An investigation into the relationship between loyalty schemes and consumer buying behaviour at Tesco and Sainsbury’s

Ashton Weir

BA (Hons) Business Studies

University of the West of Scotland

2014/2015

“I certify that all material in this dissertation which is not my own is duly acknowledged. I have read and understand the section in the programme handbook dealing with plagiarism”.

HONOURS DISSERTATIONS

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SESSION 2014/2015

Business School

Library Registration

Surname Weir

Forenames Ashton

Banner ID B00252941

Degree Title

(e.g. BA Management)

BA Honours Business Studies

Dissertation Supervisor Alan Murray

Dissertation Title An investigation into the relationship between loyalty schemes and consumer buying behaviour at Tesco and Sainsbury’s

This form must be bound in your dissertation (immediately after your title page) before submission. Your dissertation cannot be accepted unless this form OR the confidential dissertation form is bound into your dissertation.

Abstract

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This study was written to analyse whether there is any relationship between

consumer buying behaviour and the use of loyalty schemes specifically looking at

Tesco and Sainsbury’s. The study will investigate if there is any specific value

brought to customers by them using loyalty schemes. The main problem to be

solved for this study was did customers actually shop at specific supermarkets

due to loyalty schemes or was there other factors including low prices,

convenience and quality and how much of a part do these factors play. The

investigation used primary data collected from 100 consumers and secondary

data used from academic scholars and company data including their accounts.

The results of this investigation found that consumer buying behaviour can be

influenced to a point with the use of loyalty scheme but since the recession hit

more and more people are switching to cheaper alternatives specifically Aldi and

Lidl as this gives them great quality but at a fraction of the price.

Acknowledgments

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I would like to take this opportunity to thank the following people for their help,

patience and guidance as the formation of this dissertation would not have been

possible without them. I would like to say a huge thank you to my supervisor Alan

for his support and guidance as he constantly kept me on the right track, my 2

years at University has taught me a lot and it is all thanks to the following

lecturers as without them I wouldn’t have made it to the final stage, this includes

Peter McGuire, Isaac, Thandiwe, Benny, Lorraine and Stuart.

I would also like to thank my friends and family for believing in me and handing

out my questionnaires in their workplace which allowed me to meet me aim and

objective but especially my mum who has provided me assistance and guidance

not just at university but my whole life and without her having the confidence in

me I would have never even went to University never mind made it to the end of

my honours year.

Copyright

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“The copyright of this dissertation rests with the author. No quotation from it should be published without his/her prior written consent and information derived from it should be acknowledged”.

Contents

Chapter 1 Introduction....................................................................................................................1

1.1 Purpose of the Research.......................................................................................................1

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1.2 Aim........................................................................................................................................1

1.3 Objectives..............................................................................................................................2

Chapter 2 Literature Review...........................................................................................................3

2.1 Introduction..........................................................................................................................3

2.2 Loyalty Ladder.......................................................................................................................3

2.3 Loyalty Schemes....................................................................................................................4

2.4 Tesco Clubcard......................................................................................................................7

2.5 Sainsbury’s Nectar Card........................................................................................................8

2.6 Consumer Buying Behaviour.................................................................................................9

2.7 Customer Loyalty.................................................................................................................10

2.8 Branding Strategies.............................................................................................................14

2.9 Loyalty Programmes............................................................................................................15

2.10 Customer Value.................................................................................................................16

2.11 Consumer Relationships Marketing...................................................................................18

2.12 Conclusion.........................................................................................................................20

Chapter 3 Research Design and Methods.....................................................................................21

3.1 Introduction........................................................................................................................21

3.2 Research Onion...................................................................................................................21

3.3 Research Philosophy...........................................................................................................22

Ontology................................................................................................................................23

Axiology.................................................................................................................................23

Epistemology.........................................................................................................................24

Interpretivism........................................................................................................................25

Realism..................................................................................................................................25

Positivism..............................................................................................................................25

Pragmatism...........................................................................................................................26

3.4 Research Approaches..........................................................................................................26

Inductive................................................................................................................................26

Deductive..............................................................................................................................27

3.5 Research Design..................................................................................................................27

3.6 Research Strategies.............................................................................................................28

3.7 Research Choices.................................................................................................................29

3.8 Sample and Sample Size......................................................................................................30

3.9 Time Horizons......................................................................................................................31

3.10 Ethics.................................................................................................................................31

3.11 Research Limitations.........................................................................................................32

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3.12 Questionnaire....................................................................................................................33

3.13 Conclusion.........................................................................................................................34

Chapter 4 Findings & Analysis.......................................................................................................35

4.1 Introduction........................................................................................................................35

4.2 Findings...............................................................................................................................35

4.3 Questionnaire......................................................................................................................36

Question 1.................................................................................................................................36

Question 2.................................................................................................................................37

Question 3.................................................................................................................................38

Question 4.................................................................................................................................38

Question 5.................................................................................................................................39

Question 6.................................................................................................................................40

Question 7.................................................................................................................................41

Question 8.................................................................................................................................41

Question 9.................................................................................................................................42

Question 10...............................................................................................................................42

4.4 Analysis...............................................................................................................................44

Loyalty Schemes........................................................................................................................44

Impact.......................................................................................................................................46

Influence on Consumer Buying Behaviour................................................................................47

Value.........................................................................................................................................49

Conclusion.....................................................................................................................................51

Future Research............................................................................................................................51

Recommendations........................................................................................................................52

References....................................................................................................................................53

Appendices....................................................................................................................................56

Appendix 1................................................................................................................................56

Questionnaire........................................................................................................................56

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Chapter 1 Introduction

1.1 Purpose of the Research

The purpose of this research was to analyse and draw a conclusion on whether or not loyalty schemes was actually worthwhile anymore for businesses and customers as the market has changed so much over the last 5 years and consumer buying behaviour has switched from having loyalty to a specific store to going to where ever they can get the cheapest products as individual and family budgets have tightened due to a double dip recession and times aren’t getting any easier in fact they are projected to get worse before getting better.

1.2 Aim

The aim of this study is to investigate whether loyalty schemes such as the club

card and nectar card influence consumer buying behaviour at Tesco and

Sainsbury’s.

This is a viable topic as consumers who use loyalty schemes are offered money

off and rewards which could see them get many items or even there whole

shopping free depending on how many points they have therefore this will be

interesting research to see if consumers actually care about what is on offer or as

there is a rise in the number of people using shops like Aldi and Lidl if customers

are purely interested in who is offering a good quality a low price, this study will

determine if loyalty schemes are successful by using questionnaires to gather

information on how consumers really feel and if buying behaviour is influenced.

