Research Management dissertation

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Customer Relationship Management at Tesco

Submitted By

IHTISHAM AKHTAR

Dissertaion

MBA in Marketing

London of business

University of wales

September 2011

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4.5. Embracing Technology .................................................................................4.6. Conclusions of Findings ................................................................................

5. Recommendations and Conclusions ..................................................................5.1. Recommendations .......................................................................................5.2. Conclusions ..................................................................................................

6. REFERENCES ......................................................................................................

Appendix A: Letter of Introduction ...............................................................Appendix B: Interview Questions .................................................................................................

Appendix C: Questionnaire ...........................................................................................................

List of Figures

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Figure 1: Customer Retention: Building Long-term Relationships

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Figure 2: Conceptual of Customer Loyalty

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Figure 3: The Four Dimensions of Customer Relationship Management

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Figure 4: Classifications and Composition of Customer Relationship

Management 21

Figure 5: Customer Relationships Management Conceptual Model

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Figure 6: Customer perceptions on Tesco CRM success

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Figure 7: Customer Services Ranking for CRM

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AbstractCustomer relationship management (CRM) has been widely regarded as a

company activity related to developing and retaining customers through

increased satisfaction and loyalty. However, there is still much debate over

exactly what constitutes CRM. In fact, many scholars have claimed that

the precise meaning of CRM is not always clear in the literature and it is

perceived too young to be fully formed yet. This dissertation discusses the

relationships that keep international student customers loyal to Tesco

even after graduation and how CRM can continue to contribute and assist

the bank to retain its customer base for the long-term benefits of both

parties.

The theoretical framework was positioned to investigate into Customer

Relationship Management (CRM) at Tesco.

The main purpose of this research is the study and analysis of Tescos

customer relationship management, which is an activity that has been

supporting the growth of Tesco assist the giant supermarket to retain and

improve on its market leadership. Customer relationship at Tesco has

helped the company to retain its customer base over the years and has

effectively enhanced the international increase as they take their

experience with them wherever they went.

The scope of this project was the identification of the potential growth

areas of the Tesco customer management, and to learn lessons from of

how Tesco was able to make customer relationship management at Tesco

success, thereby positioning itself as global leader

The outcomes of this study are relevant and enable the derivation of

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recommendations that when followed can enable the replicate of this

success. Customer positioning is very important and it will extensively be

discussed. This study will also study and discuss the positioning of luxury

brands at the same shelves as those of competitors products that has the

advantage of consumer memory due to years of awareness and

advertising that has contributed the customers continuously loyalty all

over the years to date.

ACKNOWLEDGEMENTS

I write to sincerely acknowledge the guidance of my Supervisor without whom this work

would not have been possible. I would also like to acknowledge the support of my friends,

work colleagues and classmates who were a great source of support during some difficult

times in my educational pursuits. I will also like to acknowledge the help of those that helped

with discussions on Customer Relationship Management issues that have contributed in

widening my understanding and have helped me in formulating the answers to the research

questions which was very useful. I would also like to acknowledge the support of my family

especially my parents.

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1. IntroductionTesco was originated in the markets of Londons East End, where in 1914,

war veteran Jack Cohen began to sell groceries. The brand name of Tesco

first appeared on packets of tea in the 1920s. Tesco has seen a rapid

growth and transformation over the years to become the UK most

profitable and giant supermarket and overtook Sainsbury in 1995. In 200,

Tesco has captured 15.6% of the grocery market in the UK, which

increased to 28% in2004 and it currently controls over 34% of the UK

grocery market (UK, 2004). Tesco now operates 2318 stores in twelve

countries and has over 328, 000 employees and is now the principal

private employer in the UK.

In recent years Tescos business growth was based on abroad expansion

and on trading in merchandise other than foods. Tescos success in UK hasbeen mainly been built on low prices, customer loyalty and expansion into

other markets such as banking, insurance and telecommunication. This

diversification has been a great success that 20% of giant market leader

sales in 2004 were from non food. Tesco is the largest petrol retailer and it

operates Tesco Finance in association with Royal bank of Scotland, and

Tesco.com services (Tesco.com, 2010). Tesco is the number one food

retailer in the UK with stores in UK, Europe and Asia. Tesco also offers

financial services and products, insurance and banking services and many

varied services.

In 2004, the company announced that it was purchasing the family-run

chain Adminstore, which operates the Europa, Harts and Cullens grocery

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outlets in the London area, for 53.7 million. By April 2004, Tesco faced a

hurdle in its acquisition of Adminstore, even though the Office of Fair

Trading (OFT) cleared its bid, as the federation of Wholesale Distributions

(FWD) attempted to block the deal. The FWD argue that the OFTs decision

was flawed since the acquisition would make it virtually impossible for

independent retailers to open new stores in central London

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On the other hand, notwithstanding Tescos position as the giant retailer in

the United Kingdom (UK), its performance in terms of sales was worst in 16years in 2008 which raised fears over its growth and domination of the UK

market was seriously threatened (Thompson, 2008). Although this slowing

down of Tescos growth was due to stiff competition from its main

competitors such as Asda, Morrisons (Morrisons, 2010) and Aldi (Aldi,

2010), much of the cause of the slowdown was due to Tescos vulnerability

to the recession and its consequent impact on consumer spending habits

which has been completely transformed.

Although the overall performance of Tesco is not all gloomy as witnessed

by overall global boost of sales of 11.7% in 2008 and a forecast (in 2008)

of profits of 2.9 billion in 2008, its ;local UK forecast was not that rosy with

only a 2% growth which was its worst for 16 years. In fact in 2008, the 2%

sales enlargement of Tesco was below that of Asdas 6.9% and Sainsburys

3.9% (Thompson, 2008). Unpromisingly, apart from a changing customer

spending and shopping patterns due to the economic downturn, the

slowing down of Tescos sales was partly due to them losing their

customers to their competitors. This trouncing of sales and customers to

their main competitors in the UK was a consequence of falling food prices,

the economic slump and Tescos response to the competition by way of

discounts on many of its brands. This slump in Tescos sales of 2008 was

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just a blip which spurred the retail giant to fight back.



supporting the growth of Tesco assist the giant supermarket to retain and

improve on its market leadership. Customer relationship at Tesco has

helped the company to retain its customer base over the years and has

effectively enhanced the international increase as they take their

experience with them wherever they went. This relationship with

customers saw the development of Tesco products and services brands,

which is one of Tescos premium labels which overtook Kellogg as UKs

biggest grocery brand and posted of 1.2 billion Tesco in 2007.

One of the key objectives of this research is the study of the customer

relationship management attached to its success over the years amidstthe fierce competition facing the giant store, and it will study how Tesco

was successful despite all odds in the market. This research will

investigate why customer relationship has helped the giant store from

being nowhere to become the market leader in 1995, a position it

maintains today. For example, a decade ago, businesses including

supermarkets have being mindful of the importance of customer

management and most businesses thought customer relationship was not

the reason for driving sales, notwithstanding the kingship of the customer.

The outcomes of this study are relevant and enable the derivation of

recommendations that when followed can enable the replicate of this

success. Customer positioning is very important and it will extensively be

discussed. This study will also study and discuss the positioning of luxury

brands at the same shelves as those of competitors products that has the

advantage of consumer memory due to years of awareness and

advertising that has contributed the customers continuously loyalty all

over the years to date.

