1

A Balanced Scorecard and Strategy Map for the Tesco Company

Student Name

Course Code
Date

2
Executive Summary
The main aim of this paper is to provide a background to the proposed study. The study in depth
will attempt to examine the concept of organizational customer loyalty schemes as an effective
corporate strategy a Case Study of Tesco Plc. A balanced scorecard maintains traditional
measures of finance that are used in telling the story of events in the past, a sufficient story for
industrialized age corporations for which savings in long-standing capabilities and customer
relations were not significant for accomplishment.
The study will use triangulation research approach in which both qualitative and quantitative
research methods will be applied. To effectively determine the effectiveness customer loyalty
schemes as a corporate strategy being applied by Tesco Plc, the researcher will carry out detailed
surveys using questionnaires, in depth face to face interviews and though the use of focus
groups. The sample study will comprises of 150 respondents selected through random sampling
among which 113 of the respondents will be club card members which is one of the loyalty
programs implemented by Tesco. Customer loyalty programs are effective marketing strategy
which creates a bond between the company and the customers as well as clients. Customer
loyalty schemes are important in enhancing good customer relationships as well as increasing
overall revenues of the organization. This has been proved through the club card customer
loyalty programme implemented by Tesco.

3
Introduction
A Balanced Scorecard and Strategy Map for the Tesco Company
A balanced scorecard at Tesco was commenced by two researchers based at the Harvard School
of Business over two decades ago. It is specifically designed and developed to measure strategic
performance in an organization as well as its management structures. A balanced scorecard
maintains traditional measures of finance that are used in telling the story of events in the past, a
sufficient story for industrialized age corporations for which savings in long-standing capabilities
and customer relations were not significant for accomplishment (Tesco Case Study 2011).
nevertheless, these measures of finance are insufficient, for guidance and evaluations that
information companies are required to take so as to craft potential value in the future through
ventures in customers, dealers, workers, processes and technological advancement as well as
innovation.
Today, the company uses the balanced scorecard loyalty program to gain customer loyalty. Tesco
introduced the concept of club card in the year 1995 hence today the program is considered as a
largest club loyalty programs in United Kingdom. When various clients of Tesco use the card
they awarded points which later on are converted to vouchers. Additionally, the vouchers are
used as payments when customers shop at Tescos stores. The main advantage of the club card is
the mere fact that it gives all the holders free access to various things and clubs such as wine
club, Christmas and food club. The use of balanced scorecard by Tesco is perceived to be a
strong marketing concept when it comes to effective customer treatment. As this result of these

4
facts the study will attempt to find out the concept of organizational customer loyalty schemes as
an effective corporate strategy a Case Study of Tesco.
Research Aims and Objectives
The main aim of this research study is to examine in detail the idea of loyalty in retail and its
effectiveness as one of the organizational corporate strategies case study of Tesco Plc
Objectives

To assess if loyalty marketing is an important concept which should be incorporated in

overall retail business strategy

To analyze as well as identify loyalty concept and customer satisfaction

To investigate in -depth how customer loyalty contributes to overall organizational

profitability

To find out the role played by organizational loyalty schemes and how these programs
promotes customer loyalty and builds good customer relationships

To evaluate how loyalty marketing contributes to TESCO'S success and growth

Scope
The study primarily is concerned with the evaluation of customer loyalty schemes as an
important marketing strategy. To effectively achieve this objective, the study will evaluate Tesco
Balanced scorecards and how they contribute to the success of the company. Moreover, the study
will investigate the impact of Tescos club cards towards its market growth and building good
customer relationships. The study will concentrate only on the marketing side of customer
loyalty schemes hence it will not take into consideration financial impact of these schemes.

5
Over the years many research studies have been done on the concept customer loyalty
programmes and how they contribute to organizational efficiency. There are still gaps in the
literature review given the mere fact that no research study has been conducted to examine the
concept of organizational customer loyalty schemes as an effective corporate strategy. The great
emphasis placed on the aspect of customer loyalty schemes was why the researcher made a
decision to conduct a broader research on the concept.
Research Approach
The research will utilize both qualitative and quantitative research methodologies. The
combination of research methodologies is usually known as triangulation. The researcher will
use triangulation approach which will involve application of the two research methodologies.
The researcher additionally will conduct the research study basing on two research concepts
deductive and inductive. Inductive approach will be used to help the researcher in deeply
examining the concepts of loyalty (Cohen et al 2007). By using deductive kind of approach the
researcher will collect data, analyze it as well as provide the impact of loyalty programmes to a
company or an organization. On other hand using deductive approach will help the researcher to
effectively help the researcher to investigate the concept more effectively and in detailed. Both
primary and secondary sources of information will be used in which data will be collected from
secondary sources of information such as books, journals and online websites among other
sources. Primary data will be collected through printed questionnaires, interviews and focus
groups.
Research Questions

How does balanced scorecard loyalty program lead to customer loyalty and satisfaction?

