Research Report: Customer Loyalty Schemes Relevance for M&S

This research project investigates the relevance of customer loyalty schemes, particularly within the context of Marks & Spencer (M&S). The report begins with an abstract and table of contents, followed by a literature review exploring the purpose of loyalty schemes, the drivers of customer loyalty, and the advantages and disadvantages of their implementation. The research methodology is then outlined, followed by data analysis, leading to conclusions and recommendations for M&S. The report also includes reflections, limitations, and references, providing a comprehensive analysis of the topic. The study aims to determine whether investing in customer loyalty programs is worthwhile, exploring the factors that influence customer loyalty and examining the benefits and drawbacks of such schemes. The rationale behind the research stems from the competitive business environment, where companies invest significantly in customer loyalty programs to retain customers and attract new ones.

RESEARCH PROJECT

Abstract
This report has highlighted the study on the issue which is being faced by the Mark and
spencer. After that the study has highlighted the opininon of different author on the issue which
is faced by the company. This report has then highlighted the different sort of the methodology
which is used by the scholar in finding out the solution of the issue and also data analysis of the
different data collected with the help of the primary data collecton tool. In the end report has
highlighted the reflection, conclusion and recommendation to the cited firm.

TABLE OF CONTENTS
Abstract ...........................................................................................................................................2
LITERATURE REVIEW...............................................................................................................5
RESEARCH METHODOLOGY.....................................................................................................9
DATA ANALYSIS........................................................................................................................11
CONCLUSION AND RECOMMENDATION.............................................................................19
REFLECTION...............................................................................................................................20
LIMITATION................................................................................................................................21
REFERENCES..............................................................................................................................22

Topic: Are customer loyalty schemes still relevant?
INTRODUCTION
Background:
In this era of digitalization, top companies are main focused upon the customers strategy
and wants to grab attention of many customers towards it. That is why, company start focusing
on developing new strategy that helps to meet the demand of customers. Now a days, companies
also wants to be competitive and that is why, they tries to offer range of products at low rate and
also focus on the promotional strategies so that it will helps to attract range of customers towards
it (Wang and et.al., 2016). Such that buy two get one free, customer loyalty schemes, flat
discounts, free coupons on maximum purchasing etc. Thus, the research project main aim is to
determine whether customer loyalty are relevant for top companies i.e. Marks and Spencer
(M&S). The study determine whether investing in customer loyalty is worth or not.
Aim: The aim of the research project is to determine the whether customer loyalty are relevant
for company. Also, this strategy help to attract range of customers towards it and assist to boost
sales of a firm or not.
Objectives:
 To explore the main purpose of loyalty schemes.
 To determine the factor that drive customer loyalty.
 To examine whether making efforts on customer loyalty schemes is worthy.
 To identify the advantage and disadvantage of using customer loyalty schemes,
Research questions:
 What are the main purpose of loyalty schemes?
 What drives customer loyalty?
 Is it worth the effort?
 What are the advantage and disadvantage?
Rationale: In the competitive era, company invest huge amount of money on customer
loyalty programs but many of them are not 100% successful because of strong competition and
most of the company also uses this strategy in order to retain customers and attract new ones.
Thus, the rationale behind choosing this particular topic is such that it will assist to determine the
importance of loyalty schemes within a firm in order to attract range of customers. Also, using

