Customer Relationship Management at Tesco Submitted By

IHTISHAM AKHTAR
Dissertaion MBA in Marketing London of business

University of wales
September 2011

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Chapter1Table of Contents
1. Introduction....................................................................................................... 1.1. Scope of Research....................................................................................... 1.2. Aims and Objectives....................................................................................

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Background and Literature Review.................................................................... 2.1. Introduction.................................................................................................. 2.2. Tesco an Overview....................................................................................... 2.2.1. Competition at Tesco............................................................................. 2.2.2. Pricing strategies................................................................................... 2.2.3. Tesco’s Brand Position........................................................................... 2.2.4. Customer Retention............................................................................... 2.2.5. Customer Loyalty................................................................................... 2.3. Overview Definitions of Customer Relationship Management...................... 2.3.1. An Overview of the Conceptual Development of Customer Relationship Management................................................................................. 2.3.2. Customer Relationship Management in Business.................................. 2.3.3. Relationship Marketing and CRM........................................................... 2.3.4. Customer Relationship Management at Tesco....................................... 2.3.5. Reasons for Implementing CRM............................................................. 2.4. Managing Customer Relationships in the financial services......................... 2.4.1. Types of Customer Relationship Management....................................... 2.4.2. Benefits (Rewards) of Customer Relationship Management.................. 2.4.3. Problems/challenges of Customer Relationship Management............... 2.4.4. The future of Customer Relationship Management................................ 2.4.5. Conclusions............................................................................................ 3. Methodology...................................................................................................... 3.1. Overview...................................................................................................... 3.2. Research Design.......................................................................................... 3.3. Data Collection............................................................................................. 3.3.1. Primary data.......................................................................................... 3.3.2. Secondary data...................................................................................... 3.4. Data Sampling............................................................................................. 3.5. Data Analysis............................................................................................... 3.6. Validity and Reliability................................................................................. 3.7. Limitations................................................................................................... 3.8. Ethical and Legal Considerations................................................................. 3.9. Outcome...................................................................................................... 4. Results: Analysis of Findings.............................................................................. 4.1. Summary..................................................................................................... 4.2. Tesco.com and Tesco Direct........................................................................ 4.3. Customer Relationship Management and Tesco Clubcard........................... 4.4. Innovative and mobile marketing schemes.................................................

1.3. Research Questions............................................................................. 1.4. Significance..........................................................................................

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4.5. Embracing Technology................................................................................. 4.6. Conclusions of Findings................................................................................ 5. Recommendations and Conclusions.................................................................. 5.1. Recommendations....................................................................................... 5.2. Conclusions.................................................................................................. 6. REFERENCES......................................................................................................

Appendix A: Letter of Introduction............................................................... Appendix B: Interview Questions................................................................................................. Appendix C: Questionnaire...........................................................................................................

List of Figures
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Figure 1: Customer Retention: Building Long-term Relationships 15 Figure 2: Conceptual of Customer Loyalty 17 Figure 3: The Four Dimensions of Customer Relationship Management 21 Figure 4: Classifications and Composition of Customer Relationship Management 25 Figure 6: Customer perceptions on Tesco CRM success 50 Figure 7: Customer Services Ranking for CRM 50 21 Figure 5: Customer Relationships Management Conceptual Model 4 .

Abstract Customer relationship management (CRM) has been widely regarded as a company activity related to developing and retaining customers through increased satisfaction and loyalty. The scope of this project was the identification of the potential growth areas of the Tesco customer management. thereby positioning itself as global leader The outcomes of this study are relevant and enable the derivation of 5 . This dissertation discusses the relationships that keep international student customers loyal to Tesco even after graduation and how CRM can continue to contribute and assist the bank to retain its customer base for the long-term benefits of both parties. Customer relationship at Tesco has helped the company to retain its customer base over the years and has effectively enhanced the international increase as they take their experience with them wherever they went. The theoretical framework was positioned to ‘investigate into Customer Relationship Management (CRM) at Tesco’. which is an activity that has been supporting the growth of Tesco assist the giant supermarket to retain and improve on its market leadership. and to learn lessons from of how Tesco was able to make customer relationship management at Tesco success. many scholars have claimed that the precise meaning of CRM is not always clear in the literature and it is perceived too young to be fully formed yet. However. In fact. The main purpose of this research is the study and analysis of Tesco’s customer relationship management. there is still much debate over exactly what constitutes CRM.

I would also like to acknowledge the support of my family especially my parents. Customer positioning is very important and it will extensively be discussed.recommendations that when followed can enable the replicate of this success. ACKNOWLEDGEMENTS I write to sincerely acknowledge the guidance of my Supervisor without whom this work would not have been possible. work colleagues and classmates who were a great source of support during some difficult times in my educational pursuits. 6 . This study will also study and discuss the positioning of luxury brands at the same shelves as those of competitors products that has the advantage of consumer memory due to years of awareness and advertising that has contributed the customer’s continuously loyalty all over the years to date. I will also like to acknowledge the help of those that helped with discussions on Customer Relationship Management issues that have contributed in widening my understanding and have helped me in formulating the answers to the research questions which was very useful. I would also like to acknowledge the support of my friends.

Tesco is the number one food retailer in the UK with stores in UK. where in 1914. insurance and telecommunication. Europe and Asia. Tesco also offers financial services and products. customer loyalty and expansion into other markets such as banking. Harts and Cullens grocery 7 . war veteran Jack Cohen began to sell groceries. which increased to 28% in2004 and it currently controls over 34% of the UK grocery market (UK. The brand name of Tesco first appeared on packets of tea in the 1920s. the company announced that it was purchasing the family-run chain Adminstore. Tesco is the largest petrol retailer and it operates Tesco Finance in association with Royal bank of Scotland. 2010). In 2004.com services (Tesco. Tesco now operates 2318 stores in twelve countries and has over 328.6% of the grocery market in the UK. This diversification has been a great success that 20% of giant market leader sales in 2004 were from non food. 000 employees and is now the principal private employer in the UK. insurance and banking services and many varied services. which operates the Europa.com. Tesco has seen a rapid growth and transformation over the years to become the UK most profitable and giant supermarket and overtook Sainsbury in 1995. Introduction Tesco was originated in the markets of London’s East End. In recent years Tesco’s business growth was based on abroad expansion and on trading in merchandise other than foods. Tesco has captured 15. and Tesco.1. 2004). Tesco’s success in UK has been mainly been built on low prices. In 200.

even though the Office of Fair Trading (OFT) cleared its bid. the economic slump and Tesco’s response to the competition by way of discounts on many of its brands. as the federation of Wholesale Distributions (FWD) attempted to block the deal. notwithstanding Tesco’s position as the giant retailer in the United Kingdom (UK). Unpromisingly.ebscohost.9% (Thompson.7% in 2008 and a forecast (in 2008) of profits of 2. This slump in Tesco’s sales of 2008 was 8 . for £53. 2008).local UK forecast was not that rosy with only a 2% growth which was its worst for 16 years. Although the overall performance of Tesco is not all gloomy as witnessed by overall global boost of sales of 11. Morrisons (Morrisons. By April 2004. 2010) and Aldi (Aldi. its . the slowing down of Tesco’s sales was partly due to them losing their customers to their competitors. its performance in terms of sales was worst in 16 years in 2008 which raised fears over its growth and domination of the UK market was seriously threatened (Thompson.com/ehost/detail?vid=5&hid=112&sid=04bfca2632d1-4eb2-b343. much of the cause of the slowdown was due to Tesco’s vulnerability to the recession and its consequent impact on consumer spending habits which has been completely transformed. Although this slowing down of Tesco’s growth was due to stiff competition from its main competitors such as Asda. 2008).9% and Sainsbury’s 3. Tesco faced a hurdle in its acquisition of Adminstore. 2010). the 2% sales enlargement of Tesco was below that of Asda’s 6. The FWD argue that the OFT’s decision was flawed since the acquisition would make it virtually impossible for independent retailers to open new stores in central London (http://web.c1fe7c1f3b6e %40sessionmgr103&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d %3d#db=bth&AN=36585680) On the other hand.7 million. This trouncing of sales and customers to their main competitors in the UK was a consequence of falling food prices.outlets in the London area.9 billion in 2008. In fact in 2008. apart from a changing customer spending and shopping patterns due to the economic downturn.

One of the key objectives of this research is the study of the customer relationship management attached to its success over the years amidst the fierce competition facing the giant store.Scope of Research Customer relationship management (CRM) is getting increasingly more paramount and powerful as evidenced by the move to creating CRM 9 . For example.2 billion Tesco in 2007. Customer positioning is very important and it will extensively be discussed. a position it maintains today. notwithstanding the kingship of the customer. which is an activity that has been supporting the growth of Tesco assist the giant supermarket to retain and improve on its market leadership. This research will investigate why customer relationship has helped the giant store from being nowhere to become the market leader in 1995.just a blip which spurred the retail giant to fight back. Customer relationship at Tesco has helped the company to retain its customer base over the years and has effectively enhanced the international increase as they take their experience with them wherever they went. which is one of Tesco’s premium labels which overtook Kellogg as UK’s biggest grocery brand and posted of £1. a decade ago. This relationship with customers saw the development of Tesco products and services brands. The main purpose of this research is the study and analysis of Tesco’s customer relationship management. and it will study how Tesco was successful despite all odds in the market. businesses including supermarkets have being mindful of the importance of customer management and most businesses thought customer relationship was not the reason for driving sales.1. 1. This study will also study and discuss the positioning of luxury brands at the same shelves as those of competitors products that has the advantage of consumer memory due to years of awareness and advertising that has contributed the customer’s continuously loyalty all over the years to date. The outcomes of this study are relevant and enable the derivation of recommendations that when followed can enable the replicate of this success.

for example. and to learn lessons from of how Tesco was able to make customer relationship management at Tesco success. which has the aim of customer satisfaction for future expansion and driving sales. This study will enable the drawing up of recommendations of value to be made. 1. Consequently. Tesco customer relationship has continued to attract strong market penetration and in roads. The objective also is what future also holds for relationship marketing that saw the development of Tesco Direct (Tesco’s online arm) as a result of the feedback the company continued to receive from loyal customers. this 10 . This has and is continuously driving the sales force of business. Due to this.3. Tesco was not the leader the industry but due to organized and planned marketing relationship management in dealing with customers across the entire store. Tesco continue to increase market share through offering better value and providing more choice and convenience to customers. thereby ultimately outstripping traditional store sales in future. The scope of this project was the identification of the potential growth areas of the Tesco customer management. their history changed from being a follower to a market leader by overtaking its main competitor. it is necessary to formulate appropriate research questions that need answers. 1.2. Another objective of this research is to gain an in-depth knowledge of the workings of Tesco customer relationship management.departments across most businesses with supermarkets inclusive. Research Questions In order to achieve the research objective.Aims and Objectives The key aims of this study are the establishment of the current strength of the customer relationship management at Tesco and to analyse the key factors behind its success. from conception to market domination. thereby positioning itself as global leader. Sainsbury’s in 1995. and they are establishing themselves as big money makers for their companies. The study was not limited to the critical analysis and observations but an overall study of the Tesco Customer relationship management.