How does customer loyalty result to profitability?

What role do organizational loyalty programs play in promoting customer loyalty and
good relationships?

Balance Scorecard
Good customer data is an advantage of the corporation. Rationally, anything that adds to
sustainable aggressive benefit is an advantage to the business. Because information on clientele
is helpful in better harmonizing a firm's goods as answers to customer requirements, client
information is an advantage that adds to sustainable competitive benefit (Reinartz & Kumar
2002). For instance, retailing has turned into so violently competitive that client information
possessions are now perceived as an aggressive advantage. Customer reliability programs in
trading are an effort to link client information to business data. Client databases with
procurement histories illustrating shopping inclinations can be employed in client centric
business assessments (Sargeant & West 2001). Client information is therefore valuable that
businesses which share client information ought to be careful concerning possession of the
record.
Most loyalty agendas involve some sort of remuneration for the sustained sponsorship of
their clientele. Denoted as rate of recurrence marketing, continuity agendas, prizes or point
agendas, or simply fidelity programs; the objective of these agendas is to promote and manage
relations with clientele (Kotler & Armstrong 2001). Numerous of the corporations programs try
to harden their relations with its clientele. The recompenses or prizes, as they are termed as, may
appear in the structure of free goods and services by the business, or occasionally even free
goods from other businesses. The elegant firms impose limitations on the employment of these
repayments, in order that they are utilized to augment demand when as well as where required.
The predicament is that numerous of these agendas are mistaken in plan and execution. One

7
obvious oversight is obvious when the life span calculus is contrasted to the principle for the
reimbursement. The rewards crack down on revenues in favor of the most elements. That
expenses are allowed for is not apparent at all. Given the attainment expenses, the corporation
must maintain attention on the client's cost of maintenance. If the corporation misjudged a
client's lifetime worth or devoted more assets to the attainment of the client than the proceeds
stream would substantiate, the corporation has either to reduce maintenance costs or discontinue
serving the client if probable (Stacks & Michael 2008). Loyalty agendas assist the corporation in
heartening the customers to procure the other goods of the corporation. Corporations also utilize
it to keep an eye on the loyalty performance of the customers as well as which feature of the
corporation adds to the clients loyalty.
Types of Loyalty agendas
Remunerations card
Loyalty schemes offer rewards to clientele in response for their sustained patronage. The
assessment provider is capable of gathering individual information, which is a lot more precious
for modified product contributions than is whichever of the collective data concerning the
'average' client or market fragment typically employed in customary marketing performances
(Kotler 2003). The recompense card bears redeemable points for expenses, and generates
customer purchase activities data for the supplier. A quantity of co-branded licenses has been
commenced, and an amount of grouping of retail, monetary services, and efficacies has been
created to allocate marketing resources, allocation channels, and data about client purchasing
(Zikmund 2003).). Marketing goals for these systems are meant to; engender proceeds; add
worth for, and fabricate affinity with, license holders; develop faithfulness; and increase brand
awareness. Eventually, if loyalty systems are to be foundations of sustainable viable advantage,

8
they ought to catalyze a substitute approach about the company of the worth provider (Rayner
1998). The remuneration cards assemble points as the consumer buys at a particular store. For a
particular merchandise or shopping venture, the client obtains an equal point that is documented
via the card. When the client assembles adequate points, the customer can swap it for exceptional
merchandise or he or she can achieve reductions from the hoard. Points can merely be offered if
the customer presents his or her remuneration card to the teller (Oliver 1999).
Club card
The Club license in whichever approach is not an exceptional program. similar to whichever
other purported loyalty license, a customer gets a prize for buying as well as a position of
promotional tenders to hearten them to revisit, shop extra, among others (Oliver, 2010). When
they put an application for a license, they provide their address along with some life phase
information. The other part of the client profile is gathered through gauging the conduct of the
card owners (Tony 2006). To make a system valuable it is certainly significant that the license is
utilized. For instance, Tesco has approximately 80% usage of entire turnover; thus, Tesco can
recognize who purchased what, when as well as in what circumstance for 80% of its earnings
through roughly 8 million vigorous card bearers or households (John et al 2006). It is capable of
moreover determining allocation of wallet, acquiring conduct over time as well as a quantity of
other magnitudes.
Recommendations
Data is ought to be scrutinized considering the financial outcomes and it is the accountability of
the corporation to make sure that the programmes convey the preferred results. The performance
of the balanced scorecard programs ought to always be analyzed and kept under specific
measurements (Rundle-Thiele & Bennet 2001). Regularly many businesses start in the expansion

