyse the role of loyalty in building effective relationship with the

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?

1.5 RESEARC OUTLINE


The research outline can be discussed easily by using the bullet points and the
explanation has been given below

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

by a lot of the researchers and it is an elusive phenomenon


As all research the chapter three deals with all the methods and the approaches
that incorporated in the study y the researcher. The methodology acts a as a
foundation of the research for the data gathering. The research tools and the
methods have been evaluated and the one selected has been discussed in detail

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LITERATURE REVIEW

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Chapter 2. Literature Review


INTRODUCTION
The main aim of this study was to analyse the loyalty concept and to know the
impact of the loyalty on the customers. The literature was constructed across the
loyalty aspect and the true meaning of the loyalty has been explored too. The
loyalty has been studied by a lot of the researchers and it is an elusive
phenomenon. There was another aspect to be noted that sometimes the researchers
uses the loyalty for some other aspects like the repurchase behaviour and in the
retention aspect. The research articles and the journals has been discussed to
structure around the loyalty aspect.
2.1 Loyalty
Loylaty has

been

defined

as

the

being

faithful

or

the

steadfast

in

allegiance(Oxford (2003, pg 327).According to Payne 2002 the loyalty has been


discussed by most of the researchers and it has been misunderstood by a lot of
them in the recent past. There was another aspect to be noted that sometimes the
researchers uses the loyalty for some other aspects like the repurchase behaviour
and in the retention aspect. The customer loyalty has been entirely different from
that of the customers repurchase behaviour as the loyalty is one of the internal
factor that can make the customers loyal (Hansen,2000) .The customer retention is
also one of the different construct and it is purely based on the behavioural
character while the loyalty construct has been dealing with the attitudinal
dimensions. The customer retention will involves the marketers and the role while
the customer loyalty will be more focused on the behaviour of the customers
(Hansen,2000) .
The loyalty is one of the element that has been associated by the customers with
the products and the services, sores and brands etc (Laurent, 1997) .The customer
loyalty will depend upon the attachment that the customer holds with the brand or
the product and the other dimension is the repeat patronage. The attachment
dimension has been based on the two elements like the preference degree and the
preference of the perceived product degree. The level of the attachment has been
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noted a high when customers enjoy a great purchase preference attached with the
great product differentiation preference (Griffin 2005).
2.2 Loyalty aspect category ( Retailers view)

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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2.3 LOYALTY CONCEPTS (CUSTOMERS VIEW)

Adapted from Uncles et al., 2002

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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behaviour of the customers (Stone, 1997) .the customer loyalty has been analysed
with the help of the past purchases with secondary consideration has been given to
the motivations of the customers and the commitment (Ehrenberg 1988; Fader and
Hardie 1996; Kahn, Kalwani and Morrison 1988; Massy, Montgomery and
Morrison 1970). In the stochastic approach the customers buying observed
patterns has been decribed.The loyalty of the rand can be measure with respect to
the repeated purchase and this can lead to weak commitment.
The customer repeated purchase cannot be related with the loyalty only as there
are a lot of factors that can lead to the repeat purchase of the customers.
Sometimes the convenience and the price and other aspect can lead the customers
decision to purchase agin.if the customers found the brand unavailable then the
customers will choose the product that similar to that product ( East 1997;
Ehrenberg, Barnard and Scriven 1997). The one big challenge in the approach is
that the researchers consider the loyalty behaviour as a complex phenomenon due
to the presence of a number of variables and the process of the loyalty is very
dichotomous (Odin,2001).it has been another factor that only some customers will
be hundred percent loyal to only one brand and generally the customers will be
loyal to three or four brands belong to the same category and this loyalty has been
seen as polygamous loyalty (O Malley, 1998) .in the case of the determinist
approach the loyalty will be regarded as an attitude and there will only a few
factors influence them.
Customer satisfaction: the customer satisfaction and the loyalty has been linked
each other and this relation has been considered as a symmetric relation where the
customers are satisfied and all satisfied customers will not be loyal(Oliver 1999).
Sometimes the customers will be satisfied and loyal and it does not mean that the
customers will repeat the purchase with the brand. For an example in the case of
the automobile industry suppose the 80 percent customers are satisfied but in this
80 percent only 40 or 50 will repeat the purchase from the same automobile. This
shows that the satisfaction will not be so linked with the loyalty
Commitment and Trust: the commitment and the trust also can affect the loyalty
and these two aspects are not so linked together as they underlines the success of
the marketing(Morgan 1994).the trust shows that the customers believes in the
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brand

and will purchase the product and the risk involved is very less. The

commitment refers to the physiological attachment of the customers with the


brand.
2.4 Loyalty Frameworks
The loyalty has been associated with a lot of frameworks and the loyalty
frameworks has been proposed by Beckman and Crompton (1994) and it has been
demonstrated by the following diagram.
Adapted from O Malley 1998, pg 47-55

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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sensitive to betrayal. (Maurice R. Franks, 2004,page 10).it has been seen that without
any great brand or the product the organisations can survive but they cant be survive
without nay customers who are loyal.
2.5 REASONS FOR THE RAPID INCREASE IN POPULARITY OF
CUSTOMER LOYALTY

