From the commencement of my report; I am very glad to give thank God for giving me skills, knowledge and power. After that; I am very blessing that I have a family who supports me in every step of my life. Accordingly; this report is prepared from their inspiration and support. That is why; I also give thanks to them. I have also a supervisor. Without him; I would not be able to complete my report task. He was very friendly and supportive mind and gave me enough information about the preparation of my research. Therefore; I also give very thanks to my supervisor. Finally; I thanked my colleagues and respondents of the survey who also gave me enough support and information.
The aim of this research is to critically analyze the impact of customer loyalty on business performance in the case of the UK retail sector, and the study aims to provide recommendations for UK retailers on how they can improve their customer loyalty to increase business performance. Objectives of this study are a) to analyze the importance of customer loyalty in term of the UK retail business sector; b) to analyze the importance of firm performance in the case of the UK retail business sector; c) to analyze the impact of customer loyalty on the business performance in case of UK retail sector, and d) to provide recommendation for the UK retailers on how they can improve their customer loyalty to increase business performance
This research focused on positivism philosophy and the quantitative method. Additionally; the researcher has imposed the descriptive research design and the deductive approach was applied to evaluate the relationship between two variables. In this research study; the primary data is collected through a survey of 300 customers of Tesco and secondary data are collected from published journals, respected websites of Tesco, and several magazines. The survey questionnaire was included the 10 questions and a pilot test was done on the 10 participants to evaluate the quality of the survey for meeting the objectives of the research.
The finding of this study shows that the majority number of participants (68.5%) shop at least once a week at Tesco, majority number (54.4%) of Tesco customers retained for one to four years. This means Tesco customers retain for a short time period. Then, the highest number of participants (41%) said they shop at different stores in their convenience 76.7% of Tesco customers are at least somewhat loyal. Then, many of the participants responded that the best things in their eyes are that Tesco is offering a wide variety of products at cheaper prices, big selection and product availability, good values for their money, all the desired products are available, stores are available to the closer of home and offer flexible opening hours. On the other hand, the worse things about Tesco are it frequently changes product prices, customer service of Tesco, difficulty to deal with the self-checkout machines, finding products on shelves and sometimes price tags are wrong. The survey finding shows that 78% of participants think Tesco provides great value for their money. The majority number of participants (80.6%) said they are somehow happy with the products of Tesco and 66.70% of customers said they have Tesco Clubcard.
Chapter 1: Introduction
In this age of globalization, the global market is very competitive. Due to severe competitiveness marketers (mainly the retailers) face challenges to retain their customers and make them loyal. Additionally, the customer frequently changes their buying behavior that creates challenges for marketers to understand customers changing needs and expectations and to make them loyal. Thus, marketers are giving more concentration on customer loyalty than ever before. That is why they are giving high concentration on research and development to understand the changing needs of consumers and on customer relationship marketing (Kotler et al., 2015). This paper conducts research on customer loyalty and its effectiveness on firm performance in the case of the UK retail sector, where Tesco’s business case is focused on.
1.1 Research background
Customers are the key fact in this current business world, most importantly in the retail sector. According to Lee et al. (2016), retail sales are closely related to store loyalty where retailers use a hierarchical value map approach. Seiders et al. (2017) stated that customer loyalty in the retail sector highly depends on store layout, service levels, hours, product assortment, location speed of checkout and relationship among these features. Dynamic and the best-performing retailers understand their customer changing needs and offer unique service to meet customer expectations. Loyalty programs in current business world, mainly in UK retail sector, play a significant role in building customer loyalty (Yi and Jeon, 2015). Bolton et al. (2017) said loyalty program aims to increase customer retention and satisfaction. Straughan and Albers (2015) said that the key aim of the customer loyalty program is to manipulate and understand the buying behavior of customers. According to Tesco Annual Report (2018), Tesco’s Clubcard (loyalty program) has been effectively used to retain its customers, where Tesco uses customer profile information to understand their buying behaviors.
1.2 Research rationales
The retailer sector business has enough acceptability to the people of UK due to several key advantages of the retailing sector. In the UK; most of the markets are covering by retailing section. The popular retailers in the UK include Asda, Sainsbury, Morrisons and Tesco. The competition level among these retailers is maximizing day after day. The retailers are imposed several key strategies for sustaining in the market and growing the market share. The strategic sales and marketing strategies are followed by the retail sectors including discounts, coupons, free services and other offers (Cooper et al., 2016). All strategies are maintained due to retaining the customers for an infinite time (Bititci et al., 2017). Customer loyalty emerges from the concept of customer retention (Jin and Sternquist, 2014). The survival of the retailer business in the market depends on the customer’s retention power. The increase of customer loyalty is the main tool for improving the business position in the market. The firm performance is evaluated through the financial and non-financial parameters. Both the financial and non-financial parameters are affected by customer loyalty. Customer loyalty boosts up the sales amount and profit of the firm that indicates the food performance of the firm. The customers’ loyalty also indicates that the higher level of customers’ satisfaction that also affects the firms’ non-financial performance (Chatterjee 2013).
1.3 Research Problems
The business world becomes more large and competitive. The business firms are facing different kinds of challenges from the market that affect their existence negatively especially in relating sectors the UK. For this reason; strategic plans and proceeds are needed to overcome the problems. A customer loyalty program is one of them. The retailers can use various types of loyalty programs for the customers to amplify the loyalty position (Demoulin and Zidda, 2013). The loyalty card is one of them. The loyalty card helps motivate the potential customers to become loyal customers for a particular brand because a loyalty card has several benefits, especially for the customers. Over the last 23 years, the loyalty cards program has been continued because of its acceptance and still now. Singh and Imran (2012) stated that most of the UK households are connected with 21 loyalty programs but most of them are not active due to several issues including reward irrelevance, hard and fast reward policies and poor service. At this time; it is necessary to evaluate the importance of customer loyalty to improve the firms’ performance level because of the lack of a customer loyalty program; Tesco has lost its market position. Lal and Bell (2013) mentioned that there was little research on this important topic. Therefore; this research has focused on the relationship between customer loyalty and the performance of Tesco.
1.4 Research aim and objectives
The aim of this research is to critically analyze the impact of customer loyalty on business performance in the case of the UK retail sector, and the study aims to provide recommendations for UK retailers on how they can improve their customer loyalty to increase business performance.
- To analyze the importance of customer loyalty in term of the UK retail business sector
- To analyze the importance of firm performance in the case of the UK retail business sector
- To analyze the impact of customer loyalty on the business performance in the case of the UK retail sector
- To provide recommendation for the UK retailers on how they can improve their customer loyalty to increase business performance
1.5 Research questions
- What is the importance of customer loyalty in terms of the UK retail business sector?
- What is the importance of firm performance in the case of the UK retail business sector?
- How does customer loyalty affect business performance in the case of the UK retail sector?
- How can the UK retail businesses improve their customer loyalty to increase business performance?
1.6 Scope of the study
In every aspect of business organization; customer loyalty is considered as a most vital factor because the goals and objectives of a firm normally depend on the customers’ acceptance & satisfaction. This research though only concentrates on the retail part of the business of the UK. But this research will also concentrate and provide information about the world retailer sectors. This research will collect primary information from the largest retailer shop in the UK named Tesco for generating outcomes that will helpful for other retailers of the UK and world. The research also will produce some recommendations for not only Tesco but also helpful for other retailers of the UK and the world…..