A Critical Review of Rewards and Consumer Loyalty Schemes in UK Retail Sector: A Case Study of Primark

This study explores the effectiveness of rewards and consumer loyalty schemes in the UK retail sector, using Primark as a case study. It examines the impact of these schemes on customer acquisition and retention, and provides recommendations for improving loyalty programs.

University
A CRITICAL REVIEW OF THE EFFECTIVENESS OF
REWARDS AND CONSUMER LOYALTY SCHEMES IN
ACQUIRING AND RETAINING CUSTOMERS IN UK RETAIL
SECTOR: A CASE STUDY OF PRIMARK
Name
ID
Unit Title
Code Number
Lecturer’s name

Consumer behaviour
Executive summary
This study is the amalgamation of a research proposal and a research project. While in the first
tasks plan for the project along with theoretical conception has been provided the following tasks
focus on implementation of the plan and evaluating the data. This entire study has been
conducted on the aspects of loyalty schemes, rewards and their effect on the purchase behaviour
and loyalty of customers, with examples from Primark. Completion of the study has provided the
researcher with an understanding of the strategic changes the organisation needs to make in its
reward and loyalty programmes to retain preferences of customers.
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Consumer behaviour
Table of content
Introduction......................................................................................................................................4
Task 1...............................................................................................................................................4
1.1 Possible research project outline specification..........................................................................4
1.2 Factors contribution to selection of research project.................................................................5
1.3 Critical review of key references...............................................................................................5
1.4 Research project specification...................................................................................................7
1.5 Plan and procedure for research project specification...............................................................8
Task 2...............................................................................................................................................9
2.1 Matching resources with research question...............................................................................9
2.2 Undertaking research investigation...........................................................................................9
2.3 Data presentation.....................................................................................................................10
Task 3.............................................................................................................................................20
3.1 Choice of appropriate research evaluation technique..............................................................20
3.2 Analysis and interpretation......................................................................................................20
3.3 Recommendation and future scope for research......................................................................21
Task 4.............................................................................................................................................23
4.1 Presentation of result and recommendation.............................................................................23
Conclusion.....................................................................................................................................23
References:....................................................................................................................................24
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Consumer behaviour
Introduction
In oligopoly market structure, such as the structure of retail market of the United Kingdom,
business organisations need to work considerably hard for acquiring and retaining preference of
customers. Soderlund and Colliander (2015) pointed out that acquiring new customer in
considerably more difficult and expensive that retaining the existing one. Therefore business
organisations of the current time put considerable effort in retaining their existing customers for
which they use different loyalty and reward schemes are the applicable on a certain amount of
purchase or remaining loyal to a company for certain period. Such marketing strategies served
considerably well in fashion retail sectors as consumers tend to prefer such products from
reliable sources. This issue has been discussed in this particular study with practical examples
