Retailer Choice and Loyalty Schemes - Evidence from Sweden

From economic theory, it is known that consumer loyalty schemes can have lock-in effects resulting in entry barriers and higher prices. This paper concerns consumer loyalty schemes where the main issue is to test the hypothesis that loyalty scheme membership affects the choice of food retailer. This choice is modeled as a random utility maximization problem estimated with maximum likelihood. Based on a data set covering 1,551 Swedish households, we find evidence supporting this hypothesis. Further, according to the results, store characteristics and geographical distance matter for the choice of retailer while household characteristics are not found to have a significant effect.Bonus card; Conditional logit; Consumer choice; Distance; Food retailer; Loyalty scheme

Algorithmic Food – How “Software is Eating the World”

In this paper, we explore how algorithms have empowered customers and promoted their preferences, while turning the sourcing of food from the purchase of a valuable good into a simple transaction. Focusing on the generative character of algorithms in the organizing of food, we study the changing nature of food retailing in the UK over the last 20 years. Theoretically we focus on the role that algorithms and thus technology have played in the transformation of the organizing of food and shed new light on how the latter has undergone tremendous changes. Our study enhances the current understanding of the impact big data has and will have on many organizational aspects and demonstrates that we need to have a better and more critical understanding of its consequences

Getting Something for Nothing?:A User-Centric Perspective on Loyalty Card Schemes

Loyalty cards are a form of tracking and recording technology (TRT) that enables retailers to collect data about their customers' demographic and purchase behaviours. As recompense for sharing their data consumers receive 'loyalty points' which they can redeem for exclusive discounts and rewards. The design of loyalty schemes, and TRTs more generally, plays a key role in defining the economic terms of that exchange, and ultimately the economic value of personal data. In this paper we present findings from an interview study with 12 loyalty cardholders in the UK explicating the ways in which they create (and lose) value through the everyday practice of shopping with loyalty cards and the orientations associated with them. Based on our findings we suggest cardholders are less concerned with the protection of their privacy than with leveraging its value, only some of which was economic. We provide design guidelines for TRTs that may enable consumers to derive greater value from the data they produce and share

Optimising supermarket promotions of fast moving consumer goods using disaggregated sales data: A case study of Tesco and their small and medium sized suppliers

The use of price promotions for fast moving consumer goods (FMCG’s) by supermarkets has increased substantially over the last decade, with significant implications for all stakeholders (suppliers, service providers & retailers) in terms of profitability and waste. The overall impact of price promotions depends on the complex interplay of demand and supply side factors, which has received limited attention in the academic literature. There is anecdotal evidence that in many cases, and particularly for products supplied by small and medium sized enterprises (SMEs), price promotions are implemented with limited understanding of these factors, resulting in missed opportunities for sales and the generation of avoidable promotional waste. This is particularly dangerous for SMEs who are often operating with tight margins and limited resources. A better understanding of consumer demand, through the use of disaggregated sales data (by shopper segment and store type) can facilitate more accurate forecasting of promotional uplifts and more effective allocation of stock, to maximise promotional sales and minimise promotional waste. However, there is little evidence that disaggregated data is widely or routinely used by supermarkets or their suppliers, particularly for those products supplied by SMEs. Moreover, the bulk of the published research regarding the impact of price promotions is either focussed on modelling consumer response, using claimed behaviour or highly aggregated scanner data or replenishment processes (frameworks and models) that bear little resemblance to the way in which the majority of food SMEs operate. This thesis explores the scope for improving the planning and execution of supermarket promotions, in the specific context of products supplied by SME, through the use of dis-aggregated sales data to forecast promotional sales and allocate promotional stock. An innovative case study methodology is used combining qualitative research to explore the promotional processes used by SMEs supplying the UK’s largest supermarket, Tesco, and simulation modelling, using supermarket loyalty card data and store level sales data, to estimate short term promotional impacts under different scenarios and derive optimize stock allocations using mixed integer linear programming (MILP). ii The results suggest that promotions are often designed, planned and executed with little formalised analysis or use of dis-aggregated sales data and with limited consideration of the interplay between supply and demand. The simulation modelling and MILP demonstrate the benefits of using supermarket loyalty card data and store level sales data to forecast demand and allocate stocks, through higher promotional uplifts and reduced levels of promotional wast

