Loyalty Marketing Tool

School of Management
Blekinge Institute of Technology
The accuracy of customer reward program as loyalty marketing tool
Philip Law
Supervisor: Anders
ederstierna
Thesis for the Master!s degree in Business Administration "all#Spring $%%&
A'strac t
ABSTRACT
)elationship marketing is perceived as a leading trend in marketing and twenty*first century consumers have evolved into 'ecoming +increasingly promotion*literate! , arlow- (../ cited in 0gan $%%(- pg 1&(23 The knock on effect of this is a decrease in reliance on traditional and most fre4uently used methods for 'uilding customer relationships3 "or over a decade- supermarkets have transformed the shopping e5perience through the creation of out of town locations which can accommodate the development of considera'le si6ed outlets- e5tensive product ranges e5panding 'eyond food3 7ffering a wide range of services one would not normally associate with a supermarket such as telecommunications- finance and insurance- and with this the additional incentive of customers collecting and redeeming points through customer loyalty programs3 8ategorically today Tesco is not only the 9:!s largest grocer- 'ut also the world!s most successful internet supermarket , um'y and unt- $%%;- pg (23 The Tesco 8lu'card is widely considered to 'e a pioneer and success story in loyalty marketing- helping to propel Tesco to 'e the num'er one supermarket retailer in the 9: ,Tapp- $%%<- pg (/=23 By carrying out a literature review on previously pu'lished materials and the use of a 4uantitative survey- this study aims to uncover and identify the value of the 8lu'card scheme and how significant it is it in creating true customer loyalty to Tesco3 The findings of the study revealed consumers place greater importance upon store location- value for money and product range rather than loyalty card schemes- in* store maga6ines and vouchers3 The results revealed that although respondents aspired to gain points and redeem the rewards offer 'y the Tesco 8lu'card- they also showed that today!s consumer is more in touch (
A'strac t and has a greater knowledge of the schemes and as such consumers tastesperceptions- attitudes and demands have
A'strac t evolved3 "urthermore- it was revealed that consumers are effectively manipulating suppliers to their own ends as the findings e5posed that consumers are shopping around for the 'est deals and they own and actively use more than one loyalty card3 The primary research revealed the failure to evolve the Tesco 8lu'card scheme into what today!s consumer demand has 'rought the 8lu'card proposal to a uni4ue crossroad3 It is recommended that the 8lu'card model evolves to adapt to the new tastesattitudes and demands of the new generation of consumers3 An understanding of the $( century consumers will help ensure a loyal customer 'ase3 Areas such as lowering prices shall help sustain a competitive advantage within the supermarket industry3 "urther consideration should 'e given to giving customers an instant re'ate at the point and time of sale rather than rewarding them through the collection of points3 The current image of the 8lu'card feels dated and as such a revision and re*launch may give it a much needed 'oost and help motivate and e5cite consumers3
st
Acknowledgement s
ACKNOW !"#!$!NTS
I would like to give thanks to the following people for their help and support in the completion of this study3 "irst and foremost I would like to give great thanks to my family and friends who have supported me through my studies3 Special thanks to my partner >enny for all her help and support during my course and the writing of this thesis * I couldn!t have done it without you? I would like to thank my tutor Anders ederstierna for his time- attention
and guidance throughout the writing of this thesis3 "inally I would like to thank Tesco for allowing and helping with the research of this dissertation3
%hilip aw
Ta'le of 8ontents
TAB ! O& CONT!NTS

A'stract Acknowledgement s Ta'le of 8ontents Ta'le of "igures
'()
C*A%T!R ON! + ,NTRO"-CT,ON

'(' '(/ '(1 '(3 '(4 '(8 The Rise of Tesco The Background to the Study The Scope of the Study %urpose O56ecti7es Summary . 0 2 ') ') ''
/()
C*A%T!R TWO + ,T!RAT-R! R!9,!W

/(' /(/ ,ntroduction The Tesco Story '1 '1 '.
$3$3( The Tesco Timeline /(1 /(3 /(4 /(8
Characteristics of Customer Relationship $anagement /) :CR$; The Clu5card %henomenon /' "efining oyalty oyalty $arketing /1 /8 /2 1' 13 18
$3=3( The 8ustomer Loyalty Ladder /(. /(0 /(2 The Tesco Clu5card as a oyalty $arketing Tool The Relationship 5etween Satisfaction and oyalty "oes oyalty Result to %rofit<
Ta'le of 8ontents /(') /('' "o Customer Reward %rograms "eli7er ong Term< Conclusion 12 31
1()
C*A%T!R T*R!! + $!T*O"O O#=

1(' 1(/ 1(1 ,ntroduction Research O56ecti7es Selection of Research $ethods 30 30 4) 4/ 43 43 44 48 48 4. 40 40 42 8) 8) 8' 8/ 8/
1313( "eatures of @ualitative and @uantitative )esearch 1313$ Analysis of Aata 1(3 >uestionnaire "esign
13;3( The 0ight*step @uestionnaire 8onstruction Procedure 13;3$ >ustification of @uestions 13;31 @uestion Types and Bording 13;3; @uestionnaire Layout 13;3< Interviewer Cersus )espondent 8ompletion 13;3= 8oding 1(4 1(8 Sample Selection %rocedure and Sample Characteristics Strengths? imitations and 9alidity
13=3( Strengths 13=3$ Limitations 13=31 Calidity 1(. Summary
3() C*A%T!R &O-R + R!S!ARC* &,N",N#S AN" ANA =S,S

3(' 3(/ ,ntroduction Analysis 83 83 83 8.
;3$3( 9ser Profile of Tesco 8lu'card )espondents ;3$3$ 8ustomer Perceptions on Tesco 8lu'card
Ta'le of 8ontents ;3$31 Loyalty and Satisfaction ;3$3; TescoDs 0fficiency and use of the Information Eained from 8lu'card ;3$3< as the Tesco 8lu'card 8reated LoyaltyF ./ .1 .4 .8 .2 0/
;3$3= Are consumers Manipulating SuppliersF ;3$3/ Aoes Tesco )eally Geed the 8lu'cardF 3(1 Conclusion
4()
C*A%T!R &,9! @ CONC -S,ON

4(' 4(/ 4(1 4(3 ,ntroduction Conclusion of the Study Recommendations imitations and further research 04 04 02 2)
R!&!R!NC!S
21
B,B ,O#RA%*=
')1
Appendi5 A * @uestionnaire >ustification Appendi5 B H @uestionnaire Appendi5 8 * SPSS 8oded @uestionnaire )esults Appendi5 A * SPSS "re4uency Ta'les for @uestionnaire )esults
')4 '). '') ''3
Ta'le of "igures
TAB ! O& &,#-R!S
/()

$3$3( '. $3=3( /2 The Tesco Timeline 8ustomer Loyalty Ladder
1()
C*A%T!R T*R!! + $!T*O"O O#=

1313( 4/ 13;3( 44 "eatures of @ualitative and @uantitative )esearch The 0ight*Step @uestionnaire 8onstruction Procedure
3() C*A%T!R &O-R + R!S!ARC* &,N",N#S AN" ANA =S,S

;3$3(3( &reAuency ta5le: Eender of )espondents 84 ;3$3(3$ Cross ta5ulation: Please 8hoose your Eender I Please Indicate Bhich Age Eroup Jou "all Into 84 ;3$3(31 Cross ta5ulation: Please Indicate Bhich Age Eroup Jou "all Into I I Trust Tesco Products and Their Image 88 ;3$3$3( &reAuency ta5le: Please Indicate ow 7ften Jou 9se Jour 8lu'card Bhen Jou Purchase Eoods or Services with Tesco 8. ;3$3$3$ Cross ta5ulation: Please Indicate Bhich Age Eroup Jou "all Into I If Tesco Aid Got ave the 8lu'card Scheme- Bould you Still 8ontinue to Shop ThereF 80 ;3$3$31 Cross ta5ulation: I Think Tesco is Cery Innovative I I "eel More ;
8ould 'e Aone to Increase my Loyalty 82
Ta'le of "igures
;3$3$3; Cross ta5ulation: I Trust Tesco Products and Their Image I I "eel More 8ould 'e Aone to Increase my Loyalty 82 ;3$3$3< Cross ta5ulation: If Tesco did not have the 8lu'card scheme- Bould you Still 8ontinue to shop thereF I I 05pect )ewards to 'e a part of my Gormal Shopping 05perience .)
<
Ta'le of "igures ;3$3$3= Cross ta5ulation: Importance of Loyalty 8ard Schemes I ave you )edeemed any )ewards from the 8lu'card Scheme within the last ($ MonthsF .' ;3$313( Cross ta5ulation: Bould you Aescri'e Jourself as Being Loyal to TescoF I Bould you Aescri'e Jourself to 'e a Satisfied 8ustomer of TescoF ./ ;3$3;3( &reAuency ta5le: Ao you read 8lu'card Maga6ineF .3 ;3$3;3$ Cross ta5ulation: Ao you read 8lu'card Maga6ineF I If KyesK or KsometimesK Please Indicate what you think of the Maga6ine .3 ;3$3<3( Cross ta5ulation: Aoes the 8ollection of Points Influence you to 'uy more or to 'uy specific#alternative Promotional ProductsF I Location 7f Store Importance .4 ;3$3=3( &reAuency ta5le: Apart from 8lu'card- do you own and regularly use other store loyalty cardsF Please indicate how many .8 ;3$3=3$ &reAuency ta5le: I 9sually Shop Around to get the Best Aeals .. ;3$3=31 &reAuency ta5le: I 05pect )ewards to 'e a part of my Gormal Shopping 05perience .0 ;3$3=3; Cross ta5ulation: Please Indicate which age group you fall into: I Ao you know how many 8lu'card Points you gain for every L( you spend in storeF .2 ;3$3/3( Ta5le: The Importance )espondents Placed upon "actors that Influence Loyalty .2 ;3$3/3$ &reAuency ta5le: Bhat more could Tesco do to make you more =
LoyalF 0'
Ta'le of "igures
8hapter 7ne * Introduction
Chapter One
Introduction
&
8hapter 7ne * Introduction
'() C*A%T!R ON! + ,NTRO"-CT,ON

'(' The Rise Of Tesco
8ategorically today Tesco is not only the 9:!s largest grocer- 'ut also the world!s most successful internet supermarket , um'y and (23 Argua'ly one of the world!s most successful advocates of 8ustomer )elationship Management ,8)M2 , um'y and unt- $%%;- pg (2 and as commented 'y Tapp ,$%%<- pg (/=2- MThe 'ig success story of data'ase driven management is Tesco3 It seems to understand when to closely manage the analysis- and when to let it go its own wayN when to go with a hunch 'ased on e5perience and when to 4uestion conventional wisdoms23 Since the introduction of the Tesco 8lu'card scheme in (..<- the retailer has managed to ascertain a sound reputation for innovation using imagination and technology to constantly deliver customer value resulting in increased sales and customer retention in the ferociously competitive food retailing industry3 Tesco and the Tesco 8lu'card are seen as Mthe key player in the 9: and one of the most important schemes in commercial history O3 It has revolutionised the way a multi* 'illion pound industry is run3 Individual*level data has 'een systematically gathered on most of Tesco!s ($ million customers- allowing the company to understand each customer!s value to the company and how it may 'e a'le to increase that value or prevent lossP ,Tapp- $%%<- pg (.$23 MBefore 8lu'card- Tesco was stuck as the 9:!s second*ranking supermarketP , um'y and unt- $%%=- pg (23 Tesco claims nearly L( of every L/ spent on the high street , awkes- $%%&23 In April $%%& MTesco has reported an ((3&Q rise in underlying annual profits for $%%/ to L$3&;='n- meeting analysts! forecastsP ,BB8 Business Gews- $%%&23 unt- $%%;- pg
8hapter 7ne * Introduction Bhat this thesis will investigate is how significant and instrumental the 8lu'card scheme has 'een in 'uilding the success of Tesco!s rise to dominance3 Bith other supermarkets offering similar schemes- why e5actly do customers constantly return and not defect to rival storesF Bhat is the true value of the 8lu'card scheme to TescoF Eiven the current position that Tesco are in and offering so much to customers it could 'e disputed if Tesco really need the 8lu'card scheme3 Bith this setting in mind I would like to initiate the concept of 8ustomer )elationship Management ,8)M23 Berry and Parasuraman- ,(..(2 have commented that in order for an organisation to sustain a relationship with its customers it needs to offer 'enefits that are important to them and at the same time difficult for competitors to replicate3 Barry stressed that the aim is to transform indifferent customers into loyal ones and solidify the relationship3 This argument is further enforced that twenty*first century consumers have evolved into 'ecoming +increasingly promotion* literate! , arlow (../ cited in 0gan $%%(- pg 1&(23 MToday- there is a 8)M revolution underway among 'usinesses3 It represents an inevita'le H literally irresisti'le H movement3 All 'usinesses will 'e em'racing 8)M sooner or later- with varying degrees of enthusiasm and successP ,Peppers and )ogers- $%%;- pg =23 8)M has 'ecome a maRor management growth tool of the last decade ,Eilles- )igh'y and )eichheld $%%$2 and research has shown that the market for the worldwide customer relationship management ,8)M2 software is proRected to surpass S&3. 'illion in $%%& and is forecasted to reach S(131 'illion 'y $%($3 ,8)MToday3com$%%&23
'(/
The Background to the Study
The evolution of supermarket shopping has advanced at an e5pediential rate (%
over the last decade3 changed the way
8hapter 7ne * Introduction aving transformed the shopping e5perience and
((
8hapter 7ne * Introduction in which we shop through the creation of out of town locations which can accommodate the development of considera'le si6ed outlets- e5tensive product ranges e5panding 'eyond food- a wide range of services one would not normally associate with a supermarket such as telecommunications- finance and insurance3 Bith this the additional incentive of customers collecting and redeeming points through customer reward programs3 The trend and interest in using loyalty cards is undenia'le3 Appro5imately &<Q of households in the 9: had at least one active loyalty card ,Mintel$%%;23 These loyalty cards are key to an organisation!s marketing activity as it allows marketers to interact directly to the people who will 'enefit the most with tailor made offers and communication3 owever- some studies have suggested that the loyalty card scheme are at a crossroad and do not work as shoppers attitudes have changed and they prefer to pay less for their groceries than earn points on their purchases3
'(1
The Scope of the Study
The study of this dissertation will commence with focusing on secondary datain the form of a literature review3 The motivation for this is that it shall provide a depth of understanding- the concepts and theories that are to 'e investigated and to provide an e5ample on how others have em'arked upon this su'Rect area3 Primary research is essential in order to complete the o'Rectives that this thesis sets out to achieve- therefore the findings of the literature review will direct the author into the construction of a primary research tool in the shape of a 4uestionnaire to address areas where there may'e gaps3 Su'se4uently- the methodology will e5plain the conditions into how the primary research was conducted 'efore an analysis of the results attained3 The closing stages of this study will then 'e concluded and recommendations will 'e made3
($
8hapter 7ne * Introduction '(3 %urpose
The intention of the thesis is to uncover if Tesco truly need their 8lu'card scheme any longer to keep customers loyal due to the sheer amount of effort they currently use to keep customers loyal and given the position that they are in3 The tool may assist in the aid of repeat purchases 'ut does the scheme demonstrate and create true loyalty3
'(4
O56ecti7es
(23 8hronicle Tesco!s rise to power and 'eing the num'er one supermarket retailer within the 9:3 $23 Aefine loyalty and loyalty marketing3 123 )ecognise the factors that affect the significance of a customer reward program and their roles within the supermarket sector3 ;23 @uestion how instrumental the 8lu'card reward program is in 'uilding the success of Tesco to where it is today and its role as a marketing tool3 <23 0sta'lish the real value and significance of the 8lu'card reward program to Tesco3 =23 Aiscover the general attitude of Tesco customers towards the 8lu'card reward program3 Analyse and o'tain the importance of the scheme to customers and ascertain Rust how significant the scheme is in keeping them loyal3
(1
8hapter 7ne * Introduction '(8 Summary
"rom esta'lishing the aim of this study the reader is conscious to the scope of the investigation and what it sets out to accomplish3 The motivation of the su'Rect and a 'rief 'ackground to Tesco and its 8lu'card scheme has provided a solid foundation for advancing to e5amine secondary research3 The literature review follows in the ne5t chapter3
(;
8hapter Two H Literature )eview
Chapter Two
Literature Review
/()
/('

