Customer Reward As Loyality Marketing Tool

School of Management
Blekinge Institute of Technology
The accuracy of customer reward
program as loyalty marketing tool

Philip Law
Supervisor: Anders Hederstierna
Thesis for the Master’s degree in Business Administration
Fall/Spring 2008
Abstract
ABSTRACT

Relationship marketing is perceived as a leading trend in marketing and twenty‐first
century consumers have evolved into becoming ‘increasingly promotion‐literate’
(Harlow, 1997 cited in Egan 2001, pg 381). The knock on effect of this is a decrease
in reliance on traditional and most frequently used methods for building customer
relationships.

For over a decade, supermarkets have transformed the shopping experience through
the creation of out of town locations which can accommodate the development of
considerable sized outlets, extensive product ranges expanding beyond food.
Offering a wide range of services one would not normally associate with a
supermarket such as telecommunications, finance and insurance, and with this the
additional incentive of customers collecting and redeeming points through customer
loyalty programs. Categorically today Tesco is not only the UK’s largest grocer, but
also the world’s most successful internet supermarket (Humby and Hunt, 2004, pg
1). The Tesco Clubcard is widely considered to be a pioneer and success story in
loyalty marketing, helping to propel Tesco to be the number one supermarket
retailer in the UK (Tapp, 2005, pg 176).

By carrying out a literature review on previously published materials and the use of a
quantitative survey, this study aims to uncover and identify the value of the Clubcard
scheme and how significant it is it in creating true customer loyalty to Tesco.

The findings of the study revealed consumers place greater importance upon store
location, value for money and product range rather than loyalty card schemes, in‐
store magazines and vouchers. The results revealed that although respondents
aspired to gain points and redeem the rewards offer by the Tesco Clubcard, they also
showed that today’s consumer is more in touch and has a greater knowledge of the
schemes and as such consumers tastes, perceptions, attitudes and demands have

1
Abstract
evolved. Furthermore, it was revealed that consumers are effectively manipulating
suppliers to their own ends as the findings exposed that consumers are shopping
around for the best deals and they own and actively use more than one loyalty card.
The primary research revealed the failure to evolve the Tesco Clubcard scheme into
what today’s consumer demand has brought the Clubcard proposal to a unique
crossroad.

It is recommended that the Clubcard model evolves to adapt to the new tastes,
attitudes and demands of the new generation of consumers. An understanding of
the 21st century consumers will help ensure a loyal customer base. Areas such as
lowering prices shall help sustain a competitive advantage within the supermarket
industry. Further consideration should be given to giving customers an instant
rebate at the point and time of sale rather than rewarding them through the
collection of points. The current image of the Clubcard feels dated and as such a
revision and re‐launch may give it a much needed boost and help motivate and
excite consumers.

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Acknowledgements

ACKNOWLEDGEMENTS

I would like to give thanks to the following people for their help and support in the
completion of this study.

First and foremost I would like to give great thanks to my family and friends who
have supported me through my studies. Special thanks to my partner Jenny for all
her help and support during my course and the writing of this thesis ‐ I couldn’t have
done it without you!

I would like to thank my tutor Anders Hederstierna for his time, attention and
guidance throughout the writing of this thesis.

Finally I would like to thank Tesco for allowing and helping with the research of this
dissertation.

Philip Law

Table of Contents

TABLE OF CONTENTS

Abstract
Acknowledgements
Table of Contents
Table of Figures

1.0 CHAPTER ONE – INTRODUCTION
1.1 The Rise of Tesco 7
1.2 The Background to the Study 8
1.3 The Scope of the Study 9
1.4 Purpose 10
1.5 Objectives 10
1.6 Summary 11

2.0 CHAPTER TWO – LITERATURE REVIEW
2.1 Introduction 13
2.2 The Tesco Story 13
2.2.1 The Tesco Timeline 17
2.3 Characteristics of Customer Relationship Management (CRM) 20
2.4 The Clubcard Phenomenon 21
2.5 Defining Loyalty 23
2.6 Loyalty Marketing 26
2.6.1 The Customer Loyalty Ladder 29
2.7 The Tesco Clubcard as a Loyalty Marketing Tool 31
2.8 The Relationship between Satisfaction and Loyalty 34
2.9 Does Loyalty Result to Profit? 36

Table of Contents
2.10 Do Customer Reward Programs Deliver Long Term? 39

2.11 Conclusion 43

3.0 CHAPTER THREE – METHODOLOGY
3.1 Introduction 48
3.2 Research Objectives 48
3.3 Selection of Research Methods 50
3.3.1 Features of Qualitative and Quantitative Research 52
3.3.2 Analysis of Data 54
3.4 Questionnaire Design 54
3.4.1 The Eight‐step Questionnaire Construction Procedure 55
3.4.2 Justification of Questions 56
3.4.3 Question Types and Wording 56
3.4.4 Questionnaire Layout 57
3.4.5 Interviewer Versus Respondent Completion 58
3.4.6 Coding 58
3.5 Sample Selection Procedure and Sample Characteristics 59
3.6 Strengths, Limitations and Validity 60
3.6.1 Strengths 60
3.6.2 Limitations 61
3.6.3 Validity 62
3.7 Summary 62

4.0 CHAPTER FOUR – RESEARCH FINDINGS AND ANALYSIS
4.1 Introduction 64
4.2 Analysis 64
4.2.1 User Profile of Tesco Clubcard Respondents 64
4.2.2 Customer Perceptions on Tesco Clubcard 67

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Table of Contents
4.2.3 Loyalty and Satisfaction 72

4.2.4 Tesco's Efficiency and use of the Information Gained from
Clubcard 73
4.2.5 Has the Tesco Clubcard Created Loyalty? 75
4.2.6 Are consumers Manipulating Suppliers? 76
4.2.7 Does Tesco Really Need the Clubcard? 79
4.3 Conclusion 82

5.0 CHAPTER FIVE ‐ CONCLUSION
5.1 Introduction 85
5.2 Conclusion of the Study 85
5.3 Recommendations 89
5.4 Limitations and further research 90

REFERENCES 93

BIBLIOGRAPHY 103

Appendix A ‐ Questionnaire Justification 105
Appendix B – Questionnaire 107
Appendix C ‐ SPSS Coded Questionnaire Results 110
Appendix D ‐ SPSS Frequency Tables for Questionnaire Results 114

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Table of Figures
TABLE OF FIGURES

2.2.1 The Tesco Timeline 17
2.6.1 Customer Loyalty Ladder 29

3.0 CHAPTER THREE – METHODOLOGY
3.3.1 Features of Qualitative and Quantitative Research 52
3.4.1 The Eight‐Step Questionnaire Construction Procedure 55


4.2.1.1 Frequency table: Gender of Respondents 65
4.2.1.2 Cross tabulation: Please Choose your Gender * Please
Indicate Which Age Group You Fall Into 65
4.2.1.3 Cross tabulation: Please Indicate Which Age Group You Fall
Into * I Trust Tesco Products and Their Image 66
4.2.2.1 Frequency table: Please Indicate How Often You Use Your
Clubcard When You Purchase Goods or Services with Tesco 67
4.2.2.2 Cross tabulation: Please Indicate Which Age Group You Fall Into
* If Tesco Did Not Have the Clubcard Scheme, Would
you Still Continue to Shop There? 68
4.2.2.3 Cross tabulation: I Think Tesco is Very Innovative * I Feel More
Could be Done to Increase my Loyalty 69
4.2.2.4 Cross tabulation: I Trust Tesco Products and Their Image * I Feel
More Could be Done to Increase my Loyalty 69
4.2.2.5 Cross tabulation: If Tesco did not have the Clubcard scheme, Would
you Still Continue to shop there? * I Expect Rewards to be a
part of my Normal Shopping Experience 70

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Table of Figures
4.2.2.6 Cross tabulation: Importance of Loyalty Card Schemes *
Have you Redeemed any Rewards from the Clubcard
Scheme within the last 12 Months? 71
4.2.3.1 Cross tabulation: Would you Describe Yourself as Being Loyal to
Tesco? * Would you Describe Yourself to be a Satisfied
Customer of Tesco? 72
4.2.4.1 Frequency table: Do you read Clubcard Magazine? 74
4.2.4.2 Cross tabulation: Do you read Clubcard Magazine? * If "yes" or
"sometimes" Please Indicate what you think of the Magazine 74
4.2.5.1 Cross tabulation: Does the Collection of Points Influence you to
buy more or to buy specific/alternative Promotional Products? *
Location Of Store Importance 75
4.2.6.1 Frequency table: Apart from Clubcard, do you own and regularly
use other store loyalty cards? Please indicate how many 76
4.2.6.2 Frequency table: I Usually Shop Around to get the Best Deals 77
4.2.6.3 Frequency table: I Expect Rewards to be a part of my Normal
Shopping Experience 78
4.2.6.4 Cross tabulation: Please Indicate which age group you fall into: *
Do you know how many Clubcard Points you gain for every £1
you spend in store? 79
4.2.7.1 Table: The Importance Respondents Placed upon Factors that
Influence Loyalty 79
4.2.7.2 Frequency table: What more could Tesco do to make you more
Loyal? 81

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Chapter One ‐ Introduction

Chapter One

Introduction

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1.0 CHAPTER ONE – INTRODUCTION

1.1 The Rise Of Tesco

Categorically today Tesco is not only the UK’s largest grocer, but also the world’s
most successful internet supermarket (Humby and Hunt, 2004, pg 1).

Arguably one of the world’s most successful advocates of Customer Relationship
Management (CRM) (Humby and Hunt, 2004, pg 1) and as commented by Tapp
(2005, pg 176), “The big success story of database driven management is Tesco. It
seems to understand when to closely manage the analysis, and when to let it go its
own way; when to go with a hunch based on experience and when to question
conventional wisdoms).

Since the introduction of the Tesco Clubcard scheme in 1995, the retailer has
managed to ascertain a sound reputation for innovation using imagination and
technology to constantly deliver customer value resulting in increased sales and
customer retention in the ferociously competitive food retailing industry. Tesco and
the Tesco Clubcard are seen as “the key player in the UK and one of the most
important schemes in commercial history …. It has revolutionised the way a multi‐
billion pound industry is run. Individual‐level data has been systematically gathered
on most of Tesco’s 12 million customers, allowing the company to understand each
customer’s value to the company and how it may be able to increase that value or
prevent loss” (Tapp, 2005, pg 192). “Before Clubcard, Tesco was stuck as the UK’s
second‐ranking supermarket” (Humby and Hunt, 2006, pg 1).

Tesco claims nearly £1 of every £7 spent on the high street (Hawkes, 2008). In April
2008 “Tesco has reported an 11.8% rise in underlying annual profits for 2007 to
£2.846bn, meeting analysts’ forecasts” (BBC Business News, 2008).

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What this thesis will investigate is how significant and instrumental the Clubcard
scheme has been in building the success of Tesco’s rise to dominance. With other
supermarkets offering similar schemes, why exactly do customers constantly return
and not defect to rival stores? What is the true value of the Clubcard scheme to
Tesco? Given the current position that Tesco are in and offering so much to
customers it could be disputed if Tesco really need the Clubcard scheme.

With this setting in mind I would like to initiate the concept of Customer Relationship
Management (CRM). Berry and Parasuraman, (1991) have commented that in order
for an organisation to sustain a relationship with its customers it needs to offer
benefits that are important to them and at the same time difficult for competitors to
replicate. Barry stressed that the aim is to transform indifferent customers into
loyal ones and solidify the relationship. This argument is further enforced that
twenty‐first century consumers have evolved into becoming ‘increasingly promotion‐
literate’ (Harlow 1997 cited in Egan 2001, pg 381).

“Today, there is a CRM revolution underway among businesses. It represents an
inevitable – literally irresistible – movement. All businesses will be embracing CRM
sooner or later, with varying degrees of enthusiasm and success” (Peppers and
Rogers, 2004, pg 6). CRM has become a major management growth tool of the last
decade (Gilles, Righby and Reichheld 2002) and research has shown that the market
for the worldwide customer relationship management (CRM) software is projected
to surpass $8.9 billion in 2008 and is forecasted to reach $13.3 billion by 2012.
(CRMToday.com, 2008).

1.2 The Background to the Study

The evolution of supermarket shopping has advanced at an expediential rate over
the last decade. Having transformed the shopping experience and changed the way

8
in which we shop through the creation of out of town locations which can
accommodate the development of considerable sized outlets, extensive product
ranges expanding beyond food, a wide range of services one would not normally
associate with a supermarket such as telecommunications, finance and insurance.
With this the additional incentive of customers collecting and redeeming points
through customer reward programs.

The trend and interest in using loyalty cards is undeniable. Approximately 85% of
households in the UK had at least one active loyalty card (Mintel, 2004). These
loyalty cards are key to an organisation’s marketing activity as it allows marketers to
interact directly to the people who will benefit the most with tailor made offers and
communication. However, some studies have suggested that the loyalty card
scheme are at a crossroad and do not work as shoppers attitudes have changed and
they prefer to pay less for their groceries than earn points on their purchases.

1.3 The Scope of the Study

The study of this dissertation will commence with focusing on secondary data, in the
form of a literature review. The motivation for this is that it shall provide a depth of
understanding, the concepts and theories that are to be investigated and to provide
an example on how others have embarked upon this subject area. Primary research
is essential in order to complete the objectives that this thesis sets out to achieve,
therefore the findings of the literature review will direct the author into the
construction of a primary research tool in the shape of a questionnaire to address
areas where there maybe gaps. Subsequently, the methodology will explain the
conditions into how the primary research was conducted before an analysis of the
results attained. The closing stages of this study will then be concluded and
recommendations will be made.

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1.4 Purpose

The intention of the thesis is to uncover if Tesco truly need their Clubcard scheme
any longer to keep customers loyal due to the sheer amount of effort they currently
use to keep customers loyal and given the position that they are in. The tool may
assist in the aid of repeat purchases but does the scheme demonstrate and create
true loyalty.

1.5 Objectives

1). Chronicle Tesco’s rise to power and being the number one supermarket retailer
within the UK.

2). Define loyalty and loyalty marketing.

3). Recognise the factors that affect the significance of a customer reward program
and their roles within the supermarket sector.

4). Question how instrumental the Clubcard reward program is in building the
success of Tesco to where it is today and its role as a marketing tool.

5). Establish the real value and significance of the Clubcard reward program to Tesco.

6). Discover the general attitude of Tesco customers towards the Clubcard reward
program. Analyse and obtain the importance of the scheme to customers and
ascertain just how significant the scheme is in keeping them loyal.

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1.6 Summary

From establishing the aim of this study the reader is conscious to the scope of the
investigation and what it sets out to accomplish. The motivation of the subject and a
brief background to Tesco and its Clubcard scheme has provided a solid foundation
for advancing to examine secondary research.

The literature review follows in the next chapter.

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Chapter Two – Literature Review

Chapter Two

Literature Review



2.1 Introduction

This chapter aims to provide a background to the study and seeks to carry out the
following objectives of the dissertation:

1). Chronicle the history and rise of Tesco.
2). Understand the concept of CRM.
3). Define Loyalty and Loyalty Marketing.
4). Determine if the Tesco Clubcard has generated loyalty and what factors
customers are loyal to.
5). Realise the issues that may affect the value of a customer reward program
and recognise the importance within the supermarket industry.
6). Given Tesco’s current range of loyalty marketing strategies, examine if
the Tesco Clubcard is really needed.

The literature review will commence with the charting of Tesco’s background story,
followed with defining the fundamental terms with a focused discussion. It will
conclude with a summary of the main points mentioned.

2.2 The Tesco Story

Recent work from Reference for Business (2007) and the European Foundation for
the Improvement of Living and Working Conditions (2007) have chronicled the
history of Tesco. It is with allusion to these bodies of work that this section is based
upon.

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In 1919, John Edward Cohen invested £30 into a small grocery stall in the East End of
London, selling whatever could be housed in the tiny stall. Thus began Cohen’s
career as a market trader after serving in the Royal Flying Corp.

By 1932, Cohen officially founded Tesco Stores Limited. The name was a based on a
private label tea that Cohen bought and sold from a merchant which used the initials
T.E. Stockwell and by adding the first two letters of his surname – TESCO was born.

Within 8 years, Cohen expanded his operation and opened more than 100 small
stores in the London area. In 1935 Cohen was invited by several key American
suppliers to the United States to witness and learn the American food retailing
system. On returning to the UK from his visit, Cohen wanted to take the American
self‐service supermarket vision and implement it in the UK.

By 1947, Cohen realised his dream and opened the first Tesco self‐service store in
Hertfordshire. However, the public were not ready for such a radical approach and it
failed to capture the interest of British shoppers, the end result was that the store
closed in 1948. Not deterred by this Cohen reopened the shop one year later to a
warmer reception from the great British public.

Helped by the acquisition of smaller grocery chains Tesco rapidly expanded over the
next two decades and in 1956 the first Tesco supermarket to carry fresh foods in
addition to more traditional dried goods was opened.

During the 1960’s, Tesco range of products diversified. Non‐food merchandise and
household items were now being sold and with it came a higher margin. It was also
during this period that the company completed construction on a 90,000 square‐foot
warehouse. With the opening of a 40,000 square‐foot store the term “superstore”
was born. This term not only referred to the actual size of the store but also the
immense selection of food and non‐food items available within it.

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In 1963, Tesco signed up to the Green Shield stamps scheme. This was another
American idea, where the theory of the scheme was that retail organisations would
purchase these stamps and then give them away as a bonus to customers for every
purchase they made. The amount of stamps given reflected on how much
customers spent. Once the customers had collected sufficient stamps and stuck
them into a Green Shield collector’s book, the shoppers could then exchange this for
merchandise from a catalogue or shop. The outcome of this was customer loyalty as
shoppers congregated on stores offering stamps.

The American food retailing system that Cohen had introduced resulted in Tesco
operating approximately 900 supermarkets and superstores throughout the UK by
1976.

The sheer nature of the American supermarket vision of ‘pile it high, sell it cheap’ did
not lend itself to generous profit margins and the firms management established
that this strategy had not aged well and in fact was deteriorating, consequently
causing an image problem among consumers.

The food industry and consumers were evolving and Tesco were guilty of missing the
vital signs of change in the market and that consumers were demanding quality over
quantity.

During the 1970’s, consumers were spending less money on food purchases and
Tesco profits were lower as customers’ tastes were changing and they had more
disposable income. In addition, the Tesco brand began to look slightly jaded and was
suffering an image quandary. In an attempt to win back shoppers, increase sales and
gain more market share the Green Shield Stamp scheme was scrapped in 1973 and
prices were cut across the board.

Initially the new strategy worked, however the diminishing image of Tesco was still
apparent. The majority of Tesco stores were poorly staffed with inadequate

15
customer service and merchandise selection. In order to recuperate, an extensive
modernisation program was undertaken and 500 unprofitable stores were closed.
Tesco made a considerable investment to not only improve its stores physically but
also to provide the higher quality merchandise that consumers desired. The upshot
was prevalent upgrading and enlargement of smaller cramped stores. Cosmetic and
practical changes such as widening aisles and enhanced lighting were used and the
main focus of Tesco was on the superstore concept. The average superstore covered
25,000 square feet but eventually expanded to as large as 65,000 square feet.

