FINAL DISSERTATION

“An analysis of the effectiveness of loyalty cards, its methods and outcomes: The case of TESCO (UK) 2010 & 2011”

SUBMITTED BY

Muhammad Wajahat Siddiq

BITE ID: 43449

Submitted in partial fulfilment of the requirement for the MBA Innovative Management

In collaboration with Coventry Universityand the British Institute of Technology & E-commerce

August 2011

ABSTRACT

Dissertation Statement of Originality

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Except for those parts in which it is explicitly stated to the contrary, this work is my own. It has not been previously submitted for assessment at this or any other institution.

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ABSTRACT

ABSTRACT

Shopping has always been fascinating activity and also has seen a latest tendency,

maintained more than duration in the face of cards. This is very modern activity to

maintain and attract customers. Now a day’s top retailers and supermarket include a

scheme called loyal cards which enables them to change starting from transaction

marketing to relationship market. Furthermore this research investigates an analysis of the

effectiveness of loyalty cards, its methods and outcomes: the case of retails industry UK

2010 and 2011 and also discusses the impact of loyalty cards on customer’s perceptions.

“Parvatiyar & Sheth, 2005 relation advertising is where businesses spotlight on the

relationship among businesses plus customers, amid importance on consumer

maintenance”.

Loyalty cards scheme is one of the relationships marketing practice, retailer control twisted

using store up loyalty cards with supermarket, top supermarket like Sainsbury and Tesco

set the standard within the market and now smaller retailer such as Summerfield, Iceland’s

are using them in order to retain customers. Therefore for full understanding of the study

and investigation the literature was narrated from past research and studies with related

theories. Moreover the methodological framework for testing the two hypotheses of this

study is based on different techniques. The quantitative research was carried out which

involved questionnaires between different age groups to understand customer perspective

on importance of loyalty cards. In research findings and questionnaire data that has been

collected was compared with literature. In the last chapter the conclusion was carried out

on writers’ understanding of the literature review and data collected through questionnaire.

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ACKNOWLEDGEMENTS

ACKNOWLEDGEMENTS

First of all would like to thank all mighty GOD for providing me such a knowledgeable

opportunity to excel myself. I would like to gratefully and sincerely thank Dr. Lawrence

Mensah Akwetey for his guidance, understanding, patience, and most importantly, his

friendship during my MBA studies for everything you have done for me, Dr. Lawrence

Mensah Akwetey I thank you. I also would like to pay my gratitude towards those who

have provided me a well rounded experience consistent my long-term career goals; those

who have encouraged me to not only grow as an experimentalist but also as an independent

thinker. I am not sure many graduates given the opportunity to develop their own

individuality and self-sufficiency by being allowed to work with such independence.

I would also like to thank Mr David lecturer LCBMIT for his constant help, support and

guidance throughout this study. Also would like to thank him for providing me the best

knowledgeable experimental information, data for this particular study.

I also would like to thank all the academic and technical staff of the British Institute of

Technology and E-Commerce for their constant support and help. I also would like to

show my gratitude for the computing and library staff of the college for providing me the

best environment and services throughout research.

My parents Mr & Mrs Muhammad Siddiq deserve my special thanks for the excellent

educational foundation they laid for me with much love and care, many years ago. Last but

not the least I thank my sisters Uzma, Faiza, my elder sweet brother Muhammad Ali and

his wife Ayosha Ali for their moral support and everyone who in one way or the other

contributed in his or her small way to help me complete this course of study.

God Bless You All.

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DEDICATION

DEDICATION

This study is Dedicated to Almighty ALLAH and My Dear Parents

“I wasn't raised in a mansionOr fed with a silver spoon

I wasn't brought up to think money is everythingBecause only fools believe that’s true

I wasn't raised to live out my parents dreamBut to proudly dream my own

I wasn't raised to walk the popular pathBut to strongly pave my own

I wasn't raised with material thingsBut something great indeed

I was raised with loveAnd love is all I need”

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TABLE OF CONTENTS

TABLE OF CONTENTS

ABSTRACT iii

ACKNOWLEDGEMENTS iv

DEDICATION v

LIST OF FIGURES 6

LIST OF TABLES 6

CHAPTER 1 INTRODUCTION………………………………………………....1-10

1.0 Introduction 1

1.1.0 Background 1

1.2 Literature Review 5

1.3 Problem Definition 5

1.4 Objectives of Research 6

1.5 Methodology 7

1.5.1 Aim of Study 8

1.7 Organizing of the learning 8

1.7.1 Map for the Study 9

1.8 Conclusion 10

CHAPTER 2 LITERATURE REVIEW OF RELATIONSHIP MARKETING AND

LOYALTY PROGRAMMES……………………………………………………..11-31

2.0 Introduction 11

2.1.0 Relationship marketing 11

2.1.1 Customer Loyalty and Loyalty programmes 14

2.1.2 The loyalty schemes and retail industry 18

2.1.3 Price Promotions 21

2.2.0 The Superstore Industry 22

2.2.1 Introduction 22

2.2.1.1 Backdrop of superstore loyalty cards 22

2.2.1.2 Tesco Club Card 23

TABLE OF CONTENTS

2.2.1.3 The Sainsbury Reward & Nectar Card 26

2.3.0 Safeway Morrison’s, Asda and Other Supermarket Loyalty Cards 29

2.3.1 Safeway/Morrison’s 29

2.3.2 Asda 30

2.3.4 Somerfield 31

2.3.5 The present Market state and prospect of Loyalty Cards 31

CHAPTER 3 RESEARCH METHODOLOGY AND DESIGNE…………………39-46

3.0 Introduction 39

3.1.0 Research Design 39

3.1.1 The research process 39

3.2.0 Research Method 41

3.3.0 Questionnaire Design 42

3.4.0 Sampling Method 43

3.5.0 Data Analysis 45

3.6.0 Limitations 45

3.7.0 Conclusion 46

CHAPTER 4 FINDINGS AND ANALYSIS……………………………….............47-66

4.0. Introduction 47

4.1.0 Background 48

4.2.0 Determining the efficiency of loyalty card compare to the cost reductions 52

4.2.1 To discusses the efficiency of the point cards 55

4.3.0 Elaborated the grounds whether loyalty cards enhance customer retention

headed for superstores 60

4.4.0 To discusses the findings on loyalty card scheme to verify and enhance the market

share of superstores 64

4.5.0 Conclusion 66

CHAPTER 5 CONCLUSION AND RECOMMENDATION …………………….67-75

5.0: Introduction 67

5.1.0 Span of the Study 67

TABLE OF CONTENTS

5.1.1 Research objectives and problem definition 67

5.1.2 Methodology 69

5.2.0 Research contribution 70

5.2.1 To establish, the efficiency of point card compare to cost decline 70

5.2.2 To establish the efficiency of loyalty cards 71

5.3.0 Recommendations and Areas for further research 72

5.3.1 Local market network 73

5.3.1.1 Cash incentives instead loyalty points 74

5.3.1.2 Fresh products 74

5.3.1.3 Special events like holidays, Mother’s day, Father’s day, valentine day etc (Extra

points for use of card in holidays 74

5.3.1.4 Party points when customers are buying product for parties should rewarded for

extra benefits and points 74

5.3.1.5 Referrals points when introducing new friend or family 75

REFERENCES AND APPENDIXES …………………………………………….76-101

References 76-85

Appendix (A)

Survey questionnaire 86-90

Appendix (B)

Survey results according to gender 91-93

Appendix (C)

Survey result according to age category 94-100

LIST OF FIGURES

LIST OF FIGURES

Figure 1:1 The purposes of the research 7

Figure 1.2 Research stages source investment attraction by Dr Lawrence 8-9

Figure 2.1 Sweeney & Source Kilby 2005 34

Figure 4.1 demographic breakdowns 49

Figure 4.2 Represent the percentage of the customers who visited the supermarkets most often 50-51

Figure 4.3 Interviewers view regarding loyalty cards 53

Figure 4.4 Respondents view regarding permanent low prices 54

Figure 4.5 respondents receive money off vouchers 59

Figure 4.6 Female & Male Opinion over loyalty card and collecting points 63

Figure4.7 Different age group respondent’s opinions about convenience and

loyalty 65

Figure 5.1 Further suggestions what needs to be added 73

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LIST OF TABLES

LIST OF TABLES

Table 2.1: Consumers distribution among UK supermarket. Source: Marketing Week,

4th August 2005 33

Table 2.2: Shopping preferences dictating where consumers shop. (Source:

Marketing Week, 4th August, 2005) 34

Table 2.3: Price linked reason dictate where customers shop. Source: Marketing

Week, 4th August, 2005 35

Table 3.1: Sample breakdown in regards to gender and age allocation 44

Table 3.2: Sample distribution according to gender 44

Table: 4.1 Represent the percentage of the customers who visited the supermarkets

most often

49

Table 4.2: interviewer’s opinion about loyalty cards and cost reduction 52

Table 4.3 Respondents purchasing habits of goods on special offer 55

Table 4.4: Category of loyalty card and usage 56

Table 4.5: how often customers exchange their loyalty points 57

Table 4.6 Respondents receive money off vouchers 59

Table 4.7 why customers call the same store 60

Table 4.8: Demographical analysis of difference of opinion when it comes to

collecting points and loyalty card 62

Table 4 .9 Different age group respondent’s opinion about convenience and

Loyalty 65

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INTRODUCTION

CHAPTER 1

INTRODUCTION

1.0 Introduction

Most of the conversation in this research mainly consists on loyalty card schemes. This

chapter provides the comprehensive backdrop of the loyalty card system and also

highlights the rationale for the research issues. This research is stand on one of the major

marketing activity called loyalty card scheme. Loyalty card schemes are basically

structured marketing activities that provide incentives and also encourage loyal buying

behaviour. Loyalty card scheme has wide background in retailing generally in marketing

which recognize the card owner as part of loyalty plan. This trend is almost everywhere

around the world mainly popular in retail industry and has different name in different

countries, like in the United Kingdom it’s known as loyalty card whereas in United states

it’s known as reward card or discount card and so on so forth.

1.1.0 Background

Shopping has always been fascinating activity and also has seen a latest tendency,

maintained more than duration in the face of cards. This is very modern activity to

maintain and attract customers. Now a day’s top retailers and hypermarket include a

scheme called loyal cards which enables them to change starting from transaction

marketing to affiliation market. According to the (Buttle, 1996) where marketing is

considered as initial, trade and deliver merchandise, it’s now importantly considered to

maintain good association with clients to boost up the business as well as the latest ideas.

Moreover according to the (Parvatiyar & Sheth, 2005) relation advertising is where

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INTRODUCTION

businesses spotlight on the relationship among businesses plus customers, amid importance

on consumer maintenance. In broader meaning given by (1983 Berry), enhancing,

maintaining and attract customer relationship is called relationship marketing.

Relationship marketing could be classified from personalised services to catalogue which

further includes brand loyalty, strategic alliance, loyalty programmes, and internal

marketing. Gummesson 1994, Kotler 1992, Morgan and Hunt 1994. According to

woodcock & Stone 1995 relationship marketing include high range of marketing

techniques which incorporated with communication, customer care, sales indentify process

of individual customers and have relationship with them, which will ultimately beneficial

for both market and customers. Good relationship builds profitable infrastructure between

customer and marketers. Bristol & Bellizzi 2004. They have also mentioned in their studies

that customer loyalty is the main source to reduce cost while customer retention is

associated with lower cost incurred on customer development. Moreover stronger and

positive perceptions toward retailers could earn higher profit to an organization Bristol &

Bellizzi 2004. Stores have tried to increase loyalty in past decade by increasing loyalty

programmes.

According to Karolefski 1998 loyalty programmes especially card based loyalty

programmes gained much popularity during 1990. Because this is normal process for

customer to obtain the card and shop around the markets and get loyalty points by swiping

ever time they visit the store. This process also maintains customer record by identifying

customer purchases and number of point they gained on particular visit. This is how they

make customers more loyal by offering rewards and incentives at particular store. Studies

have shown that by offering incentives and rewards through loyalty schemes, provides

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INTRODUCTION

consumer maintenance and consumer share improvement Verhoef, 2003. Purchases at all

supermarkets plus purchases at particular store defines the ratio which creates the

customers share development Rogers and Peppers 1999.

TNS the market researchers found that 85% of the UK population have one loyalty card

“Shabi 2003”. According to Shabi 2003 UK retailers especially supermarkets are most

competitive retail industries. Moreover grocery retailings are the classic example of

oligopoly in the UK because they claimed that with three or more supermarkets they

capture 60% of the marketplace “Shabi 2003”. Because of the high competitive

environment among the retailers, still there is steady exploration for having a frame above

the others. Shop loyalty cards have been established by the grocery retailers in 1995 by

TESCO called TESCO club card, but because emphases gone up in regards to the loyalty

card schemes and customers loyalty and retention Mark and Spencer and John Lewis then

introduced store card this is why retailers were introduced with another competitive

activity.

Shabi 2003 defines that it was Tesco supermarket who took the initiative to introduce the

loyalty card in 1995 and later on introduced club card with more benefits. This is why with

the circulation of club cards customers started to spend more at Tesco, about 28% at Tesco

and 16% less at Sainsbury. In 1996 Sainsbury launched its own loyalty card according to

Shabi 2003 that is why its membership went up to 10 million by 1998. In bigger

competition line Safeway introduce abc loyalty cards with collaboration with Argos

introduced foremost card. Subsequently Tesco introduced Club card plus which was

loyalty and credit card in one. Moreover Sainsbury’s came into the competition and

introduced Nectar card with the collaboration with Barclaycard, BP and Debhnams in

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INTRODUCTION

2006. This is a scheme where retailers have to spend initially to target more and more

customers and cost is high as per the studies, which is why safe ways surrender its loyalty

card scheme due to high cost involved, whereas Summerfield introduced the saver card and

discard premier loyalty card. By 2003 Tesco had 10 million active customers whereas

Sainsbury nectar card hhad about 11 million customers Shabi 2003.

As discussed earlier in this chapter that loyalty card have been found to be the best

marketing approach to retain and target more customer. However according to Data

monitor 2005 with increasing success of loyalty cards there is also growing weakness in

loyalty card schemes as well as among customers that merchants are started to come out of

errand with loyalty cards. Because of numeral of loyalty card in around, retailers are

fighting for pocket place due to the lofty number of loyalty card in marketplace.

