The Concept Of Loyalty In Retail Marketing Essay

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Generally Marketing is focused on market share and customer acquisition rather than retaining existing customers and build lasting relationships with them (Kotler, 2003). More recently, but market share has steadily losing his reverence status as marketing's holy grail and the wisdom of focusing exclusively on customer acquisition (hope this effort will compensate for the high levels of defection) is now seriously questioned and considered a very high risk, as more and more players are a growing market pressures (Baker, 2000). In response to these changes is a new emphasis on defensive marketing, focusing on retaining existing customers and more customized to their (higher "share of customer"), as opposed to activities that focus on winning new customers. Calls for a paradigm shift to the exercise of loyalty as a strategic objective increasingly become popular over the past year (Sharp & Sharp, 1997).

Consequently, in February 1995, Tesco is changing the way they did business so fundamental that the effects are in every part of the company. The events changed the way Tesco decisions, to develop products, manage its stores, especially the way it serves its customers. On that day, Tesco beginning of the "club card", its loyalty program. As a major food retailer in a competitive market sector, there is always a need for brand loyalty. Loyalty schemes are not a new idea when Tesco launched, but Tesco is developing a contemporary version of the original concept goes much further in developing an active relationship with clients. Today Tesco club card has established itself as one of the most successful loyalty schemes over the past nine years, and a key driver of this is that the scheme is an integral part of Tesco's stated core purpose, "customer value creation. By understanding the customers more and use this insight to deliver back what the client wants, Tesco has succeeded in its goal to deliver value to customers and earn their lifetime loyalty Working with its suppliers. it helps both parties to better understanding of what the customer wants in terms of quality products and in-store promotions, Tesco's marketing work. because it combines insight with creativity, value and scale.

Before club card, Tesco was off as the UK's second-ranked supermarket. Today, not only is it the UK's biggest grocer, is the world's most successful Internet supermarket chain, one of Europe's fastest growing financial services company, and probably one of the world's most successful exponents of CRM. Tesco club card is the most successful CLP present in the United Kingdom, used by a third of all UK households (there are 25 million Clubcards in circulation, of which 10 million are active in any one week), 82 % of Tesco's turnover goes through the club card (the outer hyper-town, this figure rises to over 95%). (Humpy et al, 2004) .. Nobody would claim that club card responsible for the success of Tesco, but it is clear that the benefits of the club card is now required by the Tesco business letters as a piece of rock. (Mason, 2003 cited in Humpy et al.)

Tesco also has the enviable position without club card but it was not as fast or as cheap as it did without the club card information to an insight into the club card offers did. This information leads almost all of the key business decisions management team, reducing the risk of taking bold new initiatives. As Mason points out 'It changes the behavior of businesses. With club card Tesco personal gain through a medium through which it can treat customers as individuals. It can be mass-fit the needs of all types of clients of all ages and tastes and income to match. Not based on what they think the masses of customers want, but in the knowledge of individual customers actively choose what they prefer. While every business talks about the fact that the client cantered, Tesco has made that commitment in tangible assets. This design club card not only show loyalty to Tesco, but more importantly, Tesco's loyalty to customer identification.

club card is a reflection of the characteristics of the business and its commitment: a strong team ethic, a commitment to serving customers, and most of all, top to bottom retailer's pragmatism. Tesco made loyalty marketing work, when every other UK supermarket loyalty program in the late 1990s failed, faltered or never start.

Every year since 1995, news proclaimed the death of loyalty scheme, usually enthusiastically supported by other retailers' loyalty schemes distant memories. Another club card was never questioned as a strategic priority of the administration. Instead, Tesco has responded by building critics measured by sales club card, using the appropriate knowledge to create it the way it runs its business to improve.

In short, Tesco has not found its loyalty program is a costly overhead. Because Tesco club card made, can figure out what customers need and generate enough sales by satisfying those needs cover the cost of finding out. Tesco club card run, and doing it since 1995 because there is no net cost.


Since the study examines the Tesco club card only, the results can not be generalized to all loyalty schemes. Future research should attempt to study other retailers to replicate be able to get a better understanding of the loyalty due to customer loyalty programs. Also, this study examines only the loyalty due to the Tesco club card in terms of its marketplace impact, it does not investigate the effects of loyalty in terms of financial impact of the program. The econometrics of the club card is part of the research.


The interesting perceptions of conflicting thoughts on loyalty in the retail and loyalty schemes, there is enough interest aroused in the author to go in for an inquiry into the elusive concept. Although conventional wisdom dictates that loyalty is the most important aspect of any business because companies live or die from repeat business, in fact, loyalty programs are surprisingly ineffective and almost 50% of them miss their business objectives partially or completely (Internet 5). However, most of the major supermarket multiples on the train, for some, it's a huge success, while others appear more as a burden to be. This story of the tough retail was made to the author for a study of loyalty, since no existing literature has a clear statement on the issue of loyalty in retail. Is loyalty a treasure that came, conquered and died?

