Critical analysis of customer satisfaction and loyalty (Tesco, UK)


Abstract

In recent globalized and competitive business environment, the issue and concern of customer satisfaction and customer loyalty is becoming important for the purpose of achieving organizational goals and objectives through providing quality products and services to the customers. Customer satisfaction is the expression of happiness or positive feelings about particular products and/or services after consuming of those products and/or services from a business. Customer loyalty is the nature and approach of purchasing and re-purchasing of products and/or services from a business by the customers. Both customer satisfaction and customer loyalty is very subjective approach and differ from person to person. This research project is based on the critical analysis of the relationship between customer satisfaction and customer loyalty at Tesco plc, UK. The primary objective of this research is to explore and analysis the relationship between customer satisfaction and customer loyalty i.e. how does customer satisfaction can affect customer loyalty at Tesco plc, UK.

Based on the critical review of literature, it is clear that customer satisfaction and customer loyalty can be affected by several factors, including product quality, service quality, price of product/service, store location and environment, shopping environment, product availability, overall customer service, and so on. The researcher has used three most common and effective research methods, such as semi-structured interview, questionnaire survey, and document review & analysis for the purpose of collecting data and information in relation to  research aims, objectives and research questions. Finally, based on the primary and secondary findings, the author would like to opine that there is positive (i.e. satisfy customer become loyal to the business) relation between customer satisfaction and customer loyalty at Tesco plc, UK.

Chapter 1: Introduction and Background

Introduction

This research project is based on the critical analysis of the relationship between customer satisfaction and customer loyalty at Tesco PLC in the United Kingdom (UK). Tesco PLC is one of the largest and biggest retail businesses in the UK. The company has been serving millions of customers every week (Tesco PLC, 2011). Panchal (2012) has mentioned that the market share of Tesco is 30.1% which is almost twice than its main competitors Sainsbury’s (16.7%) and Asda (17.2%). So, the selection of Tesco plc, UK to critically analyse the relationships between customer satisfaction and customer loyalty is most relevant and appropriate.

A. Relevance of the research for the chosen organization: Tesco has a good range of products, including own label products.  It seeks to provide excellent customer service, and ensure high levels of customer satisfaction that is leading to customer loyalty of business. Tesco has managed to streamline the customer’s shopping experience while ensuring customers get the quality and the prices they want. At the same time they have seamlessly integrated customers’ in-store and online shopping experiences (Tesco PLC, 2011). So, the approach and relationship of customer satisfaction and customer loyalty at Tesco PLC in the UK is an important research area.

The researcher has chosen Tesco Leytonstone Superstore to conduct interview and survey. From Tuesday to Friday the store is open for 24 hours, while there are some limited hours for store opening times on Saturday to Monday (Tesco.com, 2012). Some competitors, such as Asda and Sainsbury’s has store in the same areas, i.e. Leytonstone, UK. So, the nature of customer satisfaction and customer loyalty at Tesco PLC is an important concern in that particular area.

 B. Academic relevance of the research: In competitive business environment customer satisfaction and customer loyalty has become an important research topic and some academic researchers are paying considerable attention to explore and evaluate the relationship between customer satisfaction and customer loyalty (Khan et al. 1996). For example, Evans and Berman (1997) have mentioned that companies with satisfied customers have a good opportunity to convert them into loyal customers- who purchases from those firms over an extended period. However, there is some criticism on the positive relationship between customer satisfaction and customer loyalty. For instance, According to Storbacka and Lehtinen (2001), customer satisfaction is not necessarily a guarantee of loyalty. They said that in certain industries up to 75% of customers who switch business say that they were ‘satisfied’ or even ‘very satisfied’ with the previous business.

Despite of having some researches on customer satisfaction and customer loyalty at supermarket within the UK, there is no sufficient research works in relation to the critical analysis of the relationship between customer satisfaction and customer loyalty at Tesco PLC in the UK (Capizzin and Ferguson, 2005). For example, in past 12 months Tesco market share dropped from 31.4% to 30.6%. In spite of having a very good strategy of customer service there is a hard evidence of good customer service at Tesco. A huge number of customers have made complaint regarding the product or services offered at the customer service at Tesco (The Guardian, 2008). Thus, from the above discussion, the researcher would like to say that the critical analysis of relationship between customer satisfaction and customer loyalty at Tesco PLC in the UK has academic relevance and importance.

C. Concept and definition of customer satisfaction and customer loyalty: In recent competitive retail industry, particularly in the UK, the issue of customer satisfaction and customer loyalty is very important and crucial for the organization to achieve goals and objectives (Beatson et al. 2007). According to Cochran (2003), customer satisfaction can mean virtually anything that can involve several variables, such as price, reliability, responsiveness, professionalism and convenience etc. He has described that customer satisfaction has great influence over the strategic aspects of the organization, for example, the top management must acknowledge and communicate that customer satisfaction is the ultimate goal, is an investment and everyone of the organization must involve in customer satisfaction.

According to Lawfer (2004), customer loyalty is a response to how a business presents its products and services and described that customer loyalty is an approach that depends on personal view and opinion and there is no particular reasons for which the customer make purchase again and again from a business. However, he stated that a customer may continue to buy from a business because of the relationship that has made by the business and offering products and services according to their demands and expectations. So, based on the above definitions of customer satisfaction and customer loyalty it is clear that there is close and integrated relationship with the customer satisfaction and customer loyalty, meaning that if the customer become satisfies with particular products and/or services of a business, then they become loyal to the business.

D. Tools and techniques to measure customer satisfaction and customer loyalty: Researchers have developed many models to measure customer satisfaction and service quality that lead to customer loyalty, some of those models are: SERVQUAL (Parasuraman et al. 1985), SERVPERF (Cronin and Taylor, 1992), the Service-Profit Chain Model (Heskett et al., 1994), Technical-Functional Quality Model (Gronroos, 1984), Satisfaction-Service Quality Model (Spreng and Mackoy, 1996) and the Attributes model (Dabholkar, 1996). SERVQUAL and SERVPERF are two of the most widely used models to measure customer satisfaction and service quality (Jain and Gupta, 2004), but there is no consensus in the literature about which is better. The research has contributed to this debate by reviewing the SERVQUAL and SERVPERF models in order to evaluate their strengths and weakness and decide which one is more suitable to use for the primary research in relation to critical analysis of the relationship between customer satisfaction and customer loyalty at Tesco PLC in the UK.

Research aim and objectives

The researcher would like to represent the research aim and objectives as follows-

Research aim: To investigate and critically analyse the relationship between customer satisfaction and customer loyalty at Tesco PLC in the UK.

Research objective One: To critically review the literature on the relationship between customer satisfaction and customer loyalty, including analyzing and defining the concept of customer satisfaction and customer loyalty, exploring the factors affecting customer satisfaction, analysing the constituent elements of customer loyalty (attitudinal and behavioural) and why customer loyalty is seen as very important for organization like Tesco PLC in the UK.

Research objective Two: To measure the customer satisfaction by evaluating two of the most common and effective models, known as SERVQUAL and SERVPERF model, with the aim of identifying which would be most suitable for the primary purpose of the research.

Research objective Three: To collect primary and secondary data from the case studied organization, such as Tesco PLC in the UK at Leytonstone Superstore through two most effective research methods, such as semi-structured interview and questionnaire survey.

Research objective Four: To develop valid recommendations through analysing data and information collected from primary, secondary and tertiary sources whether there is close relationship or link between customer satisfaction and customer loyalty both to academic and organizational perspective.

Brief outline of all chapters

The first chapter has been designated to discuss and explain research background, organizational background, academic relevance, research aims and objectives, research questions, rationale for selection of research topic, and overall limitations etc. The second chapter has been designated to present previous research works in the same research subject, sources and strategy of review of literature, theoretical framework of references, limitations on review of literature etc.

The third chapter has been designated to highlight research methodology, including research philosophy, research approach, data collection methods, data analysis tools and techniques, data presentation techniques, consideration of ethical issues, validity, reliability and generalisability etc. The fourth chapter that has discuss and explain primary research findings, including findings from primary data and their analysis, findings from secondary data and their analysis etc. The final chapter has been designated to present conclusions and recommendations, including key summary of the primary data, key summary of the secondary data, recommendations to academic and organizational perspective, self-reflection on research project, future research opportunities etc.

