1

IMPACT OF CUSTOMER LOYALTY IN STORE

PROMOTION: A CASE STUDY OF SUPERDRUG

(UK)

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Table of Contents 1.1 Background of the Research: .................................................................................................3

1.2 Rationale of the Research: .....................................................................................................3

1.3 Research Objectives: .............................................................................................................4

1.4 Research Questions: ..............................................................................................................4

2. Literature Review ....................................................................................................................5

2.1 Conceptual Framework: ........................................................................................................5

2.2 Customer Loyalty: .................................................................................................................6

2.3 Customer Loyalty Strategies: .................................................................................................6

2.4 Factors influencing Customer loyalty: ...................................................................................7

2.5 Customer Loyalty life Cycle: .................................................................................................8

2.6 Product promotion elements: .................................................................................................9

2.7 Customer loyalty and product promotion: ............................................................................ 10

3. Methodology: ........................................................................................................................ 12

3.2 Research Philosophy: .......................................................................................................... 12

3.3 Research Approach: ............................................................................................................ 13

3.4 Research Design: ................................................................................................................. 13

3.5 Data Collecting Techniques: ................................................................................................ 13

3.6 Data Analysis: ..................................................................................................................... 14

3.7 Population and Sampling: .................................................................................................... 14

3.8 Ethical Considerations: ........................................................................................................ 15

3.9 Limitations of the Research: ................................................................................................ 15

3.10 Future Scope of Study: ...................................................................................................... 15

4. Conclusion: ........................................................................................................................... 15

Reference List ........................................................................................................................... 16

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1. Introduction

The current proposal deals with an investigation as to how customer loyalty impacts store

promotion for a retailer such as Superdrug. Using customer loyalty to augment the promotion of

a store is a challenge that the Superdrug brand faces in the current market situation. As

commented by Babutsidze (2011), store promotion is a marketing strategy that attracts customers

into the new outlet and stimulates them to make repeated visits at the store. The main objective

behind store promotion is to earn additional revenue by selling more products to the customers,

and subsequently expand the existing business. Bemmaor and Mouchoux (2009) opine that there

are many benefits of store promotion in terms of attracting more customers into the store, to earn

extra revenue, to create brand awareness; and gain more customer loyalty. Many strategies are

used in store promotion. Some of the common strategies used in in store promotion are banners,

discounts in specific products, TV screens etc. These are effective strategies to draw the attention

of the customers to brand message and create preference for the brand. As per Alessandra

(2007), store promotion is very much effective in generating loyalty of the customers to a

specific brand.

1.1 Background of the Research:

This research has been conducted on Superdrug. Goldstein family established the organisation in

1964 (Superdrug.com, 2014). This organisation is the second largest beauty and health retailer in

the UK and has 800 stores in the UK (Superdrug.com, 2014). In the stores of Superdrug, health

and beauty products of various brands are sold. Though, Superdrug uses many effective

marketing strategies such as online marketing, TV advertisements and social media marketing to

create brand awareness among the customers, due to the lack of effective store promotional

strategies, the loyalty of the customers to some specific brands is getting negatively affected. In

this context, the research is conducted in order to understand how formulation of effective in

store promotional strategies will be helpful for Superdrug.

1.2 Rationale of the Research:

The main issue related to the research is the decrease in the customer loyalty level towards some

specific brands, the products of which are sold by Superdrug.

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As put forward by Chu and Liu (2008), a proper combination of the effective marketing

strategies is helpful in creating and retaining the loyalty of the customers. If an organisation

emphasises on a specific marketing strategy such as social media marketing due to cost

effectiveness, that can have negative impact on the sales and brand awareness. This will

eventually affect customer loyalty. Therefore, all the channels of reaching to every kind of

customers need to be properly utilised by an organisation.

The organisation is having many effective strategies in order to increase the brand awareness and

create customer loyalty. Nevertheless, due to the lack of effective in store promotional strategies,

Superdrug is lacking the loyalty of many potential customers.

This research will be helpful for Superdrug, if the findings of the research are considered by the

organisation.

1.3 Research Objectives:

o To understand how customer loyalty impacts the promotion of a store

o To analyse the store promotional strategies used by Superdrug as a result of customer

loyalty

o To identify the limitations of Superdrug’s store promotional strategies

o To recommend Superdrug with appropriate suggestions

1.4 Research Questions:

How do store promotion strategies influence customer loyalty?

What are the marketing strategies including store promotional strategies of Superdrug?

What are the limitations of Superdrug’s store promotional strategies?