Furthermore Data monitor 2004 mentioned that ASDA being biggest super retail market

never launched its loyalty card because they believe in worth for cash throughout inferior

prices, that is the reason why safe ways discard its system understanding that the customers

favour worth for cash then to get more loyalty card having spending more on goods every

day.

ASAD lower price strategy has even endangered Sainsbury’s marketplace contribution

Data Monitor 2004. CEO “Andy Bond famously said you can’t buy loyalty with plastic

points”. ASDA has launched EDLP scheme rather than loyalty plastic card scheme which

mean customers get lower prices every day and that’s what makes customer to be more

loyal with ASDA. For example if customers spend £120 at Sainsbury and £110 at TESCO

and they get voucher of £20 which is to be spending on next visit that means customers

have to spend again £120 and £110 in order to redeem their £20 voucher. While at ASDA

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INTRODUCTION

customers get a 10% cheaper product which is more reliable. Moreover retailer like

Waitrose a very successful supermarket never compromises on it quality and standard that

is why they never introduced a point base loyalty card but still have high number of

customers.

1.2 Literature Review:

Ultimate rationale of this section is to talk about the long term association of consumer

with retail business, where the client devotion is most significant. In today’s aggressive

surroundings retail institute use strategy to invite the consumers, as consumer hold is the

mainly significant things for every organization. There are lots of chapters and definitions

written by lots of author, due to time scale and some restriction some of them are discuss in

chapter 2 under the heading literature review. The literature review has been done through

various sources which are as follow,

1.3 Problem Definition:

Loyalty cards scheme is one of the relationships marketing practice, retailer control twisted

using store up loyalty cards with supermarket, top supermarket like Sainsbury and Tesco

set the standard within the market and now smaller retailer such as Summerfield, Iceland’s

are using them in order to retain customers. Since there is fast growing trend of loyalty

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Books Journals Internet sources

Publications Different article

Previous researches

INTRODUCTION

cards among the businesses yet there are some businesses that do not have loyalty cards at

all, for example ASDA never launched its loyalty card because they relies on price

reduction Morrison’s and Safeway’s have stopped their loyalty cards and also Waitrose is

on the same line. In this situation where some businesses are using loyalty cards and some

are not but both are successful like (Tesco are market head and ASDA is next). The

question that arises here is,

Does cards are favourable scheme to enhance consumer loyalty or they just

advertising approaches to attract fresh consumers?

Moreover is price reduction a threat to loyalty card scheme?

Could the new wave of credit cards and store cards be the new scheme for company

to have point cards?

Following research questions will be addressed with this study:

1.4 Objectives of Research

Country like United Kingdom where competition in retail market is very high, learning

such as this plan should provide invaluable as of its possible to institute link among some

definite retail industries for useful developments and customer attraction. Moreover this

study propose to utilise the research opportunity, with specific reference to effectiveness of

the loyalty cards within the retail industry to carry out the objectives outlined below.

The purposes of the research, therefore, are:

1. To establish, the efficiency of point card compare to cost decline.

2. To establish the efficiency of point cards.

3. To establish grounds whether point cards enhance consumer retention headed for a

superstore.

4. To verify either point/loyalty cards enhance/reduce the bazaar share of a superstore.6 | P a g e

Establish efficiency compare to cost decline

INTRODUCTION

Author figure1:1

Two hypotheses were developed for effectively examine the efficiency of point/loyalty

card toward increasing constancy.

H1: Male and female customers always have different level of importance when it comes

to make a decision which superstore to shop at.

H2: Variation in the rank of significance clients of diverse mature group give to well-

situated location and have a point card when decide which superstore to shop at.

1.5 Methodology

In order to complete the above purpose, both primary and secondary data were used. The

associate collected a few main and less important data to take out the sensible sight of the

whole scenario. The secondary taken inform of literature check mostly from books,

journal, repost, and past researches. Survey was designed and conducted on the basis of

research method which was chosen in first place. The author explained the imitation of the

survey and analysed the data. Whereas primary data was gathered from face to face

interviews, questionnaire handling in London.

1.5.1 Aim of Study:

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Verify loyalty card enhance share of supemarkets

Establish the efficiency of point cards

Enhance consumer retention for superstore

INTRODUCTION

This investigation is stand on equally prime and secondary data. The study introduces

thorough the introduction chapter, which provides a comprehensive backdrop of this study.

It also provides objectives and aims of the learning, which are accessible in shape of

investigation question.

The less important information was obtainable in shape of novel reviews, which are

discussed plus maintain the concept of the investigation questions. It also provides the

complete information that how researcher have concentrate on the similar concept and it

also brought both retail industry and academic knowledge together for improved

understanding of investigation question and helps to provide possible solutions.

1.7 Organizing of the learning:

The research is organized in major stages.

Stage 1:

Stage 2:

Stage 3:

Stage 4:

Stage 5:

Stage 6:

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This stage introduces the main research problems and uses different means to investigate the objectives of the research.

This stage presents the relevant theories and models in related to the effectiveness of the loyalty card scheme. All literature review on particular study is discussed.

This stage describes the research methodology and design of the study. It also describes the surveys and interviews with the respondents in London.

This stage describes the findings and analysing of all research study. Empirical evidence gathered on the basis of which the conclusion and recommendation are made

This stage provides the overall picture of the study in shape of conclusion and recommendation

This stage represents the appendices and the references, questionnaire and survey results demographically presented in this stage.

INTRODUCTION

Figure 1.2 Research stages source investment attraction by Dr Lawrence

1.7.1 Map for the Study

The research is separated into 6 episodes.

Chapter 1: This is the major beginning chapter of this study which includes the study’s

backdrop, its aim and draw round the study problems.

Chapter 2: This division provides the detailed accessible literature review on the

relationship marketing and loyalty programmes as well as on the overall supermarket.

Chapter 3: This section is stand on Methodology of this study which further includes

research design, research methods, and questionnaire design.

Chapter 4: This episode is based on the investigate results of loyalty cards whether loyalty

cards increase Customer loyalty towards supermarkets.

Chapter 5: This section summarise all the discussion, recommendation and the theme of

this study.

1.8 Conclusion:

This preliminary chapter describes the grounds for the investigation issues under

examination. This episode also present the need of the loyalty card system, moreover the

process from introduction to end of the study involved in this chapter have been

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INTRODUCTION

highlighted. The objectives, methodological approach have been discussed. This section

ends with the diverse phases and sketch for the research. The next section is literature

review.

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LITERATURE REVIEW

Chapter 2

Literature review

Of relationship marketing and loyalty

programmes

2.0 Introduction:

Ultimate rationale of this section is to talk about the lengthy period association of

consumer with trade business, where the client devotion is most significant. In today’s

aggressive surroundings retail institute use strategy to invite the consumers, as consumer

hold is the mainly significant things for every organization. There are lots of chapters and

definitions written by lots of author, due to time scale and some restriction some of them

are discuss below.

2.1.0 Relationship marketing:

Numerous organizations have answered to dares in the marketplace by construction

association with consumers and supplier (Lester & Solow 1989). These relations depend

on a connection which is base on tall rank of faith (Oh, 1987: Hunt & Dwyer, Schurr,

1994). These lofty ranks of faith enable party to spotlight on extended phrase payback of

the connection (ganeson, 1994). Which finally provides effective efficiency and decrease

transaction expenses ( john & Nevin, 1990).

Moreover, relationship marketing loom has replaced transactional approach by stressing

the worth of extended term relations (Payne et.al, 1999). Association advertising focuses

the relationship between customers and businesses, with intentions to retain customers 11 | P a g e

LITERATURE REVIEW

(Sheth 1995 Parvatiyar & Sheth, 1994:). According to (Peppers & Rogers 1993) focus on

personality or one to one relationship with consumers develop and combine record

information with extended time consumer maintenance and expansion plan. Affiliation

promotion could be defined as: “To establish / identify, enhance / sustain when essential

dismiss relationship by stakeholders and with customers. This could only be done with

clear intentions and joint trade and completion of promise” (Egan, 2000).

Ballantyne (1991), relationship marketing represent the junction of advertising, total

quality movement and customer service underscore the concept of inner position and stress

the process dependent nature and the cross functional character of association marketing.

This is acknowledged loyalty and consumer fulfilment build throughout the formation of

better worth for the consumer and that worth is formed all through the businesses.

According to Reicheld (1994), A tall association among consumer maintenance and

corporation profits. His investigation also describes that customer retention rate and its

improvement could also make a remarkable impact on productivity, support by Fornel and

Wenerfelt in their studies (1987).

More over switiching behaviour of customers can have dramatic effects on company’s

profitability (Ganesh et.al, 2000). Many corporation have show high attention in consumer

relationship by spending in consumer relationship management system (Reinartz & Kumar

2002, Kerstetter 2002, Winer 2001). According to Hoekstra, Leeflang 1999, and Reicheld

1996) significant benefits of consumer affiliation supervision are maintenance rates and

consumer share. Companies aim to bulid close customer relationship by enhancing

customer relationship perceptions and by using relation advertising instrument like loyalty

programme and straight mailing companies can increase customer relationship (Hart

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LITERATURE REVIEW

et.al1999, Roberts and Berger 1999). Furthermore, investigators have experiential that in

regards to every further year membership linking a business and a client, client turn into

fewer expensive to supply due to knowledge effects and decrease allocation overheads.

Association promotion mechanism can be confidential according to Berry’s 1995 first 2

level of association promotion. The 1st stage (kind I), businesses utilize financial incentive

like rewards and cost reduction to expand the connection with customers.

The 2nd stage (kind II), businesses utilize extra public attribute in regards to give the client

connection a extra individual touch. Psychosomatic investigation shows that benefits can

be extremely attractive (Locke 1991). It’s at present accepted that constructing and

preserving relations is not cost free and might be expensive-especially in terms of

professional time (Blois, 1997). The decision to set up a relationship must be based upon

watchful assessment of the case for and against doing so (Blois, 1997). Moreover, it is now

understood that even though a company has been a dealer to a consumer over a long-

lasting time, it’s not obvious that affiliation exists (Blois, 1997).

As Mattsson & Godde (1987) have figured out: “the reliable range of the same dealer over

time can happen for a amount of reasons.” in addition, there is also a call for distinguish

between true seller loyalty and easy replicate purchase performance (Wilcox, and Jarvis

1978). It is therefore necessary to determine data that indicates long-term relationships and

understand the context in which they exist (Blois, 1997). According to Stone & Woodcock

(1995) it’s significantly more cost efficient to keep active clientele than exert a pull on new

ones. By spotlighting the marketing scheme on the additional profitable segment of the

consumer base, businesses will create most of their necessary revenue and raise market

share without spending in new clients.

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LITERATURE REVIEW

2.1.1 Customer Loyalty and Loyalty programmes:

There are many aspects to be considered for relationship marketing but one particular is

loyalty. According to the (Singh & Sirdeshmukh, 2000) consumer loyalty is “rising as the

marketplace exchange for the 21st century”. Loyalty could be distinct as behavioural

conditions mean the figure of purchase deliberate by monitor the regularity of purchaser

and some kind switch (Egan, 2001). (Woodcock and Stone 1995) loyalty could be distinct

as “a position of brain, a state of attitude, requirements etc”. Though a more complete

meaning of loyalty which is prejudiced behavioural reply (revisist) articulated by a number

of decision creation element with admiration to one (provider) some set of (supplier)

which is a choice creation and evaluative process resultant in kind promise (Bloemer and

Ruyter, 1998). The definition inside the background of loyalty scheme is multi surface with

fundamentals of every ordinary equally:

There are diverse approaches to the plan is not compose all consumers loyal, but to get

better the reliable of those consumers that are respondent (Stone & Woodcock, 1995).

Supervision loyalty means to affect consumer’s approach towards corporation for longer

period of time not specifically for next visit or obtain. Consequently, a well manage loom

to loyalty could make a lot of difference in terms of customer retention (Stone &

Woodcock, 1995). Moreover supervision loyalty means disturbing the consumer’s

approach near the corporation over the extended phrase and not till the subsequently visit

or buying Woodcock, and Stone 1995. Consequently, a correctly managed move towards

loyalty must create the buyer desire to do extra trade through the corporation or maintain

the active stage of big business Stone and Woodcock 1995.

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LITERATURE REVIEW

Consumer liking sustain loyalty and in direct to attain this allegiance scheme have been

taking place. There are varieties of motive for scenery up constancy scheme:

Constructing durable associations with consumers by satisfying them for their

investment.

High income during extensive goods examination and cross trade.

Gathering consumer information and distinguish from the mass crowd.

Protecting marketplace alongside a competitor’s loyalty plan.

As branch of an aggressive action.

One of the main purposes of loyalty agenda seems to be the compilation of client

information. Another reason according to Hart et.al (1999) is to construct permanent

dealings with consumers. Loyalty method have been considered as illustration of

association promotion in act (Gronroos 1996, Palmer 1994; Gilbert 1996) but there has

not been much examination of how or if loyalty system do in detail operational relationship

advertising (Hart et.al, 1999). According to Gronroos (1997) relationships may not in fact

subsist between companies and clients. He suggests that latent relationships exist though

the client or the company may or may not wish to make active the association.

As loyalty programme rewards usually depend on prior customer behaviour, they can

supply hurdle to client’s exchange. If the prize formation depends on the span of the

association, clients are less possible to change due to the time pause before the similar

level of plunder can be inward from a different retailer (Verhoef, 2003). It is also

recognized that exchanging costs are significant predecessor of consumer loyalty

(Klemperer, 1995 Dick & Basu, 1994). Furthermore, a loyalty programme with monetary

inducement leads to better consumer preservation (Verhoef, 2003).

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LITERATURE REVIEW

According to “Evans et.al, 1997 Jones, Dowling & Uncles, and O Brien 1997” and

Mitchell et.al, Boussofiane 1996. Point scheme are placed with the purpose to construct

permanent relations with consumers besides pleasing them for their support, to grow top

buy income throughout extensive goods custom and cross selling to collect consumer

statistics, to de commodity brand, to protect marketplace in the look of rival loyalty

system. Additionally, investigation into loyalty programme suggests that mainly loyalty

scheme appear to be suspicious strategy to defend positions in an extremely competitive

marketplace rather than constructing a relationship with consumers (Sharp & Sharp, 1997

Uncles, 1994.pg 337 ;).