In order to improve efficiency the original distribution systems were computerised
and restructured. To compliment the new high‐quality and service‐oriented image
of these new stores, Tesco also introduced its own label product lines which had
been developed through extensive Research and Development (R&D) programs.

During the late 1970’s and early 1980’s the UK food sales market was in a slump. In
order to encourage more sales and customer loyalty Tesco began an application
which cut prices on approximately 1,500 food items. The knock on effect of this was
a renewed price war between Tesco and J. Sainsbury.

Throughout the rest of the 1980’s Tesco continued to expand into Ireland and in
1985 the 100th superstore was opened. By 1989 the company had spent £500
million on building 29 new stores.

By the beginning of the 1990’s, Tesco had become one of the top three food retailers
in the UK, encompassing 371 stores in Great Britain in addition to becoming the
largest independent gasoline retailer in the UK. It was also during this period that
Tesco expanded into new countries acquiring store chains in Poland, the Czech
Republic and Slovakia.

To further reinforce the innovation at Tesco, two new formats of store were
experimented. The first was the Tesco Express format, which combined a petrol

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station and small convenience store into one. The Tesco Extra format expanded the
non‐food departments.

In February 1995, the Tesco Clubcard was introduced. Two years later, in 1997,
Tesco branched out into financial services creating a Tesco Visa card, in‐store banks,
savings accounts, loans and insurance.

By the millennium Tesco, launched its e‐commerce business and turned to
developing its non‐food business. The aim was to turn the non‐food side of the
business to be as strong as the food side.

Stores now carried extensive electronic products, toys, sports equipment and
general household goods and furnishings. In September 2002 Tesco introduced its
own line of clothing. International operations were also developing as Tesco entered
Asia opening stores in Thailand, South Korea, Taiwan, Malaysia and China.

Today, Tesco stands as a genuine retail giant, it has consistently out performed rivals
and increased market share. The strength and diversification of Tesco’s own brand
products is indisputably impressive. Expansion in the UK and abroad is continuing
and industry observers can find little to fault the company’s operations.

2.2.1 The Tesco Timeline

Timeline on the growth of Tesco:

1919 ‐ Founder Jack Cohen begins selling surplus groceries from a store in the East
End of London. His first day's profit was 1 pound on sales of 4 pounds.

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1924 ‐ Cohen's first own‐brand product is called Tesco Tea. The name came from the
initials of TE Stockwell, a partner in the firm of tea suppliers, and CO from Cohen's
surname.

1939 ‐ Tesco has around 100 branches.

1947 ‐ Tesco Stores (Holdings) Ltd floats on London Stock Exchange with share price
of 25 pence.

1956 ‐ First Tesco self‐service supermarket opens in a converted cinema in Maldon.

1960 ‐ Takes over chain of 212 stores in North of England and adds another 144
stores in 1964 and 1965.

1961 ‐ Tesco Leicester enters Guinness Book of Records as the largest store in
Europe.

1963 ‐ Introduction of Green Shield Stamps scheme.

1979 ‐ Annual sales reach 1 billion pounds.

1982 ‐ Annual sales exceed 2 billion pounds.

1987 ‐ Tesco has 377 stores – far fewer than before, but each store is larger.

1991 ‐ Becomes Britain's biggest independent petrol retailer.

1995 ‐ Becomes Britain’s market‐leading food retailer. Tesco Clubcard customer
rewards scheme is launched, the innovation set to transform the store’s fortunes,
and track it’s customers. Tesco enters Hungary.

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1996 ‐ Tesco spreads to Poland, Czech Republic, Slovakia and Northern Ireland.

1997 ‐ Terry Leahy becomes chief executive. Tesco moves to capture share of loan
and personal finance market as Tesco Personal Finance is launched. Company
launches 24‐hour trading as the first of many Tesco Extra Hypermarkets open.

1998 ‐ Enters Taiwan and Thailand

1999 ‐ Mobile phones go on sale in Tesco stores; launches online bookstore and
online banking. Enters South Korea.

2000 ‐ Tesco.com launched and goes live.

2001 ‐ Strategic relationship with U.S. supermarket Safeway to take Tesco.com
model to United States. Enters Malaysia.

2002 ‐ Tesco has 730 stores in the UK.

2003 ‐ Tesco enters Japan and Turkey.

2004 ‐ Enters China. Launches own brand Fairtrade range. Tesco broadband
launched. Enters music download market.

2005 ‐ Makes 2 billion pounds of annual profits. Announces non‐food store trial.
Enters Czech Republic and Slovakia through Carrefour asset swap and exits Taiwan

2006 ‐ Tesco has a total of 1,879 UK stores and controls approximately one‐third of
the UK grocery market.

November 8, 2007 ‐ Opens first U.S. store near Los Angeles.

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Adopted from Sanderson (2007) and Simm (2007, pg 116‐117).

2.3 Characteristics of Customer Relationship Management (CRM)

“The past decade has seen many firms (re)adopt a customer focus – often through a
formal program of customer relationship management (CRM)” (Uncles, Dowling and
Hammond, 2004, pg 92). Peppers and Rogers (2004, pg 6) back up this claim citing
that “there is a CRM revolution underway among businesses”. Despite becoming
one of the most intensive and important developments of the business climate there
is no specific definition for CRM, as commented by Goodroe (2005, cited in Wylie),
“CRM is difficult to define. It’s somewhat misunderstood, largely misused, and in
some cases abused…often by the very people who strive to define it.”

In the modern marketplace customers continue to gain vigour, it is vital that an
understanding of them is undertaken to provide personalised value. “Customers
don’t want to be treated equally. They want to be treated individually” (Newell
2003, pg 17).

Through the use of an elaborate process arbitrated by information technology, CRM
is designed to create and continuously improve the relationship between an
organisation and its customers in real‐time transactions. Despite the fact that CRM
is essentially rooted within information technology it is more than just a technology.
It draws from traditional marketing principles and key to this process is the
recognition and definition of what customers deem as value and delivering it, the
end result is “value is thus created with customers, not for them” (Gordon, 1998, pg
9).

What can be established is that the CRM process suffers when it is not adequately
understood or implemented. Clearly CRM involves much more than marketing and
“in its most generalised form, CRM can be thought of as a set of business practices

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designed, simply to put an enterprise into closer and closer touch with its customers,
in order to learn more about each one, with the overall goal of making each one
more valuable to the firm” (Peppers and Rogers, 2005, pg 6).

In order for an organisation to truly engage the customer it is essential that
companies can exceed consumers expectations, therefore any definition of CRM
would be fundamentally wrong if it didn’t start with the customer in mind. The
following excerpt will be used to define CRM:

“Relationship Marketing is the ongoing process of identifying and creating new
values with individual customers and then sharing the benefits from this over a life
time. It involves the understanding, focusing and management of ongoing
collaboration between suppliers and selected customers for mutual value creation
and sharing interdependence and organisational alignment” (Gordon, 1998, pg 9).

For the case of the Tesco Clubcard, Humby and Hunt (2004, pg 16) have cited that
“the definition of CRM is best summarised as: to improve our performance at every
point of contact with our customers, to make them happier and the company
richer”.

2.4 The Clubcard Phenomenon

“Customer loyalty is not about how customers demonstrate their loyalty to us,
it is about how we demonstrate our loyalty to them”.

Lord MacLaurin, Chairman of Tesco

In February 1995, the Tesco Clubcard was launched and it became the UK’s first
supermarket customer reward program. Originally piloted in twelve stores, the
inspiration of the card was to gain an insight into shopping habits of customers and

21
give something back to them. Points would be accumulated for every £5 spent and
in turn the points would be converted every quarter into Clubcard vouchers which
the customer could redeem in any Tesco store. However this scheme was later
changed when it was realised that pensioners and students were not fully benefiting
due to the small frequent purchases they made (Louis, 2002, pg 5).

Under the new scheme, shoppers gained one point for every £1 spent on goods in‐
store, online, on Tesco Petrol forecourts, Tesco Personal Finance products and Tesco
Telecoms. Additional points could also be connected at 10 Clubcard partner
companies (Papworth, 2005).

Once the customer has accumulated 150 points the points are converted into
Clubcard vouchers at an exchange rate of 1p to one point, thus giving an effective
discount of 1%.

To add further value to the vouchers, they can be “swapped for AirMiles or Clubcard
Deals such as days out, film hire, restaurant meals, magazine subscriptions, holidays
and flights. These deals are priced at four times the in‐store redemption value of the
vouchers. For example a year’s magazine subscription to Cosmopolitan magazine
which normally costs £34.20, costs £8.55 in Clubcard vouchers” (Papworth, 2005).

The costs associated with running a loyalty program are notoriously high. The Green
Shield stamp scheme cost £12 million annually. The Clubcard scheme introduced
new point‐of‐sale (POS) technology as well a call centre to handle customer queries
and a vast supporting computer system to record and analyse the Clubcard
information. In total it cost Tesco £300 million over the first three years and
approximately 4.5% of Tesco profits to run the scheme.

Within six months of the introduction of Clubcard, Tesco’s share of the UK retail
grocery trade had increased from 15% to 18%. Less than 12 months after the launch,
with over eight million Clubcard customers purchasing some 200 million in‐store

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products per day, Tesco was now propelled to being the number one retailer in the
UK (Peppers and Martha, 2001).

Following the success, some competitors launched rival schemes although these
were later scrapped. One retailer, ASDA, did resist the trend of loyalty cards and
focused primarily on its competitiveness and reducing costs. It was assessed that in
2001 the Clubcard scheme had managed to attract approximately 20 million
members in the UK, of which over ten million card holders were active users.

Seth and Randall (2001, pg 39) have commented that Tesco “did not invent the card
nor were they a first mover, but in retrospect they executed its introduction bravely
and brilliantly, getting the timing right”.

2.5 Defining Loyalty

In order to investigate the value of the Tesco Clubcard scheme, it is vital that an
understanding and definition of loyalty is established. In the context of retail
marketing loyalty can be perceived as “a combination of customer behaviour and
attitude” (Fraoch Marketing, 2006). It is usually characterised as activities carried
out by an organisation for the development of a long‐term relationship with its
customers.

With this in mind, the concept of loyalty may initially appear to be rather simplistic.
However, there is an overwhelming amount of research focused on the definition
and term for the notion of loyalty. Customer loyalty is acknowledged as a key
concept whose importance has been recognised by many academics and
practitioners.

“Questions about how to define loyalty were addressed more than 20 years ago”
(Grisaffe, 2001). Upon further investigation and reading it can be seen that there is a

23
lot more to the notion and as commented by Parker and Worthington (2000, pg 491)
it is a “complex phenomenon”.

One of the most distinguished insights into loyalty was provided by Dick and Basu
(1994, pg 102), who cited loyalty as “the strength between relative attitude and
repeat patronage”. Key to understanding this is the correlation between behaviour
and attitude. However this is not significantly sufficient as the perception could
ascertain changes in behaviour and attitudes in the future.

It has been suggested by scholars that loyalty is an emotional concept, Jenkinson
(1995, pg 116) resists defining loyalty in behavioural terms and notes the concept of
loyalty as “the reflection of a customer’s subconscious emotional and psychological
need to find a constant source of value, satisfaction and identity”. This advocates
that loyalty is an emotional concept created by trust. Humby and Hunt (2004, pg 17)
have commented that “loyalty is an emotional response based on empathy”. To
further the ideology and recognition that thoughts and feelings are active, East
(1997, cited in Rowley, pg 539) comments “other variables such as social and
physical environment as well as the personal abilities have been found to pre‐empt
action”. Conversely this view could be seen as being “functionally loyal” (Barnes
2002) whereby customers are only loyal to a company due to convenience.
Functional loyalty is often created by functional values such as quality, distribution,
price, convenience or through different loyalty programs providing a tangible reason
to prefer certain suppliers. However, this is easily replicated by competitors, thus
the creation of functional value only offers a short‐lived competitive advantage,
functional loyalty can’t be very long lasting (Barnes, 2002).

Neal (2000 cited in Grisaffe 2001), states that “loyalty is a behaviour”, this is
“arguably the most controversial (view) but the best supported by data. The
controversy comes about because loyalty is this model is defined mainly with
reference to the pattern of past purchases with only secondary regard to underlying
consumer motivations or commitment to the brand” (Ehrenberg, 1998; Fader and

24
Hardie, 1996; Kahn et al., 1988; Massey et al., 1970 as cited in Uncles, Dowling and
Hammond, 2004, pg 94). Shapiro and Varian (1998, pg 128) believe that loyalty is
concerned with repeat purchase or buying largely and exclusively from a single
vendor.

Uncles et al., 1994 (as cited in Uncles, Dowling and Hammond, 2004, pg 94),
comments that after extensive studies of data and purchase pattern, researchers
“have found that few consumers are ‘monogamous’ (100 percent loyal) or
‘promiscuous’ (no loyalty to any brand). Rather, most people are ‘polygamous’ (i.e.
loyal to a portfolio of brands in a product category)”. Essentially “from this
perspective, loyalty is defined as an ongoing propensity to buy the brand, usually as
one of several” (Ehrenberg and Scriven, 1999, cited in Uncles, Dowling and
Hammond, 2004, pg 94).

“Loyalty to the brand (measured by repeat purchase) is the result of repeated
satisfaction that in turn leads to weak commitment. The consumer buys the same
brand again, not because of any strongly‐held prior attitude or deeply‐held
commitment, but because it is not worth the time and trouble to search for an
alternative” (Uncles, Dowling and Hammond, 2004, pg 94).

Grisaffe (2001) argues that loyalty is not just about behaviour, “If a buyer has a
cognitive rule, ‘buy the lowest priced brand’, and brand B is always lowest, they look
behaviourally loyal to B over time. Until brand A enters the market at a lower price.
Then the customer switches to show repeat purchase of A, until market prices
change again. To which are they loyal, the brands, or the decision rule? True loyalty
is not just behavioural”. Barnes (2002) claims that “repeat buying does not make
loyalty …. Loyalty is essentially an emotional concept, like relationships, and yet
many firms seem not to understand or appreciate this. Many businesses continue to
define loyalty in behavioural terms”. Furthermore Barnes (2002) also cites that,
“There is a great tendency in business to measure or define loyalty entirely in
behavioural terms ‐ number of visits, frequency of visits, total spend, share of

25
category spend, number of years as a customer, etc. There is a tendency to confuse
loyalty with retention ‐ two concepts that are related, but certainly not the same
thing. Retention is a behavioural concept; loyalty is not. A focus on retention
creates a high‐risk situation where a company may think its customers are a lot more
loyal than they really are. Why, then, do some businesses define loyalty primarily if
not exclusively in behavioural terms? The answer is often as simple as that’s what
we are able to measure most easily. In fact, many companies today capture such
information automatically every time a customer interacts with the firm. To obtain a
list of our most ‘loyal’ customers, we simply request the information from the
customer database. Loyalty defined behaviourally is also a much easier concept to
understand, without having to get into all that consumer psychology”.

Of the various definitions, the characterisation deemed to be the most appropriate
when discussing the Tesco Clubcard has been cited by Humby and Hunt (2004, pg 9).
It has been suggested that day‐to‐day life loyalty suggests “emotional commitment”
and “monogamy: one choice above all else”. In comparison retail loyalty implies on
“looking to achieve a little extra goodwill, a slight margin of preference, an
incremental shift in buying behaviour”.

2.6 Loyalty Marketing

“Loyalty marketing can be defined as the management process of identifying ‘best
customers’ and utilising customer data and insight to create, retain and grow
profitable relationships” (ICLP, 2005).

Loyalty marketing is often expressed in a manner of ways, such as relationship
marketing, one‐to‐one marketing, customer‐centric marketing and frequency
marketing. However as commented by Duffy (1998, pg 435), the appropriate term
should be loyalty marketing as “loyalty is the business objective. What we seek to
achieve here is loyalty”.

26

Regardless of the idiom, loyalty marketing is an approach based on strategic
marketing and has been expressed as the “sine qua non of an effective business
strategy” (Heskett, 2002, pg 355). The fundamental aim is to define profitable
behaviour and consequently manage this relationship by designing a range of
initiatives to maintain and influence profitable behaviour. Repeat purchase is
rewarded and a channel of communication with customers is facilitated to
encourage further repeat purchase.

“Customer loyalty programs are coordinated, membership based marketing activities
designed to enhance the building of continued marketing exchanges among pre‐
identified customers toward a sponsoring brand or firm. Loyalty programs use
targeted communications and customise the delivery of branded goods and services
to build stronger bonds with the sponsoring brand/firm that would result without
such programs. Often based on cumulative brand purchases, loyalty programs
enhance value proposition offerings to preserve active customer status” (Lacey and
Sneath, 2006, pg 459). “They allow marketers to capture detailed transactional and
preference customer databases. These databases can be used to determine
customer value, define specific marketing strategies for finite customer segments,
and model customer attrition and intervention strategies” (Lacey and Sneath, 2006,
pg 461). Uncles, Dowling and Hammond, (2004, pg 92) claim that the “two aims of
customer loyalty programs stand out. One is to increase sales revenue by raising
purchase/usage levels, and/or increase the range of products bought from the
supplier. A second aim is more defensive – by building a closer bond between the
brand and current customers it is hoped to maintain the current customer base”.

Gordon (1998, pg 20), has criticised loyalty marketing as programs that “typically
result in another piece of plastic in your wallet to encourage more customer
patronage”. However, “several kinds of scheme are currently run in the retail
industry, from card schemes, special services, and customer magazines to customer
panels” (Wright and Sparks, 1999, pg 431).

27

Of the above excerpts it can be empathised that the most frequent used customer
reward programs employed are loyalty cards, given their ability to identify frequent
buyers and segment the market. Humby and Hunt (2004, pg 17) have argued that it
should not be contended that card‐based customer reward programs are credible
alternatives to being offered excellent service, innovative products and services or
the right price. All of which can develop loyalty. “The important point is that these
initiatives and a card‐based loyalty scheme are not mutually exclusive”.

Rayner (1996, pg 8) identifies customer reward programs as a “mechanism for
identifying and rewarding loyal customers”. Sharp and Sharp (1997, cited in Lacey
and Sneath 2006, pg 459), have commented that “loyalty programs are set apart
from other forms of promotions by their long‐term nature and deliberate emphasis
on preserving customer retention and intensifying purchase frequency”.

