Abstract
This case study focuses on Tesco Plc, a large UK retailer. The case
covers the period 1992 to 1997. In February 1995 Tesco launched the
‘Clubcard’ – the first major national supermarket loyalty card in the
UK. The case study charts the success of the Clubcard and a range
of other customer-focused initiatives and enhancements. Central to
this success is the use of database marketing, which was used to
underpin other elements of its marketing strategy. The subsequent
introduction of a debit card – ‘Clubcard Plus’ – is also discussed.
This case examines one of the most successful examples of a loyalty
card in the UK, one which has resulted in Tesco displacing J.
Sainsbury Plc from their former pre-eminent position as the number
one food retailer. Competitors’ reactions to Tesco’s initiatives are
also addressed.
Learning points
The purpose of the Tesco case is to demonstrate the implementation
of a highly successful customer retention programme in the UK
food retailing sector. It highlights the success that can be achieved
by having a clear market focus and using all the organization’s
resources to achieve their strategy. In particular, it highlights how an
organization such as a food retailer needs to develop an integrated
marketing approach to achieve customer retention. Tesco developed
an impressive marketing campaign which ensured the right goods
were stocked, at the right price points, with the right store environ-
ment, in the right location and with high levels of customer service.
Tesco first focused on delivery of a superior value proposition to the
customer segments it sought to serve and then used the loyalty card
as a method of customer bonding. This strategy is in sharp contrast
to the strategy of some other retailers, who have sought to ‘buy’
loyalty by simply issuing a loyalty card.
Broad marketing and strategic issues:
● repositioning a major food retailer
● developing and implementing a new business strategy in retailing
● creation of a superior value proposition
● creating a new product development strategy through the launch of
financial services
● first mover advantage.
The customer market domain: Managing relationships with buyers 57