Customers Perception Of Multi-Brand

Retail (Apparel) Loyalty Card

FORE School of Management
PLAN OF ACTION

1. Introduction
2. Literature Review
3. Approach Diagram
4. Problem Statement
5. Hypothesis
6. Research Methodology
7. Analysis
8. Findings and Conclusion
9. Recommendation
10. Limitations
11. Bibliography

INTRODUCTION
LOYALTY


A deeply held commitment to re-buy or re-patronize a
preferred product/service consistently in the future, thereby
causing repetitive behavior reflecting purchase of the brand
despite situational influences and marketing efforts having the
potential to cause a switching behavior.


--Keiningham,T.L.,Vavra,T.G.,Aksoy,L. & Wallard.H.
Loyalty Myths John Wiley & Sons Inc, 2006 edition.




Creating and maintaining customer loyalty
Using a variety of means to encourage loyalty
. Measuring and changing purchase behavior is a critical
component of loyalty programs, so its obvious that
tracking that purchase behavior is paramount
Customer retention is more important and more
cost-effective than customer development
Loyalty programs/cards have become one of the most
critical means by which companies manage their
customer relationships

Do these loyalty programs really work?

Do customers choose to go to a specific store due to the
loyalty cards they have or are there more pressing
reasons for preferring that store?

How do customers perceive these loyalty cards?

Can a loyalty program change how customers behave
and get them to spend more money with a specific
retailer?

Does loyalty card usage and store loyalty go hand in
hand ?


LITERATURE REVIEW
Real brand loyalty results from an emotional bond created
by trust, dialogue, frequency, ease of use and a sense of
value and added satisfaction. Loyalty is the reflection of a
customers subconscious emotional and psychological
need to find a constant source of value, satisfaction and
identity

-- Jenkinson, A. (1995), Retailing and shopping on the Internet,
International Journal of Retail and Distribution Management, 24, (3), pp.26-37

There is a range of conceptualizations as to what constitutes
loyalty. These range from repeat purchases to a lifetime .The
different types of loyalty could be: No loyalty, spurious
loyalty, latent loyalty, and sustainable loyalty. Loyalty
schemes can only offer value as part of a coherent value
proposition in the context of sustainable loyalty; a key role is
in converting spurious loyalty, in which relative attitude is low
and patronage behavior high repeat, to sustainable loyalty.
This involves converting conveniencebased loyalty to
commitment, and reduces the customers inclination to defect.

--Dick A. and Basu K., Customer Loyalty: Toward and Integrated Conceptual Framework,
Journal of the Academy of Marketing Science, vol. 22, Spring 1994, pp. 99-113



A recent contribution from Huddleston et al. (2004) confirms that
food store customers exhibited spurious loyalty, i.e. high repeat
patronage, but low relative attitude towards preferred stores, which
would suggest a role for loyalty schemes.
--Huddleston, P., Whipple, J. and van Auken, A. (2004), Food
store loyalty: application of a consumer loyalty framework, Journal of
Targeting,Measurement and Analysis for Marketing, 12, (3), pp.213-230

Whyte (2004), on the other hand, suggests that loyalty programmes
may only create spurious loyalty, and may not be very successful in
translating such loyalty to commitment. They suggest that frequent
flyer programmes in Australia create spurious loyalty, and that
repeat purchase is not a proxy for customer satisfaction or
commitment.
--Whyte, R. (2004), Frequent flyer programmes: is it a
relationship, or do the schemes create spurious loyalty?, Journal of Targeting, Measurement
and Analysis for Marketing, 12, (3), pp.269-280

There are two important attitude-type constructs.

The first is affective commitment (Morgan and Hunt 1994; Verhoef 2003), or the factors that
create stickiness in a relationship. This commitment is affected directly by the degree of
personal interaction between a customer and a company and how the company manages the
customers account over time (Bendapudi and Leone 2002).

The second is brand equity, which is influenced by factors such as repeated performance and
satisfaction (Keller 1993; Selnes 1993), word of mouth or the buzz about the brand (Rosen
2000), the degree of identification with the brand, and its relevance to a customers situation
(Aaker 2004; Keller 2003).

As the market grows and customer experience accumulates, more affective attitudes
toward the relationship and brand come to drive intentions. With respect to
relationship commitment, the implication is that the personal relationship between a
customer and a company should be measured, nurtured, and managed effectively
(Bendapudi and Leone 2002) through a companys customer relationship
management system. For brand equity, the implication is that the degree to which
customers identify with a particular brand and find it relevant to their situation
should also be measured and managed effectively.

