Customers’ Service Quality in Achieving Customers’ Loyalty: The Case of Tesco

31 Pages   |   6,247 Words

The Role of Customers’ Service Quality in Achieving Customers’ Loyalty: The Case of Tesco

Acknowledgement

First of all, I would like to acknowledge the contribution of my supervisor, who provided me with continuous guidance. This enabled me to complete this research dissertation on time. The encouragement given by my supervisor allowed me to analyse and conclude this challenging research task in most efficient manner. I would also like thank my family, who provided me with the congenial environment and supported me during the process. In the end, I would like to thank my colleagues and friends, who, through their candid feedback, enabled me to overcome different shortcomings in the research paper.

Abstract

The purpose of this research is to determine the role of customer service in creating and sustaining customer loyalty for Tesco. Tesco is one of the largest supermarket chains of the world. In order to maintain a sustainable customer base, it has introduced different initiatives as part of its customer service. In this paper, an effort is made to analyse the effectiveness of such customer service in achieving customer loyalty for the organization. The research made use of both quantitative and qualitative information. The quantitative information took the shape of primary research, which was conducted from a sample from 50 respondents through a close-ended questionnaire. The data collected from this researched allowed the application of different statistical tests, which allowed the determination of the validity of two hypotheses. Our research showed that customer perceived customer service as main prerequisite for both customer loyalty and repeat purchases. The research also shed light on the demographics of Tesco’s customer base. Qualitative information was presented in the literature review, which allowed the research to introduce and clear the concepts of customer loyalty. The understanding of these concepts facilitated the process of interpreting the results from the research. From the research, it can be concluded that Tesco’s customers attach great importance to the customer service. It is, therefore, important for Tesco to ensure the provision of quality customer service in order to maintain a loyal customer base, which, subsequently, benefits the organization with repeat purchases.
  

 Table of Contents

Acknowledgement. ii
Abstract. iii
List of Figures. v
List of Table. vi
Introduction. 1
1.1 Company Background. 1
1.2Research Questions. 2
1.3 Research Aims and Objectives. 2
Literature Review.. 3
Research Methodology. 5
3.1 Research Approach. 5
3.2 Data Collection. 6
3.3 Sample. 7
3.4 Data Analysis. 7
3.5 Validity and Reliability. 7
Findings and Results. 9
4.1 Introduction. 9
4.2 Data Demographics. 9
4.3 Data Summary. 10
Research Analysis. 17
5.1 Customer Demographics. 17
5.2 Customer Service and Repeat Buying. 17
5.3 Customer Service and Customer Loyalty. 18
Limitations of Study. 19
Conclusion. 19
Recommendations. 20
Appendix. 21
References. 24

List of Figures

Figure 1: Gender Distribution. 9
Figure 2: Age Group. 10

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Introduction

In order to create a loyal customer base, organizations take different initiatives. One such initiative exists in the shape of provision of customer service. Organizations ensure that quality customer service is provided to the customers, which are up to their needs and expectations. The purpose of such customer service is to bring the customer back to the organization. In other words, organization wants to develop long and sustainable relationship with the customers, which not only buy their products and services once but also conduct repeat purchases. A loyal customer base is always beneficial for the organization. This can be substantiated from the fact that the cost of the acquisition of new customer is around 10 times more than the cost of customer retention. As a result, every organization tries its best to increase customer retention. For this purpose, they offer customer base with the best possible customer service. Moreover, the customer service is customized for the purpose of providing personalized service to consumers. All these effort enables organizations to create a loyal customer base, which guarantees a constant stream of revenue and profitability for the organization (Zemke, 1999).

