Effectiveness of Loyalty Cards

MARKETING RESEARCH
TOPIC: LOYALTY CARDS
SUBMITTED TO: DR.JINAL PARIKH
SUBMITTED BY:
GROUP 14
ABHIK SHAH 65
ARCHI SHAH 67
HARSH SHAH 69
PARSHWA SHAH 73
RIYA SHAH 74
SIDDHARTH SHAH 76
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Study on the Effectiveness of Loyalty Cards
Table of Contents
ABSTRACT .......................................................................................................................................................3
ACKNOWLEDEGEMENTS ............................................................................................................................4
CHAPTER ONE: ORIENTATION................................................................................................................5-7
1.1 Introduction ..............................................................................................................................................5
1.2 Why is this research being conducted ......................................................................................................6
1.3 Research Problem ....................................................................................................................................6
1.4 Research Objectives .................................................................................................................................6
1.5 Research Questions...............................................................................................................................6-7
1.6 Research Hypothesis ................................................................................................................................7
1.7 Limitations ...............................................................................................................................................7
CHAPTER TWO: RESEARCH METHODODLOGY............................................................................8-11

Why exploratory research design?.................................................................................................................8
DECIDING RESEARCH APPROACH....................................................................................................................... 8-11
CHAPTER THREE: PRIMARY DATA ANALYSIS...............................................................................12-25
4.1 Focused Group Discussion Analysis................................................................................................12-14
4.2 Analysis of Questionnaire.................................................................................................................15-25
CHAPTER FOUR: CORRELATION ANALYSIS...................................................................................26-32
CHAPTER FIVE: REGRESSION ANALYSIS.........................................................................................33-35
CONCLUSION................................................................................................................................................35
Annexure.....................................................................................................................................................36-43
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ABSTRACT
Apparel manufacturing is one of the most desired businesses today. With the advancements in the
technology, there are huge scopes for the apparel industry to make great strides soon and reap in rich
rewards. India ranks among the top target countries for any company sourcing textiles and apparel. There is
considerable debate as to the effectiveness of loyalty programmes in achieving customer loyalty.
Our study focussed on the effectiveness of loyalty cards in apparel industry in Ahmedabad. We evaluated the
effectiveness of loyalty cards in terms of the special price, service, convenience, extended guarantee rewards and
benefits, trust, awareness, ambience and store image. To explore the effectiveness of this loyalty card our group
has used qualitative as well as quantitative measures to get responses from respondents in order to know the
effectiveness of the loyalty cards. Under qualitative research we have used focus group discussion and under
quantitative research we have used questionnaires. Focus groups were conducted from which a questionnaire was
formulated. The questionnaire was then distributed to 420 consumers.
The study revealed that the respondents within the sample had an accurate understanding of the purpose of
a customer loyalty programme. A higher proportion of respondents belonged to one or more loyalty cards. It
was revealed; however, that membership to loyalty cards did not primarily influence purchasing behaviour.
Consumers were also influenced to join and use the loyalty cards by the rewards and perks, service offered
by the retail store.
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ACKNOWLEDEGEMENTS
I am sincerely thankful and appreciate to everyone who has contributed to the presentation of this report.
Of particular mention are the following individuals,
Dr.Jinal parikh, our research faculty. Thank you for your enthusiasm, guidance and support throughout the
research process.


 and friends, who offered constant words of encouragement and support throughout the research
To our family
process.
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CHAPTER ONE: ORIENTATION
1.1 Introduction
It is very important in today’s world to retain customers and to improvise the relationship with customers.
For this, retailers carry on the Customer Relationship Management and Loyalty Card Programs are one of
the strategies used by them. An effective loyalty card program helps customer patronizes one store for his
shopping needs.
The main objective of this research is to study whether the loyalty cards are effective in creating loyalty
amongst customers or not and to study customers inclination towards polygamous loyalty and the factors
affecting their decision. The current problem focuses on the loyalty mechanism that these loyalty cards are
not able to create loyalty amongst customer and hence towards one store.
Many of the earlier researches have been conducted on loyalty cards but hardly any focuses on its
effectiveness and factors resulting polygamous loyalty.
The research has been conducted using two research designs; conclusive research design and exploratory
research design. Through conclusive research design, we tested the hypothesis that were derived on the basis
of the research questions and examined the relationship between variables resulting polygamous loyalty.
With the help of the exploratory research design, research questions were answered. It enabled us to
understand the issue thoroughly by gathering information. For conducting our research we have used
quantitative as well as qualitative research method and have used questionnaires for data collection under
quantitative research and focus group discussions under qualitative research method. At 95% confidence
level, our sample size for questionnaire comes to 385 but as an upper limit, we have taken samples from 420
respondents. Also, we have had 5 focused group discussions with 5 to 8 respondents in each group.
The data is analysed through pie charts using some of the statistical tools like regression and correlation.
There is an inverse relationship between the number of loyalty cards a respondent has and its service. As a
result, a respondent won’t be loyal to one store expecting good service from other stores which will make
him a polygamous customer.
Similarly, there is an inverse relationship between number of loyalty cards a respondent has and the
convenience. This suggests that a respondent would purchase from a store because of convenience.
A similar kind of relationship was found between the numbers of loyalty cards a respondent has and the
rewards and benefits he receives. This means that if a customer is not satisfied with the rewards and benefits
offered by one store, he may visit another and another for good rewards and benefits which again results him
being polygamous.
There is an inverse relationship between the number of loyalty cards a respondent has and the value that is
delivered from that card. If a customer is not satisfied with the value, he might go to another store and vice-
versa.
In a similar manner, there is a correlation run between the number of loyalty cards a respondent has and;
extended guarantee, trust, awareness regarding the benefits and schemes, ambience, etc.
First we ran regression correlation between the factors and they were has significant relation. Then we ran
regression to see the
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Degree of relation between the dependent and independent variables. The overall model is significant and so
there is a significant relationship between the dependent and independent variables. Through regression, the
hypothesis that ownership of loyalty card leads to preference of a retail store is accepted.
Our addition to the research is that loyalty cards are able to generate loyalty amongst the consumers but the
effectiveness of this loyalty cards becomes much smaller when customers become polygamous in nature.
We brought into being the factors that lead to monogamous loyalty which include shopping from one
particular store, special discounts, reward and benefits, and convenience. The factors affecting polygamous
behaviour of card holders are rewards and benefits, discounts and offers, variety of goods, availability of
cards for free and special price.
The analysis results that spending at the store of which one has loyalty cards is impacted by whether the
respondent pays to get enrolled or not. Hence, our hypothesis, whether loyalty cards impact spending on a
store, is accepted.
To conclude loyalty cards are effective considering they provide value to the preference of store in the
minds of consumers. The apparel industry not only in India but across the globe is enormous. In such a
scenario factors such as quality, type, range, price etc., of products play a vital role in decision making of
preferences of store. With such huge blanket of factors, customers are surely going to be loyal but their
behaviour maybe more inclined towards polygamous loyalty.
1.2 Why is this research being conducted

In today’s competitive environment it is essential for retailers to improvise business relationship with
customers, for that they have to practice Customer relationship management. Loyalty card program is one of
the strategies used for customer retention and reward them for their frequent purchases. Issuing a loyalty
card does not necessarily create loyalty amongst customers. The purpose of our study is to know whether the
loyalty cards are effective in creating loyalty towards one particular store. To examine the understanding and
perceived knowledge customers have for usage of loyalty cards and its benefits. To gain insights into
perception of loyalty card holders and to study the effectiveness of loyalty card programmes in Ahmedabad.
To study how frequently they buy from a store and avail the benefits of the loyalty card, to study the card
holding pattern of consumers. To study consumers loyalty towards various brands due to loyalty cards. So
the group felt the need for carrying out this study.
1.3 Research Problem

It is very important for retailers to formulate strategies that will entice consumers to return. Loyalty program
is one of the strategies used for consumer retention. True loyalty implies that consumer patronises one store
for all his shopping needs. Most retailers think that issuing loyalty cards will make consumer loyal, but it is
not the case so. Consumers are not aware of the benefits that one can avail from loyalty cards. The current
problem focuses on loyalty mechanisms that are not creating ultimate loyalty to one particular store.
1.4 Research Objectives

1. To study whether the loyalty cards are able to generate loyalty amongst the consumers or not.
2. To study the consumers inclination towards polygamous loyalty and the factors affecting their decision.
1.5 Research Questions

1. Does loyalty card programme affect choice of retail store?
2. Are consumers aware of the benefits provided by the loyalty card programme?
3. Do consumers acquire loyalty cards because of the benefits and value provided by the loyalty programme?
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4. Are consumers polygamous in their behaviour towards loyalty cards?
1.6 Research Hypothesis
H0: Consumers are not aware of benefits provided by the loyalty card programme.
H1: Ownership of loyalty cards leads to preference of a retail store.

