customer reward as loyality marketing tool

School of Management

Blekinge Institute of Technology

The accuracy of customer reward program as loyalty marketing tool

Philip Law Supervisor: Anders Hederstierna

Thesis for the Master’s degree in Business Administration

Fall/Spring 2008

http://www.bth.se/

http://www.bth.se/

Abstract

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ABSTRACT

Relationship marketing is perceived as a leading trend in marketing and twenty‐first

century consumers have evolved into becoming ‘increasingly promotion‐literate’

(Harlow, 1997 cited in Egan 2001, pg 381). The knock on effect of this is a decrease

in reliance on traditional and most frequently used methods for building customer

relationships.

For over a decade, supermarkets have transformed the shopping experience through

the creation of out of town locations which can accommodate the development of

considerable sized outlets, extensive product ranges expanding beyond food.

Offering a wide range of services one would not normally associate with a

supermarket such as telecommunications, finance and insurance, and with this the

additional incentive of customers collecting and redeeming points through customer

loyalty programs. Categorically today Tesco is not only the UK’s largest grocer, but

also the world’s most successful internet supermarket (Humby and Hunt, 2004, pg

1). The Tesco Clubcard is widely considered to be a pioneer and success story in

loyalty marketing, helping to propel Tesco to be the number one supermarket

retailer in the UK (Tapp, 2005, pg 176).

By carrying out a literature review on previously published materials and the use of a

quantitative survey, this study aims to uncover and identify the value of the Clubcard

scheme and how significant it is it in creating true customer loyalty to Tesco.

The findings of the study revealed consumers place greater importance upon store

location, value for money and product range rather than loyalty card schemes, in‐

store magazines and vouchers. The results revealed that although respondents

aspired to gain points and redeem the rewards offer by the Tesco Clubcard, they also

showed that today’s consumer is more in touch and has a greater knowledge of the

schemes and as such consumers tastes, perceptions, attitudes and demands have

Abstract

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evolved. Furthermore, it was revealed that consumers are effectively manipulating

suppliers to their own ends as the findings exposed that consumers are shopping

around for the best deals and they own and actively use more than one loyalty card.

The primary research revealed the failure to evolve the Tesco Clubcard scheme into

what today’s consumer demand has brought the Clubcard proposal to a unique

crossroad.

It is recommended that the Clubcard model evolves to adapt to the new tastes,

attitudes and demands of the new generation of consumers. An understanding of

the 21st century consumers will help ensure a loyal customer base. Areas such as

lowering prices shall help sustain a competitive advantage within the supermarket

industry. Further consideration should be given to giving customers an instant

rebate at the point and time of sale rather than rewarding them through the

collection of points. The current image of the Clubcard feels dated and as such a

revision and re‐launch may give it a much needed boost and help motivate and

excite consumers.

Acknowledgements

ACKNOWLEDGEMENTS

I would like to give thanks to the following people for their help and support in the

completion of this study.

First and foremost I would like to give great thanks to my family and friends who

have supported me through my studies. Special thanks to my partner Jenny for all

her help and support during my course and the writing of this thesis ‐ I couldn’t have

done it without you!

I would like to thank my tutor Anders Hederstierna for his time, attention and

guidance throughout the writing of this thesis.

Finally I would like to thank Tesco for allowing and helping with the research of this

dissertation.

Philip Law

Table of Contents

TABLE OF CONTENTS

Abstract

Acknowledgements

Table of Contents

Table of Figures

1.0 CHAPTER ONE – INTRODUCTION

1.1 The Rise of Tesco 7

1.2 The Background to the Study 8

1.3 The Scope of the Study 9

1.4 Purpose 10

1.5 Objectives 10

1.6 Summary 11

2.0 CHAPTER TWO – LITERATURE REVIEW

2.1 Introduction 13

2.2 The Tesco Story 13

2.2.1 The Tesco Timeline 17

2.3 Characteristics of Customer Relationship Management (CRM) 20

2.4 The Clubcard Phenomenon 21

2.5 Defining Loyalty 23

2.6 Loyalty Marketing 26

2.6.1 The Customer Loyalty Ladder 29

2.7 The Tesco Clubcard as a Loyalty Marketing Tool 31

2.8 The Relationship between Satisfaction and Loyalty 34

2.9 Does Loyalty Result to Profit? 36

Table of Contents

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2.10 Do Customer Reward Programs Deliver Long Term? 39

2.11 Conclusion 43

3.0 CHAPTER THREE – METHODOLOGY

3.1 Introduction 48

3.2 Research Objectives 48

3.3 Selection of Research Methods 50

3.3.1 Features of Qualitative and Quantitative Research 52

3.3.2 Analysis of Data 54

3.4 Questionnaire Design 54

3.4.1 The Eight‐step Questionnaire Construction Procedure 55

3.4.2 Justification of Questions 56

3.4.3 Question Types and Wording 56

3.4.4 Questionnaire Layout 57

3.4.5 Interviewer Versus Respondent Completion 58

3.4.6 Coding 58

3.5 Sample Selection Procedure and Sample Characteristics 59

3.6 Strengths, Limitations and Validity 60

3.6.1 Strengths 60

3.6.2 Limitations 61

3.6.3 Validity 62

3.7 Summary 62

4.0 CHAPTER FOUR – RESEARCH FINDINGS AND ANALYSIS

4.1 Introduction 64

4.2 Analysis 64

4.2.1 User Profile of Tesco Clubcard Respondents 64

4.2.2 Customer Perceptions on Tesco Clubcard 67

Table of Contents

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4.2.3 Loyalty and Satisfaction 72

4.2.4 Tesco's Efficiency and use of the Information Gained from

Clubcard 73

4.2.5 Has the Tesco Clubcard Created Loyalty? 75

4.2.6 Are consumers Manipulating Suppliers? 76

4.2.7 Does Tesco Really Need the Clubcard? 79

4.3 Conclusion 82

5.0 CHAPTER FIVE ‐ CONCLUSION

5.1 Introduction 85

5.2 Conclusion of the Study 85

5.3 Recommendations 89

5.4 Limitations and further research 90

REFERENCES 93

BIBLIOGRAPHY 103

Appendix A ‐ Questionnaire Justification 105

Appendix B – Questionnaire 107

Appendix C ‐ SPSS Coded Questionnaire Results 110

Appendix D ‐ SPSS Frequency Tables for Questionnaire Results 114

Table of Figures

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TABLE OF FIGURES


2.2.1 The Tesco Timeline 17

2.6.1 Customer Loyalty Ladder 29

3.0 CHAPTER THREE – METHODOLOGY

3.3.1 Features of Qualitative and Quantitative Research 52

3.4.1 The Eight‐Step Questionnaire Construction Procedure 55


4.2.1.1 Frequency table: Gender of Respondents 65

4.2.1.2 Cross tabulation: Please Choose your Gender * Please

Indicate Which Age Group You Fall Into 65

4.2.1.3 Cross tabulation: Please Indicate Which Age Group You Fall

Into * I Trust Tesco Products and Their Image 66

4.2.2.1 Frequency table: Please Indicate How Often You Use Your

Clubcard When You Purchase Goods or Services with Tesco 67

4.2.2.2 Cross tabulation: Please Indicate Which Age Group You Fall Into

* If Tesco Did Not Have the Clubcard Scheme, Would

you Still Continue to Shop There? 68

4.2.2.3 Cross tabulation: I Think Tesco is Very Innovative * I Feel More

Could be Done to Increase my Loyalty 69

4.2.2.4 Cross tabulation: I Trust Tesco Products and Their Image * I Feel

More Could be Done to Increase my Loyalty 69

4.2.2.5 Cross tabulation: If Tesco did not have the Clubcard scheme, Would

you Still Continue to shop there? * I Expect Rewards to be a

part of my Normal Shopping Experience 70

Table of Figures

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4.2.2.6 Cross tabulation: Importance of Loyalty Card Schemes *

Have you Redeemed any Rewards from the Clubcard

Scheme within the last 12 Months? 71

4.2.3.1 Cross tabulation: Would you Describe Yourself as Being Loyal to

Tesco? * Would you Describe Yourself to be a Satisfied

Customer of Tesco? 72

4.2.4.1 Frequency table: Do you read Clubcard Magazine? 74

4.2.4.2 Cross tabulation: Do you read Clubcard Magazine? * If "yes" or

"sometimes" Please Indicate what you think of the Magazine 74

4.2.5.1 Cross tabulation: Does the Collection of Points Influence you to

buy more or to buy specific/alternative Promotional Products? *

Location Of Store Importance 75

4.2.6.1 Frequency table: Apart from Clubcard, do you own and regularly

use other store loyalty cards? Please indicate how many 76

4.2.6.2 Frequency table: I Usually Shop Around to get the Best Deals 77

4.2.6.3 Frequency table: I Expect Rewards to be a part of my Normal

Shopping Experience 78

4.2.6.4 Cross tabulation: Please Indicate which age group you fall into: *

Do you know how many Clubcard Points you gain for every £1

you spend in store? 79

4.2.7.1 Table: The Importance Respondents Placed upon Factors that

Influence Loyalty 79

4.2.7.2 Frequency table: What more could Tesco do to make you more

Loyal? 81

Chapter One ‐ Introduction

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Chapter One

Introduction


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1.0 CHAPTER ONE – INTRODUCTION

1.1 The Rise Of Tesco

Categorically today Tesco is not only the UK’s largest grocer, but also the world’s

most successful internet supermarket (Humby and Hunt, 2004, pg 1).

Arguably one of the world’s most successful advocates of Customer Relationship

Management (CRM) (Humby and Hunt, 2004, pg 1) and as commented by Tapp

(2005, pg 176), “The big success story of database driven management is Tesco. It

seems to understand when to closely manage the analysis, and when to let it go its

own way; when to go with a hunch based on experience and when to question

conventional wisdoms).

Since the introduction of the Tesco Clubcard scheme in 1995, the retailer has

managed to ascertain a sound reputation for innovation using imagination and

technology to constantly deliver customer value resulting in increased sales and

customer retention in the ferociously competitive food retailing industry. Tesco and

the Tesco Clubcard are seen as “the key player in the UK and one of the most

important schemes in commercial history …. It has revolutionised the way a multi‐

billion pound industry is run. Individual‐level data has been systematically gathered

on most of Tesco’s 12 million customers, allowing the company to understand each

customer’s value to the company and how it may be able to increase that value or

prevent loss” (Tapp, 2005, pg 192). “Before Clubcard, Tesco was stuck as the UK’s

second‐ranking supermarket” (Humby and Hunt, 2006, pg 1).

Tesco claims nearly £1 of every £7 spent on the high street (Hawkes, 2008). In April

2008 “Tesco has reported an 11.8% rise in underlying annual profits for 2007 to

£2.846bn, meeting analysts’ forecasts” (BBC Business News, 2008).


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What this thesis will investigate is how significant and instrumental the Clubcard

scheme has been in building the success of Tesco’s rise to dominance. With other

supermarkets offering similar schemes, why exactly do customers constantly return

and not defect to rival stores? What is the true value of the Clubcard scheme to

Tesco? Given the current position that Tesco are in and offering so much to

customers it could be disputed if Tesco really need the Clubcard scheme.

With this setting in mind I would like to initiate the concept of Customer Relationship

Management (CRM). Berry and Parasuraman, (1991) have commented that in order

for an organisation to sustain a relationship with its customers it needs to offer

benefits that are important to them and at the same time difficult for competitors to

replicate. Barry stressed that the aim is to transform indifferent customers into

loyal ones and solidify the relationship. This argument is further enforced that

twenty‐first century consumers have evolved into becoming ‘increasingly promotion‐

literate’ (Harlow 1997 cited in Egan 2001, pg 381).

“Today, there is a CRM revolution underway among businesses. It represents an

inevitable – literally irresistible – movement. All businesses will be embracing CRM

sooner or later, with varying degrees of enthusiasm and success” (Peppers and

Rogers, 2004, pg 6). CRM has become a major management growth tool of the last

decade (Gilles, Righby and Reichheld 2002) and research has shown that the market

for the worldwide customer relationship management (CRM) software is projected

to surpass $8.9 billion in 2008 and is forecasted to reach $13.3 billion by 2012.

(CRMToday.com, 2008).

1.2 The Background to the Study

The evolution of supermarket shopping has advanced at an expediential rate over

the last decade. Having transformed the shopping experience and changed the way


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in which we shop through the creation of out of town locations which can

accommodate the development of considerable sized outlets, extensive product

ranges expanding beyond food, a wide range of services one would not normally

associate with a supermarket such as telecommunications, finance and insurance.

With this the additional incentive of customers collecting and redeeming points

through customer reward programs.

The trend and interest in using loyalty cards is undeniable. Approximately 85% of

households in the UK had at least one active loyalty card (Mintel, 2004). These

loyalty cards are key to an organisation’s marketing activity as it allows marketers to

interact directly to the people who will benefit the most with tailor made offers and

communication. However, some studies have suggested that the loyalty card

scheme are at a crossroad and do not work as shoppers attitudes have changed and

they prefer to pay less for their groceries than earn points on their purchases.

1.3 The Scope of the Study

The study of this dissertation will commence with focusing on secondary data, in the

form of a literature review. The motivation for this is that it shall provide a depth of

understanding, the concepts and theories that are to be investigated and to provide

an example on how others have embarked upon this subject area. Primary research

is essential in order to complete the objectives that this thesis sets out to achieve,

therefore the findings of the literature review will direct the author into the

construction of a primary research tool in the shape of a questionnaire to address

areas where there maybe gaps. Subsequently, the methodology will explain the

conditions into how the primary research was conducted before an analysis of the

results attained. The closing stages of this study will then be concluded and

recommendations will be made.


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1.4 Purpose

The intention of the thesis is to uncover if Tesco truly need their Clubcard scheme

any longer to keep customers loyal due to the sheer amount of effort they currently

use to keep customers loyal and given the position that they are in. The tool may

assist in the aid of repeat purchases but does the scheme demonstrate and create

true loyalty.

1.5 Objectives

1). Chronicle Tesco’s rise to power and being the number one supermarket retailer

within the UK.

2). Define loyalty and loyalty marketing.

3). Recognise the factors that affect the significance of a customer reward program

and their roles within the supermarket sector.

4). Question how instrumental the Clubcard reward program is in building the

success of Tesco to where it is today and its role as a marketing tool.

5). Establish the real value and significance of the Clubcard reward program to Tesco.

6). Discover the general attitude of Tesco customers towards the Clubcard reward

program. Analyse and obtain the importance of the scheme to customers and

ascertain just how significant the scheme is in keeping them loyal.


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1.6 Summary

From establishing the aim of this study the reader is conscious to the scope of the

investigation and what it sets out to accomplish. The motivation of the subject and a

brief background to Tesco and its Clubcard scheme has provided a solid foundation

for advancing to examine secondary research.

The literature review follows in the next chapter.

Chapter Two – Literature Review

Chapter Two

Literature Review


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2.1 Introduction

This chapter aims to provide a background to the study and seeks to carry out the

following objectives of the dissertation:

1). Chronicle the history and rise of Tesco.

2). Understand the concept of CRM.

3). Define Loyalty and Loyalty Marketing.

4). Determine if the Tesco Clubcard has generated loyalty and what factors

customers are loyal to.

5). Realise the issues that may affect the value of a customer reward program

and recognise the importance within the supermarket industry.

6). Given Tesco’s current range of loyalty marketing strategies, examine if

the Tesco Clubcard is really needed.

The literature review will commence with the charting of Tesco’s background story,

followed with defining the fundamental terms with a focused discussion. It will

conclude with a summary of the main points mentioned.

2.2 The Tesco Story

Recent work from Reference for Business (2007) and the European Foundation for

the Improvement of Living and Working Conditions (2007) have chronicled the

history of Tesco. It is with allusion to these bodies of work that this section is based

upon.


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In 1919, John Edward Cohen invested £30 into a small grocery stall in the East End of

London, selling whatever could be housed in the tiny stall. Thus began Cohen’s

career as a market trader after serving in the Royal Flying Corp.

By 1932, Cohen officially founded Tesco Stores Limited. The name was a based on a

private label tea that Cohen bought and sold from a merchant which used the initials

T.E. Stockwell and by adding the first two letters of his surname – TESCO was born.

Within 8 years, Cohen expanded his operation and opened more than 100 small

stores in the London area. In 1935 Cohen was invited by several key American

suppliers to the United States to witness and learn the American food retailing

system. On returning to the UK from his visit, Cohen wanted to take the American

self‐service supermarket vision and implement it in the UK.

By 1947, Cohen realised his dream and opened the first Tesco self‐service store in

Hertfordshire. However, the public were not ready for such a radical approach and it

failed to capture the interest of British shoppers, the end result was that the store

closed in 1948. Not deterred by this Cohen reopened the shop one year later to a

warmer reception from the great British public.

Helped by the acquisition of smaller grocery chains Tesco rapidly expanded over the

next two decades and in 1956 the first Tesco supermarket to carry fresh foods in

addition to more traditional dried goods was opened.

During the 1960’s, Tesco range of products diversified. Non‐food merchandise and

household items were now being sold and with it came a higher margin. It was also

during this period that the company completed construction on a 90,000 square‐foot

warehouse. With the opening of a 40,000 square‐foot store the term “superstore”

was born. This term not only referred to the actual size of the store but also the

immense selection of food and non‐food items available within it.


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In 1963, Tesco signed up to the Green Shield stamps scheme. This was another

American idea, where the theory of the scheme was that retail organisations would

purchase these stamps and then give them away as a bonus to customers for every

purchase they made. The amount of stamps given reflected on how much

customers spent. Once the customers had collected sufficient stamps and stuck

them into a Green Shield collector’s book, the shoppers could then exchange this for

merchandise from a catalogue or shop. The outcome of this was customer loyalty as

shoppers congregated on stores offering stamps.

The American food retailing system that Cohen had introduced resulted in Tesco

operating approximately 900 supermarkets and superstores throughout the UK by

1976.

The sheer nature of the American supermarket vision of ‘pile it high, sell it cheap’ did

not lend itself to generous profit margins and the firms management established

that this strategy had not aged well and in fact was deteriorating, consequently

causing an image problem among consumers.

The food industry and consumers were evolving and Tesco were guilty of missing the

vital signs of change in the market and that consumers were demanding quality over

quantity.

During the 1970’s, consumers were spending less money on food purchases and

Tesco profits were lower as customers’ tastes were changing and they had more

disposable income. In addition, the Tesco brand began to look slightly jaded and was

suffering an image quandary. In an attempt to win back shoppers, increase sales and

gain more market share the Green Shield Stamp scheme was scrapped in 1973 and

prices were cut across the board.

