Asda. Relationship Marketing and Loyalty

Innovation and creativity within the context of a firm’s customer’s provide the basis for establishing and developing strong customer relationships, as well as continual business growth and success. Industry leaders represent good examples that demonstrate just how important customers are towards creating value for the firm; such is the case with Australia’s airline industry where Qantas, one of the largest and most reputable brands, continuously re-evaluates their marketing strategies in order to stay ahead of the competition.

Market players generally have a wide variety of potential customers, which considerably weakens buyer power. Although consumers in this industry may be loyal to particular brands or chains, loyalty to retailer brands is arguably less important than competitive pricing. Many supermarkets run rewards programs for frequent shoppers, such as Tesco’s ‘Clubcard’, and these schemes can help companies retain customers and reduce buyer power.

Over the decades there were tremendous amount of challenges for every business. Customers have more knowledge, they have more options, and they have higher expectations. Customers are more informed with the humungous development in technology. Having more options in front of them, expectations has surpassed in retail industry. Loyalty is a customer having faith that your organization’s product or services offered is the best for them. It is the process of tapping the buying pattern of customers in a store based on their preferences. Customer loyalty is significant because it is economical to retain the old customers rather than acquiring new customers. So, organizations employ loyalty programs which reward customers for their repeat business.

The practices which I have looked at before, within the Legal, Ethical and Operational Issues, I do believe Tesco has complete intentions of putting them into practice. Unfortunately a lot of employees and individuals can see that there is a profit to be made out of some of the information Tesco acquires, even though this profit would be obtained illegally they are unlikely to think about the consequences as they are so focused on greed. The Tesco website does state that any information they obtain on customers is for the use it was obtained for and unless the customer has agreed to their information being passed along to others, they will not share any details, apart from within the Tesco organisation.

In this article, Brooks discusses how online businesses as well as regular businesses differ in benefitting from loyalty reward programs offered to customers. With the new age of technology becoming more and more prevalent, customers are less likely to actually travel to stores to purchase goods from businesses. The ones who do typically go to the places that

Founded back in 1914 in Victoria by George James Coles, Coles Supermarkets Australia Pty Ltd has undoubtedly developed and expanded over the century since its humble beginning. Starting out its early days as an average retail store, Coles has now successfully become a common name in households throughout Australia. In recent years since its acquisition by Wesfarmers back in 2007, it has now grown even more and in April 2012, the Coles group announced the substantial relaunch of its loyalty program called “flybuys” which was originally launched in 1994 as a joint venture with other companies. The article entitiled “Coles ups loyalty ante” is being reviewed and analyzed in this paper discusses about the revamped loyalty program offered by Coles,

The company to demonstrate is The Co-operative Food. Retail chains are at the fore-front for advances in technology and are competing for ways in which to understand their customers and use the strategies to improve customer intimacy. The purchasing behavior in food retail is the most repetitive of all (Manas, 2011), so to get this customer intimacy correct has never been more important. The Co-operative Food (Co-op) uses their loyalty strategy by having membership scheme available to all colleagues and customers. This card acts as most retail cards do in that they collect a customer’s information which is then fed to the company’s data base. There is a number of ways in which this card creates an improvement in customer intimacy. First of all, unlike all of the other schemes available, twice a year the Co-op gives a share of its profits through the post to all of the members of the scheme. ‘You can enjoy your share of the profits along with exclusive member discounts and offers’

Even though the theoretical model suggested that winning loyalty is a long-term process and might be affected by some internal and external factors, in the case of Tesco, it was very much a positive impact helping to enhance the buying experience of customers, along with capturing high marketing share. Das (2009) stated that there are many factors that define the impact of loyalty schemes. Some customers are price conscious, meaning loyalty points do not matter to them. On the other hand,

Hannen (2001: cited in Reading Pack) said that keeping existing customers is cheaper than finding the new ones. However, the retailing industry is a ‘generic market’ and a lot of effort is needed to build meaningful relationships with the consumers.

| A recent survey found that 84% of “satisfied” customers will “jump ship” for a better deal if the opportunity arises. With the marketplace becoming increasingly commoditized, customer retention has become a critical part of business strategy. (E)

This strategy is used by businesses to build a relationship with their customers; this will mean that their customers will be loyal to them which could result in the business making more revenue. Examples of this strategy are customer loyalty schemes. The reason a business would do this is to ensure that they have loyal customers which will ensure that those customers will come back to their business.

It’s essential that companies or businesses today listen to their customers. No company or business today can afford to disregard the importance of customer satisfaction and loyalty. Aren’t they the same thing? No, they are absolutely not and they are enormously

First of all, the main thing that all firms want is to make as much profit as possible. To support this claim we can look at the basic economic theory of people rationality and profit maximization (Frank, 2010). Under a more is better assumption, people have to seek for tangible assets and they get better off with every cent they receive. Profit maximization relies on this assumption and proves that profits are the main reason we have companies and, in turn, loyalty programs. Firms do like dependent and loyal clients, because for them, returning clients are the main source of money. However, consumers should not be influenced by this theory, since they have a full freedom to choose which products to buy, so companies

President John F. Kennedy discusses in 1962, in a Special message on Protecting the Consumer Interest, “All of us are Consumers. All of us deserve the right to be protected against fraudulent or misleading advertisements and labels - the right to be protected against unsafe or worthless drugs and other products - the right to choose from a variety of products at competitive prices.”( (John F. Kennedy as cited in Carrol & Buchholtz, 2012). In his book “The loyalty effect”, Frederick Reichheld wrote that small increases in customer retention rates can lead a dramatic increase in profits. In fact, an article by Amanda Stillwagon, on smallbiztrends.com, states “You can’t overestimate the importance of customer retention,” and it is less expensive for the company to retain loyal customers and more expensive to constantly market to acquire new ones. Studies show that even a 5% increase in retention can lead to between 25% to 95% increase in profits. Even with Blue Bell fighting to stay

In the initial part of study, it has elaborate meaning of loyalty. Now, this section has presented literature on effectiveness of loyalty on customer retention. Loyalty program often considered as value sharing or enhancement instrument. Sabol, 2002) addressed that value enhancement function is important because of ability to provide superior value to customer relationship and retention. Loyalty program provide value to consumer in two stages. (Bolton, 2000), has explained stages in brief that in the first stage program points are issued to customer and the second stage when customer redeemed those points. Though these points value don’t have any practical value unless customer redeemed them. However, according to the study by (Machanda, 2004) showed that it has important psychological meaning to customer. Points accumulation can gives customer feelings of benefits and these benefits are able to give customer positive value perception. It is because customer can redeemed those values later for rewards. At redemption stage, customer receives both economic and psychological value. Thus it enhances appreciation and recognition of