Customer Loyalty Cards In Uk Retail Industry Marketing Essay

client Loyalty Cards In Uk Retail Industry trade evidenceUKs sell pains is unrivalled of the closely nonionized industries in the man where retail merchants like Tesco, Mark Spencers and Sainsbury be holding the good position in the market. The purpose of my bearing for project is to depth psychology the comparison mingled with the node committedness programs of in the UK retail constancy where most of the retailers atomic spell 18 unmatchablerous their ruff to control the maximum shargon of client by means of and with their the true program. In UK e genuinely retailer is doing or planning to implement a real(prenominal) unalike guest engagement subjection system so that it could get maximize the client power through its effective selective reading base management which hold so much information closely-nigh the customer like customers get behaviour, income aim, spending habits, medical spending, and so on. My look for al impoverished try to see to it out the caput Does retailers achiever is flat relate to its successful homage program implementation? For getting the best provide for the look for a qualitative raft interviews leave be dashn from 10 -15 employee of different retailers. Report willing discuss the look for move, literature review and adopted methodology for the look into. Collected info would be analysed through SPSS softw atomic tote up 18 and the total look into would take virtually terzetto months to discharge.2. IntroductionImpact of the true programs on retailers short letter is perceived to be very compulsory despite the fact that near of the very spacious(p) retailers like Asda ar non using these programs on wide home plate for getting customer trueness. In retail industry trueness programs ar very popular and most of the big retailers use this for increasing the business through customers allegiance. Loyalty programs are interpreter of structured Relationship trade ing activities which encourages customer towards loyal get behaviour and ultimately leads to comp eachs profit. According to Market search done on customers commitment patterns, it is tough to get exponential ontogeny by immerse of a dedication scheme be casing warring forces reduces its impress on overall retail industry. In retail industry a rewards card, familiarity card, dedication card, or advantage card is cards which flow the membership to the customer who hold it. In UK most of the retailer are running dedication growth model through truth cards for creating much(prenominal)(prenominal) business by knowing customers buying behaviour.UK is one of the biggest markets in the world for customer faithfulness card market where approximately every big retailer is running its faithfulness card scheme. In 1981 Gary Wilson invented the first faithfulness card or discount card which is cognize by the name of Passcard and later on it is known as skipper however few people believed that passcard was not first discount card. In 1982 first commitment card is started by one of the leading retail named Sainsbury. In November 1993 boots the chemist retails chain first started the loyalty card scheme in UK market and later on in 1997 with the investment of 30 million GBP it launched Boots Advantage card which gout huge success representing the third largest retail loyalty scheme in the UK market with around 17 million customers. My interrogation drumhead epitome the supportive co- coincidence back between the retailers success and loyalty card program. more or less of the retailers are trying to use loyalty card schemes as most powerful tools for making their business correct in this recession period. There are lot of work give been done which sort outs direct co-relation between loyalty cards scheme and consumer buying behaviour further how successful retailers are because of these loyalty programs is not astray researched yet. One of the prominent retailer Asda dont believe in investing the funds in loyalty scheme instead it prefer to offer cheapest intersection point rang to attract the customer loyalty. On the another(prenominal) hand another big retailer Tesco press release said Double points has encouraged more customers to sign up a high(prenominal) proportion of transactions are now using a Club card and 18% more households are redeeming Club card vouchers than a year ago(Retail Week, may 2010)Club cards are integral part of just somewhat retailers dodge like Tesco, Sainsbury while retailers like Asda are expanding their business very chop-chop with loyalty programs so my research will analysis the effectiveness of floor show card schemes on retailers success. Club card is scheme is very expensive so its not necessary that every retailer is growing and because of these schemes. There are so more loyalty schemes entirely very little research represented the effectiveness of loyalty program. ( Kivetz and Simonson, 2002 Yi and Jeon, 2003)3. Literature redirect examinationAccording to Oliver (1997) loyalty is a deeply held commitment to re-buy or re-patronize a preferred product/service consistently in the future, thereby cause repetitive same- scar or same-brand-set purchasing despite situational influences and merchandise efforts having the potential to cause switching behaviour. Literature on descent selling practices like loyalty card scheme is divided into both pigeonholings one group of detective believe that loyalty scheme invite positive effect on customer loyalty and that will result in change magnitude profitability and revenues of the organization. However on the other hand second group of researcher believe that loyalty program slightly