The Impact of Consumer Loyalty on Demand Management at Tesco

This literature review examines the critical role of consumer loyalty in demand management within Tesco, a major player in the UK retail market. The review begins with an overview of the retail sector's significance in the UK economy, highlighting the challenges and opportunities faced by Tesco, including competition from other brands and the impact of Brexit. The core of the review explores the importance of consumer loyalty, defining it as the extent to which consumers repeatedly purchase from Tesco. It discusses the factors influencing consumer loyalty, such as customer satisfaction, positive emotions towards the brand, and consistent product quality. The review also delves into the practical application of consumer loyalty, emphasizing its impact on demand forecasting and management. It further explores various strategies through which Tesco can foster emotional connections with its consumers, improve customer retention, and ultimately, enhance its profitability. The review also touches upon the influence of promotional activities and pricing strategies on consumer demand, providing a comprehensive analysis of the subject.

Thesis- Literature Review

Table of Contents
INTRODUCTION...........................................................................................................................2
3. LITERATURE REVIEW............................................................................................................4
3.1 Overview...............................................................................................................................4
3.3 Effectiveness of consumer satisfaction in improving demand management .....................14
3.4 Different ways through which Tesco plc can create an emotional attachment with
consumers .................................................................................................................................19
3.5 To investigate the influence of promotion and lowering price on demand of Tesco's
product and services."...............................................................................................................20
CONCLUSION..............................................................................................................................21
REFERENCES .............................................................................................................................22
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INTRODUCTION
In UK business market retail sector play a most significant role for the economic growth.
As per the statistics, UK retail market has generated 395 billion Euros and in 2018 retail
businesses housed around 319,000 (Hood, Clarke and Clarke, 2016). It has been analyzed that,
UK retail market is generating good results in terms of growth and results. But on the other side,
for retail sector 2018 was filled with lots of turbulence and disruption and opportunities. The
challenges faced by retail sector in 2017 were very difficult in terms of disturbances and
ineffectiveness. Industry has faced challenging effects in terms of consumer spending, falling
consumer confidence and weaker sterling. Besides, resale price maintenance were also removed
in 2014. Apart from that it may rise the long term market in an appropriate manner. However the
present research will be base on TESCO to analyze their importance of consumer loyalty on
demand management.
In terms of talking about the clothing section so clothing retailers faced somewhat
challenging operating conditions over the past five years. Clothing prices have fallen recently
due to persistent price or due to price competition (Perikleous and et.al., 2018). TESCO or Retail
sector of UK is highly competitive where they face competition of other brands such as M&S,
H&M, Primark, Zara etc. All these brands enhance the level of competition in the market. It
brings lack of inconsistency in between the company which might affect the overall businesses.
Britain's retail market were dominated by the super marker such as Tesco, Sainsbury, Asda,
Morrison etc.
All retailer no matter what sector they work in face to face challenges and burdens on
their business. In terms of innovation and development technology factor is more helpful and
leading to turn retailers to turn the tide, experts have told the telegraph with many now
combining online and offline, digital and physical to survive in turbulent times. Brexit is the term
which has been created several challenges for the UK market (Jin and Cedrola, 2016). On the
other sides, retail sector also introduced new offers and technologies for the betterment such as
online shopping around 17ps of retail in the UK in April 2018 (Retail in Britain: the past 12
years 2007, 2018). Online technologies also help retail market with the help of Office Of
National Statistics figures reveal which still a fraction of the total but regarded as a growing
threat to the British high street.
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In other words, retail market is the most convenient sector where businesses like TESCO
has to take care the needs and wants of the customers in high extend manner. In other words, the
role of customer loyalty makes very significant result on the business growth. Retail sector has
been increasing the level of services to achieve the level of competition in the market. On the
other hand, in retail sector there are high competition in the market due to which company has to
develop new services or products to meet the market opportunity (Birkin, Clarke and Clarke,
2017). It helps to motivate the business channel and development result to take the better
effective growth. This helps to bring the management sources which makes businesses more
profitable and challenging.
In the economy of UK, TESCO plays a very dynamic role in competitive market.