There are around 150 vendors card based loyalty system nationwide (Davies, 1998) with

around 40 million card in flow (Wood 1998). How loyal are you customers? If your

consumers have 20 loyalty cards, (Mazur, 1998). If customers are counter to loyalty system

as they would to trade endorsement in that they are only loyal to the current offers

available then retailers will have to develop their schemes to base them on retention and

forming relationships (Evan, 1999). According to Uncles (1994), from a consumer’s

viewpoint various loyalty plan offer me too profit but there are no assurance of constant

loyalty and are often trivial to the kind option choice.

To some loyalty schemes are seen as small more than classic sale promotions with short

term benefits to attract unfaithful brand switcher (Palmer, 1998.pg 114; Uncles, 1994.pg

341). Loyalty schemes do gain additional business in the short run, however they quickly

become the market sector norm and hence customers expect these schemes at every store

(Palmer, 1996). As a result customers become promiscuous and visit stores that provide

them with satisfaction through these loyalty schemes (Tynun, 1997). Customers may use

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loyalty schemes as criterion for switching (Jobber, 2004). Loyalty cards can also result in

focussing on a choose group of clientele and neglecting others (Jobber, 2004).

Retention programmes like loyalty schemes aim at exploiting a customer’s life-time worth

to the business. The concept of life-time value is important when assessing potential

customers. Life time value method, profits that can be accepted from customers over their

life time (Jobber, 2004). Loyalty cards even though seem to be a good strategy for

increasing loyalty; they can raise the costs of business. Overheads are very elevated when

technology software, self-training, management, communication and expenses and plunder

are taken into consideration. If contestant responds with me toos the result may be no more

than a planned advantage for the company. With such high costs the reason loyalty cards

are introduced is in order to follow the leader e.g. Tesco and for defensive reasons as

opposed to proactive (Khan, 1998).

A loyalty system can be beneficial if the layout is related to needed activities (Shmuel,

1996). The subsequent return and difficulty of loyalty scheme:

Compensation of a loyalty system to an establishment (Shmuel, 1996 pg 15):

o Consumer maintenance.

o Identify the largely gainful clientele to an organization.

o By use of information to divide customers.

o Save on marketplace investigation.

o Create a reasonable benefit.

Disadvantage of loyalty scheme to an establishment (Shmuel 1996 pg 15)

o Sky-scraping cost.

o Terminate agenda can injure repute.

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o Consumer reply may be slow.

Rewards of loyalty scheme to a customer (Shmuel, 1996, pg 16):

o Acceptance extra worth to purchase.

o Benefits to be loyal.

o A probable enlarge in societal rank by being element of association.

o Enhanced service from the establishment.

Drawback of loyalty scheme to a customer (Shmuel, 1996, pg 16):

o Other establishment using the information and transferring unnecessary

data.

o Enhance in rate of acquire.

o Customers may neglect other opportunity from other businesses.

2.1.2 The loyalty schemes and retail industry:

According to (Dekimpe et.al, 1997) loyal customers could be taken as competitive assets to

the company because from loyalty cards scheme companies now have all detailed

information about their customers into their databases which is very helpful to make

certain change where needed (Ainsley and Pitt, 1992). Though there’s still doubt

concerning how to make use of information given by the customers because elevated

retention consumers are not simply switch and they remain unsure. There are lots of factors

which influence loyalty such as store accessibility, shopping frequency, approach towards

shop and attractive store character (East et.al, 2000).

I buy information not point card (Purdie, 1996). In loyalty agenda the return is the price

against information, the origin of this activity was in food retail industry where they used

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to information through technology i.e. bar code, which provide all information about the

product and also helps to maintain record about the product and also provide the aptitude

to record detailed item sold to detailed customer. Loyalty cards are similar and so

supermarket can match offer with consumers (Evans, 1999). According to Purdi 1996,

“programme which creates apply of new trade system and other fresh technology to

convince shopper to fancy one retail crowd to its competitor, throughout payments linked

rewards, straight marketing or both.”

In the grocery retiling the nonexistence of relationship marketing, was because at the time

it was not aggressive for businesses. Retail profits and limitations were stretched and the

marketing budgets were spotted somewhere else. Though the condition is now transformed

and it’s easy to maintain new relationship with consumers by offering and initiating a

loyalty cards schemes that include following (Woodcock & Stone 1995):

1. Provide customer rewards for their loyalty with loyalty cards or similar methods.

2. According to preference expressed in questionnaire, it provides coupons for every

customer according to what they have purchased.

3. Consumers who buy a exact item or companies personal brand, it provides

incentives to those which ultimately give retailer a higher profit margin.

4. Base on the individual desires, mainly loyal consumers it helps to reserve and

control outlets in proper manner.

Barlow (1992) suggests, “Loyalty identify, maintain and boost capitulate from best clients

through long term interactive worth extra relations.” In his study he has recognized three

(3) level of point programme. The 1st is point and prize, which is alike to the old green

protect stamp system. The 2nd is the raised ground, perk and prize in which target for

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expenditure are place and compensated and consumers also receive unique offers. The

third is easy partisanship in which the customer pays a partisanship fee in revisit for

discount (Evans, 1999).

Even though they are named point’s programmes, many customers contribute in more than

one retailer’s loyalty programme (Weinstein, 1999 & Brookman, 1999). Moreover, some

customers and customer supporter are worried that loyalty cards can result in a loss of

privacy (Black, 2002) due to the fact that so much personal information can be collected

from the cards. They view loyalty programmes to have a Big Brother stamp on it

(Scheraga, 2004). In addition, clientele who do not contribute in the loyalty programme

feel that they are not offered the same deals as loyalty card members are (Scheraga, 2004).

To truthfully become loyalty cards, supermarket needs to bind in card payback to

increasing use.

In addition, the cumulative use should be fully communicated to consumers through

promotional activities (Bellizzi & Bristol, 2004). Furthermore, supermarkets can also find

other ways to reward value clientele (Bellizzi & Bristol, 2004). This however, can result in

the possible alienation of other customers. According to Bellizzi & Bristol (2004) card

loyalty schemes are not tracker of loyalty and the apparent drivers of loyalty for a

supermarket are expediency, new produce, a bakery, high-quality meat, a deli and low

prices.

In their study Bellizzi and Bristol (2004) also suggest that achievement in grocery

transaction is about the uppermost quality deliver constantly at a low price. Data such as

loyalty cards can gain brief notice (Tesco’s introduction of the Club Card set them on the

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road to overtake Sainsbury as the UK’s important superstore) but at the end of the day,

supermarkets have to get the basics right.

2.1.3 Price Promotions:

Price promotion strategy is used as one of the major tool by the marketer to retain and

attract consumers to their outlets and increase sales of continues period of time. (Mulhern

and Podgett, 1995). According to Podgett 1995 those customers who visit stores for

unplanned shopping or for promotions are often considered as price conscious consumers.

As customer gets familiar with other things which are not on shopping list by looking at in

store product which also enhances their exposure towards products. Clients who decide a

shop on the base of cost promotion may change supplies often, rising their wants for in

shop data and their possible for purchase regular price products (Mulhern and Podgett,

1995).

Businesses can draw customers who are value responsive and switch time to time with

endorsements to increase store traffic, where as loyal customers can buy an item at both

higher and reduce prices ( Hoch and Dhar 1996. However, price discounts are not

considered a strong tool for building loyalty (Garbarino & Johnson, 1999). According to

Reicheld (1996) limited price cuts only attract customers often do not result in much profit

for the retailer (Sirohi & McLoughlin, 1998). Therefore profits can be enhanced if a

retailer’s strategy is focusing on customer retention.

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2.2.0 The Superstore Industry

2.2.1 Introduction

As client association has been consider in the earlier episode, in this section writer explain

the affiliation between client and superstore business, that how supermarket seeks

customer attraction during loyalty cards, to what level this plan is victorious and what type

of profit are known to the clients. In this section the associate will talk about the

hypothetical implication of hypermarket strategy concerning the present rank and prospect

forecast of point cards.

2.2.1.1 Backdrop of superstore loyalty cards:

UK major supermarket have been trying to accept new inventive information for the years

to draw new consumers to built businesses, so loyalty schemes were the main ideas

initially introduce by the supportive group in the shape of “divis” base on dividend as well

as on the quantity of purchase complete throughout a time and afterwards by trading stamp

in the 1960s. Loyalty scheme later introduce by the airline industry and petrol retailers to

frequent visitors (Egan, 2001).

Tesco’s were the main retailer among supermarket who introduce loyalty card scheme in

1995, it was initially introduced with the concept of making improvement to provide

sequence organization but later it involved into getting better customer relationship

(Carrol, case learning, 2004). Club card made tesco to become bazaar leader in same

category because the card uses to carry afloat consumers into Tesco (Benady, 1995)

support active consumers to expend further (Anon, 1995). Consumers have readily

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responded to loyalty cards. Known the option between 2 stores, consumers are more likely

to shop at the one where rewards are earned the most (Shabi, 2003).

During the time loyalty cards were launched the market was considered to be saturated

with discounters and multiples additional or less selling the similar effects for the identical

price. There was however, seen to be a difference in the demographic profiles of shoppers

in the different supermarkets. Sainsbury’s was seem to have an older, more up market

clientele whereas Tesco’s Clientele was seen to be younger with a large percentage of 25

to 45 year olds and small families. Safeway (now Morrisons) was regarded to have a

similar profile to Tesco and Somerfields catered for older and less affluent customers.

Asda was seen to cater for younger families and those on a tight budget (Peck et.al, 1999).

Waitrose catered for the up-market and affluent consumers however, according to a

nationwide existence study accumulate by Acxiom (2005) consumers do not regard

Waitrose as the main shopping destination and it picks up a very high volume of secondary

spend (Kilby & Sweeney, 2005).

2.2.1.2 Tesco Club Card:

In February 1995 the 1st national superstore loyalty card scheme was introduced by the

TESCO called Tesco Club card. The Tesco Club card scheme was at first introduced to say

“thank you to the existing customers”. To produce the kind of association on the

foundation of loyalty card method that had survived between limited structure and their

clientele around 50 years ago “Peck et. Al, 1999”. It was the time when loyalty card

system got on to its peak because other competitors and supermarket larders observed

seriously that the scheme has potential and it should be followed with their possess loyalty

card system. Although with the point system Tesco urbanized an imposing advertising

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movement that facilitate Tesco the correct things to be supply at the correct place, at the

right value. That had also enabled Tesco to create an environment which focuses right

location as well as high customer retention. Peck et. Al 1999

The launch of the Tesco Club card results in an increase in rivalry in previously violently

economical superstore sector. According to Peck et al (1999), Moreover, several major

supermarkets dominated the sector; Sainsbury, Tesco, Safeway (now Morrisons), Asda,

Somerfield, Kwik Save, Iceland and the Co-operative societies. The loyalty card portrayed

that Tesco had decided to become more customer focused. Tesco wanted to present better

worth, progress the supplies and provide a senior level of facility to their consumers. The

Club card allowed Tesco to expand a one to one association on a business level. The costs

of the scheme were tall with start up costs estimated to be £10 million (Peck et.al, 1999).

The Club card partisanship was allowed to all Tesco consumers. Cards were available on

request and could be used to collect points on every shop. Customers presented the card

and facts of the client’s purchases were evidence with the Club card direct prize for every

£5 spent. Points accumulated by the customers are extra periodicals and provide the

customers have collected a smallest of 50 point money off coupon are sent to the

consumers homes to be exchanged against future expenses (Peck et.al, 1999). Furthermore,

consumers also receive promotional coupon for exact considered products that they may

like to use but haven’t done so before.

The Club card has been a significant implement for assembling customer information such

as what they acquisitions, how much they spend, when and how often they shop (Peck

et.al, 1999). This type of information reveals the everyday life of the consumer and it has

authorized Tesco to division its consumer base according to real acquire performance

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rather than on demographic or socio economic typecast. Tesco has been aiming to utilize

the information collected to construct loyalty throughout tailored, worth support offers

mail to the homes of exact groups of clientele. Towards the end of March 1995, over 5

million people had connected the Club card method and Tesco evidenced a like for like

boost in sales. Tesco had 18.1% of the market with a 2.1% boost in marketplace share

since the Club card launch (Peck et.al, 1999). In addition, house diffusion had enlarged by

roughly 1% i.e. an extra 200,000 household had gone to structure at Tesco stores and over

a third of the increase were at Sainsbury expense.

By early 1996, Tesco had examined their consumer record and recognized 12 section each

of which was embattled another way (Evans, 1999). Tesco had also mailed 5,000

dissimilar account of the Club card periodical and by 1998 there were 60,000 diverse

marketplace sections each besieged with a dissimilar version of the publication or proffer

(Evans, 1999). Due to the introduction of other competitive loyalty cards Tesco increased

the number points given to customers per shop (Mitchel, 1995). Tesco has taken the loyalty

card a step further by introducing the Club card Plus. This allows clientele to place money

into an explanation by a monthly position order so that when customers shop at Tesco, the

cost of groceries can be subtracted from the account.

Moreover, customers are also paid 5% gross attention and are allowed an overdraft facility

plus collecting points on their shopping (Peck et.al, 1999). On a more recent note in regard

to respond to the victory of the Nectar card launched by Sainsbury, Tesco has taken the

loyalty scheme online. Customers can covert the points they earn into e -voucher and

vouchers that can be exchanged online (Data monitor, 2002). Tesco has also recently

launched “Club card Keys.” In this scheme as well as Club card point consumers make a

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key for every £25 exhausted on a single contract. Over a 1year age a consumer must make

50 keys to succeed as a “Key holder,” which permit him or her to a 50% reduction on Club

card contract. Earn 100 keys succeed the customer as a quality Key holder and he or she

obtain 75% discount on Club card deals.