1.1.Scope of Research

Customer relationship management (CRM) is getting increasingly more

paramount and powerful as evidenced by the move to creating CRM

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departments across most businesses with supermarkets inclusive. This

has and is continuously driving the sales force of business, for example,

Tesco was not the leader the industry but due to organized and planned

marketing relationship management in dealing with customers across the

entire store, their history changed from being a follower to a market leader

by overtaking its main competitor, Sainsburys in 1995. Due to this, Tesco

customer relationship has continued to attract strong market penetration

and in roads, and they are establishing themselves as big money makers

for their companies. Tesco continue to increase market share through

offering better value and providing more choice and convenience to

customers.

The scope of this project was the identification of the potential growth

areas of the Tesco customer management, and to learn lessons from ofhow Tesco was able to make customer relationship management at Tesco

success, thereby positioning itself as global leader. The study was not

limited to the critical analysis and observations but an overall study of the

Tesco Customer relationship management, from conception to market

domination. This study will enable the drawing up of recommendations of

value to be made.

1.2.Aims and ObjectivesThe key aims of this study are the establishment of the current strength of

the customer relationship management at Tesco and to analyse the key

factors behind its success. Another objective of this research is to gain an

in-depth knowledge of the workings of Tesco customer relationship

management. The objective also is what future also holds for relationship

marketing that saw the development of Tesco Direct (Tescos online arm)

as a result of the feedback the company continued to receive from loyal

customers, which has the aim of customer satisfaction for future

expansion and driving sales, thereby ultimately outstripping traditional

store sales in future.

1.3. Research Questions

In order to achieve the research objective, it is necessary to formulate

appropriate research questions that need answers. Consequently, this

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research aims to provide answers to the following research questions.

1) Why customers continue to be loyal to Tesco and not changing to their

competitor?

2) What is it that Tesco does to keep and retain customers and what add-ons

services do the market leader offer to earn their customer loyalty?

3) What are customers attitudes towards the supermarket and how does the

market leader

relates and manages such attitudinal behaviours?

4) What is the role of customer relationship management in the

retention Tescos customers and the method used to attract the

loyal customers its competitors such as Marks and Spencers ( M&S),

Sainsburys and Waitrose?

5) How are the online retailing arm Tesco.com and its new Argos-style

catalogue service boosting Tesco Direct sales and market share for

Tesco CRM and how they transform customers habits?

1.4. Significance

The result of this study can potentially ensure the use of the optimum IT

systems that will enhance performance levels and ensure that financial

services companies can remain competitive by using the appropriate IT

systems that are customised for their needs. It will enable an

understanding of the relationship between IT technology, it development

and the impact it has financial services. It will also provide an insight into

whether IT is developing too fast for financial services industry and

whether the financial services industry should keep abreast with IT

developments or use the technology that suits their needs

2. Background and Literature Review

2.1.Introduction

Customer Relationship Management (CRM) has in the main been taken to

generate a competitive edge for an organisation, as well as to have a

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positive impact on organisational performance. Nevertheless, there is still

much debate over exactly what the makeup is. This supports the high

amount of research and the focus that the concept has continued to

experience in recent times, more or so the commencement of the

deregulation of financial services related sectors in the midst 1980. In fact,

definitions of CRM are everywhere, and, different and therefore has no one

meaning in its strictest sense.

This study seeks to find out why customers continued to shop at the

market leader stores amidst the fierce competition that is facing the

industry and to explore the relationships that keep customers loyal to the

store. The overall reason for the research is to find out how the market

leader continued to position and reposition its marketing strategies so asto know, keep and maintain customers and how CRM can continue to

contribute and assist the store to retain its customer base for long-term

benefits for both parties.

This chapter is divided into three parts. The first part examines an

overview of Tesco as a company. It looks into the fierce competition the

industry is experiencing from competitors and the pricing strategy it

adopts to continue win more customers and customer loyalty.

The second part looks at customer relationship management from a

general perspective, CRM in business, relationship marketing and CRM,

CRM at Tesco and the reasons for implementing CRM in businesses.

The third and final part focuses on managing customer relationships, the

rewards (benefits) of CRM, problems and challenges of CRM, the CRM

situation in the future and the conclusions drawn from the concept.

2.2.Tesco an Overview

Tesco was originated in the markets of Londons East End, where in 1914,

war veteran Jack Cohen began to sell groceries. The brand name of Tesco

first appeared on packets of tea in the 1920s. Tesco has seen a rapid

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growth and transformation over the years to become the UK most

profitable and giant supermarket and overtook Sainsbury in 1995. In 200,

Tesco has captured 15.6% of the grocery market in the UK, which

increased to 28% in2004 and it currently controls over 34% of the UK

grocery market (UK, 2004). Tesco now operates 2318 stores in twelve

countries and has over 328, 000 employees and is now the principal

private employer in the UK.

In recent years Tescos business growth was based on abroad expansion

and on trading in merchandise other than foods. Tescos success in UK has

been mainly been built on low prices, customer loyalty and expansion into

other markets such as banking, insurance and telecommunication. This

diversification has been a great success that 20% of giant market leader

sales in 2004 were from non food. Tesco is the largest petrol retailer and itoperates Tesco Finance in association with Royal bank of Scotland, and

Tesco.com services (Tesco.com, 2010). Tesco is the number one food

retailer in the UK with stores in UK, Europe and Asia. Tesco also offers

financial services and products, insurance and banking services and many

varied services.

Tesco is the largest petrol retailer and it operates Tesco Finance in

association with Royal bank of Scotland, and Tesco.com services

(Tesco.com, 2010). Tesco is the number one food retailer in the UK with

stores in UK, Europe and Asia. Tesco also offers financial services and

products, insurance and banking services and many varied services.

In 2004, the company announced that it was purchasing the family-run

chain Adminstore, which operates the Europa, Harts and Cullens grocery

outlets in the London area, for 53.7 million. By April 2004, Tesco faced a

hurdle in its acquisition of Adminstore, even though the Office of Fair

Trading (OFT) cleared its bid, as the federation of Wholesale Distributions

(FWD) attempted to block the deal. The FWD argue that the OFTs decision

was flawed since the acquisition would make it virtually impossible for

independent retailers to open new stores in central London

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(http://web.ebscohost.com/ehost/detail?vid=5&hid=112&sid=04bfca26-

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%40sessionmgr103&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d

%3d#db=bth&AN=36585680)

Tesco is the number one food retailer in the UK with stores in UK, Europe

and Asia. Tesco also offers financial services and products, insurance and

banking services, Telecommunication products and many varied services.

The main strength of Tesco is its huge and increasing share of the market

in the UK. Tescos dominant share of the food retail service and its

increasing share of the retail market will enable Tesco to expand even

more and gain an even bigger share of the non food market. This will see a

continuous increase in revenues.

Tesco also operates tesco.com (Tesco.com, 2011) which covers 96% of theUK. The Tesco.com is very successful with more than a million households

having used it. This is another platform from which Tesco can derive huge

revenues. Tescos has a firm and unassailable share of the UK market

which has seen its sales of 71% more than Sainsburys, which makes it

difficult for its competitors to compete

One of the weaknesses of Tesco is that it is too reliant on the UK market

and any changes in the UK market can have a direct impact on Tesco. Any

merger of Tescos competitors can threaten Tesco as the dominant force

in the UK market. The continued expansion of Tesco imposes restrictions

on available money other operations and there is the danger that Tescos

expansion and acquisition of other companies can reduce revenues and

reduce quality of its products and services. There is also the perception by

many consumers of Tesco products being of low quality.

There is however, an opportunity to increase its share of the retail market.