Customers are either attracted by general sales discounts or by discounts offered in a particular
manner. On the contrary, in this sector, competitive level is very high which affect the business
into the long term process in terms of makes the leading work (Burnette, 2015). Also, it is widely
accepted that the customer satisfaction increases the customer retention and boosts the
profitability of businesses. Retail market is the most competitive market as compare to other
market growth that affect the overall industry and growth.
This sector involves high range of unique services or products offering by the company in
order to seek the customer retention growth. In other words, retail market influence customer and
get attracted by different offers and growth for the new betterment growth. Retail market of UK
is full of services or products that helps customers to get the better facilities and growth in terms
of maintaining the effective standard of living. TESCO also helps to develop in economic growth
by offering the employment opportunity to the unemployed persons. This process helps to retain
and increases the rate of consumer purchasing power. This sector also brings different innovative
way through which they easily get attracted by some many channels such as Artificial
Intelligence Marketing (AIIM) solution which is the latest example of marketing solution in
which it defines how marketers can truly excel at building and maintaining one to one
relationship at scale (Burnette, 2015). Retail sector is the most growing sector in terms of
consumer goods and services. On the other side, UK also consisting major of retail companies
such as Tesco, Asda, M&S, Sainsbury etc.
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3. LITERATURE REVIEW
3.1 Overview
Retail sector is the highly competitive market which attracts buyers by offering high
range of product quality and varieties to enhancing the company brand and store items. To attract
buyers, retail businesses has been provided different offers and organize different marketing
promotional plans to get the best outcomes and growth (Burnette, 2015). This is very much
important for the retailers to make the best developing results outcomes in order to generate the
new forming results and bring the new developing results in the competitive market. It also
describes the betterment and maintaining the legal opportunity and goals. Also, it describes the
wide concept and customer satisfaction in terms of increasing the customer retention. Further in
this Literature review it has been explained that the furthermore opportunity and task will be
more challenging and effective towards the long lasting development goals. Moreover, overview
look after the consumer behavior in retail industry.
3.2 Importance of consumer loyalty on demand management and demand forecasting.
Consumer Behaviour role is the most significant in within the organization that store the
high challenging performance area to build up the long lasting challenge. In other words,
consumer satisfaction is the factor that build up the long lasting way to perform the best
approach and leading advancement goals to build up the strong relationship with the company
and its consumers. Present thematic presentation or concept will explains and meet out the all
questions of the study which is based on the TESCO.
Concept of consumer loyalty
According to Hill and Alexander, (2017) consumer loyalty may be defined as the extent
to which consumer is devoted towards the company for making its repeated purchases. consumer
loyalty is associated with the consumer emotions. Positive emotions of the consumers towards
the particular brand shows the loyalty of the consumers towards the product or services of a
specific brand. Loyal consumers are those consumers who exclusively purchase the products or
services of the TESCO over the other competitive brands and doesn't shift their preferences.
Every firm should focus on maximising the consumer loyalty through enhanced consumer
satisfaction as retention of consumers is less expensive as compared to attraction of new
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consumers. Thus, consumer loyalty can provide the company a sustainable competitive
advantage over the rivalry firms.
For example : Amazon results over the past holiday season are mind blowing. It also
helps to determine the best following results and goals to make the best outcomes for the
customers. Amazon has always come up with the new ideas and growth that gives the positive
action plans for the customers (5 Reasons Amazon Prime, 2016). Such as Amazon have
experimented with initiatives like Prime day and the focus on pull rather than push messaging is
admirable. Amazon has also come up with new offers for their prime members.
But according to Watson (2015), consumer loyalty may be defined as a tendency of
consumers to choose the products or services of a TESCO over the products or services of the
rivalry firms. Consumer loyalty is regarded as a positive perception in the mind of employees
which in turn is responsible for keeping the consumers satisfied and happy as the company meets
the needs of the consumers effectively and efficiently. Consumer loyalty begins with the
satisfaction of consumers. Higher the satisfaction of the consumers, higher would be the loyalty
of the consumers towards the brand. Consumer loyalty is reflected through repeated purchases
that the consumers make with favourable nature or positive attitude towards the particular
product or service. Consumer loyalty is both attitudinal or behavioural tendency in favour of a
particular brand rather than its competitors.