H2: Consumers are polygamous when it comes to loyalty towards retail stores.
1.7 Limitations
1. The scope of research is limited to only in Ahmedabad city.
2. The only area which we could focus on was the apparel Industry.
3. We studied only the loyalty card holders during the questionnaires.
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CHAPTER TWO: RESEARCH METHODODLOGY
The Research design classification that is universally followed and simple to comprehend is the one based
upon the objective or the purpose of the study. Research design or the blueprint that directs the research also
lays the foundation for conducting it effectively and efficiently.
There are basically two main types of research designs:
Conclusive research design
Exploratory research design
Conclusive Research Design
This research design is used to test hypotheses and examine relationships. Conclusive research is further
divided into causal and descriptive research designs.
Exploratory Research Design
Exploratory research intends merely to explore the research questions and is conducted for a problem that
has not been clearly defined. Exploratory research helps to understand an issue more thoroughly, before
attempting to quantify mass responses into statistically inferable data.
Exploratory research is done in areas/fields on which little or no previous research has been done. The
objective of exploratory research is to gather preliminary information that will help define problems and
suggest hypotheses.
Why exploratory research design?

We are conducting exploratory research design because not much of research has been done in apparel
industry in Ahmedabad before and also as a group we want to know what are the factors affecting the
effectiveness of loyalty cards.
DECIDING RESEARCH APPROACH.

Qualitative Research
Qualitative research can be used to explore, describe, and understand the reasons for a certain phenomenon.
It is loosely structured and open to interpretations. Data collection is done through interviews, observations,
focus group discussions etc.
We have used focus group discussion: A focus group discussion is a highly versatile and dynamic method
of collecting information from a representative group of respondents.
Quantitative Research
This research is used when the data to be studied needs to be quantified to a suitable analysis in order to
generalize the findings to the population at large. It is formatted and structured. Quantitative research
emphasizes objective measurements and the statistical, mathematical, or numerical analysis of data collected
through questionnaires, surveys etc.
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SAMPLING DESIGN
A sample design is made up of two elements: Sampling method and Estimator. Sampling method refers to
the rules and procedures by which some elements of the population are included in the sample. Some
common sampling methods are simple random sampling, stratified sampling, and cluster sampling.
SCOPE
The scope of our survey is to know whether the loyalty cards are effective in creating loyalty towards one
particular store. To gain insights into perception of loyalty card holders and to study the effectiveness of
loyalty card programs in Ahmedabad. To study how frequently they buy from a store and avail the benefits
of the loyalty card, to study the card holding pattern of consumers. To study consumers loyalty towards
various brands due to loyalty cards. So the group felt the need for carrying out this study.
SAMPLING METHODS USED
Target population: Males and Females of Ahmedabad.
Sampling unit: Males and Females living within the geographical boundaries of Ahmedabad and who have
loyalty cards of either one store or more than one store.
For conducting our research we have used quantitative as well as qualitative research method and have used
questionnaires for data collection under quantitative research and focus group discussions under qualitative
research method.
FOR FOCUS GROUP DISCUSSIONS
A focus group is a small group of six to ten people led through an open discussion by a skilled moderator.
We have conducted 5 focus groups which consist of people who have loyalty cards and also those who do
not have loyalty cards. The kind of focus group we conducted was of a question and answer type wherein
some questions were asked to participants related to the topic and the participants answered those questions.
Each focus group was for around 15 to 20 minutes. The participants were around 5 to 8 in each focus group
discussion that we conducted.
FOR QUESTIONNAIRES
Convenience sampling
Convenience sampling, as the name implies is a specific type of non-probability sampling method that relies
on data collection from population members who are conveniently available to participate in study. This
sampling method involves getting participants wherever you can find them and typically wherever is
convenient. This sampling technique helps in data collection in a shorter duration of timeand there is
simplicity in sampling since it is possible to get respondents at convenient time and place.
Snowball sampling:
Snowball sampling is a non-probability sampling technique that is used by researchers to identify potential
subjects in studies where the responses are obtained from respondents through references.It is also known as
chain sampling, chain-referral sampling, referral sampling. Here the responses are obtained through referrals.
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Snowball sampling may help you discover characteristics about a population that you weren’t aware ever
existed and also allows for studies to take place where otherwise it might be impossible to conduct because
of a lack of participants.
It facilitates respondents in a quick and an easy manner through
references SAMPLE SIZE
The sample size determined was 385 and considering the upper limit, we have taken 420 as our sample
size.(surveymonkey.com)
Population of Ahmedabad (age: 18-60 years) =
3800000 Confidence level=95%, margin of error=5%
Confidence level: A measure of how certain you are that your sample accurately reflects the population,
within its margin of error.
Margin of error: it is a percentage that describes how closely the answer of sample is to its true value of
population. Smaller margin of error indicates higher probability of exact answer at a given confidence level
Population Size = N Margin of error = e z-score = z