The Tesco Club card has enabled Tesco to become the number one supermarket knocking

off Sainsbury from the top spot. The loyalty card has been used to attract floating

customers into the store and tie in existing customers to encourage them to spend more

(Benady, 1995). The Club card has enlarged the incidence of shopping plus Tesco has

larger stores, which also contributes to customers spending more (Benady, 1995). Tesco is

also offering a wider variety of store formats. It hopes to meet the need for urgent

purchases, regular household purchases and occasional extraordinary purchases

(Datamonitor, 2002) hence trying to make it the first point of call for customers.

2.2.1.3 The Sainsbury Reward & Nectar Card

According to Benady, 1995 when the point cards were launched originally, Sainsbury’s

was the market leader and they had dismissed loyalty card scheme with chairperson saying

that they were “Electronic green shield stamps”. But later on they have had introduced

their own club card scheme and they found success, other than that they had also

introduced coupon support loyalty card system which was initially branch of figure of

loyalty card system experienced by Sainsbury to strike back at the Tesco Club card

Benday, 1995. After the success of club card Sainsbury’s started to protect their figure one

marketplace share place by extending their test of the investor card system and then initiate

a “consumer first” scheme. More over they had made some collaboration in regards to the

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club card scheme with Home base, DIY, so that customers can spend at DIY and Home

base and also can redeem their points at all Sainsbury supplies Peck et. Al 1999.

Sainsbury was the primary superstore to link its loyalty card with 12 leading high street

brands and offering a comprehensive range of benefits for customers (Anon, 1998). The

Reward card was considered to be the UK’s favourite card and the 13 million cardholders

to benefit from deal with “Burton Menswear, Dorothy Perkins, Evans, Hawkshead,

Principles, Racing Green, Top Shop, Top Man, Burger King, British Gas, Blockbuster

Videos and Harry Ramsden”. The reward points collected at Sainsbury could be redeemed

as discounts at all the participating stores. Within two and a half years more than 13

million prize cards had been issued with around 50,000 people union every week (Anon,

1998) making it, according to Sainsbury, the mainly popular superstore loyalty card. It was

described as popular as it not only offered savings on grocery shopping but added value

through partnership offers and special clubs. The reward points could also be used to

purchase tickets at theme parks. According to a study conducted by NCH Marketing

Services 83% of consumer inspection had a Sainsbury prize card (Anon, 1998).

Even though the Reward card had become the most popular card the Tesco Club card was

still the nation’s biggest scheme. In order to combat the huge success of Tesco, Sainsbury,

taking the loyalty card to another level, joined forces with BP, Barclaycard and

Debenhams to develop the UK’s first coalition loyalty programme card, the Nectar Card

(Data monitor, 2002). This coalition scheme enabled customers to use just one card at a

variety of places and increased the cards chance of getting wallet space (Data monitor,

2002). The Nectar loyalty programme was launched in September 2002. The launch was

flipside by a marketing movement estimate more than £40 million. This loyalty card was

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amalgamating existing loyalty schemes of all the partners into what was considered to be

the largest scheme in the UK (Carrol case study, Jobber, 2004).

The scheme was aiming to capture 50% of the UK’s 25 million households (Carrol case

study, Jobber, 2004) and predicted 12 million households to join within the first year

collecting an estimated 50 billion Nectar points (Anon, 2002). The Nectar programme

operated by Loyalty Management UK (LMUK) developed the programme over 18 months

using wide customer investigation to make sure that Nectar tackles the many fears people

had with loyalty programme (Anon, 2002). Consumers using the card at any reward

partners could collect points that could be used for free flights, meals, vouchers etc (Carrol

case study, Jobber, 2004). The Nectar scheme was considered to be different from other

loyalty schemes in that retailers could pool their possessions which helped increase

expenses linked with setting up and running the scheme (Carrol case study, Jobber, 2004).

Card users could collect points from a larger number of participating retailers really

attractive their point earning possible and creation rewards more achievable. Customers

could earn two Nectar points for each £1 spent. Moreover, the Nectar scheme

differentiated the market attracting both high and low spenders. Also, with several brands

joined together the loyalty system had a much broader petition.

During the first week the scheme was launched the Nectar website distorted under the

damage of the huge order which resulted in 100,000 striker per minute. LMUK was also

affected to pull press and TV advertising as it could not manage with the large amount of

registrations. In addition, the scheme also came under fire by the media for presenting poor

price to consumers, as they now had to collect more points to be rewarded “Carrol case

study, Jobber, 2004”. In November 2002 the nectar card overtook the Tesco Club card as

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the most popular scheme (Carrol case study, Jobber, 2004). In March 2003 Vodafone and

Adams also joined the Nectar card (Mintel, 2003). According to LMUK, to date Nectar

cards are active in 51% of household in the U.K (Hemsley, 2005).

2.3.0 Safeway Morrison’s, Asda and Other

Supermarket Loyalty Cards:

2.3.1 Safeway/Morrison’s

The first supermarket to have loyalty card scheme was Safe way which is now Morrison’s

Initially they introduced ABC loyalty card plan which was organizing in few shops but

later on when Tesco introduced their Club card Safeway enlarged the figure of shops

contributing in the scheme “Peck et.al, 1999”. To build up consumer information Safeway

started to expand the ABC card imprisons capacity. According to “Peck et.al 1999”

Safeway introduce ABC card scheme nationally in 1995 due to increase in competition

with Tesco and other stores. Free goods were the main traits of the ABC card scheme to

differentiate from Tesco (Anon, 1995). Based on simple voucher and discount programme

Safeway then introduced catalogues based card scheme Wilson, 1996.

However, in August 2001 Safeway abandoned their loyalty card scheme citing that the

costs outweighed the benefits of running the scheme and that consumers preferred

immediate discounts “Mintel, 2001”. Safeway adopted price cutting campaigns and EDLP

(everyday squat price) or BOGOF (buy one get one free) strategies (Carrol case study,

Jobber, 2004). According to Safeway, customers could be attracted to their stores by

offering good value for money rather than complicated loyalty schemes (Peck et.al, 1999).

Safeway familiarity a expansion in sales after the loyalty card was withdrawn due to better

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Moreover, they had decided to target apparently loyal customers of its rivals. They would

email customers of Sainsbury’s and Tesco who lived near their own stores and provide

them with offers to switch their shopping habits (Datamonitor, 2002). If customers spent

over £50 at a time at Safeway the Safeway would give them £10 of free petrol (Data

monitor, 2002). Even though Safeway saw an increase in sales with such promotional

offers the supermarket retailer was taken over by rival Morrison’s, which plans to change

all Safeway stores to Morrison stores in the near future.

2.3.2 Asda

In the hurry to expand and open loyalty card scheme Asda did not commence a loyalty

card and jammed to their price assurance initiative presenting customer’s worth for money

(peck et.al, 1999). Asda have though, use fidelity card scheme for their garments variety

and holiday time merchandise such as the fashion tag which provided clients coupon for

garments and free time products (Peck et.al, 1999).

ASDA has provided low price strategy and worth for cash and made differentiation among

other retailers (peck 1999). It has made huge success with providing everyday low pricing

plan such as “Price roll back”. This is how ASDA is now considered number second

market in the UK with its low price strategy. Asda increased and enhanced it image among

the other retailers by offering low prices and contributed in wide variety of products. This

fast going expression of the ASDA finally has resulted to become number 2 retailer

without introducing loyalty cards schemes yet with the improved price strategy. (Data

monitor 2002). It got also involved into providing financial services to the community and

introduced credit card along with Asda store card.

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2.3.4 Somerfield

Collaboration with Argos Somerfield is now 7th biggest retailer in grocery and has

introduced loyalty scheme in July 1995. Customers can use this loyalty card in Argos as

well as in Somerfield to grab more loyalty points. However in early stages the card didn’t

make reasonable prospects for both therefore it had to reserved. Asda, Somerfield and safe

ways introduced the price check strategy to draw consumers.

Another kind of loyalty card named Saver card was introduced by Somerfield in 2002 and

limited to number of stores throughout the UK. However after the provisional profits in

very next year they extended this programme to more 100 stores country wide kleinman

2003.

The card offer instant coupon prize and incentive to client’s hemsley, 2005. 3 million

customers were attracted in first year and 60% incensement was due to the card. Moreover

Somerfield introduced new ways to attract more customers with special offers every week

and they managed to attract about 1 million clients initially Hensley 2005.

2.3.5 The present Market state and prospect of Loyalty

Cards

Most of the UK leading markets like ASDA and SAFEWAYS are now enlarging

pioneering habits to draw and retain consumers. However they have also discarded loyalty

schemes on the basis of everyday low worth and purchase one get one free offers.

According to (Carrol and Jobber 2004 case study) Retailers have thought that the

customers are retained or attracted to their stores because of loyalty card scheme or

likewise, however they are not they are actually attracted to their stores because of the

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value for money they offer. Furthermore (Carrol and Jobber case study 2004) says that the

Waitrose, Morrison’s and Safeway’s have higher level of loyal consumers who do not use

loyalty cards.

The retail grocery sector has seen an augment in the figure of local stores and with the

increase in market supremacy of Tesco and the climb of Morrison’s it seems that

expediency and customer option are becoming significant factors in deciding where to

shop (Kilby & Sweeney, 2005). According to the National existence review conducted by

Acxiom (Kilby & Sweeney, 2005) the most admired superstores are the ones most suitable

based on site. Tesco is still dominating with 11.4% year on year expenditure growth (TNS,

April2005) and a footfall analysis shows that 27% of houses choose to do their major

structure at Tesco.

Sainsbury has seen a 4.1% year-on-year growth where as ADSA has had a 3% growth

(Kilby & Sweeney, 2005). In adding, the majority of customers do not choose Waitrose for

their main shop. The supermarket footfall analysis shows only 1.9% however, it attracts a

large volume of secondary spend. The table below shows that the consumer share among

UK supermarkets on the basis of the preference, as highlighted stores are more considered

among all. Therefore it is obvious that the preferred stores hold the high percentage of

shares.

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Table 2.1 Consumers distribution among UK supermarket. Source:

Marketing Week, 4th August 2005

Store share of consumers

Aldi 1.4%

Asda 20.2%

Co-op 3.3%

Iceland 1.3%

Kwik 3.0%

Lidi 0.9%

Marks & Spencer 0.9%

Morrison/Safeways 14.4%

Netto 1.0%

Sainsburys 12.4%

Summerfield 2.6%

Tescos 27.0%

Waitrose 1.9%

others 9.7%

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The above survey results showed that consumers share among UK supermarkets in regards

to the preference of the store on the basis of following,

Authors Diagram 2.1: Sweeney & Source Kilby 2005

Table 2.2 Shopping preferences dictating where consumers shop.

(Source: Marketing Week, 4th August, 2005).

Where Main

Shop is done

Distance

%

Convenience

%

Quality of

product %

Non-food

products %

Queuing

lengths %

Asda 30.62 46.03 27.13 1.03 0.94

Marks & Spencer 32.29 51.02 31.24 0.61 2.03

Morrison’s/Safeway 30.85 46.44 27.77 0.69 1.71

Sainsbury’s 31.93 49.88 29.92 0.65 1.12

Tesco 31.84 49.01 28.16 0.68 1.09

Waitrose 30.94 51.40 34.04 0.48 1.39

According to the table above convenience was the most important factor for Waitrose

customer whereas most of the customers 46.03% from Asda, Tesco and Sainsbury

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Convenience

Price

Location

Quality of product

LITERATURE REVIEW

considered this as attractive aspect. This could be one of the reasons for Tesco and

Sainsbury to extend their metros and limited stores to progress their client convenience so

that customer visits their store easily and cheerfully. Locations play vital role and it is 2nd

most significant feature by customers when thinking which shop to go and shop.

However quality is the most important factor for Waitrose customers about 34% customers

shop based on the quality doesn’t really matter how far they have to go and get quality.

Sainsbury’s customers are 29%, Asda; Morrison’s about 27% and Tesco’s customer are

about 26% concerned about the quality yet they are more concerned with the convenience

of the store, which ultimately makes a lot of difference. (Sweeney and Kilby 2005)

Table 2.3: Price linked reason dictate where customers shop. Source:

Marketing Week, 4th August, 2005.

Where main shop is done Price % Special offers %

Asda 37.14 6.63

Marks & Spencer 23.07 5.02

Morrison’s/ Safeway’s 33.25 8.95

Sainsbury’s 30.15 5.49

Tesco 29.36 5.86

Waitrose 18.64 3.56

According to the Kilby & Sweeney, 2005 the above survey shows that Tesco and

Morrison’s consumers are more concerned with the price as they claim this is the

motivating factor for them to shop at Tesco and Morrison’s. Whereas 37% customers from

Asda cited price is most important factor for them yet 6% saying special offers are not that

much important because these stores have already offer reasonable prices. Waitrose

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customers are quality conscious customers so that is why price and special offers are least

important to them. Moreover the special offers are somehow important to Morrison’s

customers as it the highest among all 8.95%.

This survey also indicates that the convenience and location are the two main factors for

customers yet the quality and the prices are least important to them (Sweeney and Kilby,

2005. Well if this is the case then the main question that has to be taken into consideration

whether loyalty cards schemes are best source to attract and retain customers? According

to (East et.al, 1998) loyalty cards could be the reason to improve value for the customers

or might simply be involved to provide them financial incentives, which is ultimately

reason to retain customers. Moreover it is also said that the older customers are more loyal

and retained to the particular stores as compare to the younger generation the switching

rate is very less among older particularly withier generation. The high first store loyalty

has less rate of switching from first store to another (East et. Al, 1998).

According to (Hemsley, 2005) as there so many loyalty schemes are in circulation among

supermarkets to make customers more loyal and retain but the successful are those which

provide them perceived value year after year. However these schemes are considerably

increasing day by day because the advertising and influence rate is high that is why it is

considered as pure discount schemes by the customers now days, which ultimately helps

companies to identify and discover who their most valuable and loyal customers. By

developing Lifestyle segmentations and modelling system based on customers shopping

behaviour Tesco has developed an infrastructure which identifies the customer segment,

spending and retention rate (Hemsley, 2005.

