We recommend Meredith Collins reintroduce the loyalty program in Reed Supermarkets. Currently, they are leading the Columbus area with a 14% market share. With the recent evolution of the food retailing industry, this number has remained stable for two years with no growth and is susceptible to further decline. Throughout the recession, customer loyalty has significantly diminished and by implementing a redesigned loyalty program, Reed Supermarkets will be able to incorporate low pricing on products, an increase in market share, and maintain their brand image.
Decision Options •Reintroduce Loyalty Program •Expand the “Dollar Special” Campaign •Continue on the Current Course Decision Criteria Among the relevant criteria to Meredith Collins’s decision, three are most essential. •Low Pricing on Products •increase market Share •Maintain brand image Proof of Recommended Option The first option is the preferred decision because it satisfies all three criteria. Based on customer survey data, as shown in Exhibit 1, Columbus area customers cite low prices as the most important factor when deciding where to grocery shop.
The Essay on Customer Loyalty and Customer Satisfaction
Customer Loyalty can be difficult to define given the different views that are presented within the literature. Zithaml, Berry and Parasuraman (1996) determine that loyalty includes a customer’s intention to stay with an organisation and that loyalty includes four elements: repurchase intentions, recommending the service provider to other customers, less complaints and tolerance of price ...
By reintroducing the loyalty program, Reed Supermarkets will be able to offer lower prices on products to the existing customers while continuing to offer the current pricing structure to nonmembers. According to the survey results, the top citing factors revolve around lowering prices. Exhibit 1 Reed email survey of 400 Columbus area customers, March 2010 Percent of customers citing factor as important to them% Citing factor Better prices75 Better discounts and coupons62 Double coupons47 Promotions and coupons that are mailed to my home44
Promotions and coupons that are emailed to me 34 More natural/healthy foods27 More local foods that are grown/produced near where I live26 Source: Reed email survey of current customers The CEO of Reed Supermarkets had set a Columbus market share target of 16% by 2011. Reintroducing the loyalty program will improve the retention rate of existing customers. It will allow Reed Supermarkets to reinforce social bonds with its existing customers. By increasing communication, this will help them determine the product selection that fits their customers’ individual needs.
In turn, they can utilize the profile data obtained to create a marketing campaign that targets and clones their best customers. As a result, Reed Supermarkets will increase their market share by drawing customers that meet their profile away from other market segments. Through this strategy, Reed Supermarkets will maintain their brand image because they can continue to offer the same high quality product and excellent customer service all while continuing to cater to consumers who meet their existing customer profile.
Evidence In sum, Collins needs to reintroduce the loyalty program in Reed Supermarkets in order to enhance customer relationships and maximize customer lifetime value. Critique of Reject Options Expand the “Dollar Special” Campaign Collins should reject the second option of taking the “Dollar Special” campaign route. Members of upper management felt that it detracted from the company’s quality image. In addition, steep discounts led to lower overall margins. The top three dollar special stores in Columbus are Dollar General, Dollar Tree, and Family Dollar which represent 0.
The Essay on Reed’s Supermarket Strategic Positioning
... customers than the market household average income. Whereby, they influenced their differentiation advantage throughout the supermarket ... That we have clearly exhibited the Columbus Market, the Competitors and their different Strategic ... the main concern of Reed Supermarkets, for which Reeds’ have been uniquely well ... them “remedies” to the present “Dollar Special Campaign” & other “Cost Advantage ...
61%, 0. 40%, and 0. 79% of the market share, respectively. The use of discounts became the main focus of the ad campaigns which was a clear departure from what has worked for Reed Supermarkets in the past—the ad focus centered on 250 items out of 50,000. Management also pointed out that people were coming in and buying only the dollar specials and lowering the overall transaction value of the average ticket by 40%. Continue on the Current Course Collins should reject the third option of continuing on the current course of waiting for the market share to come back post-recession.
CEO, Jack Morrisey, proposed staying the course as a result of his experience with past business cycles. The food retailing market in Columbus is dynamic. The new waves of competitors are capitalizing on niche markets caused by the recession. Consumers today are more price conscious than ever before and this approach does not take that into consideration. Even though Reed Supermarkets have quality scores that are high compared to others in the industry, consumers viewed them as not being price friendly, see Exhibit 2. Reed Supermarkets customer profile is somewhat unique.
The Reed Supermarket shoppers are older, more affluent, have a smaller household size than the typical consumer, have a tendency to be pet owners, and the median income is 12% higher than the household average in the Columbus market. In order to increase market share for 2011, the current model of waiting for the customer base to come back after the recession did not look promising. Exhibit 2 Consumer Perceptions of Supermarket Chains in the Columbus Market, 2008 – 2010 Price IndexQuality Index 200820092010200820092010 Reed4. 24. 34. 58. 38. 48. 4 Delfina4. 143. 98. 187. 8 Galaxy4. 54. 54.
66. 16. 16. 2 TopVal65. 95. 855. 55. 4 Whole Foods Market3. 83. 73. 58. 58. 78. 6 WalMart77. 27. 16. 26. 36. 3 Costco7. 576. 966. 26. 3 Trader Joe7. 27. 27. 56. 46. 56. 7 AldiN/AN/A8. 5N/AN/A6 Dollar GeneralN/A7. 37. 5N/A5. 15. 6 Family DollarN/A8. 18. 3N/A5. 35. 8 Source: Company records. 2010 data based on first six months of 2010 Note: Indices were developed on the basis of an annual survey of 400 principal food purchasers in the Columbus market. Respondents were asked to name the best, second best, third best, worst, second worst, and third worst retailers on price, quality, and value.
The Essay on Customer Satisfaction And Loyalty
As the world economy expands, customers have more choices for where they get their products and services. Satisfying customers is no longer enough. Even satisfies customers have many options that can easily attract them away from their current supplier. Retaining customers requires building loyalty, which not only includes customer satisfaction, but also and emotional response that keeps customers ...
On the basis of each respondent’s answers, points were assigned to each supermarket from 1 (worst) to 10 (best).
Figures in the chart represent mean index scores across all respondents. Disadvantages of Recommended Option The decision does have some disadvantages. Reed Supermarkets would be running the risk of alienating potential customers who do not wish to release personal information in order to sign up for the loyalty program. Action Plan Goal: Increase market share from 14% to 16% by reintroducing the loyalty program within a target time frame of six months to begin and one year to complete.
Short-Term Steps •Design a more effective loyalty program •Approval from upper management to reintroduce loyalty program •Sending out financial incentives to new and existing members •Maintain brand image through product and superior customer service Medium-Term Steps •Create a line of communication with loyalty program members through email, social media, and direct mail •Take feedback from customers and implement by adjusting product selection and incentives •Clone the best customer through data mining and create IMC campaign designed to acquire new customers
Long-Term Steps •Close the gap between the Dollar Store “fill-in trips” and “one-stop shopping” at super centers •Continue forging client relationships Risks and Countermeasures •If the loyalty program is not implemented correctly, we risk losing support from top management. •Once the program is implemented, not maintaining the program correctly and adhering to protocol can result in it being ineffective and unproductive. •Potential abuse of customer’s personal/private information.