1) Why customers continue to be loyal to Tesco and not changing to their competitor? 2) What is it that Tesco does to keep and retain customers and what add-ons services do the market leader offer to earn their customer loyalty? 3) What are customers attitudes towards the supermarket and how does the market leader relates and manages such attitudinal behaviours? 4) What is the role of customer relationship management in the retention Tesco’s customers and the method used to attract the loyal customers its competitors such as Marks and Spencer’s ( M&S). It will also provide an insight into whether IT is developing too fast for financial services industry and whether the financial services industry should keep abreast with IT developments or use the technology that suits their needs 2. Sainsbury’s and Waitrose? 5) How are the online retailing arm Tesco. Significance The result of this study can potentially ensure the use of the optimum IT systems that will enhance performance levels and ensure that financial services companies can remain competitive by using the appropriate IT systems that are customised for their needs. as well as to have a 11 . it development and the impact it has financial services. Background and Literature Review 2.Introduction Customer Relationship Management (CRM) has in the main been taken to generate a competitive edge for an organisation.research aims to provide answers to the following research questions.4. It will enable an understanding of the relationship between IT technology.com and its new Argos-style catalogue service boosting Tesco Direct sales and market share for Tesco CRM and how they transform customers’ habits? 1.1.

The overall reason for the research is to find out how the market leader continued to position and reposition its marketing strategies so as to know. where in 1914. The third and final part focuses on managing customer relationships. problems and challenges of CRM. CRM at Tesco and the reasons for implementing CRM in businesses. relationship marketing and CRM. the CRM situation in the future and the conclusions drawn from the concept. war veteran Jack Cohen began to sell groceries. It looks into the fierce competition the industry is experiencing from competitors and the pricing strategy it adopts to continue win more customers and customer loyalty. keep and maintain customers and how CRM can continue to contribute and assist the store to retain its customer base for long-term benefits for both parties. Nevertheless. This study seeks to find out why customers continued to shop at the market leader stores amidst the fierce competition that is facing the industry and to explore the relationships that keep customers loyal to the store. The brand name of Tesco first appeared on packets of tea in the 1920s. The second part looks at customer relationship management from a general perspective. there is still much debate over exactly what the makeup is. This chapter is divided into three parts.Tesco an Overview Tesco was originated in the markets of London’s East End. different and therefore has no one meaning in its strictest sense.2. Tesco has seen a rapid 12 .positive impact on organisational performance. This supports the high amount of research and the focus that the concept has continued to experience in recent times. The first part examines an overview of Tesco as a company. more or so the commencement of the deregulation of financial services related sectors in the midst 1980. 2. definitions of CRM are everywhere. and. In fact. the rewards (benefits) of CRM. CRM in business.

The FWD argue that the OFT’s decision was flawed since the acquisition would make it virtually impossible for independent retailers to open new stores in central London 13 . 000 employees and is now the principal private employer in the UK. Tesco has captured 15. Tesco now operates 2318 stores in twelve countries and has over 328. Tesco is the largest petrol retailer and it operates Tesco Finance in association with Royal bank of Scotland. and Tesco. In recent years Tesco’s business growth was based on abroad expansion and on trading in merchandise other than foods. 2010). Tesco is the number one food retailer in the UK with stores in UK. Europe and Asia.com services (Tesco.7 million. for £53. which increased to 28% in2004 and it currently controls over 34% of the UK grocery market (UK. Tesco is the largest petrol retailer and it operates Tesco Finance in association with Royal bank of Scotland. In 200. Tesco faced a hurdle in its acquisition of Adminstore. By April 2004. In 2004. Tesco’s success in UK has been mainly been built on low prices. and Tesco. insurance and telecommunication. Tesco also offers financial services and products. Tesco is the number one food retailer in the UK with stores in UK. the company announced that it was purchasing the family-run chain Adminstore. which operates the Europa.com services (Tesco.com. Europe and Asia. as the federation of Wholesale Distributions (FWD) attempted to block the deal.com. customer loyalty and expansion into other markets such as banking. Harts and Cullens grocery outlets in the London area. insurance and banking services and many varied services. 2004). even though the Office of Fair Trading (OFT) cleared its bid. This diversification has been a great success that 20% of giant market leader sales in 2004 were from non food.growth and transformation over the years to become the UK most profitable and giant supermarket and overtook Sainsbury in 1995. Tesco also offers financial services and products. insurance and banking services and many varied services.6% of the grocery market in the UK. 2010).

2011) which covers 96% of the UK. UK health and beauty ranges.com (Tesco. The main strength of Tesco is its huge and increasing share of the market in the UK.com/ehost/detail?vid=5&hid=112&sid=04bfca2632d1-4eb2-b343.(http://web. The Tesco. The continued expansion of Tesco imposes restrictions on available money other operations and there is the danger that Tesco’s expansion and acquisition of other companies can reduce revenues and reduce quality of its products and services. which makes it difficult for its competitors to compete One of the weaknesses of Tesco is that it is too reliant on the UK market and any changes in the UK market can have a direct impact on Tesco. Any merger of Tesco’s competitors can threaten Tesco as the dominant force in the UK market. This is another platform from which Tesco can derive huge revenues. an opportunity to increase its share of the retail market. Tesco’s dominant share of the food retail service and its increasing share of the retail market will enable Tesco to expand even more and gain an even bigger share of the non food market. Tesco also operates tesco. This will see a continuous increase in revenues. There is also the opportunity the opportunity overseas growth to increase earnings. There is also the perception by many consumers of Tesco products being of low quality. insurance and banking services.c1fe7c1f3b6e %40sessionmgr103&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d %3d#db=bth&AN=36585680) Tesco is the number one food retailer in the UK with stores in UK. Tesco’s has a firm and unassailable share of the UK market which has seen its sales of 71% more than Sainsbury’s.ebscohost.com. This can be achieved by using its market share and low cost brand and advertising skills to spur growth. develop its telecoms business. Europe and Asia. Tesco is has millions of Clubcard users which offers it the opportunity to have invaluable insight in general 14 . Tesco also offers financial services and products. There is however.com is very successful with more than a million households having used it. Telecommunication products and many varied services.

on its part. Tesco. since being bought by Walmart is a major competitor capable of competing with Tesco on price and variety of food items. 15 . and the parent company is threat to the Tesco brand. There are threats that Tesco has to be aware of and which it should manage. Tesco’s debts may increase due to its growth which is expensive. Additionally. introduced the Tesco finest in 1998 and this has helped the giant store to continue to win new businesses and more customers to establish a market leader position. since being bought by Walmart is a major competitor capable of competing with Tesco on price and variety of food items. Asda. which are expensive.2. Additionally. Tesco’s debts may increase due to its growth which is expensive.and personal consumer spending patterns which can be used to tailor marketing campaigns with great effect. Due to the current market fragility that businesses continue to face as result fierce competition for increased revenue growth and customer growth and retention. any new brands needs investment and well coordinated marketing campaigns. any new brands needs investment and well coordinated marketing campaigns.Competition at Tesco In the current business atmosphere. which are expensive.1. Asda. 2. Tesco is has millions of Clubcard users which offers it the opportunity to have invaluable insight in general and personal consumer spending patterns which can be used to tailor marketing campaigns with great effect. The potential price war between its main competitors can lead to a reduction in profitability. and the parent company is threat to the Tesco brand. business of all kinds have embarked on product brand positioning in order to win more customers. there are threats that Tesco has to be aware of and which it should manage. The potential price war between its main competitors can lead to a reduction in profitability.

the company’s pricing strategy is also regionspecific.3% like-for-like sales growth in the three months to the end of September 2010 (Burrows. and to appeal to every conceivable part of the UK consumer base. and coupled with perhaps the strongest and most visible brand on the British high street. Tesco’s retail positioning is unique. including bread. roast pork belly and endorsement from the celebrity chef Jamie Oliver (Sweney. 2010). an area of London with a large share of the population coming from ethnic minorities. which consists of 23 products designed to appeal to shoppers who are eating out less.141 products ((Hall & Wallop. Sainsbury’s Taste the difference was launched in 2000 (sainsbury. Tesco aims for a total positioning. Sainsbury overhauled its Taste the Difference and re-launched it in a multimillion pound campaign which saw the range expanded from 150 lines to 1. meat and grocery items. ready meals. Asda also launched its Asda Extra special in 2004 which however concentrated more on its mid range brands named ’Chosen by You’. cheese. this allowed the company to easily move into other areas of retailing. For example. 2000). the Tesco outlet in Brixton. Similarly. The extent of its retail reach and buying power is enormous. fruit and vegetables. offers a wide range of Afro-Caribbean and Asian produce.Although Tesco's Finest was the first to be launched. 2010). Its “The Best” brand was launched in 2005. The re-launched also focused around the new ‘Bistro line’ of restaurant-quality food. This reflects the company’s strategy of aiming to be all things to all consumers. The Sainsbury’s taste the difference brands has more than 350 foods and has a product range that consists of products from all around the store. The range was re-energized by the introduction of products such as slow cooked lamb shanks. changed the packaging and design of its label ‘The Best’ in 2008. The retailer aims to maximise the potential of the local consumer base for its stores. with lower prices offered in lower-income areas and higher prices in more affluent areas across the majority of its formats 16 . Morrison on the other hand. 2010)). primarily due to its sheer size. This helped Asda post a 1. In 2010.

Despite the less cost. Several factors are involved in these higher profit margins enjoyed by the private label brands like Tesco Finest. It launched its Discount Brands private label line in order to help families with limited budgets over the course of the recession. 2002). and it provides one of the most important forms of information available to consumers when making a purchasing decision ((Jin & Sternquist. although price variations tend to have a big impact on pricing decisions private labelled brands still enjoy about 20 to 44% higher gross profit margins than established brands. Although Tesco Finest brands can command premium prices given that their notion of exclusiveness. According to (Davies & Brito. 1997) result in deal seekers becoming regular purchasers of privately labelled brands over time. and as a result of this pricing awareness of customers. Constant and innovative promotions and targeted and mobile marketing campaigns of privately labelled brands may sway consumers to become aware of price variation which may eventually and potentially result in a “trade down” of a privately labelled item. This range was launched in an attempt to challenge cut-price 17 . the private label brand can still command premium price. Consequently.2.3.2. many lines of Tesco Finest brands get compared to regular. Brand position of the Tesco Finest is also another critical business pillar.Tesco’s Brand Position Tesco continues to invest heavily in cutting prices and increasing promotional activity. Prices of established brands and private label differs among different retailers and certain products types. and sometimes even compared to well-established manufacturers brands. which according to (Steenkamp & Dekimpe. they get stiff competition from their competitors and indeed from within the same store from the Tesco valued brands.2. The reasons include cost saving in research and development budget.2. 2002). 2. product launch and their advertising budget is comparatively very low.Pricing strategies Pricing is very important in the consumer market. value Tesco brands.

many retailer ownbrands are now shifting to premium brands to reflect what de Chernatony described as the “personality of stores” (de Chernatony. these premium own-brands are designed to compete with leading brands while at the same time differentiating their Tesco brands from other brands. 2010). Originally introduced as cheap. 1988).German discounters Aldi and Lidl. Tesco’s private label products successfully appeal to a wide cross-section of consumers in the UK. low-price alternatives to manufacturer brands. In its packaged food range. premium store brands like Tesco Finest are often not priced lower than other brands (Laaksonen & Reynolds. The company offers distinct ranges of private label products. For example Tesco Finest Premier Cru champagne was named the best non vintage champagne at the 2005 International Wine Challenge (Steenkamp & Dekimpe. the last two decades have seen a change in positioning of retailer own-brands. and taking the position factor into consideration. particularly in the UK. With widespread acceptance. Notwithstanding their success. This changing position of retailer own-brands appears to result from the fact that retailers now take an active role in developing and marketing their own proprietary brands rather than being a passive distributor of brands. there is still scope for growth. Tesco also features the Healthy Living. with these priced in order to attract as wide a consumer base as possible. 1994). 1997). The market positioning of premium store brands provides consumers with a high value-added products with an innovative design and sometimes even higher quality than other brands. Tesco's strategy for the recession was focused on low prices and its Clubcard loyalty scheme. but at a cheaper level than its Finest line. with these aimed at more health-conscious consumers Over the years and most particularly. 18 . Organic and Whole foods ranges. but this was in addition to Tesco looking to the premium marketing positioning (Burrows. Therefore. from Value to Finest. The goods on offer within the range are priced at a higher level than Tesco’s Value line.