e is percentage, put into decimal form (for example, 5%=0.05)
The z-score is the number of standard deviations a given proportion is away from the mean
At 95% confidence level, z score is 1.96(taken from table)
DATA COLLECTION
Data collection is the process of gathering and measuring information on targeted variables in an
established systematic manner which enables one to answer relevant questions and evaluate outcomes.
Primary data
Secondary data
Primary data
Primary data refers to the type of information that is obtained directly from first-hand sources by means of
surveys. It is the data that is derived by the researcher specifically addressing the study and collected at the
source.
Focus group discussion
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The group intends to use FGD for the purpose of research since the group wants to know from the customers
whether loyalty cards are able to generate loyalty amongst them
Questionnaire
The group intends to use questionnaire for the purpose of research. This is one of the most common and
popular tools used for collecting primary data.
Secondary data.
Secondary data is the data that have been already collected by and readily available from other sources.
We have also used research papers, articles for our research.
DATA ANALYSIS
Data Analysis is the process of systematically applying statistical and/or logical techniques to describe and
evaluate data.
Method of Data analysis
The data has been explained through pie charts and some statistical tests like correlation and regression for
better understanding of data.
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CHAPTER THREE: PRIMARY DATA ANALYSIS
4.1 Focused Group Discussion Analysis
FGD 1:
Customers have loyalty cards of multiple stores which makes them disloyal on the first hand itself. Loyalty
cards are effective to an certain extend and the benefits or the points which are accumulated are very less.
During birthday weeks and anniversary weeks of customers, additional discounts or vouchers or coupons are
given to the customers in which means that companies are loyal to customers in spite of customer not being
loyal to them. Discounts which the customers get are very less in comparison to purchases. For ex. customer
makes a purchase worth Rs. 500 to Rs. 600, he gets 10 to 12 points which is equal to Rs.10 or Rs. 12 and
that is very less.
Another aspect to be looked upon as is consumers loyal to the issuing company or are they polygamous in
nature. The responses were Customer is polygamous in his behavior as he is greedy. He buys loyalty card of
different stores to avail discounts and rewards not because he is loyal to the store. One of the responses was
like the services of the sales person like their manner of communication with the customer, readiness to
help, understanding customers taste, helping customers with sizes, colors, pairing up clothes for them etc.
counts while choosing a store.
The respondents some being the experts in the field gave some suggestions to make the loyalty cards as per
their experience. Apparel industry is large and giving them same benefits as your competitors give would
not attract customers to be loyal to the store. So a differentiating factor in rewards should be introduced to
make loyalty cards effective. The stores should increase the proportion of rewards in terms of points that
they give. They should almost double the rewards that they are giving currently.
FGD 2:
Customers main reasons behind enrolling into a loyalty programme is to get regular updates about arrival of
stocks, offers, discounts and some of the special services that are given to the card holder like separate
billing counter, the discounted stock is offered first to them etc. So customers purpose behind buying loyalty
card is getting these benefits and not because of their loyalty towards the store. Some of the suggestions
given by the card holder to make loyalty card programme more effective were like stores should keep a
separate stocks of products which are different from those offered to normal customers for the loyal
members. This would attract the customer to buy from the particular store only. Store can also create sub
categories among their loyal customers and offer them additional benefits. Stores can also give additional
points to the customers if within a particular month they purchase above a set limit.
Stores try to target customers buy giving them additional points which can be redeemed as discount later,
but as these discounts are minimal and moreover customers are also not price sensitive. They would buy
products that they like so having a loyalty card of a particular store does not affect their purchase decision.
For the customer product range, availability of stock and quality of the product is important and not the price
or discounts. Thus Loyalty cards are effective in giving discounts to the card holders but are not effective in
generating loyalty towards a particular store.
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FGD 3:
In the focus group discussion conducted earlier, there were 6 respondents from the above question and the
responses, it is evident that various consumers sometimes don’t use their loyalty cards for their own specific
reasons. A brands image and loyalty plays an important role in the usage of the loyalty cards and on the
other hand, things like time and expiry date also plays a crucial role in the usage of the loyalty cards. The
other aspect can be analysed that consumers have a mix response for the benefit of loyalty cards in terms of
saving a lot of money. Three of six respondents said no to the benefit derived from the loyalty vouchers
because they feel it does not have a significant impact on the savings. Interestingly, it is also seen that
having the benefit to save more through vouchers make the consumer to spend even more, since they feel
they will get greater benefits. Some consumers think that shopping is only its worth when they save a lot of
money through loyalty vouchers. It was even found that products that offers extra loyalty benefits do have an
significant impact on the buying behaviour on the consumers, for the majority of the respondents it seems a
worthy decision to buy those products which offer extra loyalty points on their purchase and for the rest it
makes them unsatisfied as well as results in over spending to gain more points. It can be known that
consumers have a mix response for the overlapping importance of quality, consumers, and the ambience
over the benefits derived from the loyalty points.
FGD 4:
During focus group discussion we asked participants if they had loyalty card. Out of 6 respondents, 2 of
them didn’t had. When asked about reasons, they highlighted that: He shops once in a year and from one
particular store, Jade blue. The other reason stated by respondent was that there was one membership card
with family member so the respondent didn’t have loyalty card of her own. If companies choose to design
and customise it’s offering on basis of the transaction done by loyalty card holders, it should consider cases
where in it is not necessary that the transaction was performed by holder, it may lead to deviation in an
creating loyalty. Rewards and benefits are major component of a loyalty card program. Majority of
respondents considered it to be beneficial apart from one respondent for whom the status of VVIP was
beneficial. It shows that apart from discounts, the loyalty card holders find the services availed as a benefit
too. One of the objective of loyalty cards is customer retention. The respondents were clear that loyalty card
doesn’t affect the store selection, however one of the respondent mentioned that it affects when he has to
purchase medicine, as Apollo provides 10% discount. With similar benefits, the loyalty card mechanisms are
seen working in different industry. When asked to respondent who shopped from one particular store about
his willingness to pay and enrol for loyalty program, he refused to. He didn’t find it worth as the amount of
benefits that are provided to non-members and members are quite similar. They will be ready to pay, if the
loyalty card caters value to the members and make them feel privileged. Concluding the discussion, we
asked if loyalty cards helped them to be loyal to one particular store. The negative response showed loyalty
card’s inability to create loyalty and give rise to polygamous loyalty, where the customers are loyal to more
than one store/brand due to reasons like discounts provided, benefits given and services availed.
FGD 5:
During the focus group discussion, among the 6 respondents 4 of them didn’t have any loyalty cards.
According to them the benefits and reward points which they are able to earn by being a loyal customer is
very less. They think that being loyal to one or two stores can never happen, as many a times the store you
visit does not have what you want. One of the reasons is the benefits which are acquired by having a loyalty
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cards is very common and not so differentiating that one would like to get enrol for that. If you want to get
some extra benefits from the loyalty program, then you’ll have to pay for loyalty cards which are a strong
reason why people don’t like to go for enrolling loyalty cards. While the other two argued that if given a
choice to select a store they would first prefer going to the store of which they are having a loyalty cards.
They think that having loyalty cards helps them to be updated to the new schemes and offers. To the same
point the non-holders argued that the discounts and offers would be even made public after 2 days the
holders are made aware of, they would also get the same discounts as the holders are getting. No extra
discount schemes especially for holders are introduced. As such make it no more difference in holding or
not holding the cards. It’s one and the same thing only.
Overall Analysis
Rewards and benefits are major perks that loyalty cards holder receive. Looking at the response majority of
respondents revealed that the benefits they receive are similar to benefits provided by other stores, also during
SALE the discounts provided to loyalty card holders and non-holders had no major difference. This makes them
indifferent while selecting store when asked if they considered loyalty cards while deciding store to shop from.
Respondents who didn’t have any membership in loyalty card stated reasons like, shopping from one particular
store and negligible difference in discounts that they received as non-card holders.
Customer’s main reasons behind enrolling in a loyalty card program was to get regular update about
discounts, arrivals of stock, offers and some special services. It was observed that polygamous loyalty was
prevalent in respondents because they had loyalty cards of multiple stores and Respondents further stated
that they consider quality of products, ambience, brand image while deciding place to shop from.
Retailers can customize their loyalty program by mapping their shopping behaviour. It may fail when there
are more than one number of customers using one single card to collect points. We can say this because one
of the respondent used her mother’s card to collect payback points. It was observed that loyalty mechanism
are found working efficiently in other industry as respondents mentioned going to particular store like
Apollo pharmacy, Planet Health to buy medicines.
From the above mentioned analysis there is some basic information that we came across. It helped us to know
what trends and reasons affect the decision for taking up membership in loyalty card program. There were few
factors which were common amongst the all respondents during focused group discussion. On basis of primary
data that we collected during focused group discussion and from secondary data i.e. literature papers referred by
the group we framed our questionnaire to know the effectiveness of loyalty card.
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4.2 Analysis of Questionnaire

Age:
2% Age
4%
BELOW 18
19%
18-36
37-55
75%
55 AND ABOVE
Out if 420 respondents, 75% of them were under age group of 18-36 years. The minority age group is of 55
and above, contributing 2% of respondents.
Gender:
Gender
42%
FEMALE
58% MALE
58% of respondents were female and 42% of them were male.

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Q1. How many loyalty cards do you have?
Number of loyalty cards

27% 1
37%
2
3
24% 4 AND MORE

12%
From the above data gathered for the number of loyalty cards held by our respondents; 36.4% of them had
more than 4 loyalty cards. We can infer that they shop from more than one store. Considering loyalty card
holding pattern, 27.4% of them had loyalty card of only one store and looking at the other side 72.6% of
them had more than 1 loyalty cards, which suggests that they can be polygamous in loyalty towards stores.
Q2. State at least one reason of having only one loyalty card.
Reason for one card
16% Shop from one store only

6%
To get Discounts, Benefits
49% and Rewards
Convenience
29%
Others
When asked about reasons of having only one loyalty card, the result showed that 49% of respondents
shopped from one particular store. This suggests that the respondents are more inclined towards shopping
from a particular store and are loyal to it rather than benefits and rewards provided as 29% of respondents
agreed that they hold one loyalty card because of benefits and rewards they get as a loyalty card holder.
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Q3. State at least one reason of having more than one loyalty cards.
Reason for 2 or more cards

Rewards and benefits
4%
9%
Discounts and offers
29%
12%
Shop from more than one
store for variety
Free of cost
24%
22%
Special Service
Others
The above graph suggests that majority of respondents have more than one loyalty card because of the
benefits, rewards and discounts, i.e. 51%. We can interpret that respondents want to gain maximum benefit
from the loyalty cards that they hold, presence of POLYGAMOUS LOYALTY can be observed in such
case. The remaining reasons varied like more choice or options, free of cost, they shop from more than one
store and special service.
Q4. How much amount do you spend on clothes in a year?
Spending on clothes
4%
BELOW 5K
17%
28%
5K- 10K
10K- 15K
19% 32% 15K- 25K

25K & ABV
It was observed that 32% of respondents spent around 10-15K, which was in majority. The least spending
was below 5k which was voted by 4% of respondents. There wasn’t a major difference observed in the
respondents that spends 5-10k (17%) and 15k-25K (19%).
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Q5. How often do you use loyalty cards?
Usage of loyalty cards

