This thesis has been submitted in fulfilment of the requirements for a postgraduate degree (e.g. PhD, MPhil, DClinPsychol) at the University of Edinburgh. Please note the following terms and conditions of use: • This work is protected by copyright and other intellectual property rights, which are retained by the thesis author, unless otherwise stated. • A copy can be downloaded for personal non-commercial research or study, without prior permission or charge. • This thesis cannot be reproduced or quoted extensively from without first obtaining permission in writing from the author. • The content must not be changed in any way or sold commercially in any format or medium without the formal permission of the author. • When referring to this work, full bibliographic details including the author, title, awarding institution and date of the thesis must be given. Are Tesco customers exhibiting a more social type of loyalty towards Tesco and Tesco Clubcard? A critical analysis of the nature and type of Tesco customer loyalty to Tesco in Dundee. Jason James Turner Doctor of Philosophy (PhD) The University of Edinburgh 2012 Declaration I declare that the following thesis is all my own work and has not been copied or plagiarised from any other source. I have read and understood the University’s Academic Deceit Policy and Procedures and have fully complied with all of its requirements in this thesis. The thesis does not contain material accepted for any other degree or diploma at any University. Jason James Turner 13th April 2012 i Acknowledgements The following persons deserve a mention for assisting this study reach its fruition: Prof. John Dawson, University of Edinburgh, in his capacity of supervisor. The Carnegie Trust for their partial funding of aspects of the fieldwork. Tesco Extra and Tesco Superstore (Riverside) for allowing the researchers access to respondents. The research team for carrying out the quantitative section of the research. The University of Abertay Dundee for their support whilst I was a member of staff at the institution. The University of Edinburgh for their support and assistance in my academic development. Dr Andrew Allsebrook and Dr James Kelly for their valuable comments. Ms. Pamela Cord for her support and photocopying expertise on the final day before submission. Finally I would like to acknowledge the assistance of my parents for their support in all aspects of my life. ii Table of Contents Section Subject Page Number Declaration i Acknowledgements ii Table of Contents iii Table of Tables and Figures vii Abstract ix Chapter One: Introduction 1 1.1 Research background 1 1.2 Research approach 5 1.3 Structure of the thesis 6 Chapter Two: Literature Review of Social and Customer 10 Relationships 2.1 Introduction 10 2.2 Customer Relationship Marketing 11 2.2.1 Customer focus 14 2.3 Social Relationships 19 2.3.1 Relationship phases 22 2.3.2 Attachment and love 25 2.3.3 Love 26 2.3.3.1 Commitment 28 2.3.3.2 Intimacy and Passion 29 2.4 Summary 31 2.5 Loyalty defined 32 2.5.1 Types of loyalty 34 2.5.2 Attitude and behaviour 41 2.5.3 Satisfaction 45 2.5.4 Trust 49 2.5.5 Commitment 53 2.6 Gaps in the literature 56 2.7 Conclusion 57 iii Section Subject Page Number Chapter Three: Literature Review of Loyalty programmes 60 3.1 Introduction 60 3.2 Loyalty in retail 61 3.3 Loyalty programmes defined 66 3.3.1 Types of loyalty programmes 68 3.3.2 Loyalty programmes 73 3.3.3 Loyalty programmes in grocery retail 75 3.3.4 Limitations surrounding loyalty programmes 80 3.3.5 Loyalty programmes have loyalty potential 86 3.3.6 Tesco Clubcard and realising loyalty 88 3.3.6.1 Tesco and Customer Clubs 94 3.4 Gaps in the literature 98 3.5 Conclusion 100 Chapter Four: Methodology 102 4.1 Introduction 102 4.2 Research aims and hypotheses 102 4.3 Research design 105 4.3.1 Quantitative method 106 4.3.2 Qualitative method 106 4.4 Survey method 108 4.4.1 Survey design - questionnaire 109 4.4.2 Survey design - interview 119 4.4.3 Pre-testing 120 4.4.4 Location of survey 125 4.4.5 Sampling 128 4.5 Conclusion 133 Chapter Five: Analysis and discussion of quantitative data relating 135 to nature of customer loyalty to Tesco and Tesco Clubcard 5.1 Introduction 135 5.2 Customer shopping profiles 135 5.2.1 Customers preferred grocery retailer 137 5.2.2 Factors influencing choice of store 138 5.3 Customer loyalty 142 5.3.1 Nature of customer loyalty 146 iv Section Subject Page Number 5.3.1.1 Nature of Tesco customer loyalty towards preferred grocery 149 retailer 5.3.1.2 Levels of satisfaction towards preferred grocery retailer and Tesco 151 Clubcard 5.3.1.3 Levels of trust towards preferred grocery retailer and Tesco 153 Clubcard 5.3.1.4 Levels of commitment towards preferred grocery retailer and 155 Tesco Clubcard 5.3.1.5 Levels of