Chapter 2: Critical Review of Literature

Introduction

Critical review of literature is one of the most common and vital part within the dissertation. It builds the foundation and background of the research project. The researcher should collect relevant data and information from the primary sources in relation to issues and concepts that arrived during the critical review of literature (Saunders et al., 2009). Moreover, Macauley (2001); Galvan (1999); Hart (1998) and Bruce (1997) added that a literature review may constitute an essential chapter of a dissertation for the purpose of: to place each work in the context of its contribution to the understanding of the subject under review; to describe the relationship of each work to others under consideration; to identify new ways to interpret and shed light on any gaps in, previous research; to resolve conflicts amongst seemingly contradictory previous studied; to identify areas of prior research to prevent duplication; to point the way forward for further research; and to place original work in the context of existing literature etc.

Thus, the researcher would like to mention that the critical review of literature is very important to explore and evaluate existing theories and practices in accordance with the current research subject. In this chapter, there has discussed and explained some of the following main things associated with the critical review of literature- sources and strategy for critical review of literature; key themes explore from the critical review of literature; theoretical framework of references; limitations on critical review of literature; and conclusion.

Sources for critical review of literature

The identification of the sources for the critical review of literature is an important task for the researcher. There may have several sources to conduct critical review of literature, but Saunders et al. (2009) have stated that there should be proper sources to collect relevant research works, previously done by others. The researcher has used some of the relevant books, articles, journals, publications and websites etc. as the source of tertiary data and information in accordance with the critical analysis of the relationship between customer satisfaction and customer loyalty within an organization, a case study of Tesco PLC, UK.

The researcher has divided review of literature into three main sections, such as overview of customer satisfaction within an organization, including Tesco PLC, UK; overview of customer loyalty of an organization, including Tesco PLC, UK; and relation between customer satisfaction and customer loyalty within an organization, including Tesco PLC, UK. The researcher believed that all of the used sources of literature were very relevant and appropriate in respect to explore and evaluate the existing theories and practices in the field of customer satisfaction and customer loyalty within an organization, a case study of Tesco PLC, UK.

Objectives from review of literature

This chapter has addressed the first two objectives of the study:

  • To critically review the literature on the relationship between customer satisfaction and customer loyalty, including analysing the constituent elements of loyalty (attitudinal and behavioural) and why loyalty is seen as very important for retailers like Tesco plc, UK.
  • To evaluate SERVQUAL and SERVPERF model as means of measuring customer satisfaction in a supermarket context, with the aim of identifying the better model to use as the basis of the researcher’s primary research. This objective will look specifically at what factors customers value most in terms of organization’s service quality, so as to ensure that the chosen model covers all of the key aspects.

The researcher has explored following key themes from the critical review of literature in respect to critical analysis of the relationship between customer satisfaction and customer loyalty within an organization, a case study of Tesco plc, UK-

  • Overview of customer satisfaction within an organization, case of Tesco plc, UK;
  • Overview of customer loyalty within an organization, case of Tesco plc, UK; and
  • Relationship between customer satisfaction and customer loyalty within an organization, case of Tesco plc, UK.

Customer satisfaction in Tesco, UK

A. Definition and explanation of customer satisfaction: Globalisation and more intense competition among supermarkets highly raised the awareness of customers; there is a significant impact of customer satisfaction on profitability and ultimately the survival of organisations: thus customer satisfaction has become one of the most important key issues in the present business world (Cheng et al. 2011; Beatson et al. 2007).

Kotler (2000) defined customer satisfaction as the feelings of a person’s pleasure or disappointment that resulted from the comparison between the performance and outcome of a product with his/her expectations about the performance of that product. Customer satisfaction is customers’ post-purchase perception or evaluation of a particular product or service (Stank et al. 2007) and customer satisfaction is customers’ comment or feedback regarding product or service made from the practical experience after receiving or consumption of that product or service (Fornell, 1992; Oliver, 1981). Customer satisfaction is very subjective approach that can be influenced by several variables, including price of the product/service, reliability, responsiveness and lead time etc. (Cochran, 2003).

According to Tse and Wilton (1988), customer satisfaction is the customer’s response to the evaluation of the perceived discrepancy between prior expectations and the actual performance of the product as perceived after its consumption.

Thus, based on the definition and explanation of customer satisfaction, the author would like to opine that customer satisfaction is an important concern for an organization, like Tesco PLC, UK that is mainly customer-oriented business in UK. From the definition, it also clear that customer satisfaction leads to repeat purchase and thus in most cases customer loyalty of the organization.

B. Factors affecting customer satisfaction: Customer satisfaction is the overall impression of the customer about the supplier and the products and services delivered by the suppliers (Allbal, 2011). He has mentioned following factors that could affect customer satisfaction at Tesco, UK-

  • Department wise capability of the supplier;
  • Technological and engineering or re-engineering aspects of products and services;
  • Type and quality of response provided by the supplier;
  • Supplier’s capability to commit on deadlines and how efficiently they are met;
  • Customer service provided by the supplier;
  • Complaint management;
  • Cost, quality, performance and efficiency of the product; and
  • Compatible and hassle free functions and operations.

On the other hand, some researchers identified that customer satisfaction depends on overall quality of product or service or both (Shamdasani et al. 2008; Swaid and Wigand, 2007) and mood of service deliver (Johnston, 1997). For example, service quality, a vital factor affecting customer satisfaction is defined as the customers’ overall judgement regarding the superiority or excellence of a product or service (Parasuraman et al. 1988; Zeithaml, 1988) that absolutely depends on the integrated characteristics and feature of a product or service to satisfy the needs of customers (Kotler and Armstrong, 1996). According to Humby et al. (2009), customer satisfaction within retail supermarket, like Tesco PLC, UK can be influenced by several factors, including- i. Retail formats, such as in-store selling, non-store selling, market segmentation and target group selection etc.; ii. Collaboration in retail value chain, such as supply chain management, quick response, efficient consumer response etc.; iii. Demand management, such as portfolio management, category management, space management etc.; iv. Store operations, such as store ordering, product replenishment process, customer service, store refurbishment etc.; and v. Loyalty programmes and information sharing, such as Tesco loyalty card, use of shopper data, customer information sharing system etc.

Several researchers and authors, (e.g. Hallowell, 1996; Fornell et al., 1996; Athansassopoulos, 2000) have mentioned different factors that have great influence on the customer satisfaction. For instance, Hallowell, (1996, p. 29) has noted that customer satisfaction is the result of a customer’s perception of the value received where value equals perceived service quality relative to price. The first determinant of overall customer satisfaction is perceived quality and the second determinant of overall customer satisfaction is perceived value (Fornell et al., 1996, p. 9). In addition, Athanassopoulos (2000) added that customer satisfaction is recognized as being highly associated with ‘value’ and is based, conceptually, on the amalgamation of service quality attributes with such attributes as price. Customer satisfaction and service quality are so closely related and become vital issues of corporate success in today’s dynamic and intense competitive retail business (Anitsal and Paige, 2006) and it is important to measure service quality in order to measure customer satisfaction based on customers’ perceptions towards product or service (Lin, 2007).

C. Measuring customer satisfaction: Customer satisfaction measurement has become one of the most widely used non-financial measures in business today (Shaw and Reed, 1999). They also mentioned that improving customer satisfaction index can be a core measure, alongside sales targets and profitability. Customer relationship management (CRM) approach can be considered as important tool to measure customer satisfaction. For example, Ederer et al. (2000) have stated that CRM has following advantages in relation to customer satisfaction that lead to customer loyalty-

  • Every satisfied customer brings in at least three more customers;
  • The rate of repeat sales climbs with increased reliance and satisfaction with the performance of their suppliers;
  • Regular customers exhibit less price sensitivity than new customers; and
  • An unhappy customer communicates his or her negative experience to ten more potential customers.

According to Hill et al. (2007), the following techniques can be apply to measure customer satisfaction within an organization, like Tesco PLC, UK-

  1. The nature of repeat purchasing and loyalty of the customer; and
  2. The implementation of market research, such as survey, interview etc. to monitor level of satisfaction on products/services by a customer.

