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Many companies have to change to be customer oriented in this increasingly competitive environment like nowadays (Kotler, 1997). Especially in this period of economic uncertainty, instead of attracting new customers, major retail department stores such as Central and The Mall Group have emphasized on launching new loyalty marketing programs to encourage current shoppers. The key initiatives like Customer relationship management (CRM) and customer experience management (CEM) are used in promoting an impressive shopping experience for their current customers. The loyalty card seems to be a good choice as a tool to enhance CRM of the retail department store.
This paper will serve to investigate the role of loyalty card programs in establishing the loyalty towards a large retail department store likes Central Department Store.
Statement of Research Problem
The purpose of research paper is to aim to study the role of loyalty card program in order to improve customer satisfaction and customers' repurchase intention toward Central department stores.
The Central Retail Corporation and Central Department Stores have been established for 62 years. Central Retail has sales revenue of more than 1.5 billion US dollars per year. The company has more than 30,000 employees. Central Retail currently operates and wholly owns more than 200 stores in various sizes and formats throughout Thailand.
Central Retail Corporation is comprised of:
Department Stores - Central Department Store
Robinson Department Store
Zen Department Store
Specialty Stores - Top Marketplace
Joint Venture - Big C Super center
Marks & Spencer
Online Business - Central Online
Central Department Store has been recognized to be an excellent retailer in Thailand for more than 6 decades. Much survey of shoppers show that Central is Thailand's favorite department store, and it is also the continual number 1 in department store sales.
With its affluence and prosperity, Central supplies to all Thai's urban population, including expatriates and tourists. Not only expanding branches in Bangkok, Central expands other four branches in large provincial area which are Chiang Mai, Hadyai, Phuket Island, and Pattaya Beach. Both local and international reputations of Central Department Store are its unwavering commitment to outstanding merchandise selection, excellent visual presentation, excellent store environment, and unrivalled services. Central has been honoring by many Alliances with numerous coveted awards. In 2003, the Global Innovator Award from the United States of the best house ware merchandising in the Asia-Pacific region was given to the company.
Asia's Top 1,000 Brands Report by Media Portfolio ranked Central Department Store to be 175th out of the 1,000 brands surveyed in September 2006. In the department store category, the Central Department Store is voted number two after Sogo of Japan. Moreover, the Reader's Digest's ranked Central as the winners of Trusted Brands Gold Award for the Department Store category in Thailand in 2007.
Central's Loyalty Card Background
Sometimes mightiness can be a big problem. Initially Central Retail Corporation operates a variety of businesses and each business has its own membership card. This makes customer can not combine the advantages and benefits of each membership card together. Since each segment of the market varies, it is better to synchronize the customers' data in all databases. As a result, customers can use only on loyalty card at every outlet of Central.
Mr. Tos Jirathivat, President of Central Retail Corporation suggests the concept of sharing market among affiliates under the card. Similarly to all customers under the Group along with regular customers to change behavior to spend more on every business of Central Retail corporation under the name of The 1 Card. To penetrate target membership credit card, the company issued in the name of the group affiliates, Robinson Card, and Central card to both current and new customers.
Back to the late of the year 2003, the company tried to differentiate its marketing and customer relationship campaign in the retail business especially in supermarkets and hypermarket by launching The 1 Card to all Central shoppers. Initially the company focused only on expanding branches to cover all area and reducing the price to less than competitors. The company differentiates its campaign by using Loyalty Program via The 1 Card and Spot Rewards Card membership for customers who come shopping for all of the outlets of Company.
Central Retail Corporation chooses to focus on customers of The 1 Card membership, which the past has developed in parallel with the expanding customer base. Nowadays the current membership of The 1 Card has nearly 2 million less than the original target was placed at 2.8 million, even though all 2 million itself did not have active status. 90% of the current members are active and another 10% are non-active. If any member is not active permanently, it would be removed from the system because these data have no benefit to analyze. But if the former active members then disappeared, they will be seen what to do to draw these customers back into active membership as same.
The 1 Card
With The 1 Card, customers can collect points when they shop at the following outlets of Central Retail Stores such as Central Department Store, ZEN Department Store, Robinson Department Store, PowerBuy, SuperSports, B2S, and Homeworks. There are a total of over 230 locations throughout Thailand. Customers can show The 1 Card every time they make a purchase and get points. The points accumulated in the card can be redeemed for many benefits such as cash coupons, gift vouchers, and special gifts. In addition, The 1 Card members regularly receive special privileges to suit your lifestyle.
â€¢ Every purchase gets rewards
Simply show The 1 Card when you make a purchase, or remember the member ID then show it to the sales person to get your points and rewards. Customers will get 1 point for every 25 Baht purchase. The point earned is unlimited. The paying method is unlimited too. Customers can pay in any way them want: cash, credit card, gift voucher, or cash coupon.
â€¢ Everyday Enjoyment
The 1 Card's Everyday Enjoyment programs provide special events and privileges to suit your lifestyle. There are many classes such as makeup application techniques, baking, interior decoration, and seminars on IT products, provided for The 1 Card members for free.