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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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
life rime purchases will be loosed by the organisation and the lifetime patronage
will not be there (Kotler and Armstrong, 2001).If the customers lose one of the
customers then it will influence the organisation effectively. The retention of the
customers is more effective than the attraction of the new customers (Oliver,
1999).
The loyal customers will remain with the product and will not avail the
competitors products. The loyal customers will buy more from the organisation
and they will ready to pay higher prices and will also act as a word of mouth for
the organisation (Morgan et al.,2000).The profit management has also been very
influential in the recent years and sometimes the customers will get only cheap
profit from the organisation. One of the studies done by the Kumar (2002) showed
that the customers ho loyal to the organisation will get only less profit when
compared with the short term customer.
2.5 Customer-Loyalty-Programmes
The customer loyalty programmes has been structured to increase the loyalty of
the organisation and it has been seen from t he past research that the loyalty
programmes can be traced back from the 18 th century (Sparks,1999).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
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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. This card can be used by the customers
ate the organisations and this will help in the customer identification and the
behaviour of the customers can be easily understood. By recording the purchase
details of the customers in the loyalty cards the behaviour pattern can be easily
understood and this helped in the creation of the better CLP.The some of the
variety of the loyalty cards that has been used by the retailers are
Payment cards: the payment cards is one of the loyalty cards that has been used
and this will help in the payment of the customers to the retailers and it si also
termed as the store cards
Reward cards: the reward cards is another form and as the name indicates will
help to reward the customers based on the purchase behaviour and it will also
termed as the bonus cards and the Tesco club card will belong to the reward card
category.
Combined cards: As the name indicates the combined card deal with the mix of the
payment and the reward card.
The card strategies that available in the CLP are explained below( Cuthbertson and
Williams 1999)
Pure Strategy:
The pure strategy is the one of the strategies among the four CLP strategies. In
this pure strategy the benefits and the spending can be done only in one retailer
who issued the loyalty card. This strategy is done to increase the bond between the
customers and the organisation and this will help in the retailer understanding the
needs and wants of the customers. The pure strategy is basically functions as a two
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way dialogue where the retailer understand the needs and fulfils it with the help of
the loyalty cards (Rayner, 1998).the pure strategy is followed by the Tesco as well
and the one main objective was o develop the relationship between the customer
and the brands by understanding their needs.
Push Strategy:
The push strategy is one of the other strategies where by the customers can spend
at a lot of the retailers while the benefits will be associated with the retailer who
issues the card. This is one strategy that will motivate the customers to use a
shopping style that they dont done before by making the customers to depend on
the new channels and this will help in the new behaviour pattern. The one of the
example of the push strategy has been done by the cheap airlines and it will be
more suited for the retailers into the noncore businesses. In the case of the pure
strategy the loyalty has been done among the exisisting customers while new
customers will be attracted with the help of the push strategy(Rayner ,1998)
Pull Strategy:
In the pull strategy the customers can spend at the retailer which issues the card
and the benefits can be collected outside the retailer. This strategy will help in the
attraction of the customers by means of a retail offer so that the purchase on one
of the product will give an offer on another product.tis has been referred in the
business views as the buy one get one free aspect. This will be focused on
increasing the sales by making the customers to buy a new thing (Sharp,1997).
Purchase Strategy:
In the purchase strategy the spending and the benefits that has been accured can be
done across a lot of the retailers. The purchase strategy will try to increase the
purchases of the product regardless of the place where the sales occurs. The best
suited business will be the banking business and the service providers. For
increasing the usage the strategies will depend on the greater availability and the
awareness of the brand etc.This card will act as the payment cards in the first
instance and then as a reward card( Reichheld , 2000)
Purge Strategy:
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The purge strategy involves the avoidance of the loyalty cards and the strategy
will target the customers belong to other schemes and will try to increase the
benefits and the market share. The one of the main aim will be to increase the
retailer competitiveness other than the measures associated with the loyalty
cards.The information that has been derived from the members of the CLP are
very important as they have made themselves very clear by associating them with
the loyalty card schemes (Butscher (2001)
2.6 Building a CLP
The organisations will formulate the loyalty programmes for increasing the loyalty
aspect. The creation and the implementation of the CLP programme is not very
simple as it requires careful analyses and the implementation. The CLP has been a
resource intensive and so that the organisations have to take care while design the
CLP programme. The organisation has to be aware of the time, the effort that has
to be needed and the financial involvement too (Butsher,2001). The organisation
that create the CLP programme has to analyse the customers value because of the
fact that the loyalty has been associated with the customer values and then the
organisations have to develop a CLP programme than can increase the value in the
mind of the customers (Morgan et al, 2000). When the customers have increased
the perceived value of the organisation product then the loyalty will also be good
(Bryan, 2002). A value proposition is the full positioning of a brand , the full
mix of benefits upon which it is positioned and the answer to the customers
question Why should I buy your brand?(Kotler & Armstrong,2001,P 120 ).To
make the customer loyalty programmes viable it has to be take care that the
loyalty programmes of the organisations will be distinct and it will be difficult to
make a copy and it has to be differentiated from that of the competitors
(Morgan,2001).the benefit has been of two types like the soft(magazines, events
etc) and the hard(Discounts and offers etc) and the combination of these two has
been done by the some retailers. Tesco knows the significance of the savings and
the hard benefits has been copied easily and the Tesco consider the soft benefits
for their loyalty programmes as they cant be copied by the others due to the
intangibility.

