Factors impacting on customers’ loyalty in retail sector. Case study of Waitrose

Inhaltsverzeichnis

1. Introduction
1.1 Background of research
1.2 Research questions
1.3 Objectives of the study

2. Literature review
2.1 The definition of loyalty
2.2 Factors impacting on customer’s loyalty
2.2.1 Customer service
2.2.2 Loyalty programs
2.2.3 Branding
2.2.4 Corporate Social Responsibility

3. Research methodology
3.1 Research design
3.2 Data collection
3.3 Sampling
3.4 Data analysis
3.5 Time horizon
3.6 Validity
3.7 Reliability
3.8 Ethical considerations
3.9 Limitations of the study

4. Conclusion

5. References

1. Introduction

1.1 Background of research

Nowadays, when the competition is high and it’s difficult to get through to the market, it’s important to invest in relationship with customers. People, who are loyal to a particular brand, have high level of satisfaction, therefore world of mouth is important to gain more customers in the future. The customer loyalty is not only a phenomenon, which results from buyers’ behaviour, but most often the company has to put bigger effort to gain the new loyal customers and keep the old ones. Therefore, more often the companies introduce loyalty schemes, which contain many advantages such as discounts from being a member. The buyers also come back to the stores, where can find friendly atmosphere and well–informed, helpful staff that behave with high professional manners. Moreover, the customers have faith in the brand, which delivers the quality, which he get used to. In addition, the customer has to feel privileged, special from belonging to the particular organization. Having a group of loyal customers for sure constitutes a competitive advantage than other brands.

According to Micah Solomon (2014), the company should invest time to get to know the customer and systematically build a business relationship, which can be turned afterwards into personal bond with the firm.

According to researches (Marketing Donut 2015) that the keeping of existing customers is 10% of the cost of acquiring the new ones. From the economical point of view, it is more profitable to have the group of loyal buyers. Therefore, it’s important for the firms to create sort of retention strategy, which will lead to customer profitability, because it decreases the account maintenance cost.

Furthermore, if the business cares about good relationships with current customers, it can create better work environment, what has positive influence on job satisfaction, because usually long term customers require less help and have less amount of problems to deal with (Marketing Donut 2015).

According to Al-Ghamdi (2015), the long term relationship between customer and the brand has connection with customer satisfaction. Nowadays, to attract and satisfy the customers, the company not only has to meet their demand but also give something more, unique, and different than other competitive businesses. Therefore, the companies introduce for their customers a loyalty scheme, which offers variety of vouchers, gifts, discounts, bonuses and make return the customer to the specific firm.

Waitrose is one of the largest grocery retailers in the United Kingdom. The firm works in partnership with John Lewis. The store has 322 branches including ‘’little Waitrose”- convenience stores across the country. The supermarket runs also online groceries, where a customer can pick up particular products with a free delivery. In 2011, the store introduced My Waitrose card- the type of loyalty scheme. This service enables customers to drink tea or coffee for free, discounts on specific products, free food magazine and access to other promotions in particular period. The store focus mainly on sales from quality, organic, free range products, what distinguishes it from other supermarkets. Within couple of years, Waitrose received many awards and acclaims e.g. Big Society Award and Best Loyalty Scheme (Waitrose 2015).

1.2 Research questions

1. What impact has customer service on the customer’s loyalty in Waitrose?
2. What is the role of the corporate social responsibility in the purchasing particular products from Waitrose?
3. To what extent do the loyalty programs influence customer loyalty in Waitrose store?

1.3 Objectives of the study

1. To examine the impact of customer service on the customer loyalty in Waitrose store.
2. To analyse the role of corporate social responsibility in the selecting particular products among the customers of Waitrose.
3. To investigate the influence of the loyalty programs on the customers loyalty in Waitrose.

2. Literature review

2.1 The definition of loyalty

According to Humby et al. (Rai 2014), the loyalty in everyday life demonstrates unselfish trust in organisations, unswerving faith in marriage or emotional commitment to people. From the costumer point of view, the loyalty exhibits specific tendency towards particular brand, product, store or service. According to Oliver (Rai 2014), the customer loyalty indicates that an individual re-buys or re-patronizes a certain brand and continues purchasing the same product in the future despite situational influences such as competition’s effort, which can cause a potential source of switching behaviour. According to Uncles et al (Moore 2005), the customer loyalty can also be seen from two opposite perspectives. On one hand, loyalty expressed in terms of attitude, which leads to relationship between the customer and the brand and on the other hand, the loyalty as a revealed behaviour.

