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Customer Loyalty Programs: Target Market

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Choose a retail chain where you have shopped and/or worked. Imagine that you are a VP ? Customer Engagement for that store.

The CEO has asked you to prepare a memo for the Board of Directors. You are asked to comment on whether the Pathmark strategy of debit/loyalty cards would be appropriate for your store. Your discussion should cover these topics. You are encouraged to use sub-headings related to each question.

(a) Would this type of card be appropriate for your target market? Why or why not?
(b) How can the program be modified to fit your particular retail chain and its target market? Why would your target market be especially responsive? For example, Victoria's Secret offers its credit card holders a free gift every month with an extra on their birthdays. Their target market is women with discretionary income and a sense of fun, so gifts are appealing to them. Macy's has sales with an extra 10% off to credit card holders. They have a much broader market than Victoria's Secret. (Do not use these examples in your own report. Create your own example.)
(c) What kind of backlash can you anticipate from this program? What concerns customers (e.g., privacy loss)? Why?

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To: Wal-Mart Inc.

From: VP Customer Engagement

Subject: CUSTOMER LOYALTY PROGRAMS

Customer loyalty programs are a way to influence the buying behavior of customers, who are loyal towards the products and services of the company (Byron & Sharp, 1997). These kinds of programs are the marketing efforts of the organizations, which encourage the customer to maintain a long term relationship with the company (Kumara & Shah, 2004).

Introduction:
Pathmark Strategy of Debit/loyalty cards is a mean to maintain a long term relationship with the customers. According to this strategy the customer, who purchases various products from the retail store, they get a loyalty card from the store. In this plan they receive some points for their shopping (HSBC, Pathmark Plan Loyalty Rewards Debit Payment Card Program, 2009). After collecting a fixed number of points such as 100, 200, etc. the customer wins a gift or discounts over their purchases (HSBC, Pathmark Plan Loyalty Rewards Debit Payment Card Program, 2009). My retail store is Wal-Mart, which is the world's top retailer company.

About Retail Store:
Wal-Mart is situated in the United States. The company is world's largest corporation in the generation of revenue (Kotler, 2002). The main objective of the company is to save money of the people more and more so that they can live a better life (Wal-Mart, 2009). Presently, the company is running more than 7000 retail stores all over the world. It severs about 170 ...

Solution Summary

The solution examines customer loyalty programs and target markets. How to modify programs for particular retail chain is determined.

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Similar Posting

Case to write up:

Pathmark Sidestepping Interchange Fees With Loyalty/Payment Combo Card
Written by Evan Schuman
October 17, 2007

http://www.storefrontbacktalk.com/payment-systems/pathmark-sidestepping-interchange-fees-with-loyaltypayment-combo-card/

Directions:

(1) Read the case.

(2) Review the above article and at least 1 more article from a quality source on the Internet (not wikipedia). Hint: Do an Internet search on "credit and customer loyalty" and/or "credit and CRM."

(3) Choose a retail chain where you have shopped and/or worked. Imagine that you are a VP of Customer Engagement for that store.

(4) The CEO has asked you to prepare a memo for the Board of Directors. You are asked to comment on whether the Pathmark strategy ? debit/loyalty cards ? would be appropriate for your store. Your discussion should cover these topics. You are encouraged to use sub-headings related to each question.

(a) Would this type of card be appropriate for your target market? Why or why not?
(b) How can the program be modified to fit your particular retail chain and its target market? Why would your target market be especially responsive? For example, Victoria?s Secret offers its credit card holders a free gift every month with an extra on their birthdays. Their target market is women with discretionary income and a sense of fun, so gifts are appealing to them. Macy's has sales with an extra 10% off to credit card holders. They have a much broader market than Victoria?s Secret. (Do not use these examples in your own report. Create your own example.)
(c) What kind of backlash can you anticipate from this program? What concerns customers (e.g., privacy loss)? Why?

http://www.storefrontbacktalk.com/payment-systems/pathmark-sidestepping-interchange-fees-with-loyaltypayment-combo-card/
http://ezinearticles.com/?How-Reward-Card-Programs-Help-Retailers-Improve-Customer-Loyalty&id=5167306

(3) Choose a retail chain where you have shopped and/or worked. Imagine that you are a VP of Customer Engagement for that store. Gander Mountain

(4) The CEO has asked you to prepare a memo for the Board of Directors. You are asked to comment on whether the Pathmark strategy ? debit/loyalty cards ? would be appropriate for your store. Your discussion (750-1000 words, excluding title page) should cover these topics. You are encouraged to use sub-headings related to each question.

(a) Would this type of card be appropriate for your target market? Why or why not?

Gander Mountain stores would greatly benefit from offering loyalty cards to its customers. We currently compete with other outdoor stores such as Bass Pro Shop, LL Bean and Cabela's. Some of our customers also purchase many of the items we sell at Wal-Mart, Target and other chain stores. Many people come to our store because of the atmosphere. They like the outdoor themes, the neat hunting and camping supplies and the technology on display in the form of fish finders and GPS units. However, while many people look at our merchandise, a fair number of those see the prices and choose to wander over to Wal-Mart and purchase an admittedly inferior product but for a cheaper price.

One way for us to convince shoppers to become customers is by issuing a loyalty card with their first purchase. By vesting them in our stores we offer an incentive to continue purchasing goods from us instead of always seeking out the cheapest price. Customers will be able to accumulate loyalty points and redeem those points for merchandise. Offering loyalty cards will also be beneficial for us because we will be able to monitor the purchasing habits of our customers and will be better able to gauge the types of products they are interested in. This should help eliminating overstocking of products that will not sell easily and will help streamline our purchasing process.

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