relationship marketing dissertation

8/12/2019 Relationship Marketing Dissertation

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How Relationship marketing affects the customers and sales within Tesco

supermarket?

By

HARINDER SINGH RAJPAL

STU 21209

Enrolment date: April 2010

Course: MBA

Date: July 29 th, 2011


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Page count: 17,255 (excluding abstract, acknowledgement, reference and

appendix page)


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Table of Contents:

Acknowl edgement7

Abstra ct..8

Chapter 1: Introduction .9

1.0. Introduction to problem .9

1.0.1. Problems background 10

1.0.2. Statement of purpose 11

1.0.3. Rationale .11

1.1. Objectives and Aims for research .12

1.1.1. Research's question .12

1.2. Research methods 13

1.3. Suppositions and Limitations ..13

1.4. Thesis description .13

1.5. Conclusion .14

Chapter 2: Literature review .15

2.0. The Six Market model 15

2.1. Benefits of RM ..19

2.2. Implications of RM ..20

2.3. Measuring Customer Loyalty . 21


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2.4. Customer Satisfaction .23

2.5. Customer Retention .26

2.6. Conclusion .30

Chapter 3: Researc h methods...31

3. Introduction 31

3.1. Purpose of study 31

3.2. Research question .32

3.2.1. Hypotheses ..32

3.2.2. Research problem ..32

3.3. Instrument .33

3.4. Population .33

3.5. Sample 34

3.6. Data collection 34

3.7. Research approach ...35

3.7.1. The Inductive versus the Deductive approach .36

3.7.2. The Qualitative versus the Quantitative approach ..37

3.8. Summary ...38

Chapter 4: Analysis of results 39

4.0. Introduction 39


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4.1. Discussion of results 40

4.2. Findings .55

4.3. Conclusions ..56

Chapter 5: Findings, Conclusions and Recommendations, Limitations.57

5.0. Introduction 57

5.1. Synopsis of findings 57

5.2. Recommendations ..61

5.3. Limitations .64

5.4. Future research agenda ..67

5.5. Conclusion 69

Reference 70

Appendix 1: Electr onic message..81

Appendix 2: Online questionnaire 82

Appendix 3: S urvey data84


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List of figures and tables:

(1) Figure 1: Deductive versus Inductive approach ..36

(2) Figure 2: Survey overview ..40

(3) Figure 3 .42

(4) Figure 4 .43

(5) Figure 5: With Club card .46

(6) Figure 6 .47

(7) Figure 7 .47

(8) Figure 8: No Club card ...48

(9) Figure 9 .50

(10) Figure 10: Reach ability of shop .50

(11) Waiting time at the checkouts .51

(12) Figure 12 .52

(13) Figure 13: Feel good factor about customer services .53

(14) Figure 14 .54

(15) Figur e 15.55

(1) Table 1: Cross tabulation 43

(2) Table 2: Chi-square statistics for Question no: 1 and 2 .44

(3) Table 3: Cross tabulation of Q2 and Q3 .46


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Acknowledgement:

I am grateful to my supervisor Mr. Stephen Humphrey for his valuable support

due to which I have able to complete this research. It is very hard to express

but due to his personal support made this possible to reach the journey. Hisunderstanding, backing and encouragement and especially, his swift,

productive and deeply valued feedback and disparagement, were precious for

the study, scribing and finishing point for the research. I am very thankful to

you.


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Abstract:

The various British supermarket retailers roll out different loyalty cards to

retain customers. This research was carried out to study the effect of

Relationship Marketing techniques such as Club card while taking intoaccount the significant components of Tesco supermarket which helps in

improving the performance. Critics have argued that loyalty cards are just like

a bribe and customers are not loyal to one supplier and also shop at other

supermarkets. The research is centered on the problem outlined to measure

the significant components of Tesco supermarket which helps in improving

performance. The literature review covers the Six Market model and

measures the loyalty of customers, satisfaction level of customers andretaining the customers to determine the significant components of Tesco

supermarket.

The findings as per literature review shows which could be the significant

components of Tesco supermarket. The research was developed through

libraries and electronic database, books, academic journals and was desk-

based. The primary data was collected through sample population via online

questionnaire in supplement to secondary data. The research approach

followed is deductive one as it allows the researcher to accumulate the data

through literature and through quantitative evaluation of people opinions living

in UK by conducting online questionnaire. The conclusion is based on the

findings of the online questionnaire or web survey and literature review and

the recommendations for the strategic significant components of Tesco

supermarket.


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1.0.1. Problems background:

In early 1997, contentment at a good job being done was leading way to

disturbance at Tesco and the data promised more than was being delivered

and the demand was to preserve the enormous control that Club card hadattained for Tesco (Hunt et al. 2003). Tesco needed to make some

fundamental business decisions that too with better belief if the information

might be prepared to divulge more of the actual consumer behavior behind

them and for this Tesco needed to address five main business problems

(Hunt et al. 2003):

(1) Price sensitivity: Tesco needed to know which of their million of customercared about discounts and which product and commodities they most wanted

to see discounted, so that they could compete the confrontation as intensely

as any competitor however on their own conditions, spending in price cut

where the cash would perform solidly.

(2) Ranging for customers: Tesco want to de-average its offers to customers

and design it more specifically to offer to local requirements and if they get a

clear picture of the tastes if each store's constituency, they could profitably fill

more of the holes in their customers' baskets.

(3) Range creation: Tesco food team wanted to bring in latest ranges aimed at

the rising number of consumers who had particular nutritional requirements

and choice.

(4) Promotions: The measure of the success of the promotions like '20% off'and 'buy one get one free' has been sales.

(5) Competitive attack: Club card provided Tesco who their customers were

and who were not. Segmenting the customers on the base of crude geo

demographics, RFV and collecting data at store department level was useful

but too bland and unfocused for work but with Club card, Tesco know about

'who, what, when and how much' or but not 'why' and for this Tesco neededto create a useful measure of loyalty.


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1.0.2. Statement of purpose:

As relationship marketing concern is on the twofold focus of finding and

retaining customers and aims to cover all three factors such as quality,

customer service and marketing under one loop in the context of competitivemarketing strategy (Payne et al. 1995). In an effort to find that how RM does

affects customers and sales in a Tesco, the study will examine the effect of

RM in boosting the sales and retaining the customers. In accomplishing this,

the research will find out the significant factors involved in employing RM

technique.

1.0.3. Rationale:

The 1980s and 1990s saw the rising fame of the relationship marketing idea,

with substantial development in the amount of educational documents being

issued on this subject. Early work on the subject related to the business-to-

business sector or services marketing perspective and contemporary RM

theory originates from interaction and network approach concept being

popularized by International Marketing and Purchasing group in 1976

(Gronroos 1997).

RM adopts a holistic approach to attract new customers and focus on creating

relationships in the way that intimates with relationships that consumer have

with each other and in this way consumer can recommend companies to

which they feel are nearer through RM and RM aim at those who get a good

offer rather than thinking too much about saving and best deals and these

consumers are those who are targeted by companies to know about their

shopping habits and companies try seek information on these consumers so

that their habit form around the company product (Little and Marandi 2003).

As an extended version of the RM approach, several organizations have

brought in loyalty schemes. Firstly, such schemes only gave discount to

customers shopping regularly. Though, retailer such as Tesco has introduced

loyalty schemes out to other fields. Tesco's Clubcard scheme can be used inseveral distinct settings and also provides useful information to the business,


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which it can utilize to review the details of a consumer's shopping habit and

aim at that consumer's habit in a very precise way (Hunt et al. 2003).

1.1. Objectives and Aims for research:

The purpose of the research is to find the significant components of Tesco

supermarket which helps in improving performance and to ascertain the effect

of relationship marketing technique such as Club card that which attained

massive lead and which lead Tesco to make some fundamental changes into

business decisions to overcome the pressure.