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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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The CLP of the Tesco belongs to the category of the integrative instruments
(Stauss 2011) because of the ability to combine the different techniques of the
existing techniques. Generally the product mix of the Tesco involves the Tesco
services and its partners. The Tesco price mix will be related with the discounts
and the advantage of the organisation by using the bonus programmes and the
payment methods favourable to the customers. The communication will also be
played in the interaction of the members and the exclusive communication has
been done and will be accessible only with the members. The one notable aspect is
that the Tesco listens what the members meant to stay instead of taking to them
(Hansen, 2000). Or this aspect the Tesco has introduced the CLP magazines and
the mailings conducted regularly and the member events (Butsher, 2001).
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
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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
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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life rime purchases will be loosed by the organisation and the lifetime patronage
will not be there. The loyaty schemes and the schemes as a strategy has been done
in this study as well. The most general aspects is that the CLP doe not exist in
vacuum but it is the element of the organisations overall strategy In order to
realize the purpose of the research, its important to assess loyalty schemes as a
part of a strategy rather than a stand-alone entity (OMalley , 2000).The Tesco has
identified the importance of the loyalty cards and having been using it as one of the
main strategies (Morgan et al,2000).The design of the CLP will mainly based on the
nature of the business and the Tesco position in the market and the purpose and the goal
of the Tesco (Fournier et al, 2001). The Tesco CLM will be a long term strategy and
will not involve the current relationship of the customers with the Tesco and it will be
focusing on the strategic direction of the tesco.The organisation will be success when
the organisation has been aligned closely with the organisation ( Sawhney, 2001).
Tescos concept of Relationship Management begins and ends with the customer.
The strategies has been effectively used for analysing the customers needs and the way
to meet the needs and this can be termed as Ideal customer service(Fournier 2003).The
characteristics for an ideal customer experience has been designed by the Fournier so
that the better service has been provided with the customers. If the customer need has
been analysed and fulfilled by the organisation in a better way then it can cause for the
repurchase behaviour. This relationship will start by analysing the needs of the
customers and ends in satisfying the needs, the ultimate reward can be in the form of
the increased loyalty.

2.8 Customer Loyalty Measures


The Customer Loyalty Measures are formed in order to make the people who are
within the company to understand and dictate upon the strategic directions that are
made by the organisation itself. These would be helping the company with evaluating
the level of performance by the current customer base of the company and this would

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be driving the customer strategy in overall into future directions. When we consider the
Loyalty measures by TESCO it consists of the following elements.
The mean profit on each customer by tenure
Customer base size by Tenure
The customer bases life time value by tenure
The customer bases potential value by tenure
There is a brief discussion on the Loyalty measures are being done but there does not
involve a deep analysis done on the econometrics of the club card by TESCO.

Rank the Customer Base by Value


There exists a key output for determining the Customer Loyalty Measures and this
process is done in order to rank the customer base in terms of value. This is a very
crucial aspect and this would be the driving force that would be helping the company in
decision making on the allocation of the resource. Previously the Loyalty Scheme by
the Tesco was one size fits all and the company was later analysed and understood the
vitality to perform something more which would be more profitable for Premium Loyal
customers. The company started to understand the pivotal concept that involved in
determination of the value of the customers and they understood that certain customers
are important to them than some others.
Customer Strategies
There are customer strategies that are adopted by Tesco in order to retain the High
Valued customers, to grow the High Growth customers, to acquire either High value or
High Grow customers and also for the determining of the customers with negative
value whom they can change into profitable customers. Every single step would be
outlining the needs of the Tesco for retaining, growth and acquiring or terminating
certain customers. These are done through the process of customer experience.

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Chapter 3. RESEARCH METHODOLOGY


