Background

In the increasingly competitive global market, loyal customers are an important asset in the success of a global firm. Customers, drawn from diverse markets, are a reliable source of revenue based on their purchasing habits (Li & Green, 2010). According to Reichheld and Sasser (1990), loyal customers are a consistent source of a firm’s revenue that stems from increased as well as repeat purchases. They add that such customers are willing to buy purchases again and again in the face of competitive alternatives that may trigger a switch. Customer retention is a direct product of successful customer loyalty strategy. Kerin et al (2009) and Reichheld and Sasser (1990) found that a 5% improvement in customer retention results into a 25-85% increase in profits. Given the value of customer retention, this study looks at how international retailers ensure customer retention which then leads to customer loyalty.

Aim

Aim is to explore and critically evaluate factors that influence customer loyalty among global retailers in the retail and grocery industry. The focus is on Tesco and Wal-Mart which are some of the leading retailers in the UK. The study will enrich the existing body of literature with empirical findings and further provide a basis for future research in the global marketing and customer loyalty.

Objectives

This study seeks to achieve the following objectives:

1. To critically review previous studies to investigate which factors can have influence on customer loyalty
2. To determine what factors influence customer loyalty by conducting the comparison between Tesco and Walmart
3. To find, evaluate the critically assess the strategies being employed by international retailers to retain customers

Think high level objectives how you will meet the aim.

These objectives will be achieved through an empirical research with a focus on Tesco and Wal-Mart. The two firms are global and successful retailers with a diverse customer base. Therefore consumer views through a questionnaire will help to achieve the objectives. Further, secondary sources of data such as journals and books will play a key part towards realising the objectives.

Literature Review

Through loyal customers, firms are able to maximise profits since such customers are willing to buy more frequently, offer product or service recommendation to others, spend their money to try on new products or services, and provide firms with sincere feedbacks (Reichheld & Sasser, 1990). Rust et al (2004) opines that to deliver value to consumers, firms need to develop loyal customers that can lead to increased purchase quantity, frequency, and limiting switching behaviour. Different studies have sought to establish factors that influence or generate loyalty among customers. In their study, Rahman and Jalil (2014) found that product quality, service quality, and price strategy were key determinants of customer loyalty. Yuen and Chen (2010) demonstrate that service quality and product quality are critical factors towards achieving loyal customers. Customer loyalty depends on their level of satisfaction. According to the European Customer Satisfaction (ECSI) model, perceived quality is an important element in customer loyalty (Gronholdt et al., 2000). Perceived quality in ECSI model is divided into service or product quality (hardware) and customer interactive elements like atmosphere of the service environment and personal behaviour (human ware). Pattarakitham (2015) found that customer loyalty is influenced by brand image, customer satisfaction, and perceived value.

Bruhn and Grund (2000) state that in the face of growing intensity of competition, firms in established industries are shifting from attracting new customers to protecting and improving customer loyalty. However, despite a lot of research on customer loyalty, Davis-Sramek et al (2008) noted that firms find it difficult to implement because much of it is either contradictory or ambiguous. This study investigates factors influencing customer loyalty among international retailers, specifically focussing on Wal-Mart and Tesco and the strategies they employ to achieve customer loyalty.

Methodology

According to Martin and Guerin (2006), when conducting research, research methodology can be based on systematic investigation, sample selection and analysis. Although different strategies are available, this study will adapt case as the study research strategy. Yin (2003) stated that case study research relies on multiple sources of evidence and makes use of prior theory to guide data collection and analysis. This study will use primary and secondary data. Secondary data will be collected from journals, books, industry reports and company published data. Primary data will be collected through a self-administered questionnaire that will be designed and administered to customers of Wal-Mart and Tesco. A sample of 50 customers drawn from each firm will be randomly selected as respondents. Different factors such as perceived value, customer satisfaction, product quality and service quality will be examined to determine if they have any influence on customer loyalty.

Case study research is faced with criticisms and thus it is important to establish validity and reliability of data. To ensure validity and reliability of data, Yin (2003) suggested tactics that can be used. For this study, construct validity will be used; this will involve multiple sources of evidence. Case study protocol will also be applied to ensure data reliability.

Bibliography

Bruhn, M., & A., M. (2000). Theory, development, and implimentation of national customer satisfaction indices: the Swiss index of customer satisfaction (SWICS). Total Quality Management, 11(17):1017-1028.

Davis-Sramek, B., Mentzer, J. T., & Stank, T. P. (2008). Creating consumer durable retailer customer loyalty through order fulfillment service operations. Journal of Operations Management, 26:781-797.

Gronholdt, L., Martesen, L., & Kristensen, K. (2000). The relationship between customer satisfaction and loyalty: cross-industry differences. . Total Quality Management, Vol.11, No.4/5&6:509-514.

Kerin, R. A., Hartley, S. W., & Rudelius, W. (2009). Marketing (9th Ed.). Boston, MA: McGraw-Hill.

Li, M. L., & Green, R. D. (2010). A Mediating Influence on Customer Loyalty: The Role of Perceived Value. Journal of Management and Marketing Research, 1-12.

Martin, C. S., & Guerin, D. A. (2006). Using Research to inform design solutions. Journal of Facilities Management, 4(3):167-180.

Pattarakitham, A. (2015). The factors influence customer satisfaction and loyalty: A study. XIV International Business and Economy conference (IBEC). Bangkok, Thailand.

Rahman, M. K., & Jalil, A. (2014). Exploring factors influencing customer loyalty: An empirical study on Malaysian hypermarkets perspective. British Journal of Applied Science & Technology , 4(14):1772-1790.

Reichheld, F. F., & Sasser, W. E. (1990). Zero defections. Quality comes to services. Harvard Business Review, 68 (5):105-111.

Yin, R. K. (2003). Case study research: Design and methods, 3rd edition. . London: Sage.

Yuen, F., & Chan, S. (2010). The effect of retail service quality and product quality on customer loyalty . Journal of Sata Base marketing and Customer Strategy Management, 17:222-240.