Analysis of The Effectiveness of The Loyalty Cards, Its Methods and Outcomes.

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 University
and 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
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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 days 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 customers 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, Icelands
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.
3|Page
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 mansion

Or fed with a silver spoon
I wasn't brought up to think money is everything
Because only fools believe thats true
I wasn't raised to live out my parents dream
But to proudly dream my own
I wasn't raised to walk the popular path
But to strongly pave my own
I wasn't raised with material things
But something great indeed
I was raised with love
And love is all I need
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TABLE OF CONTENTS
TABLE OF CONTENTS
ABSTRACT
iii
ACKNOWLEDGEMENTS
iv
DEDICATION
LIST OF FIGURES
LIST OF TABLES
CHAPTER 1 INTRODUCTION....1-10
1.0 Introduction
1.1.0 Background
1.2 Literature Review
1.3 Problem Definition
1.4 Objectives of Research
1.5 Methodology
1.5.1 Aim of Study
1.7 Organizing of the learning
1.7.1 Map for the Study
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 Morrisons, Asda and Other Supermarket Loyalty Cards
29
2.3.1 Safeway/Morrisons
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 DESIGNE39-46
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, Mothers day, Fathers 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
Figure 1.2
8-9
Research stages source investment attraction by Dr Lawrence
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
respondents opinions
about
convenience
loyalty
65
Figure 5.1 Further suggestions what needs to be added
73
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and
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: interviewers opinion about loyalty cards and cost reduction
52
Table 4.3
55
Respondents purchasing habits of goods on special offer
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
Table 4 .9
Different age group respondents opinion about convenience and

Loyalty
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62
65
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 its known as loyalty card whereas in United states
its 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 days 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, its now importantly considered to
maintain good association with clients to boost up the business as well as the latest ideas.
1|Page
INTRODUCTION
Moreover according to the (Parvatiyar & Sheth, 2005) relation advertising is where
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
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INTRODUCTION
have shown that by offering incentives and rewards through loyalty schemes, provides
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 Sainsburys came into the competition and
3|Page
INTRODUCTION
introduced Nectar card with the collaboration with Barclaycard, BP and Debhnams in
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 Sainsburys marketplace contribution
Data Monitor 2004. CEO Andy Bond famously said you cant 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 thats 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
4|Page
INTRODUCTION
have to spend again 120 and 110 in order to redeem their 20 voucher. While at ASDA
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 todays 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,
Books
Journals
Internet
sources
Publications
Different
article
Previous
researches
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, Icelands
5|Page
INTRODUCTION
are using them in order to retain customers. Since there is fast growing trend of loyalty
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 Morrisons and Safeways 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|Page
Establish efficiency compare to cost decline
INTRODUCTION
Verify loyalty card enhance share of

supemarkets
Establish the efficiency of point cards
Enhance consumer retention for

superstore
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 wellsituated 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:

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.
7|Page
INTRODUCTION
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.
This stage introduces the main research problems and uses different means to
Stage 1: investigate the objectives of the research.
This stage presents the relevant theories and models in related to the effectiveness
Stage 2: 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
Stage 3: describes the surveys and interviews with the respondents in London.
This stage describes the findings and analysing of all research study. Empirical
Stage 4: evidence gathered on the basis of which the conclusion and recommendation are
made
Stage 5: This stage provides the overall picture of the study in shape of conclusion and
recommendation
Stage 6: This stage represents the appendices and the references, questionnaire and survey
results demographically presented in this stage.
Figure 1.2 Research stages source investment attraction by Dr Lawrence