”. 1991.2. anytime technologies. that were previously scarce or at least difficult to access. 1990. Because fewer customers churn. 1996. Coviello et al. customer expectations of employees in service organisations have 19 . Venetis et al (2004) European Journal of Marketing Vol. Buttle. customer replacement costs fall..Customer Retention Customer retention has been shown to be a primary goal in firms that practice relationship marketing (Gro¨nroos. p. Finally. 11/12. Figure 7 Customer Retention: Building long-term relationships No.. All of these conditions combine to increase the net present value of retained customers. Lindgreen et al. for example. retained customers may pay higher prices than newly acquired customers. the volumes purchased grow and customer referrals increase. and are less likely to receive discounted offers that are often made to acquire new customers.4. 2002). using anywhere. Thus. relationship maintenance costs fall as both customer and supplier learn more about each other. 38 Customers are able to access information. Reichheld. 2004).2. (2000. As customer tenure lengthens. compute that “it can be [up to] ten times more expensive to win a customer than to retain a customer – and the cost of bringing a new customer to the same level of profitability as the lost one is up to 16 times more. 2001) there appears to be a general consensus that focusing on customer retention can yield several economic benefits (Dawkins and Reichheld. 2004 Source: Karin A. Simultaneously. 295). While the precise meaning and measurement of customer retention can vary between industries and firms (Aspinall et al.

2.Loyalty mainly expressed in terms of revealed behaviour (i. Like CRM. circumstances. loyalty is something that consumers may exhibit to brands. services. Oliver. and/or the purchase situation (Model 3) (see figure 20 . Dick and Basu.Loyalty as primarily an attitude that sometimes leads to a relationship with a brand Model 1) II. At a very general level.e.increased because customers have become more knowledgeable about the products and services available to them. stores. products categories (cigarettes) and activities (swimming). In this context however.Customer Loyalty Customer loyalty presents a paradox. 1999). 1978. the pattern of past purchases (Model 2). This influences customer choices about their use of service delivery channel in a multi-channel service delivery environment 2. the use of Clubcards has increasingly made customers to stick to their store.5. there is still no universally accepted definition (Jacoby and Chestnut. it is used to emphasize that loyalty is a feature of people (consumers) rather than something inherent in brands. 1). Buying moderated by the individual’s characteristics. In the case of Tesco. Instead there are three famous conceptualization as follows: I. 1994. and III. Many people view it as mainly an attitudinal base pattern that can be predisposed significantly by customer relationship management initiatives such as the increasing popular loyalty and affinity programs.

This is seen as taking the form of a consistently favourable set of stated beliefs towards of the brand purchased as evident with the case of Tesco brand. M.392) defines customer loyalty as: A deeply held commitment to rebuy or repatronize a preferred product/service consistently in the future.4 and customer loyalty With loyalty as primarily an attitude that sometimes leads to a relationship with the brand (Model 1) Many people argue that there must be strong ‘attitudinal commitment’ to a brand for true loyalty to exist.20 No. These attitudes may be measured by asking how much people say they like the brand. p. Oliver (1997. thereby causing repetitive same brand or same brand-set purchasing despite situational influences and marketing efforts having the potential to cause switching behaviour. Vol.D – Customer loyalty programmes (2003) pp294-316. feel committed to it – relative to competing brands. An extension of the “attitudes define loyalty” perspective is to suggest 21 . To support the above notion and beliefs.Figure 7 Conceptualization of customer loyalty Source: Uncles.

Kahn et al. It suggests that most consumers have split-loyalty portfolios of habitually-bought brands. 22 .. argue that the best conceptualisation of loyalty is to allow the relationship between attitude and behaviour to be moderated by contingency variables such as the individual’s current circumstances. Buying moderated by the individual’s characteristics. This is especially in terms of cross-selling and up-selling. their characteristics. although this success is also closely linked to the high-profile advertising. circumstances. 1988) The attitude approach taken by Tesco aims to increase sales by enhancing beliefs about the brand and strengthening the emotional commitment of their customers to their brand. rather than as highly persuasive information that fundamentally change their attitudes and/or levels of commitment (Ehrenberg et al. and/or the purchase situation faced. the contingency approach. 1996. and/or the purchase situation (Model 3) Supporters of this model. Brown. Loyalty programmes also designed to strengthen commitment and create velvet handcuffs to bond the customer to the brand. The controversy comes about because loyalty in this model is defined mainly with reference to the pattern of past purchases with only secondary regard to the underlying consumer motivation or commitment to the brand (Fader and Hardie. This way of thinking has become commonplace in communication. this model is arguably the most controversial but the best supported by data. branding and CRM textbooks. Here it is assumed that consumers tend to view advertising and other forms of marketing communication more as publicity that sustains awareness and offers reinforcement. but they will be of secondary importance to the functional adequacy of the brand.that consumers form relationships with some of their brands.. This is not to suggest that attitudes will not form towards these brands over time (model 1). 1998. 2000). The Tesco Clubcard scheme is regarded as a financial success and has continued to help push and grow the size (and thus sales revenue) of a typical brand – when used in combination with other marketing programmes. Loyalty mainly in terms of revealed behaviour (Model 2) Paradoxically.

In another aspect. This means it is an integrated process that is aimed at continuously improvising ways of knowing an organization’s customers and how to attract new ones by utilizing your capabilities and competencies. This means that organizations must have strategies of identifying. another dimension of CRM is. and different. and strategic developments in the management of Tesco (Broadbent. 1997) 2. which seeks to integrate. and enhances multiple-delivery channel that allows companies to capture profitable new customers and improve service on existing customers”. “it is a continuous performance initiative to increase a company’s knowledge of its customers. Referring to the works of McDonald (2007:p388). McDonald (2007) offers a selection of what could be referred to as CRM. and manage the cost of doing business with less profitable customers”. 2000. the term Customer Relationship Management has been defined by Foss & Stone (2002) as “the business strategy and mode of operation deployed to maintain and develop relationship with profitable customers. It all depends on which perspectives one is looking at. knowing and retaining their valuable customers in order to increase their long-term operational efficiencies and profitability at all levels of business operations and also finds solutions to reduce the operational costs with less valuable and profitable ones.product range extension. Definitions of CRM are everywhere. CRM can be defined as “consistent high-quality customer support across all communication channels and business functions. 2007:388)”.3. East and Hogg. 23 . their customers and business partners”. This means it is focuses on customer support across towards satisfying customers needs using all the available channels of communication within the organization setup.Overview Definitions of Customer Relationship Management “Customer Relationship Management (CRM) is really too young to be fully formed yet and what it is rather depends on who you happen to be talking to – or who is trying to sell it to you (McDonald. based on common information shared by employees.

their CRM initiatives are focused on improving customer service. product development. CRM may mean an emerging research paradigm in marketing (Parvatiyar and Sheth. 1995 and 2004). Carriers want their CRM initiatives to help establish a single view of a customer or household with constantly updated information that can be seen by sales. For example. as an elaborate marketing or customer service discipline (Peppers and Rogers.3. many start at the same point: creating a unified view of their customers across sales. In fact. However. Others think of CRM.An Overview of the Conceptual Development of Customer Relationship Management. 2001). and service functions.Research has shown in general that according to companies. CRM may mean customer retention or customer partnering (Peppers and Rogers. 1991) or a technology or software solution that helps track data and information (data base marketing) about customers to enable better customer service. and target marketing. 2.1. Customer Relationship Management (CRM) has generally been assumed to create a competitive edge for an organisation. 1992).one. Luck and Lancaster (2003) note that the term has become a buzzword. many scholars have claimed that the precise meaning of CRM is not always clear in the literature (McDonald. 1995. there is still much debate over exactly what constitutes CRM. with the concept being used to reflect a number of differing themes or perspectives. 2001). At a strategic level. at tactical level. Nevin (1995). as well as to have a positive impact on organisational performance. up selling. Thus a clarification and conceptualization of what CRM actually means is needed to ensure that our knowledge of CRM grows in a snowballing 24 . service. Parvatiyar and Sheth. 2002). Nevin. Vavra. Such information could be used for cross selling. While there are many paths that companies can take to achieve those objectives. 2002). marketing. improving retention. 1993. CRM may mean an electronic marketing (Blattberg and Deighton. or one – to. At a theoretical level. 2007. The system should ensure that customers will never be orphaned and will receive excellent customer service (Dynia. Furthermore. and getting an enterprise-wide view of the customer. and marketing departments (Dynia. increasing revenue.

CRM as an emerging paradigm in marketing. Figure 7: The Four Dimensions of Customer Relationships Management Source: Sin. is in need of further theoretical development. to date no systematic attempt has been made to develop a valid measure of it. Given these problems. Moreover. Gummesson (2002a) observes that CRM. In fact. as an upand-coming discipline. will remain underdeveloped until its key dimensions have been identified and operationalised. while we note and observe that there has been an increase in the focus paid to CRM by practitioners and academics. 25 .Customer Relationship Management in Business CRM is an information system that tracks customers’ interactions with the firm and allows employees to instantly pull up information about customers such as past and current sales and/or service records.manner. 2004). LYM et al (2003) CRM: Conceptual and scale of development The identification of the fundamental dimensions of CRM is therefore very paramount. It is no longer sufficient to advise practitioners or researchers that the key to successful marketing is through CRM without providing information on what dimensions actually constitute relationships upon which CRM can be considered to exist (cited from Sin.3.2. outstanding records or unsolved problem calls. or to assess its influence on business performance. et al. 2.

marketing. Upper Saddle River. by doing something with their logos or catchy styles that can give 26 . He proposed the following 2 goals: 1). and what problems they have had with their purchases. Prentice-Hall PTR. is retained in a CRM database.Figure 7: Classification of framework for CRM articles (Composition of CRM) Source: Kincaid. The system not only uses this data to generate simple reports but can produce critical information to help coordinate sales. Information such as customer names. (2003). This agrees with the concept put forward by peppers & Rogers (1995 & 2004) that describes CRM to mean a number of differing themes or perspectives. NJ. A CRM system stores all information about its customers in a data base. Freeland (2003) suggests that companies should define the goal of implementing CRM in their businesses. Customer Relationship Management: Getting it Right!. Guiding principles . what they bought. and customer service departments to better and faster serve customers’ needs. J.Organisations who want to reshape the focus of their CRM programs should follow these three guiding principles: • Customer experience is essential to creating brand value – i.W. Again this supports the reasoning argued by McDonald (2007) that CRM rather depends on who you happen to be talking to – or who is trying to sell it you for one to understand the meaning attached to it.e.

