Tesco's Clubcard Program: Challenges and Solutions for Targeting the Right Audience - Case study

Ebsc7320 Masters Project Reassessment

Introduction: Ebsc7320 Masters Project Reassessment

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Business organisations encounter a variety of problems when conducting business. While making plans for business growth, they must pay attention to a number of different elements. Organizational issues may result from poor decision-making, ignorance of the situation, and audience targeting. Businesses like TESCO experience difficulties moving their organisations forward since they don't take the necessary precautions when creating their business plans. 

Title of project

The modifications that Tesco made to its Clubcard customers' loyalty card programs.

Aim and objective of research

The project's goal is to highlight the difficulties Tesco has in mistargeting its customers.

Objectives

• To pinpoint the issue the organisation is having with the new loyalty card system.
• To analyse the problem and identify solutions
• To suggest strategies that could be used to solve the issue

The purpose of the study is to identify the challenges that the organisation encountered by making changes to the Clubcard members' programme and by researching and analysing those problems. It offers solutions and advice on how to solve certain issues.

Importance of the research

When a company chooses the incorrect audience to market its products to, it confronts many difficulties. Tesco is the company or brand being discussed here, and it is having significant issues as a result of picking the incorrect market segment. Tesco created the Tesco Clubcard programme to give customers more advantages when making purchases from their company. Customers who use this card occasionally receive additional savings on particular products. Tesco is an expert at finding customers who will match their needs in terms of sales. As a result, Tesco finds it extremely challenging to generate the necessary money because they are unable to serve all audiences who do not fall into that group, which ultimately has an adverse effect on their entire economy. If this issue is not resolved successfully, it may have a negative impact on the organization's future expansion.

Annotated bibliography

Author	Key ideas	Discussion
“Yawson et al. 2022”	“The Gold Standard: The TESCO Club Card Loyalty Program”	Tesco introduced the loyalty card system to the market to draw in more customers. Customers who understood how to use loyalty cards did so effectively. The use of Clubcard for purchases not only increased Tesco's revenue but had further effects as well. The use of this card enables consumers to receive home delivery and purchase products at reduced prices. Anyone who did not understand how to use this card lost their points because they were unable to benefit from it. As a result, it demonstrates Tesco's partial targeting of customers.
‘Hood et al. 2021’	“Applications of big data from store loyalty cards in site selection.”	One kind of big data that was utilised during the site planning process was the shop loyalty card. This assisted in learning many things regarding the various aspects of the retail industry. It focuses on consumer behaviour when purchasing online or at any other location. Along with Tesco, many other commercial enterprises adopted this strategy to expand their clientele. The information provided by the store loyalty card was really helpful and aided in the process of deciding where to locate the store. Additionally, it aids in the analysis of consumer demands and preferences.
“Rains and Longley, 2021”	“Data from loyalty cards' origins for urban and retail analytics.”	The loyalty card serves a number of functions since it provides information about client behaviour and purchasing habits. This card provides comprehensive information on any competitor's retail location as well as consumer preferences. Additionally, it includes information on urban business. All the problems are briefly discussed, and solutions are advised for solving them so that the business can develop properly.
“ŽILINSKÁ et al. 2021”	“CAN A BUSINESS EARN A LOYAL CUSTOMER BY IMPLEMENTING A LOYALTY PROGRAM?”	The loyalty card has benefits for all retailers and service providers. This card can help you plan your business effectively. This is beneficial to commercial organisations, but it has little impact on customers. The analysis reveals that this card doesn't attract repeat customers. This only describes the ideal geographic area for expanding the business. This card's scheme makes it difficult to learn about the behavior, morals, and loyalties of its customers.
“Hughes, 2021”	“Supermarket Sweep: How Changes in Credit Supply and Clubcard Points Impact House Prices.”	In many business organisations in the UK, numerous loyalty cards were used, but Tesco introduced a card to their retail sector called Clubcard. Customers have to spend the points on this card while making purchases from their stores. The use of those points encompasses a variety of techniques, and customers even employed home delivery. The card's points could be used to both offline and online payment methods, however they could only be used at Tesco. The Clubcard was only used in Tesco's retail market, and it had a variety of negative effects on the company's operations.
“Hassan et al. 2019”	“Loyalty Programs for Positive Purchase Decisions and Customer Relationship Management Using Technology.”	This study aims to identify the various technologies that Tesco and Sainsbury use for their loyalty programmes. The first goal is to go over the influential aspects of technology-based loyalty programmes that are related to the management of customer relationships. The second goal is to critically assess and compare the impact of various policies that are implemented by the two retail organisations. From the result of this analysis, it is clear that responsible These schemes also demonstrate that it affects the consumer's decision-making.
"Moura, 2021”	“Food and retail equity research from TESCO PLC”	This study provides a broad overview of the Tesco organisation, outlining its history, numerous business models that have been employed in the past, as well as an analysis of key performance indicators and the overall corporate governance structure. These indicators include the company's GDP growth, unemployment and inflation rates, population expansion rates, and the amount of disposable income in the economy. This analysis offers details on the company's competitive positioning and includes SWOT and PESTEL analyses, which give a general idea of how the organisation operates. In this study, two approaches were used to value Tesco: the absolute valuation approach and the relative valuation approach.
“Bird, 2021”	“Enhancing chatbots for customer service with attention-based transfer learning.”	Two alternatives are being looked into in this investigation. First, learning transfer can enable each individual in different company sectors provide better customer care. The second step is creating a framework for physical robots so they can communicate with various people. They are primarily utilised on social media sites like Facebook and Twitter to offer customer service for different profiles on the network. The original intent of transformer-based chatbot models was for them to learn a single domain from the initial weight distribution. The chatbots were finally put into use on the Temi and Pepper robots, though there are still some issues with their viability that need to be resolved.
“Paavola and Cuthbertson, 2022”	“Recognizing the significance of strategic and operational intent on performance, capabilities are redefined as drivers of adaptation, incremental change, and transformation.”	The significance of dynamic talents that influence organisational transformation is emphasised in this study. This study examines how dynamic roles and skills can occasionally shift and ultimately produce only transformational results. In ethnographic research, interactions between customers are observed over an extended length of time. Existing operational capabilities must be disrupted in order to implement change, and these capabilities can be found using a variety of approaches. This may introduce a taxonomy for the capabilities that is both theoretically sound and practically useful. This may eventually assist in resolving some of the complaints regarding their ambiguous implications.
“Resimi?, 2018”	“Holistic approach to spiritual and ethical marketing as a component of strategic business leadership.”	The field of marketing is seen to be impacted by the growing interest in morality and spirituality. These marketing concepts are developing into a type of discipline that is assessed independently. The categories of business leadership and the potential for holistic development are seen to have a strong relationship with the components of spiritual and ethical marketing. The growth of moral and ethical marketing within an organisation is also essential for strategic business leadership. This will assist in resolving the crisis and enhancing need satisfaction.

