Buy custom essay paper on TESCO CLUB CARD: IDENTIFY RELATIONSHIP BETWEEN CUSTOMER LOYALTY AND CUSTOMER SATISFACTION

Data selection and analysis
This section presents the study developed to test for the proposed hypotheses.
In doing the research, we started by reviewing international studies in peer-reviewed scholarly journals and adopted the relevant questionnaire items to our survey. Then, we distributed and collected questionnaires to gather information from the customers of Tesco in the UK.
Qualitative method
Qualitative research is aimed to make a deeper and more meaningful conceptual understanding of the research about the loyalty program introduced by Tesco, according to the sources such as Tesco web sites, Tesco brochures, case study of Tesco, magazines, journals, news articles, interviews, thesis, information from internet, business news etc.
Just as winning new customers is very costly, keeping existing customers is very profitable. In recent years more and more organisations have realized this fact, resulting in a proliferation of ‘loyalty schemes’.
The best loyalty scheme is, of course, customer satisfaction. This is achieved by ‘doing best what matters most to customers’, with tokens, bonus points and other loyalty schemes making only a marginal difference. The fundamental justification for measuring customer satisfaction is to provide the information which enables managers to make the right decisions to maximize customer satisfaction and therefore improve customer retention.
The concept of loyalty can be considered from different points of view. In the case when we study changes in the behaviour of the buyer, it does not indicate the factors causing these changes, saying the transaction loyalty. Examples of numerical expressions of this type of loyalty is the share of buyers of their total number, which makes re-purchase, and share
gross revenue from these repeat purchases.
In the case when the primary loyalty is a subjective factor of expression of client’s satisfaction – it is a perceptional loyalty. And this kind of loyalty is more important and informative than the transactional loyalty, because it can help shape a loyalty program and find out customer opinions on the proposed product or service.
Numerical indicators of customer loyalty – is the proportion of all buyers who are in the survey agree with statements like “I am fully satisfied with the goods of this brand” or “if this product is not in the store, I’m ready to go to another shop for the goods of this brand,” etc. buy custom essay paper
To determine more accurately the level of customer loyalty of Tesco loyalty programs we are using a combination of transactional and loyalty perseptional called integrated loyalty. In this case, a matrix of loyalty / satisfaction, reflecting both look at this notion. Table. 1 has information in the form of matrix.
Table1. Matrix “Loyalty / Satisfaction”
Satisfaction Low loyalty High loyalty
Numerous purchases at the store True loyalty False loyalty
Buying at the competitive store Hidden loyalty Lack of loyalty
As a result, we have received four types of loyalty.
1.True loyalty. The customers are satisfied with Tesco store and buy goods there. This is the most stable part of the clientele, which is the least sensitive to the actions of competitors (lower prices, the introduction of additional amenities, etc.)
2.False loyalty. The customer is not satisfied with the store, but he makes shopping there – for reasons not related to the emotional commitment to the brand, for example, due to seasonal or cumulative discounts, temporary unavailability of competitive brands, the high cost of transition to another shop, a lack of awareness about alternative proposals etc. These are buyers who will go to the competitors at the slightest changes in the market.
3.Hidden loyalties. The customers are satisfied with a shop (or, perhaps, appreciates it, focusing on advertising, image and recommendations), but does not make purchases there for whatever reasons (for example due to high prices or distance).
4.Lack of loyalty. The buyer is not satisfied with the store and do not shop there.
These are the factors of higher profitability of loyal customers, according to loyalty programs of tesco. Thus loyal customers:
• Longer remain with the company
• Buy more
• Easier (cheaper) to maintain, because understand the procedure of service
• Less sensitive to price
• Provide oral recommendations
It is important to note not close connection between customer satisfaction and their behaviour (shopping). A satisfied customer does not necessarily make a purchase – only satisfaction is enough. Monitoring programs of satisfaction only ignore the behavioural aspect and as a result – lead to incorrect conclusions about what must change in marketing strategy and tactics of the company.
In statistical models of relationship between satisfaction and consumer behaviour associated with the re-purchase does not exceed 30% and is usually at the level of 10-20%, which is extremely small.
Investigation of relationships between loyalty and level of repeat purchases shows that the relationship of these variables is typically 60-80%. This suggests that there is little to achieve customer satisfaction – to try to tie him to her as a loyal (and not just satisfaction) the consumer is likely to come to us once again that the evidence in favour of the effectiveness of
loyalty programs as a tool for customer retention.

In conducting the literature review it was noted there was a wealth of acclaim and admiration for the Tesco Clubcard scheme. However, despite this positive commendation there appears to be a lack of evidence that it has actually created loyalty. Humby and Hunt (2004, pg 17) argued that it should not be contended that card‐based customer reward programs are credible alternatives to being offered excellent service, innovative products and services or the right price. All of which can develop loyalty. Much of the literature raised the claims that loyalty is generated and influenced by other factors such as price, location, coupons, range of products and staff assistance.
Tesco have been vigilant to these factors and the needs of their customers by implementing all of the strategies mentioned, in addition to the Clubcard customer reward program. Therefore primary research is required to be undertaken to determine and establish if the Clubcard has actually created loyalty. If it has, then one must determine what factors the customers are loyal towards Tesco, the customer reward program or to the Clubcard brand itself?
There is the view that Tesco sustained the Clubcard is a straightforward “thank you” to their customers and it is “designed to give you something back for shopping with Tesco” (www.tesco.com).
However, from this an area of interest is found concerning customers being less attentive to rewards and instead being more interested in gaining appreciation and recognition from Tesco. The issue raised here is with regards to the building of affinity that Tesco has with its customers through the use of specific magazine topics or quarterly mailings.
With the quantity and penetration of customer reward programs currently in operation, the Clubcard model is not unique with Seth and Randall (2001, pg 39) commenting that Tesco “did not invent the card nor were they a first mover”.
Additionally the research indicated that consumers have come to expect some form of reward as part of their routine shopping experience (Parker and Worthington, 2000, pg 491).
In addition to the issues raised from the literature review, it was felt that several other objectives were left unresolved. From this the research objectives are:
1) Investigate customer opinions and perception on the Tesco Clubcard, analyse and understand their opinions and mind‐set.
2) Gauge the effectiveness of how the gathered information from the Tesco Clubcard is utilised.
3) Recognize and identify the main users of the Tesco Clubcard Scheme.
4) Determine if the Tesco Clubcard has actually created loyalty and ascertain what customers are loyal towards.
5) Establish if the Tesco Clubcard is actually needed, given the number of loyalty initiatives currently employed by Tesco to facilitate customer satisfaction.
All these questions will be included in a quantitative research. From the research methodology it was determined that there are several areas that need to be established. This has enabled the analysis to be divided into separate sections in order to achieve each objective.