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1.3 Objectives

The objectives of the investigation are put in place to help achieve the aim and

through each of the chapters of this investigation all objectives will be answered

and the aim will be met.

1. To identify the different types of loyalty schemes used in the supermarket

sector

2. To investigate the impact loyalty schemes have had in the supermarket sector

3. To analyse how loyalty schemes influence consumer buying behaviour in the

supermarket sector

4. To determine the value of loyalty schemes to the customer

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Chapter 2 Literature Review

2.1 Introduction

This section will look to critically review existing literature regarding loyalty

schemes and how they work in the retail sector with a main focus on

supermarkets. It will aim to see if consumer buying behaviour changes or if brand

loyalty plays a role in where customers shop.

2.2 Loyalty Ladder

The loyalty ladder also known as the relationship marketing ladder is a marketing

tool used by companies, the main idea behind this is to start a person off as

being a potential customer and keep moving them up the steps of the ladder

using a range of different marketing techniques until they become advocates for

the company and are promoting them to friends and family.

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2.3 Loyalty Schemes

The best way to start off is to look at what a loyalty scheme actually is, how it

works and what the advantages and disadvantages of them are. There is not one

specific definition of a loyalty scheme and most author’s opinions differ, we will

look at the differences in what authors say and what they regard loyalty schemes

as being.

There are 5 types of loyalty schemes which have been identified, these are:

• Monopoly Loyalty – This is when there is no other choice available to the

customer and they are forced to give their loyalty to one place.

• Inertia Loyalty – This is when the customer is not looking to try and find a

substitute.

• Convenience Loyalty – This is when loyalty is due purely to geographical

location as people will shop where ever is closer to them.

• Price Loyalty – This speaks for itself and shows customers are motivated

to shop where they will get the lowest price.

• Incentivised Loyalty - This is when the customers is loyal due to the

rewards they receive as a result of a loyalty scheme or programme and emotional

loyalty which is where customers have loyalty to a brand.

Sopanen (1996)

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Mullen (2010) gives a detailed opinion that a loyalty scheme is no more than ‘A

good old fashioned points mean prize scheme’ meaning that customers feel as

though they are gaining something at the end of their purchase, he also states

that Tesco have enjoyed an increased market share since their Clubcard

launched in 1995, he also give his view on how loyalty schemes will die out and

will instead be replaced with people bonding with a brand (form of brand loyalty).

Many other academic authors have agreed with this including, Cummins (2002),

Wilmshurst et al (2002) and Professor Adrian Furnham (2007)

West et al (2010) agrees with other scholars on what a loyalty scheme is and why

it is used but states that there is many drawbacks including the high cost of

advertising. He also points out that people will go where they are being offered

the lowest price and it would be therefore likely that having a loyalty scheme

doesn’t really play a part in where people choose to shop. Dowling and Unlces

(1997) had also found the same results when they had carried out their research

10 years earlier when loyalty schemes where just up and coming.

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Butscher (2002) describes the creation of a loyalty scheme as being similar to

creating a brand new product and there has to be a mix in the way it is done, this

mix includes planning, preparing and developing. He states that in a business

world there is a battle for every customer and that if you do not communicate,

worship and make them feel special it could lead to the demise of the business

and the loyalty scheme will only work if the customer perceives it as being good

value. What Butscher is saying is also very similar to what West et al (2010) and

Dowling and Uncles (1997) which is the company still basically has to be very

competitive with prices and offer good deals to retain the customer.

Uncles et al (2003) expanded on what they said in 1997 and furthered their

research to look at how effective loyalty schemes really are at generating new

customers, increasing and maintaining sales and how well they work once up and

running. They found that loyalty schemes are no more than promotional

programmes that are in place to divide customer loyalty and they are in place to

be used for the brands people already buy. When looking at the loyalty ladder

Uncles et al (2003) would be referring to the top under advocate as the customer

has brand loyalty and this is where any business would hope to have their

customers at which could be the explanation for these schemes being in place.

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2.4 Tesco Clubcard

In 1993 Tesco had decided to create a new loyalty scheme as they had already

tried and failed with Green Shield Stamps, after 2 years in the making in 1995 the

Clubcard was launched and after it enjoyed much success there was a re-launch

in 2005 which saw all customers being sent new cards as well as mini fobs which

enabled them to just be scanned at a checkout rather than swiped. The main

reason for the launch of the Clubcard was to bring customers discounts and allow

them to enjoy the benefits of being a Tesco customer with receiving special offers

that included one point for every pound spent, this meant the more a person

spent the bigger the rewards would be as the Clubcard could be used to pay for

items or get money off depending on the amount of points a person has.

Turner and Wilson (2006) did an investigation to see if the Clubcard did effect

customer loyalty, due to this research they found there was evidence to suggest

that customer with a Clubcard were more loyal to the store. They also took

Sopanen (1996) framework which was built on Dick and Basu (1994) framework

to reveal which type of loyalty customers had to Tesco.

They state that from the research carried out that the Tesco Clubcard and most

other loyalty schemes would be an incentivised type of loyalty and this is shown

due to the way customers shop, although they do add that the strength of that

loyalty can be called into question.

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2.5 Sainsbury’s Nectar Card

After Tesco launched the Clubcard in 1995, Sainsbury’s refused to implement a

loyalty scheme until they seen the huge success Tesco was having as they took

over the market share of UK supermarkets. In 2002 Sainsbury’s finally decided

that in order to try and win customers back from Tesco they would partner up with

Aimia who is the owner of the Nectar card and a global leader in loyalty

management. Nectar has the largest loyalty programme in the UK with over 19

million users who are able to use their card not just in Sainsbury’s but many other

stores, since the Nectar card was launched collectors have spent £1.5 billion in

rewards which include money off purchases, booking holidays and buying

insurance. (Nectar 2014)

Beamish and Ashford (2006) states that Sainsbury’s has the most successful

loyalty package ever to be on offer to customers as it lets you collect points in

more than one place as there is over 500 places that the Nectar card can be

used.

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2.6 Consumer Buying Behaviour

Engel, et al. (1986) define consumer behaviour as “those acts of individuals

directly involved in obtaining, using, and disposing of economic goods and

services, including the decision processes that precede and determine these

acts”. Solomon et al (2006) expands on what Engel is saying and states that “It is

a study of the processes involved when individuals or group select, purchase,

use or dispose of products, services, ideas or experiences to satisfy need and

desires”

Brosekhan et al (2013) says that there are 2 factors which will influence the way

people decide, these are:

Risk Aversion – This is a measure of how certain customers need to be

when making a purchase as there are 2 types of customers. The first type

is a highly risk adverse who always have to be certain of what they are

purchasing and the second is less risk adverse will buy even if they don’t

need the product and don’t mind the risk or uncertainty in the purchase.