Aim and purpose of the research


To analyze and explore the concept of loyalty in the retail and effectiveness to determine whether a company's strategy through a Tesco Plc case study.

The purpose of this research is fresh insights to get into the concept of 'loyalty' and 'customer relationship management and the role it plays in strategic decision making. This is the strategic implications of loyalty schemes that the project would like to see. Objective 5 in a way the primary purpose of the study, all other goals needed to achieve a thorough understanding of the strategic impact of loyalty programs "were obtained. So goals are important stations 1-4 (intermediate goals) that helps the final destination or goal (goal 5) to reach.

Objective 1

Analyse and define the concept of loyalty and identify the relationship between satisfaction and loyalty

Customer Loyalty is one of the most misunderstood concepts in recent years (Payne, 2002). Unfortunately there is no universally agreed definition of loyalty (Jacoby and Chestnut 1978, Dick and Basu 1994, Oliver 1999). Oliver (1999) suggested that loyalty and satisfaction are inseparable, but that this relationship is asymmetrical, argues that while loyal customers are usually satisfied, satisfaction is an unreliable precursor to loyalty. This research aims to 'real' sense of loyalty to define in terms of retail and how it differs from satisfaction.


Investigation into the circumstances under which the loyalty increases profitability

Some loyalty schemes have been mentioned as a disguise of sales promotion. They are just another way of bribing the clients (Woolf, 1996) is a zero-sum game 'as profit margins scheme (Oliver, 1999) to perform. Dealing with data is compressed as water is a fire hose (Humpy et al, 2004) yet. loyalty schemes practiced by major retailers. This study tries to variables that help a loyalty known to successfully identify and clearly under what circumstances loyalty increase profitability identification.

Objective 3

Assessing the role of loyalty programs in the promotion of loyalty and build relationships with customers convenient

"Our customers told us they prefer pounds in their pockets (Zaria Pinchbeck, Asda, 2003, quoted in a Web) .." I've tried to analyze the data is madness "(Waitrose, quoted in Web 2)," Attack the loyalty card is unthinkable "(Russell Craig, Tesco, 2004, quoted in Web 3). The market research company Mintel says There is mixed evidence that loyalty cards really promote loyalty Gary Davies (2004), professor of retailing at Manchester Business School (quoted in Web 4), apparently. that loyalty cards steam said that most of us had tickets for at least two stores that the struggle against the point [of loyalty]. The UK's top two supermarkets, Tesco and Sainsbury's, both said that loyalty schemes are an integral part of their retail strategy and insist they remain committed to them. The study loyalty programs aimed at contributing to evaluate the creation of a long term relationship with the client.

Objective 4

Evaluate the extent to which loyalty marketing makes its contribution to Tesco's success and identify key areas where TESCO outwits his opponents

The study seeks to address the parameters TESCO believes that the impact of its loyalty program to quantify and evaluate whether those parameters are warranted to show. Safeway's loyalty scheme (SPC Card) started off well but eventually pulled back four and a half years after the start. ASDA has shied away from the rollout of the loyalty card nationwide after trials at various stores. TESCO club card is three times more famous than Sainsbury's saver card and two and a half time a greater awareness than any other card. (Woolf, 2002) TESCO CEO Terry Leahy that ". This is not the skill but the will that counts" This research aims to Tesco's skill and the will to make his loyalty program stand out, and the extent to examine what it contributes to the retailer's success.

Objective 5

Determine whether loyalty marketing should be part of a retail firm's overall business strategy form

Loyalty Marketing is dead or is it a vital force to handle? Anti-Loyalty lobbyists argue that loyalty programs are little more than a discount scheme that do nothing to produce loyal consumers. Loyal supporters, on the other hand, maintains loyalty programs form the core of their business strategy, and their value for the customer to increase, growing market share and successfully enter new markets. The research will explore the myth and realities of loyalty marketing and the part it plays in the formation of Tesco's overall corporate strategy.

Literature Review

The purpose of this is the air of confusion to clear on the concept of loyalty and brings his "true" meaning, as well as the attitude and behavior dimensions. This is a complete breakdown of the specific loyalty frameworks and models to give that purists and investigate the reasons for the popularity and sudden rise in loyalty schemes. It evaluates whether successful loyalty program is a separate entity or is part of the overall strategy and help strategic decision-making. The chapter concludes by pointing to the hype and hoopla surrounding loyalty schemes and the myths associated with it.

1: Categorisation of Loyalty Concept (the retailer's perspective)

2: notions of loyalty (from the customer's perspective)

3: Loyalty frameworks

4: Reasons for the rapid increase in the popularity of loyalty

5: Customer Loyalty-

6: loyalty as a strategy

7: Rhetoric vs. Reality

Research Methodology

In order for the above research goals of advancing this long pilot study took into account both qualitative and quantitative research strategies that are often needed for triangulation "- meaning" to a solution of two or more locations (Green et al, 2002). The inquiry approach is a combination of deductive and inductive approach. Deductive because the existing concept of loyalty and its impact on business decisions and strategy for the first time tested using data and inductive, because the data collected and analyzed new dimensions loyalty concept and strategic impact on business decisions to give.