8|Page
INTRODUCTION
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 studys
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
highlighted. The objectives, methodological approach have been discussed. This section
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INTRODUCTION
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 todays
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
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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 companys
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 Berrys 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). Its 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 longlasting time, its 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) its 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 consumers 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 consumers
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 competitors 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 clients 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
15 | P a g e
LITERATURE REVIEW
(Klemperer, 1995 Dick & Basu, 1994). Furthermore, a loyalty programme with monetary
inducement leads to better consumer preservation (Verhoef, 2003).
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 consumers
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
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(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
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 customers 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.
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Disadvantage of loyalty scheme to an establishment (Shmuel 1996 pg 15)
LITERATURE REVIEW
o Sky-scraping cost.
o Terminate agenda can injure repute.
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 theres 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).
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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
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 its 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
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protect stamp system. The 2nd is the raised ground, perk and prize in which target for
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 points programmes, many customers contribute in more than
one retailers 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
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loyalty cards can gain brief notice (Tescos introduction of the Club Card set them on the
road to overtake Sainsbury as the UKs 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
retailers 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).
Tescos 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)
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support active consumers to expend further (Anon, 1995). Consumers have readily
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. Sainsburys was seem to have an older, more up market
clientele whereas Tescos 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
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system. Although with the point system Tesco urbanized an imposing advertising
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 clients 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 havent 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
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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
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
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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
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, Sainsburys
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 Sainsburys started to protect their figure one
marketplace share place by extending their test of the investor card system and then initiate
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a consumer first scheme. More over they had made some collaboration in regards to the
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 UKs 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 nations 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 UKs 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
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marketing movement estimate more than 40 million. This loyalty card was 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 UKs 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
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study, Jobber, 2004. In November 2002 the nectar card overtook the Tesco Club card as
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 Morrisons, Asda and Other Supermarket Loyalty

Cards:
2.3.1 Safeway/Morrisons
The first supermarket to have loyalty card scheme was Safe way which is now Morrisons
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).
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Safeway familiarity a expansion in sales after the loyalty card was withdrawn due to better
promotional offers (Peck et.al, 1999).
Moreover, they had decided to target apparently loyal customers of its rivals. They would
email customers of Sainsburys 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 Morrisons, 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 customers 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
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2002). It got also involved into providing financial services to the community and
introduced credit card along with Asda store card.
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 didnt
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 clients 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
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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
value for money they offer. Furthermore (Carrol and Jobber case study 2004) says that the
Waitrose, Morrisons and Safeways 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 Morrisons 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,
Convenience
Price
Location
Quality of product
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
Distance
Convenience
Quality
Shop is done
Asda
30.62
Marks & Spencer
of
Non-food
Queuing
product %
products %
lengths %
46.03
27.13
1.03
0.94
32.29
51.02
31.24
0.61
2.03
Morrisons/Safeway
30.85
46.44
27.77
0.69
1.71
Sainsburys
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
considered this as attractive aspect. This could be one of the reasons for Tesco and
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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 doesnt really matter how far they have to go and get quality.
Sainsburys customers are 29%, Asda; Morrisons about 27% and Tescos 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
Asda
Marks & Spencer
Morrisons/ Safeways
Sainsburys
Tesco
Waitrose
Price %
37.14
23.07
33.25
30.15
29.36
18.64
Special offers %
6.63
5.02
8.95
5.49
5.86
3.56
According to the Kilby & Sweeney, 2005 the above survey shows that Tesco and
Morrisons consumers are more concerned with the price as they claim this is the
motivating factor for them to shop at Tesco and Morrisons. 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
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 Morrisons
customers as it the highest among all 8.95%.
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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.
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
36 | P a g e
LITERATURE REVIEW
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
collecting points. Moreover, the study intends to determine if loyalty cards augment the
marketplace share of a hypermarket.
37 | P a g e
RESEARCH METHODOLOGY AND DESIGNE
CHAPTER 3
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
39 | P a g e
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.
40 | P a g e
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.)
41 | P a g e
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 its easy to recognize and simple to
code and analyse. To attain objective information a reasonable scale was used in questions.
42 | P a g e
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.
43 | P a g e
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
Count
Respondents
Age
Category
18-25
years
26-33
years
34-41
years
42 and
above
Total
Female
Count
17.1
14.5
14
34.1
20
36.4
12
29.3
17
30.9
19.5
10
18.2
41
100.0
55
100.0
Table 3.2: Sample distribution according to gender:

Respondents Gender
Male
Count
41
%
42.7
Female
Count
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
44 | P a g e
following
link.
(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
45 | P a g e
time scale, which made researcher to had small sample size on one particular area rather
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.
46 | P a g e
FINDINGS AND ANALYSIS
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.
47 | P a g e
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.
48 | P a g e
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.
TESC
SAINSB WAITR
MORRIS SOMERFI OTH
O
ASDA URY
OSE
ON
ELD
ER
12.5
1
%
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%
49 | P a g e
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 dont 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 dont 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.
1= Most Visisted
2= 2nd Most Visisted
TESCO
ASDA
TESCO
ASDA
SAINSBURY
WAITROSE
SAINSBURY
WAITROSE
MORRISON
SOMERFIELD
MORRISON
SOMERFIELD
OTHER
OTHER
5%
19%
19%
50 | P a g e
58%
2%
49%
32%
17%
3= 3rd Most Visisted 4= 4th Most Visisted

TESCO
ASDA
TESCO
ASDA
SAINSBURY
WAITROSE
SAINSBURY
WAITROSE
MORRISON
SOMERFIELD
MORRISON
SOMERFIELD
OTHER
OTHER
10% 3% 10%
13% 32%
14% 5%
9%
18%
9%
45%
32%
5= 5th Most Visisted 6= 6th Most Visisted

TESCO
ASDA
TESCO
ASDA
SAINSBURY
WAITROSE
SAINSBURY
WAITROSE
MORRISON
SOMERFIELD
MORRISON
SOMERFIELD
OTHER
OTHER
24%
7%
31%
38%
9% 2%
41%
20%
29%
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.
51 | P a g e
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: interviewers opinion about loyalty cards and cost reduction:
Criteria
Loyalty cards
are a sales
gimmick
Special offers
provide more
value for money
Points are useful
Permanent low
prices provide
more value for
money
Collecting points
takes time
Strongly
Disagree
%
4.2
Disagree
%
49
Neither Disagree
nor agree
%
35.4
Agree
%
11.5
Strongly Agree
%
0
97.9
5.2
39.6
54.2
4.2
17.7
16.7
58.3
3.1
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 its 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.
52 | P a g e
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
the similar view. Almost 100% of all age category groups very strongly in accord that
loyalty cards points take time and are not quick.
53 | P a g e
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 respondents
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
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
54 | P a g e
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
How often products on special
offer are purchased
Every Visit
%
Most Visits
%
Occasionally
%
Never
%
7.3
65.6
27.1
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 customers investigation acquires at least 1 superstore loyalty card.
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.
55 | P a g e
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
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%.
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
56 | P a g e
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.
Criterion
How often points are redeemed by
respondents
Every Visit
%
Most Visits
%
Occasionally
%
Never
%
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%
57 | P a g e
however16.7% said they never claim their loyalty points back which means they either
dont have loyalty card or they just dont 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 dont 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 dont even redeem
loyalty points at all thats 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
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
58 | P a g e
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:

50
45
40
35
30
25
20
Are money-off vouchers

for products respondents
purchase
15
10
5
0
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
customers present mixed response, 46.9% respondents said that they get same product
vouchers sometimes and 32.3% respondents said they dont 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
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.
59 | P a g e
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:
Very
unimportant
%
0
Unimportant
%
2.1
Neither
Unimportant
nor Important
%
4.2
Collecting
points
1.0
9.4
Variety of
fresh produce
Frequent
special offers
Open 24
hours
Criteria
53.1
Very
Important
%
40.6
34.4
50
5.2
2.1
3.1
91.7
3.1
3.1
92.7
3.1
10.4
32.3
56.3
Fresh Bakery
4.2
35.4
60.4
Loyalty card
6.3
35.4
57.3
Quick moving
checkout lines
67.7
31.3
Convenience
Important
%
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.
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
60 | P a g e
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 thats why 53.1% said its 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 its 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%
mentioned that its 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.
61 | P a g e
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 wellsituated 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
Collecting points
Store has loyalty card
Male mean
female mean
T-Value
3.24
3.67
0.009
3.24
3.75
0
Graph: 4.6 Female & Male Opinion over loyalty card and collecting points
62 | P a g e
3.8
3.7M
ea
3.6n
3.5
3.4
3.3
Collecting points
3.2
3.1
3
2.9
Male mean
female mean
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.
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
63 | P a g e
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.
64 | P a g e
Criteria
Convenience
Store has loyalty
card
18-25
years
26-33
years
34-41
years
Mean
4.33
3.6
Mean
4.32
3.74
Mean
4.1
3.48
42
years
&
above
Mean
4.67
3.17
FValue
Significance
2.886
3.565
0.04
0.017
Table 4 .9 Different age group respondents opinion about convenience and loyalty:
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
Convenience
Respondents age Groups