Initially the new strategy worked, however the diminishing image of Tesco was still

apparent. The majority of Tesco stores were poorly staffed with inadequate


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customer service and merchandise selection. In order to recuperate, an extensive

modernisation program was undertaken and 500 unprofitable stores were closed.

Tesco made a considerable investment to not only improve its stores physically but

also to provide the higher quality merchandise that consumers desired. The upshot

was prevalent upgrading and enlargement of smaller cramped stores. Cosmetic and

practical changes such as widening aisles and enhanced lighting were used and the

main focus of Tesco was on the superstore concept. The average superstore covered

25,000 square feet but eventually expanded to as large as 65,000 square feet.

In order to improve efficiency the original distribution systems were computerised

and restructured. To compliment the new high‐quality and service‐oriented image

of these new stores, Tesco also introduced its own label product lines which had

been developed through extensive Research and Development (R&D) programs.

During the late 1970’s and early 1980’s the UK food sales market was in a slump. In

order to encourage more sales and customer loyalty Tesco began an application

which cut prices on approximately 1,500 food items. The knock on effect of this was

a renewed price war between Tesco and J. Sainsbury.

Throughout the rest of the 1980’s Tesco continued to expand into Ireland and in

1985 the 100th superstore was opened. By 1989 the company had spent £500

million on building 29 new stores.

By the beginning of the 1990’s, Tesco had become one of the top three food retailers

in the UK, encompassing 371 stores in Great Britain in addition to becoming the

largest independent gasoline retailer in the UK. It was also during this period that

Tesco expanded into new countries acquiring store chains in Poland, the Czech

Republic and Slovakia.

To further reinforce the innovation at Tesco, two new formats of store were

experimented. The first was the Tesco Express format, which combined a petrol


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station and small convenience store into one. The Tesco Extra format expanded the

non‐food departments.

In February 1995, the Tesco Clubcard was introduced. Two years later, in 1997,

Tesco branched out into financial services creating a Tesco Visa card, in‐store banks,

savings accounts, loans and insurance.

By the millennium Tesco, launched its e‐commerce business and turned to

developing its non‐food business. The aim was to turn the non‐food side of the

business to be as strong as the food side.

Stores now carried extensive electronic products, toys, sports equipment and

general household goods and furnishings. In September 2002 Tesco introduced its

own line of clothing. International operations were also developing as Tesco entered

Asia opening stores in Thailand, South Korea, Taiwan, Malaysia and China.

Today, Tesco stands as a genuine retail giant, it has consistently out performed rivals

and increased market share. The strength and diversification of Tesco’s own brand

products is indisputably impressive. Expansion in the UK and abroad is continuing

and industry observers can find little to fault the company’s operations.

2.2.1 The Tesco Timeline

Timeline on the growth of Tesco:

1919 ‐ Founder Jack Cohen begins selling surplus groceries from a store in the East

End of London. His first day's profit was 1 pound on sales of 4 pounds.


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1924 ‐ Cohen's first own‐brand product is called Tesco Tea. The name came from the

initials of TE Stockwell, a partner in the firm of tea suppliers, and CO from Cohen's

surname.

1939 ‐ Tesco has around 100 branches.

1947 ‐ Tesco Stores (Holdings) Ltd floats on London Stock Exchange with share price

of 25 pence.

1956 ‐ First Tesco self‐service supermarket opens in a converted cinema in Maldon.

1960 ‐ Takes over chain of 212 stores in North of England and adds another 144

stores in 1964 and 1965.

1961 ‐ Tesco Leicester enters Guinness Book of Records as the largest store in

Europe.

1963 ‐ Introduction of Green Shield Stamps scheme.

1979 ‐ Annual sales reach 1 billion pounds.

1982 ‐ Annual sales exceed 2 billion pounds.

1987 ‐ Tesco has 377 stores – far fewer than before, but each store is larger.

1991 ‐ Becomes Britain's biggest independent petrol retailer.

1995 ‐ Becomes Britain’s market‐leading food retailer. Tesco Clubcard customer

rewards scheme is launched, the innovation set to transform the store’s fortunes,

and track it’s customers. Tesco enters Hungary.


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1996 ‐ Tesco spreads to Poland, Czech Republic, Slovakia and Northern Ireland.

1997 ‐ Terry Leahy becomes chief executive. Tesco moves to capture share of loan

and personal finance market as Tesco Personal Finance is launched. Company

launches 24‐hour trading as the first of many Tesco Extra Hypermarkets open.

1998 ‐ Enters Taiwan and Thailand

1999 ‐ Mobile phones go on sale in Tesco stores; launches online bookstore and

online banking. Enters South Korea.

2000 ‐ Tesco.com launched and goes live.

2001 ‐ Strategic relationship with U.S. supermarket Safeway to take Tesco.com

model to United States. Enters Malaysia.

2002 ‐ Tesco has 730 stores in the UK.

2003 ‐ Tesco enters Japan and Turkey.

2004 ‐ Enters China. Launches own brand Fairtrade range. Tesco broadband

launched. Enters music download market.

2005 ‐ Makes 2 billion pounds of annual profits. Announces non‐food store trial.

Enters Czech Republic and Slovakia through Carrefour asset swap and exits Taiwan

2006 ‐ Tesco has a total of 1,879 UK stores and controls approximately one‐third of

the UK grocery market.

November 8, 2007 ‐ Opens first U.S. store near Los Angeles.


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Adopted from Sanderson (2007) and Simm (2007, pg 116‐117).

2.3 Characteristics of Customer Relationship Management (CRM)

“The past decade has seen many firms (re)adopt a customer focus – often through a

formal program of customer relationship management (CRM)” (Uncles, Dowling and

Hammond, 2004, pg 92). Peppers and Rogers (2004, pg 6) back up this claim citing

that “there is a CRM revolution underway among businesses”. Despite becoming

one of the most intensive and important developments of the business climate there

is no specific definition for CRM, as commented by Goodroe (2005, cited in Wylie),

“CRM is difficult to define. It’s somewhat misunderstood, largely misused, and in

some cases abused…often by the very people who strive to define it.”

In the modern marketplace customers continue to gain vigour, it is vital that an

understanding of them is undertaken to provide personalised value. “Customers

don’t want to be treated equally. They want to be treated individually” (Newell

2003, pg 17).

Through the use of an elaborate process arbitrated by information technology, CRM

is designed to create and continuously improve the relationship between an

organisation and its customers in real‐time transactions. Despite the fact that CRM

is essentially rooted within information technology it is more than just a technology.

It draws from traditional marketing principles and key to this process is the

recognition and definition of what customers deem as value and delivering it, the

end result is “value is thus created with customers, not for them” (Gordon, 1998, pg

9).

What can be established is that the CRM process suffers when it is not adequately

understood or implemented. Clearly CRM involves much more than marketing and

“in its most generalised form, CRM can be thought of as a set of business practices


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designed, simply to put an enterprise into closer and closer touch with its customers,

in order to learn more about each one, with the overall goal of making each one

more valuable to the firm” (Peppers and Rogers, 2005, pg 6).

In order for an organisation to truly engage the customer it is essential that

companies can exceed consumers expectations, therefore any definition of CRM

would be fundamentally wrong if it didn’t start with the customer in mind. The

following excerpt will be used to define CRM:

“Relationship Marketing is the ongoing process of identifying and creating new

values with individual customers and then sharing the benefits from this over a life

time. It involves the understanding, focusing and management of ongoing

collaboration between suppliers and selected customers for mutual value creation

and sharing interdependence and organisational alignment” (Gordon, 1998, pg 9).

For the case of the Tesco Clubcard, Humby and Hunt (2004, pg 16) have cited that

“the definition of CRM is best summarised as: to improve our performance at every

point of contact with our customers, to make them happier and the company

richer”.

2.4 The Clubcard Phenomenon

“Customer loyalty is not about how customers demonstrate their loyalty to us,

it is about how we demonstrate our loyalty to them”.

Lord MacLaurin, Chairman of Tesco

In February 1995, the Tesco Clubcard was launched and it became the UK’s first

supermarket customer reward program. Originally piloted in twelve stores, the

inspiration of the card was to gain an insight into shopping habits of customers and


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give something back to them. Points would be accumulated for every £5 spent and

in turn the points would be converted every quarter into Clubcard vouchers which

the customer could redeem in any Tesco store. However this scheme was later

changed when it was realised that pensioners and students were not fully benefiting

due to the small frequent purchases they made (Louis, 2002, pg 5).

Under the new scheme, shoppers gained one point for every £1 spent on goods in‐

store, online, on Tesco Petrol forecourts, Tesco Personal Finance products and Tesco

Telecoms. Additional points could also be connected at 10 Clubcard partner

companies (Papworth, 2005).

Once the customer has accumulated 150 points the points are converted into

Clubcard vouchers at an exchange rate of 1p to one point, thus giving an effective

discount of 1%.

To add further value to the vouchers, they can be “swapped for AirMiles or Clubcard

Deals such as days out, film hire, restaurant meals, magazine subscriptions, holidays

and flights. These deals are priced at four times the in‐store redemption value of the

vouchers. For example a year’s magazine subscription to Cosmopolitan magazine

which normally costs £34.20, costs £8.55 in Clubcard vouchers” (Papworth, 2005).

The costs associated with running a loyalty program are notoriously high. The Green

Shield stamp scheme cost £12 million annually. The Clubcard scheme introduced

new point‐of‐sale (POS) technology as well a call centre to handle customer queries

and a vast supporting computer system to record and analyse the Clubcard

information. In total it cost Tesco £300 million over the first three years and

approximately 4.5% of Tesco profits to run the scheme.

Within six months of the introduction of Clubcard, Tesco’s share of the UK retail

grocery trade had increased from 15% to 18%. Less than 12 months after the launch,

with over eight million Clubcard customers purchasing some 200 million in‐store


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products per day, Tesco was now propelled to being the number one retailer in the

UK (Peppers and Martha, 2001).

Following the success, some competitors launched rival schemes although these

were later scrapped. One retailer, ASDA, did resist the trend of loyalty cards and

focused primarily on its competitiveness and reducing costs. It was assessed that in

2001 the Clubcard scheme had managed to attract approximately 20 million

members in the UK, of which over ten million card holders were active users.

Seth and Randall (2001, pg 39) have commented that Tesco “did not invent the card

nor were they a first mover, but in retrospect they executed its introduction bravely

and brilliantly, getting the timing right”.

2.5 Defining Loyalty

In order to investigate the value of the Tesco Clubcard scheme, it is vital that an

understanding and definition of loyalty is established. In the context of retail

marketing loyalty can be perceived as “a combination of customer behaviour and

attitude” (Fraoch Marketing, 2006). It is usually characterised as activities carried

out by an organisation for the development of a long‐term relationship with its

customers.

With this in mind, the concept of loyalty may initially appear to be rather simplistic.

However, there is an overwhelming amount of research focused on the definition

and term for the notion of loyalty. Customer loyalty is acknowledged as a key

concept whose importance has been recognised by many academics and

practitioners.

“Questions about how to define loyalty were addressed more than 20 years ago”

(Grisaffe, 2001). Upon further investigation and reading it can be seen that there is a


24

lot more to the notion and as commented by Parker and Worthington (2000, pg 491)

it is a “complex phenomenon”.

One of the most distinguished insights into loyalty was provided by Dick and Basu

(1994, pg 102), who cited loyalty as “the strength between relative attitude and

repeat patronage”. Key to understanding this is the correlation between behaviour

and attitude. However this is not significantly sufficient as the perception could

ascertain changes in behaviour and attitudes in the future.

It has been suggested by scholars that loyalty is an emotional concept, Jenkinson

(1995, pg 116) resists defining loyalty in behavioural terms and notes the concept of

loyalty as “the reflection of a customer’s subconscious emotional and psychological

need to find a constant source of value, satisfaction and identity”. This advocates

that loyalty is an emotional concept created by trust. Humby and Hunt (2004, pg 17)

have commented that “loyalty is an emotional response based on empathy”. To

further the ideology and recognition that thoughts and feelings are active, East

(1997, cited in Rowley, pg 539) comments “other variables such as social and

physical environment as well as the personal abilities have been found to pre‐empt

action”. Conversely this view could be seen as being “functionally loyal” (Barnes

2002) whereby customers are only loyal to a company due to convenience.

Functional loyalty is often created by functional values such as quality, distribution,

price, convenience or through different loyalty programs providing a tangible reason

to prefer certain suppliers. However, this is easily replicated by competitors, thus

the creation of functional value only offers a short‐lived competitive advantage,

functional loyalty can’t be very long lasting (Barnes, 2002).

Neal (2000 cited in Grisaffe 2001), states that “loyalty is a behaviour”, this is

“arguably the most controversial (view) but the best supported by data. The

controversy comes about because loyalty is this model is defined mainly with

reference to the pattern of past purchases with only secondary regard to underlying

consumer motivations or commitment to the brand” (Ehrenberg, 1998; Fader and


25

Hardie, 1996; Kahn et al., 1988; Massey et al., 1970 as cited in Uncles, Dowling and

Hammond, 2004, pg 94). Shapiro and Varian (1998, pg 128) believe that loyalty is

concerned with repeat purchase or buying largely and exclusively from a single

vendor.

Uncles et al., 1994 (as cited in Uncles, Dowling and Hammond, 2004, pg 94),

comments that after extensive studies of data and purchase pattern, researchers

“have found that few consumers are ‘monogamous’ (100 percent loyal) or

‘promiscuous’ (no loyalty to any brand). Rather, most people are ‘polygamous’ (i.e.

loyal to a portfolio of brands in a product category)”. Essentially “from this

perspective, loyalty is defined as an ongoing propensity to buy the brand, usually as

one of several” (Ehrenberg and Scriven, 1999, cited in Uncles, Dowling and

Hammond, 2004, pg 94).

“Loyalty to the brand (measured by repeat purchase) is the result of repeated

satisfaction that in turn leads to weak commitment. The consumer buys the same

brand again, not because of any strongly‐held prior attitude or deeply‐held

commitment, but because it is not worth the time and trouble to search for an

alternative” (Uncles, Dowling and Hammond, 2004, pg 94).

Grisaffe (2001) argues that loyalty is not just about behaviour, “If a buyer has a

cognitive rule, ‘buy the lowest priced brand’, and brand B is always lowest, they look

behaviourally loyal to B over time. Until brand A enters the market at a lower price.

Then the customer switches to show repeat purchase of A, until market prices

change again. To which are they loyal, the brands, or the decision rule? True loyalty

is not just behavioural”. Barnes (2002) claims that “repeat buying does not make

loyalty …. Loyalty is essentially an emotional concept, like relationships, and yet

many firms seem not to understand or appreciate this. Many businesses continue to

define loyalty in behavioural terms”. Furthermore Barnes (2002) also cites that,

“There is a great tendency in business to measure or define loyalty entirely in

behavioural terms ‐ number of visits, frequency of visits, total spend, share of


26

category spend, number of years as a customer, etc. There is a tendency to confuse

loyalty with retention ‐ two concepts that are related, but certainly not the same

thing. Retention is a behavioural concept; loyalty is not. A focus on retention

creates a high‐risk situation where a company may think its customers are a lot more

loyal than they really are. Why, then, do some businesses define loyalty primarily if

not exclusively in behavioural terms? The answer is often as simple as that’s what

we are able to measure most easily. In fact, many companies today capture such

information automatically every time a customer interacts with the firm. To obtain a

list of our most ‘loyal’ customers, we simply request the information from the

customer database. Loyalty defined behaviourally is also a much easier concept to

understand, without having to get into all that consumer psychology”.

Of the various definitions, the characterisation deemed to be the most appropriate

when discussing the Tesco Clubcard has been cited by Humby and Hunt (2004, pg 9).

It has been suggested that day‐to‐day life loyalty suggests “emotional commitment”

and “monogamy: one choice above all else”. In comparison retail loyalty implies on

“looking to achieve a little extra goodwill, a slight margin of preference, an

incremental shift in buying behaviour”.

2.6 Loyalty Marketing

“Loyalty marketing can be defined as the management process of identifying ‘best

customers’ and utilising customer data and insight to create, retain and grow

profitable relationships” (ICLP, 2005).

Loyalty marketing is often expressed in a manner of ways, such as relationship

marketing, one‐to‐one marketing, customer‐centric marketing and frequency

marketing. However as commented by Duffy (1998, pg 435), the appropriate term

should be loyalty marketing as “loyalty is the business objective. What we seek to

achieve here is loyalty”.


27

Regardless of the idiom, loyalty marketing is an approach based on strategic

marketing and has been expressed as the “sine qua non of an effective business

strategy” (Heskett, 2002, pg 355). The fundamental aim is to define profitable

behaviour and consequently manage this relationship by designing a range of

initiatives to maintain and influence profitable behaviour. Repeat purchase is

rewarded and a channel of communication with customers is facilitated to

encourage further repeat purchase.

“Customer loyalty programs are coordinated, membership based marketing activities

designed to enhance the building of continued marketing exchanges among pre‐

identified customers toward a sponsoring brand or firm. Loyalty programs use

targeted communications and customise the delivery of branded goods and services

to build stronger bonds with the sponsoring brand/firm that would result without

such programs. Often based on cumulative brand purchases, loyalty programs

enhance value proposition offerings to preserve active customer status” (Lacey and

Sneath, 2006, pg 459). “They allow marketers to capture detailed transactional and

preference customer databases. These databases can be used to determine

customer value, define specific marketing strategies for finite customer segments,

and model customer attrition and intervention strategies” (Lacey and Sneath, 2006,

pg 461). Uncles, Dowling and Hammond, (2004, pg 92) claim that the “two aims of

customer loyalty programs stand out. One is to increase sales revenue by raising

purchase/usage levels, and/or increase the range of products bought from the

supplier. A second aim is more defensive – by building a closer bond between the

brand and current customers it is hoped to maintain the current customer base”.

Gordon (1998, pg 20), has criticised loyalty marketing as programs that “typically

result in another piece of plastic in your wallet to encourage more customer

patronage”. However, “several kinds of scheme are currently run in the retail

industry, from card schemes, special services, and customer magazines to customer

panels” (Wright and Sparks, 1999, pg 431).


28

Of the above excerpts it can be empathised that the most frequent used customer

reward programs employed are loyalty cards, given their ability to identify frequent

buyers and segment the market. Humby and Hunt (2004, pg 17) have 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. “The important point is that these

initiatives and a card‐based loyalty scheme are not mutually exclusive”.