,ntroduction
This chapter aims to provide a 'ackground to the study and seeks to carry out the following o'Rectives of the dissertation: (23 8hronicle the history and rise of Tesco3 $23 9nderstand the concept of 8)M3 123 Aefine Loyalty and Loyalty Marketing3 ;23 Aetermine if the Tesco 8lu'card has generated loyalty and what factors customers are loyal to3 <23 )ealise the issues that may affect the value of a customer reward program and recognise the importance within the supermarket industry3 =23 Eiven Tesco!s current range of loyalty marketing strategies- e5amine if the Tesco 8lu'card is really needed3 The literature review will commence with the charting of Tesco!s 'ackground story- followed with defining the fundamental terms with a focused discussion3 It will conclude with a summary of the main points mentioned3
/(/
The Tesco Story
)ecent work from )eference for Business ,$%%/2 and the 0uropean "oundation for the Improvement of Living and Borking 8onditions ,$%%/2 have chronicled the history of Tesco3 It is with allusion to these 'odies of work that this section is 'ased upon3
(1
8hapter Two H Literature )eview In (.(.- >ohn 0dward 8ohen invested L1% into a small grocery stall in the 0ast 0nd of London- selling whatever could 'e housed in the tiny stall3 Thus 'egan 8ohen!s career as a market trader after serving in the )oyal "lying 8orp3 By (.1$- 8ohen officially founded Tesco Stores Limited3 The name was a 'ased on a private la'el tea that 8ohen 'ought and sold from a merchant which used the initials T303 Stockwell and 'y adding the first two letters of his surname H T0S87 was 'orn3 Bithin & years- 8ohen e5panded his operation and opened more than (%% small stores in the London area3 In (.1< 8ohen was invited 'y several key American suppliers to the 9nited States to witness and learn the American food retailing system3 7n returning to the 9: from his visit- 8ohen wanted to take the American self*service supermarket vision and implement it in the 9:3 By (.;/- 8ohen realised his dream and opened the first Tesco self*service store in ertfordshire3 owever- the pu'lic were not ready for such a radical approach and it failed to capture the interest of British shoppers- the end result was that the store closed in (.;&3 Got deterred 'y this 8ohen reopened the shop one year later to a warmer reception from the great British pu'lic3 elped 'y the ac4uisition of smaller grocery chains Tesco rapidly e5panded over the ne5t two decades and in (.<= the first Tesco supermarket to carry fresh foods in addition to more traditional dried goods was opened3 Auring the (.=%!s- Tesco range of products diversified3 Gon*food merchandise and household items were now 'eing sold and with it came a higher margin3 It was also during this period that the company completed construction on a .%-%%% s4uare*foot warehouse3 Bith the opening of a ;%-%%% s4uare*foot store the term MsuperstoreP was 'orn3 This term not only referred to the actual si6e of the store 'ut also the immense selection of food and non*food items availa'le within it3 (;
8hapter Two H Literature )eview In (.=1- Tesco signed up to the Ereen Shield stamps scheme3 This was another American idea- where the theory of the scheme was that retail organisations would purchase these stamps and then give them away as a 'onus to customers for every purchase they made3 The amount of stamps given reflected on how much customers spent3 7nce the customers had collected sufficient stamps and stuck them into a Ereen Shield collector!s 'ook- the shoppers could then e5change this for merchandise from a catalogue or shop3 The outcome of this was customer loyalty as shoppers congregated on stores offering stamps3 The American food retailing system that 8ohen had introduced resulted in Tesco operating appro5imately .%% supermarkets and superstores throughout the 9: 'y (./=3 The sheer nature of the American supermarket vision of pile it high, sell it cheap did not lend itself to generous profit margins and the firms management esta'lished that this strategy had not aged well and in fact was deteriorating- conse4uently causing an image pro'lem among consumers3 The food industry and consumers were evolving and Tesco were guilty of missing the vital signs of change in the market and that consumers were demanding 4uality over 4uantity3 Auring the (./%!s- consumers were spending less money on food purchases and Tesco profits were lower as customers! tastes were changing and they had more disposa'le income3 In addition- the Tesco 'rand 'egan to look slightly Raded and was suffering an image 4uandary3 In an attempt to win 'ack shoppers- increase sales and gain more market share the Ereen Shield Stamp scheme was scrapped in (./1 and prices were cut across the 'oard3 Initially the new strategy worked- however the diminishing image of Tesco (<
8hapter Two H Literature was still apparent3 The maRority of Tesco stores )eview were poorly staffed with inade4uate
(=
8hapter Two H Literature )eview customer service and merchandise selection3 In order to recuperate- an e5tensive modernisation program was undertaken and <%% unprofita'le stores were closed3 Tesco made a considera'le investment to not only improve its stores physically 'ut also to provide the higher 4uality merchandise that consumers desired3 The upshot was prevalent upgrading and enlargement of smaller cramped stores3 8osmetic and practical changes such as widening aisles and enhanced lighting were used and the main focus of Tesco was on the superstore concept3 The average superstore covered $<-%%% s4uare feet 'ut eventually e5panded to as large as =<-%%% s4uare feet3
In order to improve efficiency the original distri'ution systems were computerised and restructured3 To compliment the new high*4uality and service*oriented image of these new stores- Tesco also introduced its own la'el product lines which had 'een developed through e5tensive )esearch and Aevelopment ,)TA2 programs3 Auring the late (./%!s and early (.&%!s the 9: food sales market was in a slump3 In order to encourage more sales and customer loyalty Tesco 'egan an application which cut prices on appro5imately (-<%% food items3 The knock on effect of this was a renewed price war 'etween Tesco and >3 Sains'ury3 Throughout the rest of the (.&%!s Tesco continued to e5pand into Ireland and in (.&< the (%% superstore was opened3 By (.&. the company had spent L<%% million on 'uilding $. new stores3 By the 'eginning of the (..%!s- Tesco had 'ecome one of the top three food retailers in the 9:- encompassing 1/( stores in Ereat Britain in addition to 'ecoming the largest independent gasoline retailer in the 9:3 It was also during this period that Tesco e5panded into new countries ac4uiring store chains in Poland- the 86ech )epu'lic and Slovakia3 To further reinforce the innovation at Tesco- two new formats of store were e5perimented3 The first was the Tesco 05press format- which (/
th
com'ined a petrol
(&
8hapter Two H Literature )eview station and small convenience store into one3 The Tesco 05tra format e5panded the non*food departments3 In "e'ruary (..<- the Tesco 8lu'card was introduced3 Two years later- in (../- Tesco 'ranched out into financial services creating a Tesco Cisa cardin*store 'anks- savings accounts- loans and insurance3 By the millennium Tesco- launched its e*commerce 'usiness and turned to developing its non*food 'usiness3 The aim was to turn the non*food side of the 'usiness to 'e as strong as the food side3 Stores now carried e5tensive electronic products- toys- sports e4uipment and general household goods and furnishings3 In Septem'er $%%$ Tesco introduced its own line of clothing3 International operations were also developing as Tesco entered Asia opening stores in Thailand- South :oreaTaiwan- Malaysia and 8hina3 Today- Tesco stands as a genuine retail giant- it has consistently out performed rivals and increased market share3 The strength and diversification of Tesco!s own 'rand products is indisputa'ly impressive3 05pansion in the 9: and a'road is continuing and industry o'servers can find little to fault the company!s operations3
/(/('
The Tesco Timeline
Timeline on the growth of Tesco: (.(. * "ounder >ack 8ohen 'egins selling surplus groceries from a store in the 0ast 0nd of London3 is first dayDs profit was ( pound on sales of ; pounds3
(.
8hapter Two H Literature )eview (.$; * 8ohenDs first own*'rand product is called Tesco Tea3 The name came from the initials of T0 Stockwell- a partner in the firm of tea suppliers- and 87 from 8ohenDs surname3 (.1. * Tesco has around (%% 'ranches3 (.;/ * Tesco Stores , oldings2 Ltd floats on London Stock 05change with share price of $< pence3 (.<= * "irst Tesco self*service supermarket opens in a converted cinema in Maldon3 (.=% * Takes over chain of $($ stores in Gorth of 0ngland and adds another (;; stores in (.=; and (.=<3 (.=( * Tesco Leicester enters Euinness Book of )ecords as the largest store in 0urope3 (.=1 * Introduction of Ereen Shield Stamps scheme3 (./. * Annual sales reach ( 'illion pounds3 (.&$ * Annual sales e5ceed $ 'illion pounds3 (.&/ * Tesco has 1// stores H far fewer than 'efore- 'ut each store is larger3 (..( * Becomes BritainDs 'iggest independent petrol retailer3 (..< * Becomes Britain!s market*leading food retailer3 Tesco 8lu'card customer rewards scheme is launched- the innovation set to transform the store!s fortunes- and track it!s customers3 Tesco enters ungary3
$%
8hapter Two H Literature )eview (..= * Tesco spreads to Poland- 86ech )epu'lic- Slovakia and Gorthern Ireland3 (../ * Terry Leahy 'ecomes chief e5ecutive3 Tesco moves to capture share of loan and personal finance market as Tesco Personal "inance is launched3 8ompany launches $;*hour trading as the first of many Tesco 05tra ypermarkets open3
(..& * 0nters Taiwan and Thailand (... * Mo'ile phones go on sale in Tesco storesN launches online 'ookstore and online 'anking3 0nters South :orea3 $%%% * Tesco3com launched and goes live3 $%%( * Strategic relationship with 93S3 supermarket Safeway to take Tesco3com model to 9nited States3 0nters Malaysia3 $%%$ * Tesco has /1% stores in the 9:3 $%%1 * Tesco enters >apan and Turkey3 $%%; * 0nters 8hina3 Launches own 'rand "airtrade range3 Tesco 'road'and launched3 0nters music download market3 $%%< * Makes $ 'illion pounds of annual profits3 Announces non*food store trial3 0nters 86ech )epu'lic and Slovakia through 8arrefour asset swap and e5its Taiwan $%%= * Tesco has a total of (-&/. 9: stores and controls appro5imately one* third of the 9: grocery market3 Govem'er &- $%%/ * 7pens first 93S3 store near Los Angeles3 $(
8hapter Two H Literature )eview Adopted from Sanderson ,$%%/2 and Simm ,$%%/- pg ((=*((/23
/(1
Characteristics of Customer Relationship $anagement :CR$;
MThe past decade has seen many firms ,re2adopt a customer focus H often through a formal program of customer relationship management ,8)M2P ,9ncles- Aowling and ammond- $%%;- pg .$23 Peppers and )ogers ,$%%;pg =2 'ack up this claim citing that Mthere is a 8)M revolution underway among 'usinessesP3 Aespite 'ecoming one of the most intensive and important developments of the 'usiness climate there is no specific definition for 8)M- as commented 'y Eoodroe ,$%%<- cited in Bylie2- M8)M is difficult to define3 It!s somewhat misunderstood- largely misused- and in some cases a'usedOoften 'y the very people who strive to define it3P In the modern marketplace customers continue to gain vigour- it is vital that an understanding of them is undertaken to provide personalised value3 M8ustomers don!t want to 'e treated e4ually3 They want to 'e treated individuallyP ,Gewell $%%1- pg (/23 Through the use of an ela'orate process ar'itrated 'y information technology- 8)M is designed to create and continuously improve the relationship 'etween an organisation and its customers in real*time transactions3 Aespite the fact that 8)M is essentially rooted within information technology it is more than Rust a technology3 It draws from traditional marketing principles and key to this process is the recognition and definition of what customers deem as value and delivering it- the end result is Mvalue is thus created with customers- not for themP ,Eordon- (..&- pg .23
Bhat can 'e esta'lished is that the 8)M process suffers when it is not $$
8hapter Two H Literature ade4uately understood or implemented3 8learly )eview 8)M involves much more than marketing and Min its most generalised form- 8)M can 'e thought of as a set of 'usiness practices
$1
8hapter Two H Literature )eview designed- simply to put an enterprise into closer and closer touch with its customers- in order to learn more a'out each one- with the overall goal of making each one more valua'le to the firmP ,Peppers and )ogers- $%%<- pg =23 In order for an organisation to truly engage the customer it is essential that companies can e5ceed consumers e5pectations- therefore any definition of 8)M would 'e fundamentally wrong if it didn!t start with the customer in mind3 The following e5cerpt will 'e used to define 8)M: M)elationship Marketing is the ongoing process of identifying and creating new values with individual customers and then sharing the 'enefits from this over a life time3 It involves the understanding- focusing and management of ongoing colla'oration 'etween suppliers and selected customers for mutual value creation and sharing interdependence and organisational alignmentP ,Eordon- (..&- pg .23 "or the case of the Tesco 8lu'card- um'y and unt ,$%%;- pg (=2 have
cited that Mthe definition of 8)M is 'est summarised as: to improve our performance at every point of contact with our customers- to make them happier and the company richerP3
/(3
The Clu5card %henomenon Customer loyalty is not about how customers demonstrate their loyalty to us, it is about how we demonstrate our loyalty to them. Lord MacLaurin, Chairman of Tesco
In "e'ruary (..<- the Tesco 8lu'card was launched and it 'ecame the 9:!s first supermarket customer reward program3 7riginally piloted in twelve stores- the inspiration of the card was to gain an insight into shopping ha'its $;
of customers and
$<
8hapter Two H Literature )eview give something 'ack to them3 Points would 'e accumulated for every L< spent and in turn the points would 'e converted every 4uarter into 8lu'card vouchers which the customer could redeem in any Tesco store3 owever this scheme was later changed when it was realised that pensioners and students were not fully 'enefiting due to the small fre4uent purchases they made ,Louis- $%%$- pg <23 9nder the new scheme- shoppers gained one point for every L( spent on goods in* store- online- on Tesco Petrol forecourts- Tesco Personal "inance products and Tesco Telecoms3 Additional points could also 'e connected at (% 8lu'card partner companies ,Papworth- $%%<23 7nce the customer has accumulated (<% points the points are converted into 8lu'card vouchers at an e5change rate of (p to one point- thus giving an effective discount of (Q3 To add further value to the vouchers- they can 'e Mswapped for AirMiles or 8lu'card Aeals such as days out- film hire- restaurant meals- maga6ine su'scriptions- holidays and flights3 These deals are priced at four times the in* store redemption value of the vouchers3 "or e5ample a year!s maga6ine su'scription to 8osmopolitan maga6ine which normally costs L1;3$%- costs L&3<< in 8lu'card vouchersP ,Papworth- $%%<23 The costs associated with running a loyalty program are notoriously high3 The Ereen Shield stamp scheme cost L($ million annually3 The 8lu'card scheme introduced new point*of*sale ,P7S2 technology as well a call centre to handle customer 4ueries and a vast supporting computer system to record and analyse the 8lu'card information3 In total it cost Tesco L1%% million over the first three years and appro5imately ;3<Q of Tesco profits to run the scheme3 Bithin si5 months of the introduction of 8lu'card- Tesco!s share of the 9: retail grocery trade had increased from (<Q to (&Q3 Less than ($ months after the launch- with over eight million 8lu'card customers purchasing some $%% million in*store $=
8hapter Two H Literature )eview products per day- Tesco was now propelled to 'eing the num'er one retailer in the 9: ,Peppers and Martha- $%%(23 "ollowing the success- some competitors launched rival schemes although these were later scrapped3 7ne retailer- ASAA- did resist the trend of loyalty cards and focused primarily on its competitiveness and reducing costs3 It was assessed that in $%%( the 8lu'card scheme had managed to attract appro5imately $% million mem'ers in the 9:- of which over ten million card holders were active users3 Seth and )andall ,$%%(- pg 1.2 have commented that Tesco Mdid not invent the card nor were they a first mover- 'ut in retrospect they e5ecuted its introduction 'ravely and 'rilliantly- getting the timing rightP3
/(4
"efining oyalty
In order to investigate the value of the Tesco 8lu'card scheme- it is vital that an understanding and definition of loyalty is esta'lished3 In the conte5t of retail marketing loyalty can 'e perceived as Ma com'ination of customer 'ehaviour and attitudeP ,"raoch Marketing- $%%=23 It is usually characterised as activities carried out 'y an organisation for the development of a long*term relationship with its customers3 Bith this in mind- the concept of loyalty may initially appear to 'e rather simplistic3 owever- there is an overwhelming amount of research focused on the definition and term for the notion of loyalty3 8ustomer loyalty is acknowledged as a key concept whose importance has 'een recognised 'y many academics and practitioners3 M@uestions a'out how to define loyalty were addressed more than $% years agoP ,Erisaffe- $%%(23 9pon further investigation and reading it can 'e seen that there is a $/
8hapter Two H Literature )eview lot more to the notion and as commented 'y Parker and Borthington ,$%%%- pg ;.(2 it is a Mcomple5 phenomenonP. 7ne of the most distinguished insights into loyalty was provided 'y Aick and Basu ,(..;- pg (%$2- who cited loyalty as Mthe strength 'etween relative attitude and repeat patronageP3 :ey to understanding this is the correlation 'etween 'ehaviour and attitude3 future3 It has 'een suggested 'y scholars that loyalty is an emotional concept>enkinson ,(..<- pg ((=2 resists defining loyalty in 'ehavioural terms and notes the concept of loyalty as Mthe reflection of a customer!s su'conscious emotional and psychological need to find a constant source of valuesatisfaction and identityP3 This advocates that loyalty is an emotional concept created 'y trust3 um'y and unt ,$%%;- pg (/2 have commented that Mloyalty is an emotional response 'ased on empathyP3 To further the ideology and recognition that thoughts and feelings are active- 0ast ,(../- cited in )owley- pg <1.2 comments Mother varia'les such as social and physical environment as well as the personal a'ilities have 'een found to pre*empt actionP3 8onversely this view could 'e seen as 'eing Mfunctionally loyalP ,Barnes $%%$2 where'y customers are only loyal to a company due to convenience3 "unctional loyalty is often created 'y functional values such as 4ualitydistri'ution- price- convenience or through different loyalty programs providing a tangi'le reason to prefer certain suppliers3 owever- this is easily replicated 'y competitors- thus the creation of functional value only offers a short*lived competitive advantage- functional loyalty can!t 'e very long lasting ,Barnes$%%$23 Geal ,$%%% cited in Erisaffe $%%(2- states that Mloyalty is a 'ehaviourP- this is Margua'ly the most controversial ,view2 'ut the 'est supported 'y data3 The controversy comes a'out 'ecause loyalty is this model is defined mainly with $& owever this is not significantly sufficient as the perception could ascertain changes in 'ehaviour and attitudes in the
8hapter Two H Literature )eview reference to the pattern of past purchases with only secondary regard to underlying consumer motivations or commitment to the 'randP ,0hren'erg(..&N "ader and
$.
8hapter Two H Literature )eview ardie- (..=N :ahn et al3- (.&&N Massey et al3- (./% as cited in 9nclesAowling and ammond- $%%;- pg .;23 Shapiro and Carian ,(..&- pg ($&2 'elieve that loyalty is concerned with repeat purchase or 'uying largely and e5clusively from a single vendor3 9ncles et al3- (..; ,as cited in 9ncles- Aowling and ammond- $%%;- pg .;2- comments that after e5tensive studies of data and purchase patternresearchers Mhave found that few consumers are +monogamous! ,(%% percent loyal2 or +promiscuous! ,no loyalty to any 'rand23 )ather- most people are +polygamous! ,i3e3 loyal to a portfolio of 'rands in a product category2P3 0ssentially Mfrom this perspective- loyalty is defined as an ongoing propensity to 'uy the 'rand- usually as one of severalP ,0hren'erg and Scriven- (...cited in 9ncles- Aowling and ammond- $%%;- pg .;23
MLoyalty to the 'rand ,measured 'y repeat purchase2 is the result of repeated satisfaction that in turn leads to weak commitment3 The consumer 'uys the same 'rand again- not 'ecause of any strongly*held prior attitude or deeply*held commitment- 'ut 'ecause it is not worth the time and trou'le to search for an alternativeP ,9ncles- Aowling and ammond- $%%;- pg .;23
Erisaffe ,$%%(2 argues that loyalty is not Rust a'out 'ehaviour- MIf a 'uyer has a cognitive rule- +'uy the lowest priced 'rand!- and 'rand B is always lowestthey look 'ehaviourally loyal to B over time3 9ntil 'rand A enters the market at a lower price3 Then the customer switches to show repeat purchase of A- until market prices change again3 To which are they loyal- the 'rands- or the decision ruleF True loyalty is not Rust 'ehaviouralP3 Barnes ,$%%$2 claims that Mrepeat 'uying does not make loyalty O3 Loyalty is essentially an emotional concept- like relationships- and yet many firms seem not to understand or appreciate this3 Many 'usinesses continue to define loyalty in 'ehavioural termsP3 "urthermore Barnes ,$%%$2 also cites that- MThere is a great tendency in 'usiness to measure or define loyalty entirely in 'ehavioural terms * num'er of visits- fre4uency of visits- total spend- share of
1%
8hapter Two H Literature )eview category spend- num'er of years as a customer- etc3 There is a tendency to confuse loyalty with retention * two concepts that are related- 'ut certainly not the same thing3 )etention is a 'ehavioural conceptN loyalty is not3 A focus on retention creates a high*risk situation where a company may think its customers are a lot more loyal than they really are3 Bhy- then- do some 'usinesses define loyalty primarily if not e5clusively in 'ehavioural termsF The answer is often as simple as that!s what we are a'le to measure most easily3 In fact- many companies today capture such information automatically every time a customer interacts with the firm3 To o'tain a list of our most +loyal! customers- we simply re4uest the information from the customer data'ase3 Loyalty defined 'ehaviourally is also a much easier concept to understand- without having to get into all that consumer psychologyP3 7f the various definitions- the characterisation deemed to 'e the most appropriate when discussing the Tesco 8lu'card has 'een cited 'y um'y and unt ,$%%;- pg .23 It has 'een suggested that day*to*day life loyalty suggests Memotional commitmentP and Mmonogamy: one choice a'ove all elseP3 In comparison retail loyalty implies on Mlooking to achieve a little e5tra goodwill- a slight margin of preference- an incremental shift in 'uying 'ehaviourP3
/(8
oyalty $arketing
MLoyalty marketing can 'e defined as the management process of identifying best customers and utilising customer data and insight to create- retain and grow profita'le relationshipsP ,I8LP- $%%<23 Loyalty marketing is often e5pressed in a manner of ways- such as relationship marketing- one*to*one marketing- customer*centric marketing and fre4uency marketing3 owever as commented 'y Auffy ,(..&- pg ;1<21(
8hapter Two H Literature the appropriate term should 'e loyalty marketing)eview as Mloyalty is the 'usiness o'Rective3 Bhat we seek to achieve here is loyaltyP3
1$
)egardless of the idiom- loyalty marketing is an approach 'ased on strategic marketing and has 'een e5pressed as the Msine ua non of an effective 'usiness strategyP , eskett- $%%$- pg 1<<23 The fundamental aim is to define profita'le 'ehaviour and conse4uently manage this relationship 'y designing a range of initiatives to maintain and influence profita'le 'ehaviour3 )epeat purchase is rewarded and a channel of communication with customers is facilitated to encourage further repeat purchase3 M8ustomer loyalty programs are coordinated- mem'ership 'ased marketing activities designed to enhance the 'uilding of continued marketing e5changes among pre* identified customers toward a sponsoring 'rand or firm3 Loyalty programs use targeted communications and customise the delivery of 'randed goods and services to 'uild stronger 'onds with the sponsoring 'rand#firm that would result without such programs3 7ften 'ased on cumulative 'rand purchases- loyalty programs enhance value proposition offerings to preserve active customer statusP ,Lacey and Sneath- $%%=- pg ;<.23 MThey allow marketers to capture detailed transactional and preference customer data'ases3 These data'ases can 'e used to determine customer valuedefine specific marketing strategies for finite customer segments- and model customer attrition and intervention strategiesP ,Lacey and Sneath- $%%=- pg ;=(23 9ncles- Aowling and ammond- ,$%%;- pg .$2 claim that the Mtwo aims of customer loyalty programs stand out3 7ne is to increase sales revenue 'y raising purchase#usage levels- and#or increase the range of products 'ought from the supplier3 A second aim is more defensive H 'y 'uilding a closer 'ond 'etween the 'rand and current customers it is hoped to maintain the current customer 'aseP3 Eordon ,(..&- pg $%2- has criticised loyalty marketing as programs that Mtypically result in another piece of plastic in your wallet to encourage more customer patronageP. owever- Mseveral kinds of scheme are currently run in the retail industry- from card schemes- special services- and customer maga6ines to customer panelsP ,Bright and Sparks- (...- pg ;1(23 11
7f the a'ove e5cerpts it can 'e empathised that the most fre4uent used customer reward programs employed are loyalty cards- given their a'ility to identify fre4uent 'uyers and segment the market3 um'y and unt ,$%%;- pg (/2 have argued that it should not 'e contended that card*'ased customer reward programs are credi'le alternatives to 'eing offered e5cellent serviceinnovative products and services or the right price3 All of which can develop loyalty3 MThe important point is that these initiatives and a card*'ased loyalty scheme are not mutually e5clusiveP3 )ayner ,(..=- pg &2 identifies customer reward programs as a Mmechanism for identifying and rewarding loyal customersP3 Sharp and Sharp ,(../- cited in Lacey and Sneath $%%=- pg ;<.2- have commented that Mloyalty programs are set apart from other forms of promotions 'y their long*term nature and deli'erate emphasis on preserving customer retention and intensifying purchase fre4uencyP3 They work 'y using a process of operant conditioning theory3 M7perant conditioning refers to a systematic program of rewards and punishments to influence 'ehaviour or 'ring a'out desired 'ehaviour O3 It relies on two 'asic assumptions a'out human e5perience and psychology: ,(2 a particular act results in an e5perience that is a conse4uence of that act and ,$2 the perceived 4uality of an act!s conse4uence affects future 'ehaviourP , eil- $%%=23 7perant conditioning is 'ased on the concept that Mif a given 'it of 'ehaviour has a conse4uence of a special sort- it is more likely to occur again upon similar occasionsP ,Skinner- (./&- pg (.23 7perant conditioning deals with learned and not refle5ive 'ehaviour and the procedure occurs as individuals learn to perform 'ehaviours that produce positive outcomes3 Applied to retail organisations- over time consumers associate with companies that reward them- the knock on effect is they will choose to reiterate to 'uy products that fulfil their own needs3 Implemented customer reward programs- points and the incentives offered all act to influence and strengthen consumers! 'ehaviour3 It can 'e remarked that this 'ehaviour is 1;
8hapter Two H Literature )eview not generic amongst all consumers and that some customers are not affected or influenced 'y the prospect of rewards3 Tapp ,$%%<- pg- ($=2 has
1<
8hapter Two H Literature )eview commented- Mgiven the hue and cry a'out loyalty over the last decade- let us 'e clear * the prevailing evidence is that a'solute loyalty cannot 'e regarded as the norm in most marketsP3 9ncles- Aowling and ammond- ,$%%;- pg .<2 claim that Mto increase sales 'y
enhancing 'eliefs a'out the 'rand and strengthen emotional commitment of customers to their 'randP- companies need to move Mcustomers up a +loyalty ladder! through image*'ased or persuasive advertising and personal service ,recovery2 programs are fre4uently used tacticsP ,Brown- $%%%N Bhite and Schneider- (..& as cited in 9ncles- Aowling and ammond- $%%;- pg .<23
Payne ,(..;- pg $.*1%2- has constructed the M8ustomer Loyalty LadderP which illustrated that the goal of loyalty marketing is Mkeeping and improving the relationship with the customerP3 /(8(' The Customer oyalty adder
1=
"rom the a'ove diagram each rung of the ladder shows the priority in which tasks should 'e undertaken in order to accomplish loyalty3 Payne has o'served that companies need to focus on improving their relationship with each customer and Mprogress them up the ladderP rather than converge on individual sale ,Payne- (..;- pg 1%23 Loyalty marketing is not undertaken 'y every organisation- )eichheld ,cited in "innie and )andall- $%%$- pg $=2 has commented that some companies do not view loyalty marketing as an Mo'Rective- 'ut a duty and a mustP3 "urthermore )eichheld ,cited in Tapp- $%%<- pg ($=2 asserts that- Multimately the key to profita'ility was the high retention of the firm!s e5isting- sta'leprofita'le customersP3 Additionally- Tapp ,$%%<- pg (/$2 construes that- Ma lot of fre4uent*purchase 'ehaviour ,e3g3 supermarket goods2 is 'ased on +repertoire! purchasing- in that customers retain a 'asket of 'rands which they Rump 'etween in a +polygamous! fashion O3 The clear conclusion from these pieces of work is that e5clusive 'rand loyalty cannot 'e regarded as the norm in most marketsP3 9ncles- Aowling and ammond- ,$%%;- pg .<2 conclude 'y claiming Mloyalty programs are also designed to strengthen commitment and create velvet handcuffs to 'ond the customer to the 'randP3 The num'er and similarity of loyalty programs employed today has caused concern and rather than creating or adding towards customer loyalty it can argued that they are actually causing confusion and apathy and stimulating Mloyalty overloadP ,Tapp$%%<23 Additionally- 9ncles- Aowling and ammond ,$%%;- pg (%$2- claim that Mwhen widespread copying happens- any 'enefit gained is likely to 'e ephemeralP3
1/
8hapter Two H Literature )eview /(. The Tesco Clu5card as a oyalty $arketing Tool
MLoyalty schemes tend to 'e most useful in fre uent purchase markets O3 And also commonly found in markets where the core product is a commodity and companies have great difficulty differentiating themselvesP ,Tapp- $%%<pg $/;23 The amount of customer reward programs that has 'een introduced 'y retailers and service providers has 'ecome more widespread in recent years3 Byrom et al. ,$%%(2 suggests that there is over (<% such schemes currently in the 9: with a result of appro5imately ;% million cards in current circulation3 Stone ,$%%;- pg (.$2 comments that- MAround &% per cent of 9: households participate in at least one customer loyalty scheme3 The average consumer participates in three schemes3 In the grocery market- Tesco claims a Dfirst mover advantageD not in the sense of having a scheme 'ut in the sense of 'eing the first where the scheme is a strong part of a transformed marketing approachP3 M istorically information has 'een linked to e5change theory , irschman(.&%2- where'y consumers are willing to e5change their personal information in order to o'tain other resources- such as monetary savings or enhanced services O3 In the case of loyalty programs- participating customers are offered an enhanced value proposition- and in return firms will 'e given access to personal information that can 'e used to further refine strategies and tacticsP ,Lacey and Sneath- $%%=- pg ;=(23 Bhen a customer Roins a customer reward program their details are entered into a data'ase in which further transactions of their purchases are recorded 'uilding a profile of purchasing ha'its3 MIn e5change for registration- the customer receives points that can 'e used in full or part payment for products or servicesP ,)owley$%%<- pg (.<23 Mauri ,$%%1- pg (1*(;2 has commented that- Mthe technology of loyalty cards 1&
8hapter Two H Literature )eview allow retailers to transform cold data on consumer 'ehaviour into warm relationships and
1.
8hapter Two H Literature )eview eventually into a genuine loyalty founded on mutual understanding and trust3 A warm relationship is also a learning relationshipP3 A prologue with regards to the Tesco 8lu'card has already 'een covered in section $31 of this thesis3 The 8lu'card is viewed 'y Tesco as a way of saying thank you to its customers 'y allowing them to earn points through Mmeeting everyday needs and undertaking everyday activitiesP ,)owley- $%%<- pg (.&23 M8lu'card is designed to give you something 'ack for shopping with TescoP ,http:##www3tesco3com23 As the 9:!s largest retailer and given the considera'le customer 'ase- the Tesco 8lu'card accumulates and records information on a si6a'le population of the 9: on an astounding 'asis3 It is estimated that on eight of every ten trips to Tesco- shoppers use a 8lu'card3 There are in the region of $< million 8lu'cards in e5istence which represents (; million householdsN resulting in more than (( million active cards ,Simm- $%%/23 As commented 'y >enkinson ,(..<2- loyalty cards are also a'out the collection of customer data- Min a 'onus program- the 'onus is the price for the information that I get3 I 'uy knowledge through it- not loyalty- 'ecause loyalty is not purchasa'leP3 Bith every swipe of a loyalty card at a point of sale- the retailer is recording the entire transaction in detail: from the name of the shopper- the time they shopthe shop they visited and the entire contents of their trolley ,"ield (../23 Langenderfer and 8ook ,$%%;- cited in Lacey and Sneath- $%%=- pg ;<&2have raised the issue that Mfor customers who participate in loyalty programmes- there is potential for increased concern a'out the misuse of personal information and loss of control over how information is 'eing collected and disseminatedP3 Simm ,$%%/2 remarks- MThe 8lu'card ena'les Tesco to keep a record of each holders name- age- address- telephone num'er and email3 The company knows each holders dietary preferences and the make*up of their family3 It keeps track of e5actly everything a cardholder has ever 'ought- from which store- and the precise date and time of each purchase3 "rom the data- Tesco can guess whether you had a lonely singles ;%
8hapter Two H Literature )eview night in- or threw a party at the weekend3 It will know if you have a drink pro'lem- 'uy
;(
8hapter Two H Literature )eview condoms- whether youDre a Runk*food addict- hooked on painkillers- or have an undue fondness for tinned pineapple3 The card will keep a record of any complaints made or other communication with the store- and any additional market research you have taken part in3 The information helps Tesco to typecast its customers 'y analysing their +life stage!- whether student- young family or retired3 It assesses how much they are worth to them- 'y spending and loyalty3 It works out if they are +upmarket!- +market! or poor ,or- as Tesco euphemistically calls this category+cost* conscious!3 Being a'le to classify groups in this way has helped Tesco 'ecome the 9:!s dominant retailerP3 Bith the vast range of product offerings from Tesco such as financeinsurance- mo'ile phone services in conRunction with core food and non*food products- the message is MTesco is an everyday e5perienceP ,)owley- $%%<pg (..23 MAn important component of many loyalty programs is the cope for cross*selling- in an attempt to increase share*of*wallet- rather than market share ,Peppers and )ogers- (../23 Loyalty*program mem'ers are encouraged to 'uy products they would not normally have 'ought from that provider3 In essence- the loyalty program is seen as a 'rand e5tensionP ,9ncles- Aowling and ammond- $%%;- pg (%%23
Aue to the success of the 8lu'card scheme- addition multiple 'rands such as Avis and Powergen#037G energy have Roined to align themselves with the 8lu'card 'rand3 Swaminathan and )eddy ,$%%% as cited 'y Lacey and Sneath- $%%=- pg ;<.2 have mentioned that Mloyalty programs supported 'y multiple participants offer increased customer value 'y accommodating a 'roader scope of 'usiness and organisational value due to the sharing of program costsP3 The strength of the Tesco 8lu'card image was highlighted in the Powergen 8orporate )esponsi'ility )eport ,$%%12 which notes- MIn $%%1- Powergen Roined Tesco!s 8lu'card scheme as a key facet to our approach to customer loyalty3 Tesco 8lu'card demonstrates our focus on customersP3 ;$
8hapter Two H Literature )eview 8api66i and "erguson ,$%%<- pg /$2 descri'e the loyalty marketing industry as having Mthe telltale characteristics of a mature marketP- principally in the 9: where Mprogrammes look the same everywhereP3 The 8lu'card model although not uni4ue has firmly em'edded itself as a customer reward program with multiple relationships- Me5tending 'eyond the simple relationship 'etween Tesco and their customersP ,)owley $%%<- pg (.&23 It should also 'e mentioned that in addition to the 8lu'card scheme- Tesco also employ other marketing tools to create loyalty3 Approaches such as lower prices on key products- in*store maga6ines or value added approaches in service or store layout are all utilised3 owever- with all this added value and as commented 'y Parker and Borthington ,$%%%- pg ;.(2- MRust as a shopper e5pects to 'e offered trolleys at the entrance to a supermarket he#she will e5pect some sort of +reward! to 'e offered at the check*outP3
/(0
The Relationship 5etween oyalty and Satisfaction
Much research has 'een carried out 'y scholars into the importance of customer satisfaction3 :otler ,$%%%2 defined satisfaction as Ma person!s feelings of pleasure or disappointment resulting from comparing a products perceived performance ,or outcome2 in relation to his or her e5pectationsP3 )eichheld ,(..=- pg 1&(2- views that Mcustomer satisfaction is the key to securing customer loyaltyP- this hypothesis has remained largely unsu'stantiated and is far from ro'ust3 As argued 'y Gewell ,$%%%- pg 1%2 who claims that customers today demand more that Msimple satisfactionP for their loyalty and that Mmost companies think a +satisfied customer! will 'e a loyal customer3 That may have 'een true at one time- 'ut it!s not nowP3
;1
8hapter Two H Literature )eview Bhat can 'e esta'lished is that satisfaction can lead customers to Mtreat their primary store as a safe 'et in their attempt to reduce their perceived risk of disappointment when shoppingP ,)eselius- (./(23 +8ustomer satisfaction leads- 'y linear progression- to retention#loyalty and ultimately to profita'ility! , allowell(..=23 SUderlund ,(..&2- e5pands on this theory 'y accepting for a positive association 'etween loyalty and satisfaction- 'ut additionally o'serving that Mincreasing satisfaction does not produce an e4ual increase in loyalty for all customersP3 Satisfaction does not continually produce in retention- similarly dissatisfaction does not necessarily result in defection3 There is no evidence to suggest that satisfaction alone is a significant factor in influencing loyalty3 owever- satisfied customers can help form the 'ase of any successful 'usiness and result to repeat purchases- 'rand loyalty- and positive word of mouth e5posure , oyer and MacInnis- $%%(23 Bhat this demonstrates is that the correlation 'etween customer satisfaction and customer loyalty is neither clear*cut nor linear- with satisfied customers still defecting3 Vairi ,$%%%2 has commented on numerous studies that have 'een carried out to e5amine the impact of customer satisfaction on repeat purchase- loyalty and retention3 The end result is they all suggest a similar message in that: satisfied customers are likely to share their positive e5perience with appro5imately five or si5 people and dissatisfied customers are likely to tell another ten people of their unhappiness3 In addition gauging dissatisfied customers can 'e difficult since many customers will not complain and also to differences in the industry sectors3 It is vital that the distinction 'etween satisfaction and loyalty is noted since the two are clearly different3 Auffy ,$%%(- pg 1=2 'elieves satisfaction is a starting point- remarking that Mit is essential to get you in the race- 'ut it!s no longer enough to make you a winnerP3 The importance of satisfaction should not 'e overlooked and the conse4uences of not satisfying customers can have severe conse4uences to 'usinesses3
;;
8hapter Two H Literature )eview The importance of customer satisfaction has 'een reinforced 'y La Bar'era and Ma6ursky ,(.&12 who commented that- Msatisfaction influences repurchase intentions whereas dissatisfaction has 'een seen as a primary reason for customer defection or discontinuation of purchaseP3 oweverMcIlroy and Barnett ,$%%%2 argue- Meven if customers are satisfied with the service they will continue to defect if they 'elieve they can get 'etter valueconvenience or 4uality elsewhere O3 Satisfaction is a necessary 'ut not a sufficient condition to loyalty3 In other words- we can have satisfaction without loyalty- 'ut it is hard to have loyalty without satisfactionP3 Miranda et al ,$%%<- pg $1%2 sustains that loyalty does not result from satisfaction alone3 MBreakaway customers may not have 'een dissatisfied with the service provided from their primary storeN it is simply that it did not insulate them sufficiently from switchingP3 This is especially significant to any 'usiness operating in a highly competitive market with many choices and low customer switching costs- as commented 'y Best ,$%%<- pg (=2- MErocery storerestaurant- and 'ank customers can switch 4uickly if they are not completely satisfiedP3 It is the authors 'elief that defecting customers may not have 'een dissatisfied with the service they received from their primary store- it is purely that the store did not insulate them ade4uately from switching3 It was discovered that loyalty was influenced 'y several factors such as price- level of service- travel distance and reward programs3 This area has 'een considered in chapter four of this thesis3
/(2
"oes oyalty Result to %rofit<
M"irms employing loyalty programs should e5pect them to 'e profita'le3 7n the cost side of the profit e4uation- accurate estimates are difficult to o'tain H even within corporationsP ,9ncles- Aowling and ammond- $%%;- pg (%(2
;<
8hapter Two H Literature )eview The costs involved with e5ecuting and sustaining a customer reward program are notoriously high3 Investment in technology means millions are 'eing spent on software- hardware and personnel3 Such schemes can take years to esta'lish and if successful can reap dividends to an organisation3 8larke ,(../- pg (;/2 has noted that Mif it is well planned and aimed at the right customers- it can pay for itself many times overP3 The sheer competitiveness of the food retailing industry ensures that maintaining market share and increasing profit is an invaria'le and gruelling campaign among maRor players3 devotionP3 The association 'etween loyalty and profit and the economics of customer loyalty has 'een recognised 'y numerous scholars and studies3 Anton ,(..=2 statesMBhen you can increase customer loyalty a 'eneficial +flywheel! kicks inpowered 'y: increased purchases of the e5isting product- cross*purchasing of your other products- price premium due to appreciation of your added*value servicesreduced operating cost 'ecause of familiarity with your service system and positive word*of* mouth in terms of referring other customers to your companyP3 )eichheld and Sasser ,(..%2 concluded that as a customer!s relationship with a company e5tends then profits rise3 Bowen and 8hen ,$%%(2 have stated MIt is commonly known that there is a positive relationship 'etween customer loyalty and profita'ility3 Todaymarketers are seeking information on how to 'uild customer loyalty3 The increased profit comes from reduced marketing costs- increased sales and reduced operational costs3 "inally- loyal customers cost less to serve- in part 'ecause they know the product and re4uire less information3 They even serve as part*time employees3 Therefore loyal customers not only re4uire less information themselvesthey also serve as an information source for other customersP3 ;= owever- Butscher ,$%%$- pg 12- has noted that Malthough there are thousands of programmes in e5istence- very few create real loyalty and
8hapter Two H Literature )eview To further the union 'etween loyalty and profit- aywood ,(.&.- cited in McIlory and Barnett $%%%- pg 1;/2 notes- M'uilding customer loyalty has a direct impact on profita'ility and past research has claimed that it can 'e five times more e5pensive to o'tain a new customer than to retain oneP3 In a Mgeneration of increasingly promotion*literate customersP , arlow- (../ cited in 0gan $%%(- pg 1&(2- the su'stance and worth of word of mouth communication is essential3 8larke ,(../- pg (;=2 points out that making customers more loyal will facilitate them to Mremain as customers for longer'uy more- will pay premium prices and- most importantly generate e5tra 'usiness through referralsP3 Today!s consumers know the fundamental messages and aims of promotions designed to get them to part with their cash3 Personal recommendations from friends- family or colleagues are perceived as a more relia'le form of endorsement and assurance3 Bith this perception the customers themselves are a marketing resource through referrals3 MLoyalty is a conse4uence of creating value for customers and profit is a conse4uence of loyaltyP ,Tapp $%%<- pg (/123 MProfita'ility is determined 'y margins that depend on a wide mi5 of factors- of which loyalty is oneP ,Aowling and 9ncles (../23 The connection 'etween loyalty and profit is apparent and may initially appear to 'e rather simplistic3 owever as mentioned- consumers are 'ecoming increasingly more savvy- the internet has allowed an increase in suppliers of goods and services to 'e utilised and all manner of price comparison we'sites and forums to appear where mem'ers post deals for all variety of goods and services resulting in sensitive price conscience consumers3 MThe Internet makes a 'uyers search more efficient and encourages rational shopping versus a more emotional shopping in 'rick and mortar store- which appeals to our sensesP ,Trehan $%%=23 :han ,(..&2 is of the same opinion- stating Mthat consumers are smarter than marketers generally perceive- and are actively manipulating suppliers for their own endsP3 0gan ,$%%(- pg 1&(2 argues that consumers are taking advantage of ;/
8hapter Two H Literature )eview suppliers and Rumping from one to another to get the 'est deal they can3
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/(')
"o Customer Reward %rograms "eli7er ong Term<
MLoyalty programs are a marketing strategy 'ased on offering an incentive with the aim of securing customer loyalty to a retailer3 Achieving rewards is related with purchasing fre4uency- so this type of program are also called fre4uent purchase programs ,Shoemaker and Lewis- (...N Long and Schiffman- $%%%N Bell and Lall$%%$2 or reward programs ,:opalla et al3- (...N :im et al3- $%%(2P ,EWme6Arran6 and 8illXn $%%=- pg 1&/23 Eiven the popularity of loyalty programmes and as suggested 'y Byrom et al. ,$%%(2 that there are over (<% such schemes currently in the 9:,$%%;- pg um'y and unt
(;2 state Mthere have 'een more loyalty programmes that have failed than succeededP3 Aespite the considera'le growth in customer reward programsone of the most de'ated areas is Rust how successful are loyalty programmes in delivering and do they actually create value to either 'usinesses or consumers3 Aetermining the success of a customer reward program is very su'Rective in that it depends on the goals that were set and what echelon of achievement is a loyalty programme considered to 'e a success3 There are many factors at play such as how one can Mtotally isolate the effect of one stimulus from all other factors that could have influenced the target factorP ,Butscher- $%%$- pg (;%23 In addition customer preferences and circumstances change over timeas well as 'eing e5posed to a whole host of advertisement- promotion and other loyalty programmes3 M8onsumers are most likely to participate in programs they 'elieve offer e4uita'le relationships and will- ultimately- 'ase their decision to participate in loyalty programs according to their perceptions of fairnessP ,Lacey and Sneath- $%%=- pg ;=$23 9ncles- Aowling and ammond ,$%%;- pg (%%2 claim that Monly a truly ;.
8hapter Two H Literature e5ceptional program will change the purchasing )eview 'ehaviour of customers to increase sales revenues significantlyP3
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8hapter Two H Literature )eview As mentioned- Tesco is the num'er one supermarket retailer in the 9: and um'y and unt ,$%%;- pg 12 have commented that MTesco may well have got to this envia'le position without 8lu'card H 'ut it could not 'e done so as 4uickly or as cheaply as it has done without the customer data and insight that 8lu'card provides3 The information has guided almost all of the key decisions the management team have made in recent times- reducing the risk of taking 'old new initiativesP3 Many critics and scholars 'elieve the customer reward program phenomenon to 'e a 'ri'e3 Parker and Borthington ,$%%%- pg ;.=2 have commented that the term +loyalty card! is a misnomer and that the customer!s loyalty is not for sale3 It cannot 'e 'ought 'y organisations or deals3 To further this argument- 0gan ,$%%(- pg 1&$2 declared Mloyalty is fleeting and cannot 'e 'oughtP3 )eichheld ,(..= cited in Tapp- pg (/%2- raises the issue that Mloyal customers ignore vouchers and coupons- and are less price sensitive on individual items than new customers3 There is an interesting irony here: many companies have +loyalty schemes! which offer lower prices via points systems in return for loyal customN 'ut companies whose customers only stay with them 'ecause of the customer reward program don!t have genuinely loyal customersP3 )eichheld ,(..=2 found that +old! customers pay higher prices than new ones 'ecause fundamentally they are happy with the value they are getting from the company3 )eichheld ,$%%$- cited in "innie and )andall2- also argues that loyalty programmes can assist in reducing 'usiness costs and increasing profit as Mreturn customers tend to 'uy more from a company over timeP- Mrefer others to your companyP and Mpay a premium to continue to do 'usiness with you rather than switch to a competitor who they are neither familiar nor comforta'leP3 )eichheld ,(..=2 has constantly maintained that companies can!t 'uy loyalty3 They can only earn it through consistently creating superior value for their customers3 There has 'een much criticism of customer reward programs and that Mmost studies claim lower prices- rather than loyalty schemes- will keep customers <(
8hapter Two H Literature )eview loyalty programs have coming 'ack for moreP ,Matheson- $%%123 Additionallyfaced Mmounting
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8hapter Two H Literature )eview pressure concerning their use as a facilitator of specific customer information and potential to discriminate against non*mem'er customers 'ecause of greater marketing resource allocations shifted toward selective customersP ,Lacey and Sneath- $%%=- pg ;=$23 Bhen considering the success of loyalty programmes Msome indices are easy to measure- such as num'er of mem'ers- increase in e5penditure on loyalty programme products- and response to special offers3 Indices that are more difficult to measure include a mem'er!s repeat purchase 'ehaviour or increase in 'rand loyaltyP ,Butscher- $%%$- pg (;123 MPerhaps the greatest 'enefit o'tained from loyalty programs resides in the data mining and knowledge 'ase that firms can use to develop statistical models to improve customer loyalty- support customer service- and develop new offerings to help reduce defection and increase customer lifetime valueP ,Bansink- $%%1- cited in Lacey and Sneath- $%%=- pg ;=(23 04uipped with this specific information- organisations can design specific communications and product mi5 offerings3 MLoyalty programs represent an alternative to mass*market promotion since firms have the a'ility to more precisely target an increasingly fragmented customer 'ase- and communicate customised and relevant vale propositions and marketing messages to individual customersP ,Lacey and Sneath- $%%=- pg ;=(23 Bhat can 'e esta'lished is that loyalty programmes can provide retailers with a mechanism and Rustification for individual customer data3 In such fiercely competitive markets- as commented 'y Stone ,(..;- pg 1/2- Mknowing who the 'est customers are- what they 'uy- and how often provides a secret weaponP3 It is estimated that as a result of the 8lu'card scheme Tesco has appro5imately (%%-%%% different promotional messages which reflect the 'uying ha'its and preferences of its customers3
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8hapter Two H Literature )eview Pressey and Matthews ,cited in Tapp- $%%<- pg (/(2- argue that Mdespite the recent use of loyalty cards and data'ase marketing techni4ues 'y 9: retailers- most transactions are +discrete- short*term- one*off actsP3 8ustomer reward programs can also direct 'usinesses to overlook divisions of the 'usiness which may need attention- as noted 'y "ill ,$%%$- pg =/$2- Min $%%%the num'er of in*store promotions fell from /%% to Rust $%%- reflecting the need to provide for those whom are price sensitiveP3 Although it is clear that customer reward programs can create value through personalisation- they are increasingly attracting negative remarks3 7!Malley ,(..&- pg <$2 descri'es them as Mlittle more than sophisticated sales promotionP3 um'y and unt ,$%%;- pg (12 profess that customer reward programs can destroy value and encourage Ma +Big Brother! cultureP implying that Mthe relationship isn!t trust- it is 'ullying on 'ehalf of corporate giants who won!t give discounts unless you give up your right to privacyP3 This hints that Mloyalty relationships are more appropriate to 'usiness to 'usiness markets rather than consumer markets ,Aowling and 9ncles(../23 To further this perception- MThe notion of customer loyalty is important to marketing people 'ut not- on the whole- to customers3 8ustomers don!t see why they should accept a good offer from a new supplier Rust 'ecause they are satisfied with their present oneP ,Mc8orkell- (../ cited in Tapp- $%%<- pg (/$23 "rom the a'ove criti4ue and given the fact customer reward programs are Mcostly compared to other promotionsP ,Aowling and 9ncles- (../23 7ne may 4uestion that perhaps the marketing 'udget funds are 'etter spent elsewhere3 This is palpa'le in the market place today with many 'usinesses proRecting funds into lowering prices- developing own 'rands and 'ranching out into other markets and services3 Eiven the sheer num'er of organisations participating and operating their own customer reward programs and consumers owning more than one loyalty card- it is evident that achieving loyalty is increasingly difficult3 <;
8hapter Two H Literature )eview M8learly- loyalty programs can 'e used to convey prestige to customers and make them feel special- important and appreciatedP ,Morgan et al3- $%%% cited in Lacey and Sneath- $%%=- pg ;<.23 M owever the effect on the firm!s non*participating customers can lead to dissatisfaction and alienation with the firm3 Moreover- customers who participate in the program might 'ecome frustrated- and perhaps even disenfranchised- due to their ina'ility to 'enefit from those programsP ,Aownling and 9ncles- (../ cited in Lacey and Sneath- $%%=- pg ;<.23 Aespite the criticism- loyalty programmes if e5ecuted properly and maintained can 'e hugely 'eneficial to the retailer3 Tesco have always maintained that the 8lu'card was a simple Mthank youP for customers who shop at their stores and as such offered the promise of rewards to them3 owever- 9ncles et al3- ,$%%1- cited in Lacey and Sneath $%%=- pg ;=(2 states- Mthe ultimate marketing o'Rective 'ehind loyalty programs is their use as a primary data*gathering platform that can help improve the efficiency and effectiveness of a firm!s marketing initiativeP3 In actuality they are Meffectively locking them into the loyalty programme and preventing them from moving to a competitor 'randP ,"ill- (...- pg <=123 Barnes ,$%%$2 also concurs that- MThe 'asic premise 'ehind such programs is to reward customers for giving the company a greater share of their 'usiness3 The rewards are e5trinsic * points- +free! merchandise or trips3 Bhere true loyalty e5ists- the rewards are largely intrinsic3 7ne shopper recently o'served in an interview that the fre4uent*shopper +clu'! of which he is a mem'er feels nothing like any other clu' to which he has 'elonged3 It never meets3 e rarely gets to associate with other mem'ers3 Such programs often lock customers in3 They create 'arriers to e5it- 'ut they don!t often lead to true loyaltyP3
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Conclusion
It was suggested that there was a difference in every day loyalty and retail loyalty3 Loyalty was recognised as 'eing emotional- 'ehavioural or attitudinal and defined as Mlooking to achieve a little e5tra goodwill- a slight margin of <<
8hapter Two H Literature )eview preference- an incremental shift in 'uying 'ehaviour , um'y and unt- $%%1pg .23 MLoyalty
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8hapter Two H Literature )eview marketing can 'e defined as the management process of identifying best customers and utilising customer data and insight to create- retain and grow profita'le relationshipsP ,I8LP- $%%<23 Loyalty marketing was also identified as a M'usiness strategyP , eskett- $%%$- pg 1<<2- which transpires through the theory of operant conditioning3 Additionally- the long*term 'enefits of a customer reward program and if it creates value was analysed3 Loyalty programs are Mdesigned to accommodate individual consumers in the form of added products or enhanced customer service options not generally presented to all of the firm!s customersP ,Lacey and Sneath- $%%=- pg ;<.23 These schemes can offer many 'enefits to the retailer and act as a mechanism and Rustification for accumulating personal data of customers and increasing switching costs Meffectively locking them into the loyalty programme and preventing them for moving to a competitor 'rand ,"ill- (...- pg <=123 It is widely regarded that loyalty is esta'lished through trust3 owever the literature surrounding the su'Rect implies that loyalty schemes# customer reward programs are manipulative and controlling and are Mlittle more than sophisticated sales promotionP ,7!Malley ,(..&- pf <$23 )eichheld ,$%%$- pg $/2 argues that some loyalty programmes are MRust gimmicks to get the ma5imum value e5tracted from a customer 'aseP3 Bhile Parker and Borthington ,$%%%- pg ;.=2 raise the issue of a new strain of customers known as Mpoints RunkiesP who are desperate to gain and save points in order to redeem them for free products or services3 Additionally- Parker and Borthington ,$%%%- pg ;.=2 commented on the knowledge of consumers 'y 4uestioning Mhow ethical is a reward scheme that relies on maintaining the ignorance of the very customers that it wants to see e5hi'iting loyal 'ehaviourP3 Aespite this Mloyalty programs continue to 'e used 'y organisations as marketing tools to support their customer relationship management ,8)M2 strategiesP ,Lacey and Sneath- $%%=- pg ;<&23 Bhat was found was the perception that loyalty could actually lead to customers manipulating suppliers 'y Rumping 'etween organisations to get the 'est deal3
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8hapter Two H Literature )eview "rom the literature review it is apparent that satisfaction and loyalty is not the same thing and they are not mutually e5clusive3 The focus addressed issues that would affect the value of a customer reward program and illustrates the need for an organisation to steer satisfied customers into loyal customers3 It was also determined that organisations operating in market sectors where there is intense competition and similar competitors necessitate the use of loyalty marketing3 PLoyalty schemes tend to 'e most useful in fre uent purchase markets O3 And also commonly found in markets where the core product is a commodity and companies have great difficulty differentiating themselvesP ,Tapp- $%%<- pg $/;23 Aue to the sheer num'er of customer reward programs 'eing offered to customers- it is vital that retailers are more innovative and creative with the rewards they offer3 8api66i and "erguson ,$%%<- pg /&2 imply that some loyalty card mem'ers view the rewards they gain as 'eing opportunities of a lifetime which they have complete control over having commented that the rewards given to customers must appeal on a different level and that customer reward program participants are Mem'racing the idea of redeeming points for an once*in*a*lifetime e5perienceP- specifically Mlifestyle themed rewards that appeal to a mem'ers! dreamP3 The theory is that customers will aspire to collect and redeem more points and thus increase spending3 The use of the M8ustomer Loyalty LadderP ,Payne- (..;2 determined how marketing tasks should 'e prioritised in order for an organisation to accomplish the target of loyalty3 By e5ploring the Tesco 8lu'card model we gain a hypothetical insight into how Tesco are providing an Meveryday e5perienceP ,)owley- $%%<- pg (..2 to their customers3 owever- Mthe oft*cited success of Tesco!s loyalty scheme is difficult to determine 'ecause it was introduced as part of a much 'roader program of new 'usiness development and store ac4uisitionP ,0ast and ogg- (../ cited in 9ncles- Aowling and ammond- $%%;- pg (%$23 <&
8hapter Two H Literature )eview The completion of the literature review has addressed several o'Rectives3 owever there are areas which have 'een identified and do re4uire further investigation3 The main issues is a user profile of the 8lu'card and to realise the differentiation 'etween loyalty in relation to the 8lu'card 'rand- the customer reward programs itself and Tesco3 To which of these factors do loyalty schemes generate true loyaltyF These factors and the remaining o'Rectives of the dissertation will 'e answered and achieve through primary research in the ne5t chapter3
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8hapter Three H )esearch Methodology
Chapter Three
Research Methodology
1()
1('
C*A%T!R T*R!! + R!S!ARC* $!T*O"O O#=

