Assessing Customer Loyalty and Reward Schemes: Sainsbury's Case Study

This research project investigates the effectiveness of customer loyalty and reward schemes within the context of Sainsbury's supermarket, specifically focusing on its Paternoster Square location in London, UK. The study aims to determine if these schemes are successful in attracting and retaining customers, especially in a highly competitive retail environment. The project includes a research proposal outlining the scope, objectives, and methodology, followed by the research project itself. The research employs a descriptive and qualitative research design, utilizing both primary and secondary data collection methods. Data analysis involves thematic analysis to identify patterns in customer responses. The research also explores the concept of customer loyalty, the importance of reward systems, and the benefits of these schemes for retail businesses, considering factors like customer behavior and market competition. The findings provide recommendations for Sainsbury's to enhance customer loyalty and improve its marketing strategies.

RESEARCH PROJECT
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Table of Contents
TASK 1 RESEARCH PROPOSAL.................................................................................................3
1.1 Introduction............................................................................................................................3
1.2 Scope of the study..................................................................................................................3
1.3 Aim of research......................................................................................................................3
1.4 Objectives of the study..........................................................................................................4
1.5 Problem specification............................................................................................................4
1.6 Limitation of the study...........................................................................................................4
1.7 Research question..................................................................................................................4
1.8 Key benefits...........................................................................................................................4
1.9 Literature review....................................................................................................................5
1.10 Research methodology.........................................................................................................5
TASK 2 RESEARCH PROJECT....................................................................................................6
2.1 Effective utilization of resource to the research questions 5.................................................6
2.2 Undertaking the proposed research........................................................................................7
TASK 3 RESEARCH PROJECT....................................................................................................8
3.1 Evidence of recording and collecting data.............................................................................8
3.2 Interpretation and analysis of the results.............................................................................17
3.3 Evidence of evaluation of investigation...............................................................................20
3.4 Recommendation and justification for further consideration..............................................20
CONCLUSION..............................................................................................................................20
REFERENCES..............................................................................................................................21
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TASK 1 RESEARCH PROPOSAL
1.1 Formulation of process
In the present era, the business environment has become highly competitive and it is
changing at rapid speed. There is presence of several organizations that are competing for the
sake of survival within such environment. The role of customer loyalty as well as reward
schemes has increased to a greater extent as such it offers long term success to the business. This
is one that offers greater attraction to the target market. Reward schemes can be regarded as
major source of motivation for the customers who would make purchase at the retail business.
There is greater need for the business to make adoption of such marketing strategies in order to
promote the customers to make utilization of the services. Through purchasing of such schemes
the customers is able to gain the right to get discount on the current purchase. Customer loyalty
and reward schemes are considered as the unique aspects that are offered by the firm for the sake
of increasing its customer base in an effective manner. In the proposed investigation the
organization that is being taken into account is Sainsbury and the specific area is Paternoster
square in London UK. As the firm is second largest chain of supermarket thus it needs to develop
unique strategies that can work for it in an effective manner.
Scope of the study
The selection of the present research topic has been done by making analysis of the scope
of the subject matter. It has been examined that scope of present investigation is wider. This
implies that carrying out investigation on the present topic would assist the researcher in
attaining effective knowledge that will assist in future course of time. There is presence of less
number of investigation that are being carried out on the particular topic. This reflects that
carrying out research on the particular topic will help the researcher in gaining deeper knowledge
about the phenomenon. Moreover the study will help the retail business in knowing the outcomes
that can be attained through implementation of consumer loyalty and rewards schemes. Along
with this working of this can also be known in an effective manner. The organization would be
able to understand regarding the whether consumer loyalty and rewards schemes actually works.
1.2 Factors contribute
The problem in the present research is to know whether customer loyalty and reward
schemes works or not. The firm is supermarket chain that aims at offering quality products to the
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target market. It is important for the business to attain knowledge regarding how it works so that
it is able to attract the target market in an effective manner. The loyalty of the customer depends
on the kind of schemes that are being provided by the target market to the firm. This assist in
increasing the attractiveness of the target customers to a greater extent.
