Consumer_Loyalty_Cards

Running head: CONSUMER LOYALTY CARDS 2 Abstract Relationship Marketing refers to a customer’s purchasing history. According to Wikipedia, relationship marketing is defined as market development from campaigns that give emphasis to customer retention, customer satisfaction, and transaction of sales. The overall goal is to retain customers, attract new customers, and increase profits. The process known as the customer relationship management builds and maintains relationships by managing detailed information about a customer (Wikipedia, 2011). How can satisfied customers be loyal customers' How can we ensure a customer’s return' Most companies hone into deeper interactive approaches by offering loyalty cards. The effectiveness of loyalty cards and their usefulness to consumers and retailers continue to be a topic of discussion in today’s business world. CONSUMER LOYALTY CARDS 3 Consumer Loyalty Cards Marketer’s use communication tools to build closer customer relationships (Kotler, 2010). How can a company deliver greater value to its customers' There is an assortment of factors that affect consumer behavior. Factors such as culture, social, and psychological influence the consumer’s buying decisions (Kotler, 2010, p 193). Marketer’s use these behaviors to promote their products. Most companies focus on target marketing to create value for customers. Smaller market segments reach the customer more efficiently and effectively with products or services that meet their needs. Although, a market can also be segmented, it does not mean that the customer will purchase the same or similar product in the future from the same retailer. Retailers must reach out to gain a long term strategy to gain and retain loyalty from its customers. Loyalty cards are used to capture personal information and build a customer buying profile. The cards are used to keep tabs on what you purchased, how often you shop, and what your buying preferences are (Bosworth, 2005). The information is also stored and used in the future for invites to events, to determine the dollar amount spent on specific items, such as wine or toothpaste, or other shopping habits. The data that might be collected when a consumer uses this card is: 1) name, 2) phone number, 3) age, 4) gender, and 5) user status. This information is used to determine a customer’s loyalty and develop customized advertisements (Office, 2008). The name identifies who purchased the products. It is also used to offer discounts on the current purchase, or allocation of points to be used for future purchases. It can also be used to determine psychographic, geographic, and demographic marketing segments (Kotler, 2010, pps 192-198). CONSUMER LOYALTY CARDS 4 Consumer Loyalty Cards Obtaining a phone number in the loyalty card program gives the company the opportunity to contact the customer real time with discounts or limited specials. The database is reviewed often to hone in on recent purchases to influence more product purchases. It is used to determine geographic marketing segments (Kotler, 2010, p 193). A customer’s age is another variable in the demographic market segmentation. It determines the needs and wants of a customer. However, marketers have to be careful against building stereotypes when using this segmentation (Kotler, 2010, pps 193-194). Gender segmentation is used when customers purchase clothing, cosmetics or magazines. This market segment is used to offer new lines of products and reach a larger target market more efficiently (Kotler, 2010, p 194). User status is another variable used in the market segmentation. This market segment is formed into groups; non-users, potential users, first time users or regular users. Generally, this refers to bridal registries or groups facing life changes. The markets goal is to reinforce and retain customer relationships. Analyzing buying patterns starts with a customer’s loyalty. It is also a quest to maximize customer relationships. Loyalty cards develop growth in the market and maintain customer satisfaction. However, it does not guarantee a customer’s return. It can help companies determine a better understanding of customer segments more efficiently. The effectiveness of loyalty cards and their usefulness to consumers and retailers will retain customers, attract new customers, and increase profits. Although, this practice is common among independent retailers, unfortunately, it is at the expense of a consumer’s privacy. CONSUMER LOYALTY CARDS 5 References Bosworth, M. H. (2005, July 11). Loyalty Cards: Reward or Threat' Retrieved February 8, 2011, from www.ConsumerAffairs.com: http://consumeraffairs.com/news04/2005/loyalty_cards.html Kotler, P. (2010). Principles of marketing (13th ed.). Upper Saddle River, NJ: Pearson Publishing Company. Office, I. L. (2008, July 29). Data Protection Authority Fines Supermarket for Misuse of Loyalty Card Information. Retrieved February 10, 2011, from http://www.internationallawoffice.com/Newsletters/detail.aspx'g=8b2059b8-dd77-48b2-a250-1447625464a0 Wikipedia. (2011, January 9). Retrieved February Tuesday, 2011, from http://en.wikipedia.org/wiki/Relationship_marketing