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Customer Loyalty At Tesco Marketing Essay

3598 words (14 pages) Essay in Marketing

5/12/16 Marketing Reference this

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These days marketers are showing great interest and to make stronger relationships with their customers which is known as customer loyalty.Customer loyalty have a growing importance in nowadays competitive world. Most of the companies pursue customer share intelligence rather than market share intelligence.Similiarly many companies have implemented the concept of customer loyalty to organize their retention strategies. Customer loyalty offers a paradox. Sometimes it can be seen as first and foremost a behaviour-based event than can be influenced considerably by customer relationship management like the growing famous loyalty and attraction programs. For many years there has been programs used by sellers and marketers to safe customer loyalty. Such as , credit cards issued by Barclays bank and the banks present regular customers a variety of helpful advantages.

The main factor and focus of Tesco is its customers and Tesco is keen to work hard to meet their requirements and this is a main aspect Tesco is winning. Tesco also fully understand the benefits of competition and also the benefits it conveys to the customer. Tesco has developed as a UK’s most famous supermarket by satisfying customer’s needs and expectations by having secure, nourishing, food at reasonable prices which has only been done by maintaing its popularity by listening to its customers feedback and also by actng in response to their needs.

As lives change shopping habits also changes infact whole Britain is changing because life has become more complex and busier, livelihood costs are more luxurious therefore Tesco has made shopping more suitable ,simpler and affordable.Tesco’s theory is customer will get incentive with their loyalty in such a way that if customer’s lives change Tesco and its challengers benefits their customers whatever and wherever they do shopping.Reserving the best offers and deals for their shoppers has become a philosophy of Tesco. It can be customer loyalty to Tesco but it should be Tesco’s loyalty to their customers. It is impossible to get a loan if you are a new bank or insurance customer but Tesco take care of its new customers far better than its active customers.

Area of study and Research Background

This Customer loyalty research only examines the tesco club card and the result of this research attempt can not apply on every loyalty schemes. Further research impersonate the knowledge on the other business retailers in a way to get a wide knowledge of the loyalty affects.This attempt is only carried out to examin the loyalty affects of the Tesco Club Card in terms of its market place impact .

Nowadays Tesco has developed its Tesco Clubcard as one of the most thriving and successful loyalty schemes which is also a vital driver of this is that the scheme in essential to Tesco’s assured main principal, ‘To make worth for customers’. To earn its customer life time loyalty Tesco is following its principal to provide value to its customers. To get a healthier knowledge of what the the Tesco customer wants in terms of better value quality products and in-store advertising Tesco works with its supplier. Tesco’s marketing works because they combine insight with resourcefulness, worth and degree.

Tesco was jammed as Britains’s second grade supermarket before it introduced its Clubcard. Nowadays Tesco is not only a top grocer but it also the most thriving internet supermarket as well as the Europe’s rapidly expanding financial services company. Tesco Clubcard is the most blooming customer loyalty program running in Britain which is according to our experienced research a one third population is using Tesco Clubcard . Over the past 10 years Tesco club card has established itself as one of the most booming loyalty schemes. Tesco is the third leading trader in the world and its aggressive expansion and the use of Clubcard customer loyalty program is expanding day by day.

PROBLEM STATEMENT

Almost all traders want to make and maintain loyal customers who connects in sustained gainful business with them. Customer loyalty is the evaluation of achievement of the trader or retailer in sustaining a long-standing connection and affiliation with their customers. When a retailer or a trader gets the final incentive of his attempts in interrelating with their customer. Customer Loyalty have a tendency for a customer to willingly select an exact product or service beside another for his requirement. Loyalty can be product specific or it also can be company specific. When a loyal customer has recurring need of the similar product, these customers are illustrated as brand loyal.

Tesco Clubcard is basically an indication of the features of the business and its dedication or loyalty: a strong team. Tesco has made its customer loyalty marketing work when other British retailer loyalty program failed or paused in the late 1990s. Headlines have stated publicly the fatality of loyalty method since 1995, generally devotedly maintained by other retailers whose loyalty methods are isolated memories. Clubcard is never questioned as a premeditated precedence yet by the administration. As an alternative, Tesco has acted in response to the opponents by evidently constructing sales through Clubcard by utilizing the important familiarity it creates to develop the way it runs its business.