,ntroduction
In order to address all the o'Rectives set out in this dissertation- primary research is essential3 The methodology will illustrate the chosen methods undertaken in order to conduct the primary research3 It will impart Rustification into the chosen method of research and provide assessment to the chosen approach in terms of advantages- disadvantages and limitations3
1(/
Research O56ecti7es
"rom the literature review- several issues were discovered which re4uired further investigation and research3 )eferring to section $3/ in the literature review drawing attention to the perception that a satisfied customer was not necessarily loyal- )eichheld ,(..=2 inRects that Mcustomer satisfaction is the key to securing customer loyaltyP3 owever- Auffy ,$%%(- pg 1=2 descri'ed satisfaction as 'eing a starting point in order to create true loyalty3 The crucial issue raised in the works of these scholars is that it demonstrates the role of the Tesco 8lu'card in 'uilding loyalty- either through the theory that customers simply need to 'e satisfied in order to 'e loyal or through Auffy!s loyalty calculation hypothesis3 In conducting the literature review it was noted there was a wealth of acclaim and admiration for the Tesco 8lu'card scheme3 actually created loyalty3 um'y and owever- despite this positive commendation there appears to 'e a lack of evidence that it has unt ,$%%;- pg (/2 argued that it should not 'e contended that card*'ased customer reward programs are credi'le alternatives to 'eing offered e5cellent serviceinnovative products and services or the right price3 All of which ;&
8hapter Three H )esearch Methodology can develop loyalty3 Much of the literature raised the claims that loyalty is generated and influenced 'y other factors such as price- location- couponsrange of products and staff assistance3 Tesco have 'een vigilant to these factors and the needs of their customers 'y implementing all of the strategies mentioned- in addition to the 8lu'card customer reward program3 Therefore primary research is re4uired to 'e undertaken to determine and esta'lish if the 8lu'card has actually created loyalty3 If it has- then one must determine what factors the customers are loyal towards3 Tesco- the customer reward program or to the 8lu'card 'rand itselfF Section $3= illustrated the view that Tesco sustained the 8lu'card is a straightforward Mthank youP to their customers and it is Mdesigned to give you something 'ack for shopping with TescoP ,www3tesco3com23 owever- from this an area of interest is found concerning customers 'eing less attentive to rewards and instead 'eing more interested in gaining appreciation and recognition from Tesco3 The issue raised here is with regards to the 'uilding of affinity that Tesco has with its customers through the use of specific maga6ine topics or 4uarterly mailings3 The literature review also e5posed that consumers are increasingly 'ecoming more aware- as commented 'y :han ,(..&2- Mconsumers are smarter than marketers perceive- and are actively manipulating suppliers for their own endsP3 0gan ,$%%(- pg 1&(2 supports this view 'y concluding that consumers are taking advantage of suppliers and Rumping from one to another to get the 'est deal they can3 This would suggest that loyalty card schemes are actually allowing consumers to manipulate suppliers for their own needs3 Bith the 4uantity and penetration of customer reward programs currently in operation- the 8lu'card model is not uni4ue with Seth and )andall ,$%%(- pg 1.2 commenting that Tesco Mdid not invent the card nor were they a first moverP3 owever- it is essential to know if the 8lu'card scheme Minsulate,s2 them YconsumersZ sufficiently from switchingP ,Miranda et al3- $%%<- pg $1%23 ;.
8hapter Three H )esearch Additionally the literature review indicated Methodology that consumers have come to e5pect some form of
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8hapter Three H )esearch Methodology reward as part of their routine shopping e5perience ,Parker and Borthington$%%%- pg ;.(23 In addition to the issues raised from the literature review- it was felt that several other o'Rectives were left unresolved3 "rom this the research o'Rectives are: (2 Investigate customer opinions and perception on the Tesco 8lu'cardanalyse and understand their opinions and mind*set3 $2 Eauge the effectiveness of how the gathered information from the Tesco 8lu'card is utilised3 12 )ecognise and identify the main users of the Tesco 8lu'card Scheme3 ;2 Aetermine if the Tesco 8lu'card has actually created loyalty and ascertain what customers are loyal towards3 <2 0sta'lish if the Tesco 8lu'card is actually needed- given the num'er of loyalty initiatives currently employed 'y Tesco to facilitate customer satisfaction3 =2 8onsider the conRecture that consumers are manipulating suppliers for their own needs 'y shopping around and participating in other customer reward programs3
1(1
Selection of Research $ethods
The techni4ue of research methods can 'e divided into 4uantitative and 4ualitative approaches3 As commented 'y 8haroenruk ,$%%/- pg (*$2M4uantitative research is descri'ed 'y the terms +empiricism! ,Leach- (..%2 and +positivism! ,Auffy- (.&<23 It derives from the scientific method used in <(
8hapter Three H )esearch Methodology the physical sciences ,8ormack- (..(23 This research approach is an o'Rective- formal systematic process using numerical
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8hapter Three H )esearch Methodology data findings- it descri'es- tests- and e5amines cause and effect relationships ,Burns T Erove- (.&/2- using a deductive process of knowledge attainment ,Auffy(.&<23P It is primarily concerned with the collection of data using num'ers and measurements3 It seeks to esta'lish relationships 'etween two or more varia'les via a process of statistical methods to o'tain the connotation of the relationship3 According to Malthotra and Peterson ,$%%=- pg (<%2- 4uantitative research is Ma research methodology that seeks to 4uantify the data and typically applies some form of statistical analysisP3 )outinely the data is collected using a premeditated template of 4uestions in the form of a structured 4uestionnaire survey incorporating primarily closed 4uestions with set responses3 MThere are various vehicles used for collecting 4uantitative information 'ut the most common are on*street or telephone interviewsP ,Market )esearch Borld $%%=23 @ualitative research is chiefly concerned with the collection of in*depth information via a process of asking 4uestions to understand how people feel and why they feel as they do ,Market )esearch Borld $%%=23 In*depth interviews- focus group discussions and participant o'servation are common methods used for collecting 4ualitative information3 Bith reference to Proctor ,$%%1- pg <$.2- 4ualitative research methods Musually involve small sampleswhich attempt to elicit descriptive information a'out the thoughts and feelings of respondents on a topic of interest to the researchP3 8haroenruk ,$%%/- pg $2- comments that- M4ualitative research differs from 4ualitative approaches as it develops theory inductively3 There is no e5plicit intention to count or 4uantify the findings- which are instead descri'e in the language employed during the research process ,Leach- (..%23 A 4ualitative approach is used as a vehicle for studying the empirical world from the perspective of the su'Rectnot the researcher ,Auffy- (.&/23 Benoliel ,(.&<2 e5panded on this aspect and descri'ed 4ualitative research as +modes of systematic en4uiry concerned <1
8hapter Three H )esearch with understanding human 'eings and theMethodology nature of their transactions with themselves and with their understandingsP3
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8hapter Three H )esearch Methodology 1(1(' &eatures of >ualitati7e and >uantitati7e Research
Adapted from Geill ,$%%/2 * @ualitative versus 4uantitative research: key points in a classic de'ate3
>ualitati7e
>uantitati7e
The aim is a complete- detailed description3
The aim is to classify features- count themand construct statistical models in an attempt to e5plain what is o'served3 )esearcher knows clearly in advance what he#she is looking for3 )ecommended during latter phases of research proRects3 All aspects of the study are carefully designed 'efore data is collected3
)esearcher may only know roughly in advance what he#she is looking for3 )ecommended during earlier phases of research proRects3 The design emerges as the study unfolds3
)esearcher is the data gathering instrument3 )esearcher uses tools- such as 4uestionnaires or e4uipment to collect Aata is in the form of words- pictures or numerical data3 Aata is in the form of num'ers and statistics3 7'Rective H seeks precise measurement T analysis of target concepts- e3g3- uses surveys- 4uestionnaires etc3 @uantitative data is more efficient- a'le to test hypotheses- 'ut may miss conte5tual detail3 )esearcher tends to remain )esearcher tends to 'ecome o'Rectively separated from the
o'Rects3 Su'Rective * individuals!
interpretation of events is important -e3g3- uses participant o'servation- in*depth interviews etc3 @ualitative data is more DrichD- time consuming- and less a'le to 'e generali6ed3
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In order to achieve the o'Rectives of the methodology- the selected research method to 'e used re4uires the outcome of a com'ination of statistical analysis in addition to an indication with regards to consumers! attitudes and perceptions3 It is often mentioned amongst marketing research literature that 4ualitative and 4uantitative approaches are 'ipolar measurements of data3 The 4ualitative approach places emphasis on gaining in*depth answers from a small num'er of respondents- whereas in contrast 4uantitative approaches accentuates gaining statistical information from a large num'er of respondents3 ,(../- pg owever- Ceal
1;2 has o'served that Msometimes the information is 4ualitative in nature 'ut is presented in 4uantitative formP3 This supports the suggesting that 4ualitative characteristic 4uestions in a survey can 'e collected 'y using open ended 4uestions seeking opinions3 An additional 'enefit of using open 4uestions is that it allows for a multitude of replies Mwhere each respondent can give a personal response or opinion in his or her own wordsP ,8ollis and ussey- $%%1- pg (/.23
"rom the research methods mentioned a'ove it has 'een determined that a 4uestionnaire survey will 'e the most effective and efficient medium in order to achieve the o'Rectives of the dissertation3 Luck and )u'in ,(.&/2 defined a 4uestionnaire as a Mformalised schedule to o'tain and record specific and relevant information with tolera'le accuracy and completenessP3 Bruce ,$%%;pg /2- states that Mthe role of the 4uestionnaire is to elicit the information that is re4uired to ena'le the researcher to answer the o'Rectives of the survey3 To do this- the 4uestionnaire must not only collect the data re4uired- 'ut collect the data in the most accurate way possi'leP3 Additionally- McGa'' ,$%%;- pg (<%2 comments that- M4uestionnaires can 'e designed to determine what people know- what they think or how they act or plan to act O3 The fle5i'ility of the 4uestionnaire results in very few rules to follow in development of the instrumentP3 <=
8hapter Three H )esearch Methodology The decision to use a 4uantitative method over a 4ualitative approach was 'ased on the grounds that a large representative sample is needed3 @ualitative research is principally 'ased on in*depth interviews and focus groups 'ased on non* representative samples3 Therefore this method is regarded to 'e inappropriate to the study3 It is imperative that there is un'iased study and analysis of data3 7ne such possi'le scenario with using a focus group could 'e that an individual could influence other respondents or control the group to a specific direction3 "urthermore- Mgiven the e5tensive training re4uired to conduct a sophisticated 4ualitative studyP ,McAaniel and Eates- $%%=- pg &(2- it is apparent that in order to e5tract the re4uired information the interviewer re4uired a great skill set3 It is acknowledged that focus groups are a useful medium for understanding emotions and attitudes3 owever- 'y using 'oth 4ualitative and 4uantitative techni4ues in the survey- it is felt that this understanding can 'e an achieved to an e5tent on a larger scale and at considera'ly less e5pense3
1(1(/
Analysis of "ata
)esults and analysis of the data using a computer software package known as SPSS ,Statistical Package for the Social Sciences2 can 'e found in appendi5 8 and appendi5 A respectively3
1(3
>uestionnaire "esign MThe 4uestionnaire represents one part of the survey process3 It ishowever- a very vital part of the process3 A poorly written 4uestionnaire will not provide the data that are re4uired or- worse- will provide data that are incorrectP ,Bruce- $%%;- pg /23
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8hapter Three H )esearch Methodology As the 4uestionnaire is the chief data collection tool- it is essential that the 4uestions are appropriate to what this study is intending to achieve3 0mphasis should 'e on using the correct terminology and it should 'e appropriate enough to e5tract the re4uired information from the respondent 'ase3
1(3('
The !ight@Step >uestionnaire Construction %rocedure
McGa'' ,$%%;- pg (<(2 has constructed an 0ight*Step 4uestionnaire construction procedure
Malhotra ,(...- cited in McGa''- $%%;- pg (<(2 claims that in the preparation of a 4uestionnaire Mthe researcher must follow a systematic procedure in order to 'e sure that it fulfils three 'road o'Rectives3 The 4uestionnaire must: (23 Successfully gather information that answers each study 4uestion3 $23 Motivate respondents to answer all 4uestions to the 'est of their a'ility3 123 :eep all potential error to a minimum3P
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8hapter Three H )esearch Methodology Bith this in mind- the a'ove 4uestionnaire construction ta'le has 'een used as a guideline rather than a checklist of steps as M4uestionnaire construction is as much as art as it is a scienceP ,McGa''- $%%;- pg (<(23
1(3(/
Bustification of >uestions
The preliminary intentions for the survey have 'een recognised from the secondary data3 This has identified the issues and areas to 'e addressed 'y providing Ma map for the 4uestionnaireP ,Punch- $%%1- pg 1%23 The validation of the 4uestions used can 'e found in appendi5 A3
1(3(1
>uestion Types and Wording
It is imperative that the 4uestionnaire has 'een constructed using clear and concise terminology- avoiding dou'le*'arrelled 4uestions and Rargon to avoid any unnecessary confusion3 As commented 'y Bruce ,$%%;- pg &2- Ma 4uestionnaire writer who is not familiar with the voca'ulary of a market can very 4uickly come unstuckP3 Additionally the consideration for avoiding 'ias in a 4uestion has 'een noted and the pro'lem if respondent!s ina'ility to evoke has 'een a'ridged 'y keeping the Mreference time periods relatively shortP ,McAaniel and gates- $%%=- pg $/$23 The 4uery of age group and se5 of respondents are used to help meet the o'Rective of 'uilding a profile of the Tesco 8lu'card user3 As age can 'e a sensitive issue it was decided that the use of pre*coded groups was the 'est method3 The 4uestionnaire consists predominantly of 'oth multiple choice and dichotomous closed 4uestions3 It was devised that the multiple choice closed 4uestions allowed <.
8hapter Three H )esearch Methodology respondents to indicate their opinions as well as allowing for more than one response to 'e recorded3 The dichotomous 4uestions were purposely limited to two fi5ed alternatives as this is easier to manage 'ut it also ensures a rapid answer from respondents3 In order to gain a 'etter understanding of respondents! opinions and to allow for a more precise measurement of attitudes- certain 4uestions within the 4uestionnaire will 'e graded using a Likert scale of one to five where Prespondents are instructed to tick the response options that 'est reflect their positions on each itemP ,"oddy- (...pg (<;23 The Rustification adopting a five*point Likert scale is to ensure that respondents have a sufficient choice of responses which 'est represents their feeling and it will also increase the response rate and 4uality of responsesadditionally this approach allows for attitudes to 'e measured and analysed accurately3 The addition of an open 4uestion has 'een incorporated in the 4uestionnaire3 The initiative for this is to allow respondents to use their own words and e5pressions without restricting choice3 "urthermore it will ena'le an opportunity for the interviewer to encourage respondents to develop and e5pand on their answers and reveal more information3 Although analysis of this data will not 'e as straight forward as the closed 4uestions- it was determined that they could support the data o'tained from the previous 4uestions and reveal more information with regards to their motivations and attitudes3
1(3(3
>uestionnaire ayout
8ohen and Manion ,(..;- pg $<&2- commented that Mthe appearance of the 4uestionnaire is vitally important3 It must look easy- attractive and interesting rather than complicated- unclear- for'idding and 'oringO3 it is importantperhaps- for respondents to 'e introduced to the purposes of each section of a 4uestionnaire- so that they can 'ecome involved in it and may'e identify with it3 If space permits- it is
=%
8hapter Three H )esearch Methodology useful to tell the respondent the purposes and foci of the sections#of the 4uestionnaireP3 The 4uestionnaire will commence esta'lishing connection through the introductory statement detailing the topic and the motive for carrying it out3 7nce initial contact is made- the opening 4uestion in the 4uestionnaire will determine if the respondent is 4ualified- i3e3 if he#she owns a Tesco 8lu'card3 If the answer is negative then the 4uestionnaire will 'e terminated to avoid wasting time for either party3 A positive answer will 'e followed 'y a 'rief description of the respondent and multiple choice 4uestions which can 'e answered 4uickly and accurately3
1(3(4
,nter7iewer 7ersus Respondent Completion
The chosen method of data collection is that the 4uestionnaires will act as an initial script where'y the interviewer reads out the 4uestions to the respondent and records the answer they give3 The validation for this method of data collection is so that the interviewer can ensure that the responses received are complete- accurate and facilitates any 4uestions that respondents may field during the survey3 It is vital that care and attention must 'e taken so that no attempt is made to take lead or influence the respondent into giving answers they normally would not give3
1(3(8
Coding
M8oding means assigning a code- usually a num'er- to each possi'le response to each 4uestionP ,Malhotra and Peterson- $%%=- pg ;%/23 This refers to Mthe way the gathered data will 'e coded- ta'ulated- analysed- and interpretedO 8omputers using readily availa'le- easy*to*use statistical software ta'ulate almost all survey results3 "or this reason- most 4uestionnaires are pre!coded ,classification num'ers appear 'eside each =(
8hapter Three H )esearch Methodology 4uestion and each possi'le response2- making data entry simple and less
=$
8hapter Three H )esearch Methodology error*proneO )esponses to open*ended 4uestions are grouped into categories and classes are then translated into numerical form for counting and additional statistical analysisP ,McGa''- $%%;- pg (<123
1(4
Sample Selection %rocedure and Sample Characteristics
It has 'een determined that appro5imately (%% respondents shall 'e drawn from a population of all visitors to Tesco in Gewcastle 9pon Tyne3 The si6e of the sample has had to 'e limited due to availa'le time- money and resources3 This can 'e classified as Mconvenience samplingP in which Mthe sampling selection process is continued until your re4uired sample si6e has 'een reachedP ,Saunders et al3- $%%1- pg (//23 It is felt that pro'a'ility sampling would 'e the most appropriate methodtherefore there is no set criteria for respondents other than that they are Tesco customers3 As commented 'y "ink ,(..<- pg .2- Mevery mem'er of the target population has a known non6ero pro'a'ility of 'eing included in the sampleP3 9sing this process will eliminate any su'Rectivity and ensure a fair method of ac4uiring respondents3 Potential respondents will 'e approached as they enter the supermarket and the pro'a'ility sampling that will 'e employed will 'e a rule of four personswhere'y every forth person that passes will 'e asked to participate3 )egardless of the response the process will start over again3 "urthermore it has 'een determined that potential respondents will 'e approached as they enter the supermarket3 The reason for this is 'ecause potential contri'utors are more likely to participate when empty handed and less likely to 'e in a rush3
=1
8hapter Three H )esearch Methodology The times and dates in which this research was carried out were unfortunately constrained 'y the periods that Tesco allowed3 The 4uestionnaire was carried out on the following dates and times:
"ate C Time th (< April $%%& * .31%am * ((31%am (= April $%%& * .31%am * ((31%am (/ April $%%& * .31%am * ((31%am (& April $%%& * .31%am * ((31%am
th th th
Completed >uestionnaires (; $; (. $$ ($ . TOTA D '))
1(8
Strengths? imitations and 9alidity
The proposed method of collecting data through 4uestionnaires is akin to any form of research- it has its merits 'ut additionally it also contains limitations and issues of validity3 M@uestionnaires have many advantages3 The greatest of these is the considera'le fle5i'ility of the 4uestionnaire3 @uestionnaires can 'e custom* designed to meet the o'Rectives of almost any type of research paperP ,McGa''- $%%;- pg (<%23
1(8('
Strengths
The method of using a 4uestionnaire allows responses to 'e collected in a standardised way- resulting in the data 'eing more o'Rective3 This results in a reduced 'ias and allows respondents to talk freely3 =;
"urthermore the information gathered can 'e presented in numerical and graphical form3 Moreover this would facilitate the platform of a structured logical analysis and- if re4uired- this can 'e re*analysed 'y others3 9sing a 4uestionnaire results in a potentially large representative sample3 Information can 'e gathered from a large portion of a group3 The use of the forth person rule ensures that everyone calling into Tesco on the days and time the 4uestionnaire will take place has an e4ual pro'a'ility of 'eing chosen to carry out the 4uestionnaire3
1(8(/
imitations
M@uestionnaires- like many evaluation methods occur after the event- so participants may forget important issuesP ,Milne- (...23 As commented 'y 8larke and 8richter ,(.&<- pg $/2- Mthere is always a gap 'etween what people say and what they actually doP3 This is valid in all research models nonetheless this factor must 'e taken into consideration when carrying out an analysis of the results3 The time limits imposed 'y Tesco for when the 4uestionnaire can 'e conducted will not 'e (%%Q representative of their customer 'ase3 Aue to the restrictions- data will only 'e o'tained from consumers who happen to visit the store on the specific days the survey is conducted and within the allocated time frame3 Additionally- respondents may answer superficially- however as the 4uestionnaire is designed to 'e completely relatively 4uickly hopefully this issue can 'e avoided3
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1(8(1
9alidity
In the conte5t of 4uestionnaires- validity depends chiefly on relia'ility3 M)elia'ility is a characteristic of the instrument itself- 'ut validity comes from the way the instrument is employedP ,0BB $%%/23 If a 4uestionnaire is shown to 'e unrelia'le then there is no discussion of validity3 Ceal ,(.&/- pg (&=2 commented that validity is Mthe e5tent to which ,the 4uestionnaires2 accurately reflect what they are meant to reflectP3 0BB ,$%%/2 'ack this up 'y citing- Mvalidity refers to whether the 4uestionnaire or survey measures what it intends to measureP3 In an interview situation- validity could 'e compromised 'y an assortment of scenarios and circumstances3 "or e5ample- if respondents are in a rush to complete the 4uestionnaire this could affect their responses3 Additionally- the possi'ility of respondents giving e5aggerated responses or Mfail to interpret the 4uestions as intended 'y its designerP ,Belson- (.&=- pg (123 The proposal of approaching respondents and interviewing them 'efore they enter the store is made on the 'asis that the respondents latest e5perience with Tesco may cause an irrational change in their opinion and thus resulting in inaccurate data 'eing recorded 'y the 4uestionnaire3 This will further enhance the validity of the 4uestionnaire3
1(.
Summary
The method in which the data will 'e collected has 'een defined and acknowledged with validation in this chapter of the dissertation3 9sing the 4uestionnaire as a research tool and com'ining 4uantitative and 4ualitative research methods will answer the aims of the study3 The ne5t chapter presents the research findings and provides analysis of the results3
==
8hapter "our H )esearch "indings and Analysis
Chapter Four
Research Findings and Analysis
3()
3('
C*A%T!R &O-R + R!S!ARC* &,N",N#S AN" ANA =S,S