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LITERATURE REVIEW

As the competition is very high and loyalty schemes are in and out kind of activities for

the customers, so to encourage active participation to ensure that the rearwards are

important and very relevant, achievable and tangibles. To be the profitable 60% customers

have to take part into loyalty cards schemes (Hemsley, 2005). The signs show that the

loyalty cards may go down or explode soon (Benady & Brierly, 1996). According to the

companies’ long term objective that the loyalty cards are long term financial commitment

for the customers on the basis of its rewards and benefits. Customers take it as simple

loyalty and point collecting source however this is the main strategy for an organization to

increase and retain customers as well as provide benefits.

Moreover some organizations handle loyalty cards schemes as short term tactical device

but not as strategic vision for supermarkets; however in the cities companies are passionate

about their performance rather the concentrating how to provide full attention towards

loyalty cards. All corporations are challenging for folder room and the ultimate results of

this that the customer will use loyalty card for every day to build loyalty (Benady &

Brierly, 1996).

Supermarkets using loyalty card schemes are now aware of this and know that they cannot

take their customers for granted. In order to have really loyal customers, supermarkets

need to get the basics right by providing high quality produce at consistently low prices

(Bellizzi & Bristol, 2004). Hence with such sentiments in circulation this learns intends to

determine if loyalty cards are a contributing factor to increasing loyalty towards

supermarkets. This learning aims to determine the competence of loyalty cards in the

current market situation and whether consumers prefer price reductions as opposed to

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collecting points. Moreover, the study intends to determine if loyalty cards augment the

marketplace share of a hypermarket.

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RESEARCH METHODOLOGY AND DESIGNE

CHAPTER 3

RESEARCH METHODOLOGY AND DESIGNE

3.0 Introduction:

This chapter describes the theoretical approach and presented the complete backdrop on

which the study was support. The method and design of the research is illustrated in this

chapter. Most of the information in this chapter is depend upon the interview with

respondents in order to get reasonable view of this chapter.

A comprehensive impression of the study design is discussed in section 4.1. The

information requirement and gathering procedure are discussed in 4.2. 4.3, is based on

questionnaire design which is closed ended questions. Sampling method discussed in 4.4

followed by the data analysis in section 4.6. Limitations have been discussed in section 4.7

to mention the issues related to this study. The associate collected a few main and less

important data to take out the sensible sight of the whole scenario. Survey was designed

and conducted on the basis of research method which was chosen in first place. The author

explained the imitation of the survey and analyse the data.

3.1.0 Research Design

3.1.1 The research process

The aim of the study is to determine the efficiency of supermarket and loyalty cards. To

develop a conclusive research a hypothetic-deductive approach has been assumed. The

research was based on both quantitative primary information gathering methods as well as

secondary information techniques, with the objective of examining the association and

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power between the loyalty cards scheme and customers. To determine the efficiency of

loyalty cards an initial desk investigation was conducted using secondary information

based on the journals, marketing information, and various data bases.

In direction to carry out the comprehensive study, a research design was formed because

“for carrying out a marketing investigation project study propose is framework based on

which a researcher can find the ultimate objective of the study” Briks and Malhotra 2003.

The information which was needed was attained in the initial investigate learn by shaping

the means of gathering information necessary, identifying the qualitative and quantitative

example procedure and size Malhotra and Bricks, 2003. Descriptive research study was

taken into account to determine the quantitative objective on the basis of which single

cross sectional design was formed. For answering the research objective a descriptive

study was formed because it involves forming a planned study.

A single sectional design was formed due to time and resources restriction because it

requires only one example of respondent and required data repossess from the example

only once. Further more because of the marketing characteristics a descriptive research

design was considered Malhotra and Bricks 2003. According to Kinnear and Taylor, 1996

“descriptive studies seriously rely on information from secondary data and consumers

sources” which is why this study used equally secondary data and primary data to reply the

objectives of the research. Using questionnaire and non probability sampling methods

primary data was collected.

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3.2.0 Research Method:

This researcher involved the use of both quantitative principal information and secondary

information gathering methods such as assessment. Secondary information was used to

find out the latest circumstances in regards to the point base cards. (Malhotra & Briks

2003), secondary information which was calmed for the idea rather than problem in this

learning secondary information was used to present insight that how other author of

research have already addressed same concept for research question. Furthermore, the

secondary information was comprised equally industry information and academic data to

comprehend the study question and provide possible solution.

In addition the secondary information was used to support in budding an example plan and

informing the survey for gathering the principal information. Some of the secondary data is

not currently applicable because of current changed situation in the field of loyalty card

schemes. Care was taken into account while collecting data that the data is up to date to

offer entire and accurate image of the superstore.

Principal information was composed by carrying out a survey. According to Bricks and

Malhotra 2003 investigation methods should be based upon the structured questionnaire

which is to be given to the sample of inhabitants in order to get appropriate results. This is

why official survey was ready and then questions were asked in prearranging order

because this technique involves structured data collection process. Furthermore to

condensed the unpredictability in results fixed response questions were used because

difference in techniques used by interviewers could have got researcher different results.

However the danger in getting accurate results could have been high as respondent might

have not been able to provide the required information. (Bricks and Malhotra 2003.)

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The review was managed by individual face to face road discussion means. This means

authorized a sky-scraping elasticity of information compilation and the respondents could

also describe enquiries and explore respondent to obtain the compulsory data. Also, this

means allowed a diversity of enquiries to be asked and the respondents possibly will

simplify any uncertainty that interviewers had in the survey. In adding up, the data may

possibly be collected quickly with a soaring reaction rate. Furthermore a few disadvantages

were found out like time scale was too short for the respondent to respond properly as well

as for researcher. In this case result could fluctuate from the original requirement because

of social desirability by respondent Malhotra and Bricks 2003. This is why this method

was used to balance advantages and disadvantages with the resource limitations of the

researcher.

3.3.0 Questionnaire Design:

The survey questionnaire was consisting of small, controlled close ended question (copy

presented in appendix A). The questions were a mixture of several choices, and likert

question. There were five several picking questions out of which one was based on

Dichotomous and 4 were likert scale questions. Several option questions were very easy to

understand and consume less time to answer, additionally coding and handing out of

information was much easier and they reduce the risk of interviewer being bias while

answering questions. Which is why author avoid to use sensitive question at the start of the

questionnaire because “Malhotra 1996 written if responsive questions are asked at the

start, interviewers are extra likely to hesitate reply untimely and questions may not be

working” A dichotomous questions was used because it’s easy to recognize and simple to

code and analyse. To attain objective information a reasonable scale was used in questions.

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The questionnaire was responsive because they were not frightened and was capable to

supply the required data.

To determine which respondent had supermarket loyalty cards the dichotomous question

was designed which was also branching question. In start general question were asked

followed by more precise questions and then questions related to gender, age, and

shopping habits were asked. The researcher have distributed questionnaire among friends

and family and others known people in start as to get some polite information based on

which researcher test whether they have understood these questions properly and also to

find any changes that had to be made. So researcher made changes in question number 9

where interviewer had to provide some example beforehand.

3.4.0 Sampling Method:

The end people for this study/research were eighteen years and more, equally male &

female adult was incorporated. The final and targeted population includes single, married,

living with family, retired people and students. Initially the target population was managers

and senior staff from organizations but due to time limitation and some other restrictions

over to arrange interview with managers and other related staff it was then decided to

interview general customers.

Sample size was 50 because of limited time for the study yet large sample was taken into

account. Initially quota sampling method was considered to use but because of the time

scale and other limitations convenience sampling was used and it was quick, economical,

and practical and straightforward which ultimately gave researcher good results in shape of

questionnaire being filled. Inaccuracies and other factual error could not be measured.

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This survey was conducted in west London, Morden, Wimbledon, for the period of two

started from 22nd July 2011. Because researcher used convenience sampling therefore it

was later discovered that it is good enough to represent the final result according to the

population. A total number of questionnaires were 50 available for people to analyse the

outcomes at the end of the survey. Researcher has made showed the break down according

to the gender, age distribution.

Table 3.1: Sample breakdown in regards to gender and age allocation.

Respondents’ Gender

Male Female Count % Count %Respondents’

Age Category

18-25 years 7 17.1 8 14.5

26-33 years

14 34.1 20 36.4

34-41 years

12 29.3 17 30.9

42 and above

8 19.5 10 18.2

Total 41 100.0 55 100.0

Table 3.2: Sample distribution according to gender:

Respondents’ Gender

Male FemaleCount % Count %

41 42.7 55 57.3

Here are some results shown on the basis of the sample demographic distribution and this

was compared to the census population results 2001 for the Wimbledon and Morden areas,

the recent census took place in March 2011 to obtain recent results it was bit difficult that

is why researcher used the last result announced in 2001 for the sampling. However the

recent population distribution obtained from the following link.

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(www.nsdtabase.co.uk/locationdetail.cfm)on 25/07/2011. The 2001 census reports showed

that the male population is less than female population and it is still the same in 2011. The

female population is about 51% and the male population is about 48%. Table 4.1.4

describe the distribution similar to the population 57.3% are female respondent and 42.7%

are male respondent.

3.5.0 Data Analysis:

Obtaining correct and accurate data from customers, has always been competitive task,

however author had managed to get some information and put that into framework which

provided ultimate shape of this particular study. After collecting the data, the author had

gone through all thoroughly and then found some critical tasks to be edited. Questionnaires

had to check properly to make sure if there is still need to complete those entire

questionnaire properly without any mistakes and then to assign codes to each answer.

Author used SPSS software to generate the exact percentage and analyse the data. The

results had been accessible in the form of evocative figures, like percentage and several of

the other grades. To provide clear image of the grades of the review a graphical

representation was also used.

3.6.0 Limitations:

Well the limitations for every research are there, however it depends how researchers

tackle them and in what way. Author had faced some limitations while conducting this

research study. First of all the time scale, which was very less and limited, without

structured time frame it would not have been possible to achieve correct and accurate

information. Moreover the limited area had to be taken into account for research due to

time scale, which made researcher to had small sample size on one particular area rather

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than entire city so very complete study could not be commence. Obviously the more

resources the more better outcomes on the way, however researcher had very limited

recourses in order to conduct the study systematically.

Moreover it was very hard to engage people in this particular activity people were not

willing to take part in it which was indeed a tense moment for the researcher. As

respondents made many errors because most of them were in hurry to end the interview

which ultimately made them to provide inaccurate information intentionally or

unintentionally.

3.7.0 Conclusion:

This episode has discusses the study tactics and plan of the study. It also explains

requirements and compilation technique moreover face to face meeting with interviewers

in Wimbledon area in London. Secondary information gathered from journals, and other

sources were also utilized for the investigation. The rationale behind the study was to

develop accurate understanding of marketing technique called loyalty card scheme for the

reader. The data and literature worn in the investigation have been obviously pointed and

used to maintenance the method procedure which ultimately has provided a structure for

the compilation and structure of the study.

The next chapter, chapter 4 discusses the results were taken out from the information

provided from respondents. Chapter also discusses the research objectives as well as

demographic breakdown.

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Chapter 4

Findings and Analysis

4.0. Introduction:

This episode presents the analysis on loyalty card scheme as well as customer retention

level for last 15 years from 1995 to 2011. This chapter also discuss the retail industry

investment climate as discuss in the chapter 3 in the literature review by many authors who

have written their studies on loyalty card scheme and customer retention. This chapter also

discusses the overall investment made by the retail industry to improve customer retention.

Moreover this chapter further discusses the whole picture of the study and surveys in sub

sections which are further elaborated with graphical representation of the data gathered

from surveys.

Section 1: describes the efficiency of loyalty card compare to the cost reductions, and also

discusses the findings on loyalty card and retention of the customers.

Section 2: discusses the efficiency of the point cards

Section 3: further elaborated the grounds whether loyalty cards enhance customer

retention headed for superstores.

Section 4: this section discusses the findings on loyalty card scheme to verify and enhance

the market share of superstores.

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4.1.0 Background:

The overview of the retention of the customers has been discussed clearly in chapter 3, that

how important customer loyalty and retention for the organization. The portion of the

background has been taken in order to present this chapter in proper manner. Retention

programmes like loyalty schemes aim at exploit a consumers life-time worth to the

corporation. The concept of life-time value is important when assessing potential

customers. Life-time values way the incomes that can be accepted from clientele over their

life-times (Jobber, 2004). Loyalty cards even though seem to be a good strategy for

increasing loyalty; they can raise the costs of business.

Expenses are very lofty when technology, software, self-training, administration,

communication and costs and rewards are taken into consideration. If participants react

with “me-toos” the result may be no more than a planned advantage for the company. With

such high costs the reason loyalty cards are introduced is in order to follow the leader e.g.

Tesco and for defensive reasons as opposed to proactive (Khan, 1998). Furthermore

initially a clear overview of the results has been provided according to the demographic

category such as age, gender, etc. a survey presented by Acxiom, was compared to this

study to find similarities in trends and provide perception of the research.

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Figure 4.1 demographic breakdowns.

As can be seen in figure 4.1, around 36% customers are intended to do their shopping once

a week. Whereas 19% goes shopping once a month, and 17% do their shopping twice a

week. Customers who do shopping twice a month are about 10.5%, whereas daily shoppers

are about 16% and others are less than 5%.

Following are the graphical representations of the customers who visited the supermarkets

most often by assigning a rank from 1 to 6 where 1= most visited, 2= second most visited

etc.

Table: 4.1 represent the percentage of the customers who visited the

supermarkets most often.

  TESCO ASDASAINSBURY

WAITROSE

MORRISON

SOMERFIELD

OTHER

1 12.5% 4% 4% 1% 0% 0% 0%2 6.5% 3.5% 10% 0.5% 0% 0% 0%3 1.5% 5% 5% 2% 1.5% 0.5% 0%4 0.5% 1% 1% 5% 2% 1.5% 0%5 0% 1% 0% 4.5% 5.5% 3.5% 0%6 0% 2.5% 0.5% 5.5% 8% 11.5% 0%7 0.5% 2.5% 0.5% 2% 3% 3% 0%

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According to the survey results which are shown in table 4.1 describes that 12.5%

customers visit Tesco most often. 4% said ASDA is most often visited superstore for them

on the other hand Sainsbury is the same 4%. Only 1% customers said they visit Waitrose

most often. According to the table customers don’t really give preference to Morrison,

Somerfield when it comes to shopping as compare to TESCOASDA AND SAINSBURY.