Raab et al. (2008) have stated that after consuming or using a product/service, the customers may ask themselves whether they were happy or not with the product/service. If the answer is yes they will tend to choose the product/service to buy it again, to recommend it to others, and to become a regular customer of that product/service. As an example, the author would like say that Tesco PLC, UK is committed to improve its products and services and thus introduce value-for-money offer based on shoppers’ perceptions of all aspects of the shopping experience—price, quality, range, service. This also included factors such as the shopping environment, availability of parking, and levels of store hygiene (Tesco plc, 2012).  For example, to track long-term changes in consumer preferences and identify differences between customer groups, Tesco carried out market research every two years into key stores of the organization. This exercise asked a large sample of Tesco shoppers about their demands and expectations and the ability of the organization to meet those demands and expectations (Tesco plc, 2012).

SERVQUAL model can be used to measure customer satisfaction within an organization that is developed by Parasuraman et al (1988). SERVQUAL model is based on the perception gap between the received service quality and the expected service quality and has been widely adopted for explaining consumer perception of service quality and thus level of customer satisfaction. Originally 10 dimensions of service quality were proposed (reliability, responsiveness, competence, access, courtesy, communication, credibility, security, understanding the consumer, and tangibles) in SERVQUAL model and later these were reduced to five (reliability, responsiveness, empathy, assurances and tangibles). However, several authors (e.g. Cronin and Taylor, 1992; Finn and Lamb, 1991; and Rust and Oliver, 1994) have argued that SERVQUAL model is not fully appropriate to measure the customer satisfaction through the identification of perceived quality and expected quality. For example, Cronin and Taylor (1992); and Finn and Lamb (1991) have stated that the components of SERVQUAL could not fully evaluate consumer perception of service quality in certain industries.

Another example showed that Rust and Oliver (1994) have provided a three-component model explaining service quality through service product, service delivery and service environment, while Brady and Cronin (2004) suggested three service quality dimensions- service-outcome, consumer-employee interaction and service environment and thus SERVQUAL model does not solely used to measure customer satisfaction within an organization.  Service Quality within retail units is pivotal for satisfying customers, retaining them and creating loyalty amongst customers and SERVQUAL model is use to analyze the gap between perceptions and expectations of the customers that reflects the satisfaction and loyalty (Naik et al., 2010). They have proposed that SERVQUAL model can be used for following purposes relating to customer satisfaction and customer loyalty-

  1. How an organization can satisfy its customers through using service quality (SERVQUAL) dimensions; and
  2. How service quality (SERVQUAL) dimensions act as important dominant in influencing customer satisfaction.

SERVPERF model that is developed by Cronin and Taylor in 1992 can be used to measure the performance of an organization and thus the level of customer satisfaction of that organization. According to this model, service quality is evaluated by perceptions of the service delivered only. SERVPERF assumes that respondents provide their ratings by automatically comparing performance perceptions with performance expectations and that measuring expectations directly is unnecessary. Numerous authors (Babakus and Boller, 1992; Brady et al, 2002; and Carrillat et al., 2007) have suggested that SERVPERF is a better alternative for measuring service quality that lead to measure the customer satisfaction within an organization.

 

Customer loyalty in Tesco, UK

A. Definition and explanation of customer loyalty at Tesco: Tesco is a customer-orientated business. It aims to offer products that provide value for money for its customers and to deliver high-quality service. Tesco wants to attract new customers, but it also wants to keep its existing customers happy. Building customer loyalty is a cost-effective strategy to grow the business. This is because satisfied customers are a good advert for the business (The Times 100, 2012). The word ‘loyalty’ used to describe strong promise or enthusiastic devotion to a country, an action or a person. Lovelock and Wirtz,  (2011) defined customer loyalty in a business context as  the willingness of a customer to continue patronising an organisation over a long period of time, prefer the organisation for shopping on an exclusive basis and continue to recommend the product or service of the organisation to friends, family and associates.

Another comprehensive definition of customer loyalty is given by Toporek (2011) that is Customer loyalty is the continued and regular patronage of a business in the face of alternative economic activities and competitive attempts to disrupt the relationship. Customer loyalty often results in other secondary benefits to the firm such as brand advocacy, direct referrals, and price insensitivity”. Thus, based on the definitions of customer loyalty, it can be noted that customer loyalty is a devotion to an organization by the customer.

B. Factors affecting customer loyalty: Blokdijk (2008) has stated that customer loyalty is becoming key concern for an organization and thus the organization has to consider several factors that are affecting customer loyalty. As an example, Blokdijk (2008) has mentioned that quality of product with better service can create customer loyalty. Blokdijk (2008) has also mentioned that several factors can influence customer loyalty and these include- bonuses and incentives by the organization, good marketing and promotion works, and how the product set apart from other competitors.

Ndubisi (2007) has found that customer loyalty affected by four major factors namely: trust, commitment, communication and conflicting handling. According to Cronin et al (2000), customer loyalty can be affected and influenced through several factors, including- the greater levels of service quality that encourage patronage by increasing satisfaction associated with organization’s products/services; the behavioural intentions of the customers; the effect of quality, value and satisfaction in together that lead to make purchase decision by the customers. So, the author would like to mention that there are several factors, such as product quality, service quality, bonuses and incentives provided by organization, behaviour and attitudes of the customers etc. have significant influence on customer loyalty of an organization, like Tesco plc, UK.

Relationship between satisfaction and loyalty

Shaw and Reed (1999) described that customer satisfaction is widely believed to have a sequential structure which impacts on purchasing and therefore loyalty. They also described that customer satisfaction is directly correlated to loyalty and profitability of an organization. Customer satisfaction is the major factor of success of an organization. Customer satisfaction leads to positive word – of – mouth communications, loyalty, repeated purchase and more profitability for organizations. Customer satisfaction can be considered as the fundamental principle in modern markets, so that the success of firms is highly depended on identifying and satisfying customer needs (Ranjbarian and Barari, 2009).

Rashid (2003) has mentioned that organizations seek benefits in order to develop a relationship with their customers for the purpose of achieving competitive advantage. Meanwhile, in same manner the customers, who seek benefits towards an organization and respond with their loyalty to the organization (Rashid, 2003). The researcher would like to mention that the mission statement of the Tesco ‘our core purpose is to create value for customers to earn their lifetime loyalty’ depict the close and inter-related relationship between the customer satisfaction and customer loyalty. So, it can clarify as that the creation of value for customer will increase customer satisfaction and the approach of earning lifetime loyalty will reflects the customer loyalty at the organization.

As an example, Benady (2006) has mentioned that with the application of loyalty schemes, Tesco PLC, UK has achieved immediate advantage over competitor in following areas-

  • To explore consumer trends;
  • To establish targeted communications;
  • To accurately measured promotions;
  • To defence against competitor activities;
  • To ensure right product in the right place on time;
  • To ensure power negotiation between consumers and supplies; and
  • To make proper site locations and thus to make appropriate cross-selling.

Benady (2006) has concluded that all of these issues are helping Tesco PLC, UK to improve quality of product and service to increase customer satisfaction and thus to create customer loyalty among the customers. According to Fornell and Wernerfelt (1987), the immediate consequences of increased customer satisfaction are decreased customer complaints and increased customer loyalty. In the same line, Reichheld and Schefter (2000) have mentioned that an increase in overall customer satisfaction should decrease the incidence of complaints and thus increase customer loyalty. Fornell et al (1999) have proposed a framework that clearly defines the relationship between customer satisfaction and customer loyalty. From the above figure, it is clear that overall customer satisfaction may lead to customer loyalty and customer complaints. If the customers become satisfied with product and/or service it leads to customer loyalty on the other hand, if the customers dissatisfied with product and/or service it leads to customer complaints. Thus, it can be said that customer satisfaction is closely related with the customer loyalty.

However, there is some criticism on that customer satisfaction may not always lead to customer loyalty. For example, Leverin and Liljander (2006) have mentioned that customer satisfaction is a good basis for loyalty, although it does not guarantee it, because even satisfied customers may switch product/service providers and suppliers because of different reasons, including price of the product/service, economic incentives and other benefits and rewards to the customers. But finally, Leverin and Liljander (2006) have concluded that although the effectiveness of loyalty programs has been questioned, customer satisfaction have a significant and positive impact on customer retention, service usage, and/or share of customer purchases that constitute customer loyalty.