As inspired by the aim of the study, the primary objective of thesis is toobserve and explore the application of RM technique helps in improving the

performance or not and the loyal customers who use Tesco club card do

shopping at Tesco store or some other store also. In the framework the main

objectives of the research study can be stated as:

To scrutinize the effect of RM on performance.

To check the loyalty of the customer those who make use of RM technique

like Tesco club card.

To know whether the sales boost or not with use of RM technique.

1.1.1. Research's question:

What could be the significant components of Tesco supermarket which helps

in improving the performance and effect of the RM scheme like Club card to

manage the customers?

The research is to carry out to find about whether:

(1) The application of RM improves the performance of Tesco store or not i.e.

is the performance improving or declining and what could be the factors which

can lead to poor performance?


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(2) Do the schemes like loyalty club card helps Tesco store to retain customer

or not?

(3) Do the customers help push the sales within Tesco store with the help of

RM or not?

(4) Do Tesco have the feel good factor about the customer services?

1.2. Research Methods:

The research was developed through libraries or electronic databases, books

or articles and from academic resources and was desk-based. The researcher

accumulated primary data through sample populations via online

questionnaire or web survey in supplement to secondary data. The research

assessed the significant components of Tesco supermarket that help in

improving performance.

1.3. Suppositions and Limitations:

Numerous suppositions and limitations concerned to this research. Firstly, theresearch used the online questionnaire or web survey mechanism which

indicates the respondents were bounded to express their judgments' on the

set of questions except have to pick from number of options available. Thus

the responses got may not be that accurate which signifies the respondent's

opinion although nearly corresponds to the opinion.

The sample size was not that too big and doesn't indicate that the sample inthe research is representative of the larger demographic which is the other

drawback of this research. The last drawback is the researcher's less

experience in managing erudite exploration and appraising the information.

1.4. Thesis description:

There are five chapters in this research, chapter one outlines the interested

area and the issues to be dealt with and discusses the research questions,


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limitations and the chosen methodology in brief. The chapter two discusses

the literature review on the Six market model, benefits and implications of RM

and how to measure the loyalty of customers, satisfaction level of customers

and retaining the customers. The chapter three discusses the methodology

and the tactic deployed in collecting primary as well as secondary information

which deduce the rationalization of the definite choices and also

acknowledges certain intrinsic drawbacks. The chapter four discusses the

findings collected from primary as well as secondary information and the

answers to the research questions outlined in chapter one and also exhibits

the breakdown study of the research questions which validates the hypothesis

of the research owing to findings. The chapter five ends the study and exhibits

the recommendations for this research.

1.5. Conclusion: The research focuses on the significant components of the

Tesco supermarket which helps in improving the performance as outlined in

this chapter. The chapter subsequent to this exhibits the literature evaluated

for the research.


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Chapter 2: Literature review

2.0. The Six Market model:

Adrian Payne et al. (1995) recognize six markets that are vital to RelationshipMarketing, and propose that only concentrating on one or two of these

markets is a frequent error that results in unproductive functioning and a

letdown to large extent (Payne et al.1995). Hunt et al. (2003) advise that

much of Tesco's achievement is listed to the corporation having commenced

this Six Markets Model precisely, devotedly and with great notice to key

elements (Hunt et al. 2003), and recognize the several phases of Tesco's

achievement as with completely in link with the six different markets.Therefore, by examining Tesco's execution of the Six Markets model, it must

be viable to establish not just causes for earlier achievement, but as well

fields where development is still possible.

Internal Markets:

Internal markets comprise a corporation's capability to support worker to

adjust to the corporation's beliefs, and to respond to alter in an optimistic and

practical way. Thus it helps worker to found a compelling association with the

corporation, which has a plenty of advantages:

Workers are pushed to work hard for the corporation and have sense of

belonging within a part of the group (Hunt et al. 2003);

Workers are pleased in their work and this converts to an extra valuableapproach when it appears to do business with customers, thus builds

(probably fragile) staff-customer relationships;

Workers are more probably to stay with the corporation, lessening the

requirement to churn and encourages trained worker to move on within

Tesco's rank.


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Some analyst argues that the plan that internal markets enhance workers

loyalty is a illusion, and is established on conventional observations of

corporation-workers relationship that neglect to keep in mind the environment

of modern corporations, where several administrators are considered to have

only minimal power. Nonetheless, a more advanced understanding of this

kind of association may imply that workers are consequently encourage to

build up an effective mutual emotion amongst themselves, thus create

relationship that assist to produce a particular uniqueness for a store. This

definitely would respond to improved workers retention (Rowe and Barnes

1998).

Supplier Markets:

This is the field where Tesco's strategy has been powerfully criticized. Tesco

itself maintains that it has sound relationships with its supplier, who sees

Tesco as associate (Tesco Annual Report 2009). Though, this proposition is

perceived by few as an advertising approach that fails to show the exact

condition. As Davey (2008) notes that Tesco's supplier have accuse it of

undergoing the forceful stand in the negotiation and just hand them a piece of

document with the price rate they would be compensated but Tesco replies it

is to just negotiate the finest deal with supplier on behalf of customer (Davey

2008).

In the current financial slump, Tesco purportedly tried to influence its supplier

to slash their own cost so that Tesco's store can propose cost reduction with

no damage to the company earnings. Supplier complains that they had

previously been pressurized in earlier years, and that Tesco's demand was

not possible to agree to. Though, Tesco's bazaar controls ensure that it is in

favor of the almost all parts to dictates its term in this field and the relationship

- though sound - is very inequitable. For example, suppliers makes profit as

long as they provide products to Tesco, and the supermarkets know that if

they lose Tesco as their customer would be big loss in compare to meet

demand to lower the cost. This is a important field where Tesco can be seen

to be influencing it unquestionable marketing influence which verge on a


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domination in few area acceptable to take advantage of the short of

equivalence in its relationships with supplier (Tesco Annual Report 2009).

Recruitment Markets:

Recruitment is an imperative component of the achievement of any

corporation, and expands to relationship with recruitment supplier and

advisor. The formation of operative margins that dictates a corporation

internal structure concerning recruitment follows to a noticeably better

recruitment centered, which recognize that everybody functioning within a

corporation such as Tesco is both a suppliers and a customers. As Fisk

(2006) notices that lay off have become a reality of existence for Britishindustries. Many trained and competent peoples have been force to go back

into job markets and it seems that companies have even better resource of

promising applicants to choose from. The reality is that it has increasingly

become very hard to find good workers. In such vibrant and accomplished

recruitment markets which exist to level afar the corporations limit, it's vital

that sound relationship must be highlighted in terms of (a) promising workers,

(b) staffing consultant, and (c) present workers who may encourage the

choice of those who want to work with the company.

Referral Markets:

Tesco has applied amount of scheme planned to boost referrals, which arise

when consumer push other consumer to use the brands benefits. This type of

tittle-tattle promotion is far less disturbing than any other, and involves the

company exploits relationship between consumers in order to set up new

relationship with new consumer (Sahaf 2001). For eg, the Computer for

School program has seen consumer encourage other shopper to use Tesco in

order to boost the figure of voucher they get; minimal price is believed to

make conversation among shopper, especially during the present financial

slump; talking of Club card benefit result in new consumer opting for the Club

card choice. All these actions strengthen the significance of the Referral

Market and make sure that Tesco is able to benefit upon its achievementwhen it comes to encourage consumer to refer other customer. Though,


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Tesco has struggled to get little accomplishment is 'actualized referral', a

familiar marketing practice whereby consumer gets rewarded to refer other

consumer. It's challenging to envisage how this can be included into the

current Clubcard system, but with a slight small change it may be viable to

prompt such a scheme. Though, some analysts think that this type of tactic

imitates the (undesirable) disturbing marketing practice, and Tesco may opt to

avoid this (Roberts et al. 2003).