They work by using a process of operant conditioning theory. “Operant conditioning
refers to a systematic program of rewards and punishments to influence behaviour
or bring about desired behaviour …. It relies on two basic assumptions about human
experience and psychology: (1) a particular act results in an experience that is a
consequence of that act and (2) the perceived quality of an act’s consequence affects
future behaviour” (Heil, 2006). Operant conditioning is based on the concept that “if
a given bit of behaviour has a consequence of a special sort, it is more likely to occur
again upon similar occasions” (Skinner, 1978, pg 19). Operant conditioning deals
with learned and not reflexive behaviour and the procedure occurs as individuals
learn to perform behaviours that produce positive outcomes. Applied to retail
organisations, over time consumers associate with companies that reward them, the
knock on effect is they will choose to reiterate to buy products that fulfil their own
needs. Implemented customer reward programs, points and the incentives offered
all act to influence and strengthen consumers’ behaviour. It can be remarked that
this behaviour is not generic amongst all consumers and that some customers are
not affected or influenced by the prospect of rewards. Tapp (2005, pg, 126) has

28
commented, “given the hue and cry about loyalty over the last decade, let us be
clear ‐ the prevailing evidence is that absolute loyalty cannot be regarded as the
norm in most markets”.

Uncles, Dowling and Hammond, (2004, pg 95) claim that “to increase sales by
enhancing beliefs about the brand and strengthen emotional commitment of
customers to their brand”, companies need to move “customers up a ‘loyalty ladder’
through image‐based or persuasive advertising and personal service (recovery)
programs are frequently used tactics” (Brown, 2000; White and Schneider, 1998 as
cited in Uncles, Dowling and Hammond, 2004, pg 95).

Payne (1994, pg 29‐30), has constructed the “Customer Loyalty Ladder” which
illustrated that the goal of loyalty marketing is “keeping and improving the
relationship with the customer”.

2.6.1 The Customer Loyalty Ladder

29

From the above diagram each rung of the ladder shows the priority in which tasks
should be undertaken in order to accomplish loyalty. Payne has observed that
companies need to focus on improving their relationship with each customer and
“progress them up the ladder” rather than converge on individual sale (Payne, 1994,
pg 30).

Loyalty marketing is not undertaken by every organisation, Reichheld (cited in Finnie
and Randall, 2002, pg 26) has commented that some companies do not view loyalty
marketing as an “objective, but a duty and a must”. Furthermore Reichheld (cited in
Tapp, 2005, pg 126) asserts that, “ultimately the key to profitability was the high
retention of the firm’s existing, stable, profitable customers”.
Additionally, Tapp (2005, pg 172) construes that, “a lot of frequent‐purchase
behaviour (e.g. supermarket goods) is based on ‘repertoire’ purchasing, in that
customers retain a basket of brands which they jump between in a ‘polygamous’
fashion …. The clear conclusion from these pieces of work is that exclusive brand
loyalty cannot be regarded as the norm in most markets”. Uncles, Dowling and
Hammond, (2004, pg 95) conclude by claiming “loyalty programs are also designed
to strengthen commitment and create velvet handcuffs to bond the customer to the
brand”.

The number and similarity of loyalty programs employed today has caused concern
and rather than creating or adding towards customer loyalty it can argued that they
are actually causing confusion and apathy and stimulating “loyalty overload” (Tapp,
2005). Additionally, Uncles, Dowling and Hammond (2004, pg 102), claim that
“when widespread copying happens, any benefit gained is likely to be ephemeral”.

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2.7 The Tesco Clubcard as a Loyalty Marketing Tool

“Loyalty schemes tend to be most useful in frequent purchase markets …. And also
commonly found in markets where the core product is a commodity and companies
have great difficulty differentiating themselves” (Tapp, 2005, pg 274).

The amount of customer reward programs that has been introduced by retailers and
service providers has become more widespread in recent years. Byrom et al. (2001)
suggests that there is over 150 such schemes currently in the UK with a result of
approximately 40 million cards in current circulation. Stone (2004, pg 192)
comments that, “Around 80 per cent of UK households participate in at least one
customer loyalty scheme. The average consumer participates in three schemes. In
the grocery market, Tesco claims a 'first mover advantage' not in the sense of having
a scheme but in the sense of being the first where the scheme is a strong part of a
transformed marketing approach”.

“Historically information has been linked to exchange theory (Hirschman, 1980),
whereby consumers are willing to exchange their personal information in order to
obtain other resources, such as monetary savings or enhanced services …. In the case
of loyalty programs, participating customers are offered an enhanced value
proposition, and in return firms will be given access to personal information that can
be used to further refine strategies and tactics” (Lacey and Sneath, 2006, pg 461).

When a customer joins a customer reward program their details are entered into a
database in which further transactions of their purchases are recorded building a
profile of purchasing habits. “In exchange for registration, the customer receives
points that can be used in full or part payment for products or services” (Rowley,
2005, pg 195).

Mauri (2003, pg 13‐14) has commented that, “the technology of loyalty cards allow
retailers to transform cold data on consumer behaviour into warm relationships and

31
eventually into a genuine loyalty founded on mutual understanding and trust. A
warm relationship is also a learning relationship”.

A prologue with regards to the Tesco Clubcard has already been covered in section
2.3 of this thesis. The Clubcard is viewed by Tesco as a way of saying thank you to its
customers by allowing them to earn points through “meeting everyday needs and
undertaking everyday activities” (Rowley, 2005, pg 198). “Clubcard is designed to
give you something back for shopping with Tesco” (http://www.tesco.com).

As the UK’s largest retailer and given the considerable customer base, the Tesco
Clubcard accumulates and records information on a sizable population of the UK on
an astounding basis. It is estimated that on eight of every ten trips to Tesco,
shoppers use a Clubcard. There are in the region of 25 million Clubcards in existence
which represents 14 million households; resulting in more than 11 million active
cards (Simm, 2007). As commented by Jenkinson (1995), loyalty cards are also about
the collection of customer data, “in a bonus program, the bonus is the price for the
information that I get. I buy knowledge through it, not loyalty, because loyalty is not
purchasable”. With every swipe of a loyalty card at a point of sale, the retailer is
recording the entire transaction in detail: from the name of the shopper, the time
they shop, the shop they visited and the entire contents of their trolley (Field 1997).

Langenderfer and Cook (2004, cited in Lacey and Sneath, 2006, pg 458), have raised
the issue that “for customers who participate in loyalty programmes, there is
potential for increased concern about the misuse of personal information and loss of
control over how information is being collected and disseminated”. Simm (2007)
remarks, “The Clubcard enables Tesco to keep a record of each holders name, age,
address, telephone number and email. The company knows each holders dietary
preferences and the make‐up of their family. It keeps track of exactly everything a
cardholder has ever bought, from which store, and the precise date and time of each
purchase. From the data, Tesco can guess whether you had a lonely singles night in,
or threw a party at the weekend. It will know if you have a drink problem, buy

32
condoms, whether you're a junk‐food addict, hooked on painkillers, or have an
undue fondness for tinned pineapple. The card will keep a record of any complaints
made or other communication with the store, and any additional market research
you have taken part in. The information helps Tesco to typecast its customers by
analysing their ‘life stage’, whether student, young family or retired. It assesses how
much they are worth to them, by spending and loyalty. It works out if they are
‘upmarket’, ‘market’ or poor (or, as Tesco euphemistically calls this category, ‘cost‐
conscious’. Being able to classify groups in this way has helped Tesco become the
UK’s dominant retailer”.

With the vast range of product offerings from Tesco such as finance, insurance,
mobile phone services in conjunction with core food and non‐food products, the
message is “Tesco is an everyday experience” (Rowley, 2005, pg 199). “An important
component of many loyalty programs is the cope for cross‐selling, in an attempt to
increase share‐of‐wallet, rather than market share (Peppers and Rogers, 1997).
Loyalty‐program members are encouraged to buy products they would not normally
have bought from that provider. In essence, the loyalty program is seen as a brand
extension” (Uncles, Dowling and Hammond, 2004, pg 100).

Due to the success of the Clubcard scheme, addition multiple brands such as Avis
and Powergen/E.ON energy have joined to align themselves with the Clubcard
brand. Swaminathan and Reddy (2000 as cited by Lacey and Sneath, 2006, pg 459)
have mentioned that “loyalty programs supported by multiple participants offer
increased customer value by accommodating a broader scope of business and
organisational value due to the sharing of program costs”. The strength of the Tesco
Clubcard image was highlighted in the Powergen Corporate Responsibility Report
(2003) which notes, “In 2003, Powergen joined Tesco’s Clubcard scheme as a key
facet to our approach to customer loyalty. Tesco Clubcard demonstrates our focus
on customers”.

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Capizzi and Ferguson (2005, pg 72) describe the loyalty marketing industry as having
“the telltale characteristics of a mature market”, principally in the UK where
“programmes look the same everywhere”. The Clubcard model although not unique
has firmly embedded itself as a customer reward program with multiple
relationships, “extending beyond the simple relationship between Tesco and their
customers” (Rowley 2005, pg 198).

It should also be mentioned that in addition to the Clubcard scheme, Tesco also
employ other marketing tools to create loyalty. Approaches such as lower prices on
key products, in‐store magazines or value added approaches in service or store
layout are all utilised. However, with all this added value and as commented by
Parker and Worthington (2000, pg 491), “just as a shopper expects to be offered
trolleys at the entrance to a supermarket he/she will expect some sort of ‘reward’ to
be offered at the check‐out”.

2.8 The Relationship between Loyalty and Satisfaction

Much research has been carried out by scholars into the importance of customer
satisfaction. Kotler (2000) defined satisfaction as “a person’s feelings of pleasure or
disappointment resulting from comparing a products perceived performance (or
outcome) in relation to his or her expectations”.

Reichheld (1996, pg 381), views that “customer satisfaction is the key to securing
customer loyalty”, this hypothesis has remained largely unsubstantiated and is far
from robust. As argued by Newell (2000, pg 30) who claims that customers today
demand more that “simple satisfaction” for their loyalty and that “most companies
think a ‘satisfied customer’ will be a loyal customer. That may have been true at one
time, but it’s not now”.

34
What can be established is that satisfaction can lead customers to “treat their
primary store as a safe bet in their attempt to reduce their perceived risk of
disappointment when shopping” (Reselius, 1971). ‘Customer satisfaction leads, by
linear progression, to retention/loyalty and ultimately to profitability’ (Hallowell,
1996). Söderlund (1998), expands on this theory by accepting for a positive
association between loyalty and satisfaction, but additionally observing that
“increasing satisfaction does not produce an equal increase in loyalty for all
customers”. Satisfaction does not continually produce in retention, similarly
dissatisfaction does not necessarily result in defection. There is no evidence to
suggest that satisfaction alone is a significant factor in influencing loyalty. However,
satisfied customers can help form the base of any successful business and result to
repeat purchases, brand loyalty, and positive word of mouth exposure (Hoyer and
MacInnis, 2001). What this demonstrates is that the correlation between customer
satisfaction and customer loyalty is neither clear‐cut nor linear, with satisfied
customers still defecting.

Zairi (2000) has commented on numerous studies that have been carried out to
examine the impact of customer satisfaction on repeat purchase, loyalty and
retention. The end result is they all suggest a similar message in that: satisfied
customers are likely to share their positive experience with approximately five or six
people and dissatisfied customers are likely to tell another ten people of their
unhappiness. In addition gauging dissatisfied customers can be difficult since many
customers will not complain and also to differences in the industry sectors.

It is vital that the distinction between satisfaction and loyalty is noted since the two
are clearly different. Duffy (2001, pg 36) believes satisfaction is a starting point,
remarking that “it is essential to get you in the race, but it’s no longer enough to
make you a winner”. The importance of satisfaction should not be overlooked and
the consequences of not satisfying customers can have severe consequences to
businesses.

35
The importance of customer satisfaction has been reinforced by La Barbera and
Mazursky (1983) who commented that, “satisfaction influences repurchase
intentions whereas dissatisfaction has been seen as a primary reason for customer
defection or discontinuation of purchase”. However, McIlroy and Barnett (2000)
argue, “even if customers are satisfied with the service they will continue to defect if
they believe they can get better value, convenience or quality elsewhere ….
Satisfaction is a necessary but not a sufficient condition to loyalty. In other words,
we can have satisfaction without loyalty, but it is hard to have loyalty without
satisfaction”.

Miranda et al (2005, pg 230) sustains that loyalty does not result from satisfaction
alone. “Breakaway customers may not have been dissatisfied with the service
provided from their primary store; it is simply that it did not insulate them
sufficiently from switching”. This is especially significant to any business operating in
a highly competitive market with many choices and low customer switching costs, as
commented by Best (2005, pg 16), “Grocery store, restaurant, and bank customers
can switch quickly if they are not completely satisfied”. It is the authors belief that
defecting customers may not have been dissatisfied with the service they received
from their primary store, it is purely that the store did not insulate them adequately
from switching. It was discovered that loyalty was influenced by several factors such
as price, level of service, travel distance and reward programs. This area has been
considered in chapter four of this thesis.

2.9 Does Loyalty Result to Profit?

“Firms employing loyalty programs should expect them to be profitable. On the cost
side of the profit equation, accurate estimates are difficult to obtain – even within
corporations” (Uncles, Dowling and Hammond, 2004, pg 101)

36
The costs involved with executing and sustaining a customer reward program are
notoriously high. Investment in technology means millions are being spent on
software, hardware and personnel. Such schemes can take years to establish and if
successful can reap dividends to an organisation. Clarke (1997, pg 147) has noted
that “if it is well planned and aimed at the right customers, it can pay for itself many
times over”. The sheer competitiveness of the food retailing industry ensures that
maintaining market share and increasing profit is an invariable and gruelling
campaign among major players. However, Butscher (2002, pg 3), has noted that
“although there are thousands of programmes in existence, very few create real
loyalty and devotion”.

The association between loyalty and profit and the economics of customer loyalty
has been recognised by numerous scholars and studies. Anton (1996) states, “When
you can increase customer loyalty a beneficial ‘flywheel’ kicks in, powered by:
increased purchases of the existing product, cross‐purchasing of your other
products, price premium due to appreciation of your added‐value services, reduced
operating cost because of familiarity with your service system and positive word‐of‐
mouth in terms of referring other customers to your company”. Reichheld and
Sasser (1990) concluded that as a customer’s relationship with a company extends
then profits rise.

Bowen and Chen (2001) have stated “It is commonly known that there is a positive
relationship between customer loyalty and profitability. Today, marketers are
seeking information on how to build customer loyalty. The increased profit comes
from reduced marketing costs, increased sales and reduced operational costs.
Finally, loyal customers cost less to serve, in part because they know the product and
require less information. They even serve as part‐time employees. Therefore loyal
customers not only require less information themselves, they also serve as an
information source for other customers”.

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To further the union between loyalty and profit, Haywood (1989, cited in McIlory
and Barnett 2000, pg 347) notes, “building customer loyalty has a direct impact on
profitability and past research has claimed that it can be five times more expensive
to obtain a new customer than to retain one”.

In a “generation of increasingly promotion‐literate customers” (Harlow, 1997 cited in
Egan 2001, pg 381), the substance and worth of word of mouth communication is
essential. Clarke (1997, pg 146) points out that making customers more loyal will
facilitate them to “remain as customers for longer, buy more, will pay premium
prices and, most importantly generate extra business through referrals”. Today’s
consumers know the fundamental messages and aims of promotions designed to get
them to part with their cash. Personal recommendations from friends, family or
colleagues are perceived as a more reliable form of endorsement and assurance.
With this perception the customers themselves are a marketing resource through
referrals.

“Loyalty is a consequence of creating value for customers and profit is a
consequence of loyalty” (Tapp 2005, pg 173). “Profitability is determined by margins
that depend on a wide mix of factors, of which loyalty is one” (Dowling and Uncles
1997). The connection between loyalty and profit is apparent and may initially
appear to be rather simplistic. However as mentioned, consumers are becoming
increasingly more savvy, the internet has allowed an increase in suppliers of goods
and services to be utilised and all manner of price comparison websites and forums
to appear where members post deals for all variety of goods and services resulting in
sensitive price conscience consumers. “The Internet makes a buyers search more
efficient and encourages rational shopping versus a more emotional shopping in
brick and mortar store, which appeals to our senses” (Trehan 2006). Khan (1998) is
of the same opinion, stating “that consumers are smarter than marketers generally
perceive, and are actively manipulating suppliers for their own ends”. Egan (2001,
pg 381) argues that consumers are taking advantage of suppliers and jumping from
one to another to get the best deal they can.

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2.10 Do Customer Reward Programs Deliver Long Term?

“Loyalty programs are a marketing strategy based on offering an incentive with the
aim of securing customer loyalty to a retailer. Achieving rewards is related with
purchasing frequency, so this type of program are also called frequent purchase
programs (Shoemaker and Lewis, 1999; Long and Schiffman, 2000; Bell and Lall,
2002) or reward programs (Kopalla et al., 1999; Kim et al., 2001)” (Gómez, Arranz
and Cillán 2006, pg 387).

Given the popularity of loyalty programmes and as suggested by Byrom et al. (2001)
that there are over 150 such schemes currently in the UK, Humby and Hunt (2004, pg
14) state “there have been more loyalty programmes that have failed than
succeeded”. Despite the considerable growth in customer reward programs, one of
the most debated areas is just how successful are loyalty programmes in delivering
and do they actually create value to either businesses or consumers.

Determining the success of a customer reward program is very subjective in that it
depends on the goals that were set and what echelon of achievement is a loyalty
programme considered to be a success. There are many factors at play such as how
one can “totally isolate the effect of one stimulus from all other factors that could
have influenced the target factor” (Butscher, 2002, pg 140). In addition customer
preferences and circumstances change over time, as well as being exposed to a
whole host of advertisement, promotion and other loyalty programmes.
“Consumers are most likely to participate in programs they believe offer equitable
relationships and will, ultimately, base their decision to participate in loyalty
programs according to their perceptions of fairness” (Lacey and Sneath, 2006, pg
462). Uncles, Dowling and Hammond (2004, pg 100) claim that “only a truly
exceptional program will change the purchasing behaviour of customers to increase
sales revenues significantly”.

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As mentioned, Tesco is the number one supermarket retailer in the UK and Humby
and Hunt (2004, pg 3) have commented that “Tesco may well have got to this
enviable position without Clubcard – but it could not be done so as quickly or as
cheaply as it has done without the customer data and insight that Clubcard provides.
The information has guided almost all of the key decisions the management team
have made in recent times, reducing the risk of taking bold new initiatives”.

Many critics and scholars believe the customer reward program phenomenon to be
a bribe. Parker and Worthington (2000, pg 496) have commented that the term
‘loyalty card’ is a misnomer and that the customer’s loyalty is not for sale. It cannot
be bought by organisations or deals. To further this argument, Egan (2001, pg 382)
declared “loyalty is fleeting and cannot be bought”. Reichheld (1996 cited in Tapp,
pg 170), raises the issue that “loyal customers ignore vouchers and coupons, and are
less price sensitive on individual items than new customers. There is an interesting
irony here: many companies have ‘loyalty schemes’ which offer lower prices via
points systems in return for loyal custom; but companies whose customers only stay
with them because of the customer reward program don’t have genuinely loyal
customers”.

