Customer Loyalty and Reward Scheme Effectiveness: Tesco Case Study

This research project investigates the effectiveness of customer loyalty and reward schemes, focusing on Tesco as a case study within the competitive UK retail market. The project begins with an introduction outlining the importance of customer satisfaction and the increasing prevalence of loyalty programs. It establishes the aim to assess whether Tesco's customer loyalty and reward schemes are effective. The literature review explores the concepts of customer loyalty and reward schemes, factors affecting customer loyalty, and the benefits of implementing such schemes. The research methodology employs a descriptive research design with an inductive approach, utilizing an interpretivism philosophy and secondary data collection methods. Qualitative data analysis, specifically thematic analysis, is used to interpret the results. The project includes a survey to gather data on customer perceptions of Tesco's services, delivery speed, purchase likelihood, customer base duration, staff helpfulness, recommendation likelihood, and product quality. The findings are then analyzed to determine the effectiveness of Tesco's loyalty and reward programs, and recommendations for improvement are provided, along with areas for further research.

RESEARCH PROJECT

Table of Contents
PROJECT TITLE.............................................................................................................................1
INTRODUCTION...........................................................................................................................1
Background of the research....................................................................................................1
AIM AND OBJECTIVES................................................................................................................1
LITERATURE REVIEW................................................................................................................2
RESEARCH METHODOLOGY.....................................................................................................4
EXPECTED OUTCOMES..............................................................................................................6
TASK 2............................................................................................................................................6
2.1 (A) Resources that are required to carry research ...........................................................6
(B) Relationship between research resources and research questions....................................7
2.2 Undertake the proposed research investigation................................................................7
2.3 Record and collect required data......................................................................................7
TASK 3..........................................................................................................................................10
3.1 Research evaluation techniques......................................................................................10
3.2 Interpret and analyse results in term of original research specification.........................10
3.3 Make recommendation to justify areas for further research ..........................................16
TASK 4..........................................................................................................................................16
4.1 Results and recommendations........................................................................................16
REFERENCES..............................................................................................................................17
APPENDIX....................................................................................................................................19

