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Keywords
Supermarkets, Consumer behaviour, United States of America
Abstract
A survey was conducted in a large US metropolitan area of the West. The objective of the study was to determine if loyalty cards issued by supermarkets are actually associated with customer loyalty and how loyalty cards compare with other factors that retailers could use to enhance supermarket loyalty. The results indicate that loyalty cards are not associated with supermarket loyalty. Frequent users of loyalty cards are more likely to shop at different stores and use loyalty cards from several stores. The consumer respondents indicated that there are a number of factors other than having a supermarket loyalty card that would be more likely to increase their loyalty to any one supermarket. Besides confirming the universally accepted belief that consumers would be more loyal to conveniently located supermarkets, the respondents identified a few other factors that would enhance their supermarket loyalty such as stores that offer fast check-out lanes. Loyalty factors were cluster analyzed into three categories, those most important, those least important, and those of moderate importance.
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Customer loyalty is a highly prized marketing outcome. It is associated with reduced costs, since customer retention is normally a lower cost endeavor than customer development. It is associated with higher margins since loyal customers will normally have stronger perceptions of relative advantage toward the product, service, brand, or supplier than less loyal customers. During the last decade, supermarkets have attempted to enhance store loyalty by issuing loyalty cards. Shoppers obtain loyalty cards by providing a limited amount of personal information (name, address, phone number). When shoppers use their cards, they are rewarded by receiving lower prices on selected promotional items. Non-loyalty card shoppers pay higher prices on these items. This paper presents the results of a study that investigated the efficacy of loyalty cards to create store loyalty in one major metropolitan area in the USA. Other means of enhancing supermarket loyalty, other than loyalty cards, were also investigated and compared.
Loyalty card history
For years supermarkets have used a variety of means to encourage loyalty. Common in the...