from Primark. Primark is a well-known British business organisation that operates through over
315 stores and employs 68,000 people across the world (Primark.com, 2017).
Task 1
1.1 Possible research project outline specification
Researcher has aimed at underlining the impact of different customer loyalty schemes and
rewards for improving the customer retention, loyalty, and acquisition and marketing strategy.
Therefore, researcher has produced following research question helpful in understanding and
achieving the study objective.
Question 1: what is importance of loyalty schemes and rewards in retaining and achieving the
consumer in UK retail industry?
Question 2: how loyalty schemes and rewards are contributing organisational achievement of
Primark?
Question 3: what are the issues raising due to the loyalty schemes and rewards in Primark?
Question 4: how Primark can overcome from the identified issues due to loyalty schemes and
rewards?
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Consumer behaviour
1.2 Factors contribution to selection of research project
Many organisations are predominantly planning and developing their marketing strategy for
gaining the competitive advantage in global market. Due to the active participation in latest
trends of marketing, business environment is getting more complex and putting excessive
pressure on management for leading the market. Organisations are in the competition of
producing effective loyalty schemes and rewards to attract worldwide customers. The varied
usage of this trend is enabling and management to distinguish the brand. Therefore, researcher
has chosen the particular topic for conducting the research in order to explore in-depth
knowledge about how customer loyalty schemes and rewards are affecting improvement in
consumer retention and attainment.
1.3 Critical review of key references
In order to acquire the relevant information and data about research topic, annotated bibliography
has been taken into consideration. Various articles have been used in this section such as
Journals, books and news articles for exploring in-depth knowledge about research topic.
"Implications of loyalty program membership and service experiences for customer retention
and value”
In this article, authors have focused on intentions of an organisation for resourcing the loyalty
reward programs. However, the consequences of offering loyalty rewards are measured with
long term customer relationship and positive impact over customer behaviour and evaluation. A
significant aspect of loyalty programs has been underlined with probability of exposure of
continuum from service experiences. The reason behind moving on to another service provider is
also considered as deep impact of over continuous customer relation with an organisation.
“Relationship marketing management: Its importance in private label extension”
In order to establish effective customer relationship, authors have referred private label in the
traditional category as a significant tool. However, use of relationship marketing has been
suggested for generating the long-term relationship with partners such as consumers and
shareholders. This article concentrates at building of improved customer loyalty deriving from
consumer satisfaction, trust, experience and commitment. However, due to the excessive
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Consumer behaviour
involvement of customer in organisational loyalty programs might hamper the customer
expectation because their expectation level noticeably increases with terms of usage duration.
“Mobile marketing: a contemporary strategic perspective”
Authors have coined the mobile marketing as latest communication channels of direct marketing
that significantly affects the beneficial rate of organisational offers made to consumers and
partners. The mobile marketing incorporating values are investigated with marketing mix and
practices of direct marketing for identifying the benefit from offers of mobile channels. Authors
have underlined the SoLoMo (Social, Local and Mobile) marketing as multi-channel of
marketing strategy effective in enhancing the long-term customer relationship and purchase.
“The influence of loyalty programs and short-term promotions on customer retention”
The cumulative over time purchasing is considered while delivering the customer loyalty
rewards and measuring the impact of implemented loyalty program by an organisation. Authors
have mentioned that loyalty programs motivate a customer for repetitive purchasing decision-
making rather than single periodic decision making about purchase from the organisation.
However, the excessive policy experiments and empirical output have been highlighted as big
phenomena for decreased customer relationship thus leading to customer move on to another