Similarly the second most visited choice is SAINSBURY as its 10%, means people may

switch from Tesco to Sainsbury for some certain reasons such as if they don’t have Tesco

available around them so they might give preference to Sainsbury for shopping rather than

Asda, Waitrose and etc.

To further elaborate the table 4.1 here are some pie charts stand on the information

available in Table 4.1 showing the percentage of the customers who visited the most by

assigning the rank from 1 to 6.

Figure 4.2 represent the percentage of the customers who visited the

supermarkets most often.

58%19%

19%

5%

1= Most VisistedTESCO  ASDA SAINSBURYWAITROSE MORRISON SOMERFIELDOTHER

32%

17%

49%

2%

2= 2nd Most VisistedTESCO  ASDA SAINSBURYWAITROSE MORRISON SOMERFIELDOTHER

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FINDINGS AND ANALYSIS

10%

32%

32%

13%

10%3%

3= 3rd Most VisistedTESCO  ASDA SAINSBURYWAITROSE MORRISON SOMERFIELDOTHER

5% 9%9%

45%

18%

14%

4= 4th Most VisistedTESCO  ASDASAINSBURY WAITROSEMORRISON SOMERFIELDOTHER

7%

31%

38%

24%

5= 5th Most VisistedTESCO  ASDA SAINSBURYWAITROSE MORRISON SOMERFIELDOTHER

9%2%

20%

29%

41%

6= 6th Most VisistedTESCO  ASDA SAINSBURYWAITROSE MORRISON SOMERFIELDOTHER

These results are almost similar to the Acxiom results (Sweeny, and Kilby 2005), as both

surveys have showed that most of the customers do their shopping at Tesco however there

is still difference between Acxiom and this survey, according to the Acxiom most of the

customers do their shopping at ASDA but in this case respondent prefer to do their

shopping at Sainsbury. But both surveys shows that fewer customers are attracted toward

others stores.

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4.2.0 Determining the efficiency of loyalty card compare to

the cost reductions:

One of the major purpose of this study to find out that whether customers have a

preference of cost reduction or loyalty card. The question that arises here is, are loyalty

cards are effective compared to price reduction? To find out these, customers were asked

about their opinion in regards to the price reduction and loyalty cards.

Table 4.2: interviewer’s opinion about loyalty cards and cost

reduction:

CriteriaStrongly Disagree

%Disagree

%

Neither Disagree nor agree

%Agree

%Strongly Agree

%Loyalty cards

are a sales gimmick

4.2 49 35.4 11.5 0

Special offers provide more

value for money

0 0 1 97.9 1

Points are useful 0 5.2 39.6 54.2 1Permanent low prices provide more value for

money

4.2 17.7 16.7 58.3 3.1

Collecting points takes time 0 0 3.1 92.7 4.2

In the above table it is indicated that 49% customers think that loyalty cards are not a sales

trick yet 35.4% are neither agree or disagree, only 11% said that it is sales gimmick. This

means that the most people think that it’s not sales trick. However 54.2% customers are

agreed that points they get on shopping are actually useful and they can be used in stores

against purchase. Respondents who think and agree that collecting points take a lot of time

and they cannot be redeeming quickly are about 92.7% which is fairly high amount of

people to say this.

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Graph 4.3: Interviewers view regarding loyalty cards.

Furthermore according to the demographic distribution 43.9% of male respondents said

that the loyalty cards are not sales tricks however 52.7% females showed the same opinion.

As far as the age category is concern about 60% respondents fall into the 18-25 age

category and have the same opinion and this is large number of respondents presented the

similar opinion. (Appendix B). But as the age group goes up the opinion got changed

(appendix C). Around 56.4% females think that collecting point is useful while 51.2%

male think the same. Moreover 95.1% males and 90.9% females agreed that collecting

point acquire more time to collect them.

Respondents who fall under the age category of 26 to 33yeras are 67.6% and believed that

loyalty points are helpful as they can be redeemed in other stores. In the age category of 18

to 25years respondents believed that loyalty points are useful so that the age category of 34

to 41 years have the same opinion. 50% of the age categories of the 42 or over are also of

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FINDINGS AND ANALYSIS

the similar view. Almost 100% of all age category groups very strongly in accord that

loyalty cards points take time and are not quick.

Moreover when collecting information on whether particular offers offer more worth for

money or not and on the other hand respondents were asked to mention that if low prices

permanently provides extra value for change, 58.3% of the interviewers were strongly

agree that it does provides permanently value for money whereas 97.7% said that particular

tender provides worth for wealth. Here is the graphical representation of respondent’s

opinion regard permanently low prices.

Graph 4.4 Respondents view regarding permanent low

prices

According to the graph above most of the respondents of all age category agrees that

special offer gives higher value for money. Respondents that are 42 years or above about

66.7% agree that lastingly low worth present value for wealth 44.8% of the interviewers

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FINDINGS AND ANALYSIS

between 34 to 41 years have the same opinion. Furthermore 64.7% respondents aged

between 26 to 33 years and 60% aged between 18 to 25 years have mentioned the same

opinion. Therefore in order to link above question and answer it in more depth respondents

were asked that how often they buy special offers to establish the attractiveness of special

offers.

Table 4.3 Respondents purchasing habits of goods on

special offer.

Criterion Every Visit%

Most Visits%

Occasionally%

Never%

How often products on special offer are purchased 7.3 65.6 27.1 0

According to the table above 7.3% respondents said that they buy special offer products on

almost every time they visit superstore. 27.1% respondents purchase special offer products

occasionally. Whereas 65.6% respondents buy particular offers products on mainly visits.

Demographically 39% male respondents and 18.2% females buy special offer products

occasionally. Respondents who fall under 42 years or above age category purchase special

offer products on most visits. This study also shows that as the age increases the buying

habit of the customers especially on special offer product get increases.

4.2.1 To discusses the efficiency of the point cards:

To establish how efficient loyalty cards are customers were requested to enquire about

their custom prototype of loyalty cards and the reimbursement they gained. Grades explain

that 100% of the customer’s investigation acquires at least 1 superstore loyalty card.

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Interviewers were as well asked which reliability cards they had and which they used the

most. The subsequent table present an impression of the grades attained.

Table 4.4: Category of loyalty card and usage:

Type of Loyalty Card % of respondents owning the card % of respondents who use the card the most

Nectar Card 67.7 67.7

Tesco Club card 69.8 65.6

John Lewis Partnership Card 4.2 5.2

Tesco Club card Plus 11.5 10.4

Asda Store Card 16.7 12.5

Somerfield Saver Card 9.4 5.2

Asda Credit Card 7.3 5.2

Other Supermarket Loyalty Cards

0 0

According to the table above it clearly shows that most of the respondents have Tesco club

card and Nectar card. It further describes that the circulation of the Tesco club card is

higher than any other card in this field as it describes that the 69.8% respondents have

Tesco club card. Moreover Nectar card is in close competition with Tesco club card as

67.7% respondents said they have Nectar cards. Most of the respondents have different

loyalty cards but Tesco club card and Nectar cards are the ones respondents uses the most.

This also shows the customers trend to choose the superstore when it come to shopping.

However demographically results shows that the females almost have multiple loyalty card

but 72.7% have Nectar card compared to males who have 61%.

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FINDINGS AND ANALYSIS

Also more male respondents have Tesco clubs cards as compared to female respondents.

According to the results that more respondents under the age category of 18-25 have Tesco

club card and Nectar card however fewer respondents have Asda store card, Somerfield

saver card, Asda Credit card and Tesco club card plus in this same age category. Age

categories 26 to 33 have more respondents who have Tesco cards and Nectar cards but no

one has John Lewis partnership card in this age category as well as in age category of 18 to

25. Respondents who have john Lewis card are mostly fall under the age category of 34 to

41 which shows that john Lewis is attracted by the mature and aged people about 10.3%

respondents have John Lewis card in this age category. 72.2% Respondents in the older

age categories have Tesco club card and 5.6% contain John Lewis card which shows that

older respondents have Waitrose partnership card and habitual shoppers at Waitrose. Table

4.3.1 also show the compression between Tesco and Nectar loyalty cards, it shows that

67.7% uses nectar card and 65.6% uses Tesco club card however more of the respondents

have Tesco club card. This also refers to the popularity of the Nectar card amongst its

users.

Demographically in regards to gender 73.2% male respondents uses the Tesco Club card

while 72.7% female respondents uses the Nectar card which means there is not much

difference in between these two loyalty cards and they both on are fare competition. Nectar

Card and Somerfield saver cards are much famous amongst 18 to 25 years old respondents

on the other hand Tesco card is famous amongst 25 to 33 years old age category. To find

out the consuming behaviour and loyalty card usage and its effectiveness, respondents

were requested to mention how often they redeem loyalty card points.

Table 4.5: how often customers exchange their loyalty points.57 | P a g e

FINDINGS AND ANALYSIS

Criterion Every Visit%

Most Visits%

Occasionally%

Never%

How often points are redeemed by respondents 9.4 26 47.9 16.7

According to the table above respondents who exchange their loyalty points occasionally

are 47.9%. Those who said they redeem their loyalty points on most visits are 26%

however16.7% said they never claim their loyalty points back which means they either

don’t have loyalty card or they just don’t want to use it for whatever reason. Only 9.4%

respondents said they claim their loyalty card point back on every visit which seems very

less amount of the respondents as compare to other categories. Further more reasons for

not claiming for their points to be redeemed on every visit is because people don’t buy lots

of stuff on every visit as compare to the people who visit superstore once or twice a month

or week so they are tend to keep on collecting loyalty points on every visit and redeem

them occasionally that is another reason why more respondents said they redeem points

occasionally. As far as gender is concern so female redeem points on every visit where as

male customers redeem point occasionally some of the male customer don’t even redeem

loyalty points at all that’s is the reason why a higher percentage of female redeem points.

14.5% females redeem points on every visit whereas only 2.4% redeem points on every

visit.24.4% male and 27.3% females redeem their loyalty points on most visits. On the

other hand 45.5% females and 51.2% male redeem points occasionally. 12.7% female and

22% males never exchange loyalty points. Moreover younger age respondents are more

efficient to redeem points than older age respondents; survey shows that 18 to 25 age

category respondents redeem points on most visits are 46.7% . 47.1% respondents fall

under the age category of 26 to 33 who redeem points occasionally, 37.9% respondents in

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FINDINGS AND ANALYSIS

the age category of 34 to 41 redeem points occasionally, however 72.2% respondents are

42 years or above.

Table 4.6 respondents receive money off vouchers:

Criterion Yes%

No%

Sometimes%

Are money-off vouchers for products respondents purchase

20.8 32.3 46.9

Graph 4.5 respondents receive money off vouchers:

% % %Yes No Sometimes

0

5

10

15

20

25

30

35

40

45

50

Series1Are money-off vouchers for products respondents purchase

This investigation focuses on money off vouchers that customers receive from

supermarkets whether supermarket money off vouchers is for the same products that they

buy every time or they get vouchers on any of the product that they buy. In regard to this

customer’s present mixed response, 46.9% respondents said that they get same product

vouchers sometimes and 32.3% respondents said they don’t get vouchers for the same

product that they buy. However 20.8% respondents said yes they get vouchers for the same

product they buy every time. Consequently the information received by the supermarkets

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FINDINGS AND ANALYSIS

through loyalty card is not suitable for the customers to be building up long lasting

customer relationship however supermarkets would like to provide more incentives and

build a long lasting and strong customer relationship.

4.3.0 Elaborated the grounds whether loyalty cards

enhance customer retention headed for superstores.

To determine the above objective customers were requested to appraise many reasons as to

why the visit same store every time they go for shopping and also to find out how loyalty

point card play role to retain customers toward particular superstores.

Table 4.7 why customers call the same store:

Criteria Very unimportant

%

Unimportant%

Neither Unimportant

nor Important%

Important%

Very Important

%Convenience 0 2.1 4.2 53.1 40.6

Collecting points

1.0 9.4 34.4 50 5.2

Variety of fresh produce

0 2.1 3.1 91.7 3.1

Frequent special offers

0 1 3.1 92.7 3.1

Open 24 hours

0 10.4 32.3 56.3 1

Fresh Bakery 0 4.2 35.4 60.4 0

Loyalty card 0 6.3 35.4 57.3 1

Quick moving checkout lines

0 1 0 67.7 31.3

To grab the data as to why customers calls into the same stores every time they go for

shopping different criteria and factors have been taken into consideration. According to the

above table from the convenience to quick moving checkout lines respondents were asked

to mention that which is the most dominant factor that makes them to visit the same store.

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FINDINGS AND ANALYSIS

Almost 92% respondent answer yes to variety of fresh products because they believe for

better health the products such as vegetables, dairy products have to be fresh every day

only 3.1% said very important. 92.7% respondents said frequent special offers are very

important to them. However the next very most important factor for the respondents is

quick moving checkout lines as 67.7% said its important factor and 31.3% said its very

important factor so almost every respondent mentioned that this is the important factor.

The reason why they have said its important factor because of daily schedule and routine

as London is very busy place and people have to manage everything in order to get on with

everything properly and also now a days because of work burden and other matters people

cannot resist waiting for longer period of time. That is the reason why superstores have

already introduced self check outs to reduce the timing. Furthermore convenience is

another factor which is important to respondents that’s why 53.1% said it’s important and

40.6% said its very important factor.

The results also shows that special offer is important than collecting loyalty points hence

loyalty cards are not playing vital role toward retaining customers. According to the survey

done in 2005 by Acxiom, mentioned that location and convenience is the most important

factor and second important factors are quality of the product and price in regard to giving

preference one store to another. Moreover demographical representation of above table

declares that female and male respondents give high importance to quick checkouts and

fresh products. 94.5% female respondents mentioned that special offers are important.

Furthermore male respondents said that collecting points are not important factor to them

as 51.2% said it’s neither important nor unimportant. However a female respondent seems

more interesting in collecting loyalty points as 58.2% said its important factor and 72.7%

61 | P a g e

FINDINGS AND ANALYSIS

mentioned that it’s important to decide which supermarket to shop at when it comes to

collecting loyalty points.

It was considered that difference of opinion would occur that is why statistical T-TEST

analysis carried out to test investigation hypothesis mentioned in chapter 1.