In a nutshell, Tesco has not located that its loyalty programme is an expensive transparency because Tesco has made Clubcard work, it can identify the need of customers and produce sufficient sales by fulfilling those needs cover the cost of identification.

RATIONALE OF STUDY

Even though conservative knowledge states that customer loyalty is the most crucial feature of every business because companies live or die from repeat business, in reality, loyalty programmes are amazingly unproductive and almost 50%of them neglect their business intention s partially or wholly .With regards to loyalty in retail and loyalty schemes the motivating observations with conflicting assessment is what stimulate adequate significance in the writer to go in for a research into this special perception.

RESEARCH OBJECTIVES

Objective 1

Determine why tesco’s customers shop at Tesco’s – from customer and store perspective

1.1

Examine and identify the idea of loyalty and classify the association between customer satisfaction and customer loyalty

This research finds to define the ‘real’ meaning of loyalty in retail terms and how it differs to satisfaction. In recent years customer loyalty has been the most misunderstood idea in customer relationships of many retailers and unluckily there is no generally decided definintion of loyalty. Loyalty and satisfaction are associated inextricably, but also that this asscociation is asymmetric, in conflict that even though loyal customers are regularly satisfied, satisfaction is an untrustworthy predecessor to loyalty.

1.2

Scrutinize the circumstances under which customer loyalty develops effectiveness

This study looks for classifying the variables which help make a loyalty scheme booming, and visibly recognize the conditions under which loyalty enhances profitability. In sales promotion there are some loyalty schemes which are termed as hidden which is only another way of inducing customer and according to Oliver ” ‘ its a ‘ zero sum game’ as profit margins are squeezed to run the schene ”. Loyalty schemes are practiced by big retailers.

Obective 2

to determine whether store customer loyalty cards influence where they shop

2.1

Examine the responsibility of loyalty programs in encouraging loyalty and building complimentary customer affiliations.

This research looks for assessing the involvement of loyalty programs in creating long-standing affiliation with the customer. Mintel is a market research company says that these is a mixed proof that loyalty cards really promote loyalty. In addition, Gary Davied who is a professor of retailing in Manchester Business School says that loyalty cards have run out of steam declaring that most of us have loyalty cards for no less than two stores. Britain’s top two supermarkets, Tesco and Sainsbury’s, both say that loyalty schemes are a fundamental part of their retailing scheme and maintain they remain committed to them.

2.2

Assess the level to recognize important areas where Tesco outwits its challengers and which loyalty marketing makes its involvement to Tesco’s achievement.

This study looks to scrutinize TESCO’s proficiency and the motivation which makes its loyalty program stand out and the degree to which it donates to the retailer’s accomplishment. This research looks to find out the factors Tesco thinks to calculate the consequence of its loyalty program and examine if those factors are acceptable.

Objective 3

Make recommendations aqnd draw conclusions as appropriate

In this research we can conclude and identify that customer loyalty is a complex

concept and its often assessed by three different theories: situational loyalty,

behavioral loyalty and attitudinal loyalty which has already been mentioned in the introduction and literature review of this project. Recommendation of this project for Tesco is to be loyal with the customers and make them satisfied as much as they can so that it can increase the customer trust and can generate revenue for the organization.

Chapter: 2

LITERATURE REVIEW

Loyalty marketing has become Tesco’s foundation on which Tesco’s business strategy has helped to develop in its strategic way from being an outstanding food retailer to being a knowledge-focused business by continuously looking for ways to perform as the value-adding representative for its shoppers. Tesco’s customer knowledge advantages uses to permit it to follow a strategic approach to customer management. Companied embarked on a loyalty scheme should ensure that information or data is examined with an eye on advantageous economic results and companies should ensure that they launched what they are trying to achieve with the program and frequently determine its presentation. Loyalty scheme of Tesco recommends that a loyalty scheme can have a maintained influence on the bottom line when, from its commencement, it transforms the vibrant tradition of the organization. As soon as the board identifies that loyalty scheme data is the foundation of their business then the substantial speculation in technology, manpower and other different reserves actually starts to pay share.