1.1 Company Background

Tesco is a leading British multinational company dealing in grocery and general merchandise retailing. Not only Tesco is dominant retailer in the UK, but it is one of the leading retailers globally. This can be substantiated from the fact that it is third largest retailer in the world after Wal-Mart and Carrefour in terms of revenue. Moreover, its status can be gauged from the fact that it is the second largest retailer in the world in terms of profit. Tesco is a truly multinational organization with operations in more than 14 countries and presence in Asia, Europe and North America (Humby, 2008). In the UK, Tesco is the market leader in grocery retail market. Tesco was founded in 1919 as a group of market stalls. Its first store was opened in 1929 in Burnt Oak, Middlesex. From then onwards, Tesco expanded rapidly and within ten year time, it reached the figure of 100 stores throughout the UK. In 1990s, Tesco brought a strategic shift, as it invested in different parts of the world. The purpose of such investment was to increase the company’s geographical diversification (Dinkhoff, 2009). Furthermore, it also diversified in other areas of retail such as books, clothing, electronics, furniture, petrol, financial services and IT services. The size of Tesco can also be measured from its presence in London Stock Exchange and FTSE 100 Index. Similarly, in 2012, it had a market capitalization of around £24.4 billion, which made it 5th largest company in the London Stock Exchange (Fortune, 2012).
In this research study, an effort will be made to determine the role of Tesco’s customer service quality in achieving customer’s loyalty. The problem statement will be analysed through the use of appropriate hypothesis accompanied by primary research. In addition to this, proper statistical tests and applications will be applied to the data gathered from the primary research in order ascertain the validity of the hypothesis. In order to conduct the primary research, a questionnaire is developed, which will cover the different aspects of the problem statement. The methodology part covers the description of research designs and research procedure for the current study, followed by an analysis of the results.

1.2Research Questions

As, the case under discussion relates to the role of customers’ service quality in achieving customer loyalty, the following will be the main research question:
  • To what extant has Customers’ Service at Tesco been successful in achieving costumers’ loyalty?

1.3 Research Aims and Objectives

The primary aim of the research is to determine the effectiveness of Tesco’s customer service in creating customer loyalty for the organization. For this purpose, research has following key Objectives:
  1. To define the concept of loyalty and recognize the relationship between customer satisfaction and customer loyalty.
  2. To determine whether Tesco’s customer service plays its role in creating positive customer relationship.
  3. To determine the ways in which Tesco ensures the provision of quality customer service to customers.

Literature Review

The purpose of this chapter is to analyse the concept of customer loyalty in terms of behavioural dimensions. This will allow proper evaluation of customer loyalty in the context of Tesco’s customer service.
Customer loyalty is often seen synonymous with repeat buying and customer retention. However, there is considerable difference as customer loyalty is much deeper concept. This is due to the fact that customer retention and repeat buying are purely behavioural concept whereas customer loyalty also includes attitudinal dimensions. Moreover, the scope of customer retention and repeat buying also include marketer as the third party whereas customer loyalty is only limited to different aspects of consumer behaviour. Loyalty can be defined as a feeling or action, which customers show towards specific products or services (Griffin, 2002). Moreover, this feeling could be directed towards a brand. In this context, customer cannot only be loyal towards a product or service but also towards a company. Similarly, customer loyalty is a product of two factors, which are feeling of attachment and repeat patronage of certain product, service or brand. More specifically, a consumer develops attachment on the basis of one’s preference for the said product, service and brand and perception of differentiation in the mind of the consumer regarding the product, service and brand. Therefore, the attachment is most strong, when the presence of the two above variables is most strong in the consumer behaviour (Lawfer, 2004).
There are numerous concepts, which can facilitate the understanding of the concept of loyalty. One pertinent framework is developed by Bergeron. According to Bergeron (2000), there are primarily three types of customer loyalties. The first is the transactional loyalty. In this type of loyalty, the interest of the consumer is purely economic and commercial. Due to the scope of transactional loyalty, it is the ultimate objective of every retailer. The second category is called perceptual loyalty. As, the name suggests, this type of loyalty is based on consumer’s perception about the product or service. Consequently, the importance of attitudes and opinions of consumers are very important in this type of loyalty. In certain case, attitudes and opinion are the main behaviour forming factors for the consumers (Bell & Patterson, 2007). Complex loyalty is the third and last category. It is the product of the two above mentioned categories and, therefore, contains elements of both transactional and perceptual loyalty. In the context of case, Tesco focuses more on the development of perceptual loyalty despite the fact that being a retailer; it should focus more on consumer loyalty. This can be attributed to the fact that perceptual loyalty is more long-lasting and has greater returns for the company. In order to develop and sustain perceptual loyalty, the presence of two key elements is vital. These two elements are satisfaction and awareness. It can be clearly deduced that customer service can play a vital role in the development of these two elements (Hurth, 2006).
Similarly, loyalty has also been defined in two distinct ways. Some scholars have used the stochastic approach whereas others have used deterministic approach. Both approaches have considerable difference, when it comes to conceptualizing and measuring loyalty. The proponents of the stochastic approach consider loyalty as behaviour and determine the loyalty on the basis of the magnitude and frequency of purchase of a certain brand. According to this approach, there is difficulty in measuring customer loyalty. Resultantly, only consumer behaviour can be measured, which can lead to the assessment regarding the presence of loyalty or not (Allaway et al., 2011). In this approach, loyalty is defined in the context of past purchases whereas limited weight is given to factors such consumer motivation and commitment. On the other hand, determinist approach tends to define loyalty in more attitudinal terms and advocates that it can be defined through different factors. The two such factors are customer satisfaction and commitment. According to Oliver (1999), there is a clear linkage between loyalty and satisfaction. Moreover, a satisfied customer will translate into a loyal customer. Similarly, commitment and trust also plays their part in the development of the loyal customer. Therefore, it is important that both of these elements are present in every relationship marketing effort. Trust directly implies consumer’s confidence in the company’s product or service, which, in return, leads to the development of sustainable and long-lasting customer relationship.

