Understanding Business Models and Customer Loyalty

This assignment delves into the realms of business models and customer loyalty. It examines influential theories and frameworks related to both topics, drawing upon seminal works from scholars like Chatterjee, Dorotic, Dowling, and Verhoef. The focus extends to understanding the value proposition concept in marketing, the role of sales promotion, and the significance of corporate reputation. Additionally, the assignment explores the dynamic relationship between customer loyalty programs, brand equity, and customer lifetime value.

A study of the factorsA study of the factors
responsible for success ofresponsible for success of
TESCO's loyalty programs inTESCO's loyalty programs in
contrast to that of thecontrast to that of the
competitors' which have notcompetitors' which have not
been successfulbeen successful

Table of Contents
PART A...........................................................................................................................................1
Title .................................................................................................................................................1
INTRODUCTION...........................................................................................................................1
Research Aims and Objectives....................................................................................................1
Research Questions.....................................................................................................................1
Rational of the study........................................................................................................................2
What is the research issue?.........................................................................................................2
Why is it an issue?.......................................................................................................................2
Why is it an issue now?...............................................................................................................3
What could this research highlight?............................................................................................3
Importance of this research?.......................................................................................................3
LITERATURE REVIEW................................................................................................................4
RESEARCH METHODOLOGIES.................................................................................................7
Research philosophies.................................................................................................................7
Research Design..........................................................................................................................7
Data Collection Methods.............................................................................................................7
Sampling Method........................................................................................................................8
Data Analysis..............................................................................................................................8
Ethical Consideration..................................................................................................................9
TIME TABLE..................................................................................................................................9
REFERENCES..............................................................................................................................11

PART A
Title
A study of the factors responsible for success of TESCO'S loyalty programs in contrast to that of
the competitors' which have not been successful.
INTRODUCTION
Organisation which are working a big level are having a huge need to be loyal to their
customers which can help to them to be successful in their targeted market. Loyalty programmes
are conducted by companies to reward their loyal customers which are regular to buy their
products. these loyalty programmes supports and gives an honour to respected customer of an
organisation. This research proposal is based on the TESCO which is the leading organisation of
the grocery retail market, they are having a more than 27% which shows that they are having a
huge data base of customers which support them in to their sales (Vanhamme and et. al., 2012).
This research is based on the success of loyalty programmes which support them a lot to involve
new customers and retain old consumers. This report will also shows the types, importance of
loyalty programmes to understand on this topic.
Research Aims and Objectives
Aim: This research will aim on factors which helps in the success of the loyalty programmes of
TESCO which ignored by it's rivalry organisation.
Objectives:
 To analyse the effectiveness of the loyalty programmes which are adopted by TESCO.
 To identify the factors that contribute in order to implement loyalty programmes as
compare to their competitors companies.
 To identify the impact of loyalty programs of TESCO on customers in contrast to their
competitors.
 To recommend TESCO, to consider some more factors to be more effective in loyalty
programmes.
Research Questions
1. Which type of loyalty programmes used by the TESCO and their effectiveness?
2. What factors are involved behind the success of loyalty programmes of the TESCO?
1

3. What are the factors of loyalty programmes supported to TESCO in contrast with
rivalries?
4. How the TESCO can be more effective to implement a better loyalty programmes in their
future?
Rational of the study
What is the research issue?
This research is based on the loyalty programmes which helps to the company to be more
effective to their customers to retain them for a longer time which can help to them to increase
their sales by retaining their old customers and involving new consumers. Research is based on
those factors which are used and consider by the TESCO which helps them a lot to implement
successful loyalty programmes (Peppard and Ward, 2016). It is essential for the company to
maker an effective program which can help to them to increase the interest of the customers in
these programmes to retain their old customers interest in their products and also to show that
their customers are precious for them. Most of the organisation which are working in the same
retail grocery sector are having some loyalty programmes but they are not successfully
implemented these as TESCO has used to be more successful in the retail sector.
Why is it an issue?
This is an issue for those companies which are having a huge investment in their business
so by these programmes companies wants to retain their customers which can help to them to
make a longer list of those employees which are taking their services for a long time. These kind
programmes provide an assurance to companies about their future which can help to them to
provide more better services and products to their targeted customers. Companies which are
having a vision to their future adopt these type of techniques by which they can increase their
customer data base which can help to them to promote their new products and services, by this
they can make communication with listed customers which can help to them to improve their
sales (Marshall, 2010). Loyalty programmes helps to establish customer acquisition because
many organisation are working a in sector and a purchaser can move to another company so by
this an organisation can retain their customers.
2

