Analysis of Customer Value and Experience for TESCO (Marketing Report)

This report provides a detailed analysis of customer value and customer experience within the context of TESCO, a leading grocery retailer. It begins with an introduction to customer experience and its impact on customer value, followed by a company background of TESCO. The report then delves into the concept of customer value, identifying key factors that influence it, such as products, price, quality, and brand. It also examines TESCO's strategies related to these factors, including product offerings, pricing promotions, and quality control measures. The report further explores service quality using the SERVQUAL and Gap models to evaluate TESCO's effectiveness in meeting customer requirements. The analysis includes rankings and comparisons with competitors like Sainsbury’s and Aldi. The report concludes with an overview of the key findings and insights into maximizing customer value and satisfaction for TESCO.

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,

customer value increases massively. Even a slightest variation between the price and the
customer’s perceived value of benefits of a product or service has major impacts on customer
value in total. Price-optimisation tools are used by management to determine the relative demand
at different price levels and a level where maximisation of organisational goal is possible is
selected as the market price.
To increase the position of price dimension in company’s favour, TESCO frequently
makes use of various tools for sales promotion such as cash discounts, buy one get other at 50%
discount etcetera to increase the price value embedded in the products for the customer. The
policies which are being adopted by the company for pricing of the products clearly states out the
mission of the company to ensure that no one can beat it when it comes to monetary value of
products. As per my personal opinion, the price-value associated with the products is very high
as most of the products have a lot to offer as compared to the price which is further reduced with
the help of promotion tools. However, the company has recently increased the prices for a lot of
its products which is affecting the customer value negatively and the management of the
company has to take steps to control the damage being caused to customer value and experience
as a result of price hikes.
ITEMS TESCO SAINSBURY’S ALDI
Semi-skimmed Milk (4 pints) £1.10 £1.10 £1.09
Soft-white Farmhouse Bread (800g) £1.55 £1.45 £0.72
Orange-juice (1litre) £1.29 £1.40 £0.76
Fusilli (500g) £0.59 £0.60 £0.47
Medium-free range British Eggs (6) £0.90 £1.10 £0.79
Toilet Roll (4 pack, 2 ply) £2.65 £2 £1.59
Butter (500g) £1.90 £2.20 £0.76
Total £9.98 £9.85 £6.18
(Source:https://www.lovemoney.com/news/86638/tesco-metro-sainsburys-local-aldi-
convenience-store-essentials)
Ranking:
I will give 8/10 to both TESCO and Sainsbury’s and 10/10 to Aldi for prices as per my
experience. I think that products of TESCO and Sainsbury’s are overpriced when compared to
competitiors such as Aldi.

Quality:
Offering a wide range of products and offering a wide range of quality products are two
different things which define the importance of quality of a product or service in influencing the
customer value. Quality can be defined as the features or characteristics of a product or service
which differentiates it from the other products or services being offered in the market. Goods of
high quality often help in maximising the customer value and undermine the importance and
influence of other dimensions such as price (lal Bhardwaj, 2012). Quality is a relative concept
and hence it is difficult to define a fixed standard or benchmark which could have the potential to
meet any demand or situation. Thus, it is important for product managers to ensure that best
efforts are being put to increase the quality of the product while considering the other factors or
dimensions of customer value.
TESCO is a company which strongly emphasize the need to deliver the products of best
quality to the customer for increasing the customer satisfaction and value. The management of
the company has been making sure to formulate policies which help the company to produce
better quality products at a competitive prices. Approaches such as six sigma and total quality
management are being followed to adhere to the quality requirements of the customers
Ranking:
I have always liked the quality of products at TESCO so I will give 9/10 to TESCO for quality
and to Sainsbury’s I will give 9/10 also and to Aldi I will give 8/10 because sometimes I was not
satisfied with the quality of their products.
Brands:
Brand can be defined as anything such as logo, name or design which helps in
differentiating the goods of a particular seller or manufacturer from other goods in the market.