 Key summary of findings

The key summary of findings from review of literature can be shown as follows-

Table: 2.2. Key summary of findings from review of literature

Name of author(s) and year of publication Main theory or focus in relation to customer satisfaction and customer loyalty at Tesco, UK
Beatson et al (2007); and Cheng et al (2011). Customer satisfaction has become one of the most important key issues in the present business world.
Fornell (1992); Kolter (2000); Oliver (1991); Stank et al (2007). Definition of customer satisfaction as the degree of happiness by the customers after consuming products and services of an organization.
Allbal (2011) Customer satisfaction is an overall impression of the customers about products and services that can influenced by type and quality of product, costs, performance, and customer service and complaint management and so on.
Fornell et al (1996); and Hallowell (1996). Value received by the customers and perceived quality relative to price can be regard as factors affecting customer satisfaction.
Shaw and Reed (1999) The measurement of customer satisfaction is becoming vital non-financial measures in recent businesses.
Hill et al (2007) There are mainly six dimensions within the measuring of customer satisfaction.
Ederer et al (2000); and Raab et al (2008) CRM is one the most common approach to measure customer satisfaction within an organization. 
Cronin and Taylor (1992); Parasuraman et al (1988) SERVQUAL model to measure customer satisfaction within an organization that mainly concern about five features, such as reliability, responsiveness, empathy, assurances and tangibles etc.
Babakus and Boller (1992); Brady et al (2000); and Carrillat et al (2007). SERVPERF model to measure customer satisfaction that mainly concern with service quality and performance perceptions against performance expectations.
Lovelock and Wirtz (2011) Definition of customer loyalty that based on the willingness of a customer to patronize an organization again and again in relation to purchase products and/or services.
Blokdijk (2008) Important of customer loyalty within an organization and some factors that should consider by the organization in relation to increase customer loyalty.
Ndubisi (2007); and Oliver (2010) Major factors affecting customer loyalty, including trust, commitment, communication and conflict handling etc.
Ranjbarian and Barari (2009); and Shaw and Reed (1999) Customer satisfaction leads to positive impact on re-purchasing of products and/or services by the customers and therefore increases customer loyalty.
Benady (2006); Fornell and Werterfelt (1987); Leverin and Liljander (2006); and Reichheld and Schefter (2000). Application of loyalty schemes at Tesco that increase customer satisfaction and customer loyalty through positive impact on customer retention, service usage, and/or share of customer purchases.

Source: Author’s analysis

Limitations for review of literature

The researcher has some limitations during the review of literature. Some of the limitations are as follows-

  1. The lack of available time was the most common limiting factor that affected the research work in relation to review of relevant literatures.
  2. The lack of availability in financial resource was another limiting factor that has negative impact on the review of literature for the purpose of reviewing more relevant books, articles, journals and other publications.

Despite of having some limitations on critical review of literature, the researcher would like to opine that he has identified all of the relevant issues and concerns in relation to the critical analysis of the relationship between customer satisfaction and customer loyalty within an organization, a case study of Tesco PLC, UK.

 Chapter 3: Research Methodology

Introduction

Research methodology determines the way by which the research project has been done through collecting relevant and appropriate data and information in accordance with research aims, objectives and research questions (Saunders et al., 2009). In this chapter some of the following key aspects of the research methodology- research philosophy; research approach; data collection methods, including access to the case studied organization, primary and secondary data collection methods, access to the sample and sampling strategy, data analysis tools and techniques, data presentation techniques, advantages of used research methods, possible disadvantages of used research methods etc.; consideration of ethical issues, discussion on validity, reliability and generalisability; and limitations on research methodology.

So, it can be noted that research methodology has crucial influence to collect all relevant data and information and thus to make standard research report with valid conclusions and recommendations in the field of critical analysis of the relationship between customer satisfaction and customer loyalty at Tesco, UK.

Research philosophy

According to Lancaster (2005), research philosophy is the way by which the researcher produces knowledge and understanding in respect with the research subject. The explanation of each research philosophy can be represent as follows-

Table: 3.1. Discussion and explanation of research philosophy

Research philosophy Main feature in relation to research project
Positivism In accordance with positivism, the researcher views the world in an objective manner. In this case, the researcher act as objective and analyst and work independently.
Interpretive It is not easy to understand the world through the principles and the world can be interpreted in subjective manner. According to interpretive philosophy, the research is based on researcher’s interests.
Pragmatism In this case, the researcher handles the research activities with the actual facts. Based on the pragmatism, the research question has key role within the research project as well as the research is based on the practical outcomes.
Realism This research philosophy is based on the positivism and interpretive that focuses on the assumptions of the research, which states that to understand the subjective nature of human beings.

Source: Lancaster (2005), Saunders et al. (2009), and Bryman and Bell (2007)

In this research project, the researcher was realistic for the purpose of collecting relevant data and information in accordance with research aims, objectives and research questions. The reason to be realistic is to explore subjective nature of customer satisfaction and customer loyalty at Tesco plc.

Research approach

According to Saunders et al. (2009), research approach is very common and vital concern for the researcher to establish theory and/or models in context of the research subject. They have mentioned that there are mainly following research approaches-

  • Qualitative and quantitative;
  • Subjective and objective; and
  • Inductive and deductive.

Bryman and Bell (2007) have mentioned that inductive and deductive research approaches are widely used to explore and analyse close relations between two variables. Based on the inductive research approach, the researcher provide a specific theory or model from the general issues under the research subject while in deductive approach, the researcher provide general issues from a specific issue under the research subject (Bryman and Bell, 2007). Customer satisfaction is very subjective in nature. It may vary from person to person. Satisfied customers become loyal to the business, while there is debate as well, all satisfied customers may not purchase regularly from the same business. So, it is clear that both customer satisfaction and customer loyalty is a general issue. For this reason, the researcher has used inductive research approach to develop a specific theory on the relationship between customer satisfaction and customer loyalty at Tesco plc.

Data collection methods

Data collection methods play significant role to collect relevant and appropriate data from the primary sources in respect to the research aims, objectives and questions. The researcher has to consider some of the common things within the data collection methods, including, access to the case studied organization, primary data collection methods, secondary data collection methods, access to the sample and sampling strategy, data analysis tools and techniques, data presentation techniques, advantages and disadvantages of used research methods etc.

All of these things can be discuss and explain as follows-

i. Access to the case studied organization

The researcher conducted semi-structured interview with the management personnel at the selected store, such as Tesco Leytonstone branch. To get the access to the case studied organization, the researcher has followed and maintained both academic and organizational procedures, such as sending letter from academic institution, agreeing organizational code of conduct etc.

ii. Primary data collection methods

The primary data has been collected by two methods, such as conducting semi-structured interviews and carrying out questionnaire survey. The semi-structured interviews were conducted with the management personnel of the case studied organization at Leytonstone branch in relation to collect real life information and existing practices within the organization to satisfy customers and the approach of customer loyalty. The questionnaire survey was carried out among customers on randomly to get general views and perceptions of customer satisfaction and customer loyalty towards Tesco plc.

iii. Secondary data collection methods

The secondary data has been collected through reviewing and analysis of existing documents of the case studied organization and from other relevant sources, such as published articles, journals and websites etc.

iv. Access to the sample and sampling strategy

According to Cohen et al. (2007), access to the sample is a key issue and is an early factor that must be decided in research. The researcher need to ensure that access to the sample is not only permitted but also, in fact, practicable. The researcher has ensured appropriate methods, such as letter of informed consent, to get access to the sample during the interviews and questionnaire survey at the selected store of the Tesco, UK. There are two main methods of sampling, such as probability known as random sample and non-probability known as purposive sample (Cohen and Holliday, 1996). During the semi-structured interview, the researcher has used purposive sampling technique to ensure right interviewee to collect relevant data on customer satisfaction and customer loyalty at Tesco plc. During the questionnaire survey, the researcher has followed simple random sampling technique to ensure the equal chance of being selected of each customer at the selected store of the Tesco, UK.

 v. Development of research instrument (questionnaire survey)

The researcher has used mainly following questions during the survey-

  • The main factors that affect customer satisfaction to assess the approach of customer loyalty towards Tesco plc.
  • The level of customer satisfaction with the existing products and services in relation to evaluate the impact and influence of customer satisfaction on the loyalty at Tesco plc.
  • The current practices as well as future plans to increase customer satisfaction that can create more customer loyalty at Tesco plc.

