Loyalty card schemes (Essay Sample)

-47625-3810000center70000704088094100100002285997038975A Critical Investigation of the “Impacts of Loyalty Card Scheme on Competitiveness in UK’s top Supermarkets”Written by:00A Critical Investigation of the “Impacts of Loyalty Card Scheme on Competitiveness in UK’s top Supermarkets”Written by:-91440057403900center300003017520 941000
Contents TOC \o "1-3" \h \z \u Introduction PAGEREF _Toc63109512 \h 1Literature Review PAGEREF _Toc63109513 \h 2Research Methods PAGEREF _Toc63109514 \h 5Main Findings PAGEREF _Toc63109515 \h 5Conclusions and Recommendations PAGEREF _Toc63109516 \h 9Appendix PAGEREF _Toc63109517 \h 10References PAGEREF _Toc63109518 \h 12
Introduction
Loyalty cards are widely used in supermarkets worldwide to embrace and develop close relations with customers and increase sales. However, this marketing strategy can be difficult to implement in supermarket stores. As it emphasizes the more usage of loyalty cards and applies marketing techniques within the short-term (Pressey and Mathews, 2019). The supermarket is becoming more competitive in the UK, so retailers have adopted different ways of marketing to generate sales and profits. They are adopting such loyalty schemes that build customer loyalty and repeated purchases, to create a long-term relationship with customers, that improves their profits and helps them to compete in the market. Loyalty cards are one of many competitive strategies to use by retailer’s product promotions, customer service, and other benefits. It makes a better customer shopping experience, that keeps customers loyal and improves share in the retail market industry (Pressey and Mathews, 2019). The research is conducted by the literature review with giving insights of methodology and main findings based on provided data the research will prove the loyalty program strategies while positioning the various top retail stores in the UK's competitive market.
Aim and Objectives:
The main aim of this research is to investigate the loyalty card schemes' impact on UK’s top supermarkets' competitive strategy (Tesco, Sainsbury, Asda, Iceland, etc.) A secondary purpose is to distinguish its tactics to bring market share and to visualize how loyalty club schemes change Organization strategy with competitors and then recommending new and improved strategies for loyalty schemes for UK's top supermarkets. With these strategies, we will further recognize the effect on the customer loyalty program and supermarket roles.
1. To identify different loyalty club schemes of UK's top supermarkets (Tesco, Sainsbury, Asda, Iceland etc.)
2. To evaluate the impact of those loyalty club schemes on organization competitiveness
3. To visualize the how loyalty club schemes change organization strategy with competitors
4. To recommend new and improved strategies for loyalty schemes for UK's top supermarkets.
Literature Review
The literature review will commence with the supermarket's background about loyalty cards, followed by defining strategy terms and their discussions. It will then conclude with a summary of important points mentioned in the report. Loyalty cards are now adopted by almost all the supermarkets and it is useful for frequent purchases by customers, It is found in those markets where it's difficult for the company to differentiate their brand and their core product is a commodity (Tapp, 2005). Through loyalty programs, they offer reward programs in purchases which are now widely used by retailers (Byrom et al, 2001). Over 150 loyalty schemes are being offered in the UK for 40 million loyalty cards circulating the country (Stone, 2004). And around 80% of UK citizens follow the schemes and participate in them (Reuters, 2015). Tesco is found to be the number one for offering such schemes and they have the first-mover advantage over all competitors. Their scheme is not only the first one but found to be the most effective and useful with the strong marketing strategies used for it. Customers are ready to share their personal information to get the resources and services. Loyalty schemes offer a value proposition to the customers and in return, they get access to their personal information to be used for implementing marketing strategies (Lacey and Senath, 2016). Details of customers are entered in the database when they purchase and use the loyalty card by that purchasing habits can be recorded for marketing tactics (Rowley, 2015). Tesco, Sainsbury, and other top retailers also use marketing tools to create loyalty schemes and discount offers on their key products which adds value to the service and customers purchase more often due to the lower prices of products. Through these effective use of loyalty schemes company gets a competitive advantage with other retailers to get the benefits (Merlin Stone, 2019) Most of the competition in UK supermarkets is happening because of the loyalty cards being offered as they set the prices according to customers' demands to provide the convenience and all of the supermarkets Aldi, Asda and Sainsbury which doesn't use the schemes properly get under pressures (quarter, 2020). It shows that loyalty schemes must be managed with the responsibility to make effective decisions and fast results. Price-cut schemes decision must be made quickly for a new approach to compete in the market and introduce it first to get the customer’s attention (Merlin Stone, 2019).