1.3 Key benefits
The major benefits that would be attained from the present investigation are presented in
the manner as below:
 The researcher would attain the knowledge regarding the investigation
 To determine whether consumer loyalty and rewards schemes works for the retail
business
 To assess the significance of consumer loyalty and rewards schemes
Limitation of the study
There would be presence of greater limitation for the present investigation. It has been
assessed that as the investigation needs to be accomplished within specified duration of time thus
there is presence of certain aspect that are being missed out. This demonstrates that time is
regarded as the main constraint because of which size of sample has been restricted within 100.
Another major limitation of the investigation is towards translating the questions within the
regional language that can take away certain meaning of what is meant by the respondents.
1.4 (Specification) Aim of research
The aim of the present study is: To assess whether consumer loyalty and rewards
schemes actually works: A case of Sainsbury Paternoster square.
Objectives of the study
The Objectives of the present report are enumerated in the manner as under:
 To explore the concept of consumer loyalty and rewards schemes
 To assess the significance of consumer loyalty and rewards schemes
 To determine whether consumer loyalty and rewards schemes works for the retail
business
 To recommend the options that can be used for attracting the target market
Research question
 What is the concept of consumer loyalty and rewards schemes?
 How significant is consumer loyalty and rewards schemes?
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 Do think whether consumer loyalty and rewards schemes works for the retail business ?
 What can be the alternative options that can be used for attracting the target market?
1.5 Literature review
There is greater importance of customer loyalty and reward scheme for the target market.
Such is considered as the kind of discount that is being offered to the customers so that they are
able to develop loyalty for the firm. Along with this it has importance in attracting the target
market to a greater extent. In the present time as there is greater competition thus it is important
for the firm to come up with something new that can increase the attractiveness. This assist the
business in increasing the base of the customer which results in increasing the sales and
profitability of the business to a greater extent.
In accordance with the views of Yoshida, M. and James, J.D., (2010) it has been
examined that customer loyalty and reward scheme works for the customers who are loyal and
make repeat purchases of the organizational product. Along with this such unique aspect assist
the business in getting an edge over the competitors as well. When the customers are provided
with new scheme they feel encouraged to buy the product. In addition to this it has been assessed
that such is regarded as strategy of marketing that increase awareness among the customers to
purchase the products and services. As per the views of Flint, Blocker and Boutin, (2011) this
has been determined that customers `needs are accomplished when they are offered with
schemes which build confidence among them in relation with organization.
Research methodology
There is existence of several tools related with research methodology that are being
utilized in order to conduct the research on specific topic that is whether consumer loyalty and
rewards schemes actually works. The in depth description in relation to all the research methods
utilized are as such. There is presence of several types of research design. In the present study
descriptive research design would be employed as such it assists in detail description regarding
the chosen topic. In addition to this the research type of the present thesis is qualitative. Here the
researcher is involved in assessing the behavior of the customers towards execution of the
customer loyalty as well as reward scheme. Thus such type of investigation is appropriate. The
collection of the data in the present investigation is done through both primary and secondary
sources. This helps in collecting adequate amount of information which can help in gaining
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suitable results. It has been determined that in the present investigation analysis of the data
would be carried out through qualitative technique. Under this thematic method would be
employed where on the basis of responses patterns are developed. The sampling that would be
selected is simple random and 50 respondents will be selected as respondents that includes
customer of Sainsbury.
TASK 2 RESEARCH PROJECT
2.1 Effective utilization of resource to the research questions 5
Concept of customer loyalty and reward schemes
As per the view of Yuksel, A., Yuksel, F. and Bilim, Y., (2010) customer loyalty can increase if
corporation offers attractive rewards to them. Customer behavior is so sensitive and they are
most attract toward such product and services which is available in the offers, discount price,
schemes etc. Customer loyalty refers the process under which customer choose to consistently
purchase the same brand of product and services again and again. Customer loyalty can assist to
business in gaining effective success and profitability because if customer repeatedly purchase
the product and services then company's profitability and sales can also increase. As per the view
of Flint, Blocker and Boutin, (2011) reward system for customer is that gifts which offered by
company in order to attract them toward the organization. It is the best option which helps to
attract the customer for purchasing the product and services from particular organization. Thus, it
can be said that customer loyalty and reward system has direct relationship as if company offers
reward schemes to customer then their customer loyalty can automatically increase. Customer
loyalty assist firm in developing effective brand image in the market and gain large market share.