Innovativeness – This is a global measure which looks at how far

customers are willing to go to take the chance and change the way they do

things e.g. switching brands.

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2.7 Customer Loyalty

Customer loyalty is viewed as how strong the relationship is between a person’s

attitude and their willingness to continue supporting a brand Dick and Basu

(1994), as time goes on and more is learned about customer loyalty Uncles et al

was able to give a more in depth analysis.

Uncles et al (2003) states that from around 1993 many firms have taken on a

customer focus programme to build customer relationship management and due

to the advance in technology marketing managers have the tools needed to

create customer relationship management tactics and the most popular one

being a customer loyalty programme, it also found that in the UK it was especially

supermarkets who adopted this scheme. Uncles also looks at the aims of theses

loyalty programmes and found 2 main ones that stood out, the first aim was

companies wanted to increase sales revenue and could do this by increasing the

range of products, purchase and usage levels. The second is to build a strong

bond between the brand and customer in the hope of maintaining the customer

base. They state that profits can rise significantly if either one of these aims are

me. Dowling (2002) agrees as does Oliver (1999).

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Theories of marketing are more customers focused on these days and the

managers primarily focus on long term perspective relationship with the

customers since the loyalty, relationships and the long customer life span are

related to cross-buying, due to which consumer goes for high transaction and

hence they more profit. Bolton et al (2004), Gupta et al (2004).

Scholars classify the consumer relation management in relation with the

customer lifecycle because a customer likes towards a firm generally not

continuous. Consumers may be dissatisfied at any time with the product and

service, by knowing the customer valued things and with the long term

perspectives of buying behaviour the CRM strategies should be designed Oliver

(1999). In order to motivate the customer in buying their products on a repeated

basis the development of CRM strategies were done. One such strategy

designed to develop customer relationships is loyalty card programmes. Lars

Meyer-Waarden (2008). Such loyalty programs rarely benefit when the customer

buy for first time but the companies show more consumer loyalty in inducing the

customer to buy more products in a repeated basis. Sharp and Sharp (1997.)

Therefore the Issue is “how these loyalty programs do changes the purchase

behaviour of local and foreign residents? How the demographic factors of both

the residents impact on loyalty schemes? How to evaluate and compare the

relationship and the effect of changes between the consumer purchase behaviour

and Loyalty cards between the nationalities.

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Customer satisfaction can be considered the central determinant in all phases of

the contact chain. Multi-dimensional recording of customer loyalty reveals clear

differences in the interactions first with brand loyalty and, second, with dealer

loyalty. In contrast to the opinion widely held in practice, customers in the

automotive sector definitely do not perceive the brand and the dealer as one unit.

The results obtained are so fundamental that they can be translated into

implications even by internationally operating companies Huber and Herrmann

(2001)

The relationship between the purchase intention and customer satisfaction has

been widely investigated. The evidence suggests that there is a strong positive

relationship between the two. Several of these studies indicate that higher levels

of satisfaction lead to greater customer loyalty Yi (1991), Anderson and Sullivan

(1993) Boulding, Staelin,Kalra, and Zeithaml (1993) all cited in Dervaraj et al

(2001)

Consumers who purchase higher quality vehicles expect to receive higher quality

service, therefore the assumption is made that poor service will lead to greater

dissatisfaction among those that purchase the higher quality vehicles. Conlon et

al (1997) observed that “customers who purchase higher quality rated vehicles

are more likely to use dealer facilities to maintain their vehicles” Conlon et

al(1997) cited in Dervaraj et al (2001)

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Oliver (1999) suggests that “ultimate customer loyalty is a function of perceived

product superiority, personal fortitude, social bonding, and their synergistic

effects. His arguments generally support the assertion that measures of loyalty

that are constrained only to repurchase considerations fail to capture the richness

of the loyalty construct. (Oliver (1999)cited in Taylor, S. et al 2004:219).

If loyalty is essentially an irrational and emotional attachment to product, service

or business, then marketers need to focus on elements that create this emotional

attachment. In developing a strategy that draws on the irrational attitudes of

consumers, brand equity plays an important role. All the elements that contribute

to the development of brand equity are difficult to measure, often based on

consumer emotions rather than on rational behaviour, and the objective of brand

marketing is, in part, to create a generally favourable impression of the product or

service without the use of objective or tangible factors. It is this intangible element

that gives brands their value since, without such intangibles, brands become

worthless. Kotler et al (2005).

The dilemma with subjective measures is that they take marketers back into the

territory which they thought they had left behind. Back to the world where we

know half our marketing works but not which half. Five decades of scientific

marketing has resulted in a situation when crucial concept such as customer

loyalty gets defined in terms of elusive consumer emotions and on a (not

unreasonable) assumption that consumers will continue to act irrationally from

time to time. Taylor et al (2004).

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2.8 Branding Strategies

Thomas (2012) writes that branding isn’t just the motto or the look and feel of a

company’s marketing communications. Thomas states that branding is the whole

of what your customer will experience and feel about the products and service

offered to them and in actual fact it is really what people are saying about you to

others and the message they are carrying regarding your company, the beginning

of all customer contact behaviour begins with a branding strategy.

Thomas (2012) also states the benefits of branding and adds that the bigger the

budget the better the strategy will be as it will allow to market a product or service

better through the use of advertising and using multi-media, direct mail and

expanding customer relations. Some of the benefits include branding gives your

company value and makes you different from the competition, if the company is

receiving bad press branding will help due to customer loyalty and branding

allows you to keep on top of the competition as you research them and become

more successful.

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2.9 Loyalty Programmes

Hallberg (2004) states that the epitome of loyalty programme are the airline

frequent flyer programmes, first introduced in the early 1980s, which offer free

trips and upgrades on the airline. Since then, many other marketers, ranging from

the travel industry to financial services to the grocery business, have followed

suit. Judging by their popularity, the general consensus of the marketing

community seems to be that these kinds of programmes are an effective tool for

building customer loyalty and sales.

The central determining factor of customer loyalty is customer satisfaction Oliver

(1997). Active complaint management anchored in the strategic target system

must also be recommended. Barriers to dissuade a customer from making a

complaint must be lowered, solutions found quickly and appropriately within the

process and the information gained used for a permanent improvement. This will

certainly entail a change towards an in-house dealer culture where a complaint is

highly valued as a loyalty indicator.