organisation or service providers for fulfilling their basic needs.
“The customer loyalty solution: What works (and what doesn't) in customer loyalty programs”
This particular book has represented the impact of database marketing over marketing program
of an organisation in terms of enhancing the customer loyalty schemes. The author has pointed
the traditional thinking and antiquated technologies as major issue for deriving failed research
project over evaluation of customer loyalty program. Apart from that, this book cover the
evaluation of case study with mentioned research topic on different organisations such as
StrideRite, FedEx, Cingular and Cendant for exploring the different ways to enhance their
market-proven program in order to track the activity of consumer; building strong loyalty
program and consider the communication of customer as profit centre.
“Marketing Is No Longer a One-Way Street”
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Consumer behaviour
The customer relationship marketing is evolving the changing face of society where people are
highly involving with companies with the help of internet rather than their physical attainment.
Author has stated that customers are highly fearful since they do not want to be victimized of
fake advertisement nowadays. It is creating potential barriers for companies to attract the
consumer and improving online purchase. The global market has been rapidly shaping with
technical tools evolving high competitive threat and processing difficult business operation.
Therefore, it can be stated that relationship marketing has been rapidly shaping with complex
business environment and difficult consumer involvement for improving the sales margin and
touching the edge of competitive advantage in the global market. However, it has never been
easy so far for organisations to produce effective loyalty program due to the competitive
interference and online presence of worldwide industries. Exclusive offers are creating more
competition thus narrowing the beneficial edge for companies and creating big barriers in
improving customer attainment and retention. . Limited period of the applicability of the offers is
another issue perceived by the respondents that affect their purchase experience. It can be stated
that these issues can be considered as the hygiene factors, timely mitigation of which is essential
for ensuring that customers do not feel de-motivated regarding repeated purchase.
1.4 Research project specification
The research project specification tells about how this research project is going to be conducted
and what methods will be used for accomplishing this research successfully.
Research objectives
 To identify the value of rewards and loyalty schemes in achieving and retaining
customers in UK retail industry
 To assess the contribution of loyalty schemes and rewards in the business of Primark
 To critically evaluate the issues faced by Primark in retaining customers, applying loyalty
schemes and rewards
 To suggest suitable solutions to mitigate the identified issues
Researcher will consider the following objective and implement the project. However, research
has also mentioned the useful and necessary techniques to be followed in this project.
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Consumer behaviour
Research Investigation
This research will follow the deductive research approach with descriptive research design rather
than inductive approach. It will help the researcher in achieving the apt findings through tallying
primary data with secondary information.
Data Collection Methods
Researcher will follow the quantitative data collection method to collect the primary data.
Researcher will conduct online survey for collecting information from consumers of Primark.
Sampling
Researcher is going to continue the research project with probability sampling method along
with simple random sampling technique. It will be helpful in choosing the participants
effectively and significant in gathering desired information from them. Researcher has selected
30 consumers of Primark in this research work.
Research evaluation techniques
After collection of primary data through applying different methods, researcher will then use two
different research evaluation techniques such as Frequency and Inferential analysis. Frequency
analysis will be helpful in tallying the information gathered as primary data with proposed
research questions. On the other hand, inferential analysis will help to explore in-depth
knowledge about research issues along with effective framework for conducting future studies on
similar research topic.
1.5 Plan and procedure for research project specification
Main activities First
week
Second
Week
Third
Week
Fourth
week
Fifth
week
Fifth
week
Sixth
week
Choosing research topic