Influence Markets:

Though Influence Markets permit a company to network with different groups,

as well as lobbyist, stockholder and government regulator, who have authorityto disturb the functioning of the corporation, it's imperative to give definite

assurance that authority is not seen to be as trading service, but considerably

as somewhat that is holistically encouraged. Tesco has wanted authority in

terms of deals with regulator in vital area, but has also been criticized for its

role in dealing with lobbyist and government regulator, especially in terms of

nurturing favorable bazaar clauses. Tesco is exceptionally unbeaten when it

comes to defend its bazaar importance (Jenkins 2005). This tactic, though

flourishing in several instances, risk damaging relationship with consumer,

who may come to see the corporation as dominant and greedy, and as

detrimental to the High Street environment. Tesco has managed to stay within

the limits of suitability on this matter so far, but must evaluate the advantages

of Influence Markets with the requirement to uphold other relationship as well.

Customer Markets:

In this area, Tesco has been especially doing well. Compelling brand loyalty

has been made sure because of the making of several sub-brands within the

Tesco domain, which includes Tesco Value (low-priced goods) and a number

of high-cost goods, all integrated beneath the Tesco excellence warranty. This

create a sequence of relationship with customer from a figure of distinctive

demographics and psychographics category, and it's also clear that these

customer often move from one brand to a different within the period ofshopping, e.g. prefer to buy high-cost goods in one type, and Tesco Value


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goods in a different type. This lets Tesco to take advantages from amount of

variable relationships type, inside which the consumers can shift liberally

(Saren and Tzokas 1998).

As Tesco attempt to acquire new customer and then keep them by offeringreward via the Clubcard scheme. The companies recognize that no customer

relationship will ever engage 100% loyalty, and handiness will each time be

an issue. Tesco therefore offer cost comparison chart inside its store,

highlighting the information that its price is less than those of several of its

competitors. The company identifies that cost cut fulfills the requirement of

one type of relationship (although these cuts are as small as one penny),

while the Clubcard offer a more clear type of relationship. This preservation ofseveral synchronized relationship allow Tesco to make sure that it has a

succession of exceptionally sound relationship that functions on a amount of

level with every customer.

2.1. Benefits of RM:

RM require customer to entrust them self to a specific trader and to reveal a

vast amount of information about them self to that supplier. This indicates the

customer have to believe the trader and think that the information they supply

will be held with sensitivity and confidence. More notably this promise signifies

giving up the advantage of performing prospectively and not to look for

negotiations, price cut and superior business somewhere else, fancying

instead the feasible long-standing gains of doing dealings with the similar

trader. The benefit which customer can thus imagine can be high excellence

assistance, customized product, a sense of belonging, decline of

nervousness, are often contained in the writing. Customer that has long-term

relationship with their service providers go through 3 initial forms of

advantages: belief, social and unique behavior (Gwinner et al. 1998) and

Bejou et al. (1998) also refer to less recognized danger as an advantage for

RM for consumers.


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2.2. Implications of RM:

The following five possible negative factors as summarized by Belois (1998)

or drawback of absorbing in relationships lay forwarded by Hakansson and

Snehota (1995) are as follow:

(1) Loss of control: Building a relationship unavoidably effect in some loss of

control over issues such as sources, actions and purposes. Tesco had lot of

ground to make up in the Club card as it would lead to a significant

opportunity to increase customer share in the Club card category (Reichheld

et al. 2000).

(2) Indeterminateness: A relationship is questioned to constant changes, with

an unsure prospect which is, in part, concluded by its past but also by recent

affairs and the company's anticipation of upcoming affairs. Before Tesco Club

card launching, decisions such as how big a dividend or cash back should

Club card offer and what about the students or pensioners who spend

modestly, as these factors raised doubt over the success of Club card

(Barnes 2002).

(3) Resource demanding: Endeavor is needed to foster and uphold

relationships. This can be considered as a venture and a preservation cost.

As a larger part of Tesco business have shelved because that degree of

enthusiasm and interest is less apparent, or because the potential for

involvement is not shared by prospective members who have disparate

priorities and tastes (Aspinall et al. 2001).

(4) Preclusion from other opportunities: Each time it is needed to prioritize the

utilization of reduced reserves and therefore, it might not be probable to follow

all of the separately appealing prospects. Furthermore, certain relationships

might be incompatible with the present relationship. As if without the forename

and home-address specifying who the associate is and particulars of the

family, Club card would be no further helpful to Tesco than the store's

everyday till-roll, and no more inspiring to consumers than a concession card(Belois 1998).


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(5) Unexpected demands: Known that the 2 companies in a relationship would

also have extra relationships, maintaining a relationship indicating being

connected, if only inactively, into a group of relationships. Such relation to or

attachment of a set of contacts might carry with it commitments or hopes by

others of particular actions. A Club card team at Tesco interrogated the

customer data and listened to customers in groups just to know whether the

emotional equity would substantially add to Club card and Tesco brand or not

(Blois 1999).

So absorbing in a relationship needs time, price and endeavor on the basis of

the companies concerned and so these must be considered beside the

probable benefits.

2.3. Measuring Customer Loyalty:

Critics of service quality and satisfaction monitoring generally advocate the

monitoring of loyalty or repeated purchases (Reichheld et al. 2000). The

measurement of attitudes such as satisfaction and perceived quality has not

been found to be reliable or accurate predictor of customer behavior (Boulding

et al. 1993). Although they can provide useful general information on

relationship performance and diagnosis of problems, many researchers argue

that information on customer's past behavior provides a firmer foundation for

future planning (Rechheld et al. 2000). The loyalty can be monitored without

additional customer surveys, provided that the supplier captures the data

necessary to identify the customer at a later date, though it is not easy to state

that monitoring of loyalty is either cheap or easy, but the fact that loyalty

monitoring can be built into sales data means that customers need not be

troubled by requests to complete satisfaction or quality surveys (Reichheld

1993).

As RM assess achievement in a way that how long a consumer is reserved in

the relationship and the portion of 'customer wallet' and RM comprises

assessing consumers lifespan values and holding in relationships build on the

values of those relationships more than a amount of years which means thatconsider supplier, consumer and other as associates instead than opposed


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companies (Gummesson 1999). Tesco measures its customer loyalty with the

use of basic measurement i.e. RFV (Recency, Frequency and Value) and the

benefit of RFV is that it can be computed precisely and the statistics it gives

could be an experimental base for helpful, valuable achievement, as RFV

study could underline a category of susceptible consumers that want

additional consideration to hold, or it can give a proportional compute among

stores, or it may assist a seller generate unfussy consumer segment that can

be of use for differentiating communication and offer (Ahmad and Buttle

2001).

RM entails a long-term relationship and discarding of other supplier by the

consumers, and shared swap of statistics rely on nurturing a tie among theconsumers and the suppliers which is joined with understanding (Callaghan et

al. 1995). As Tesco recognized that analytic skills are vital for its prospect

commerce that came in 1997 and it established a team called 'customer

insight unit' and the scheme was to join the expertise of people from its site

investigation group, who prepared propositions for new store developments

established on a cocktail of native statistical sources, with new competencies

from advertising and business-related (Berry 2002).

RM swings the stress from focusing on acquiring market share and satisfying

its workers for the fresh dealings which they fetch in. But, it focuses on

keeping customers and attempts to achieve a larger stake of their wallet by

trading more of the similar products or by cross selling to existing customers

(Peppers and Rogers 1995). Blois (1999) argues that these peoples are

geographer, statistician who had spend very large amount of time applying

those skills to understand how customers would behave and they might

chomp through the things that come from Clubcard, see the patterns in it and

they might begin to assist the running of the business. But it is not cheap for

the suppliers to spend in long-term relationship with all customer and not that

all customer should essentially need such relationships and RM cost a lot and

keeping customers can be pricey and hence long-term customer ought to be

chosen sensitively (Bejou 1997). As Tesco model is not centered on crude

averages, but on person choices i.e. you are what you purchase and instead

pushing a profile into families by means of comprehensive information from


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their zip code, the customers behavioral approach start from the distinct acts

of consumers and create real one mind group of consumers having same

likings and activities from actual buying preferences they formulate (Reichheld

and Detrick 2003).