this method also assist to enhance the current knowledge related to this topic which can be used
in future as well. In addition to this, it is also analysed that customers join loyalty programs
because they want to save their own money by receiving rewards. Therefore, conducting study
on this topic will help to examine the advantage and disadvantage of using customer loyalty
programs which will also help in future.
Scope: The scope of conducting this study is such that it will help top industries to
determine the importance of using customer loyalty programs. Further, this study also assist
other researcher or scholar to collect information in their study so that they may get an idea
whether investing customers loyalty programs are beneficial or not for companies (Dorotic,
2019). In addition to this, it is also analysed that using customer loyalty programs, company can
gain trust from customers and feels that they are also an important part of the firm, which in turn
assist to sustain long term relationship as well.
LITERATURE REVIEW
Purpose of loyalty schemes
In the words of Ladsawut and Nunkoo, (2017) loyalty schemes and programs is the best
marketing strategy designed in order to attract the consumers and retain them. This is necessary
because of the fact that this is a good marketing strategy to attract more of the consumers and to
retain in the business. This includes the providing of consumers with some extra benefits and
perks so that they are connected within the company and purchase the goods and services. In
against of this Park, Kim and Kwon, (2017) argues that consumer loyalty is defined as the
willingness of consumer to purchase the goods and services on a regular basis from the same
brand. Thus, for the success of the company it is very necessary that the consumers remain loyal
to the company. The major reason is that the regularity of same consumer again and again will
increase the goodwill and market share of company to a great extent. This is basically due to the
fact that regular purchase illustrates that the consumer is liking the product and this displays that
the goods and services are of good quality.
As per the views of Rubio, Villaseñor and Yagüe, (2017) the major purpose of using the
loyalty scheme is to increase the market share by attracting more of the consumers. This is
necessary because the competition in the business environment is very large and it is very
necessary for companies to be in competition for getting success. Hence, for this the use of

loyalty cards and schemes is made as this provides and increases the number of loyal consumers
for the company and this in turn increases the sales of the company.
Also, in the views of Kumari and Chahal, (2017) the major purpose of using the loyalty
card scheme is that the loyal consumers spend more amount of money as compared to new
consumers. The major reason behind this fact is that the consumers which are used to the product
will keep on purchasing the product more often. Thus, this will increase the sales of company
and also this will increase the number of consumers. This is majorly because of the fact that
when other people will see that the company is having many frequent purchases by the same
consumers then other employees will also get attracted towards the product and services of the
company. Hence this will increase the overall sales and number of consumers for the company.
Wang, Hu and Liu. (2017) criticizes that the use of loyalty scheme and cards will assist
the company in reducing the marketing cost of the company. This is majorly because of the fact
that if the consumers are loyal with the company then this automatically increase the marketing
of the company without any effort. It is so majorly because of the reason that when there is
loyalty of same consumers then this will automatically attract other consumers and this will in
turn reduce the cost of marketing as other consumer will automatically get attracted.
Driver of consumer loyalty
As per the thinking of Ofori, Boakye and Narteh, (2018) there are many drivers which
influences the consumers to be loyal to one brand only. These drivers are some points or basis on
which the consumers get attracted and purchases the goods and services on a frequent basis. The
major driver is the attitude of the consumers. This is majorly because of the fact that if the
attitude of the consumer will be positive towards the product and services and the image of the
company then the consumer will be loyal.
The positive attitude of customers towards services or goods will be beneficial for
company as it help to generate their revenue and increase profitability. Attitude plays vital role in
consumer loyalty, it can be said that it is one of the most essential diver of it. Emotional and
sentimental attitude help in consumer loyalty, some people stick to a specific suppliers and
products due to their sentimental and emotional connection with that person and thing. This
attachment may be due to product feature and uniqueness. Physical location of supplier is the
base of attachment that help to increase consumer loyalty. Goods pattern and packaging provided
by supplier that exactly suits client due to esteemed assistance provided by supplier. This kind of

bonding will effectively enhance customers loyalty. Furthermore, number of other drivers under
attitude consider as driver of consumer loyalty such as rational type. Few clients take purchase
decision rationally without thinking too much. Before taking any things they conduct evaluation
and examine suppliers and assess profitability criteria, rational type of consumers always be
loyal towards products.
On the other hand Han and et.al., (2018) highlighted that different types of driver playing
their role towards driving consumer loyalty. Great customers service offered by firm play
effective and most important role as driver of client loyalty. When target market love goods and
feel valued when they purchase items from any firm, it drives towards consumer loyalty they
being always loyal with that thing for longer and purchase it with repetitive habit. When
Consumer feel respected when they get great services, they likely to form a positive emotional
connection with specific brand that keep them loyal for longer period. People appreciate pleasant
and friendly services when they make buy something, it keeps them connected with that services
or things for long period of time.
Aspects of goods could substantially help and contribute in retaining loyalty of
consumers. According to Vahabzadeh and et.al., (2017) differentiation in goods will help firm to
influence on consumers' mindset, nature and behaviour towards purchasing, it also helps to
reduce competition in market, that make customer always loyal for them. Product is the
significance driver of consumer loyalty instead of other, while buying things people always focus
on goods quality. When it must be good consumer stick with it for longer, but when it becomes
worst they never see or buy it again. By producing multiple goods, firms can enhance their
relationship with its clients and increase consumer loyalty because it is very essential as it helps
to increase consumer base and support to gain competitive benefits. By offering different goods
to same consumers organization effectively retain its target market and increase level of loyalty
towards products as well as business. When individual client is loyal towards specific brand, then
there are the best chances to retain their loyalty for entire range of brands.
Worth of using customer loyalty schemes
According to Nastasoiu and Vandenbosch (2019) loyal customers always tell their family
and friends about the positive experience and if company uses customer loyalty programs the It
will be more beneficial for the company to increase the brand image of the firm. Further,
investing upon these customer loyalty programs will also help to increase customer retention and

