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Research: Benefits & Limitations of Royalty Cards Essays

Introduction
The given research paper is based on a very effective and current topic to be researched. The topic selected for the research is related to supermarkets. Supermarket is a place where all the household products with wide variety are available under the single roof. In the parts of North America, the supermarkets are also known as grocery markets. The supermarkets are very large in size, which provide all kinds of merchandise to the customers for fulfilling their basic requirements.
There are large numbers of supermarkets, which are working on global level. Some of the famous supermarkets are:
Sainsbury nectar
Tescos Clubcard,
Asdas Advantages Points Scheme,
Aldi/ Lidl.
These supermarkets provide various kinds of services to the customers. One of the effective services provided by these supermarkets is the provision of loyalty cards for the customers. The loyalty cards are provided to the customers by the business entities and business organizations under a program named loyalty program.
In the loyalty programs, the business organizations do very effective efforts in their marketing process in order to make the customer loyal. In the loyalty programs, customers are provided with some special benefits to mould their buying behaviour in such a way that they can have positive buying behaviour for the products or services of a particular business organization. These loyalty programs are very beneficial for the firms as these programs turn the behaviour of the customers in a positive way.
Under the loyalty programs, the business organizations like supermarkets provide various kinds of plastic cards to the customers like loyalty cards, advantage cards, club cards, etc. These cards are quite similar to the debit or credit cards. With these cards, the customer becomes the member of the customer loyalty program of the particular business organization. The system of loyalty cards is managed according to the model of loyalty business. The loyalty cards are used at a very high level. These cards are very costly to be directed for the things for which the customers pay. The most beneficial aspect of the loyalty cards is that these cards provide very valuable mass of data to the companies.
In the entire world, the market of the loyalty card of the United Kingdom is counted among the most significant markets. In this market the most business organizations provide the chains of reward systems to the customers. The supermarket chains of the United Kingdom have four major supermarkets named Sainsbury, Tesco, Asda, and Aldi. Out of these four super markets, two supermarkets, Sainsbury and Tesco provide the facility of the loyalty cards to their customer, but the other two supermarket chains, Asda and Aldi do not use the system of loyalty card for their customers (ALDI, 2009).
Sainsbury is counted among the top five largest supermarket chains of the United Kingdom. It was established in the year 1869, in London, the capital city of the United Kingdom. Till the year 1922, Sainsbury became the largest supermarket of the United Kingdom. Currently, the business of Sainsbury has become very vast. At present, this supermarket chain operates about 800 hypermarkets and supermarkets. In this chain, about 276 convenience stores are also included (Sainsbury’s, 2009).
The second largest supermarket chain operating in the United Kingdom is Tesco. Tesco is one of the international grocery stores or supermarkets, which provide a large variety of the retail products to the customers. Its market share on local level and sales on global level have made it the largest retail store in the United Kingdom. Tesco supermarket was also established in London in the year 1919. This supermarket has very profitable online shopping services for the customers.
These two supermarkets of the United Kingdom launched their customer loyalty cards in 1995. These loyalty cards are launched by the supermarkets as a very important instrument of improving marketing efforts. These supermarkets considered it beneficial for the customers and thought it to be the best tool to promote their sales at a very high level by making the buying behaviour of the customers’ positive towards their selling system. These customer cards helped these two supermarkets to have a very vast information data about the buying habits of the target customers.
On the other hand, next two supermarkets of the United Kingdom namely Asda and Aldi do not provide loyalty cards to the customers. Asda is a very large supermarket chain of British. It retails a large variety of products including apparel, toys, food and various other general household things. In the year 1992, Asda became Wal-Mart’s associate. Asda was established in the year 1949 at Leeds. In the year 1998, this supermarket chain commenced its online retail services.
The other super market chain of the United Kingdom is Aldi. Aldi is working as a discount, based supermarket chain in Germany. This supermarket operates all over the world. Currently, it has about 8078 retail stores in the entire world. The product line of the Aldi groups includes the food products, equipments of sanitary, beverages, and much other low priced household merchandise (ALDI, 2009).