Research Methodology

Research methodology is a process through which a systematic observation is converted into a scientific method of research. The end-result of this research enables the research to access the authentic data on the basis of which the researcher can make an accurate assessment. The research outcome is not only useful for the researcher, as it answers different aspects of the research, but it also highlights different dimensions of the problem. Researchers can use a multitude of methods to conduct research in order to find answers to a given problem. The methods used by researchers are scientific in nature and, therefore, free from any personal bias or discrepancies (Kumar, n.d.). Furthermore, the application of various statistical checks allows the establishment of validity of research methods. On the basis of this research question, following two hypotheses will be used:
Hypothesis 1:
H0: Quality of customer service at Tesco has led to customer repeat buying.
H1: Quality of customer service at Tesco has not lead to customer repeat buying.
Hypothesis 2:
H0: Quality of customer service at Tesco has led to customer loyalty.
H2: Quality of customer service at Tesco has not led to customer loyalty.

3.1 Research Approach

In order to analyse and investigate the primary research question, both inductive and deductive approaches are used. The deductive approach manifests itself in the form the testing of the concept of loyalty and its effects and implications for retailers using primary data. On the other hand, inductive approach is applied through the analysis of the primary data in order to give new meaning to the concept of customer loyalty and its implications for any business organization. This research is based primarily on quantitative data, which is collected from the primary research (Scruggs & Mastropieri, 2006). Primary research has been used in order to find the extent Tesco’s customer service play a role in the development of customer loyalty for the organization. The main reason to base the research on quantitative method was hidden in the fact that primary quantitative data can be easily summarized, analysed and interpreted to derive key findings for the research question (Kothari, 2008). In addition to this, this method is also very time effective when compared to the data collection techniques using qualitative paradigm. However, primary data collection was only used after adequate and significant understanding regarding the concept of customer loyalty and its importance for business was made through secondary data. The main reason to base the research on quantitative method was hidden in the fact that primary quantitative data can be easily summarized, analysed and interpreted to derive key findings for the research question. In addition to this, this method is also very time effective when compared to the data collection techniques using qualitative paradigm. Qualitative information was used from a variety of secondary data such as Tesco Case Studies, Tesco Web page, books, academic journals and periodicals. The purpose of the secondary data was to provide theoretical foundations on which findings of primary research could be based.

3.2 Data Collection

The primary data is collected using a questionnaire. The questionnaire consisted of 9 close-ended questions dealing with customer loyalty. Moreover, the questionnaire also touched different aspects of Tesco’s customer service and how it is perceived by the customers. The purpose of using close-ended questions was to limit the response of the respondents to predetermined options. This was done in order to facilitate the process of data collection, compilation, categorization and analysis (Phillips & Stawarski, 2008). Moreover, it also facilitated the process of the application of advanced statistical tools in order to test the validity of the hypothesis. The questionnaire was ideal surveying tool as it allowed the identification of behavioural and attitudinal tools. Moreover, it also limited the normative input of the respondents thus allowing the researcher to quantify the data. In addition to this, the objective nature of data allowed the researcher to provide results in compact and understandable, which made the whole research procedure more reliable and valid (Fuller, 2011). The questions were required the respondents to provide answers on a Likert-type scale consisting of 5 points (ranging from 1= Strongly Agree, 2=Somewhat Agree, 3=Neutral, 4=Somewhat Disagree and 5=Strongly Disagree). This enabled the respondents to answer the question by accurately reflecting their opinion through the selection of appropriate choice (Axinn & Pearce, 2006). The questionnaires were filled in the presence of the researcher in order to facilitate the respondents with the answers of their questionnaire related queries.

