Effectiveness of Tesco Clubcard in Earning Competitive Advantage on Other UK Retailers

1.0 Title:

“Effectiveness of Tesco Club card in earning competitive advantage on other UK retailers.”

1.1 Introduction:

In order to increase the market share an organization needs to create strategies that can provide competitive advantage over the other companies in the same industry. As mentioned by Morecroft (2012), competitive advantage helps   to create values for the firms and its stake holders. On the other hand, Nelson (2011) has argued that competitive advantage provides the sustainability to the organization. The company can increase the revenues and the net profit through competitive advantage. Competitive advantage can be created by providing some extra benefits rather than only providing the goods and services. It has been observed that, a stiff competition persists in the UK retail industry. Companies like Sainsbury, Asda, Morrisons, Aldi are the existing competitors in the market. In order to increase competitive advantage over its rival, Tesco has initiated several new thinking. Club card is one of the most important services offered by Tesco to its loyal customers.  It offers the customers one point for every £ 1  spent in the store. In this research work, the researcher will evaluate the effectiveness of the club card in order to create competitive advantage over the rivals.

1.2 Research aims:

The research aims to evaluate the impact of Club card in the retail market of UK. Moreover, in this study the researcher will compare the effectiveness of Tesco’s Club card with the other same kinds of bonus cards offered by its rivals.

1.3 Research objectives:

Referring to the research aim mentioned, the research objectives are mentioned below:

  • To study the literature review on the consumer buying behaviour.
  • To monitor that how the Club card has helped the organization to increase the profitability.
  • To understand the effectiveness of Tesco’s Club card in order to influence the buying behaviour of the customers compare to the other bonus cards provided by its rivals.

1.4 Research questions:

The research questions are as follows:

  • Why the Club card is beneficial to the consumers?
  • How the customers can make the points by using Club card at the time of shopping?
  • Does this system is effective from the point of view of Tesco?
  • Analyze how the Club card is useful for the customers’ point of view?

1.5 Rationale for study:

The current research will be conducted on the evaluation of the effectiveness of Club card used by Tesco. By undertaking this project the researcher will be capable to understand the factors that can affect the consumers’ buying behaviour. On the other hand, in this research work the researcher can also measure how the profitability of Tesco has impacted after the introduction of the Club card. Moreover, in order the analyze the impact of Club card to create the competitive advantage over its rival, the researcher will compare the benefits and disadvantages of the Club card than the other kinds of bonus cards used by the retailers like Sainsbury or Morrisons. However, the author also aims to add value to the academic degree through a practical and real time study. Thus, the basic purpose of this study is to explore the effectiveness of Tesco’s Club card over the other kinds of bonus cards used by the retailers.

2.0 Literature review:

2.1.1 Relevance of service in the context of consumers’ buying behaviour:

Cognitive physiology is the widely used concept to understand the consumer behaviour pattern. As mentioned by Normann and Rairez (2008), consumer choice can be described as a problem-solving and decision making sequences of activities.  The outcome of this activity can be determined by the intellectual functioning and the goal directed processing of the information.

Customer service is one of the most important functions of marketing Perrow (2008). Services often get the higher ranks in the parameter that affects the purchasing decision of the customers. As mentioned by Lorsch and Mathias (2009), it is much cheaper for the company to retain the loyal customers for the years than to find the new customers every year.

2.2.2 Different methods to increase the service and its effect on the profitability:

The companies have taken different strategies in order to create a value proposition for the customers. Tesco has launched the Club card in the year 1995. It has helped the company to create a one to one relationship with the customers. It can be treated as a corporate level strategy of the company. A considerable amount has been spent for launching the card. However, it has increased the number of loyal customers of the company in a significant manner. The customers have pursued a very strong feedback about the club card (Tesco.ie, 2014).

After one month of the launch of the Club card about 5 million people have joined in this club. As a result of that Tesco has recorded a drastic improvement of sales (Tescoplc.com, 2014). On the other hand, Barone et al. (2003) has argued that customer service can not only increase the sustainability of the company. The company needs to develop different strategies to improve the quality of the product to cope up with the stiff competition. The pricing strategy is also very much important to improve the profitability of the company.

3.0 Methodology:

Methodology provides a clear idea through which the researcher will conduct the research work. According to the view of Bernard (2011), methodology creates a base on which every step of the study can be designed. A research methodology includes strategies like: sampling, data collection, methods reliability and the validity. In this research work the researcher has selected the explanatory and deductive approach. As the researcher will analyze the effectiveness of Club card based on the existing market structure of UK, explanatory approach has been chosen. On the other hand, the researcher will analyze the data based on the existing concepts and theories. No new model will be developed in this study. Therefore, deductive approach has been selected by the researcher.