The prime intention of this research is to bring out the ‘true’ meaning in view of both attitudinal and behavioural aspects and also to understande the atmosphere of uncertainty with regards to the cocept of loyalty. This research goes on to give a specified explanation of appropriate loyalty frameworks and models put forward by traditionalists and assess the reasons for the popularity and rapid propagation of loyalty schemes. It then examines whether flourishing loyalty programmes are a unrelated individual or form a part of the overall strategy and help in strategic assessment making. The chapter concludes by highlighting the propaganda adjoining loyalty schemes and the mythology affiliated with it.

TYPES OF LOYALTY

Many reasons can be found why suppliers retain the business of their shoppers or customers. Following are the five main types of loyalty.

Monopoly loyalty

Cost of range loyalty

Incentivised loyalty

Habitual loyalty

Committed loyalty

MONOPOLY LOYALTY (I have no choice)

Its a tremendous example and also show the point. In Monopoly loyalty customers have no choice or a little choice and customers loyalty is far from dedicated and is sometimes aggrieved. According to various experienced surveys show that customers with no choice or very little choice sometimes feel very uncomfortable.

COST OF RANGE LOYALTY (I cant bear the thought of all the hassle)

In Some cases the hassle issue engaged in changing suppliers is so great that customers will do it only as last option. Research illustrate that the customers will be much lesser than normal levels of contentment before they change suppliers.

INCENTIVISED LOYALTY (I might as well collect the points)

In recent years incentivised loyalty has perhaps been the most advertised marketing strategy. It can have some influence on customers who are not using or spending their money

HABITUAL LOYALTY (Its so handy)

This type of loyalty is the most general type of repeat business. Well-known schedules can be rapidly achieved with least thought become part of the standard of living because time become progressively inadequate service for many shoppers. Retention of customers can be a confusing logic of security because loyalty to suppliers in these cases can be very minimal. When a convenient, more modern and more convenient new petrol station, pub or supermarket opens the inventive supplier can find this there was a very less loyalty reinforcing the earlier levels of customer retention.

COMMITTED LOYALTY (They are the best)

As compare to loyalty, dedication and duty of the four above mentioned loyaty types with the loyal customers of a famous football club. All these three words affects their loyalty which is sometimes originated in their core values for example they were brought up that Manchester United are the greatest more willingly than in their approaches. The level of customer dedication can be used in customer contentment measurement to segment the customer base and identify those customer groupings that are most at threat of deficiency .

Customer Loyalty Key to Profitability

The word customer loyalty is used to illustrate the attitude and behaviour of repeat customers and those offers good testimonials, reviews and ratings. Customer loyalty is a process, program or a group of program goes toward maintain a customer happy so the customer will offer more business. It can be accomplished by presenting a quality product with a definite assurance, or it can be accomplished through free offers like low interest rates on financing, coupons, unlimited warranties, rebates and other motivation programs.which connects to profitabililty.

To offer a risk free assessment period for a service or a product is another good promotion or incentive to achieve customer loyalty and profitability. CL can be a one-time incentive or it can be an ongoing group of programs to attract customers such as buy-on-get-one-free promotions are very famous as well the purchases that come with free gifts and incentives. Briliant customer service is another important aspect to get customer loyalty for example if a customer have a problem than the organization has to to do that take to make things right. If a product is defective than it should be replaced or refunded which is a standard process for a reputable business.

Customer Loyalty Schemes

On the whole a good service is the finest way of producing customer loyalty. By using customer loyalty schemes occasionally old customer relationships revived and new relationships can be reinforced . The customer loyalty schemes can use fixed and offer discounts or may offer some gifts or prizes to reward customer for attitude that promotes any retail business like Tesco. If any business thinks that they have successfully deal with previous issues and problems with their customer service they can be used in terms of convincing the customer to give them another chance .

Customer loyalty programme is an uncomplicated and efficient technique of encouraging the active clients or customer to carry on buying and using products or services more regularly or in larger quantities, and to discourage them from going to a challenger. Loyalty schemes are the assortment of high technology for example smart cards and air miles which are less complicated but nevertheless helpful like on next purchase giving a coupon with concession .

It is more important to decide what kind of buying attitude an organization is finding to promote and which sector of their customers are they wish to offer incentives. Budgeting is an integral part in any company’s loyalty schemes which can decide that the rewards offered to the customers are really valuable and for this its essential to do market research at this point by asking mock customers and shoppers in which incentives and rewards they are interested in.