3.3 Sample

The population of the study consists of all customers of Tesco. As it was not feasible or practical to cover the entire population, sample was used for research. Considering the non-availability of the population for the research, convenience sample was used as a non-probability technique. The benefit of using a convenience sample is its ability to provide data for research in most efficient manner (Thompson, 2012). In addition to this, convenience sample allowed the researcher to overcome financial and time constraints. The sample consisted of 50 Tesco customers, which were surveyed in front of a local Tesco supermarket store. This technique used is also known as mall-intercept-interviewing. The filling of the questionnaire from a single respondent took an average of 5-12 minutes. However, there is one drawback of convenience sampling, which also needs to be taken into account. The major drawback is the absence of statistical technique to measure random sampling error, which limits the application of the results beyond the sample. The demographic breakdown of the respondents is covered in the analysis section.

3.4 Data Analysis

As, the data of the research was collected using 5 point Likert-type scale, the collected data was nominal or categorical in nature. In order to analyse this data, the chi square was used to evaluate the trends of responses, which were collected from the questionnaire. Chi-square allows the identification of degree of significance for a set of variables by highlighting the association between two or more variables. Resultantly, this research has used Chi-square to identify the relationship between customer services and repeat buying and customer service and customer loyalty. In addition to this, this research has also used correlation technique to identify the degree of relationship between variables such as repeat buying and customer loyalty with the quality customer service. Correlation is ideal because it allows the analysis of linear relationship between set of a variables (Sivia & Skilling, 2006).

3.5 Validity and Reliability

Hypothesis were developed at the start of the research, thus making, the whole process highly valid. High validity means that the study is the reflection of the reality. The only issue is the inability of the research to find the random sampling error due to the inherent flaw of the selected sampling technique (Singh, n.d.). In addition to this, a study is called reliable, when its findings can be repeated in any future research endeavour under the similar ground conditions using the same set of variables. This study is also very reliable because the questionnaire, which is used to collect the primary data, is based on the pilot study. Moreover, the research procedure can be repeated with high probability that the results will be the same.

Findings and Results

4.1 Introduction

Questionnaire was used to collect data which was later analysed using statistical tools.  The tests used in this research are chi square tests. These tests will allow us to reject or accept the null hypotheses. Moreover, correlation is applied to find the relationship between two variables. The details of correlation analysis will be covered in the succeeding section. Additionally, other statistical applications have also been used to give shape to data collected. Mean, standard deviation and percentages have been used to categorize and quantify data in order to make it presentable for derivation.

4.2 Data Demographics

The following graph shows the distribution of the sample on the basis of gender. As, it can be seen from the figure, a large number of respondents are female whereas only 38% are male.

Figure 1: Gender Distribution
Similarly, respondents were questioned about their age range. This allowed the researcher to identify the age range of customers, which most frequently shop at Tesco. Following is the figure related to the age distribution of respondents. From the following figure, it can be clearly deduced that most of the customer coming to Tesco belong to 30-50 age group. This age group represents those customers, which are independent and have the required purchasing power to shop at Tesco.

Figure 2: Age Group

4.3 Data Summary

In this section, we will analyse the results after conducting chi square tests on the hypothesis.
Hypothesis 1:
H0: Quality of customer service at Tesco has led to customer repeat buying.
H1: Quality of customer service at Tesco has not led to customer repeat buying,
 
Table 1: Level of importance attached to customer service at Tesco with customer repeat buying
 
    Frequency Percent Valid Percent Cumulative Percent
Valid 3 22 44.0 44.0 44.0
4 17 34.0 34.0 78.0
5 6 12.0 12.0 90.0
7 1 2.0 2.0 92.0
10 2 4.0 4.0 96.0
13 1 2.0 2.0 98.0
15 1 2.0 2.0 100.0
Total 50 100.0 100.0  
 
 
Question 4, 5 and 8 in the questionnaire was specifically designed to test the level of importance attached to customer service at Tesco with customer repeat buying. The above result shows that respondents mostly agreed with the statements present in the questionnaire. The questionnaires were marked on the following criteria.
Table 2: Likert-type Scale
 