Reichheld (1996) found that ‘old’ customers pay higher prices than new ones because
fundamentally they are happy with the value they are getting from the company. Reichheld
(2002, cited in Finnie and Randall), also argues that loyalty programmes can assist in
reducing business costs and increasing profit as “return customers tend to buy more from a
company over time”, “refer others to your company” and “pay a premium to continue to do
business with you rather than switch to a competitor who they are neither familiar nor
comfortable”. Reichheld (1996) has constantly maintained that companies can’t buy loyalty.
They can only earn it through consistently creating superior value for their customers.

There has been much criticism of customer reward programs and that “most studies
claim lower prices, rather than loyalty schemes, will keep customers coming back for
more” (Matheson, 2003). Additionally, loyalty programs have faced “mounting

40
pressure concerning their use as a facilitator of specific customer information and
potential to discriminate against non‐member customers because of greater
marketing resource allocations shifted toward selective customers” (Lacey and
Sneath, 2006, pg 462).

When considering the success of loyalty programmes “some indices are easy to
measure, such as number of members, increase in expenditure on loyalty
programme products, and response to special offers. Indices that are more difficult
to measure include a member’s repeat purchase behaviour or increase in brand
loyalty” (Butscher, 2002, pg 143).

“Perhaps the greatest benefit obtained from loyalty programs resides in the data
mining and knowledge base that firms can use to develop statistical models to
improve customer loyalty, support customer service, and develop new offerings to
help reduce defection and increase customer lifetime value” (Wansink, 2003, cited in
Lacey and Sneath, 2006, pg 461). Equipped with this specific information,
organisations can design specific communications and product mix offerings.
“Loyalty programs represent an alternative to mass‐market promotion since firms
have the ability to more precisely target an increasingly fragmented customer base,
and communicate customised and relevant vale propositions and marketing
messages to individual customers” (Lacey and Sneath, 2006, pg 461).

What can be established is that loyalty programmes can provide retailers with a
mechanism and justification for individual customer data. In such fiercely
competitive markets, as commented by Stone (1994, pg 37), “knowing who the best
customers are, what they buy, and how often provides a secret weapon”. It is
estimated that as a result of the Clubcard scheme Tesco has approximately 100,000
different promotional messages which reflect the buying habits and preferences of
its customers.

41
Pressey and Matthews (cited in Tapp, 2005, pg 171), argue that “despite the recent
use of loyalty cards and database marketing techniques by UK retailers, most
transactions are ‘discrete, short‐term, one‐off acts”. Customer reward programs can
also direct businesses to overlook divisions of the business which may need
attention, as noted by Fill (2002, pg 672), “in 2000, the number of in‐store
promotions fell from 700 to just 200, reflecting the need to provide for those whom
are price sensitive”.

Although it is clear that customer reward programs can create value through
personalisation, they are increasingly attracting negative remarks. O’Malley (1998,
pg 52) describes them as “little more than sophisticated sales promotion”. Humby
and Hunt (2004, pg 13) profess that customer reward programs can destroy value
and encourage “a ‘Big Brother’ culture” implying that “the relationship isn’t trust, it
is bullying on behalf of corporate giants who won’t give discounts unless you give up
your right to privacy”. This hints that “loyalty relationships are more appropriate to
business to business markets rather than consumer markets (Dowling and Uncles,
1997). To further this perception, “The notion of customer loyalty is important to
marketing people but not, on the whole, to customers. Customers don’t see why
they should accept a good offer from a new supplier just because they are satisfied
with their present one” (McCorkell, 1997 cited in Tapp, 2005, pg 172).

From the above critique and given the fact customer reward programs are “costly
compared to other promotions” (Dowling and Uncles, 1997). One may question that
perhaps the marketing budget funds are better spent elsewhere. This is palpable in
the market place today with many businesses projecting funds into lowering prices,
developing own brands and branching out into other markets and services. Given
the sheer number of organisations participating and operating their own customer
reward programs and consumers owning more than one loyalty card, it is evident
that achieving loyalty is increasingly difficult.

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“Clearly, loyalty programs can be used to convey prestige to customers and make
them feel special, important and appreciated” (Morgan et al., 2000 cited in Lacey
and Sneath, 2006, pg 459). “However the effect on the firm’s non‐participating
customers can lead to dissatisfaction and alienation with the firm. Moreover,
customers who participate in the program might become frustrated, and perhaps
even disenfranchised, due to their inability to benefit from those programs”
(Downling and Uncles, 1997 cited in Lacey and Sneath, 2006, pg 459). Despite the
criticism, loyalty programmes if executed properly and maintained can be hugely
beneficial to the retailer. Tesco have always maintained that the Clubcard was a
simple “thank you” for customers who shop at their stores and as such offered the
promise of rewards to them. However, Uncles et al., (2003, cited in Lacey and
Sneath 2006, pg 461) states, “the ultimate marketing objective behind loyalty
programs is their use as a primary data‐gathering platform that can help improve the
efficiency and effectiveness of a firm’s marketing initiative”. In actuality they are
“effectively locking them into the loyalty programme and preventing them from
moving to a competitor brand” (Fill, 1999, pg 563). Barnes (2002) also concurs that,
“The basic premise behind such programs is to reward customers for giving the
company a greater share of their business. The rewards are extrinsic ‐ points, ‘free’
merchandise or trips. Where true loyalty exists, the rewards are largely intrinsic. One
shopper recently observed in an interview that the frequent‐shopper ‘club’ of which
he is a member feels nothing like any other club to which he has belonged. It never
meets. He rarely gets to associate with other members. Such programs often lock
customers in. They create barriers to exit, but they don’t often lead to true loyalty”.

2.11 Conclusion

It was suggested that there was a difference in every day loyalty and retail loyalty.
Loyalty was recognised as being emotional, behavioural or attitudinal and defined as
“looking to achieve a little extra goodwill, a slight margin of preference, an
incremental shift in buying behaviour (Humby and Hunt, 2003, pg 9). “Loyalty

43
marketing can be defined as the management process of identifying ‘best customers’
and utilising customer data and insight to create, retain and grow profitable
relationships” (ICLP, 2005). Loyalty marketing was also identified as a “business
strategy” (Heskett, 2002, pg 355), which transpires through the theory of operant
conditioning.

Additionally, the long‐term benefits of a customer reward program and if it creates
value was analysed. Loyalty programs are “designed to accommodate individual
consumers in the form of added products or enhanced customer service options not
generally presented to all of the firm’s customers” (Lacey and Sneath, 2006, pg 459).
These schemes can offer many benefits to the retailer and act as a mechanism and
justification for accumulating personal data of customers and increasing switching
costs “effectively locking them into the loyalty programme and preventing them for
moving to a competitor brand (Fill, 1999, pg 563). It is widely regarded that loyalty is
established through trust. However the literature surrounding the subject implies
that loyalty schemes/ customer reward programs are manipulative and controlling
and are “little more than sophisticated sales promotion” (O’Malley (1998, pf 52).
Reichheld (2002, pg 27) argues that some loyalty programmes are “just gimmicks to
get the maximum value extracted from a customer base”. While Parker and
Worthington (2000, pg 496) raise the issue of a new strain of customers known as
“points junkies” who are desperate to gain and save points in order to redeem them
for free products or services. Additionally, Parker and Worthington (2000, pg 496)
commented on the knowledge of consumers by questioning “how ethical is a reward
scheme that relies on maintaining the ignorance of the very customers that it wants
to see exhibiting loyal behaviour”. Despite this “loyalty programs continue to be
used by organisations as marketing tools to support their customer relationship
management (CRM) strategies” (Lacey and Sneath, 2006, pg 458). What was found
was the perception that loyalty could actually lead to customers manipulating
suppliers by jumping between organisations to get the best deal.

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From the literature review it is apparent that satisfaction and loyalty is not the same
thing and they are not mutually exclusive. The focus addressed issues that would
affect the value of a customer reward program and illustrates the need for an
organisation to steer satisfied customers into loyal customers. It was also
determined that organisations operating in market sectors where there is intense
competition and similar competitors necessitate the use of loyalty marketing.
”Loyalty schemes tend to be most useful in frequent purchase markets …. And also
commonly found in markets where the core product is a commodity and companies
have great difficulty differentiating themselves” (Tapp, 2005, pg 274).

Due to the sheer number of customer reward programs being offered to customers,
it is vital that retailers are more innovative and creative with the rewards they offer.
Capizzi and Ferguson (2005, pg 78) imply that some loyalty card members view the
rewards they gain as being opportunities of a lifetime which they have complete
control over having commented that the rewards given to customers must appeal on
a different level and that customer reward program participants are “embracing the
idea of redeeming points for an once‐in‐a‐lifetime experience”, specifically “lifestyle
themed rewards that appeal to a members’ dream”. The theory is that customers
will aspire to collect and redeem more points and thus increase spending.

The use of the “Customer Loyalty Ladder” (Payne, 1994) determined how marketing
tasks should be prioritised in order for an organisation to accomplish the target of
loyalty. By exploring the Tesco Clubcard model we gain a hypothetical insight into
how Tesco are providing an “everyday experience” (Rowley, 2005, pg 199) to their
customers.

However, “the oft‐cited success of Tesco’s loyalty scheme is difficult to determine
because it was introduced as part of a much broader program of new business
development and store acquisition” (East and Hogg, 1997 cited in Uncles, Dowling
and Hammond, 2004, pg 102).

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The completion of the literature review has addressed several objectives. However
there are areas which have been identified and do require further investigation. The
main issues is a user profile of the Clubcard and to realise the differentiation
between loyalty in relation to the Clubcard brand, the customer reward programs
itself and Tesco. To which of these factors do loyalty schemes generate true loyalty?

These factors and the remaining objectives of the dissertation will be answered and
achieve through primary research in the next chapter.

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Chapter Three – Research Methodology

Chapter Three

Research

Methodology

3.0 CHAPTER THREE – RESEARCH METHODOLOGY

3.1 Introduction

In order to address all the objectives set out in this dissertation, primary research is
essential.

The methodology will illustrate the chosen methods undertaken in order to conduct
the primary research. It will impart justification into the chosen method of research
and provide assessment to the chosen approach in terms of advantages,
disadvantages and limitations.

3.2 Research Objectives

From the literature review, several issues were discovered which required further
investigation and research. Referring to section 2.7 in the literature review drawing
attention to the perception that a satisfied customer was not necessarily loyal,
Reichheld (1996) injects that “customer satisfaction is the key to securing customer
loyalty”. However, Duffy (2001, pg 36) described satisfaction as being a starting
point in order to create true loyalty. The crucial issue raised in the works of these
scholars is that it demonstrates the role of the Tesco Clubcard in building loyalty,
either through the theory that customers simply need to be satisfied in order to be
loyal or through Duffy’s loyalty calculation hypothesis.

In conducting the literature review it was noted there was a wealth of acclaim and
admiration for the Tesco Clubcard scheme. However, despite this positive
commendation there appears to be a lack of evidence that it has actually created
loyalty. Humby and Hunt (2004, pg 17) argued that it should not be contended that
card‐based customer reward programs are credible alternatives to being offered
excellent service, innovative products and services or the right price. All of which

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can develop loyalty. Much of the literature raised the claims that loyalty is
generated and influenced by other factors such as price, location, coupons, range of
products and staff assistance. Tesco have been vigilant to these factors and the
needs of their customers by implementing all of the strategies mentioned, in
addition to the Clubcard customer reward program. Therefore primary research is
required to be undertaken to determine and establish if the Clubcard has actually
created loyalty. If it has, then one must determine what factors the customers are
loyal towards. Tesco, the customer reward program or to the Clubcard brand itself?

Section 2.6 illustrated the view that Tesco sustained the Clubcard is a
straightforward “thank you” to their customers and it is “designed to give you
something back for shopping with Tesco” (www.tesco.com). However, from this an
area of interest is found concerning customers being less attentive to rewards and
instead being more interested in gaining appreciation and recognition from Tesco.
The issue raised here is with regards to the building of affinity that Tesco has with its
customers through the use of specific magazine topics or quarterly mailings.

The literature review also exposed that consumers are increasingly becoming more
aware, as commented by Khan (1998), “consumers are smarter than marketers
perceive, and are actively manipulating suppliers for their own ends”. Egan (2001,
pg 381) supports this view by concluding that consumers are taking advantage of
suppliers and jumping from one to another to get the best deal they can. This would
suggest that loyalty card schemes are actually allowing consumers to manipulate
suppliers for their own needs.

With the quantity and penetration of customer reward programs currently in
operation, the Clubcard model is not unique with Seth and Randall (2001, pg 39)
commenting that Tesco “did not invent the card nor were they a first mover”.
However, it is essential to know if the Clubcard scheme “insulate(s) them
[consumers] sufficiently from switching” (Miranda et al., 2005, pg 230). Additionally
the literature review indicated that consumers have come to expect some form of

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reward as part of their routine shopping experience (Parker and Worthington, 2000,
pg 491).

In addition to the issues raised from the literature review, it was felt that several
other objectives were left unresolved. From this the research objectives are:

1) Investigate customer opinions and perception on the Tesco Clubcard, analyse and
understand their opinions and mind‐set.

2) Gauge the effectiveness of how the gathered information from the Tesco Clubcard
is utilised.

3) Recognise and identify the main users of the Tesco Clubcard Scheme.

4) Determine if the Tesco Clubcard has actually created loyalty and ascertain what
customers are loyal towards.

5) Establish if the Tesco Clubcard is actually needed, given the number of loyalty
initiatives currently employed by Tesco to facilitate customer satisfaction.

6) Consider the conjecture that consumers are manipulating suppliers for their own
needs by shopping around and participating in other customer reward programs.

3.3 Selection of Research Methods

The technique of research methods can be divided into quantitative and qualitative
approaches. As commented by Charoenruk (2007, pg 1‐2), “quantitative research is
described by the terms ‘empiricism’ (Leach, 1990) and ‘positivism’ (Duffy, 1985). It
derives from the scientific method used in the physical sciences (Cormack, 1991).
This research approach is an objective, formal systematic process using numerical

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data findings, it describes, tests, and examines cause and effect relationships (Burns
& Grove, 1987), using a deductive process of knowledge attainment (Duffy, 1985).”
It is primarily concerned with the collection of data using numbers and
measurements. It seeks to establish relationships between two or more variables via
a process of statistical methods to obtain the connotation of the relationship.
According to Malthotra and Peterson (2006, pg 150), quantitative research is “a
research methodology that seeks to quantify the data and typically applies some
form of statistical analysis”. Routinely the data is collected using a premeditated
template of questions in the form of a structured questionnaire survey incorporating
primarily closed questions with set responses. “There are various vehicles used for
collecting quantitative information but the most common are on‐street or telephone
interviews” (Market Research World 2006).

Qualitative research is chiefly concerned with the collection of in‐depth information
via a process of asking questions to understand how people feel and why they feel as
they do (Market Research World 2006). In‐depth interviews, focus group discussions
and participant observation are common methods used for collecting qualitative
information. With reference to Proctor (2003, pg 529), qualitative research methods
“usually involve small samples, which attempt to elicit descriptive information about
the thoughts and feelings of respondents on a topic of interest to the research”.

Charoenruk (2007, pg 2), comments that, “qualitative research differs from
qualitative approaches as it develops theory inductively. There is no explicit intention
to count or quantify the findings, which are instead describe in the language
employed during the research process (Leach, 1990). A qualitative approach is used
as a vehicle for studying the empirical world from the perspective of the subject, not
the researcher (Duffy, 1987). Benoliel (1985) expanded on this aspect and described
qualitative research as ‘modes of systematic enquiry concerned with understanding
human beings and the nature of their transactions with themselves and with their
understandings”.

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3.3.1 Features of Qualitative and Quantitative Research

Adapted from Neill (2007) ‐ Qualitative versus quantitative research: key points in a
classic debate.

Qualitative Quantitative

The aim is a complete, detailed description. The aim is to classify features, count them, and
construct statistical models in an attempt to
explain what is observed.

Researcher may only know roughly in advance Researcher knows clearly in advance what
what he/she is looking for. he/she is looking for.

Recommended during earlier phases of Recommended during latter phases of
research projects. research projects.

The design emerges as the study unfolds. All aspects of the study are carefully
designed before data is collected.

Researcher is the data gathering instrument. Researcher uses tools, such as questionnaires
or equipment to collect numerical data.

Data is in the form of words, pictures or objects. Data is in the form of numbers and statistics.

Subjective ‐ individuals’ interpretation of events Objective – seeks precise measurement &
is important ,e.g., uses participant observation, analysis of target concepts, e.g., uses surveys,
in‐depth interviews etc. questionnaires etc.

Qualitative data is more 'rich', time consuming, Quantitative data is more efficient, able to
and less able to be generalized. test hypotheses, but may miss contextual detail.

Researcher tends to become subjectively Researcher tends to remain objectively
immersed in the subject matter. separated from the subject matter.

52

In order to achieve the objectives of the methodology, the selected research method
to be used requires the outcome of a combination of statistical analysis in addition
to an indication with regards to consumers’ attitudes and perceptions.

It is often mentioned amongst marketing research literature that qualitative and
quantitative approaches are bipolar measurements of data. The qualitative
approach places emphasis on gaining in‐depth answers from a small number of
respondents, whereas in contrast quantitative approaches accentuates gaining
statistical information from a large number of respondents. However, Veal (1997, pg
34) has observed that “sometimes the information is qualitative in nature but is
presented in quantitative form”. This supports the suggesting that qualitative
characteristic questions in a survey can be collected by using open ended questions
seeking opinions. An additional benefit of using open questions is that it allows for a
multitude of replies “where each respondent can give a personal response or
opinion in his or her own words” (Collis and Hussey, 2003, pg 179).

From the research methods mentioned above it has been determined that a
questionnaire survey will be the most effective and efficient medium in order to
achieve the objectives of the dissertation. Luck and Rubin (1987) defined a
questionnaire as a “formalised schedule to obtain and record specific and relevant
information with tolerable accuracy and completeness”. Bruce (2004, pg 7), states
that “the role of the questionnaire is to elicit the information that is required to
enable the researcher to answer the objectives of the survey. To do this, the
questionnaire must not only collect the data required, but collect the data in the
most accurate way possible”. Additionally, McNabb (2004, pg 150) comments that,
“questionnaires can be designed to determine what people know, what they think or
how they act or plan to act …. The flexibility of the questionnaire results in very few
rules to follow in development of the instrument”.

53
The decision to use a quantitative method over a qualitative approach was based on
the grounds that a large representative sample is needed. Qualitative research is
principally based on in‐depth interviews and focus groups based on non‐
representative samples. Therefore this method is regarded to be inappropriate to
the study. It is imperative that there is unbiased study and analysis of data. One
such possible scenario with using a focus group could be that an individual could
influence other respondents or control the group to a specific direction.
Furthermore, “given the extensive training required to conduct a sophisticated
qualitative study” (McDaniel and Gates, 2006, pg 81), it is apparent that in order to
extract the required information the interviewer required a great skill set.

It is acknowledged that focus groups are a useful medium for understanding
emotions and attitudes. However, by using both qualitative and quantitative
techniques in the survey, it is felt that this understanding can be an achieved to an
extent on a larger scale and at considerably less expense.

