Understanding and Engaging in the Customer Experience

Understanding and Engaging
in the Customer Experience

Contents
INTRODUCTION...........................................................................................................................3
COMPANY BACKGROUND........................................................................................................3
TESCO PLC Ltd.:........................................................................................................................3
CUSTOMER VALUE.....................................................................................................................4
1. Factors affecting customer value:............................................................................................5
SERVICE QUALITY....................................................................................................................13
1. SERVQUAL Model:.............................................................................................................14
2. Gap Model of Service Quality:..............................................................................................17
CONCLUSION..............................................................................................................................20
REFERENCES..............................................................................................................................21

INTRODUCTION
Customer experience can be defined as the outcome of a customer’s interaction with any
company or organisation over a period of time (Šambronská, 2013). It is a very subjective matter
and is influenced by many factors which contribute to the perceived value of the product for
customers. In the following project report, an attempt has been made to identify the factors
which impact the potential of maximising the customer value for TESCO. TESCO is a leading
chain of grocery retail stores which was founded in the year 1919 by Jack Cohen. The following
project report aims to evaluate the effectiveness of quality systems of TESCO in meeting the
customer requirements.
COMPANY BACKGROUND
TESCO PLC Ltd.:
TESCO, one of the leading grocery retailer in United Kingdom, was founded in the year
1919 by Jack Cohen. The company has a huge chain of supermarket stores in not just UK but in
more than 7 countries. It is also one of the largest food retailer in the world. Initially, the
company was started with a small grocery store but over the years, the operations of TESCO has
expanded to a variety of product ranges and even services. The company is the leader in the
supermarket retail industry in UK with a market share of approximately 27% which is much
higher when compared with any of its competitors (Chowdhury, 2016). Company majorly faces
competition from other grocery retail stores such as Sainsbury’s, Morrisons etcetera. The annual
revenue of the company in the year 2019 was estimated at $75.6B and the number of employees
were more than 4,60,000. TESCO had 6800 shops worldwide in the year 2019 which accounts
for the widely spread operations of the supermarket giant. The company offers a wide range of
products to its customers varying from household products to daily food essentials.

Source: https://www.tescoplc.com/sustainability/sourcing/top-20/
Both the online and physical stores of the company are estimated to serve about more than
million customers per week which makes it imperative for the company to understand the
importance of customer relationship management and maximise the potential value of its
products and services for the customers. Customer relationship management can be defined as
the management approach at interacting with current and potential customers of a business with
an aim of obtaining long-term sales growth. Customer relationship management aims to develop
long-term positive relations with the customers which helps a company to maintain its
competitive position in the industry and increase the value of customer satisfaction. Customer
satisfaction comes from the personal experience of the customer. Customer experience can be
defined as the perceived result of the experience of a customer with an interaction with any
brand. Customer experience is one of the most important factors which determine the long-term
relationship between the company and its customers. A detailed analysis of customer value and
experience is being done in the following sections of the report.
CUSTOMER VALUE
Customer value can be defined as a concept which is used to determine the sum total of all
the benefits as perceived by the customer upon consumption of a product or service. It is a term
used to determine the worth of a product or service for any customer. Customer value is the
outcome of customer experience. Over the years, business environment has changed completely
with the number of people being involved in the manufacturing or service sector ever-increasing.

This change or trend in business environment has increased the importance of customer value as
a concept for business managers and organisations in effectively shaping the nature of their
operations and financial performance of the company (Peeroo, Samy and Jones, 2016). An
organisation’s value perception usually becomes least important in determining the sales of a
product or service and this is where customer value dominates in influencing operations in every
industry whatsoever. Arguably, the sales or popularity of a product is not based on the
management perception of its values but the perceived benefits and advantages of using that
product in the minds of customer is what really determines the sales potential. Hence,
understanding the nature of customer behaviour and customer value becomes an important job of
managers of every business organisation in any industry. From this context, it is imperative for
the management of TESCO Ltd. to understand that customer value is a very subjective matter
and can only be influenced, never controlled. Identifying what drives a customer is important for
comprehension of the customer value.
1. Factors affecting customer value:
Every organisation makes efforts to maximise the customer value associated with its
offerings so that the competitive edge can be maintained. Here are a few important factors or
dimensions which needs to be considered for maximisation of customer value:
Products:
Product specification and description is one of the most important determinant of
customer value. A product which is being offered by any company or organisation should be in
compliance and similarity with the customer requirements and needs. Identifying the needs of the
customer and creating a product which has the potential to fulfil and satisfy customer needs is an
important task which adds to the customer value. Identical products may have different perceived
value for different groups of customer so it becomes necessary for a business organisation to
determine the target group or potential customers to clearly establish the customer expectation
from a product. Creation of a customer persona is a technique which helps the business
organisations to figure out ways in which customer value can be improved.
For the purpose of maximisation of customer value, TESCO has taken some great
initiatives by offering products which hit the sweet spot of customer requirements. The
management of the company keeps bringing new innovations to the existing product lines which
helps to further increase the value associated with the product. The vast range of product being

offered by the company is the testimony to the fact that customer value is an important criterion
in taking management decisions by the company (Vu, 2016). The company recently launched a
new range of organic food items with an objective of catering to the changing needs of healthy
food items with high nutritional contents of customers as more and more people are becoming
aware of the health issues and concerns. I believe that as far as the product requirement and
specification is considered, TESCO is doing a great work in offering products according to the
changing needs of the consumer. The company is also conducting regular feedbacks to ascertain
the likelihood of its products in fulfilling the demands and needs of consumer. As per my view,
TESCO certainly deserves a high rating when it comes to the product requirements dimension of
customer value as the company offers a large range of products which is expanding at a rapid
pace.
Source: https://www.tesco.com/groceries/en-GB/products/252380883
Ranking:
According to me, I will rank TESCO 9/10 for its products which are according to the
specification and customer requirement such as organic food products. I will give 8/10 to
Sainsbury’s and 8/10 to Aldi because they are also offering products as per market demand.
Price:
Price can be defined as the amount which a customer has to pay in order to avail any
service or consume any product. It is another dimension which has an important role to play in
maximising customer value of products (Ihtiyar and Ahmad, 2012). If the price of a product is
higher than the perceived value of benefits for any consumer, it negatively affects the customer
value and if the price of a product is less than the perceived value of benefits for the consumer,