Evaluation on Supermarket Price Wars and the Interaction of Customer Loyalty behaviour: Tesco

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TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION1

Background of the Study1

Research Aims and Objectives2

Research Question2

Company Profile: Tesco Plc2

CHAPTER 2: LITERATURE REVIEW4

Pricing and Promotional Strategy4

Price Wars4

Price War in Supermarkets4

Customer Loyalty5

CHAPTER 3: METHODOLOGY8

Research Methodology8

Sampling Technique8

Data Collection Method8

Secondary Data-Literature Search9

Primary Data- Questionnaire Surveys9

Research Strategy for Case Study10

Limitations10

Analytical Technique10

Ethical Considerations11

REFERENCES12

CHAPTER 1: INTRODUCTION

Background of the Study

In highly intense globally competitive industry, organisations try to identify organisational metrics that contribute towards leading the long term success. The concept of marketing has stipulated that for achieving a sustainable success, businesses and organisations need to increase customer loyalty by enhancing customer satisfaction (Solberg, 2007, 30). For this, organisations are highly focusing on identifying the needs and wants of their customers in order to provide satisfactory services and products that would meet up their expectation for increasing customer's loyalty and retain customers. Customer loyalty is highly linked with various dimensions such as customer satisfaction, price changes, trust, etc. Although, the industries, specifically retail and grocery industry, has highly focused on price, however, the factors of price changes like price acceptance, price reduction and price war have not been focused and studied adequately.

Organisations like ASDA and Tesco are highly involved in price wars for increasing customer loyalty. They have observed the important role played by price and its impact on consumer behaviour. While purchasing a product, price was one of the most important factors considered by consumers. Therefore, in order to understand the impact of price on consumer behaviour, this research will evaluate impact of supermarket price wars on customer's loyalty.

Research Aims and Objectives

The main aim of the research is to evaluate the impact price war of super market on customer loyalty. This aim will be achieved through following objectives:

To highlight the importance of customer loyalty

To identify the relation between price and customer satisfaction

To analyse the relation between customer satisfaction and customer loyalty

To analyse the impact of supermarket price war

To analyse the impact of supermarket price war on customer loyalty

Research Question

The research will conducted on the basis of following research questions:

What is the relation between price and customer satisfaction?

What is the relation between customer satisfaction and customer loyalty?

Does price reduction motivate consumer for buying a product?

What is the impact of supermarket price war on customer loyalty?

Company Profile: Tesco Plc

In 1919, Tesco Plc was established by Jack Cohen, by utilizing the bonus which he achieved for his services in the World War I army. Then in 1924, he purchased a tea consignment from the company TE Stock well. He decided to put the initial three alphabets of TE Stock well, and the initials of his name Cohen collectively to name his brand Tesco. In 1929, Cohen opened the very first Tesco store in Edgware, London. Originally, Cohen's formulated the strategy of Piling it high, selling it cheap. Despite the fact that this strategy assisted Tesco in attracting a great amount of consumers, it also assisted Tesco in branding itself as a store for average class consumers and even earned an image ...