3.3.2 Analysis of Data

Results and analysis of the data using a computer software package known as SPSS
(Statistical Package for the Social Sciences) can be found in appendix C and appendix
D respectively.

3.4 Questionnaire Design

“The questionnaire represents one part of the survey process. It is, however,
a very vital part of the process. A poorly written questionnaire will not
provide the data that are required or, worse, will provide data that are
incorrect” (Bruce, 2004, pg 7).

54
As the questionnaire is the chief data collection tool, it is essential that the questions
are appropriate to what this study is intending to achieve. Emphasis should be on
using the correct terminology and it should be appropriate enough to extract the
required information from the respondent base.

3.4.1 The Eight‐Step Questionnaire Construction Procedure

McNabb (2004, pg 151) has constructed an Eight‐Step questionnaire construction
procedure

Malhotra (1999, cited in McNabb, 2004, pg 151) claims that in the preparation of a
questionnaire “the researcher must follow a systematic procedure in order to be
sure that it fulfils three broad objectives. The questionnaire must:

1). Successfully gather information that answers each study question.
2). Motivate respondents to answer all questions to the best of their ability.
3). Keep all potential error to a minimum.”

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With this in mind, the above questionnaire construction table has been used as a
guideline rather than a checklist of steps as “questionnaire construction is as much
as art as it is a science” (McNabb, 2004, pg 151).

3.4.2 Justification of Questions

The preliminary intentions for the survey have been recognised from the secondary
data. This has identified the issues and areas to be addressed by providing “a map
for the questionnaire” (Punch, 2003, pg 30). The validation of the questions used
can be found in appendix A.

3.4.3 Question Types and Wording

It is imperative that the questionnaire has been constructed using clear and concise
terminology, avoiding double‐barrelled questions and jargon to avoid any
unnecessary confusion. As commented by Bruce (2004, pg 8), “a questionnaire
writer who is not familiar with the vocabulary of a market can very quickly come
unstuck”. Additionally the consideration for avoiding bias in a question has been
noted and the problem if respondent’s inability to evoke has been abridged by
keeping the “reference time periods relatively short” (McDaniel and gates, 2006, pg
272).

The query of age group and sex of respondents are used to help meet the objective
of building a profile of the Tesco Clubcard user. As age can be a sensitive issue it was
decided that the use of pre‐coded groups was the best method.

The questionnaire consists predominantly of both multiple choice and dichotomous
closed questions. It was devised that the multiple choice closed questions allowed

56
respondents to indicate their opinions as well as allowing for more than one
response to be recorded. The dichotomous questions were purposely limited to two
fixed alternatives as this is easier to manage but it also ensures a rapid answer from
respondents. In order to gain a better understanding of respondents’ opinions and
to allow for a more precise measurement of attitudes, certain questions within the
questionnaire will be graded using a Likert scale of one to five where ”respondents
are instructed to tick the response options that best reflect their positions on each
item” (Foddy, 1999, pg 154). The justification adopting a five‐point Likert scale is to
ensure that respondents have a sufficient choice of responses which best represents
their feeling and it will also increase the response rate and quality of responses,
additionally this approach allows for attitudes to be measured and analysed
accurately.

The addition of an open question has been incorporated in the questionnaire. The
initiative for this is to allow respondents to use their own words and expressions
without restricting choice. Furthermore it will enable an opportunity for the
interviewer to encourage respondents to develop and expand on their answers and
reveal more information. Although analysis of this data will not be as straight
forward as the closed questions, it was determined that they could support the data
obtained from the previous questions and reveal more information with regards to
their motivations and attitudes.

3.4.4 Questionnaire Layout

Cohen and Manion (1994, pg 258), commented that “the appearance of the
questionnaire is vitally important. It must look easy, attractive and interesting rather
than complicated, unclear, forbidding and boring…. it is important, perhaps, for
respondents to be introduced to the purposes of each section of a questionnaire, so
that they can become involved in it and maybe identify with it. If space permits, it is

57
useful to tell the respondent the purposes and foci of the sections/of the
questionnaire”.

The questionnaire will commence establishing connection through the introductory
statement detailing the topic and the motive for carrying it out. Once initial contact
is made, the opening question in the questionnaire will determine if the respondent
is qualified, i.e. if he/she owns a Tesco Clubcard. If the answer is negative then the
questionnaire will be terminated to avoid wasting time for either party. A positive
answer will be followed by a brief description of the respondent and multiple choice
questions which can be answered quickly and accurately.

3.4.5 Interviewer versus Respondent Completion

The chosen method of data collection is that the questionnaires will act as an initial
script whereby the interviewer reads out the questions to the respondent and
records the answer they give. The validation for this method of data collection is so
that the interviewer can ensure that the responses received are complete, accurate
and facilitates any questions that respondents may field during the survey. It is vital
that care and attention must be taken so that no attempt is made to take lead or
influence the respondent into giving answers they normally would not give.

3.4.6 Coding

“Coding means assigning a code, usually a number, to each possible response to
each question” (Malhotra and Peterson, 2006, pg 407). This refers to “the way the
gathered data will be coded, tabulated, analysed, and interpreted… Computers using
readily available, easy‐to‐use statistical software tabulate almost all survey results.
For this reason, most questionnaires are pre‐coded (classification numbers appear
beside each question and each possible response), making data entry simple and less

58
error‐prone… Responses to open‐ended questions are grouped into categories and
classes are then translated into numerical form for counting and additional statistical
analysis” (McNabb, 2004, pg 153).

3.5 Sample Selection Procedure and Sample Characteristics

It has been determined that approximately 100 respondents shall be drawn from a
population of all visitors to Tesco in Newcastle Upon Tyne. The size of the sample
has had to be limited due to available time, money and resources. This can be
classified as “convenience sampling” in which “the sampling selection process is
continued until your required sample size has been reached” (Saunders et al., 2003,
pg 177).

It is felt that probability sampling would be the most appropriate method, therefore
there is no set criteria for respondents other than that they are Tesco customers. As
commented by Fink (1995, pg 9), “every member of the target population has a
known nonzero probability of being included in the sample”. Using this process will
eliminate any subjectivity and ensure a fair method of acquiring respondents.

Potential respondents will be approached as they enter the supermarket and the
probability sampling that will be employed will be a rule of four persons, whereby
every forth person that passes will be asked to participate. Regardless of the
response the process will start over again. Furthermore it has been determined that
potential respondents will be approached as they enter the supermarket. The
reason for this is because potential contributors are more likely to participate when
empty handed and less likely to be in a rush.

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The times and dates in which this research was carried out were unfortunately
constrained by the periods that Tesco allowed. The questionnaire was carried out on
the following dates and times:

Date & Time Completed Questionnaires
15th April 2008 ‐ 9.30am ‐ 11.30am 14
16th April 2008 ‐ 9.30am ‐ 11.30am 24
17th April 2008 ‐ 9.30am ‐ 11.30am 19
18th April 2008 ‐ 9.30am ‐ 11.30am 22
19th April 2008 ‐ 9.30am ‐ 11.30am 12
20th April 2008 ‐ 9.30am ‐ 11.30am 9
TOTAL = 100

3.6 Strengths, Limitations and Validity

The proposed method of collecting data through questionnaires is akin to any form
of research, it has its merits but additionally it also contains limitations and issues of
validity.

“Questionnaires have many advantages. The greatest of these is the considerable
flexibility of the questionnaire. Questionnaires can be custom‐designed to meet the
objectives of almost any type of research paper” (McNabb, 2004, pg 150).

3.6.1 Strengths

The method of using a questionnaire allows responses to be collected in a
standardised way, resulting in the data being more objective. This results in a
reduced bias and allows respondents to talk freely.

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Furthermore the information gathered can be presented in numerical and graphical
form. Moreover this would facilitate the platform of a structured logical analysis
and, if required, this can be re‐analysed by others.

Using a questionnaire results in a potentially large representative sample.
Information can be gathered from a large portion of a group. The use of the forth
person rule ensures that everyone calling into Tesco on the days and time the
questionnaire will take place has an equal probability of being chosen to carry out
the questionnaire.

3.6.2 Limitations

“Questionnaires, like many evaluation methods occur after the event, so participants
may forget important issues” (Milne, 1999). As commented by Clarke and Crichter
(1985, pg 27), “there is always a gap between what people say and what they
actually do”. This is valid in all research models nonetheless this factor must be
taken into consideration when carrying out an analysis of the results.

The time limits imposed by Tesco for when the questionnaire can be conducted will
not be 100% representative of their customer base. Due to the restrictions, data will
only be obtained from consumers who happen to visit the store on the specific days
the survey is conducted and within the allocated time frame.

Additionally, respondents may answer superficially, however as the questionnaire is
designed to be completely relatively quickly hopefully this issue can be avoided.

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3.6.3 Validity

In the context of questionnaires, validity depends chiefly on reliability. “Reliability is
a characteristic of the instrument itself, but validity comes from the way the
instrument is employed” (EWB 2007). If a questionnaire is shown to be unreliable
then there is no discussion of validity. Veal (1987, pg 186) commented that validity
is “the extent to which (the questionnaires) accurately reflect what they are meant
to reflect”. EWB (2007) back this up by citing, “validity refers to whether the
questionnaire or survey measures what it intends to measure”.

In an interview situation, validity could be compromised by an assortment of
scenarios and circumstances. For example, if respondents are in a rush to complete
the questionnaire this could affect their responses. Additionally, the possibility of
respondents giving exaggerated responses or “fail to interpret the questions as
intended by its designer” (Belson, 1986, pg 13).

The proposal of approaching respondents and interviewing them before they enter
the store is made on the basis that the respondents latest experience with Tesco
may cause an irrational change in their opinion and thus resulting in inaccurate data
being recorded by the questionnaire. This will further enhance the validity of the
questionnaire.

3.7 Summary

The method in which the data will be collected has been defined and acknowledged
with validation in this chapter of the dissertation. Using the questionnaire as a
research tool and combining quantitative and qualitative research methods will
answer the aims of the study. The next chapter presents the research findings and
provides analysis of the results.

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Chapter Four – Research Findings and Analysis

Chapter Four

Research Findings

and Analysis



4.1 Introduction

The subsequent chapter will present the findings gained from the primary research
conducted via the questionnaire (appendix B) and interpret the results. The results
from the quantitative research have been correlated and investigated. This segment
of the study provides the fundamental information and data required in order to
meet the aims of the dissertation.

Individual frequency tables of the results can be found in appendix D

4.2 Analysis

From the research methodology it was determined that there are several areas that
need to be established. This has enabled the analysis to be divided into separate
sections in order to achieve each objective. The techniques employed in order to
present the findings of the analysis include frequency tables and cross tabulation.

4.2.1 User Profile of Tesco Clubcard Respondents

The secondary research highlighted a distinct lack of information with regards to the
characteristics of the fundamental users of loyalty cards. It has therefore been
determined that an ideal starting point is to identify and establish a user profile of
the selected sample. Using the rule of every forth person helped ensure that the
sampling was random.

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Figure 4.2.1.1
Please choose your Gender:
Cumulative
Frequency Percent Valid Percent Percent
Valid Male 29 29.0 29.0 29.0
Female 71 71.0 71.0 100.0
Total 100 100.0 100.0

Figure 4.2.1.1 shows the results from the questionnaire illustrating that out of the
100 respondents, 29 are males and 71 are female. Although the data obtained was
somewhat limited by the sample size and time scale, it does exemplify that women
are more likely to be cardholders. Interestingly, the fact that 29 males owned a card
shows that men are also active consumers and the Tesco Clubcard has effectively
obtained the segment.

Figure 4.2.1.2
Please choose your Gender: * Please indicate which age group you fall into: Crosstabulation
Count
Please indicate which age group you fall into:
Under 21 22 - 29 30 - 39 40 - 49 50 - 59 60 + Total
Please choose your Male 2 9 5 3 5 5 29

Gender:
Female 8 12 23 9 10 9 71
Total 10 21 28 12 15 14 100
Figure 4.2.1.2 shows the age group of respondents compared to their gender. The
data shows clearly the mass appeal of the Clubcard to be across all age

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demographics and from the data we can establish that the typical male user of
Clubcard is aged 22‐29 and for females aged 30‐39.

Figure 4.2.1.3

Please indicate which age group you fall into: * I trust Tesco products and their image Crosstabulation
Count
I trust Tesco products and their image
Strongly
Strongly Agree Agree No Opinion Disagree Disagree Total
Please indicate which Under 21 4 4 1 0 1 10

age group you fall into:
22 - 29 3 8 1 7 2 21
30 - 39 3 16 2 4 3 28
40 - 49 4 5 1 2 0 12
50 - 59 5 5 4 1 0 15
60 + 2 9 1 2 0 14
Total 21 47 10 16 6 100

Figure 4.2.1.3 highlights the age of the respondents compared with their level of
trust for Tesco products and the Tesco image. The above data indicates that the age
groups most likely to be loyal to Tesco’s due to the notion they trust Tesco products
and its image are the 30‐39 age groups. Conversely, it is also shown in the 22‐29 and
30‐39 age groups higher claims that they do not trust Tesco. In total out of the 100
respondents, 22% did not trust Tesco while 68% did trust Tesco (the other 10%
neither agreeing nor disagreeing). What this shows is that Tesco has been successful
in establishing position in the market place. However, there is no evidence to
suggest that the trust exemplified was formed by Clubcard single‐handedly.

The results also show that the Tesco Clubcard appeals to every age group and that
Tesco is effectively managing its relationship with customers in each of their
different “life stage” (Simm, 2007) to attain competitive advantage and thus adding
value to the Clubcard scheme.

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4.2.2 Customer Perceptions on Tesco Clubcard

The specific focus of the questionnaire has resulted in limited results of Clubcard
users, creating unambiguous data that are significant to the study.

Figure 4.2.2.1

Please indicate how often you use your Clubcard when you purchase goods or
services with Tesco
Cumulative
Valid Always 42 42.0 42.0 42.0
Frequently 39 39.0 39.0 81.0
Little 18 18.0 18.0 99.0
Never 1 1.0 1.0 100.0
Total 100 100.0 100.0

Figure 4.2.2.1 discloses that a total of 81% of the respondents surveyed used their
Tesco Clubcard always or frequently when completing a transaction with Tesco. This
high value could be accounted for by suggesting that customers value the Clubcard
and have integrated it into their normal shopping behaviour and routine. However,
despite this the results also show that there is a remaining 19% of customers who
seldom or never use their Clubcard. It is essential that this margin is not overlooked
or ignored as this marker represents a large percentage and demonstrates that some
consumers do not buy into the scheme and are simply not motivated by the rewards
on offer, furthermore it also illustrates that the Tesco Clubcard scheme is not enough
to keep specific customers loyal to Tesco. With reference to operant conditioning as
mentioned in the literature review in section 2.6 and that “if a given bit of behaviour
has a consequence of a special sort, it is more likely to occur again upon similar
occasions” (Skinner, 1978, pg 19). However, the results from the questionnaire show
that this concept is indeed not generic and that some consumers do not view one set

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of behaviours to lead to positive outcomes, adding value to the statement that
behaviour is not generic amongst all consumers and that some customers are not
affected or influenced by the prospect of rewards.

Figure 4.2.2.2
Please indicate which age group you fall into: * If Tesco did not have the Clubcard scheme, would
you still continue to shop there? Crosstabulation
Count
If Tesco did not have the Clubcard scheme, would you still
continue to shop there?
Yes No Don't Know Total
Please indicate which age Under 21 10 0 0 10

group you fall into:
22 - 29 21 0 0 21
30 - 39 26 2 0 28
40 - 49 11 0 1 12
50 - 59 14 0 1 15
60 + 13 1 0 14
Total 95 3 2 100

Figure 4.2.2.2 shows the age of respondents equated with the notion that if Tesco
did not have the Clubcard customer reward program in place, would they still
continue to shop there. The results show that a resounding 95% of respondents
across all age demographics would still continue to shop there. This raises the
notion that perhaps customers view the Clubcard as being of little or no significance
or application when they do their shopping at Tesco and in actual fact perceive it as
an additional bonus. Appreciably what these results show is that Tesco is doing and
offering so much more than merely a loyalty card that facilitates repeat purchases to
their customers. It also raises the notion that loyalty is more behavioural than
attitudinal.

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Figure 4.2.2.3
I think Tesco is very innovative * I feel more could be done to increase my loyalty Crosstabulation
Count
I feel more could be done to increase my loyalty
Strongly
I think Tesco is very Strongly Agree 1 8 2 0 1 12

innovative
Agree 4 46 8 4 1 63
No Opinion 0 16 4 2 0 22
Disagree 0 2 0 1 0 3
Total 5 72 14 7 2 100
What we can establish from figure 4.2.2.3 is that 77% of the respondents surveyed
either strongly agree or agree that more could be done by Tesco to increase their
loyalty, conversely 75% view Tesco as being an innovative company. What is evident
from these findings is that despite consumers feeling that more could be done to
increase their loyalty they nevertheless view Tesco as being an inventive company
and in a positive light.

Figure 4.2.2.4
I trust Tesco products and their image * I feel more could be done to increase my loyalty Crosstabulation
Count
I feel more could be done to increase my loyalty
Strongly
I trust Tesco products and Strongly Agree 1 16 2 1 1 21

their image
Agree 3 34 7 2 1 47
No Opinion 1 5 2 2 0 10
Disagree 0 13 2 1 0 16
Strongly Disagree 0 4 1 1 0 6
Total 5 72 14 7 2 100

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As stated previously and as shown in figure 4.2.2.3, 77% of respondents felt more
could be done to increase their loyalty. However, despite this, 68% strongly agree or
agree on trusting Tesco products and their brand image. What can be identified
from this is despite customers’ attitudes to more being done to keep them loyal they
would still continue to purchase products from services due to their confidence in
the products and brand offered by Tesco.

Figure 4.2.2.5
If Tesco did not have the Clubcard scheme, would you still continue to shop there? * I expect rewards to be a
part of my normal shopping experience Crosstabulation
Count
I expect rewards to be a part of my normal shopping experience
Strongly Agree Agree No Opinion Disagree Total
If Tesco did not have the Yes 8 48 29 10 95

Clubcard scheme, would
No 1 1 1 0 3
you still continue to shop
Don't Know 1 1 0 0 2
there?
Total 10 50 30 10 100

Figure 4.2.2.5 shows that 60% of the respondents strongly agree or agree that they
expect rewards as part of their normal shopping experience. However, despite this
95% would continue to shop at Tesco if they did not have the Clubcard scheme. This
comparison again shows the loyalty that Tesco has generated and that the majority
of customers will shop there regardless of a customer reward program. However
what is unclear are all the separate factors that have contributed to build this loyalty.