Moreover, the Everyday Enjoyment Partners program such as restaurants, spas, and other partner companies provide The 1 Card members with privileges at a wide array of participating.
The 1 Card members can use their points to get special redemption opportunities. The 1 Card members can get a 100 baht cash coupon by redemption of 800 points in The 1 Card. This cash coupon can be used at every branch of Central Department Stores, ZEN Department Store, Robinson Department Store, PowerBuy, SuperSports, B2S, and Homeworks. Customers can check current redemption specials and point collection at the customer service counter.
Ms. Sawanya Pholkhan, director of the strategic customer relationship management company Central Retail Corporation Limited said "The 1 Card today continued its leadership in customer relationship management. By the number of subscribers than 2.5 million which card is regularly over 80% of spending through the card in the past year, representing 75% of total sales in the Central Retail Corporation and the rate of points. The 1 Card for more than 80% to the advantages of The 1 Card at knowing and understanding customer needs and respond with the same intention."
What are the motive factors influencing The 1 Card member to shop more at Central Department Store?
- To find the most motivating factors influencing The 1 Card member to shop more at Central Department Store.
- To study factors those affect The 1 Card member to shop more at Central Department Store.
- To study if reputation affects the motive factors influencing The 1 Card member to shop more at Central Department Store.
- To study if sale promotion affects the motivating factors influencing The 1 Card member to shop more at Central Department Store.
- To study if Convenience affects the motivating factors influencing The 1 Card member to shop more at Central Department Store.
The conceptual framework is drawn from the literature review to develop. It shows the relationship between the independent variable and dependent variables toward purchasing intention at Central Department Store. The factors that affect the intention to purchase at Central Department Store.
Figure 1: The Role of Variable Factors toward the Purchase Intention at Central Department Store
Oliver's Four-Stage of Loyalty Model
In this paper, The Oliver's four-stage loyalty model can be used to explain the role of loyalty card program. This model is produced in 1997 in a simplified form. It consists of 4 stages which the first one is cognitive loyalty; which consumers base on costs and quality, the second one is affective loyalty which consumers base on satisfaction, the third one is conative loyalty which consumers make repurchase and recommend to other people, and the last one is action which consumers have loyalty and do their shopping at the store frequently.
The first stage of Oliver's loyalty model is identified as cognitive loyalty. In this phase, loyalty is directed toward the price and services or product's quality. Consumers still support one store instead of others based on valuable reasons. For example, if one store has lower prices or better service than other stores, customers will not change to buy products from others. At the same time, loyalty may not be very strong because it is solely influent by functional characteristics and consumers' commitment towards a store. In case that another store offer more attractive prices or better service, the consumer may be easily change to shop at that store. Because they are conscious of the store preparation on cost and benefit, consumers may switch when faced with noncompetitive performance.
The second stage of Oliver's loyalty model is affective loyalty. The affective loyalty has developed on the basis of cumulatively satisfying opportunities and there is a linkage and attitude toward the brand. Oliver sets that a process of cognitive can be lead by emotional decisions. In addition to cognition, this is a stronger form of loyalty in that loyalty at this stage is driven by prior attitudes towards that store and at a later stage by satisfaction. This stage of loyalty is stronger in that "counter-argumentation" alone will not dislodge the loyalty of a consumer since it is based on affect also. At this stage the consumer's loyalty is a function of both attitude and satisfaction. We, therefore, use consumer evaluation of relative attitude and satisfaction to measure affective loyalty.
Commitment at this stage is referred to as affective loyalty and is encode in the consumer's mind as cognition and affect. Whereas cognition is directly subject to counter argumentation, affect is not as easily dislodged the product or services exhibited is directed. At the degree of affect for the brand is similar to cognitive loyalty. However, this form of loyalty remains subject to switching, as is evidenced by the data that show that large percentages of brand defectors claim to have been previously satisfied with their product or services. Thus, it would be desirable if consumers were loyal at a deeper level of commitment. In this stage we will use consumer evaluation of satisfaction to measure affective loyalty from the consumers.
The third stage of loyalty of Oliver's model is conative loyalty. At this phase the consumer holds a commitment to buy. This stage is illustrated by repurchase intentions and via actions like recommending the store to others.
The final stage of loyalty is action loyalty in that "action is the necessary result of the confluence of the preceding three stages." Our measure of loyalty (the share of visits to department stores accruing to the store in question) is a measure of action loyalty. Figure 3 presents the model that is being tested here.
During the many players in the retail department stores concentrate on innovation to support the issuance of membership cards to new customers including the creation of the campaign and various promotions to attract consumers to register to be a member, but for Central Retail Corporation and Central Food Retail subsidiary are celebrating the success of loyalty cards, including two membership of The One Card and Spot Rewards Card.
As a pioneer, this is the reward they received from the strategy of building loyalty in the retail business in Thailand with the member of 4.1 million people and generating sales for the company up to 82% on membership card and Spot Rewards Card. Central Food Retail's executive shop supermarkets under the Central Food Hall, Tops Market, Tops, Tops Supermarket and Deli.