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Marketing MA Management and International Business

Extracts from this document...

Introduction

Marketing MA Management and International Business Topic: Retail Loyalty Sona Petrosyan Student number: 33368121 Date: 13/12/04 Introduction CRM is a term for methodologists, technologies and e-commerce capabilities -used by companies to manage customer relationships. (Foss, 2001:1) It is also called customer management, customer care and sometimes customer centricity or customer-centric management. (Brown, 2000:1) All the names and definitions of CRM have customer, as its core-it is the management of customer relationships, which attempts to revolutionize marketing and reshape entire business models. To survive and grow the business must make a profit. To make a profit it has to find people who are willing to pay more for its products/services than they cost. Therefore profit comes from customers. C.Daffy, (2001:13) The idea of CRM is not new-it was the way the local shopkeeper treated his customer-he knew him, knew what was happening in his life, what he was buying, (one to one marketing?) etc. What is new though is that nowadays the retailers try to establish dialog with tens of thousands or even millions of customers in an attempt to understand them better, their individual needs and maximise the lifetime value of this relationship. ...read more.

Middle

As a result retailers seek different ways of improving sales and profits. They are adopting different loyalty schemes that aim to: a) Build greater customer loyalty and retention; b) Develop methods of creating long-term relationships c) Lead ultimately to increased sales and profits (Gilbert, 1999:128) In the 1950s the Co-op led the way with the cash dividend schemes ('divi') for Co-op Society members, who received money back in proportion to the amount they had spent, similar to the way today's loyalty cards operate. (http://news.bbc.co.uk/1/hi/business/52056.stm) Tesco became the first supermarket to issue loyalty cards in 1995, with the launch of its Clubcard.It was followed by Sainsburys'Reward Card. and afterwards most major companies followed their example. There are now several other cards, including Boots Advantage Card, Nectars, Debenhams (Omar, 1999) Some of these programs brought major competitive advantage in the early stages of induction but they ended up providing little advantage to the retailers. Why did this happen? First of all, too many cards have been launched on the market; they have become more like a trend than a long-term strategy. The list of retailers launching loyalty cards is growing day by day. ...read more.

Conclusion

It has now been dropped for the Nectar card scheme, which itself has been weighed down by difficulties since its launch. Conclusion In order to survive in today's highly competitive environment the businesses try to form good loyal relationships with the customers. For this purpose the retailers launch various loyalty programs aimed at getting loyals customers for lifetime. The companies can greatly benefit from using the loyalty schemes, but because of the reasons mentioned above (the number of cards, poor planning, customers' distrust, high costs, inadequate use of information) these schemes do not do much in sense of gaining customer loyalty. So, the retailers should not place too much trust in them. Moreover, nowadays the consumers are surrounded with great variety of choices, offers and incentives, which makes it extremely difficult to be loyal to one retailer for long period. Even the 'habituals' ("lazy loyalty" by C.Daffy) who can be 'loyal' will switch to a smarter competitor who might recognize the situation and make switching easy. So, the retail loyalty in my opinion is" Holy Grail" and the businesses can only try to achieve slight margin of preference, temporary competitive edge by retaining the customers with good quality products, services and low prices. This can add up towards a massive contribution to the financial success of the business. ...read more.

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