While on the other hand, from the view of Kandampully, Zhang and Bilgihan (2015),
loyal consumers stick to the TESCO and consistently purchase the products of the same
company rather than shifting to other competitive firms. Companies can maintain consumer
loyalty by providing consistent products at every time and at same level of success. Consumer
loyalty is enhanced only if the consumer has positive experiences in favour of the product or
service. Hence, every business should make maximum efforts to enhance the consumer
experiences through various means in order to bring repeated sales for the company. This in turn
plays a vital role in achieving the objectives of the company effectively and efficiently.
According to Balaji, (2015) consumer loyalty is not developed spontaneously, it is
developed over a period through strong and constant efforts on the part of TESCO. Consumer
loyalty not only helps in better retention of employees with the TESCO but also help in
increasing the profitability of the company through increased sales and reduced cost. In the
current globalised world, consumer loyalty has become the integrated part of management of
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TESCO. If this responsibility has been effectively performed by the company then it will lead to
greater expenses from the wallet of consumers as they would shop consistently without any
hurdles. Thus, consumer loyalty helps in creating long lasting preference towards a particular
product or service which in turn would contribute in bringing in repeated sales. Consumer
loyalty is the major factor that is responsible for the success of the business. Even faster sales
and marketing cannot lead to the TESCO to success up-to the extent which consumer loyalty can
contribute. Thus, consumer loyalty is something that all the companies should aspire by virtue of
their existence.
But as per the opinion of McCall and McMahon, (2016), there is a very simple consumer
loyalty process. If this process is followed, then it would assist the companies in attainment of
their objectives up-to a wide extent.
 The process starts with acquisition of new consumers through providing them products
and services of better quality and affordable prices with the objective of fulfilling all the
needs and wants of the consumers.
 Then the next step of the consumer loyalty process lays emphasis on development of
consumers that focusses on enhancing the relationship between the consumers and the
TESCO through making the consumers realise that they have wide number of advantages
if they stay or retain with the company.
 After that, the next stage is consumer commitment. At this stage makes the TESCO
makes commitment to the consumers that they will deliver them all the benefits
associated with retaining the company (Lacoste and Blois, (2015). The basic objective
behind this is to build trust with the consumers.
 Then finally the last and most important stage is the consumer retention. It is the most
important stage the TESCO is benefited more with the increased retention rate of
consumers rather than attraction of new consumers. Hence, every company should make
immense emphasis on retaining the employees in order to survive in this competitive
world through giving them incentives and various kinds of perks.
Key consumers
According to Lacoste and Blois, (2015) consumer's may be defined as a person who is
the recipient of goods and services along with the ability to analyse all the products and services
and then make the best choice. consumers are regarded as the king of every organisation and this
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in turn creates the need for business organisations to fulfil the needs and wants of the consumers
efficiently in order to sustain and grow their operations in long run. If an organisation fails to
retain its existing consumers and attract new consumers, then the company would lose its
competitiveness and lag far behind its competitors in the race of achieving major market share n
the industry.
But as per the opinion of Davis, Roth and Soileau, (2017) though it is important to serve
all the consumers efficiently but it is stated that the key consumers of the company are existing
consumers. TESCO should leave no stone unturned with regards to fulfilling the needs and wants
of the existing consumers so that they retain in the company for a longer duration of time.
Though company should even lay emphasis on attracting the new consumers but the focus area
should be existing consumers. The basic reason behind this is that the companies have to incur
huge cost on attracting consumers but at the same time requires very low cost on retaining the
existing consumers (Deshmukh and Mohan, 2016). Hence, the key consumers of the company
are existing consumers.
Concept of demand Management and demand forecasting
According to Moon, (2018) demand forecasting is the combination of demand and
forecasting which it helps to make the estimation of the demand of the product. It is basically
carried with the objective of analysing the future demand of the consumers so that TESCO
remains prepared in advance to deal with the high demands in the market and vice versa.
According to SPARKS, (2018) demand management is a method of planning the
requirements of a business unit and operations of internal purchasing. It is basically concerned
with managing the demand of the company effectively and efficiently. It is very important for
remaining constantly engaged towards maintenance of supplier relationship as well as all the
advantages related to the various aspects of the company. The basic objective behind using the
demand management system is to address various factors such as external spending, eradication
of waste and arrangement of purchase orders. Demand management helps to keep the balance
between the demand and supply of the TESCO. It is the most important approach and helps the
company to manage its demand and run the business in right direction and also concern with
smooth flow of the organisation.