This can be achieved by using its market share and low cost brand and

advertising skills to spur growth. There is also the opportunity the

opportunity overseas growth to increase earnings, develop its telecoms

business, UK health and beauty ranges. Tesco is has millions of Clubcard

users which offers it the opportunity to have invaluable insight in general

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and personal consumer spending patterns which can be used to tailor

marketing campaigns with great effect.

There are threats that Tesco has to be aware of and which it should

manage. The potential price war between its main competitors can lead to

a reduction in profitability. Asda, since being bought by Walmart is a major

competitor capable of competing with Tesco on price and variety of food

items, and the parent company is threat to the Tesco brand. Tescos debts

may increase due to its growth which is expensive. Additionally, any new

brands needs investment and well coordinated marketing campaigns,

which are expensive.

2.2.1.Competition at Tesco

In the current business atmosphere, there are threats that Tesco has to beaware of and which it should manage. The potential price war between its

main competitors can lead to a reduction in profitability. Asda, since being

bought by Walmart is a major competitor capable of competing with Tesco

on price and variety of food items, and the parent company is threat to the

Tesco brand. Tescos debts may increase due to its growth which is

expensive. Additionally, any new brands needs investment and well

coordinated marketing campaigns, which are expensive. Tesco is has

millions of Clubcard users which offers it the opportunity to have

invaluable insight in general and personal consumer spending patterns

which can be used to tailor marketing campaigns with great effect.

Due to the current market fragility that businesses continue to face as

result fierce competition for increased revenue growth and customer

growth and retention, business of all kinds have embarked on product

brand positioning in order to win more customers. Tesco, on its part,

introduced the Tesco finest in 1998 and this has helped the giant store to

continue to win new businesses and more customers to establish a market

leader position.

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Although Tesco's Finest was the first to be launched, Sainsburys Taste the

difference was launched in 2000 (sainsbury, 2000). The Sainsburys taste

the difference brands has more than 350 foods and has a product range

that consists of products from all around the store, including bread, ready

meals, fruit and vegetables, cheese, meat and grocery items. In 2010,

Sainsbury overhauled its Taste the Difference and re-launched it in a multi-

million pound campaign which saw the range expanded from 150 lines to

1,141 products ((Hall & Wallop, 2010). The range was re-energized by the

introduction of products such as slow cooked lamb shanks, roast pork belly

and endorsement from the celebrity chef Jamie Oliver (Sweney, 2010). The

re-launched also focused around the new Bistro line of restaurant-quality

food, which consists of 23 products designed to appeal to shoppers who

are eating out less.

Asda also launched its Asda Extra special in 2004 which however

concentrated more on its mid range brands named Chosen by You. This

helped Asda post a 1.3% like-for-like sales growth in the three months to

the end of September 2010 (Burrows, 2010)). Morrison on the other hand,

changed the packaging and design of its label The Best in 2008. Its The

Best brand was launched in 2005.

Tescos retail positioning is unique, primarily due to its sheer size. Theextent of its retail reach and buying power is enormous, and coupled with

perhaps the strongest and most visible brand on the British high street;

this allowed the company to easily move into other areas of retailing.

Tesco aims for a total positioning, and to appeal to every conceivable part

of the UK consumer base. The retailer aims to maximise the potential of

the local consumer base for its stores. For example, the Tesco outlet in

Brixton, an area of London with a large share of the population coming

from ethnic minorities, offers a wide range of Afro-Caribbean and Asian

produce. This reflects the companys strategy of aiming to be all things to

all consumers. Similarly, the companys pricing strategy is also region-

specific, with lower prices offered in lower-income areas and higher prices

in more affluent areas across the majority of its

formats

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2.2.2.Pricing strategies

Pricing is very important in the consumer market, and it provides one of

the most important forms of information available to consumers when

making a purchasing decision ((Jin & Sternquist, 2002). Prices of

established brands and private label differs among different retailers and

certain products types. According to (Davies & Brito, 2002), although pricevariations tend to have a big impact on pricing decisions private labelled

brands still enjoy about 20 to 44% higher gross profit margins than

established brands.

Several factors are involved in these higher profit margins enjoyed by the

private label brands like Tesco Finest. The reasons include cost saving in

research and development budget, product launch and their advertising

budget is comparatively very low. Despite the less cost, the private label

brand can still command premium price. Constant and innovative

promotions and targeted and mobile marketing campaigns of privately

labelled brands may sway consumers to become aware of price variation

which may eventually and potentially result in a trade down of a

privately labelled item, which according to (Steenkamp & Dekimpe, 1997)

result in deal seekers becoming regular purchasers of privately labelled

brands over time. Consequently, and as a result of this pricing awareness

of customers, many lines of Tesco Finest brands get compared to regular,

value Tesco brands, and sometimes even compared to well-established

manufacturers brands. Although Tesco Finest brands can command

premium prices given that their notion of exclusiveness, they get stiff

competition from their competitors and indeed from within the same store

from the Tesco valued brands. Brand position of the Tesco Finest is also

another critical business pillar.

2.2.3.Tescos Brand Position

Tesco continues to invest heavily in cutting prices and increasing

promotional activity. It launched its Discount Brands private label line in

order to help families with limited budgets over the course of the

recession. This range was launched in an attempt to challenge cut-price

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German discounters Aldi and Lidl. The goods on offer within the range are

priced at a higher level than Tescos Value line, but at a cheaper level

than its Finest line.

Tescos private label products successfully appeal to a wide cross-section

of consumers in the UK. The company offers distinct ranges of private

label products, from Value to Finest, with these priced in order to attract

as wide a consumer base as possible. In its packaged food range, Tesco

also features the Healthy Living, Organic and Whole foods ranges, with

these aimed at more health-conscious consumers

Over the years and most particularly, the last two decades have seen a

change in positioning of retailer own-brands. Originally introduced as

cheap, low-price alternatives to manufacturer brands, many retailer own-

brands are now shifting to premium brands to reflect what de Chernatonydescribed as the personality of stores (de Chernatony, 1988). This

changing position of retailer own-brands appears to result from the fact

that retailers now take an active role in developing and marketing their

own proprietary brands rather than being a passive distributor of brands.

Tesco's strategy for the recession was focused on low prices and its

Clubcard loyalty scheme, but this was in addition to Tesco looking to the

premium marketing positioning (Burrows, 2010).

The market positioning of premium store brands provides consumers with

a high value-added products with an innovative design and sometimes

even higher quality than other brands. For example Tesco Finest Premier

Cru champagne was named the best non vintage champagne at the 2005

International Wine Challenge (Steenkamp & Dekimpe, 1997). Therefore,

and taking the position factor into consideration, premium store brands

like Tesco Finest are often not priced lower than other brands (Laaksonen &

Reynolds, 1994). With widespread acceptance, particularly in the UK, these

premium own-brands are designed to compete with leading brands while

at the same time differentiating their Tesco brands from other brands.

Notwithstanding their success, there is still scope for growth.

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2.2.4.Customer Retention

Customer retention has been shown to be a primary goal in firms that

practice relationship marketing (Gronroos, 1991; Coviello et al., 2002).

While the precise meaning and measurement of customer retention can

vary between industries and firms (Aspinall et al., 2001) there appears to

be a general consensus that focusing on customer retention can yieldseveral economic benefits (Dawkins and Reichheld, 1990; Reichheld, 1996;

Buttle, 2004). As customer tenure lengthens, the volumes purchased grow

and customer referrals increase. Simultaneously, relationship maintenance

costs fall as both customer and supplier learn more about each other.

