Creating and maintaining customer loyalty - Free Essay Example

CREATING CUSTOMER LOYALTY   THE CHALLENGE OF TODAYà ¢Ã¢â€š ¬Ã¢â€ž ¢S BUSINESSES ABSTRACT This research considers the challenge of todayà ¢Ã¢â€š ¬Ã¢â€ž ¢s businesses in creating and maintaining customer loyalty. The supermarket sector in particular is considered. Literature and previous research regarding loyalty and various loyalty programmes is first reviewed. A focus group of consumers and loyalty card users was held, focusing on their perception of loyalty and loyalty programmes. Results from the focus group were analysed and compared to data from literature and previous research. Overall conclusions from combined research are that loyalty reward schemes are no longer as effective as when first introduced at directly influencing participant behaviour. Consumers tended to be first most loyal to particular products within a store, then loyal to a specific store in their community, whether part of a national chain or not. Consumers were somewhat loyal to retailer brand a nd less so to particular reward schemes. In general, consumers favoured either lower overall prices or loyalty reductions at the register, rather than point accumulation programmes. INTRODUCTION This study seeks to consider the components that create customer loyalty, and in particular whether loyalty reward schemes are an effective tool in creating loyalty. Literature and previous studies of customer loyalty in general and loyalty reward schemes in particular were reviewed. Considerations were made with specific reference to the supermarket sector, because it is a market highly dependent on repeat-purchases and customer loyalty, and as an industry has participated in loyalty reward schemes. A focus group was then developed of supermarket consumers and loyalty reward programme participants. These consumers were asked a series of open-ended questions, which they then discussed. Their answers were recorded and grouped, where applicable. Findings were analysed and presented in su mmary form, with quantitative data available in Appendix 1 of this study. This research hopes to verify what components create customer loyalty, and how they affect each other and the consumerà ¢Ã¢â€š ¬Ã¢â€ž ¢s perception of loyalty to a store or retail brand. It is also anticipated to generate relevant data regarding consumersà ¢Ã¢â€š ¬Ã¢â€ž ¢ attitudes towards loyalty reward schemes. Much of the data attesting to the effectiveness of such data is from three or more years ago, and does not take into consideration the market saturation existing in the loyalty scheme sector, or that the novelty of such programmes has worn off for some consumers. It is anticipated that other, more traditional factors may be found to be more important in creating and maintaining customer loyalty than the reward schemes introduced in the past fifteen years. LITERATURE REVIEW Loyalty is both a business strategy and a consumer perception. As a business strategy, the importance of customer loyal ty and repeat purchases is relative to the type of business (Fill 2004). The need for retuning customers is less important to a firm selling retirement cottages, for example, than the supermarket trying to capture customersà ¢Ã¢â€š ¬Ã¢â€ž ¢ weekly spend. Loyalty is earned through several factors: quality merchandise for a reasonable price, company or label status, attentive informed sales help, and adequate after sale follow-up. A positive combination of these factors (not every loyalty-building purchase requires all four) gives customers the perception of a fulfilling purchase experience, and increases the likelihood they will buy again (Uncles, Dowling and Hammond 2003). Research has shown the customer experiences loyalty as an attitude established over time (Woodruff and Gardial 1996). Customers first try a particular retailer. If the retailer satisfies a threshold percentage of their needs and expectations, the customer is likely to return (Woodruff and Gardial 1996). Over t ime, the customer develops shopping habits related to the particular store, which may include but are not limited to location of particular products in the store, purchase of store brands, participation in reward schemes, low-context relationships with store personnel, habitual stops at the store (such as on the way home from work), and participation in various secondary services (such as purchasing cosmetic items or using an in-shop florist). The store-specific shopping experience becomes a customer habit, and will continue in the form of repeat-purchase behaviour until something occurs to affect the customerà ¢Ã¢â€š ¬Ã¢â€ž ¢s habit (Woodruff and Gardial 1996). A number of studies by both stores and independent researchers have focused on this process of customer loyalty, with the explosive growth in loyalty reward schemes in recent years a particular consideration. In the past ten years, the UK retail sector has seen loyalty programmes grow from a handful to over sixty (Byrom, Hernadez and Benison 