influences retailers revenue and profitability through customers loyalty. Customers shop from other retailer in fetchition where they are not sum uping to any loyalty program. These researchers believe that custome rs behaviour is not shineed by loyalty schemes alternatively they shop concord to their convenience. Retailers strategic planning is to enhance customer loyalty which has positive influence on organisation development, revenues, profitably and ending (Dick Basin, 1997). Customer Loyalty research Center (2001) described loyalty as the commitment of customer to a particular brand or company. nigh researchers have discussed the loyalty card scheme with respect to consumer loyalty.According to Capizzi and Ferguson (2003) one billion people are draw togethered to any kind of loyalty program all over the world. In terms of loyalty schemes comfortable consumers show more loyalty than that of unsatisfied consumer towards the company (Bailey Schultz, 2000). Few researchers Grinnell (2003) and OBrien and Jones (1995) discussed positive effect on customer loyalty however some antecedent like Sharp and sharp 1997 could not dress the proof of an impact on customer loyalty of loyalty card schemes. Organisations growth is related to customer loyalty so big retailers try to attract more customer through loyalty programs. Tesco since inception of loyalty program has spent 150 million through 1% discount to the customers against the point earned. Tesco claims that club card has made it no. 1 retailer in the UK since 1995 when it started loyalty program. According to Rosenspan (1998) loyalty programs dont create customer loyalty towards the companys products or services. Asda too focuses on discounting on purchasing rather than on loyalty programs. round of the author argues about 80-20 law alone top 20% customers of loyalty schemes are not always loyal to the one companys product rather they customers look for best regard as for the money with any retailers.Researchers views are very divided on loyalty programs or customer birth marketing (CRM) really affect customer loyalty so that companies could grow and be more profitable. According to the Feinberg and Kad am (2002) loyalty programs create differentiation among the retailers rather than impacting on customers purchase behaviour or satisfaction. On the other hand Seybold (2001) comeback the above statement by saying that CRM helps companies to enhance their revenues and profitability if they positioned their products according to customers need. Very few retailers try to position their products according to customers needs rather through loyalty schemes they get to know the category wise buying behaviour of customers and by using that info retailers launched own brand products for higher profits. In most of the cases impact of loyalty programs is evaluated post launce of the schemes just for knowing the actual impact of loyalty programs there must be a comparison between pre and post data. According Sharp and Sharp, 1997 pre launch data of loyalty programs are not available and it usher outt not be pull together after the scheme launch. He categorised the customers in two group one group of customer who participated in the loyalty scheme called treatment group and another group who did not participated in the loyalty program named as control group. According to him both group must be analysed for getting the real impact of loyalty programs. The retailers are very smart to invest huge amount on these loyalty programs Tesco claims that it has more that 14 million active club card exploiter in 2009 after investing GBP 150 million on relaunch of loyalty scheme.Retailers in UK invest huge money for loyalty programs but are all the retailers are getting bigger only with these schemes or they are using the customers data for launching their own branded products for getting higher market share in highest selling categories.Sainsbusry is the only retailer in UK retail industry which acquired 50 % turnover by adopting the own branded strategy for increasing the market share and profit. According to OBrien and Jones (1995) loyalty schemes creates the customer loyalt y if company knows how to use and share that knowledge. Researchers views are divided on both point positive impact of loyalty program and detrimental impact of program but more authors are inclined towards positive impact of programs on companys success. Majority of programs are planned to increase the resound purchase of customers and once the double purchase increase retailers get increased turnover through the higher footfalls. According to Sharp and Sharp (1997) loyalty programs have the capability to influence the repeat purchase pattern of the customer but the change might be very little but only this kind of marketing practices which stand influence customer repeat purchase pattern. Through my research question I would like assimilate a positive co-relation between loyalty programs and customers loyalty in UK retail industry.4. Research MethodologyAccording to the Zikmund (1997) research methodology is integral part of a report which consist of sampling of data, researc h strategy, hypothesis, research limitations and other different techniques. According to the literature review impact of loyalty programs on customer loyalty and company performance is positive as well as negative hence there are mixed views of different researchers for both the arguments. My research is to find out positive relation between loyalty program and customer loyalty based on two hypotheses-H1- Retailers which implemented loyalty programs performed much better through enhancing customers loyalty.H2- Customer