1995.2004)..g.customers the impression or awareness that it is their product or service. 1995)(cited from sin et al.3. • Transforming marketing. Crosby et al. To achieve these. Identifying where money is being wasted or misspent on the market while ignoring the “market noise” to efficiently quantify and optimize all resources. Hart and Johnson. Improving the quality of customer interactions while at the same time driving down the cost of service. The ability to understand customer needs and accurately predict their behaviour. 1983. 2. Dwyer et al. Components for success.3.. CRM programs should be planned according to both financial ability and risk elimination to the best of company’s practice. 1994.Relationship Marketing and CRM Although past studies have made significant progress toward understanding the importance of cooperative and collaborative relationships between buyers and sellers (e. 2). 2002. Every contact that the company has with its customers determines the economic value of its future. There are still some questions remaining to trash out: 27 . Identifying the customers that the company wants based on its existing business corporate mission. • • Gaining customer insights. Palmer. • CRM programs should be executed in a pragmatic way that mitigates financial and delivery risk. Realizing greater value from customer contact activities. 1990. 2000. organisations should Organize their CRM initiatives around the following four components: • Setting the strategy. • Customer insight should inform and drive customer treatment. Morgan and Hunt. 1987. Parvatiyar and Sheth. Berry. 1999.

interactive and profitable exchanges with selected customers (partners) over time is engaged in relationship marketing. It is directed to long term win-win relationships with individual customers. lasting relationships with individual accounts. For example.” Recently. development and enhancement of individualized customer relationships with carefully targeted customers and customer groups resulting in maximizing their total customer life-time value.  What precisely is CRM? How can it be implemented properly in a business organisation? In the marketing literature.” Harker (1999) proposes the following definition: “An organization engaged in proactively creating. Jackson (1985) suggests CRM to mean “marketing oriented toward strong. that these relationships are longitudinal in nature.” Although the above definitions differ somewhat. recognizing that marketing is embedded in the total management of the networks of the selling organization. networks and interaction.” On the other hand. the market and society. and value is jointly created between the parties involved. Gummesson (2002b) defines it as “marketing based on relationships. 2000). by broadening the scope of relationship marketing and viewing it in a comprehensive management and social context. Berry (1983) defines relationship marketing as “attracting. and that both parties benefit in the relationship 28 .” Kotler and Armstrong (2004) define CRM as “the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. maintaining and enhancing customer relationships.” Payne (2000) asserts that CRM is concerned with “the creation. they all indicate that the core theme of CRM and relationship marketing perspectives revolves around its focus on individual buyer-seller relationships. the terms CRM and relationship marketing are used almost interchangeably (Parvatiyar and Sheth. developing and maintaining committed.

relationship marketing is relatively more strategic in nature. On the other hand.established. that firm must have customers or the enterprise isn’t a business – it’s a hobby. reciprocity.4. and grow customers. 2. Whether a business focuses its effort on product innovation. both the CRM and relationship marketing concept can be viewed as a distinct organizational culture/value that puts the buyer-seller relationship at the center of the firm’s strategic or operational thinking. Second. keep. some important differences between CRM and relationship marketing do exist: first. and enhancing customer relationships. 2004) Figure 7: Customer Relationship Management conceptual model Sources: Mercedes Marzo-Navarro et al (2004) pp.3. or customer intimacy. 2000).436 29 . empathy. operational efficiency and low price. from a firm’s perspective. CRM is more managerial per se. focusing on how management can make concerted efforts in attracting. for public as well as private enterprise (Peppers & Rogers. once you strip away all the activities that keep a business busy every day. Zablah et al.Customer Relationship Management at Tesco The goal of every enterprise.425 . relationship marketing is relatively more emotional and behavioural. This is true for nonprofits (where the “customers” may be donors or volunteers as well as for firms large and small. In short. and trust (Yau et al. is simply to get.. maintaining. 2001. centering on such variables as bonding. 2004).. In spite of the commonalities described above. whilst CRM is used in a more tactical sense (Ryals and Payne.

2004). Rowley.com/results.aspx?q=CRM+media&src=IE-SearchBox).live. Some of these recommendations offered by customers enhanced the advent of an appropriate management tool of managing customers’ relationships for the achievement of organizations strategies and objectives. in terms of their level of financial knowledge. global economics. which means financial institutions have put themselves at risk of losing customers (http://search.5. Change is occurring across the spectrum of segments— from retail consumers to commercial customers. Kandampully and duddy (1999) quote that “it 30 . etc   Attracting new customers Cost savings Researches over the years have shown that it is mostly costly to gain a new customer than retaining an existing customer. marketing. Yet satisfaction levels have not kept pace. needs. businesses including Tesco need to hedge against the risk of losing customers by coming up with management techniques of how to relate to their customers. For example. and regulatory tightening have put pressure on the financial services industry to evolve how it approaches customers.Over the past decade new technology. Several authors highlight the strategic advantage of maintaining the customer base as opposed to merely attracting new customers (Luck and Lancaster. This would entice customers to continue with loyalty and offer their businesses to the institutions that are outward looking and taking on board customer suggestions of future improvements.Reasons for Implementing CRM The motivating factors for companies moving towards Customer Relationship Management are numerous. 2003. from private clients to institutions. operations finance. and their service expectations. In this regards. 2.3. Customers and partners are savvier today than ever before. and their brokers and agents. The major considerations for companies to using CRM are to:    Improve customer satisfaction level Retain existing customers and to improve customer lifetime value Providing better strategic information to sales.

Managing Customer Relationships in the financial services The financial industry has faced unprecedented changes since the advent of the deregulation of the financial services industry in the midst 1980. Customer retention is less costly and. 31 . Banks have evolved from providers of simple banking services to vast groups selling services that range from banking. 2. Zineldin (1999) argues that getting customers is important. Due to this development. own and then maximise and manage customer relationships: their biggest asset and then offer them high service qualities in order to keep them satisfy and retain them (Rust and Zahorik. Thus the need to develop business strategy that allows them to identify customers.1. interact with customers and then provide customise treatment to their customers for the long-term relationship and profitability. Brown (2000) identified four types of CRM programs that enable the company to win back customers who have defected or are planning to or to create loyalty among existing customers. through business advice to asset finance and fleet services.costs five times more to attract a new customer than it does to keep an existing one”. but keeping and satisfying them is more important.Types of Customer Relationship Management CRM allows a company to address all of the types of customers it serves at different points in their life cycle and to choose the marketing program that best fits a customer’s attitude toward the company and willingness to purchase its products and services. which in turn further lowers customer acquisition costs and thus increases profitability and growth. 2. therefore. insurance.4. more profitable than customer attraction. differentiate customers. It is generally believed that retention contributes to the creation of reputation.4. 1993). loans and mortgages. The objective for client-facing staff in banking is to understand. Competition for customers is fierce.

who have bad credit ratings or whose usage is low. Win Back or Save This is the process of convincing a customer to stay with the organisation at the point they are discontinuing service or convincing them to rejoin once they have left. advertising and concessionary pricing. It is essential to develop an effective needs-based segmentation model that allows the organisation to effectively target the offer. Loyalty This is the category in which it is most difficult to gain accurate measures. The organisation is trying to prevent customers from leaving and uses three essential elements: Value-based and needs-based segmentation and predictive churn models. Once the customer has passed the value-based segmentation screening. the three most critical elements of a prospecting campaign are segmentation. 32 . Prospecting Prospecting is the effort to win new. such as airline miles and hotel points. first-time customers. in a bit to have penetrating market share. the organisation can use needs-based segmentation to offer a customize loyalty program.to up-sell or cross-sell services to these customers and to prospect for new customers. Apart from the offer itself. To preserve the revenue stream and prevent the customer from becoming a “traditional” win-back candidate. a few organisations are now including partial disconnects and reduced –usage customers in their win-back campaigns. Affinity programs. win back is the most-time sensitive. selectivity and sources. Selectivity is the other essential characteristic of a successful win-back campaign. Value-based segmentation allows the organisation to determine how much it is willing to invest in retaining a customer’s loyalty. Leading organisations often filter their prospects for contact to exclude customers who have frequently switched (churners). organisations either fails to achieve an adequate acceptance or rate on the offer or spends too much on promotions. Without a focus. Of the four categories.

1990). The final component of the successful loyalty campaign is the development of a predictive churn model. win-back rate. and cross-sell capabilities ■ Decreased churn rate 33 . Osborne (2002) identified some of the key benefits of CRM as follows: Customer ■ Enhanced understanding and forecasting of customer behavior and needs ■ Precise customer targeting ■ Improved customer service ■ Increased customer retention.4. special help lines or back-end loaded credits as a means of encouraging loyalty. but instead of offering a complementary product. In order to maintain relationships. The purpose is to identify complementary offerings that a customer would like.Benefits (Rewards) of Customer Relationship Management CRM is first and foremost a business philosophy or strategy where all activities in the company are driven by the needs of the customer. Up-selling is similar. replacing an analogue data line with ISDN is a good example of an up-sell.Sell / Up. promises have been made and kept so as to win customer’s loyalty (Gro¨nroos. Cross.Sell This CRM program is also known as increasing wallet share or the amount the customer spends with you. For instance. a basic long.distance customer could be a candidate to buy Internet access. acquisition. 2. For example. Other programs offered include customised billing.2. This means the objective of CRM is to build and maintain relationships with customers. This is achieved by using the vast amount of demographic data and usage available for the existing base of customers.are some of the most popular. and the loyalty won from customers would enhance new promises to be made for the benefit of both parties in the future. the organisation offers an enhanced one.

organisations must have achieved marketing enlightenment in order to implement relational approach effectively with customers. by implication. Peelen (2005).Financial ■ Reduced marketing and sales cost ■ Better tracking and evaluation capabilities ■ Lower communication cost ■ Increased efficiency through supply chain management These benefits run across the board for all types of customers.4. In addition. In short. 1991). as such its’ structure may be insufficiently decentralised to encourage a relationship approach and too inflexible to adapt. the extent to which they wish to develop a relationship with a bank. Perrien and Richard (1995) and McDonald (2007) identified the following key potential challenges and impediments:  The firm’s understanding of the customer base and /or technological resource for managing the information may be inadequate and. including the student market which is the focus of this research. suggested that the student segment may use similar products but have different preferences for how they deal with a bank and. The student segment has a limited financial services needs and uses basic services.3. 2.  Policies for managing human resources may impede the recruitment and training of suitable staff. which are dominantly money transmission focused and may involve limited lending. However. students have been found to prefer free banking and free overdrafts to interest on credit accounts (Lewis and Bingham.Problems/challenges of Customer Relationship Management Despite the above identified benefits. Dibb and Meadows (2001). organisations seeking the benefits of CRM face considerable challenges and setbacks if CRM is handled and managed. Thwaites and Vere (1995). and to borrow Kotler’s (1997) metaphor. This could have serious impacts on 34 .

Are you ready? 35 . The result is customer dissatisfaction and eventual loss of revenue.4.  Weak leadership could cause problems for any CRM implementation plan. In order to make CRM work.The future of Customer Relationship Management In just a few years Customer Relationship Management has emerged as a powerful business trend. the future of CRM is bright indeed. unless everyone in the business is committed to viewing their operations from the customers' perspective. Adapting to a customer-focused approach may require a cultural change. CRM will become deeply ingrained as a business strategy for most companies. If a proposed plan isn't right for your customers. The rest is up to you. and customers have their hands on the road map and the steering wheel. There is a danger that relationships with customers will break down somewhere along the line. In short.implementing a CRM strategy. the best is yet to come. not a destination. don't do it. Technology will evolve while technical and organizational challenges are overcome. all the relevant people in the business must know what information is needed and how to use it.  There could be a lack of commitment from people within the company to the implementation of a CRM solution. CRM customers are also demanding more and more knowledge management functionality.4. Send your teams back to the drawing board to come up with a solution that will work. 2. Much will change in the years ahead. However. The onus is on management to lead by example and push for a customer focus on every project. but one thing is certain: CRM is a journey.  Poor communication can prevent buy-in.