2001). Where once grocers competed with perhaps one or two other stores in their immediate geographic area, the instruction of large national chains and superstores has created an oligopoly environment in the sector (Mistry 2005). As differentiation is difficult and repeat-purchase customers vital in the supermarket sector, loyalty programmes were started to try to win new customers by breaking their prior shopping habits, to retain existing customers, and to encourage customers to consolidate their spend at one market (Shabi 2003). There are three primarily types of loyalty programmes. Some loyalty schemes are offered by a specific manufacturer, and award discounts or rewards solely for the purchase of products made by that firm. Schemes that require a consumer to save box-tops or points from the side of the carton are an example of this type of loyalty programme. Some retailers issue cards, which provide consumers discounts at the register or allow them to accumulate points towards a discount or special purchase. Points or discounts may only be earned and redeemed at that particular retailer. The Somerfield Saver Card is an example of this type of loyalty programme. A third type of loyalty scheme is the multi-retailer card, such as the Nectar card. This allows consumers to receive discounts or accumulate points at a number of partnering retailers. Supermarkets either operate their own retailer-specific loyalty programme or participate in a multi-retailer scheme (Uncles, Dowling and Hammond 2003 ). Loyalty cards have been shown to draw new customers, primarily by offering them a reason to try another store. The cards also have been shown to increase purchase consolidation, with customers using loyalty reward cards increasing their average spend by sixteen to twenty-eight percent (Rowley 2005). It is important to note these results were more strongly documented at the outset of the loyalty schemes, recent data indicates loyalty prog rammes are less successful at all three than when the schemes were first implemented (Rowley 2005). Loyalty cards are now viewed as supplementary in customer acquisition and retention; cards canà ¢Ã¢â€š ¬Ã¢â€ž ¢t replace quality product, low price, or responsive, professional staff (Mistry 2005). The most significant benefit to retailers of loyalty reward schemes is the data gathered by such programmes. This data can be used for a loyalty strategy, but is of possibly more benefit to retailers in todayà ¢Ã¢â€š ¬Ã¢â€ž ¢s market as a market analysis tool (Fill 2004). Some supermarkets use the data for decisions that do affect customer loyalty, such as which products to carry or where to shelve products (Shabi 2003). These decisions usually have an ulterior motive of profit, however. A supermarket is likely to plan its products, presentation, and prices for the shopper who regularly buys high-return items. The store is unlikely to make decisions to encourage loyalty from the shoppe r who only purchases items on sale or those with little profit margin. Stores interested in high-quality, detailed market analysis should definitely consider loyalty reward programmes as one very effective way to gather such data. However, stores truly aiming at customer loyalty will place loyalty reward programmes in a category of less importance (Shabi 2003). Loyalty has been shown to develop over time through quality products, reasonable prices, and service that meets or exceeds customer expectations (Brassington and Pettitt 2003). These expectations are of particular importance. For loyalty to build, store marketing must fit with its products and services to offer a shopping experience that meets or exceeds customer expectation. For example, the expectations of a customer at Tesco are different from the expectations of a customer at Asda. Asda is a discount supermarket, and customer expectations hinge greatly on price. Tesco, on the other hand, markets itself on value and ser vice. à ¢Ã¢â€š ¬Ã…“No-one tries harder for their customers,à ¢Ã¢â€š ¬Ã‚  Tesco claims, we à ¢Ã¢â€š ¬Ã…“treat people how we like to be treatedà ¢Ã¢â€š ¬Ã‚  (Tesco 2005). It is important to develop marketing strategy, including the loyalty component, based on clear differentiation between stores, and resulting creation of realistic customer expectation (Fill 20 04). In the end, loyalty returns to the three components of product, price, and people. If all three of these are adequately executed and realistically communicated to the customer, loyalty will develop over time. METHODS AND METHODOLOGY Two main types of data analysis were performed in the course of this research. The first was secondary research, reviewing findings from previous studies of loyalty and loyalty schemes. This was taken from recent literature, including journals, news articles, websites, and books. It included literature related to loyalty schemes and customer loyalty in general, as well as res earch focused specifically on the grocery and supermarket sector. Retailers in general and supermarkets in