The study again confers the central importance of product satisfaction for brand

loyalty. The path adopted by the manufacturers towards greater technical and

functional quality should therefore be pursued meticulously. Target group

strategies to promote loyalty should specially promote an intensive

communications process with highly involved customers and the potential to

15

secure the bonds of loyalty with older customers by taking into account their

needs of development and marketing. Huber and Herrmann (2001)

These programmes should not just be an exercise in sales pushing. Taylor et al

(1997) discussed this as “programmes developed on the back of discounting,

sales promotions and tactical communications do not create loyal customers”.

This does not mean that such programmes are without value since they do

contribute to sustaining market share and to keeping the business from the

majority of customer who typically act promiscuously in their consumption of our

product.

2.10 Customer Value

Customer value management (CVM) has become a major focus in current

marketing, as value marketing has become a slogan among marketing

practitioners. Sinha and DeSarbo (1998) defined this as “in the marketplace,

value often is defined as quality at the right price" and is seen as more important

to consumers than quality, because value is quality that the consumers can

afford.

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Zeithaml (1988) reports considerable heterogeneity among consumers in the

integration of the underlying dimensions of perceived value. They define the

perceived value as a trade-off of "higher order abstractions," such as perceived

benefits and sacrifice, which are formed from both intrinsic and extrinsic product

attributes, including texture, quality, price, performance, service, and brand name

There is a strong link between relationship marketing and customer value, the

higher value placed on the customer will reflect in their purchasing choices. True

and spurious relationships are the extreme points on a continuum. At the lower

end, customers may be behaviourally committed to the service but satisfaction is

only latent. At the higher end, customers are more manifestly satisfied and more

affectively committed to the service. Liljander and Roos (2002)

Berry (2000) proposed three relationship levels of customer perceived value.

These are based on financial, social and structural bonds. Financial bonds, such

as loyalty programmes, are considered the weakest form and may only lead to

spurious relationships Social and structural bonds are more closely related to true

customer relationships. According to Berry (2000), “structural bonds offer value-

adding problem solutions that are not dependent on individual service

representatives, and which are difficult for competitors to copy”.

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2.11 Consumer Relationships Marketing

Organisations should build a stronger relationship with their profitable customers.

There are five different levels of relationship marketing that can be practiced. The

basic level does not really involve building a relationship, for example it is when a

car salesperson smiles and sells you a car and waves good-bye as you drive it

off the lot. You never see him again; if you need service you talk to someone in

the service department. Very few auto dealership systems succeed in building

such a strong bond between the dealership and the client that the client keeps

buying from the same dealership. Kotler (1992)

Reactive marketing is the next level of relating. At this level, as the salesperson

wave’s good-bye to the customer, he says, "By the way, if there’s any problem,

please call me. You don't have to call the service department; I am responsible

for your satisfaction" The employee has taken on some of the responsibility of

managing the customer’s needs. Kotler (1992)

A higher form of relationship is accountability. At this level, the salesperson calls

the new car owner within two weeks of the sale and asks how he likes the car,

and if there is any way the car could have been better. Those salespeople often

get an earful. The customer might say, "I wish the door had a pocket for maps. I

wish there was a rear window wiper." At that point, the dealer should ask, "How

much would it have been worth to you if the car did have a map pocket in the

door and rear window wiper?" That type of information will help the automobile

manufacturer continuously improve its product (Kotler, P. 1992:52).

18

Still, a higher level is proactive, where the salesperson will call the customer from

time to time and say "The manufacturer has developed product that will help you

save fuel, it's something we can add to your engine and it will reduce your fuel

costs." Customers get a sense that the company still is interested in their needs.

Partnerships are the ultimate form of relationship marketing. They involve actually

living with the customer and are mostly confined to business-to-business

relationships (Kotler, P. 1992:52).

Each level requires more cost, so it is important for organisations to determine

when it is worth going to the next level. Two dimensions that are particularly

critical are the margin that the firm makes on the business and the number of

customers making purchases. For example, allow-margin business with many

customers, for example selling toothpaste would operate at the basic level. The

organisation has so many customers for that product and makes so little per unit

that it would not be cost-effective to develop a high-level relationship. Kotler

(1992).

There are five levels of response for each customer service and retention tool.

Those levels vary within companies; an organisation might be reactive with

respect to technical assistance, accountable with respect to service and basic in

terms of value-added. The important thing is to know where your competitors

stand, what is their profile with respect to relationship investments, and what

things should you do to be superior to the target market.

19

2.12 Conclusion

This chapter has found numerous academic resources for secondary data which

has helped meet the objectives of the investigation, it has identified what a loyalty

scheme is and types of loyalty available. It also establishes what customer value

actually is and how to maintain a relationship with the customer using loyalty

schemes.

Chapter 3 Research Design and Methods

20

3.1 Introduction

The purpose of this chapter is to identify what philosophies there is and what

one(s) the author has chosen, approaches the author will take and describe

which data collection methods will be used to collect primary and secondary data

in order to answer the objectives. The research onion will be used to identify the

core research approach, this will be achieved by going through each layer of the

onion eventually getting to the core.

3.2 Research Onion

Saunders et al (2008)

3.3 Research Philosophy

21

The first section of the research onion is philosophies and Saunders et al (2007)

explains that a research philosophy is an overarching term which relates to the

development of knowledge and the nature of it as you are setting out to acquire

knowledge of a specific field relating to your research. They state that an author

will base their decision on their own beliefs and values which can impact the way

research is carried out and could potentially be viewed as researcher bias and

this will play a pivotal role in what research strategy will be chosen. Collins (2010)

states there are 3 main philosophies used in research, ontology is the study of

existence or the nature of being, axiology which is the study of value and quality

and has a high concern for ethics and epistemology which is the nature, scope

and limitations of knowledge and whatever a researcher decides to use will

determine the way they view the world and this will form the basis of the research

strategy, for this investigation ontology and epistemology have been selected as

they are the most logical.

Ontology

22

Saunders et al (2012) states that ontological questions deal with the nature of

reality or existence and it’s the researcher’s view of reality and how the world

operates and when conducting research this can be broken down further into two

subsections:

• Subjectivism – This can be biased as it is based on the writer’s personal

opinions along with points of views which they may already have and

therefore a judgement or outcome would be due to what the author has

already perceived.

• Objectivism – This is where there writer would prefer to keep their

personal feelings separate and base their information on facts making it a

more positive way to analyse data.

Axiology

Killam (2013) states that axiology is defined as the philosophy of what the

researcher deems to be ethical and of value and this will guide the researcher

when making decisions as its their own personal values. Saunders et al (2012)

agrees the philosophy will take the researchers values into account and

furthermore expands that this philosophy is not used often as the researchers

own values will interfere with the answers and it would therefore be considered

unethical.

Epistemology

23

Collins (2010) states that this is the study of knowledge and justified belief, she

states that the researcher is concerned with sources, structure and limits.