Because fewer customers churn, customer replacement costs fall. Finally,

retained customers may pay higher prices than newly acquired customers,

and are less likely to receive discounted offers that are often made to

acquire new customers. All of these conditions combine to increase the net

present value of retained customers. Lindgreen et al. (2000, p. 295), for

example, compute that it can be [up to] ten times more expensive to win

a customer than to retain a customer and the cost of bringing a new

customer to the same level of profitability as the lost one is up to 16 times

more..

Figure 7 Customer Retention: Building long-term relationships

Source: Karin A. Venetis et al (2004) European Journal of Marketing Vol. 38No. 11/12, 2004

Customers are able to access information, using anywhere, anytime

technologies, that were previously scarce or at least difficult to access.

Thus, customer expectations of employees in service organisations have

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increased because customers have become more knowledgeable about

the products and services available to them. This

influences customer choices about their use of service delivery channel in

a multi-channel service delivery environment

2.2.5.Customer Loyalty

Customer loyalty presents a paradox. Many people view it as mainly an

attitudinal base pattern that can be predisposed significantly by customer

relationship management initiatives such as the increasing popular loyalty

and affinity programs. In the case of Tesco, the use of Clubcards has

increasingly made customers to stick to their store.

At a very general level, loyalty is something that consumers may exhibit to

brands, services, stores, products categories (cigarettes) and activities

(swimming). In this context however, it is used to emphasize that loyalty isa feature of people (consumers) rather than something inherent in brands.

Like CRM, there is still no universally accepted definition (Jacoby and

Chestnut, 1978; Dick and Basu, 1994; Oliver, 1999). Instead there are

three famous conceptualization as follows:

I.Loyalty as primarily an attitude that sometimes leads to a

relationship with a brand Model 1)

II.Loyalty mainly expressed in terms of revealed behaviour (i.e. the

pattern of past purchases (Model 2); and

III. Buying moderated by the individuals characteristics,

circumstances, and/or the purchase situation (Model 3) (see figure

1).

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Figure 7 Conceptualization of customer loyalty

Source: Uncles, M.D Customer loyalty and customer loyalty

programmes (2003) pp294-316, Vol.20 No.4

With loyalty as primarily an attitude that sometimes leads to a relationship

with the brand (Model 1)

Many people argue that there must be strong attitudinal commitment toa brand for true loyalty to exist.

This is seen as taking the form of a consistently favourable set of stated

beliefs towards of the brand purchased as evident with the case of Tesco

brand. These attitudes may be measured by asking how much people say

they like the brand, feel committed to it relative to competing brands.

To support the above notion and beliefs, Oliver (1997, p.392) defines

customer loyalty as:A deeply held commitment to rebuy or repatronize a

preferred product/service consistently in the future, thereby causing

repetitive same brand or same brand-set purchasing despite situational

influences and marketing efforts having the potential to cause switching

behaviour.

An extension of the attitudes define loyalty perspective is to suggest

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that consumers form relationships with some of their brands.

Loyalty mainly in terms of revealed behaviour (Model 2)

Paradoxically, this model is arguably the most controversial but the best

supported by data. The controversy comes about because loyalty in this

model is defined mainly with reference to the pattern of past purchases

with only secondary regard to the underlying consumer motivation or

commitment to the brand (Fader and Hardie, 1996, Kahn et al; 1988)

The attitude approach taken by Tesco aims to increase sales by enhancing

beliefs about the brand and strengthening the emotional commitment of

their customers to their brand. It suggests that most consumers have

split-loyalty portfolios of habitually-bought brands. Here it is assumed that

consumers tend to view advertising and other forms of marketing

communication more as publicity that sustains awareness and offersreinforcement, rather than as highly persuasive information that

fundamentally change their attitudes and/or levels of commitment

(Ehrenberg et al..; 1998; Brown, 2000). Loyalty programmes also designed

to strengthen commitment and create velvet handcuffs to bond the

customer to the brand. This way of thinking has become commonplace in

communication, branding and CRM textbooks.

Buying moderated by the individuals characteristics, circumstances,

and/or the purchase situation (Model 3)

Supporters of this model, the contingency approach, argue that the best

conceptualisation of loyalty is to allow the relationship between attitude

and behaviour to be moderated by contingency variables such as the

individuals current circumstances, their characteristics, and/or the

purchase situation faced. This is not to suggest that attitudes will not form

towards these brands over time (model 1), but they will be of secondary

importance to the functional adequacy of the brand.

The Tesco Clubcard scheme is regarded as a financial success and has

continued to help push and grow the size (and thus sales revenue) of a

typical brand when used in combination with other marketing

programmes. This is especially in terms of cross-selling and up-selling,

although this success is also closely linked to the high-profile advertising,

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product range extension, and strategic developments in the management

of Tesco (Broadbent, 2000; East and Hogg, 1997)

2.3.Overview Definitions of Customer Relationship

Management

Customer Relationship Management (CRM) is really too young to be fully

formed yet and what it is rather depends on who you happen to be talking

to or who is trying to sell it to you (McDonald, 2007:388). Definitions of

CRM are everywhere, and different. It all depends on which perspectives

one is looking at. McDonald (2007) offers a selection of what could be

referred to as CRM. CRM can be defined as consistent high-quality

customer support across all communication channels and business

functions, based on common information shared by employees, their

customers and business partners. This means it is focuses on customer

support across towards satisfying customers needs using all the available

channels of communication within the organization setup.

In another aspect, the term Customer Relationship Management has been

defined by Foss & Stone (2002) as the business strategy and mode of

operation deployed to maintain and develop relationship with profitable

customers, and manage the cost of doing business with less profitable

customers. This means that organizations must have strategies of

identifying, knowing and retaining their valuable customers in order to

increase their long-term operational efficiencies and profitability at all

levels of business operations and also finds solutions to reduce the

operational costs with less valuable and profitable ones.

Referring to the works of McDonald (2007:p388), another dimension of

CRM is, it is a continuous performance initiative to increase a companys

knowledge of its customers, which seeks to integrate, and enhancesmultiple-delivery channel that allows companies to capture profitable new

customers and improve service on existing customers. This means it is an

integrated process that is aimed at continuously improvising ways of

knowing an organizations customers and how to attract new ones by

utilizing your capabilities and competencies.

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Research has shown in general that according to companies, their CRM

initiatives are focused on improving customer service, increasing revenue,

improving retention, and getting an enterprise-wide view of the customer.

While there are many paths that companies can take to achieve those

objectives, many start at the same point: creating a unified view of their

customers across sales, service, and marketing departments (Dynia,

2002). Carriers want their CRM initiatives to help establish a single view of

a customer or household with constantly updated information that can be

seen by sales, marketing, and service functions. Such information could be

used for cross selling, up selling, product development, and target

marketing. The system should ensure that customers will never be

orphaned and will receive excellent customer service (Dynia, 2002).

2.3.1.An Overview of the Conceptual Development of Customer

Relationship Management.

Customer Relationship Management (CRM) has generally been assumed to

create a competitive edge for an organisation, as well as to have a positive

impact on organisational performance. However, there is still much debate

over exactly what constitutes CRM. In fact, many scholars have claimed

that the precise meaning of CRM is not always clear in the literature

(McDonald, 2007; Nevin, 1995; Parvatiyar and Sheth, 2001). Furthermore,

Nevin (1995), Luck and Lancaster (2003) note that the term has become a

buzzword, with the concept being used to reflect a number of differing

themes or perspectives. For example, at tactical level, CRM may mean an

electronic marketing (Blattberg and Deighton, 1991) or a technology or

software solution that helps track data and information (data base

marketing) about customers to enable better customer service. Others

think of CRM, or one to- one, as an elaborate marketing or customerservice discipline (Peppers and Rogers, 1995 and 2004). At a strategic

level, CRM may mean customer retention or customer partnering (Peppers

and Rogers, 1993; Vavra, 1992). At a theoretical level, CRM may mean an

emerging research paradigm in marketing (Parvatiyar and Sheth, 2001).