PROJECT TITLE
“To assess that whether customer loyalty and reward scheme work actually or not - A
case study on Tesco”.
INTRODUCTION
Within the competitive market, customer satisfaction is very important concept in retail
industry. In this aspect, they can serve their products and services according to customers’
demand and requirement. Nowadays, customer loyalty and reward scheme increasing very fast.
Thus, it is important to assess reason that how to satisfy them (Kim, Lee and Johnson, 2013).
Main aim of the enterprise is to serve effective services so that they can easily get loyalty
through providing them rewards. If the company is unable to serve effective services, their
goodwill will be reduced which create negative impact on people to whom they served.
Therefore, the present report covers discussion to assess customer loyalty and reward scheme to
people of Tesco that leading in retail sector of the UK market.
Background of the research
From last several years, it has been observed that customer is effectively engaged in
different types of loyalty programs. In this context, retail sector of UK market has been selected
that faces many issues and problems to switch towards new customer or dealing with another
competitor (Floh, Zauner and Rusch, 2014). It is the main reason in current era which is crucial
for retailers. Hence, loyalty program initiatives have been taken which retained to the long-term
objectives and survive in the market. With reference to Tesco, present study is assessing whether
consumer loyalty and reward scheme actually work or not.
AIM AND OBJECTIVES
Aim – To assess that whether customer loyalty and rewards schemes actually work or not – a
case study on Tesco.
Objectives
 To explain the concepts of consumer loyalty and rewards schemes used in Tesco
 To evaluate the importance of consumer loyalty and rewards schemes for Tesco
 To assess the benefits that Tesco can gain through consumer loyalty and rewards schemes
 To recommend the ways for improving consumer loyalty and rewards schemes in Tesco
Research questions
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 What is consumer loyalty and rewards schemes used in Tesco?
 What is the importance of consumer loyalty and rewards schemes for Tesco?
 What are the benefits that Tesco can gain through consumer loyalty and rewards
schemes?
 How consumer loyalty and rewards schemes can be improved in Tesco?
LITERATURE REVIEW
Concept of customer loyalty and reward scheme
As per the point of Kumar, Sharma and Rajan, (2013), it can be stated that customer
loyalty defines as trust of the people towards products and services of the organisation. It assists
to gain effective customer satisfaction for long term in the enterprise. There are several methods
through business easily get customer loyalty at workplace. In this aspect, it can be critically
analysed that customer loyalty is very essential for the enterprise to ascertain long run surviving
within the organisation. However, Kang, Alejandro and Groza, (2015), stated that reward play
very important role for the firm to develop results and profitability in successful manner. In this
way, customer can be targeted to raise their morality at workplace. In respect to ultimate leading,
high revenue need to be generated that assists to achieve competitive advantages. With the help
of earning more amount of revenue and profits, the business can also diversify their operations
and functions in different areas of market.
According to Watson, Beck and Palmatier, (2015), it can be argued that when enterprise
not offering reward schemes to customers, they are unable to earn more profits within the
environment. Therefore, no more customers at workplace attracts which assists to promote
profitability in successful aspect. In respect to target the people, high revenue need to be
generated at workplace that assists to gain competitive edge that overcome problems and issues
in effective manner. On the other hand, Yoo and Bai, (2013) critically evaluates that customer
loyalty and reward scheme are two different parameters of same coin. Thus, it cannot easily be
implemented at workplace of retail business. Reputation of the business boost in high extend
which make effective position and operations at workplace. Generation of high profits could be
maintained through attaining sustainable objectives and goals which beating to results.
As per the point of Bowen and Chen McCain, (2015), it can be stated that operations and
functions of Tesco assists to measure reward scheme towards customers. The chosen enterprise
is dealing with retail store sector and provides products and services in online and offline stores.
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This system assists to attain competitive advantages so that customers are feeling very safe to use
different types of goods. It also creates value towards them and they are giving longer time to
retain at workplace. In order to target people, business need to concentrate on their products and
services with effective quality and profitability. On the contrary, according to McCall and
McMahon, (2016), there are several advantages take place due to implementing of loyalty and
reward scheme that increase profits and revenue. It also enhances market share of the company
which aids in to make goodwill and increase customer spirit level and stakeholders as well.
There are several methods through customer satisfaction can be attain at workplace with
implementing of reward scheme such as vouchers, free coupons, membership and cards, etc. It
also reduces cost of the enterprise and improves profits for diversify operations and functions.
With the help of increasing selling of products and services, the chosen enterprise can compare
existing customer with new and cost as well.
Factors Affect Customer Loyalty
As per the view Zakaria, Rahman and Osman, (2014), there are many factors which
affect customer loyalty. It includes convenience, expectations, customer services, personal
relationships, reward, etc. due to customer change their taste and preferences. When customer
purchase any product or service, they are likely see towards previous loyalty of product. Due to
price, their shopping habit may be change so that it is essential to look previous buying. It is the
opportunity to Tesco to create the highest loyalty to make effective products and services.
However, Tanford and Malek, (2015) argued that when customer buying any product or service
many loyal people regularly buy products according to their convenience. They are also
preferring brand in specific stock when they have no time. In addition to this, expectations also
relate to enhance continue to live up with delivering brand promise and remain relevant through
price, value and availability. Customers mainly attracts through some consideration so that
chosen enterprise need to especially provide it with options. Hereafter, customer never go
towards another organisation.
According to the point of Söderlund and Colliander, (2015), reputation of products and
services of the organisation plays many important role in success. In this aspect, commercial and
social elements influence long term relationship with customers. With the help of resources of
financial, labour and sourcing practices scrutiny to increasing transparent world. When the
enterprise looks towards support of customer, it is very important to take participation from
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community. In this aspect, loyalty can be build which never break so that customers remain loyal
so that it can be stated that it is another main factor which create impact on loyalty and reward
scheme. On the other hand, Wang, Lewis and Sprigg, (2016) stated that it is very essential to
winning customer with hearts and mind. With the help of providing effective products and
services, good feeling can be gain towards customer which maintain positive word of mouth at
workplace. In term of amount of resources, good behaviour need to be devote to make loyalty
seems straightforward enough. Customer loyalty is become is important element which need to
be focus for changing market so that better understanding can be taken which implement to
accomplish results.
RESEARCH METHODOLOGY
In respect to assess customer loyalty and reward scheme, Tesco need to assess market
that also implementing that depend on nature of study. Research design: In the present research, descriptive design has been used through
scholar as per the topic for theoretical and in-depth knowledge. In this aspect,
information also ascertained regarding topic which assists to gain effective results that
helps to describe characteristics (Floh, Zauner and Rusch, 2014). Research approach: In respect to assess whether customer are loyal and reward scheme
work or not, inductive research approach has been used by researcher. In this way,
scholar assists to gather relevant information and specific data that ascertain topic of
study and gather relevant information and make conclusion towards selected topic.
Hence, it can be used in same sector of the business in future as well (Research
Approach, 2017). Research philosophy: Researcher also use interpretivism philosophy that assists to make
relationship in variables and examined social constructions that made in term of
language, conciousness with sharing meaning. There are several objectives and reliability
of study will be ensure by the scholar to develop effective results at workplace (Kim, Lee
and Johnson, 2013). Data collection: There are some information will be gather in successful manner which
gather from secondary sources. In this aspect, topic required to use plenty of details from
different sources that are available in books, journals, articles, published material, etc.
4

