Marketing is a central idea in the world of business since the customer is made aware of the products and services a business offers. This is very important since information and the way that particular information is relayed to the customer gives them the chance to buy or not hence profit or loss for the various businesses. Currently a number of marketing strategies have been developed to aid in the process of reaching a customer in order to close a business deal. In the past many believed in face-to-face marketing, print media, and such like rudimentary channels but currently various ideals have developed such as direct and digital marketing.
One of marketing gurus, David Ogivly once said that “One day, all agencies will be direct marketing agencies”. In as much as this phrase was correct then in his futuristic mind, the problem is that communication in the marketing strategies developed and used by the agencies in his days might not have been sufficient and effective. Berry suggests that in a rephrase of Ogivly’s statement, “One day, all communication agencies will embrace direct marketing”. This is according to Berry will be the major idea in the modern world of business (1998).
Direct marketing is defined as an interactive system of marketing that uses a variety of advertising media to generate a measurable response or transaction at any point. According to Berry, direct marketing seeks to establish a dialogue since it asks for responses and expects the same. It employs one or more advertising media and thus is not in itself an advertising medium but a system of marketing which is a subset of total marketing (1998).
Loyalty systems are a very instrumental tools that influence consumer preferences and according to the UTalk Marketing.com, the “average shopper belonging to two schemes and 76%, not unsurprisingly, is said to favour brands that provide rewards”. Answers.com defines loyalty program as a “marketing program designed to enhance brand loyalty by cultivating an ongoing relationship between a marketer and customer. Successful loyalty program encourages the customer to buy frequently, in order to increase the amount spent each time, and to concentrate all or most of their related purchases on that brand.” A good number of the loyalty programs usually offer perks for the membership in a club or program and reward purchases.
Loyalty programs are structured marketing efforts which carry rewards with them and hence give encouragement for loyal purchasing behaviour and these results to potential benefit to the firm. This program can be implemented in the form of a plastic card that identifies each card holder and his or her account normally visually similar to a credit or debit card. Contrasting direct marketing and digital marketing, there is a method used when personal mails are delivered through post and this is referred to direct mail. The key factor here is the personal address where a named person, at a specific location or address. It means that a letter of some description is sent to an identified person who is also a potential buyer. This is very involving since a firm has to identify its potential clients and has their mail addresses. Advertising as part of a marketer’s job involves working to try and establish a good relationship with consumers or even the potential clients. According to MacRury, advertising as a tool, bought and used to help build and maintain a profitable market relation (2009). Many consumers have objects and ideas coming to matter in so far as they be culturally intelligible probably to becoming part of a lifestyle as so is a loyalty scheme.
MacRury states that “relationships between consumers and products can be classified on a continuum” and at an end of such a relationship, the interaction ay involve emotionally intense or exciting but ingrained as routine (MacRury, 2009). Brands such as Asda or Walmart currently offer what is termed product coverage in a number of areas of life such as food, finance and even travel. These brands provide a client with a long standing focus for the routines of a family or individuals to an extent that they might provoke a sense of belonging. MacRury says that consumers become heavily involved with such brands due to the loyalty schemes that encourage frequent shopping visits.
The schemes that have been currently used to retain customers by major industries and wholesalers is quickly gaining fame. According to Frei, most organizations create customer retention schemes and then mistakenly call them loyalty programs (2009). When companies pay customers to try out their products and services, its part of customer acquisition program but when these selling groups pay customers to remain customers then this is a customer retention program. This implies that when certain firms invest in various activities that increase client’s willingness to pay, then they have a customer loyalty program and when these work, the chances of a client choosing to buy will increase over a seller with lower pricing (Frei, 2009).
ASDA Loyalty Program
Asda is currently experimenting with a very different set of activities than its competitors. Instead of offering discounts on its brand of products, Asda is involving its loyal customers in strategic decisions such as which products to offer and how they should be arranged in as store. This implies that certain customers given early opportunity and access to products to give their opinions will have more influence. Hence good clients will effectively earn the right to be part of the company’s choice-making process. Thus they earn the right to co-create the value they eventually consume (Frei, 2009). The success of this method of a loyalty scheme is such that the benefits are shared since cutomers are involved with the producer or seller and a custom made, produced or service item is offered to the clients. The customers of Asda make the service better, and also become more devoted to the brand along the way therefore everybody wins. With this kind of program, Asda eventually and accordingly compensates customers who are very helpful. It is important to note that the advertising methods or criterion adopted in this case embodies certain important aspects of establishing a relationship with a consumer. These are:
- Understanding the product for sale in detail
- Understand what the potential consumer thinks and might want from the product
- Know how best to reach the audience, to get and keep attention for the product
- Present the product creatively to its market-making the product mean something to potential consumers.
When all these have been considered, then a proper loyalty program can be initiated that will ensure both acquisition and retention of customers.
Sainsbury Loyalty Program
Comparing a two competing firm within a common market is not very simple since both companies always tend to out-do each other in all manner of ways and aspects of the company. According to Dunkley, Sainsbury has set to establish a new loyalty program that customers will be given money-off coupons at the till for hundreds of branded and own –label products in the company’s biggest investment. Currently according to Dunkley, over 60 leading brands have signed up to the scheme and will offer money saving opportunities to Sainsbury’s customers (Dunkley, 2009).