,ntroduction
The su'se4uent chapter will present the findings gained from the primary research conducted via the 4uestionnaire ,appendi5 B2 and interpret the results3 The results from the 4uantitative research have 'een correlated and investigated3 This segment of the study provides the fundamental information and data re4uired in order to meet the aims of the dissertation3 Individual fre4uency ta'les of the results can 'e found in appendi5 A
3(/
Analysis
"rom the research methodology it was determined that there are several areas that need to 'e esta'lished3 This has ena'led the analysis to 'e divided into separate sections in order to achieve each o'Rective3 The techni4ues employed in order to present the findings of the analysis include fre4uency ta'les and cross ta'ulation3
3(/('
-ser %rofile of Tesco Clu5card Respondents
The secondary research highlighted a distinct lack of information with regards to the characteristics of the fundamental users of loyalty cards3 It has therefore 'een determined that an ideal starting point is to identify and esta'lish a user profile of the selected sample3 9sing the rule of every forth person helped ensure that the sampling was random3
=;
&igure 3(/('('
Please choose your Gender: Cu,ulative Fre/uency 0alid Male Fe,ale Total !$ ." "&& Percent !$1& ."1& "&&1& 0alid Percent !$1& ."1& "&&1& Percent !$1& "&&1&
"igure ;3$3(3( shows the results from the 4uestionnaire illustrating that out of the (%% respondents- $. are males and /( are female3 Although the data o'tained was somewhat limited 'y the sample si6e and time scale- it does e5emplify that women are more likely to 'e cardholders3 Interestingly- the fact that $. males owned a card shows that men are also active consumers and the Tesco 8lu'card has effectively o'tained the segment3
&igure 3(/('(/
Please choose your Gender: * Please indicate which age group you fall into: Crosstabulation Count Please indicate which age group you fall into: nder !" Please choose your +ender: Male Fe,ale Total ! "& !! # !$ $ "! !" %& # %$ ( !% !'& # '$ % $ "! (& # ($ ( "& "( )& * ( $ "' Total !$ ." "&&
"igure ;3$3(3$ shows the age group of respondents compared to their gender3 The data shows clearly the mass appeal of the 8lu'card to 'e across all age
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8hapter "our H )esearch "indings and Analysis demographics and from the data we can esta'lish that the typical male user of 8lu'card is aged $$*$. and for females aged 1%*1.3 &igure 3(/('(1
Please indicate which age group you fall into: * I trust Total Super Store products and their image Cross tabulation Count I trust Total products and their i,age 2trongly 2trongly Agree Please indicate which age group you fall into: nder !" !! # !$ %& # %$ '& # '$ (& # ($ )& * Total ' % % ' ( ! !" Agree ' ") ( ( $ '. 3o Opinion " " ! " ' " "& 4isagree & . ' ! " ! ") 4isagree " ! % & & & ) Total "& !" !"! "( "' "&&
"igure ;3$3(31 highlights the age of the respondents compared with their level of trust for Tesco products and the Tesco image3 The a'ove data indicates that the age groups most likely to 'e loyal to Tesco!s due to the notion they trust Tesco products and its image are the 1%*1. age groups3 8onversely- it is also shown in the $$*$. and 1%*1. age groups higher claims that they do not trust Tesco3 In total out of the (%% respondents- $$Q did not trust Tesco while =&Q did trust Tesco ,the other (%Q neither agreeing nor disagreeing23 Bhat this shows is that Tesco has 'een successful in esta'lishing position in the market place3 is no evidence to suggest that the trust e5emplified was formed 'y 8lu'card single*handedly3 The results also show that the Tesco 8lu'card appeals to every age group and that Tesco is effectively managing its relationship with customers in each of their different Mlife stageP ,Simm- $%%/2 to attain competitive advantage and thus adding value to the 8lu'card scheme3 == owever- there
8hapter "our H )esearch "indings and Analysis 3(/(/ Customer %erceptions on Tesco Clu5card
The specific focus of the 4uestionnaire has resulted in limited results of 8lu'card users- creating unam'iguous data that are significant to the study3
&igure 3(/(/('
Please indicate how often you use your Total Rewards Program when you purchase goods or services with Total Super Store Cu,ulative Fre/uency 0alid Always Fre/uently Little 3ever Total '! %$ "" "&& Percent '!1& %$1& "-1& "1& "&&1& 0alid Percent '!1& %$1& "-1& "1& "&&1& Percent '!1& -"1& $$1& "&&1&
"igure ;3$3$3( discloses that a total of &(Q of the respondents surveyed used their Tesco 8lu'card always or fre4uently when completing a transaction with Tesco3 This high value could 'e accounted for 'y suggesting that customers value the 8lu'card and have integrated it into their normal shopping 'ehaviour and routine3 owever- despite this the results also show that there is a remaining (.Q of customers who seldom or never use their 8lu'card3 It is essential that this margin is not overlooked or ignored as this marker represents a large percentage and demonstrates that some consumers do not 'uy into the scheme and are simply not motivated 'y the rewards on offerfurthermore it also illustrates that the Tesco 8lu'card scheme is not enough to keep specific customers loyal to Tesco3 Bith reference to operant conditioning as mentioned in the literature review in section $3= and that Mif a given 'it of 'ehaviour has a conse4uence of a special sort- it is more likely to occur again upon similar occasionsP ,Skinner- (./&- pg (.23 owever- the results from the 4uestionnaire show that this concept is indeed not generic and that some =/
consumers do not view one set
=&
8hapter "our H )esearch "indings and Analysis of 'ehaviours to lead to positive outcomes- adding value to the statement that 'ehaviour is not generic amongst all consumers and that some customers are not affected or influenced 'y the prospect of rewards3
&igure 3(/(/(/
Please indicate which age group you fall into: * If Total Super Store did not have the Total Rewards scheme would you still continue to shop there! Cross tabulation Count If Tesco did not have the Total Rewards sche,e5 would you still continue to shop there6 7es Please indicate which age group you fall into: nder !" !! # !$ %& # %$ '& # '$ (& # ($ )& * Total "& !" !) "" "' "% $( 3o & & ! & & " % 4on8t 9now & & & " " & ! Total "& !" !"! "( "' "&&
"igure ;3$3$3$ shows the age of respondents e4uated with the notion that if Tesco did not have the 8lu'card customer reward program in place- would they still continue to shop there3 The results show that a resounding .<Q of respondents across all age demographics would still continue to shop there3 This raises the notion that perhaps customers view the 8lu'card as 'eing of little or no significance or application when they do their shopping at Tesco and in actual fact perceive it as an additional 'onus3 Apprecia'ly what these results show is that Tesco is doing and offering so much more than merely a loyalty card that facilitates repeat purchases to their customers3 It also raises the notion that loyalty is more 'ehavioural than attitudinal3 =.
8hapter "our H )esearch "indings and Analysis &igure 3(/(/(1