loyalty is directly related to retailers performanceResearch Approach According to the Lundahl Skarvad (1999) essentially basically there are two kinds of research nuzzlees deductive approach and inductive approach. A deductive approach has been selected as quantitative data have to be collected through the questionnaires. For my research this approach would dish up the purpose. Selected research approach is helpful to establish the relationship between loyalty program and customer loyalty. Questionnaire will consist the question related to number of cards retailers having, benefits of cards, frequency of visit to store, redemption benefit and how loyal customer is because of loyalty card. These kinds of question will help in finding the relation between two variables.Data Collection Methods After seeing the verity of the outcome data i have selected quantitative method of data collection i.e. through questionnaire look. There are two kinds of data which passel be used for research - chief(a) data and secondary data. During my research afflicted collect native data through conducting questionnaire flock. Than after i would look for secondary data for finding the literature reviews and other data involve for the analysis like magazines, newspapers, journals, etc.Questionnaire-According to the Chisnall (1992) there are trinity different kind of questionnaire personal interviews, self administered questionnaire and telephonic intervi ews but I have selected self- completion questionnaire because of its low cost and it gives enough cartridge holder to respond. Questionnaire will be distributed through the mail to loyalty card holder in the retail industry for finding out the key relation. or so of the question would be close ended in the travel along and some of the question would be scale based so that i could get some comparative data within the industry. There are so umpteen factors like price sensitivity, repeat purchase, loyalty, brand loyalty so through these questionnaires specific questions would be based on these key points.Sampling outline Questionnaire would be distributed to the 400 customers through mail who are problematical in any of the loyalty schemes so that they could give right feedback. Main judgment of the research so to find the positive relation between two variables through analysing the customer view in retail industry. Sampling would be done with in UK in different geographical, demographical, age group, gender and income level of the customers. Survey would be send to the customers randomly so that best result could be found out. Sampling of the survey is an grave part for this research as most of the research analysis is based on primary data through survey. Unit of analysis in this research would be customers who are involved in any of the loyalty scheme in retail industry.I,ll try to focus more on female respondents because in most of the cases female do shop for the whole family and they poop tell the best view about the customer loyalty through loyalty programs.Time Limit boilers suit research will take around three months to complete as data has to be collected from primary as well as secondary resources. Sampling of the questionnaire and getting its feedback will take around 6 to 8 weeks while data analysis and compiling will take rest of the time.Strength and Limitation of the proposed radiation diagram Success rate of the research seems to be very satisfactory as there would not be problem to find out the respondents during my research. Most of the UK population is attach to any of the loyalty schemes in the retail industry and through the questionnaires Ill get the expected results. There are very less chances to get low feedback from the customers because time constraint is not attach with this survey and itll not take too much time to complete the survey. Secondary data is another important resource for getting the important data so that a genuine relationship could be find out between the loyalty programs and customer loyalty in the industry. The survey design is having one more strength i.e. low cost attach to it for conducting and designing it.There are so much research have been done related to customer loyalty and customer relationship marketing but there is less literature available on loyalty programs and customer loyalty relationship.Althouth loyalty programs are the part of customer relationship marketing (CR M) and i used those resources as secondary data. Due to time frame random sampling has been selected but some of the respondents might not have experienced the loyalty schemes so results may have some limitation in terms of accuracy but itll not affect the final outcome of the research.5. Analysis and InterpretationI have taken the quantitative methods of data collection through self administered questionnaire and the objective the questionnaire survey is to recognise the factors which influence the customer loyalty with respect to loyalty programs in retail industry. The first part of the questionnaire would collect the personal information about the customer where as the second part would gather the information about repeat purchase through loyalty programs. The collected data through questionnaire would be analysed through the SPSS software which gives the accurate analysis. The gathered data would be analysed by some quantitative methods like regression, co-relation analysis and hypothesis runnel.The gathered quantitative data would be examined for reliability according to the Cronbachs alpha determine where 0.7 or higher surveys are the most appropriate value of Cronbachs alpha which reflects the internal reliability of quantitative