Answer Category Strongly Agree Somewhat Agree Neutral Somewhat Disagree Strongly Disagree
Score 1 2 3 4 5
 
 
On the basis of the above criteria, the scores were recorded on the frequency distribution table. Low scores signalled that the respondents of the survey gave more weight to customer service in order to ensure repeat buying from the customers. Around 78%, of the respondents directly linked customer service with the repeat buying.
After consolidating the collected data in the frequency distribution table, numbers of tests were conducted to determine the acceptance or rejection of hypothesis 1. There will be used chi-square to determine whether the results obtained from the sample are significantly different or not from the mentioned hypothesis. Moreover, correlation will enable us to find the nature of relationship between the two variables. It will also delineate whether these two variables are directly or inversely proportional to each other or not. The following table gives the results obtained from the Chi-square tests followed by its analysis.
Table 3: Chi-Square Tests
 
  Value df Asymp. Sig. (2-sided)
Pearson Chi-Square 38.824a 18 .083
Likelihood Ratio 30.058 18 .037
Linear-by-Linear Association .001 1 .971
N of Valid Cases 50    
 
  1. 25 cells (89.3%) have expected count less than 5. The minimum expected count is .02.
 
The chi-square test is conducted on sample size of 50 with 18 degrees of freedom. The test gives the value of 38.824, whereas the value of p stands at .083. These figures clearly suggest that there is a strong association between customer service and repeat buying. These results allow us to accept the H0 hypothesis and to deduce that sample results are not significantly different from the hypothesis.
Table 4: Correlations
 
    Customer Service Repeat Buying
Customer Service Pearson Correlation 1 .65
Sig. (2-tailed)   .972
N 50 50
Repeat Buying Pearson Correlation .65 1
Sig. (2-tailed) .972  
N 50 50
 
 
Another way to look at the relationship between these two variables is through application of correlation. The above table shows the relationship between the two variables based on the sample size of 50 respondents. Figure of .65 of Pearson Correlation shows a strong correlation among two variables. However, significance level of .972 only corroborates the early finding that sample results are not significantly different from the hypothesized values.
Hypothesis 2:
H0: Quality of customer service at Tesco has led to customer loyalty.
H2: Quality of customer service at Tesco has not led to customer loyalty.
Question 3, 6, 7 and 9 in the questionnaire were designed to measure the relationship between customer service and customer loyalty.
 
Table 5: Relationship between customer service and customer loyalty
 
    Frequency Percent Valid Percent Cumulative Percent
Valid 4 13 26.0 26.0 26.0
5 23 46.0 46.0 72.0
6 10 20.0 20.0 92.0
10 2 4.0 4.0 96.0
15 1 2.0 2.0 98.0
20 1 2.0 2.0 100.0
Total 50 100.0 100.0  
 
 
Using the same marking criteria, the data was collected, which is shown in the above table. The above table shows that around 46 respondents scored between 4 and 6 which only substantiate that the majority of respondents showed acquiescence with the statements present in the questionnaire. This figure represents around 92% of respondents. It also shows that a large majority of the respondents has the opinion that customer service is imperative for customer loyalty. The data collected was further analysed using Chi-square test as shown in the following figure.
 
Table 6: Chi-Square Tests
 
  Value df Asymp. Sig. (2-sided)
Pearson Chi-Square 16.354a 15 .359
Likelihood Ratio 17.094 15 .313
Linear-by-Linear Association .063 1 .801
N of Valid Cases 50    
 
a. 21 cells (87.5%) have expected count less than 5. The minimum expected count is .02.
 
The test is conducted on sample size of 50 with 15 degrees of freedom. The value of 16.354 and probability of .359 only shows that the sample does not differ significantly from the hypothesis. These results show that majority respondents believe that quality customer service will lead to customer loyalty for the organization such as Tesco. Hence, the hypothesis H0 is valid in the light of these results.
 
Table 7: Correlations
 
    Customer Service Customer Loyalty
Customer Service Pearson Correlation 1 .75
Sig. (2-tailed)   .804
N 50 50
Customer Loyalty Pearson Correlation .75 1
Sig. (2-tailed) .804  
N 50 50
 
 
The above table shows a strong correlation between customer service and customer loyalty. The value of .75 only shows that there is a strong relationship between the two variables. Furthermore, positive sign indicates that customer loyalty is directly proportional to customer service. On the other hand, the value .804, which is larger than .05, indicates that sample results are not significantly different from the hypothesized values. 