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2. Literature Review

The literature review engages the current knowledge, learning and approach on the concerned

research topic to increase the quality of investigation (Gruebele, 2012). With the engagement of

different standpoints and viewpoints of authors the researcher can able to provide a proper

support on gathering information related to the factors and elements that influence the customer

loyalty to make product promotion in the market place. The engagement of theoretical approach

increase more close specification and investigation on the research topic. As per Hallowell

(2009), the literature review engages the secondary source of information that provides proper

support to the investigation of the particular research topic.

2.1 Conceptual Framework:

Old

customers

Satisfaction

s

Belief

Involvement

positive

commitmen

loyalty

New

customers

Customer

loyalty

Customer

Satisfaction

Commitmen

t

Negative

evaluation

Product

promotion

Customer

pleasure

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Figure 1: Conceptual Framework

(Source: Created by Author)

2.2 Customer Loyalty:

In the competitive market place, the business organizations enhance the performance profitability

and posit ling in the market place with the influence of potential customers. Thus, every business

entities focus on their targeted customers to increase their loyalty in relation to provide quality

product and services (Bemmaor and Mouchoux, 2009). As the customers makes the final

purchase decisions it becomes necessary for management of the company to evaluate and assess

every elementary factors that accurately and prominently effects the customer purchase decisions

for the particular product and services (Williamson and Bello, 2005). The business organizations

enhances the product quality and performance in the market for these customers as they are the

major source of creating differences within the competitors, evaluated accurate demand from the

customers. Alessandra (2007) stated that the customer loyalty is stated to be more than behavior

that makes a consistency in believing and valuing a particular organizations and product and

services been offered in the market place. The valuation of product and services certainly

enhances the customer perceptions and estimation that increase performance of the product in the

market place. It has been evaluated that the loyal customer estimates that the product and

services are been purchased by them are better the competitors, thus in a manner monitoring and

measuring customer loyalty certain provide information on the positioning of product and

company in the market place (Griffin, 2009).

2.3 Customer Loyalty Strategies:

The loyalty business model is a strategic business model that is been introduced by management

of the company relation to enhance the customer loyalty for a reticular product or service. Dick

and Basu (2010) mentioned that quality of product meets the satisfaction of the customer and

satisfaction leads to the customer loyalty for the particular product. There are arte different

strategies that is been engaged for creating a proper customer loyalty, defensive strategies is one

of the major strategies that are been engaged by most of the business entities that enhances the

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customer satisfaction creating barriers to other factors effecting customer buying procedures

(Salanova et al. 2005). There are decision making stages also stated as another strategies that is

been engaged in creating a customer loyalty, the management of company evaluates the

customer decision making procedures in three major stagers that is defining alternatives of brand,

relevant information gathering on brand, application of decision making principles to enhance

the customer buying decisions. Brand loyalty one of the major strategies that is been engaged by

management of the organization in relation to create product value in the customers mind

(Babutsidze, 2011). The costing of brand loyalty is relevantly measures as low-pricing products

creates retention of customers to enhance their loyalty along with attracting new customers for

the particular product and services in the market place.

Figure 2: Customer Loyalty strategies

(Source: Gruebele, 2012, p- 58)

2.4 Factors influencing Customer loyalty:

According to Yang and Peterson (2004) there are six major factors that influences loyalty and

retention of the customers. It has been stated that the factors plays an important role in creation

and retention of the customer’s loyalty on particular brand. Core offering is one of the major

factors that include the commitments that are made by the companies in relation to enhance the

customer’s attention based on the locations, service qualities, and product and service

performances (Alessandra, 2007). Another factor that includes the customer loyalty is Customer

Satisfaction, as per the evaluation it has been stated that the satisfaction is relevant elements to

increase the interest and desire to revisit or repurchase the particular product. It has been stated

Customer Loyalty

Strategies

Defensive strategies brand loaylity decision making

strategies

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that higher level of isolated satisfaction usually declines the sales volume of product that

increases development of the loyalty of the customers.

Figure 3: Factors influencing customer loyalty

(Source: Reinartz and Kumar, 2010, p- 88)

The market place is another core element that effects the creation of the customer loyalty for a

particular product or services. As per Griffin (2009), the key drivers of market place such as

switching the opportunities of rising demands and inaction of loyalty that is usually found when

customers are unable to switch their brands form one to another due to lack of availability.

2.5 Customer Loyalty life Cycle:

The customer life cycle provides different stages that describe the progression of a customer

purchasing, using and retaining the product loyalty. As per the evaluation the steps are engaged

to make management understand the steps that is been engaged by a customer in that creates

purchase decisions, satisfactions, and strategies need to be implemented for regaining interest to

repurchase the product. According to Hallowell (2009), the customer loyalist life cycle steps

engages customer reach that includes different source and techniques to target and reach the

Factors influencing Customer

loyalty

Core offerings

Market palce

Customer satisfaction

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customers in relations to provide specification and information on the product, acquisition of the

customer attention and interests by providing relevant benefits, specifications and features of the

product (Srinivasan et al. 2002). The life cycle that following steps of customer loyalty life

cycle is conversions that engages customers perceptions and interests into buying decisions,

following to that the company increases the retention of customers by engaging their interest on

the series or range of product and services available in a particular brand that creates relevant

customer loyalist towards the every product and services been introduced in the market place.

