Impact of Loyalty Card Schemes on Business

LITERATURE REVIEW

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Literature review..........................................................................................................................1
Positive effects.............................................................................................................................1
Negative effects...........................................................................................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Loyalty card program is an effective marketing strategy that is used to attract the
customers and encourage them to make the repeated purchases with the brand. It can be in the
form of discounts or the points whose benefit can be availed in future purchases. This shall
ensure customer loyalty with the brand. The project shall be representing the impact of these
loyalty card schemes on the business.
MAIN BODY
Literature review
As per the views of the Sukmaningsih and et.al. (2019) the loyalty card schemes are used
by the company as a marketing strategy whereby they issue such cards under the loyalty program
which either provides the customers with discounts the purchases that are made currently or shall
be allotted in the form of points which shall give benefits on the future purchases of the clients.
Bombaij and Dekimpe (2020) contradicts that by the application of such marketing strategy the
company shall come to a point of market saturation. As gradually the competitors will be also
following the same strategy and the point of differentiation does not exist any more. Apart from
that many times the company has to withdraw from the promise to avoid loss of sales. Li, X., Ma
and Zhou (2017) proposes that the loyalty program in a company is undertaken as a promotional
technique for the purpose of retaining the customers with the company for longer time through
providing them with attractive deals. This gives competitive edge to the company as compared to
the competitors in the market.
Positive effects
As per the opinion of Chaudhuri and König (2018) the major significance of issuing the
loyalty cards to the customers is that it improves the relationship of the company with its
customers. It helps in facilitating better communication, understanding and trustworthy relations.
The fostering of customer relations can be beneficial in deriving the future growth prospects of
the company. Yang and et.al. (2020) evaluates that the consumer loyalty programs are very
efficient in the flourishing of the hospitality sector. This is due to the intense competition that
lies in the industry and for surviving in the cut-throat competition the differentiation strategy has
to be adopted by the company. With the adoption of the card program the unique selling point is
derived by the company enhancing the level of satisfaction that is experienced by the customers.
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