RM facilitates two-way dialogue among the suppliers and the consumers in

order to distinguish requirements and to obtain results and is eventually about

associating and associations build upon, and preserved by, conversation and

interaction (Gummesson 1999). As Tesco analyzed customer behavior over

time through the use of Club card and establish that in any particular store,

the top purchasing hundred consumers were as precious as the bottom four

thousand (Roberts et al. 2003).

Due to RM, service provider obtains improved understanding of the

consumer's requirement and also customizes the products and

communications of every consumer (Berry 1995). As Club card provides one

piece of information via application form about the age of the group of the

cardholder, which make it simple to create meaningful customer segments

based on the age and family make-up of the household and no one at the

Tesco claimed at the time that this was a right way to find common interests

between customers 'young adults' for example has to combine a wide range

of attitudes, behaviors and priorities (Reinartz and Kumar 2000).

2.4. Customer Satisfaction:

Heskett et al. (1994) claims that satisfaction is one of the mainly significant

requisites of loyalty, while the practical facts states that satisfaction is a

dependable analyst of a consumer's intent to repurchase (Liljander and

Strandvik 1995). The measurement of customer satisfaction levels is

generally utilized to observe relationships quality, as it is a quite ephemeral

and prejudiced condition, and consumers frequently realize it's hard to make

dependable reasoning's about their own satisfactions levels, especially from

observation (Gummesson 1999). As satisfaction surveys are often linked to

poor quantitative measure of relationship performance but in determiningsatisfaction means that customer satisfaction levels may change without any


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influence from the supplier but such surveys can provide qualitative feedback

which helps to identify problems or major shifts in customer expectations

(Reichheld et al. 2000).

A large fraction of satisfied consumers do actually fault to rivals and thatsupplier should attain great satisfaction level or customers delight in order to

encourage the retaining of customers (Reichheld et al. 2000). As loyalty

program tries to attain a somewhat bigger stake of the consumers spend and

Tesco has 'Every little helps' as its trademark guarantees to consumers and

this motto is centered on the reality that frequent yet reasonable

improvements in Tesco's offer and services are valued by consumers and

gather their generosity and that evenly stable but minor changes inconsumers behavior are very much beneficial to Tesco's commerce (Roberts

et al. 2003).

But a degree of subjectivity for quality is 'fitness for purpose' and the

assumption is that the producer should recognize the utilization to which

product will be placed by the consumers, as the product capacity to

accomplish that value will shape the source for thoughts on quality and

subjectivity criteria is based on design, brand reputation and corporate image

in customer's perception of quality (Juran and Gryna 1988). For Tesco Club

card, the CRM is to enhance their functioning at each moment of

communication with their consumers, to render them more contended and the

corporation richer (Berry 2002).

A consumers will frequently be prepared to shell our more for products if that

extra spending gets mind tranquility and the degree to which a customers are

ready to stand monetary and mental costs in reply for a distinguished

advantages will based on their personal situations, hence consumers

perception of worth must be observed regularly if the producer hopes to

please its consumers (Bejou 1997). As Club card offers a free bulk

contribution unpaid plan that push users to recognize in their own while they

do shopping and excellent consumer information rich in data, appropriate and

latest are indispensable for a CRM policy but a lack of one end i.e. IT and notsufficient to consumers and for corporations like Tesco, the loyalty program is


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a consumers initial tactic to generate effectiveness via CRM (Stone and Foss

2001).

For every transactions observed in segregation, satisfaction is originated by a

favorable evaluation of the awareness of quality with opportunities and theresult of every transactions influence the consumers attitudes toward his

complete relationship with the suppliers and if transaction constantly results in

satisfaction, trust gets build up (Parasuraman et al. 1994). Whereas Stewart

(2000) concluded that handling a data is like to drink through fire hose and

million containers a day, million things get scanned, so that the amount of

information should be very high to yield meaning of it and finally, they

understand slightly regarding their consumers that they may perhaps notperceive.

A corporation that concentrates on customer satisfaction possess the danger

of turning into undistinguished trademark whose consumers trust simply that it

encounters the least functioning criterion for the type and everlasting

customer retention in aggressive marketplaces require the suppliers to go

further than simple fundamental satisfaction and find out means to establish

relations of loyalty that would assist in evading opponent move (Clark 2001).

The lots of articles about how much loyalty was worth were carried by UK

Press in 1990's, and also draw tables to compare the rewards, rather like a

evaluation of mobile phone tariff plans and not be too confused by

concessions, selected offers that retailers offers after surveying seven loyalty

cards in August 1996 (Grewal et al. 2003).

As trust is a keenness to depend on trade collaborator in whom one has belief

or it highlight on mental temperament regarding a collaborator belief or

dependence on the collaborator (Moorman et al. 1993). No one would

contend that a card-based loyalty scheme is a substitute to being the correct

value, giving exceptional services, inventive goods and customer care

because if trade avoids features like these is very improbable to have

everlasting achievement for customer loyalty (Stone et al. 2000). Often, the

commitment acts as trade collaborator considering that an unendingrelationship with a different is so significant as to secure pains at preserving it


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(Morgan and Hunt 1994). Once a substantial number of customers embrace a

loyalty program, they are probable to be very reluctant to have it taken away

and customers quite reasonably believes that the gains they got from the

loyalty scheme have the right to claim as their own, and respond

disapprovingly to any perceived cutback in the price they get from the

corporation (Piercy 1995).

2.5. Customer Retention:

It is the customers who must be considered 'first among equals' because

customer loyalty has to be received almost every day, as they usually have

the slightest emotive and monetary fund's spend in the corporation andcommonly can go wherever else with the smallest attempt, even though

accountants, cash flow statements overlook this fact, all cash flow originates

in the customer's wallet and it is marketing's challenge to manage this life-

giving wellspring of customer loyalty by ensuring that the firm attracts the right

customers whose loyalty the firm is able to earn and keep and that they

consistently receive superior value from the firm (Ahmad and Buttle 2002). It's

simply doesn't concern if we possess and utilize amount of spirited loyalty

cards as million consumers hold a Nectar card, a Boots advantage card, Club

card and further but till the mutual talk go on, then all of those trademarks has

the chance to attempt and convince us to remain a bit more extra 'loyal', if the

conversation dries up, then it's a sign that the relationship is faltering, that as

a customer we are less engaged with the brand, maybe we're not hearing

propositions that are as relevant to us as before or maybe the brand isn't

listening closely enough to what we have told them through our actions (Allen

et al. 2001).

A customer retention field ought to have additional consideration on 2 counts:

Effectiveness: In additional situations than it is implicit, advertising can do well

in constructing loyal subsequent of recur purchasers instead than frequently

wooing fresh workforce. This movement can guarantee a justifiable and

increasing market share.


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Efficiency: It is anticipated that the standard corporation invests 6 times extra

to acquire another consumer than it do to preserve the present one. A

consumer lost lessens corporation earnings by $118; compared with a $20

price to maintain customers happy (James 1983).

An inactive tactic to keep customers might prove detrimental to corporations

and an advertising tactic that goes behind both fresh and long-standing

consumers is usually not efficiently tackling the existing consumers and

certain corporations appear to be keen on constant amounts of new

consumers to deal with consistent shortfall of existing consumers (Ahmad and

Buttle 2001). As customer satisfaction is complex to compute and determine,

it has rarely been a highest precedence both with bosses or workers, as theimportance of preserving consumers is for organization to underline the

money importance of all consumers, so that employees now recognize that

what they carry out or speak can lead to extreme monetary penalties afar the

earnings and everyone at the storehouse, from phone machinist to the

delivery worker, nowadays recognized that how significant it is to guarantee

that the consumers are happy and approach to customer satisfaction differ

from corporation to corporation and even from, organization to organization(Churchill and Suprenaut 1982).