Value of a brand also has a major impact on the overall customer experience and satisfaction.
Customers are likely to associate themselves with a brand which has a high value and the mere
association with a highly-valued brand gives them an immense amount of satisfaction and
increases the richness of their experience (Siami and Gorji, 2012). Consumer relationships with
particulars brand is a testimony of the impact brand value has on development of customer
relationships and influencing customer value. Brand helps a firm to differentiate itself from its
rivals or competitors.
Source: https://www.marketingweek.com/tesco-shifts-marketing-focus-to-value/
TESCO is one of the highest valued brand in the United Kingdom and also stands strongly
in the worldwide group of highest-valued brands. It can be observed from the above graph that
the management of the company has shifted their focus towards building a brand of great value
in the past few years which has also changed the customer satisfaction levels. A brand which has
a high-value is able to gain the trust of the customer and having a positive customer attitude
helps significantly in subconsciously improving the quality of customer experience and the
perceived value by the customers. I think that the strategies which the company has adopted for
branding has helped significantly in building a better brand image and as a result, customers are
more likely to associated themselves with TESCO and enjoy greater level of satisfaction. Some
of the most effective strategies around building a better brand image has been of ‘every little
helps’ and ‘exclusively at TESCO’. Under the first strategy of the company, focus was laid on
giving to society by contributing in terms of little helps that matters. The next strategy of the
company focused on offering an entire range of products which were available only at TESCO

which gives the leverage of attracting more consumers by targeting potential customers. The
level of satisfaction and customer value increased evidently as a consequence of improving the
brand value. I think it can be concluded that brand value is one of the important factor which can
have an impact on maximising customer value.
(Source: https://www.which.co.uk/news/2019/02/best-and-worst-supermarkets-for-2019/)
Ranking:
I will give 8/10 rating to TESCO for brand value as there is a scope of improvement. I will give
9/10 to Sainsbury’s and 10/10 to Aldi because both the companies are taking necessary steps for
establishing a strong brand.
Value-adding services:
Value-adding services as the name suggests are services which are being offered by
companies or business organisations with the objective of increasing the worth and benefits of
using a product or availing any service. Value-adding services have the objective of providing
additional value and benefit to the customer other than the benefits associated with the product
(Vorasaiharit and Thawesaengskulthai, 2016). These are services which are not the core
competency of the organisation but an additional provision for increasing the customer
satisfaction and enhancing consumer experience. For example, after sales services, home-
delivery, online shopping etcetera. These services generally increase the convenience for the user

or customer in some way or the other. Understanding the importance of providing services which
adds to the value of a product is necessary for managers to enhance the customer experience and
satisfaction.
TESCO has been making changes in its policies and started offering additional services
which are very impactful in increasing the overall customer satisfaction and experience. The
company has recently launched an online platform where customers can shop very conveniently
by the help of few clicks. Provision of shopping online is very impactful in increasing the
perceived value of products and services. The company website is a very efficiently designed
platform where the customer can shop without any complexities and it adds to the overall value
of the products. I believe that the provision of bulk shopping – offering a wide range of products
under one roof and online shopping is a very effective way which has improved the experience
and satisfaction levels drastically for me and many others.
Source: https://www.carolinemayling.com/2013/08/tesco-malaysia-online-shopping.html
Ranking:
Because of TESCO’s online shopping facility, I will give 9/10 to TESCO for value-added
services and 8/10 to Sainsbury’s and 9/10 to Aldi because it is also developing such services.
Customer-relationship:
Customer-relationship can be defined as the connection between the customers and the
company. Relationship of a company with its customers influences the satisfaction level and
experience of the customer. Managers of business organisations are taking measures to develop a
long-term relationship with the customers to obtain stable future-sales. Many a times, a customer
is influenced to buy the product of any particular brand or company on the basis of his prior
experience and the relationship which has been developed with the company (Dinçer, Yüksel and

Pınarbaşı, 2019). It takes a significant amount of time and effort to develop long-term
relationships with the customers but the relevance and importance of customer-relationship in
influencing buying decisions and perceived value can hardly be doubted.
TESCO implemented a loyalty card program to enable the customers to avail discounts
when they shop for multiple times with the company. It is one of the best measure which is being
used by the company for relationship management and developing long-term relationships.
Loyalty card program help TESCO to also obtain important data regarding the demographics of
its customers which helps in further strategy formulations. I think that the loyalty card program
increases the perceived value of products for the customers of TESCO as the customer gets
entitled to a discount in future on the purchase of products from the same brand. It helps in
increasing sales for the company and at the same time helps in increasing customer satisfaction
levels. As per my opinion, along with loyalty card program, the management of the company
should take measures to strengthen the position of survey and feedback channels of the company
which could result in better grievance handling and increase the satisfaction level of customer
and build long-term relationships.
Source: https://eternalsunshineoftheismind.wordpress.com/2013/03/05/tesco-the-crm-champion/
Ranking:
Based on my personal experience, I think TESCO is taking some serious steps for CRM such as
club cards which are better than any of its competitors. Hence, I will give 9/10 to TESCO and
8/10 Aldi and 7/10 To Sainsbury’s.
SUMMARY TABLE:
DIMENSION TESCO ALDI SAINSBURY’S
Product 9 8 8
Price 8 10 7
Quality 9 8 9