Assessing Tesco's Customer Loyalty and Rewards Schemes: A Case Study

This report presents a case study examining the effectiveness of customer loyalty and rewards schemes, specifically focusing on Tesco. The introduction highlights the increasing importance of customer satisfaction and loyalty in the competitive retail market. The report aims to assess the efficacy of Tesco's loyalty programs, evaluating their impact on customer retention and business performance. It explores the concepts of consumer loyalty and rewards schemes, their significance for Tesco, and the benefits derived from them. The literature review synthesizes various academic perspectives on customer loyalty, reward schemes, and their impact on business outcomes. The research methodology section outlines the descriptive research design, inductive approach, and interpretivism philosophy employed. Data collection relies on secondary sources, with thematic analysis used to analyze the gathered information. The report anticipates that Tesco and other retail firms can improve customer retention and gain a competitive advantage through loyalty programs. The expected outcomes include increased customer loyalty, repeat purchases, and enhanced business performance. The report concludes by suggesting recommendations for enhancing Tesco's customer loyalty and rewards schemes, offering insights for both academics and industry professionals.

To assess that whether customer
loyalty and rewards schemes actually
work or not – a case study on Tesco

TABLE OF CONTENTS
PROJECT TITLE............................................................................................................................1
INTRODUCTION...........................................................................................................................1
Background of research...............................................................................................................1
AIM & OBJECTIVES.....................................................................................................................1
LITERATURE REVIEW................................................................................................................2
Contribution to new understanding.............................................................................................3
RESEARCH METHODOLOGY....................................................................................................3
EXPECTED OUTCOMES..............................................................................................................5
REFERENCES................................................................................................................................7

PROJECT TITLE
To assess that whether customer loyalty and rewards schemes actually work or not – a
case study on Tesco
INTRODUCTION
In the present competitive world, it is important for organisations to keep their customers
satisfied so that they can remain in the market for longer span of time. For the same, trend of
consumer loyalty and rewards schemes has been increasing at a fast pace. Main reason behind
keeping customers satisfied is that there are only finite number of customers that a firm can serve
and if they would not be satisfied, losing of them will cost a company a lot in terms of reduced
profits as well as the goodwill in market (Taylor and et.al., 2010). Therefore, in the present
report, there will be discussion on assessing that that whether consumer loyalty and reward
schemes actually work or not with respect to Tesco which is the leading company is retail sector
of UK.
Background of research
Since a few years, it has been observed that consumers' overall engagement in traditional
loyalty programs have not been much focused by the firms in retail industry of UK and thus, they
all are facing the problem of switching over of customers to other competitor organisations. This
is the reason; in current era, it is crucial for retailers to refocus their loyalty initiatives customers
can be retained in the long run and firm will sustain and survive effectually. Thus, with reference
to Tesco, there will be study made on assessing that whether consumer loyalty and reward
schemes actually work or not.
AIM & 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
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Research questions:
1. What is consumer loyalty and rewards schemes used in Tesco?
2. What is the importance of consumer loyalty and rewards schemes for Tesco?
3. What are the benefits that Tesco can gain through consumer loyalty and rewards
schemes?
4. How consumer loyalty and rewards schemes can be improved in Tesco?
SELECTION OF RESEARCH TOPIC
This part of the research is related with the identify reason for the selection of topic a case study
on Tesco. As previous part, it has been discussed that retail business one of the most competitive
task for an enterprise and they required to maintain their performance level. There are following
reason are mentioned below:
 In the recent years Tesco profit and revenue is going down which having adverse impact
on their consistent growth. Therefore, top management feel that to understand the role of
customer loyalty.
 Tesco also required to make attract its customer and for this they need to analysis its
impact on the business performance and sales in the longer run.
 In the recent time each and every company is concentrate on consumer and they produce
their products accordingly. Tesco required to identity needs of their customer which can
help to increase customer satisfaction level.
LITERATURE REVIEW
As per the views of Ernst and et.al., (2011) it can be said that consumer loyalty is trust of
target audience of an organisation on its products and services which it gains after making the
customers satisfied to the utmost level and since a long period of time. Firm can gain consumer
loyalty by providing value to them in against of what they spend on purchasing the products and
services of company. It can be critically analysed that winning the loyalty of customers is
essential for companies as if it will become unable to do so, surviving in the long run would be
impossible.