The attitudinal concept emphasizes the importance of the mental processes in building loyalty. According to Basu (Rai 2014), the attitudinal loyalty relies on commitment, positive attitude and feelings about organization, likelihood to recommend the brand/product to others. However, according to Yu and Dean (Moore 2005), there is no proof that the specific requirements have to be met for loyalty to exist. According to Ahluwalia et al (Moore 2005), the customer, who shows attitudinally-loyal, indicates higher level of susceptibility to negative information about the favourite brand than those, who are non-loyal. Furthermore, according to Rundle-Thiele Bennet (Moore 2005), if the particular brand doesn’t have understanding or knowledge about attitude towards act of purchasing, it’s difficult to design marketing programmes to modify behavioural approach.

The behavioural loyalty relies on purchasing products on regular basis from the same supplier increasing in the same time bond and relationship between an organization and customer of the company. Moreover, it’s critically significant for the business, because without customers, there won’t be revenues. However, there is a risk that unhappy customers can choose the competition in the future over the groceries and give negative feedback/word of mouth to other customers. This approach means more as repeated satisfaction than emotional bond (attitudinal loyalty). According to Stone (Moore 2005), the firm, which adapts the attitudinal concept, is focus on achieving special place in the mind of customer and rewards his loyalty by stronger relationship, whereas behavioural theory concentrates on inducements, which strengthens a behavioural pattern .

2.2 Factors impacting on customer’s loyalty

2.2.1 Customer service

The customer service has crucial impact on the customer loyalty. Therefore, it’s important for the firm to hire right people with specific qualifications. According to Armstrong (2012), the recruitment process enables an employer to appoint a person, who fits into the company and finds out, who has not enough skills to get the job. However, Flippo (Bose 2012) argues that the recruitment has also negative effects, because great amount of applicant become rejected. It’s important that an individual receive training to develop his skills regarding customer service. Basically, the staff should be well-informed about current promotions, therefore the trainings should be provided on regular basis in order to help customers. The employees, who work with the customers, have to also indicate high level of patience and calmness. Nowadays, at a time of growing competition is easy to lose customers, thus it’s important to have the knowledge and abilities, how to deal with customers.

2.2.2 Loyalty programs

The loyalty programs constitute the important aspect of every business’s strategy. The customers want to feel privileged from the fact that they belong to the particular organization. The individuals expect additional advantages for instance free testers of the new introduced products, variety of discounts or bonuses for the shopping in the particular place. According to Joe LaCugna (2015), the loyalty cards are perfect solution to keep the loyal customers within the organization, because they delivered many advantages from possessing them and the customers want to take advantage from it. Through scanning the cards, the organization has also view into the shopping list of the customer, what enables to accomplish marketing strategies in the future. The studies show that the firms, which introduced these service for the loyal clients, observed an increase in sales about 25%. The loyal customers are willing to pay more for the service, but the company has to provide in return a high level of care about them. However, Joe LaCugna (2015) admits further, that there is no need to reward the highly loyal customers as frequently as others, because there is a certainty that they will come back even without constant incentive.

2.2.3 Branding

Branding of the products influences significantly customer’s loyalty and gives a major edge in the competitive market. People, who knows the brand, how the product look like and has quality, will be more loyal over the new products, which are unknown. However, if the newcomer prepares a good branding campaigns s such as good slogan or logo, adverts, puts many funds for promotions, can gain customers over the well-known firms. The consistency of the product on the marketplace is also significant regarding to branding. If the brand keeps consistent that means that the image and the quality is the same for long time, so it’s the higher probability to acquire loyal customers (Williams 2015). However, according to Neil Kokemuller (2013) the keep of brand on high level requires higher costs. Promotions and slogans cost money to develop and promote a strong brand.