Graph 4 .7 Different age group respondents 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
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.
65 | P a g e
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 customers 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.
66 | P a g e
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
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. Its 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
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
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
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 Tescos
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 didnt 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 its 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
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 doesnt
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
Cash incentives
instead loyalty points
Local market network
Permanently low prices should

be provided
Provide more and

more fresh products
Special events such as holidays, mothers

day, fathers day, valentine day etc (extra
points for use of card in holidays)
Referrals
points
when
Party points when customers are buying
introducing new friend or
product for parties should rewarded for
family
extra benefits and points.

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 customers services and loyalty schemes.
5.3.1.1 Cash incentives instead loyalty points
73 | P a g e
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, Mothers day, Fathers 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
Mothers day, Fathers day and etc because high amount of customers rush towards
supermarkets to buy gifts for their loved one. So its 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
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.
75 | P a g e
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www.Datamonitor.com. Sainsburys: Aware of the Crosshairs,
www.Datamonitor.com. Safeway: Disloyalty Scheme Could be a Winner,
www.Datamonitor.com. Tesco:Loyalty Goes Online,
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www.Datamonitor.com. Loyalty Schemes:Sweet As Nectar,
www.sainsbury.co.uk/media. News Releases.
APPENDIX (A)
85 | P a g e
SURVEY
QUESTIONNAIRE
This Marketing Research study is being conducted in order to determine the
Effectiveness of supermarket loyalty cards. This interview will take approximately
five minutes and any information will be kept in confidence. Thank you for your time
and 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
Somerfield saver card
Asda credit card
86 | P a g e
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
Very
unimportant
2
Unimportant
3
Neither
important nor
unimportant
4
Important
Collecting points on supermarket loyalty card

1
Very
unimportant
2
Unimportant
3
Neither
important nor
unimportant
4
Important
1
Very
unimportant
2
Unimportant
3
Neither
important nor
unimportant
4
Important
3
Neither
important nor
unimportant
4
Important
3
Neither
4
Important
Store frequently has special offers

1
Very
unimportant
2
Unimportant
Store is open 24 hours

1
Very
87 | P a g e
2
Unimportant
unimportant
important nor
unimportant
Store maintains a fresh bakery

1
Very
unimportant
2
Unimportant
3
Neither
important nor
unimportant
4
Important
3
Neither
important nor
unimportant
4
Important
Store has a loyalty card

1
Very
unimportant
2
Unimportant
Store has quick moving checkout lines

1
Very
unimportant
2
Unimportant
3
Neither
important nor
unimportant
4
Important
Q 7. How often do you redeem the points collected on your card?

1
Every
Visit
2
Most
visits
3
Occasionally
4
Never
Q 8. How often do you purchase products that are on special offer?

1
Every
Visit
2
Most
visit
3
Occasionally
Q 9. Are the money off vouchers you receive from the supermarket for products that
you purchase?
Yes.
No.
Sometimes.
Q 10. Listed below are different opinions about Supermarkets. Please indicate
Below how strongly you agree or disagree with each of the following.
88 | P a g e
4
Never
1=strongly disagree, 2=disagree, 3=neither agree or disagree, 4=agree,

5=strongly agree.
Supermarket loyalty cards are a sales gimmick.
1
Strongly
disagree
2
Disagree
3
Neither
agree or
disagree
4
Agree
3
Neither
agree or
disagree
4
Agree
Special offers provide more value for money.

1
Strongly
disagree
2
Disagree
Points collected on supermarket loyalty cards are useful as they can be used
in other stores.
1
Strongly
disagree
2
Disagree
3
Neither
agree or
disagree
4
Agree
3
Neither
agree or
disagree
4
Agree
Permanently low prices provide more value for money.