Thus a clarification and conceptualization of what CRM actually means is

needed to ensure that our knowledge of CRM grows in a snowballing

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manner. Moreover, while we note and observe that there has been an

increase in the focus paid to CRM by practitioners and academics, to date

no systematic attempt has been made to develop a valid measure of it, or

to assess its influence on business performance.

Given these problems, CRM as an emerging paradigm in marketing, will

remain underdeveloped until its key dimensions have been identified and

operationalised. In fact, Gummesson (2002a) observes that CRM, as an up-

and-coming discipline, is in need of further theoretical development.

Figure 7: The Four Dimensions of Customer Relationships Management

Source: Sin, LYM et al (2003) CRM: Conceptual and scale of development

The identification of the fundamental dimensions of CRM is therefore very

paramount. It is no longer sufficient to advise practitioners or researchers

that the key to successful marketing is through CRM without providing

information on what dimensions actually constitute relationships upon

which CRM can be considered to exist (cited from Sin, et al, 2004).

2.3.2.Customer Relationship Management in Business

CRM is an information system that tracks customers interactions with the

firm and allows employees to instantly pull up information about

customers such as past and current sales and/or service records,

outstanding records or unsolved problem calls.

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Figure 7: Classification of framework for CRM articles (Composition of CRM)

Source:Kincaid, J.W. (2003), Customer Relationship Management: Gettingit Right!, Prentice-Hall PTR, Upper Saddle River, NJ.

A CRM system stores all information about its customers in a data base.

This agrees with the concept put forward by peppers & Rogers (1995 &

2004) that describes CRM to mean a number of differing themes or

perspectives. Again this supports the reasoning argued by McDonald

(2007) that CRM rather depends on who you happen to be talking to or

who is trying to sell it you for one to understand the meaning attached to

it.

Information such as customer names, what they bought, and whatproblems they have had with their purchases, is retained in a CRM

database. The system not only uses this data to generate simple reports

but can produce critical information to help coordinate sales, marketing,

and customer service departments to better and faster serve customers

needs.

Freeland (2003) suggests that companies should define the goal of

implementing CRM in their businesses. He proposed the following 2 goals:

1). Guiding principles - Organisations who want to reshape the focus of

their

CRM programs should follow these three guiding principles:

Customer experience is essential to creating brand value i.e. by

doing something with their logos or catchy styles that can give

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customers the impression or awareness that it is their product or

service.

Customer insight should inform and drive customer treatment. Every

contact that the company has with its customers determines the

economic value of its future.

CRM programs should be executed in a pragmatic way that

mitigates financial and delivery risk. CRM programs should be

planned according to both financial ability and risk elimination to the

best of companys practice.

2). Components for success.To achieve these, organisations should

Organize their CRM initiatives around the following four components:

Setting the strategy. Identifying the customers that thecompany wants based on its existing business corporate

mission.

Gaining customer insights. The ability to understand

customer needs and accurately predict their behaviour.

Realizing greater value from customer contact activities.

Improving the quality of customer interactions while at the

same time driving down the cost of service. Transforming marketing. Identifying where money is being

wasted or misspent on the market while ignoring the

market noise to efficiently quantify and optimize all

resources.

2.3.3.Relationship Marketing and CRM

Although past studies have made significant progress toward

understanding the importance of cooperative and collaborative

relationships between buyers and sellers (e.g. Berry, 1983, 1995, 2002;

Crosby etal., 1990; Dwyer et al., 1987; Hart and Johnson, 1999; Morgan

and Hunt, 1994; Palmer, 2000; Parvatiyar and Sheth, 1995)(cited from sin

et al,2004). There are still some questions remaining to trash out:

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What precisely is CRM?

How can it be implemented properly in a business organisation?

In the marketing literature, the terms CRM and relationship marketing are

used almost interchangeably (Parvatiyar and Sheth, 2000). For example,

Berry (1983) defines relationship marketing as attracting, maintaining

and enhancing customer relationships.Harker (1999) proposes the

following definition: An organization engaged in proactively creating,

developing and maintaining committed, interactive and profitable

exchanges with selected customers (partners) over time is engaged in

relationship marketing.Recently, by broadening the scope of relationship

marketing and viewing it in a comprehensive management and social

context, Gummesson (2002b) defines it as marketing based on

relationships, networks and interaction, recognizing that marketing isembedded in the total management of the networks of the selling

organization, the market and society. It is directed to long term win-win

relationships with individual customers, and value is jointly created

between the parties involved.

On the other hand, Jackson (1985) suggests CRM to mean marketing

oriented toward strong, lasting relationships with individual accounts.

Payne (2000) asserts that CRM is concerned with the creation,

development and enhancement of individualized customer relationships

with carefully targeted customers and customer groups resulting in

maximizing their total customer life-time value. Kotler and Armstrong

(2004) define CRM as the overall process of building and maintaining

profitable customer relationships by delivering superior customer value

and satisfaction.

Although the above definitions differ somewhat, they all indicate that the

core

theme of CRM and relationship marketing perspectives revolves around its

focus on individual buyer-seller relationships, that these relationships are

longitudinal in nature, and that both parties benefit in the relationship

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established. In short, from a firms perspective, both the CRM and

relationship marketing concept can be viewed as a distinct organizational

culture/value that puts the buyer-seller relationship at the center of the

firms strategic or operational thinking.

In spite of the commonalities described above, some important differences

between CRM and relationship marketing do exist: first, relationship

marketing is relatively more strategic in nature, whilst CRM is used in a

more tactical sense (Ryals and Payne, 2001; Zablah et al., 2004). Second,

relationship marketing is relatively more emotional and behavioural,

centering on such variables as bonding, empathy, reciprocity, and trust

(Yau et al., 2000). On the other hand, CRM is more managerial per se,

focusing on how management can make concerted efforts in attracting,maintaining, and enhancing customer relationships.

2.3.4.Customer Relationship Management at Tesco

The goal of every enterprise, once you strip away all the activities that keep a

business busy every day, is simply to get, keep, and grow customers. Whether a

business focuses its effort on product innovation, operational efficiency and low

price, or customer intimacy, that firm must have customers or the enterprise isnt

a business its a hobby. This is true for nonprofits (where the customers may

be donors or volunteers as well as for firms large and small, for public as well as

private enterprise (Peppers & Rogers, 2004)

Figure 7: Customer Relationship Management conceptual modelSources: Mercedes Marzo-Navarro et al (2004) pp.425 - 436

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Over the past decade new technology, global economics, and regulatory

tightening have put pressure on the financial services industry to evolve how it

approaches customers. Change is occurring across the spectrum of segments

from retail consumers to commercial customers, from private clients to

institutions, and their brokers and agents. Customers and partners are savvier

today than ever before, in terms of their level of financial knowledge, needs, and

their service expectations. Yet satisfaction levels have not kept pace, which

means financial institutions have put themselves at risk of losing customers

(http://search.live.com/results.aspx?q=CRM+media&src=IE-SearchBox).

In this regards, businesses including Tesco need to hedge against the risk of

losing customers by coming up with management techniques of how to relate to

their customers. This would entice customers to continue with loyalty and offer

their businesses to the institutions that are outward looking and taking on board

customer suggestions of future improvements. Some of these recommendations

offered by customers enhanced the advent of an appropriate management tool of

managing customers relationships for the achievement of organizations

strategies and objectives.