But the opinion was different of Rantanen, Grant and Piotrowicz, (2017), as per the
author, the focus of demand management is on volume of products that should be purchased by
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the providers rather than individual product pricing. There are various other names of demand
management such as consumption management or strategic spend management. Thus, by
managing the demand TESCO would not only be able to improve its brand image but would also
contribute a lot towards improvement of consumer loyalty up-to a wide extent.
From the point of view of (Holguín-Veras, and Aros-Vera, 2015), demand management
is a planning methodology that is used to forecast, plan for and manage the demand for the
products and services. This can be done in macro level as in economics and at micro level within
individual. It is also defined as a set of process ,capabilities and recommended behaviors for
companies that produce goods and services.
According to(Holguín-Veras, and Aros-Vera, 2015) demand management begins with an
in – depth perception of exiting business requirements ,historical buying behavior and expected
requirement for the services or product sources by an organization. It helps TESCO to engage
with the suppliers' relationship . Demand management focus on the volume of products that are
purchased from providers rather than individual products pricing. Demand management is also
known as consumption management or strategic spend management. While applying demand
management is necessary to consider many other points such as available options for volume
discounts, order timing approach on pricing, precise attention to describe contract processes.
According to (Hu, Chiu and Zhu, 2015) it is important for the TESCO to determining the
demand might be in future and planning how to manage it is called demand management . It is
important to manage the demand of the company so that company run in the right direction. For
properly manage demand , TESCO need to look at many other factor ,firstly the company need
to understand the wants and preferences of the consumers such as what do consumers want and
also it is necessary to understand the concept of marketing so that it will help the company in the
future. As if the company wants to sell more products, it might increase commercialization of the
products. Companies might influence demand by their price and promotions. Demand
management is broadly divided into Macro-economics and micro economics. Many
organizations that use demand management to target indirect spent sections also use the
approach for more complicated spent categories, such as travel, direct material and technology.
Significance of consumer loyalty in demand management and forecasting
According to Kaura, Durga Prasad and Sharma, (2015) consumer loyalty for demand
management means aligning the business strategies with consumer demand. This approach plays
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a vital role in aligning the whole business with precisely match consumer demand. It is very
important as it helps the business firms to attain the business objectives effectively and
efficiently. Apart from this, consumer loyalty on demand management also helps in improving
the profitability of the company because the consumers would be willing to buy more products
of the company because of positive perception in their mind of consumers that the company
manages the demand of the consumers efficiently.
According to Christopher, (2016) demand management plays a vital role in creating
merchandising effectiveness which is very important to keep the consumers happy and satisfied
for the long-term survival and growth of the businesses towards the attainment of TESCO
objectives. It also contributes towards maintaining the supply chain of the company efficiently
based on demand forecasts which is very essential for running the business smoothly in the long
run.
But Huang, Cheng and Chen (2017), believed proper management of demand will help
the TESCO in creating consumer loyalty as by efficient management of demand; company is
able to maximise consumer experience along with retention of consumers for a long duration of
time. TESCO can manage its demand by making the products or services available to the
consumers as and when required without any delay, this in turn would prevent the consumers to
remain brand loyal rather than shifting to other competitive firms for their purchases. Thus, on-
time delivery would contribute up-to a large extent on improving the loyalty of the consumers
towards the brand. Even the demand can be managed by using the technology for enhancing the
visibility as well as tracking the inventory.
According to Filimonau and Gherbin, (2017) demand management would help the
company in ensuring that they neither fall short of inventory which may lead to creation of dis-
satisfaction on the part of consumers nor the surplus of inventory which may lead to outdated
products which may add up to displeasure for the consumers. Thus, technology helps in bringing
in innovation and creativity which in turn enhances the brand image of the TESCO leading to
increased loyalty of consumers towards the company. The chief concern of every business firm
should be to keep its consumers happy and satisfied so that they remain brand loyal. But this is
not an easy task, it is very challenging and this is evident from the fact that only a handful of
companies are able to keep its consumers happy and satisfied which in turn leads to increased
consumer loyalty. These handful companies have grown exponentially with the changing time as
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they have managed the demand of the consumers very efficiently leading to increased consumer
loyalty.