On the other hand, according to Chan and Ip, (2011) reward schemes play a vital role for
the organisation as with the help of same, firm gets successful in raising the morale of customers;
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result of which is that they repeat their purchase with the firm and does not want to switch over
to other rivalry brands present in the market. Thus, it ultimately leads organisation to generate
higher revenues with which gaining a competitive edge over others becomes easy.
It can be critically evaluated in the words of Singh and et.al., (2012) that firms which are
not offering the rewards schemes to customers; generally they are not able to earn desired profits
as they always lack with the number of customers while, those firms that offer rewards schemes
to their target people, they are more likely to generate higher revenues as they have a large
customer base. Therefore, it is clear that Tesco has to give due emphasis on customer loyalty and
reward system so as to gain competitive advantage in the market.
As per the views of Postrel, (2010) customer loyalty and reward schemes prove to be
essential for organisation as with the help of same, reputation of business gets boosted to a high
extent as company becomes at the position where it generates higher profits with having a large
customer base. With these loyalty programs and rewards schemes, firms become able to attain
sustainable objectives and thus, it can be said that through enticing awards, business increases its
duration of survival in the market with beating the competition.
However, Johnston and Kong, (2011) argues that companies like Tesco that are operating
in retail sector can offer in-store or digital rewards so as to reduce the level of competition by
gaining competitive advantage in terms that customers would feel valued that will help in
retaining them for longer span of time. Thus, with the same, target audience will happily do
business with the organisation which many-a-times lead to do promotion of its products and
services through work-of-mouth. Therefore, it can be said that these rewards schemes play a
significant role in enjoying the loyalty and trust of customer by which business grows and
develops at a fast pace.
On the contrary, as per Schmeyer and Cruz, (2011) there are a lot of advantages that
firms like Tesco can gain through continuing consumer loyalty and rewards schemes in terms of
increased profits and market share along with rise in goodwill with enhanced satisfaction level of
customers and other stakeholders. It can be critically assessed that Tesco can offer reward
schemes in the form of vouchers, free coupons, membership cards, etc. by which cost of firm
will be reduced and profits will be increased. It is because; selling products and services to
existing customers is cost saving in comparison to attracting the new ones (Customer loyalty and
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reward programs, 2016). Therefore, it is proved that customer loyalty and reward schemes
actually work for Tesco.
Contribution to new understanding
Information collected in the literature review of present study will prove to be highly
helpful for researchers who would conduct their study on the same topic. Along with that, this
study will help many teachers and professors to teach their students with taking the help of this
information. Further, many Ph.D. scholars will gain the help in terms that they will have a clear
idea regarding this subject if they are making their study in the same field. Apart from that, firms
other than Tesco in retail as well as in other sectors can also use this data to assess that whether
consumer loyalty and rewards schemes actually work or not.
RESEARCH METHODOLOGY
In order to check that whether consumer loyalty and reward schemes actually work or not
in Tesco, researcher will use appropriate tools and techniques depending on the nature of study,
that is qualitative. Research design – Descriptive research design will be used by scholar as the topic is
completely theoretical and requires in-depth understanding regarding the topic which will
be gained by the same. This research design will help the researcher in describing
characteristics of a population that will be studied (Flick, 2015). Research approach – For assessing that whether the consumer loyalty or rewards
schemes actually work or not, inductive research approach will be used by the researcher.
Under the same, initially, scholar will gather the specific data with reference to topic of
study and them on the basis of this information, generalised conclusion will be made that
can be used by other firms of similar as well as others sectors also. Research philosophy – Researcher will use interpretivism research philosophy in which
relation between the variables will be examined as well as social constructions will be
made in terms of language, consciousness along with the shared meanings (Galvan,
2010). With the same, objectivity and reliability of study will be ensured by the scholar. Data collection – Complete information in the present study will be gathered from
secondary sources only as the topic requires plenty of details from various sources
available like books and journals of different authors, published articles as well as online
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material. Through these sources, a lot of secondary data will be gathered by the
researcher depending on which final conclusion will be framed (Glesne, 2015). Data analysis – Being a theoretical subject of study, qualitative method of analysing data
will be used by the scholar. In order to analyse the gathered information, tool of thematic
analysis will be taken in use that will help in making distinct themes based on assessing
that whether the consumer loyalty and rewards schemes actually work or not. On the
basis of results gained from the justification made by these themes, scholar will frame the
conclusion of study and depending on same, suitable and appropriate recommendations
will be given (Mackey and Gass, 2015).