Gupta et al (2004) further went on to state that: It is important to cultivate long-term customer relationships as it costs substantially less to keep an existing customer as opposed to obtaining a new one. It is important to note that CRM is a complex area and is certainly an interdisciplinary field. it did not come into its name and officially gain momentum – especially in terms of its name . In another dimension. CRM can therefore.Conclusions Customer Relationship Management (CRM) has been in existence for a long time.2. 2007).5. marketing management (Ryals and Payne 2001). 2004). and what it is rather depends on who you happen to be talking to . CRM is the management of relationships between the firm and its customers in order for both the company and its customers to receive maximum value from the relationship (Gupta et al. The term can be used to reflect differing perspectives in all walks of life. 2004). McLeod and Schell.4. thereby making its precise meaning shadowy. i. with the concept being used to reflect a number of differing themes or perspectives. the term CRM has been defined by Jackson (2005) as “CRM is a business strategy evolved to manage the development of a company. the acquisition and retention of its customers and to create long-term value between them”. Developing and maintaining customer satisfaction should lead to deeper relationships with customers where customer loyalty is increased and there is a good prospect of attracting potential customers (Turban et al. thus supporting the arguments made by Luck and Lancaster (2003) that CRM has become a buzzword.who is trying to sell to you (McDonald. There are many aspects of CRM which were mistakenly thought to be capable of being implemented in isolation from each other. This means the term may have several meanings to several people.until the 1990s. only be successfully implemented if it receives the full 36 . 2004. however.e.

commitment of all the stakeholders. When someone mentions CRM, we immediately think of technologies that could improve marketing, sales, customer services and customer relations. However, CRM is more than just technologies, it is a strategic process. CRM helps companies better understand their customers’ needs so they can provide these needs to their customers at the right time while improving the company’s processes (The ABCs of CRM, 2005). From the outside of the organization, a customer experiences the business as one entity operating over extended periods of time. Thus piecemeal CRM implementation can come across to the customer as unsynchronized where employees and web sites and services are acting independently of one another, yet together represent a common entity. In a nutshell, CRM is a combination of philosophies, polices and strategies connecting different players within an organization so as to coordinate their efforts in creating an overall valuable series of experiences, products and services for the customer. In this regards, CRM can allow Tesco to gather student data swiftly, identify the most valuable student customers over time and increase customer loyalty by providing bespoke banking and facility services. It also reduces the cost of serving these customers and makes it easier to acquire similar customers (i.e. new international students) (Rigby & Ledingham 2004).

3. Methodology
3.1.Overview
This section describes the research methods undertaken and reported in this dissertation. This research method section deals with the different aspects of the research into customer relationship management (CRM). The main purpose of this research is the study and analysis of Tesco’s customer relationship management, which is an activity that has been 37

supporting the growth of Tesco to assist the giant supermarket to retain and improve on its market leadership. This section identifies and provides justification for the methodology used during the research. It specifically discusses the research options that were available and describes the reasoning behind the choices that were made in the design of the research, the data collection methodology, sampling and verification. The following subsections provide explanations for the theoretical and analytical basis for the choices that were made.

3.2.Research Design
Research design is a two tier process. The first level provides the logic for and helps to structure the research to enable the delivery of the evidence that is needed to answer the research question. The second level is concerned about data and evidence collection (McGivern, 2003). There are many research designs in the literature, of which case study and experimental research designs are common. A case study approach provides an in depth investigation of a case (McGivern, 2003) whilst the experimental research design methodology uses independent data and variables to measure effect (McGivern, 2003). This project is well aligned with the case study research design given that it is set out to determine the case/cause of Tesco brand success. The research design is a critical part of the research process because it enables the collection of the appropriate evidence that is used to answer the research question. But for this to be done effectively requires the specification of the type of evidence that should be collected to describe what it is that the research sets out to do and to answer the research question comprehensively. In order to get an answer to this research question, a qualitative research strategy that consisted of the study of the consumer companies and the services they offer was conducted in order to provide an understanding of the context in which branding occurs. A case study research strategy was used because it aligned well with the objective of the research of obtaining an in depth understanding of the Tesco Finest brand. This enabled a comprehensive study of Tesco which 38

gave context to the study and provided an understanding of the brand in the Tesco context.

3.3.Data Collection
The descriptive and qualitative research methodology was used because it goes more deeply into the research issue and enabled the accurate description of the characteristics and causes of what the research tries to explain (Robson, 2002). The quantitative approach was selected because the aim of this study was to investigate the consumers’ perceptions, attitudes and behaviours about the factors.
3.3.1.Primary data

A personal interview with a sample of carefully selected Tesco consumers and management was used as a vital source of primary data collection (see Appendix B: Interview Questions). An interview with primary source allows more detailed questions to be asked and ensures that answers to questions are responded to. It is however expensive, and its outcome can be influenced by bias and cheating by the interviewer if not conducted properly. A questionnaire was also used for primary data collection because it is cost effective, eliminates researcher’s bias and results in more accurate answers. It is a structured technique for data collection consisting of a series of questions, written or verbal, that a respondent answers (Malhotra & Birks, 2006). Defining clear research questions is one of the key criteria for a successful research process as emphasized by Nutbrown (Clough & Nutbrown, 2007). However, the main disadvantages of this type of primary data collection methodology are its low response rates, and it can lead to some unanswered questions and sometimes in accurate answers. In order to benefit from the advantages of this type of primary data collection, a specially designed questionnaire was used (see Appendix C: Questionnaire). The questionnaires of the required sample size (see data 39

2. and to study customer attitudes and behaviour 3. news paper articles and business books. Email communications with customers and Tesco management was also not used for similar reasons The questionnaire was made up of 14 questions which were clear and easy to understand. Telephone interviews as a means of data collection was not used because even though it would have saved time and reduced bias.3.. 3. The stores were chose due to location accessibility and friendliness of customers and research was mainly conducted during the evening and weekends. and perception by customers.sampling section) were distributed at a number of Tesco stores. The questionnaire was designed such that it took not more than 10 minutes on average to complete.Data Sampling Sampling is defined as “ . Given that this type of data collection results in low response rates. Secondary research is a use of previously existing resources to meet the research goals (Grossnickle & Raskin.4. The collected secondary data was used to provide an understanding of the brand. 2001) and it is a cost effective way of obtaining certain types of data. the process of selecting without bias and with 40 .Secondary data Secondary data collection method was by the use of journal articles. The purpose of the questionnaire was to investigate the level of brand awareness. it limits the depth and the length of the interview and customers’ reluctance to share personal data limits this data collection method.. It also investigated customer shopping habits. Tesco’s Annual Report and review was also an excellent source of relevant information. competitiveness. the researcher ensured an increase response rate by personally distributing and collecting questionnaires at Tesco stores and handing. Collecting secondary data was straightforward given that many articles. journals and books are written on Tesco and Store brands.

2000). A probability sampling method was used by selecting customers and Tesco management as random. The sampling frame is vital as it contains all the elements of interest (McGivern. the overall percentages (where applicable) were determined. The design of the questionnaire was mainly focused on customer attitude. the response to them were categorised and prioritized 41 . 3.Data Analysis Gathered data was analysed and used to generate descriptive statistics and for each variable in the questionnaire and interview. the population chosen can provide the data that will enable the drawing of conclusions relevant to the research (Jankowicz. 2006). In this research the population of interest was limited to Tesco management and customers. frequency and method of the sampling and the size of the samples.as much precision as resources allow. It involves the definition of the population. the items or elements from which or from whom we wish to collect our data” (McGivern. Although this has the disadvantage of being more time consuming and increases costs. It enables the gathered data to be representative of the population that interest us which in this case is the Tesco customers (Wilson. A total of 85 samples were distributes from which 60 were returned. The benefit of this type of sampling type is that it can be used to project the outcome to the whole customer base and management corps of Tesco. 2003). This work used a sample frame of all Tesco stores in England with particular emphasis on the store at Harlow. As most of the questions are open-ended. In theory. customer behaviour and customers perception of the brand and values associated with it. The sample size used in this research was determined by financial and time constraints. determination of frame. 2006).5. 2003). it was used because the results were then representative of the whole customer base. The determination of sample size is dependent on a number of issues such as financial issues (Wilson.

attitude. The internal validity refers to the reliance of the researcher’s conclusion as to whether the experimental treatment was the sole cause of observed changes in the dependent variable. These are known as hypothetical constructs which are assumed to exist as factors which explain observable 42 . Construct validity refers to establishing the correct operational measures for the concepts being studied. ambition and anxiety. structure and impact. such as motivation. All collected data from interview and from questionnaires will be reviewed and data found to be unduly biased or inaccurate will be discarded. The data collected was quantitatively and qualitatively analysed which enabled data to be sorted and structured according to its characteristics. the answers to the open ended questions provided the strongest and most important responses and provided customers and management the opportunity to express their opinions in their own words. The qualities analysis method was used to describe the general characteristics of the Tesco Fines brand and the quantitative approach was used to determine the characteristics. according to Zikmund (2003:302) “is the ability of a measure (for example. 1994:18). construct validity. Referring to Collis and Hussey (2003:59). an attitude measure) to measure what is supposed to measure”. Validity can be supported by building the data collection framework of the study. As a result all conducted interviews will be recorded with consent of interviewees to ensure accurate transcribing of the interview and standard interview protocols will be used to ensure repeatability by other researchers.6. this relates to the problem that there are a number of phenomena which are not directly observable.Validity and Reliability The validity and reliability of collected date is paramount. external validity and reliability validity (Yin. The quality of research design can be evaluated through four criteria. 3. satisfaction. namely internal validity. In fact. Validity. behaviour.based upon frequency of mention.

Interviews of key bank decision. In the present study. construct validity is increased by the use of multiple sources of evidence. is the extent to which you can come to conclusions about one thing (Collis & Hussey. bulletins and Tesco’s customers’ statistics. customer relationship management practices at Tesco supermarket. 1997:33-41). Gummerson (1991.makers have been conducted to clarify some specific issues. 2003:60) who contends that it is possible to generalize from a very few cases. However. External validity is the quality of being able to generalize beyond the data of an experiment to other subjects or other groups in the population under study.g. (Lindsay. both customer retention and customer satisfaction variables in relation to the student market are assessed and studied separately from the other customer relationship variables. Furthermore. Generalization. He supports the views of Normann (1970. as it is sometimes referred to. cited in Collis & Hussey. or even a single case. if your analysis has captured the interactions and the characteristics of the phenomena you are studying.phenomena. One of the aims of the current study is ‘What is it that Tesco does to keep and retain customers and what add-ons facilities/services does Tesco offer to gain customer loyalty and why new customers shop with the store? 43 . but also related to the other issues of customer relationship management practices of the financial services provider. cited in Collis & Hussey. in a phenomenological study you may be able to generalize from one setting to another. 2003:60) argues that using statistics to generalize from a sample to a population is just one type of generalization. to meet the construct validity. 2003:59). archival documents. The aim of the interviews are to obtain as a true a record as possible of what customers perceived of particular issues. e. Additional sources of evidence include third parties contacts. brochures.