But Fares, Lebbar and Sbihi, (2018) was of the belief that consumer loyalty to demand
management is important for increasing the speed to delivery. This would help in providing the
products to the consumers on timely basis which would add up to their satisfaction level which is
essential for achieving the business objectives effectively and efficiently. This could be done by
establishing pop-up-fulfilment centres which helps the TESCO in expanding their business
operations without much investment. Thus, this has helped the company in enhancing the
consumer loyalty through efficient management of demand leading to smooth running of the
business in long term.
According to Picón-Berjoyo, Ruiz-Moreno and Castro, (2016) consumer loyalty is very
important for every business firm in order to run the business smoothly in long run. This is so
because there are wide range of choices available to consumer which increases their probability
towards shifting to the rivalry firms and hence for this purpose it is important for business firms
to take measures to keep their consumers happy and satisfied so that they remain brand loyal and
doesn't shift towards rivalry firms. TESCO would only be able to achieve this objective of
keeping the consumers loyal by managing the demand efficiently. This would in turn help the
company to run the business smoothly in long run towards the accomplishment of objectives.
While as per the opinion of Wirtz, (2018) consumer base is the foundation of success of
every business firm. Hence, every organisation should retain its existing consumers and attract
new consumers in order to succeed in their smooth running of business operations. Existing
consumers can be retained with the company; if the company manages to fulfil the demand of the
consumers n a very effective and efficient manner and this will in turn help in enhancing the
consumer loyalty. There are various ways in which firms can enhance the consumer loyalty but
there are very few firms which have the art of managing the demand of the company efficiently
which leads to increased consumer loyalty.
As per Kasemsap, (2018) in this globalised world, organisations should not even expect
that consumers would wait to buy products from their company if they fail to fulfil the demand
of the consumers on time. Thus, in order to enhance the consumer base, it is very important to
fulfil the demand of the consumers quickly by providing real time solutions so that they do not
move towards the rivalry firms and remain loyal towards the brand. Hence, the business firms
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should leave no stone unturned towards managing the demand, otherwise TESCO would be able
to survive and grow in long run in the race of competition with the other rivalry firms of all
across the globe. It is as simple as that if the company would take care about the demand of the
consumers by managing it on time as well as effectively and effectively then the consumers
would even take about the company by retaining with the company for a long duration of time
and show their loyalty towards the brand. Loyal consumers not only bring repeat business to the
brand but even contribute towards the enhancement of the brand image. The most appropriate
form of enhancing the consumer loyalty is demand management and the company can achieve it
by adopting various measures through which it can be managed properly and appropriately.
While as per the opinion of Sulistiani and Tjahyanto, (2017) consumers should not be
underestimated as they are the basic reason behind the smooth running of the business towards
the attainment of the objectives of the company. Since consumers are the king, their needs and
wants should be given priority and efforts should be made to fulfil it on time. The TESCO can do
it by managing the demand efficiently by carring out intense research of the market to get an
overall idea about the recent trends, taste and preferences of the consumers. This will in turn help
the company in remaining pre-prepared in case of emergency or high demand from the
consumers. This will help the company in managing the demand efficiently in case the need
arises which in turn will help in creating consumer loyalty and prevention of consumers to shift
towards any rivalry firm.
But according to Lee, (2018) companies should ensure that it grabs all the opportunities
of the market as soon as it arises. These opportunities will help the company in enhancing the
consumer loyalty. If the business firms would fail to tap the market opportunities then it wont be
able to retain the consumers in the company for a longer duration of time. Companies should use
its full range of resources in order to keep the consumers satisfied by managing the demand of
the consumers in a very efficient manner so as to attain the objectives of a company very
smoothly.
According to McColl-Kennedy, (2016) in this current globalized world, it is very
important to build the consumer loyalty to run the business smoothly in long run. In order to
build the consumer loyalty, companies should treat all the consumers with care so that they
remain satisfied and happy which in turn will help the company in bringing repeated purchases
from the company. This could be done by fulfilling the needs and wants of the consumers with
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