These cards offer a wide range of discounts and offer each time a customer swipes the card depending on the points, Tesco offered a loyalty club card scheme which is proven to be the largest loyalty scheme in the history of UK supermarket which offers a wide range of discount and deals (Rodrigo, 2015). Customers are more loyal to the supermarkets which offer loyalty card schemes some other factors can affect such as fast check-out as well.
Supermarkets have developed loyalty programs that allow the customer to get benefit from their purchases. Retail stores and supermarkets are facing high competition from online markets also as it is more convenient. To deal with this competition supermarkets are opening for more long hours and on weekends also to compete in the market (BTEK first business., Diane Canwell, 2005).
Customer loyalty card schemes at top supermarkets like Sainsbury's are more about providing customer satisfaction and it achieves long-term customer loyalty which helps a brand to be competitive if a competitor offers the same thing then it becomes the cost of being in the market rather than creating a difference with the other supermarkets (Hooley, 2008). Tesco is using its marketing strategy more effectively than other supermarkets to build a profile then Sainsbury's have the disadvantage of not providing loyalty card and they launched loyalty card to rival Tesco and contributed to the market (Hooley, 2008). Whereas some of the supermarkets still don’t have the information about loyalty card schemes and they are following traditional methods like observing consumer behavior to get the customer’s loyalty (Blattberg, Kim and Neslin, 2008). To prove the positioning and loyalty card strategies of top supermarkets are discussed with statistics data in main findings.
Research Methods
In this research, the quantitative research approach is considered because the nature of the research is too descriptive, and the research design chosen is also descriptive. The quantitative research will help to gather more data which will be numerical form and raw data form. To collect the quantitative data, the secondary research source will be used. As this study will commence with a focus on quantitative secondary data, it will be supported with literature review theories and objectives of the topic.
The motivation of this study is that it will provide a deep understanding of supermarket strategies for loyalty programs and competitiveness in the retail industry along with the theories and concepts that are investigated with the help of statistics and graphs data to provide examples on supermarket’s competitiveness and impact of loyalty card strategy. This study is taken by previous research data conducted to show how others have evaluated on the same subject area. The entire research is based on secondary data as primary data is time-consuming because of questioners and interviews.
Despite some limitations of this study, all the information is taken from the secondary research that relates to the aim and objectives of this research to benefit the readers. The research is consisted of evaluating several articles, journals, various statistics, and websites to support the argument. The other data is collected from the company’s report of UK supermarkets like Tesco, Iceland, Asda, and others to measure the impact of customer’s loyalty to prove the statistics result.
Main Findings
The purpose of this research project was to analyze the comparison between the customer loyalty programs of the UK retail industry where retailers are trying best to get the maximum share through their loyalty program. Due to the global pandemic Covid-19, has caused a crisis worldwide every business is facing challenges. Food and beverage industries such as supermarkets are trying hard to engage their customers through their loyalty programs (Andy Nemes, 2020). While examining the structure of supermarket stores of UK some of the top names are proven to be (Tesco, Sainsbury's, Asda), They have been recognized as a top brand in an intense market. They have a national share above 5%, while Tesco is a strong operator, Asda has its presence in the market UK (Dublin, 2020). The crisis of Covid-19 has switched the customers to move online, and new...