Sainsbury and Asda have two very varying schemes for loyalty such that:
Sainsbury has loyalty that rewards items using money-off coupons while Asda has a scheme that ensures customers choose what they want to be sold in the stores and later for better performing of supportive customers compensation will be done. According to Dunkley, coupons for Sainsbury are generated on-the spot through standalone printers installed across the stores huge chain of supermarkets. Using this system, “customers will benefit from discounts on branded and Sainsbury’s own brand” items with a little savings on certain retailers most popular items (Dunkley, 2009).
This can be considered a very successful option in loyalty schemes since customers always prefer taking coupons or vouchers with them hence a very practical way of having individuals constraining their budgets in hard economic times. The coupons with low prices and promotions imply that clients of Sainsbury are getting unbeatable value on the products most needed by them.
Benefits of the Sainsbury Loyalty Program to Consumers
The shoppers effectively receive just less than 1% discount on goods purchased at the stores. According to the Answers.com, after a shopper has spent 250 Pounds, there is always a 500 points earned and this can translate to a rebate of 2.50pounds to be redeemed at the next shop. With the Sainsbury loyalty scheme, Nectar, awards on the card of points for purchases made through certain online retailers can be experienced. This has been made possible through the use f affiliate marketing where the Sainsbury Nectar card operates as an affiliate for a particular retailer hence the cardholder must visit the Website prior to completing their shopping with a given online retailer.
It is very efficient in that the loyalty scheme at Sainsbury allows clients to redeem at a given Sainsbury store, this implies that the customer must have collected Nectar points in that particular store within the previous 12 months, and at least 24hours earlier.
The success of any loyalty scheme must be seen in the light of the retailers’ profits as well as customer satisfaction. Some of the benefits of the scheme at Sainsbury include:
Estimated initial 50%-250% return on investment
Increased retention and this is due to the nature of the loyalty scheme where a customer who shops regularly with more one store can gain points faster hence reducing chances of getting tired.
More offers exist such that a store can have its risks spread widely thus allowing the customers to choose from a variety.
The scheme helps turn tertiary and secondary buyers into primary buyers thus customers who buy just what is essential at a local store into customers who comes for main shopping at the store for instance Sainsbury or Asda.
When looking at the loyalty programs or schemes, O’Brien and Jones state about five elements that are of significance in order to determine the value and interest (1995). These elements include:
- The ease to use the scheme- The benefits and ways of how to acquire need to be clearly communicated to the public and the potential customers. The more the simplicity the more likely the scheme can be successful.
- The monetary value of the rewards-Most customers value or notice the gains of a reward program by looking at the monetary value it holds. This value according to O’Brien and Jones is the value ration of the reward and the necessary purchases to acquire it (1995). Johnson recommends a reward value of achieving at least 2% of the amount spent by the clients and states that blow this amount then the value is not really perceived. In contrast the Sainsbury scheme rewards less than 1% hence the customers are forced to purchase more only to the greater benefit of the company (store) (1999)
- A variety of rewards-The stores must ensure a variety in the products and services against which points can be attached. This allows a wide spread of customers to purchase and not cluster the market with very wide margins. A good retailer loyalty scheme should propose the largest variety of rewards.
- The aspired value for the reward- An example of this is giving a free flight to an exotic destination or a privilege that has a very high perceived value from the client’s perspective and cannot be simply or easily compared with a purely monetary reward.
- Probability to reach the reward- When probability is high enough then the more a loyalty scheme has chance to be used. One can employ delayed or immediate rewards depending on the marketing strategies that have been established and that empirically have been proven to work. It is suggested that when rewards are delayed then a store such as Sainsbury has a significant possibility to prolong the relationship period. This normally results into repeat purchases and hence more profit for the stores as well as granting the customer a greater chance of getting more rewards.
In the light of the above elements, Sainsbury seems to have a more comprehensive mix for its loyalty program unlike Asda that has rolled out the program where customers’ say is considered and later with their support being helpful to the stores, are rewarded accordingly.
Asda may not have a very successful loyalty program that makes customers want to come for repeat purchases since most clients look for the monetary value of any rewarding schemes. This implies that element two has not been thoroughly considered even though according to Asda the customers that provide supportive information on the product mix and brands will eventually be rewarded; it seems to employ a delayed reward management option. This for many reasons is considered as very beneficial to most companies since many people; customers in this case, will always continue to give their views in the earnest expectation that they will get a reward.
Both Asda and Sainsbury loyalty programs have not been very successful for the reason that a number of aspiring rewards are not pegged onto the schemes according to O’Brien and Jones (1995). This implies that many customers have a similar view of the schemes and end up not being interested in any. This can only change when a completely different approach is used in the loyalty scheme where a customer is acquired, retained and rewarded. This will ultimately give a very good meaning to direct marketing where a customer is truly involved in the information of what a brand is all about and the benefits with which the brand comes. It has to be recognized that promotional budget can be devoted to a loyalty scheme in order to ensure a customer centered orientation of businesses. This attracts more clients and helps to give confidence to your customers in order that they can always trust what the retailer or selling party offers.