This section of the paper sort to discuss some of the current research findings in topic.
According Baker M (2000), loyalty schemes is the “Overt attempt of exchanging partnership to build a long term relationship association, characterised by purposeful co-operation and mutual dependence on the development of social, as well as structural bonds with consumer”.
Many marketers agree that by reducing customer’s to competitors defection by only 5 per cent, companies can improve profits by anywhere from 25 per cent to 95 per cent. There is no question this will be a great advantage and could benefit any retailer. It is for this very reason why consumer’s relationship marketing and using tools such as loyalty scheme is important to retain consumers.
The goal should be to deliver long-term value to consumers and to measure success in long-term customer satisfaction (Berelson J.G and Steiner R.A, 1964 ). This requires that the company’s departments work together as a team to serve the consumers.
However, before going into consumer’s relationship using loyalty cards it is vital to understand that every consumer is unique. Although Tesco might want to develop a consumers relationship they should understand that not all consumers are wealth while to be in a relationship with.
“When it comes to relationship marketing… you don’t want a relationship with every consumer… in fact, there are some bad customers (the objective is to) figure out which consumer are worth cultivating because you can meet their needs more effectively then anyone else” (Chisnall, P.M 1995).
Other researcher such Brian T and Peter G P (1996) argue that there is no question about the importance of returning consumers. It is the way in which retailer collect the information that is unethical. They point out that consumers give out their private information without knowing that they are doing so. Day R L (1984) also point out that the argument that retailers are using the information for the benefit of consumers in meaningless because in any case consumers will always return to make a purchase if they like the service the get from retailer such as Tesco. Therefore it would benefit retailers to focus on service to consumers in order to return them.
2.2 RELATIONSHIP MARKETING AND LOYALTY
Relationship marketing is the process of creating, maintaining and enhancing strong, value-laden relationship with customers and other stakeholder (Kotler 1997). The goal of relationship marketing is todeliver long-term value and measure of long-term customers satisfaction. This involve collecting information (using loyalty card) about how often consumers visit this the shop, what products they purchase and so on.
By so doing the company can try to deliver the products which the consumers are likely to purchase. The loyalty cards the cornerstone of this relationship marketing, as it is the one, which hold consumer data.
According to Kotler (1997), the underpinning principal business that driver’s consumer relationship marketing in royalty scheme is understanding of consumer behaviour.
2.3 CONSUMER BEHAVIOUR
Although the purpose of the study was the investigation of consumer loyalty, it would be pointless to examine only loyalty as relationship marketing involves consumer behaviour. In the marketing context, consumer behaviour refers not only to the purchasing activities but also to any pre-purchase and post purchase activities. Engel (1993), defines consumer behaviour as those acts directly involved in obtaining, using, and disposing of economic goods and services, including decision processes that precede and determine these acts as shown in the figure below.
2.4 CONSUMER BEHAVIOUR AND SELF-IMAGE
Consumer behavior does play a big part in consumer purchasing decision. Factors such as social, culture, personal and psychological will influence the consumers, as this will determine what self-image the consumers’ holds about...