These sources assists to gathered researcher which depending on final conclusion that
framed in successful manner (DATA COLLECTION METHODS, 2017).
 Data analysis: As the theoretical knowledge of study, qualitative method assists to
analysis data that are used in scholar. In respect to assess and gathered information,
thematic analysis has been making distinctive results on customer loyalty and reward
scheme that actually work or not. In respect to gain information, justification also need to
be made on different themes that frame conclusion for study. Further, appropriate and
suitable recommendations also provided for another research and meet negative impact as
well (Kumar, Sharma and Rajan, 2013).
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Illustration 1: Research onion
Source: (Research methodology, 2017)

Activity/Week 1 2 3 4 5 6 7 8 9 10 11 12 13
Research proposal
Formulating research aim
and objectives
Reviewing the available
literature from secondary
sources
Proposing research
methodology
Collection of data
Analysing the collected data
Making conclusion
Giving suggestions
Final submission
EXPECTED OUTCOMES
In order to considered present study, it has been expected that consumer loyalty and
reward scheme play vital role to make successful results in Tesco and other retail sector
businesses. In this research, it has been expected that long term objectives and competitive
advantages can be gain in successful manner to make trust of customer. It also creates repeat
purchasing of customer to become loyal and create effective results to make targets in business
6

(Kumar, Sharma and Rajan, 2013). Consumer loyalty program and reward scheme proves that it
is highly helpful to enhance satisfaction level of customers through offered products and
services. Consumer loyalty program and reward scheme proves that it is highly helpful to
increasing satisfaction level towards company products and services. It has been expected that at
the time of getting services and products, customer see behaviour and post services as well.
Hereafter, it assists to gain large customer base that make loyalty and trustworthy towards the
enterprise to enhance goodwill.
Further, it can also expect that outcomes from the research assists to earn high profits and
revenue which assists to implement loyalty and reward scheme. Hence, customer target will be
accomplish which enhance purchasing from of customer with creating effective results at
workplace (Watson, Beck and Palmatier, 2015).
TASK 2
2.1 (A) Resources that are required to carry research
Primary resources are those elements that are collected first time in the business
environment at workplace of Tesco. At workplace, there are several tools and techniques assists
to gather relevant information that assists through questionnaire. It gives direct and first hand
information that assists to promote outcomes and results in successful manner. From the help of
conducting survey, operations and functions can be manage at workplace. On the other hand,
secondary data also collected through published resources that assists to find out more
information in related topic (McCall and McMahon, 2016). All published and unpublished work
done in systematic way which assists to analysis business performances with collected resources.
With the help of journals, articles, magazines, books, etc. Tesco can analysis their performances.
(B) Relationship between research resources and research questions
In respect to collect relevant information, research program is conducted which assists to
collect information from different resources that are existed in market. It includes primary and
secondary sources which grows outcomes and performances in systematic way. With the help of
making relations in elements, proper information can be gather. With the help of primary data,
customer loyalty with reward scheme can be assess at workplace. It assists to make relevant
results with explores different activities (Söderlund and Colliander, 2015). However, customer
loyalty is relates with reward scheme to get their participation in business unit. With the help of
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assessing buying behaviour, the enterprise can support to functions and operations in successful
manner.
All tools and project specification has effective relationship that make successful results
in it. In this aspect, primary and secondary data has been gather to conduct effective research in
it. Primary data assists to gather fresh and relevant information through business develop in
effective manner. Survey is the best way, through researcher can conduct research and develop
their operations towards the objectives and goals. In addition to this, secondary data assists to
gather information from previous researches that assists to enhance profitability in significant
manner. It includes, magazines, articles, newspapers, etc. In addition to this, previous research
also helps to compare fresh information and previous outcomes.
2.2 Undertake the proposed research investigation