determine the need and wants of customer as well. Not only this, Pesonen, Komppula and
Murphy (2019) also stated that it is worth of using customer loyalty because it leads to better
customer communication and this in turn assist to raise the brand image of the firm as well. Not
only this, investing upon the customer loyalty programs also assist to market saturation and in
this competitive working environment, most of the company should use best loyalty programs
which is based upon the sustainable competitive advantage.
He, Tian and Wang (2019) stated that investing in the customer loyalty programs also
leads to repeat business and also reduce marketing cost too which in turn assist to improve the
brand image and also forecast accuracy. Hence, this is also increase the selling opportunities and
minimize service cost as well, which in turn assist to attract range of customers towards it.
Advantage and disadvantage of using customer loyalty schemes
Gopalakrishnan and et.al., (2019) stated that customer retention is the primary motive
behind every loyalty program in which company needs to retain their customer. Such that many
studies also state that loyalty programs increase the overall revenue up to 10% and most of the
members also spend 20% as compared to non members on average. Another advantage of using
this method is such that it increases customer communication and also offers a direct line to
customers in order to make communication easier. Ladsawut and Nunkoo, (2017) explain that
another benefit of using customer loyalty schemes is such that it increases brand differentiation
which means help to distinguish business from competitors. Further, reward programs also assist
customer to choose business by their own.
On the other other side, Kim and Kwon, (2017) argued that there are different limitation
of using customer loyalty programs such that customer panel data may also be more
representative as compared to loyalty card member data. Also, customer also feel offended
sometimes, if they are uncomfortable while sharing the sensitive information in order to get best
incentives of the programs. Along with this, perhaps the data also did not be accurately reflect
about customer loyalty and it is so because frequent buyer is not necessarily a loyal one. That is
why, most of the top company did not use this method in order to get the best outcomes.
In addition to this , Rubio, Villaseñor and Yagüe, (2017) stated that reward programs are
also expensive and by providing discount on the specific products will also lead to somehow
damage the overall financial performance of the firm in negative manner. More that 75% of the
top multinational companies also have loyalty programs which also generate return on

investment and in the same time, if the discount are balance and if programs are effective then
company are able to recoup any losses.
RESEARCH METHODOLOGY
Research methodology is the specific process which is used to select, process as well as
analyse the information relate to specific topic. This section assist researcher to determine the
overall study's reliability and validity. Further, the key element of research methodology section
are as mention below:
Research method: There are three main types of research method such that qualitative,
quantitative and mixed research methods (Kumar, 2019). for the current study, qualitative
research study is used that assist to explain the overall view point of selected respondents.
Through this method, researcher also conduct the overall study in more precise manner so that it
will easily meet the defined aim and objectives.
Research philosophy: It is the notion which is used to collect the information and
conduct the research in precise manner. Research philosophy also involves to formulate beliefs
and assumptions. There are four types of research philosophy such that Realism, Interpretivism,
Positivism and Pragmatism. Among all, researcher chooses interpretivism research philosophy
that integrates human interest into a study and also access to reality. Further, this method also
assist to focus on aim and also reflect different aspect of issue. Through this method, researcher
may easily determine whether customer loyalty programs are worth or not.
Research approach: Research approach is that plan or procedure which consist to
different steps with a broad assumptions into a detail method of data collection, analysis. This
method also assist to determine how research problem is assessed. There are three types of
research approach such that deductive, inductive and deductive (De Costa, Crowther and
Maloney, 2019). Among all, inductive research approach has been chooses in order to answer the
research problem in better manner. Further, this method also involves the search for pattern from
observation and development of explanation. Hence, this method also assist to conduct the
research in more precise manner and also determine whether customer loyalty is worthy or not.
Data collection: It is the method or process of collecting the information which enable a
researcher to answer the research question. Further, there are two types of data collection
methods which are also used by researcher i.e. primary and secondary data collection method.

