EDEXCEL BUSINESS STUDIES CASE STUDY JUNE 2009 - UNIT 1 (Tesco plc 2007)

hmmm herez my answer...da questin was sucha pain in da ***

Analyse the benefits of using loyalty card scheme as a promotional technique to Tesco Plc.

Promotion is one of the four elements in the marketing mix , that promotes, that is inform and/ persuades customers to purchase the products and services provided by the business. Promotional techniques are the ways in which they are achieved.

Tesco Plc uses loyalty card scheme along with many other community initiatives in order to promote it’s products. Using this card, customers will be able to benefit from reduced costs while shopping at Tesco.

Tesco Plc as a retailer, targets a very large proportion of the market, and there fore, while choosing their promotional techniques, they must ensure it is able to reach its target market. Using loyalty card scheme will be of benefit to Tesco, as it will attract a lot of customers towards its store in the hope of shopping at lower prices. Besides, in order to be able to get hold of a “loyalty card”, the customers will have to prove their “loyalty” to Tesco plc by shopping at their stores as often as possible, in the process; Tesco will be able to benefit from increased sales and profit. Also, once the customers get their loyalty cards, they will tend to return to Tesco more often for their groceries shopping as they will then be able to purchase products with cheaper price than if they purchased the same products from other retail stores. However, customers may not like the fact that they will have to prove their loyalty by shopping more often firstly, to be able to get a loyalty card, and next, to shop even more to gain enough points to get the discounts. Also, this method of promotion is quite risky when we consider the fact that tesco will have to provide a large number of customers at a discounted rate for indefinite period of time, and there fore, the promotional technique is very expensive as well.

In conclusion it can be said that, using loyalty scheme cards is a very smart move taken by Tesco, as besides being used as a promotional tool, it can also be used as a market research technique if the firm keeps track of the frequent purchases made by their loyal customers along with their likes and dislikes. However, as this techniques is likely to incur a lot of costs, but then again, Tesco’s already high returns will probably be enough for it to fund for such investments.

Heya! Bug B thnx for crrcting ma answer ........LOL!!
buh the point is dat i cnt get any more limitations for tesco product diversification........... i had one more point in my mind buh i wasnt sure about including it , the falling demand of some products wre due to the loss made by royal bank of scotland which is joint venture with tesco??? like it affected the company's reputation? would that b crrct?

Hey Nes I got this from wikipedia:



No where does it say that customers get discounts for shopping at Tesco, they are just rewarded for it. But they do get exclusive deals.

And don't worry, if such a question comes, it won't be for promotional purposes only, we will be able to right about it being a market research tool. Their card scheme is what gave them an edge. Tesco somewhat pioneered retailing because they tried things which others didn't and wasn't aware of, like this card scheme.

Btw, what do you guys think about product diversifiction increasing internal competition. Diversification can be a different brand of product right?

@Z for all: I don't think a loss made by RBS will affect Tesco, but negative pulicity might. And Tesco bought out RBS' stake in the Tesco Personal Finance project, so RBS is no more. You can't write this though, just thought I'd update you on the situation.

Edit: One last thing, customers don't need to shop regularly for a card, they can just apply for it. http://www.tesco.com/clubcard/clubcard_n/howtojoin.asp

I know, but these aren't the same. Customers don't directly get a discount on their purchases in Tesco, so I'm pretty sure it's not right to say they do.

I had a coffee world discount card, and used to get 10% discount everytime I visited the place, but in Tesco its like Agora's card scheme, you collect points based on your purchases then redeem them later. These act as a reward rather than a discount.

yeah..i wrote that in my answer...the customers may not like the fact that they will have to purchase to the limit to get hold of a card and then further purchase more to be able to get discount...

No they don't have to purchase to a limit to get a card. They can just apply for it directly by taking a form in-store.

I'm not calling it a discount card because customers don't get the discounted price until they build up and redeem points. For a discount card, you usually don't need to collect anything, just an initial fee or maybe a yearly fee will suffice, and you get it everytime you use their service.

I didn't mention this before,

Official Site:


Part of a Clubcard Review:




That can be your point, customers having to build up on points and then cashing them in to receive vouchers for any form of discounts, instead of being able to use them to receive discounts directly, and maybe even poor in-store points value (1 point = 1 pence).

Plus they also encourage you to spend more by sending you exclusive deals (confirmed from another review).


Edit: All this time I thought you called the Clubcard a discount card in your answer. God I need to pay more attention when reading answers....

Guyx..............wht abt internal competition..........
how it effects Tesco line of product and its revenue???