Traditionally, marketing has focused on market shares and customer acquisition rather than on retaining existing customers and on building long-lasting relationships with them (Kotler, 2003). More recently, however, market share has been gradually losing its revered status as marketing's holy grail and the wisdom of focusing solely on customer acquisition (hoping that this effort will compensate for high levels of defection) is now being seriously questioned and considered as very high risk since ever more players enter an increasingly crowded marketplace (Baker,2000). In response to these changes there has been a new emphasis on defensive marketing, which focuses on holding on to existing customers and getting more custom from them (higher “share of customer”), in contrast to activities which focus on winning new customers. Calls for a paradigm shift to the pursuit of loyalty as a strategic business goal have become increasingly popular over the recent years. Accordingly, in Feb 1995, Tesco changed the way it did business so fundamentally that its effect is still seen in every part of the company. The events changed the way Tesco makes decisions, develop products, and manages its stores and, most importantly the way it serves its customers. On that day Tesco launched ‘Clubcard', its customer loyalty program. As a major food retailer, in a competitive market sector, there is always a need for brand loyalty. Customer loyalty schemes were not a new idea when Tesco launched it but Tesco developed a contemporary version of the original concept which went much further in developing an active relationship with customers. Today, Tesco Clubcard has established itself as one of the most successful loyalty schemes over the past nine years, and a key driver of this is the scheme integral to Tesco's stated core purpose, ‘To create value for customers'.
[...] (2000) ‘Patronage and Loyalty Strategies: Understanding the Behavioral and Attitudinal Outcomes of Customer Retention Programs' in Hennig-Thurau T. and Hansen U. (eds) Relationship Marketing Gaining Competitive Advantage Through Customer Satisfaction and Customer Retention Berlin: Springer-Verlag Oppenheim, A (1992) Questionnaire Design, Interviewing and Attitude Measurement, London, Cassell Oxford Dictionary of Current English (1996) Oxford: Oxford University Press Payne A. and Frow P. (2000) ‘Services Relationship Marketing: A Sector Case Study' in Hennig-Thurau T. and Hansen U. (eds) Relationship Marketing Gaining Competitive Advantage Through Customer Satisfaction and Customer Retention Berlin: Springer-Verlag Pearson, Stewart (1996), Building Brands Directly. [...]
[...] Objective 1 Analyze and define the concept of loyalty and identify the relationship between customer satisfaction and customer loyalty Customer Loyalty has been one of the most misunderstood concepts of recent years (Payne, 2002). Unfortunately there is no universally agreed definition of loyalty (Jacoby and Chestnut 1978; Dick and Basu 1994; Oliver 1999). Oliver (1999) suggested that loyalty and satisfaction are linked inextricably, but also that this relation is asymmetric, arguing that although loyal customers are usually satisfied, satisfaction is an unreliable precursor to loyalty. [...]
[...] Some of them did say that loyalty does have a part to play as far as supermarkets are concerned but the reasons for loyalty were ‘value for money', ‘Product Variety', ‘Quality of products', ‘Good customer service' , ‘Tesco Value products' and ‘Good shopping environment' (like less wait at the till Regards Clubcard , most of them said that they signed up for it because they had nothing to lose. Respondents were happy over the Clubcard in the key ring format which meant they didn't have to remember taking the Clubcard whenever they shopped at Tesco. [...]
[...] Reasons for the rapid increase in popularity of customer loyalty A critical evaluation Gronroos (19994b, p9) described the objectives of relationship marketing as being to identify and establish, maintain and enhance and, when necessary terminate relationships with customers and other stakeholders, at a profit so that the objective of all parties involved are met, and this is done by a mutual exchange and fulfilment of promises. Customer loyalty is a strategic approach to improving shareholder value through the development of appropriate relationships with key customers and customer segments.(Payne & Ballantyne,2002). [...]
[...] The bottom line must always be to start with the basics of what is most important to the customer and build from there." (Jeremy Braune, Head of Customer Experience at Detica) As pointed out by Morgan and Hunt(1994) and Dowling (2002) in literature review ; for loyalty programs to be successful and enhance profitability companies should:- Have a good base product that performs well in the market and is in some way differentiated. Focus on intrinsic rather than extrinsic awards The reward should be genuinely valued and perceived as taking some effort on part of the company to deliver. [...]
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