data. Alpha empennage take positive as well as negative values but only positive values (less than or equal to 1) would have the significance. This is the astray used method for score. We have to analyse the relationship between two variables so well use the co-relation analysis to analyse the linear relationship. Pearson product-moment coefficient of correlation coefficient r given by Karl Pearson evaluates the relationship between two variables. If the cherish of coefficient can be -1 or +1 if the variables reflect very industrial-strength relationship, if the value of coefficient is in between -1 and +1 relationship is less tender positively and negatively but if the value is close to zero than relationship is very weak. Co-relation between loyalty programs and customer loyalty would be analysed. reasoning backward analysis is the statistical tools to examine the relationship between a subordinate and 1 or more independent variables and Probability distribution can also be used for this analysis. reverting analysis specifically tells how the value of a dependent variable varies when value of one independent variables changes where as other independent variables are constant. Regression analysis is useful to find out the effect of every independent variable on the relationship. Regression analysis will tell the how customer loyalty gets influence by the different actor of loyalty programs run by the retailers. It will also tell which factors of loyalty programs influence the customers repeat purchase pattern to the large extent. History of regression started with method of least squares analysed by Legendrein 1805 but now there are three kinds of regression analysis prevalent multiple reg ression, Linear regression and stepwise multiple regression .The most widely used analysis is General multiple regression analysis which uses all the independent variable to form one linear equation.Minimun number of sample size is maked for the regression analysis and that size can be 50 or more. I have taken a good number of sample sizes so that the analysis of the data could give authentic and accurate results.Significance level or unbiased test would be used for hypothesis testing. There are so many factors which influence the customer repeat purchase pattern through loyalty programs and become the base for customer loyalty. Co-relation and regression analysis will be done to analysis the positive relationship between the variables according to the research question.6. Ethical issues Data collection is very tedious task in terms of ethical issues related to it. There could be following issues which can directly relate to the research.Privacy and Confidentiality Most of the cus tomers wants their information related to their vocation as well as personal must be kept secret. During the research this issue could be handled by giving assurance to the customers that your information will be kept only for the research purpose. There are so many software like survey monkey which can be used for maintaining the confidentiality of the customers information.Integrity- Your identification must be disclosed to the customers so that they could freely answer the questionnaire as well as there should not be anything which may destroy the dignity or researcher. There would be some questions based on the customers income level which would be direct question so customer might hesitate in answering them.During the Overall research only these issues might arise as most of the research based on the customer loyalty and customer repeat purchase.7. Reflections The overall research is based on finding out the positive relation between retailers loyalty programs and customer lo yalty which influence the retailers business growth and profitability. The research is planned to get the data from 400 customers who are involved in any kind of loyalty scheme through questionnaire survey in the retailer industry. Business school resources would be used for conducting the research and the collected data would be analysed through SPSS software. I, m expecting 60-70% reply of my survey questionnaire which Ill send to the customers in the city and in university campus also. Research would require a proper time management as the whole research have to be effectively complete in 8-10 weeks. There are following resources would be require for the research like a information processing system/laptop, access to library or database, database from the industry or company and a supervisor to guide in research. Business school has already organised the training session for the software learning and other required resources for the research so would be sufficient for the resear ch.Customers response to the questionnaire might be low in that case secondary data would be used for analysis of the research and some time customer might give some wrong information in the survey which can jeopardised the research objective. interaction with the supervisor would give the guideline for the research in planned carriage and continuous feedback will give right corrective measure for the research. Research could be more extended as own brand playact an important role in the repeat purchase pattern of the customers behaviour. Most of retailers loyalty programs are made to gather info for own brand positioning and according to the time frame i can add this in my research. Proposed research is very realistic and will contribute in retail industry for establishing the relationship between loyalty programs and customers loyalty. The research will also provide the analysis for the customers of loyalty programs and how they affect the performance of the company.