Both these supermarkets do not consider the loyalty cards as a better way to make the customers loyal for their increased sales. According to Asda, the better scheme in comparison of the loyalty card is to provide the lower priced products to the customers. Aldi also thinks that the administration of the loyalty cards is very costly and with these cards, the prices of the products for the customer increases up to a very high level.
In short, the first two supermarkets, Sunsbary and Tesco use the loyalty cards as a benefit, while the other two supermarkets Asda and Aldi consider these cards as a disadvantage for the business.
Research Methodologies
The given research is based on the loyalty programs provided by the supermarket chains of the United Kingdom. The aim of the given research is to analyse the benefits and limitations of the use of these loyalty cards for the supermarkets. This research is done very specifically because all the supermarkets of the United Kingdom do not consider the provision of the loyalty card beneficial for the business organizations. This is beneficial for the supermarkets, which focus on the strategy of profit maximisation, while it has limitations for the supermarkets, which are customer centred and focus on the strategy of the customer satisfaction.
The research methodology part of the given research is very important for the analysis of the goal of the research. This research methodology is very helpful for the readers to have a good knowledge of the entire research and the goals of the research. Research methodology is a way to solve the research problem in a systematic way to understand the steps adopted to solve the problem of the research. In the first part of the research, the purpose of the research is to be analyzed. This research is done to analyze whether the use of the loyalty cards is beneficial for the supermarkets of the United Kingdom or not.
In the project planning of the research, the planning for the completion of whole research is done. In this methodology, the whole research process is planned. The most important part of the planning is the research design and methods. The research method and designs used for the research are essential to be analyzed during the project planning. The research design used for the given research is the exploratory research design. With this design, the ideas and thoughts, which are related to the research problem, are analyzed.
The appropriate research method for the given research is the library research. In the library research, the historical records related to the business progress of the supermarkets using the loyalty cards are to be analyzed.  The second research method suitable for the given research is the mass observation. In this method, the behaviour of the particular mass of the customers, which are using the facility of the loyalty cards and others, which do not prefer this facility is to be recorded and analyzed.  In addition to this, personal interviews are also conducted in the public places to have the views of the general public regarding the research problem. Another important methodology of the research is the literature review. The literature review is the most important part of the research as in this part the literature evidences related to all the supermarkets which prefer the use of loyalty cards and the others which are not using the loyalty cards are analyzed. With this review, the benefits and limitations of the use of loyalty cards can be accessed very easily to approach a precise result regarding the use of the loyalty cards in the supermarkets.
In the final part of the research methodology, it is to be concluded that the aspect of the research problem is favorable for the supermarkets. They should either use the loyalty cards or approach any other scheme to promote the customer loyalty. In addition to this, some effective recommendations are also suggested for the well being of the business process of the supermarkets. As per the conclusion, they are suggested some effective recommendation to use the results of the research in an effective way.
Thus, the research methodologies used for the given research are quite relevant to the given research and very helpful to perform the research in an effective way.
Project Planning
Project planning is the most important part of the entire research. For evaluating the given research, project planning is required to be done in the three stages. These three stages are as under:
In the first stage of the project planning, the problems are to be identified in clear terms, which can be understandable for the user.
The second stage includes the evaluation of the different aspects of the research problems in concern of the performance of the organizations.
In the third stage of the project planning, a proposal is prepared for the given research project. In the proposal, the objectives and benefits of the research are analyzed (Research Programme Planning).
At the first stage of the project planning for the given research, it is analyzed through the problem identification process whether the use of loyalty cards is beneficial for the supermarkets of the United Kingdom or not. This is the main problem of the entire research. In this research, it is to be analyzed why some of the supermarkets of the United Kingdom are using the facility of the loyalty card as a supportive marketing tool to improve the buying behavior of the customers. It also aims to analyze why some other supermarkets in the same market of the United Kingdom do not prefer to use the facility of the loyalty cards.
In the second stage of the project planning, the performance of all the supermarkets is to be analyzed in concern of the problem identified in the first part of the research planning. The performance of the different supermarkets is affected by the marketing technologies adopted and used by them. With the use of some effective techniques of marketing, the supermarkets of the United Kingdom like Sainsbury and Tesco are having great benefits. With these loyalty cards, the mentioned supermarkets have the appropriate knowledge of the buying behaviour of the customers. With this information, the supermarkets mould the buying behaviour of the customers from other brands to the brands provided by them.