1
Strongly
disagree
2
Disagree
Collecting points takes time and so cannot be redeemed quickly.

1
Strongly
disagree
2
Disagree
Please indicate which age category you belong to

18-25 years
26-33 years
34-41 years
42 and above
Gender :
Male
89 | P a g e
3
Neither
agree or
disagree
4
Agree
Female
End of Interview.
Thank You!!!
90 | P a g e
APPEDIX (B)
SURVEY RESULT ACCORDING TO GENDER
Table 1: Respondents opinion about loyalty cards and price reductions:
Criteria
Gender
Strongly
Disagree
%
Disagree
%
Loyalty
cards are a
sales
gimmick
Special offers
provide more
value for
money
Male
7.3
43.9
Neither
Disagree
nor Agree
%
34.1
Female
1.8
52.7
Male
Female
Points
collected are
useful
Permanent
low prices
provide more
value for
money
Collecting
points takes
time
Agree
%
Strongly
Agree
%
14.6
36.4
9.1
97.6
2.4
1.8
98.2
Male
4.9
41.5
51.2
2.4
Female
5.5
38.2
56.4
Male
7.3
17.1
17.1
56.1
2.4
Female
Male
1.8
0
18.2
0
16.4
2.4
60
95.1
3.6
2.4
Female
3.6
90.9
5.5
Table 2: Respondents purchase patterns of products on special offer:

Criterion
How often
products on
special offer
are
purchased
91 | P a g e
Gender
Every
Visit
%
Most
Visits
%
Occasionally
%
Never
%
Male
4.9
56.1
39
Female
9.1
72.7
18.2
Table 3: How often respondents redeem their points:

Criterion
Gender
How often
points are
redeemed
Male
Female
Every
Visit
%
2.4
Most
Visits
%
24.4
Occasionally
%
51.2
Never
%
22
14.5
27.3
45.5
12.7
Table 4: Type of loyalty cards respondents have and use the most:
% of male
respondents owning
the card
% of male
respondents who
use the card the
most
% of
female
respondent
s owning
the card
% of
female
respondent
s who use
the card the
most
Nectar Card
61
61
72.7
72.7
Tesco Clubcard
John Lewis
Partnership Card
75.6
73.2
65.5
60
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

Other Supermarket
Loyalty Cards
7.3
2.4
7.3
7.3
Type of
Loyalty Card
92 | P a g e
Table 5: Reasons why respondents visit a particular supermarket:

Criteria
Gender
Very
Unimportant
%
Unimportant
%
Convenience
Male
Female
Male
Female
Male
Female
Male
0
0
2.4
0
0
0
0
2.4
1.8
14.6
5.5
4.9
0
2.4
Neither
Important
Nor
Unimportant
%
2.4
5.5
41.5
29.1
4.9
1.8
7.3
0
9.8
10.9
Collecting
points
Fresh
produce
Frequent
special offers
Important
%
Very
Important
%
53.7
52.7
39
58.2
87.8
94.5
90.2
41.5
40
2.4
7.3
2.4
3.6
0
0
31.7
32.7
94.5
56.1
56.4
5.5
2.4
0
Female
Open 24
hours
Male
Female
0
0
0
Fresh bakery
Male
Female
0
0
4.9
3.6
41.5
30.9
53.7
65.5
0
0
Loyalty card
Male
Female
0
0
12.2
1.8
51.2
23.6
36.6
72.7
0
1.8
Male
Female
0
0
2.4
0
0
0
58.5
74.5
39
25.5
Quick
moving
checkout
lines
93 | P a g e
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
Neither
Strongly
Disagre
Disagre Disagre
e or
e
e
Agree
Agree
%
%
%
%
Respondents
Age
Category
18-25 years
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
26-33 years
34-41 years
42 and above
Table 2: Special offers provide more value for money:

Special Offers Provide More Value
for Money
Neither
Disagree
Strongly
or Agree
Agree
Agree
%
%
%
Respondents
Age
Category
18-25 years
6.7
93.3
26-33 years
34-41 years
42 and above
100.0
96.6
100.0
Table 3: Points collected are useful as they can be used in other stores:
94 | P a g e
3.4
Points Collected are Useful

Neither
Disagre
Disagre
e or
Strongly
e
Agree
Agree
Agree
%
%
%
%
Respondents
Age
Category
18-25 years
40.0
60.0
32.4
67.6
13.8
44.8
37.9
5.6
44.4
50.0
26-33 years
34-41 years
42 and above
3.4
Table 4: Permanent low prices provide more value for money:

Permanently Low Prices Provide More Value for
Money
Neither
Strongly
Disagre
Disagre Disagre
e or
Strongly
e
e
Agree
Agree
Agree
%
%
%
%
%
Respondents
Age
Category
18-25 years
6.7
20.0
6.7
60.0
2.9
11.8
20.6
64.7
3.4
24.1
20.7
44.8
5.6
16.7
11.1
66.7%
6.7
26-33 years
34-41 years
42 and above
6.9
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
100.0
26-33 years
34-41 years
42 and above
95 | P a g e
10.3
91.2
8.8
86.2
3.4
100.0
Table 6: Respondents purchase patterns of products on special offer:

How Often Products on Special
Offer are Purchased
Every
Most
Occasionall
Visit
Visits
y
%
%
%
Respondents
Age
Category
18-25 years
6.7
60.0
33.3
5.9
64.7
29.4
13.8
65.5
20.7
72.2
27.8
26-33 years
34-41 years
42 and above
Table 7: Supermarket loyalty cards that respondents have;
18-25
years
%
Respondents Age Category

26-33
34-41
42 and
years
years
above
%
%
%
Nectar Card
80.0
64.7
72.4
55.6
Tesco Clubcard
86.7
70.6
58.6
72.2
10.3
5.6
John Lewis Partnership card

Tesco Clubcard Plus
6.7
11.8
10.3
16.7
Asda store card
6.7
17.6
20.7
16.7
Somerfield Saver card
13.3
8.8
10.3
5.6
2.9
20.7
Asda credit card
96 | P a g e
Table 8: Supermarket loyalty cards that respondents use the most:
Nectar Card Used Most
18-25
years
%
80.0
Tesco Clubcard Used Most
73.3
Respondents Age Category

26-33
34-41
42 and
years
years
above
%
%
%
64.7
72.4
55.6
70.6
John Lewis Partnership Card Used

Most
55.2
66.7
10.3
11.1
Tesco Clubcard Plus Used Most
6.7
8.8
10.3
16.7
Asda Store Card Used Most
6.7
11.8
13.8
16.7
Somerfield Saver Card Used Most
13.3
2.9
6.9
2.9
13.8
Asda Credit Card Used Most
Table 9: How often respondents redeem points:

How Often Points are Redeemed
Every
Most
Occasionall
Visit
Visits
y
Never
%
%
%
%
Respondents
Age
Category
18-25 years
34-41 years
42 and above
97 | P a g e
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
26-33 years
Reasons why respondents visit a particular supermarket:
Table 10: Convenience:
Supermarket Conveniently Located

Neither
Unimportan
Very
Unimportan
t nor
Importan Importan
t
Important
t
t
%
%
%
%
Respondents
Age
Category
18-25 years
6.7
46.7
46.7
2.9
58.8
38.2
62.1
24.1
33.3
66.7
26-33 years
34-41 years
42 and above
13.8
Table 11: Collecting points on loyalty card:
Collecting Points on Supermarket Loyalty Card

Neither
Very
Unimportan
Very
Unimportan Unimportan
t nor
Importan Importan
t
t
Important
t
t
%
%
%
%
%
Respondents
Age
Category
18-25
years
26-33
years
34-41
years
42
and
abov
e
98 | P a g e
3.4
33.3
66.7
5.9
32.4
55.9
5.9
17.2
24.1
44.8
10.3
11.1
55.6
33.3
Table 12: A wide variety of fresh produce:
Store Offers a Wide Variety of Fresh Produce

Neither
Unimportan
Unimportan
t nor
Very
t
Important
Important Important
%
%
%
%
Respondents
Age
Category
18-25 years
100.0
26-33 years
34-41 years
6.9
10.3
42 and above
97.1
2.9
75.9
6.9
100.0
Table 13: Store has frequent offers:
Store Frequently Has Special Offers

Neither
Unimportan
Very
Unimportan
t nor
Importan Importan
t
Important
t
t
%
%
%
%
Respondents
Age
Category
18-25 years
6.7
93.3
2.9
97.1
26-33 years
34-41 years
42 and above
3.4
86.2
5.6
10.3
94.4
Table 14: Store is open 24 hours:
Store is Open 24 Hours