particular were found to broadly support loyalty programmes. Studies indicate they believe these schemes encouraged shoppers to spend more at their stores. More importantly, loyalty schemes generated data that could be used for both broad and detailed market analysis. Both of these were seen as being valuable to retailers. There was concern loyalty schemes were not as effective as they were a few years ago, and that retailers have begun rewarding customers for purchases they would have made regardless of loyalty rewards. Overall, loyalty as a concept was seen as actions resulting from attitude toward and perceptions of a particular store or brand. On a retailer level, it included loyalty reward programmes in combination with the service, product selection, and price provided by the supermarket. These factors together led to a gradual development of loyalty to a particular st ore. Information culled from this initial study revealed that consumers also perceive loyalty cards and programmes as being beneficial to them. However, there is evidence of some market saturation in the loyalty sector. Consumers were not as influenced in their shopping habits as they were several years ago. In addition, repeat-purchase shopping (such as at the supermarket, where the customer buys a similar trolley each week) was most affected by product loyalty, followed distantly by store loyalty and retailer brand loyalty. With a few exceptions, loyalty programmes were not considered a comparatively major component of the customerà ¢Ã¢â€š ¬Ã¢â€ž ¢s purchase decision. The above information was used to develop a plan for a consumer and loyalty card user focus group to consider loyalty and supermarket retailers. It was hoped the group would reinforce and add to the findings of previous research. A series of questions was developed regarding brand loyalty, store loyalty, parti cipation in loyalty schemes, benefits and drawbacks of loyalty programmes, how brand and store loyalty could be increased, how loyalty schemes could be improved, and perceptions and recommendations regarding privacy and loyalty programmes. The group began with a short questionnaire to gather some basic demographic and loyalty data. Participants were then asked to introduce themselves and share the information on the questionnaire with the group. Finally, the format of the focus group was explained. The group was tape-recorded, with an observer also making notes during the session. Participants were asked a series of questions by the moderator (not one of the twelve participants), and given approximately ten minutes to discuss each question. Each was provided the complete list of questions in print before the moderator began. These were open questions, with no sample answers provided, which allowed recording of participantsà ¢Ã¢â€š ¬Ã¢â€ž ¢ uninfluenced opinions and perceptions. These responses were later grouped, where appropriate. For some questions, participants could make multiple responses; the nature of other questions required them to generate a single response. The group occasionally drifted off the subject presented, and in these cases the moderator asked follow-up or redirecting questions when necessary during the group session. Both the moderator and research observer were careful not to influence participant input by affirming or opposing their contributions; questions, including follow-up and redirecting, were open ended. For example, the moderator would ask à ¢Ã¢â€š ¬Ã…“What is your perception of privacy guarantees offered by those controlling loyalty data?à ¢Ã¢â€š ¬Ã‚  rather than à ¢Ã¢â€š ¬Ã…“Are you concerned about violations of privacy by those controlling loyalty data?à ¢Ã¢â€š ¬Ã‚  It is important to note an issue of group dynamics that effected quantitative results. First, there were three fairly dominant members of the g roup who occasionally tried to influence other group members to agree with one or more of them. In these instances, the research observerà ¢Ã¢â€š ¬Ã¢â€ž ¢s notes, in combination with the tape recording of the session, were used to determine whether the participant had willingly changed his or her view, or appeared to be placating a dominant group member. For example, one younger woman originally stated Somerfield was her favourite loyalty programme, because à ¢Ã¢â€š ¬Ã…“you donà ¢Ã¢â€š ¬Ã¢â€ž ¢t have to fiddle with points or keep track of them.à ¢Ã¢â€š ¬Ã‚  She lucidly went on to explain her distasted for tracking and redeeming points in other loyalty schemes. She was opposed, however, by a middle-aged woman, who forcibly countered each of the younger womanà ¢Ã¢â€š ¬Ã¢â€ž ¢s reasons, with an implication that tracking and redeeming points was easy and à ¢Ã¢â€š ¬Ã…“ shouldnà ¢Ã¢â€š ¬Ã¢â€ž ¢t bother anyone.