Why is it an issue now?
Market competition is high so it is essential for the organisation which are working in the
same sector to use their innovative ideas which can help to them to be successful in their targeted
market. It is essential for the companies which are using loyalty programmes to use their logical
thinking process which can help to them to understand the factors which can help to them to be
successful to implement a loyalty program and connect more customers with it. TESCO is a
market leader organisation and it is essential for them to retain their market leading tag by which
they can retain their position and improve it. This is the natural tendency of customers that they
want a newer things in their products and services (Chatterjee, 2013). So it is a major task for the
companies to manage their old consumers by creating valuable changes in their products and
services to retain them. This is a new concept of loyalty programmes which are adopted by many
companies to give a special benefit to their old customers and also to promote their business
among those which are also regular customers of the company.
What could this research highlight?
This research will highlight on those factors which helped to the TESCO to implement a
better loyalty program by making a proper analysis of the customers. It is essential for the
company to satisfy their customers by their products and services. Customer loyalty programmes
are related to the rewards for customers to being loyal for the company so this research will
highlight on the loyalty program used by TESCO. Cited organisation has used TESCO Club
Card for those customers which are loyal for the company. This research will provide factors
which helped to make a successful loyalty program for it's respected customers. Most of the
organisation which are working a with futuristic vision are using some loyalty programmes but
which are not much successful as TESCO Club Card will also discuss in this research (Dowling
and Moran, 2012). This report will make a reflection on the perfection of the TESCO on their
loyalty program which support them a lot to increase their market share.
Importance of this research?
This report will be significant for those organisations which wants to increase their
business. Most of the organisation which are working in the retail sector are having a huge
significant need of those techniques which can help to them to increase their market share and
sales. Also this research will help to TESCO and other companies which are using loyalty
program and wants to improve their loyalty program which can help to them to be more effective
3

for their customers. Also this research will help to companies to use an effective program which
can help to them to use an interesting loyalty program which is easier to understand for
customers and which can help to them to be more effective to retain customers for a longer a
time of period (Manning, 2013). This report cab help to those organisation which wants to
interact with new customers by their loyalty program schemes by which they can increase
customer data base in a short time of period.
LITERATURE REVIEW
As TESCO has used a consumer loyalty program which is named as a TESCO Club
Card, TESCO Group PLC is having several ventures and they are having a huge number of
customers which are regularly dealing with them. As cited organisation is working in different
sectors so it is essential for them to retain their old customer and include new customers. So they
have provided an option to their customers in all segments that they can be involved in this
scheme which will give them an adverse benefit. This is a point based scheme and in which
customer's get points for each of their purchase from the organisation, minimum 150 points are
required in this which can make able to a customer to purchase product from their grocery stores.
As it is an international organisation so they are having a differentiation in their purchase points,
customer in the UK which has saved more than 150 points are able to purchase three time of face
values. So this is an interesting schemes which helped a lot to TESCO to increase their number
of customers in their all types of business. It just having a need of login through their website in
this scheme which can help to them to increase their customers data base which can help to them
to promote their new products by using this data base.
According to Lemon (2013), customers are having their interest in their benefits which
can be in monetary terms and after selling services. As the TESCO has used their smart work in
this which helps them a lot to maintain the customer interest. Most of the organisation are using
customer loyalty schemes but it is not much effective as compare to this. It is an effective
programme for customers because they can easily logion in this scheme and generate their own
coupon which can help to them to get points on their purchase. Another thing is that they are
having a huge range of products in their grocery store and their customers which are able to use
these points can buy products from their grocery market.
As per the views of Verhoef (2013), it is essential for the organisation to go down in the
depth of the matter by which they can get the exact cause or point which can help to them to be
4

effective of that particular cause. As the organisation is working in the retail sector so it is
essential for them to use an effective programme which can help to them to be a market leader.
So they have used their Smart Work which helped them a lot to built a technique which can
help them to make a better customer loyalty program. A customer is highly focused to find out
those products which are having an extra benefit for it's users e.g. a consumer buy that product
which has an extra quantity and discount on rates (Gedenk, Neslin and Ailawadi, 2010). As they
are dealing in banking, finance and crude oil sector so they can provide an extra benefits
quantitative amount so they have used coupon system which helped to their customers to get
extra benefits points which provides consumers an extra point on each purchase for a particular
quantity in crude oil and getting a fixed amount as a loan from their banking and finance
services. So they can get an extra purchase of products by collecting minimum points which are
150 points. Analysis of expectations, they have made a proper analysis of customers to identify
the best profit which can help to them to retain their interest in the organisation. So they have
worked on this concept which supports them a lot to be effective for their customers by
providing them benefits in monetary terms. They are having a huge range of products which
attracts customers towards them so this is an effective or factor which is used by the TESCO.
Vision it is an another factor which has a huge impact on this program, as the TESCO is having a
huge investment in their business so they have developed a program by which they can entertain
their customers interest. This card concept it not used by several companies and interesting thing
is that all of their ventures get linked through this scheme. Promotions, They have used effective
promotions to promote this programme which helped them a lot to increase number of
customers. They have used effective promotional schemes which helped them to get involved
more people in this scheme. They have provided this scheme for newer customers and they can
make a direct login through their website.
Tesco is established various programmes that helps for attract more customers. Company
has used various promotion tools that helps to promote and advertise their product and achieve
profitability and productivity in near future. They use various loyalty schemes that are beneficial
for customer (Hassan, 2012). They established various facilities to their target customer in term
of discounting offer, incentive schemes etc. Recently they launched the club card scheme in
which they attract more customer toward us. The main motive of company is to develop the
customer loyalty programme is to gain sustainable competitive advantage. Company has
5