In respect to arrange survey, researcher need to take views from various customers in
term of purchase behaviour. Thus, 50 respondent have been taken by researcher from Tesco to
arrange research program.
2.3 Record and collect required data
With the help of effective research program, it is important to develop concept which
assists to gather relevant information. Researcher analysed customer loyalty and reward scheme
with different theme which are as follows:
1. People are highly satisfied with products and services of Tesco
Did you purchase from Tesco company
satisfy you?
No. Of respondents
Strongly Agree 30
Agree 10
Neutral 5
Disagree 3
Strongly disagree 2
2. Delivery of Tesco is very fast
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When you are purchasing products and
services from Tesco, delivery is very fast or
not?
No. Of respondents
Yes 40
No 5
Can't say 5
3. People are like to purchase products and services from Tesco
Would you like to purchase goods and
services from the company again?
No. Of respondents
Yes 42
No 5
Can't say 3
4. Large number of customer base purchasing products and services from more than 24 months
How long have you been the customer of
Tesco?
No. Of respondents
0-6 months 2
12 to 18 months 3
18 to 24 months 5
More than 24 months 40
5. Staff of the chosen company is helpful to delivers effective services and products to customer
Staff of the enterprise is helpful to provide
effective products and services?
No. Of respondents
Yes 45
No 3
Can't say 2
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6. People are excellent recommends to their friends and relatives
How likely are you recommend the Tesco
to a friend or relative?
No. Of respondents
Excellent 38
Very good 5
Good 3
Fair 2
Poor 2
7. Design and quality of products and services are very good
What you think about design and quality of
the chosen organisation products and
services?
No. Of respondents
Very good 45
Good 2
Average 3
8. Tesco provide products and services at moderate price.
What you think about variation in pricing
level of Tesco with another company?
No. Of respondents
High price 2
Moderate price 48
Low price 0
9. Reward of the company is providing through all elements
What is main element which give effective No. Of respondents
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reward in customer loyalty?
Free coupon 40
Discount 5
Festival offers 3
Buy one get one free offer 1
All the above 1
10. People aware from products quality and material
Do you aware from the products and
service quality of Tesco?
No. Of respondents
Yes 40
No 5
Can't say 5
TASK 3
3.1 Research evaluation techniques
With regards of research evaluation, there are several techniques assists to gather relevant
information that increase productivity of the company. With the help of questionnaire, proper
results and investigation can be take place at Tesco. In this context, following methods can be
applied in business environment:
Scientific experimental model: In order to carry scientific experimental model, strategies
can be evaluated with implementation of several methods. In this aspect, priorities can be set
which assists to gather accurate information with quasi experimental designs. In this aspect,
social science has been effective that assists to priorities the tasks to accomplish effective results
in the business.
Management oriented system model: In this way, PERT and CPM strategies have been
taken which assists to gather effective business program in successful manner. PERT assists to
make logical information and emphasize to evaluate frameworks in business. In addition to this,
stakeholders participation also made to enhance evaluation system in the business environment.
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Qualitative model: This method emphasizes to observe results and performance with
quality of work. There are several elements included in subjective participation which required to
conduct results. Art criticism approach has been measure that grows effective results at
workplace. Client centre and stakeholders approaches are examples of this model that need to be
taken in the present research.
3.2 Interpret and analyse results in term of original research specification
With the help of conducting survey, following findings occurs for researcher:
Theme 1. People are highly satisfied with products and services of Tesco
Interpretation: From the above graph, it has been shown that at workplace of Tesco, there are
various people highly satisfied from the products and services. It creates positive impact on the
operations and functions of the business to promote their operations in new areas. Beside this, 10
people are agree with this statement. There are 5 people who are neutral towards products and
services of the enterprise. However, there are 3 respondents stated that they are disagreed with
products and services of the organisation. Remain 2 persons are strongly disagreed about
productivity of the business unit.
Theme 2. Delivery of Tesco is very fast
12
Strongly Agree
Agree
Neutral
Disagree
Strongly disagree