à ¢Ã¢â€š ¬Ã‚  The younger woman finally changed her favourite loya lty scheme to Tesco, the same one as the middle-aged woman, but it appeared she did so more to avoid conflict than as a conscious change of opinion. Where this type of group dynamic was observed, notations were added to data (see Appendix 1). Two forms of data were collected from the group. Membersà ¢Ã¢â€š ¬Ã¢â€ž ¢ answers to each question generating numeric responses were quantified and recorded. The numeric information from these answers appears in Appendix 1 of this research. For questions soliciting names or descriptions, the most common cited were listed. Where participants did not respond to a specific question or responded in such a way that quantification was not possible, their response section was left blank. These blanks were not considered in data calculations. Items recorded were offered by group participants in response to open-ended questions; no questions offered answers. Secondly, specific comments that the researcher considered particularly relevant were noted for each question. These are used to reinforce numeric data, and are included where appropriate in the Results and Analysis section of this study. RESULTS AND ANALYSIS The consumer and loyalty card user focus group consisted of twelve adults, ages twenty-two to sixty-seven. There were five men and seven women; nine of the participants were currently married or living together and seven had children at home. One participant had an elderly parent in their care. There were no couples within the group, those with spouses attended without them. Six participants stated they did all the grocery shopping in their households, three did at least half of the shopping, and three shopped occasionally. One group member was not enrolled in any loyalty programmes, although he stated he believed his wife had had a Safeway ABC card at one time. Two group members had more than ten loyalty cards; the average number of cards per participant was 7.3. The most common loyalty schemes participants wer e enrolled in were Tesco Clubcard, Nectar, Somerfield Saver, and Boots Advantage. The questions first dealt with whether participants were most loyal to product manufacturer, particular store, store brand (chain), or loyalty programme. Group members stated strong manufacturer preference on certain products, but not on others. Several participants stated they or members of their households would only use one brand of coffee or ketchup, for example. This applied to individual products by individual manufacturers, and appeared highly personal taste. This type of loyalty did not appear to affect the overall shopping experience or retailer loyalty, except in combination with price differentiation. Enough specific manufacturer products offered at a lower price were recognised as a reason to change supermarkets. à ¢Ã¢â€š ¬Ã…“If a new store opened with what we buy for less, of course Ià ¢Ã¢â€š ¬Ã¢â€ž ¢d change.à ¢Ã¢â€š ¬Ã‚  Indeed, eleven indicated they were quite wiling to jump sh ip if another store offered the same manufacturerà ¢Ã¢â€š ¬Ã¢â€ž ¢s products at lower pri ces. The individual store was slightly more important than retailer brand. This was most important to one participant who shopped at a non-chain local grocer. This gentleman stated he was retired, and he and his wife shop several times each week. They particularly appreciated conversations with store personnel, some of whom they have à ¢Ã¢â€š ¬Ã…“known for years.à ¢Ã¢â€š ¬Ã‚  Seeing friends and neighbours was also an important part of the manà ¢Ã¢â€š ¬Ã¢â€ž ¢s shopping experience. The social and proximity aspects of the local grocer were the most important to generating store loyalty for this participant. Another participant who found individual store most important was a young woman with three small children. She indicated the convenience of the store to her home and accommodations for the children such as special trolleys were significant in her shopping decision. It would appear fr om these two examples that individual store loyalty is enhanced by specific services and pe rsonal relationship. There was significant variety amongst participants in the number of supermarkets they visited regularly. One group member shopped at four to six different supermarkets in any given month. She indicated she did this to à ¢Ã¢â€š ¬Ã…“get the good sales. You can save on different [products] at each.à ¢Ã¢â€š ¬Ã‚  Three group members regularly shop at three different supermarkets, for the same reason. Most group members indicated they shopped at two supermarkets, usually one chain or major retailer for the bulk of their shopping and a local grocer for the occasional item between major shopping trips. One participant only shopped at a store near her home, citing convenience as the primary cause of her shopping decision. à ¢Ã¢â€š ¬Ã…“I canà ¢Ã¢â€š ¬Ã¢â€ž ¢t be bother to go all over for 50p.