However. Observing the same phenomena in the same setting should also provide similar information. namely customer relationship management Tesco. reliability refers to demonstrating that the same results could be obtained if the data collection procedure is repeated again (Yin. as some of the interviewees are Tesco Management. Thus the results have to be interpreted with the help of a qualitative approach. data does not allow the analysis of single variable or respondents by statistical analysis. The generalization of the results is rather high within the respondents in relation to the customer relationship management practices. In relation to qualitative research. “reliability is concerned with whether alternative researchers would reveal similar information.With regard to the results. if they are to carry out similar data collection procedures”. Finally. The data collection is not dependent on the investigator but the data is obtainable by identical procedure. staff and professionals and others hold key managerial positions in businesses and there is no reason to expect that they had not understood the interview questionnaires. That is the very objective of the present chapter. 44 . cited in Saunders et al 2003:252) supports Yin’s views and thus said. generalization is attempted by concluding the results of the subunits of the study and returning to the original phenomenon of interest. 1994:36). A prerequisite for reliability criteria is that the research procedure is well documented. Easterby-Smith et al (2002. The respondent sample represented over 80% of the targeted customer and management market and this indicates a high response rate.

In fact. the use of probability sampling was used to reduce this limitation.9. 3. Permission was sought when using any equipment such as recorders and they were all informed of their rights particularly that of confidentiality as outlined in the data protection act of 1998. the recorders were used during interviews with prior consent of interviewees.Ethical and Legal Considerations The research and data collection involved interaction with customers and the process therefore had to comply with standards of code of conduct. 3.8.3.7.Outcome a) The outcome of the data collection exercise and research enabled an understanding of the Tesco customer relationship management. the letter in the Appendix explaining the purpose of the research was designed to limit the impact of this limitation. recent antagonism towards Tesco due to their aggressive expansion might lead some customers to deliberately not provide truthful answers as they might wrongly construe the data collection exercise as sanctioned by Tesco. • The taking of notes during personal interviews can be very time consuming and tedious and getting busy management staff for a long interview is difficult. 45 .Limitations This research was subject to the following limitations. • There were limitations on the number of sample used and on the locations of sampling due to financial constraints. the confidentiality of collected data was assured and all customers and Tesco management staff who participated were assured of this data confidentiality. Additionally. • Customers who completed the questionnaires might not willingly provide truthful and correct answers given the suspicion that most people have of Tesco. However. To reduce this limitation. However. • The time used for the data collection was also limited due to a limit on the duration of the research.

e) Identify the criteria the supermarket uses to acquire valuable customers and the various f) types of CRM techniques available and the benefits that accrues to adopting CRM. This was because the interviewer was not only interested on what participants said. In order to save time. 46 . but also tried to give an indication of the tone in which it was said and the participants’ non-verbal communications. The interviewer not only took time to record and transcribe exactly what was said and by whom.Interview Questionnaire Development This section summarises the results of the research into why the customer relationship at Tesco has been so successful and why there has been such customer loyalty and retention. an interview questionnaire was developed to aid the collection of the data from participants. g) It also helped to identifying various methods that could be used to improve customer relationship management 4.Results: Analysis of Findings 4. the researcher made on the spot interviews as and when opportunity was available to do so. c) It also provided an understanding of how customer relationship management is used to support the driving the sales across the store.b) It also enabled the underlying reasons why Tesco has used it overcome their competitors and how Tesco was able to make it competitive and successful.1. d) Identifying the various ways of how CRM can improve the giant store’s operational efficiencies in managing its relationships. In order to establish this. but in the way they said it as well.

In the interview questionnaire development.com transform customers’ habits? 14)Would you recommend friends and family members to shop with 47 .com and its new Argos-style catalogue service boosting Tesco Direct sales and market share for Tesco finest? 13)How does Tesco. how quickly does it act on your queries? 9) What is the role of customer relationship management in the retention Tesco’s customers? 10)What method used to attract and maintain loyal customers and attract customers from competitions such as Marks and Spencer’s (M&S). the most relevant questions included the following: 1) What attracted you to shop with Tesco supermarket? 2) What facilities and add-ons services does Tesco offer to customers you to gain high market share? 3) What are the facilities that you enjoy/gain from Tesco supermarket? 4) In your opinion what do you think Tesco should do to continue to win more customers? 5) What criteria does Tesco use to acquire and support value customers in order to maintain their loyalty? 6) Why does Tesco always recommend high quality services to its customers? 7) What other customer services the market leader offer to customers? 8) Does Tesco respond to your needs as customers? If so. Sainsbury’s and Waitrose? 11)What is the role of new media in the future growth of Tesco? 12)How are the online retailing arm Tesco.

com and Tesco Direct Tesco was one of the first retailers to go online with the launch of Tesco. According to John Browett (CEO Tesco. The expansion of non-food sales is vital for Tesco’s future and it is predictable that Tesco will further enhance the capacity of its direct operation. This increased sales by more than 50% and with home shopping service selling more than 15. one billion products were sold via Tesco. Instead of opting for huge warehouses for delivery processing.5 million catalogues. the organisation issued 11. with the summary of the findings depicted with an aid of a pictorial diagram and presented below.2.com. In 2010. The aim was initially as an edge against new eretailers. Last year. bicycles. It enabled customers to choose to have goods delivered to their home or allow them to pick them up at one of Tesco’s 261 in-store direct desks. with sales of more than £2bn.com is currently one of the largest online retailers in the UK. and retails a wide range of non-food products via the Internet and catalogues. In 2008. Tesco used in-store staff to pick items ordered over the internet off the shelves.Tesco? Do you have comments if any that you would want to share with your interviewer? In order to heed to the word count limitation. In 2010 Tesco revamped its website as it moved onto a new platform that allowed international shipping which was a big improvement on the previous deadline that only allowed online shopping for customers in the UK. Tesco 48 .com in 1995. 4.com) running home delivery service from the stores gave customers the best service and value and delivery times were kept below 30 minutes from store to house which enabled Tesco to keep down stores and also increased the shopping convenience of customers. attracted around 1. Tesco direct was founded in 2006. But Tesco. and golf clubs to electrical products. the results of the analysis are divided into subsections according to the reasons given for the success of the Tesco customer relationship management.Tesco.5 million visits to its website each week.500 products which ranged from furniture. Ireland and South Korea.

Relationship marketing shifts the focus of the marketing exchange from transactions to relationships (Stone & Young. 1999). Based on the interview conducted. p. For example. referral. 60% of the participants said that they loyal because they can do business anytime they have opportunity. . 4. alliance. 1992) and six market models such as internal. 49 during the Christmas period. customers must be rewarded for their loyalty.direct sales grew by 28%. 2004. 30% said that it is the user-friendly of the service delivery that keep them with Tesco. Customer Relationship Management is a comprehensive approach for creating. Tesco is also very innovative with their loyalty scheme.Customer Relationship Management and Tesco Clubcard Another area that enabled Tesco to be successful in their finest brand is in the customer relationship model and their club card royalty scheme. and influence identifies stakeholders. 2002).3. supplier. quality and price (Wright & Sparks. Tesco club card promotes incentive base loyalty by making the customer collect points rather than buying the product from someplace else at a slightly lower or equal price. recruitment. while 10% said they have no tangible reasons. To further maintain loyalty. maintaining and expanding customer relationships (Anderson & Ker. 3). and customer loyalty can be achieved through a number convenience of location. Tesco club card is an effective way of recognising and rewarding customer loyalty. Successful relationship marketing and management can only be a success if the relationships are properly managed with all stakeholders with the ultimate aim being loyalty of all its customers. Tesco Clubcard which was introduced in 1995 not only offer benefits to regular shoppers but it also enabled it to learn about their customers’ needs and shopping preference which further enabled them to cater for their customer’s shopping needs and requirements (Tesco.

can build integrated profiles of online and offline shopping activity. 1997) which further helped to build store loyalty and decreases store-switching behaviour. it heavily discounted and extended its finest brand to prevent customers from going elsewhere. We do well when people aren't feeling wealthy as we offer good value. Empirical evidence supports the strong relationship between purchasing of high end store brands and store loyalty (Kumar. In 2009 customers earned £550m in Clubcard vouchers (Tesco. and for collecting customer data. From a relationship perspective this allows customers additional access to their statement. Tesco.implements a double point’s campaign and mailed out vouchers. and access to clubs. 2007) and the combination of Tesco finest brand and the loyalty scheme projects a favourable image (Steenkamp & Dekimpe. From a customer data perspective.com/clubcard) offers an opportunity for interaction and flexibility between Tesco and Clubcard members. Sir Terry Leahy admitted that "Tesco's strategy to earn loyalty through prices has kept shoppers at Tesco. Tesco CEO." Tesco Clubcard’s online presence (www. 50 . and information about the scheme in parallel with printed documentation. According to Herstein and Gamliel (2006).tesco. the brand was replicated on the Internet and developed in the virtual world. From a branding perspective. The former boosted loyalty during the important festive period whilst the latter helped persuade its customer base to shop thereby helping it to offset the competitive threats posed its main competitors who traditionally perform strongly over Christmas. This is a rich environment for building customer and brand relationships. and any partners with whom they share data. Additionally. Importantly. This is very advantageous as it provided Tesco with customer profiles. The brand name ‘Tesco Finest’ is in its own way promotes customer loyalty and profile. private label brands can assist in developing loyalty to a retailer and in the creation of a distinct corporate identity for a company. 2010). Clubcard operates seamlessly between online and in-store modes.

Innovative and mobile marketing schemes Advances in multimedia (data. online banking. and to receive different types of information in a timely and personalised way. In fact. 18% said they are not and that they do not even have clubcards and other hand. 51 .4. 75% of the participants (management and customers) attributed Tesco’s success to the introduction of the clubcard. Because they are very personal devices they are very attractive for use in targeted marketing campaigns and their sophistication makes them an advertisers dream as they are able to display different types of contextual information. One of the business models which Tesco has taken advantage of is mobile marketing which has gradually gained prevalence and importance over recent years. voice and video). Additionally the proliferation of mobile phones and devices such as Personal Data Assistants (PDA) has established them as a marketers dream and they have been heavily used by Tesco to contribute to the success of their brands. They have a high market acceptance and penetration and they have changed and impacted the way people access information and how they interact with business providers. 7% of the participants chose to remain neutral for reasons best known to them 4. mobile and broadcast network technologies has created new business models and opportunities which Tesco has been adept at utilising to further its market share. text and multimedia communication capabilities. They are equipped with data. a way of appreciating customer’s loyalty through awarding points for every purchase. Mobile devices such as mobile phones are increasingly becoming intelligent and powerful communication devices.Referring to the findings. and they are now routinely used for E-commerce. the importance of mobile marketing has led to Google buying AdMob in 2009 for US$ 750 million (Insight. The increasing use of mobile networks and mobile devices for commercial activity (mobile commerce) has provided an opportunity to engage in targeted advertisement campaigns for new and existing products using consumers’ mobile devices.

understood the disadvantages of mobile marketing and avoided the pitfalls. Tesco has been able to control mobile marketing and have been able to allay customer’s fear of intrusion and privacy concerns which have been known to harm mobile marketing campaigns (Sipior et al.35 billion compared to $600 million in 2007 (Vatanparast & Asil. The use of mobile phones and mobile devices for marketing purposes remove these disadvantages which makes them very popular. and therefore ignore them (Tawakol. such as the time needed to change the content. 2004). This limits the amount of type information that can be used in mobile advertisements.. credit to them. There is a lot of advertisement and consumers often are exposed to advertisement on television. Although mobile billboard adverts mounted on vehicles gained popularity due to restrictions on stationary billboards. Tesco. In fact. the mobile marketing industry is expected be worth $11.. 2008). and the Internet. Mobile terminal equipment such as mobile phones has small display and most do not have a full keyboard. Additional mobile advertisement in whatever form can annoy consumers who see such advertisements as spam. emails and SMS. 2010). they have a number of disadvantages. 2009). Tesco used mobile technology as an opportunity to develop marketing campaigns that targeted customers by way of telephony. 2002). Additionally. consumers are sometimes put off using interactive advertisements 52 . when they use Internet and from other ubiquitous sources such as billboards. Outdoor advertisement revenues amounted to $34. Tesco has used mobile marketing to target their customers with a personalised marketing approach thereby improving the Tesco brand. which reduces their cost effectiveness. 2007) (Persson.2009).4 billion in 2010 and a majority of this was from billboard advertisement (Charts. SMS and MMS are the most popular mobile advertisement methods which enables mass and targeted marketing campaigns at lower costs (Samanta et al.

