STUDY ON THE IMPACT OF RETAIL LOYALTY PROGRAMS ON

CONSUMERS BUYING BEHAVIOUR AND STORE LOYALTY IN

BANGALORE

Submitted to

Prof. Venkatesh Bhagwath

Asst. Professor, Christ University Institute of Management

Group No. 03
Bhagesh Kumar (1221208)

Chetan Kumar Dubey (1221209)

Chethan B S (1221211)

Dhiraj Suprit Mishra (1221213)

Sunny Singh Sodhi (1221239)

 ABSTRACT Commented [m1]: No Abstract. Delete this.

The organized retail business requires managers to strive for unique and
innovative strategies to acquire and retain customers to keep their business running.
Acquiring new customers is very expensive for the business, So many business
organizations are offering loyalty programs to retain/reward existing customers and
maintain a healthy relationship. The premise of customer relationship management is that
once a customer is locked in, it will be beneficial to both the business organization as well
as customer to maintain relationships and would be a win-win situation for both.
Consumers find it beneficial to join such programs to earn rewards for staying loyal.

This paper, exploratory in nature, attempts to provide a conceptual overview of

Loyalty in organized retail sector of Bangalore, the IT capital of India. It also throws light
on consumer expectations, perceptions and problems faced through in depth exploration.
Based on literature review and environment in India, an emerging economy, it attempts to
predict the impact of retail loyalty programs on consumers buying behavior and store
loyalty in Bangalore.

Keywords: Loyalty programs, Customer behavior, Retail, Store loyalty, Bangalore.

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1) INTRODUCTION: Commented [m2]: No indentation please !!!

Loyalty Program can be defined as a program that allows consumers to accumulate

free rewards when they make repeated purchases with a firm. (Yuping Liu, 2007).

In US, the value of loyalty programs was worth $6 billion in early 2000, and there were
2,250 separate loyalty programs. Recent study found that 90% of Americans actively participate
in some type of loyalty programs. Forrester research study found that 54% of primary US
grocery shoppers belong to 2 or more programs.

Everyone values loyalty presidents, generals, and friends. Thats no less true for Commented [m3]: Are u saying this?....

corporations. US companies spend $50 billion a year on loyalty programs. When done right,
loyalty programs can generate as much as 20 percent of a companys profits.

Loyalty marketing:
Customer loyalty and marketing is gaining importance and due importance and
transformed into a discipline. Studies suggest that bringing in new customer is expensive when
compared to retaining existing customers. The discipline of customer loyalty marketing has been
around for many years, but expansions from it merely being a model for conducting business to
becoming a vehicle for marketing and advertising have made it omnipresent in consumer
marketing organizations since the mid- to late-1990s.

Loyalty marketing is an approach to marketing, based on strategic management, in which

a company focuses on growing and retaining existing customers through
incentives. Branding, product marketing and loyalty marketing all form part of the customer
proposition the subjective assessment by the customer of whether to purchase a brand or not
based on the integrated combination of the value they receive from each of these marketing
disciplines.

Early adoption of loyalty programs was found in airline sector. Hotels, retail, financial
services, leisure sectors followed suit. FMCG sector also experimented through continuity

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 programs and loyalty clubs. It is observed that durable goods manufacturers, many service
businesses (like entertainment businesses-multiplexes, credit card providers) and organized retail
outlets have been using varied loyalty programs.

In this research, we will make attempt to predict the impact of organized retail loyalty Commented [m4]: Avoid first person address in the report..

programs on consumers buying behavior and store loyalty in Bangalore.

2) SCOPE OF THE STUDY:

This research shall be conducted in Bangalore and targeting shoppers of Pantaloons,

Shoppers stop, Kanti Sweets, Glenands and Westside to represent the above mentioned loyalty
card types.

3) OBJECTIVE OF THE RESEARCH

The objective of the research is to study the impact of loyalty programs on consumers
buying behavior, build lasting relationships, to gain profit through extended product usage &
cross selling, to gather information through the MIS reports which leads to strengthen customer
loyalty. Commented [m5]: Split this in to multiple objective
statements.
Remove company related objective.
4) RESEARCH PROBLEM
Impact of retail loyalty programs on consumers buying behavior and store loyalty in
Bangalore. Commented [m6]: This is not a problem !!

5) RESEARCH OBJECTIVE

Following are the research objectives:

Determine whether participants have changed or modified their purchasing behaviors and
attitudes after enrolling themselves in the loyalty card scheme.

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 To establish the influence of demographic information on Customer Loyalty Program
membership and non-membership. Commented [m7]: Are you saying that Do demographics
moderate the relationship between loyalty program and purchase
decision?