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Figure 4.2.2.6
Loyalty Card Scheme * Have you redeemed any rewards from the Clubcard scheme within the
last 12 months? Crosstabulation
Count
Have you redeemed any rewards from the

Clubcard scheme within the last 12 months?
Yes No Total
Loyalty Card Scheme 1 - Very Important 4 5 9
2 7 1 8
3 5 2 7
4 13 3 16
5 12 9 21
6 9 3 12
7 5 11 16
8 - Not Important At All 6 5 11
Total 61 39 100

Figure 4.2.2.6 shows that 61% of respondents have redeemed some kind of reward
with Tesco in the last 12 months. What these results reveal is that consumers are
attracted to the rewards and seek to realise the experiential and lifestyle themed
incentives that Tesco makes available to them. Additionally, 40% of respondents
rank a customer reward programs importance between 1‐4 on a scale of 8 (1 = very
important, 8 = not important at all). When these results are analysed we can see
that 60% of respondents do not view loyalty card schemes as being primarily
important (ranked 4‐8). This shows that consumers are not principally interested in
customer reward programs or the rewards they can attain from despite a relatively
high number of respondents’ taking advantage of them, but instead view other
factors as being more important to them. What this finding illustrates is that
shoppers’ attitudes have changed and they view other factors as being more
important than earning points on their purchases.

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4.2.3 Loyalty and Satisfaction
The debate in the correlation between loyalty and satisfaction has been highlighted
in the literature. By using a cross tabulation table, the individual variables can be
analysed (figure 4.2.3.1).

Figure 4.2.3.1
Would you describe yourself as being loyal to Tesco? * Would you describe yourself to be a satisfied customer of
Tesco? Crosstabulation
Count
Would you describe yourself to be a satisfied customer of Tesco?
Yes No Don't Know Total
Would you describe yourself Yes 19 13 4 36

as being loyal to Tesco?
No 31 15 12 58
Don't Know 4 1 1 6
Total 54 29 17 100

The results from the table show that overall, 54% of the respondents surveyed
described themselves as being satisfied Tesco customers. However, when the
question is cross tabulated we can see that 31% are satisfied but would describe
themselves as not being loyal. What we can deduce from this is that satisfied
customers are not necessarily loyal to a business. Accordingly, 13% of respondents
expressed they were not satisfied Tesco customers but were loyal, exhibiting that
they are locked into being loyal. One justification for this could be defined by Barnes
(2002) as “functionally loyal” and mentioned in section 2.5. Functionally loyal is
whereby customers are only loyal because they have an objective reason to be such
as convenience, factors such as opening times and location is central to them.

Furthermore, figure 4.2.3.1 also indicated that 19% of the respondents are loyal and
satisfied with Tesco. It is advocated that this percentage of respondents achieved

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their loyalty condition through the linear progression theory as pointed out in
section 2.7.

The Clubcard scheme can be viewed as a starting point to loyalty as mentioned by
Duffy (2001, pg 36). However, the results indicate that more additional factors are
required in order to “insulate them (customers) from switching” (Miranda et al.,
2005, pg 230).

Some consumers simply need to be satisfied with a business in order to be loyal.
However, the 12% divergence from the results in figure 4.2.3.1 indicates that most
consumers need more than satisfaction to be loyal.

The results show that the association between loyalty and satisfaction is not
achievable through a single method alone and in actual fact is dependent on
consumers’ own variables. Thus confirming Söderlund’s (1998 – section 2.7) notion
that, “increasing satisfaction does not produce an equal increase in loyalty for all
customers”.

What can be concluded is that the Clubcard scheme does add value and operating in
conjunction with other loyalty marketing tools that Tesco utilise, such as competitive
pricing and customer service, allows customers to reach a state of loyalty via
different routes and methods.

4.2.4 Tesco’s Efficiency and Use of the Information Gained from Clubcard

The Clubcard magazine has a run of nearly 9 million copies four times a year (Stone,
2004, pg 203) and is an integral part of the Clubcard scheme. It was shown in the
previous section that 61% of respondents surveyed have redeemed some kind of
reward from Tesco in the last 12 months. Figure 4.2.4.1 below demonstrates the
frequency of the respondents who read the clubcard magazine.

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Figure 4.2.4.1
Do you read Clubcard Magazine
Cumulative
Valid Yes 25 25.0 25.0 25.0
No 49 49.0 49.0 74.0
Sometimes 26 26.0 26.0 100.0
Total 100 100.0 100.0

The results show that 49% of respondents claim to not read the Clubcard magazine
and that only 51% answered positively to reading it. These statistics are dependant
on how long the respondent has been a Clubcard member. However, what can be
devised from this is that it does signify that consumers have a lack of interest in this
medium.

Figure 4.2.4.2
Do you read Clubcard magazine * If “yes” or “sometimes please indicate what you think of the magazine.
Crosstabulation
Count
If “yes” please indicate what you think of the magazine.
It covers It is a good read

everything you with some
would expect informative It is dull,
and is of great articles and unhelpful and of
use features no use Total
Do you read Clubard Yes 3 9 13 25

magazine
Sometimes 5 14 7 26
Total 8 23 20 51

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Furthermore, figure 4.2.4.2 shows that out of the 51 respondents surveyed who did
read the Clubcard magazine, a staggering 20 of them found the magazine to be dull,
unhelpful and of no use to them. Consequently, this could suggest that Tesco is not
suitably employing the data it has gathered from Clubcard to efficiently and
effectively communicate with its end customers. Therefore, it could be suggested
that the marketing funds could be better utilised elsewhere.

4.2.5 Has the Tesco Clubcard Created Loyalty?

Humby and Hunt (2004, pg 9) implied that retail loyalty is “looking to achieve a little
extra goodwill, a slight margin of preference, an incremental shift in buying
behaviour”. To highlight a shift in buying behaviour it is practical to recognise and
acknowledge if the collection of points results in an increase of the respondents’
expenditure. By means of cross tabulating the data with how important respondents
rank the location of a store, the data can be divided into true loyal and functionally
loyal.

Figure 4.2.5.1

Does the collection of points influence you to buy more or to buy specific/alternative promotional products *
Location Of Store Crosstabulation
Count
Location Of Store
8 - Not
1 - Very Important
Important 2 3 4 5 6 7 At All Total
Does the collection Yes 0 1 3 1 1 0 0 0 6

of points influence
No 19 22 13 11 6 3 1 1 76
you to buy more or
Don't
to buy 2 6 3 1 2 2 2 0 18
Know
specific/alternative
promotional Total
21 29 19 13 9 5 3 1 100
products

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Figure 4.2.5.1 shows that 76% of the respondents surveyed claimed that the
collection of points did not influence them to increase their expenditure or to buy
specific alternative/promotional products. At a glance this statistic appears to show
that the Tesco Clubcard has failed in its activity to create loyalty and generate an
increase in sales. However, on closer inspection, and with reference to preceding
literature, though only 6% of the respondents stated that their spending increased in
their pursuit of points, this is a noteworthy figure in relation to profits. The
importance of word of mouth exposure was pointed out in section 2.7 and thus this
number can be seen as favourable in regards to profit margins. Remarkably the
respondents who are increasing their expenditure because of the Clubcard, none of
them ranked the location of a store as being the most important factor to them. This
suggests a minor fraction of substantiation against the functionally loyal concept.

4.2.6 Are Consumers Manipulating Suppliers?

Figure 4.2.6.1 shows that from the 100 respondents surveyed, a total of 83%
indicated that they own and regularly use up to 3 other store loyalty cards in
addition to their Tesco Clubcard, while 17% professed they only own a Tesco
Clubcard.

Figure 4.2.6.1
Apart from Clubcard, do you own and regularly use other store loyalty cards? Please
indicate how many:
Cumulative
Valid 1 other card 28 28.0 28.0 28.0
2 other cards 45 45.0 45.0 73.0
3 or more other cards 10 10.0 10.0 83.0
I only own a Tesco Clubcard 17 17.0 17.0 100.0
Total 100 100.0 100.0

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These results lead to the principle that competitors are finding it straightforward to
replicate and imitate similar offerings, and consumers are harvesting the benefits
from all these schemes. Additionally, it also points to the belief that the Tesco
Clubcard is little more than an expensive sales promotion technique. It can be
contended that when the Tesco Clubcard was first introduced in 1995 it could have
achieved loyalty through its uniqueness and innovation. However, today amongst
the twenty‐first century generation of consumers who have more diverse tastes,
attitudes and perceptions, loyalty is now much harder to achieve. One can question
if loyalty cards have reached saturation point and if the era of the Tesco Clubcard is
over?

Figure 4.2.6.2 below puts this finding into practice as it illustrates that 60% of the
respondents surveyed either strongly agree or agree that they actually shop around
to get the best deals. What this data confirms is that consumers are savvy, as
mentioned in section 2.9 and that they are manipulating suppliers for their own
gains, reinforcing Khan’s (1998) notion “that consumers are smarter than marketers
generally perceive, and are actively manipulating suppliers for their own ends”.
Furthermore these results actually constraint the value of the Tesco Clubcard as a
loyalty marketing tool.
Figure 4.2.6.2
I usually shop around to get the best deals
Cumulative
Valid Strongly Agree 28 28.0 28.0 28.0
Agree 32 32.0 32.0 60.0
No Opinion 10 10.0 10.0 70.0
Disagree 22 22.0 22.0 92.0
Strongly Disagree 8 8.0 8.0 100.0
Total 100 100.0 100.0

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With the sheer profusion on different but similar customer reward programs being
employed by organisations and offered to consumers, the data acquired through the
survey and shown in figure 4.2.6.3 reveal that 60% of respondents expect some kind
of reward as part of their normal everyday shopping experience. This exemplifies
the need for market leading suppliers to invest in loyalty marketing schemes in order
to compete for evolved consumers with exceptionally high buyer power.

Figure 4.2.6.3
I expect rewards to be a part of my normal shopping experience
Cumulative
Agree 50 50.0 50.0 60.0
No Opinion 30 30.0 30.0 90.0
Disagree 10 10.0 10.0 100.0
Total 100 100.0 100.0

The secondary research remarked that loyalty card schemes rely “on maintaining the
ignorance of the very customers that it wants to see exhibiting loyal behaviour”
(Parker and Worthington, 2000, pg 496). Additionally Parker and Worthington
(2000, pg 496) also argued that such schemes were unethical and lead to the
materialisation of “points junkies”. However, the information gathered from the
survey opposes this hypothesis. Figure 4.2.6.4 indicates that consumers are not as
ignorant as originally advocated, as well as pointing out that consumers recognise
how much they need to invest in to the scheme in order to receive a laudable
prize/reward. A total of 52% of respondents correctly indicated that they knew that
for every pound they spent at Tesco they would receive one point in the Clubcard
scheme.

78
Figure 4.2.6.4
Please indicate which age group you fall into: * Do you know how many Clubcard points you gain for every
£1 you spend in store? Crosstabulation
Count
Do you know how many Clubcard points you gain for every £1 you spend in
store?
1 point for 2 points for 5 points for 10 points for

every £1 every £1 every £1 every £1 Total
Please indicate which Under 21 5 1 1 3 10

age group you fall into:
22 - 29 12 1 1 7 21
30 - 39 17 4 0 7 28
40 - 49 8 1 2 1 12
50 - 59 6 1 4 4 15
60 + 4 2 1 7 14
Total 52 10 9 29 100

4.2.7 Does Tesco Really Need the Clubcard
The data collected from the survey has provided an important insight into the
significance of what factors respondents place upon that influence loyalty. Figure
4.2.7.1 below provides this information.

Figure 4.2.7.1
1 2 3 4 5 6 7 8
Very Not very
important important
Value for money 31% 18% 20% 10% 3% 6% 8% 4%
Location of store 21% 29% 19% 13% 9% 5% 3% 1%
Quality of service and staff 12% 14% 24% 19% 13% 8% 6% 4%
Loyalty card scheme 9% 8% 7% 16% 21% 12% 16% 11%
Product range and presentation 25% 19% 12% 14% 15% 4% 9% 2%
Overall store layout and appearance 1% 9% 12% 13% 18% 27% 11% 9%
In‐store promotional magazine and flyers 1% 1% 2% 5% 8% 14% 18% 51%
Money off coupons/vouchers and special
promotions 0% 2% 4% 8% 14% 25% 29% 18%

79

Taking into account what respondents valued as 1 and 2 (very important/important)
and totalling them up revealed the highest ranked order to be:

1) Location of store.
2) Value for money.
3) Product range and presentation.
4) Quality of service and staff.
5) Loyalty card scheme.
6) Overall store layout and appearance.
7) In‐store promotional magazine and flyers.
8) Money off coupons/vouchers and special promotions.

The findings exemplify that location of store and value for money are the most
influential determinant factors in achieving loyalty. The ranking system also shows
that loyalty card schemes are in the bottom half of important factors when choosing
a primary supermarket. Although the results show that money off
coupons/vouchers and special promotions as being the least important, if we
examine the other end of the grading scale we can see that a staggering 51% of the
respondents ranked in‐store promotional magazine and flyers as 8 (not very
important). This is an interesting discovery as these are both products of the Tesco
Clubcard. These findings are substantiation that Tesco may be better off investing
money into other areas rather than in its Clubcard scheme.

Figure 4.2.7.2 show the results of the open‐ended question in the survey. The aim of
which was to give respondents the opportunity to freely write their own comments
and remarks into how Tesco could make them more loyal. The responses were
grouped as follows:

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Figure 4.2.7.2
What more could Tesco do to make you more loyal?
Cumulative
Valid Improve facilities for elderly

10 10.0 10.0 10.0
people
Have discounts at the till

22 22.0 22.0 32.0
rather than rewards
Help those without transport 14 14.0 14.0 46.0
Improve store layout 2 2.0 2.0 48.0
Faster checkouts/self service

10 10.0 10.0 58.0
checkouts
More Clubcard points per

4 4.0 4.0 62.0
pound
Increase product range 12 12.0 12.0 74.0
Increase store promotions 3 3.0 3.0 77.0
More store entrances and

3 3.0 3.0 80.0
exits
Increase Clubcard rewards 3 3.0 3.0 83.0
Improved on-line shopping 16 16.0 16.0 99.0
Improve Clubcard
1 1.0 1.0 100.0
administration
Total 100 100.0 100.0

The results show that the majority of responses signal towards direct, on the spot,
discounts from their final shopping bill, rather than gaining rewards in the long term.
This evidence points towards consumers trying to un‐complicate and simplify their
everyday lives and that the Clubcard is in theory complicating things for them.
Additionally, the findings also show that Tesco should consider investing extra
money into providing adequate transport facilities for customers, improved
provisions for older people, increased product selection and improvements to the
online shopping service. The feeling is that the Tesco Clubcard should evolve by

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taking into account direct discounting from the final bill at the point of sale as a
result of points collection. Not only will this assimilate the pricing element of loyalty,
but it could also help maintain the success of the Tesco Clubcard.

4.3 Conclusion

Through the analysis of the primary research, several key findings have been
established and the objectives of the study have been achieved. The results
assessed the value of the Tesco Clubcard as a loyalty marketing tool by classifying
the findings into several fundamental areas.

The results from the questionnaire show that loyalty does exist amongst Tesco
Clubcard holders and Tesco and thus the Tesco Clubcard can be viewed as a valuable
asset in terms of a loyalty marketing tool. The high usage of the card by respondents
indicate that they have accepted the scheme and are willing to incorporate it into
their normal shopping experience at Tesco.

Despite the accomplishment of the Clubcard, the results demonstrate that it is not
the only aspect that causes consumer loyalty. There has been no indication or
evidence to support the theory that the Clubcard alone has created loyalty.
Furthermore the results have shown that other areas need to be considered to
prevent consumers from switching to a rival. Particular attention should be paid to
the details that consumers place importance on, such as value for money, location
and store facilities, rather than loyalty card schemes, in‐store vouchers and
magazines which were all ranked poorly by respondents.

The analysis suggests that the Clubcard scheme is a costly sales technique and that
perhaps the resources used to finance the scheme might be better apportioned
elsewhere to factors which can keep customers loyal and lead to repeat purchases
such as lowering prices throughout the entire product range. Respondents regarded

82
the product of the Clubcard (vouchers and in‐store magazine) to be at the lower end
of the scale in terms of importance when choosing a primary supermarket.
Moreover, 49% of respondents claimed they did not read the magazine and out of
the respondents that did admit to reading the magazine nearly half maintained that
the magazine was not adequate as it did not appeal to them and they regarded it as
dull and unhelpful.

A total of 85% of respondents claimed they owned and regularly used at least 1
other store loyalty card in addition to the Tesco Clubcard. Additionally 60% of
respondents also strongly agree/agreed that they usually shop around to get the
best deals. The results have brought to light the new twenty‐first century generation
of consumers who have more diverse tastes, attitudes and perceptions and the
results show that the buying power they possess is higher than ever and as such they
are effectively manipulating suppliers to meet their own needs and wants. With this
in mind, it could be contended that the Tesco Clubcard in its current form is a dated
remnant of the past and needs to evolve and transform in order to advance its value
as a loyalty marketing tool.

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Chapter Five – Conclusion and Recommendations

Chapter Five

Conclusion and

Recommendations

84
5.0 CHAPTER FIVE ‐ CONCLUSION AND RECOMMENDATIONS

5.1 Introduction

The purpose of this study was to discover if Tesco really needs the Clubcard scheme
despite all the efforts it employs to keep customers loyal. Additionally, it also
examined the value of the Tesco Clubcard scheme in the context as a loyalty
marketing tool. The primary research carried out has produced key results and
addressed the objectives of the thesis, outlined in chapter one.

This concluding chapter shall illustrate the main findings of the study collectively,
concentrating upon the objectives before making applicable recommendations,
ascertaining the limitations to the study and, finally, highlighting areas that need
further investigation and directing further research.

5.2 Conclusion of the study

The literature review has pointed to the notion that loyalty card proposals such as
the Tesco Clubcard scheme are an invaluable marketing tool offering a multitude of
advantages to both the organisation and the consumers. The Clubcard has provided
Tesco with an opulent collection of data on individual customer tastes, preferences
and spending habits. This wealth of information has enabled Tesco to sustain its
position as the market leading UK supermarket retailer. However, by examining the
scheme in the context of meeting the objectives of this thesis, it can be noted that
the significance and value of the Clubcard in achieving customer loyalty appears
dissimilar.

It was discovered that loyalty did exist amongst some card holders, but the study has
revealed no evidence to support the notion that the Tesco Clubcard alone has
achieved loyalty.

85

The study has identified that a series of modus operandi exists in order to achieve a
loyal customer base and that loyalty marketing consists of several factors and not
just loyalty cards. Additionally, the thesis has acknowledged and identified the
importance of store location and competitive pricing as being the most effective
factors in achieving customer loyalty. Tesco currently utilises a number of
techniques to ensure that customers are happy and content. Therefore it can be
argued that the Clubcard scheme can be seen as an expensive encumbrance and is
detracting away from the core business of Tesco. The knock on effect would be to
allow funds to be better allocated and spent on areas which improve the other
techniques currently in place.

Additionally, the study has shown that consumers have evolved since the original
conception of the Clubcard scheme, and the new perceptions, attitudes and buyer
power they possess has immensely altered the value of the Clubcard and how they
see the Clubcard. Furthermore the huge number of customer reward programs and
similar designs has resulted in consumers no longer being concerned with the loyalty
marketing gimmicks and rewards. Today’s consumer is more interested in finding
the best deal they can. What has transpired from the study is the discovery that the
Tesco Clubcard was a starting point for loyalty. At the time of launch the scheme
was innovative and appealing to consumers, however the results of the primary
research reflect that respondents who claimed they were satisfied with Tesco were
not necessarily loyal and thus more is required in order to lock them into being truly
loyal to Tesco.