vi. Data analysis tools and techniques

The researcher has collected both qualitative and quantitative data. For example, qualitative data has been collected from semi-structured interviews with the management personnel of the case studied organization. On the other hand, quantitative data has been collected from questionnaire survey with customers at selected branch of the case studied organization. Thus, the researcher has used descriptive technique, such as transcribing interview results to analyse qualitative data and statistical technique, such as percentages of survey results to analyse quantitative data.

vii. Data presentation techniques

According to Tejada (2002), data can be present through several ways, including presenting tables and figures, presenting numbers and presenting the results both qualitative and quantitative. In this research, the researcher has used all of these techniques to present data derived from the semi-structured interviews, questionnaire survey and document review & analysis etc.

viii. Advantages of used research methods, such as semi-structured interview, questionnaire survey, and document review and analysis

The researcher has used three most effective research methods, such as semi-structured interview, questionnaire survey and document review & analysis to collect both primary and secondary data from the case studied organization in relation to the research aims, objectives and research questions. The advantages of the used research methods can be shown as follow-

Table: 3.2. Advantages of used research methods, such as semi-structured interview, questionnaire survey and document review and analysis

Research method

Advantages

Semi-structured interview To collect reliable and detailed data from the relevant person of the case studied organization; andTo ensure more flexibility in collecting data.
Questionnaire survey To collect large amount of data from the mass people; andTo get the general perception about the research subject among the large population.
Document review & analysis, such as organization’s code of conduct policy guide book, annual report etc. To collect real data from the case studied organization; andTo compare data collected from the interview and survey.

Source: Author’s analysis

 ix. Possible disadvantages of used research methods

There may have some disadvantages of used research methods that can be shown as follow-

Table: 3.3. Possible disadvantages of used research methods, such as semi-structured interview, questionnaire survey and document review and analysis

Research method

Possible disadvantages

Semi-structured interview It may be difficult to analyse the open-ended questions of semi-structured interview.It may require skills and experiences to conduct interview.
Questionnaire survey It may produce large volume of data and can be difficult to find appropriate ones.Questions used in survey may not applicable for all respondents.
Document review & analysis One of the major disadvantages of this method is the issue of confidentiality and privacy of the case studied organization.All relevant data may not be available in document of the case studied organization.

Source: Author’s analysis

 Consideration of ethical issues

There are several ethical issues that should be considered by the researcher during the collection of data through using several research methods. For example, Bryman and Bell (2007) have stated that the issue of confidentiality and anonymity is vital for the researcher to identify persons, organizations and places etc. under the research area. Moreover, Ghauri and Gronhaug (2005) added that the researcher has a moral responsibility to explain and find answer in accordance with research questions honestly and accurately. The researcher has followed and maintained all of the relevant ethical issues, including informed consent, confidentiality, privacy, honesty, integrity, and so on during the conducting of semi-structured interview, carrying out questionnaire survey and reviewing & analysis of document to collect primary and secondary data from the case studied organization, Leytonstone branch, Tesco, UK. For instance, the researcher has preserved confidentiality and privacy of all respondents both in interview and survey during the preparation of research report.

 Discussion on validity, reliability and generalisability

Saunders et al. (2009) have described that the researcher should ensure the validity, reliability and generalisability of the research project. They have stated that the research report must be valid, the collected data should be reliable and the research findings should be generalised. However, Muijs (2010) has noted that there are three key concepts in quantitative methods, such as validity, reliability and generalisability. The researcher has ensured the validity of the research through pilot study and testing of the research questions with his peers. The data has been collected through three most common research methods, such as semi-structured interview, questionnaire survey and document review & analysis etc. that ensured the reliability of the data and thus the research findings.

The research report has been prepared in such a way that is applicable to the general aspect in relation to the critical analysis of the relationship between customer satisfaction and customer loyalty at Tesco, UK to the similar organization and in some cases to the different organization as well. For example, the quality of service is one the most common and vital aspects in customer satisfaction that may lead to customer loyalty towards the business. This concept is applicable to all types of industries, such as retail, banking, service-providing etc.

Limitations on research methodology

There were some limitations on research methodology that have may some negative impact on the collection of relevant and appropriate data and thus make good research report with valid conclusions and recommendations. The researcher would like to mention following points as limitations on research methodology-

i. Lack of availability of time: Due to lack of available time, the researcher has conducted only two interviews with the management personnel of the case studied organization. So, the limited number of interview may have negative impact on the overall research report.

ii. Small sample size: Due to time constraint, the researcher has carried questionnaire survey with limited number of respondents. Thus, small sample size may not be enough to get perception on the relationship between customer satisfaction and customer loyalty at Tesco plc.

iii. Issue of confidentiality: There was issue of confidentiality during the collection of primary and secondary data through interview, survey and reviewing and analysis of document. So, the ethical issues were one the major limitations to collect relevant data and information on the relationships between customer satisfaction and customer loyalty at Tesco plc.

 Chapter 4: Research Findings and Analysis

Introduction

Analysis of research findings has vital influence on research project to prepare standard research report with valid conclusions and recommendations. For example, Saunders et al (2009) have mentioned that under the chapter research findings and their analysis, the researcher has to present all of the relevant data collected from primary research. In this chapter, the researcher has sets out the results of primary research that has been obtained through semi-structured interviews, questionnaire survey and document review and analysis of the case studied organization that was described in chapter 3.

Primary findings and their analysis

Primary data has been collected through conducting semi-structured interviews and questionnaire survey from the case studied organization. The semi-structured interview was conducted with the three management personnel of the case studied organization Tesco Superstore Leytonstone, UK. The questionnaire survey has been carried out among 50 customers within the selected store. The researcher has divided primary findings and their analysis into two parts- research findings from the semi-structured interviews and their analysis; and research findings from the questionnaire survey and their analysis.

 A. Research findings from the semi-structured interview and their analysis

The semi-structured interviews were conducted with three (3) management personnel, such as Team Leader, Assistant Store Manager and Store Manager of the case studied organization. The researcher has used 12-15 questions in each interview. The duration of each interview was 25-30 minutes. The interview questions were developed in accordance with research aims, objectives and overall research questions in the field of critical analysis of the relationship between customer satisfaction and customer loyalty at Tesco plc, UK.

Interview results and their analysis can be represent as follows-

A. i. Demographic profile of the interviewees: The demographics of the interviewees can be represent as follows-

Table: 4.1. Demographics of the interviewees at Tesco plc, UK

  Team Leader Assistant Store Manager Store Manager
Gender Male Female Male
Age 27 30 35
Number of year working at this position 3 5 8

Source: Interview data

The interview result shows that Team Leader was male and aged of 27 years who have been working for nearly 3 years within Tesco plc. The Assistant Store Manager was female and aged of 30 who have been working for 5 years within Tesco plc. The Store Manager was male and aged 35 years who have been working for more than 8 years within the case studied organization, such as Tesco plc. From the above result, it is clear that the interviewees were relevant personnel to identify and analyse existing practices and approaches to satisfy customers at Tesco plc, UK.

A. ii. What are the major factors affecting customer satisfaction and customer loyalty at Tesco plc, UK

The researcher has derived data from the interviews in relation to the major factors affecting customer satisfaction and customer loyalty at Tesco plc, UK. For example, the Assistant Store Manager has mentioned that there are several factors, such as price of product, availability of product and overall customer service etc. that can affect customer satisfaction and customer loyalty at Tesco plc, UK. In addition to the above mentioned factors, the Store Manager has stated that product quality, service quality, store location, store environment and customer relationship management etc. have great influence on the customer satisfaction and customer loyalty at Tesco plc, UK. During the interview, Team Leader has mentioned almost same factors that affect customer satisfaction and customer loyalty with an organization, like Tesco plc, UK. Thus, based on the interviews results, researcher would like to opine that all of these factors can greatly affect the customer satisfaction and customer loyalty at Tesco plc, UK.