2.2.4 Corporate Social Responsibility

Corporate Social Responsibility is the concept, which endeavours to incorporate social and environmental concerns into business activities and in their interactions with stakeholders. In terms of employees, the corporate social responsibility relies on ensuring an individual with the fair work conditions that means safe, healthy and without discrimination environment and give possibilities for training and reasonably salaries. The good relations between employees and the company influence positively customer’s experience. These tendency increase revenues and reduce costs (e.g. looking for new staff). Nowadays, customers have higher level of awareness; therefore they want to be bond with the companies, which have high standards of ethics. Nowadays more and more customers purchase Fairtrade and organic products than others and are loyal to the brands, which respects animals’ and human’s rights. Sharing the profit supporting charities and local communities is also important regarding the CSR. Businesses try to be eco-friendly reducing chemicals or using only natural ingredients or recycled material to produce the packages of the items, because of the changes in climate and increase in environmental pollution.

However, according to Vogel (2008), the ‘ethical’ products constitute niche on the market. Generally, people purchase items on the basis of price and quality, not because of involvement in charities work or environmental protection. Furthermore, the studies (Forbes 2008) show that the companies with the good CSR reputation indicate poorer performance than those with the poor CSR records. Vogel (2008) admits also that CSR has no influence on financial performance and activities of competition. Moreover, some shareholders do not want to pay additional costs, which are associated with CSR.

3. Research methodology

3.1 Research design

In the research, the positivist philosophy will be selected. This doctrine is the most relevant to the methods, which are utilized in this study. As a philosophy, positivism indicates that the knowledge about the specific area of the research should be gathered only from a scientific source. The positivists believe that the scientific, mathematical tools enable to examine the problem more accurate and reduce the errors recurrence. The doctrine was introduced by French philosopher Auguste Comte (Crowther 2012). The positivists don’t speculate a conclusion from a subjective approach and don’t let emotions and the feeling has an impact on his judgement because they are in the human’s consciousness. According to principles of positivism, only the knowledge based on facts, which are gathered through observation and measurement, can be trustworthy. According to Wilson (2010), the researcher, who took a positivist approach, has to be independent of his research, which means minimal interaction with the participations and purely objectivity.

Moreover, Crowther and Lancaster (2012) emphasize that the general principle of the positivism is to adjust the deductive approach. According to Wilson (2010), the aim of the deductive approach is to develop the hypothesis, which is based on existing theory and then to design research strategy to test this hypothesis.

According to Snieder and Larner (2009), the deductive approach follows the logical path most closely. The reasoning begins with a theory and leads to create a new hypothesis. The hypothesis is tested by confronting it with the observation and this causes the confirmation or a rejection of the hypothesis.

The instrument selected for the purpose of this research will be online survey. The request with the survey will be sent as an email to every member of the loyalty scheme. The survey will have form of questionnaire. There will be closed- ended 40 questions with multiple choices (a, b, c, d) and likert questions (strongly agree/agree/neither agree or disagree/disagree/strongly disagree). After pressing the link attached in an email, the individual automatically will be sent to the website, where will be set a questionnaire. The quantitative data will be collected due to closed-ended questions about factors, which have an impact on the loyalty of the buyers.

3.2 Data collection

The study will start with the collection of secondary data. During this phase, the online database will be accessed such as Ebsco and ProQuest. Furthermore, the researcher will collect data from libraries (British Library, LSC). The collection of secondary data constitutes the basis of the primary data collection phase. The next stage of the process will be selection of the primary data.

Primary data collection has been selected for the purpose of the study. In the research, the web-based questionnaire will be applied, because this method is cost effective and its small probability of error, therefore specific information could be gathered.

3.3 Sampling

The study will be conducted on the customers of Waitrose. The request to fill the questionnaire will be sent to every member of the Waitrose loyalty scheme, who owns also myWaitrose card. Only 300 surveys with questionnaire will be chosen at random. The probability sampling will be utilized in the sample. As far as the questionnaire is concerned, the simple random sampling approach will be applied in the research, because every participant of the survey will have equal chances for selection.

3.4 Data analysis

After the quantitative data will be collected, the information will be coded, edited and analysed . In order to record the data, the Excel spreadsheet will be utilized. Moreover, the data will be analysed through the use of the program as SPSS.

3.5 Time horizon

It is the intention to finish the research in the following order. Firstly, 1st of November 2015 the questions for the survey will be prepared. The emails with the request about filling the questionnaire will be sent to the customers on the 3rd of November 2015. The last survey will be submitted by 29th of November 2015. The 30th of November 2015, the quantitative data will be collected. The 1st of December 2015, the data will be analysed and summarised. Finally, the report will be finalized by the 3rd of December 2015.

[...]