The short of managerial synchronization and handling commonly plays a part

in the shortfall of consumers and this problem takes two basic forms: a lack of

sensitivity to customer turnover rates, and insufficient linkage between the

marketing function and the operations group as customer turnover is an

accepted fact of life, it often goes unmeasured, so the marketers set

acceptable target turnover rates for evaluating market performance and in the

absence of clearly defined limits on customer turnover, organizations find it

easy to rely on promotions to recruit new batches of customers, as in

consumer goods companies, the prized assignments are on new products,

while established brands are favored less (Andersen 2001). While Tesco,

Boots, Sainsbury's and some other large retailers have competed fiercely with

each other using a variety of loyalty marketing techniques, the whole influence

of their loyalty tactics has been to switch the money they spend on small


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retailers else invest anywhere else and it's certainly not good news for smaller

supermarkets (Aspinall et al. 2001).

Inadequate coordination between marketing and the operations group

characterizes many type of firms and this lack applies especially to servicebusinesses where marketing has done less to determine product attributes

and where customers find product quality difficult to measure, sometimes

coordination problems frequently result in overselling, where marketing sees

its task solely as attracting customers by promising virtually anything, as

expectations of the product or service benefits generated by such an

approach become so inflated that the consumers will invariably be

disappointed by the actual functioning (LaBarbera and Larry1980). As Clubcard had altered consumers behavior and mind-set and provide unmatched

stages of challenging records that no additional sources can give and it had

helped Tesco create new businesses which resulted in incremented sales and

profits (Barnes 2002).

To accomplish improved selling and earnings, most corporations might be

doing additional further to nurture commerce from their existing consumers,

but keenness for consumers retaining tactics should not jeopardize reliable

consumers getting's effort (LaBarbera and Larry 1980). But to intensify to

reach to previous consumers while seeking fresh consumers, for several

corporations, will mean alteration in bazaar analysis, development techniques,

administration incentive, and Advertising Corporation (Andersen 2001). But

consumers marketer tends to consider achievement as stemmed from

acquiring new consumers though inadvertently reducing the significance of

pleasing previous consumers, hence companies must discern among their

getting's and preserving tasks, to evaluate the stability among them, and to

cure any inadequacy in customer retention (Takeuchi and Quelch 1983). As

Tesco was not the market leader in early 1990's which it is now and being

pressured to remain unbeatable bazaar leader in Sainsbury and with an

ominous danger posed from lower cost-cutter like Asda and Kwiksave to clash

alongside the rivalry, Tesco wanted to look after its present market share by

maintaining and upholding the significance of its consumers sources (Arantola

2002).


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Just attracting fresh consumers turn into a dangerous approach to flourish, at

the same moment, the earnings improves by retaining onto consumers plus

receiving more commerce from consumers and kept for future as there is

lesser augmentation of peoples and earnings in the decade forward values

the assets of present consumers and demand to lessen customer

dissatisfaction produces a requirement for enhanced concern for consumers,

particularly after the trade (Day 1977). Customer loyalty corrodes when there

is an extensive variety of a parallel product all over the country and retailers

available and most advertising executives grow up in the period when

advertising fundamental task was to get new consumers, but now the

requirement is to preserve a corporation's consumer's source and to expand

its purchasing activities (Aldisert 1999). When Tesco launched a Club cardand the cost of issuing membership cards and reward vouchers , Tesco

calculated that a 1.6 percent uplift in sales was required and early results

shows sales nearer 4 percent an almost unheard of sales spike from a single

marketing initiative and settling well above 2% (Ahmad and Buttle 2002).

The vital value of customers and prospect records as a source of market

research has been highlighted and despite this most surveys have reported alow level of sophistication of customer information held within information

systems (Anton and Vilsoet 2002). In an early study (Fletcher 1983) found

that the vast majority of systems could supply information about customers

and sales, customer and competitive analysis was seldom reported as the

reason. As in 1994, Tesco could only get the information about the amount of

all consumers had spend, and the date and place they spend it but now Tesco

know about the summary of several consumers build on the grouping of

supermarket divisions they used, highlights the divisions that lacked to draw

consumers who bought profoundly in additional fields, by analyzing the

access of club card relationship by zip code, the Club card data gives a clear

picture, stores by stores, of how significantly worthy consumers were

prepared to journey for shopping (Arnett et al. 2003).


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2.6. Conclusion:

Birchall (2009) observes as a corporation develops its requirements in the

marketplace vary. Strategy that did fit for Tesco while it was making its

supremacy might not be suitable now that such domination appears to bepromised. The corporations either need to embrace a fresh model for its

recent state, or to discover a tactic to employ its present model to a varied

stance in market. The current state so far indicates that Tesco will go for the

later method and indicates that the corporation is looking to carry on its

progress though boosting the solid inter-connected advertising relationships

that had already proven to be doing so well, as for eg., the Clubcard format is

growing to include an uniform larger variety of stores, and Tesco is likely toboost the suppleness of Clubcard points in the online atmosphere (Blythman

2005).

At the heart of its importance of associations, yet, Tesco remain an industry,

and one among insatiable craving for revenue, as all that the corporation does

no issue how it is wrapped and collected draw closer down to a wish to

enhance monetary functioning and one key lesson from Tesco's execution of

RM and, in specific, the Six Markets model, is that the corporation has

flourished as outcome of undertaking a long- term outlook than several of its

competitors (Blythman 2005). The Clubcard format, for instance, took several

years to build up, and the corporation had to respond to amount of changes

that took place in market, in due course, let the Clubcard to form into a loyalty

scheme that had receive support from customers (Ali 2009). Tesco was left

with a very huge and significant data available related to customer activities,

and this data was recognized to have a significant use, in the recent era it is

considered to of great use, as the Clubcard format lets Tesco to aim

customers very sensibly, and the corporation has computerized techniques to

use the Clubcard data functioning to throw nonintrusive marketing that

support the scheme of a relationship among customer and business, as it's

obvious that Tesco has accepted that its potential achievement rely on

improving Six Markets model and ensures that it carries on to meet the

customer's needs (Blythman 2005).


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Chapter 3: Research methods

3. Introduction:

This section exhibits a chosen research methods. It would get noticed; thepersuaded methodology is through a principle of the report plus is centered at

estimation through a most favorable tactic for solution to the research's

issues. While, the recent chapter examines the principle of the report, put

forward the research's issues and hypotheses, and discuss the data analysis

and data collection methods and the research drawbacks.

3.1. Purpose of Study:

This study purpose is to analyze the effect of relationship marketing technique

such as Club card that which attained massive lead and which lead Tesco to

make some fundamental changes into business decisions to overcome the

pressure. The rationale to carry out this is to conclude the application of RM

technique helps in improving the performance or not and the loyal customers

who use Tesco club card do shopping at Tesco store or some other store

also. To carry out this rationale, it could be essential to evaluate the literatures

on how do the principles of relationship marketing apply to the supermarket

chain Tesco. This demanded an assessment of the description of the work

practices in supermarkets, the task to check the loyalty of the customer those

who make use of RM technique like Tesco Club card. Simultaneously, it was

imperative to look at whether the schemes like loyalty Club card facilitate

Tesco store to preserve customer or not. This was entirely done to prepare in

supplement to the point of fulfilling the prime objective of the research which is

the application of RM technique helps in improving the performance or not. As

it could be inferred as of now, the present study depicts explanatory purpose.