According to Saunders et al (2012) this is the researcher’s view of what is

acceptable knowledge and is more concerned for knowledge that is true rather

than how to.

Saunders et al (2012) states when conducting research there are 4 stances a

researcher can take, interpretivism, realism, positivism and pragmatism and they

will make their choice based on what they view as knowledge in their area of

research, whatever stance the researcher choses will have an impact on how

they view the results of their research. For this investigation an interpretivist

approach will be used along with positivism as this allows the researcher to

conduct their research without bringing their own feeling into it and being biased

so it would actually be considered as a pragmatism approach as the researcher

will use aspects of other philosophies to obtain the best results and overall

answering the objectives in order to meet the aim.

Interpretivism

24

Saunders (2012) states that this is the approach taken by a researcher who has

adopted an ontological subjectivist stance. It has the view that the most important

part of any organisation is the people and their input is valid and can help and

therefore when it comes to research it focuses on the human element and that is

more valued as opposed to conducting quantitative research.

Realism

Saunders et al (2012) states this approach is somewhere between a positivist

and interpretivist as the research recognises how important subjectivity is in

research but still believes that reality can be interpreted, measured and

categorised. It has a scientific background on how knowledge has been devised.

Positivism

Saunders et al (2012) describes this approach as being the most common

approach in most business and management research plus the researcher

conducts the research in an impartial manner therefore excluding any researcher

bias when collecting data. He also states that this approach tends to be adopted

by researchers have an objectivist ontological stance and the researcher looks to

identify any similarities with results and research already undertaken.

Pragmatism

25

Saunders et al (2012) states that this approach is taken by a researcher who has

adopted a variety of aspects from other philosophies meaning it is possible to use

both a positivist and interpretivist method, this allows the researcher to achieve

the best results possible as data can be collected and interpreted using different

perspectives making it more practical and meets their needs of answering the

aim and objectives.

3.4 Research Approaches

Saunders (2012) states this is the second layer of the Research Onion and there

are 2 approaches which can be taken when developing theories or hypothesises

and this will depend on how the research is designed, inductive and deductive.

Inductive

This is when the researcher takes the approach of developing a theory based on

the results of data that has been gathered. To begin with the researcher will

gather data relevant to their area of interest, once data has been gathered they

will then look for patterns and once patterns have been found a theory will be

developed and a conclusion will be reached.

Deductive

26

This is when the researcher will take the opposite approach of inductive and the

researcher finds a theory they find compelling and then create a strategy to either

prove or disprove it by gathering facts and data and bases their conclusion on

what they find. Robson (2002) lists sequential steps to testing theory:

• Deducing a Hypothesis from the theory

• Expressing the hypothesis in operational terms

• Testing this operational hypothesis

• Examining the specific outcome of the inquiry

• If necessary, modify the theory in the light of the findings

3.5 Research Design

The research design defines what way the data collection will gathered, what

research methods have been chosen and the way they will be used. It has clear

objectives derived from the research question, it specifies what the constraints

and ethical issues of the research are and validates the reason for the

researcher’s choice of design.

3.6 Research Strategies

27

This is the third layer of the research onion and it gives the researcher guidance

on how the research should be conducted and the process to go through.

Saunders et al (2012) states there are many strategies which can be used

including experiment, survey, case study, action research, grounded theory,

ethnography and archival research, he also says depending on the research it is

possible to use more than one of these strategies. For this investigation the

researcher will use a questionnaire for their primary source to gain data which will

be used to answer all of the objective and ultimately enable the researcher to

meet her aim, as there is a time barrier on this investigation there are many

benefits of a questionnaire as they are practical as they can collect a huge

volume of data in a short period of time at a low cost or no cost at all and the

results can be analysed quickly using most software packages.

3.7 Research Choices

28

This is the fourth layer of the research onion, Saunders et al (2012) explains that

research is either quantitative or qualitative. Quantitative is when data is

numerical and is normally collected in the form of a questionnaire and is analysed

using statistics whereas qualitative is usually in the form of words or pictures and

is collected using techniques such as interviews, this is analysed using non-

statistical methods. The researcher will be using a quantitative technique in the

form of a questionnaire which will enable her to answer the objectives set out at

the beginning of the investigation. There are 3 choices in the research onion

which the researcher could use when gathering data:

Mono – This is when the researcher only uses one approach for the purpose of

the study being either taking a qualitative or quantitative approach and the other

is completely disregarded.

Mixed – The name says it all, this is when more than two methods are used but

usually taking at least one technique from qualitative and quantitative research.

Multi – This is when the researcher has used 2 or more methods so it is similar to

mixed methods but used the methods in different sections.

The researcher will use mono methods taking a quantitative approach due to time

constraints and the questionnaire being sufficient enough to answer the research

objectives.

 

3.8 Sample and Sample Size

29

Saunders et al (2009) states sampling is used all around us whether it be in a

newspaper or on the television, he also states that the reason for sampling is to

answer the research objectives even although it could be possible to do a census

of the entire population to find out their opinions but it is more effective to sample

people as you don’t have to worry about time and budget constraints. He states

there are 2 main sampling techniques that can be used, these are:

• Probability – this means that all members of the public have the same chance of

being selected to be part of the research. This is associated more with survey

and experimental research strategies. Types of probability sampling include

simple random, stratified random, systematic, cluster and multi stage.

• Non-Probability – this means there is more of an uneven chance of being

selected for the research. This makes it harder for the researcher to answer

statistical questions but can still generalise. Types of non-probability sampling

include quota, snowball, convenience, purposive, self-selection, extreme case,

critical case, typical case, homogeneous and heterogeneous.

The researcher will use probability sampling when giving questionnaires to the

public and furthermore it will be stratified sampling as this will allow myself to give

the questionnaires specifically to the people in Glasgow who shop at the main 4

big supermarkets including Asda, Tesco, Morrison’s and Sainsbury’s as well as

Aldi and Lidl as this will allow the researcher to determine whether loyalty or low

prices play a bigger part in consumer buying behaviour.

3.9 Time Horizons

30

This is the fifth layer of the research onion and sets out two types of time

horizons which are also known as planning horizons as it is a fixed time in the

future when research is set to end or be evaluated. The 2 time horizons are cross

sectional which is when the researcher will focus on a particular time frame and

look at what they want to achieve in the end and longitudinal which is when the

researcher uses time to analyse and make changes over the course of their

research. The researcher in this investigation will have to use cross sectional as

due to time constraints longitudinal would not be possible.