Rayner (1996, pg 8) identifies customer reward programs as a “mechanism for

identifying and rewarding loyal customers”. Sharp and Sharp (1997, cited in Lacey

and Sneath 2006, pg 459), have commented that “loyalty programs are set apart

from other forms of promotions by their long‐term nature and deliberate emphasis

on preserving customer retention and intensifying purchase frequency”.

They work by using a process of operant conditioning theory. “Operant conditioning

refers to a systematic program of rewards and punishments to influence behaviour

or bring about desired behaviour …. It relies on two basic assumptions about human

experience and psychology: (1) a particular act results in an experience that is a

consequence of that act and (2) the perceived quality of an act’s consequence affects

future behaviour” (Heil, 2006). Operant conditioning is based on the concept that “if

a given bit of behaviour has a consequence of a special sort, it is more likely to occur

again upon similar occasions” (Skinner, 1978, pg 19). Operant conditioning deals

with learned and not reflexive behaviour and the procedure occurs as individuals

learn to perform behaviours that produce positive outcomes. Applied to retail

organisations, over time consumers associate with companies that reward them, the

knock on effect is they will choose to reiterate to buy products that fulfil their own

needs. Implemented customer reward programs, points and the incentives offered

all act to influence and strengthen consumers’ behaviour. It can be remarked that

this behaviour is not generic amongst all consumers and that some customers are

not affected or influenced by the prospect of rewards. Tapp (2005, pg, 126) has


29

commented, “given the hue and cry about loyalty over the last decade, let us be

clear ‐ the prevailing evidence is that absolute loyalty cannot be regarded as the

norm in most markets”.

Uncles, Dowling and Hammond, (2004, pg 95) claim that “to increase sales by

enhancing beliefs about the brand and strengthen emotional commitment of

customers to their brand”, companies need to move “customers up a ‘loyalty ladder’

through image‐based or persuasive advertising and personal service (recovery)

programs are frequently used tactics” (Brown, 2000; White and Schneider, 1998 as

cited in Uncles, Dowling and Hammond, 2004, pg 95).

Payne (1994, pg 29‐30), has constructed the “Customer Loyalty Ladder” which

illustrated that the goal of loyalty marketing is “keeping and improving the

relationship with the customer”.

2.6.1 The Customer Loyalty Ladder


30

From the above diagram each rung of the ladder shows the priority in which tasks

should be undertaken in order to accomplish loyalty. Payne has observed that

companies need to focus on improving their relationship with each customer and

“progress them up the ladder” rather than converge on individual sale (Payne, 1994,

pg 30).

Loyalty marketing is not undertaken by every organisation, Reichheld (cited in Finnie

and Randall, 2002, pg 26) has commented that some companies do not view loyalty

marketing as an “objective, but a duty and a must”. Furthermore Reichheld (cited in

Tapp, 2005, pg 126) asserts that, “ultimately the key to profitability was the high

retention of the firm’s existing, stable, profitable customers”.

Additionally, Tapp (2005, pg 172) construes that, “a lot of frequent‐purchase

behaviour (e.g. supermarket goods) is based on ‘repertoire’ purchasing, in that

customers retain a basket of brands which they jump between in a ‘polygamous’

fashion …. The clear conclusion from these pieces of work is that exclusive brand

loyalty cannot be regarded as the norm in most markets”. Uncles, Dowling and

Hammond, (2004, pg 95) conclude by claiming “loyalty programs are also designed

to strengthen commitment and create velvet handcuffs to bond the customer to the

brand”.

The number and similarity of loyalty programs employed today has caused concern

and rather than creating or adding towards customer loyalty it can argued that they

are actually causing confusion and apathy and stimulating “loyalty overload” (Tapp,

2005). Additionally, Uncles, Dowling and Hammond (2004, pg 102), claim that

“when widespread copying happens, any benefit gained is likely to be ephemeral”.


31

2.7 The Tesco Clubcard as a Loyalty Marketing Tool

“Loyalty schemes tend to be most useful in frequent purchase markets …. And also

commonly found in markets where the core product is a commodity and companies

have great difficulty differentiating themselves” (Tapp, 2005, pg 274).

The amount of customer reward programs that has been introduced by retailers and

service providers has become more widespread in recent years. Byrom et al. (2001)

suggests that there is over 150 such schemes currently in the UK with a result of

approximately 40 million cards in current circulation. Stone (2004, pg 192)

comments that, “Around 80 per cent of UK households participate in at least one

customer loyalty scheme. The average consumer participates in three schemes. In

the grocery market, Tesco claims a 'first mover advantage' not in the sense of having

a scheme but in the sense of being the first where the scheme is a strong part of a

transformed marketing approach”.

“Historically information has been linked to exchange theory (Hirschman, 1980),

whereby consumers are willing to exchange their personal information in order to

obtain other resources, such as monetary savings or enhanced services …. In the case

of loyalty programs, participating customers are offered an enhanced value

proposition, and in return firms will be given access to personal information that can

be used to further refine strategies and tactics” (Lacey and Sneath, 2006, pg 461).

When a customer joins a customer reward program their details are entered into a

database in which further transactions of their purchases are recorded building a

profile of purchasing habits. “In exchange for registration, the customer receives

points that can be used in full or part payment for products or services” (Rowley,

2005, pg 195).

Mauri (2003, pg 13‐14) has commented that, “the technology of loyalty cards allow

retailers to transform cold data on consumer behaviour into warm relationships and


32

eventually into a genuine loyalty founded on mutual understanding and trust. A

warm relationship is also a learning relationship”.

A prologue with regards to the Tesco Clubcard has already been covered in section

2.3 of this thesis. The Clubcard is viewed by Tesco as a way of saying thank you to its

customers by allowing them to earn points through “meeting everyday needs and

undertaking everyday activities” (Rowley, 2005, pg 198). “Clubcard is designed to

give you something back for shopping with Tesco” (http://www.tesco.com).

As the UK’s largest retailer and given the considerable customer base, the Tesco

Clubcard accumulates and records information on a sizable population of the UK on

an astounding basis. It is estimated that on eight of every ten trips to Tesco,

shoppers use a Clubcard. There are in the region of 25 million Clubcards in existence

which represents 14 million households; resulting in more than 11 million active

cards (Simm, 2007). As commented by Jenkinson (1995), loyalty cards are also about

the collection of customer data, “in a bonus program, the bonus is the price for the

information that I get. I buy knowledge through it, not loyalty, because loyalty is not

purchasable”. With every swipe of a loyalty card at a point of sale, the retailer is

recording the entire transaction in detail: from the name of the shopper, the time

they shop, the shop they visited and the entire contents of their trolley (Field 1997).

Langenderfer and Cook (2004, cited in Lacey and Sneath, 2006, pg 458), have raised

the issue that “for customers who participate in loyalty programmes, there is

potential for increased concern about the misuse of personal information and loss of

control over how information is being collected and disseminated”. Simm (2007)

remarks, “The Clubcard enables Tesco to keep a record of each holders name, age,

address, telephone number and email. The company knows each holders dietary

preferences and the make‐up of their family. It keeps track of exactly everything a

cardholder has ever bought, from which store, and the precise date and time of each

purchase. From the data, Tesco can guess whether you had a lonely singles night in,

or threw a party at the weekend. It will know if you have a drink problem, buy


33

condoms, whether you're a junk‐food addict, hooked on painkillers, or have an

undue fondness for tinned pineapple. The card will keep a record of any complaints

made or other communication with the store, and any additional market research

you have taken part in. The information helps Tesco to typecast its customers by

analysing their ‘life stage’, whether student, young family or retired. It assesses how

much they are worth to them, by spending and loyalty. It works out if they are

‘upmarket’, ‘market’ or poor (or, as Tesco euphemistically calls this category, ‘cost‐

conscious’. Being able to classify groups in this way has helped Tesco become the

UK’s dominant retailer”.

With the vast range of product offerings from Tesco such as finance, insurance,

mobile phone services in conjunction with core food and non‐food products, the

message is “Tesco is an everyday experience” (Rowley, 2005, pg 199). “An important

component of many loyalty programs is the cope for cross‐selling, in an attempt to

increase share‐of‐wallet, rather than market share (Peppers and Rogers, 1997).

Loyalty‐program members are encouraged to buy products they would not normally

have bought from that provider. In essence, the loyalty program is seen as a brand

extension” (Uncles, Dowling and Hammond, 2004, pg 100).

Due to the success of the Clubcard scheme, addition multiple brands such as Avis

and Powergen/E.ON energy have joined to align themselves with the Clubcard

brand. Swaminathan and Reddy (2000 as cited by Lacey and Sneath, 2006, pg 459)

have mentioned that “loyalty programs supported by multiple participants offer

increased customer value by accommodating a broader scope of business and

organisational value due to the sharing of program costs”. The strength of the Tesco

Clubcard image was highlighted in the Powergen Corporate Responsibility Report

(2003) which notes, “In 2003, Powergen joined Tesco’s Clubcard scheme as a key

facet to our approach to customer loyalty. Tesco Clubcard demonstrates our focus

on customers”.


34

Capizzi and Ferguson (2005, pg 72) describe the loyalty marketing industry as having

“the telltale characteristics of a mature market”, principally in the UK where

“programmes look the same everywhere”. The Clubcard model although not unique

has firmly embedded itself as a customer reward program with multiple

relationships, “extending beyond the simple relationship between Tesco and their

customers” (Rowley 2005, pg 198).

It should also be mentioned that in addition to the Clubcard scheme, Tesco also

employ other marketing tools to create loyalty. Approaches such as lower prices on

key products, in‐store magazines or value added approaches in service or store

layout are all utilised. However, with all this added value and as commented by

Parker and Worthington (2000, pg 491), “just as a shopper expects to be offered

trolleys at the entrance to a supermarket he/she will expect some sort of ‘reward’ to

be offered at the check‐out”.

2.8 The Relationship between Loyalty and Satisfaction

Much research has been carried out by scholars into the importance of customer

satisfaction. Kotler (2000) defined satisfaction as “a person’s feelings of pleasure or

disappointment resulting from comparing a products perceived performance (or

outcome) in relation to his or her expectations”.

Reichheld (1996, pg 381), views that “customer satisfaction is the key to securing

customer loyalty”, this hypothesis has remained largely unsubstantiated and is far

from robust. As argued by Newell (2000, pg 30) who claims that customers today

demand more that “simple satisfaction” for their loyalty and that “most companies

think a ‘satisfied customer’ will be a loyal customer. That may have been true at one

time, but it’s not now”.


35

What can be established is that satisfaction can lead customers to “treat their

primary store as a safe bet in their attempt to reduce their perceived risk of

disappointment when shopping” (Reselius, 1971). ‘Customer satisfaction leads, by

linear progression, to retention/loyalty and ultimately to profitability’ (Hallowell,

1996). Söderlund (1998), expands on this theory by accepting for a positive

association between loyalty and satisfaction, but additionally observing that

“increasing satisfaction does not produce an equal increase in loyalty for all

customers”. Satisfaction does not continually produce in retention, similarly

dissatisfaction does not necessarily result in defection. There is no evidence to

suggest that satisfaction alone is a significant factor in influencing loyalty. However,

satisfied customers can help form the base of any successful business and result to

repeat purchases, brand loyalty, and positive word of mouth exposure (Hoyer and

MacInnis, 2001). What this demonstrates is that the correlation between customer

satisfaction and customer loyalty is neither clear‐cut nor linear, with satisfied

customers still defecting.

Zairi (2000) has commented on numerous studies that have been carried out to

examine the impact of customer satisfaction on repeat purchase, loyalty and

retention. The end result is they all suggest a similar message in that: satisfied

customers are likely to share their positive experience with approximately five or six

people and dissatisfied customers are likely to tell another ten people of their

unhappiness. In addition gauging dissatisfied customers can be difficult since many

customers will not complain and also to differences in the industry sectors.

It is vital that the distinction between satisfaction and loyalty is noted since the two

are clearly different. Duffy (2001, pg 36) believes satisfaction is a starting point,

remarking that “it is essential to get you in the race, but it’s no longer enough to

make you a winner”. The importance of satisfaction should not be overlooked and

the consequences of not satisfying customers can have severe consequences to

businesses.


36

The importance of customer satisfaction has been reinforced by La Barbera and

Mazursky (1983) who commented that, “satisfaction influences repurchase

intentions whereas dissatisfaction has been seen as a primary reason for customer

defection or discontinuation of purchase”. However, McIlroy and Barnett (2000)

argue, “even if customers are satisfied with the service they will continue to defect if

they believe they can get better value, convenience or quality elsewhere ….

Satisfaction is a necessary but not a sufficient condition to loyalty. In other words,

we can have satisfaction without loyalty, but it is hard to have loyalty without

satisfaction”.

Miranda et al (2005, pg 230) sustains that loyalty does not result from satisfaction

alone. “Breakaway customers may not have been dissatisfied with the service

provided from their primary store; it is simply that it did not insulate them

sufficiently from switching”. This is especially significant to any business operating in

a highly competitive market with many choices and low customer switching costs, as

commented by Best (2005, pg 16), “Grocery store, restaurant, and bank customers

can switch quickly if they are not completely satisfied”. It is the authors belief that

defecting customers may not have been dissatisfied with the service they received

from their primary store, it is purely that the store did not insulate them adequately

from switching. It was discovered that loyalty was influenced by several factors such

as price, level of service, travel distance and reward programs. This area has been

considered in chapter four of this thesis.

2.9 Does Loyalty Result to Profit?

“Firms employing loyalty programs should expect them to be profitable. On the cost

side of the profit equation, accurate estimates are difficult to obtain – even within

corporations” (Uncles, Dowling and Hammond, 2004, pg 101)


37

The costs involved with executing and sustaining a customer reward program are

notoriously high. Investment in technology means millions are being spent on

software, hardware and personnel. Such schemes can take years to establish and if

successful can reap dividends to an organisation. Clarke (1997, pg 147) has noted

that “if it is well planned and aimed at the right customers, it can pay for itself many

times over”. The sheer competitiveness of the food retailing industry ensures that

maintaining market share and increasing profit is an invariable and gruelling

campaign among major players. However, Butscher (2002, pg 3), has noted that

“although there are thousands of programmes in existence, very few create real

loyalty and devotion”.

The association between loyalty and profit and the economics of customer loyalty

has been recognised by numerous scholars and studies. Anton (1996) states, “When

you can increase customer loyalty a beneficial ‘flywheel’ kicks in, powered by:

increased purchases of the existing product, cross‐purchasing of your other

products, price premium due to appreciation of your added‐value services, reduced

operating cost because of familiarity with your service system and positive word‐of‐

mouth in terms of referring other customers to your company”. Reichheld and

Sasser (1990) concluded that as a customer’s relationship with a company extends

then profits rise.

Bowen and Chen (2001) have stated “It is commonly known that there is a positive

relationship between customer loyalty and profitability. Today, marketers are

seeking information on how to build customer loyalty. The increased profit comes

from reduced marketing costs, increased sales and reduced operational costs.

Finally, loyal customers cost less to serve, in part because they know the product and

require less information. They even serve as part‐time employees. Therefore loyal

customers not only require less information themselves, they also serve as an

information source for other customers”.


38

To further the union between loyalty and profit, Haywood (1989, cited in McIlory

and Barnett 2000, pg 347) notes, “building customer loyalty has a direct impact on

profitability and past research has claimed that it can be five times more expensive

to obtain a new customer than to retain one”.

In a “generation of increasingly promotion‐literate customers” (Harlow, 1997 cited in

Egan 2001, pg 381), the substance and worth of word of mouth communication is

essential. Clarke (1997, pg 146) points out that making customers more loyal will

facilitate them to “remain as customers for longer, buy more, will pay premium

prices and, most importantly generate extra business through referrals”. Today’s

consumers know the fundamental messages and aims of promotions designed to get

them to part with their cash. Personal recommendations from friends, family or

colleagues are perceived as a more reliable form of endorsement and assurance.

With this perception the customers themselves are a marketing resource through

referrals.

“Loyalty is a consequence of creating value for customers and profit is a

consequence of loyalty” (Tapp 2005, pg 173). “Profitability is determined by margins

that depend on a wide mix of factors, of which loyalty is one” (Dowling and Uncles

1997). The connection between loyalty and profit is apparent and may initially

appear to be rather simplistic. However as mentioned, consumers are becoming

increasingly more savvy, the internet has allowed an increase in suppliers of goods

and services to be utilised and all manner of price comparison websites and forums

to appear where members post deals for all variety of goods and services resulting in

sensitive price conscience consumers. “The Internet makes a buyers search more

efficient and encourages rational shopping versus a more emotional shopping in

brick and mortar store, which appeals to our senses” (Trehan 2006). Khan (1998) is

of the same opinion, stating “that consumers are smarter than marketers generally

perceive, and are actively manipulating suppliers for their own ends”. Egan (2001,

pg 381) argues that consumers are taking advantage of suppliers and jumping from

one to another to get the best deal they can.


39

2.10 Do Customer Reward Programs Deliver Long Term?

“Loyalty programs are a marketing strategy based on offering an incentive with the

aim of securing customer loyalty to a retailer. Achieving rewards is related with

purchasing frequency, so this type of program are also called frequent purchase

programs (Shoemaker and Lewis, 1999; Long and Schiffman, 2000; Bell and Lall,

2002) or reward programs (Kopalla et al., 1999; Kim et al., 2001)” (Gómez, Arranz

and Cillán 2006, pg 387).

Given the popularity of loyalty programmes and as suggested by Byrom et al. (2001)

that there are over 150 such schemes currently in the UK, Humby and Hunt (2004, pg

14) state “there have been more loyalty programmes that have failed than

succeeded”. Despite the considerable growth in customer reward programs, one of

the most debated areas is just how successful are loyalty programmes in delivering

and do they actually create value to either businesses or consumers.

Determining the success of a customer reward program is very subjective in that it

depends on the goals that were set and what echelon of achievement is a loyalty

programme considered to be a success. There are many factors at play such as how

one can “totally isolate the effect of one stimulus from all other factors that could

have influenced the target factor” (Butscher, 2002, pg 140). In addition customer

preferences and circumstances change over time, as well as being exposed to a

whole host of advertisement, promotion and other loyalty programmes.