Although Tesco’s effective advertisement campaign was minor in the overall Tesco’s brand investment. and consumers are generally only willing to enter personal data if the privacy of their data is guaranteed. Tesco took and is still taking advantage of this new form of marketing platform to enhance brand awareness. This prevents consumers interacting with advertisements given that most consumers would not want to pay for the advertisements and expect the advertisers to pay. The advertisement campaign is needed to stave off stiff competition and change consumers’ perception of Tesco’s products as cheap. optimise marketing campaigns and increase scale effectiveness. The potential impact of using mobile marketing is that it enabled Tesco to provide an intelligent. Tesco has used mobile marketing opportunity to use its share of the retail 53 . by enabling Tesco to attract new customers whilst retaining existing ones. it has largely been accredited to having played a crucial role in the remarkable transformation of Tesco’s fortunes.because they reluctant to enter a lot of data on such limited interface. Tesco’s advertisement campaign was instrumental in reshaping Tesco’s image which played a pivotal role attracting new customers and new potential employees. Another impediment of using mobile marketing is the expensive usage of mobile data communications. Privacy concerns are heightened especially in location based services in which user terminals are automatically located and targeted advertisements sent to consumers. and it allowed Tesco to reach an increased number of customers and allowed brand and service advertisements to be sent to people who are interested them thereby enhancing brand awareness and increases sales. The potential threat from Tesco’s main competitors threatens the Tesco brand and profitability and Tesco needed to embark on expensive marketing campaigns for its new and increasing products. personalised and targeted marketing campaign at a lower cost. Mobile marketing raises many privacy concerns because mobile phones are very personal devices.

Tesco used it for an effective. which offered it the opportunity to have invaluable insight in consumer spending patterns. Services provided by Tesco are numerous and include banking. growth. credit cards and consumer finance and they evolved. they are not driven by the media related activities. whilst 11% said they are not attracted by other means other than their desire to shop. according to consumers’ needs. Another form of mobile advertisement that Tesco used is the insertion of advertisement messages into text messages. especially in mobile handsets purchased from Tesco. increased in reach. 4.Embracing Technology Another area that enabled Tesco to maintain and grow its market share was its use of advances in Information Technology (IT) which it successfully harnessed to improve performance. This was done in exchange rewards on the club car points or direct vouchers. personalised and cost effective marketing campaign. to reduce costs and to reduce the required workforce. Tesco has complex processes that are located in different locations which create 54 . which it used to embark on a tailored and innovative marketing campaign. Tesco therefore use Location Based Services (LBS) to ensure that consenting consumers are sent targeted advertisements about Tesco services and products within their location.market and used its advertising skills and the millions of Club card user database. Tesco is expanding its business and range of products to the extent that some of its stores sell more of their latest products than the traditional foodstuffs. 28% said they were introduce by either friends or family members. 61% of the participants said it was the innovative and mobile marketing schemes that made them to start shopping with Tesco. Sourcing from the interview survey. and the amount of processing that they do is vast.5. IT which has witnessed tremendous developments over the years has been instrumental in optimising the performances of processes of financial services and it plays a vital role in the operation of financial services companies such as Tesco and it greatly influences how they do business.

This was necessary due to Tesco’s growth and in which office systems made up several systems that use tens or hundreds of databases and hundreds of software applications. how they are delivered and how they are used by customers. However. In fact they eventually become expensive to maintain and are excessively costly (Ross et al. their use of Enterprise Systems (ES) solved performance bottlenecks in by automating the diverse and complex processes carried out by Tesco. and the systems are added as the company grew. Complex IT systems such as Enterprise Systems (ES) are used to reduce costs by automating the diverse and complex processes carried out by financial service companies and they have become big business with sales totalling US$ 19. They have drastically changed the way that Tesco does business. Tesco therefore need to use back office IT systems that are bought and installed according to and as the needs of the company grows. large IT system such sometimes lack full integration which may negatively impact many organisations and many 55 . This is a major impediment because any increase in complexity can cause the IT system to become overly complex and expensive and the risks involved in change increases accordingly. 2006) and instead of the IT systems increasing efficiency they instead become a liability and expensive to maintain. the complexity of IT systems such as ES increases tremendously. and a 25% increase in a company’s complexity can result in a 100% increase in complexity. For example.. Sometimes. Research has shown that IT structures in most companies are so dense that it is a surprise that they work at all. The risk of losing customer or that data might be stolen for fraudulent purposes are a taxing concern for Tesco and for financial services. These IT systems were installed over many years. and Tesco was innovative in using the IT systems to intelligently control processes that have become increasingly complex. Companies normally want changes to their automated systems and processes and therefore want changes and customisation of IT system to fit their needs. depending on availability of new systems that offer improved performance.9 billion as organisations continued to invest in them.operational difficulties and the amount of information that it processes in real time is enormous. and most of that data is confidential and need to be protected. Tesco had to invest in new IT systems which were instrumental in optimising its operations. This helped change and enhance how some of Tesco’s services are created.

23% said the success was due to the fact that management as well as employees are using their technical-know how to gain a high market shares that in return has contributed to the success registered.companies see integration as an ongoing process (Koh. Although IT systems are intensively used in financial services companies and it can theoretically improve performance and profitability. goods and services that it offers. IT increases the flow and access to information including confidential and corporate information. 4. majority of the participants (69%) said that technology is an aspect of Tesco’s recorded success over the years. confidential data stolen and other security related problems which can have a huge negative impact on the company. there has not been any clear and measurable proof of the amount of impact that IT systems have on financial institutions. However. The exact impact of IT on Tesco such as quality optimisation has not yet been empirically proven and is subject to debate. while 3%said they actually don’t know the story. The proliferation of Internet access enables customers to gain access to a company’s IT infrastructure and distance and location does not become an issue. Tesco has been innovative and judicious in the way it has used the new IT technologies to enhance its operations to further achieve performance enhancements.Conclusions of Findings This section summarises the results of the research into why the customer 56 .6. and to use operational defensive mechanisms such as firewalls and intrusion detection systems to protect the centralised information and data. This can however be mitigated by using security protocol to protect the data when being transported from one location to another. However. This has been very beneficial especially as Tesco has continued to grow in size and number of products. a lack of proper security can lead to the IT infrastructure being compromised. However. 5% said that are not sure but believe it is mixture of various issues. 2001). Finally. The impact of IT on financial institutions is many and they depend on the type and size of the financial institution. This might be due to a lack of tangible measurable indicators or a lag in leaning the IT system for proper evaluation to be accurate.

78+75+70+27). Although important. Figure 7: Customer Perceptions on Tesco CRM Success On customer services concepts and ranking for success (100 customers were approached but only 90 customer participants agreed to take part). In summary. (i. customer 57 . The innovation in marketing especially the use of targeted marketing using latest technologies such as mobile marketing was attributed with the success by 65% of the management team respondents. In total. Out of total ranking of 250. 30 management team and staff and 90 out of 100 customers took part in the research. over 120 Tesco management team. only about 15% of Tesco management attributed the success to their embracing of advances in technology which enabled them to communicate effectively with their customers and which also enabled them to optimise operations and thereby provide customer services and needs at relatively cheaper prices. 23% said it was due to their customer loyalty scheme (clubcard) has been the anchor through which they were able to drive the success. whilst 5% chose to be neutral. This reduction in operational costs enabled them to make to provide Tesco products and services at very competitive prices. staff and customers interviewed during the research. 10% said it was due to innovative and mobile marketing schemes.e.relationship at Tesco has been so successful and why there has been such customer loyalty and retention. 28% attributed the success due to their online presence and to the success of the Tesco direct portal. overall. 20% thought that their customer relationship management service delivery and commitment.

Over two thirds of the customers cited the Tesco direct and online business as a part of the overall shopping experience that Tesco offers them as the reason for loyalty and why they always go back to Tesco.com is very successful with more than a million households having used it. Thus having a strong online presence is a prerequisite for building success which gives a competitive edge. This has also been cited as the key to loyalty.Recommendations The success of Tesco banding was based on a number of issues which can be used as a template of success. and almost all of the customers 70% (25 participants) of customers perceive Tesco products and services in a good light and thought it as good value for money and 27% (9 participants) were neutral Figure 7 Customer Services Ranking for CRM 5.relationship management featured high on the reason for the success by 78% (i. Nearly 75% (27 participants) of those that replied cited the Tesco clubcard scheme as evidence of Tesco caring and giving something back to their customers. This is another platform from which Tesco can derive huge revenues.com covers 96% of the UK. an opportunity to increase its share of the retail market 58 . Tesco also operates tesco. Surprisingly though there is no mention of price as the reason for loyalty even though this has been a key feature of the Tesco advertisement campaign. 29 participants)of customers who feel that Tesco actually cared for them and really took their concerns into consideration.e.1. The Tesco. There is however. Recommendations and Conclusions 5.

Tesco used mobile technology as an opportunity to develop marketing campaigns that targeted customers by way of telephony. Reward schemes are very important and ensure that customers remain loyal and it is therefore a very key element for branding success. emails and SMS. premium store brands like Tesco Finest are often not priced lower than other brands. maintaining and expanding customer relationships. Therefore. these premium own-brands are designed to compete with leading brands while at the same time differentiating their brands from other brands. Tesco has millions of Clubcard users which offer it the opportunity to have invaluable insight in general and personal consumer spending patterns which can be used to tailor marketing campaigns with great effect. when they use Internet and from other ubiquitous sources such 59 . understood the disadvantages of mobile marketing and avoided the pitfalls.which can be achieved by using market share and low cost brand and advertising skills to spur growth. and taking the position factor into consideration. With widespread acceptance. The market positioning of premium store brands provides consumers with a high value-added products with an innovative design and sometimes even higher quality than other brands. There is also the opportunity for overseas growth to increase earnings. Tesco. Relationship marketing shifts the focus of the marketing exchange from transactions to relationships and successful relationship marketing and management can only be a success if the relationships are properly managed with all stakeholders with the ultimate aim being loyalty of all its customers. Another area that enabled Tesco to be successful in the customer relationship model and their club card royalty scheme. credit to them. Customer Relationship Management is a comprehensive approach for creating. and the Internet. SMS and MMS are the most popular mobile advertisement methods which enables mass and targeted marketing campaigns at lower costs. particularly in the UK. There is a lot of advertisement and consumers often are exposed to advertisement on television.