Collecting the secondary
information or data
 
Literature review
 
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Consumer behaviour
Forming research plan

Collecting primary information or
data
 
Analyzing the collected primary
data
 
Findings

Draft for formation

Submission of Project

Table 1: Gantt chart for plan and procedure of research project specification
(Source: Created by author)
Task 2
2.1 Matching resources with research question
The information provided about key references was effective enough to address the current
research question. Ample theories and literatures have been used wisely for gathering more
information about research topic. However, the secondary information or data collected in this
research project were not sufficient to derive successful accomplishment of the project.
Therefore, primary data or information has been collected for successfully conducting the
research and achieving the appropriate findings from the research. Apart from that, through
identifying present barriers of Primark, researcher has given relevant suggestions using SMART
recommendation format for filling out those gaps or loopholes.
2.2 Undertaking research investigation
For conducting this study, the researcher has undertaken deductive research approach with
descriptive research design as the researcher plans to evaluate specific primary data with the help
of secondary theories to acquire specific findings (Adams and Lawrence, 2014). On the other
hand, positivism research philosophy has been used in the study to evaluate the research issue
from different perspectives (Baskerville and Wood-Harper, 2016). Only quantitative data is
acquired through the survey as they avail an opportunity to evaluate the feedback based on
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Consumer behaviour
frequency. For choosing the respondents, the researcher has applied probability sampling method
along with simple random sampling technique and has approached 30 customers of Primark. The
chosen customers are availed survey questionnaire containing 10close ended MCQ type
questions that are developed based on Likert’s scale (Costello and Welch, 2014).
After collecting the feedback from respondents, the researcher identified that some of the
questionnaires were incomplete. Therefore, the researcher in this study would use the responses
from only correctly filled 23 questionnaires for the data analysis. This acquired data has been
presented in the following section with the help of table and charts and mean, median, mode and
standard deviation is calculated for statistical analysis.
2.3 Data presentation
Q1. Please specify your gender.
Options Total responses Number of responses Response %
Female 23 9 39%
Male 23 14 61%
Table 2.1: Age of respondents
Female Male
0%
10%
20%
30%
40%
50%
60%
70%
39%
61%
Response %
Figure 2.1: Age of respondents
Q2. Please specify your age.
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Consumer behaviour
Options Total responses Number of responses Response %
18 - 25 Years 23 7 30%
26 - 35 Years 23 5 22%
36 - 45 Years 23 4 17%
46 – 55 Years 23 3 13%
Above 55 23 4 17%
Table 2.2: Age of respondents
18 - 25 Years 26 - 35 Years 36 - 45 Years 46 – 55 Years Above 55
0%
5%
10%
15%
20%
25%
30%
35%
30%
22%
17%
13%
17%
Response %
Figure 2.2: Age of respondents
Q3. Since how long have you been customers of Primark?
Options Total responses Number of responses Response %
3 months 23 2 9%
6 months 23 4 17%
Around 1 year 23 7 30%
2-4 years 23 5 22%
5 years or above 23 5 22%
Table 2.3: Customer retention of Primark
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Consumer behaviour
3 months 6 months Around 1 year 2-4 years 5 years or above
0%
5%
10%
15%
20%
25%
30%
35%
9%
17%
30%
22% 22%
Response %
Figure 2.3: Customer retention of Primark
Q4. How frequently does Primark offer you reward facilities and loyalty points?
Options Total responses Number of responses Response %
Very frequently 23 6 26%
Often 23 9 39%
Sometimes 23 5 22%
Rarely 23 3 13%
Never 23 0 0%
Mean Median Mode SD
2.347826087 2 2 1.265223504
Table 2.4: Frequency of rewards and loyalty offered
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Consumer behaviour
Very frequently Often Sometimes Rarely Never
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
26%
39%
22%
13%
0%
Response %
Figure 2.4: Frequency of rewards and loyalty offered
Q5. How far are you satisfied with the loyalty schemes introduced by Primark?
Options Total responses Number of responses Response %
Strongly Satisfied 23 3 13%
Satisfied 23 9 39%
Neutral 23 2 9%
Dissatisfied 23 7 30%
Strongly Dissatisfied 23 2 9%
Mean Median Mode SD
2.826086957 2 2 1.266784545
Table 2.5: Customer satisfaction with loyalty schemes
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Consumer behaviour
Strongly Satisfied Satisfied Neutral Dissatisfied Strongly Dissatisfied
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
13%
39%
9%
30%
9%
Response %
Figure 2.5: Customer satisfaction with loyalty schemes
Q6. How far are you satisfied with the type of rewards availed in Primark?
Options Total responses Number of responses Response %
Strongly Satisfied 23 3 13%
Satisfied 23 7 30%
Neutral 23 4 17%
Dissatisfied 23 8 35%
Strongly Dissatisfied 23 1 4%
Mean Median Mode SD
2.869565217 3 4 1.179535649
Table 2.6: Customer satisfaction with rewards