2.3.5.Reasons for Implementing CRM

The motivating factors for companies moving towards Customer

Relationship Management are numerous. The major considerations for

companies to using CRM are to:

Improve customer satisfaction level

Retain existing customers and to improve customer lifetime value

Providing better strategic information to sales, marketing, operations

finance, etc

Attracting new customers

Cost savings

Researches over the years have shown that it is mostly costly to gain a

new customer than retaining an existing customer. Several authors

highlight the strategic advantage of maintaining the customer base as

opposed to merely attracting new customers (Luck and Lancaster, 2003;

Rowley, 2004). For example, Kandampully and duddy (1999) quote that it

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costs five times more to attract a new customer than it does to keep an

existing one. Zineldin (1999) argues that getting customers is important,

but keeping and satisfying them is more important. Customer retention is

less costly and, therefore, more profitable than customer attraction. It is

generally believed that retention contributes to the creation of reputation,

which in turn further lowers customer acquisition costs and thus increases

profitability and growth.

2.4.Managing Customer Relationships in the financial

services

The financial industry has faced unprecedented changes since the advent

of the deregulation of the financial services industry in the midst 1980.

Due to this development, Banks have evolved from providers of simplebanking services to vast groups selling services that range from banking,

insurance, loans and mortgages, through business advice to asset finance

and fleet services. Competition for customers is fierce. Thus the need to

develop business strategy that allows them to identify customers,

differentiate customers, interact with customers and then provide

customise treatment to their customers for the long-term relationship and

profitability.

The objective for client-facing staff in banking is to understand, own and

then maximise and manage customer relationships: their biggest asset

and then offer them high service qualities in order to keep them satisfy

and retain them (Rust and Zahorik, 1993).

2.4.1.Types of Customer Relationship Management

CRM allows a company to address all of the types of customers it serves at

different points in their life cycle and to choose the marketing program

that best fits a customers attitude toward the company and willingness to

purchase its products and services. Brown (2000) identified four types of

CRM programs that enable the company to win back customers who have

defected or are planning to or to create loyalty among existing customers,

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to up-sell or cross-sell services to these customers and to prospect for new

customers.

Win Back or Save

This is the process of convincing a customer to stay with the organisation

at the point they are discontinuing service or convincing them to rejoin

once they have left. Of the four categories, win back is the most-time

sensitive.

Selectivity is the other essential characteristic of a successful win-back

campaign. Leading organisations often filter their prospects for contact to

exclude customers who have frequently switched (churners), who have

bad credit ratings or whose usage is low. To preserve the revenue stream

and prevent the customer from becoming a traditional win-back

candidate, a few organisations are now including partial disconnects andreduced usage customers in their win-back campaigns.

Prospecting

Prospecting is the effort to win new, first-time customers. Apart from the

offer itself, the three most critical elements of a prospecting campaign are

segmentation, selectivity and sources. It is essential to develop an

effective needs-based segmentation model that allows the organisation to

effectively target the offer. Without a focus, organisations either fails to

achieve an adequate acceptance or rate on the offer or spends too much

on promotions, advertising and concessionary pricing, in a bit to have

penetrating market share.

Loyalty

This is the category in which it is most difficult to gain accurate measures.

The organisation is trying to prevent customers from leaving and uses

three essential elements: Value-based and needs-based segmentation and

predictive churn models. Value-based segmentation allows the

organisation to determine how much it is willing to invest in retaining a

customers loyalty.

Once the customer has passed the value-based segmentation screening,

the organisation can use needs-based segmentation to offer a customize

loyalty program. Affinity programs, such as airline miles and hotel points,

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are some of the most popular. Other programs offered include customised

billing, special help lines or back-end loaded credits as a means of

encouraging loyalty. The final component of the successful loyalty

campaign is the development of a predictive churn model. This is achieved

by using the vast amount of demographic data and usage available for the

existing base of customers.

Cross- Sell / Up- Sell

This CRM program is also known as increasing wallet share or the amount

the customer spends with you. The purpose is to identify complementary

offerings that a customer would like. For instance, a basic long- distance

customer could be a candidate to buy Internet access.

Up-selling is similar, but instead of offering a complementary product, theorganisation offers an enhanced one. For example, replacing an analogue

data line with ISDN is a good example of an up-sell.

2.4.2.Benefits (Rewards) of Customer Relationship Management

CRM is first and foremost a business philosophy or strategy where all

activities in the company are driven by the needs of the customer.This

means the objective of CRM is to build and maintain relationships with

customers. In order to maintain relationships, promises have been made

and kept so as to win customers loyalty (Gronroos, 1990), and the loyalty

won from customers would enhance new promises to be made for the

benefit of both parties in the future. Osborne (2002) identified some of the

key benefits of CRM as follows:

Customer

Enhanced understanding and forecasting of customer behavior and

needs

Precise customer targeting

Improved customer service

Increased customer retention, win-back rate, acquisition, and cross-sell

capabilities

Decreased churn rate

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Financial

Reduced marketing and sales cost

Better tracking and evaluation capabilities

Lower communication cost

Increased efficiency through supply chain management

These benefits run across the board for all types of customers, including

the student market which is the focus of this research. The student

segment has a limited financial services needs and uses basic services,

which are dominantly money transmission focused and may involve

limited lending. In addition, students have been found to prefer free

banking and free overdrafts to interest on credit accounts (Lewis and

Bingham, 1991). However, Thwaites and Vere (1995), suggested that thestudent segment may use similar products but have different preferences

for how they deal with a bank and, by implication, the extent to which they

wish to develop a relationship with a bank.

In short, and to borrow Kotlers (1997) metaphor, organisations must have

achieved marketing enlightenment in order to implement relational

approach effectively with customers.

2.4.3.Problems/challenges of Customer Relationship Management

Despite the above identified benefits, organisations seeking the benefits of

CRM face considerable challenges and setbacks if CRM is handled and

managed. Peelen (2005), Dibb and Meadows (2001), Perrien and Richard

(1995) and McDonald (2007) identified the following key potential

challenges and impediments:

The firms understanding of the customer base and /or technological

resource for managing the information may be inadequate and, as

such its structure may be insufficiently decentralised to encourage a

relationship approach and too inflexible to adapt.

Policies for managing human resources may impede the recruitment

and training of suitable staff. This could have serious impacts on

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implementing a CRM strategy.

There could be a lack of commitment from people within the

company to the implementation of a CRM solution. Adapting to a

customer-focused approach may require a cultural change. There is

a danger that relationships with customers will break down

somewhere along the line, unless everyone in the business is

committed toviewing their operations from the customers'

perspective. The result is customer dissatisfaction and eventual loss

of revenue.

Poor communication can prevent buy-in. In order to make CRM

work, all the relevant people in the business must know what

information is needed and how to use it.

Weak leadership could cause problems for any CRM

implementation plan. The onus is on management to lead by

example and push for a customer focus on every project. If a

proposed plan isn't right for your customers, don't do it. Send your

teams back to the drawing board to come up with a solution that will

work.

2.4.4.The future of Customer Relationship Management

In just a few years Customer Relationship Management has emerged as a

powerful business trend. However, the best is yet to come. CRM customers

are also demanding more and more knowledge management functionality.

In short, the future of CRM is bright indeed. CRM will become deeply

ingrained as a business strategy for most companies. Technology will

evolve while technical and organizational challenges are overcome. Much

will change in the years ahead, but one thing is certain: CRM is a journey,

not a destination, and customers have their hands on the road map and

the steering wheel. The rest is up to you. Are you ready?