In addition to this, it is also analyzed that the other supermarkets like Asda and Aldi are not using the loyalty cards as they think that these loyalty cards put extra cost burden on the customers, which makes them dissatisfied and change their buying behaviour (ASDA, 2009). In comparison to this, these supermarkets adopt the strategies of low cost products to the customers with high quality. They do not provide any kind of discount, but provide the products on a very lower price in advance compared to other supermarkets. Thus, through this stage of project planning, it can be analyzed that the loyalty cards have benefits for some supermarkets of the United Kingdom, while for some other supermarkets these, cards have several limitations.
In the third stage of the project planning, a project proposal is prepared for the given research. In this proposal, the objective of the research and its benefits are analyzed. The objective of the given research is to analyze whether it is beneficial for the supermarkets of the United Kingdom to use the loyalty cards in its marketing efforts or not. With the analysis of the given research, the supermarkets can come to a position to decide whether they should use these cards longer or not. The benefits of the research are also discussed in the proposal. With this research, the supermarkets can have a clear understanding of the fact that what level of success can be achieved according to the outcomes of the results. The effective recommendations are also useful for the supermarkets to follow the concluded results of the research in an effective way for their marketing efforts.
Thus, the project planning of the given research is very fruitful for the completion of the entire research as this renders the base for the overall research. With this project planning, the user can understand what is to be done in the further steps of the research and what benefits will the research provide to the researchers. With this the effectiveness of the research can be analyzed.
Research Process

Research process consists of series of actions or steps necessary to effectively carry out research and the desired sequencing of these steps. The activities of the research process are closely related with each other. In this process, the first step determines the nature of the last step to be undertaken. There is not any specific process for the accomplishment of any research project, but it can be formed according to the requirements of the research. For the given research, the main steps of the research process are given as under:
Define Research Problem: The problem of the given research is identified in the research methodology part of the given research. The problem is to analyze whether the use of the loyalty cards is beneficial for the supermarkets of the United Kingdom or there are some limitations of the use of such cards.
Literature Survey: In this step of the research process, the literary materials available are surveyed thoroughly. In this step, the researcher has to identify the sources used to do the literature survey (Marczyk, DeMatteo, & Festinger, 2005).
Further Literature Search: This step is also quite similar to the literature survey. It is used to collect the data for the support of the problem identified in the first step of the research process. In this further search, some more data is searched to make the research effective.
Analysis of Literature Search: The material search with the literature survey and further literature search are analyzed in this step to reach some conclusion regarding the problem of the research.
Literature Review: The literature review is the most important part of the entire research as with this review, the analysis of the literature search and its conclusions are supported with the help of some evident text and literature material. This supports the accuracy of the search material.
Analysis of the Results of Research: This is the final step of the research process. In this step, the results of the research are concluded in an effective way to approach an appropriate solution of the research problem.
This research process is very effective for the given research.
Literature Survey
The Literature Survey is the most important part of the given research. In this survey, it is to be analyzed that what kind of literary sources are used for the collection of the data for the given research. In this particular research, the literature survey is done with the help of the secondary sources. The literature survey related to the above research problem is done with the help of the various library sources. The library sources used for the survey are the journals, new articles, books and magazines (Marczyk, DeMatteo, & Festinger, 2005).
The accomplished literature survey done from all these literary sources is very helpful to have a comprehensive review of the entire research, including the research problem. This literature survey is conducted in context of the United Kingdom. The main objective of the research study is to identify, whether the loyalty cards issued by the supermarkets are fully concerned with the customers’ loyalty and to compare the other factors rendered by some other supermarkets to enhance the loyalty of the clientele.