Tesco loyalty scheme based on the following five key offer incentives and rewards on the basis of these rewards any company or business can get a valuable loyalty scheme concept.

replicate custom

increasing spend

instructs for huge amount or with a high assessment.

without delay payment

duration of affiliation

For instance a car was may suggest cleaning at no cost for every eighth visit or also may offer a free product for a customer chooses for the deluxe service. Similiarly a mail order company may offer a voucher exchangeable against purchases to renew the interest of former customers, an expiry date can be setup for such vouchers or incetives. This fact should keep in mind that every contact with the customers is a prospect to get more near to have an idea of what makes these customer thinks about the business or a retailer.

Loyalty schemes can make replicate business and catch customers into the products or services of a company. If customers of an organization go to their business rivals it will be a huge lost and danger of losing their economical benefit because the loyalty of their customers is supreme.Customer’s feedback of the overall service a business offers will directly implement customer loyalty than short term incentives and rewards will. Loyal customer are an enormous advantage as they will suggest the business to their friends and co-workers which is called viral marketing.

Customer Satisfaction

Customer satisfaction is a sense of satisfaction of a customer and an overall idea of customer about the retailer or a company about its products or services. While having an idea to measure customer satisfaction it is important to meet the customer expectations .Customer satisfaction has little to do with customer loyalty.

Customer Satisfaction Factors

Supplier’s personal facets like etiquettes and friendliness.

Complaint management.

Type and quality of response provided by the supplier.

Department wise capability of the supplier.

Cost, quality, performance and efficiency of the product.

Customer service provided by the supplier.

Technological and engineering or re-engineering aspects of products and services.

Compatible and hassle free functions and operations.

Supplier’s ability to manage whole customer life cycle.

Supplier’s capability to commit on deadlines and how efficiently they are met.

Importance of Customer Satisfaction

Nowadays customer are more demanding and also have more alternatives to select from than ever before. Many organizations and executives have shown increasing attention in customer satisfaction in order to obtain a competitive benefit. If a product or service is having problem and needs continous maintainance and support than the client can get dissatisfied on the other hand if these problems are tackled efficiently by dealing with complaints than these dissatisfied clients can changed and converted into long lasting customer .

Simultaneously recognized ‘switching obstacles’ , the difficulty of chaning supplier is decreased. It is nearly impossible for the retailer to provide all the above mentioned aspects there can be some positive and negative aspects in products or services by which customers can get irritated. It is also true that more the positive features more the buyer or customer is satisfied. Tesco’s prime focus is to enhance these feeling from its customers and which can also increase customer satisfaction. Tesco assess these positive features by analyzing the customer information using CRM system.

Customer satisfaction and customer confidence are the key aspects of Tesco which considers to be the crucial in building the intermediate targets and offering economical benefit, as they guide straight to a thriving outcome.

Customer Loyalty and Customer Satisfaction Relationship

Customer are the most important part for any business both the loyal and satisfied customers or shoppers are an integral aspect of an organization or a retail business on the basis of this fact any business can be successfull. In the long term building an affiliation with customers is a good approach to maintain loyal customers . Various researches has proposed that creating customer connection will guide to encouraging behavioural results for example customer satisfaction and customer loyalty. Loyalty can be a major objective of relationship marketing. Furthermore customer loyalty is considered as an important foundation of long-standing business achievement.

Customer satisfaction has a positive association with customer loyalty because customer with high satisfaction will enhance their loyalty and accordingly the likelihoods of repurchasing also can be improved. Customer satisfaction can directly effect and influence customer loyalty because customer satisfaction is an essential predecessor of proposed loyalty. Customer loyalty to services and products providers is not only reliant on their degree of satisfaction or dissatisfaction. Nevertheless, the recognized predecessors of loalty stays best and highly tentative.

Within supplier customer loyalty is a reflecting value,trust , commitment and attitudinal state. Customer satisfaction is one of various predecessors of loyalty. Revival programmes must get it right first time. Customers who stay disappointed after a grievance has been handled are more dissatisfied than if no revival effort had been made. Dissatisfaction and customer satiation are main foundations of a customer’s departure. The clarification to customer satisfation is vibrant worth conception. compilation and observing of customer information is required for achievement and two-way communication is important.

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