9
of the programs and numerous of them do not succeed as a result of poor performance and
execution of the programs. consequently it is advisable that corporations assess customer
purchasing behavior and also assess the aspects of size market share size, products and services,
in order to understand the customers needs effectively, companies should not only focus on the
appropriate products and services in addition to quality approaches that initiate the aspects of
targeting the customers but include the capability to deliver the right products and services,
Before indulging on the balanced scorecard programs these are specific questions that are
required to be answered:

What are the goals of the balanced scorecard program, do they focus on customer loyalty,
the management and its enhancements, and if so how are this goals set and assessed.

How will the balanced scorecard program focus profitability. What kind of time frame is
applied to assess the program profitability?

What is the plea of the balanced scorecard program for the customers?

Critical evaluation and Analysis

Challenges for Tesco
Balanced scorecard as a Global scheme
With Tesco growing remarkably globally since almost half of its retail floor space is situated
overseas the question remains that whether the balanced scorecard will effectively work in the
market. Researchers have argued that balanced scorecard programs enhance corporation

10
turnovers. Initially there are different shopping trends that have been developed but consumer
behaviour and attitudes in other markets contrasts (Philip & Armstrong 2001). Customers in
many countries are usually influenced by the discounts that are provided and the rewards. In
some areas retails are usually underdeveloped brands and have more sophisticated markets hence
customers are probable of bargaining in a number of retail shop, even though the legal
environment may act out differently. Consequently the challenge that Tesco is probable of facing
is how to situate this scheme in overseas market in order to provide competitive advantage.
Issuing Rewards
One of the advantages of the balanced scorecards issued by Tesco to its customer is the
accumulation of the rewards rather than redeeming them when it is necessary. Through there is a
quarterly mailing program that is developed by Tesco but according to customer research argues
that customers are value there custom loyal store. They are also in a position to claim the
membership advancements that, hence this situates Tesco in a position to develop discounts and
pro motions that act as a target to the customer.

List of References
Cohen, L., Manion, L. & Morrison, R., (2007). Research methods in education. New York:
Routledge.

11
John B, Sandra M & William, W (2006). Advertising Principles and Practice. New York:
Pearson Prentice Hall.
Kotler P. & Armstrong G. (2001). Principles of Marketing 9th edition. New Jersey: PrenticeHall Inc.
Kotler P. (2003). Marketing Management, New Jersey: Prentice-Hall Inc.
Oliver R. L. (1999). Where consumer loyalty? Journal of Marketing 63, 33 44.
Oliver, R.L (2010).Satisfaction: a behavioral perspective on the consumer.2nd ed. Armonk,
N.Y: M.E. Sharpe.
Philip, K & Armstrong, G (2001). Principles of Marketing, 9th ed. New

Jersey, USA:

Prentice-Hall.
Rayner, S (1998). Customer Loyalty Schemes: Effective Implementation and
Reinartz W. & Kumar V. (2002). The Mismanagement of Customer Loyalty Harvard
Business Review Article Product Number: 1407.
Rundle-Thiele S. and Bennet R. (2001). A brand for all seasons? A discussion of brand loyalty
approaches and their applicability for different markets The Journal of Product and
Brand Management 10, 1, 25 37.
Sargeant, A & West, D (2001). Direct and Interactive marketing. New York: Oxford, Oxford
University Press.
Stacks, D & Michael, B (2008). Approach to communication theory and research.2nd ed.
Chicago: Taylor & Francis.
Tesco Case Study: How Tesco Became the UK's Largest Retailer. (2011). S.l.: Datamonitor Plc.
Tony, Y. (2006).Integrated Marketing Communications: The holistic approach. New York:
Routledge.

12
Zikmund, W. (2003). Business Research Methods. Ohio: Thompson South-western.