Building Customer Loyalty for Company Profitability

Abstract -This paper aims to review several possible ways of building customer loyalty in business and investigate the correlation between company profitability and customer loyalty. For this purpose, a comprehensive literature review on several marketing approaches utilizing foundations of customer loyalty was performed with a focus on real company cases. A marketing model with four main factors, namely building customer-firm/staff relationship, establishing brand affinity, offering loyalty programs, and avoiding customer demotion was developed depending on those marketing approaches. Findings obtained from this marketing model show that customer loyalty generated through four main factors enhances company profitability based on the empirical data presented in this paper. The proposed marketing model would be helpful for business owners to better understand the customer behaviors and to build loyal relationships with them. The study also indicates how marketing approaches contribute to the customer loyalty and how do these techniques can be utilized by company owners to promote their businesses' profitability

Marketing Performance Measurement in FMCG Share of Wallet in Italian Retail Industry

Recent years, the Marketing Science Institute considered marketing performance measurement (MPM) a priority in marketing research and managerial practice. Several contributions on the same topic have been proposed in literature. The ability to measure the marketing performance is considered, a cognitive gap that determined a decrease of marketing relevance within firm and organizations. On the basis of relevant literature on retailing and an explorative case study, it will be proposed a conceptual and pragmatic model to investigate MPM for a consumer goods retailer. The model is aimed to identify antecedents of “share of purchase”, “share of wallet” and “share of visit”. An early test of the model has been carried out on two Italian leading chains: Superò, a master franchisee of SMA Spa (owned of 27 small supermarkets under control of the French Auchan Group) and Decò-Multicedi (the Group is a multi-channel company based on network of 5 Ad Hoc cash & carry centers, 253 Decò outlets and 3 Ayoka pet shops) located in Campania Region

Customer Relationship Management : Concept, Strategy, and Tools -3/E

Customer relationship management (CRM) as a strategy and as a technology has gone through an amazing evolutionary journey. After the initial technological approaches, this process has matured considerably – both from a conceptual and from an applications point of view. Of course this evolution continues, especially in the light of the digital transformation. Today, CRM refers to a strategy, a set of tactics, and a technology that has become indispensable in the modern economy. Based on both authors’ rich academic and managerial experience, this book gives a unified treatment of the strategic and tactical aspects of customer relationship management as we know it today. It stresses developing an understanding of economic customer value as the guiding concept for marketing decisions. The goal of this book is to be a comprehensive and up-to-date learning companion for advanced undergraduate students, master students, and executives who want a detailed and conceptually sound insight into the field of CRM

Consumer choice models on the effect of promotions in retailing

This doctoral thesis contains three empirical essays regarding the effect of promotions on consumer choices in a retailing context. The first essay studies the scheduling of featured price cuts for national brands, across retail chains. It shows that coordinating promotions across chains influences the performance outcomes for both manufacturers and retailers in several consumer packaged goods (CPG) categories. The second essay investigates the impact of consumers’ decision making processes on store-flyer and discount promotions. It shows that the effect of such promotions depends on whether a consumer follows a brand-focused structure (in which case s/he disproportionately substitutes between retailers) or a retailer-focused structure (in which case s/he primarily switches among brands within a given retail chain), and that a mixture of these structures is at work in CPG categories. The third essay examines large-scale promotional events (“Savings Weeks”). It provides insights into the mechanisms that set these events apart from ‘business-as-usual’ promotions, and sheds light on how they influence households’ retailer visit and spending decisions

Effects of Sales Promotions on Consumer Preferences and Brand Equity Perception: with specific reference to FMCG Products

The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of US$ 20.1 billion. It has a strong MNC presence and is characterized by a well-established distribution network, intense competition between the organized and unorganized segments and low operational cost. Availability of key raw materials, cheaper labour costs and presence across the entire value chain gives India a competitive advantage. Also, increase in the urban population, along with increase in income levels and the availability of new categories, would help the urban areas maintain their position in terms of consumption. At present, urban India accounts for 66% of total FMCG consumption, with rural India accounting for the remaining 34%. However, rural India accounts for more than 40% consumption in major FMCG categories such as personal care, fabric care, and hot beverages. newline Family income is one of the variables which should be considered while designing sales promotion schemes more specifically cash discount. There is significant difference between consumer preference of cash discount and free gift as sales promotion schemes. It is also very clear that consumers prefer cash discount as a sales promotion schemes compare to free gift as a sales promotion scheme. It is found that Consumer deal proneness differs according to marital status. Furthermore, it is also proved that married are more deal prone compare to Unmarried. Added to it Brand Equity perception differs according to employment categories. It is concluded that male prefers the newspaper and point of purchase material as a source to know sales promotion schemes over female. newline Overall, Sales promotion scheme on international brand, awareness spread out by word of mouth, Scheme is value added type with immediate benefit is preferred by the customer