à ¢Ã¢â€š ¬Ã‚  None of the participants recognised the need of a jolt or catal yst of some kind to change their shopping habits. Analysing these preferences, the shopper who frequented four to six supermarke ts would be the most likely to try a new store, but the most expensive to acquire as a customer who bought their entire trolley there. To keep her and most of her spend, the supermarket would have to provide extensive selection yet significantly under price its competitors on almost every item, which given the narrow profit margin on many food items is unlikely. The majority of participants, who shopped at two stores each month, would be the target customers in a loyalty change. The retailer would have to first lure them over to the new store, then keep them shopping there for a long enough period of time until a new shopping habit was established. While loyalty reward programmes accomplished this in the 1990s, it is questionable whether one would do so now, unless it offered tremendous savings. The cost to the retailer to offer such savings would then cal l into question the benefit of such program, particularly regarding short-term profitability. Only one participant was most influenced by retailer brand. This man, who is single without children, also indicated a high preference for online shopping. à ¢Ã¢â€š ¬Ã…“At Sainsbury onlineà ¢Ã¢â€š ¬Ã‚ ¦ you can get wine delivered to your door.à ¢Ã¢â€š ¬Ã‚  He also listed brand selection at any Sainsbury store as a positive factor in his shopping decision, as was similar layouts store to store, which made it easier to quickly find his products of choice. An insightful comment was made by one participant that perhaps this is why many national chains look the same inside and out. He felt this could be a way of encouraging customers to shop there, as it looks just like another store by the same retailer that they frequent. There was some discussion of negative perceptions related to retailer brand. One participant recounted a rude experience at Tesco, which influences her decision n ot to shop there anymore. Some indicated they did not shop discount supermarkets due to lack of desired products and manufacturers; although there was no particular consensus as to which particular products and manufacturers were most desirable. The perceived status of shopping at a particular retailer (primarily negative in relation to discount supermarkets), store cleanliness, and quality of store brands were all discussed. None of the participants cited loyalty programmes as their prime determinate of shopping choice, although all found some benefit in such schemes. Saving money was the prime benefit, with special offers in exchange for points a distant second. Additionally, benefits were described as less of an incentive than when loyalty schemes were first introduced. à ¢Ã¢â€š ¬Ã…“I used to pay more attention to points and such. Not so much now. If youà ¢Ã¢â€š ¬Ã¢â€ž ¢ve a card for everywhere, it doesnà ¢Ã¢â€š ¬Ã¢â€ž ¢t matter so much where you shop.à ¢Ã¢â€š ¬Ã‚  E ight group members preferred reward schemes that gave discounts directly at the time of purchase. à ¢Ã¢â€š ¬Ã…“Somerfield has good produce, and you donà ¢Ã¢â€š ¬Ã¢â€ž ¢t have to earn pointsà ¢Ã¢â€š ¬Ã‚ ¦ They give the discount when you buy.à ¢Ã¢â€š ¬Ã‚  This was significant as the most popular loyalty schemes cited by group members were those requiring redeeming points rather than those offering discount at time of purchase. Three participants preferred point reward schemes, primarily due to larger rewards. à ¢Ã¢â€š ¬Ã…“Boots gives 4p. It doesnà ¢Ã¢â€š ¬Ã¢â€ž ¢t get better. One group member had no preference regarding either scheme. The prime drawbacks of loyalty schemes included having to count and redeem points, forgetting the card, and privacy concerns. The first two of these were not presented as major drawbacks, but more as minor irritations. Four group members disliked having to earn a certain number of points to quality for a reward, as well as the process of re deeming their rewards. It is significant that all four stated this did not keep them from participating in points-earned reward programmes. Privacy, however, was a concern amongst at least six of the participants, who felt the programmes collected a significant amount of information. Only one of these indicated he felt the information to be à ¢Ã¢â€š ¬Ã…“Very personal,à ¢Ã¢â€š ¬Ã‚  whilst ten participants found the information to be à ¢Ã¢â€š ¬Ã…“Somewhat personal.à ¢Ã¢â€š ¬Ã‚  It is of note that participants first discussed the amount of information collected, then how personal the information. Several group members became more concerned about privacy as the conversation progressed. This was particularly true of three group members who appeared to have little recollection or had not much considered the information they were revealing to loyalty card retailers. à ¢Ã¢â€š ¬Ã…“Did you have to put your employment on the application? I donà ¢Ã¢â€š ¬Ã¢â€ž ¢t remember that. It was so long ago.à ¢Ã¢â€š ¬Ã‚  à ¢Ã¢â€š ¬Ã…“But theyà ¢Ã¢â€š ¬Ã¢â€ž ¢re not allowed to put it out, are they?