Importance of consumer loyalty and reward system in the retail business
As per the view of Flint, Blocker and Boutin, (2011) in the retail businesses, attractive schemes
for customer is the best option through which company can attract the large number of customer.
In the present era, customer are mostly attracted toward effective rewards such as gift vouchers,
discount prices, festival schemes, discount sales etc. These all option of reward can very
beneficial for the retail business through which it can develop customer loyalty. Retail business
should offer attractive offers and reward schemes to customer so as they can repeatedly purchase
the product and services from the particular retail organization. As per the view of Yoshida and
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James, (2010) in order to gain effective success and enhance sales and profitability, retail
business needed to consider on the improving customer loyalty and reward system. For
enhancing customer loyalty toward business enterprise, company needs to consider effective
offers, discount, sales offers, gift vouchers etc. In the retail industry, there is high level of
competition available because there is various retail business operated in the UK. In order to
gain effective success and develop its own brand image in the market, reward system is the best
option for company through which customer loyalty can easily develop among the customer and
sales and profitability can automatically increase.
2.2 Undertaking the proposed research
The following research project assist in acquiring the knowledge about the customer loyalty and
reward system works in the retail businesses. In order to conduct the research, investigator have
to consider various methods and approach of research which are as follows-
Research Design- It is an important plan which assist in answering the research question and
meeting the objective of research. In this project, descriptive research design can used in order to
detail analysis of the study (Lushey and Munro, 2015).
Research technique- Research technique is another major part of the research which assists in
collecting and analyzing the research data. There are two type of research techniques that is
qualitative and quantitative (Mackey and Gass, 2015). In the following research project,
qualitative research technique has used because Here the researcher is involved in assessing the
behavior of the customers towards execution of the customer loyalty as well as reward scheme.
Thus such type of investigation is appropriate (Flick, 2015).
Data collection- Data collection is another major method of research through which investigator
can able to collect and analyze the information from various sources. There are two type of data
collection that is primary and secondary (Tarone, Gass and Cohen, 2013). In the following
research project, both primary and secondary data has used by the scholar. In the context of
primary data, investigator has conducted the survey of 50 customers of Sainsbury who regular
purchase the product and services from the company. On the other hand in order to collect the
information from the customer loyalty and reward system, scholar has used various secondary
resources such as books, magazines, newspaper, blogs, internet websites etc.
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Sampling- Sampling is a process under which scholar selects group of people in order to conduct
the survey , interview etc (Dumay and Cai, 2015). In this research project, researcher has used 50
respondent as a sample size.
TASK 3 RESEARCH PROJECT
3.1 Evidence of recording and collecting data
Name:___________________
Age:________________
Occupation:_____________
Sainsbury is one major retail chain in the UK?
 Yes
 No
Loyalty schemes that are prepared by the Sainsbury are effective.
 Strongly agree
 Agree
 Neutral
 Disagree
 Strongly disagree
Loyalty schemes prepared by the business firm help it in increasing number of customers in the
business.
 Strongly agree
 Agree
 Neutral
 Disagree
 Strongly disagree
Loyalty schemes that are prepared by the business firm are effective and help firm in competing
with Tesco and other rivals?
 Strongly agree
 Agree
 Neutral
 Disagree
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 Strongly disagree
Customer loyalty schemes affects your choice for the retail stores.
 Strongly agree
 Agree
 Neutral
 Disagree
 Strongly disagree
Loyalty schemes play a very important role in increasing competition between retail chains in
UK.
 Strongly agree
 Agree
 Neutral
 Disagree
 Strongly disagree
Do you think that there is a need to bring changes in the customer loyalty schemes?
 Yes
 No
Loyalty schemes help Sainsbury in competing with Lidl and Aldi.
 Strongly agree
 Agree
 Neutral
 Disagree
 Strongly disagree
Which of the below given factor firm must focus to attract target customers through loyalty
schemes?