Interpretation: This graph shows that 40 respondents stated that delivery of product and
services of is very fast. On the other hand, 5 persons are opposed to this statement and said that
there is no fast delivery of Tesco. Remaining 5 people stated that they can't say about delivery of
the products and services of the chosen business.
Theme 3. People are like to purchase products and services from Tesco
Interpretation: From the above graph, it can be stated that there are 42 people who said that
they are again purchasing products and services from the organisation. Beside this, 5 persons are
not again purchasing from the organisation. Another 3 respondents are stated can't say to
purchasing of products and services from the business.
Theme 4. Large number of customer base purchasing products and services from more
than 24 months
13
Yes
No
Can't say
Yes
No
Can't say

Interpretation: This graph shows connectivity of organisation with its customers. Thus, it
determines that there are 40 respondents connected with the organisation around more than 24
months. Further, 5 people are connected around 18 to 24 months. In addition to this, 3 and 2
persons are connected around 12 to 18 months and 0 to 6 months respectively.
Theme 5. Staff of the chosen company is helpful to delivers effective services and products
to customer
Interpretation: With the help of this graph, it has been analysed that there are 45 people who
stated that staff members are effectively provides products and services to them. They are
dealing in effective manner to develop effective results at workplace. On the other hand, 3
persons are said that staff members are not supportive to provide effective results in business
environment. Remaining 2 people unable to get their response towards employees of the firm.
Theme 6. People are excellent recommends to their friends and relatives
14
0-6 months
12 to 18 months
18 to 24 months
More than 24
months
Yes
No
Can't say

Interpretation: With the help of above diagram, it can be interpret that 38 respondents are stated
that they excellently recommend about Tesco to their friends and relatives. Beside this, 5 persons
stated that it is very good services providing which effective to deals with positive results at
workplace. In remaining 2 persons stated that it is fair recommending to friends and relatives
remaining 2 persons stated that it provides very poor products and services which never
implementing to friends and relatives.
Theme 7. Design and quality of products and services are very good
Interpretation: This graph shows that design and quality of the chosen firm products are
effective or not. Therefore, 45 people stated that design and quality of products is very attractive
and good to develop outcomes and results in successful manner. Further, 2 people stated that it is
not effective to develop performances and results in successful manner. Remaining 3 persons
15
Excellent
Very good
Good
Fair
Poor
Very good
Good
Average

stated that quality of products and services in Tesco is average so that it is not effectively
providing in effective manner.
Theme 8. Tesco provide products and services at moderate price.
Interpretation: With the help of this graph, it has been analysed that 48 people stated that
pricing level of the enterprise is moderate which create effective results on the performances and
results. This is because, each type of customer can buy products and services from the business
which is beneficial to deal at workplace. On the other hand, 2 persons stated that Tesco charging
very high amount to make productive results in successful manner.
Theme 9. Reward of the company is providing through all elements
Interpretation: With the help of this graph, it has been shows that 40 people stated that free
coupon is the best method to provide reward to each individual at workplace. 5 People stated that
discounting on products and services is the best element which assists to grow effective results at
workplace. 3 persons stated that on festival occasion, different aspects assists to gather relevant
16
High price
Moderate price
Low price
Free coupon
Discount
Festival offers
Buy one get one free
offer
All the above

results at workplace. 1 respondent said that buy one get one is the effective element which assists
to gather relevant information at workplace. 1 person stated that all the methods assists to
effective results through implementing different types of reward system at workplace.
Theme 10. People aware from products quality and material
Interpretation: With the help of this graph, it can be stated that there are 40 respondent aware
towards products and services of the organisation in successful manner. Further 10 respondent
are not known and can't say respectively.
3.3 Make recommendation to justify areas for further research
In order to improves effective results and performances, following recommendation can
be provide at workplace of Retail industry:
Improves customer services: With the help of providing customer services, long term
loyalty can be maintained at workplace. In this aspect, consistent and reliable services could be
provide that increase trust and loyalty of customer towards business products and services.
Focus on online selling: Another recommendation could be provided to the business to
focus on their selling via online website. This is because, it is the best method to reach towards
each customer which create effective results at workplace.
Reduce turnover: Employee turnover is the major element which create impact on
production and reduce productivity of retail enterprises. Thus, it is essential to look towards each
individual that create opportunity to enhance profitability at workplace.
However, this research is also lack some important knowledge and concept which also
need to improve in further programs. Therefore, on the following areas of research can be
ascertained to develop effective results:
17
Yes
No
Can't say

