RESEARCH METHODOLOGY: THE IMPACT OF THE SUCCESS OF TESCO’S LOYALTY CARD SCHEME IN COMPARISON WITH COMPETITOR’S SCHEMES
Here in this assignment, the researcher tries to delineate in details the way in which the present research is conducted. It is important to have a clear understanding about the specification and plan of conducting a particular research even before the beginning of that very research work. This undoubtedly helps the researcher to complete the study with the desired success. Thus at the very beginning of the assignment, the researcher clearly indicates the purposes, rationale and ethical considerations of the present research work. The researcher also reveals the intended outcomes of this present study in this part of the assignment only. In the next part of the assignment, the researcher tries to chalk out the research plan by following which the present research work is conducted. The later part of the assignment contains a detail discussion on the finding of the research work and in the concluding part of the assignment; the researcher makes some effective recommendations.Here at this juncture, it is indeed important to mention the research topic on which the researcher conducts the research. For the present study, the researcher decides to take up the topic of Tesco’s success in designing its customer loyalty card name CLUBCARD and how this very attempt helps Tesco to gain competitive advantage in the UK retail market.
1.1 Research Aim:
The main aim of this present research is to identify the extent to which Tesco’s customer loyalty club system helps the company to attain business success in the UK retail market and move a step ahead of its competitors.
1.2 Research Objective:
The major objective of this present study is to evaluate the success of Tesco’s CLUBCARD in gaining a competitive advantage in the UK retail market.
1.3 Research Question:
The primary research question with which the researcher deals in this very research work is:
How far does Tesco’s loyalty card system namely CLUBCARD was successful to claim added loyalty from the UK retail customer in favor of Tesco and help the company to gain an added advantage over its other competitors in the market?
1.4 Purpose of the Research:
The researcher has taken up the present study for an academic purpose only. The successful completion of the research work will help the researcher to earn a management degree with high marks. With this very management degree, the researcher will be able to place himself/herself in the management position of a renowned business organization in the very near future. The knowledge that the researcher gained from this very study will prove to be great help for the researcher in future days to come. The very research will help the researcher to develop an analytical mind with which the researcher will be able to properly analyze and impart solution to any business situation which the researcher finds demanding during the researcher’s professional attachment to a particular business organization.
From another perspective, the significance of this very research can be evaluated. By analyzing the outcomes of this very research work; Tesco will be able to understand how far the company’s customer loyalty card system brings a positive outcome for the company. The outcomes of the study will also help the company to understand what effective changes the company can impart to its existing CLUBCARD system in order to retain its existing customers in a successful way. The present study will also reveal how far the retail giant of UK is successful to utilize its customer loyalty card system in order to create a difference to the other major retailers of the country.
1.5 Research Outcomes:
The probable outcomes of the present research work can be highlighted through hypotheses. For the present research work, the research hypotheses can be:
H0: Tesco’s customer loyalty card system does not help the company to retain its customers in a successful way and gain a competitive advantage in the market.
H1: Tesco’s customer loyalty card system helps the company to retain its customers in a successful way and gain a competitive advantage in the market.
1.6 Rationale of the Research:
The major issue with which the present research work deals with includes a discussion on whether Tesco is successful to utilize its customer loyalty card system in a positive way to mark a difference with the other retailing companies of the country or not. It is just unnecessary to mention that Tesco uses to enjoy a leading position in the UK retailing industry. The company has more than 27% of market share in the UK food retail market whereas its nearest competitors are lagging a way behind Tesco in terms of gaining market share (Marketingmagazine.co.uk, 2015). The company is immensely successful to retain its existing customer base for a long period of time and it is quite easily understandable that the majority of the company’s customers prefer to show an increased level of customer loyalty towards their most trusted retail brand. In order to gain increased level of customer loyalty from its customers, the company also constantly tries to provide added benefits and privileges to its trusted and loyal customers (Blythman, 2005, pp.134). The company’s customer loyalty card CLUBCARD is such an attempt and the effectiveness of this very initiative is felt in the company’s success in gaining increased market share. The very loyalty card scheme of the company helps Tesco to make its competitors insignificant in the UK market, as Tesco’s CLUBCARD proves to be more effective than Sainsbury’s Nectar or Morrisons’ Miles. Here in this present study, the researcher tries to find out to what extent Tesco’s loyalty card scheme is successful to give the retailer a competitive edge in the UK market.