Figure 4: Customer Life Cycle

(Source: Babutsidze, 2011, p- 80)

2.6 Product promotion elements:

The product promotion is an integrated element of marketing mix that is been engaged for

introduction and development of new product in the market place. It has been stated that the

elements of product promotions is based on gaining targeted customers retention on the product.

Advertising is one of the major elements of promotional mix that engages customer attraction

and attention on the products to be introduced. Alessandra (2007) evaluated that engagement of

more innovations influences the customers more interests on acknowledging about the product or

Customer reach

Customer aquisition

Customer development

Customer retaintion

Customer inspiring

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service, personal selling is another relevant option that is been used by companies in relation to

provide more close demonstration based on the product benefits can be understood by the

customers. The procedure of personal selling engages persuasions and oral presentations of the

product in which the customers can able to make a clear idea of the product and different

alternative ways it may benefit to them (Gronholdt et al. 2006). In the personnel selling, the

sellers easily able to learn different responses of the customers on the product presentations and

applies proper strategies and interactions to satisfy them to purchase the product. It has been

evaluated that the personal swelling of usually varies from product to product as per the targeted

customers (Chu and Liu, 2008). The sales promotions includes different incentives, discounts,

rewards and gifts that is provided to the different customers in relation to enhance their attention

and attraction by decline the prices or providing some extra benefits with purchases of the

product. The direct marketing is another element of promotional mix that includes campaigning,

street advertising, promotional invitations, letters and prominently used promotional events that

without using any specific mode or channel of providing information about the product in the

market place (Williamson and Bello, 2005).

2.7 Customer loyalty and product promotion:

The retail market is based on the customer mindset that is been usually estimated higher in

relations to make purchase decisions. Thus, they are stated to be kings in the market place, as

they always surrounded with alternative products to choice and make purchase decisions. It has

been stated by Griffin (2009), one of the major tools of increasing sales promotion of a product is

customer loyalty that certain increases retention and new customers to make an attempt for

buying a particular product. It has been stated that there are two major formed of customer

loyalty that is hardcore loyal customers purchasing same brand for ever time and brand switching

customers which refers two or more brands at a time (Reinartz and Kumar, 2010). The customer

decision making based on the quality of the product, quality of the services, pricing of the

product and promotional strategies been applied by an organizations. The customer loyalty is

been directly related to the promotional activity for a particular product as the promotional

activities not only increase the interest and attention but also enhances purchases by providing

certain incentives, rewards and extra benefits (Yang and Peterson, 2004).

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Figure 5: Factors of customer decision making

(Source: Andreassen and Lindestad, 2010, p- 20)

Cusrtomer decision making

Product quality Service quality Pricing

Promotional strategies

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3. Methodology:

In this section, the researcher has discussed his selection of the research tools and methods. In

doing so, the researcher has discussed about the available research tools and has justified his

selection for a specific research tool. The success of a research depends to the selection of

appropriate research tools (Jha, 2008).

3.1 Research Onion:

Research onion is a helpful research tool that helps the researcher to select required research

methods and techniques step by step.

Figure 6: Research Onion

(Source: Saunders et al. 2009)

3.2 Research Philosophy:

Realism, Interpretivism, Positivism and Post-positivism are the major schools of philosophy

(Easterby-Smith et al. 2006). Out of these, the researcher has used Positivism in this study. This

particular philosophy is chosen mainly because Positivism is the most appropriate philosophy for

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a business research. This philosophy helps the researcher to gather factual knowledge gained

through physical perception. In this study, Positivism has helped the researcher to collect

observable and quantifiable data. With the help of this philosophy, the researcher has learned not

to be subjective at the time of conducting a research.

3.3 Research Approach:

Out of Inductive and Deductive approach, the researcher has selected Deductive research

approach for this study. As a rule of Positivism, Deductive approach goes well with Positivism

(Bryman and Bell, 2007). The main difference between the two research approaches is the

placement of theories and hypothesis. In case of Deductive approach, a range of hypothesis is

adopted by the researcher and hypothesis is built at the end of the study in case of Inductive

research approach due to the lack of relevant theories. As, in this study, the researcher has been

able to access to lot of relevant theories, models and concepts, Deductive approach is chosen by

him.

3.4 Research Design:

As commented by Zikmund et al (2012), research design is nothing but the framework of the

research. Exploratory, Descriptive and Explanatory are the main categories of research designs.