Under primary, researcher chooses questionnaire method under survey method that helps to
determine the overall view of selected sample (Gray, 2019). While on the other side, for
secondary research method, researcher chooses relevant articles, journals and books related to
topic so that it will assist to determine the answer of research question. This method examine
whether investing in customer loyalty programs are worthy or not.
Data analysis: It refers to that procedure which is used to inspecting, cleansing and
transforming the data with a goal of discovering useful information so that it will lead to generate
the overall conclusion. Moreover, in order to meet the defined aim and objectives, researcher
chooses thematic data analysis method under qualitative data analysis method in which different
graphs and pictures are used that helps to examine views of selected sample. Moreover, this
method also assist scholar to take better decision and answer all the research question in more
better manner.
Sampling: It is the process through which researcher determine number of observation
which are taken from the large population. Sampling will assist to determine the mindset and
perception of selected respondents and this will further assist to generate best results with regards
to topic. Moreover, there are two types of sampling probability and non- probability sampling
method (Ryder and et.al., 2019). Among all, researcher chooses random sampling method in
which it select 30 customer who help to determine the whether customer loyalty programs are
beneficial for the business and it will assist to meet the defined aim and objectives or not.
Ethical and considerations: It is another key element of the research methodology
section which specify researcher to conduct the research in more precise manner. Scholar should
take consent from the selected respondents prior to conducting study so that it will not cause any
harm to study (Sivell and et.al., 2019). Further, researcher should also make sure that they
maintain proper confidentiality and also make sure that there should not be any
miscommunication because it may leads to generate wrong results as well. Researcher should
also make sure that they will comply with Data protection act so that proper confidentiality will
maintained.
Limitation: There were many limitation which was seen by the scholar at the time of
conducting research for the cited firm. Selection of the sample size was the biggest limitation, as
it was getting difficult for the scholar in selecting the sample size for the project, but with the
help of the tutor and senior scholar was able to select the sample size for the project. Another

limitation of the study was the lack of the previous studies on the topic of the study or supportive
topic, but with the help of the different article of different author, scholar was able to carry out
the outcome of the research.
DATA ANALYSIS
Theme 1: “Knowledge about the topic”
Particular Number of respondent Percentage of respondent
Yes 28 93.33
No 2 6.67
Total 30 100
Interpretation: Collected data through survey has helped the scholar in understanding
that there is good sort of knowledge about customer loyalty scheme in the organization, this is
very positive sign for the organization. As it will help the company in bringing the variety of the
new policy in the organization very comfortably. As all the employee will provide a good sort of
support to the organization in different condition of the organization. This will also help the
organization, as it is very important for the organization to have a good sort of the employee
support to bring different customer loyalty scheme in an organization. Collected data shows that
Yes No
0
10
20
30
40
50
60
70
80
90
100 93.33
6.67
Percentage of respondent

out of pool of total 30 respondent 28 respondent has choose the option of yes and remaining 2
respondent has choose the option of no in the survey.
Theme 2: “Main factor which used to drive the customer loyalty”
Particular Number of respondent Percentage of respondent
Positive attitude 2 6.67
Physical location of store 3 10.00
Customer Service 12 40
Differentiation in goods 13 43.33
Total 30 100
Interpretation: Collected data with the help of primary data collection tool, it has been
interpreted that there are two main factor which used to drive the customer loyalty scheme in the
market. As there 25 respondent out of 30 respondent has gone with customer service and
Differentiate good ( Specifically 12 respondent customer service and 13 respondent has gone
6.67
10.00
40.00
43.33 Positive attitude
physical location of store
Customer Service
Differentiation in goods