APPROACH DIAGRAM
CUSTOMER
STORE LOYALTY
Stores
attractive
interior design
Ease of product
return
Quality of
product
STORE LOYALTY
CARD
Notify
cardholders
about
upcoming
promotions/dis
counts
Special
discount on
cardholder's
special days
Cash back
facility
Accumulate
points and
redeem it at a
later stage
Variety of
products
Transportation
convenience

Helpful sales
people
PROBLEM STATEMENT
OBJECTIVE

To determine the Customers
Perception Of Multi-brand
Retail(Apparel) Loyalty Card

HYPOTHESIS

1. Loyalty card possession for males is not
different from females.

2. Family income does not affect the number
of loyalty cards a person has.

3. People who have higher number of loyalty
cards, rate importance of loyalty cards
same as people with lesser number of cards



RESEARCH METHODOLOGY
RESEARCH
DESIGN
CONCLUSIVE
Research
Design
CAUSAL
Research
DESCRIPTIVE
Research
LONGITUDINAL
Design
CROSS-
SECTIONAL
Design
EXPLORATORY
Research
Design
DESCRIPTIVE
STUDIES
Sales
Studies
Market
Potential
Sales
Analysis
Market
share
Consumer
Perception and
Behavior Studies
Image
Product
Usage
Advertising
Pricing
Market
Characteristic
Studies
Distribution
Competitive
Analysis
Three basic approaches that have evolved to conceptualize
loyalty: a behavioral (purchase) approach, an attitudinal
(feelings) approach, and a hybrid approach incorporating
consumer characteristics and purchase situation

Behavioral
Loyalty
Historical purchasing
of brand and
competitors
Satisfactory
experiences
(reinforcement)

Loyalty mainly expressed in terms of Revealed
behavior

The Behavioral Model of Loyalty
Attitudinal
Loyalty
Attitudes and beliefs
Toward The brand or
company
Social factors,
influence of
significant others
and community

Loyalty as an attitude that sometimes leads to an
ongoing relationship with a brand

The Attitudinal Model of Loyalty
Co-
determinants of
Choice
Situation and usage
occasion
Consumers
characteristics and
desire for variety
Loyalty as behavior moderated by the customers characteristics,
circumstances, and/ or the purchase situation.
The Situational Model of Loyalty
ANALYSIS
About the Sample
GENDER
INCOME
STORE LOYALTY CARD
Summary of Results





Hypothesis P value Decision
Loyalty card possession for
males is not different from
females.

.304 Accept
Family income does not affect
the number of loyalty cards a
person has.

.479 Accept
People who have higher
number of loyalty cards, rate
importance of loyalty cards
same as people with lesser
number of cards

.744 Accept
FINDINGS and CONCLUSION
Factors like
quality and variety of products that the store offers
weigh at the top while
helpful salesperson,
ease of product return
Stores attractive interiors and
transportation convenience are the other crucial
factors towards the determination of a stores loyalty.

Amongst all the important factors that determine
a stores loyalty, holding the loyalty card of a store
is the least important factor towards
determination of store loyalty.


Although companies are able to gather some very useful
information about their consumers and they benefit
from this accumulated knowledge as they develop
marketing strategies. By doing so, companies are able to
segment their markets more effectively, serve their
target markets more successfully. However, many
customers (18 % of our sample chose not to opt for a
loyalty card) complain about this fact and privacy
invading matter that companies get their hands on such
personal information while many customers (25 % of
our sample who chose not to opt for a loyalty card) state
that they dislike being contacted for offers.






Amongst the sample of customers who own one
or more than one loyalty cards, 40% confessed
that having a loyalty card of a particular store
does not prevent them from going to other
retailers as they feel they benefit more by
visiting a variety of stores and utilizing a range
of cards while 33% of them either dont use
them or use them very rarely.
Amongst the sample of customers who own
one or more than one loyalty cards confess
that their frequency of purchase at a
particular store has not changed after the
store has issued a loyalty card.

The most attractive benefit that the customer
seeks from a loyalty card is special discount on
cardholders special days. This shows privilege
seeking as well as discount seeking behavior of
the customer. This requirement of the customer
could be fulfilled by giving more discounts or by
developing healthy and long term relationship
with the customer.

RECOMMENDATION
Loyalty cards looks like an important component in a
whole program of efforts designed to increase customer
commitment to a store. They represent the opportunity to
build long term customer loyalty. But they are not the sole
factor in a customers store loyalty development. Results
of this study show that customers also focus heavily on the
availability of a wide variety of products, salespeoples
positive attitudes and ease of transportation as their top
factors for developing store loyalty. Therefore, companies
have to take the whole package into consideration. They
must aim to build a connected network of customers,
partners and vendors, enabled by technology, all working
towards profitable, and mutually beneficial relationships.




Hence we suggest the companies to bury the loyalty
cards for a while and relook at how they can get
customer loyalty by some sustainable means.

LIMITATIONS
Marketing Research (MR) is not an exact science though it uses the techniques of science.
Thus, the results and conclusions drawn upon are not very accurate.

The research was carried out on consumers, who are humans. Humans have a tendency to
behave artificially when they know that they are being observed. Thus, the consumers and
respondents upon whom the research is carried behave artificially when they are aware that their
attitudes, beliefs, views, etc are being observed.

We faced time constraint during our research, as we had only 8 weeks for the completion of the
research.

Money constraints: We havent had the proficiency to carry wide surveys for collecting
primary data, and hence were not also able to hire specialized market experts and research
agencies to collect primary data. Thus, we had to go for obtaining secondary data that is cheaper
to obtain.

Sample size: Due to time and money constraint, we had to go for convenient sampling.

The research was conducted in open marketplace where numerous variables act on research
settings.
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Jenkinson, A. (1995), Retailing and shopping on the Internet, International
Journal of Retail and Distribution Management, 24, (3), pp.26-37

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QUESTIONS PLEASE