Bsa_310_Frequent_Shopper_Program

Frequent Shopper Program BSA/310 December 2, 2010 Table of Contents Table of Contents 2 Information about Frequent Shopper Program 3 Legal Considerations 3-4 Ethical Considerations……………………………………………………………………......4 Security Considerations…………………………………………………………………….4-5 Financial Analysis……………………………………………………………………………5 Conclusion 5 Reference page 6 Turnitin Originality Report…………………………………………………………………...7-8-9 Information about Frequent Shopper Program Kudler Fine Foods frequent shopper program was designed to reward customer loyalty. The program is based on the frequency of shopping and a shopper’s spending levels. Such programs are used as marketing strategies “enabled by point-of-sale technology to record and store customer purchases in exchange for rewards” (Appel, p. 156, 2006). In Kudler’s development of this program, web-based consumer shopping (also-called business-to-consumer) programs will be used. By applying web-based advertising, cost reductions, and increased consumer awareness can be achieved. The sales and marketing goal of this sustainable frequent shopper program is an increase of 5% in revenue. It is estimated that this approach will yield the desired result within 12 months. An analysis of the legal, security and ethical considerations of the program is undertaken by Kudler Foods to facilitate its success. Legal Considerations Consumer trends will have to be studied, so that the program can function smoothly and meet its highest potential as a marketing tool. The use of this information may also provide for a better shopping experience for Kudler’s customers. “Market research and demographic data can be used to better target products and produce better or customized products; such data are becoming increasingly valuable” (National Research Council, p. 156, 1994). Legal issues that surround customer privacy have received increased attention in response to the collection of this type of data. It is important that Kudler consider these legal issues and treat the information collected to protect both themselves and the public interest. The information collected must be employed for only the specified purposes, or legal action may ensue. This requirement demands that employees handling information be trained about all aspects of the legal issues at hand. Ethical Considerations Electronic commerce applications have been demonstrated to reduce costs as well as increasing sales. E-commerce also can provide Kudler’s customers with additional shopping opportunities, leading to better profit margins for Kudler. However, there are increased concerns regarding privacy issues when electronic databases, such as these, are maintained. Kudler wishes to use the IT system to “gather personal data about customer bases, and use it to support vital business functions, such as the authentication of individuals requesting service, verification of credit and accounting information, delivery of services and goods, marketing, decision-making and law enforcement” (Appel, p. 156, 2006). In order to do so effectively Kudler’s employees must be well-trained in those duties which limit access to and use of personal information. Security Considerations Database design and development are not usually focused on the concerns of access to and protection of personal information held in those databases. This information is sensitive as it may be used for identity theft and other types of fraud. Frequent buyer programs have been shown to release information to manufacturers, pharmaceutical companies, insurance companies, and even employers. (Appel,2006). An individual’s purchases have to be considered as information that is to be held private and secure. This all stems from the concern an individual’s information may be used in undisclosed and unauthorized ways. Kudler must design and develop their database and e-commerce sites to be fully secure, so that they meet the ethical expectations of their customers and the marketplace. Financial Analysis The cost for startup of the frequent shopper program is minimal. Electronic, word-of-mouth and paper fliers are all inexpensive forms of advertising that may be used. A partner organization will be used to reward customer loyalty. Rajiv and Bell argue that “customer retention costs are generally lower than customer acquisition costs, companies are better off focusing attention on their more loyal customers especially since the top 20% of customers account for 80% of revenues and often more than 100% of profits” (p.180, 2003). Marketing expenses will be reduced by targeting customer loyalty through rewards and the accompanying sales increases that comes from these customers’ increased spending. Conclusion This frequent shopper tool can be an effective way of accomplishing the difficult task of bringing in new customers. It also allows for retention of the existing customer base Kudler already enjoys. Reward points may be used as exchange for luxury items, enticing customers to remain loyal to the business. Public relations can be kept good for this program by addressing privacy concerns during the design and implementation phases. By allowing customers to be aware of the specific uses of the information gathered in this program, conflicts can be minimized. Information security and customer privacy must be paramount for the program to remain successful. References Apollo Group, Inc. (2007). Kudler Fine Foods. Kudler Fine Foods Shopping the World for the Finest Foods. December 2, 2010. BSA/310. https://ecampus.phoenix.edu/secure/aapd/cist/vop/Business/Kudler/Internet/KudlerPort.htm Appel, F. (2006). The study of database design must address privacy concerns. Info, Comm & Ethics in Society 4(3), 155-161. Retrieved December 2, 2010, from http://www.emeraldinsight.com/Insight/ViewContentServlet' Filename=/published/emeraldfulltextarticle/pdf/3640040304.pdf http://search.ebscohost.com/login.aspx' direct=true&db=bth&AN=16399192&site=ehost-live National Research Council (1994). Realizing the information future: the Internet and beyond. Retrieved December 2, 2010, from http://books.google.com/books' id=TJCoXffSAzkC&printsec=frontcover Rajiv,L. & Bell, D. (2003). The Impact of Frequent Shopper Programs in Grocery Retailing. Quantitative Marketing & Economics 1(2), 179-202. Retrieved December 2, 2010, from EBSCOhost database Business Source Complete