I thin" Total Super Store is very innovative * I feel more could be done to increase my loyalty Cross tabulation Count I feel ,ore could :e done to increase ,y loyalty 2trongly 2trongly Agree I thin; Total is very innovative 2trongly Agree Agree 3o Opinion 4isagree Total " ' & & ( Agree ') ") ! .! 3o Opinion ! ' & "' 4isagree & ' ! " . 4isagree " " & & ! Total "! )% !! % "&&
Bhat we can esta'lish from figure ;3$3$31 is that //Q of the respondents surveyed either strongly agree or agree that more could 'e done 'y Tesco to increase their loyalty- conversely /<Q view Tesco as 'eing an innovative company3 Bhat is evident from these findings is that despite consumers feeling that more could 'e done to increase their loyalty they nevertheless view Tesco as 'eing an inventive company and in a positive light3 &igure 3(/(/(3
I trust Total Super Store products and their image * I feel more could be done to increase my loyalty Cross tabulation Count I feel ,ore could :e done to increase ,y loyalty 2trongly 2trongly Agree I trust Total products and 2trongly Agree their i,age Agree 3o Opinion 4isagree 2trongly 4isagree Total " % " & & ( Agree ") %' ( "% ' .! 3o Opinion ! . ! ! " "' 4isagree " ! ! " " . 4isagree " " & & & ! Total !" '. "& ") ) "&&
/%
As stated previously and as shown in figure ;3$3$31- //Q of respondents felt more could 'e done to increase their loyalty3 Bhat can 'e identified from this is despite customers! attitudes to more 'eing done to keep them loyal they would still continue to purchase products from services due to their confidence in the products and 'rand offered 'y Tesco3 owever- despite this- =&Q strongly agree or agree on trusting Tesco products and their 'rand image3
&igure 3(/(/(4
If Total Super Store did not have the Total Rewards scheme would you still continue to shop there! * I e#pect rewards to be a part of my normal shopping e#perience Crosstabulation Count I e<pect rewards to :e a part of ,y nor,al shopping e<perience 2trongly Agree If Total did not have the Total rewards sche,e5 you still continue to shop there6 7es 3o 4on8t 9now Total " " "& Agree '" " (& 3o Opinion !$ " & %& 4isagree "& & & "& Total $( % ! "&&
"igure ;3$3$3< shows that =%Q of the respondents strongly agree or agree that they e5pect rewards as part of their normal shopping e5perience3 owever- despite this .<Q would continue to shop at Tesco if they did not have the 8lu'card scheme3 This comparison again shows the loyalty that Tesco has generated and that the maRority of customers will shop there regardless of a customer reward program3 owever what is unclear are all the separate factors that have contri'uted to 'uild this loyalty3
/(
&igure 3(/(/(8
Total Rewards Program * $ave you redeemed any rewards from the Total Rewards scheme within the last % months! Cross tabulation Count =ave you redee,ed any rewards fro, the Clu:card sche,e within the last ! ,onths6 7es Total Rewards 2che,e " # 0ery I,portant ! % ' ( ) . - # 3ot I,portant At All Total ' . ( "% "! $ ( ) )" 3o ( " ! % $ % "" ( %$ Total $ . ") !" "! ") "" "&&
"igure ;3$3$3= shows that =(Q of respondents have redeemed some kind of reward with Tesco in the last ($ months3 Bhat these results reveal is that consumers are attracted to the rewards and seek to realise the e5periential and lifestyle themed incentives that Tesco makes availa'le to them3 Additionally- ;%Q of respondents rank a customer reward programs importance 'etween (*; on a scale of & ,( [ very important- & [ not important at all23 Bhen these results are analysed we can see that =%Q of respondents do not view loyalty card schemes as 'eing primarily important ,ranked ;*&23 This shows that consumers are not principally interested in customer reward programs or the rewards they can attain from despite a relatively high num'er of respondents! taking advantage of them- 'ut instead view other factors as 'eing more important to them3 Bhat this finding illustrates is that shoppers! attitudes have changed and they view other factors as 'eing more important than earning points on their purchases3 /$
3(/(1
oyalty and Satisfaction
The de'ate in the correlation 'etween loyalty and satisfaction has 'een highlighted in the literature3 By using a cross ta'ulation ta'le- the individual varia'les can 'e analysed ,figure ;3$313(23 &igure 3(/(1('
&ould you describe yourself as being loyal to Total Super Store! * &ould you describe yourself to be a satisfied customer of Total Super Store! Cross tabulation Count >ould you descri:e yourself to :e a satisfied custo,er of Total 2uper 2tore 2tore6 7es 3o 4on8t 9now Total >ould you descri:e yourself as :eing loyal to Total6 7es 3o 4on8t 9now Total "$ %" ' (' "% "( " !$ ' "! " ". %) () "&&
The results from the ta'le show that overall- <;Q of the respondents surveyed descri'ed themselves as 'eing satisfied Tesco customers3 owever- when the 4uestion is cross ta'ulated we can see that 1(Q are satisfied 'ut would descri'e themselves as not 'eing loyal3 Bhat we can deduce from this is that satisfied customers are not necessarily loyal to a 'usiness3 Accordingly- (1Q of respondents e5pressed they were not satisfied Tesco customers 'ut were loyal- e5hi'iting that they are locked into 'eing loyal3 7ne Rustification for this could 'e defined 'y Barnes ,$%%$2 as Mfunctionally loyalP and mentioned in section $3<3 "unctionally loyal is where'y customers are only loyal 'ecause they have an o'Rective reason to 'e such as convenience- factors such as opening times and location is central to them3 "urthermore- figure ;3$313( also indicated that (.Q of the respondents are loyal and satisfied with Tesco3 It is advocated that this percentage of respondents achieved
/1
8hapter "our H )esearch "indings and Analysis their loyalty condition through the linear progression theory as pointed out in section $3/3 The 8lu'card scheme can 'e viewed as a starting point to loyalty as mentioned 'y Auffy ,$%%(- pg 1=23 switchingP ,Miranda et al3$%%<- pg $1%23 owever- the results indicate that more additional factors are re4uired in order to Minsulate them ,customers2 from
Some consumers simply need to 'e satisfied with a 'usiness in order to 'e loyal3 owever- the ($Q divergence from the results in figure ;3$313( indicates that most consumers need more than satisfaction to 'e loyal3 The results show that the association 'etween loyalty and satisfaction is not achieva'le through a single method alone and in actual fact is dependent on consumers! own varia'les3 Thus confirming SUderlund!s ,(..& H section $3/2 notion that- Mincreasing satisfaction does not produce an e4ual increase in loyalty for all customersP3 Bhat can 'e concluded is that the 8lu'card scheme does add value and operating in conRunction with other loyalty marketing tools that Tesco utilisesuch as competitive pricing and customer service- allows customers to reach a state of loyalty via different routes and methods3
3(/(3 TescoEs !fficiency and -se of the ,nformation #ained from Clu5card The 8lu'card maga6ine has a run of nearly . million copies four times a year ,Stone$%%;- pg $%12 and is an integral part of the 8lu'card scheme3 It was shown in the previous section that =(Q of respondents surveyed have redeemed some kind of reward from Tesco in the last ($ months3 "igure ;3$3;3( 'elow demonstrates the fre4uency of the respondents who read the /;
clu'card maga6ine3
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&igure 3(/(3('
'o you read Clubcard (aga)ine Cu,ulative Fre/uency 0alid 7es 3o 2o,eti,es Total !( '$ !) "&& Percent !(1& '$1& !)1& "&&1& 0alid Percent !(1& '$1& !)1& "&&1& Percent !(1& .'1& "&&1&
The results show that ;.Q of respondents claim to not read the 8lu'card maga6ine and that only <(Q answered positively to reading it3 These statistics are dependant on how long the respondent has 'een a 8lu'card mem'er3 owever- what can 'e devised from this is that it does signify that consumers have a lack of interest in this medium3
&igure 3(/(3(/
'o you read Clubcard maga)ine * If *yes+ or *sometimes please indicate what you thin" of the maga)ine, Crosstabulation Count If ?yes@ please indicate what you thin; of the ,agaAine1 It covers everything you would e<pect and is of great use 4o you read Clu:ard ,agaAine 7es 2o,eti,es Total % ( It is a good read with so,e infor,ative articles and features $ "' !% It is dull5 unhelpful and of no use "% . !& Total !( !) ("
/=
8hapter "our H )esearch "indings and Analysis "urthermore- figure ;3$3;3$ shows that out of the <( respondents surveyed who did read the 8lu'card maga6ine- a staggering $% of them found the maga6ine to 'e dull- unhelpful and of no use to them3 8onse4uently- this could suggest that Tesco is not suita'ly employing the data it has gathered from 8lu'card to efficiently and effectively communicate with its end customers3 Therefore- it could 'e suggested that the marketing funds could 'e 'etter utilised elsewhere3
3(/(4
*as the Tesco Clu5card Created oyalty< unt ,$%%;- pg .2 implied that retail loyalty is Mlooking to achieve a
um'y and
little e5tra goodwill- a slight margin of preference- an incremental shift in 'uying 'ehaviourP3 To highlight a shift in 'uying 'ehaviour it is practical to recognise and acknowledge if the collection of points results in an increase of the respondents! e5penditure3 By means of cross ta'ulating the data with how important respondents rank the location of a store- the data can 'e divided into true loyal and functionally loyal3 &igure 3(/(4('
'oes the collection of points influence you to buy more or to buy specific-alternative promotional products * .ocation /f Store Crosstabulation Count Location Of 2tore - # 3ot " # 0ery I,portant 4oes the collection 7es of points influence you to :uy ,ore or to :uy specificBalternative pro,otional products 4on8t 9now Total !" !$ "$ "% $ ( % " "&& ! ) % " ! ! ! & "3o & "$ ! " !! % % "% ' " "" ( " ) ) & % . & " I,portant At All & " Total ) .)
/<
8hapter "our H )esearch "indings and Analysis "igure ;3$3<3( shows that /=Q of the respondents surveyed claimed that the collection of points did not influence them to increase their e5penditure or to 'uy specific alternative#promotional products3 At a glance this statistic appears to show that the Tesco 8lu'card has failed in its activity to create loyalty and generate an increase in sales3 owever- on closer inspection- and with reference to preceding literature- though only =Q of the respondents stated that their spending increased in their pursuit of points- this is a noteworthy figure in relation to profits3 The importance of word of mouth e5posure was pointed out in section $3/ and thus this num'er can 'e seen as favoura'le in regards to profit margins3 )emarka'ly the respondents who are increasing their e5penditure 'ecause of the 8lu'card- none of them ranked the location of a store as 'eing the most important factor to them3 This suggests a minor fraction of su'stantiation against the functionally loyal concept3
3(/(8
Are Consumers $anipulating Suppliers<
"igure ;3$3=3( shows that from the (%% respondents surveyed- a total of &1Q indicated that they own and regularly use up to 1 other store loyalty cards in addition to their Tesco 8lu'card- while (/Q professed they only own a Tesco 8lu'card3 &igure 3(/(8('
0part from Clubcard do you own and regularly use other store loyalty cards! Please indicate how many: Cu,ulative Fre/uency 0alid " other card ! other cards % or ,ore other cards I only own a Tesco Clu:card Total !'( "& ". "&& Percent !-1& '(1& "&1& ".1& "&&1& 0alid Percent !-1& '(1& "&1& ".1& "&&1& Percent !-1& .%1& -%1& "&&1&
/=
These results lead to the principle that competitors are finding it straightforward to replicate and imitate similar offerings- and consumers are harvesting the 'enefits from all these schemes3 Additionally- it also points to the 'elief that the Tesco 8lu'card is little more than an e5pensive sales promotion techni4ue3 It can 'e contended that when the Tesco 8lu'card was first introduced in (..< it could have achieved loyalty through its uni4ueness and innovation3 owever- today amongst the twenty*first century generation of consumers who have more diverse tastesattitudes and perceptionsloyalty is now much harder to achieve3 7ne can 4uestion if loyalty cards have reached saturation point and if the era of the Tesco 8lu'card is overF "igure ;3$3=3$ 'elow puts this finding into practice as it illustrates that =%Q of the respondents surveyed either strongly agree or agree that they actually shop around to get the 'est deals3 Bhat this data confirms is that consumers are savvy- as mentioned in section $3. and that they are manipulating suppliers for their own gains- reinforcing :han!s ,(..&2 notion Mthat consumers are smarter than marketers generally perceive- and are actively manipulating suppliers for their own endsP3 "urthermore these results actually constraint the value of the Tesco 8lu'card as a loyalty marketing tool3 &igure 3(/(8(/
I usually shop around to get the best deals Cu,ulative Fre/uency 0alid 2trongly Agree Agree 3o Opinion 4isagree 2trongly 4isagree Total !%! "& !! "&& Percent !-1& %!1& "&1& !!1& -1& "&&1& 0alid Percent !-1& %!1& "&1& !!1& -1& "&&1& Percent !-1& )&1& .&1& $!1& "&&1&
//
8hapter "our H )esearch "indings and Analysis Bith the sheer profusion on different 'ut similar customer reward programs 'eing employed 'y organisations and offered to consumers- the data ac4uired through the survey and shown in figure ;3$3=31 reveal that =%Q of respondents e5pect some kind of reward as part of their normal everyday shopping e5perience3 This e5emplifies the need for market leading suppliers to invest in loyalty marketing schemes in order to compete for evolved consumers with e5ceptionally high 'uyer power3
&igure 3(/(8(1
I e#pect rewards to be a part of my normal shopping e#perience Cu,ulative Fre/uency 0alid 2trongly Agree Agree 3o Opinion 4isagree Total "& (& %& "& "&& Percent "&1& (&1& %&1& "&1& "&&1& 0alid Percent "&1& (&1& %&1& "&1& "&&1& Percent "&1& )&1& $&1& "&&1&
The secondary research remarked that loyalty card schemes rely Mon maintaining the ignorance of the very customers that it wants to see e5hi'iting loyal 'ehaviourP ,Parker and Borthington- $%%%- pg ;.=23 Additionally Parker and Borthington ,$%%%- pg ;.=2 also argued that such schemes were unethical and lead to the materialisation of Mpoints RunkiesP3 owever- the information gathered from the survey opposes this hypothesis3 "igure ;3$3=3; indicates that consumers are not as ignorant as originally advocated- as well as pointing out that consumers recognise how much they need to invest in to the scheme in order to receive a lauda'le pri6e#reward3 A total of <$Q of respondents correctly indicated that they knew that for every pound they spent at Tesco they would receive one point in the 8lu'card scheme3
/&
8hapter "our H )esearch "indings and Analysis &igure 3(/(8(3
Please indicate which age group you fall into: * 'o you "now how many Clubcard points you gain for every 12 you spend in store! Crosstabulation Count 4o you ;now how ,any Clu:card points you gain for every C" you spend in store6 " point for every C" Please indicate which age group you fall into: nder !" !! # !$ %& # %$ '& # '$ (& # ($ )& * Total ( "! ". ) ' (! ! points for every C" " " ' " " ! "& ( points for every C" " " & ! ' " $ "& points for every C" % . . " ' . !$ Total "& !" !"! "( "' "&&
3(/(.
"oes Tesco Really Need the Clu5card
The data collected from the survey has provided an important insight into the significance of what factors respondents place upon that influence loyalty3 "igure ;3$3/3( 'elow provides this information3
&igure 3(/(.('
' 9ery importan t 1(Q $(Q ($Q .Q $<Q (Q (Q %Q / 1 3 4 0 Not 7ery importan t =Q &Q ;Q <Q 1Q (Q &Q =Q ;Q ($Q (=Q ((Q ;Q .Q $Q $/Q ((Q .Q (;Q (&Q <(Q (&Q 8 .
9alue for money ocation of store >uality of ser7ice and staff oyalty card scheme %roduct range and presentation O7erall store layout and appearance ,n@store promotional magaFine and flyers $oney off couponsG7ouchers and special promotions
(&Q $.Q (;Q &Q (.Q .Q (Q $Q
$%Q (.Q $;Q /Q ($Q ($Q $Q ;Q
(%Q (1Q (.Q (=Q (;Q (1Q <Q &Q
1Q .Q (1Q $(Q (<Q (&Q &Q
(;Q $<Q $.Q
/.
Taking into account what respondents valued as ( and $ ,very important#important2 and totalling them up revealed the highest ranked order to 'e: (2 Location of store3 $2 Calue for money3 12 Product range and presentation3 ;2 @uality of service and staff3 <2 Loyalty card scheme3 =2 7verall store layout and appearance3 /2 In*store promotional maga6ine and flyers3 &2 Money off coupons#vouchers and special promotions3 The findings e5emplify that location of store and value for money are the most influential determinant factors in achieving loyalty3 The ranking system also shows that loyalty card schemes are in the 'ottom half of important factors when choosing a primary supermarket3 Although the results show that money off coupons#vouchers and special promotions as 'eing the least important- if we e5amine the other end of the grading scale we can see that a staggering <(Q of the respondents ranked in*store promotional maga6ine and flyers as & ,not very important23 This is an interesting discovery as these are 'oth products of the Tesco 8lu'card3 These findings are su'stantiation that Tesco may 'e 'etter off investing money into other areas rather than in its 8lu'card scheme3 "igure ;3$3/3$ show the results of the open*ended 4uestion in the survey3 The aim of which was to give respondents the opportunity to freely write their own comments and remarks into how Tesco could make them more loyal3 The responses were grouped as follows:
&%
8hapter "our H )esearch "indings and Analysis &igure 3(/(.(/