5%
24% EVERYTIME
41%
VERY OFTEN
OFTEN
NEVER
30%
Loyalty card usage was noticed majorly as 41.2% of respondents used it every time and 30.2% of them used
it very often. Often usage was 24%. Remaining 3.6% of respondents never used loyalty card.
Q6. Would you pay to get enrolled for a loyalty card?
Pay to get enrolled
36%
YES
64% NO
Majority of respondents refused to pay for enrolment of loyalty cards, i.e. 63.8%. While, 36.2% of them
agreed to pay in order to get a loyalty card. We can infer that enrolment of loyalty card does not necessarily
create loyalty amongst consumers. As, decision of paying for loyalty card differs.
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Q7.State the reason why do you find that it was worth paying
Reason for is it worth paying

REWARDS N BENEFITS
40% 44% SPL TREATMENT N 1ST

PREFERENCE
INFORMD ABOUT
DISCOUNTS N
16% PROMOTIONS
OTHERS
Loyalty card delivers value to respondents who are ready to pay for loyalty card because 84% of them are
ready to pay for the benefits, rewards and discounts they receive. 16% of respondents enjoy first preference
as a loyalty card holder, which suggests that the value the services provided to them as a loyalty card holder.
Q8.Rate the statements and tick mark any one accordingly:
1) I prefer going to a particular store because of special price that I enjoy as a loyalty card holder
Special Price
7% 7% STRONGLY DISAGREE
DISAGREE
16%
26% SLIGHTLY DISAGREE
NEUTRAL
15% SLIGHTLY AGREE
AGREE
18% 11%
STRONGLY AGREE
It was observed that the respondents were indifferent in their response. Out of 420 respondents, 25.7%
which is majority among them do agree that they enjoy the special price, if we see the overall agreement, the
vote comes to 50.4% and overall disagreement vote came to 38.5%.We can infer that special price can be
effective in making customer loyal to a particular store.
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2) The service provided to me encourages me to purchase from store
Special Service
5%
6% STRONGLY DISAGREE
19% DISAGREE
25% SLIGHTY DISAGREE
NEUTRAL
15% SLIGHTY AGREE
19% AGREE
11%
STRONGLY AGREE
Majority of respondents, i.e. 25% strongly agreed that the services provided to them as a loyalty card holder
encourages them to shop from a particular store. It was only 19% of population that disagreed. If retailers
provide special service to consumers, it can prove to be effective as 50% of respondents agree that it
encourages them to shop from store.
3) Membership of a loyalty card makes my shopping experience convenient, which helps me to

choose a store for shopping
Convenience
7% 8% STRONGLY DISAGREE
15% DISAGREE
20%
SLIGHTLY DISAGREE
NEUTRAL
14%
SLIGHTLY AGREE
17%
AGREE
19%
STRONGLY AGREE
Considering the convenience that a loyalty card holder has, overall 45% of respondents voted in agreement,
19% of them were neutral and 36% of them disagreed. Convenience plays an important role in shopping
experience, if it is provided to customers than it can create loyalty amongst loyalty card holders as it helped
majority of respondents to choose store on basis of it.
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4) Rewards and benefits that I get as a loyalty card holder makes me revisit the store and re-
purchase from it.

4%
13% STRONGLY DISAGREE

10%
DISAGREE
12% SLIGHTLY DISAGREE
24% NEUTRAL
15% SLIGHTLY AGREE

AGREE
22% STRONGLY AGREE
The overall result shows that 59% of respondents agree that rewards and benefits that they receive as a
loyalty card holder makes them re visit store and re purchase from it and around 26% of them disagree. We
can interpret that the loyalty card mechanism are successful in generating loyalty from loyalty card holders
as it encourages them to re visit store and purchase again.
5) Extended guarantee that I get as a loyalty card holder affects my purchase decision
Extended Guarantee
7%
1 Strongly disagree
7%
2 disagree
19% 15%
3 slightly disagree
12% 4 neutral
5 slightly agree
22%
18% 6 agree
7 strongly agree
Extended guarantee is one of the benefits that is provided to loyalty card holders in most of loyalty
programs. It was noted that around 7% of respondents strongly agreed, 19% agreed, 22% slightly agreed
which comes to overall 48% of agreement. Looking at the other side, 34% disagreed and 18% of them were
neutral regarding this. We can interpret that extended guarantee can be beneficiary to retailers as it can
positively affect purchase decision.
P a g e | 22
6) I tend to trust the store if I own its membership card
Trust
7% 9% 1 STRONGLY DISAGREE
2 DISAGREE
18% 15%
3 SLIGHTLY DISAGREE
4 NEUTRAL
14%
16% 5 SLIGHTLY AGREE
6 AGREE
21%
7 STRONGLY AGREE
Respondents aren't very clear whether trust for a particular store is generated due to loyalty card they hold.
Majority of them i.e. 21% are neutral in their decision, whereas 18% of them agreed that it builds trust if
they hold a loyalty card for a particular store.
7) I am satisfied with the perks I enjoy as a loyalty card holder as it delivers value to me
Value
8% 7% 1 Strongly disagree
9%
2 disagree
3 slightly disagree
23%
13%
4 neutral
5 slightly agree
19% 21%
6 agree
7 strongly agree
Among 420 respondents, 23% of them do agree that they are satisfied with the perks they get as a loyalty
card holder, while on the other side 21% of them aren't very sure about the satisfaction they get after being
a loyalty card holder. So no clear inference could be carried out. Which suggests that 'THEY VALUE'
services provided to them as loyalty card holder.
P a g e | 23
8) I spend more at a store when I hold its loyalty card with comparison to a store where I do not
hold a loyalty card
Spend more at Loyalty card store

2 disagree
17% 22% 3 slightly disagree
4 neutral
22% 15%
5 slightly agree
14% 6 agree
7 strongly agree
Here, where 22% of them do slightly agree that they spend more at a particular store where they hold loyalty card
at the same time other 22% of them disagree that they don't spend more compared to the other where they don't
have a loyalty card. If we consider overall agreement, around 46% of respondents tend to spend more where they
hold a loyalty card. Retailers can increase their share of wallet if the loyalty card is effective.
9) I am aware of all the benefits that are provided by the loyalty card
Awareness of benefits
12%
2 disagree
3 slightly disagree
21% 16%
4 neutral
5 slightly agree
19% 17%
6 agree
7 strongly agree
One of our objectives is to know the awareness of benefits provided by loyalty card to their holders.
Findings were, around 51.43% overall agreed, 17.15 were neutral and 31.42% overall disagreed. We can
interpret that majority of respondents were aware of all benefits that are provided by loyalty card.
P a g e | 24
Rate the factors that are important for you as a loyalty card holder (Tick mark any one)
10) Ambience
Ambience
18% 11% 1 least important
9%
2 unimportant
3 neutral
37%
25% 4 important
5 most important
Majority of respondents, i.e. 36.9% find ambience to be an important factor and around 9% of them find it to
be an unimportant factor. At the same time, 25.2% of them are neutral regarding the ambience of store. We
can infer that ambience is not one of major factor that loyalty card holders consider.
11) Availability of goods
Availability of goods
5% 2%
1 least important
16%
2 unimportant
45%
3 neutral
32%
4 important
5 most important
With 45.53%, maximum number of respondents found availability of goods to be most important factor. It
was only 4.5% of respondents who find availability of goods to be of least importance. If the goods are
managed properly, the loyalty card can positively affect sale of goods as according to consumers it is an
important factor.
12) Store image
Store image
1% 4%
1 LEAST
IMPORTANT
32% 24%
2
UNIMPORTANT
39% 3 NEUTRAL
P a g e | 25
Considering overall importance, store image gets whopping vote of 71.2%. It was only 4.76% of
respondents who finds it to be unimportant. A store can leverage upon its image and develop business. New
customers can be enrolled in loyalty card program.
13) Special Service
Special service
1% 4%
1 least important
28% 21% 2 unimportant
3 neutral
4 important
46%
5 most important
Special service is one of the perk that customers receive as a loyalty card holder. It’s with majority of
45.71% of respondents consider special service to be important to them. It was only 3.8% of respondents
who find it unimportant. Stores can focus on delivering better services, hence satisfying customer’s needs.
14) Rewards and Benefits