Harlow (1997 cited in Egan 2001, pg 381) remarked on the evolution of twenty‐first
century consumers as becoming ‘increasingly promotion‐literate’ and this has
reduced the significance of the loyalty card within the supermarket industry. Parker
and Worthington (2000, pg 496), claimed that consumers are ignorant, however the
results from the primary research dispute and contradict this. The primary research
showed that consumers are aware of the value of points and they do own and use

86
more than one loyalty card. As consumers utilise technology around them, such as
the internet, it can be deduced that today’s consumers are actively and effectively
manipulating suppliers to meet their own needs. The knock on effect of the boom of
loyalty cards has now led consumers into expecting some kind of reward in their
normal shopping experience.

Consumers today are loyal to functional aspects of their shopping experience rather
than rewards, with factors such as faster checkouts, product range, transport and
online shopping all viewed as being important aspects. Ultimately these factors all
contribute to a more convenient shopping experience but it has been suggested that
the Clubcard only complicates matters. Furthermore, the results indicated that
many respondents claimed that money off discounts of their final bill at the point of
sale rather than future rewards were preferred and would make them more loyal.
This is a clear indication that consumers today are more attracted to an instant
saving/price reduction rather than the long‐term collection of points in order to
attain a similar reduction. From this finding it can be suggested that changing the
format of the Clubcard to be more in line with what consumers demand may make it
a more viable and valuable loyalty marketing tool.

The general customer perception of the Tesco Clubcard revealed respondents high
usage of the card and that they trust the Tesco brand and image in addition to
having ardent aspirations to redeem rewards. Conversely, the results also showed
some respondents using the card little or never per transaction which points towards
the speculation that rewards are simply not enough to keep certain customers loyal
to Tesco. The findings also showed that respondents perceived the card as an
additional bonus to their shopping and the theory of operant conditioning, as
highlighted in section 2.6 has been proven to not be generic with some consumers
showing positive actions and behaviour without the need for rewards. This factor is
further reinforced by the discovery that the majority of respondents’ surveyed
claimed they would continue to shop at Tesco even without the Clubcard scheme.

87
One of the categorical features of employing a customer reward program is to
reduce high wastage by specifically targeting consumers with information that will
appeal to them. The results showed that Tesco’s communication with its customers
via the medium of magazine and vouchers was not effective and not realised to full
capacity by recipients. Readership amongst respondents were moderately low and
several respondents did not rate the magazine and/or its content. This finding
suggests that the Clubcard scheme is directing Tesco to disregard particular sections
of the market which offer more interest to consumers such as price reductions or
improved facilities. With outlay into other more effective loyalty marketing
mechanisms it can be reasoned that in terms of achieving a loyal customer base they
may produce better results.

Parker and Worthington (2000, pg 496) commented that loyalty “cannot be bought”
and the findings in the primary research back this theory up, discovering over half
the respondents claiming they were satisfied customers of Tesco. Further
confirmation of this was established with the greater part of respondents
maintaining they would continue to shop at Tesco and trusted the Tesco brand.
What the findings have shown is that the epoch of the loyalty card is becoming
passé. In its current form it is not enough to sustain competitive advantage. The
failure to evolve the Clubcard scheme into what today’s consumer demand has
brought the Clubcard proposal to a unique crossroad. The sheer number of similar
customer reward programs has reduced the overall value of schemes. Coupled with
consumers that have evolved and are more intelligent has resulted in high buyer
power within the supermarket industry. This evidence points to the Clubcard
scheme becoming a “zero sum game” (Mazur, 1997, pg 16).

The findings from the primary research have revealed several factors which limit the
value of the Tesco Clubcard. These are:

88
• Competitors: the quantity of similar schemes has de‐valued customer reward
programs, caused confusion and resentment amongst consumers and their
simplicity of limitations has brought loyalty card schemes to a crossroad.
• External environment: the evolution of tastes, attitudes, awareness and
demands of today’s promotional literate consumer has resulted in savvy
shoppers who are hunting around for the best deals and commanding more.
• Perception: the study revealed respondents’ perceptions towards the
Clubcard and the additional Clubcard products such as in‐store magazine and
vouchers was perceived as being weak in terms of productivity and
effectiveness.

The study has ascertained that the value of the Tesco Clubcard is contentious as it
has made loyalty harder to achieve and thus failed to meet the base requirements of
the model. Additionally, the research can conclude that the Clubcard in its current
format may well have reached its zenith and if it continues to stay dormant then the
future value of the scheme is uncertain.

5.3 Recommendations

Unquestionably the Tesco Clubcard customer reward program has brought success
to Tesco, yet despite this accomplishment the study has found that it is now in a
state of decline. Its value as a loyalty marketing tool is weakening due to numerous
factors. Building upon this conclusion, the following recommendations can be
suggested:

• Investigate key areas which are of importance to consumers and allocate the
funds necessary in order to ensure that these new customer demands are
met to help ascertain a loyal customer base.
• Examine and reduce the current amount of money invested into the Clubcard
customer reward program as the concept becomes more dated and investing

89
money in more significant areas. Areas such as lowering prices shall help
sustain a competitive advantage within the industry.
• Evolve and transform the Clubcard model to adapt to the new tastes,
attitudes and demands of the new generation of consumers. Consideration
should be noted to giving customers an instant rebate at the point and time
of sale rather than rewarding them through the collection of points. The
current image of the Clubcard feels dated and as such a revision and re‐
launch may give it a much needed boost and help motivate and excite
consumers.

5.4 Limitations and Further Research

This study is not without limitations. The main area of concern is the sample size of
the questionnaire. It is felt that it is not a 100% representation of the whole
population and the times and dates in which this research was carried out were
unfortunately constrained by the periods that Tesco allowed. Furthermore, with
reference to the 100 respondents, generalisations have regrettably had to be made
to the sample group.

Time and money are supplementary factors which have limited the study to a
degree. Tesco would only allow questionnaires to be carried out during a small
number of mornings and over a few hours. The result of this is limited results of
consumers who happened to visit the store on the specific times and dates the
survey was being carried out. Additionally, it is felt that if qualitative interviews were
established and carried out the results could help verify and support the findings
from the questionnaire.

Extra studies could be performed at different Tesco stores to determine if the value
and perception of Clubcard is the same or if it differs from region to region. Further
investigation could be carried out to reveal what effects an increased rate of loyalty

90
points per pound spent would have and if it would make the scheme a more viable
and valuable proposition.

The research focused solely on Clubcard holders, however it may have been
advantageous to extend the investigation to reflect on consumers who do not own a
Clubcard yet continue to shop at Tesco despite this. Performing such an analysis
would illustrate and identify what generates consumer loyalty and thus determine
the most valuable loyalty marketing tool within the supermarket industry.

91
References

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Appendices

Appendices

Appendices
APPENDIX A – QUESTIONNAIRE JUSTIFICATION

QUESTION VALIDATION
1a). Do you own a Tesco Initial question, leads directly into the subject and instantly establishes
Clubcard? rapport with the respondent.

1b). If "yes", please indicate how Although customers may own a Clubcard, the inclusion of this question
often you use your Clubcard
when determines how actively they use their card. If a respondent owns a
you purchase goods or services card but never uses it, this will indicate to the author a greater insight
with Tesco. with regards to impending questions concerning their attitudes towards
the Clubcard scheme.

2). Please choose your Gender Used to build a user profile of the Clubcard scheme.

3). Please indicate which age Helps in building the user profile and responses have been intentionally
group you fall into. broadly grouped. It is vital there is no overlap in the age ranges
stipulated.

4). On a scale of 1‐8 (1 = excellent The intention of this question is to establish what factors lead
and 8 = poor), how do you rank
the importance of each customers to repeat purchase and determine the connection between
of the following factors when customer and store. This question also highlights the range of loyalty
deciding which supermarket marketing strategies currently used within the retail industry.
you use

5). Apart from Clubcard do you The use of this question will determine how many respondents
own and regulary use other own more than one loyalty card and divulge if consumers are “actively
store loyalty cards? manipulating suppliers for their own ends” (Khan 1998).
Please indicate how many

6a). Do you read the Clubcard Tesco use the information gathered from Clubcard users to determine
Magazine? the articles it publishes in its Clubcard magazine. This question will
establish how effective this practice is and if customers are responding
by reading the magazine and indicate how prevalent this modus
operandi is.

6b). If "yes" or “sometimes” The motive of splitting this question is to void any confusion to
Please indicate what you think of respondents and also understanding how they value Tesco’ efforts
The magazine. to communicate with them.

7). Do you know how many The inclusion of this question will discover is consumers are as
Clubcard points you gain for as ‘ignorant’ as Parker and Worthington (2000) asserted.
every £1 you spend in store?

8). Does the collection of points Parker and Worthington (2000) claimed that consumers are
influence you to buy more or to becoming ‘points junkies’ who are desperate to gain and save
buy specific/alternative points. Additionally it will also address if customers aspire to
promotional products which collect and redeem more points and thus increase spending.
offer bonus points?

105
Appendices

9). Have you redeemed any This question is designed to test Capizzi and Ferguson (2005) claim
rewards from the Clubcard
scheme that customers actively seek lifestyle themed rewards.
within the last 12 months?

10). Would you describe yourself This will establish directly if the customer feel loyal towards Tesco.
as being loyal to Tesco?

11). Would you describe yourself Used in conjunction with the above question this will address the
to be a satisfied customer of concerns in the literature review with regards to the relationship
Tesco? between loyalty and satisfaction.

12). If Tesco did not have the This question will establish if consumers are ‘locked in’ to Tesco as
Clubcard scheme, would you still the paradigm created by the literature review suggests that it is not
continue to shop there? just loyalty cards that create loyalty.

13). Please tick the appropriate The inclusion of this was to gather and understand customers
box which accurately reflects your attitudes and opinions with regards to Tesco and loyalty.
level of agreement or
disagreement.

14). What could Tesco do more to Purposely an open ended question to determine any other feelings
make you more loyal? that respondents had and to gain a better understanding of them.
Hopefully it will also present new ideas or concepts surrounding
customer loyalty.

106
Appendices
APPENDIX B ‐ QUESTIONNAIRE

TESCO CLUBCARD USER SURVEY

As part of my MBA thesis I am doing some research on the Tesco Clubcard. I would appreciate it if you
could take a few moments of your time to carry out this survey. All results will be kept confidential.

1a). Do you own a Tesco Clubcard?
Yes 1 No 2

1b). If “yes”, please indicate how often you use your Clubcard when you purchase goods or service with Tesco:
Always 1 Frequently 2 Little 3 Never 4
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2). Please choose your Gender:
Male 1 Female 2
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3). Please indicate which age group you fall into:
Under 21 1 40 – 49 4
22 – 29 2 50 – 59 5
30 – 39 3 60 + 6
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4). On a scale of 1 to 8 (1 = very important and 8 = not important at all) How do you rank the importance of each
of the following factors when deciding which supermarket you use:
Rank 1 ‐ 8
‐ Value for money ________ 1
‐ Location of store ________ 2
‐ Quality of service and staff helpfulness ________ 3
‐ Loyalty card schemes ________ 4
‐ Product range and presentation ________ 5
‐ Overall store layout and appearance ________ 6
‐ In‐store promotional magazine and flyers ________ 7
‐ Money off coupons/vouchers and special promotions ________ 8
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5). Apart from Clubcard, do you own and regularly use any other store loyalty cards? Please indicate how many:
1 other card 1 3 or more other cards 3
2 other cards 2 I only own a Tesco Clubcard 4
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6a). Do you read the Clubcard Magazine? If “No” please move onto Question 7.
Yes 1 No 2 Sometimes 3

6b). If “yes” or “sometimes” please indicate what you think of the magazine.
It covers everything you would expect and is of great use 1
It is a good read with some informative articles and features 2
It is dull, unhelpful and of no use 3
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

‐ Please turnover questionnaire to continue ‐

107
Appendices

7). Do you know how many Clubcard points you gain for every £1 you spend in store?
1 point for every £1 1 5 points for every £1 3
2 points for every £1 2 10 points for every £1 4
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8). Does the collection of points influence you to buy more or to buy specific/alternative promotional products
which offer bonus points?
Yes 1 No 2 Don’t know 3
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9). Have you redeemed any rewards from the Clubcard scheme within the last 12 months?
Yes 1 No 2
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10). Would you describe yourself as being loyal to Tesco?
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11). Would you describe yourself to be a satisfied customer of Tesco?
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12). If Tesco did not have the Clubcard scheme, would you still continue to shop there?
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13). Please tick the appropriate box which accurately reflects your level of agreement or disagreement:
Strongly Agree Agree No Opinion Disagree Strongly Disagree

I trust Tesco products and
their image 1 2 3 4 5

I think Tesco is very
innovative 1 2 3 4 5

I usually shop around to get
the best deals  1 2 3 4 5

I expect rewards to be
a part of my normal
shopping experience  1 2 3 4 5

I feel more could
be done to increase 1 2 3 4 5
my loyalty

108
Appendices

14). What could Tesco do more to make you more loyal?

_______________________________________________________________________________________________

_______________________________________________________________________________________________

_______________________________________________________________________________________________

_______________________________________________________________________________________________

‐ Many thanks for your time and attention ‐

109
Appendices
APPENDIX C – SPSS CODED QUESTIONNAIRE RESULTS
Q1a Q1b Q2 Q3 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q5 Q6a Q6b Q7 Q8 Q9 Q10 Q11 Q12
1 2 1 2 3 2 8 1 5 4 6 7 1 1 3 4 2 1 1 1 1
1 2 1 4 1 2 3 8 4 5 7 6 1 2 1 3 2 2 3 1
1 2 2 3 2 1 6 7 3 4 8 5 1 2 1 2 2 2 2 1
1 3 2 4 1 4 3 2 5 6 8 7 1 3 3 2 2 1 2 1 1
1 2 2 3 2 3 4 1 5 7 8 6 1 2 4 1 2 1 2 1
1 2 2 3 3 7 2 1 5 8 4 6 1 1 2 1 2 2 2 2 1
1 2 2 4 4 2 1 3 6 7 8 5 4 2 3 2 1 1 1 3
1 3 2 2 6 3 5 1 4 7 8 2 2 2 1 1 1 2 1 1
1 3 2 4 3 1 5 6 4 7 8 2 2 1 1 1 2 1 1 2 1
1 3 1 2 4 3 2 7 1 5 8 6 2 1 3 4 2 1 2 3 1
1 2 2 3 3 2 4 8 1 6 7 5 2 3 3 1 3 2 2 1 1
1 2 2 2 3 2 1 6 7 8 5 4 2 3 2 4 2 1 1 2 1
1 3 2 4 3 2 1 5 7 8 6 4 2 1 3 1 2 2 1 1 1
1 1 2 3 3 2 1 5 8 7 6 4 2 1 3 2 2 2 2 2 1
1 3 2 2 3 2 1 5 7 8 6 4 2 3 2 1 3 2 2 2 1
1 2 1 3 3 1 4 8 2 5 6 7 2 1 3 1 3 1 2 1 1
1 2 2 3 7 1 2 5 3 6 4 8 1 3 3 4 2 1 1 1 1
1 2 2 3 4 5 3 1 2 6 7 8 1 2 1 2 2 2 1 1
1 3 1 5 4 1 3 5 2 6 8 7 3 2 1 2 1 1 1 1
1 2 1 2 3 2 7 4 1 5 6 8 4 2 1 3 1 2 2 1
1 3 2 4 6 3 2 1 4 5 7 8 4 1 2 1 2 2 1 2 1
1 1 1 6 6 5 4 1 2 3 8 7 4 1 2 4 3 1 1 1 1
1 1 2 1 6 2 4 3 1 5 8 7 4 2 1 2 1 2 3 1
1 1 2 6 1 6 4 8 2 3 5 7 4 2 3 2 1 2 1 1
1 3 2 3 1 4 3 7 2 6 5 8 1 2 2 2 2 3 3 1
1 1 2 6 1 3 4 2 5 6 7 8 1 2 2 3 2 2 1 1
1 2 2 1 1 2 5 8 3 7 4 6 1 2 4 2 1 2 3 1
1 1 1 3 1 4 6 5 2 3 8 7 1 2 1 2 2 2 3 1
1 2 1 1 2 6 3 1 4 5 8 7 1 3 2 2 2 2 2 1 1
1 2 2 1 3 2 1 5 4 8 7 6 2 3 3 4 2 1 2 3 1
1 1 2 3 8 3 4 2 1 6 5 7 2 3 1 1 1 1 2 1 1
1 3 2 5 5 4 1 7 3 2 8 6 4 2 3 2 2 1 1 1
1 1 2 3 3 7 2 8 1 6 4 5 4 2 1 3 1 1 2 1
1 1 2 5 2 3 4 7 1 6 8 5 3 1 3 3 2 1 1 1 1
1 2 2 3 1 4 5 8 2 3 6 7 4 3 2 1 3 2 2 2 1
1 4 2 5 5 4 3 2 1 6 8 7 1 3 3 1 2 1 1 3 1
1 2 2 3 2 3 1 8 4 5 7 6 1 2 1 3 2 1 3 1
1 1 2 2 1 2 3 4 5 6 8 7 2 3 2 1 2 1 2 2 1
1 1 2 6 8 1 3 5 7 6 2 4 2 1 3 1 2 2 2 1 1
1 3 2 3 6 2 3 7 1 4 5 8 2 3 2 4 1 2 3 2 1
1 1 2 4 7 5 1 3 4 2 8 6 3 2 1 2 2 2 1 1
1 1 1 6 1 3 2 5 6 8 4 7 3 3 2 4 2 1 3 1 1
1 2 2 3 8 4 3 5 7 2 1 6 3 1 2 2 2 2 1 2 1
1 1 1 2 2 1 4 3 5 8 6 7 4 3 3 1 3 1 2 2 1
1 1 2 2 1 5 3 4 2 6 8 7 4 2 1 2 1 1 2 1
1 1 2 5 2 4 1 7 6 5 3 8 1 3 1 4 1 2 1 1 1
1 2 2 6 1 2 3 4 7 5 8 6 1 2 1 2 1 2 3 1
1 1 2 6 7 1 4 6 3 2 8 5 1 1 2 1 2 2 2 1 1
1 2 1 2 1 2 4 6 3 5 8 7 1 2 4 3 2 2 3 1