3.10 Ethics

Before deciding on ethical considerations a researcher must decide on what

research methods they will use, as I will be using questionnaires therefore the

ethical considerations will be:

1. Participants will be guaranteed anonymity

2. Privacy for participants

3. Allowing participants to include their views by including ‘other’ boxes for the

answers thus allowing them to state whatever they may deem as valuable

information

3.11 Research Limitations

31

Research limitations are anything that could stop you from reaching your

maximum potential when carrying out research. Limitations come in many forms

and can be problematic for researchers as there are sometimes no solutions to

these limitations. For this project the limitations which the researcher faces are:

May not gather enough primary data if people don’t answer the

questionnaire and therefore objectives could not be met

Not having enough knowledge on the subject

Being restricted geographically, due to time constraints and lack of funds

the research will be carried out in Glasgow this limits the research as all

over the country stores will find different areas of the business affected by

loyalty schemes making the research small in comparison to what it could

be.

Not having enough time to collect and analyse all data to a high standard

due to having deadlines and the researcher has other studies going on

and is therefore restricted from putting her whole focus on the investigation

3.12 Questionnaire

32

Hair et al (2003) describes a questionnaire/ survey as a particular course of

action intended to collect primary data from individuals, in which information

sought could range from gender, age education, income, beliefs, opinions and

attitudes to lifestyles. They further explain that surveys are mainly used in

research studies which involves collecting information from a large sample of

individuals in which the respondents are aware that information about their beliefs

or behaviour are being collected, hence there is the likelihood that this may

possibly influence their responses and economical, allows collection of

standardized data, easy comparison and gives the researcher more control over

the research process. As a questionnaire is the only method being used to collect

and analyse data it was important that is was suitable for distribution and reader

friendly therefore a pilot study was conducted with a group of 10 people who are

friends and family of the researcher and have no knowledge of the business

world, the advantage of this was the researcher was able to determine that the

layout was reader friendly and the questions where easy to understand. By doing

the pilot study the researcher found that no changes had to be made to the

questionnaire and all questions were valid in order to answer objectives. A copy

of the questionnaire can be seen in Appendix 1.

3.13 Conclusion

33

This chapter outlines all methods that where available to researcher and the

reasoning for the method she chose as opposed to the others, it also outlined the

philosophies which were deemed as acceptable as they would further the

research and remove researcher bias and looked at limitations which the

researcher could face, it also looked at ways in which data would be collected

and found as it would be a quantitative method it would be a questionnaire which

would be presented using graphs making it reader friendly which will be

presented in the next chapter. It can be concluded that all the methods and

theories which have been chosen by the researcher are the right ones for the

purpose of this study as they will answer all objectives therefore meeting the aim.

Chapter 4 Findings & Analysis

34

4.1 Introduction

The purpose of this chapter is to present the researchers findings based on their

primary and secondary data in order to answer the objectives of the investigation.

It will demonstrate ways data was collected using the chosen method which was

looked at in the previous chapter. The data collection method that was selected

was a questionnaire using a direct distribution technique. This chapter also aims

to identify any weaknesses the researcher has found in the material. It will also

analyse all data gathered from both primary data found in the questionnaire and

secondary data found in the literature review in chapter 2 to determine how

objectives and the overall aim has been met and in order to do this each

objective will have a sub heading with evidence and an analysis provided.

4.2 Findings

The questions in the questionnaire where designed to answer the objectives in

different ways to enable the researcher to narrow down what group of people

would be more likely to use loyalty schemes, what type of household they lived in

and what was there reasoning for shopping in a certain supermarket among

many more. The results of the questionnaire will be looked at separately below

along with secondary research.

4.3 Questionnaire

35

Hard copies of the questionnaire were distributed as the researcher wasn’t

getting the number of respondents she wanted using the online website Survey

Monkey therefore she decided to use direct distribution techniques where she

handed the questionnaires out at a school and 3 different companies with whom

family members work for, by using this technique the researcher gathered 100

responses. The research will discuss below the results to each question and

analyse what this determines and the objective which will have been met.

Question 1

What is your gender?

78% of respondents were female and 22% were male, the reason that there was

such a high percentage of females could be due to the fact that most females are

responsible for household shopping, this question was asked as it allowed the

researcher to determine the percentage of people who would be more likely to

use a loyalty scheme and this would be a starting point to create a profile of the

average consumer.

Question 2

What is your age?

36

No respondents where under 18 or over 75, 23% were aged between 18 and 24,

14% were aged between 25 and 34, 47% were aged between 35 and 44, 12%

were aged between 45 and 54, 3% were between 55 and 64 and the remaining

1% was aged between 65 and 74. This question was included as Leon et al

(2003) states asking questions about age is important as it provides background

characteristics and personal data and as this is an investigation into consumer

buying behaviour before you can establish whether it can be effected by the use

of loyalty schemes the consumer must first be identified and the only way to do

this is to ask personal questions and as we can see from the above data nearly

have of respondents were aged between 35 and 44. This build on question one

when creating a customer profile.

Question 3

Which household best describes yours?

37

No respondents described their household as being in the other category and

only 3% lived in shared accommodation, over half of respondents at 54% stated

they lived in a family home while 27% lived with a partner as a couple and 16%

lived in a single person household. This question was included in the

questionnaire to allow the researcher to describe who is more likely the shop in a

certain supermarket and their reasoning and further more to determine if it would

be students, families, couples or single people who used the loyalty scheme and

once this could be determined the reasoning behind using a loyalty scheme could

then be determined which will all be looked at through the rest of the questions.

Question 4

Which of the following categories best describes your employment status?

Over half the respondents at 53 % described themselves as being employed full

time, a relatively small number of respondents at 4% stated they were employed

part time, 14% stated that they were unemployed and 29% stated they were a

student. This question was asked to allow the researcher to determine the

relationship between loyalty schemes and the class of people who use them

whether it be working class, lower class or students and going back to the first

question this one allows the researcher to keep building on the consumer profile

of loyalty scheme users.

Question 5

38

39%

35%

3%2%

12%

9%

What supermarket do you use?

Asda Tesco Sainsbury's Morrisons Aldi Lidl

Respondents were asked to choose between Asda, Tesco, Sainsbury’s,

Morrison’s and they had the option of choosing other and specifying where they

choose to shop. The highest result was Asda as 39% of respondents said they

shopped there, Tesco was a close second as 35% of respondents shopped

there, only 3% of people said they shopped at Sainsbury’s and even less said

they shopped at Morrison’s with only 2% of respondents shopping there, the final

21% of respondents stated they used another supermarket and in the box

provided on the questionnaire they were asked to specify and 12% stated they

shopped at Aldi and the remaining 9% shopped at Lidl.