The issue now Tesco has to face is that the retailer of late has to lose a certain portion of its market share in the UK food retail industry to cheap supermarkets like Aldi and Lidl. Evan ASDA and Sainsbury’s are also successful to increase their respective market share by a certain percentage. The present study sheds some light on the effective ways through which Tesco can utilize its existing CLUBCARD system in order to extract increased level of loyalty from its existing customers and gain a competitive advantage in the UK retail market.
1.7 Ethical Issues:
By following the guidelines of the Data Protection Act 1998, the researcher has to consider certain ethical issues related to the present study with acute care. First of all, it is indeed important to note that the data that the researcher has collected in order to conduct the present research should be kept in a safe and secured manner. It is the responsibility of the researcher to ensure that the collected data is only used for the purpose of research. The researcher will not utilize the data for any illegal purpose. The researcher assures that the personal details of the participants from whom the researcher has collected necessary data for the present research work will never be disclosed to anyone by the researcher. Finally, the researcher also confirms that the collected data was duly destroyed once the research work is over.
1.8 Research Methodology:
In order to conduct the present study with success, the researcher has followed a specific research methodology by following which the researcher tries to conduct the research process. In the very first place, it is indeed important to understand that the researcher has conducted the research work for academic purpose and thus the researcher does not have ample time to complete the research work. The researcher has to choose a cross sectional research study, as a longitudinal one will take a huge time to complete. As far as the research philosophy is concerned, the researcher chooses post positivism research philosophy. The researcher has shown faith on a deductive research approach and a descriptive research design. In order to conduct the research work with success, the researcher has collected data from both the primary and secondary sources. In order to collect primary data, the researcher has conducted surveys amongst the retail customers of UK and entered into face to face interview sessions with the retail customer relationship management experts of the country. For the collection of secondary data, the researcher has relied on various books, journals and online articles. The researcher has decided to analyze the collected data with the help of both qualitative and quantitative data analysis techniques in order to reach to the desired outcomes of the study.
2.1 Specific Tasks Needed to Get Completed:
The research plan by following which the present research is conducted should contain a systematic organization of tasks that need to be completed in order to complete the present study. In any research work, there are certain important tasks to complete. Saunders’ Research Onion proves to be of great help here at least in this context in order to arrange the specific tasks needed to get accomplished for the present research work.
Figure 1: Research onion
(Source: Saunders et al. 2009, pp. 52)
Saunders’s Research Onion uses to contain six predefined layers each of which contain a specific task that needs to be done in order to complete a research work. The outer most layer of the onion speaks of research philosophies. At the beginning of the research work, it is indeed important to have a look at the research philosophy. Research philosophy actually serves the purpose of a mind map for the researcher which helps the researcher to analyze the collected data in relation to the findings of previous research works conducted on this very topic (Brannen, 2009, pp.9). Among various research philosophies, the researcher for the present study selects positivism research philosophy. To be more precise the researcher selects an improved version of positivism philosophy which is post positivism research philosophy. The second layer of the research onion speaks of research approaches. There are basically two types of research approach available – inductive and deductive. For the present study, the researcher selects deductive research approach. The third layer of the onion speaks of research strategies (Saunders et al. 2009, pp. 52). Among a large number of strategies, the researcher for the present study can show reliance on surveys, case studies and so on. As far as the choice of research is concerned, as indicated in the fourth layer of the onion, the researcher in this present study should go with the mixed method. As it is already discussed, the researcher has limited time to complete the research work; longitudinal study will not be an appropriate choice for the researcher. Thus the researcher for the present study should opt for a cross sectional research study. The innermost layer of the research onion reveals data collection and data analysis techniques. For the present study, the researcher has to collect both primary and secondary data and has to utilize both the qualitative and quantitative data analysis techniques.
2.2 Time frame for Conducting the Research:
2.3 Key Milestones:2.3.1 Selection of Appropriate Research Philosophy:
Amongst the available research philosophies, the researcher for the present study has decided to adopt post positivism research philosophy, which is nothing but an improved version of positivism philosophy. Like positivism, post positivism research philosophy also prefers to take a rational approach in order to analyze the research topic with the desired accuracy (Bryman, 2006, pp.102). The point where post positivism differs from positivism research philosophy is that post positivism philosophy tries to highlight that psychological consideration of the given research topic. The metatheoretical stance of this very philosophy tries to establish a link between the researcher and the persons on whom the research is conducted. They very philosophy reveals that the theoretical knowledge, values and background of the researcher has a direct link with the pattern of the researcher’s observation of the entire research topic.