A. iii. What are the unique activities compare to other retailers to increase customer satisfaction and customer loyalty at Tesco plc, UK

Tesco plc, UK is one of the leading retail supermarket chains in the UK market. The Company is committed to deliver quality products and services to satisfy customer that lead to customer loyalty. Based on the interviews results, it can be said that there are some unique activities compare to other retailers (competitors) that include- number of stores, location of stores, format of retailing (e.g. in-store and non-store selling), loyalty schemes (e.g. Club card), the use of advanced technologies for the customers, the nature of customer service and customer relationship management etc.  Thus, the author would like to opine that the Tesco plc, UK is providing some of the unique and separate activities compare to other retailers for the purpose of satisfying customer that lead to customer loyalty at Tesco plc, UK.

A. iv. Defining the relationship between customer satisfaction and customer loyalty at Tesco plc, UK

The interviews results described that the Assistant Store Manager has noted there is positive relationship between customer satisfaction and customer loyalty at Tesco plc, UK, while the Store Manager has noted that there is highly positive relationship between customer satisfaction and customer loyalty. Thus, it can be said that the customer satisfaction is positively influenced the customer loyalty within an organization, such as Tesco plc, UK.

 A. v. Measuring customer satisfaction and customer loyalty at Tesco within the UK market

Tesco plc, UK is committed to deliver quality products and services to achieve organizational goals and objectives through increasing customer satisfaction that lead to customer loyalty. To ensure quality products and better services in accordance with customers’ demands and expectations, the company is measuring customer satisfaction and customer loyalty within the UK market. For instance, all of the interviewees, such as Store Manager, Assistant Store Manager and Team Leader have mentioned that the company is using several tools and techniques (e.g. customer satisfaction survey, club card exchange promotion) to measure the level of customer satisfaction. So, it can be concluded that with the application of these models, the company is measuring level of customer satisfaction and customer loyalty and thus to achieve organizational goals and objectives.

A. vi. Does customer relationship management (CRM) plays significant role in relation to customer satisfaction and customer loyalty at Tesco plc, UK

The interviews results showed that all of the interviewees (i.e. Store Manager, Assistant Store Manager and Team Leader) are strongly agreed that CRM plays significant role in relation to customer satisfaction and customer loyalty at Tesco plc, UK. As stated by the Store Manager, it is clear that CRM can ensure better customer services, customer responses, customer complaints handling and other related things within the customer satisfaction and customer loyalty at Tesco plc, UK. Moreover, the Team Leader has described that the CRM helps the organization to explore and identify the needs, demands and expectations of the customer to the organization (e.g. Tesco, UK) and thus establish strategies and plans that increases and improve customer satisfaction and customer loyalty within the organization.

A. vii. What are the future business strategies and plans to increase customer satisfaction and customer loyalty at Tesco plc, UK

Based on the interviews results, the researcher would like to summarize the future strategies and plans of the Tesco, UK to increase customer satisfaction and customer loyalty as follows-

  • To keep focus on the core purpose of the business such as to create value for customers to earn lifetime loyalty;
  • To ensure most highly valued business to the customers, communities, staffs and shareholders etc.;
  • To collect customer feedback and suggestions on regular basis as to explore their demands and expectations and thus develop business plans; and
  • To provide competitive price with quality product and service compare to other competitors in the UK retail markets.

 A. viii. Suggestions and comments in relation to the critical analysis of the customer satisfaction and customer loyalty at Tesco plc, UK

Based on the interview results, the researcher would like to summarize the suggestions on the relationships between customer satisfaction and customer loyalty at Tesco plc as follows-

  • Due to huge market competition in retail markets, the issue of customer satisfaction is becoming very important for Tesco plc and thus the company should focus more on the practices and policies to increase customer satisfaction;
  • Customer loyalty is one the most important aspects to establish brand image among the customers and the community in which a business, like Tesco plc is operates and to create more customer loyalty the company should take more initiatives to satisfy the through quality products and services; and
  • The customer satisfaction and customer loyalty is closely related and inter-connected within an organization, such as Tesco plc, UK and the company should focus on customer satisfaction that lead to customer loyalty to achieve organizational goals and objectives.

B. Research findings from the questionnaire survey and their analysis

The researcher has carried out a questionnaire survey among the customers at the selected store, Tesco Superstore Leytonstone, UK for the purpose of collecting primary data in relation to the relationship between customer satisfaction and customer loyalty at Tesco, UK. All of the questions in survey were based on the aims and objectives of research as well as the issues identified in review of literature.

The researcher would like to represent questionnaire survey results as follows-

B. i. Demographics of the survey respondents

The researcher would like to represent the demographics of the respondents of the survey in a table as follows-

Table: 4.2. Demographics of the survey respondents

Total number of respondents Percentages of respondents
Gender Male 27 54%
Female 23 46%
Age band 20-29 years 7 14%
30-39 years 16 32%
40-49 years 18 36%
50-above years 9 18%

Source: Survey data

The survey results represent that both male and female customers are shopping at selected store of the Tesco plc, UK. The survey results showed that majority (54%) of the customers are male and rest of the customers are female (46%). Thus, it can be said that more male customers are shopping at Tesco plc, UK than female customers. The survey results also denoted that the case studied organization is experiencing different aged customers. For example, from the survey it can be said that nearly half (e.g. 36%) of the customers are fall under the age band of 40-49 years. The second highest (e.g. 32%) of the customers are fall under the age of 30-39 years. Thus, it is clear that mostly young and adult people are visiting and shopping at the case studied organization, i.e. Tesco plc, UK.

B. ii. How often the respondents come for shopping at Tesco at the selected store

The frequency of shopping can be used as one of the effective tools that can be used to measure the behavioural loyalty of a customer. Based on the frequency of shopping by a customer, it can be assume that the customer is satisfied and loyal to the business. For example, if the customers come for shopping in more frequently that may depicts that they are satisfied with products and services as well as loyal customers of that business. The survey results show that nearly half, such as 35% of the respondents are coming more frequently for the purpose of shopping at Tesco, UK at the selected store, i.e. Tesco Superstore Leytonstone, UK. About 21.25% respondents have mentioned that they are coming once a week, followed by 18.75% customers who are coming twice a week for the purpose of shopping at the selected store of the Tesco plc, UK. However, small number of respondents has mentioned that they are coming twice a month, such as 15% customers and once a month, such as 7.5% customers. Thus, it is clear that the majority (35%+21.15%+18.75%= 75%) of the customers are coming within a week time for the purpose of shopping at the selected store of the Tesco, UK.

B. iii. What are the major factors affecting customer satisfaction and customer loyalty at Tesco plc, UK

Customer satisfaction and customer loyalty within an organization can affected by several factors and variables, including the price of products/services, quality of products and/or services, location of the store, retailing formats and use of recent technologies and so on. The survey results in relation to factors affecting customer satisfaction and customer loyalty at Tesco. The survey results showed that 28% of the respondents have mentioned that product quality, followed by price of product, and mentioned by 22% of the respondents are the most important factors that affect customer satisfaction and customer loyalty at Tesco plc, UK. However, service quality and store environment (e.g. 16% of the respondents have mentioned that service quality and 16% of the respondents have mentioned store environment) have vital influence on the satisfying customers and thus making them loyal customers to the business. Thus, the author would like to mention that product quality, service quality, price, store location & environment, along with product availability, overall customer service and special offers plays role to satisfy customers and thus make them loyal to the business.

B. iv. The level of satisfaction with quality of product at Tesco, UK

The survey results in relation to level of satisfaction with quality of products at Tesco. The survey results depicted that half, such as 50% of the respondents have mentioned that they are satisfied with the quality of products at Tesco, UK and nearly one-fourth, such as 23.75% of the respondents have mentioned that they are highly satisfied in this case. On the other hand, only 3.75% respondents have mentioned that they are highly dissatisfied and 8.75% customers are dissatisfied with the quality of products at Tesco, UK. The rest of the respondents (13.75%) did not say either they are satisfied or dissatisfied in relation to the quality of the products at Tesco, UK.

B. v. Level of satisfaction with quality of service at Tesco plc, UK

The survey results in respect to level of satisfaction with quality of service at Tesco. Based on the survey results, it is clear that nearly half (40%) of the customers are satisfied with the quality of service at Tesco, UK. About 31.25% customers are highly satisfied with the quality of service at Tesco, UK. On contrast, only more than one-fifth of the customers, such as 10% highly dissatisfied and 11.25% dissatisfied with the quality of service at Tesco, UK. Thus, the author would like to mention that majority (40%+31.25% = 71.25%) of the customers are highly satisfied and satisfied with the quality of service at Tesco, UK.