The chosen design for this research is Descriptive. In a Descriptive study, the demographic

profiles of the respondents are connected with the research-findings. In case of Explanatory

research, only secondary data are explained in detail and in case of Exploratory research,

research questions are explored, but the researcher does not recommend any solution for the

problem. It is evident that only Descriptive research design goes well with this particular study.

3.5 Data Collecting Techniques:

In this research, the researcher has collected birth primary and secondary data. Secondary data

are collected by reviewing the relevant literature in books, journals and academic websites.

Primary data are collected by taking mixed method (both qualitative and quantitative), as the

researcher has identified the need of collecting both kind of data in this research.

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3.5.1 Quantitative Technique—In order to collect quantitative data, the researcher has used this

technique. As commented by Ryan et al (2009), this kind of data can be measured and written

down in numbers. There are many methods of collecting quantitative data such as experiments,

psychometric tests, surveys etc. Out of this, the researcher has used survey in order to collect

data from the customers of Superdrug. the close-ended survey questionnaire was emailed to the

customers of this organisation.

3.5.2 Qualitative Technique— Brace (2008) comment that qualitative data are descriptive and

narrative in nature. The open-ended qualitative responses of the participants take the researcher

deep into the study. The commonly used qualitative data collecting techniques are interviews and

case studies. in this study, some of the managers of Superdrug were interviewed telephonically,

as they did not permit to conduct face-to-face interview.

3.6 Data Analysis:

3.6.1 Statistical Analysis—both statistical and qualitative data analysis methods are used to

analyse the quantitative and qualitative data (Jha, 2008). The quantitative data collected from the

customers of Superdrug are represented in tables and charts to enable the readers to understand

the data easily. The data are converted into percentage so that the responses of the customers can

be compared easily.

3.6.2 Qualitative Analysis—the responses of all the managers are compared and represented by

the researcher so that the points of agreement and argument can be easily understood.

3.7 Population and Sampling:

In this study, the population is the entire group of people who are connected with Superdrug. As

it is not possible for the researcher to involve the entire population in the research, he has

selected some people (sample) who hold all the characteristics of the entire population. The

sample size for the quantitative research is 50 customers of Superdrug. The researcher emailed

the survey questionnaire to 65 customers but only 50 customers responded back. The sample size

for the qualitative research is 5 marketing managers of Superdrug. Therefore, the total sample

size is 55.

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The researcher has selected Simple Random Sampling for the customers and Convenience

Sampling for the marketing managers.

3.8 Ethical Considerations:

The respondents participated in the research voluntarily. The researcher has taken permission

from the authority of Superdrug for conducting this research. He also ensures that the findings of

the research will not be used for commercial purpose. The secondary data, used in the research

are cited.

3.9 Limitations of the Research:

This is a cross-sectional research. Due to the lack of sufficient budget and time, the research

cannot be longitudinal. It can also not be ensured by the researcher that the primary data, used in

the research are authentic. Due to the biasness to the company, the customers and the managers

may have a tendency to produce false data.

3.10 Future Scope of Study:

In this research, only the in store promotional strategies of Superdrug are considered in the

research. There are scopes of conducting future researches on the other marketing strategies of

Superdrug. A comparison between the marketing strategies of Superdrug and its competitors can

also be the future research topic.

4. Conclusion:

In this proposal, the researcher has clarified the rationale, objectives and research questions for

the research. In order to build the academic base of the research, a brief literature review has

been also added in this proposal. The readers will be able to have the basic idea of customer

loyalty and in store promotion by reading the literature review. In the later section of the

proposal, the methods, used in the research are clarified.

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Reference List

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Alessandra, A. (2007). The stairs of customer loyalty. 1st ed. [S.l.: Electronic & Database Pub.]

Brace, I. (2008). Questionnaire design. 1st ed. London: Kogan Page

Bryman, A. and Bell, E. (2007). Business research methods. 2nd ed. Oxford: Oxford University

Press

Easterby-Smith, M., Thorpe, R. and Lowe, A. (2006). ‘Management research: An introduction.’

London: SAGE Publications Ltd

Griffin, J. (2009). Customer loyalty. 1st ed. New York: Lexington Books

Jha, N. (2008). Research methodology. 1st ed. Chandigarh: Abhishek Publications

Ryan, B., Scapens, R. W. and Theobald, M. (2009) Research method and methodology, 4th ed.

New York: Nova Publication

Zikmund, W. G., Babin, B. J. and Carr, J. C. (2012) Business Research Methods, 6th ed. New

York, London: Routledge

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Websites:

Superdrug.com, (2014). Today | Superdrug Site. [online] Available at:

http://www.superdrug.com/today#.VCEITJSSzfI [Accessed 23 Sep. 2014].