“Consumers are most likely to participate in programs they believe offer equitable

relationships and will, ultimately, base their decision to participate in loyalty

programs according to their perceptions of fairness” (Lacey and Sneath, 2006, pg

462). Uncles, Dowling and Hammond (2004, pg 100) claim that “only a truly

exceptional program will change the purchasing behaviour of customers to increase

sales revenues significantly”.


40

As mentioned, Tesco is the number one supermarket retailer in the UK and Humby

and Hunt (2004, pg 3) have commented that “Tesco may well have got to this

enviable position without Clubcard – but it could not be done so as quickly or as

cheaply as it has done without the customer data and insight that Clubcard provides.

The information has guided almost all of the key decisions the management team

have made in recent times, reducing the risk of taking bold new initiatives”.

Many critics and scholars believe the customer reward program phenomenon to be

a bribe. Parker and Worthington (2000, pg 496) have commented that the term

‘loyalty card’ is a misnomer and that the customer’s loyalty is not for sale. It cannot

be bought by organisations or deals. To further this argument, Egan (2001, pg 382)

declared “loyalty is fleeting and cannot be bought”. Reichheld (1996 cited in Tapp,

pg 170), raises the issue that “loyal customers ignore vouchers and coupons, and are

less price sensitive on individual items than new customers. There is an interesting

irony here: many companies have ‘loyalty schemes’ which offer lower prices via

points systems in return for loyal custom; but companies whose customers only stay

with them because of the customer reward program don’t have genuinely loyal

customers”.

Reichheld (1996) found that ‘old’ customers pay higher prices than new ones because

fundamentally they are happy with the value they are getting from the company. Reichheld

(2002, cited in Finnie and Randall), also argues that loyalty programmes can assist in

reducing business costs and increasing profit as “return customers tend to buy more from a

company over time”, “refer others to your company” and “pay a premium to continue to do

business with you rather than switch to a competitor who they are neither familiar nor

comfortable”. Reichheld (1996) has constantly maintained that companies can’t buy loyalty.

They can only earn it through consistently creating superior value for their customers.

There has been much criticism of customer reward programs and that “most studies

claim lower prices, rather than loyalty schemes, will keep customers coming back for

more” (Matheson, 2003). Additionally, loyalty programs have faced “mounting


41

pressure concerning their use as a facilitator of specific customer information and

potential to discriminate against non‐member customers because of greater

marketing resource allocations shifted toward selective customers” (Lacey and

Sneath, 2006, pg 462).

When considering the success of loyalty programmes “some indices are easy to

measure, such as number of members, increase in expenditure on loyalty

programme products, and response to special offers. Indices that are more difficult

to measure include a member’s repeat purchase behaviour or increase in brand

loyalty” (Butscher, 2002, pg 143).

“Perhaps the greatest benefit obtained from loyalty programs resides in the data

mining and knowledge base that firms can use to develop statistical models to

improve customer loyalty, support customer service, and develop new offerings to

help reduce defection and increase customer lifetime value” (Wansink, 2003, cited in

Lacey and Sneath, 2006, pg 461). Equipped with this specific information,

organisations can design specific communications and product mix offerings.

“Loyalty programs represent an alternative to mass‐market promotion since firms

have the ability to more precisely target an increasingly fragmented customer base,

and communicate customised and relevant vale propositions and marketing

messages to individual customers” (Lacey and Sneath, 2006, pg 461).

What can be established is that loyalty programmes can provide retailers with a

mechanism and justification for individual customer data. In such fiercely

competitive markets, as commented by Stone (1994, pg 37), “knowing who the best

customers are, what they buy, and how often provides a secret weapon”. It is

estimated that as a result of the Clubcard scheme Tesco has approximately 100,000

different promotional messages which reflect the buying habits and preferences of

its customers.


42

Pressey and Matthews (cited in Tapp, 2005, pg 171), argue that “despite the recent

use of loyalty cards and database marketing techniques by UK retailers, most

transactions are ‘discrete, short‐term, one‐off acts”. Customer reward programs can

also direct businesses to overlook divisions of the business which may need

attention, as noted by Fill (2002, pg 672), “in 2000, the number of in‐store

promotions fell from 700 to just 200, reflecting the need to provide for those whom

are price sensitive”.

Although it is clear that customer reward programs can create value through

personalisation, they are increasingly attracting negative remarks. O’Malley (1998,

pg 52) describes them as “little more than sophisticated sales promotion”. Humby

and Hunt (2004, pg 13) profess that customer reward programs can destroy value

and encourage “a ‘Big Brother’ culture” implying that “the relationship isn’t trust, it

is bullying on behalf of corporate giants who won’t give discounts unless you give up

your right to privacy”. This hints that “loyalty relationships are more appropriate to

business to business markets rather than consumer markets (Dowling and Uncles,

1997). To further this perception, “The notion of customer loyalty is important to

marketing people but not, on the whole, to customers. Customers don’t see why

they should accept a good offer from a new supplier just because they are satisfied

with their present one” (McCorkell, 1997 cited in Tapp, 2005, pg 172).

From the above critique and given the fact customer reward programs are “costly

compared to other promotions” (Dowling and Uncles, 1997). One may question that

perhaps the marketing budget funds are better spent elsewhere. This is palpable in

the market place today with many businesses projecting funds into lowering prices,

developing own brands and branching out into other markets and services. Given

the sheer number of organisations participating and operating their own customer

reward programs and consumers owning more than one loyalty card, it is evident

that achieving loyalty is increasingly difficult.


43

“Clearly, loyalty programs can be used to convey prestige to customers and make

them feel special, important and appreciated” (Morgan et al., 2000 cited in Lacey

and Sneath, 2006, pg 459). “However the effect on the firm’s non‐participating

customers can lead to dissatisfaction and alienation with the firm. Moreover,

customers who participate in the program might become frustrated, and perhaps

even disenfranchised, due to their inability to benefit from those programs”

(Downling and Uncles, 1997 cited in Lacey and Sneath, 2006, pg 459). Despite the

criticism, loyalty programmes if executed properly and maintained can be hugely

beneficial to the retailer. Tesco have always maintained that the Clubcard was a

simple “thank you” for customers who shop at their stores and as such offered the

promise of rewards to them. However, Uncles et al., (2003, cited in Lacey and

Sneath 2006, pg 461) states, “the ultimate marketing objective behind loyalty

programs is their use as a primary data‐gathering platform that can help improve the

efficiency and effectiveness of a firm’s marketing initiative”. In actuality they are

“effectively locking them into the loyalty programme and preventing them from

moving to a competitor brand” (Fill, 1999, pg 563). Barnes (2002) also concurs that,

“The basic premise behind such programs is to reward customers for giving the

company a greater share of their business. The rewards are extrinsic ‐ points, ‘free’

merchandise or trips. Where true loyalty exists, the rewards are largely intrinsic. One

shopper recently observed in an interview that the frequent‐shopper ‘club’ of which

he is a member feels nothing like any other club to which he has belonged. It never

meets. He rarely gets to associate with other members. Such programs often lock

customers in. They create barriers to exit, but they don’t often lead to true loyalty”.

2.11 Conclusion

It was suggested that there was a difference in every day loyalty and retail loyalty.

Loyalty was recognised as being emotional, behavioural or attitudinal and defined as

“looking to achieve a little extra goodwill, a slight margin of preference, an

incremental shift in buying behaviour (Humby and Hunt, 2003, pg 9). “Loyalty


44

marketing can be defined as the management process of identifying ‘best customers’

and utilising customer data and insight to create, retain and grow profitable

relationships” (ICLP, 2005). Loyalty marketing was also identified as a “business

strategy” (Heskett, 2002, pg 355), which transpires through the theory of operant

conditioning.

Additionally, the long‐term benefits of a customer reward program and if it creates

value was analysed. Loyalty programs are “designed to accommodate individual

consumers in the form of added products or enhanced customer service options not

generally presented to all of the firm’s customers” (Lacey and Sneath, 2006, pg 459).

These schemes can offer many benefits to the retailer and act as a mechanism and

justification for accumulating personal data of customers and increasing switching

costs “effectively locking them into the loyalty programme and preventing them for

moving to a competitor brand (Fill, 1999, pg 563). It is widely regarded that loyalty is

established through trust. However the literature surrounding the subject implies

that loyalty schemes/ customer reward programs are manipulative and controlling

and are “little more than sophisticated sales promotion” (O’Malley (1998, pf 52).

Reichheld (2002, pg 27) argues that some loyalty programmes are “just gimmicks to

get the maximum value extracted from a customer base”. While Parker and

Worthington (2000, pg 496) raise the issue of a new strain of customers known as

“points junkies” who are desperate to gain and save points in order to redeem them

for free products or services. Additionally, Parker and Worthington (2000, pg 496)

commented on the knowledge of consumers by questioning “how ethical is a reward

scheme that relies on maintaining the ignorance of the very customers that it wants

to see exhibiting loyal behaviour”. Despite this “loyalty programs continue to be

used by organisations as marketing tools to support their customer relationship

management (CRM) strategies” (Lacey and Sneath, 2006, pg 458). What was found

was the perception that loyalty could actually lead to customers manipulating

suppliers by jumping between organisations to get the best deal.


45

From the literature review it is apparent that satisfaction and loyalty is not the same

thing and they are not mutually exclusive. The focus addressed issues that would

affect the value of a customer reward program and illustrates the need for an

organisation to steer satisfied customers into loyal customers. It was also

determined that organisations operating in market sectors where there is intense

competition and similar competitors necessitate the use of loyalty marketing.

”Loyalty schemes tend to be most useful in frequent purchase markets …. And also

commonly found in markets where the core product is a commodity and companies

have great difficulty differentiating themselves” (Tapp, 2005, pg 274).

Due to the sheer number of customer reward programs being offered to customers,

it is vital that retailers are more innovative and creative with the rewards they offer.

Capizzi and Ferguson (2005, pg 78) imply that some loyalty card members view the

rewards they gain as being opportunities of a lifetime which they have complete

control over having commented that the rewards given to customers must appeal on

a different level and that customer reward program participants are “embracing the

idea of redeeming points for an once‐in‐a‐lifetime experience”, specifically “lifestyle

themed rewards that appeal to a members’ dream”. The theory is that customers

will aspire to collect and redeem more points and thus increase spending.

The use of the “Customer Loyalty Ladder” (Payne, 1994) determined how marketing

tasks should be prioritised in order for an organisation to accomplish the target of

loyalty. By exploring the Tesco Clubcard model we gain a hypothetical insight into

how Tesco are providing an “everyday experience” (Rowley, 2005, pg 199) to their

customers.

However, “the oft‐cited success of Tesco’s loyalty scheme is difficult to determine

because it was introduced as part of a much broader program of new business

development and store acquisition” (East and Hogg, 1997 cited in Uncles, Dowling

and Hammond, 2004, pg 102).


46

The completion of the literature review has addressed several objectives. However

there are areas which have been identified and do require further investigation. The

main issues is a user profile of the Clubcard and to realise the differentiation

between loyalty in relation to the Clubcard brand, the customer reward programs

itself and Tesco. To which of these factors do loyalty schemes generate true loyalty?

These factors and the remaining objectives of the dissertation will be answered and

achieve through primary research in the next chapter.

Chapter Three – Research Methodology

Chapter Three

Research Methodology


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3.0 CHAPTER THREE – RESEARCH METHODOLOGY

3.1 Introduction

In order to address all the objectives set out in this dissertation, primary research is

essential.

The methodology will illustrate the chosen methods undertaken in order to conduct

the primary research. It will impart justification into the chosen method of research

and provide assessment to the chosen approach in terms of advantages,

disadvantages and limitations.

3.2 Research Objectives

From the literature review, several issues were discovered which required further

investigation and research. Referring to section 2.7 in the literature review drawing

attention to the perception that a satisfied customer was not necessarily loyal,

Reichheld (1996) injects that “customer satisfaction is the key to securing customer

loyalty”. However, Duffy (2001, pg 36) described satisfaction as being a starting

point in order to create true loyalty. The crucial issue raised in the works of these

scholars is that it demonstrates the role of the Tesco Clubcard in building loyalty,

either through the theory that customers simply need to be satisfied in order to be

loyal or through Duffy’s loyalty calculation hypothesis.

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


49

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?

Section 2.6 illustrated 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.

The literature review also exposed that consumers are increasingly becoming more

aware, as commented by Khan (1998), “consumers are smarter than marketers

perceive, and are actively manipulating suppliers for their own ends”. Egan (2001,

pg 381) supports this view by concluding that consumers are taking advantage of

suppliers and jumping from one to another to get the best deal they can. This would

suggest that loyalty card schemes are actually allowing consumers to manipulate

suppliers for their own needs.

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”.

However, it is essential to know if the Clubcard scheme “insulate(s) them

[consumers] sufficiently from switching” (Miranda et al., 2005, pg 230). Additionally

the literature review indicated that consumers have come to expect some form of


50

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) Recognise 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.

6) Consider the conjecture that consumers are manipulating suppliers for their own

needs by shopping around and participating in other customer reward programs.

3.3 Selection of Research Methods

The technique of research methods can be divided into quantitative and qualitative

approaches. As commented by Charoenruk (2007, pg 1‐2), “quantitative research is

described by the terms ‘empiricism’ (Leach, 1990) and ‘positivism’ (Duffy, 1985). It

derives from the scientific method used in the physical sciences (Cormack, 1991).

This research approach is an objective, formal systematic process using numerical


51

data findings, it describes, tests, and examines cause and effect relationships (Burns

& Grove, 1987), using a deductive process of knowledge attainment (Duffy, 1985).”

It is primarily concerned with the collection of data using numbers and

measurements. It seeks to establish relationships between two or more variables via

a process of statistical methods to obtain the connotation of the relationship.

According to Malthotra and Peterson (2006, pg 150), quantitative research is “a

research methodology that seeks to quantify the data and typically applies some

form of statistical analysis”. Routinely the data is collected using a premeditated

template of questions in the form of a structured questionnaire survey incorporating

primarily closed questions with set responses. “There are various vehicles used for

collecting quantitative information but the most common are on‐street or telephone

interviews” (Market Research World 2006).

Qualitative research is chiefly concerned with the collection of in‐depth information

via a process of asking questions to understand how people feel and why they feel as

they do (Market Research World 2006). In‐depth interviews, focus group discussions

and participant observation are common methods used for collecting qualitative

information. With reference to Proctor (2003, pg 529), qualitative research methods

“usually involve small samples, which attempt to elicit descriptive information about

the thoughts and feelings of respondents on a topic of interest to the research”.

Charoenruk (2007, pg 2), comments that, “qualitative research differs from

qualitative approaches as it develops theory inductively. There is no explicit intention

to count or quantify the findings, which are instead describe in the language

employed during the research process (Leach, 1990). A qualitative approach is used

as a vehicle for studying the empirical world from the perspective of the subject, not

the researcher (Duffy, 1987). Benoliel (1985) expanded on this aspect and described

qualitative research as ‘modes of systematic enquiry concerned with understanding

human beings and the nature of their transactions with themselves and with their

understandings”.


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3.3.1 Features of Qualitative and Quantitative Research

Adapted from Neill (2007) ‐ Qualitative versus quantitative research: key points in a

classic debate.

Qualitative Quantitative

The aim is a complete, detailed description. The aim is to classify features, count them, and

construct statistical models in an attempt to

explain what is observed.

Researcher may only know roughly in advance Researcher knows clearly in advance what

what he/she is looking for. he/she is looking for.

Recommended during earlier phases of Recommended during latter phases of

research projects. research projects.

The design emerges as the study unfolds. All aspects of the study are carefully

designed before data is collected.

Researcher is the data gathering instrument. Researcher uses tools, such as questionnaires

or equipment to collect numerical data.

Data is in the form of words, pictures or objects. Data is in the form of numbers and statistics.

Subjective ‐ individuals’ interpretation of events Objective – seeks precise measurement &

is important ,e.g., uses participant observation, analysis of target concepts, e.g., uses surveys,

in‐depth interviews etc. questionnaires etc.

Qualitative data is more 'rich', time consuming, Quantitative data is more efficient, able to

and less able to be generalized. test hypotheses, but may miss contextual detail.

Researcher tends to become subjectively Researcher tends to remain objectively

immersed in the subject matter. separated from the subject matter.


53

In order to achieve the objectives of the methodology, the selected research method

to be used requires the outcome of a combination of statistical analysis in addition

to an indication with regards to consumers’ attitudes and perceptions.

It is often mentioned amongst marketing research literature that qualitative and

quantitative approaches are bipolar measurements of data. The qualitative

approach places emphasis on gaining in‐depth answers from a small number of

respondents, whereas in contrast quantitative approaches accentuates gaining

statistical information from a large number of respondents. However, Veal (1997, pg

34) has observed that “sometimes the information is qualitative in nature but is

presented in quantitative form”. This supports the suggesting that qualitative

characteristic questions in a survey can be collected by using open ended questions

seeking opinions. An additional benefit of using open questions is that it allows for a

multitude of replies “where each respondent can give a personal response or

opinion in his or her own words” (Collis and Hussey, 2003, pg 179).

From the research methods mentioned above it has been determined that a

questionnaire survey will be the most effective and efficient medium in order to

achieve the objectives of the dissertation. Luck and Rubin (1987) defined a

questionnaire as a “formalised schedule to obtain and record specific and relevant

information with tolerable accuracy and completeness”. Bruce (2004, pg 7), states

that “the role of the questionnaire is to elicit the information that is required to

enable the researcher to answer the objectives of the survey. To do this, the

questionnaire must not only collect the data required, but collect the data in the

most accurate way possible”. Additionally, McNabb (2004, pg 150) comments that,

“questionnaires can be designed to determine what people know, what they think or

how they act or plan to act …. The flexibility of the questionnaire results in very few

rules to follow in development of the instrument”.


54

The decision to use a quantitative method over a qualitative approach was based on

the grounds that a large representative sample is needed. Qualitative research is

principally based on in‐depth interviews and focus groups based on non‐

representative samples. Therefore this method is regarded to be inappropriate to

the study. It is imperative that there is unbiased study and analysis of data. One

such possible scenario with using a focus group could be that an individual could

influence other respondents or control the group to a specific direction.

Furthermore, “given the extensive training required to conduct a sophisticated

qualitative study” (McDaniel and Gates, 2006, pg 81), it is apparent that in order to

extract the required information the interviewer required a great skill set.

It is acknowledged that focus groups are a useful medium for understanding

emotions and attitudes. However, by using both qualitative and quantitative

techniques in the survey, it is felt that this understanding can be an achieved to an

extent on a larger scale and at considerably less expense.