B. vi. Level of satisfaction with price of product at Tesco plc, UK

The survey results in relation to level of satisfaction with price of product/service at Tesco. Based on the survey results, it is clear that nearly half (45%) of the customers are dissatisfied and second majority (23.75%) customers are highly dissatisfied with the price of product/service at Tesco plc, UK. On the other hand, only small percentages of customers are highly satisfied (6.25%) and satisfied (15%) with the price of product/service at Tesco, UK. Thus, it can said that majority (45%+23.75% = 68.75%) of the customers are not satisfied with the price of product/service at Tesco plc, UK.

B. vii. Level satisfaction with product availability at Tesco plc, UK

The survey results in relation to level of satisfaction in relation to product availability at Tesco. Based on the survey results, it is clear that half (48%) of the respondents have mentioned that they are satisfied, followed by 16.25% highly satisfied with the product availability at Tesco, UK. On contrast, more than one-fourth of the respondents have mentioned that they are highly dissatisfied, such as 8.75% and dissatisfied, such as 18.75% in relation to the product availability at Tesco, UK. Thus, it can be said that more than half, such as 48% + 16.25% = 64.25% customers are satisfied with the product availability at Tesco, UK and however, there should be more focus by the organization in this case to increase more customer satisfaction and customer loyalty within the business.

B. viii. Level of satisfaction with store environment at Tesco plc, UK

The survey results in relation to level of satisfaction with shopping environment, store location and store environment at Tesco. Based on the survey results, it can be said that more than half (62%) of the respondents have mentioned that they are satisfied with store environment at Tesco, UK. While, 21% respondents have mentioned that they are highly satisfied in this case. On the other hand, only few respondents, such as 8% have mentioned that they are dissatisfied and 3% are highly dissatisfied that is very negligible. So, the author would like to opine that the case studied organization is having satisfied and highly satisfied customers in relation with the shopping environment, store location and store environment at Tesco, UK.

B. ix. Suggestions and comments regarding increasing customer satisfaction and customer loyalty at Tesco plc, UK

The researcher would like to summarize survey results in relation to suggestions from the respondents on relationships between customer satisfaction and customer loyalty at Tesco plc, UK as follow-

  1. The company should ensure quality of products as well as to create better shopping environment for the customers that will increase customer satisfaction and customer loyalty at Tesco plc, UK;
  2. The company should reduce price of product and to provide more frequent special offers and discounted price on product on different occasions, like Christmas;
  3. The organization should carry out marketing research on regular basis to identify and analyse demands and expectations from the customers;
  4. The organization should collect feedback and suggestions from the customers as well as to focus on customer relationship management, customer response, and customer complaint management etc. to improve customer satisfaction that can lead customer loyalty; and
  5. The company must involve in several community activities and thus have to play vital roles towards the society and the environment in which the business is operates.

C. Research findings from document review and analysis of the case studied organization 

The researcher has completed document review and analysis of the case studied organization in relation to explore existing theories and practices on customer satisfaction and customer loyalty at Tesco plc, UK. The aim was to compare and to make validity of the primary data that has been collected through semi-structured interviews and questionnaire surveys. The researcher would like to opine that the secondary data was vital to support the primary data for the purpose of making good research report with valid conclusions and recommendations in accordance with critical analysis of the relationship between customer satisfaction and customer loyalty at Tesco plc, UK.

The discussion and explanation of the secondary research findings can be represent as follows-

Business strategies of the Tesco

The key business strategies of Tesco, that mainly focus on the customer satisfaction that can lead to customer loyalty include-

  • To grow the UK core;
  • To be an outstanding international retailer in stores and online;
  • To be as strong in everything we sell as we are in food;
  • To grow retail services in all our markets;
  • To put our responsibilities to the communities we serve at the heart of what we do;
  • To be a creator of highly valued brands; and
  • To build our team so that we create more value (Tesco Plc, 2011).

A. Number and location of Tesco’s stores: During the interview, Store Manager hs stated that the number and location of stores has great influence on customer satisfaction and customer loyalty within an organization, such as Tesco, UK. The company is committed to open more stores in different locations within the country. A study revealed that 54% of shoppers are able to reach a Tesco Extra within 15 minutes (Tesco Plc, 2011).

B. Tesco loyalty schemes at UK’s market: One of the most effective approach and policy within the Tesco to introduce different loyalty schemes for the customers for the purpose of satisfying them and thus make them loyal customers for the business. Tesco club card is the great example of the loyalty scheme at the organization that is providing some benefits to the users while they make purchase from any stores of the Tesco. For example, club card continues to play an important role in earning customers’ loyalty. We’ve continued to invest in Double Points, we have introduced the Big Club card Voucher Exchange and we have expanded our Partner Reward Scheme (Tesco Plc, 2011).  Club card is about more than just earning money-off vouchers and that they can use points as currency in other areas of their lives. Thus, it can be said that club card is playing crucial role to increase customer satisfaction and customer loyalty at Tesco plc, UK.

Conclusion

The researcher has presented and analysed both primary and secondary data that has been collected and gathered through semi-structured interviews, questionnaire surveys and document review & analysis of the case studied organization. Based on the findings from the primary and secondary data, it is clear that the case studied organization, Tesco plc, UK is providing quality products and services as well as conducting some other related activities for the purpose of satisfying customers an thus to make them loyal to the business. Finally, the researcher would like to say that this chapter has been discussed and explained most relevant and appropriate issues and concepts in accordance with the critical analysis of the relationship between customer satisfaction and customer loyalty at Tesco plc, UK.

Chapter 5: Conclusions and Recommendations

Introduction

Under this chapter, the researcher has discussed and explained some of the following things- key summary of the primary findings, key summary of the secondary findings, recommendations and implications- both to academic and organizational perspective, self-reflection, future research ideas and alternative research designs, overall limitations of the study etc. In conclusion part, the researcher has provided valid conclusions based on the primary and secondary research findings. In recommendation part, the researcher has provided cost-effective and constructive recommendations for the case studied organization as well as future research opportunities in accordance with the critical analysis of the relationship between customer satisfaction and customer loyalty at Tesco plc, UK. Thus, this chapter sets out the conclusions and recommendations, based on the literature review and the primary research carried out by the researcher.

Key summary of the secondary findings

The researcher has derived secondary findings from review of literatures, such as relevant books, articles, journals, scientific publications and documents of the case studied organization.

The key summary of the secondary findings can be represent as follows-

  1. Customer satisfaction and customer loyalty is becoming one of the most vital concern and important key issues in recent competitive business environment (Beatson et al., 2007 and Cheng et al., 2011).
  2. Customer satisfaction is the level of happiness and positive impression regarding particular products and/or services after consuming those products/services from a business (Fornell, 1992 and Kotler, 2000).
  3. Customer satisfaction can be influenced by several variables, including type and quality of products/services, costs, performance, customer service and so on (Allbal, 2011).
  4. There are several dimensions within the measurement of customer satisfaction and customer loyalty that can be regard as non-financial measures and mainly SERVQUAL and SERVPERF models can be used to measure customer satisfaction that focus on the perceived service quality and perceived performance (Hill et al., 2007; Shaw and Reed, 1999; Parasurman et al., 1988; and Cronin and Taylor, 1998).
  5. Customer loyalty can be achieved through trust, commitment, communication, and conflict/complaint management etc. by an organization (Blokdijk, 2008 and Ndubisi, 2007).
  6. Customer satisfaction leads to positive influence on re-purchase and therefore increase customer loyalty within a business (Shaw and Reed, 1999 and Ranjbarian and Barari, 2009).
  7. Tesco plc, UK has introduced a loyalty programme, known as Tesco Club Card for the purpose of increasing customer satisfaction and thus to create more customer loyalty at the business (Benady, 2006; Leverin and Liljander, 2006; and Reichheld and Schefter, 2000).

Key summary of the primary findings

The primary findings have been derived from the primary and secondary data through semi-structured interviews, questionnaire surveys and document review & analysis of the case studied organization, Tesco plc, UK. All of the research questions during the interview and survey were based on the issues and concepts of the research aims and objectives as well as that arrived during the critical review of the literature.