3.1 Introduction
As all research the chapter three deals with all the methods and the approaches that
incorporated in the study y the sresearher.the mthsodolohy acts a as a foundation of the
research for the data gathering. The research tools and the methods have been evaluated
and the one selected has been discussed in detail. The chapter also continues to discuss
the validity and the reliability and ends with stating the ethics of the study.
3.2 The Research Philosophy
The philosophy will be vital as it deals with the position of the researcher from he starts
the research. The most reseahera argued that the philopshy is not important but it will
have an impact on the entire study if not given enough attention (Saunders et al., 2007).
The general two philosophies available for this study has been discussed below
Positivism
The positivism will be more common in the research which deals with the scientific
topics. The more common use of the positivism in the scientific research is due to help
he researcher in the collecting statistical information which will be free from the bias.
The positivism will be free from the bias and generally used in study which involves
the testing of a theory. The another common reason for the sue of the positivism is due
to the fact that the generalisability will be there in the research. The positivism does not
involves any attachment with the participants invited in the study and will be free from
the emotional attachment. The main assumption of positivism is that the researcher is
independent of and neither affects nor is affected by the subject of the research
(Remenyi et al, 1998 p.33 cited in Saunders et al, 2009, p.114).
Interpretivism
The another common form is the interpretisvism.The most common use of the
interpretivism in the research will be suited in the management researches. The
qualitative data will be collected from the participants of the study with the use of the
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interpretisvim.The participants emotions and the feeling can be analysed more
effectively. In the interpretivism the research will be more done on the subjects and it
will be subjective in its nature. The rich and the in depth gathering of the data will be
possible Any using the interpretivism (Saunders et al., 2007; Greener, 2008).The one
notable feature is that threw will be bias in the interpretivism studies and it will affect
the reliability.
3.3 Position on Philosophy
The use of the interpretivism has been used by the researcher in this study. The research
questions nature and the data that needed to be collected demands the use of the
interpretivism rather than the positivism. The qualitative data will be collected from the
participants of the study with the use of the interpretivism and in this study the
customers perceptions has to be colleteced.The participants emotions and the feeling
can be analysed more effectively. In the interpretivism the research will be more done
on the subjects and it will be subjective in its nature. The rich and the in-depth
gathering of the data will be possible by using the interpretivism and this study needs
the deep exploration of the topic.
3.4 Research Approach
The one of the other step in the methodology is the approach of the study. The purpose
of the approach is to understand when there is any theory to be tested or development
of the theory. The choose f the approach will also depend on the prior knowledge about
the topic of the research. The general tow research approaches has been discussed
below
Deduction
The deductive approach will be used in the testing of a theory as the theory ill be
deducted on the basis of the literature. The deductive sues the primary form of the
research to test the hypothesis and the common use of the deductive is done in
positivism. The main reason for this is the fact that it can give standardised
generalisations (Saunders et al., 2009).The deduction has been also been used in the
management research as well and the deductive from will help in the exploration of the
data more of the quantitative type. The deductive from will involves the data that are
more of the numerical nature.
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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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3.6 Research Strategy
The strategy that can be adopted fro a research will depend on the questions of the
study and purpose of the study. The strategy will guide the researcher to get valid
answers to the questions. so it will be very vital to select the best strategy that suits the
research. The some form of the strategy has been discussed below
Grounded Theory
The inductive form of the study will choose the grounded theory most as sit has been
more embed to the inductive form and will be adopted in the interpretivism studies as
well. The grounded theory will help in the development of the theory from the primary
data collected at the time when they doing the research. The grounded theory is well
suited when the literature concerned to the study been very little. In this study the
literature concerned to the loyalty has been very ample and so grounded has not been
adopted (Saunders et al., 2009).
Ethnography
The ethnography is also suited in the inductive forms of the research. The ethnography
involves the interpretation of the social world as the actors may interpret it(Fisher
2010).The deep understanding and the rich data can be gained through the ethnography
strategy. The ethnography is a very time consuming strategy and will involves a lot of
time. In ethnographic strategy the researcher has o involve deeply in the research. The
ethnography has not been adopted as the researcher has no time to deeply involve in the
study (Saunders et al., 2007; Saunders et al., 2009; Fisher, 2010).
Case Study
The use of the case study has been done in this study. The main aspect of the selection
of the case study was that this study was only done on the Tesco and so the deep
understanding about the Tesco loyalty can be done through the case study. The one
main advantage of the case study is that it can be adopted for the inductive and the
deductive form. In this research the combined from has been selected and the case
study will be suitable. The case study involves the real life exploration and helps in the
collection of the in-depth data regarding the phenomenon. The case study will be
suitable for the exploratory or the explanatory and this study the case study will be
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suited for the exploratory nature. The one aspect of disadvantage associated with the
case study is that when the case is not s rich it cant provide the conclusive results to the
research. The most important aspect is that the multiple case can be used and it so the
validity an the reliability of the research will be increased. Due to the limited time
period in this research only a single case has been used. The use of the case study helps
to use two or more data techniques and this can increase the data validity. The general
forms of the techniques that has been used in the case study are the
interviews,questioannires and the focus group (Saunders et al., 2009). The use of the
multiple collection tools will help in the data triangulation. The use of the different data
collection techniques will help to validate the results obtained. The case study in this
context will, help in the collection of the in depth information regarding to the tesco
customer loyalty.
3.6 Data Collection Techniques
In a research the researcher has to collect the data for arriving at the valid findings. The
primary information will be collected in this research from the population of the study.
The secondary data that used in the study will be for the section of the literature. The
primary authentic data has been collected with the adoption of the questionnaires and
the focus group. The researcher cant gather data from all the population as it difficult to
get the access. The primary data was collected from the London are as it is easy to
access the population. In the London the researcher will use the sampling to select the
samples from the population under study.
3.7 Sampling and Population
Due to the time limit and difficult in the access to the entire population the sampling
has been used here in this research. In the sampling method the non probability is the
adopted one ude to the nature of the samples. The main reason is due to the fact that the
samples are not representative. The non probability will be used in the qualitative
exploration about the research wee the use of the representative sample is not needed.
The convenience sampling also been selected to choose the samples. The sample size of
the study was 60 customers of the Tesco in the London area.
Qualitative Data