The rationale of explanatory research is to study a condition or a difficulty so

as to justify the relationships among variables (Bryman and Bell 2007). This

study points to elucidate the application of RM technique helps in improving

the performance or not and has an explanatory objective. Yin (1994)

differentiate between the explanatory and exploratory purpose of research inrelation to approach to explanation building, which commences with a


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theoretical proposition, may be appear to similar to inductive theory approach

but this hypothesis testing approach is related to explanatory case studies, so

here the researcher will examine the significant components of Tesco

supermarket which helps in improving the performance on the basis of

explanatory research purpose.

3.2. Research Question:

What could be the significant components of Tesco supermarket which helps

in improving the performance and effect of the RM scheme like Club card to

manage the customers?

3.2.1. Hypotheses:

The research hypotheses depend upon studying the following factors such as

measuring customer loyalty, retaining the customers and to determine

'customer satisfaction' level.

3.2.2. Research Problem:

The research, as it could be understandable since the hypotheses, chapter 1

and research question, scrutinizes a specific difficulty. The issue is the

significant components of Tesco supermarket. The dilemma of the

investigation surfaces from this point. Easily stated, when Tesco embarked on

its loyalty Club card scheme in 1995 and some argued that loyalty schemes

are simply kickbacks and customer don't actually concern from where they do

shopping. 55% of supermarkets purchasers thought that their supermarketincreased price to shell out for its loyalty schemes as per NOP's September

2002 survey. They can only formulate definite reason for it when they

comprehend the attributes of Tesco supermarket and employ all of the

significant components within their particular processes. Appropriately, the

research problem, as put in plain words, is how RM does affects customers

and sales in a Tesco and in accomplishing this, the research would come

across the significant components such as measuring customer loyalty,


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customer retention and customer satisfaction involved in employing RM

technique.

3.3. Instrument:

This study conducted the web survey questionnaire designed with the help of

'QuestionPro' (Bhaskaran 2007) to get the feedback from people living in UK

and the questionnaire was posted on the social networking websites like

facebook and Linkedin to get a feedback from people. The company in

question, when Tesco launched its club card which lead a way to disturbance

at Tesco and the data promised more than was being delivered and the

demand was to preserve the enormous control that club card attained whichwould help in studying the key significant components of Tesco supermarket.

The survey instrument was posted online on social networking websites and

around 49 peoples responded back who were based in UK. The web survey

or online questionnaires which collected information like who shopped at

Tesco store or other store, who have Tesco Club card or not, how much they

shop with or without Tesco club card, do they feel that Tesco have the feel

good factor about the customer services, and also they were asked about

their satisfaction level based on the factors listed in the questionnaire. The

questionnaire was accompanied by a heading at a start that it is for

dissertation purposes and all the responses will be held confidential and the

contact number and email of the researcher was given if anyone has query or

want any information. The questionnaire was brief so as to make clear that it

should take only 2-3 minutes to respond not more than that and consequently,

encourage to participate. The questionnaire included four lines at starting

which explains that it is for dissertation purpose only.

3.4. Population:

The researcher had asked for at least for 40 to 50 responses for its online

questionnaire, however, within the period of two weeks, only 49 responded to

the online questionnaire. Since it was voluntary participation, it couldn't be

feasible to obtain further replies, particularly when no face to facecommunication existed among the researcher and the online respondents.


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Even though the questionnaire was short, the researcher got only 49

responses from online respondents.

3.5. Sample:

In support of the objective of the research and concerning position of the

circulation of questionnaire, it should be impracticable to utilize the methodical

form of sampling method. If the population is less than 50, then it is not

advisable to go for probability sampling and if one is collecting data on the

entire population, as the impact of a specific utmost case on succeeding

numerical analyses is more definite than for bigger samples (Henry 1990).

Therefore, convenience sampling was used which is a form of non-probabilitysampling, as it is most appropriate and concerns selection of those instances

which are the easier to acquire for your sample and sample selection

procedure is repeated till your necessary sample size has been achieved,

possibly saved on computer and suitable for collecting data from

geographically dispersed area or meeting the persons through technological

means like internet or conducting online questionnaire (Sharp et al. 2002).

The response from 49 online respondents represented both sexes and one

nationality.

3.6. Data Collection:

The desk-based research is used primarily for collecting secondary data. The

significance of this research is associated to its data collection techniques and

prominently, it might be or not, it also incorporates secondary data as well as

primary data (Jackson 1994). The secondary data, as it is a discreet data

collection technique, relies on the site of relatable and demonstrable

availability of scholastic studies and theories in the past (Creswell 2003). After

pinpointing the whole of data, it should decisively assess by the researcher in

direction to formulate definite, so it could be applicable and dependable. In

short, the well referenced secondary data available from verifiable articles and

scholastic research will be incorporated in the report by the researcher

(Creswell 2003). Beyond this matter, researcher just utilized information whichwas attained from libraries or electronic databases, books or articles and from


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academic resources. The researcher accumulated primary data through

sample populations, as elucidated above in supplement to secondary data.

The response rate can vary considerably when collecting primary data and

Dillman (1978) research documented response rates among 50% and 92%

for questionnaire surveys, as there is wide variation in response rates (Healey

1991).

The data collection technique such as online questionnaire or web surveys

allows researcher to accumulate the significant amount of useful data only

with a narrow finances within a very brief period (Creswell 2003). Web

surveys functions by requesting probable respondents to go to a website at

which the questionnaire is posted and complete it online and questionnairemust be designed in a way that, when there is a filter function or can also be

automated so that only one query appear on the screen or so that respondent

can scroll down and have a glance at all queries beforehand and finally,

respondents answers can be automatically programmed to download into a

database, thus eradicating the ciphering of a sizeable amount of

questionnaires (Bryman and Bell 2007). It ought to be noticed that online

questionnaire was posted on the social networking websites and researchergot response from 49 online respondents. It must be ensured that whatever

the personal information is accumulated via questionnaires is kept secret. In

fact, it was ensured to the participants in the questionnaire that individual

information will be held secret and would not be make public for promotional

purposes at all, apart from as function of the analysis outcomes. The

Microsoft excel was used for the analysis of data collected.

3.7. Research Approach:

The designing gets influenced by research approach which furnishes the

researcher with the possibility to consider about how each of the abundant

techniques could be a factor, or restrict, his research (Creswell 2003). The

qualitative/quantitative and deductive/inductive approaches are referred here

for research approach.


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3.7.1 The Inductive versus the Deductive Approach:

Saunders et al. (2009) outlines the testing of theories as a deductive

approach. The set of theories are there in researcher's mind in the beginning

and hypothesis is formed on that source. After that, the hypothesis gets testedby researcher. Additionally, the well composed pragmatic information forms

concept and theories on the source of that information for the inductive

approach (Saunders et al. 2009). When the research project is commenced

from a deductive position by the researcher, then researcher seeks to utilize

the theory which exist to figure the approach and researcher adopt that

approach for the qualitative research method also and also for data analysis

aspects, on the other hand, where the research project is commenced froman inductive position by the researcher, then researcher seeks to foster the

theory which is satisfactorily established on the amount of pertinent rationale

and the qualitative research design expects researcher to distinguish this

option, so that an appropriate strategy gets devised to deduce our research

project (Riley 1990).

Figure 1: Deductive Versus Inductive Approach

Source: adapted from Trochim (2001)

The above figure shows that the approach one which follows a top-down and

the other a bottom-up approach which is the basic difference among the

deductive and inductive approaches.


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There are 2 reasons for which the deductive approach has been followed for

the research. Firstly, it is far ahead of the researcher academic knowledge

and expertise to propose a theory which could be tested via observation.

Secondly, the deductive approach seems to be suitable for the objective of

the research, in order to accumulate the significant components of Tesco

supermarket which improves the performance through literature and

subsequently establish how they transform into preparation in an attempt to

assess existing procedures and recommend approaches for further progress.