H1: Male and female customers always have different level of importance when it comes

to make a decision which superstore to shop at.

H2: Variation in the rank of significance clients of diverse mature group give to well-

situated location and have a point/loyalty card when decide which superstore to shop at.

Furthermore to elaborate the difference of opinion and analyse MEAN AND T-VALUE it

was required to elaborate hypnotises in regards to dependent and independent variables.

Therefore in H1 (make a decision which super market to shop at) is dependent variable

over (level of importance) in case of male and female preference. Similarly in H2 (decide

which superstore to shop at) is dependent variable over (diverse mature group).

Table 4.8: demographical analysis of difference of opinion when

it comes to collecting points and loyalty card:

Criteria Male mean female mean T-Value Collecting points 3.24 3.67 0.009Store has loyalty card 3.24 3.75 0

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FINDINGS AND ANALYSIS

Graph: 4.6 Female & Male Opinion over loyalty card and

collecting points

Male mean female mean2.9

3

3.1

3.2

3.3

3.4

3.5

3.6

3.7

3.8

Collecting points

Store has loyalty card

To complete the above objective T-test was carried out to understand the statistical

difference between these two groups whether the mean of these two groups male and

female is different from each other. Therefore the results from above table shows that the

mean value for the male based on collecting points is 3.24% and female mean for same

category is 3.67% which means that the female have higher trend towards collecting

points. However for the second option that how far is it important for the store to offer

loyalty card? The mean value for the male is 3.24% whereas female mean value is 3.75%

again in this case female have higher participation toward store that has loyalty card.

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Mean

FINDINGS AND ANALYSIS

Furthermore the extracted value is less than 5% for both stores have loyalty card and

collecting points so the null Hypothesis is rejected. Hence male and female have different

opinion about having a loyalty card and collecting loyalty points. Moreover the T value for

the mail in both categories is 0.009 which mean that male has difference of opinion when it

comes to collecting points and loyalty card whereas female in both categories do prefer

store that has loyalty card and where they can collect points. It also shows that female does

give preference when it comes where to shop at. It is also extracted that having different

loyalty card gives female opportunity to choose where to shop in order to collect points.

Moreover according to demographic results a higher percentage of the respondents who are

42 years and above consider convenience of the located markets as important factor it

becomes fewer when the age decreases such as 18 to 25 age category would regard

collection of the points as important factor. However the most important thing for all age

categories is to have fresh products at every supermarket.

4.4.0 To discusses the findings on loyalty card scheme

to verify and enhance the market share of superstores.

Further to elaborate whether loyalty card schemes increases the market share of super store

or not? Well according to the findings which already have been mentioned in this chapter it

is very difficult to say that loyalty card schemes increases the share of supermarkets

because there are many factors involve in enhancing the share of supermarkets. However

some of the statistical analyses have been developed on some of the aspects based on

hypothesis such as convenience and loyalty card. Those are presented in one way

ANOVAs to understand and authenticate the analysis.

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FINDINGS AND ANALYSIS

             Criteria 18-25

years26-33 years

34-41 years

42 years

& above

F-Value

Significance

  Mean Mean Mean Mean    Convenience 4.33 4.32 4.1 4.67 2.886 0.04

Store has loyalty card

3.6 3.74 3.48 3.17 3.565 0.017

Table 4 .9 Different age group respondent’s opinion about

convenience and loyalty:

18-25 years

26-33 years

34-41 years

42 years & above

F-Value

Significance

00.51

1.52

2.53

3.54

4.55

Convenience

Store has loyalty card

Mean

Graph 4 .7 Different age group respondent’s opinions about convenience and loyalty:

The table and graph above shows that the convenience of location is very popular among

all age categories; however the mean value is less than 0.05 for loyalty cards and store

convenience. This also shows that there is difference in pinion among all age categories

whether its convenience or loyalty cards. Furthermore almost in all age categories

65 | P a g e

Respondents age Groups

FINDINGS AND ANALYSIS

respondents said that the convenience of store is important however store loyalty card is

not as important as convenience is. Therefore it assumed that the loyalty card has not

bigger impact for stores to retain and attract more and more customers in order to enhance

share of the market.

4.5.0 Conclusion

This chapter focused and outlined the findings and analysis of the entire study also focused

on how these relates to the effectiveness of the loyalty card as well as customer retention.

The marketing techniques that are being implemented by the superstore to increase and

improve customer’s satisfaction have been discussed in this chapter in many different

forms. Questionnaire has been designed and synchronized among customers to get the best

and correct information. Different tables and graphs have been shown in this chapter for

clear and accurate understandings. Different statistical methods have been implemented to

get the fair view from the respondents over effectiveness of the loyalty card and it

methods. Two hypotheses have been developed to analyse the study and therefore present

the results and finding.

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FINDINGS AND ANALYSIS

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CONCLUSION & RECOMMENDATION

Chapter 5

Conclusion & Recommendation

5.0: Introduction:

This chapter describes the comprehensive overview of this study, investigation and also

concludes the research with general argument, understanding and review of result, and

proposition of the loyalty cards and its methods used by the retail industry in the past

almost 15 years from 1995 to 2011. This chapter also presents the recommendation based

on the research methodology and its results.

Section 5.1 presents about the findings in chapters 3 and 4 focusing on the effectiveness of

the loyalty cards and customer retention in the UK. This section also provides the outline

of the all-purpose conversation on suggestion of the experimental. Section 5.2 discusses

the rationale behind the methodology and design of this study which is in chapter 3.

5.1.0 Span of the Study

5.1.1 Research objectives and problem definition

Loyalty card schemes have been really influential and it has attracted many customers in

this field, it had made at an individual to singe up at least one loyalty card if not all of the

supermarket card scheme. There has been lot of gossip around that the loyalty cards are in

declining phase however this research shows that customers do not take loyalty card as sale

tricks and do actively take part in this scheme. This study and its results shows that male

are not really active users as compare to female users. This investigation also shows that

67 | P a g e

CONCLUSION & RECOMMENDATION

consumers do take part in loyalty schemes such as price reduction and special offers which

ultimately attract more customers. It also allows customer to receive benefits and

incentives as they shop rather than waiting and keep collecting point for longer period of

time and redeem them. That is the reason why most supermarkets have now introducing

special offer and reduced prices along with loyalty cards. Supermarkets have made

significant improvement in customers retention by offer them coupons because the more

coupons redeemed the more profit supermarkets are going to make.

Loyalty cards and its usage has reflected the customers, in particular which shop to

consume at. The most popular cards now days are nectar and Tesco club cards similarly

both supermarkets are popular respectively. According to survey results most of the

customers have either of these cards or both of them. It’s been already discussed that

female are more participant in loyalty schemes than male, a very high number of female

customers have loyalty card and use them more than male consumers. However female

customers collect points and redeem them reasonably more often, the reason behind this

rationale is that female customers visit markets more than male.

Loyalty card schemes also help supermarkets to segment their customers in regards to

demographic distribution such as age, gender etc. This also helps supermarkets to provide

them tailored offers. However the results shows that supermarkets might not use the

similar way to tailored their customers with money off voucher schemes on the basis of

information they have collected for what customers buys therefore they are not building

long term relationship what they have aimed for. Moreover as supermarkets have huge

amount of customers data base, they have now started to take loyalty card a step forward in

regards to building up new and long term relationship with customers which also shows

68 | P a g e

CONCLUSION & RECOMMENDATION

that loyalty cards are not going to go out of the business soon. The reasonable example

could be the loyalty card and credit card together which they believe they can attract more

customers with this trick.

As because there are lots of new inventions coming up in loyalty cards schemes and

customers retention schemes for building up new and long term relationship. The new

following ideas and tricks and objectives have to be taken into consideration for new

research.

1. More incentives and benefits especially for loyalty card holders

2. Loyalty points cards plus particular store credit card together

3. Different loyalty points offers on different products such as buy product and get 100

loyalty points.

5.1.2 Methodology

The data which has been collected for this study was through questionnaire, however many

difficulties have been faced, it was initially decided to gathered the required data through

face to face interview with the authorities but they were unable to provide all the relevant

information because of the ethic policy of the company. Therefore it was decided to grab

the data through questionnaire and meet customers individually, which ultimately took

time in collecting data, time was very less, less resources and etc. the primary data was

collected through books journals, internet and etc in order to accurately assess the best

variables to implement in experimental support.

The difficulties have been discussed in this study and lesson has been learnt and it will help

in getting completed other research in future. The technique which was mentioned by Dr

Lawrence Mensah Akwetey in his book investment attraction and trade promotion 2002

69 | P a g e

CONCLUSION & RECOMMENDATION

P.G 214 concerned with difficulties was taken into consideration “getting in” “getting on”

“getting out” and “getting back”.

5.2.0 Research contribution

The ultimate objective of this study was to identify the impact of loyalty card scheme and

its methods and outcomes used by the retail industry in especially in the case of Tesco in

2010 & 2011 in London. Therefore on the basis of hypothesis and findings it has been

revealed that loyalty card scheme has influenced business in big time which is ultimately

helps businesses to improve further and also contribute towards economy of the country.

5.2.1 To establish, the efficiency of point card compare to

cost decline

This research ultimate intention was to comply with the objective of this study that how to

established link between efficiency and cost reduction and then of course how to enhance

customer retention for supermarkets. Here it is not important to have loyalty card when it

comes to decide which supermarket to shop at said people. As conceived from the results

and surveys that people are determine to shop, where they could find fresh products and

convenience and special offers. It has been recorded that there are so many loyalty card in

circulation and people have more than one and also they are active members of more than

one scheme, hence loyalty cards are not noteworthy drivers for loyalty.

Therefore people like to use their loyalty cards almost on every visit as they like to receive

benefits which also can be used to receive price reduction through collecting points. “Me

Too” term used by the supermarkets which represents the loyalty card benefits and

incentives and also supermarkets defensive strategy. Therefore through the new wave

70 | P a g e

CONCLUSION & RECOMMENDATION

supermarkets are increasing the wallet space of customers by introducing loyalty and credit

card together.

5.2.2 To establish the efficiency of loyalty cards.

As discussed above that supermarket are more concerned with the efficiency by

introducing loyalty card and credit card in one package which will ultimately help

supermarkets to enhance relationship and also its financial aspects. Sainsbury and Tesco’s

have banks and ASDA is also setting up banking facilities for customers to enhance the

customer relationship. Therefore these are the grounds on which supermarkets can create

brand name such as Tesco, Sainsbury, and others.

As far as market share of supermarket is concern research shows that by increasing offers

through loyalty cards and offering more incentives could lead to increase the share of the

markets. Such as Tesco is now leader of supermarket because it has gone through step by

step to introduce the different loyalty programmes like loyalty card to club card plus etc.

survey shows that 2.1% increase in market share for Tesco by introducing club card

however Sainsbury didn’t get well on with loyalty card scheme and refuse to launch more,

in consequence Sainsbury lost its customers and they turned out to be Tesco customers.

Moreover other stores like Somerfield introduced saver card and in result they managed to

retain more customers which further resulted in increasing their sales by 60%. Well

initially as it was new market gimmick to people and businesses that is why they managed

to get high sales and more customers but as it’s been long time that loyalty cards are in

circulation and more and more loyalty programmes are coming into the market there not

much contribution towards increase in sales. In addition there is now diversified kind of

71 | P a g e

CONCLUSION & RECOMMENDATION

competition going on with in supermarkets such as for having non food items and slashing

down the prices resulted in contributing towards customers and hence increasing market

share. Somerfield had introduced loyalty card as well but did not succeeded, however they

introduced cash incentives to customers rather than loyalty points but now as they talk

about loyalty card so Somerfield has started to think again to introduce loyalty card again

with more benefits and incentives. Hence it has been shown that loyalty cards doesn’t

make a lot of difference in retaining customers and increasing sales yet the brand image

and quality of products and convenience is more important to increase the market share.

5.3.0 Recommendations and Areas for further research

While loyalty cards are so much in circulation now and new improvised loyalty schemes

are coming. But the question that arises here is how simple point based card will increase

in sale as well as in customer retention? For that here are some suggestion and

recommendations based on this study and its results.

ROUT MAP

72 | P a g e

CONCLUSION & RECOMMENDATION

Figure 5.1 further suggestions what needs to be added

This is how loyalty card should design to retain more customers, loyalty cards also extend

brand name among the communities so special measure should be taken into account while

promoting loyalty schemes.

5.3.1 Local market network

Supermarkets should consider the current situation with in the market while implementing

the new ideas and loyalty schemes. This will help supermarkets to understand the need and

demands of the customers in regards to the customer’s services and loyalty schemes.

5.3.1.1 Cash incentives instead loyalty points

73 | P a g e

Local market network Cash incentives instead loyalty points

Provide more and more fresh products

Party points when customers are buying

product for parties should rewarded for

extra benefits and points.

Referrals points when

introducing new friend or

family

Special events such as holidays, mother’s

day, father’s day, valentine day etc (extra

points for use of card in holidays)

Permanently low prices should be provided

CONCLUSION & RECOMMENDATION

As discussed above in the case of Somerfield that they introduced cash incentives to

customers frequently rather than loyalty points. Almost every supermarket should take into

consideration to introduce cash incentives to retain more existing customers to particular

superstore.

5.3.1.2 Fresh products

Customers are more indented to buy fresh products rather than collecting loyalty points so

every store has to provide fresh products all day long specially vegetables, fruits, dairy

products.

5.3.1.3 Special events like holidays, Mother’s day, Father’s day,

valentine day etc (extra points for use of card in holidays)

Supermarkets should take this into account to provide extra incentives on occasion like

Mother’s day, Father’s day and etc because high amount of customers rush towards

supermarkets to buy gifts for their loved one. So it’s better idea for supermarket to attract

more customers by offering more incentives on special events.

5.3.1.4 Party points when customers are buying product for

parties should rewarded for extra benefits and points.

The trend has been seen that customers spend more when it comes to party, so

supermarkets should provide them extra benefits when they purchase party products. This

also helps supermarkets to deliver word of mouth concept in order to attract more

customers.