&hat more could Tesco do to ma"e you more loyal! Cu,ulative Fre/uency 0alid I,prove facilities for elderly people =ave discounts at the till rather than rewards =elp those without transport I,prove store layout Faster chec;outsBself service chec;outs More Clu:card points per pound Increase product range Increase store pro,otions More store entrances and e<its Increase Clu:card rewards I,proved on#line shopping I,prove Clu:card ad,inistration Total "& Percent "&1& 0alid Percent "&1& Percent "&1&
!! "' ! "&
!!1& "'1& !1& "&1&
!!1& "'1& !1& "&1&
%!1& ')1& '-1& (-1&
' "! % % % ") " "&&
'1& "!1& %1& %1& %1& ")1& "1& "&&1&
'1& "!1& %1& %1& %1& ")1& "1& "&&1&
)!1& .'1& ..1& -&1& -%1& $$1& "&&1&
The results show that the maRority of responses signal towards direct- on the spot- discounts from their final shopping 'ill- rather than gaining rewards in the long term3 This evidence points towards consumers trying to un*complicate and simplify their everyday lives and that the 8lu'card is in theory complicating things for them3 Additionally- the findings also show that Tesco should consider investing e5tra money into providing ade4uate transport facilities for customers- improved provisions for older people- increased product selection and improvements to the online shopping service3 The feeling is that the Tesco 8lu'card should evolve 'y &(
8hapter "our H )esearch "indings and Analysis taking into account direct discounting from the final 'ill at the point of sale as a result of points collection3 Got only will this assimilate the pricing element of loyalty- 'ut it could also help maintain the success of the Tesco 8lu'card3
3(1
Conclusion
Through the analysis of the primary research- several key findings have 'een esta'lished and the o'Rectives of the study have 'een achieved3 The results assessed the value of the Tesco 8lu'card as a loyalty marketing tool 'y classifying the findings into several fundamental areas3 The results from the 4uestionnaire show that loyalty does e5ist amongst Tesco 8lu'card holders and Tesco and thus the Tesco 8lu'card can 'e viewed as a valua'le asset in terms of a loyalty marketing tool3 The high usage of the card 'y respondents indicate that they have accepted the scheme and are willing to incorporate it into their normal shopping e5perience at Tesco3 Aespite the accomplishment of the 8lu'card- the results demonstrate that it is not the only aspect that causes consumer loyalty3 There has 'een no indication or evidence to support the theory that the 8lu'card alone has created loyalty3 "urthermore the results have shown that other areas need to 'e considered to prevent consumers from switching to a rival3 Particular attention should 'e paid to the details that consumers place importance onsuch as value for money- location and store facilities- rather than loyalty card schemes- in*store vouchers and maga6ines which were all ranked poorly 'y respondents3 The analysis suggests that the 8lu'card scheme is a costly sales techni4ue and that perhaps the resources used to finance the scheme might 'e 'etter apportioned elsewhere to factors which can keep customers loyal and lead to repeat purchases such as lowering prices throughout the entire product &$
range3 )espondents regarded
&1
8hapter "our H )esearch "indings and Analysis the product of the 8lu'card ,vouchers and in*store maga6ine2 to 'e at the lower end of the scale in terms of importance when choosing a primary supermarket3 Moreover- ;.Q of respondents claimed they did not read the maga6ine and out of the respondents that did admit to reading the maga6ine nearly half maintained that the maga6ine was not ade4uate as it did not appeal to them and they regarded it as dull and unhelpful3 A total of &<Q of respondents claimed they owned and regularly used at least ( other store loyalty card in addition to the Tesco 8lu'card3 Additionally =%Q of respondents also strongly agree#agreed that they usually shop around to get the 'est deals3 The results have 'rought to light the new twenty*first century generation of consumers who have more diverse tastesattitudes and perceptions and the results show that the 'uying power they possess is higher than ever and as such they are effectively manipulating suppliers to meet their own needs and wants3 Bith this in mind- it could 'e contended that the Tesco 8lu'card in its current form is a dated remnant of the past and needs to evolve and transform in order to advance its value as a loyalty marketing tool3
&;
8hapter "ive H 8onclusion and )ecommendations
Chapter Five
Conclusion and Reco,,endations
&<
4() C*A%T!R &,9! @ CONC -S,ON AN" R!CO$$!N"AT,ONS