0% 2%
1 least important
15%
2 unimportant
52% 3 neutral
31% 4 important
5 most important
Majority of respondents find Rewards and Benefit to be most important, that is 52%. Considering overall
results, 83% of votes were given in favour of importance and other side around 2.6% of respondents found it
unimportant. Rewards and benefits provided to loyalty card holders are considered to be important factors by
the loyalty card holders. That is why they are willing to pay for loyalty card and avail benefits. Respondents
also suggested that it makes them re visit store and purchase from it. Considering overall mechanism of
loyalty cards, we conclude that rewards, benefits and discounts help in generating loyalty. Apart from that,
loyalty card is effective in area where in holders enjoy special price, convenience provided & get extended
guarantee for products.
P a g e | 26
CHAPTER FOUR: CORRELATION ANALYSIS

Correlations
no of loyalty
cards a
respondent has service
no of loyalty cards aPearson Correlation 1 -.144**

respondent has
Sig. (2-tailed) .003
N 420 420
**
service Pearson Correlation -.144 1
N 420 420
**. Correlation is significant at the 0.01 level (2-tailed).
In the above given output the correlation between the number of loyalty cards respondents have and the service provided by the company. Here, the relationship between
service and loyalty cards is significant because = 0.01 which means it is less than ≤ 0.05. The relationship between service and loyalty cards is negative as per the Pearson
correlation, r is negative for both the variables i.e r = -0.144.
So, this kind of inverse relationship between the two suggests that if the respondent does not get good
services at a particular store then he will prefer to have more cards thinking that he might get good services
at other store. So, then he will keep on collecting cards thinking that as he has more cards he will get more
services. As a result he won’t be loyal to one store and will purchase goods from multiple stores this will
make him a polygamous customer. This behaviour of being polygamous card holder makes the efficiency of
the card becomes much smaller. Thus, the purchase frequency of the card holder towards that retail store
reduces. Reduction in purchase will in turn lead to reduction in spending.
P a g e | 27
Correlations
no of loyalty
cards a
respondent has convenience

respondent has
N 420 420
**
convenience Pearson Correlation -.262 1
N 420 420
In the above given output the correlation between the number of loyalty cards respondents have and convenience is shown. Here, the relationship between convenience and
loyalty cards is significant because = 0.01 which means it is less than ≤ 0.05. The relationship between convenience and loyalty cards is negative as per the Pearson
correlation, r is negative for both the variables i.e r = -0.262.
So, this kind of inverse relationship between the two suggests that if it is more convenient for the respondent to
visit a particular store it may be due to various reasons like it is near to his house or he gets all the products he
wants at that particular store or he may like to visit that store only. So, if a company will try to make certain
efforts and make its customers visit more convenient then there may be an increase in loyalty card holders
spending towards the store. This means the frequency of purchase visit by the card holder will increase. With the
increase in spending and purchase frequency there will be reduction in polygamous loyalty.
P a g e | 28
Correlations
no of loyalty
cards a
respondent has rewards_and_benefits

respondent has
N 420 420
**
rewards_and_benefits Pearson Correlation -.210 1
N 420 420

In the above given output the correlation between the number of loyalty cards respondents have and rewards and
benefits provided by a store is shown. Here, the relationship between rewards and benefits and loyalty cards is
significant because = 0.01 which means it is less than ≤ 0.05. The relationship between rewards and benefits and
loyalty cards is negative as per the Pearson correlation, r is negative for both the variables i.e. r = -0.210.
So, this kind of inverse relationship between the two suggests that if the customer or respondent gets
less rewards and benefits at a particular store then he will prefer to have more cards as one of the
main reason why people have loyalty cards is to get financial benefits i.e. additional discounts,
reward points, benefits etc. So, if a person has more cards then he can purchase apparels from
various stores to avail the financial benefits from those stores. This behavior of card holder makes
him polygamous in nature. Saturation may decrease the efficacy of loyalty initiatives with customers
manipulating the system by holding multiple loyalty cards so that financial advantages can be gained
wherever card holder choses to shop. Stores could possibly offer monogamous customers extra
financial benefits through special offers in order to reward their loyalty.
Correlations
P a g e | 29
no of loyalty cards
a respondent has delivers value

respondent has
N 420 420
delivers_value Pearson Correlation -.330** 1

N 420 420
In the above given output the correlation between the number of loyalty cards respondents have and value is shown. Here, the
relationship between trust and loyalty cards is significant because = 0.01 which means it is less than ≤ 0.05. The relationship between
value and loyalty cards is negative as per the Pearson correlation, r is negative for both the variables i.e. r = -0.330.
So, this kind of inverse relationship between the two suggests that if a store does not deliver value to a
respondent then he will prefer to have more cards and vice versa. If a customer finds that all the financial and
non-financial benefits that he avails provides him value then the number of loyalty cards holding reduces.
Companies should try and deliver more economic value to their card holder to increase the loyalty amongst the
card holders. Also the balance between the value and cost should be maintained to make the cards more
effective. The cost here may be monetary and non-monetary, when customers find value for their cost the
effectiveness of the card increases. This reduces the polygamous behaviour of the loyalty card holders.
Correlations
no of loyalty cards extended

a respondent has guarantee

respondent has
N 420 420
extended guarantee Pearson Correlation -.298** 1

N 420 420

P a g e | 30
In the above given output the correlation between the number of loyalty cards respondents have and extended guarantee
provided by the company is shown. Here, the relationship between extended guarantee and loyalty cards is significant
because = 0.01 which means it is less than ≤ 0.05. The relationship between extended guarantee and loyalty cards is
negative as per the Pearson correlation, r is negative for both the variables i.e r = -0.298.
So, this kind of inverse relationship between the two suggests that if the customer does not get extended
guarantee at a store then he will prefer to have more cards. Extended guarantee is a concern customers have
while making purchases. It eliminates the future costs of repairs and will lead to monetary benefits for the
card holders. Thus if a company provides more extended guarantee i.e. protection against cost of product
repair, exchanges or replacement, to those who have loyalty card can help in making customers loyal
towards their store. This will reduce the polygamous behaviour for the companies and will lead to increase
in frequency of purchase and this will lead to increase in spending. The effectiveness of loyalty cards may
increase with the increase in extended guarantee.
Correlations
no of loyalty
cards a
respondent has trust

respondent has
N 420 420
**
trust Pearson Correlation -.295 1
N 420 420
In the above given output the correlation between the number of loyalty cards respondents have and the trust shown towards a store by the
respondent is shown. Here, the relationship between trust and loyalty cards is significant because = 0.01 which means it is less than ≤ 0.05. The
relationship between trust and loyalty cards is negative as per the Pearson correlation, r is negative for both the variables i.e r = -0.295.
So, this kind of inverse relationship between the two suggests that if the respondent does not trust a
particular store then he will prefer to have more cards. The trust of card holder depends on the expectations
and the way they are met. Card holder might not trust the store may be because the store is unable to meet
the expectations of the customer. It is important for the store to meet the requirements of the customer so
that if his requirements are met the loyalty of the customer increases. But, if not then he may not be loyal to
one store and will not trust that store.
P a g e | 31
Correlations
no of loyalty
cards a
respondent has awareness

respondent has
N 420 420
**
awareness Pearson Correlation -.258 1
N 420 420
**. Correlation is significant at the 0.01 level (2-tailed)
In the above given output the correlation between the number of loyalty cards respondents have and awareness the
respondent has about the benefits provided by loyalty cards is shown. Here, the relationship between awareness and loyalty
cards is significant because = 0.01 which means it is less than ≤ 0.05. The relationship between awareness and loyalty
cards is negative as per the Pearson correlation, r is negative for both the variables i.e r = -0.258.
So, this kind of inverse relationship between the two suggests that if the respondent is not aware or less
aware of the benefits that can be availed by using loyalty cards then he will prefer to have more cards and
vice versa. If a customer does not know that as loyalty card holder what all benefits can be availed by him
then he may not be able to avail those benefits and may just keep on collecting cards without knowing
whether it is worth to own a loyalty card of a particular store of not. But, if the customer is aware of all the
benefits or even few benefits then he will try to take maximum advantage of those benefits and will invest
his money properly as some stores only.
P a g e | 32
Correlations
no of loyalty cards
a respondent has ambience
no of loyalty cards aPearson Correlation 1 .144**