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2.4.5.Conclusions

Customer Relationship Management (CRM) has been in existence for a

long time, however, it did not come into its name and officially gain

momentum especially in terms of its name - until the 1990s. CRM is the

management of relationships between the firm and its customers in order

for both the company and its customers to receive maximum value fromthe relationship (Gupta et al, 2004; McLeod and Schell, 2004). Gupta et al

(2004) further went on to state that: It is important to cultivate long-term

customer relationships as it costs substantially less to keep an existing

customer as opposed to obtaining a new one.

In another dimension, the term CRM has been defined by Jackson (2005)

as CRM is a business strategy evolved to manage the development of a

company, the acquisition and retention of its customers and to create

long-term value between them, thus supporting the arguments made by

Luck and Lancaster (2003) that CRM has become a buzzword, with the

concept being used to reflect a number of differing themes or

perspectives.

Developing and maintaining customer satisfaction should lead to deeper

relationships with customers where customer loyalty is increased and

there is a good prospect of attracting potential customers (Turban et al,

2004).

It is important to note that CRM is a complex area and is certainly an

interdisciplinary field, i.e. marketing management (Ryals and Payne 2001).

This means the term may have several meanings to several people,

thereby making its precise meaning shadowy. The term can be used to

reflect differing perspectives in all walks of life, and what it is rather

depends on who you happen to be talking to - who is trying to sell to you

(McDonald, 2007).

There are many aspects of CRM which were mistakenly thought to be

capable of being implemented in isolation from each other. CRM can

therefore, only be successfully implemented if it receives the full

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commitment of all the stakeholders.

When someone mentions CRM, we immediately think of technologies that

could improve marketing, sales, customer services and customer relations.

However, CRM is more than just technologies, it is a strategic process.

CRM helps companies better understand their customers needs so they

can provide these needs to their customers at the right time while

improving the companys processes (The ABCs of CRM, 2005).

From the outside of the organization, a customer experiences the business

as one entity operating over extended periods of time. Thus piecemeal

CRM implementation can come across to the customer as unsynchronized

where employees and web sites and services are acting independently of

one another, yet together represent a common entity.

In a nutshell, CRM is a combination of philosophies, polices and

strategies connecting different players within an organization so as

to coordinate their efforts in creating an overall valuable series of

experiences, products and services for the customer. In this

regards, CRM can allow Tesco to gather student data swiftly,

identify the most valuable student customers over time and

increase customer loyalty by providing bespoke banking and

facility services. It also reduces the cost of serving these customers

and makes it easier to acquire similar customers (i.e. new

international students) (Rigby & Ledingham 2004).

3. Methodology

3.1.Overview

This section describes the research methods undertaken and reported in

this dissertation. This research method section deals with the different

aspects of the research into customer relationship management (CRM).



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supporting the growth of Tesco to assist the giant supermarket to retain

and improve on its market leadership.

This section identifies and provides justification for the methodology used

during the research. It specifically discusses the research options that

were available and describes the reasoning behind the choices that were

made in the design of the research, the data collection methodology,

sampling and verification. The following subsections provide explanations

for the theoretical and analytical basis for the choices that were made.

3.2.Research Design

Research design is a two tier process. The first level provides the logic for

and helps to structure the research to enable the delivery of the evidence

that is needed to answer the research question. The second level is

concerned about data and evidence collection (McGivern, 2003). There are

many research designs in the literature, of which case study and

experimental research designs are common. A case study approach

provides an in depth investigation of a case (McGivern, 2003) whilst the

experimental research design methodology uses independent data and

variables to measure effect (McGivern, 2003). This project is well aligned

with the case study research design given that it is set out to determine

the case/cause of Tesco brand success.

The research design is a critical part of the research process because it

enables the collection of the appropriate evidence that is used to answer

the research question. But for this to be done effectively requires the

specification of the type of evidence that should be collected to describe

what it is that the research sets out to do and to answer the research

question comprehensively. In order to get an answer to this research

question, a qualitative research strategy that consisted of the study of the

consumer companies and the services they offer was conducted in order

to provide an understanding of the context in which branding occurs. A

case study research strategy was used because it aligned well with the

objective of the research of obtaining an in depth understanding of the

Tesco Finest brand. This enabled a comprehensive study of Tesco which

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gave context to the study and provided an understanding of the brand in

the Tesco context.

3.3.Data Collection

The descriptive and qualitative research methodology was used because it

goes more deeply into the research issue and enabled the accurate

description of the characteristics and causes of what the research tries to

explain (Robson, 2002). The quantitative approach was selected because

the aim of this study was to investigate the consumers perceptions,

attitudes and behaviours about the factors.

3.3.1.Primary data

A personal interview with a sample of carefully selected Tesco consumers

and management was used as a vital source of primary data collection(see Appendix B: Interview Questions). An interview with primary source

allows more detailed questions to be asked and ensures that answers to

questions are responded to. It is however expensive, and its outcome can

be influenced by bias and cheating by the interviewer if not conducted

properly.

A questionnaire was also used for primary data collection because it is cost

effective, eliminates researchers bias and results in more accurate

answers. It is a structured technique for data collection consisting of a

series of questions, written or verbal, that a respondent answers (Malhotra

& Birks, 2006). Defining clear research questions is one of the key criteria

for a successful research process as emphasized by Nutbrown (Clough &

Nutbrown, 2007). However, the main disadvantages of this type of primary

data collection methodology are its low response rates, and it can lead to

some unanswered questions and sometimes in accurate answers.

In order to benefit from the advantages of this type of primary data

collection, a specially designed questionnaire was used (see Appendix C:

Questionnaire). The questionnaires of the required sample size (see data

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sampling section) were distributed at a number of Tesco stores.

The stores were chose due to location accessibility and friendliness of

customers and research was mainly conducted during the evening and

weekends. Given that this type of data collection results in low response

rates, the researcher ensured an increase response rate by personally

distributing and collecting questionnaires at Tesco stores and handing.

Telephone interviews as a means of data collection was not used because

even though it would have saved time and reduced bias, it limits the depth

and the length of the interview and customers reluctance to share

personal data limits this data collection method. Email communications

with customers and Tesco management was also not used for similarreasons

The questionnaire was made up of 14 questions which were clear and easy

to understand. The purpose of the questionnaire was to investigate the

level of brand awareness, competitiveness, and perception by customers.

It also investigated customer shopping habits. The questionnaire was

designed such that it took not more than 10 minutes on average to

complete.

3.3.2.Secondary data

Secondary data collection method was by the use of journal articles, news

paper articles and business books. Collecting secondary data was

straightforward given that many articles, journals and books are written on

Tesco and Store brands. Tescos Annual Report and review was also an

excellent source of relevant information. Secondary research is a use of

previously existing resources to meet the research goals (Grossnickle &

Raskin, 2001) and it is a cost effective way of obtaining certain types of

data. The collected secondary data was used to provide an understanding

of the brand, and to study customer attitudes and behaviour

3.4.Data Sampling

Sampling is defined as ... the process of selecting without bias and with

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as much precision as resources allow, the items or elements from which or

from whom we wish to collect our data (McGivern, 2003). It involves the

definition of the population, determination of frame, frequency and

method of the sampling and the size of the samples. In this research the

population of interest was limited to Tesco management and customers. In

theory, the population chosen can provide the data that will enable the

drawing of conclusions relevant to the research (Jankowicz, 2000).