4(' ,ntroduction
The purpose of this study was to discover if Tesco really needs the 8lu'card scheme despite all the efforts it employs to keep customers loyal3 Additionally- it also e5amined the value of the Tesco 8lu'card scheme in the conte5t as a loyalty marketing tool3 The primary research carried out has produced key results and addressed the o'Rectives of the thesis- outlined in chapter one3 This concluding chapter shall illustrate the main findings of the study collectively- concentrating upon the o'Rectives 'efore making applica'le recommendations- ascertaining the limitations to the study and- finallyhighlighting areas that need further investigation and directing further research3
4(/
Conclusion of the study
The literature review has pointed to the notion that loyalty card proposals such as the Tesco 8lu'card scheme are an invalua'le marketing tool offering a multitude of advantages to 'oth the organisation and the consumers3 The 8lu'card has provided Tesco with an opulent collection of data on individual customer tastes- preferences and spending ha'its3 This wealth of information has ena'led Tesco to sustain its position as the market leading 9: supermarket retailer3 owever- 'y e5amining the scheme in the conte5t of meeting the o'Rectives of this thesis- it can 'e noted that the significance and value of the 8lu'card in achieving customer loyalty appears dissimilar3 It was discovered that loyalty did e5ist amongst some card holders- 'ut the study has revealed no evidence to support the notion that the Tesco 8lu'card &=
alone has achieved loyalty3
&/
The study has identified that a series of modus operandi e5ists in order to achieve a loyal customer 'ase and that loyalty marketing consists of several factors and not Rust loyalty cards3 Additionally- the thesis has acknowledged and identified the importance of store location and competitive pricing as 'eing the most effective factors in achieving customer loyalty3 Tesco currently utilises a num'er of techni4ues to ensure that customers are happy and content3 Therefore it can 'e argued that the 8lu'card scheme can 'e seen as an e5pensive encum'rance and is detracting away from the core 'usiness of Tesco3 The knock on effect would 'e to allow funds to 'e 'etter allocated and spent on areas which improve the other techni4ues currently in place3 Additionally- the study has shown that consumers have evolved since the original conception of the 8lu'card scheme- and the new perceptionsattitudes and 'uyer power they possess has immensely altered the value of the 8lu'card and how they see the 8lu'card3 "urthermore the huge num'er of customer reward programs and similar designs has resulted in consumers no longer 'eing concerned with the loyalty marketing gimmicks and rewards3 Today!s consumer is more interested in finding the 'est deal they can3 Bhat has transpired from the study is the discovery that the Tesco 8lu'card was a starting point for loyalty3 At the time of launch the scheme was innovative and appealing to consumers- however the results of the primary research reflect that respondents who claimed they were satisfied with Tesco were not necessarily loyal and thus more is re4uired in order to lock them into 'eing truly loyal to Tesco3 arlow ,(../ cited in 0gan $%%(- pg 1&(2 remarked on the evolution of twenty*first century consumers as 'ecoming +increasingly promotion*literate! and this has reduced the significance of the loyalty card within the supermarket industry3 Parker and Borthington ,$%%%- pg ;.=2- claimed that consumers are ignorant- however the results from the primary research dispute and contradict this3 The primary research showed that consumers &&
8hapter "ive H 8onclusion and )ecommendations are aware of the value of points and they do own and use
&.
8hapter "ive H 8onclusion and )ecommendations more than one loyalty card3 As consumers utilise technology around themsuch as the internet- it can 'e deduced that today!s consumers are actively and effectively manipulating suppliers to meet their own needs3 The knock on effect of the 'oom of loyalty cards has now led consumers into e5pecting some kind of reward in their normal shopping e5perience3 8onsumers today are loyal to functional aspects of their shopping e5perience rather than rewards- with factors such as faster checkouts- product rangetransport and online shopping all viewed as 'eing important aspects3 9ltimately these factors all contri'ute to a more convenient shopping e5perience 'ut it has 'een suggested that the 8lu'card only complicates matters3 "urthermore- the results indicated that many respondents claimed that money off discounts of their final 'ill at the point of sale rather than future rewards were preferred and would make them more loyal3 This is a clear indication that consumers today are more attracted to an instant saving#price reduction rather than the long*term collection of points in order to attain a similar reduction3 "rom this finding it can 'e suggested that changing the format of the 8lu'card to 'e more in line with what consumers demand may make it a more via'le and valua'le loyalty marketing tool3 The general customer perception of the Tesco 8lu'card revealed respondents high usage of the card and that they trust the Tesco 'rand and image in addition to having ardent aspirations to redeem rewards3 8onversely- the results also showed some respondents using the card little or never per transaction which points towards the speculation that rewards are simply not enough to keep certain customers loyal to Tesco3 The findings also showed that respondents perceived the card as an additional 'onus to their shopping and the theory of operant conditioning- as highlighted in section $3= has 'een proven to not 'e generic with some consumers showing positive actions and 'ehaviour without the need for rewards3 This factor is further reinforced 'y the discovery that the maRority of respondents! surveyed claimed they would continue to shop at Tesco even without the 8lu'card scheme3 .%
8hapter "ive H 8onclusion and )ecommendations 7ne of the categorical features of employing a customer reward program is to reduce high wastage 'y specifically targeting consumers with information that will appeal to them3 The results showed that Tesco!s communication with its customers via the medium of maga6ine and vouchers was not effective and not realised to full capacity 'y recipients3 )eadership amongst respondents were moderately low and several respondents did not rate the maga6ine and#or its content3 This finding suggests that the 8lu'card scheme is directing Tesco to disregard particular sections of the market which offer more interest to consumers such as price reductions or improved facilities3 Bith outlay into other more effective loyalty marketing mechanisms it can 'e reasoned that in terms of achieving a loyal customer 'ase they may produce 'etter results3 Parker and Borthington ,$%%%- pg ;.=2 commented that loyalty Mcannot 'e 'oughtP and the findings in the primary research 'ack this theory updiscovering over half the respondents claiming they were satisfied customers of Tesco3 "urther confirmation of this was esta'lished with the greater part of respondents maintaining they would continue to shop at Tesco and trusted the Tesco 'rand3 Bhat the findings have shown is that the epoch of the loyalty card is 'ecoming pass\3 In its current form it is not enough to sustain competitive advantage3 The failure to evolve the 8lu'card scheme into what today!s consumer demand has 'rought the 8lu'card proposal to a uni4ue crossroad3 The sheer num'er of similar customer reward programs has reduced the overall value of schemes3 8oupled with consumers that have evolved and are more intelligent has resulted in high 'uyer power within the supermarket industry3 This evidence points to the 8lu'card scheme 'ecoming a M6ero sum gameP ,Ma6ur- (../- pg (=23 The findings from the primary research have revealed several factors which limit the value of the Tesco 8lu'card3 These are:
.(
8hapter "ive H 8onclusion and )ecommendations ] Competitors: the 4uantity of similar schemes has de*valued customer reward programs- caused confusion and resentment amongst consumers and their simplicity of limitations has 'rought loyalty card schemes to a crossroad3 ] !Hternal en7ironment: the evolution of tastesattitudes- awareness and demands of today!s promotional literate consumer has resulted in savvy shoppers who are hunting around for the 'est deals and commanding more3 ] %erception: the study revealed respondents! perceptions towards the 8lu'card and the additional 8lu'card products such as in*store maga6ine and vouchers was perceived as 'eing weak in terms of productivity and effectiveness3 The study has ascertained that the value of the Tesco 8lu'card is contentious as it has made loyalty harder to achieve and thus failed to meet the 'ase re4uirements of the model3 Additionally- the research can conclude that the 8lu'card in its current format may well have reached its 6enith and if it continues to stay dormant then the future value of the scheme is uncertain3
4(1
Recommendations
9n4uestiona'ly the Tesco 8lu'card customer reward program has 'rought success to Tesco- yet despite this accomplishment the study has found that it is now in a state of decline3 Its value as a loyalty marketing tool is weakening due to numerous factors3 Building upon this conclusion- the following recommendations can 'e suggested: ] Investigate key areas which are of importance to consumers and allocate the funds necessary in order to ensure that these new customer demands are met to help ascertain a loyal customer 'ase3 ] 05amine and reduce the current amount of money invested into the 8lu'card customer reward program as the concept 'ecomes more dated and .$
investing
.1
8hapter "ive H 8onclusion and )ecommendations money in more significant areas3 Areas such as lowering prices shall help sustain a competitive advantage within the industry3 ] 0volve and transform the 8lu'card model to adapt to the new tastesattitudes and demands of the new generation of consumers3 8onsideration should 'e noted to giving customers an instant re'ate at the point and time of sale rather than rewarding them through the collection of points3 The current image of the 8lu'card feels dated and as such a revision and re* launch may give it a much needed 'oost and help motivate and e5cite consumers3
4(3
imitations and &urther Research
This study is not without limitations3 The main area of concern is the sample si6e of the 4uestionnaire3 It is felt that it is not a (%%Q representation of the whole population and the times and dates in which this research was carried out were unfortunately constrained 'y the periods that Tesco allowed3 "urthermore- with reference to the (%% respondents- generalisations have regretta'ly had to 'e made to the sample group3 Time and money are supplementary factors which have limited the study to a degree3 Tesco would only allow 4uestionnaires to 'e carried out during a small num'er of mornings and over a few hours3 The result of this is limited results of consumers who happened to visit the store on the specific times and dates the survey was 'eing carried out3 Additionally- it is felt that if 4ualitative interviews were esta'lished and carried out the results could help verify and support the findings from the 4uestionnaire3 05tra studies could 'e performed at different Tesco stores to determine if the value and perception of 8lu'card is the same or if it differs from region to region3 "urther investigation could 'e carried out to reveal what effects an increased rate of loyalty .;
8hapter "ive H 8onclusion and )ecommendations points per pound spent would have and if it would make the scheme a more via'le and valua'le proposition3 The research focused solely on 8lu'card holders- however it may have 'een advantageous to e5tend the investigation to reflect on consumers who do not own a 8lu'card yet continue to shop at Tesco despite this3 Performing such an analysis would illustrate and identify what generates consumer loyalty and thus determine the most valua'le loyalty marketing tool within the supermarket industry3
.<
)eference s
References and Di:liography
.=
)eference s
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Appendice s
A%%!N",I A + >-!ST,ONNA,R! B-ST,&,CAT,ON

>-!ST,ON (a23 Ao you own a Tesco esta'lishes 8lu'cardF 9A ,"AT,ON Initial 4uestion- leads directly into the su'Rect and instantly rapport with the respondent3
('23 If KyesK- please indicate how Although customers may own a 8lu'card- the inclusion of this 4uestion often you use your 8lu'card when determines how actively they use their card3 If a respondent owns a you purchase goods or services card 'ut never uses it- this will indicate to the author a greater insight with Tesco3 with regards to impending 4uestions concerning their attitudes towards the 8lu'card scheme3 $23 Please choose your Eender 123 Please indicate which age intentionally group you fall into3 the age ranges 9sed to 'uild a user profile of the 8lu'card scheme3 elps in 'uilding the user profile and responses have 'een 'roadly grouped3 It is vital there is no overlap in stipulated1 ;23 7n a scale of (*& ,( [ e5cellent The intention of this 4uestion is to esta'lish what factors lead and & [ poor2- how do you rank the importance of each customers to repeat purchase and determine the connection 'etween of the following factors when customer and store3 This 4uestion also highlights the range of loyalty deciding which supermarket marketing strategies currently used within the retail industry3 you use <23 Apart from 8lu'card do you own and regulary use other Mactively store loyalty cardsF (..&23 Please indicate how many =a23 Ao you read the 8lu'card determine Maga6ineF The use of this 4uestion will determine how many respondents own more than one loyalty card and divulge if consumers are manipulating suppliers for their own endsP ,:han
Tesco use the information gathered from 8lu'card users to the articles it pu'lishes in its 8lu'card maga6ine3 This 4uestion will esta'lish how effective this practice is and if customers are responding 'y reading the maga6ine and indicate how prevalent this modus operandi is3
='23 If KyesK or MsometimesP The motive of splitting this 4uestion is to void any confusion to Please indicate what you think of respondents and also understanding how they value Tesco! efforts The maga6ine3 to communicate with them3 /23 Ao you know how many The inclusion of this 4uestion will discover is consumers are as 8lu'card points you gain for as +ignorant! as Parker and Borthington ,$%%%2 asserted3 every L( you spend in storeF &23 Aoes the collection of points Parker and Borthington ,$%%%2 claimed that consumers are influence you to 'uy more or to 'ecoming +points Runkies! who are desperate to gain and save 'uy specific#alternative points3 Additionally it will also address if customers aspire to promotional products which collect and redeem more points and thus increase spending3 offer 'onus pointsF
Appendice s (%<
Appendice s
.23 ave you redeemed any rewards from the 8lu'card scheme within the last ($ monthsF (%23 Bould you descri'e yourself as 'eing loyal to TescoF ((23 Bould you descri'e yourself to 'e a satisfied customer of TescoF ($23 If Tesco did not have the 8lu'card scheme- would you still continue to shop thereF (123 Please tick the appropriate 'o5 which accurately reflects your level of agreement or disagreement3 (;23 Bhat could Tesco do more to make you more loyalF
This 4uestion is designed to test 8api66i and "erguson ,$%%<2 claim that customers actively seek lifestyle themed rewards3 This will esta'lish directly if the customer feel loyal towards Tesco3
9sed in conRunction with the a'ove 4uestion this will address the concerns in the literature review with regards to the relationship 'etween loyalty and satisfaction3 This 4uestion will esta'lish if consumers are +locked in! to Tesco as the paradigm created 'y the literature review suggests that it is not Rust loyalty cards that create loyalty3 The inclusion of this was to gather and understand customers attitudes and opinions with regards to Tesco and loyalty3
Purposely an open ended 4uestion to determine any other feelings that respondents had and to gain a 'etter understanding of them3 opefully it will also present new ideas or concepts surrounding customer loyalty3
(%=
Appendice s
A%%!N",I B @ >-!ST,ONNA,R! T!SCO C -BCAR" -S!R S-R9!=