respondent has
N 420 420
ambience Pearson Correlation .144** 1

N 420 420
In the above given output the correlation between the number of loyalty cards respondents have and ambience is shown. Here,
the relationship between ambience and loyalty cards is significant because = 0.01 which means it is less than ≤ 0.05. The
relationship between trust and loyalty cards is positive as per the Pearson correlation, r is negative for both the variables i.e. r =
0.144.
So, this kind of positive or direct relationship between the two suggests that if the respondent likes
ambience of stores then he will prefer to have more cards and vice versa. If a customer likes the
atmosphere of the store then he may own a card of that store. So, if there are many stores where a
respondent visits and he likes the atmosphere of all those stores then he is likely to hold more
cards. He may hold more cards without even knowing whether it is worth to have a loyalty card of
that store and will that store provide benefits. If the ambience is good it may not mean that the
retail store will provide benefits, services, guarantee, value etc. So, a customer should not only look
at the ambience but there are other factors to focus on that are more important.
All the above mentioned factors affect the effectiveness of loyalty cards.
Most of the factors have a negative relation with loyalty card. This suggests that if any loyalty
card holder does not get proper rewards and benefits, services, guarantee, value, trust and is not
aware of benefits then he will visit multiple stores. This will make him loyal to more than one
store. His share of wallet will also get distributed as he will spend at multiple stores to get more
benefits. As, he is a polygamous card holder his purchase frequency will reduce. Also, the time
that he might spend while shopping at one store will decrease as he now visits multiple retail
stores. All this results into making customers polygamous in their behavior.
The hypothesis that consumers are polygamous when it comes to loyalty towards retail store is
accepted.
P a g e | 33
CHAPTER FIVE: REGRESSION ANALYSIS

Model Summary
Change Statistics
Std. Error of the
Model R R Square Adjusted R Square Estimate R Square Change F Change df1 df2 Sig. F Change
1 .214a .046 .041 1.66101 .046 10.036 2 417 .000
a. Predictors: (Constant), whether the respondent pays to get enrolled , usage of cards
b. Dependent Variable: spending at store of which you have a loyalty card
Regression is done to check the degree of relationship between the dependent and independent variable. The
above given multiple regression output shows the relationship between the dependent and independent
variables. The dependent variable is spending at the store of which the respondent has a card and the
independent variables are usage of cards and whether the respondent pays to get enrolled or not. The overall
model is significant and so there is a significant relationship between the dependent and independent
variables. R square is 0.046 which means that 4% of change in the spending is caused due to usage and
whether the respondent is paying or not to get enrolled. Adjusted R square shows the relation between the
independent variable.
Coefficientsa
Unstandardized Standardized 95.0% Confidence Interval