designed marketing programme that helps to increase their goodwill and brand loyalty. Business
has established this programmes that encourage loyal buying behaviour which is most beneficial
to form. A loyalty programme also provide customer to access in advance of new product, sales
coupon and free merchandising. This help to increase the customer retention and customer
satisfaction level. This build the retention rates that provide incentives for customers to purchase
more frequently (Dorotic, Bijmolt and Verhoef, 2012). Most of the organisation used reward
system to attract and retain more customers. More customers are immediately redeem their
points into free services. Loyalty preprogrammes not only works for increase organisation
goodwill but also increase the customer habits and preference. Company mainly focus for
establishment of this programmes, so more customers are attracted toward products and services.
It increase the customer happiness and retention. The main am of company to launched this
programme is to collect all information about its target customer. This programmes is mainly
used by retail business.
TESCO can be more effective in this program by using more smart work in their
programme. As they are providing cards to their customers for shopping but as they are having a
minimum limit of 150 points so they have to decrease this limit which can help to them to
increase their number fop customers. Most of the customer can not reach on this limit so it6 is
essential for them to provide more benefits to more number of customers which can help to them
to increase number of satisfied customers. Decrease in the points can help to them to improve
number of customers which are taking this benefit so by this they can provide m,ore customer
satisfaction to a large number of consumers which can help to them to attract more new
customers (Kumar and et. al., 2013). Another thing is that they can provide an another benefit
that they can give access to them to cash their points although they can make some change in the
face value. A large range of benefits can help to them to attract more customers. Monetary
benefits are having a higher customers attraction power so they have to use it and they have to
provide monetary profits to their new and old consumers. Customers can use these coupon
benefits in the same sector in which they are taking services of TESCO. As a customers which
are taking financial services can use these points in their loans by which they can take an
advantage in the amount paid to organisation.
6

RESEARCH METHODOLOGIES
Research philosophies
Research philosophy can be simply defined as belief, supposition and values of scholarly
person for the present topic. There are mainly two kinds of research philosophy namely
interpretivism and positivism. In this report researcher are using interpretivism philosophy
because it is reflecting on the single fact with large number of facts (Vanhamme and et. al.,
2012). Furthermore this philosophy is greatly impacted by the method of enquiry which will be
performed in this study. Taking interpretivism philosophy is proved to be very helpful as this
assist in acquiring valid result for the present topic. It will be effectual for the researcher in
respect to sound perceptive regarding to their effectiveness of the customer loyalty program.
Research Design
It is a process which can help to the researcher to make a pro0per format of their research
by which analyser can get actual finding on their topics. Research design is a format in which
researcher has to present their research which is easier to reader to get the exact meaning of their
research. This research will be based on the descriptive research design method which can help
to researcher to conduct and it can help to researcher to get informations easily which can be
taken by different sources. It is essential for the researcher to get a valid outcome from the
research so this descriptive research design will support in this to make a better research on the
research aims and objectives. As this research is based on the organisation which are working on
high level so it is essential to provide a brief description on each objective which can be
accomplish by this research.
Data Collection Methods
Collection of information can be done by using two methodologies namely primary nad
secondary. In this project, both of the methods are used in order to collect data. Primary methods
are those whereby new data is gathered which has not be published before. On the other hand, in
the secondary type, those data are taken which are already published by variours authlors in
different books and journals, etc (Peppard and Ward, 2016). There are various methods of
gathering primary data such as survey, interview, questionnaires, etc. In this report, researcher
are using survey method for gathering the data whereby questions are asked by the workers of
Tesco. On the contrary, the secondary data are gathered via books, newspaper, internet, etc. In
7