Table 1: Annotated bibliography

Key issues

The Tesco organisation typically uses the Clubcard to target customers who are more interested in sales, value, and cost considerations. It aims to serve all socioeconomic segments of the market. This limits the target audience because it cannot serve all market consumers and thus has a smaller market share. It cannot offer high-quality service to customers who prefer to purchase expensive goods. Tesco created Clubcard, a loyalty program, to appeal to budget-conscious customers. From time to time, Clubcard offers discounts on a variety of goods (Brekke and Thorbjrnsrud, 2020). The problem is that Tesco targets a specific group of customers who are cost-conscious, but fails to live up to the expectations of people who demand high-priced products because no additional services are provided for them. Clubcard is not perceived to give provisions to consumers who can afford expensive products.          

Methodology

In this study, a descriptive research design is used to specifically target a target audience while accurately and methodically describing the problems the organisation is facing. Numerous surveys are carried out to collect statistical information on the target market served by Tesco. On the basis of the data, various observations are also made that can be used to analyse the real effects of targeting the wrong customers in the market. The impact of selecting the incorrect audience in the market is also examined using various prior case studies.       

This study used a qualitative research approach to gather information about the consequences of selecting the incorrect audience. This kind of study entails the gathering and examination of non-numerical data, such as various kinds of audio and video that can assist companies like Tesco in comprehending the ideas, viewpoints, or experiences of numerous people who have been mistakenly targeted as an audience (Guezenoc et al. 2019). The issue caused by selecting the incorrect audience can also be thoroughly examined using this research technique, along with suggestions for how to address it. 

Figure 1: Types of the methodology used

Deductively, information about selecting the incorrect audience has been gathered from various sources that can help to comprehend the issues with selecting the incorrect audience in the market. Based on this information, certain inferences are made that can aid in identifying and resolving the necessary issues. This type of methodology is also known as "premise conclusion," which refers to making claims based on evidence that supports a conclusion. This approach has been very beneficial in obtaining some basic problem-related information.    

This study is also grounded on a positivist philosophy, which emphasizes "factual" knowledge that is connected to facts based on past observations collected using a quantitative research approach (Suleimenov et al. 2018). As a result, this attitude will help this study have a solid defense for the factual evidence of Tesco's inappropriate audience targeting.   

The information for this study strategy will all be gathered ethically and from dependable or legitimate sources. To enhance the study's findings and make it useful for the organization and other rival businesses, all available information on this concept will be gathered. The "Data Protection Act, of 2018" will be followed when gathering any of the research plan's data. 