3.3.2 Analysis of Data

Results and analysis of the data using a computer software package known as SPSS

(Statistical Package for the Social Sciences) can be found in appendix C and appendix

D respectively.

3.4 Questionnaire Design

“The questionnaire represents one part of the survey process. It is, however,

a very vital part of the process. A poorly written questionnaire will not

provide the data that are required or, worse, will provide data that are

incorrect” (Bruce, 2004, pg 7).


55

As the questionnaire is the chief data collection tool, it is essential that the questions

are appropriate to what this study is intending to achieve. Emphasis should be on

using the correct terminology and it should be appropriate enough to extract the

required information from the respondent base.

3.4.1 The Eight‐Step Questionnaire Construction Procedure

McNabb (2004, pg 151) has constructed an Eight‐Step questionnaire construction

procedure

Malhotra (1999, cited in McNabb, 2004, pg 151) claims that in the preparation of a

questionnaire “the researcher must follow a systematic procedure in order to be

sure that it fulfils three broad objectives. The questionnaire must:

1). Successfully gather information that answers each study question.

2). Motivate respondents to answer all questions to the best of their ability.

3). Keep all potential error to a minimum.”


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With this in mind, the above questionnaire construction table has been used as a

guideline rather than a checklist of steps as “questionnaire construction is as much

as art as it is a science” (McNabb, 2004, pg 151).

3.4.2 Justification of Questions

The preliminary intentions for the survey have been recognised from the secondary

data. This has identified the issues and areas to be addressed by providing “a map

for the questionnaire” (Punch, 2003, pg 30). The validation of the questions used

can be found in appendix A.

3.4.3 Question Types and Wording

It is imperative that the questionnaire has been constructed using clear and concise

terminology, avoiding double‐barrelled questions and jargon to avoid any

unnecessary confusion. As commented by Bruce (2004, pg 8), “a questionnaire

writer who is not familiar with the vocabulary of a market can very quickly come

unstuck”. Additionally the consideration for avoiding bias in a question has been

noted and the problem if respondent’s inability to evoke has been abridged by

keeping the “reference time periods relatively short” (McDaniel and gates, 2006, pg

272).

The query of age group and sex of respondents are used to help meet the objective

of building a profile of the Tesco Clubcard user. As age can be a sensitive issue it was

decided that the use of pre‐coded groups was the best method.

The questionnaire consists predominantly of both multiple choice and dichotomous

closed questions. It was devised that the multiple choice closed questions allowed


57

respondents to indicate their opinions as well as allowing for more than one

response to be recorded. The dichotomous questions were purposely limited to two

fixed alternatives as this is easier to manage but it also ensures a rapid answer from

respondents. In order to gain a better understanding of respondents’ opinions and

to allow for a more precise measurement of attitudes, certain questions within the

questionnaire will be graded using a Likert scale of one to five where ”respondents

are instructed to tick the response options that best reflect their positions on each

item” (Foddy, 1999, pg 154). The justification adopting a five‐point Likert scale is to

ensure that respondents have a sufficient choice of responses which best represents

their feeling and it will also increase the response rate and quality of responses,

additionally this approach allows for attitudes to be measured and analysed

accurately.

The addition of an open question has been incorporated in the questionnaire. The

initiative for this is to allow respondents to use their own words and expressions

without restricting choice. Furthermore it will enable an opportunity for the

interviewer to encourage respondents to develop and expand on their answers and

reveal more information. Although analysis of this data will not be as straight

forward as the closed questions, it was determined that they could support the data

obtained from the previous questions and reveal more information with regards to

their motivations and attitudes.

3.4.4 Questionnaire Layout

Cohen and Manion (1994, pg 258), commented that “the appearance of the

questionnaire is vitally important. It must look easy, attractive and interesting rather

than complicated, unclear, forbidding and boring…. it is important, perhaps, for

respondents to be introduced to the purposes of each section of a questionnaire, so

that they can become involved in it and maybe identify with it. If space permits, it is


58

useful to tell the respondent the purposes and foci of the sections/of the

questionnaire”.

The questionnaire will commence establishing connection through the introductory

statement detailing the topic and the motive for carrying it out. Once initial contact

is made, the opening question in the questionnaire will determine if the respondent

is qualified, i.e. if he/she owns a Tesco Clubcard. If the answer is negative then the

questionnaire will be terminated to avoid wasting time for either party. A positive

answer will be followed by a brief description of the respondent and multiple choice

questions which can be answered quickly and accurately.

3.4.5 Interviewer versus Respondent Completion

The chosen method of data collection is that the questionnaires will act as an initial

script whereby the interviewer reads out the questions to the respondent and

records the answer they give. The validation for this method of data collection is so

that the interviewer can ensure that the responses received are complete, accurate

and facilitates any questions that respondents may field during the survey. It is vital

that care and attention must be taken so that no attempt is made to take lead or

influence the respondent into giving answers they normally would not give.

3.4.6 Coding

“Coding means assigning a code, usually a number, to each possible response to

each question” (Malhotra and Peterson, 2006, pg 407). This refers to “the way the

gathered data will be coded, tabulated, analysed, and interpreted… Computers using

readily available, easy‐to‐use statistical software tabulate almost all survey results.

For this reason, most questionnaires are pre‐coded (classification numbers appear

beside each question and each possible response), making data entry simple and less


59

error‐prone… Responses to open‐ended questions are grouped into categories and

classes are then translated into numerical form for counting and additional statistical

analysis” (McNabb, 2004, pg 153).

3.5 Sample Selection Procedure and Sample Characteristics

It has been determined that approximately 100 respondents shall be drawn from a

population of all visitors to Tesco in Newcastle Upon Tyne. The size of the sample

has had to be limited due to available time, money and resources. This can be

classified as “convenience sampling” in which “the sampling selection process is

continued until your required sample size has been reached” (Saunders et al., 2003,

pg 177).

It is felt that probability sampling would be the most appropriate method, therefore

there is no set criteria for respondents other than that they are Tesco customers. As

commented by Fink (1995, pg 9), “every member of the target population has a

known nonzero probability of being included in the sample”. Using this process will

eliminate any subjectivity and ensure a fair method of acquiring respondents.

Potential respondents will be approached as they enter the supermarket and the

probability sampling that will be employed will be a rule of four persons, whereby

every forth person that passes will be asked to participate. Regardless of the

response the process will start over again. Furthermore it has been determined that

potential respondents will be approached as they enter the supermarket. The

reason for this is because potential contributors are more likely to participate when

empty handed and less likely to be in a rush.


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The times and dates in which this research was carried out were unfortunately

constrained by the periods that Tesco allowed. The questionnaire was carried out on

the following dates and times:

Date & Time Completed Questionnaires

15th April 2008 ‐ 9.30am ‐ 11.30am 14

16th April 2008 ‐ 9.30am ‐ 11.30am 24

17th April 2008 ‐ 9.30am ‐ 11.30am 19

18th April 2008 ‐ 9.30am ‐ 11.30am 22

19th April 2008 ‐ 9.30am ‐ 11.30am 12

20th April 2008 ‐ 9.30am ‐ 11.30am 9

TOTAL = 100

3.6 Strengths, Limitations and Validity

The proposed method of collecting data through questionnaires is akin to any form

of research, it has its merits but additionally it also contains limitations and issues of

validity.

“Questionnaires have many advantages. The greatest of these is the considerable

flexibility of the questionnaire. Questionnaires can be custom‐designed to meet the

objectives of almost any type of research paper” (McNabb, 2004, pg 150).

3.6.1 Strengths

The method of using a questionnaire allows responses to be collected in a

standardised way, resulting in the data being more objective. This results in a

reduced bias and allows respondents to talk freely.


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Furthermore the information gathered can be presented in numerical and graphical

form. Moreover this would facilitate the platform of a structured logical analysis

and, if required, this can be re‐analysed by others.

Using a questionnaire results in a potentially large representative sample.

Information can be gathered from a large portion of a group. The use of the forth

person rule ensures that everyone calling into Tesco on the days and time the

questionnaire will take place has an equal probability of being chosen to carry out

the questionnaire.

3.6.2 Limitations

“Questionnaires, like many evaluation methods occur after the event, so participants

may forget important issues” (Milne, 1999). As commented by Clarke and Crichter

(1985, pg 27), “there is always a gap between what people say and what they

actually do”. This is valid in all research models nonetheless this factor must be

taken into consideration when carrying out an analysis of the results.

The time limits imposed by Tesco for when the questionnaire can be conducted will

not be 100% representative of their customer base. Due to the restrictions, data will

only be obtained from consumers who happen to visit the store on the specific days

the survey is conducted and within the allocated time frame.

Additionally, respondents may answer superficially, however as the questionnaire is

designed to be completely relatively quickly hopefully this issue can be avoided.


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3.6.3 Validity

In the context of questionnaires, validity depends chiefly on reliability. “Reliability is

a characteristic of the instrument itself, but validity comes from the way the

instrument is employed” (EWB 2007). If a questionnaire is shown to be unreliable

then there is no discussion of validity. Veal (1987, pg 186) commented that validity

is “the extent to which (the questionnaires) accurately reflect what they are meant

to reflect”. EWB (2007) back this up by citing, “validity refers to whether the

questionnaire or survey measures what it intends to measure”.

In an interview situation, validity could be compromised by an assortment of

scenarios and circumstances. For example, if respondents are in a rush to complete

the questionnaire this could affect their responses. Additionally, the possibility of

respondents giving exaggerated responses or “fail to interpret the questions as

intended by its designer” (Belson, 1986, pg 13).

The proposal of approaching respondents and interviewing them before they enter

the store is made on the basis that the respondents latest experience with Tesco

may cause an irrational change in their opinion and thus resulting in inaccurate data

being recorded by the questionnaire. This will further enhance the validity of the

questionnaire.

3.7 Summary

The method in which the data will be collected has been defined and acknowledged

with validation in this chapter of the dissertation. Using the questionnaire as a

research tool and combining quantitative and qualitative research methods will

answer the aims of the study. The next chapter presents the research findings and

provides analysis of the results.

Chapter Four – Research Findings and Analysis

Chapter Four

Research Findings and Analysis


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4.1 Introduction

The subsequent chapter will present the findings gained from the primary research

conducted via the questionnaire (appendix B) and interpret the results. The results

from the quantitative research have been correlated and investigated. This segment

of the study provides the fundamental information and data required in order to

meet the aims of the dissertation.

Individual frequency tables of the results can be found in appendix D

4.2 Analysis

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. The techniques employed in order to

present the findings of the analysis include frequency tables and cross tabulation.

4.2.1 User Profile of Tesco Clubcard Respondents

The secondary research highlighted a distinct lack of information with regards to the

characteristics of the fundamental users of loyalty cards. It has therefore been

determined that an ideal starting point is to identify and establish a user profile of

the selected sample. Using the rule of every forth person helped ensure that the

sampling was random.


65

Figure 4.2.1.1

Please choose your Gender:

Frequency Percent Valid Percent

Cumulative

Percent

Male 29 29.0 29.0 29.0

Female 71 71.0 71.0 100.0

Valid

Total 100 100.0 100.0

Figure 4.2.1.1 shows the results from the questionnaire illustrating that out of the

100 respondents, 29 are males and 71 are female. Although the data obtained was

somewhat limited by the sample size and time scale, it does exemplify that women

are more likely to be cardholders. Interestingly, the fact that 29 males owned a card

shows that men are also active consumers and the Tesco Clubcard has effectively

obtained the segment.

Figure 4.2.1.2

Figure 4.2.1.2 shows the age group of respondents compared to their gender. The

data shows clearly the mass appeal of the Clubcard to be across all age

Please choose your Gender: * Please indicate which age group you fall into: Crosstabulation

Count

Please indicate which age group you fall into:

Under 21 22 - 29 30 - 39 40 - 49 50 - 59 60 + Total

Male 2 9 5 3 5 5 29

Female 8 12 23 9 10 9 71

Please choose your

Gender:

Total 10 21 28 12 15 14 100


66

demographics and from the data we can establish that the typical male user of

Clubcard is aged 22‐29 and for females aged 30‐39.

Figure 4.2.1.3

Figure 4.2.1.3 highlights the age of the respondents compared with their level of

trust for Tesco products and the Tesco image. The above data indicates that the age

groups most likely to be loyal to Tesco’s due to the notion they trust Tesco products

and its image are the 30‐39 age groups. Conversely, it is also shown in the 22‐29 and

30‐39 age groups higher claims that they do not trust Tesco. In total out of the 100

respondents, 22% did not trust Tesco while 68% did trust Tesco (the other 10%

neither agreeing nor disagreeing). What this shows is that Tesco has been successful

in establishing position in the market place. However, there is no evidence to

suggest that the trust exemplified was formed by Clubcard single‐handedly.

The results also show that the Tesco Clubcard appeals to every age group and that

Tesco is effectively managing its relationship with customers in each of their

different “life stage” (Simm, 2007) to attain competitive advantage and thus adding

value to the Clubcard scheme.

Please indicate which age group you fall into: * I trust Tesco products and their image Crosstabulation

Count

I trust Tesco products and their image

Strongly Agree Agree No Opinion Disagree

Strongly

Disagree Total

Under 21 4 4 1 0 1 10

22 - 29 3 8 1 7 2 21

30 - 39 3 16 2 4 3 28

40 - 49 4 5 1 2 0 12

50 - 59 5 5 4 1 0 15

60 + 2 9 1 2 0 14

Please indicate which

age group you fall into:

Total 21 47 10 16 6 100


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4.2.2 Customer Perceptions on Tesco Clubcard

The specific focus of the questionnaire has resulted in limited results of Clubcard

users, creating unambiguous data that are significant to the study.

Figure 4.2.2.1

Please indicate how often you use your Clubcard when you purchase goods or

services with Tesco


Cumulative

Percent

Always 42 42.0 42.0 42.0

Frequently 39 39.0 39.0 81.0

Little 18 18.0 18.0 99.0

Never 1 1.0 1.0 100.0

Valid

Total 100 100.0 100.0

Figure 4.2.2.1 discloses that a total of 81% of the respondents surveyed used their

Tesco Clubcard always or frequently when completing a transaction with Tesco. This

high value could be accounted for by suggesting that customers value the Clubcard

and have integrated it into their normal shopping behaviour and routine. However,

despite this the results also show that there is a remaining 19% of customers who

seldom or never use their Clubcard. It is essential that this margin is not overlooked

or ignored as this marker represents a large percentage and demonstrates that some

consumers do not buy into the scheme and are simply not motivated by the rewards

on offer, furthermore it also illustrates that the Tesco Clubcard scheme is not enough

to keep specific customers loyal to Tesco. With reference to operant conditioning as

mentioned in the literature review in section 2.6 and that “if a given bit of behaviour

has a consequence of a special sort, it is more likely to occur again upon similar

occasions” (Skinner, 1978, pg 19). However, the results from the questionnaire show

that this concept is indeed not generic and that some consumers do not view one set


68

of behaviours to lead to positive outcomes, adding value to the statement that

behaviour is not generic amongst all consumers and that some customers are not

affected or influenced by the prospect of rewards.

Figure 4.2.2.2

Please indicate which age group you fall into: * If Tesco did not have the Clubcard scheme, would

you still continue to shop there? Crosstabulation

Count

If Tesco did not have the Clubcard scheme, would you still

continue to shop there?

Yes No Don't Know Total

Under 21 10 0 0 10

22 - 29 21 0 0 21

30 - 39 26 2 0 28

40 - 49 11 0 1 12

50 - 59 14 0 1 15

60 + 13 1 0 14

Please indicate which age

group you fall into:

Total 95 3 2 100

Figure 4.2.2.2 shows the age of respondents equated with the notion that if Tesco

did not have the Clubcard customer reward program in place, would they still

continue to shop there. The results show that a resounding 95% of respondents

across all age demographics would still continue to shop there. This raises the

notion that perhaps customers view the Clubcard as being of little or no significance

or application when they do their shopping at Tesco and in actual fact perceive it as

an additional bonus. Appreciably what these results show is that Tesco is doing and

offering so much more than merely a loyalty card that facilitates repeat purchases to

their customers. It also raises the notion that loyalty is more behavioural than

attitudinal.


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Figure 4.2.2.3

I think Tesco is very innovative * I feel more could be done to increase my loyalty Crosstabulation

Count

I feel more could be done to increase my loyalty


Strongly

Disagree Total

Strongly Agree 1 8 2 0 1 12

Agree 4 46 8 4 1 63

No Opinion 0 16 4 2 0 22

Disagree 0 2 0 1 0 3

I think Tesco is very

innovative

Total 5 72 14 7 2 100

What we can establish from figure 4.2.2.3 is that 77% of the respondents surveyed

either strongly agree or agree that more could be done by Tesco to increase their

loyalty, conversely 75% view Tesco as being an innovative company. What is evident

from these findings is that despite consumers feeling that more could be done to

increase their loyalty they nevertheless view Tesco as being an inventive company

and in a positive light.

Figure 4.2.2.4

I trust Tesco products and their image * I feel more could be done to increase my loyalty Crosstabulation

Count

I feel more could be done to increase my loyalty


Strongly

Disagree Total

Strongly Agree 1 16 2 1 1 21

Agree 3 34 7 2 1 47

No Opinion 1 5 2 2 0 10

Disagree 0 13 2 1 0 16

Strongly Disagree 0 4 1 1 0 6

I trust Tesco products and

their image

Total 5 72 14 7 2 100


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As stated previously and as shown in figure 4.2.2.3, 77% of respondents felt more

could be done to increase their loyalty. However, despite this, 68% strongly agree or

agree on trusting Tesco products and their brand image. What can be identified

from this is despite customers’ attitudes to more being done to keep them loyal they

would still continue to purchase products from services due to their confidence in

the products and brand offered by Tesco.

Figure 4.2.2.5

Figure 4.2.2.5 shows that 60% of the respondents strongly agree or agree that they

expect rewards as part of their normal shopping experience. However, despite this

95% would continue to shop at Tesco if they did not have the Clubcard scheme. This

comparison again shows the loyalty that Tesco has generated and that the majority

of customers will shop there regardless of a customer reward program. However

what is unclear are all the separate factors that have contributed to build this loyalty.

If Tesco did not have the Clubcard scheme, would you still continue to shop there? * I expect rewards to be a

part of my normal shopping experience Crosstabulation

Count

I expect rewards to be a part of my normal shopping experience

Strongly Agree Agree No Opinion Disagree Total

Yes 8 48 29 10 95

No 1 1 1 0 3

Don't Know 1 1 0 0 2

If Tesco did not have the

Clubcard scheme, would

you still continue to shop

there?

