Final Draft

Topics: Loyalty program, Marketing, Tesco Clubcard Pages: 6 (1707 words) Published: February 16, 2015


Pre-Sessional English Programme

Written Assignment Final Draft

August 2014

Student Number: 140620263
Student Name: WEI-CHENG SU
Group: INU 1832

Assignment title: To what extend supermarket loyalty cards are advantageous to the customers Assignment title number: 7

Word Count: 1499
To what extend are supermarkets loyalty cards advantageous to the customers In the modern society, more and more supermarkets are founded, a slightly different price level will impact shoppers decide whether they buy or not. As a result, these stores have to decide new strategies to lure and retain people consuming in their supermarkets. Loyalty cards are produced from this fierce competition in market, companies design a variety of loyalty programs to become their weapon to stand out in a crowd. Currently, all of the chain supermarket have their loyalty program. Supermarkets provide loyalty cards to reward their customers, which depending on how much they spend in the store, and trying to attract their customers continue shopping in their shop. However, the loyalty cards seem like a win-to-win systems, buyers and sellers both are advantageous from it. Moreover, when the first national grocery shop Clubcard was launched on 13 February 1995 by Tesco, the spokesman of the firm claimed that the purpose of the loyalty scheme was not to draw customers back from competitors, but it is a way to appreciate their customers (Peck et al., 2013) In fact, the loyalty programs are betraying customers. This essay will argue that loyalty cards are not advantageous to customers, it will only exploit more profits from them.

Loyalty schemes could not be benefit to purchasers, but it can help firms getting more profits from punters. From the viewpoint of the retailers, in spite of they always said these programs is economical for consumers, the truth is that they want to use this system to make people stay purchasing in their stores. Reichheld and Sasser (1990) computed that customers retention has powerful influence on profitability;A consumer who has kept shopping 7 years in a same company, the profitability can be higher to 377 per cent than a customer who were enticed by merchandises or services in recent times. The authors also calculated that Only 5 per cent shoppers who maintained long-term customer's relationship with the company were kept by supermarket , profits can rise 75 per cent for the organisation. This is the motivation that supermarket design loyalty programs, they want to use these programs such as voucher, coupon and bonus to encourage their members consume more frequently and broadly in their stores. Furthermore, when people swipe their loyalty cards, this action is what firm are expecting. Though loyalty cards, buyers' purchasing habits were recorded, companies use this data to design customise advertisements, then send it to their customers to attract them coming to purchase. For example, one of the U.K. biggest grocery chain stores, Tesco, using loyalty data which were collected from their members to personalise at least four million different types quarterly journal (Reinartz and Kumar, 2002: 88). In addition, as Humby et al., (2008: 12) pointed out that companies use loyalty schemes to collect consumption habits from customers, and use it to analyse the current trends of the market. It is important for a large organisation, because it cannot change the approach of selling easily, they have to know what consume behaviour will be changed before it change. However, the most serious problem is about the invasion of privacy. People may lost their personal profile, for the sake of small discount or points which offered by loyalty cards. There are no companies could guarantee protecting their customer files safe. According to the website (http://www.epic.org/privacy/profiling/ ) of the Electronic Privacy Information Centre(EPIC) mention that the risk of divulging personal information is risen, because there is no...
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