Activity/Week 1 2 3 4 5 6 7 8 9 1
0
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
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Giving suggestions
Final submission
RESEARCH SPECIFICATION
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Introduction This part is related with the background of research and
company. Further, this will be explaining about the aims and
objectives of research:
Aims: – 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
Literature review This is one of the crucial part of the study, where researcher tries
to provide authors opinion about the research which help to
construct an effective conclusion and recommendation.
Research methodology This is related with the research approach will be used in the
study. It covers various areas such as research design, research
approach, limitation, data analysis, data collection and so on.
Data collection In the proposed research, primary and secondary both approach
will be used by the researcher.
Data analysis In the study, qualitative method is suitable for the researcher.
EXPECTED OUTCOMES
It is expected from the present study that consumer loyalty and rewards schemes play a
significant role in making Tesco and other firms in the retail industry of UK to retain their
customers in the long run and gain advantage of their trust towards business. Also, from the
present research, it is expected that firms will gain the benefit of repeat purchase of customers as
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they will become loyal towards firm and thus would stay with it in the long run. Consumer
loyalty programs and rewards schemes proves to be highly helpful in increasing their level of
satisfaction towards the products and services offered by a firm. Therefore, it is expected that
with getting the same time to time, they get intended and thus, stay with organisation and will
not switch over to other competitor brands (Taylor and et.al., 2010). Overall, it can be said that if
Tesco will give due focus on the consumer loyalty and rewards schemes, to will gain a large
customer base who will be loyal and trustworthy towards firm that will lead to increase goodwill
of business in the market.
It can also be expected as an outcome from the research that Tesco will earn higher
profits and revenues at the end by these loyalty and rewards schemes for consumers as when
target people of company will be satisfied, they would increase their purchase from it as well as
make others also aware with the same. Thus, with increased customers and purchase, higher
revenue will generate and company would grow at a fast pace.
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REFERENCES
Books and Journals
Chan, S. L. and Ip, W. H., 2011. A dynamic decision support system to predict the value of
customer for new product development. Decision Support Systems. 52(1). pp.178-188.
Ernst, H. and et.al., 2011. Customer relationship management and company performance—the
mediating role of new product performance. Journal of the Academy of Marketing
Science. 39(2). pp.290-306.
Flick, U., 2015. Introducing research methodology: A beginner's guide to doing a research
project. Sage.
Galvan, A., 2010. Adolescent development of the reward system. Frontiers in human
neuroscience. 4. pp.116-124.
Glesne, C., 2015. Becoming qualitative researchers: An introduction. Pearson.
Johnston, R. and Kong, X., 2011. The customer experience: a road-map for
improvement. Managing Service Quality: An International Journal. 21(1). pp.5-24.
Mackey, A. and Gass, S. M., 2015. Second language research: Methodology and design.
Routledge.
Postrel, R., 2010. Method and system for issuing, aggregating and redeeming merchant rewards
with an issuing bank. U.S. Patent 7,765,124.
Schmeyer, F. F. and Cruz, M. A., 2011. System and method for providing consumer rewards.
U.S. Patent 7,933,841.
Singh, S. and et.al., 2012. Systems and Methods to Facilitate Loyalty Reward Transactions. U.S.
Patent Application 13/356,506.
Taylor, R. C. and et.al., 2010. System and method for granting promotional rewards to both
customers and non-customers. U.S. Patent 7,753,259.
Online
Customer loyalty and reward programs. 2016. [Online]. Available through:
<https://www.business.gov.au/info/run/goods-and-services/selling-goods-and-services/
customer-loyalty-or-reward-programs>. [Accessed on 5th May 2017].
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