recommendation of preferred grocery retailer and Tesco 158 Clubcard 5.3.1.6 Levels of passion towards preferred grocery retailer and Tesco 160 Clubcard 5.3.1.7 Levels of emotional attachment towards preferred grocery retailer 163 and Tesco Clubcard 5.3.1.8 Levels of loyalty through past and future patronage of preferred 165 grocery retailer 5.3.1.9 Correlation analysis using Spearman’s rho in terms of the nature 167 of loyalty towards preferred grocery retailer and Tesco Clubcard 5.4 Conclusion 172 Chapter Six: Analysis and discussion of quantitative data relating 175 to type of customer loyalty to Tesco Clubcard 6.1 Introduction 175 6.2 Loyalty programmes 175 6.2.1 Nectar card and Somerfield Savers card 178 6.3 Tesco Clubcard 181 6.3.1 Tesco Clubcard use and relevance 187 6.3.2 Tesco Clubs 194 6.3.3 The type of loyalty towards Tesco Clubcard 196 6.3.4 The type of loyalty towards preferred grocery retailer 201 6.3.5 The relationships between type of loyalty towards Tesco Clubcard 206 and preferred grocery retailer 6.4 Conclusion 210 Chapter Seven: Analysis and discussion of qualitative data 212 relating to nature and type of loyalty to Tesco and Tesco Clubcard 7.1 Introduction 212 7.2 Customer loyalty to Tesco and Tesco Clubcard 212 7.2.1 Do respondents perceive a relationship with Tesco and Tesco 213 Clubcard? v Section Subject Page Number 7.2.2 Do respondents view a social dimension to their relationship with 217 Tesco and Tesco Clubcard? 7.2.3 What loyalty means to respondents 219 7.2.3.1 The social nature of customer loyalty to Tesco and Tesco 220 Clubcard 7.2.3.2 The nature of customer loyalty to Tesco and Tesco Clubcard 222 7.2.4 Loyalty and gender 224 7.2.5 The type of loyalty respondents have towards Tesco 226 7.2.6 The type of loyalty respondents have towards Tesco Clubcard 228 7.3 Discussion of qualitative results 231 7.4 Conclusion 240 Chapter Eight: Conclusion 244 8.1 Thesis summary 244 8.2 Contribution of the research 250 8.3 Thesis limitations and suggestions for future research 254 References 257 Appendix vi Table of Tables and Figures Section Subject Page Number Table 1 Comparison between relationship and social marketing 23 Table 2 Academic discussion of loyalty programmes 74 Table 3 Interview themes 120 Table 4 Background of interviewees 130 Table 5 Frequency of shopping based on the variables of age and gender 136 Table 6 Frequency of shopping based on the variables of age and gender 137 of those customers who preferred Tesco Table 7 Preferred grocery retailer based on the variables of age and 138 gender Table 8 Most important factors influencing choice of store based on age 139 and gender Table 9 Least important factors influencing choice of store based on age 141 and gender Table 10 Themes from respondent’s definitions of loyalty 143 Table 11 Validity check using Cronbach α test – nature of loyalty and 147 preferred grocery retailer Table 12 Validity check using Cronbach α test – nature of loyalty and 147 Tesco Clubcard Table 13 Statistics relating to loyalty to preferred grocery retailer 150 Table 14 Statistics relating to satisfaction with preferred grocery retailer 152 and Tesco Clubcard Table 15 Statistics relating to trust with preferred grocery retailer and 154 Tesco Clubcard Table 16 Statistics relating to commitment with preferred grocery retailer 156 and Tesco Clubcard Table 17 Statistics relating to recommending preferred grocery retailer and 159 Tesco Clubcard Table 18 Statistics relating to passion towards preferred grocery retailer 161 and Tesco Clubcard Table 19 Statistics relating to emotional attachment to preferred grocery 163 retailer and Tesco Clubcard Table 20 Statistics relating to future patronage and returning to preferred 165 grocery retailer Table 21 Correlations using Spearman’s rho between antecedents of 168 loyalty and loyalty Table 22 Correlations using Spearman’s rho between loyalty to preferred 170 grocery retailer and tested antecedents by age and gender Table 23 Correlations using Spearman’s rho between loyalty to Tesco 171 Clubcard and tested antecedents by age and gender Table 24 Ownership of loyalty cards in grocery sector 176 Table 25 Tesco Clubcard ownership based on the variables of age, gender 177 and preferred grocery retailer Table 26 Tesco Clubcard ownership based on the variables of store type 177 and frequency of shop Table 27 Respondents reasons for using Nectar card 179 Table 28 Respondents reasons for using Somerfield Saver card 179 Table 29 Respondents reasons for using Tesco Clubcard 182 Table 30 Respondents opinions on what Tesco gains from Tesco Clubcard 185 vii Section Subject Page Number Table 31 Statistics relating to respondents always using Tesco Clubcard 188 Table 32 Statistics relating to Tesco Clubcard returns 189 Table 33 Statistics