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Consumer behaviour
Strongly Satisfied Satisfied Neutral Dissatisfied Strongly Dissatisfied
0%
5%
10%
15%
20%
25%
30%
35%
40%
13%
30%
17%
35%
4%
Response %
Figure 2.6: Customer satisfaction with rewards
Q7. How far do you agree that your brand loyalty is encouraged or valued in Primark?
Options Total responses Number of responses Response %
Strongly Agree 23 4 17%
Agree 23 6 26%
Neutral 23 5 22%
Disagree 23 4 17%
Strongly disagree 23 4 17%
Mean Median Mode SD
2.913043478 3 2 1.378834932
Table 2.7: Value of customer loyalty in Primark
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Consumer behaviour
Strongly Agree Agree Neutral Disagree Strongly disagree
0%
5%
10%
15%
20%
25%
30%
17%
26%
22%
17% 17%
Response %
Figure 2.7: Value of customer loyalty in Primark
Q8. What are the different types of loyalty schemes that Primark has offered you yet?
Options Total responses Number of responses Response %
Reward points on
purchase
23 8 35%
Festive reward 23 2 9%
Loyalty card discount 23 4 17%
Loyalty points 23 6 26%
Notification about offer
days
23 3 13%
Table 2.8: Different loyalty schemes offered in Primark
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Consumer behaviour
Reward points on
purchase Festive reward Loyalty card
discount Loyalty points Notification about
offer days
0%
5%
10%
15%
20%
25%
30%
35%
40%
35%
9%
17%
26%
13%
Response %
Figure 2.8: Different loyalty schemes offered in Primark
Q9. What other type of loyalty or reward offers would you like to receive from Primark?
Options Total responses Number of responses Response %
Special sales for regular customers 23 3 13%
Special offers on birthdays of loyalty
card holders
23 7 30%
Live testing of new product 23 5 22%
Location based mobile marketing 23 6 26%
Others 23 2 9%
Table 2.9: Further demand of customers regarding rewards and loyalty schemes
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Consumer behaviour
Special sales for
regular customers Special offers on
birthdays of loyalty
card holders
Live testing of new
product Location based
mobile marketing Others
0%
5%
10%
15%
20%
25%
30%
35%
13%
30%
22%
26%
9%
Response %
Figure 2.9: Further demand of customers regarding rewards and loyalty schemes
Q10. What issues have you identified in the rewards and loyalty schemes offered by
Primark that affect your purchase experience?
Options Total responses Number of responses Response %
Not all offers availed to everyone 23 2 9%
Delayed reception of notification 23 3 13%
Limited period validity of rewards
points
23 10 43%
Limited period applicability of offers 23 8 35%
Others 23 0 0%
Mean Median Mode SD
3.043478261 3 3 0.928256473
Table 2.10: Issues in rewards and loyalty offers provided by Primark
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Consumer behaviour
Not all offers availed
to everyone Delayed reception
of notification Limited period
validity of rewards
points
Limited period
applicability of
offers
Others
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
9%
13%
43%
35%
0%
Response %
Figure 2.10: Issues in rewards and loyalty offers provided by Primark
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Consumer behaviour
Task 3
3.1 Choice of appropriate research evaluation technique
For analysis of the collected data, the researcher has utilised analytical measures such as
frequency analysis and inferential analysis. The frequency analysis has enabled the researcher to
identify the trends in responses of respondents to specific questions (Wahyuni, 2012).With the
help of inferential analysis, the identified data has been used to deduce deeper concepts
regarding the research issue that might help in not just the specific findings but also in future
studies.
3.2 Analysis and interpretation
From the data presented in the previous task, it is evident that Primark puts considerable effort
on generating customer loyalty with the help of reward based marketing which has helped the
organisation to retain its customers in long run. The response of the customers to question 4
avails the understanding that its customers are approached with loyalty schemes and rewards in
frequent interval, which is essential for retaining the preference of consumers.
Frequency analysis of question 4 and 5 avails the understanding that the consumers possess
different perception about the loyalty and reward schemes of the company. While majority of the
customers are satisfied with the loyalty schemes of the company in case of rewards majority of
the customers are dissatisfied. The reason behind such perception might be traced from the
responses to question 10 where around 43% of the respondents stated that limited validity of the
reward points availed by the company is an issue that hampers their purchase experience
applying reward points. Limited period of the applicability of the offers is another issue
perceived by the respondents that affect their purchase experience. It can be stated that these
issues can be considered as the hygiene factors, timely mitigation of which is essential for
ensuring that customers do not feel de-motivated regarding repeated purchase. On the other
hand, while asked to specify the loyalty and reward scheme that they would like to enjoy in
question 9, majority of the customers that is 30% and 26% of the respondents opted for offers on