From the results of the survey, it is analyzed that the loyalty cards are not fully associated with the loyalty of the supermarkets. In this series, it is acknowledged that out of all the four supermarkets of the United Kingdom; Sainsbury and Tesco consider the use of ‘loyalty cards’ beneficial; while the other two Asda and Aldi consider it as a limitation for the business. The responses of the consumers observed through the given literature survey indicate that there are several strategies other than these loyalty cards, which facilitate great business opportunities to the Supermarkets like Asda and Aldi. These supermarkets adopt the strategies of ‘lower priced products’ to make them loyal towards the company. It is also found that there are numerous other cards, which are used by the supermarkets, other than the loyalty cards; like the ‘bonus and membership cards’. With these cards, the customers of the supermarkets have some bonus points for their purchase or they have the option to purchase on much cheaper price, rather than those customers who don’t own such membership cards.
It is clear from the given literature survey that the use of loyalty cards by the supermarkets of the United Kingdom is not the only source of getting customer loyalty, but there are several other means, which elucidate the limitations of the loyalty cards.
Further Literature Search
The literature search is a detailed search, in order to collect and organize all the relevant and required material on a particular research topic (Marczyk, DeMatteo, & Festinger, 2005). The information related to benefits and limitations of the loyalty cards for the supermarkets of the United Kingdom has been gathered through the literature survey done in regard of this topic. To get some more information, it is essential to have the further literature survey of the given topic.
The further literature survey of the given topic is done with the help of the ‘online material’ available on the internet, on the sites of the supermarkets; and is also a helpful source for literature survey. From this further literature search, it is found that, though the market of the loyalty cards is in trend all over the world; yet it is found most significant in the markets of the United Kingdom. This is because in the United Kingdom, many of the popular supermarket chains are providing different types of cards to the customers to increase the customer loyalty.
In this regard, Sainsbury and Tesco hold the ‘number one’ position. Tesco was the first supermarket of the nation, which first adopted the scheme of the ‘loyalty cards’ in 1994. After this, Sainsbury also adopted the facility of loyalty cards in the year 1996. These supermarkets stated that they offered certain percent of discounts to the customer through these loyalty cards. But the schemes provided by these supermarkets were not found fully favourable in the market, as these were criticized for not providing the actual value of the money paid by the customers.
The Economists of the United Kingdom clear in their reports that the only benefit to the supermarkets of the United Kingdom with the loyalty card is the availability of the huge database about the customer buying habits. It was also found that the other supermarkets also stated that in spite of investing money in such a scheme, it is better to invest the same money to provide the customer, cheaper products with same quality to get their loyalty. These supermarkets claimed that the loyalty cards increase the heavy cost burden on the customers, which is not a favourable means to get the loyalty of the customers.
Analysis of the Literature Search
After accomplishing the literature survey and further literature search about the given topic, it is essential to do the detailed analysis of the information collected through the literature search. The purpose of this analysis is to find out whether the facility of the loyalty cards in the United Kingdom is completely favourable for the supermarkets or not. With this analysis, the benefits and the limitation of the loyalty cards can be analyzed up to a certain limit.
From the analysis of the given literature search, it is analyzed that there are two objectives of the supermarkets behind the offering of the loyalty cards. The first one is to acquire the information about the customers and their buying habits. Secondly, to produce the loyalty among the target customers, in order to have a great support from them for the future business. Some of the top supermarkets like Sainsbury and Tesco adopted it as a benefit, but not all. This was because the loyalty cards were not acquired by the huge mass of customers, as they were given high cost burden to the customers. To run the loyalty card programs, the supermarkets are required to have a huge mass of capital, which they charge from the customers by providing loyalty cards to them. These cards instead of providing discounts to the customers, give the products on higher costs.
Thus, with this study, it is evaluated that the loyalty cards not only have benefits for the supermarkets; but various limitations are also associated with them.
Literature Review
The Literature review is the most important part of the research study. In the literature review, the text materials are used to evaluate the authenticity of the research problem identified. The given literature review is very useful to understand the benefits and limitations of the loyalty cards. With this literary assessment, the value of the loyalty cards can be evaluated in real means. The literary review done in this research is aimed to evaluate both the benefits and limitations of the loyalty cards.