Very
Unimportan
t
%
99 | P a g e
Neither
Unimportan
t nor
Important
%
Importan
Importan
t
%
t
%
Respondents
Age
Category
18-25 years
6.7
20.0
73.3
2.9
35.3
61.8
10.3
27.8
44.8
16.7
41.4
55.6
26-33 years
34-41 years
42 and above
3.4
Table 15: Store has a fresh bakery:
Store Maintains a Fresh Bakery

Neither
Unimportan
Unimportan
t nor
Importan
t
Important
t
%
%
%
Respondents
Age
Category
18-25 years
13.3
20.0
66.7
38.2
61.8
37.9
55.2
38.9
61.1
26-33 years
34-41 years
6.9
42 and above
Table 16: Store has a loyalty card:
Store Has a Loyalty Card

Neither
Unimportan
Unimportan
t nor
Importan
t
Important
t
%
%
%
Respondents
Age
Category
Very
Importan
t
%
18-25 years
6.7
26.7
66.7
29.4
67.6
31.0
61.1
58.6
27.8
26-33 years
34-41 years
2.9
42 and above
10.3
11.1
Table 17: Store has quick moving checkout lines:

Store Has Quick Moving Checkout
Lines
100 | P a g e
Unimportan
t
%
Respondents
Age
Category
Very
Important
%
66.7
33.3
70.6
29.4
69.0
27.6
61.1
38.9
18-25 years
26-33 years
34-41 years
42 and above
101 | P a g e
Importan
t
%
3.4

Analysis of The Effectiveness of The Loyalty Cards, Its Methods and Outcomes.

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FINAL DISSERTATION

An analysis of the effectiveness of loyalty cards, its methods and

Muhammad Wajahat Siddiq

Submitted in partial fulfilment of the requirement for the

Dissertation Statement of Originality

I have referenced all passages from my source material.

Wherever I have copied someone elses words (a quotation), I have clearly

I wasn't raised in a mansion

1.2 Literature Review

1.3 Problem Definition

1.4 Objectives of Research

1.5.1 Aim of Study

1.7 Organizing of the learning

1.7.1 Map for the Study

CHAPTER 2 LITERATURE REVIEW OF RELATIONSHIP MARKETING AND

2.1.0 Relationship marketing

2.1.1 Customer Loyalty and Loyalty programmes

2.1.2 The loyalty schemes and retail industry

2.1.3 Price Promotions

2.2.0 The Superstore Industry

2.2.1.1 Backdrop of superstore loyalty cards

2.2.1.2 Tesco Club Card

2.2.1.3 The Sainsbury Reward & Nectar Card

2.3.0 Safeway Morrisons, Asda and Other Supermarket Loyalty Cards

2.3.5 The present Market state and prospect of Loyalty Cards

CHAPTER 3 RESEARCH METHODOLOGY AND DESIGNE39-46

3.1.0 Research Design

3.1.1 The research process

3.2.0 Research Method

3.3.0 Questionnaire Design

3.4.0 Sampling Method

3.5.0 Data Analysis

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

4.2.1 To discusses the efficiency of the point cards

CHAPTER 5 CONCLUSION AND RECOMMENDATION .67-75

5.1.0 Span of the Study

5.1.1 Research objectives and problem definition

5.2.0 Research contribution

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

5.2.2 To establish the efficiency of loyalty cards

5.3.0 Recommendations and Areas for further research

5.3.1 Local market network

5.3.1.1 Cash incentives instead loyalty points

5.3.1.2 Fresh products

5.3.1.5 Referrals points when introducing new friend or family

REFERENCES AND APPENDIXES .76-101

Research stages source investment attraction by Dr Lawrence

Figure 2.1 Sweeney & Source Kilby 2005

Figure 4.1 demographic breakdowns

Figure 4.4 Respondents view regarding permanent low prices

Figure 4.5 respondents receive money off vouchers

Figure 5.1 Further suggestions what needs to be added

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

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

Table 3.2: Sample distribution according to gender

Respondents purchasing habits of goods on special offer

Table 4.4: Category of loyalty card and usage

Table 4.5: how often customers exchange their loyalty points

Respondents receive money off vouchers

why customers call the same store

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

Different age group respondents opinion about convenience and

According to Karolefski 1998 loyalty programmes especially card based loyalty