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As stated above the convenience as been used for the selection of the samples in the
collection of the qualitative data. Convenience sampling involves selecting
haphazardly those cases that are easiest to obtain for your sample (Saunders et al.,
2009, p.241).in this study there will be chance of the bias as the samples has been
chosen on the basis of the researcher convenience. The samples were selected by the
researcher son his convenience and so the study will be biased to an extent (Saunders et
al., 2009). But the researcher as given care and attention in selecting the sample and the
researcher randomly selected the sample and this will decrease the bias involved. In the
collection of the qualitative data one of the notable feature is that the samples have to
be regular Tesco customers and have to poses the knowledge regarding the Tesco
clubacrd.the qualitative interviews were done on the front line staffs and the store
managers. The focus group discussion has been done on the customers of the Tesco.
Quantitative data
In the case of the qualitative data the researcher can easily collect the data if the method
used was the probability sampling but it has not been selected due to the fact that the
samples cant be accessed. In the case of the quantitative data the respondents were the
Tesco customers and the sample size in the quantitative data were the 70 customers of
the Tesco. The research invited the seventy samples for participating in the study. But it
was seen that among the 70 samples only 60 has been replied to the questioannires.The
main use of the quantitative data is due to triangulate the results of the interviews and
the focus group.
Focus Group Interviews
As the research is of the exploratory nature and more deep understanding of the topic is
needed (Fisher, 2010). For the deep understanding of the topic the tools that can be
used are the focus group and the interviews. The semis structured interviews were used
for the collection of the qualitative data from the in store manager and the front staffs of
the tesco.The focus group also has been used for the collection of the qualitative data
from customers of the Tesco regarding the loyalty cards. The focus group has been
done in tow section in which each group of the focus group contains 5 members. The
interviews were done among the five inshore managers and five front line staffs.
Questionnaires
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The quantitative data that use in the data collection were gathered using the
questionnaires. The large chunk of the data can be collected more economically by
using the questionnaires. The question used in the questionnaires was basically based
on the literature framework and the objectives of the study. The questionnaires have
been put in the survey website and the link has been forwarded to the customers and
they can fill the responses at any time they want. The main merit of the online
questionnaire is that it will generally increase the rate of the response (Saunders et al.,
2009; Kothari, 2004; Lancaster, 2005). Additionally, questionnaires bases on the
internet are more convenient for both the researcher as well as the respondents. The
questionnaires were basically used to triangulate the results of the interviews and the
focus groups. In this study also it has been used for the same purpose. The likert scale
was the method used in the framing of the questions in the questionnaire so that the
respondents can easily fill out the responses with ease. In the online questionnaires only
60 questionnaires has been replied and 10 customers does not filled out the
questionnaire.
3.8 Scope and Limitations
This study explores the customers perceptions towards the loyalty with respect to the
loyalty cards of the tesco.This study will be mainly try to explore the customers
perceptions of the Tesco loyalty scheme and whether it provided any advantage to the
organisations from the competitors. While doing the study so many limitations has been
felt by the researcher. This research will help in the exploration of the loyalty
importance in the retail sector.
The major limitation that has been let by the researcher is with regard to the time factor
and for doing a research on this topic ample amount of time is needed. The study has
been based on the Tesco and the findings will be applicable to the Tesco only. The size
o the samples for this study are very small due to this aspect. The customers
perceptions towards the loyalty can change from place to place but this research has
been done on the London are and this can affect the study findings.
3.9 Gaining Access and Research Ethics
The research ethics has been one major aspect that has to be taken care of in a research.
The students will fail to follow the research ethics in most of the research. The most of
the problems has been associated with the primary sample access. The access to the
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customers of the Tesco has been gathered prior to the data collection and the proper
code of conduct has been followed in the research. The researcher has promised the
respondents about the anonymity and the confidentiality of the information that has to
be collected in the research. The proper freedom has been given to the customers to
withdraw anytime they wish. The personal details are kept secret as well.
Conclusion
As all research the chapter three deals with all the methods and the approaches that
incorporated in the study by the researher.the mthsodolohy acts a as a foundation of the
research for the data gathering. The research tools dn the methods has been evaluated
and the one selected has been discussed in detail. The chapter also continues to discuss
the validity and the reliability and ends with stating the ethics of the study. The selected
strategy for this research was the case study and the population of the study were the
Tesco customers. The samples were selected from the London area and the convenient
sampling was used to selct the sample. The questioannires, interviews and the focus
group has been used for the gathering of the data.

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DATA ANALYSIS

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Chapter 4. DATA ANALYSIS


4.1 INTRODUCTION
In the case of the quantitative data the respondents were the Tesco customers and the
sample size in the quantitative data were the 70 customers of the Tesco. The research
invited the seventy samples for participating in the study. But it was seen that among
the 70 samples only 60 has been replied to the questioannires.The main use of the
quantitative data is due to triangulate the results of the interviews and the focus group.
For the deep understanding of the topic the tools that can be used are the focus group
and the interviews. The semis structured interviews were used for the collection of the
qualitative data from the in store manager and the front staffs of the tesco.The focus
group also has been used for the collection of the qualitative data from customers of the
Tesco regarding the loyalty cards. The focus group has been done in tow section in
which each group of the focus group contains 5 members. The interviews were done
among the five inshore managers and five front line staffs.
4.2 Analysis of the Questionnaires
The quantitative data that use in the data collection were gathered using the
questionnaires. The large chunk of the data can be collected more economically by
using the questionnaires. The question used in the questionnaires was basically based
on the literature framework and the objectives of the study. The questionnaires have
been put in the survey website and the link has been forwarded to the customers and
they can fill the responses at any time they want. The main merit of the online
questionnaire is that it will generally increase the rate of the response (Saunders et al.,
2009; Kothari, 2004; Lancaster, 2005). Additionally, questionnaires bases on the
internet are more convenient for both the researcher as well as the respondents. The
questionnaires were basically used to triangulate the results of the interviews and the
focus groups. In this study also it has been used for the same purpose. The likert scale
was the method used in the framing of the questions in the questionnaire so that the
respondents can easily fill out the responses with ease. In the online questionnaires only
60 questionnaires has been replied and 10 customers does not filled out the
questionnaire.

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1. Gender

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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strategies that has been used to increase the loyalty of the customers. The all of the
respondents in the questionnaire has been having the Tesco club card as this is one of
the reasons behind the selection of the sample. The respondents have to be aware of the
loyalty and the Tesco loyalty card.
3. Percentage of the monthly grocery budget spent with Tesco

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.

4. How often you visit a supermarket?


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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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5. Factors in selecting a super market

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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6. Are you satisfied with the Tesco loyalty card scheme?