With the literature review of the United Kingdom’s market; it was reviewed that this is the most prone market for the schemes of the loyalty cards. Some of its big supermarkets adopted this facility for getting a good knowledge about the customers. Loyalty cards, which are mostly used by the supermarkets now days, are basically a form of loyalty programs. In the United Kingdom, almost eighty-five percent of consumers possess at least one loyalty card and a number of consumers possess more than two cards. Major supermarket chains, like Sainsbury’s Nectar and Tescos Club Card Safeway make use of loyalty cards. This loyalty cards are also recognized as ‘rewards cards’ or ‘benefit cards’ (Tesco, 2009). These loyalty programs used by the supermarket giants offer a discount to its customers who are having loyalty card on certain products. Subsequent are the most generally used loyalty programs:
Appreciation Program: In this type of program, loyal customers of the supermarket are rewarded with more of their own products.
Rewards Program: Rewarding loyal customers with awards unrelated to your product/service.
Partnership Program: This program use the database of another company and the customers are allowed to select their preferable rewards from either of the partnered companies.
Rebate Program: This is the program, which loyal customers are given rewards on the basis of their purchase ratio.
From the analysis of the services of loyalty cards, it is evident that there are several benefits of such cards. With the loyalty cards, a certain amount of discount is given for the purchase by the supermarkets for a specific time period or lifetime. The discounts are also given according the amount of purchase. With these cards, the supermarkets are able to acquire an approach upon the purchasing behavior of the customers. In the buying behavior, the supermarkets come to know the things the customer purchase, frequency of purchase and the preferred products (Bosworth, 2005). With this approach, the management of the supermarkets becomes competent enough to fulfill the requirements of the customers and thus, retain more profitable customers. According to the announcement made by an advertising column of the British, the loyalty card programs in the United Kingdom had achieved about 85% consumer penetration with the help of the loyalty cards.
The users of the loyalty cards are provided facilities of special coupons and cuts in the tickets of airlines just similar to the credit cards. The loyalty card programs also provide benefits like plans of CVS for the purchase of pharmaceuticals. The loyalty cards help the supermarkets to get a great competitive advantage. Tesco and Sainsbury stated that these supermarkets got very significant sales with the provision of offering multiple loyalty cards.
In short, the loyalty card is a tool, which provides great profitability to the supermarkets. This is a key to maintain good customer relationship and retaining the customers for long-term sales.
In contrast to the benefits of the loyalty cards, it is also evident that equal number of Supermarkets in the United Kingdom like Asda and Aldi also don’t prefer the provision of loyalty cards because of several associated limitations. To operate the business through the loyalty cards is a very vast business process; and it consumes very large cost of administration. One another reasonable limitation of this facility is that there is a risk of cheat and misuse of the information of the customers by the third parties, if the security measures of the related companies are not very effective.
It is evident that the system of loyalty card has been proven as a ‘marketer,’ for; it is accountable for the data exposure of the millions of users of MasterCard and Visa for theft in the year 2005. For the promotion and implementation of the loyalty cards very high cost is required. It also requires additional efforts of the human resource, which are already engaged in the other marketing activities. It also has an associate risk of diminishing filthy of the Act of Consumer Privacy. It is not easy to leave this kind of schemes in short-times, as it takes a very long period to get out.
The provision of the loyalty cards envelops the real level of loyalty and satisfaction of customers. It is not sure that with these cards the customers are becoming loyal and if it happens so, the schemes of loyalty cards proves as a very expensive failure.  With this card schemes, the brand loyalty can not be maintained very easily.
Thus, from the given literature review, it is evident that the loyalty cards have equal number of benefits and limitations for the supermarkets of the United Kingdom.
Research Methods
Research methods are the techniques used by the researchers for the performance of research operations. For the accomplishment of the given research, very effective research methods are essential to be applied. The research methods used for the given research are library research and field research (Marczyk, DeMatteo, & Festinger, 2005). In the library research method, the analysis of the already available data is done thoroughly. In this method, the content available related to the facility of loyalty cards in the United Kingdom is analyzed in descriptive way. The analysis is done in concern with the four big supermarkets of the United Kingdom Sainsbury, Tesco, Asda and Aldi.