3.1 Sample:

In this research work, the researcher will take the feedback of the 50 customers attending the stores in a month. This will serve as the quantitative approach. As a qualitative approach, the researcher will take the interviews of 5 managers of Tesco. The quantitative approach will select the simple random samples and the qualitative approach will select the purposive sampling.

3.2 Methods:

Methods indicate the techniques and procedures to be implemented bt the research work. As mentioned by Johnson and Onwuegbuzie (2006), selecting the right methods can only help the researcher to draw a proper conclusion about chosen topic.

3.2.1 Techniques:

In this research work, the researcher will conduct the online survey for the quantitative and the qualitative approach. In some of cases face to face interview may be conducted based on the availability of the mangers.

3.2.2 Triangulation:

In this research work, the researcher will co relates the research objectives with the literature review and the findings from the interviews.

3.2.3 Reliability and Validity:

The researcher has taken the feedbacks of the managers and the customers based on the mutual contest of them. No mangers and the customers have forced to give the opinion. As mentioned by Brannen (2009), reliability and the validity of the data needs to be maintained in the research work as the results of the study highly depends on it. The researcher will not manipulate any feedbacks of the managers or the customers. The questions of the survey have set up based on the relevance of the study.

3.3 Data Analysis:

Mainly primary data will be collected for this research. The study will be conducted based on the literature review and the answers of the survey questions. However, in order to understand the effectiveness of the Club card, the changes of the profitability and the overall revenues will be represented through graphs or charts.

3.4 Anticipated Limitations:

As the research will focus mainly on the secondary data, the feedbacks of the mangers can highly influence the conclusions. Moreover, the feed backs of the managers are highly dependent on their availability. The research could have been more perfect if primary data can be analyzed. Moreover, the feed backs of the managers and the customers can be affected by the mood of them.

 

4.0 Time/Action Plan:

 

 

July Aug Sep Oct Nov
Week. No. 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48
Critical literature review ** ** ** ** ** **                                
Companies selections           ** **                              
Data collections             ** ** **                          
Analysing data                 ** ** **                      
Updating literature review                     ** ** **                  
1st draft of dissertation                         ** ** **              
Revising draft of dissertation                             ** ** **          
2nd draft of dissertation                                 ** ** **      
Revising draft of dissertation                                     ** **    
Submit final dissertation                                       ** ** **

 

 

5.0 Resources:

The researcher needs the respondent to complete the data analysis of the research work. As a part of the physical resources, a voice recorder will be required to record the feedbacks of the respondents. The researcher also needs funds to bear the travelling cost and the cost of the documentation.

6.0 Ethical considerations:

The researcher will maintain the ethical issues in the research work. The data will be collected only from the reliable sources. Harvard referencing style will be used in the research. The authentication of the feedbacks of the managers will be maintained.

 

References:

Brannen, J. (2009) ‘Prologue, mixed methods for novice researchers: reflections and themes, International Journal of Multiple Research Approaches, 3(1), 8–12.

Johnson, B. and Onwuegbuzie, A. (2006) “Mixed methods research: A research paradigm whose time has come”, Educational Researcher, 33(7), pp.14-26

Bernard, H. R. (2011) Research Methods in Anthropology: Qualitative and Quantitative Approaches. 5th ed. Plymouth: Alta Mira Press.

Tesco.ie, (2014). Talking Tesco – Clubcard – History. [online] Available at: http://www.tesco.ie/clubcard/history.htm [Accessed 11 Nov. 2014].

Tescoplc.com, (2014). Tesco PLC – Annual Report 2012 – Strategic review – Strategy in action. [online] Available at: http://www.tescoplc.com/files/reports/ar2012/index.asp?pageid=18&panel=retail [Accessed 11 Nov. 2014].

Barone, M.J. and T.E. DeCarlo (2003). “Emerging Forms of Competitive Advantage: Implications for Agricultural Producers.” Midwest Agribusiness Trade Research and Information Center Research Paper 03, pp.15.

Lorsch, J. W. and P. F. Mathias (2009). “When pro-fessionals have to manage”, Harvard Business Review ,65 (4), pp. 78–83.

Morecroft, J. D. W. (2012). “Executive knowledge, models and learning” European Journal of Oper- ational Research , 59 , pp. 9–27.

Nelson, R. R. (2011). “Why do firms differ, and how does it matter?”, Strategic management Journal , 12 , pp. 61–74.

Normann, R. and R. Rairez (2008). “From value chain to value constellation: Designing interactive strat- egy”, Harvard Business Review , 71 (4), pp. 65–77.

Perrow, C. (2008). “Organizational prestige: Some func- tions and dysfunctions”, American Journal of Soci- ology , 66 , pp. 335–341.

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