The sampling frame is vital as it contains all the elements of interest

(McGivern, 2003). This work used a sample frame of all Tesco stores in

England with particular emphasis on the store at Harlow. A probability

sampling method was used by selecting customers and Tesco

management as random. The benefit of this type of sampling type is that itcan be used to project the outcome to the whole customer base and

management corps of Tesco. It enables the gathered data to be

representative of the population that interest us which in this case is the

Tesco customers (Wilson, 2006). Although this has the disadvantage of

being more time consuming and increases costs, it was used because the

results were then representative of the whole customer base.

The determination of sample size is dependent on a number of issues such

as financial issues (Wilson, 2006). The sample size used in this research

was determined by financial and time constraints. A total of 85 samples

were distributes from which 60 were returned. The design of the

questionnaire was mainly focused on customer attitude, customer

behaviour and customers perception of the brand and values associated

with it.

3.5.Data Analysis

Gathered data was analysed and used to generate descriptive statistics

and for each variable in the questionnaire and interview, the overall

percentages (where applicable) were determined. As most of the questions

are open-ended, the response to them were categorised and prioritized

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based upon frequency of mention. In fact, the answers to the open ended

questions provided the strongest and most important responses and

provided customers and management the opportunity to express their

opinions in their own words. The data collected was quantitatively and

qualitatively analysed which enabled data to be sorted and structured

according to its characteristics, structure and impact. The qualities

analysis method was used to describe the general characteristics of the

Tesco Fines brand and the quantitative approach was used to determine

the characteristics.

3.6.Validity and Reliability

The validity and reliability of collected date is paramount. As a result all

conducted interviews will be recorded with consent of interviewees to

ensure accurate transcribing of the interview and standard interview

protocols will be used to ensure repeatability by other researchers. All

collected data from interview and from questionnaires will be reviewed

and data found to be unduly biased or inaccurate will be discarded.

The quality of research design can be evaluated through four criteria,

namely internal validity, construct validity, external validity and reliability

validity (Yin, 1994:18). Validity, according to Zikmund (2003:302) is theability of a measure (for example, an attitude measure) to measure what

is supposed to measure. Validity can be supported by building the data

collection framework of the study. The internal validity refers to the

reliance of the researchers conclusion as to whether the experimental

treatment was the sole cause of observed changes in the dependent

variable.

Construct validity refers to establishing the correct operational measures

for the concepts being studied. Referring to Collis and Hussey (2003:59),

this relates to the problem that there are a number of phenomena which

are not directly observable, such as motivation, satisfaction, behaviour,

attitude, ambition and anxiety. These are known as hypothetical

constructs which are assumed to exist as factors which explain observable

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phenomena. In the present study, to meet the construct validity, both

customer retention and customer satisfaction variables in relation to the

student market are assessed and studied separately from the other

customer relationship variables, but also related to the other issues of

customer relationship management practices of the financial services

provider.

Furthermore, construct validity is increased by the use of multiple sources

of evidence. Interviews of key bank decision- makers have been conducted

to clarify some specific issues. Additional sources of evidence include third

parties contacts, archival documents, brochures, bulletins and Tescos

customers statistics.

The aim of the interviews are to obtain as a true a record as possible of

what customers perceived of particular issues, e.g. customer relationship

management practices at Tesco supermarket, (Lindsay, 1997:33-41).

External validity is the quality of being able to generalize beyond the data

of an experiment to other subjects or other groups in the population under

study. Generalization, as it is sometimes referred to, is the extent to which

you can come to conclusions about one thing (Collis & Hussey, 2003:59).

However, Gummerson (1991, cited in Collis & Hussey, 2003:60) argues

that using statistics to generalize from a sample to a population is just one

type of generalization; in a phenomenological study you may be able to

generalize from one setting to another. He supports the views of Normann

(1970, cited in Collis & Hussey, 2003:60) who contends that it is possible

to generalize from a very few cases, or even a single case, if your analysis

has captured the interactions and the characteristics of the phenomena

you are studying. One of the aims of the current study is What is it that

Tesco does to keep and retain customers and what add-ons

facilities/services does Tesco offer to gain customer loyalty and why new

customers shop with the store?

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With regard to the results, generalization is attempted by concluding the

results of the subunits of the study and returning to the original

phenomenon of interest, namely customer relationship management

Tesco. The generalization of the results is rather high within the

respondents in relation to the customer relationship management

practices. The respondent sample represented over 80% of the targeted

customer and management market and this indicates a high response

rate.

However, data does not allow the analysis of single variable or

respondents by statistical analysis. Thus the results have to be interpreted

with the help of a qualitative approach.

Finally, reliability refers to demonstrating that the same results could be

obtained if the data collection procedure is repeated again (Yin, 1994:36).

Easterby-Smith et al (2002, cited in Saunders et al 2003:252) supports

Yins views and thus said, In relation to qualitativeresearch, reliability is

concerned with whether alternative researchers would reveal similar

information, if they are to carry out similar data collection procedures.

The data collection is not dependent on the investigator but the data is

obtainable by identical procedure. A prerequisite for reliability criteria is

that the research procedure is well documented. That is the very objective

of the present chapter. Observing the same phenomena in the same

setting should also provide similar information, as some of the

interviewees are Tesco Management, staff and professionals and others

hold key managerial positions in businesses and there is no reason to

expect that they had not understood the interview questionnaires.

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3.7.Limitations

This research was subject to the following limitations.

Customers who completed the questionnaires might not willingly

provide truthful and correct answers given the suspicion that most

people have of Tesco. In fact, recent antagonism towards Tesco due

to their aggressive expansion might lead some customers todeliberately not provide truthful answers as they might wrongly

construe the data collection exercise as sanctioned by Tesco.

However, the letter in the Appendix explaining the purpose of the

research was designed to limit the impact of this limitation.

The taking of notes during personal interviews can be very time

consuming and tedious and getting busy management staff for a

long interview is difficult. To reduce this limitation, the recorders

were used during interviews with prior consent of interviewees.

There were limitations on the number of sample used and on the

locations of sampling due to financial constraints. However, the use

of probability sampling was used to reduce this limitation.

The time used for the data collection was also limited due to a limit

on the duration of the research.

3.8.Ethical and Legal Considerations

The research and data collection involved interaction with customers and

the process therefore had to comply with standards of code of conduct.

Additionally, the confidentiality of collected data was assured and all

customers and Tesco management staff who participated were assured of

this data confidentiality. Permission was sought when using any equipment

such as recorders and they were all informed of their rights particularly

that of confidentiality as outlined in the data protectionact of 1998.

3.9.Outcome

a) The outcome of the data collection exercise and research enabled an

understanding of the Tesco customer relationship management.

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b) It also enabled the underlying reasons why Tesco has used it

overcome their competitors and how Tesco was able to make it

competitive and successful.

c) It also provided an understanding of how customer relationship

management is used to support the driving the sales across the

store.

d) Identifying the various ways of how CRM can improve the giant stores

operational efficiencies in managing its relationships.

e) Identify the criteria the supermarket uses to acquire valuable customers

and the various

f) types of CRM techniques available and the benefits that accrues to

adopting CRM.

g) It also helped to identifying various methods that could be used to

improve customer relationship management

4.Results: Analysis of Findings

4.1.Interview Questionnaire Development

This section summarises the results of the research into why the customer

relationship at Tesco has been so successful and why there has been such

customer loyalty and retention. In order to establish this, an interview

questionnaire was developed to aid the collection of the data from

participants. In order to save time, the researcher made on the spot

interviews as and when opportunity was available to do so.

The interviewer not only took time to record and transcribe exactly what

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