In this library research method, the business offerings of all these supermarkets is analyzed to know that whether, all these supermarkets are using the facility of the loyalty cards as a benefit or some of them are considering it as a limitation. The content available on the secondary sources proves evidently that all the supermarkets do not consider this facility as a benefit. Sainsbury and Tesco adopted the facility of the loyalty cards as a great benefit; while Asda and Aldi.were not in its favor, as they want to provide the low cost products to the customers to get the customer loyalty.
The other research method adopted for the given research is the Mass observation method of the field research. In this research method, the public places and the customers found in these public places are observed regarding their buying behavior and attitude towards the facility of the loyalty cards provided by the supermarkets. It was found through this research method that customers were not fully satisfied with these loyalty cards because they were moving to get other facilities of cards provided by the supermarkets.
Thus, both the research methods are very effective for the given research.
Research Design
A research design is the arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure. The research design is an outline view within which the research is conducted. The given research is conducted on the basis of the exploratory research design (Marczyk, DeMatteo, & Festinger, 2005). According to this research design, the whole research is done on the basis of the ideas and concepts available related to the United Kingdom’s supermarkets and the facilities provided by them, in order to have great customer loyalty.
This is a very flexible research design, as this provides the opportunities for considering both aspects of the research problems. It is very helpful to understand the benefits, as well as, the limitations of the loyalty cards provided by the supermarkets of the United Kingdom. In this regard, in the first part of this research design, the survey of the concerning literature is done in the literature survey part of the research. Some more information is gathered through the further literature search.
Thus, the given exploratory research design is very effective for the conduction of the given research.
Conclusion & Recommendations
The given research is descriptive in nature. It is based on the supermarkets of the United Kingdom. In this research, the main focus is given to the schemes of the loyalty cards provided by the supermarkets of the UK. Out of all the big supermarkets of United Kingdom, the four big supermarkets are selected for the given research namely Sainsbury, Tesco, Asda and Aldi. Among these four big supermarkets, Sainsbury and Tesco provide the facility of the loyalty cards while Asda and Aldi do not consider it as beneficial.
With the information collected about these four supermarkets, the given research is done to identify the benefits and limitations of the loyalty cards for the supermarkets, as well as, the customers in the current market of the United Kingdom. On the basis of the discussion done in the above research, it is concluded that though, two of the four big supermarkets of the United Kingdom use the facility of the loyalty cards as benefits, yet, this facility is not fully favorable due to the limitations associated with these facilities.
Due to its limitations, Asda and Aldi, do not adopt ‘loyalty cards’ to get the customers’ loyalty. They use the strategy of ‘lower priced products’ for the customers to get their trustworthiness. Thus, it is clear that the loyalty cards have both benefits and limitations.
There are some recommendations, which can help the supermarkets to use the loyalty cards in some effective way to make them fully beneficial, which are as under:
The supermarkets should increase their security measures to protect the information of the customers.
The supermarkets should supply the personalized cards for the customers at the time of the sales.
The cards should be of high quality and should be designed in such a manner that they can fit into the customers’ budget.
The supermarkets should carry out matched strategies of marketing with more cost effectiveness.
The given recommendations are very effective and helpful for the supermarkets of the United Kingdom to make the facility of the loyalty cards more beneficial for them.

References
ALDI, (2009). Retrieved May 04, 2009, from http://www.aldi.co.uk/
ASDA, (2009). Retrieved May 04, 2009, from, http://www.asda.co.uk/corp/home.html

Bosworth, M. H. (2005). Loyalty Cards: Reward or Threat?. Retrieved May 04, 2009, from http://www.consumeraffairs.com/news04/2005/loyalty_cards.html

Marczyk, G. R., DeMatteo, D. & Festinger, D. (2005). Essentials of Research Design and Methodology John Wiley and Sons.

Research Programme Planning. Retrieved May 01, 2009, from http://www.naarm.ernet.in/VirtualLearning/vlc/downloads/Research%20Programme%20Planning.doc

Sainsbury’s, (2009). Retrieved May 4, 2009, from http://www.sainsburys.co.uk/home.htm

Tesco, (2009). Retrieved May 04, 2009, from http://www.tesco.com/

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