Impact of Loyalty Card and Reward Scheme on Customer Behavior

1.2 Background of the research

Providing loyalty cards and rewarding scheme for customer is a part of an organization’s loyalty program (Kang 2015). U.S. merchants started providing loyalty cards and reward schemes in 1793. They invented the process of giving tokens to customers every time they purchase products. Customers used to redeem those tokens after collecting a certain amount. From that time, organizations are using this loyalty program for attracting customers in business operation. This is a part of marketing strategy of a company. A company offers exciting discounts for gaining more customers in business operation. Clients are considered as end user of any product and services. This is must to fulfil their requirements as per their desires so that they will be loyal for firm for maximum time span. In this manner, affiliation will be able to maintain their customer base for longer duration. As a result, they will easily take benefits from their contenders at marketplace. There are many kinds of loyalty programmes will run by affiliation as this helps to cater them maximum level of satisfaction. This will help to pull numerous people towards products and services.

1.3 Aim and Objective

Aim-

Researcher will aim to analyze customer behavior with respect to loyalty cards and rewards scheme of an organization. Moreover, researcher will also aim for understanding impact of loyalty cards and reward schemes in order to retain customer loyalty.

Objectives-

• To analyze impact of loyalty cards and reward schemes
• To analyze the impact of loyalty cards and reward schemes in order to gain customer loyalty.
• To identify issues of loyalty program in the process of gaining customer loyalty
• To provide some recommendation

1.4 Research questions

• What are the impacts of loyalty cards and reward schemes?
• How loyalty cards and reward schemes help in order to retain customer loyalty?
• What are the issues of loyalty programs in order to achieve customer loyalty?
• How those issues can be resolved?

1.5 Rationale

Researcher has observed that in present times most of the companies are unable to retain customer loyalty in business operation. Moreover, it is also observed that companies are able to attract customers towards the business operation. That is why, a company needs to develop and implement loyalty program for retaining customer loyalty. Implementation of loyalty program in business operation is very much important for gaining more customers and for achieving customer loyalty (Orel 2014).

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Research on Business Decision Making

1.6 Significance of the study

This research will help for developing loyalty programs for gaining more customers in business operation. Moreover, this research will help for understanding the issues of the process of gaining customer loyalty. Additionally, this research will help for understanding the need of loyalty cards and rewarding system for retaining customer loyalty. Each customer has their own preferences as well as taste which they want to accomplished. Hence, it is needed for organisation to offer them items and services accordingly. This will aid them to maintain an effective brand image at marketplace. Along with this, they will easily compete with rivals in market. Manager will develop an appropriate plan; thus, people will complete their task systematically. This has been examined that, proper planning will aid staff members as this will work as a guidelines for them.

CHAPTER 2: LITERATURE REVIEW

2.1 Concept of consumer loyalty

Customer loyalty refers to behaviour and attitude of the customers that prefer any one brand overall competitive brands. Loyalty of the customers is a willingness of any customer to buy the services and products of a particular company (Kandampully 2015). Loyalty of the customers can be come from the positive experience of the consumers that they get from the past time of purchasing any product. Different company, brand and price of the products can affect customer loyalty (Flick 2015). The factors that affect the loyalty of the customers are satisfaction of the customers, trust, habit, company history and emotional bonding.

2.2 Theories of consumer loyalty

There are several articles that have discusses the theories of consumer theory. Motivation theory like Maslow Hierarchy and theory of reasoned action can help to analyse the consumer loyalty.

Maslow hierarchy of need

Maslow hierarchy of needs has five levels that fulfil the needs of the persons. First level shows the basic needs i.e., physiological needs of the people. Level 2 describes the people needs safety after fulfilment of the physiological needs (Bowden 2015). Nest level is the belonging needs that state that people need love, family and friendship. The fourth level states that people need status and recognition in the esteem needs. The last level of this hierarchy shows that self-actualisation is the final need of the people.

Figure 1: Maslow hierarchy of need

(Source:(Bowden 2015)

Maslow hierarchy of needs represents the essential needs of the customers. The behaviour of the customer depends on the fulfilment of needs of this hierarchy. Five levels of Maslow’s hierarchy of needs is necessary to understand the customer demand regarding products. This theory is needed to know the product quality and specification. Moreover, this theory motivates the consumers to be loyal to different brands.

Theory of reasoned action

Theory of reasoned action refers to a theory that recognises the attitude and behavioural intention of the consumers towards behaviour. This theory is developed by Martin Fishbein that help to understand the marketing strategy of the consumers related to an attitude.

Figure 2: Theory of Reasoned Action

(Source:(Minnema 2017)

According to this theory, the intention of behaviour of the consumers cannot be determined by the attitude of the consumers only, but also subjective norm is responsible for this action. The decision-making process of the customers depends on the satisfactory level of the products. This theory accurately predicts the behaviour and loyalty of the customers in different conditions. Consumer loyalty towards a brand can be determined by this reasoned action.

2.3 Concept of loyalty cards and reward schemes

Loyalty programs and reward schemes are the marketing strategies that are taken by any company to attract the customers towards their organisation. This structure effort can encourage the buying behaviour and loyalty of the consumers

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