2.3.2 Selection of Appropriate Research Approach:
There are majorly two kinds of research approach available. The types are inductive and deductive research approach. In inductive research approach, a researcher has to start from a general observation (Cameron, 2009, pp.151). By treading through a long path of the research process, the researcher can ultimately land in a tentative hypothesis from where a theory can be formed. However, on the contrary, deductive research approach gives the researcher a chance to start the research process afresh with the support of various theories, models and frameworks. From an in depth understanding of the theoretical background of the research topic, the researcher can easily come to a stage where the researcher can successfully form a research hypothesis. From that very hypothesis, the researcher can become able to correlate the observation. Here for the present study, the researcher selects deductive research approach as this very approach helps the researcher to successfully utilize the support of the findings of previous research works and come at a specific confirmation.
2.3.3 Selection of Appropriate Research Design:
Amongst the three major research designs, the researcher for the present study selects descriptive research design. This very research design helps the researcher to form specific research aims and objectives at the very beginning of the research work. The most important advantage of using this very research design can be found in the fact that this very design allows a researcher to successfully utilize the support of the data collected during the research process (Ellis and Levy, 2009, pp.331). In descriptive research design, a researcher gets the opportunity of explaining the research topic with an added accuracy. The descriptive design is also appropriate for a cross sectional researcher study where the researcher has limited time to complete the research work.
2.3.4 Selection of Appropriate Sampling Method and Technique:
Here for the present study, the researcher has selected probability sampling method in which each and every individual from the selected sample population possesses equal chance of getting selected (Freshwater, 2007, pp. 135). For the present study, the researcher has chosen simple random sampling technique in which the samples are selected randomly. The researcher for the present study has chosen a sample size of 32 retail customers of UK. However, the researcher is only successful to take the responses of 25 retail customers as the responses of the rest cannot be considered as valid. The researcher has also randomly selected 3 retail customer relationship management experts of the country as per their availability and convenience.
2.3.5 Selection of Appropriate Data Collection Method:
Here in this present study, the researcher requires the support of both primary and secondary data. For the collection of primary data, the researcher conducts surveys amongst 32 retail customers of UK amongst whom the responses of 25 retail customers the researcher considers to be valid and can be used for the present study. The researcher prepares a close ended multiple choice type survey questionnaire for the respondents in order to collect relevant information for them. The researcher also conducts face to face interview sessions with the 3 renowned retail customer relationship management experts of UK. For the collection of secondary data, the researcher has to rely a lot on various books, journals and online articles.
2.3.6 Selection of Appropriate Data Analysis Techniques:
As far as the data analysis techniques for the present research work are concerned, the researcher adopts both the qualitative and quantitative data analysis techniques. The researcher quantifies the data that was collected by conducting surveys amongst the 25 retail customers of UK. At the same time, the researcher qualifies the data collected from the interview sessions with 3 retail customer relationship management experts of UK.
2.4 Review Dates and Research Monitoring Process:
As the researcher has already selected a specific time frame for the completion of the research work, it is indeed necessary to check whether each and every research related activities get completed within the specified time frame. The selection of the research topic should be completed within the first week after the beginning of the of the research work. In the very next week, it is the responsibility of the researcher to ensure that the research has successfully collected resources related to the research topic from the findings of various previous research works conducted on the similar topic. By strictly following the specified time frame for the completion of each research related activity, the researcher becomes able to finally present the research paper in front of the research supervisor or mentor within the eighth week after the beginning of the research work.
3.1 Customer Relationship Management:
In today’s modern world, the success of a business organization relies largely on the ability of the very organization in maintaining a proper Customer Relationship Management (CRM). As customers are the main pillar of any business organization depending on which a business organization can successfully expand its business operation, it is the responsibility of the business organization to maintain a proper relationship with its customers. According to Alexander and Colgate (1998, pp232) modern business organizations prefer to take the support of latest information technologies in order to maintain a healthy relationship with their existing as well as future customer base. An effective CRM should have the ability to organize and synchronize marketing, sales, service and support under one container. Peelen (2005, pp.134) thought that as far as the marketing of the products of a business organization is concerned, a business organization should be extremely careful about making their customers aware of the latest products and offers that the very organization is offering through the medium of advertising, social media and social networking sites. Buttle (2009, pp121) opined that by letting the customers aware of the new products or services of the organization, the organization can successfully generate leads and then can form a database of potential customers who may become ready to purchase the products or services of the company. In the next stage, the sales officials of the very business organization have the responsibility of converting those leads into confirmed customers. Roberts-Phelps (2004, pp348) argued that the effectiveness of CRM relies largely on the organization’s provided quality of service. As a part of its high quality service, a producing organization can think of providing free delivery products at the doorstep of the customers. Finally, the support system of any business organization provides a successful handling of customer grievances and through a proper system, a business organization can successfully maintain an effective customer relationship management.