 Allotment of fixed number of points on every visit to retail store irrespective of sale
 Allotment of points on basis of quantity of purchase
 There must be a difference on allotment of points on basis of offline and online purchase
 Allotment of points product wise
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Thematic analysis
Sainsbury is one major retail chain in the UK?
Yes 35
No 15
Figure 1Sainsbury command in the market
Loyalty schemes that are prepared by the Sainsbury are effective.
Strongly agree 15
Agree 17
Neutral 6
Disagree 7
Strongly disagree 5
Total 50
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Figure 2Effectiveness of loyalty schemes
Loyalty schemes prepared by the business firm help it in increasing number of customers in the
business.
Strongly agree 14
Agree 19
Neutral 5
Disagree 6
Strongly disagree 6
Total 50
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Figure 3Loyalty schemes and enhancement in number of customers
Loyalty schemes that are prepared by the business firm are effective and help firm in competing
with Tesco like giant market players?
Strongly agree 10
Agree 15
Neutral 7
Disagree 8
Strongly disagree 10
Total 50
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Figure 4Role that loyalty scheme play in helping firm in competing with giant retail chains
Customer loyalty schemes affects your choice for the retail stores.
Strongly agree 26
Agree 15
Neutral 1
Disagree 4
Strongly disagree 4
Total 50
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Figure 5Customer loyalty scheme and choice
Loyalty schemes play a very important role in increasing competition between retail chains in
UK.
Strongly agree 24
Agree 20
Neutral 1
Disagree 2
Strongly disagree 3
Total 50
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Figure 6Role that retail chain play in enhancing competition in UK
Do you think that there is a need to bring changes in the customer loyalty schemes?
Yes 40
No 10
Figure 7People opinion on changes that must be bring in loyalty schemes
Loyalty schemes help Sainsbury in competing with Lidl and Aldi.
Strongly agree 2
Agree 3
Neutral 1
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Disagree 24
Strongly disagree 20
Total 50
Figure 8Loyalty schemes and firm competition with Lidl and Aldi
Which of the below given factor firm must focus to attract target customers through loyalty schemes?
Allotment of fixed
number of points on
every visit to retail store
irrespective of sale 5
Allotment of points on
basis of quantity of
purchase 7
There must be a
difference on allotment
of points on basis of
offline and online
purchase 2
Allotment of points
product wise 36
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Figure 9Factors on which firm must focus to improve loyalty schemes
3.2 Interpretation and analysis of the results
Theme 1
Most of the respondents assume that Sainsbury is the one of the largest retail chain in the UK.
There are 35 respondents out of 50 who think that mentioned firm is the one of the largest retail
chain in the UK. Apart from this, there are 15 respondents who think that apart from the
mentioned firm there are other retail chains that are large in the UK like Tesco and Morrison etc.
It can be said that most of respondents have a common opinion that Sainsbury is leading the
retail industry in terms of profit and size.
Theme 2
Results are reflecting that most of respondents think that loyalty schemes that are prepared by the
Sainsbury are highly effective in nature. From the data it can be observed that there are 15
respondents who think that loyalty scheme is very effective for the firm. There are 17
respondents who state that they are agree on the fact that loyalty schemes prove effective for the
firm. There are only 6 respondents that are neutral on the asked statement. 7and 5 respondents
are disagree and strongly disagreed on the same statement. It can be said that respondents
strongly believed in the fact that loyalty scheme that is prepared by the business firm is highly
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effective and play an important role in attracting them towards the Sainsbury store for making a
purchase.
Theme 3
It can be observed from the table that is given in above section that there are 14 respondents that
are strongly agree with the fact that loyalty schemes that are prepared by the business firms play
an important role in attracting them towards the specific retail store. It is the reason due to which
loyalty scheme play a decisive role in enhancing number of customers in the business. There are
19 respondents that are agree with same statement followed by 5 people that are neutral, 6 are
disagree and same number of people are strongly disagreed on same statement. It can be said that
loyalty schemes play an important role in increasing number of customers in the firm business.