3.7.2. The Qualitative versus the Quantitative Approach:

The quantitative tools that are borrowed from physical sciences for dataanalysis are ordered in such a way which guarantees objectivity,

generalisability and reliability up to as far as possible (Creswell, 2003). Here

the research results are numerical and the researcher is objective. But,

quantitative tools are accessible in non-numerical layout and are based on

content analysis, among other things. Even though the topic that researcher is

investigating which allows researcher to obtain an incredibly precise depth

impending into the subject, they are not suitable for all sorts of researches.

Besides that, the quantitative tools are absolute for assessing the validity of

specified hypotheses and are uncomplicated and objective. As Creswell

(2003) elucidates that the value of qualitative data analysis allows researchers

to conduct in-depth explorations of a specific fact even though that value

cannot be denied, especially since it might not be utilized in this research. The

researcher has decided not to use qualitative data analysis but utilizes

quantitative data analysis because of the two reasons behind it. The

qualitative data collection and analysis can be approached from either a

deductive or an inductive perspective possibly but here the researcher

decides to go with the deductive approach as explained above and decides to

use quantitative data analysis for the two reasons. The first is that for

qualitative data analysis, there is no possibility for conducting interviews in

order to accumulate the data. The second is that the key significant

components of Tesco supermarket on which it operates have been already

identified by the researcher and wishes to test them via quantitative

evaluation of people opinions living in UK by conducting online questionnaire.


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3.8. Summary:

As this chapter has claimed that the most suitable study for the research

methodology is that which makes use of primary data, as well as, secondary

data, that is quantitative and deductive approach. The following chapter willexhibit the outcomes of the questionnaires posted online on social networking

websites to get the people views and exhibit the study's findings on the source

of these outcomes.


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Chapter 4: Analysis of results

4.0. Introduction:

This chapter provides the detailed analysis of online survey that has beenconducted since the last two weeks which clearly shows the link with the

research issues and researcher hypothesis. The research question was what

could be the significant components of Tesco supermarket and effect of the

RM scheme like Club card to manage the customers. The results are based

on the people who responded to the online questionnaire. The questionnaire

was conducted to know whether peoples those who have Club card are loyal

for any particular store from where they do shopping or also shop at othersupermarkets, as critics has argued that people those who have Club card are

not necessarily loyal for the one particular supermarket.

As discussed in chapter 2, to satisfy a customer, it is a loyal customer who

withstands opponents reduced deals, prevents a corporation promotion and

advertising dollars, suggests a services or products to other and enhances a

corporation's self-esteem internally. As noted earlier, the purpose of the study

is to determine the significant components o Tesco supermarket. To fulfill this

objective, the analysis was carried out on the basis of secondary and primary

data. With the help of academic journals, books and in few occasions,

websites were used to collect the secondary data. The literature gathered and

evaluated the theory of relationship marketing by carrying out the deep

analysis of the Six markets model in respect to supermarket chain like Tesco

and highlighted the benefits and implications of RM and the factors such as

measuring customer loyalty, retaining the customers and customer

satisfaction to determine the significant components of Tesco supermarket.

The primary data was collected through online survey to which 48 online

respondents filled the questionnaire and one dropped out.

This chapter will present the findings pursued by the discussion of the study's

result as linked to the purpose of the research, the research question, and the

statement of the problem.


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4.1. Discussion of results:

The researcher emailed customer care at Tesco to conduct a questionnaire

but in reply the researcher got the message from customer care that we don't

allow to conduct field questionnaire at their store premises and even if you willtry to contact store manager then your request will be denied as it is against

company policies as shown in Appendix 1. As noted earlier, the researcher

then decides to do online questionnaire which were posted on the social

networking websites like facebook and linkedin and 49 respondents replied to

the web survey and 48 completed it. The appropriate sample size was 50 as

102 viewed the web survey and only 48 responded and one dropped out

within the two week period as shown in figure 2.

Figure 2: Survey overview.

Out of the 49 respondents, 25 were males and 24 were females and one who

dropped out was male. There were 10 questions for the online survey and the

result of each question will be discussed in next section.

Significant components of Tesco supermarket:

The significant components of the Tesco supermarket that comes from theliterature review are:


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(1) Measuring customer loyalty

(2) Customer retention

(3) Customer satisfaction

Measuring customer loyalty:

Loyal customers frequently think that they receive superior assistance due to

their loyalty and they sense that their loyalty must be rewarded except the two

repercussions which are: (1) Loyalty tactics must try to distinguish the

relationships and services packages offered to loyal customers from the

normal level and (2) Techniques of paying unique acknowledgment at the

instant of contact with the customer must be utilized (Stone et al. 2000). The

center of the ensuing loyalty tactic will be on securing a unique space in the

psyche of customers and to make them believe that the loyalty of the

customer gets compensated through better and stronger relationships with the

customers, made noticeable, possibly in an advanced degree of services.

Managing the loyalty is like to devise an advertising plan to emphasize the

behavior and status of customers psyche who purchase extra and except a

plan devised to alter behavior reinforcement and adds value to the trademark

customers altered behavior would just continue slightly more than the plan,

except where the scheme is used to encourage trial by new users and

administering loyalty signifies that not just administering behavior however

also administering a psyche condition, it indicates that the attitude of the

customers gets affected in the long run in purpose to deal with the suppliernot just till they visit next time or until they purchase again which indicates that

well administered tactic to loyalty should prepare customers desire to do

further trade among the supplier which could be long standing or at any rate

keep up their business up to the existing stage (Stone et al. 2000).

The analysis of the 1 st and 2 nd question asked in the web survey is shown in

figure 3 and figure 4.


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Figure 3.

As shown in figure 3 to check the customer loyalty, how many times a

customer makes a visit to a Tesco store and those who have Club card often

made more visits during once in a week time and other made visits more than

once in a week or once every two weeks as shown in table 1. As critics said

that customers having loyalty card also shop at other supermarkets as thecustomer is not loyal to some specific store. It can be analyzed from table 1

that those who didn't have Tesco Club card also visited Tesco store. The

purpose is not to build all customers loyal however; to enhance loyalty of

those customers largely expected to react. The customer may even buy from

the competitors if the suppler provides the right product, as those who have

Club card also visited other stores as asked in the question no: 8 of the online

questionnaire.


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Table 1: Cross tabulation

Figure 4.

It could be noticed in figure 4 that 28 customers didn't had Tesco Club card,

but some of them still visited the Tesco store. As eight customers visited once

in a week and15 customers visited once every two weeks as shown in table 1.


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Customers will remain loyal to the supplier, only if the benefits which get

perceived overshadow the benefits which doesn't gets perceived or gets

sacrificed the most important thing is that cost doesn't have a liberty to

achieve benefits from temporary gains that arises from challenging deals

(Sheth and Parvatiyar 1995). In attempt to win new customers many

organizations reinforce this perceived sacrifice by themselves targeting new

customers with introductory deals that offer better terms than those afforded

to existing customers. Table 2 shows the Chi-square statistics.

Table 2: Chi-square statistics for Question no: 1 and 2.

It can be noticed p=0.004 specifies that this is not a significant correlation and

hence the loyalty of the customer cannot be judged upon having a Club card

or not.

Feature such as loyalty cards might carry out a role to perform in the

maintenance of relationships though they cannot practically be regarded as

substitute for the RM viewpoint, as loyalty programs are not the advertising

panacea and are only the sophisticated sales promotions where costs may

repeatedly overshadow rewards (O'Malley 1998). Loyalty schemes work as

the reinforce mechanisms, since it appears, on the whole, that only the loyal

ones gets rewarded by the supplier though somebody as well (Ward et al.1998). Many loyalty schemes might provide advantages which might be good


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to possess although these cannot certify of continuous loyalty and are

frequently unimportant to their trademark selection preference from customer

point of view (Uncles 1994). It would become gradually more clear that loyalty

schemes encompass very small effect on fundamental concerned loyalty

(Palmer 1998) or do not have to do much to exactly influence the likelihood of

retaining the accounts (Bolton et al. 2000). Fundamentally, loyalty schemes

might not change the structure of the market but may assist to shield those

who are serving and may be considered as a genuine element of the

advertising armory, however at the cost of increase in marketing expenses

and in many cases, loyalty schemes might be an expensive misnomer

(Dowling and Uncles 1997).