Research Analysis

In the previous section, the data collected was analysed using different statistical tools, completing an important phase of primary research. The questionnaire was used to collect data, which was used to conduct a survey from around 50 respondents. In order to accept or reject the hypothesis, Chi-square test was applied. The findings from these tests were used to accept or reject the hypothesis. The implications of these findings will be analysed in detail in this section. Furthermore, correlation analysis was also conducted to find a relationship between the variable under question. In this chapter, an attempt is made to analyse and discuss the implications of the results obtained. The purpose of this section is to understand the significance of findings and use them to reach a definite conclusion. The deductions achieved in this section will be able to provide research with clear evidence in order to reach definite conclusions. In the following discussion, an attempt is made to analyse the results of each hypothesis test and its value for the overall results. The discussion will also use secondary data in collaboration with primary data in order to provide a holistic picture.

5.1 Customer Demographics

The primary research also gave an insight into the regular customer base of Tesco. The research clearly shows that a large number of the customers are female. This can be attributed to the fact that in most household female members of the family are responsible for making routine household purchases such as grocery, etc. In a similar context, the research also showed that the majority of the customers, coming to shop at Tesco, belong to age group between 30 and 50 whereas the rest of the age group has limited representation. This age group also represent the earning segment of the economy with dependable purchasing power. On the other hand, the age group of 50+ consists mostly of retired and senior citizens with limited purchasing power.

5.2 Customer Service and Repeat Buying

The primary research clearly shows a positive relationship between quality customer service and repeat buying. Around 3 questions in the questionnaire were related to the measurement of the relationship between these two variables. The results of these questions clearly show that customers consider quality service as a prerequisite of customer repeat purchase. Moreover, the hypothesis linking these two variables also stands valid after the application of different statistical tools. In the context of Tesco, this result is of great importance. It shows that it is imperative for any supermarket organization like Tesco to ensure quality customer service. Only through this, organization can make sure that first time customers will once again come back to Tesco for purchases. The research also shows that customer service is one of the primary drivers of the repeat buying. The importance of repeat buying can be gauged from the fact that organization cannot achieve feasibility and sustainability without customer coming back to conduct repeat purchases. This is due to the fact that the cost of acquisition of new customer is 10 times higher than the cost of retaining a customer. This is one of the reasons that organization’s such as Tesco brings different promotional schemes in order to ensure repeat purchases from the customers.

5.3 Customer Service and Customer Loyalty

The results of the primary research also showed that respondents attached great importance to customer service in the context of customer loyalty. The statistical test also proved that the hypothesis is valid. Similarly, correlation analysis also showed a positive relationship between these two variables. The respondents not only attached great importance to customer service in the context of customer loyalty, but the respondents also believed that there is a great need for Tesco to bring changes in its customer service in order to improve the overall standards of customer service. However, it can be seen from both the primary and secondary research that Tesco has introduced a number of initiatives to improve the level of customer service, as well as to ensure customer loyalty. One such initiative exists in the shape of Tesco’s loyalty scheme. The purpose of this scheme was to identify the customers based on the level of their transactions and history with the company and provide customized services to these customers. Tesco analysed the purchase history of the customers to identify loyal customers and provided them with a number of benefits. This enabled the company to build sustainable relationship with the customers. This relationship was also symbiotic in nature, as it provided both parties with a number of benefits. The customers were able to get additional discounts on the basis of their transaction history with the customers whereas Tesco was able to retain their most valuable and loyal customers. In this way, Tesco was able to manage loyal customer base in most effective and efficient manner. This assertion is also validated in the light of the primary research, which showed customer’s satisfaction with Tesco’s customer service.
 

Limitations of Study

It is important for the integrity of this study to take into account the limitations of this study. First of all, this study is only relevant in the context of Tesco. This is due to the fact that only customers of Tesco were surveyed through ‘mall-intercept’ technique. This means that the results and findings of this study cannot be applied to any other supermarket chain. Second limitation of this study is related to the sampling technique used. As, the convenience sampling method was used in this research, it is impossible to find the random sampling error. Therefore, the application of this study is only limited to the sample under discussion. In addition to this, this study has only researched customer loyalty in terms of marketplace. Customer loyalty in the context of financial impact is beyond the purview and scope of this research.