Privacy concerns are heightened especially in location based services in which user terminals are automatically located and targeted advertisements sent to consumers. consumers are sometimes put off using interactive advertisements because they reluctant to enter a lot of data on such limited interface. This limits the amount of type information that can be used in mobile advertisements. to reduce costs and to reduce the required workforce. Mobile marketing raises many privacy concerns because mobile phones are very personal devices. Tesco had to invest in new IT systems which were instrumental in optimising its operations. The use of technology to drive new business ventures and optimise performance is vital for banding and success. Mobile terminal equipment such as mobile phones has small display and most do not have a full keyboard. 60 . This was necessary due to Tesco’s growth and in which office systems made up several systems that use tens or hundreds of databases and hundreds of software applications. IT which has witnessed tremendous developments over the years has been instrumental in optimising the performances of processes of financial services and it plays a vital role in the operation of financial services companies such as Tesco and it greatly influences how they do business. This helped change and enhance how some of Tesco’s services are created. This prevents consumers interacting with advertisements given that most consumers would not want to pay for the advertisements and expect the advertisers to pay. and Tesco was innovative in using the IT systems to intelligently control processes that have become increasingly complex. The appropriate use of mobile and targeted advertisement is vital to successful branding as shown by Tesco. and consumers are generally only willing to enter personal data if the privacy of their data is guaranteed. Additionally. their use of Enterprise Systems (ES) solved performance bottlenecks in by automating the diverse and complex processes carried out by Tesco. Another area that enabled Tesco to maintain and grow its market share was its use of advances in Information Technology (IT) which it successfully harnessed to improve performance. Another impediment of using mobile marketing is the expensive usage of mobile data communications. For example. They have drastically changed the way that Tesco does business. how they are delivered and how they are used by customers.as billboards.

from conception to market domination.2. The research formulated and found answers to the successes of Tesco as a brand and what inspired Tesco to launch that concept and how Tesco was 61 . This dissertation presented the results of a study and investigation of how the perceptions of Tesco customer relationship management have been going from being perceived negatively to being widely accepted. the times have now changed and private label brands have defied the conventional wisdom and can have a detrimental impact on a retailers’ long-term success. The study was not limited to the critical analysis and observations but an overall study of the Tesco customer relationship management perception. The study established the current strength of the Tesco as a company and a market leader and to analyse the key factors behind its success. Tesco continued increase market share through offering better value and providing more choice and convenience to customers was also investigated and the study enabled the identification of the potential growth areas of the Tesco brand. However. and to learn lessons from of how Tesco was able to make Tesco the biggest grocery brand in the UK.5. This study will enable the drawing up of recommendations of value to be made. There has been a rapid shift in mindset about the role and requirements for today’s private label brands and retailers are evolving to a new definition and greater focus for these proprietary offerings to elevate their stature and influence on the current and future business strategy. The role of Tesco Direct (Tesco’s online arm) in future expansion will be discussed given that online sales should ultimately outstrip traditional store sales in future. Supermarkets saw them as tools of growth because of high returns in terms of margins and profitability on a relatively small investment. It also provided an in-depth knowledge of the workings of Tesco customer relationship management and investigated what the future of customer relationship management.Conclusions Private label brands were once considered at the bottom pile of the consumer products that were lower priced and lower value.

The result of this study can potentially ensure the use of a successful template in branding in the retail business. It will also provide an insight into whether IT is developing too fast for financial services industry and whether the financial services industry should keep abreast with IT developments or use the technology that suits their needs. thereby increasing the components of customer relationship management. Additionally it provides answers of how IT systems can enhance performance levels and ensure that financial services companies remain competitive by using the appropriate IT systems that are customised for their needs. In summary. This reduction in operational costs enabled them to make to provide Tesco’s product and services at very competitive prices. Although important. only about 15% of Tesco management attributed the success to their embracing of advances in technology which enabled them to communicate effectively with their customers and which also enabled them to optimise operations and thereby provide customer services and needs at relatively cheaper prices.able to maintain its competitive edge. The study also investigated the role of customer relationship management in the retention Tesco’s customers and the method used to attract the loyal customers its. complemented with their customer loyalty scheme (clubcard) has been the anchor through which they were able to drive the success of the brand. The study also found the key areas of growth for Tesco marketshare and what the envisaged growth areas in the service sector are. The innovation in marketing especially the use of targeted marketing using latest technologies such as mobile marketing was attributed with the success by 65% of respondents. It will enable an understanding of the relationship between IT technology. 62 . it development and the impact it has financial services. The overwhelmingly majority (90%) thought that their customer relationship management. over 80% of interviewed Tesco management attributed the success to their online presence and to the success of the Tesco direct portal.

The reasons include cost saving in research and development budget. customers are buying more from the products and services range compared to a like-for-like comparison with their competitors However. Tesco’s competitors have also been innovative and have begun to catch up on Tesco which has increased competition.Tesco products and services brands are quality driven assortments of many services and products which are targeted towards consumers. many lines of Tesco brands get compared to regular. Consequently. Despite the less cost. value Tesco brands. They are offered at reasonable and competitive prices in order to maintain their customer base through loyalty whilst at the same time competing for and capturing new customers in order to increase their market share whilst at the same time remaining competitive. segments that would otherwise not have been provided. the private label brand can still command premium price. This has been successfully done and resulted in the moving Tesco away from the perception that it is a source of cheap products. Tesco has been able to achieve this double edged target of innovation through new high quality brands whilst remaining competitive through the creation of alternative brands and the creation of special segments and covering them with the quality brands. the Tesco brand label overtook Kellogg as UK’s biggest grocery brand and as the economy starts to emerge from recession. Several factors are involved in these higher profit margins enjoyed by Tesco as a market leader and giant in the retail services and food industry. The offering of high quality Tesco brands helps further build loyalty and the image of Tesco as an entity that offer high end own products. and as a result of this pricing awareness of customers. Constant and innovative promotions and targeted and mobile marketing sway consumers to become aware of price variation which results in deal seekers becoming regular purchasers of privately labelled brands over time. product launch and their advertising budget is comparatively very low. and sometimes even 63 compared to well-established . The success of the Tesco brands was so spectacular that by 2007.

manufacturers brands. In 2009 customers earned £550m in Clubcard and 64 . In 2008. In 2010.5 million visits to its website each week. Additionally. The expansion of non-food sales is vital for Tesco’s future and it is predictable that Tesco will further enhance the capacity of its direct operation. Tesco club card is an effective way of recognising and rewarding customer loyalty. during the Christmas period. It enabled customers to choose to have goods delivered to their home or allow them to pick them up at one of Tesco’s 261 in-store direct desks. they get stiff competition from their competitors and indeed from within the same store from the Tesco valued brands. the organisation issued 11. Tesco club card promotes incentive base loyalty by making the customer collect points rather than buying the product from someplace else at a slightly lower or equal price. bicycles. and golf clubs to electrical products. attracted around 1. This increased sales by more than 50% and with home shopping service selling more than 15. For example. Brand position of the Tesco is also another critical business pillar. Tesco direct sales grew by 28% and the following non-food Tesco products are available at Tesco direct. and retails a wide range of non-food products via the Internet and catalogues. Tesco direct was founded in 2006.5 million catalogues. Although Tesco brands can command premium prices given that their notion of exclusiveness. Tesco is also very innovative with their loyalty scheme. The former boosted loyalty during the important festive period whilst the latter helped persuade its customer base to shop thereby helping it to offset the competitive threats posed its main competitors who traditionally perform strongly over Christmas. Tesco Clubcard which was introduced in 1995 not only offer benefits to regular shoppers but it also enabled it to learn about their customers’ needs and shopping preference which further enabled them to cater for their customer’s shopping needs and requirements.500 products which ranged from furniture. it heavily discounted and extended its finest brand to prevent customers from going elsewhere. implements a double point’s campaign and mailed out vouchers.

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Business research methods. and Tse. Sin. W. 43 No. (2000). and Johnston. Business Horizon.J. Cincinnati. O. 72 .N. 33 No. 475-89. Vol. 16-24. “An evaluation of divergent perspectives on customer relationship management: towards a common understanding of an emerging phenomenon”.G.. J. Zikmund.K.. Lee. R. I am conducting a research on Tesco customer relationship management. 2nd edition. pp. R. L. applied social research method series. I will be grateful if you can fill the following questionnaire and hand it to the researcher or send it using the self addressed envelope provided. OH. A. W.. (2004).Yau. “Relationship marketing: the Chinese way”. Thomson South – Western Appendix A: Letter of Introduction Dear Sir/Madam. Chow. My name is xxx and I am currently studying for an MBA at [xxxx]. Yin. pp. Sage Publications Zablah.R. D..5. Design and methods. 6. Vol. Vol. 1. (2003). A. Bellenger. (1994). 7th edition. Case study research. Industrial Marketing Management.

your help is needed in participating and to help me to answer the following research questions. 2) What attracted you to shop with Tesco supermarket? 3) What facilities and add-ons services does Tesco offer to 73 . Specifically.com and its new Argos-style catalogue service boosting Tesco Direct sales and market share for Tesco CRM and how they transform customers’ habits? Thank you for your time and support. Sainsbury’s and Waitrose? 5) How are the online retailing arm Tesco. Achieving these aims will help me to answer the some vital research questions and reach a conclusion. 1) Why customers continue to be loyal to Tesco and not changing to their competitor? 2) What is it that Tesco does to keep and retain customers and what add-ons services do the market leader offer to earn their customer loyalty? 3) What are customers attitudes towards the supermarket and how does the market leader relates and manages such attitudinal behaviours? 4) What is the role of customer relationship management in the retention Tesco’s customers and the method used to attract the loyal customers its competitors such as Marks and Spencer’s ( M&S).This is a vital part of my studies which is intended to give me a practical understanding of real customer relationship management in businesses such as Tesco. Another objective of this research is to gain and in-depth knowledge of the workings of Tesco customer relationship management. [xxxxx] Appendix B: Interview Questions Date: 1) Greetings and thank you for taking part. The key aims of this study are the establishment of the current strength of the customer loyalty and retention and to analyse the key factors behind its success.

customers you to gain high market share? 4) What are the facilities that you enjoy/gain from Tesco supermarket? 5) In your opinion what do you think Tesco should do to continue to win more customers? 6) What criteria does Tesco use to acquire and support value customers in order to maintain their loyalty? 7) Why does Tesco always recommend high quality services to its customers? 8) What other customer services the market leader offer to customers? 9) Does Tesco respond to your needs as customers? If so.com transform customers’ habits? 15)Would you recommend friends and family members to shop with Tesco? Do you have comments if any that you would want to share with your interviewer? 74 . how quickly does it act on your queries? 10)What is the role of customer relationship management in the retention Tesco’s customers? 11)What method used to attract and maintain loyal customers and attract customers from competitions such as Marks and Spencer’s (M&S). Sainsbury’s and Waitrose? 12)What is the role of new media in the future growth of Tesco? 13)How are the online retailing arm Tesco.com and its new Argos-style catalogue service boosting Tesco Direct sales and market share for Tesco finest? 14)How does Tesco.

why? 6) Do you shop at other Morrisons/Asda/Aldi/Sainsbury’s Supermarkets – e.com transform customers’ habits? 12)Would you recommend friends and family members to shop with Tesco? 13)Does Tesco respond to your needs as customers? If so.g. how 75 .Appendix C: Questionnaire Date: 1) Which Tesco Store do you do your shopping? 2) How long have you been a Tesco customer? 3) Do you consider yourself a loyal Tesco customer? 4) Are you aware of Tesco’s position in the market and do you why they are successful today? 5) What is your perception of Tesco’s successes and if so. 7) Are you aware of other quality services and products offered by Morisons/Asda/Aldi/Sainsbury’s? 8) How do these compare to Tesco’s? 9) What is its downside? 10)What is the role of customer relationship management in the retention Tesco’s customers? 11)How does Tesco.

quickly does it act on your queries? 14)Please comment on areas that you think might improve Tesco and its related services and products? 76 .

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