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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8. The Tesco loyalty programme helps in the increased satisfaction

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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9. The Tesco loyalty card influences my purchase decision

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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Tesco Loyalty card

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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Tesco Loyalty card


4.2 DISCUSSION OF THE FINDINGS
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
strategies that have been used to increase the loyalty of the customers. The all of the
respondents in the study has been having the Tesco club card as this is one of the
reasons behind the selection of the sample. The respondents have to be aware of the
loyalty and the Tesco loyalty card. But the customers are aware of the Tesco loyalty
cards from the word of the mouth. The interview findings have been very clear that the
Tesco has been taking only less effort in increasing the awareness. The strategy of an
organisation will be more effective and eye catching when it will be communicated
effectively to the customers (Kotler 2008).
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
have been running so successful from its incorporation. The 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.
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 than 25
pounds as they always depend upon the Tesco for the day to day activities. This shows
that the most of the customers regularly visit the Tesco and this shows that the
customers will value for the money they spend. The frequency of the visit can be a
motivation of the organisation as the customers only needed a little push up to be more
loyal().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. 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
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Tesco Loyalty card


depending a store. 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.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. The loyalty is one of the element
that has been associated by the customers with the products and the services, sores
and brands etc (Laurent, 1997) .The customer loyalty will depend upon the
attachment that the customer holds with the brand or the product and the other
dimension is the repeat patronage
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.
The Tesco customers acts as a word of mouth for the Tesco and the most of the
customers ware of the club card due to the word of the mouth aspect.
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. The customer satisfaction and the loyalty has been linked each
other and this relation has been considered as a symmetric relation where the
customers are satisfied and all satisfied customers will not be loyal (Oliver 1999).
Sometimes the customers will be satisfied and loyal and it does not mean that the
customers will repeat the purchase with the brand. The customers buying decision
will be influenced by a lot of factors and t 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 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
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Tesco Loyalty card


organisation can give discounts and the offers. The loyal customers will remain with
the product and will not avail the competitors products. The loyal customers will
buy more from the organisation and they will ready to pay higher prices and will
also act as a word of mouth for the organisation (Morgan et al.,2000).The profit
management has also been very influential in the recent years and sometimes the
customers will get only cheap profit from the organisation. One of the studies
done by the Kumar (2002) showed that the customers ho loyal to the organisation
will get only less profit when compared with the short term customer.
4.3 Analysis of Focus group
The focus group will be done mainly to analyse the perceptions of the customers
regarding the Tesco loyalty card and the scheme. The most of the customers were ware
of the Tesco loyalty card abut the main notable aspect is that they are unaware of the
sue of the clubcard.The one of the customer during the focus group discussion has
stated.i holds the Tesco card and every time the staff asks I will produce the card but
dont how the points will be added based on my purchase .This discussion has showed
that the Tesco has somewhere done wrong in creating a proper awareness among the
customers. The employees responses in the interview shown that they have been given
adequate training regarding the loyalty cards but the customers during the discussion
has opinioned that they have not been guided proper by the employees regarding the
loyalty card. The one customer has views thatI my case I dont had any club card
and I asked about its benefits and the customer service staff does not had any clue..The
discussion has made clear that most customers will sign upon the loyalty card due to
the word of mouth and the effort of the Tesco has not been so great to encourage the
customers to depend on the loyalty card. The customers in the discussion have been
said that the buying behaviour has been influenced by the Tesco cards. The one
customers has stated in my case when I purchase I know how the value will be added
to my card and I know that 1 und will get one point and so I will makes sure that the
shopping of 5.90 becomes 6.The customer behaviour has not been so influential but the
Tesco has changed it to something noticeable. The discussion has also pointed to a fact
the customers are not have any knowledge regarding the discount percentage that gets
from the Tesco. The most customers thought that it would be like five percentage but
when the researcher informed them that its is one percent most of them was shocked.
This shows that the Tesco has not taken any efforts to create a impression in the
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Tesco Loyalty card


customers mind by using the clubcard.the customers were also not aware that the points
can be added other than in the Tesco stores as well. The customers consider the Tesco
loyalty card only with the Tesco and they dont know that it can be redeemed in so
many ways. This also has been a result of the failure of the Tesco to create the
awareness. The general view of the customers during the discussion was the Tesco club
card has not creating increased loyalty among a lot of the customers and the customers
feel depressed when the Tesco disappoints them and it will not effect them to stop from
shopping in the tesco.The discussion of the customers pointed that all the loyalty
schemes can create the loyalty. The customers in the discussion has pointed also that
there is no need of loyalty to be created in the case f the supermarkets as the customers
only care for the value for the money they spend and the service they get from the retail
stores. The customers has been member of a club card because it involves any money
and the one notable aspect is that the customers were attracted towards the ring format
as it remembers to take it when they shops. The Tesco loyalty cards can lead to the
satisfaction but the creation of the loyalty is undoubtable.The Tesco has been more
successful by opening new stores in new places, the value added services and the use of
the strong brand name in the market. The customers consider the Tesco has a highly
recognised brand and it influences them in the purchase decisions.
Analysis of Semi-structured interviews with Check-out (Customer facing) staff
The researcher has also interviewed the employees if the Tesco who been serving in the
check outs. The employees in the check out was o the opinion that the club card and its
aspects has been trained to them during the induction time and the importance of
making the customers aware of the loyalty card has been emphasised more specifically.
The Tesco has shown the employees the videos concerning to the loyalty cards so that
the employees can undertand.The one of the check out staff has stated thatthe video
concerned to the Tesco loyalty card has been very useful to me to make me understand
about the Tesco loyalty card. But the response shown that after all these efforts also the
employees not so ware of the loyalty card. The one of the front line staff has stated
thatI have been here for almost 4 months and still now I dont know the key benefits
of the Tesco loyalty card and all I know is it gives discounts. The most of the staffs does
not know the club card and how the customers can get value out of this clubcard.The
most of them does not know the adding up of the points and those who know was
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Tesco Loyalty card


