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Importance of boosting sales through Customer Relationship Management-a note for MBA (Marketing)

 

Defining Loyalty in the perspective of  Clubcard

In order to investigate the value of the XYZ Clubcard scheme, it is vital that an understanding and definition of loyalty is established. In the context of retail marketing loyalty can be perceived as “a combination of customer behavior and attitude” (Fraoch Marketing, 2006). Usually it is defined as activities carried out by an organization for the development of a long‐term relationship with its customers.

With this in mind, the concept of loyalty may initially appear to be rather simplistic.

However, there is an overwhelming amount of research focused on the definition and term for the notion of loyalty. Customer loyalty is acknowledged as a key concept whose importance has been recognized by many academics and practitioners.

“Questions that relates to loyalty were referred to more than 20 years ago” (Grisaffe, 2001). Upon further investigation and reading it can be seen that there is a lot more to the notion and as commented by Parker and Worthington (2000, pg 491) it is a “complex phenomenon”.

Most prominent insights into loyalty was provided by Dick and Basu (1994, pg 102), who cited loyalty as “the strength between relative attitude and repeat patronage”. Key to understanding this is the correlation between behavior and attitude. However this is not significantly sufficient as the perception could ascertain changes in behaviour and attitudes in the future. It has been suggested by scholars that loyalty is an emotional concept, as was viewed by Jenkinson (1995, pg 116) resists defining loyalty in behavioral terms and notes the concept of loyalty as “the reflection of a customer’s subconscious emotional and psychological need to find a constant satisfaction, identity and source of value”. This advocates that loyalty is an emotional concept created by trust. Humby and Hunt (2004, pg 17) have commented that “loyalty is an emotional response based on empathy”. To further the ideology and recognition that thoughts and feelings are active, East (1997, cited in Rowley, pg 539) comments “other variables such as social and physical environment as well as the personal abilities have been found to pre‐empt action”. Conversely this view could be seen as being “functionally loyal” (Barnes 2002) whereby customers are only loyal to a company due to convenience. Functional loyalty is often created by functional values such as distribution, price, quality, convenience or through different loyalty programs providing a tangible reason to prefer certain suppliers. Nonetheless, this gets quickly replicated by competitors, hence the creation of functional value only offers a short‐lived competitive advantage, functional loyalty can’t be very long lasting (Barnes, 2002).

Neal (2000 cited in Grisaffe 2001), states that “loyalty is a behaviour”, which has been considered as “arguably the most controversial (view) but the best supported by data. The

controversy comes about because loyalty is this model is defined mainly with reference to the types of earlier purchases with only secondary regard to underlying consumer motivations or commitment to the brand”, as was considered by (Ehrenberg, et al. 1998) Hardie, 1996; Kahn et al. 1988; Massey et al, 1970 as cited in Uncles, Dowling and Hammond, 2004, pg 94). Shapiro and Varian (1998, pg 128) believe that loyalty is concerned with repeat purchase or buying largely and exclusively from a single vendor.

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