Coefficients Coefficients for B
Model B Std. Error Beta t Sig. Lower Bound Upper Bound
1(Constant) 2.972 .393 7.556 .0002.199 3.745
usage of cards .912 .401 .109 2.274 .023 .124 1.700
whether the respondent pays to get .627 .169 .178 3.713 .000 .295 .960
enrolled
a. Dependent Variable: spending at store of which you have a loyalty card
Usage of cards:
The relation between usage of cards and spending is a positive or direct relationship. The variable is also
significant as p value is less than or equal to 0.05. The significance of the model suggests that spending at
the store of which one has loyalty cards is impacted by the usage of cards. B value is 0912. It can be
explained as: if the respondent spends 1 rupee at a store of which he has a card or not, but 0.012 rupees spent
is explained by usage of cards. Which also suggests that if the respondent uses a loyalty card sometimes or
always then he spends 0.912 rupees more on the store of which he has a card rather than spending it at some
other store and if he never uses the card then he will spend the 0.912 rupee at some other store of which he
does not have a loyalty card.
Whether the respondent pays to get enrolled or not:
P a g e | 34
The relationship between paying to get enrolled or not and spending is a direct relationship. The variable is
also significant as p value is less than or equal to 0.05. The significance of the model suggests that spending
at the store of which one has loyalty cards is impacted by whether the respondent pays to get enrolled or not.
B value is 0.627. It can be also explained as: if the respondent spends 1 rupee at a store of which he has a
card or not, but 0.627 rupee is explained by whether the respondent is paying to get enrolled or not. If the
respondent pays to get enrolled then he will spend 0.627 more that the store of which he owns a card. But, if
the respondent does not pay to get enrolled then he may spend 0.627 rupee at some other store. From the
relationship of variables it is also noticeable that people who pay to get loyalty cards already become loyal
to the store in a manner of repeat purchase, although this doesn’t provide for polygamous loyalty. Whereas,
those who do not pay and have a loyalty card will spend less at the store of which they have a card.
Thus, a company should increase paid enrolment to increase the effectiveness of a loyalty card. As a result,
more paid enrolments will lead to more spending. Also, a company should promote the usage of card as
there is a positive relation between usage and spending of a loyalty card holder in a retail store. Ultimately,
spending is the key element to determine the effectiveness of loyalty card. High usage of loyalty cards and
more paid enrolments will lead to more spending at a retails store and will drive sales.
So, the interpretation is that if a customer does not use a card and also does not pay for it then will spend
less at the store of which he has a card and may spend at some other store. But, if the customer pays for the
card and also uses it frequently then he will spend more at the store of which he has a card and will be more
loyal to that store than any other store. This will affect his preference of selecting one store over the other.
Thus, the hypothesis that ownership of loyalty card leads to preference of a retail store is accepted.
P a g e | 35
CONCLUSION
The research was conducted with the standpoint of looking for effectiveness of loyalty cards in apparel
industry in Ahmedabad. The nature of research design was exploratory with the motive that we were looking
for factors required to measure the impact of loyalty cards on buying behaviour of consumers. The research
provides that consumers are aware of benefits provided by the loyalty card programme. It is also apparent
that ownership of loyalty cards leads to preference of a retail store which justifies that loyalty cards are
effective and are value for cost. When it comes to loyalty towards retail stores, 73% of our respondents were
having more than one loyalty card and therefore, the polygamous behaviour of loyalty card holders make the
loyalty cards less effective.
The question that research poses is whether consumers acquire loyalty cards because of the benefits and
value provided by the loyalty programme. Loyalty card programme does affect the choice of retail store.
The benefits and value are important factors that affect the behaviour of loyalty card holder and customers
acquire loyalty cards because of these factors. 84% of them are ready to pay for the benefits, rewards and
discounts they receive which explain that loyalty cards, irrespective of the kind of services they provide add
value to the buying behaviour of consumers.
Our addition to the research is that loyalty cards are able to generate loyalty amongst the consumers but the
effectiveness of this loyalty cards becomes much smaller when customers become polygamous in nature.
We brought into being the factors that lead to monogamous loyalty which include shopping from one
particular store, special discounts, reward and benefits, and convenience. The factors affecting polygamous
behaviour of card holders are rewards and benefits, discounts and offers, variety of goods, availability of
cards for free and special price. Since the data was collected on interval scale (with a neutral / 0 point), we
derived correlation with the data series to find concurrence of different variables, and we tried to apply
regression to the same data series. The correlation coefficient values suggest that there is negative relation
between the factors, derived value, services, rewards and benefits, convenience, extended guarantee, trust
and awareness correlated with the number of loyalty cards with the respondents suggests that higher the
delivery of these factors, the lesser number of cards will the respondents hold. Shopping from one particular
store, special discounts, reward and benefits, and convenience are major factors affecting monogamous
behaviour amongst loyalty card holders.
The analysis results of the significance of the regression model suggests that spending at the store of which
one has loyalty cards is impacted by whether the respondent pays to get enrolled or not. From the
relationship of variables it is also noticeable that people who pay to get loyalty cards already become loyal
to the store in a manner of repeat purchase, although this doesn’t provide for polygamous loyalty. Whereas,
those who do not pay and have a loyalty card will spend less at the store of which they have a card. Hence,
our hypothesis, whether loyalty cards impact spending on a store, is accepted.
To conclude loyalty cards are effective considering they provide value to the preference of store in the
minds of consumers. The apparel industry not only in India but across the globe is enormous. In such a
scenario factors such as quality, type, range, price etc., of products play a vital role in decision making of
preferences of store. However, loyalty card service builds personal relation and provides monetary benefits.
Such differentiation gives an upper hand to store in retention of consumers. The further scope of research for
those willing to work in this area can be for the whole Gujarat area. And the other fields to work upon can
be on different industries as well.
P a g e | 36
Annexure
1.
Transcribtion
Topic: Whether loyalty cards are effective from customers' viewpoint or not?
Respondent 1: Loyalty cards are ineffective as for getting such cards customer will have to pay a price
against which the benefits that he would avail out of it are minimal. Moreover people buy loyalty cards from
whichever store they shop. So they have loyalty cards of multiple stores which makes them disloyal to all of
them.
Respondent 2: Loyalty cards are effective to certain extent. If a customer has loyalty card of a particular
store and when he purchases from that store certain amount of points get collected in his card and the next
time when he shops from that store he can redeem them and avail discounts. Moreover if one does not have
loyalty card he does not get any discount but if one has it, though the reward or discount amount is very less
he is getting something which is better than getting nothing.
Respondent 3: Loyalty cards are effective to some extent, taking example of shoppers stop, the members of
loyalty card programme get extra discounts during the discount seasons. If a customer makes purchase of Rs
10000 to Rs.12000 he may not get benefits of card on this purchase but the next time he purchases
something from that store he can get points on his card redeemed and avail discount of approximately Rs.
500 to Rs. 600. During birthday weeks and anniversary weeks of customers, additional discounts or
vouchers or coupons are given to the customers in which means that companies are loyal to customers in
spite of customer not being loyal to them.
Respondent 4: Loyalty cards are effective as well as ineffective because the loyal customers are given extra
discounts for being loyal to the store and repurchasing from the store and it is ineffective because the
discounts that the customer avails in terms of rewards are very less. If a customer makes a purchase worth
Rs. 500 to Rs. 600, he gets 10 to 12 points which is equal to Rs.10 or Rs. 12 and that is very less. Thus
loyalty cards are beneficial but the benefits are very less.
Are loyalty cards generating loyal customers for the issuing company or customers are polygamous in their
behavior?
Resondent 4: Holding a loyalty card does not make a customer loyal because customers holds loyalty cards
from different stores and having a loyalty card does not affect his choice of store. He would choose to buy
from the store where he gets products of his choice, at the best or minimum price and of best quality.
Customer is polygamous in his behavior as he is greedy. He buys loyalty card of different stores to avail
discounts and rewards not because he is loyal to the store. So to get benefits of price the customer purchases
loyalty card. Some stores like Pantaloons and Shoppers Stop also provide for a time slot during which if the
loyalty card holder purchases during the discount times he avails extra discounts so this shows that
companies give preference to loyal customers over other normal customers.
Respondent 3: Customers are not loyal to the loyalty card issuer but the issuer is always loyal to the
customer as they never forget to remind their customers through telephonic calls or SMS about their
discounts or offers or arrival of new stocks.
What are the factors that you consider while you go for shopping at your preferred store?
P a g e | 37
Respondent 3: Product range is the main factor that is to be considered while choosing a store. The number
of brands that lie on the shelf counts. For example if a customer goes to Levi's he would just get jeans of
Levi's over there but if he chooses to go to Shoppers Stop instead he has a good number of brands at his
disposal so he can compare and buy the best jeans that meets his requirement.
Respondent 1: The product range and the brand name are the two main factors that are considered while
choosing a store because people find it prestigious to buy from certain brands so they would revisit and
repurchase from stores which serve those brands.
Respondent 4: The services of the sales person like their manner of communication with the customer,
readiness to help, understanding customers taste, helping customers with sizes, colors, pairing up clothes for
them etc. counts while choosing a store. The product range and the collection of the store also matters.
Respondent 5: The brand name, quality and price are the factors to be considered while choosing a preferred
store.
What are the suggestions that you would give to stores to make loyalty card programme more successful?
Respondent 4: The stores should increase the proportion of rewards in terms of points that they give. They
should almost double the rewards that they are giving currently as this would give them an advantage over
other stores and attract more customers because at the end customer would be loyal to the store that gives
him more discounts and rewards.
Respondent 1: The stores should come up with some new types of rewards and benefits because apparel
industry is large and giving them same benefits as your competitors give would not attract customers to be
loyal to the store. So a differentiating factor in rewards should be introduced to make loyalty cards effective.
Respondent 3: Stores collect data about the demographics and purchase behavior of their customers through
loyalty cards. They should customize their offers as per the buying behavior of customers. For example if
the store is having discounts on those items or brands which a particular customer buys then he should be
informed about that through customized mails or SMS. The customer would feel preferred and special as his
individual needs are looked at and this would generate loyalty.
2.
Transcription
Topic: Are loyalty cards effective from customer’s viewpoint?
Respondent 1: Yes they are effective because the points that customers get on purchase can be redeemed
against the next purchase and thus in a way customers get discounts.
Respondent 2: Yes loyalty cards are effective because card holders get discounts and are also regularly
updated about new arrival of stock or discounts or any offers. Loyalty cards are also helpful in comparing
quality of different brands.
Respondent 3: Loyalty cards are effective as customers are updated about offers, stocks, discounts etc. Card
holders also get additional discounts which leads to effectiveness of loyalty cards.
Respondent 4: He does not use loyalty cards.
P a g e | 38
Respondent 5: Loyalty card holders get special services like a separate billing counter which helps them
save their time and customers also feel privileged.
Are customers polygamous in their behaviour?
Respondent 1: Most of the customers hold at least 2 or 3 cards which would mean that they are not loyal to
only one store. So the main purpose of loyalty card which is to generate loyal customer is not met.
Respondent 2: Customers buy loyalty card to get information about discounts and new arrivals not because
they are loyal to the store. Customers also buy loyalty card because some stores open their discount offers to
their loyalty card holders first and then to other customers. Reason of customers to buy loyalty card is not to
show loyalty to the store.
Does it make any difference whether a customer holds loyalty card or not?
Respondent 1: Loyalty card holder only gets points which can be redeemed against the next purchase which
means that he would get some discount on next purchase. So to certain extent it makes a difference when
customer holds a loyalty card over non holder.
Should the issuer of loyalty card make some differentiation in the benefits that he is giving to the holders? If
yes then what are your suggestions?
Respondent 1: Issuing stores should start benefits like offering a unique stock of products if the card holder
repurchases from the same store again. This would make the card holders feel privileged and would attract
them to repurchase from the same store. Stores can also sub differentiate among their loyal customers buy
categorising them and offering them different stocks.
Respondent 2: Stores can introduce systems like if within a month if the card holder purchases goods worth
more than a fixed amount extra 100 or 200 points would be credited into their card.
Respondent 3: Customers would irrespective of the points buy the product that they like. Stores try to target
the customer buy giving them extra points but product range of the store counts as the main factor.
Respondent 4: Loyalty card holders should be given first excess to new stock arrival.
Respondent 5: If a loyalty card holder is buying apparels of only particular 2 to 3 brands always from the same
store he should be offered additional discounts on that particular brand when he shops from there next time.
What are the factors that would lead you to your preferred store?
Respondent 1: Quality of the product and the product range availability at the store are important factors and
not the price or discounts.
Respondent 2: Product range and quality are important factors.
Respondent 3: Product range and quality of the products would lead to choice of preferred store.
Respondent 4: Quality and product range are important factors and not the price of product.
Respondent 5: Discounts would just attract the customer to the store. Buying decision of the customer
depends on availability of the products as per his taste.
Are loyalty cards effective or not?
Respondent 1: All loyalty card programmes are not effective. Some are effective whereas some are not.
P a g e | 39
Respondent 2: Loyalty card programmes are not effective.

Respondent 3: All issuers give same benefits to card holders. There is no differentiating feature that would
attract him to use loyalty card of only that store. So he does not use any card.
3.
Q1) I have loyalty cards which I don’t use. If yes, then why?
R1): YES, not loyal to that brand any more.

R2): YES, no time.
R3): YES, have better brand’s cards.
R4); YES, no specific reason.
R5): YES, have better brand’s cards.
R6): YES, expired cards.
Q2) I save a lot of money by using loyalty vouchers?
R1): YES, then only it is worth shopping for, else not.

R2): NO, not so significantly effective method to save money.
R3): YES, it does to a certain extent.
R4); YES, it does to a certain extent.
R5): NO, it makes me spend more and more.
R6): NO, not satisfied with the savings out of it.
Q3) I buy the products if there are extra loyalty points offered on them?
R1): YES, it saves significantly.

R2): YES, it feels worth the buy.
R3): YES, it s the best option to save money.
R4); YES, it is beneficial for future purpose.
R5): NO, I buy what I like, not just to save.
R6): NO, it makes me spend more and more.
P a g e | 40
Q4) it takes too long to earn loyalty points to get anything worthwhile?
R1): YES, it takes.