This question was asked to give the researcher evidence on where a customer

shops as Asda, Aldi and Lidl do not have a loyalty scheme but much rather use

39

their low prices to allow customers to get good deals whereas Tesco, Morrison’s

and Sainsbury’s do have loyalty schemes therefore this allowed the researcher to

determine whether loyalty scheme really do influence consumer buying behaviour

this will be explored further with question 7 as it will determine if customers really

just want low prices and good quality among other motivating factors.

Question 6

How often do you use a supermarket?

Respondents were given the option of daily, weekly, monthly or other were they

were asked to specify. 73% of people surveyed stated they done a weekly shop

compared to 21% of respondents who went shopping daily, 3% said they

shopped on a monthly basis and the final 3% choose other commenting that they

shopped every fortnight or every 2-3 days as opposed to daily. This question was

included to allow the researcher to have a better understanding of who the

average shopper as this gives a general consensus of who uses loyalty schemes.

Question 7

What motivates you to shop at a particular supermarket? (Select all that applies)

40

This question was devised with the consumer in mind as it allowed them to pick

numerous options therefore allowing the researcher to determine what

consumers prefer whether it be price, quality, convenience of using that particular

supermarket, brand loyalty or something else which the consumer felt was a

motivating factor. Price was a high motivator with 89% of consumers making this

choice, quality was also very high with 81% saying this motivates them to shop

where they do, 66% of consumers stated convenience was a motivator for them,

only 4% stated their choice of supermarket was due to brand loyalty and no one

who took part in the questionnaire selected other.

Question 8

How important is a loyalty scheme to your choice of supermarket?

Respondents were asked to decide if this was very important, important or not

important, 65% said this was not important, 23% said it was important and the

remaining 12% thought it was very important. This question was included as it will

allow the researcher to analyse the way consumers think about loyalty schemes

and also answer the objective of how much value a loyalty scheme is to the

customer as there perspective was needed and it allows consumers to state if

they see this as being beneficial to them and even if they shopped at one of the

supermarkets which do have loyalty schemes it could be purely due to

convenience and have nothing to do with loyalty.

Question 9

What is the main reason for using a loyalty scheme?

41

The researcher chose to make this a open question which required an answer

therefore 100% of respondents gave an answer and even although most

respondents didn’t use loyalty schemes they still answered factors they though

would be useful to the customer therefore this question also allowed the

researcher to answer the objective of how much value a loyalty scheme is to

customers. The most common reason given for using a loyalty scheme was to

save money with 94% of respondents saying that was the factor.

Question 10

Did the recession have an impact on where you choose to shop? Please give

reason for your answer.

89% of respondents stating that the recession did have an impact on where they

chose to shop and the most common pattern for the reason given was either

them or their partner lost their job and the family budget was squeezed so they

looked for cheaper alternatives preferring to go to shops which had own brand

labels that were still a good quality. Another common answer was participants

simply couldn’t find work and had to shop within their means and therefore

couldn’t afford to shop for luxury items.

This question was included as it allowed the research to see how the shopping

pattern of people had changed since the recession and could play a factor in why

consumer buying behaviour is influenced not only by loyalty schemes but by price

also as it has been clear to see throughout this research that price has been a big

42

motivator for people as supermarkets like Aldi and Lidl’s profits have been rising

sharply and big supermarkets especially Tesco and Morrison’s are in trouble.

4.4 Analysis

Loyalty Schemes

The objective of identifying the types of loyalty schemes used in the supermarket

sector was mainly answered through secondary sources as it was found there

43

was 5 different types of loyalty schemes which included monopoly loyalty, this

could be excluded for consumers at supermarkets as this is when there is no

choices available to customers and they and forced to give their loyalty to the one

place. Inertia loyalty is when the customers is not looking or trying to find a

substitute to their current place, this could also be excluded as he primary

research has pointed out that customers base their choice of supermarket based

on price over convenience at 89% to 66% respectively, this shows just how much

of an impact the recession had on the average shopper that people are actually

willing to go out of their way to a supermarket with lower prices over somewhere

close to them and as the average shopper does either a weekly shop or daily

shop this could save them a lot of money.

Convenience loyalty is purely due to geographical and based on the evidence

above this could also be discounted as it has become apparent price is the

biggest motivator which brings us onto the next type of loyalty with that being

price, this is when customers are motivated to shop based on where they will get

the lowest price, this would be the type of loyalty most suited to consumers as

shown in the above questionnaire when 89% of respondents stated their choice

44

of supermarket was based on price, this was also shown in the literature review

in chapter 2 when it was stated that along with loyalty schemes prices should be

kept low which would encourage purchaser to become repeat buyers and

eventually move up the loyalty ladder until they got to the top and became

advocates for the company.

The final type of loyalty which would also be suited to consumers using loyalty

schemes is incentivised loyalty, this is when the customer is loyal to a business

based on reward they are receiving by using a loyalty scheme. This shows the

value it brings to customer which will be looked at in more depth in another

section. The literature review also included 2 different sections about the types of

loyalty schemes used in the supermarket sector these being the Tesco clubcard

and Sainsbury’s nectar card, the researcher did not include the names of any

loyalty schemes in the primary research as she wanted to removes all forms of

researcher bias by not giving respondents words/ names of loyalty schemes to

use as stated in chapter 3 methodology.

Impact

The results of both primary and secondary research answered the objective of

investigate the impact loyalty schemes have had on the supermarket sector as

the questionnaire found out that 4% of respondents based their supermarket

choice on a loyalty scheme, 4%of 100 people survey in Glasgow would create a

much larger market of people who shop purely because of a loyalty scheme but

45

as the researcher was restricted geographically and financially there obviously

can’t be a full profile of results. Loyalty schemes have clearly had a huge impact

on the supermarket sector but it should be pointed out the highlight of the

research showed more customers where focused on price and would rather have

low prices as opposed to a loyalty scheme. As shown in the literature review

loyalty schemes where developed in the 90’s and becoming popular in the

millennium but within the 10-15 years from then the country has been through a

double dip recession and consumers are now more aware of their spending

habits and this could be found in the questionnaire when 89% of respondents

stated the recession has effected them and the way the shop. Tesco Clubcard is

one of the most well-known loyalty scheme for a supermarket and Sainbury’s

nectar card for being able to shop in a variety of places and receive points not

just in the supermarket but even with this fact the big supermarkets including

Asda and Morrison’s did not plan for how big Aldi and Lidl would grow and even

although loyalty schemes were popular at first after 10 years and a recession

they are slowly on the decline with prices wars now becoming more apparent and

the underdogs Lidl and Aldi are rising rapidly with Aldi announcing in 2014 that

there profits have jumped 65% just in the UK market. The Telegraph (2008), The

Guardian (2014).