To determine consumers current knowledge and understanding of the purpose of a

customer loyalty program. Commented [m8]: First objective

6) LITERATURE REVIEW
Total of 15 research articles from well renowned Journals as well as consultancy firms
has been considered for the research and have been reviewed. Commented [m9]: Give summary of the review done

7) HYPOTHESIS Commented [m10]: Add variables before hypothesis

Hypothesis 1(H1):
There is a significant evidence to show that there exists a relationship between cash back
and customers buying behavior and store loyalty in organized retail.

Hypothesis 2(H2):
There is a significant evidence to show that there exists a relationship between rewards
and customers buying behavior and store loyalty in organized retail.

8) STUDY DESIGN:

Organized retail outlets such as Pantaloons, Shoppers stop, Kanti Sweets, Glenands and
Westside shall be our target destination where the consumers shall be interviewed.

9) STUDY POPULATION AND SAMPLING:

Simple random sampling shall be used as our sampling technique and the sample size
shall be 150 comprising men and women. Commented [m11]: Judgement sampling. Not SRS.

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10) DATA COLLECTION METHODS AND INSTRUMENTS:

A questionnaire or instrument shall be administered to conduct the study in which all the
mentioned variables are considered. The questionnaire shall be administered physically to the
respondents.

11) DATA ANALYSIS METHODS:

Following statistical techniques shall be used while performing the study:

a) Descriptive
b) Regression
c) Correlation
d) Factor Analysis

12) STUDY PERIOD:

This is three months long research project conducted in the organized retail outlets in Bangalore.

13) PROFILE OF PROJECT TEAM:

Sl. No. Name Role Functions Personal

Strengths &
skills
1.0 Bhagesh Kumar Team leader Formulation of Business proposal Analytical ,
& Questionnaire, Administration communication
of Questionnaire, Data and
interpretation, Presentation, Co- presentation
ordination between team for on skill
time completion of the project.

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2.0 Chethan B.S. Team member Formulation of Analytical ,
Business proposal & communication
Questionnaire, and presentation
Administration of skill
Questionnaire, Data
interpretation,
Presentation,
3.0 Chetan Kumar Dubey Team member Formulation of Analytical ,
Business proposal & communication
Questionnaire, and presentation
Administration of skill
Questionnaire, Data
interpretation,
Presentation,
4.0 Dheeraj Suprit Mishra Team member Formulation of Analytical ,
Business proposal & communication
Questionnaire, and presentation
Administration of skill
Questionnaire, Data
interpretation,
Presentation,
5.0 Sunny Singh Sodhi Team member Formulation of Analytical ,
Business proposal & communication
Questionnaire, and presentation
Administration of skill
Questionnaire, Data
interpretation,
Presentation,

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14) PROJECT SCHEDULE#:

DATE
MONTH FROM TO ACTION TO BE TAKEN
10.06.2013 22.06.2013 Research proposal and Literature review.
JUNE 24.06.2013 28.06.2013 Question formulation and finalization.
01.07.2013 13.07.2013 Questionnaire Administration.
22.07.2013 27.07.2013 Analysis and Interpretation.
JULY 29.07.2013 Final presentation.

# Dates are tentative.

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 REFERENCES

Ajay. (2012, May 17). Linkedin. Retrieved May 07.06.2013, 2013, from
http://www.linkedin.com/groups/Retail-Revolution-in-India-Loyalty-
4362148.S.116152429:

Giriprakash, K. (2005, December 24). The Hindu Business line. Retrieved June 12, 2013, from
http://www.thehindubusinessline.in/bline/2005/12/24/stories/2005122400130100.htm:
http://www.thehindubusinessline.in

Hoogenberg, M., & Ruiter, F. (2010). Customer centric loyalty programs as key to High
performance retailing. US: Accenture.

Sheela, A. M. (2010). Impact of the growth of organized food retailing and its impact on
traditional retailers in Bangalore. Bangalore: St. Joseph's college of commerce.

Singh, B. B. (2013, April 27). Loyalty Card Scheme - Are they really loyal . Retrieved 5 May,
2013, from http://www.ideasmakemarket.com/2013/04/loyalty-card-scheme-are-they-
really.html:

Srivastava, chetan, & G, B. (2011). Impact of loyalty program on retailing business in India:
creating long term customer relationships. India: International Academy of Business and
Economics.

Vyas, P. H., & Sinha, P. K. (2008). Loyalty Programmes : Practices, Avenue, Challenges.
Ahmedabad: IIM Ahmedabad.

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