holding the club card membership. The interviews shown that the employees were not
aware of the loyalty card and its help to the organisation. The staffs of the Tesco has
only know that the customers holds a great value towards the loyalty card. The
response of the staffs shows that.even the customers dont bring the club card they
will make sure that the receipts are safe so that they can add pints and this shows the
value of the clubcard.The most of the customers always care for the points and the
discounts they are entitled too. The staffs also pointed that it has also been seen that for
adding up of the points the customers will increase the spending power. The
introduction of the key ring club card has been more useful to the customers. In the
loyalty card the customers will be given with coupons and the vouchers and they will
be rewarded mainly quarterly. The Tesco has been given the employees with the Tesco
loyalty cards and the discount cards but the employees were not motivated enough due
to the long hours of their work and may be this affects their service when they serving a
customer regarding the loyalty card. The interviews shows that the staffs do not even
ask for the loyalty cards and do not make the customers aware of the loyalty schemes
while serving them. The employees does not know even the Tesco club card can be
used in the firms where they have tie up with the Tesco and they dont know that it can
be used in the website of the Tesco as well. The staffs do not ask the customers who
does not have the loyalty card to sign a new one.
Analysis of Semi-structured face to face interviews conducted with Store
Managers
The researcher has done the semi structured interviews with the managers of the stores
in London to know about the Tesco loyalty card and how it plays a role in the Tesco
business operations. The main aspect of the interviews was the results triangulation will
be possible. The store mangers response has been pointing that the Tesco has been
giving a lot of training to the staffs about the club card and its relevance and the
important aspects of the club card that has to be remembered. The store manger during
the interview has stated that..In my training days I have been given a full day
training on the Tesco loyalty cards and this shows the relevance importance of the
Tesco card in the Tesco operations. The Tesco provide more emphasis on the club card
than any other. The managers responses shown that this has been done to make sure
that more customers are attracted towards the Tesco loyalty scheme so that the Tesco
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Tesco Loyalty card


can extend their operations. The manager has responded thatby the sue of the club
card the Tesco can analyse the specific product category and products that suits the
customers by analysing the consumption pattern and this helps them to give offers and
the discounts. The Tesco values the customers as they are the superior force in the
market and they need to be satisfied and have to make them loyal. The Tesco loyalty
card has been one of the ways by which the Tesco can increase the customers loyalty
aspect.
The managers has replied that the Tesco club card can be used to collect information
about the behaviour of the customers and this will function very well and can give an
edge over the competition. The one of the manger has emphasised that.The Uk retail
sector is very competitive and the Tesco by the only use of the club card has gone far
beyond the other competitors like the Asda and the Sainsbury.The one another manager
has added that the Asda is suing the research to understand the behaviour pattern while
the Tesco can exactly understand the behaviour with the use of the club cards. The
managers also opinioned regarding the Sainsbury nectar card and stated thatThe
Sainsbury nectar card has been also one of the scheme introduced by the competitors
but it does not worked effectively like the Tesco card because it was just a multi
branded loyalty card. The interview has showed that the managers have a lot of
knowledge regarding the club card and its aspect but the knowledge has not been the
same among the employees ate the Front floor of the store. Some employees who
services the customers does not have any idea about the Tesco club card and how ut
works and the training does not yielder any result. The interview results as shown that
the Tesco values the club card a lot and some of the decision has been made on the baisi
of the loyalty card like the promotional decisions. The store manager was very
confident that the Tesco loyalty card can increase the loyalty aspect. The one store
manager has stated a perfect example like.if a customers takes 15 minutes of drive to
reach a Tesco store then he values the Tesco a lot and this shows that he is loyal and
the loyalty is the factor that prompt him to purchase at the Tesco. The managers were
confident that the future of the Tesco will be more glimpser due to the loyalty cards and
it will be one of the main key ingredient for the Tesco in attaining their objectives. The
interviews also pointed out that the working of the loyalty card has been based on the
analysis of the loyalty cards data abut the customers buying pattern.

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CONCLUSION
The analysis of the data collected was done in the above section. The questionnaires
were discussed and findings were discussed and the analysis of the focus group,
interviews were also done.

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CONCLUSION AND RECOMMENDATION