5.3.1.5 Referrals points when introducing new friend or family

74 | P a g e

CONCLUSION & RECOMMENDATION

Supermarkets should reward customers with more benefits when they refer their friends

and family to that particular supermarket. In loyalty scheme this concept has not yet been

popular but with minimum consideration they can attract more customers and retain

existing one.

These all above points are recommendations and could be areas for further research. If

supermarkets invest their minimum effort to make these happen, they could be beneficial

in terms of finance and customers retention.

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REFERENCES & APPENDIXES

APPENDIX (A)SURVEY QUESTIONNAIRE

This Marketing Research study is being conducted in order to determine the Effectiveness of supermarket loyalty cards. This interview will take approximatelyfive minutes and any information will be kept in confidence. Thank you for your timeand cooperation.

Q 1. How often do you do your supermarket shopping?

  Daily  Twice a week.  Once a week.  Twice a month  Once a month.  Other    

Q 2. Which of these supermarkets do you visit the most? Please rank the following to the supermarket visited the most often by assigning a rank from 1 to 6.(1=most visited, 2=second most visited etc).

  Tesco.  Asda. Sainsbury.  Waitrose.

  Morrisons (Safeway)

  Somerfield  Other    

Q 3. Do you have a supermarket loyalty card?

  Yes - Go to question 4.  No - End of interview. Thank you.

Q 4. Which of the following supermarket loyalty cards do you have?

  Nectar card.  Tesco Clubcard.  John Lewis Parnership card.  Tesco Clubcard Plus.  Asda store card

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  Somerfield saver card  Asda credit card     

Q 5. Which of the following supermarket loyalty cards do you use the most?

  Nectar card.  Tesco Clubcard.  John Lewis Partnership card.  Tesco Clubcard Plus.  Asda store card  Somerfield saver card  Asda credit card  Other    

Q 6. For which of the following reasons do you visit the supermarket of your choice the most? Please rate the following on a scale of the level of importance you give to each. 1=very unimportant, 2=unimportant, 3=neither important nor unimportant, 4=important, 5=very important.

Conveniently located

1 2 3 4 Very Unimportant Neither Important

unimportant important norunimportant

Collecting points on supermarket loyalty card

1 2 3 4 Very Unimportant Neither Important

unimportant important norunimportant

1 2 3 4 Very Unimportant Neither Important

unimportant important norunimportant

Store frequently has special offers

1 2 3 4 Very Unimportant Neither Important

unimportant important norunimportant

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Store is open 24 hours

1 2 3 4 Very Unimportant Neither Important

unimportant important norunimportant

Store maintains a fresh bakery

1 2 3 4 Very Unimportant Neither Important

unimportant important norunimportant

Store has a loyalty card

1 2 3 4 Very Unimportant Neither Important

unimportant important norunimportant

Store has quick moving checkout lines

1 2 3 4 Very Unimportant Neither Important

unimportant important norunimportant

Q 7. How often do you redeem the points collected on your card?

1 2 3 4Every Most Occasionally Never Visit visits

Q 8. How often do you purchase products that are on special offer?

1 2 3 4Every Most Occasionally NeverVisit visit

Q 9. Are the money off vouchers you receive from the supermarket for products that you purchase?

  Yes.  No.  Sometimes.

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Q 10. Listed below are different opinions about Supermarkets. Please indicate Below how strongly you agree or disagree with each of the following. 1=strongly disagree, 2=disagree, 3=neither agree or disagree, 4=agree, 5=strongly agree.

Supermarket loyalty cards are a sales gimmick.

1 2 3 4Strongly Disagree Neither Agreedisagree agree or

disagree

Special offers provide more value for money.

1 2 3 4Strongly Disagree Neither Agreedisagree agree or

disagree

Points collected on supermarket loyalty cards are useful as they can be usedin other stores.

1 2 3 4Strongly Disagree Neither Agreedisagree agree or

disagree

Permanently low prices provide more value for money.

1 2 3 4Strongly Disagree Neither Agreedisagree agree or

disagree

Collecting points takes time and so cannot be redeemed quickly.

1 2 3 4Strongly Disagree Neither Agreedisagree agree or

disagree

Please indicate which age category you belong to

  18-25 years  26-33 years  34-41 years  42 and above

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Gender :

  Male  Female

End of Interview.Thank You!!!

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REFERENCES & APPENDIXES

APPEDIX (B)

SURVEY RESULT ACCORDING TO GENDER

Table 1: Respondents’ opinion about loyalty cards and price reductions:

Criteria GenderStrongly Disagree

%Disagree

%

Neither Disagree

nor Agree%

Agree%

Strongly Agree

%

Loyalty cards are a sales gimmick

Male 7.3 43.9 34.1 14.6 0

Female 1.8 52.7 36.4 9.1 0Special offersprovide more

value for money

Male 0 0 0 97.6 2.4

Female 0 0 1.8 98.2 0

Points collected are

useful

Male 0 4.9 41.5 51.2 2.4

Female 0 5.5 38.2 56.4 0Permanent low prices

provide more value for money

Male 7.3 17.1 17.1 56.1 2.4

Female 1.8 18.2 16.4 60 3.6Collecting

points takes time

Male 0 0 2.4 95.1 2.4

Female 0 0 3.6 90.9 5.5

Table 2: Respondents purchase patterns of products on special offer:

Criterion GenderEvery Visit%

Most Visits

%Occasionally

%Never

%How often

products on special offer

are purchased

Male 4.9 56.1 39 0

Female 9.1 72.7 18.2 0

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Table 3: How often respondents redeem their points:

Criterion GenderEvery Visit%

Most Visits

%Occasionally

%Never

%How often points are redeemed

Male2.4 24.4 51.2 22

Female 14.5 27.3 45.5 12.7

Table 4: Type of loyalty cards respondents have and use the most:

Type of Loyalty Card

% of male respondents owning

the card

% of male respondents who use

the card the most

% of female respondents owning the

card

% of female respondents who use the

card the most

Nectar Card 61 61 72.7 72.7

Tesco Clubcard 75.6 73.2 65.5 60John Lewis

Partnership Card 4.9 4.9 3.6 5.5

Tesco Clubcard Plus 4.9 4.9 16.4 14.5

Asda Store Card 12.2 12.2 20 12.7

Somerfield Saver Card

4.9 2.4 12.7 7.3

Asda Credit Card 7.3 2.4 7.3 7.3Other Supermarket

Loyalty Cards 0 0 0 0

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Table 5: Reasons why respondents visit a particular supermarket:

Criteria Gender Very Unimportant

%

Unimportant%

Neither Important

Nor Unimportant

%

Important%

Very Important

%

Convenience Male 0 2.4 2.4 53.7 41.5Female 0 1.8 5.5 52.7 40

Collecting points

Male 2.4 14.6 41.5 39 2.4Female 0 5.5 29.1 58.2 7.3

Fresh produce

Male 0 4.9 4.9 87.8 2.4Female 0 0 1.8 94.5 3.6

Frequent special offers

Male 0 2.4 7.3 90.2 0

Female0 0 0 94.5 5.5

Open 24 hours

Male 0 9.8 31.7 56.1 2.4Female 0 10.9 32.7 56.4 0

Fresh bakery Male 0 4.9 41.5 53.7 0Female 0 3.6 30.9 65.5 0

Loyalty card Male 0 12.2 51.2 36.6 0Female 0 1.8 23.6 72.7 1.8

Quick moving

checkout lines

Male 0 2.4 0 58.5 39Female 0 0 0 74.5 25.5

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APPEDIX (C)

SURVEY RESULT ACCORDING TO AGE

CATEGORY

Respondents’ opinion about loyalty cards and price reductions:

Table 1: Supermarket loyalty cards are a sales gimmick:

Supermarket Loyalty Cards are a Sales Gimmick

Strongly Disagre

e%

Disagree%

Neither Disagre

e or Agree

%Agree

%Respondents

’ Age Category

18-25 years

26-33 years

34-41 years

42 and above

60.0 33.3 6.7

2.9 55.9 32.4 8.8

10.3 37.9 34.5 17.2

44.4 44.4 11.1

Table 2: Special offers provide more value for money:

Special Offers Provide More Value for Money

Neither Disagree or Agree

%Agree

%

Strongly Agree

%Respondents

’ Age Category

18-25 years

26-33 years

34-41 years

42 and above

6.7 93.3

100.0

96.6 3.4

100.0

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Table 3: Points collected are useful as they can be used in other stores:

Points Collected are Useful

Disagree%

Neither Disagre

e or Agree

%Agree

%

Strongly Agree

%Respondents

’ Age Category

18-25 years

26-33 years

34-41 years

42 and above

40.0 60.0

32.4 67.6

13.8 44.8 37.9 3.4

5.6 44.4 50.0

Table 4: Permanent low prices provide more value for money:

Permanently Low Prices Provide More Value for Money

Strongly Disagre

e%

Disagree%

Neither Disagre

e or Agree

%Agree

%

Strongly Agree

%Respondents

’ Age Category

18-25 years

26-33 years

34-41 years

42 and above

6.7 20.0 6.7 60.0 6.7

2.9 11.8 20.6 64.7

3.4 24.1 20.7 44.8 6.9

5.6 16.7 11.1 66.7%

Table 5: Collecting points takes time and cannot be redeemed quickly:

Collecting Points Takes Time and Cannot be Redeemed Quickly

Neither Disagree or

Agree%

Agree%

Strongly Agree%

Respondents’ Age

Category

18-25 years

26-33 years

34-41 years

100.0

91.2 8.8

10.3 86.2 3.4

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42 and above100.0

Table 6: Respondents purchase patterns of products on special offer:

How Often Products on Special Offer are Purchased

Every Visit

%

Most Visits

%

Occasionally%

Respondents’ Age

Category

18-25 years

26-33 years

34-41 years

42 and above

6.7 60.0 33.3

5.9 64.7 29.4

13.8 65.5 20.7

72.2 27.8

Table 7: Supermarket loyalty cards that respondents have;

Respondents’ Age Category18-25 years

%

26-33 years

%

34-41 years

%

42 and above

%

Nectar Card

Tesco Clubcard

John Lewis Partnership card

Tesco Clubcard Plus

Asda store card

Somerfield Saver card

Asda credit card

80.0 64.7 72.4 55.6

86.7 70.6 58.6 72.2

10.3 5.6

6.7 11.8 10.3 16.7

6.7 17.6 20.7 16.7

13.3 8.8 10.3 5.6

2.9 20.7

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Table 8: Supermarket loyalty cards that respondents use the most:

Respondents’ Age Category18-25 years

%

26-33 years

%

34-41 years

%

42 and above

%Nectar Card Used Most

Tesco Clubcard Used Most

John Lewis Partnership Card Used Most

Tesco Clubcard Plus Used Most

Asda Store Card Used Most

Somerfield Saver Card Used Most

Asda Credit Card Used Most

80.0 64.7 72.4 55.6

73.3 70.6 55.2 66.7

10.3 11.1

6.7 8.8 10.3 16.7

6.7 11.8 13.8 16.7

13.3 2.9 6.9

2.9 13.8

Table 9: How often respondents redeem points:

How Often Points are Redeemed

Every Visit

%

Most Visits

%

Occasionally%

Never%

Respondents’ Age

Category

18-25 years

26-33 years

34-41 years

42 and above

46.7 40.0 13.3

14.7 17.6 47.1 20.6

13.8 34.5 37.9 13.8

11.1 72.2 16.7

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Reasons why respondents visit a particular supermarket:

Table 10: Convenience:

Supermarket Conveniently Located

Unimportant%

Neither Unimportan

t nor Important

%

Important%

Very Importan

t%

Respondents’ Age

Category18-25 years

26-33 years

34-41 years

42 and above

6.7 46.7 46.7

2.9 58.8 38.2

13.8 62.1 24.1

33.3 66.7

Table 11: Collecting points on loyalty card:

Collecting Points on Supermarket Loyalty Card

Very Unimportan

t%

Unimportant

%

Neither Unimportan

t nor Important

%

Important

%

Very Importan

t%

Respondents’ Age

Category

18-25 years

26-33 years

34-41 years

42 and

above

33.3 66.7

5.9 32.4 55.9 5.9

3.4 17.2 24.1 44.8 10.3

11.1 55.6 33.3

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Table 12: A wide variety of fresh produce:

Store Offers a Wide Variety of Fresh Produce

Unimportant

%

Neither Unimportan

t nor Important

%Important

%

Very Important

%Respondents

’ Age Category

18-25 years

26-33 years

34-41 years

42 and above

100.0

97.1 2.9

6.9 10.3 75.9 6.9

100.0

Table 13: Store has frequent offers:

Store Frequently Has Special Offers

Unimportant%

Neither Unimportan

t nor Important

%

Important%

Very Importan

t%

Respondents’ Age

Category

18-25 years

26-33 years

34-41 years

42 and above

6.7 93.3

2.9 97.1

3.4 86.2 10.3

5.6 94.4Table 14: Store is open 24 hours:

Store is Open 24 Hours

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Unimportant

%

Neither Unimportan

t nor Important

%

Important%

Very

Importan

t

%Respondents

’ Age Category

18-25 years

26-33 years

34-41 years

42 and above

6.7 20.0 73.3

2.9 35.3 61.8

10.3 44.8 41.4 3.427.8 16.7 55.6

Table 15: Store has a fresh bakery:

Store Maintains a Fresh Bakery

Unimportant

%

Neither Unimportan

t nor Important

%

Important%

Respondents’ Age

Category

18-25 years

26-33 years

34-41 years

42 and above

13.3 20.0 66.7

38.2 61.8

6.9 37.9 55.2

38.9 61.1

Table 16: Store has a loyalty card:

Store Has a Loyalty Card

Unimportant%

Neither Unimportan

t nor Important

%

Important%

Very Importan

t%

Respondents’ Age

Category

18-25 years

26-33 years

34-41 years

42 and above

6.7 26.7 66.7

29.4 67.6 2.9

10.3 31.0 58.6

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11.1 61.1 27.8

Table 17: Store has quick moving checkout lines:

Store Has Quick Moving Checkout Lines

Unimportant%

Important

%

Very Important

%Respondents

’ Age Category

18-25 years

26-33 years

34-41 years

42 and above

66.7 33.3

70.6 29.4

3.4 69.0 27.6

61.1 38.9

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