R2): YES, it is a normal phenomenon.
R3): YES, it’s not worth the wait for the type of reward received in return.
R4); NO, it depends from brand to brand as well as the product or service type.
R5): NO, it doesn’t.
R6): NO, it is not completely true.
Q5) Other things are more important than loyalty rewards for example: quality, consumer service, ambience
etc.?
R1): YES, quality is more important.

R2): NO, loyalty rewards are more important.
R3): YES, it does to a certain extent.
R4); YES, it does to a certain extent.
R5): NO, it is not
R6): NO, loyalty rewards are more important.
4.
How many of you have loyalty cards of stores such as Pantaloons, westside central?
R1- I don’t have it
R2 – No, I don’t
R3- Yes
R4- Yes
R5-Yes
R6 - Yes
Out of people not having loyalty cards, what is the reason behind not having it?
R1 – Because even when I use it, I use it from my mother’s card so I don’t need it.
So… You’ve some cardholder through which you get your points accumulated
P a g e | 41
R1- Yes right

And, why don’t you have it?
R2- I generally do shopping once a year. So I do not need any loyalty card..
Which is the biggest benefit that you think you receive as a loyalty card holder?
R3- May be discounts…
R4 – When I purchase something, I get returns
Like?
Like points..
R5 – same, payback points
R6- Payback points and discounts they avail us.
Do you think they deliver value to you, or you enrol only because you get points? Do you think its
beneficial for you?
R3- We become VVIP customer, so ya I
R4 – Basically its just for discounts. If we enrol for a card and purchase medicines we get additional 10%
discount. So its beneficial
R5 – Yes its beneficial. I can purchase anything from net if I have points. Say if I have 10,000 points I can
purchase a nice bag or something
Has ever loyalty card been a reason that will affect choice of the store? So consider this situation.
There are two stores westside and Pantaloons, if you think that Pantaloons provides more benefit…
Will it affect choice of the store that you shop from?
R1- No
R2- No
R3-No
R4- Not for cloths, but for medicines I’ll prefer Apollo. They give 10% additional discount so I’ll choose
Apollo
R5- No
R6- No
Which is the main factor that you consider while deciding a shop to buy from?
R6- By the card?
No… Consider if you were to shop a tee shirt for you, would you consider loyalty card before deciding
the store? Or you will go to stores that you’ve been going to?
R6–No, first I’ll go to store. Second preference is loyalty cards.
R2- I will go to store I’ve been going to
P a g e | 42
By holding loyalty cards do you think you get special discounts? Do you feel privileged?
R5 – Sometimes, not every time
Any reason for not preferring loyalty card?
R1 – No
R2 – No
And if it was offered to you, would you enrol for it? Since you shop once in a year from one specific
store… So if they provide you with loyalty card, would you enrol?
R2 – Yeah I would
What If they ask to pay for it?
R2- Why should I pay?
Because few stores have paid program
R2- Actually I’m a loyal customer for jade blue. Since childhood I buy from there.. The sales person also
knows be very well. So I don’t think I require any loyalty card holder. During discounts, I also get same
discounts as loyalty card holders
No No, Loyalty card holders get additional 5-10% discounts, if you’re on upgraded scale you get more
benefits
R2- That might be for another stores
Do you think loyalty card helps you to be loyal for one particular store?
R1 – I don’t think so
R2 – No
R3- Never
R4-No
R5-Sometimes
R6- It’s always the discounts that attract people
5.
Transcript:
Question 1: How many of them had loyalty cards? If yes, then why and if no, then why?
Respondent 1: He didn’t have any loyalty cards and the reason behind it was that he was not sure that from
where he would shop every time. So according to him, he said that buying or enrolling for any card would be
waste for him because if he had either of them, still he would prefer not using them. Also some reasons he
added were like the point system on which benefits are provided is not so interesting, you get very less
points even if you shop more.
P a g e | 43
Respondent 2: According to him the schemes weren’t so exciting or appealing which would encourage him
to go for a loyalty cards. Also he had the same reason that he is not very frequent to any particular store.
Respondent 3: He had loyalty cards and reasons were like that after having loyalty cards he felt that the
loyalty cards provided benefits as well as additional rewards which sometimes prove to be beneficial as one
of the reasons was that he was a regular customer to the stores of which he had loyalty cards.
Respondent 4: Even he didn’t have any loyalty cards because according to him loyalty cards were waste
and didn’t have any meaning.
Respondent 5: He had loyalty cards but he said that there is no major difference in having or not having
loyalty cards.
Respondent 6: he didn’t have any loyalty cards as even he found it to be ineffective.
Question 2: What makes you decide to choose a store?

R1: I frequently visit stores, so looking at the stock, I choose to purchase.
R2: Discounts and offers the store provide, but definitely not the loyalty program they run.
R3: As a loyalty card holder, I am kept updated with the schemes and special discounts so accordingly I
choose the store. I would prefer going to the store first of which I have loyalty cards.
R4: For me store doesn’t matters as my main concern is with the stock.
R5: In terms of rewards and benefits loyalty cards have failed, but a card holder I get updates of schemes
and offers, so sometimes I may decide to choose that store.
R6: There is nothing specific about me choosing the store.
Question 3: What if you are offered loyalty cards, would you get one? And what if you are asked to pay for
it?
R1: No, I won’t. Because I generally buy from different kinds of stores. So for me there would be nothing
like enjoying discounts and offers.
R2: Yes, I may try once going for cards only if they are available for free. If I am asked to pay I obviously
won’t buy. The reason why I may try is to only see if loyalty cards really help or not.
R3: No, I won’t go for cards even if they are provided for free.
R4: No.

Effectiveness of Loyalty Cards

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MARKETING RESEARCH

TOPIC: LOYALTY CARDS

SUBMITTED TO: DR.JINAL PARIKH

Study on the Effectiveness of Loyalty Cards

CHAPTER TWO: RESEARCH METHODODLOGY............................................................................8-11

Study on the Effectiveness of Loyalty Cards

Study on the Effectiveness of Loyalty Cards

Study on the Effectiveness of Loyalty Cards

CHAPTER ONE: ORIENTATION

Study on the Effectiveness of Loyalty Cards

1.2 Why is this research being conducted

1.3 Research Problem

1.4 Research Objectives

1.5 Research Questions

Study on the Effectiveness of Loyalty Cards

4. Are consumers polygamous in their behaviour towards loyalty cards?

1.6 Research Hypothesis

H1: Ownership of loyalty cards leads to preference of a retail store.

Study on the Effectiveness of Loyalty Cards

CHAPTER TWO: RESEARCH METHODODLOGY

Why exploratory research design?

DECIDING RESEARCH APPROACH.

Study on the Effectiveness of Loyalty Cards

Study on the Effectiveness of Loyalty Cards

Population Size = N Margin of error = e z-score = z

Study on the Effectiveness of Loyalty Cards

Study on the Effectiveness of Loyalty Cards

CHAPTER THREE: PRIMARY DATA ANALYSIS

4.1 Focused Group Discussion Analysis

Study on the Effectiveness of Loyalty Cards

Study on the Effectiveness of Loyalty Cards

Study on the Effectiveness of Loyalty Cards

4.2 Analysis of Questionnaire

58% of respondents were female and 42% of them were male.

Study on the Effectiveness of Loyalty Cards

Q1. How many loyalty cards do you have?

Number of loyalty cards

24% 4 AND MORE

Reason for one card

16% Shop from one store only

Study on the Effectiveness of Loyalty Cards

Reason for 2 or more cards

19% 32% 15K- 25K

Study on the Effectiveness of Loyalty Cards

Q5. How often do you use loyalty cards?

Usage of loyalty cards

Pay to get enrolled

Study on the Effectiveness of Loyalty Cards

Reason for is it worth paying

40% 44% SPL TREATMENT N 1ST

Study on the Effectiveness of Loyalty Cards

2) The service provided to me encourages me to purchase from store

3) Membership of a loyalty card makes my shopping experience convenient, which helps me to

Study on the Effectiveness of Loyalty Cards

Rewards and benefits

13% STRONGLY DISAGREE

15% SLIGHTLY AGREE

Study on the Effectiveness of Loyalty Cards

6) I tend to trust the store if I own its membership card

Study on the Effectiveness of Loyalty Cards

Spend more at Loyalty card store

Study on the Effectiveness of Loyalty Cards