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Chapter 5. CHAPTER FIVE


5.1 CONCLUSION
In the February 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
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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the study shown that they have been given adequate training regarding the loyalty cards
but the customers during the discussion has opinioned that they have not been guided
proper by the employees regarding the loyalty card..The study has made clear that most
customers will sign upon the loyalty card due to the word of mouth and the efforts of
the Tesco has not been so great to encourage the customers to depend on the loyalty
card. The customers in the discussion has been said that the buying behaviour has been
influenced by the Tesco cards.The study has also pointed to a fact the customers are not
have any knowledge regarding the discount percentage that gets from the Tesco.This
shows that the Tesco has not taken any efforts to create a impression in the customers
mind by using the clubcard.The customers were also not aware that the points can be
added other than in the Tesco stores as well. The customers consider the Tesco loyalty
card only with the Tesco and they dont know that it can be redeemed in so many ways.
This also has been a result of the failure of the Tesco to create the awareness. The
general view of the customers during the study was the Tesco club card has not creating
increased loyalty among a lot of the customers and the customers feel depressed when
the Tesco disappoints them and it will not affect them to stop from shopping in the
tesco.The discussion of the customers in the research pointed that all the loyalty
schemes can create the loyalty. The customers in the discussion has pointed also that
there is no need of loyalty to be created in the case f the supermarkets as the customers
only care fro the value for the money they spend and the service they get from the retail
stores. The customers has been member of a club card because it involves any money
and the one notable aspect is that the customers were attracted towards the ring format
as it remembers to take it when they shops. The Tesco loyalty cards can lead to the
satisfaction but the creation of the loyalty is undoubtable.The Tesco has been more
successful by opening new stores in new places, the value added services and the use of
the strong brand name in the market. The customers consider the Tesco has a highly
recognised brand and it influences them in the purchase decisions.
The most of the staffs does not know the club card and how the customers can get value
out of this clubcard.The most of them does not know the adding up of the points and
those who know was holding the club card membership. The interviews shown that the
employees were not aware of the loyalty card and its help to the organisation.In the
loyalty card the customers will be given with coupons and the vouchers and they will
be rewarded mainly quarterly. The Tesco has been given the employees with the Tesco
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Tesco Loyalty card


loyalty cards and the discount cards but the employees were not motivated enough due
to the long hours of their work and may be this affects their service when they serving a
customer regarding the loyalty card. The study shows that the staffs do not even ask for
the loyalty cards and does not make the customers aware of the loyalty schemes while
serving them. The employees does not know even the Tesco club card can be used in
the firms where they have tie up with the Tesco and they dont know that it can be used
in the website of the Tesco as well. The staffs do not ask the customers who does not
have the loyalty card to sign a new one.
5.2 RECOMMENDATIONS
The loyalty aspect of the Tesco club card has been investigated and the general
recommendation made by the researcher has been stated here in this section. The one of
the main suggestion is to increase the Tesco loyalty card awareness among the
customers. The employees have to be properly trained to make them aware of the Tesco
loyalty card aspects. The employees need to be educated in the terms of the club card
like the point system and how to make the customer sign up for a loyalty card. This will
increase the loyalty card among the customers. The one of the other suggestion will be
to use the posters and some forms of the advertisement where the customers can know
the all the places where they can redeem their points and the vouchers. This will help in
the increased popularity of the Tesco card. The Tesco can also use the innovations in
the teco card like the ring form they have did before. By adding up the new innovative
features then the customers will be more attracted towards the tesco card.
5.3 LIMITATIONS OF THE STUDY
This study explores the customers perceptions towards the loyalty with respect to the
loyalty cards of the tesco.This study will be mainly try to explore the customers
perceptions of the Tesco loyalty scheme and whether it provided any advantage to the
organisations from the competitors. While doing the study so many limitations has been
felt by the researcher. This research will help in the exploration of the loyalty
importance in the retail sector.The major limitation that has been let by the researcher is
with regard to the time factor and for doing a research on this topic ample amount of
time is needed. The study has been based on the Tesco and the findings will be
applicable to the Tesco only. The size o the samples for this study are very small due to
this aspect. The customers perceptions towards the loyalty can change from place to
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place but this research has been done on the London are and this can affect the study
findings.

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APPENDIX 1

QUESTIONNAIRE TO THE CUSTOMERS OF THE TESCO

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This questionnaire has been designed to know the loyalty aspect of the Tesco and
the research is done for the partial fulfilment of the MBA degree from the Trinity
saint David University.
Please Circle your opinion.
1. Gender
Male

female

2. Are you a club card member?


Yes

no

3. Percentage of the monthly grocery budget spent with Tesco


<2

26-50

51-75

75-100 100+

4. How often you visit a supermarket?


Daily

Weekly

Monthly

5. Factors in selecting a super market


Location

Brand

One stop shopping

Convenience

other

6. Are you satisfied with the Tesco loyalty card scheme?


Very much Satisfied

Satisfied

neutral Very much dissatisfied

Dissatisfied

7. I will recommend the Tesco club card scheme to my friends and others
Very much Satisfied

Satisfied

neutral

Very much dissatisfied

Dissatisfied

8. The Tesco loyalty programme helps in the increased satisfaction


Very much Satisfied

Satisfied

neutral

Very much dissatisfied

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APPENDIX 2
PLANNING AND EFFORT SHEETS

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Date: 26 july 2012
Summary of Discussion: the introduction section was shown to the supervisor. She
corrected some mistakes and given proper feedback. The supervisor asked to add some
market facts and some more words to the introduction.
Work required by next meeting: The completed Introduction
Date of next meeting: 02 August

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:30 August
Summary of Discussion: The full literature review section has been shown to the
supervisor. She accepted and granted permission to do the research methodology section.
She also asked to give the draft questionnaire in the next week.
Work required by next meeting: Questionnaire draft and the methodology section
Date of next meeting: 13 september

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 of next meeting:11 october

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Date: 11 october
Summary of Discussion: The analysis of the primary data has been shown to the
supervisor. She said that the analysis looks fine and it would be better if I support it with
some evidence. She asked me to cross check the entire graphs and the tabulation.
Work required by next meeting: The modified analysis and the conclusion section
Date of next meeting:17 october

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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