à ¢Ã¢â€š ¬Ã‚  Several agreed they were more aware of privacy issu es since Home Secretary David Blunkett brandished a Nectar card and raised the issue earlier this year. Most group members found the organisations that control loyalty data to be at least à ¢Ã¢â€š ¬Ã…“Somewhat trustworthy,à ¢Ã¢â€š ¬Ã‚  although none could name the controlling bodies of Nectar or other multi-retailer programmes, when this was brought up by a group member. As discussion progressed, several participants indicated they were more comfortable with an individual retailerà ¢Ã¢â€š ¬Ã¢â€ž ¢s loyalty scheme than one run by a third-party company. None indicated, however, that this concern had or would affect their purchasing and shopping decisions. Participants believed the main use of loyalty cards was to encourage them to shop more at a particular store. They felt the store then rewa rded them for spending more money. Discussion at one point drifted off into how much reward was offered by different stores. The conversation then moved to the targeted advertisements and coupons all participants agreed they had received in one form or another. Of note the group member who did not have any loyalty cards also indicated he received some targeted advertising, although he could not trace it to a loyalty scheme. Most participants found these advertisements helpful, and believed they assisted in increasing store loyalty. One participant was somewhat offended by the mailings, although she used the coupons and sales information provided to plan her purchase decisions. Two participants did not comment during the discussion. There was brief mention of using information from loyalty cards to plan sales at the close of the dis cussion. It is of note that none of the participants mentioned customer profiling or data analysis as a reason for loyalty schemes. They were much more f ocused on reasons that truly influenced customer loyalty. Group members felt that price and product were the two keys to improving customer loyalty, with eleven mentioning price and ten mentioning higher quality products as leading to improvements in loyalty. Participants stated they also preferred discounts at the register as the means of receiving loyalty rewards, although most shopped supermarkets with points earned towards rewards schemes rather than those with discounts. Several mentioned the need for courteous and informed staff, particularly who could and would assist customers when asked to do so. One participant had had a particularly unpleasant experience in a dirty store during a visit out of town, and mentioned she would never go in that particular store again. CONCLUSION This research set out to evaluate how loyalty was created, focusing on the supermarket industry and their use of loyalty reward programmes. Literature and previous research on loyalty, loyalty reward schemes, and the supermarket sector was reviewed to achieve an overview of topics, controversies, and trends. A focus group of supermarket consumers was then developed and held to discuss loyalty and loyalty-related issues. The focus group consisted of twelve participants, who discussed questions presented by a moderator. The questions were open, requiring the participants to generate answers rather than pick from a list. Data gathered from the participantsà ¢Ã¢â€š ¬Ã¢â€ž ¢ discussions was quantified, analysed and presented. The most significant finding was that group members considered quality and price, and to some extent service, as more important to customer loyalty than loyalty programmes. Most used loyalty cards during their regular food shopping, but indicated the cards were more likely to reward them for something they would do regardless, rather than be a catalyst for new or changed behaviour. This finding suggests loyalty card schemes should not be viewed as a w ay to build customer loyalty so much as a way to access valuable, relevant customer and market data. This places loyalty reward programmes at a different position within organisationsà ¢Ã¢â€š ¬Ã¢â€ž ¢ marketing and loyalty strategies. Another finding was the importance of loyalty to manufacturers of specific products. This was by far the most passionate of all the group discussions. While most participants were only strongly motivated by a few products, their loyalty to these products was high. The group had lengthy discussion of coffee and ketchup, in particular. After manufacturer product, the group was most loyal to individual store, rather than retailer brand. Personal relationships, special services, and convenience were all factors in loyalty to a particular store location. Most participants focused on the benefits of loyalty programmes, with little awareness of how their privacy could be violated or information misused. They did state they felt somewhat safe with the a mount of information and personal nature of the information they had provided to loyalty programme operators. All group members except one agreed that quality products at a lower price would cause them change stores. Quality of product was stated to be more important than selection within the supermarket sector, although none of the participants stated they had experienced significant selection issues in the past, so this may not have been properly considered. In general, these two