birthdays and location-based marketing respectively. These strategies might be used as the
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Consumer behaviour
motivation factors, thus they might be applied in the marketing policies of the company to
motivate customers to retain their loyalty.
Moreover, response of the customers to question 9 avails the insight that consumers prefer
personal touch in the marketing activities. As observed in relationship marketing when the
consumers receive customised offers that they might perceive as sent especially to them it
generates certain sense of association among the customers regarding the company. Such sense
of association is crucial for generating long-term loyalty among the customers towards the
company.
3.3 Recommendation and future scope for research
Introduction of transferable reward points
SMART criteria Strategy
Specific Modification of reward point tracking system of the company to make it suitable for
recording transfer of reward points from one consumer to another or utilising
combination of reward points availed in different occasions for a single purchase
Measurable The increased sales performance of the company would be indicator of success of
this strategy
Achievable The organisation does not need to introduce a new technology or avail vast training
to the employees
Minor alteration in data management system of the company would ensure
applicability of this strategy
The reward point management facility might be availed to customers through
mobile app of the company further utilising mobile marketing
Reliable As observed in customer feedbacks, limited validity of the reward points
considerably demotivates customers to achieve the rewards, therefore, this might be
a reliable option to retain customer's interests in reward points and activities
required to achieve them, such as making purchase of a certain amount and so on.
Time bases This strategy is expected to be implemented within 2 months
Details of the time plan is availed in Gantt chart
Table 3.1: SMART recommendation
Actions Week Week Week Week Week Week Week Week
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Consumer behaviour
1 2 3 4 5 6 7 8
Need identification
Review of existing process
Areas of change identification
Plan development
Strategies identification
Implementation
Monitoring effect on small population
Problem identification
Rectification
Promotion of the new system
Application in larger population
Table 3.2: Gantt chart for SMART recommendation
Future researches:
Through the completion of this study, the researcher along with the understanding of the specific
marketing issues of Primark has also identified the relationship between loyalty and rewards
schemes and purchase behaviour of the consumers in general. It has also enabled the researcher
to identify certain sub-areas of this study that might require further contemplation for generating
proper knowledge about their applicability in business activities. The future studies in this field
might be conducted on the following three topics for acquiring extensive understanding of
different aspects of loyalty programmes and rewards:
 Influence of location based promotions on consumer purchase behaviour
 Significance of rewards as a positive reinforcement to customer buying behaviour
 Applicability of personalised loyalty schemes for boosting sales of premium and
economic products
Task 4
4.1 Presentation of result and recommendation
The result of the researchhas been presented by tallying it with research objectives:
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Consumer behaviour
Objective 1: This objective has been addressed with the help of secondary data evaluated in task
1. The information evaluated in that section availed detailed understanding of the significance of
rewards and loyalty schemes in customer preference development. It also helped in identifying
the different loyalty measures recently applied by the companies to acquire customer preference.
Objective 2: This objective is fulfilled through evaluation of responses for question 4, 5, 6 and
7. This part highlights the manner in which such strategies contribute to the organisational
development. By tallying answer to the question 3 and 4 it can be deduced that frequent loyalty
offers help the company in retaining its customers.
Objective 3: Question 10 addresses this objective by evaluating the factors in Primark’s loyalty
and reward schemes that affect customer’s positive perception of the company. The researcher
identified limited time base of the offers to be the most frequently perceived issue.
Objective 4: based on the identified issue and preferred loyalty measures of customers the
researcher recommended certain strategies to the company for improvement of its loyalty
measures that are provided in task 3. The topic for future studies is also suggested in this section.
Conclusion
Successful completion of this study has enabled the researcher to identify that Primark needs to
modify its loyalty and reward processes as per the preference and needs of customers for
encouraging better loyalty. It has also triggered the need for future and more in-depth study of
this topic that might point out further applicability of these strategies.
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