Topic 2: Loyalty and Distribution Methods 1. Are loyalty programs more likely to
ID: 428813 • Letter: T
Question
Topic 2: Loyalty and Distribution Methods
1. Are loyalty programs more likely to be successful for certain kinds of products and service than for others?
2. Given the proliferation of loyalty programs, how can you differentiate your program from competitors programs?
3. What are your thoughts on using a franchise as a method of distribution for a business?
4. Describe the pros and cons referenced with examples to support your thoughts.
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Explanation / Answer
1.
A customer loyalty program is indeed referred as reward program offered by an enterprise to faithful consumers which in fact help further enhancement and development of the market share. Furthermore as customers are already passionate about the brand they persist buying and thus can be regarded as prime market for brand’s new goods and services.
A good loyalty program indeed facilitates to develop a good customer experience however it needs to be consistent and novel thus through application of right approach loyalty program indeed can help initiating new and varied benefit programs at reasonable price which in fact can effectively facilitate to attract consumers.
2.
Consumer brands can effectively differentiate their rewards programs which indeed can be based on various elements such as novel technology, program features, performance, design, value, service and brand policies. Furthermore program administrators indeed require to initiate with new and exciting ways to efficiently differentiate rewards program from their competitors.
Thus it’s very crucial and significant to develop exciting reward program which indeed can facilitate evoke emotional attachments, loyalty and usage from members. The key ingredients include putting consumers in control of their rewards points, creating a simple customer experience and presenting opportunities which indeed can facilitate encourage frequent redemptions.
3.
Companies such as Ford, Coca-Cola etc. produce what their franchisees sell thus the obvious benefit for them is that they indeed now have a dedicated distribution channel to sell and market their goods and services. They also may charge the franchisees a royalty percentage to be a part of the franchise system in addition to generating profit on the proprietary products they sell.
Furthermore manufacturer does not incur costs towards managing and developing an in-house sales or distribution team which can add dramatically to the overhead of a growing business system. Franchisees can also benefit from the use of a manufactured or proprietary product that is sold through the franchise system.
4
Franchising does facilitate with the ability to expand a business by utilizing the manpower and capital of others thus the inherent risks usually associated with expansion is thereby reduced. Furthermore franchisor is able to exploit and market its business more effectively through increasing the number of its outlets.
However franchised outlets can be slow to react to changes in the market and it can take longer to introduce a new range of products or services within a franchised network than in a chain of company-owned stores. It is important that franchisors maintain a balance between company-owned stores and franchised outlets as it is easier for a franchisor to introduce a change where it is based upon its own experience.