Total 10 50 30 10 100


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Figure 4.2.2.6

Loyalty Card Scheme * Have you redeemed any rewards from the Clubcard scheme within the

last 12 months? Crosstabulation

Count

Have you redeemed any rewards from the

Clubcard scheme within the last 12 months?

Yes No Total

1 - Very Important 4 5 9

2 7 1 8

3 5 2 7

4 13 3 16

5 12 9 21

6 9 3 12

7 5 11 16

8 - Not Important At All 6 5 11

Loyalty Card Scheme

Total 61 39 100

Figure 4.2.2.6 shows that 61% of respondents have redeemed some kind of reward

with Tesco in the last 12 months. What these results reveal is that consumers are

attracted to the rewards and seek to realise the experiential and lifestyle themed

incentives that Tesco makes available to them. Additionally, 40% of respondents

rank a customer reward programs importance between 1‐4 on a scale of 8 (1 = very

important, 8 = not important at all). When these results are analysed we can see

that 60% of respondents do not view loyalty card schemes as being primarily

important (ranked 4‐8). This shows that consumers are not principally interested in

customer reward programs or the rewards they can attain from despite a relatively

high number of respondents’ taking advantage of them, but instead view other

factors as being more important to them. What this finding illustrates is that

shoppers’ attitudes have changed and they view other factors as being more

important than earning points on their purchases.


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4.2.3 Loyalty and Satisfaction

The debate in the correlation between loyalty and satisfaction has been highlighted

in the literature. By using a cross tabulation table, the individual variables can be

analysed (figure 4.2.3.1).

Figure 4.2.3.1

Would you describe yourself as being loyal to Tesco? * Would you describe yourself to be a satisfied customer of

Tesco? Crosstabulation

Count

Would you describe yourself to be a satisfied customer of Tesco?

Yes No Don't Know Total

Yes 19 13 4 36

No 31 15 12 58

Don't Know 4 1 1 6

Would you describe yourself

as being loyal to Tesco?

Total 54 29 17 100

The results from the table show that overall, 54% of the respondents surveyed

described themselves as being satisfied Tesco customers. However, when the

question is cross tabulated we can see that 31% are satisfied but would describe

themselves as not being loyal. What we can deduce from this is that satisfied

customers are not necessarily loyal to a business. Accordingly, 13% of respondents

expressed they were not satisfied Tesco customers but were loyal, exhibiting that

they are locked into being loyal. One justification for this could be defined by Barnes

(2002) as “functionally loyal” and mentioned in section 2.5. Functionally loyal is

whereby customers are only loyal because they have an objective reason to be such

as convenience, factors such as opening times and location is central to them.

Furthermore, figure 4.2.3.1 also indicated that 19% of the respondents are loyal and

satisfied with Tesco. It is advocated that this percentage of respondents achieved


73

their loyalty condition through the linear progression theory as pointed out in

section 2.7.

The Clubcard scheme can be viewed as a starting point to loyalty as mentioned by

Duffy (2001, pg 36). However, the results indicate that more additional factors are

required in order to “insulate them (customers) from switching” (Miranda et al.,

2005, pg 230).

Some consumers simply need to be satisfied with a business in order to be loyal.

However, the 12% divergence from the results in figure 4.2.3.1 indicates that most

consumers need more than satisfaction to be loyal.

The results show that the association between loyalty and satisfaction is not

achievable through a single method alone and in actual fact is dependent on

consumers’ own variables. Thus confirming Söderlund’s (1998 – section 2.7) notion

that, “increasing satisfaction does not produce an equal increase in loyalty for all

customers”.

What can be concluded is that the Clubcard scheme does add value and operating in

conjunction with other loyalty marketing tools that Tesco utilise, such as competitive

pricing and customer service, allows customers to reach a state of loyalty via

different routes and methods.

4.2.4 Tesco’s Efficiency and Use of the Information Gained from Clubcard

The Clubcard magazine has a run of nearly 9 million copies four times a year (Stone,

2004, pg 203) and is an integral part of the Clubcard scheme. It was shown in the

previous section that 61% of respondents surveyed have redeemed some kind of

reward from Tesco in the last 12 months. Figure 4.2.4.1 below demonstrates the

frequency of the respondents who read the clubcard magazine.


74

Figure 4.2.4.1

Do you read Clubcard Magazine


Cumulative

Percent

Yes 25 25.0 25.0 25.0

No 49 49.0 49.0 74.0

Sometimes 26 26.0 26.0 100.0

Valid

Total 100 100.0 100.0

The results show that 49% of respondents claim to not read the Clubcard magazine

and that only 51% answered positively to reading it. These statistics are dependant

on how long the respondent has been a Clubcard member. However, what can be

devised from this is that it does signify that consumers have a lack of interest in this

medium.

Figure 4.2.4.2

Do you read Clubcard magazine * If “yes” or “sometimes please indicate what you think of the magazine.

Crosstabulation

Count

If “yes” please indicate what you think of the magazine.

It covers

everything you

would expect

and is of great

use

It is a good read

with some

informative

articles and

features

It is dull,

unhelpful and of

no use Total

Yes 3 9 13 25

Sometimes 5 14 7 26

Do you read Clubard

magazine

Total 8 23 20 51


75

Furthermore, figure 4.2.4.2 shows that out of the 51 respondents surveyed who did

read the Clubcard magazine, a staggering 20 of them found the magazine to be dull,

unhelpful and of no use to them. Consequently, this could suggest that Tesco is not

suitably employing the data it has gathered from Clubcard to efficiently and

effectively communicate with its end customers. Therefore, it could be suggested

that the marketing funds could be better utilised elsewhere.

4.2.5 Has the Tesco Clubcard Created Loyalty?

Humby and Hunt (2004, pg 9) implied that retail loyalty is “looking to achieve a little

extra goodwill, a slight margin of preference, an incremental shift in buying

behaviour”. To highlight a shift in buying behaviour it is practical to recognise and

acknowledge if the collection of points results in an increase of the respondents’

expenditure. By means of cross tabulating the data with how important respondents

rank the location of a store, the data can be divided into true loyal and functionally

loyal.

Figure 4.2.5.1

Does the collection of points influence you to buy more or to buy specific/alternative promotional products *

Location Of Store Crosstabulation

Count

Location Of Store

1 - Very

Important 2 3 4 5 6 7

8 - Not

Important

At All Total

Yes 0 1 3 1 1 0 0 0 6

No 19 22 13 11 6 3 1 1 76

Don't

Know 2 6 3 1 2 2 2 0 18

Does the collection

of points influence

you to buy more or

to buy

specific/alternative

promotional

products

Total 21 29 19 13 9 5 3 1 100


76

Figure 4.2.5.1 shows that 76% of the respondents surveyed claimed that the

collection of points did not influence them to increase their expenditure or to buy

specific alternative/promotional products. At a glance this statistic appears to show

that the Tesco Clubcard has failed in its activity to create loyalty and generate an

increase in sales. However, on closer inspection, and with reference to preceding

literature, though only 6% of the respondents stated that their spending increased in

their pursuit of points, this is a noteworthy figure in relation to profits. The

importance of word of mouth exposure was pointed out in section 2.7 and thus this

number can be seen as favourable in regards to profit margins. Remarkably the

respondents who are increasing their expenditure because of the Clubcard, none of

them ranked the location of a store as being the most important factor to them. This

suggests a minor fraction of substantiation against the functionally loyal concept.

4.2.6 Are Consumers Manipulating Suppliers?

Figure 4.2.6.1 shows that from the 100 respondents surveyed, a total of 83%

indicated that they own and regularly use up to 3 other store loyalty cards in

addition to their Tesco Clubcard, while 17% professed they only own a Tesco

Clubcard.

Figure 4.2.6.1

Apart from Clubcard, do you own and regularly use other store loyalty cards? Please

indicate how many:


Cumulative

Percent

1 other card 28 28.0 28.0 28.0

2 other cards 45 45.0 45.0 73.0

3 or more other cards 10 10.0 10.0 83.0

I only own a Tesco Clubcard 17 17.0 17.0 100.0

Valid

Total 100 100.0 100.0


77

These results lead to the principle that competitors are finding it straightforward to

replicate and imitate similar offerings, and consumers are harvesting the benefits

from all these schemes. Additionally, it also points to the belief that the Tesco

Clubcard is little more than an expensive sales promotion technique. It can be

contended that when the Tesco Clubcard was first introduced in 1995 it could have

achieved loyalty through its uniqueness and innovation. However, today amongst

the twenty‐first century generation of consumers who have more diverse tastes,

attitudes and perceptions, loyalty is now much harder to achieve. One can question

if loyalty cards have reached saturation point and if the era of the Tesco Clubcard is

over?

Figure 4.2.6.2 below puts this finding into practice as it illustrates that 60% of the

respondents surveyed either strongly agree or agree that they actually shop around

to get the best deals. What this data confirms is that consumers are savvy, as

mentioned in section 2.9 and that they are manipulating suppliers for their own

gains, reinforcing Khan’s (1998) notion “that consumers are smarter than marketers

generally perceive, and are actively manipulating suppliers for their own ends”.

Furthermore these results actually constraint the value of the Tesco Clubcard as a

loyalty marketing tool.

Figure 4.2.6.2

I usually shop around to get the best deals


Cumulative

Percent

Strongly Agree 28 28.0 28.0 28.0

Agree 32 32.0 32.0 60.0

No Opinion 10 10.0 10.0 70.0

Disagree 22 22.0 22.0 92.0

Strongly Disagree 8 8.0 8.0 100.0

Valid

Total 100 100.0 100.0


78

With the sheer profusion on different but similar customer reward programs being

employed by organisations and offered to consumers, the data acquired through the

survey and shown in figure 4.2.6.3 reveal that 60% of respondents expect some kind

of reward as part of their normal everyday shopping experience. This exemplifies

the need for market leading suppliers to invest in loyalty marketing schemes in order

to compete for evolved consumers with exceptionally high buyer power.

Figure 4.2.6.3



Cumulative

Percent


Agree 50 50.0 50.0 60.0

No Opinion 30 30.0 30.0 90.0

Disagree 10 10.0 10.0 100.0

Valid

Total 100 100.0 100.0

The secondary research remarked that loyalty card schemes rely “on maintaining the

ignorance of the very customers that it wants to see exhibiting loyal behaviour”

(Parker and Worthington, 2000, pg 496). Additionally Parker and Worthington

(2000, pg 496) also argued that such schemes were unethical and lead to the

materialisation of “points junkies”. However, the information gathered from the

survey opposes this hypothesis. Figure 4.2.6.4 indicates that consumers are not as

ignorant as originally advocated, as well as pointing out that consumers recognise

how much they need to invest in to the scheme in order to receive a laudable

prize/reward. A total of 52% of respondents correctly indicated that they knew that

for every pound they spent at Tesco they would receive one point in the Clubcard

scheme.


79

Figure 4.2.6.4

4.2.7 Does Tesco Really Need the Clubcard

The data collected from the survey has provided an important insight into the

significance of what factors respondents place upon that influence loyalty. Figure

4.2.7.1 below provides this information.

Figure 4.2.7.1

Please indicate which age group you fall into: * Do you know how many Clubcard points you gain for every

£1 you spend in store? Crosstabulation

Count

Do you know how many Clubcard points you gain for every £1 you spend in

store?

1 point for

every £1

2 points for

every £1

5 points for

every £1

10 points for

every £1 Total

Under 21 5 1 1 3 10

22 - 29 12 1 1 7 21

30 - 39 17 4 0 7 28

40 - 49 8 1 2 1 12

50 - 59 6 1 4 4 15

60 + 4 2 1 7 14

Please indicate which

age group you fall into:

Total 52 10 9 29 100

1 2 3 4 5 6 7 8 Very Not very important important Value for money 31% 18% 20% 10% 3% 6% 8% 4% Location of store 21% 29% 19% 13% 9% 5% 3% 1% Quality of service and staff 12% 14% 24% 19% 13% 8% 6% 4% Loyalty card scheme 9% 8% 7% 16% 21% 12% 16% 11% Product range and presentation 25% 19% 12% 14% 15% 4% 9% 2% Overall store layout and appearance 1% 9% 12% 13% 18% 27% 11% 9% In‐store promotional magazine and flyers 1% 1% 2% 5% 8% 14% 18% 51% Money off coupons/vouchers and special promotions 0% 2% 4% 8% 14% 25% 29% 18%


80

Taking into account what respondents valued as 1 and 2 (very important/important)

and totalling them up revealed the highest ranked order to be:

1) Location of store.

2) Value for money.

3) Product range and presentation.

4) Quality of service and staff.

5) Loyalty card scheme.

6) Overall store layout and appearance.

7) In‐store promotional magazine and flyers.

8) Money off coupons/vouchers and special promotions.

The findings exemplify that location of store and value for money are the most

influential determinant factors in achieving loyalty. The ranking system also shows

that loyalty card schemes are in the bottom half of important factors when choosing

a primary supermarket. Although the results show that money off

coupons/vouchers and special promotions as being the least important, if we

examine the other end of the grading scale we can see that a staggering 51% of the

respondents ranked in‐store promotional magazine and flyers as 8 (not very

important). This is an interesting discovery as these are both products of the Tesco

Clubcard. These findings are substantiation that Tesco may be better off investing

money into other areas rather than in its Clubcard scheme.

Figure 4.2.7.2 show the results of the open‐ended question in the survey. The aim of

which was to give respondents the opportunity to freely write their own comments

and remarks into how Tesco could make them more loyal. The responses were

grouped as follows:


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Figure 4.2.7.2

What more could Tesco do to make you more loyal?


Cumulative

Percent

Improve facilities for elderly

people 10 10.0 10.0 10.0

Have discounts at the till

rather than rewards 22 22.0 22.0 32.0

Help those without transport 14 14.0 14.0 46.0

Improve store layout 2 2.0 2.0 48.0

Faster checkouts/self service

checkouts 10 10.0 10.0 58.0

More Clubcard points per

pound 4 4.0 4.0 62.0

Increase product range 12 12.0 12.0 74.0

Increase store promotions 3 3.0 3.0 77.0

More store entrances and

exits 3 3.0 3.0 80.0

Increase Clubcard rewards 3 3.0 3.0 83.0

Improved on-line shopping 16 16.0 16.0 99.0

Improve Clubcard

administration 1 1.0 1.0 100.0

Valid

Total 100 100.0 100.0

The results show that the majority of responses signal towards direct, on the spot,

discounts from their final shopping bill, rather than gaining rewards in the long term.

This evidence points towards consumers trying to un‐complicate and simplify their

everyday lives and that the Clubcard is in theory complicating things for them.

Additionally, the findings also show that Tesco should consider investing extra

money into providing adequate transport facilities for customers, improved

provisions for older people, increased product selection and improvements to the

online shopping service. The feeling is that the Tesco Clubcard should evolve by


82

taking into account direct discounting from the final bill at the point of sale as a

result of points collection. Not only will this assimilate the pricing element of loyalty,

but it could also help maintain the success of the Tesco Clubcard.

4.3 Conclusion

Through the analysis of the primary research, several key findings have been

established and the objectives of the study have been achieved. The results

assessed the value of the Tesco Clubcard as a loyalty marketing tool by classifying

the findings into several fundamental areas.

The results from the questionnaire show that loyalty does exist amongst Tesco

Clubcard holders and Tesco and thus the Tesco Clubcard can be viewed as a valuable

asset in terms of a loyalty marketing tool. The high usage of the card by respondents

indicate that they have accepted the scheme and are willing to incorporate it into

their normal shopping experience at Tesco.

Despite the accomplishment of the Clubcard, the results demonstrate that it is not

the only aspect that causes consumer loyalty. There has been no indication or

evidence to support the theory that the Clubcard alone has created loyalty.

Furthermore the results have shown that other areas need to be considered to

prevent consumers from switching to a rival. Particular attention should be paid to

the details that consumers place importance on, such as value for money, location

and store facilities, rather than loyalty card schemes, in‐store vouchers and

magazines which were all ranked poorly by respondents.

The analysis suggests that the Clubcard scheme is a costly sales technique and that

perhaps the resources used to finance the scheme might be better apportioned

elsewhere to factors which can keep customers loyal and lead to repeat purchases

such as lowering prices throughout the entire product range. Respondents regarded


83

the product of the Clubcard (vouchers and in‐store magazine) to be at the lower end

of the scale in terms of importance when choosing a primary supermarket.

Moreover, 49% of respondents claimed they did not read the magazine and out of

the respondents that did admit to reading the magazine nearly half maintained that

the magazine was not adequate as it did not appeal to them and they regarded it as

dull and unhelpful.

A total of 85% of respondents claimed they owned and regularly used at least 1

other store loyalty card in addition to the Tesco Clubcard. Additionally 60% of

respondents also strongly agree/agreed that they usually shop around to get the

best deals. The results have brought to light the new twenty‐first century generation

of consumers who have more diverse tastes, attitudes and perceptions and the

results show that the buying power they possess is higher than ever and as such they

are effectively manipulating suppliers to meet their own needs and wants. With this

in mind, it could be contended that the Tesco Clubcard in its current form is a dated

remnant of the past and needs to evolve and transform in order to advance its value

as a loyalty marketing tool.

Chapter Five – Conclusion and Recommendations

84

Chapter Five

Conclusion and Recommendations


85

5.0 CHAPTER FIVE ‐ CONCLUSION AND RECOMMENDATIONS

5.1 Introduction

The purpose of this study was to discover if Tesco really needs the Clubcard scheme

despite all the efforts it employs to keep customers loyal. Additionally, it also

examined the value of the Tesco Clubcard scheme in the context as a loyalty

marketing tool. The primary research carried out has produced key results and

addressed the objectives of the thesis, outlined in chapter one.

This concluding chapter shall illustrate the main findings of the study collectively,

concentrating upon the objectives before making applicable recommendations,

ascertaining the limitations to the study and, finally, highlighting areas that need

further investigation and directing further research.

5.2 Conclusion of the study

The literature review has pointed to the notion that loyalty card proposals such as

the Tesco Clubcard scheme are an invaluable marketing tool offering a multitude of

advantages to both the organisation and the consumers. The Clubcard has provided

Tesco with an opulent collection of data on individual customer tastes, preferences

and spending habits. This wealth of information has enabled Tesco to sustain its

position as the market leading UK supermarket retailer. However, by examining the

scheme in the context of meeting the objectives of this thesis, it can be noted that

the significance and value of the Clubcard in achieving customer loyalty appears

dissimilar.