Conclusion

From the primary research and literature review, it can be concluded that the Tesco has been successful in achieving customer loyalty. This can be substantiated from the validity of the two hypotheses, which were tested using different statistical tools. From the research, it can be concluded, that customer service is one of the drivers of customer repeat buying. The implication of the validity of this hypothesis is enormous for Tesco. From this research, it can be seen that Tesco can increase the customer repeat purchases by bringing improvement in their customer service. The research also showed that customer service also plays a vital role in the creation of the customer loyalty. Without proper customer services, the customers are inclined to shift to the nearest substitute, which results in the loss of revenue for the company. The research also showed that Tesco is quite effective in its effort to create customer loyalty. This can be substantiated from a number of initiatives introduced by the company to create a positive relationship between customers and the company. These initiatives have led to the repeat purchases from the customers. Resultantly, this has affected the liquidity of the company in a positive manner. The results of the research also allowed the identification of the demographics of the customer base of the company. It is important for Tesco to give more weight to the preferences of females, as it represents the main segment of company’s customer base. In a similar context, the research clearly underlines the importance of customer service in the selection of supermarket. This shows that customer service is one of the main drivers for supermarket business.

Recommendations

Despite the positive results indicated by the primary research, there is still room to bring improvement in the customer service of Tesco. It is important for organizations such as Tesco to constantly bring new programs and schemes in order to reward the loyalty of the customers. These programs should also be measured and evaluated on a regular basis in order to ensure their effectiveness and efficiency. Following are some of the recommendations:
  1. Tesco should constantly collect and analyze customer data in order to identify different trends and patterns.
  2. The results from this data should be used to devise new programs in which loyal customers should be rewarded. This will allow the company to retain its most loyal customer base.
  3. Similar programs should also be devised for the first time customers in order to ensure repeat purchases from their end. This will allow the transformation of these customers into a loyal customer base.
  4. The loyalty programs and other initiatives should be constantly monitored in order to bring relevant improvements in it.
  5. Different drives in relation to customer’s buying habits should be identified. This will allow Tesco to customize its customer service more efficiently.
  6. Tesco should make an effort to recognize the needs and preferences of customers in order to develop customer service, which is more responsive to the needs of the customers.
Following these recommendations, Tesco will be successful in offering customer service, which will not only be superior in nature but will also enable it to differentiate from the rest of the competition. This will allow the company to create a positive perception and association in the minds of consumers. This positive association can later be converted into a continuous stream of revenue for the organization.

Appendix

Questionnaire
  • Gender
  • Male
  • Female
 
  • Age Group
  • 18-30
  • 30-50
  • 50+
 
  • Do you believe that customer service is a prerequisite of customer loyalty?
  • Strongly Agree
  • Somewhat Agree
  • Neutral
  • Somewhat Disagree
  • Strongly Disagree
 
  • Do you believe that customer service leads to repeat buying?
  • Strongly Agree
  • Somewhat Agree
  • Neutral
  • Somewhat Disagree
  • Strongly Disagree
 
  • Do you perceive repeat buying as an indicator of customer loyalty?
  • Strongly Agree
  • Somewhat Agree
  • Neutral
  • Somewhat Disagree
  • Strongly Disagree
 
  • Do you believe that Tesco’s customer service is above industry standards?
  • Strongly Agree
  • Somewhat Agree
  • Neutral
  • Somewhat Disagree
  • Strongly Disagree
 
  • Do you believe that Tesco is successful in creating customer loyalty?
  • Strongly Agree
  • Somewhat Agree
  • Neutral
  • Somewhat Disagree
  • Strongly Disagree
 
  • Do you believe that Tesco’s customer service is responsible for repeat buying from customers?
  • Strongly Agree
  • Somewhat Agree
  • Neutral
  • Somewhat Disagree
  • Strongly Disagree
 
  • Do you believe any improvement can be brought in Tesco’s customer service?
  • Strongly Agree
  • Somewhat Agree
  • Neutral
  • Somewhat Disagree
  • Strongly Disagree

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Fortune, 2012. Fortune 500: Global. Fortune Magazine.
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