Relationships are naturally energetic and by no means developed in a manner

that allows us to get an ethical review (Smith and Higgins 2000). However,

some companies seem to have the knack of handling relationships and the

customer might return if the relationship is very well handled by the supplier

(Gronroos 2004). The danger comes when the relationship metaphor

becomes accepted as truth and treats consumer-organizational relationships

as though they were literally true when realistically they will never be morethan associations (O'Malley and Tynan 1999). Loyalty is greatly used a lot and

mistreated word, but loyalty marketing and RM have numerous familiar

mechanisms such as use of IT, customers understanding and straight

customer's interactions, it is doubtful if the association is very profound (Hart

et al. 1999). Loyalty programs and other behavior-based initiatives

recommend that this picture of relationships development is further akin to a

spur reaction meaning than whatever thing similar to the relationships (Barnes

and Howlett 1998). Seldom are loyalty programs other than refined selling

endorsements where the loyalty is to the plan but not the trademark (O'Malley

1998). Whereas loyalty schemes may perform a role in maintenance of

relationships, they can't be realistically used as substitute for the RM

philosophy (Pressey and Mathews 1998).

As there is not a significant relationship but the peoples were asked about

their spending with the Club card and without Club card through online

questionnaire and eight of them spend around 100 to 150 pounds and seven


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spend between 50 to 100 pounds and four spend around 150 to 200 pound as

shown in Table 3.

Table 3: Cross tabulation of Q2 and Q3.

Figure 5: With Club card.

The figure 5 shows the people spending the money those who have Club

card. It can be noted that 8 people spend between 150 to 200 pounds with the

use of Club card and 7 people between 50 to 100 pounds and so on. The

question no: 4 asked in the online survey was regarding the people spending

on shopping without the use of Tesco Club card as shown below in Figure 6.


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Figure 6.

Most of the people spent between 10 to 50 pounds without the use of Tesco

Club card and other 15 people spent between 50 to150 pounds without Club

card as shown in figure 6. It was established that 18 people those who have

Tesco Club card also spent money on shopping without using the Club cardas shown below in figure 7.

Figure 7.


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The people those who had Club card normally spent around 10 to 50 pounds

on shopping without using the Club card as shown in figure 7 whereas people

spending with the Club card was generally scattered and didn't had much

people spending in the range of 10 to 15 pounds as shown in figure 5. The

people who had no Club card, as 11 people from those normally spend

between 10 to 50 pounds and other 6 peoples spend in the range of 50 to 100

pounds and other 8 peoples in the range of 100 to 150 pounds as shown

below in figure 8. Loyalty cannot be measured by the number of people

having the Club card or most number of peoples spending more with the use

of Club card on shopping. It generally depends upon the supplier that what

kind of product is selling, if it is of good quality then more customers will go to

that supplier to buy that product or item and hence the supplier can build thecustomer loyalty or customer can be loyal to that supplier if the supplier gives

the good quality of products to their customers and good customer service.

Figure 8: No Club card.

Relationships are build on understanding and when customers tells a

corporation a little bit regarding themselves, then it is the liability of the

corporation to modify its present to that customers and since that moment the

relationships gets in progress (Peppers and Rogers 2000). The relationships

gets smarter and smarter with every interaction and the relational review ofbuilding useful leads recognizes learning of relationships as an imperative


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means to build distinct lead (Selnes and Sallis 2003). There might be a

situation when any benefits associated with the relationship are outweighed

by lost opportunities elsewhere and some companies offer improved terms for

exclusive agreements and customers may decide to choose instead to open

up the contract to other suppliers and by forgoing any benefits of the

relationship in favor of the benefits of plurality, although the implications could

be that consumers might be inclined towards the reduced choice and forego

all the choices when the customers feel that there is excessive pressure to

conform to belief of others and then customers react against that pressure

(Sheth and Parvatiyar 2000).

Customer satisfaction:

The customers lifetime value is the drive to execute retention guidelines and

the downside effect is that there is no assurance that the customers will carry

on to shop at a supplier at the similar point as earlier or undeniably the

customers would still remain with the corporation and this is mainly actual in

businesses with short way outs, e.g. retailing and in rapidly changing,

competitive markets. It may also be the case in industries where substantial

sales promotion is used, indeed, if customers perceive that the only distinction

among substitute corporations is the range of the kickback presented to them

they are probably to turn out to be more immoral, actively looking out for the

maximum kickback obtainable as only the satisfaction to be derived from the

trade (Tynan 1997).

The question no: 5 asked in the online survey to know about the customer

satisfaction level with the Tesco services. There were 14 factors to judge the

satisfaction level and many of them were not satisfied two factors such as

reach ability of shop (location) and waiting time at checkout. The figure 9

shows the overall response of the question no: 5 asked in the online survey.


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Figure 9.

Figure 10: Reach ability of shop.

It can be noted that the respondents were not satisfied with two factors i.e.

reach ability of shop and waiting time at the checkouts. Out of 49

respondents, 29 were somewhat dissatisfied with this factor as shown above

in figure 10. This is quite a high figure and customers generally don't like

going afar for shopping until and unless there is a heavy sale or promotion on

products. Almost 19 respondents showed their dissatisfaction at the 'waiting


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time at the checkouts' factor as shown in figure 11. This might be due to the

large queue and fewer counters for checkouts.

Figure 11: Waiting time at the checkouts.

Many of the respondents were satisfied with other factors such as overall

appearance of store, shopping hours etc as shown in figure 9. The three

important factors out of fourteen were asked to choose in the question no: 6 in

the online survey as shown below in figure 12. As it can be noticed that

responses are almost scattered but 26 respondents chose Tesco has 'value

for price' and 19 respondents also chose that Tesco has 'choice of products'

and 15 respondents market that Tesco has 'staff helpfulness'. But the

respondents were dissatisfied with the two factors as discussed before, and

hence this is not the bone of contention when the many of the respondents

were satisfied with the other factors. The point here is to say that if the

supplier offer its customers good quality of products, good customer care,

great offers and promotion on products or items then customer will definitely

value that supplier regard of the these factors such as 'reach ability of shop

(location)' and 'waiting time at the checkouts', hence it is obvious that if there

will be good offer available on products or heavy sale then there will be heavy

rush of customers at that particular store and it can take long time at the

counters to checkout because of the long queues.


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Figure 12:

The feedback from the customers about how they feel about customer

services of that particular supplier is essential these days in order to gain

useful lead and compete in the bazaar among other players (Hart et al. 1999).

It gives supplier the indication that what its customers wants and what could

be the probability that same customer will come again and again for shopping

at that particular supplier store, hence the probability for forming the

relationship with that particular customer gets higher (Palmer 1998). The

assessment of the customer satisfaction depends upon many factors and few

of them discussed above, also the supplier has to take these factors into

consideration to retain the customer and give better customer service to the

customers (Egan 2004). As it was tried to assess from the online survey in the

question no: 7 that do the Tesco have the feel good factor about the customer

services and 29 out of 49 respondents marked option 'Yes' which indicates

that Tesco have feel good factor about its customer services as shown below


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in figure 13 and out of these 29 respondents 16 have the Club card which

indicates that Tesco has feel good factor about the customer services and 20

respondents marked option 'No' which indicates that Tesco had no feel good

factor and out of these 20 respondents 5 have the Club c

relationship marketing dissertation

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