It was discovered that loyalty did exist amongst some card holders, but the study has

revealed no evidence to support the notion that the Tesco Clubcard alone has

achieved loyalty.


86

The study has identified that a series of modus operandi exists in order to achieve a

loyal customer base and that loyalty marketing consists of several factors and not

just loyalty cards. Additionally, the thesis has acknowledged and identified the

importance of store location and competitive pricing as being the most effective

factors in achieving customer loyalty. Tesco currently utilises a number of

techniques to ensure that customers are happy and content. Therefore it can be

argued that the Clubcard scheme can be seen as an expensive encumbrance and is

detracting away from the core business of Tesco. The knock on effect would be to

allow funds to be better allocated and spent on areas which improve the other

techniques currently in place.

Additionally, the study has shown that consumers have evolved since the original

conception of the Clubcard scheme, and the new perceptions, attitudes and buyer

power they possess has immensely altered the value of the Clubcard and how they

see the Clubcard. Furthermore the huge number of customer reward programs and

similar designs has resulted in consumers no longer being concerned with the loyalty

marketing gimmicks and rewards. Today’s consumer is more interested in finding

the best deal they can. What has transpired from the study is the discovery that the

Tesco Clubcard was a starting point for loyalty. At the time of launch the scheme

was innovative and appealing to consumers, however the results of the primary

research reflect that respondents who claimed they were satisfied with Tesco were

not necessarily loyal and thus more is required in order to lock them into being truly

loyal to Tesco.

Harlow (1997 cited in Egan 2001, pg 381) remarked on the evolution of twenty‐first

century consumers as becoming ‘increasingly promotion‐literate’ and this has

reduced the significance of the loyalty card within the supermarket industry. Parker

and Worthington (2000, pg 496), claimed that consumers are ignorant, however the

results from the primary research dispute and contradict this. The primary research

showed that consumers are aware of the value of points and they do own and use


87

more than one loyalty card. As consumers utilise technology around them, such as

the internet, it can be deduced that today’s consumers are actively and effectively

manipulating suppliers to meet their own needs. The knock on effect of the boom of

loyalty cards has now led consumers into expecting some kind of reward in their

normal shopping experience.

Consumers today are loyal to functional aspects of their shopping experience rather

than rewards, with factors such as faster checkouts, product range, transport and

online shopping all viewed as being important aspects. Ultimately these factors all

contribute to a more convenient shopping experience but it has been suggested that

the Clubcard only complicates matters. Furthermore, the results indicated that

many respondents claimed that money off discounts of their final bill at the point of

sale rather than future rewards were preferred and would make them more loyal.

This is a clear indication that consumers today are more attracted to an instant

saving/price reduction rather than the long‐term collection of points in order to

attain a similar reduction. From this finding it can be suggested that changing the

format of the Clubcard to be more in line with what consumers demand may make it

a more viable and valuable loyalty marketing tool.

The general customer perception of the Tesco Clubcard revealed respondents high

usage of the card and that they trust the Tesco brand and image in addition to

having ardent aspirations to redeem rewards. Conversely, the results also showed

some respondents using the card little or never per transaction which points towards

the speculation that rewards are simply not enough to keep certain customers loyal

to Tesco. The findings also showed that respondents perceived the card as an

additional bonus to their shopping and the theory of operant conditioning, as

highlighted in section 2.6 has been proven to not be generic with some consumers

showing positive actions and behaviour without the need for rewards. This factor is

further reinforced by the discovery that the majority of respondents’ surveyed

claimed they would continue to shop at Tesco even without the Clubcard scheme.


88

One of the categorical features of employing a customer reward program is to

reduce high wastage by specifically targeting consumers with information that will

appeal to them. The results showed that Tesco’s communication with its customers

via the medium of magazine and vouchers was not effective and not realised to full

capacity by recipients. Readership amongst respondents were moderately low and

several respondents did not rate the magazine and/or its content. This finding

suggests that the Clubcard scheme is directing Tesco to disregard particular sections

of the market which offer more interest to consumers such as price reductions or

improved facilities. With outlay into other more effective loyalty marketing

mechanisms it can be reasoned that in terms of achieving a loyal customer base they

may produce better results.

Parker and Worthington (2000, pg 496) commented that loyalty “cannot be bought”

and the findings in the primary research back this theory up, discovering over half

the respondents claiming they were satisfied customers of Tesco. Further

confirmation of this was established with the greater part of respondents

maintaining they would continue to shop at Tesco and trusted the Tesco brand.

What the findings have shown is that the epoch of the loyalty card is becoming

passé. In its current form it is not enough to sustain competitive advantage. The

failure to evolve the Clubcard scheme into what today’s consumer demand has

brought the Clubcard proposal to a unique crossroad. The sheer number of similar

customer reward programs has reduced the overall value of schemes. Coupled with

consumers that have evolved and are more intelligent has resulted in high buyer

power within the supermarket industry. This evidence points to the Clubcard

scheme becoming a “zero sum game” (Mazur, 1997, pg 16).

The findings from the primary research have revealed several factors which limit the

value of the Tesco Clubcard. These are:


89

• Competitors: the quantity of similar schemes has de‐valued customer reward

programs, caused confusion and resentment amongst consumers and their

simplicity of limitations has brought loyalty card schemes to a crossroad.

• External environment: the evolution of tastes, attitudes, awareness and

demands of today’s promotional literate consumer has resulted in savvy

shoppers who are hunting around for the best deals and commanding more.

• Perception: the study revealed respondents’ perceptions towards the

Clubcard and the additional Clubcard products such as in‐store magazine and

vouchers was perceived as being weak in terms of productivity and

effectiveness.

The study has ascertained that the value of the Tesco Clubcard is contentious as it

has made loyalty harder to achieve and thus failed to meet the base requirements of

the model. Additionally, the research can conclude that the Clubcard in its current

format may well have reached its zenith and if it continues to stay dormant then the

future value of the scheme is uncertain.

5.3 Recommendations

Unquestionably the Tesco Clubcard customer reward program has brought success

to Tesco, yet despite this accomplishment the study has found that it is now in a

state of decline. Its value as a loyalty marketing tool is weakening due to numerous

factors. Building upon this conclusion, the following recommendations can be

suggested:

• Investigate key areas which are of importance to consumers and allocate the

funds necessary in order to ensure that these new customer demands are

met to help ascertain a loyal customer base.

• Examine and reduce the current amount of money invested into the Clubcard

customer reward program as the concept becomes more dated and investing


90

money in more significant areas. Areas such as lowering prices shall help

sustain a competitive advantage within the industry.

• Evolve and transform the Clubcard model to adapt to the new tastes,

attitudes and demands of the new generation of consumers. Consideration

should be noted to giving customers an instant rebate at the point and time

of sale rather than rewarding them through the collection of points. The

current image of the Clubcard feels dated and as such a revision and re‐

launch may give it a much needed boost and help motivate and excite

consumers.

5.4 Limitations and Further Research

This study is not without limitations. The main area of concern is the sample size of

the questionnaire. It is felt that it is not a 100% representation of the whole

population and the times and dates in which this research was carried out were

unfortunately constrained by the periods that Tesco allowed. Furthermore, with

reference to the 100 respondents, generalisations have regrettably had to be made

to the sample group.

Time and money are supplementary factors which have limited the study to a

degree. Tesco would only allow questionnaires to be carried out during a small

number of mornings and over a few hours. The result of this is limited results of

consumers who happened to visit the store on the specific times and dates the

survey was being carried out. Additionally, it is felt that if qualitative interviews were

established and carried out the results could help verify and support the findings

from the questionnaire.

Extra studies could be performed at different Tesco stores to determine if the value

and perception of Clubcard is the same or if it differs from region to region. Further

investigation could be carried out to reveal what effects an increased rate of loyalty


91

points per pound spent would have and if it would make the scheme a more viable

and valuable proposition.

The research focused solely on Clubcard holders, however it may have been

advantageous to extend the investigation to reflect on consumers who do not own a

Clubcard yet continue to shop at Tesco despite this. Performing such an analysis

would illustrate and identify what generates consumer loyalty and thus determine

the most valuable loyalty marketing tool within the supermarket industry.

References

92

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Appendices

Appendices

Appendices

105

APPENDIX A – QUESTIONNAIRE JUSTIFICATION

QUESTION VALIDATION 1a). Do you own a Tesco Initial question, leads directly into the subject and instantly establishes Clubcard? rapport with the respondent. 1b). If "yes", please indicate how Although customers may own a Clubcard, the inclusion of this question often you use your Clubcard when determines how actively they use their card. If a respondent owns a you purchase goods or services card but never uses it, this will indicate to the author a greater insight with Tesco. with regards to impending questions concerning their attitudes towards the Clubcard scheme. 2). Please choose your Gender Used to build a user profile of the Clubcard scheme. 3). Please indicate which age Helps in building the user profile and responses have been intentionally group you fall into. broadly grouped. It is vital there is no overlap in the age ranges stipulated. 4). On a scale of 1‐8 (1 = excellent The intention of this question is to establish what factors lead and 8 = poor), how do you rank the importance of each customers to repeat purchase and determine the connection between of the following factors when customer and store. This question also highlights the range of loyalty deciding which supermarket marketing strategies currently used within the retail industry. you use 5). Apart from Clubcard do you The use of this question will determine how many respondents own and regulary use other own more than one loyalty card and divulge if consumers are “actively store loyalty cards? manipulating suppliers for their own ends” (Khan 1998). Please indicate how many 6a). Do you read the Clubcard Tesco use the information gathered from Clubcard users to determine Magazine? the articles it publishes in its Clubcard magazine. This question will establish how effective this practice is and if customers are responding by reading the magazine and indicate how prevalent this modus operandi is. 6b). If "yes" or “sometimes” The motive of splitting this question is to void any confusion to Please indicate what you think of respondents and also understanding how they value Tesco’ efforts The magazine. to communicate with them. 7). Do you know how many The inclusion of this question will discover is consumers are as Clubcard points you gain for as ‘ignorant’ as Parker and Worthington (2000) asserted. every £1 you spend in store? 8). Does the collection of points Parker and Worthington (2000) claimed that consumers are influence you to buy more or to becoming ‘points junkies’ who are desperate to gain and save buy specific/alternative points. Additionally it will also address if customers aspire to promotional products which collect and redeem more points and thus increase spending. offer bonus points?

Appendices

106

9). Have you redeemed any This question is designed to test Capizzi and Ferguson (2005) claim rewards from the Clubcard scheme that customers actively seek lifestyle themed rewards. within the last 12 months? 10). Would you describe yourself This will establish directly if the customer feel loyal towards Tesco. as being loyal to Tesco? 11). Would you describe yourself Used in conjunction with the above question this will address the to be a satisfied customer of concerns in the literature review with regards to the relationship Tesco? between loyalty and satisfaction. 12). If Tesco did not have the This question will establish if consumers are ‘locked in’ to Tesco as Clubcard scheme, would you still the paradigm created by the literature review suggests that it is not continue to shop there? just loyalty cards that create loyalty. 13). Please tick the appropriate The inclusion of this was to gather and understand customers box which accurately reflects your attitudes and opinions with regards to Tesco and loyalty. level of agreement or disagreement. 14). What could Tesco do more to Purposely an open ended question to determine any other feelings make you more loyal? that respondents had and to gain a better understanding of them. Hopefully it will also present new ideas or concepts surrounding customer loyalty.

Appendices

107

APPENDIX B ‐ QUESTIONNAIRE

TESCO CLUBCARD USER SURVEY

As part of my MBA thesis I am doing some research on the Tesco Clubcard. I would appreciate it if you could take a few moments of your time to carry out this survey. All results will be kept confidential.

1a). Do you own a Tesco Clubcard? Yes 1 No 2

1b). If “yes”, please indicate how often you use your Clubcard when you purchase goods or service with Tesco: Always 1 Frequently 2 Little 3 Never 4

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2). Please choose your Gender: Male 1 Female 2

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3). Please indicate which age group you fall into: Under 21 1 40 – 49 4 22 – 29 2 50 – 59 5 30 – 39 3 60 + 6

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4). On a scale of 1 to 8 (1 = very important and 8 = not important at all) How do you rank the importance of each

of the following factors when deciding which supermarket you use: Rank 1 ‐ 8 ‐ Value for money ________ 1 ‐ Location of store ________ 2 ‐ Quality of service and staff helpfulness ________ 3 ‐ Loyalty card schemes ________ 4 ‐ Product range and presentation ________ 5 ‐ Overall store layout and appearance ________ 6 ‐ In‐store promotional magazine and flyers ________ 7 ‐ Money off coupons/vouchers and special promotions ________ 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5). Apart from Clubcard, do you own and regularly use any other store loyalty cards? Please indicate how many: 1 other card 1 3 or more other cards 3 2 other cards 2 I only own a Tesco Clubcard 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6a). Do you read the Clubcard Magazine? If “No” please move onto Question 7.

Yes 1 No 2 Sometimes 3 6b). If “yes” or “sometimes” please indicate what you think of the magazine. It covers everything you would expect and is of great use 1 It is a good read with some informative articles and features 2 It is dull, unhelpful and of no use 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

‐ Please turnover questionnaire to continue ‐

Appendices

108

7). Do you know how many Clubcard points you gain for every £1 you spend in store? 1 point for every £1 1 5 points for every £1 3 2 points for every £1 2 10 points for every £1 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8). Does the collection of points influence you to buy more or to buy specific/alternative promotional products

which offer bonus points? Yes 1 No 2 Don’t know 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9). Have you redeemed any rewards from the Clubcard scheme within the last 12 months? Yes 1 No 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10). Would you describe yourself as being loyal to Tesco? Yes 1 No 2 Don’t know 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11). Would you describe yourself to be a satisfied customer of Tesco? Yes 1 No 2 Don’t know 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12). If Tesco did not have the Clubcard scheme, would you still continue to shop there? Yes 1 No 2 Don’t know 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13). Please tick the appropriate box which accurately reflects your level of agreement or disagreement:

Strongly Agree Agree No Opinion Disagree Strongly Disagree

I trust Tesco products and

their image

1

2

3

4

5

I think Tesco is very

innovative

1

2

3

4

5

I usually shop around to get

the best deals

1

2

3

4

5


1

2

3

4

5

I feel more could

be done to increase my loyalty

1

2

3

4

5

Appendices

109

14). What could Tesco do more to make you more loyal? _______________________________________________________________________________________________ _______________________________________________________________________________________________ _______________________________________________________________________________________________ _______________________________________________________________________________________________

‐ Many thanks for your time and attention ‐

Appendices

110

APPENDIX C – SPSS CODED QUESTIONNAIRE RESULTS

Q1a Q1b Q2 Q3 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q5 Q6a Q6b Q7 Q8 Q9 Q10 Q11 Q12 1 2 1 2 3 2 8 1 5 4 6 7 1 1 3 4 2 1 1 1 1 1 2 1 4 1 2 3 8 4 5 7 6 1 2 1 3 2 2 3 1 1 2 2 3 2 1 6 7 3 4 8 5 1 2 1 2 2 2 2 1 1 3 2 4 1 4 3 2 5 6 8 7 1 3 3 2 2 1 2 1 1 1 2 2 3 2 3 4 1 5 7 8 6 1 2 4 1 2 1 2 1 1 2 2 3 3 7 2 1 5 8 4 6 1 1 2 1 2 2 2 2 1 1 2 2 4 4 2 1 3 6 7 8 5 4 2 3 2 1 1 1 3 1 3 2 2 6 3 5 1 4 7 8 2 2 2 1 1 1 2 1 1 1 3 2 4 3 1 5 6 4 7 8 2 2 1 1 1 2 1 1 2 1 1 3 1 2 4 3 2 7 1 5 8 6 2 1 3 4 2 1 2 3 1 1 2 2 3 3 2 4 8 1 6 7 5 2 3 3 1 3 2 2 1 1 1 2 2 2 3 2 1 6 7 8 5 4 2 3 2 4 2 1 1 2 1 1 3 2 4 3 2 1 5 7 8 6 4 2 1 3 1 2 2 1 1 1 1 1 2 3 3 2 1 5 8 7 6 4 2 1 3 2 2 2 2 2 1 1 3 2 2 3 2 1 5 7 8 6 4 2 3 2 1 3 2 2 2 1 1 2 1 3 3 1 4 8 2 5 6 7 2 1 3 1 3 1 2 1 1 1 2 2 3 7 1 2 5 3 6 4 8 1 3 3 4 2 1 1 1 1 1 2 2 3 4 5 3 1 2 6 7 8 1 2 1 2 2 2 1 1 1 3 1 5 4 1 3 5 2 6 8 7 3 2 1 2 1 1 1 1 1 2 1 2 3 2 7 4 1 5 6 8 4 2 1 3 1 2 2 1 1 3 2 4 6 3 2 1 4 5 7 8 4 1 2 1 2 2 1 2 1 1 1 1 6 6 5 4 1 2 3 8 7 4 1 2 4 3 1 1 1 1 1 1 2 1 6 2 4 3 1 5 8 7 4 2 1 2 1 2 3 1 1 1 2 6 1 6 4 8 2 3 5 7 4 2 3 2 1 2 1 1 1 3 2 3 1 4 3 7 2 6 5 8 1 2 2 2 2 3 3 1 1 1 2 6 1 3 4 2 5 6 7 8 1 2 2 3 2 2 1 1 1 2 2 1 1 2 5 8 3 7 4 6 1 2 4 2 1 2 3 1 1 1 1 3 1 4 6 5 2 3 8 7 1 2 1 2 2 2 3 1 1 2 1 1 2 6 3 1 4 5 8 7 1 3 2 2 2 2 2 1 1 1 2 2 1 3 2 1 5 4 8 7 6 2 3 3 4 2 1 2 3 1 1 1 2 3 8 3 4 2 1 6 5 7 2 3 1 1 1 1 2 1 1 1 3 2 5 5 4 1 7 3 2 8 6 4 2 3 2 2 1 1 1 1 1 2 3 3 7 2 8 1 6 4 5 4 2 1 3 1 1 2 1 1 1 2 5 2 3 4 7 1 6 8 5 3 1 3 3 2 1 1 1 1 1 2 2 3 1 4 5 8 2 3 6 7 4 3 2 1 3 2 2 2 1 1 4 2 5 5 4 3 2 1 6 8 7 1 3 3 1 2 1 1 3 1 1 2 2 3 2 3 1 8 4 5 7 6 1 2 1 3 2 1 3 1 1 1 2 2 1 2 3 4 5 6 8 7 2 3 2 1 2 1 2 2 1 1 1 2 6 8 1 3 5 7 6 2 4 2 1 3 1 2 2 2 1 1 1 3 2 3 6 2 3 7 1 4 5 8 2 3 2 4 1 2 3 2 1 1 1 2 4 7 5 1 3 4 2 8 6 3 2 1 2 2 2 1 1 1 1 1 6 1 3 2 5 6 8 4 7 3 3 2 4 2 1 3 1 1 1 2 2 3 8 4 3 5 7 2 1 6 3 1 2 2 2 2 1 2 1 1 1 1 2 2 1 4 3 5 8 6 7 4 3 3 1 3 1 2 2 1 1 1 2 2 1 5 3 4 2 6 8 7 4 2 1 2 1 1 2 1 1 1 2 5 2 4 1 7 6 5 3 8 1 3 1 4 1 2 1 1 1 1 2 2 6 1 2 3 4 7 5 8 6 1 2 1 2 1 2 3 1 1 1 2 6 7 1 4 6 3 2 8 5 1 1 2 1 2 2 2 1 1 1 2 1 2 1 2 4 6 3 5 8 7 1 2 4 3 2 2 3 1