Figure 2: Elements of Customer Relationship Management
(Source: Anderson et al. 1994, pp.53)
3.2 Customer Loyalty:
The ultimate aim of maintaining a proper customer relationship management is to gain increased level of loyalty from the end of the customers. Banasiewicz (2005, pp.336) suggested that modern business organization use to give top most priority to customer loyalty as they are of the opinion that without an increased level of customer loyalty, no business organization can achieve success in the market. In today’s highly competitive market where each and every business organization uses to face cut throat competition from its competitors operating in the same market and tries to formulate new and effective business strategies in order to gain competitive advantage in the market, customer loyalty provides an assurance to any business organization that the organization is successful to retain its existing customer base and can expect repeat business from them (Berman, 2006, pp.127). The highly competitive nature of the market always keeps modern business organizations worried about losing their existing customer base and market share to their competitors. Here at this juncture, only an increased level of customer loyalty can prove to be of great help for the modern business organizations from which the organizations can not only expect repeat business but also can get reference customers.
Beerli et al. (2004, pp. 274) thought that the necessity of customer loyalty is more conspicuously felt in the retail sector where the majority of the retail organizations use to sell standardized products and bear the same apprehension of losing their existing customer base to their competitors. Capizzi and Ferguson (2005, pp.79) opined that as the switching cost for the retail customers is mostly negligible, the retail customers never think twice before swiftly changing from one retailer to another as their preferred retail shopping destination. Here the concept of customer loyalty comes into the picture and modern retail organizations try to invest their reliance on this very concept as an effective way to retain their existing customer base and gain a competitive advantage in the market. Bell and Lal (2002, pp.371) are of the opinion that modern retailers try to give their loyal customers a wide variety of special benefits and privileges in the form of seasonal discounts, bundled offers, and special privilege coupons. This very attempt of the retailers immensely helps them to extract loyalty from their customers. However, the most innovative and effective way of claiming customer loyalty is probably found in the case of loyalty cards.
This very loyalty card system allows customers to earn points each and every time they shop from the retail outlets of the company and on the successful accumulation of certain predetermined points, the customers use to get certain special gifts or special offers from the retailers. This loyalty card system undoubtedly provides added benefits to the loyal customers of any retiling company. However, it is also important to note that the retailing companies are equally getting benefitted from this loyalty card system. According to Rust and Zahorik (1993, pp.204), by tempting the retail customers for collecting points quickly, the retailing companies become successful in claiming repeat business from its loyal customers and retain them successfully. Modern retail organizations like Tesco, Sainsbury’s are trying to utilize their existing loyalty card scheme in an effective way to retain their existing customer base and maintain a healthy market share in the retail market. Bevan (2005, pp.212) opined that with the help of this loyalty card scheme, the modern retailers become successful in gathering relevant information about the personal details of its consumers, their shopping preferences and their shopping history. By utilizing the above mentioned information, the retailers become successful to design customer specific offers for its customers and gain a competitive advantage in the market. Tesco’s customer loyalty card scheme- CLUBCARD is hugely successful in extracting increased level of loyalty from the company’s existing customers and enjoy a leading position in the UK retail market.
3.3 Tesco’s CLUBCARD – A Comparative Analysis:
Tesco, the supermarket giant of UK, uses to enjoy a formidable market share in the UK retail market for a long period of time. Though in recent times the retailer faced a decline in its existing market share due to the sudden rise of various cheap supermarkets like Aldi and Lidl, there is no denying the fact that Tesco still enjoys the leading position in the UK retail market. The following chart reflects the golden time for Tesco in which the market share of the company reaches almost to the height of 40%. From the financial year 2006-2007 to 2012-2013, the retailing giant of the country maintains an enviable market share and made its competitors insignificant in the UK market.
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