 To identify factors that assists to promote productions and services of retail sector
businesses.
 To explores reliability of digital marketing activities that required in retail industry.
 To assess employee participation in order to enhance production and outcomes of the
business.
TASK 4
4.1 Results and recommendations
Covered in PPT
18

REFERENCES
Books and Journals
Bowen, J. T. and Chen McCain, S. L., 2015. Transitioning loyalty programs: A commentary on
“the relationship between customer loyalty and customer satisfaction”. International
Journal of Contemporary Hospitality Management. 27(3). pp.415-430.
Floh, A., Zauner, A. and Rusch, T., 2014. Customer segmentation using unobserved
heterogeneity in the perceived-value–loyalty–intentions link. Journal of Business
Research. 67(5). pp.974-982.
Kang, J., Alejandro, T. B. and Groza, M. D., 2015. Customer–company identification and the
effectiveness of loyalty programs. Journal of Business Research. 68(2). pp.464-471.
Kim, H. Y., Lee, J. Y. and Johnson, K. K., 2013. Perceived benefits of retail loyalty programs:
Their effects on program loyalty and customer loyalty. Journal of Relationship
Marketing. 12(2). pp.95-113.
Kumar, V., Sharma, A. and Rajan, B., 2013. Establishing profitable customer loyalty for
multinational companies in the emerging economies: a conceptual framework. Journal of
International Marketing. 21(1). pp.57-80.
McCall, M. and McMahon, D., 2016. Customer loyalty program management: What matters to
the customer. Cornell Hospitality Quarterly. 57(1). pp.111-115.
Söderlund, M. and Colliander, J., 2015. Loyalty program rewards and their impact on perceived
justice, customer satisfaction, and repatronize intentions. Journal of Retailing and
Consumer Services. 25. pp.47-57.
Tanford, S. and Malek, K., 2015. Segmentation of reward program members to increase
customer loyalty: The role of attitudes towards green hotel practices. Journal of
Hospitality Marketing & Management. 24(3). pp.314-343.
Wang, Y., Lewis, M. and Sprigg, J., 2016. Enduring effects of goal achievement and failure
within customer loyalty programs: A large-scale field experiment. Marketing Science.
35(4). pp.565-575.
Watson, G. F., Beck, J. T. and Palmatier, R. W., 2015. Building, measuring, and profiting from
customer loyalty. Journal of the Academy of Marketing Science. 43(6). pp.790-825.
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Yoo, M. and Bai, B., 2013. Customer loyalty marketing research: A comparative approach
between hospitality and business journals. International Journal of Hospitality
Management. 33. pp.166-177.
Zakaria, I., Rahman, B. A. and Osman, M. A. F., 2014. The relationship between loyalty
program, customer satisfaction and customer loyalty in retail industry: A case study.
Procedia-Social and Behavioral Sciences. 129. pp.23-30.
Online
DATA COLLECTION METHODS, 2017. [Online] Available through:
<http://www.fao.org/docrep/003/x2465e/x2465e09.htm>. [Accessed on 18th July 2017].
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on 18th July 2017].
Research methodology, 2017. [Online] Available through:
<http://research-methodology.net/research-philosophy/>. [Accessed on 18th July 2017].
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APPENDIX
Questionnaire
Name:
Age:
Gender:
1. Did you purchase from Tesco company satisfy you?
 Highly satisfied
 Agree
 Neutral
 Disagree
 Strongly disagree
2. When you are purchasing products and services from Tesco, delivery is very fast or not?
 Yes
 No
 Can't say
3. Would you like to purchase goods and services from the company again?
 Yes
 No
 Can't say
4. How long have you been the customer of Tesco?
 0-6 months
 6-12 months
 12 to 18 months
 18 to 24 months
 More than 24 months
5. Staff of the enterprise is helpful to provide effective products and services?
 Yes
 No
 Can't say
6. How likely are you recommend the Tesco to a friend or relative?
 Excellent
3