Loyalty programs are structured marketing efforts that rewards thus encourage loyal buying behaviors. Retail chains issues a card similar to a credit card referred to as loyalty card, rewards card, points card, advantage card, or club card. A holder of the card identifies him/herself as a member of in a loyalty program. This essay will give an overall conclusion after reading the case as well it will comment on the statement “CVS believes that segmentation enables merchandising, marketing, operations, and other teams to have a common language when talking about their customers.” The essay will explain why collaborations between retailers and information specialists are valuable. The essay will give views on how Kroger should tailor its retailing strategy to take into account the seven main segments it had identified. The Seven-Eleven Japan’s nanaco program will be explained in the essay. Included in the essay will be ideas how Tesco should adapt its customer loyalties for the different countries it operates. Views on why Wal-Mart chooses not to use customer loyalty programs.
After reading this case, it is clear that loyalty programs are important marketing tools. Nevertheless, service provided is a superior marketing strategy. According to the various segments from the case, even without the programs the segments would still exist. This argument is based on the fact that the largest retail chain in the US is Wal-Mart but it doesn’t have loyalty programs (Nigam par.1).
“CVS believes that segmentation enables merchandising, marketing, operations, and other terms to have a common language when talking about their customers.” CVS started their loyalty program in 2001. Members of the program benefits from 2% of purchases which they receive as ExtraBucks and $1 to be spent on front end products for every two prescriptions purchased. CVS is willing to experiment with new consumer services including touch points, payment systems, technologies and third party partnerships. CVS have managed to segment its consumers by lifestyle and life stage through the information collected using its loyalty program. With most of their customers being women, there are three groups of women included in the segmentations. These segmentations are Caroline, Vanessa, and Sophie. Caroline is a young single or just married working woman aged 18 to 34. She shops for affordable beauty products. Vanessa is that CVS customer having little free time juggles a bit and works as well. She has kids and likes the drive through pharmacy. Sophie is a 55+ empty nester regularly shopping for discounts. Mostly she buys over the counter and a major customer of prescription drugs. To accommodate its main customer with an average height of 5 feet 4 inches, there was need to lower its gondola and shelf height to 60 inches. Due to its customers having limited time, CVS decided to make the forma easy to shop by using color codes. In is store in Manhattan, it incorporated elements gleamed from shopper insights. For convenience (Nigam par. 4).
The successful collaboration between Carrefour France and Emnos business intelligence firm made Carrefour to extend the relationship to Spain in an aim to becoming more customer-focused by segmenting customers, developing better assortments, and improving pricing and promotion policies. This led to Emnos opening a branch office in Madrid to better serve Carrefour Spain. A relationship with Retalix helped Carrefour to implement loyalty software for the retailer’s French hypermarkets. The software integrates and manages loyalty and promotion functionality. The system tracks customer data online and real-time transmission of store transactions to a centered data base. Carrefour uses Retalix in other markets, including its convenience stores in Italy (Nigam par. 5).
Kroger should ask for more information from Kroger card holders. According to their current loyalty program, customers have to visit the stores for a few times before being grouped to a particular segment. They should ask for customer’s salaries so as to determine who is to be grouped as budget shoppers. Kroger should request for customers occupations to be clear who they segment as convenience shoppers. Family information would help in determining the family-focused segment. Quality shoppers segment can be set by information from the shoppers. Grab and go shoppers can be shown by the time spent in the stores by a customer. Information on the traditional shoppers can be fetched on the sales of fresh foods. Low-fat products are purchased by the watching-the-waist-line segment in their pursuit for healthy lifestyle. The sales of this products are indicative of the segment belonged (Berman 23).
Due to Japanese people being reluctant in using credit, Japan is a cash-based economy. The money nanaco avoids paying interchange fees. The nanaco is tied on a loyalty scheme in which the user earns 1 yen for every 100 yen used in purchases. It is available either in smart card or a mobile phone format. It is waved over a point-of-sale reader to complete a purchase. The program targets frequent shoppers, speeds up register transactions, and provides a convenient payment method. Nanaco cards or mobiles can be recharged with money at group stores and ATMs (Berman 26).
Tesco should adapt its customer loyalties for the different countries where it operates by standardizing customer loyalty every where. Tesco should make the deal to be as in Britain throughout. In the other countries it should be such that one point is collected for an amount equivalent to £ 1 used by shoppers. For example for every 10.21 China Yuan Renminbi spent, 1 point is earned. Shoppers must collect 150 cludcard points to qualify for a redeemable clubcard voucher. The voucher should be redeemed either at stores or online. As in Britain, the voucher should be redeemable as discounts for magazines, travel, entertainment, and restaurants. The segments should be set differently for each country depending on the diverse lifestyles and shopping baskets.
Wal-Mart has not pursued a loyalty program because it has a localized approach to merchandising and marketing its stores. The approach is working for them. Wal-Mart collects shoppers’ insights through high-level consumer segment research, transaction analysis, and category management. Wal-Mart opts to tailor its assortment to local needs without sacrificing on prices rather than issuing out mails and giving exclusive discounts. Wal-Mart has segmented its shoppers by ethnicity, income and geography. Initially it had six segments: African Americans, affluent, empty nesters, Hispanics, rural and suburban. Due to its focusing on ethnic differences, it continues to roll out store of the community initiatives that provide food and merchandise to match local tastes. With this strategy, Wal-Mart can personalize its offer to be more like a local neighborhood store than a big corporate entity. For example, in May 2008, Wal-Mart opened its first store that was designed from the start to target the Hispanic community in the Dallas suburb of Garland, Texas. I agree with Wal-Mart’s approach for as far as the consumers are comfortable with what they get there is no need for large discounts. Getting what one needs with no extra struggle is all a consumer needs. In a place where many of the residents are the African Americans, needs a market in which most of the goods offered are what they need.
Works Cited
Berman, Barry and Evans, Joel. Retail Management: A Strategic Approach. New York. Prentice Hall, 2006. Print.
Nigam, Shashank. Five lessons from the most innovative loyalty programs in the world-inspired from loyal 2010. Web.