The key summary of the primary findings can be represent as follows-

  1. During the interviews, the management personals of the case studied organization have mentioned several factors that may affect customer satisfaction and that have crucial influence on customer loyalty. Based on the interviews results, some of the major factors include- price of product/service, product quality, service quality, store location, store environment, product availability, and special offers/discounted price, and overall customer services etc. have vital impact on the customer satisfaction and customer loyalty at Tesco plc, UK.
  2. Tesco plc, UK has been providing some unique and separate activities, such as Tesco loyalty programme, online shopping etc. compare to other retailers in the UK for the purpose of satisfying the customers and thus make them loyal to the business. The interviews results show that the most unique activities are- number of stores (e.g. more retail outlets than any other retailers), location of stores (e.g. from local area to urban area), use of recent technologies (e.g. online ordering and home delivery), loyalty schemes (e.g. Tesco club card) and so on.
  3. The interviews results showed that there is strong positive relationship between customer satisfaction and customer loyalty. Based on the interviews results, it can be noted that if a customer become satisfy with products/services and/or any other aspects at Tesco, he or she may come for re-purchase that depicts loyalty to the business.
  4. The measurement of customer satisfaction is becoming vital concern for the business in current competitive environment where all the organization believes that customers are the prime factor to achieve organizational goals and objectives and hence customer satisfaction measurement comes as vital issues for the business. During the interviews, the management personals of the case studied organization, i.e. Tesco plc, UK have mentioned that in some cases, the company has been using SERVQUAL and SERVPERF models to measure the level of customer satisfaction with the company.
  5. For the purpose of satisfying customers and thus make them loyal to the business, customer relationship management (CRM) is one of the most common and effective approach within an organization. This approach identifies and analyse some of the important things such as perceived quality, customer perceptions, perceived values etc. that has impact on the overall customer satisfaction that lead to customer loyalty. For example, during the interview, the Store Manager has mentioned that the company is trying to develop most effective and appropriate CRM system in relation to increase customer satisfaction and customer loyalty.
  6. The majority, such as 54% of the customers are male with age range of 20-39 years who are coming for shopping more frequently and within a week time. Thus, the survey results described that in most cases majority of the customers are satisfied with the products and/or services of the case studied organization.
  7. The survey results depicted that majority of the customers are satisfied and highly satisfied with shopping environment, store location, store environment etc. On the other hand, majority, e.g. 30% are dissatisfied and 26% are highly dissatisfied with the price of product/service and value for money at Tesco plc, UK. So, based on the survey results, it can be said that the price of product/service at Tesco is an important concern to increase customer satisfaction and customer loyalty at Tesco plc, UK.
  8. The majority, such as 56% of the customers are satisfied and 26% of the customers are highly satisfied with the overall activities of the Tesco plc, UK compare to other retail supermarket chains in the country. On contrast, minor percentages, such as 10% of the customers are dissatisfied and 4% are highly dissatisfied with the overall activities of the case studied organization compare to other retailers in the country in relation to satisfy customers and make them loyalty to the business.
  9. Based on the survey results, the researcher would like to mention that for the purpose of increasing customer satisfaction and customer loyalty, the organization, like Tesco plc should focus on some important things, such as more quality products, competitive price, better customer service, good relationship with customer, collecting feedback from customers and playing vital role to the community and the environment.

Thus, based on the primary findings, the researcher would like to opine that there is a close and positive relationship between customer satisfaction and customer loyalty at Tesco plc, UK.

Recommendations

The researcher has identified some of the gaps and lacking within the literature and case studied organization in relation to the critical analysis of the relationship between customer satisfaction and customer loyalty at Tesco, UK. Based on the identified gaps and lacking, the researcher has provided cost-effective and appropriate recommendations both for the academic and organizational perspective. The recommendations and implications of this research project in terms of academic and organizational perspective can be represent as follows-

A. Recommendations on academic perspectives: The researcher has identified and explored several important issues and concerns in relation to the relationship between customer satisfaction and customer loyalty within an organization, like Tesco plc, UK. Some of the major roles of the identified issues and concerns to academic perspective can be represent as follows-

  • To improve knowledge and understanding about the theories and practices in relation to customer satisfaction and customer loyalty within an organization, mostly within the retail industry, case of Tesco plc, UK;
  • To establish model(s) that can be applied for the purpose of measuring customer satisfaction and customer loyalty based on the type and nature of the business, for example, for the retail business in the UK’s market;
  • To enhance existing knowledge about the factors that affecting customer satisfaction and customer loyalty within an organization, focusing on the retail business, case of Tesco plc, UK; and
  • To create some research ideas and opportunities in the similar field of research subject with having appropriate and proper guidance and instruction to collect and gather primary data through using appropriate research methods.

B. Recommendations to Tesco plc, UK

Based on the interview and survey results, it is clear that the case studied organization is providing quality products and services, although having some drawbacks in relation to satisfy customers and thus make them loyal to the business. The researcher would like to mention following points as recommendations for the organization for the purpose of increasing customer satisfaction that will lead to customer loyalty-

  1. The organization should continue current business strategies, such as Tesco loyalty programme and in some cases the organization may need to change or modify some business strategies, such as competitive price, discount on different occasions etc. based on requirements of ensuring quality products, better services to customers, and ensuring the commitment to the customers, staffs, community, environment and the other stakeholders;
  2. The organization should carry out marketing research on regular basis in relation to identify the demands and expectations of the customers as well as to analyse the current market trends, availability of substitutes, nature of market competition etc.;
  3. The organization should continue customer satisfaction survey and other approaches to know the level of satisfaction about the products and services of the business among the customers and thus to make strategies to focus on the demands and expectations of the customers; and
  4. The organization has been collecting feedback and suggestions from the customers on regular basis. Thus, it can be said that the organization should continue online feedback system for each of the store and thus act on customers’ feedback and suggestions to increase customer satisfaction and customer loyalty.

Future research ideas and opportunities

During the review of literature and collection of primary data, the researcher has identified some issues and concepts that can be use as future research ideas. For example, during the review of literature, the researcher has identified that customer relationship management (CRM) has great influence on the customer satisfaction that lead to customer loyalty within an organization. So, the critical evaluation of CRM to increase customer satisfaction in an organization, like Tesco plc, UK can be regard as future research project.

While collecting primary data from the case studied organization through interview and survey, the researcher has found that there are several factors that can affect customer satisfaction and customer loyalty within an organization. So, it can be said that the investigation and evaluation of factors affecting customer satisfaction and customer loyalty within an organization, can be considered as future research subject within the case studied organization and/or other similar or different organization(s).

Overall limitations of the study

This research project is based on the very subjective approach, for example, customer satisfaction is virtual things and can differ persons to persons within the similar aspect as well as there was some limitations to complete the research project. The overall limitations of the study can be discuss and explain as follows-

  1. Lack of available time: The most common limitations of the study were the lack of available time that may have some negative impact on completion of research project. For example, due to shortage of time, the researcher has to review limited number of books, articles, journals and other publications in relation to explore key theories and practices in the field of relationship between customer satisfaction  and customer loyalty within an organization, case of Tesco plc, UK. This limited time also affected the collection of primary data through interview and survey.
  2. Lack of financial resources: The researcher has conducted this research project with self-financing that can be another vital limitation of the study. For instance, due to lack of money, the researcher has carried out limited number of interview among the management personnel of the case studied organization and survey among the general customers at the selected store of the organization, Tesco Leytonstone Superstore.
  3. Small sample size and limited amount of data and information: The small sample size and limited amount data may have some negative impact for the purpose of making standard research report with valid conclusions and recommendations in relation to research aims, objectives and research questions.
  4. The concern for ethical issues: As this research project was based on case studied organization and customer-oriented, so there was concern for the several ethical issues, such as confidentiality, privacy, objectivity, honesty, acknowledgement etc. All of these ethical issues may affect the presentation and explanation of the relevant data and information in respect to critical analysis of the relationship between customer satisfaction and customer loyalty at Tesco plc, UK.
  5. Lack of previous experiences and skills: The researcher has lack of previous experiences and skills to complete a research project, particularly to conduct interview and carry out survey. So, it can be said that this limitations can affect the collection of primary data in accordance with research aims, objectives and research questions.

Finally, the author would like to opine that despite of having some limitations, the researcher was able to prepare this research report with valid conclusions and recommendations in respect to the critical analysis of the relationship between customer satisfaction and customer loyalty at Tesco plc, UK.

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