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Retail Challenges: Generating Loyalty in a Fickle World (Market Focus)

Published by: Datamonitor

Published: Aug. 31, 2006 - 15 Pages


Table of Contents


DATAMONITOR VIEW
CATALYST
SUMMARY
METHODOLOGY


ANALYSIS
Consumer loyalty is hard to generate, difficult to keep, yet rather more easily measured
Cool products created the 'buy and evangelize' mentality
'Pot luck' plays a part, but clearly doesn't make understanding consumer sentiment any easier
Brands tap into product-related communities, even when their product's relevance is tangential
Measuring loyalty is perhaps easier than creating it
Loyalty in the UK - A case study
The 'difficult' 25-34 age group demographic is the hardest nut to crack
The 25-34 group is cash rich, well informed and carries out shopping 'due diligence'
'Likes groups but is not easily herded', characterizes the shopping preferences of this group
Loyalty schemes are being actively avoided, which makes Loyalty Marketing Programs difficult to tailor
Not only are they being avoided, many consumers state that they 'don't work'
The traditional loyalty drivers, plus a human element, attracts the 'difficult' groups
Individual retail sectors are working hard in challenging conditions [1]
Retailers can 'invest in loyalty' but matching brand, 'loyalty type' and supporting processes and IT is challenging
Identifying a trend is one thing, riding it another, knowing when to stop is the hardest trick
Data capture and exploitation has its limits - information 'cartels' could become 'the enemy'
Retailers are not IT companies, nor necessarily loyalty strategists - finding the right supplier is paramount
SEGOR is no fad, is worth pursuing but presents its own challenges

APPENDIX
Extended methodology
References and Further reading
Ask the analyst


List of Tables
Table 1: How loyal are you to specific brands or stores in the following categories? (A maximum of two responses per row were allowed)


List of Figures
Figure 1: Breakdown by age of primary research survey carried out for this brief
Figure 2: Do you belong to any 'loyalty schemes'? If so how many?
Figure 3: Do loyalty schemes work? Do you spend more in these stores than you otherwise would?
Figure 4: What might make you more inclined to shop in specific stores more often? (please rate 1-4 with 4 being 'most likely')

Abstract

Introduction

Technologies and processes that enable retailers to retain the right customers and offer a positive end-to-end customer experience will help retailers to justify higher margins and increase customer satisfaction. This market focus brief introduces the challenges retailers face in defining capturing and retaining customer loyalty.

Scope
  • 'Consumer loyalty' hides a myriad of sub genres and cultural nuances;
  • The 'difficult' 25-34 age group demographic is the hardest nut to crack;
  • Retailers face multiple challenges to generate and retain future loyalty;
Highlights

Regretful or otherwise, most social groups can be identified or indeed stereotyped by the products and brands they choose to buy. This is borne out by the findings of Datamonitor's survey, which demonstrates that overwhelmingly, consumers cluster specific types of shopping around small groups or brands.

Retailers face multiple challenges to generate and retain future loyalty. The challenge is to understand that loyalty is the by-product of 'getting everything else right'. Generally speaking, consumers care less about specific tools, aids, gadgets, coupons and so on, and more about the integrated whole of their shopping experience.

There are two key specifics when it comes to customers: acquisition and retention. Loyalty is about the latter. As markets mature and new customers become more and more expensive to acquire, retailers will indeed need to focus on mobilizing customers as quickly as possible through the 'profitability lifecycle'.

Reasons to Purchase
  • Access a variety of Datamonitor group retail related research wrapped into an easy to understand overview of a critical challenge for retailers
  • Understand consumer group opinion via analysis of an exclusive consumer survey carried out specifically for this paper
  • Begin to build your company's retail approach by accessing Datamonitor's take on the future 'loyalty challenges' retailers face


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