components were considered the basis for establishing and improving customer loyalty. Loyalty programmes were simply icing on the cake, so to speak. Group members preferred loyalty programmes that gave them discounts at the register to those that accrued points, if the value of the rewards were equal. Otherwise they preferred the programme that provided the highest reward. Staff and service were also recognised as important contributors to store loyalty. Overall, product, price and service were seen as the keys to customer loyalty by group members. Loyalty reward programmes were appreciated, but not considered primary in creating or maintaining customer loyalty. BIBLIOGRAPHY Brassington, F., and Pettitt S. (2003). The Principles of Marketing, 3rd Edition. Financial Times Management, London. Byrom, J. (2001). The role of loyalty card data within local marketing initiatives. International Journal of Retail Distribution Management, vol. 29, no. 7, pp. 333-342 Byrom, J., Hernandez, T., Bennison, D. (2001). Exploring the geographical dimension in loyalty card data. Marketing Intelligence Planning, vol. 19, no. 3, pp. 162-170. Cross, R., and Smith, J. (1995). Customer Bonding. NTC Publishing, Lincolnwood, IL, USA. Fill, C. (2004). Marketing Communication: Contexts, Concepts and Strategy. Prentice Hall, London. Graeff, T., Harmon, S. (2002). Collecting and using personal data: consumersà ¢Ã¢â€š ¬Ã¢â€ž ¢ awareness and concerns. Journal of Consumer Marketing, vo l. 19, no. 4, pp. 302-318. Mistry, B., (2005). A question of loyalty. Marketing, London, 2 March 2005 [online]. Available at www.emeraldinsight.com, accessed 26 March 2005. Quilter, J., (2005). Why Boots must take Advantage of its data. Precision Marketing, London, 11 February 2005, p. 11. Rowley, J. (2005). Building brand webs: Customer relationship management through the Tesco Clubcard loyalty scheme. International Journal of Retail Distribution Management, vol. 33, no. 3, pp. 194-206. Shabi, R. (2003). The card up their sleeve. The Guardian, London, 19 July 2003 [online]. Available at www.guardian.co.uk, accessed 26 March 2005. Tesco (2005). Tesco. Company website. Available at www.tesco.com, accessed 26 March 2005. Uncles, M., Dowling, G., Hammond, K. (2003). Customer loyalty and customer loyalty programs. Journal of Consumer Marketing, vol. 20, no. 4, pp. 294-316. Woodruff, R., and Gardial, S. (1996). Know your customer: New approaches to understanding cus tomer value and satisfaction. Blackwell, Oxford. APPENDIX 1 FOCUS GROUP QUESTIONS AND RESULTS 1.What is more important to you, the particular manufacturer of product you purchase, prices of products at a store, the specific store in which you shop, the retailer or chain of store in which you shop, or the loyalty reward programme available at a retailer? Prices5 Manufacturer (product selection)4 Specific store2 Retailer / chain1 Loyalty programme0 2.Who are your favourite manufacturer(s)? Favourite supermarkets? Favourite loyalty programmes? Manufacturers: Various too many to group / list Supermarkets: Tesco4**Note: One participant had Boots3two favourites. Sainsbury2 Somerfield1 Asda1 Other2* Loyalty programmes:Tesco7 Boots Advantage3 Nectar1 Somerfield1 Note: One participant recorded for Tesco originally cited Somerfield. 3.At how many supermarkets do you regularly shop (more than once per month)? Four or more1 Three3 Two 7 One1 4.What might influence you to shop at a different store or try a different manufacturerà ¢Ã¢â€š ¬Ã¢â€ž ¢s product? Price9 Quality of products9 Coupon or discount7 Recommendation from friend / relative5 Advertisement4 Convenience2 5.What type of loyalty programme do you prefer? Discount at time of purchase8 Accumulating points3 No preference1 6.What do you think are the benefits of loyalty reward schemes? Saving money12 Special offers 5 7.What are the drawbacks? Privacy10 Keeping track of points 4 Having to carry the card 1 8.How much information do you think shops collect through loyalty schemes? Significant information7 Some information3 Little information0 Not sure2 Note: Four participants were originally à ¢Ã¢â€š ¬Ã…“Not Sure.à ¢Ã¢â€š ¬Ã‚  Two participants who first stated they were à ¢Ã¢â€š ¬Ã…“Not Sureà ¢Ã¢â€š ¬Ã‚  changed their opinion through the course of group discussi on, one to à ¢Ã¢â€š ¬Ã…“Some Informationà ¢Ã¢â€š ¬Ã‚  and one to à ¢Ã¢â€š ¬Ã…“Significant Information.à ¢Ã¢â€š ¬Ã‚  9.How do you think they use this information? Encourage customer to buy there8 Send advertisements5 Decide which items to put on sale4 10.How personal do you consider data that could be collected through loyalty schemes? Very personal 1 Somewhat personal10 Not personal 0 Not sure 1 11.What is your perception of privacy guarantees offered by those controlling loyalty data? Very trustworthy1 Somewhat trustworthy8 Not trustworthy2 Not sure1 12.If you were a retailer, what would you do to improve customer loyalty? Lower prices11 Higher quality products10 Discounts at register 9 More products 4 Train staff (courtesy) 4 Clean store 1