Free Marketing Dissertations - "retail Loyalty Schemes: Myth Or Marvel?" Marketing Strategy Is Now Moving
"Retail Loyalty Schemes: Myth or Marvel?"
Marketing Strategy is now moving from the 4Ps- Product, Place, Price, Promotion of traditional marketing management to the 30 Rs- the Thirty Relationships of a new marketing paradigm (Evert Gummesson, Total Relationship Marketing). This concept that looks at Marketing in terms of different relationships between the organisation and its publics is gaining more attention and importance from organisations these days. This is because in today’s highly competitive market-place, getting new customers is becoming increasingly difficult and costly. Organisations are therefore now putting greater emphasis on maintaining their existing customers and prefer following a Zero Defection Strategy. In this essay we will look at the relationship marketing techniques and loyalty schemes being used by Tesco to develop and maintain existing relationships with the different customer segments. Throughout the essay, the objective will be to critically evaluate the strategies used by Tesco and to provide reasonable conclusions on how effective these strategies have been.
In the last decade, Tesco brought about a lot of changes in its marketing strategies and has grown to become UK’s number one retailer. Today in the UK, the retailer has been the dominant force for more than 10 years (Seth, A. & Randall, G., The Grocers: The Rise and Rise of the Supermarket Chains). It is also considered to be one of Europe’s fastest growing financial company and probably the most successful internet supermarket in the world. Interestingly, Tesco’s almost entire relationship marketing strategy is based on its Clubcard scheme. It has been able to use the Clubcard very effectively in addressing different customer segments and in attracting and retaining customers of all types. With its Clubcard scheme it not only has been able to overtake Sainsbury’s as the number one retailer but also has strengthened its market share year on year in UK.
Tesco’s Clubcard and How it Works?
Clubcard is Tesco’s membership scheme which allows customers to save money on shopping by providing them price-off vouchers. Customers get a point on every pound they spend shopping at any stores of Tesco group of companies as well as at stores of their partner companies. Once a customer accumulates 150 points, these are then converted into Clubcard vouchers which enable the customer to save money on shopping. One can argue that other retailers also have similar loyalty programs. However it is interesting to note that while most loyalty schemes and relationship marketing strategies similar to Clubcard have often failed for other retailers, Tesco’s Clubcard has worked well and managed to succeed. ASDA ran a similar pilot scheme in its stores but it did not work. Safeway tried the loyalty program by way of its ABC card but gave it up in about four years. Even the more popular Nectar card from Sainsbury’s has not been able to match the success of Clubcard.
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