As part of my MBA thesis I am doing some research on the Tesco Clubcard. I would appreciate it if you could take a few moments of your time to carry out this survey. All results will be kept confidential.
'a;(
"o you own a Tesco Clu5card< Jes (
Go
'5;( ,f JyesK? please indicate how often you use your Clu5card when you purchase goods or ser7ice with TescoL Always ( "re4uently $ Little 1 Gever ; 33333333333333333333333333333333333333333333333333333333333333333333333333333333333333 3333333333333 /;( %lease choose your #enderL Male ( "emale $ 33333333333333333333333333333333333333333333333333333333333333333333333333333333333333 3333333333333 %lease indicate which age group you fall intoL 9nder $( ( ;% H ;. ; $$ H $. $ <% H <. < 1% H 1. 1 =% b = 33333333333333333333333333333333333333333333333333333333333333333333333333333333333333 3333333333333
1;(
3;(
On a scale of ' to 0 :' D 7ery important and 0 D not important at all; *ow do you rank the importance of each of the following factors when deciding which supermarket you useL Rank ' @ 0 * Calue for money ( * Location of store $ * @uality of service and staff helpfulness 1 * Loyalty card schemes ; * Product range and presentation < * 7verall store layout and appearance = * In*store promotional maga6ine and flyers / * Money off coupons#vouchers and special & promotions 3333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333 33333333 4;( Apart from Clu5card? do you own and regularly use any other store loyalty cards< %lease indicate how manyL ( other card ( 1 or more other cards 1 $ other cards $ I only own a Tesco 8lu'card ; 3333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333 33333333 8a;( "o you read the Clu5card $agaFine< ,f JNoK please mo7e onto >uestion .(
(%/
Jes
( Sometimes
Go 1
Appendice s
,f JyesK or JsometimesK please indicate what you think of the magaFine( It covers everything you would e5pect and is of great use ( It is a good read with some informative articles and features $ It is dull- unhelpful and of no use 1 3333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333 33333333
85;(
lease turnover !uestionnaire to continue
(%&
.;(
"o you know how many Clu5card points you gain for e7ery M' you spend in store< ( point for every L( ( < points for every L( 1 $ points for every L( $ (% points for every L( ; 3333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333 33333 0;( "oes the collection of points influence you to 5uy more or to 5uy specificGalternati7e promotional products which offer 5onus points< Jes ( Go $ Aon!t know 1 3333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333 33333 2;( *a7e you redeemed any rewards from the Clu5card scheme within the last '/ months< Jes ( Go $ 3333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333 33333 Would you descri5e yourself as 5eing loyal to Tesco< Jes ( Go $ Aon!t know 1 3333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333 33333 '';( Would you descri5e yourself to 5e a satisfied customer of Tesco< Jes ( Go $ Aon!t know 1 3333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333 33333 ,f Tesco did not ha7e the Clu5card scheme? would you still continue to shop there< Jes ( Go $ Aon!t know 1 3333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333 33333 '1;( %lease tick the appropriate 5oH which accurately reflects your le7el of agreement or disagreementL Strongly Agree I trust Tesco products and their image Agree No Opinion "isagree Strongly "isagree '/;( ');(
<
I think Tesco is very innovative I usually shop around to get the 'est deals
<
<
I e5pect rewards to 'e a part of my normal shopping e5perience I feel more could 'e done to increase my loyalty
<
<
'3;(
What could Tesco do more to make you more loyal<
Many thanks for your time and attention
A%%!N",I C + S%SS CO"!" >-!ST,ONNA,R! R!S- TS

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>'1 >'1 >'1 >'1 >'1 ; $ ; $ $ $ $ ( $ $ $ 1 ; ; $ $ $ ( $ ; $ ( ; $ $ ( 1 $ ; $ ( $ ; $ < $ $ < 1 ; 1 $ ( $ $ < 1 1 ( ; ( $ ; $ $ $ ( < $ $ $ ( ( ( < ; $ ; $ $ < 1 < ; $ $ 1 ; $ $ $ $ $ 1 $ $ $ ( ; $ $ 1 1 ; $ $ 1 ; ; $ ( $ ( $ $ 1 $ ( ; $ $ 1 ; $ $ ( $ $ $ $ $ $ $ ( $ ( $ ; ; $ 1 1 $ $ ; ( $ ; $ $ ( $ ( 1 $ < ( $ $ $ $ 1 $ $ $ ( $ ( 1 $ $ 1 $ $ $ $ $ ( 1 $ $ $ ( $ $ < 1 $ $ $ ( $ $ 1 $ $ ( $ $ $ 1 ( ( 1 1 1 $ $ $ $ $ $ $ 1 $ $ $ ( 1 $ $ $ ( 1 1 $ $ $ $ ( 1 $ 1 $ $ 1 1 1 1 1 $ $ ( $ $ ; $ $ 1 1 $ 1 < 1 $ ; 1 1 $ $ $ $ ( $ $ $ 1 1 $ $
A%%!N",I " + S%SS &R!>-!NC= TAB !S &OR >-!ST,ONNAR! R!S- TS
Respondents who own a Tesco Clu5card

Cu,ulative Fre/uency 0alid 7es "&& Percent "&&1& 0alid Percent "&&1& Percent "&&1&
&reAuency of how often respondents used their Clu5card when purchasing goods or ser7ices with Tesco
Cu,ulative Fre/uency 0alid Always Fre/uently Little 3ever Total '! %$ "" "&& Percent '!1& %$1& "-1& "1& "&&1& 0alid Percent '!1& %$1& "-1& "1& "&&1& Percent '!1& -"1& $$1& "&&1&
#ender of respondents sur7eyed

Cu,ulative Fre/uency 0alid Male Fe,ale Total !$ ." "&& Percent !$1& ."1& "&&1& 0alid Percent !$1& ."1& "&&1& Percent !$1& "&&1&
Age group of respondents sur7eyed

Cu,ulative Fre/uency 0alid nder !" !! # !$ %& # %$ '& # '$ (& # ($ )& * Total "& !" !"! "( "' "&& Percent "&1& !"1& !-1& "!1& "(1& "'1& "&&1& 0alid Percent "&1& !"1& !-1& "!1& "(1& "'1& "&&1& Percent "&1& %"1& ($1& ."1& -)1& "&&1&
When deciding on which supermarket use? how important is 7alue for money
Cu,ulative Fre/uency 0alid " # 0ery I,portant ! % ' ( ) . - # 3ot I,portant At All Total %" "!& "& % ) ' "&& Percent %"1& "-1& !&1& "&1& %1& )1& -1& '1& "&&1& 0alid Percent %"1& "-1& !&1& "&1& %1& )1& -1& '1& "&&1& Percent %"1& '$1& )$1& .$1& -!1& --1& $)1& "&&1&
When deciding on which supermarket use? how important is location of store

Cu,ulative Fre/uency 0alid " # 0ery I,portant ! % ' ( ) . - # 3ot I,portant At All Total !" !$ "$ "% $ ( % " "&& Percent !"1& !$1& "$1& "%1& $1& (1& %1& "1& "&&1& 0alid Percent !"1& !$1& "$1& "%1& $1& (1& %1& "1& "&&1& Percent !"1& (&1& )$1& -!1& $"1& $)1& $$1& "&&1&
When deciding on which supermarket use? how important is Auality of ser7ice and staff helpfulness
Cu,ulative Fre/uency 0alid " # 0ery I,portant ! % ' ( ) . - # 3ot I,portant At All Total "! "' !' "$ "% ) ' "&& Percent "!1& "'1& !'1& "$1& "%1& -1& )1& '1& "&&1& 0alid Percent "!1& "'1& !'1& "$1& "%1& -1& )1& '1& "&&1& Percent "!1& !)1& (&1& )$1& -!1& $&1& $)1& "&&1&
When deciding on which supermarket use? how important is loyalty card schemes
Cu,ulative Fre/uency 0alid " # 0ery I,portant ! % ' ( ) . - # 3ot I,portant At All Total $ . ") !" "! ") "" "&& Percent $1& -1& .1& ")1& !"1& "!1& ")1& ""1& "&&1& 0alid Percent $1& -1& .1& ")1& !"1& "!1& ")1& ""1& "&&1& Percent $1& ".1& !'1& '&1& )"1& .%1& -$1& "&&1&
When deciding on which supermarket use? how important is product range and presentation
Cu,ulative Fre/uency 0alid " # 0ery I,portant ! % ' ( ) . - # 3ot I,portant At All Total !( "$ "! "' "( ' $ ! "&& Percent !(1& "$1& "!1& "'1& "(1& '1& $1& !1& "&&1& 0alid Percent !(1& "$1& "!1& "'1& "(1& '1& $1& !1& "&&1& Percent !(1& ''1& ()1& .&1& -(1& -$1& $-1& "&&1&
When deciding on which supermarket use? how important is o7erall store layout and appearance
Cu,ulative Fre/uency 0alid " # 0ery I,portant ! % ' ( ) . - # 3ot I,portant At All Total " $ "! "% "!. "" $ "&& Percent "1& $1& "!1& "%1& "-1& !.1& ""1& $1& "&&1& 0alid Percent "1& $1& "!1& "%1& "-1& !.1& ""1& $1& "&&1& Percent "1& "&1& !!1& %(1& (%1& -&1& $"1& "&&1&
When deciding on which supermarket use? how important is in@store promotional magaFine and flyers
Cu,ulative Fre/uency 0alid " # 0ery I,portant ! % ' ( ) . - # 3ot I,portant At All Total " " ! ( "' "(" "&& Percent "1& "1& !1& (1& -1& "'1& "-1& ("1& "&&1& 0alid Percent "1& "1& !1& (1& -1& "'1& "-1& ("1& "&&1& Percent "1& !1& '1& $1& ".1& %"1& '$1& "&&1&
When deciding on which supermarket use? how important is money off couponsG7ouchers and special promotions
Cu,ulative Fre/uency 0alid ! % ' ( ) . - # 3ot I,portant At All Total ! ' "' !( !$ ""&& Percent !1& '1& -1& "'1& !(1& !$1& "-1& "&&1& 0alid Percent !1& '1& -1& "'1& !(1& !$1& "-1& "&&1& Percent !1& )1& "'1& !-1& (%1& -!1& "&&1&
&reAuency of respondents who own and use another loyalty card including the Tesco Clu5card
Cu,ulative Fre/uency 0alid " other card ! other cards % or ,ore other cards I only own a Tesco Clu:card Total !'( "& ". "&& Percent !-1& '(1& "&1& ".1& "&&1& 0alid Percent !-1& '(1& "&1& ".1& "&&1& Percent !-1& .%1& -%1& "&&1&
&reAuency of respondents who read the Clu5card magaFine

Cu,ulative Fre/uency 0alid 7es 3o 2o,eti,es Total !( '$ !) "&& Percent !(1& '$1& !)1& "&&1& 0alid Percent !(1& '$1& !)1& "&&1& Percent !(1& .'1& "&&1&
RespondentsE perception on the Clu5card magaFine
Fre/uency 0alid It covers everything you would e<pect and is of great use -
Percent
0alid Percent
Cu,ulative Percent
-1&
"(1.
"(1.
It is a good read with so,e infor,ative articles and features It is dull5 unhelpful and of no use Total Missing Total 2yste,
!% !& (" '$ "&&
!%1& !&1& ("1& '$1& "&&1&
'(1" %$1! "&&1&
)&1"&&1&
The amount of points per e7ery M' spent respondents thought they were recei7ing
Cu,ulative Fre/uency 0alid " point for every C" ! points for every C" ( points for every C" "& points for every C" Total (! "& $ !$ "&& Percent (!1& "&1& $1& !$1& "&&1& 0alid Percent (!1& "&1& $1& !$1& "&&1& Percent (!1& )!1& ."1& "&&1&
&reAuency of respondents who increase eHpenditure or purchased specificGalternati7e products in the pursuit of collection points
Cu,ulative Fre/uency 0alid 7es 3o 4on8t 9now Total ) .) ""&& Percent )1& .)1& "-1& "&&1& 0alid Percent )1& .)1& "-1& "&&1& Percent )1& -!1& "&&1&
&reAuency of respondents who ha7e redeemed any rewards from the Clu5card scheme within the last '/ months
Cu,ulative Fre/uency 0alid 7es 3o Total )" %$ "&& Percent )"1& %$1& "&&1& 0alid Percent )"1& %$1& "&&1& Percent )"1& "&&1&
&reAuency of respondents who would descri5e themsel7es as 5eing loyal

Cu,ulative Fre/uency 0alid 7es 3o 4on8t 9now Total %) () "&& Percent %)1& (-1& )1& "&&1& 0alid Percent %)1& (-1& )1& "&&1& Percent %)1& $'1& "&&1&
&reAuency of respondents who would descri5e themsel7es as 5eing a satisfied Tesco customer
Cu,ulative Fre/uency 0alid 7es 3o 4on8t 9now Total (' !$ ". "&& Percent ('1& !$1& ".1& "&&1& 0alid Percent ('1& !$1& ".1& "&&1& Percent ('1& -%1& "&&1&
&reAuency of respondents who would continue to shop at Tesco if they did not ha7e the Clu5card scheme in place
Cu,ulative Fre/uency 0alid 7es 3o 4on8t 9now Total $( % ! "&& Percent $(1& %1& !1& "&&1& 0alid Percent $(1& %1& !1& "&&1& Percent $(1& $-1& "&&1&
&reAuency of respondents who trust Tesco products and their image

Cu,ulative Fre/uency 0alid 2trongly Agree Agree 3o Opinion 4isagree 2trongly 4isagree Total !" '. "& ") ) "&& Percent !"1& '.1& "&1& ")1& )1& "&&1& 0alid Percent !"1& '.1& "&1& ")1& )1& "&&1& Percent !"1& )-1& .-1& $'1& "&&1&
&reAuency of respondents who think that Tesco is 7ery inno7ati7e

Cu,ulative Fre/uency 0alid 2trongly Agree Agree 3o Opinion 4isagree Total "! )% !! % "&& Percent "!1& )%1& !!1& %1& "&&1& 0alid Percent "!1& )%1& !!1& %1& "&&1& Percent "!1& .(1& $.1& "&&1&
&reAuency of respondents who usually shop around to get the 5est deals
Cu,ulative Fre/uency 0alid 2trongly Agree Agree 3o Opinion 4isagree 2trongly 4isagree Total !%! "& !! "&& Percent !-1& %!1& "&1& !!1& -1& "&&1& 0alid Percent !-1& %!1& "&1& !!1& -1& "&&1& Percent !-1& )&1& .&1& $!1& "&&1&
&reAuency of respondents who eHpect rewards to 5e a part of their normal shopping eHperience
Cu,ulative Fre/uency 0alid 2trongly Agree Agree 3o Opinion 4isagree Total "& (& %& "& "&& Percent "&1& (&1& %&1& "&1& "&&1& 0alid Percent "&1& (&1& %&1& "&1& "&&1& Percent "&1& )&1& $&1& "&&1&
&reAuency of respondents who feel more could 5e done to increase their loyalty
Cu,ulative Fre/uency 0alid 2trongly Agree Agree 3o Opinion 4isagree 2trongly 4isagree Total ( .! "' . ! "&& Percent (1& .!1& "'1& .1& !1& "&&1& 0alid Percent (1& .!1& "'1& .1& !1& "&&1& Percent (1& ..1& $"1& $-1& "&&1&
What more could Tesco do to make you more loyal

Cu,ulative Fre/uency 0alid I,prove facilities for elderly people =ave discounts at the till rather than rewards =elp those without transport I,prove store layout Faster chec;outsBself service chec;outs More Clu:card points per pound Increase product range Increase store pro,otions More store entrances and e<its Increase Clu:card rewards I,proved on#line shopping I,prove Clu:card ad,inistration Total "& Percent "&1& 0alid Percent "&1& Percent "&1&
!! "' ! "&
!!1& "'1& !1& "&1&
!!1& "'1& !1& "&1&
%!1& ')1& '-1& (-1&
' "! % % % ") " "&&
'1& "!1& %1& %1& %1& ")1& "1& "&&1&
'1& "!1& %1& %1& %1& ")1& "1& "&&1&
)!1& .'1& ..1& -&1& -%1& $$1& "&&1&

Loyalty Marketing Tool

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Loyalty Marketing Tool

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School of Management

Blekinge Institute of Technology

The accuracy of customer reward program as loyalty marketing tool

Thesis for the Master!s degree in Business Administration "all#Spring $%%&

TAB ! O& CONT!NTS

C*A%T!R ON! + ,NTRO"-CT,ON

C*A%T!R TWO + ,T!RAT-R! R!9,!W

$3$3( The Tesco Timeline /(1 /(3 /(4 /(8

C*A%T!R T*R!! + $!T*O"O O#=

13=3( Strengths 13=3$ Limitations 13=31 Calidity 1(. Summary

3() C*A%T!R &O-R + R!S!ARC* &,N",N#S AN" ANA =S,S

C*A%T!R &,9! @ CONC -S,ON

')4 '). '') ''3

TAB ! O& &,#-R!S

C*A%T!R TWO + ,T!RAT-R! R!9,!W

C*A%T!R T*R!! + $!T*O"O O#=

3() C*A%T!R &O-R + R!S!ARC* &,N",N#S AN" ANA =S,S

8ould 'e Aone to Increase my Loyalty 82

8hapter 7ne * Introduction

8hapter 7ne * Introduction

'() C*A%T!R ON! + ,NTRO"-CT,ON

The Background to the Study

The evolution of supermarket shopping has advanced at an e5pediential rate (%

over the last decade3 changed the way

8hapter 7ne * Introduction aving transformed the shopping e5perience and

The Scope of the Study

8hapter 7ne * Introduction '(3 %urpose

8hapter 7ne * Introduction '(8 Summary

8hapter Two H Literature )eview

8hapter Two H Literature )eview

C*A%T!R TWO + ,T!RAT-R! R!9,!W

The Tesco Story

8hapter Two H Literature )eview

The Tesco Timeline

Characteristics of Customer Relationship $anagement :CR$;

8hapter Two H Literature )eview

8hapter Two H Literature )eview

8hapter Two H Literature )eview

8hapter Two H Literature )eview

The Relationship 5etween oyalty and Satisfaction

"oes oyalty Result to %rofit<

8hapter Two H Literature )eview

"o Customer Reward %rograms "eli7er ong Term<

8hapter Three H )esearch Methodology

8hapter Three H )esearch Methodology

C*A%T!R T*R!! + R!S!ARC* $!T*O"O O#=

Selection of Research $ethods

The aim is a complete- detailed description3

o'Rects3 Su'Rective * individuals!

8hapter Three H )esearch Methodology

The !ight@Step >uestionnaire Construction %rocedure

McGa'' ,$%%;- pg (<(2 has constructed an 0ight*Step 4uestionnaire construction procedure

>uestion Types and Wording

,nter7iewer 7ersus Respondent Completion

Sample Selection %rocedure and Sample Characteristics

Completed >uestionnaires (; $; (. $$ ($ . TOTA D '))

Strengths? imitations and 9alidity

8hapter Three H )esearch Methodology

8hapter Three H )esearch Methodology

8hapter "our H )esearch "indings and Analysis

8hapter "our H )esearch "indings and Analysis

C*A%T!R &O-R + R!S!ARC* &,N",N#S AN" ANA =S,S

-ser %rofile of Tesco Clu5card Respondents

CA%T!R TR!! + $!T*O"O O#=

3() CA%T!R &O-R + R!S!ARC &,N",N#S AN" ANA =S,S

CA%T!R TR!! + $!T*O"O O#=

3() CA%T!R &O-R + R!S!ARC &,N",N#S AN" ANA =S,S

CA%T!R TR!! + R!S!ARC* $!T*O"O O#=

CA%T!R &O-R + R!S!ARC &,N",N#S AN" ANA =S,S