Influence on Consumer Buying Behaviour

The results of both primary and secondary research showed that consumer

buying behaviour could be influenced by the use of loyalty schemes to a certain

point as overall 35% of respondents from the questionnaire said a loyalty scheme

was either important or very important in their choice of supermarket, 38% of

respondents also shopped at Tesco or Sainsbury’s. Results in the literature

46

review as show that consumer buying behaviour can be changed as it an act of

individuals who are directly involved in obtaining, using and disposing of good

and services on an economical scale and as a loyalty scheme is a good and a

service for consumers they could mould the way the buy products in order to

obtain a reward e.g. If a customer was using a Tesco Clubcard they could receive

double points when they spend £30 or more and as the consumer doesn’t see

this as them spending they see it as a good buy as they are being rewarded and

can use the points they receive to buy something else the next time they are

shopping so in essence they are actually receiving all or some of their shopping

for free and as seen in the secondary research this satisfies the consumers’

needs and desires. The secondary research also found that there are 2 factors

that will influence the consumer’s decision making, risk aversion which is when

you can measure how consumers are when making purchases and it states there

is 2 types of customers.

The first would be highly risk adverse who is always watching what they buy as

they don’t like to buy what they don’t need and the second is less risk adverse

who will buy a product even when they don’t need it and this is the type of

customer who would be more likely to use a loyalty scheme as they are easily

influenced into buying products which is what the business want as that is the

only way for them to stay afloat especially in the recession where Tesco and

Sainsbury’s are in a lot of trouble with profits continuously falling and are being

47

forecast to fall even further, the second factor which can influence consumer

buying behaviour is innovativeness which looks at how far customers are willing

to go to take the chance and change this up by switching brands, this is also the

perfect customer as they can be easily influenced to changing if they are being

rewarded e.g. the customer only buys Heinz beans but the loyalty scheme will

only give points to customers who buy the businesses own brand then the

consumer is more than likely to change in order to reap the rewards which is a

win-win for the business as their own label is being sold as well as they are likely

to have a repeat purchaser as they will want to claim their reward. This is also a

benefit to the consumer as the will enjoy claiming a reward for spending less, this

is proven in primary data where over 80% of consumers based where they

shopped due to low prices.

Value

The objective of determining the value of loyalty schemes to the consumer had

been met using both primary and secondary research, primary research showed

that 94% of respondents though a loyalty scheme did bring the consumer value in

the form of saving them money, this is a very high response and shows

customers do realise there are measures in place which could allow them to keep

48

a little bit extra in their pocket as 89% of respondents also stated that the

recession has had an impact on which supermarket they get their shopping from.

The secondary research showed that customer value management has become

a major trend in marketing as this is defined as quality at the right price, this is

seen as having a major impact with consumers as value is the quality customers

can afford, this also found that so long as customers thought they were getting

value they would make the sacrifice of shopping in a particular place even if

prices were slightly higher. Secondary research also found that there was a

strong link between customer value and relationship marketing and going back to

the primary data 4% of respondents stated their choice of supermarket was

based on brand loyalty and this is what relationship marketing aims for.

Going back to the secondary research and looking at the loyalty ladder this is

companies way of having customers move up the ladder to eventually become

advocates and promote the business where ever they may go, another bonus to

this is once a customer becomes an advocate they are less likely to leave even if

they get annoyed with the company.

Secondary research also discovered that there are 3 relationship levels to

customer perceived value and one level of this is financial bonds which is the

weakest of its kind and is formed based on loyalty schemes.

There are clearly many value brought to the customer using loyalty schemes as

customers get to feel a part of something bigger as they can get served quicker

at the check outs and also receive direct mailing with money off vouchers which

they would not receive otherwise it could then be stated that the biggest value for

customers is to receive discounts/ cheaper prices.

49

Conclusion

After gathering all the details of what scholars have wrote and other researchers

have wrote as well as conducting a questionnaire the researcher had aimed to

answer the question of whether a loyalty scheme had an impact on consumer

buying behaviour and throughout this whole investigation the researcher has

gathered evidence which lets us know that it does have an impact but not to the

extent of what businesses may like, it has been determined that the biggest factor

in consumer behaviour is price with the underdogs in the supermarket industry

Aldi and Lidl seeing their biggest increases ever all due to their no frills low price

50

approach. This shows how the market is always changing and how businesses

need to change their approach fast when change happens like the recession

when the buying behaviour of customers change or like Tesco and Sainsbury’s

they will end up stuck in a rut and it will end up to late for them to come back from

it with profits that just keep plummeting.

Future Research

The researcher would not say there wouldn’t be future research done on the

same topic again by her but she would say it wouldn’t be any time in the near

future as it was clear to see throughout the research that to 2 biggest

supermarkets who used loyalty schemes where having financial difficulties and it

would be therefore hard to predict if future research would be needed as the

future of the companies remain uncertain.

Recommendations

Based on the results of data from primary and secondary research there are

many recommendations which can be made. Loyalty schemes do have great

benefits and can influence consumer buying behaviour but as times have change

so has the shopping habit of the public and it would therefore be recommended

that either Tesco and Sainsbury’s spend more money on advertising to allow

potential customers to see rewards they could get by shopping at their stores or

they should stop using loyalty schemes altogether and the money they save from

this could be used to reduce prices therefore increasing the number of people

who shop there and getting their customers back who have went to the 2 mains

51

shops which are doing really well Aldi and Lidl as it has been seen through this

investigation price has been the biggest influence on the customer the latter

would be the better recommendation especially when Aldi has seen profits rise

over 60% and they don’t use any loyalty scheme they simply value themselves

on quality products at low prices and as Tesco especially is in trouble right now

with profits falling and stores closing they need to up their game in order to

remain a player in the supermarket industry.

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Appendices

Appendix 1

Questionnaire

1. What is your gender?

Male

55

Female

2. What is your age?

Under 18

18 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65 to 74

75 or above

3. Which household best describes yours?

Single Person

Couple

Family

Shared Accomodation

Other (Please Specify)

4. Which of the following categories best describes your employment status?

Employed (Full-time)

Employed (Part-time)

Unemployed

Student

5. What supermarket do you use?

56

Asda

Tesco

Sainsbury’s

Morrison’s

Other (Please Specify)

6. How often do you use a supermarket?

Daily

Weekly

Monthly

Other (Please Specify)

7. What motivates you to shop at a particular supermarket? (Select all that applies)

Quality

Price

Convenience

Brand Loyalty

Other (Please Specify)

8. How important is a loyalty scheme to your choice of supermarket?

Not Important

Important

Very Important

9. What is the main reason for using a loyalty scheme?

57

10. Did the recession have an impact on where you choose to shop? Please give reason for your answer

Yes

No

58