Reflection

Tesco is a retail company in the UK that has changed its business strategy and tactics in order to advance the company. One of the adjustments they made to the way Clubcard is used had an impact on the expansion of their firm. They made a number of other changes to their schemes as well. The modifications made to the loyalty card program reflect the modifications made to the way Clubcard is used (hulldailymail.co.uk, 2022). If customers use their Clubcard points before 10 am, they are said to be tripled; however, using Clubcard points after 10 am has no effect on their value. After ten in the morning, using loyalty cards will only redeem the face value of the points, with no additional value. Customers who could redeem it before morning ten and use the points before they expire benefited from the changes to the program. 

Many customers hurried to utilise their points in order to take advantage of the card's benefits; as a result, they used the card promptly, but many others were unable to do so, which reduced the card's business. The company's usage of the card was only partially successful because some customers were able to utilise it, while others were unable to use their points before they expired, resulting in the loss of points (hulldailymail.co.uk, 2022). Although I think the changes are good, they should also consider all customers. The corporation values every customer equally, so I don't think setting a limit on how long they can use the card is necessary. Customers should be able to use their card's perks whenever they choose. People used to receive the card's benefits before a predetermined time, which led to a decline in sales because everyone looked out for their own interests. From my perspective, the consumer would prefer if the points got doubled but they could use them whenever they wanted, rather than getting tripled while using them before morning ten. The organization's business would be impacted by the time specification's partial customer focus. Because this would appeal to all Tesco customers, I would advise making the points doubled rather than tripled and allowing card use all day. 

Conclusion

The retail market underwent a significant shift as a result of Clubcard usage. Tesco's sales increased as a result, but its profit margin was altered by the decision to adjust the Clubcard usage criteria. The rule was to use the loyalty card before 10 AM because doing so was advantageous and profitable for the customers, hence the alterations hurt usage. As a result, its utilization declined, which caused Tesco's business to decline. Therefore, it demonstrates that using a loyalty card to learn about the ideal location for a business was effective, but the changes made to the Clubcard program were not profitable because they only targeted some consumers.

References

Journals

Bird, J.J., 2021. Improving Customer Service Chatbots with Attention-based Transfer Learning. arXiv preprint arXiv:2111.14621.

Brekke, J.P. and Thorbjørnsrud, K., 2020. Communicating borders—Governments deterring asylum seekers through social media campaigns. Migration Studies, 8(1), pp.43-65.

Guezenoc, J., Gallet-Budynek, A. and Bousquet, B., 2019. Critical review and advices on spectral-based normalization methods for LIBS quantitative analysis. Spectrochimica Acta Part B: Atomic Spectroscopy, 160, p.105688.

Hassan, A., Parvez, M. and Ekiz, E., 2019, July. Technology Induced Loyalty Schemes for Customer Relationship Management and Positive Purchase Decisions. In 9th ADVANCES IN HOPITALITY AND TOURISM MARKETING AND MANAGEMENT CONFERENCE (p. 241).

Hood, N., Clarke, G., Newing, A. and Rains, T., 2021. Applications of store loyalty card big data in the location planning process. In Big Data Applications in Geography and Planning (pp. 107-120). Edward Elgar Publishing.

Hughes, D., 2021. Supermarket Sweep: How House Prices Respond to Changes in Credit Supply–and Clubcard Points. Available at SSRN 3965500.

Moura, M.B.L.D., 2021. Equity Research in Food & Retail Industry-TESCO PLC (Doctoral dissertation, Instituto Superior de Economia e Gestão).

Paavola, L. and Cuthbertson, R., 2022. Redefining capabilities as drivers of adaptation, incremental change, and transformation: recognizing the importance of strategic and operational intent on performance. Journal of Management & Organization, pp.1-18.

Rains, T. and Longley, P., 2021. The provenance of loyalty card data for urban and retail analytics. Journal of Retailing and Consumer Services, 63, p.102650.

Resimi?, M., Spiritual and ethical marketing as a factor of strategic business leadership: holistic approach. ACADEMIC JOURNAL, p.57.

Suleimenov, I., Massalimova, A., Bakirov, A. and Gabrielyan, O., 2018. Neural networks and the philosophy of dialectical positivism. In MATEC Web of Conferences (Vol. 214, p. 02002). EDP Sciences.

Yawson, D.E. and Yamoah, F.A., 2022. The TESCO Club Card Loyalty Programme: The Gold Standard. In Contemporary Retail Marketing in Emerging Economies (pp. 77-87). Palgrave Macmillan, Cham.

ŽILINSKÁ, M., VRBKA, J. and KALINOVÁ, E., 2021. DOES THE IMPLEMENTATION OF LOYALTY PROGRAMMES LEAD TO GAINING A LOYAL CUSTOMER?. Ad Alta: Journal of Interdisciplinary Research.