Theme 4
It can be observed from the fact that people have common assumption that loyalty schemes help
business firm in competing with rivals like Tesco effectively. 10 respondents are strongly agree
on the asked statement followed by 15 respondents that are agree on the same statement. There
are 7 respondents that are neutral followed by 8 and 10 respondents are disagree and strongly
disagree on the statement that is related to the role that loyalty scheme play in helping firm in
competing with Tesco. It can be deduced that majority of respondents have a common opinion
that relevant schemes to great extent help firm in competing with Tesco like retail chain.
Theme 5
It can be seen from the table that customer loyalty is playing leading role in affecting choice of
people in respect to retail chain. There are 26 people that are agree on the fact that they consider
loyalty scheme for selecting any retail chain for shopping. 15 respondents are agree on the fact
that they take in to account loyalty schemes that are currently in the market before deciding to
shop from any retail chain. 1 respondents is neutral followed by 4 respondent are disagree and
same are strongly disagree with the asked statement. It can be said that if loyalty scheme is
giving large benefits to the customers then their number can be increased in the business.
Theme 6
Most of the people have a common opinion that competition is increased between the retail
chains after loyalty scheme is bring by the firms in the market. This happened because loyalty
scheme ensure that cost of purchase will decline suddenly. Thus, in order to save money firms
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launch there schemes and due to this reason competition increased between them. There are 24
respondents that are strongly agree on the statement followed by 20 respondents are agree, 1 is
neutral, 2 and 3 respondents are disagree and strongly disagree on same statement. It can be said
that loyalty schemes play a major role in enhancing competition among the retail chains.
Theme 7
It can be seen from the table given above that there are 40 respondents out of 50 who think that
there is a need to bring changes customer loyalty schemes. Apart from this, there are only 10
respondents who state that there is no need to bring changes in the customer loyalty schemes. It
can be said that most of the respondents think that customer loyalty schemes need to be changed
and by doing so firms can elevate their performance by creating new customers in the business.
Theme 8
It can be seen from the table that respondents think that loyalty schemes does not help Sainsbury
in competing with Lidl and Aldi to great extent. There are 2 respondents that are strongly agree
followed by 3 respondents that are agree on same statement. One respondent is neutral on the
asked statement. There are 24 and 20 respondents that are disagree and strongly disagree on the
statement and believe that loyalty scheme does not help Sainsbury in any way in competing with
Lidl and Aldi. It must be noted that since 2013 collectively both firms market share increased by
70%.
Theme 9
It is reflected from the table that 36 respondents think that if there will be allotment of points by
considering products that they are purchasing from retail chain firm can attract target customers
to great extent. Apart from this, there are 5 respondents who think that there must be fix number
of points on every visit that people is doing in Sainsbury store. There are 7 respondents who state
that on the basis of quantity that is purchased points must be given under loyalty schemes. There
are only 2 respondents which state that by considering online and offline purchase points must be
given to the customers. Thus, it can be said that it is the product wise point’s allocation through
which target customers can be increased in the baseness at rapid rate.
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3.3 Evidence of evaluation of investigation
Results are clearly reflecting that Sainsbury formulate scheme and it proved effective for
same. It help business firm in competing with large retail giants like Tesco. However, same does
not help it in competing with Lidl and Aldi. This is because both firms are discount stores and
are making available products at very low price relative to Sainsbury. Thus, it was very difficult
for the firm to compete with these retails only on basis of loyalty schemes.
3.4 Recommendation and justification for further consideration
It is recommended that Sainsbury must continuously focus on the loyalty schemes and
must improve same because by doing so more and more people can be motivated to make
purchase from the mentioned firm retail store. It is also recommended that in order to compete
with Lidl and Aldi firm must try to generate economies of scale in its business because by doing
so it will be able to sale products at low price to the customers and will be able to give tough
competition to rivals.
CONCLUSION
On the basis of above discussion it is concluded that there is a huge importance of the
loyalty schemes for the business firms because by using same tough competition can be given to
the rivals. Along with this, it is also very important to cut down prices by generating economies
of scale in the business. By focusing on both sort of strategy business firm can increase its
market share and can maintain commendable position in the market. Time to time variation must
be bring in the loyalty schemes so that there must be something new to the business firm as part
of advertisement appeal to motivate people to visit retail chain number of times in the specific
time period. It can be said that there is a huge importance of the loyalty schemes for the business
firms and by using same market share can be maintained in the industry.
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