110
Appendices

Q13 Q13 Q13 Q13 Q13
4 2 1 3 2
1 2 1 3 3
2 4 1 3 2
2 2 2 3 2
2 2 2 3 3
4 2 2 3 2
4 2 3 1 2
4 2 2 3 2
4 2 2 2 2
4 2 2 3 2
2 2 4 2 2
4 2 5 2 2
2 1 4 2 1
4 2 4 2 3
4 3 1 1 2
5 3 5 2 3
4 2 4 3 2
2 2 3 1 3
1 3 4 4 2
3 4 1 2 4
1 2 2 4 3
2 3 1 3 3
1 2 2 1 1
1 3 1 2 2
2 1 4 3 2
3 2 2 1 1
1 2 5 3 2
2 1 4 2 2
2 2 4 3 1
1 2 2 2 2
2 2 2 2 3
4 4 4 3 2
4 2 4 2 4
2 3 2 1 3
5 2 1 2 2
1 2 1 2 2
2 2 1 2 2
1 2 1 1 2
2 1 5 2 3
2 2 1 2 2
2 2 2 2 2
1 1 4 2 2
3 2 3 3 2
2 2 3 2 2
2 2 2 2 2
1 2 2 3 4
2 1 2 3 2
2 2 2 2 2
4 2 4 2 2

111
Appendices

Q1a Q1b Q2 Q3 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q5 Q6a Q6b Q7 Q8 Q9 Q10 Q11 Q12
1 2 2 5 4 5 3 2 6 1 8 7 1 1 2 4 1 1 2 2 3
1 1 1 3 4 3 1 2 5 6 7 8 2 2 1 2 1 2 2 1
1 1 1 6 4 1 3 8 5 2 6 7 2 3 2 4 2 1 2 2 1
1 1 2 2 3 1 4 8 7 2 5 6 2 2 1 2 1 1 1 1
1 2 2 5 8 3 4 2 1 5 7 6 2 1 3 1 2 1 2 3 1
1 2 2 5 2 3 6 5 1 7 8 4 2 3 3 3 2 1 2 1 1
1 1 1 6 3 5 7 6 1 2 8 5 2 1 1 4 2 1 1 1 1
1 2 2 5 2 1 3 7 5 4 8 6 2 2 2 2 1 2 2 1
1 3 2 3 2 8 3 7 1 4 6 5 2 2 1 2 2 1 1 2
1 3 2 4 3 2 5 4 1 7 8 6 2 2 1 2 1 2 1 1
1 3 2 5 1 3 7 6 2 4 8 5 2 3 2 1 2 2 2 1 1
1 1 2 2 2 6 4 5 1 3 7 8 4 3 2 1 3 1 2 1 1
1 1 2 6 2 1 3 5 4 6 8 7 4 1 2 4 2 2 2 1 1
1 1 2 1 1 7 2 6 3 4 8 5 2 2 4 3 1 2 2 1
1 1 2 2 4 2 8 6 1 3 7 6 2 3 1 4 2 1 2 1 1
1 1 2 3 1 5 3 4 2 6 8 7 2 1 3 4 3 1 2 2 1
1 1 1 2 3 1 4 6 2 8 5 7 2 2 1 2 1 2 1 1
1 2 2 3 7 5 3 4 1 2 8 6 2 1 2 1 2 1 3 1 1
1 1 2 4 7 2 4 6 1 3 8 5 2 1 3 4 2 1 1 2 1
1 3 2 1 2 1 6 5 3 4 7 8 2 2 1 2 2 1 1 1
1 1 1 5 6 1 2 3 4 5 7 8 2 1 3 4 2 1 1 1 1
1 2 2 3 1 4 2 5 3 6 8 7 1 2 4 2 1 1 2 1
1 1 2 2 4 2 8 5 1 6 3 7 1 2 1 2 1 2 1 1
1 1 1 6 7 3 4 5 1 2 8 6 1 2 4 2 1 2 1 1
1 1 2 3 1 2 7 5 4 3 8 6 4 3 2 1 2 1 1 1 1
1 1 1 1 2 4 6 5 1 3 7 8 4 2 1 2 2 2 1 1
1 2 1 2 7 1 2 6 3 4 8 5 2 3 1 1 2 1 1 2 1
1 1 2 3 5 6 7 1 2 3 8 4 2 2 1 2 1 2 1 1
1 2 2 2 1 4 2 7 5 3 8 6 2 2 1 2 2 2 1 1
1 2 1 4 2 1 5 7 3 4 8 6 3 2 1 2 2 2 2 1
1 2 2 3 1 4 8 7 2 5 6 3 4 2 4 2 1 2 1 1
1 1 2 1 1 2 5 4 7 8 6 3 4 2 3 2 2 1 3 1
1 2 1 2 4 2 5 3 1 6 8 7 1 2 3 2 2 2 3 1
1 2 2 3 3 2 5 4 1 6 8 7 2 2 2 2 1 1 1 1
1 1 1 2 3 2 6 5 1 4 8 7 1 1 2 4 2 1 2 3 1
1 1 1 4 1 4 3 8 2 7 5 6 2 2 3 2 2 2 1 1
1 1 2 2 1 2 3 4 7 5 8 6 1 2 2 2 1 1 1 1
1 3 1 5 1 5 6 7 2 4 8 3 2 2 4 2 2 2 1 1
1 1 1 5 2 6 5 7 1 5 8 3 2 2 3 3 2 1 2 1
1 2 2 6 3 1 6 7 2 4 8 5 2 1 3 4 2 1 2 3 2
1 3 2 1 2 1 7 6 5 3 8 4 2 3 1 1 2 1 1 3 1
1 2 2 5 2 1 5 3 4 6 8 7 2 2 1 2 1 1 1 1
1 1 1 3 1 3 2 4 8 6 7 5 2 1 3 1 2 2 2 1 2
1 1 1 3 1 2 3 4 5 6 7 8 3 2 4 3 1 1 2 1
1 3 2 4 1 2 4 7 3 5 8 6 3 1 1 1 2 2 1 1 1
1 2 1 5 1 3 5 4 2 7 6 8 3 2 1 2 1 3 1 1
1 2 2 6 7 3 1 4 2 5 8 6 3 3 2 1 2 2 2 1 1
1 1 2 3 1 3 2 5 4 6 7 8 2 3 2 1 3 1 1 2 1
1 2 2 2 3 1 2 4 5 7 6 8 1 2 4 2 1 3 1 1
1 2 2 6 1 3 5 2 4 6 8 7 2 2 2 2 1 2 1 1
1 2 2 1 1 2 3 4 5 6 7 8 1 3 2 1 2 1 2 1 1

112
Appendices
Q13 Q13 Q13 Q13 Q13

4 2 4 2 2
2 2 1 2 2
2 3 4 4 2
2 2 1 2 4
2 1 4 2 2
1 3 2 4 2
1 2 4 2 5
2 2 5 3 4
3 2 1 2 2
5 3 3 1 4
1 2 4 2 2
2 1 5 2 2
2 1 1 1 5
4 2 4 2 2
5 3 5 4 2
2 3 4 2 2
2 2 2 3 2
2 2 1 4 2
2 3 3 4 2
2 3 4 4 2
1 2 1 2 2
3 2 1 4 2
2 3 4 2 2
1 2 2 2 2
2 2 2 1 2
1 2 4 4 2
3 3 2 2 4
1 2 4 2 2
1 2 1 3 2
5 1 2 2 2
2 3 2 2 2
1 2 1 3 2
2 3 2 2 2
2 2 1 3 2
2 2 1 2 2
5 3 2 2 2
1 2 2 3 2
2 1 2 2 2
3 1 1 3 3
3 2 2 2 2
2 2 2 3 2
2 2 1 3 2
2 2 1 3 3
2 2 2 2 1
3 2 3 2 2
3 3 3 3 3
2 2 1 2 2
4 2 2 3 3
2 3 5 3 2
4 3 3 2 2
2 2 1 2 2
2 3 3 2 2

113
Appendices

APPENDIX D – SPSS FREQUENCY TABLES FOR QUESTIONNARE RESULTS

Respondents who own a Tesco Clubcard
Cumulative
Valid Yes 100 100.0 100.0 100.0
Frequency of how often respondents used their Clubcard when purchasing goods
or services with Tesco
Cumulative
Valid Always 42 42.0 42.0 42.0
Frequently 39 39.0 39.0 81.0
Little 18 18.0 18.0 99.0
Never 1 1.0 1.0 100.0
Total 100 100.0 100.0
Gender of respondents surveyed
Cumulative
Valid Male 29 29.0 29.0 29.0
Female 71 71.0 71.0 100.0
Total 100 100.0 100.0

114
Appendices

Age group of respondents surveyed
Cumulative
Valid Under 21 10 10.0 10.0 10.0
22 - 29 21 21.0 21.0 31.0
30 - 39 28 28.0 28.0 59.0
40 - 49 12 12.0 12.0 71.0
50 - 59 15 15.0 15.0 86.0
60 + 14 14.0 14.0 100.0
Total 100 100.0 100.0

When deciding on which supermarket use, how important is value for money
Cumulative
Valid 1 - Very Important 31 31.0 31.0 31.0
2 18 18.0 18.0 49.0
3 20 20.0 20.0 69.0
4 10 10.0 10.0 79.0
5 3 3.0 3.0 82.0
6 6 6.0 6.0 88.0
7 8 8.0 8.0 96.0
8 - Not Important At All 4 4.0 4.0 100.0
Total 100 100.0 100.0

115
Appendices

When deciding on which supermarket use, how important is location of store
Cumulative
2 29 29.0 29.0 50.0
3 19 19.0 19.0 69.0
4 13 13.0 13.0 82.0
5 9 9.0 9.0 91.0
6 5 5.0 5.0 96.0
7 3 3.0 3.0 99.0
Total 100 100.0 100.0
When deciding on which supermarket use, how important is quality of service and
staff helpfulness
Cumulative
2 14 14.0 14.0 26.0
3 24 24.0 24.0 50.0
4 19 19.0 19.0 69.0
5 13 13.0 13.0 82.0
6 8 8.0 8.0 90.0
7 6 6.0 6.0 96.0
Total 100 100.0 100.0

116
Appendices

When deciding on which supermarket use, how important is loyalty card schemes
Cumulative
2 8 8.0 8.0 17.0
3 7 7.0 7.0 24.0
4 16 16.0 16.0 40.0
5 21 21.0 21.0 61.0
6 12 12.0 12.0 73.0
7 16 16.0 16.0 89.0
Total 100 100.0 100.0

When deciding on which supermarket use, how important is product range and
presentation
Cumulative
2 19 19.0 19.0 44.0
3 12 12.0 12.0 56.0
4 14 14.0 14.0 70.0
5 15 15.0 15.0 85.0
6 4 4.0 4.0 89.0
7 9 9.0 9.0 98.0
Total 100 100.0 100.0

117
Appendices

When deciding on which supermarket use, how important is overall store layout
and appearance
Cumulative
2 9 9.0 9.0 10.0
3 12 12.0 12.0 22.0
4 13 13.0 13.0 35.0
5 18 18.0 18.0 53.0
6 27 27.0 27.0 80.0
7 11 11.0 11.0 91.0
Total 100 100.0 100.0

When deciding on which supermarket use, how important is in‐store promotional
magazine and flyers
Cumulative
2 1 1.0 1.0 2.0
3 2 2.0 2.0 4.0
4 5 5.0 5.0 9.0
5 8 8.0 8.0 17.0
6 14 14.0 14.0 31.0
7 18 18.0 18.0 49.0
Total 100 100.0 100.0

118
Appendices

When deciding on which supermarket use, how important is money off
coupons/vouchers and special promotions
Cumulative
Valid 2 2 2.0 2.0 2.0
3 4 4.0 4.0 6.0
4 8 8.0 8.0 14.0
5 14 14.0 14.0 28.0
6 25 25.0 25.0 53.0
7 29 29.0 29.0 82.0
Total 100 100.0 100.0

Frequency of respondents who own and use another loyalty card including the
Tesco Clubcard
Cumulative
Valid 1 other card 28 28.0 28.0 28.0
2 other cards 45 45.0 45.0 73.0
3 or more other cards 10 10.0 10.0 83.0
I only own a Tesco Clubcard 17 17.0 17.0 100.0
Total 100 100.0 100.0

119
Appendices

Frequency of respondents who read the Clubcard magazine
Cumulative
Valid Yes 25 25.0 25.0 25.0
No 49 49.0 49.0 74.0
Sometimes 26 26.0 26.0 100.0
Total 100 100.0 100.0
Respondents’ perception on the Clubcard magazine
Frequency Percent Valid Percent Cumulative Percent
Valid It covers everything you would

expect and is of great use 8 8.0 15.7 15.7
It is a good read with some

23 23.0 45.1 60.8
informative articles and features
It is dull, unhelpful and of no use 20 20.0 39.2 100.0
Total 51 51.0 100.0
Missing System 49 49.0
Total 100 100.0

120
Appendices

The amount of points per every £1 spent respondents thought they were receiving
Cumulative
Valid 1 point for every £1 52 52.0 52.0 52.0
2 points for every £1 10 10.0 10.0 62.0
5 points for every £1 9 9.0 9.0 71.0
10 points for every £1 29 29.0 29.0 100.0
Total 100 100.0 100.0

Frequency of respondents who increase expenditure or purchased
specific/alternative products in the pursuit of collection points
Cumulative
Valid Yes 6 6.0 6.0 6.0
No 76 76.0 76.0 82.0
Don't Know 18 18.0 18.0 100.0
Total 100 100.0 100.0

Frequency of respondents who have redeemed any rewards from the Clubcard
scheme within the last 12 months
Cumulative
Valid Yes 61 61.0 61.0 61.0
No 39 39.0 39.0 100.0
Total 100 100.0 100.0

121
Appendices
Frequency of respondents who would describe themselves as being loyal
Cumulative
Valid Yes 36 36.0 36.0 36.0
No 58 58.0 58.0 94.0
Don't Know 6 6.0 6.0 100.0
Total 100 100.0 100.0

Frequency of respondents who would describe themselves as being a satisfied
Tesco customer
Cumulative
Valid Yes 54 54.0 54.0 54.0
No 29 29.0 29.0 83.0
Don't Know 17 17.0 17.0 100.0
Total 100 100.0 100.0

Frequency of respondents who would continue to shop at Tesco if they did not
have the Clubcard scheme in place
Cumulative
Valid Yes 95 95.0 95.0 95.0
No 3 3.0 3.0 98.0
Don't Know 2 2.0 2.0 100.0
Total 100 100.0 100.0

122
Appendices
Frequency of respondents who trust Tesco products and their image
Cumulative
Agree 47 47.0 47.0 68.0
No Opinion 10 10.0 10.0 78.0
Disagree 16 16.0 16.0 94.0
Total 100 100.0 100.0

Frequency of respondents who think that Tesco is very innovative
Cumulative
Agree 63 63.0 63.0 75.0
No Opinion 22 22.0 22.0 97.0
Disagree 3 3.0 3.0 100.0
Total 100 100.0 100.0

Frequency of respondents who usually shop around to get the best deals
Cumulative
Agree 32 32.0 32.0 60.0
No Opinion 10 10.0 10.0 70.0
Disagree 22 22.0 22.0 92.0
Total 100 100.0 100.0

123
Appendices

Frequency of respondents who expect rewards to be a part of their normal
shopping experience
Cumulative
Agree 50 50.0 50.0 60.0
No Opinion 30 30.0 30.0 90.0
Disagree 10 10.0 10.0 100.0
Total 100 100.0 100.0
Frequency of respondents who feel more could be done to increase their loyalty
Cumulative
Agree 72 72.0 72.0 77.0
No Opinion 14 14.0 14.0 91.0
Disagree 7 7.0 7.0 98.0
Total 100 100.0 100.0

124
Appendices
What more could Tesco do to make you more loyal
Cumulative
Valid Improve facilities for elderly

10 10.0 10.0 10.0
people
Have discounts at the till

22 22.0 22.0 32.0
rather than rewards
Help those without transport 14 14.0 14.0 46.0
Improve store layout 2 2.0 2.0 48.0
Faster checkouts/self service

10 10.0 10.0 58.0
checkouts
More Clubcard points per

4 4.0 4.0 62.0
pound
Increase product range 12 12.0 12.0 74.0
Increase store promotions 3 3.0 3.0 77.0
More store entrances and

3 3.0 3.0 80.0
exits
Increase Clubcard rewards 3 3.0 3.0 83.0
Improved on-line shopping 16 16.0 16.0 99.0
Improve Clubcard
1 1.0 1.0 100.0
administration
Total 100 100.0 100.0

125

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2.10 Do Customer Reward Programs Deliver Long Term? 39

4.2.3 Loyalty and Satisfaction 72

Please choose your Gender:

Valid Male 29 29.0 29.0 29.0

Female 71 71.0 71.0 100.0

Total 100 100.0 100.0

Please indicate which age group you fall into:

Please choose your Male 2 9 5 3 5 5 29

I trust Tesco products and their image

Please indicate which Under 21 4 4 1 0 1 10

Valid Always 42 42.0 42.0 42.0

Frequently 39 39.0 39.0 81.0

Little 18 18.0 18.0 99.0

Never 1 1.0 1.0 100.0

Total 100 100.0 100.0

Yes No Don't Know Total

Please indicate which age Under 21 10 0 0 10

I feel more could be done to increase my loyalty

I think Tesco is very Strongly Agree 1 8 2 0 1 12

I feel more could be done to increase my loyalty

I trust Tesco products and Strongly Agree 1 16 2 1 1 21

I expect rewards to be a part of my normal shopping experience

Strongly Agree Agree No Opinion Disagree Total

If Tesco did not have the Yes 8 48 29 10 95

Have you redeemed any rewards from the

Loyalty Card Scheme 1 - Very Important 4 5 9

8 - Not Important At All 6 5 11

Would you describe yourself to be a satisfied customer of Tesco?

Yes No Don't Know Total

Would you describe yourself Yes 19 13 4 36

Do you read Clubcard Magazine

Valid Yes 25 25.0 25.0 25.0

No 49 49.0 49.0 74.0

Sometimes 26 26.0 26.0 100.0

Total 100 100.0 100.0

If “yes” please indicate what you think of the magazine.

It covers It is a good read

Do you read Clubard Yes 3 9 13 25

Does the collection Yes 0 1 3 1 1 0 0 0 6

Valid 1 other card 28 28.0 28.0 28.0

2 other cards 45 45.0 45.0 73.0

3 or more other cards 10 10.0 10.0 83.0

I only own a Tesco Clubcard 17 17.0 17.0 100.0

Total 100 100.0 100.0

I usually shop around to get the best deals

Valid Strongly Agree 28 28.0 28.0 28.0

Agree 32 32.0 32.0 60.0

No Opinion 10 10.0 10.0 70.0

Disagree 22 22.0 22.0 92.0

Strongly Disagree 8 8.0 8.0 100.0

Total 100 100.0 100.0

I expect rewards to be a part of my normal shopping experience

Valid Strongly Agree 10 10.0 10.0 10.0

Agree 50 50.0 50.0 60.0

No Opinion 30 30.0 30.0 90.0

Disagree 10 10.0 10.0 100.0

Total 100 100.0 100.0

1 point for 2 points for 5 points for 10 points for

Please indicate which Under 21 5 1 1 3 10

What more could Tesco do to make you more loyal?

Valid Improve facilities for elderly

Have discounts at the till