A case study (Tesco) strategy was taken as it involves an empirical investigation of the 'loyalty' phenomenon within its real-life concept to the particular dealer.

Quantitative and qualitative

Research is applied, using both primary and secondary data collected and assembled specifically for this study. Qualitative secondary data from a variety of sources such as Tesco Case Studies Tesco Brochures, Tesco website, reference books, magazines, online magazines, newspapers and magazines (The Grocer) articles, taped interviews, business news channel views, Research Agency (eg Mintel) databases. Quantitative data from Tesco Company reports and other supermarkets were collected and analyzed to compare and contrast the effect of loyalty. Primary data was collected using "mall-intercept interviews" (Zikmund, 2000). For this purpose, a convenience sample of Tesco buyers interviewed in front of the local Tesco supermarket Other primary data collection methods, a questionnaire was divided customers into two categories, namely Tesco club card members and non-members, which is important to know that this is a benchmark to see how the Tesco club card members get their loyalty to Tesco. The "Satmetrix Market Stat" use, it is a dynamic instrument for the satisfaction and loyalty measurement that uses the "customer loyalty index" as an important yardstick to measure overall loyalty.

Research Approach:

There are two types of research approaches, deductive and inductive in my proposal I will try to focus on induction theory, the construction of the theory. The purpose inductive theory would be to create a sense of work in progress was a better kind of problem to get to understand creation. The task would be the maintenance data collection and analysis of these data and the analysis of the theoretical formulation of feeling.

Easterby Smith et al (2002) quoted in Saunder, M et al (2004) argued that there are three reasons for this approach is important for researchers.

• It allows me / researcher more informed decisions about research design, too.

• It will help me to think about the research approaches that will work for me and those who absolutely is not.

• A knowledge of the different research traditions enables me to present their research to present a draft to allow for restrictions to match.

Deductive approach has its roots in science research somewhere scholars call it research. This involves the development of the theory is subjected to rigorous testing.

Robson (1993) quoted in Saunder, M et al (2004) argued that five successive phases through which deductive research will be to progress:

1. Deducinga hypothesis (a testable part of the relationship between two or more events or concept) of the theory.

2. Expression of the hypothesis in operational term that aims to create a relationship between two specific variable creation.

3. Test the operational hypothesis

4. The investigation of the specific outcome of the investigation

5. If necessary, modifying the theory in light of the finding. Brand Strategy: Research strategy is very important part of any research, it reflects the reader what strategy the researcher to use and why? There are different types of research strategy used for different types of research. The strategies are listed below:

• Experiment

• Survey

• Case study

• soil theory

• Ethnography

• Action research

• Cross sectional and longitude

• exploratory, descriptive and explanatory strategy

In my research I will choose case study. Saunder, M et al (2004) argued that case study strategy has a significant ability to generate answers to the question why? Like that? And how? Questions tend to the matter of survey strategy. The data collected method employed can be various. They may include questioner, interviews, observation, documentary analysis and questioner. But my problem is related to how people can be maintained by the motivation and reward our case study approach will help me to my research appropriately justified.

Data collection methods:

For the purpose of this research, both primary and secondary data used for accurate results. There are four main ways in primary data collection, questionnaires, interviews, measurements and observations (Ghauri and Gronhaug, 2002). The research will be based on qualitative research is a part of my research will include both qualitative and quantities of demand and interview current and former employees and top management. Although there are important question regarding this research is employee retention, that is why I will use the former employee by the current employee. I will collect the secondary data from various books and magazines that my research was done to smoothly facilitate.

Reliability and validity of data

Reliability is defined as the consistency of a measure yields the same result in another opportunity similar observer can be reached by other observers and is there any transparency what sense of the raw data was made Saunder, M et al (2004). There was not any previous research in MMJ that this research will be the first research to find out the current problem and make a recommendation.

Validity is concerned with whether the instrument measures what it appears to measure (Sekaran, 2003; Pallant, 2003). Ghauri and Gronghaung (2002) noted that "the validity of the face, telling how the measure used seems to be a fair amount for what it purports to measure" and it can be achieved by asking other's opinions is familiar with the subject in order to value tool to convert.

Time Horizons

In my research I chose sectional studies, because we have a specific time frame for conducting this research and time we can not cross. Through the cross sectional area studies will help us to do research in a specific time frame.


I am fully aware of the university research ethics, and I hope my research will not have anything of myself to university reputation and impede an organization where the research will be conducted. On the other hand the research will be kept confidential and the data will be carefully stored.

In carrying out my research I'll tell you why the competitor export, which is the biggest challenge for the organization and they said organizations will help the current problem to overcome to research. I will verbally and through their writing that the information they will provide will be confidential and names will not be known.

I am aware of all forms of danger in my research period and I'll see that participants are protected against all forms of risk and danger. If ethical management is ongoing research output that I'll always be my project under review by the ethics implications.


• Academic Journals

• Books

• Web Pages

• Emerald Insight

• Google Scholar