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The concept of loyalty and identifying the relationship between customer satisfaction and customer loyalty (Tesco)

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75 pages
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  1. Introduction
  2. Overview and background of the study
  3. Aims and objectives of the study
  4. Scope of the study
  5. Rationale of the study
  6. Methodology of the study
  7. Categorization of the customer loyalty concept
  8. A frame on loyalty
    1. Critical evaluation
    2. The characteristics of limited and open customer-loyalty-programs
  9. Customer Loyalty index sorted by female and male Clubcard members
  10. Clubcard and non-Clubcard members on loyalty parameters
  11. Bibliography
  12. Conclusion

Traditionally, marketing has focused on market shares and customer acquisition rather than on retaining existing customers and on building long-lasting relationships with them (Kotler, 2003). More recently, however, market share has been gradually losing its revered status as marketing's holy grail and the wisdom of focusing solely on customer acquisition (hoping that this effort will compensate for high levels of defection) is now being seriously questioned and considered as very high risk since ever more players enter an increasingly crowded marketplace (Baker,2000). In response to these changes there has been a new emphasis on defensive marketing, which focuses on holding on to existing customers and getting more custom from them (higher ?share of customer?), in contrast to activities which focus on winning new customers. Calls for a paradigm shift to the pursuit of loyalty as a strategic business goal have become increasingly popular over the recent years. Accordingly, in Feb 1995, Tesco changed the way it did business so fundamentally that its effect is still seen in every part of the company. The events changed the way Tesco makes decisions, develop products, and manages its stores and, most importantly the way it serves its customers. On that day Tesco launched ?Clubcard', its customer loyalty program. As a major food retailer, in a competitive market sector, there is always a need for brand loyalty. Customer loyalty schemes were not a new idea when Tesco launched it but Tesco developed a contemporary version of the original concept which went much further in developing an active relationship with customers. Today, Tesco Clubcard has established itself as one of the most successful loyalty schemes over the past nine years, and a key driver of this is the scheme integral to Tesco's stated core purpose, ?To create value for customers'.

[...] (2000) ?Patronage and Loyalty Strategies: Understanding the Behavioral and Attitudinal Outcomes of Customer Retention Programs' in Hennig-Thurau T. and Hansen U. (eds) Relationship Marketing Gaining Competitive Advantage Through Customer Satisfaction and Customer Retention Berlin: Springer-Verlag Oppenheim, A (1992) Questionnaire Design, Interviewing and Attitude Measurement, London, Cassell Oxford Dictionary of Current English (1996) Oxford: Oxford University Press Payne A. and Frow P. (2000) ?Services Relationship Marketing: A Sector Case Study' in Hennig-Thurau T. and Hansen U. (eds) Relationship Marketing Gaining Competitive Advantage Through Customer Satisfaction and Customer Retention Berlin: Springer-Verlag Pearson, Stewart (1996), Building Brands Directly. [...]


[...] Objective 1 Analyze and define the concept of loyalty and identify the relationship between customer satisfaction and customer loyalty Customer Loyalty has been one of the most misunderstood concepts of recent years (Payne, 2002). Unfortunately there is no universally agreed definition of loyalty (Jacoby and Chestnut 1978; Dick and Basu 1994; Oliver 1999). Oliver (1999) suggested that loyalty and satisfaction are linked inextricably, but also that this relation is asymmetric, arguing that although loyal customers are usually satisfied, satisfaction is an unreliable precursor to loyalty. [...]


[...] The ?Satmetrix Market Stat? is a dynamic tool for customer satisfaction and loyalty measurement that uses the ?customer loyalty index? as key metric in order to measure overall customer loyalty (Web 11).It is used by many leading companies across a large variety of different industries, including retailers and consumer goods leaders, which are all using the following listed questions in order to measure customer loyalty (each question is rated on a 0-to-10 scale (Renis Likert's scale 1932), with 10 representing the highest score): How satisfied are you with this provider's overall performance ? [...]

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