Appendices

111

Q13 Q13 Q13 Q13 Q13

4 2 1 3 2 1 2 1 3 3 2 4 1 3 2 2 2 2 3 2 2 2 2 3 3 4 2 2 3 2 4 2 3 1 2 4 2 2 3 2 4 2 2 2 2 4 2 2 3 2 2 2 4 2 2 4 2 5 2 2 2 1 4 2 1 4 2 4 2 3 4 3 1 1 2 5 3 5 2 3 4 2 4 3 2 2 2 3 1 3 1 3 4 4 2 3 4 1 2 4 1 2 2 4 3 2 3 1 3 3 1 2 2 1 1 1 3 1 2 2 2 1 4 3 2 3 2 2 1 1 1 2 5 3 2 2 1 4 2 2 2 2 4 3 1 1 2 2 2 2 2 2 2 2 3 4 4 4 3 2 4 2 4 2 4 2 3 2 1 3 5 2 1 2 2 1 2 1 2 2 2 2 1 2 2 1 2 1 1 2 2 1 5 2 3 2 2 1 2 2 2 2 2 2 2 1 1 4 2 2 3 2 3 3 2 2 2 3 2 2 2 2 2 2 2 1 2 2 3 4 2 1 2 3 2 2 2 2 2 2 4 2 4 2 2

Appendices

112

Q1a Q1b Q2 Q3 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q5 Q6a Q6b Q7 Q8 Q9 Q10 Q11 Q12

1 2 2 5 4 5 3 2 6 1 8 7 1 1 2 4 1 1 2 2 3 1 1 1 3 4 3 1 2 5 6 7 8 2 2 1 2 1 2 2 1 1 1 1 6 4 1 3 8 5 2 6 7 2 3 2 4 2 1 2 2 1 1 1 2 2 3 1 4 8 7 2 5 6 2 2 1 2 1 1 1 1 1 2 2 5 8 3 4 2 1 5 7 6 2 1 3 1 2 1 2 3 1 1 2 2 5 2 3 6 5 1 7 8 4 2 3 3 3 2 1 2 1 1 1 1 1 6 3 5 7 6 1 2 8 5 2 1 1 4 2 1 1 1 1 1 2 2 5 2 1 3 7 5 4 8 6 2 2 2 2 1 2 2 1 1 3 2 3 2 8 3 7 1 4 6 5 2 2 1 2 2 1 1 2 1 3 2 4 3 2 5 4 1 7 8 6 2 2 1 2 1 2 1 1 1 3 2 5 1 3 7 6 2 4 8 5 2 3 2 1 2 2 2 1 1 1 1 2 2 2 6 4 5 1 3 7 8 4 3 2 1 3 1 2 1 1 1 1 2 6 2 1 3 5 4 6 8 7 4 1 2 4 2 2 2 1 1 1 1 2 1 1 7 2 6 3 4 8 5 2 2 4 3 1 2 2 1 1 1 2 2 4 2 8 6 1 3 7 6 2 3 1 4 2 1 2 1 1 1 1 2 3 1 5 3 4 2 6 8 7 2 1 3 4 3 1 2 2 1 1 1 1 2 3 1 4 6 2 8 5 7 2 2 1 2 1 2 1 1 1 2 2 3 7 5 3 4 1 2 8 6 2 1 2 1 2 1 3 1 1 1 1 2 4 7 2 4 6 1 3 8 5 2 1 3 4 2 1 1 2 1 1 3 2 1 2 1 6 5 3 4 7 8 2 2 1 2 2 1 1 1 1 1 1 5 6 1 2 3 4 5 7 8 2 1 3 4 2 1 1 1 1 1 2 2 3 1 4 2 5 3 6 8 7 1 2 4 2 1 1 2 1 1 1 2 2 4 2 8 5 1 6 3 7 1 2 1 2 1 2 1 1 1 1 1 6 7 3 4 5 1 2 8 6 1 2 4 2 1 2 1 1 1 1 2 3 1 2 7 5 4 3 8 6 4 3 2 1 2 1 1 1 1 1 1 1 1 2 4 6 5 1 3 7 8 4 2 1 2 2 2 1 1 1 2 1 2 7 1 2 6 3 4 8 5 2 3 1 1 2 1 1 2 1 1 1 2 3 5 6 7 1 2 3 8 4 2 2 1 2 1 2 1 1 1 2 2 2 1 4 2 7 5 3 8 6 2 2 1 2 2 2 1 1 1 2 1 4 2 1 5 7 3 4 8 6 3 2 1 2 2 2 2 1 1 2 2 3 1 4 8 7 2 5 6 3 4 2 4 2 1 2 1 1 1 1 2 1 1 2 5 4 7 8 6 3 4 2 3 2 2 1 3 1 1 2 1 2 4 2 5 3 1 6 8 7 1 2 3 2 2 2 3 1 1 2 2 3 3 2 5 4 1 6 8 7 2 2 2 2 1 1 1 1 1 1 1 2 3 2 6 5 1 4 8 7 1 1 2 4 2 1 2 3 1 1 1 1 4 1 4 3 8 2 7 5 6 2 2 3 2 2 2 1 1 1 1 2 2 1 2 3 4 7 5 8 6 1 2 2 2 1 1 1 1 1 3 1 5 1 5 6 7 2 4 8 3 2 2 4 2 2 2 1 1 1 1 1 5 2 6 5 7 1 5 8 3 2 2 3 3 2 1 2 1 1 2 2 6 3 1 6 7 2 4 8 5 2 1 3 4 2 1 2 3 2 1 3 2 1 2 1 7 6 5 3 8 4 2 3 1 1 2 1 1 3 1 1 2 2 5 2 1 5 3 4 6 8 7 2 2 1 2 1 1 1 1 1 1 1 3 1 3 2 4 8 6 7 5 2 1 3 1 2 2 2 1 2 1 1 1 3 1 2 3 4 5 6 7 8 3 2 4 3 1 1 2 1 1 3 2 4 1 2 4 7 3 5 8 6 3 1 1 1 2 2 1 1 1 1 2 1 5 1 3 5 4 2 7 6 8 3 2 1 2 1 3 1 1 1 2 2 6 7 3 1 4 2 5 8 6 3 3 2 1 2 2 2 1 1 1 1 2 3 1 3 2 5 4 6 7 8 2 3 2 1 3 1 1 2 1 1 2 2 2 3 1 2 4 5 7 6 8 1 2 4 2 1 3 1 1 1 2 2 6 1 3 5 2 4 6 8 7 2 2 2 2 1 2 1 1 1 2 2 1 1 2 3 4 5 6 7 8 1 3 2 1 2 1 2 1 1

Appendices

113

Q13 Q13 Q13 Q13 Q13 4 2 4 2 2 2 2 1 2 2 2 3 4 4 2 2 2 1 2 4 2 1 4 2 2 1 3 2 4 2 1 2 4 2 5 2 2 5 3 4 3 2 1 2 2 5 3 3 1 4 1 2 4 2 2 2 1 5 2 2 2 1 1 1 5 4 2 4 2 2 5 3 5 4 2 2 3 4 2 2 2 2 2 3 2 2 2 1 4 2 2 3 3 4 2 2 3 4 4 2 1 2 1 2 2 3 2 1 4 2 2 3 4 2 2 1 2 2 2 2 2 2 2 1 2 1 2 4 4 2 3 3 2 2 4 1 2 4 2 2 1 2 1 3 2 5 1 2 2 2 2 3 2 2 2 1 2 1 3 2 2 3 2 2 2 2 2 1 3 2 2 2 1 2 2 5 3 2 2 2 1 2 2 3 2 2 1 2 2 2 3 1 1 3 3 3 2 2 2 2 2 2 2 3 2 2 2 1 3 2 2 2 1 3 3 2 2 2 2 1 3 2 3 2 2 3 3 3 3 3 2 2 1 2 2 4 2 2 3 3 2 3 5 3 2 4 3 3 2 2 2 2 1 2 2 2 3 3 2 2

Appendices

114

APPENDIX D – SPSS FREQUENCY TABLES FOR QUESTIONNARE RESULTS Respondents who own a Tesco Clubcard


Cumulative

Percent

Valid Yes 100 100.0 100.0 100.0

Frequency of how often respondents used their Clubcard when purchasing goods or services with Tesco


Cumulative

Percent

Always 42 42.0 42.0 42.0

Frequently 39 39.0 39.0 81.0

Little 18 18.0 18.0 99.0

Never 1 1.0 1.0 100.0

Valid

Total 100 100.0 100.0 Gender of respondents surveyed


Cumulative

Percent

Male 29 29.0 29.0 29.0

Female 71 71.0 71.0 100.0

Valid

Total 100 100.0 100.0

Appendices

115

Age group of respondents surveyed


Cumulative

Percent

Under 21 10 10.0 10.0 10.0

22 - 29 21 21.0 21.0 31.0

30 - 39 28 28.0 28.0 59.0

40 - 49 12 12.0 12.0 71.0

50 - 59 15 15.0 15.0 86.0

60 + 14 14.0 14.0 100.0

Valid

Total 100 100.0 100.0

When deciding on which supermarket use, how important is value for money


Cumulative

Percent

1 - Very Important 31 31.0 31.0 31.0

2 18 18.0 18.0 49.0

3 20 20.0 20.0 69.0

4 10 10.0 10.0 79.0

5 3 3.0 3.0 82.0

6 6 6.0 6.0 88.0

7 8 8.0 8.0 96.0

8 - Not Important At All 4 4.0 4.0 100.0

Valid

Total 100 100.0 100.0

Appendices

116

When deciding on which supermarket use, how important is location of store


Cumulative

Percent

1 - Very Important 21 21.0 21.0 21.0

2 29 29.0 29.0 50.0

3 19 19.0 19.0 69.0

4 13 13.0 13.0 82.0

5 9 9.0 9.0 91.0

6 5 5.0 5.0 96.0

7 3 3.0 3.0 99.0


Valid

Total 100 100.0 100.0

When deciding on which supermarket use, how important is quality of service and staff helpfulness


Cumulative

Percent

1 - Very Important 12 12.0 12.0 12.0

2 14 14.0 14.0 26.0

3 24 24.0 24.0 50.0

4 19 19.0 19.0 69.0

5 13 13.0 13.0 82.0

6 8 8.0 8.0 90.0

7 6 6.0 6.0 96.0


Valid

Total 100 100.0 100.0

Appendices

117

When deciding on which supermarket use, how important is loyalty card schemes


Cumulative

Percent

1 - Very Important 9 9.0 9.0 9.0

2 8 8.0 8.0 17.0

3 7 7.0 7.0 24.0

4 16 16.0 16.0 40.0

5 21 21.0 21.0 61.0

6 12 12.0 12.0 73.0

7 16 16.0 16.0 89.0


Valid

Total 100 100.0 100.0

When deciding on which supermarket use, how important is product range and presentation


Cumulative

Percent

1 - Very Important 25 25.0 25.0 25.0

2 19 19.0 19.0 44.0

3 12 12.0 12.0 56.0

4 14 14.0 14.0 70.0

5 15 15.0 15.0 85.0

6 4 4.0 4.0 89.0

7 9 9.0 9.0 98.0


Valid

Total 100 100.0 100.0

Appendices

118

When deciding on which supermarket use, how important is overall store layout and appearance


Cumulative

Percent


2 9 9.0 9.0 10.0

3 12 12.0 12.0 22.0

4 13 13.0 13.0 35.0

5 18 18.0 18.0 53.0

6 27 27.0 27.0 80.0

7 11 11.0 11.0 91.0


Valid

Total 100 100.0 100.0

When deciding on which supermarket use, how important is in‐store promotional magazine and flyers


Cumulative

Percent


2 1 1.0 1.0 2.0

3 2 2.0 2.0 4.0

4 5 5.0 5.0 9.0

5 8 8.0 8.0 17.0

6 14 14.0 14.0 31.0

7 18 18.0 18.0 49.0


Valid

Total 100 100.0 100.0

Appendices

119

When deciding on which supermarket use, how important is money off coupons/vouchers and special promotions


Cumulative

Percent

2 2 2.0 2.0 2.0

3 4 4.0 4.0 6.0

4 8 8.0 8.0 14.0

5 14 14.0 14.0 28.0

6 25 25.0 25.0 53.0

7 29 29.0 29.0 82.0


Valid

Total 100 100.0 100.0

Frequency of respondents who own and use another loyalty card including the Tesco Clubcard


Cumulative

Percent

1 other card 28 28.0 28.0 28.0

2 other cards 45 45.0 45.0 73.0

3 or more other cards 10 10.0 10.0 83.0

I only own a Tesco Clubcard 17 17.0 17.0 100.0

Valid

Total 100 100.0 100.0

Appendices

120

Frequency of respondents who read the Clubcard magazine


Cumulative

Percent

Yes 25 25.0 25.0 25.0

No 49 49.0 49.0 74.0

Sometimes 26 26.0 26.0 100.0

Valid

Total 100 100.0 100.0

Respondents’ perception on the Clubcard magazine

Frequency Percent Valid Percent Cumulative Percent

It covers everything you would

expect and is of great use 8 8.0 15.7 15.7

It is a good read with some

informative articles and features 23 23.0 45.1 60.8

It is dull, unhelpful and of no use 20 20.0 39.2 100.0

Valid

Total 51 51.0 100.0

Missing System 49 49.0

Total 100 100.0

Appendices

121

The amount of points per every £1 spent respondents thought they were receiving


Cumulative

Percent

1 point for every £1 52 52.0 52.0 52.0

2 points for every £1 10 10.0 10.0 62.0

5 points for every £1 9 9.0 9.0 71.0

10 points for every £1 29 29.0 29.0 100.0

Valid

Total 100 100.0 100.0

Frequency of respondents who increase expenditure or purchased specific/alternative products in the pursuit of collection points


Cumulative

Percent

Yes 6 6.0 6.0 6.0

No 76 76.0 76.0 82.0

Don't Know 18 18.0 18.0 100.0

Valid

Total 100 100.0 100.0

Frequency of respondents who have redeemed any rewards from the Clubcard scheme within the last 12 months


Cumulative

Percent

Yes 61 61.0 61.0 61.0

No 39 39.0 39.0 100.0

Valid

Total 100 100.0 100.0

Appendices

122

Frequency of respondents who would describe themselves as being loyal


Cumulative

Percent

Yes 36 36.0 36.0 36.0

No 58 58.0 58.0 94.0

Don't Know 6 6.0 6.0 100.0

Valid

Total 100 100.0 100.0

Frequency of respondents who would describe themselves as being a satisfied Tesco customer


Cumulative

Percent

Yes 54 54.0 54.0 54.0

No 29 29.0 29.0 83.0

Don't Know 17 17.0 17.0 100.0

Valid

Total 100 100.0 100.0

Frequency of respondents who would continue to shop at Tesco if they did not have the Clubcard scheme in place


Cumulative

Percent

Yes 95 95.0 95.0 95.0

No 3 3.0 3.0 98.0

Don't Know 2 2.0 2.0 100.0

Valid

Total 100 100.0 100.0

Appendices

123

Frequency of respondents who trust Tesco products and their image


Cumulative

Percent


Agree 47 47.0 47.0 68.0

No Opinion 10 10.0 10.0 78.0

Disagree 16 16.0 16.0 94.0


Valid

Total 100 100.0 100.0

Frequency of respondents who think that Tesco is very innovative


Cumulative

Percent


Agree 63 63.0 63.0 75.0

No Opinion 22 22.0 22.0 97.0

Disagree 3 3.0 3.0 100.0

Valid

Total 100 100.0 100.0

Frequency of respondents who usually shop around to get the best deals


Cumulative

Percent


Agree 32 32.0 32.0 60.0

No Opinion 10 10.0 10.0 70.0

Disagree 22 22.0 22.0 92.0


Valid

Total 100 100.0 100.0

Appendices

124

Frequency of respondents who expect rewards to be a part of their normal shopping experience


Cumulative

Percent


Agree 50 50.0 50.0 60.0

No Opinion 30 30.0 30.0 90.0

Disagree 10 10.0 10.0 100.0

Valid

Total 100 100.0 100.0

Frequency of respondents who feel more could be done to increase their loyalty


Cumulative

Percent


Agree 72 72.0 72.0 77.0

No Opinion 14 14.0 14.0 91.0

Disagree 7 7.0 7.0 98.0


Valid

Total 100 100.0 100.0

Appendices

125

What more could Tesco do to make you more loyal


Cumulative

Percent

Improve facilities for elderly

people 10 10.0 10.0 10.0

Have discounts at the till

rather than rewards 22 22.0 22.0 32.0

Help those without transport 14 14.0 14.0 46.0

Improve store layout 2 2.0 2.0 48.0

Faster checkouts/self service

checkouts 10 10.0 10.0 58.0

More Clubcard points per

pound 4 4.0 4.0 62.0

Increase product range 12 12.0 12.0 74.0

Increase store promotions 3 3.0 3.0 77.0

More store entrances and

exits 3 3.0 3.0 80.0

Increase Clubcard rewards 3 3.0 3.0 83.0

Improved on-line shopping 16 16.0 16.0 99.0

Improve Clubcard

administration 1 1.0 1.0 100.0

Valid

Total 100 100.0 100.0