this project, researchers have taken help of books and journals for accumulating the relevant
data. Apart from this, there together existed other efficient need of taking an interview in order
to consider the views of Tesco's frontline managers. This will be performed by conducting
interview of 6 managers of Tesco, UK.
Sampling Method
There are mainly two types of sampling method namely probabilistic and non-
probabilistic. In this current report, non-probabilistic sampling methodology are being used
whereby purposive method of sampling would be used for conducting both interviews and
surveys. In current scenario, 50 workers of cited organisation will be selected. A survey will be
done on these employees in order to get their reviews about the matter. They will be selected
randomly but one person from every department will be called for this process. Random
sampling is considered as one of the most easy method because it candidates are chosen by
researchers without making any pattern or system. By adopted this approach, cited organisation
completed their task in short period of time (Marshall, 2010). 6 managers were also called for
interview, they have better understanding of the whole programme so face to face
communication is necessary for understanding their views. Sometime people do not like to speak
about some issues but one can understand their problem by analysing their body language.
Interview is considered as one of the most effective method as it can provide lot of information
in short period of time. Involvement of both employees and manager is necessary, worker have
ground knowledge of every matter so their options is significant, on the other hand manager are
considered as channel of communication so they have better understanding of the whole
programme.
Data Analysis
Their are two types of data, first is primary and other one is secondary. They can be collected by
Qualitative or quantitative techniques. Both methods have their own importance and shorting.
Quantitative is represented in the term of numbers, it is further analyse by using various formulas
of statistics. Qualitative is completely different from recently mentioned method. It is based on
experience of particular which can be presented in form like good or bad etc. In this report
qualitative technique is used, all the information are represent in non-numeric form. Thematic
analysis is the most significant technique for evaluation of data, different themes are prepared
from the information obtain from various sources. This approach is known for its effectiveness, it
8

covers all the areas which are significant for data analyse and ignore all the the unnecessary data
which has no connection research.
Ethical Consideration
Ethics are very important at the time of conducting a research. Incidents like favouring one side
or presenting wrong information is considered as unethical. People who are conducting research
should take complete interest in the project, they should try to cover all the areas which are
necessary for the task. If they do not give proper attention to the project than they can miss some
useful information that can hurt them in upcoming time (Chatterjee, 2013). They have to take
care about the feeling of participants and they should not judge them for their option or reviews.
They should represent the actual reason of the research to the workers and manager, if they ask
them questions by creating wrong or negative image in their mind than this will be considered as
an unethical act. Researcher do not contain any personal question which do not have any
connection with topic. Ethics are essential for earning the trust of participant so they can give
correct option and reviews and take full interest in this whole process.
TIME TABLE
9

10

REFERENCES
Books and Journals
Chatterjee, S., 2013. Simple rules for designing business models. California Management
Review. 55(2). pp.97-124.
Dorotic, M., Bijmolt, T.H. and Verhoef, P.C., 2012. Loyalty programmes: Current knowledge
and research directions. International Journal of Management Reviews. 14(3). pp.217-
237.
Dowling, G. and Moran, P., 2012. Corporate reputations. California Management Review. 54(2).
pp.25-42.
Gedenk, K., Neslin, S.A. and Ailawadi, K.L., 2010. Sales promotion. In Retailing in the 21st
Century (pp. 393-407). Springer Berlin Heidelberg.
Hassan, A., 2012. The value proposition concept in marketing: How customers perceive the
value delivered by firms–A study of customer perspectives on supermarkets in
Southampton in the United Kingdom. International journal of marketing studies. 4(3).
p.68.
Keller, K.L., Parameswaran, M.G. and Jacob, I., 2011. Strategic brand management: Building,
measuring, and managing brand equity. Pearson Education India.
Kumar, V and et. al., 2013. Establishing profitable customer loyalty for multinational companies
in the emerging economies: a conceptual framework. Journal of International
Marketing. 21(1). pp.57-80.
Manning, L., 2013. Corporate and consumer social responsibility in the food supply chain.
British Food Journal. 115(1). pp.9-29.
Marshall, N.W., 2010. Commitment, loyalty and customer lifetime value: Investigating the
relationships among key determinants. Journal of Business & Economics Research.
8(8). p.67.
Peppard, J. and Ward, J., 2016. The strategic management of information systems: Building a
digital strategy. John Wiley & Sons.
Vanhamme, J and et. al., 2012. To do well by doing good: Improving corporate image through
cause-related marketing. Journal of business ethics. 109(3). pp.259-274.
Verhoef, P.C. and Lemon, K.N., 2013. Successful customer value management: Key lessons and
emerging trends. European Management Journal. 31(1). pp.1-15.
Online
Loyalty reward programmes: Which are the best and why?, 2013. [Online]. Available Through:
<https://www.mycustomer.com/experience/loyalty/loyalty-reward-programmes-which-
are-the-best-and-why>. [Accessed on 21 August 2017].
11