Marketing Research Paper

Marketing II
Teacher: Manfred Bräuchle

Does Promotion encourage Customer Loyalty?
Market research paper 27/11/2012

Miguel Cambara – Blandine Marion –Luz María Herrera

Summary
Introduction 3
The challenge of building a relationship 4
A new approach of the customer 4
Loyal Issue 5
Context and issue 5
Definition 5
The 20/80 Concept 6
Loyalty measure 6
Objectives 7Synthesis 8
Promotion, a tool to bring loyalty 8
Promotion definition 8
Communication techniques 9
Direct communication techniques 9
Indirect communication techniques: 10
A new alliance: Promotion/Loyalty 12
Objectives 12
Principles of Loyalty Marketing 13
Development of Loyalty Promotions 14
Promotional tools serving loyalty 15
Examples of promotional tools serving loyalty 16Final objective 17
Conclusion 18
Sources 19

Introduction
Loyalty has become a priority for everybody: manufacturers, distributors, brands, consumers… Nowadays, many consumers have a fidelity card and are able to explain to you very single advantage that they have thanks to this card…just as real sellers.
At the same time, promotion has still a great interest among the actors on themarket. As present as always, promotion is also an important lever to set a brand’s durability. Yet, those two marketing tools coexist without speaking to each other.
Indeed, whereas promotion is defined on a short term, loyalty is defined on a long term. The two approaches are therefore paradoxical since one comes from an action plan and the other one a strategic plan of the brand.
Moreover, theobjectives of both tools are opposed, since the promotion’s vocation is to recruit new customers on a product category and loyalty aims to establish those same consumers into the brand.
Nevertheless, it is interesting to see that despite their differences, those types of approaches present themselves to the first place concerned person: the consumer. They both want to seduce him in order toreach the final objective, and the most important: make him consume the more products of its brand, satisfying him. From a more strategic point of view we may notice that a brand answers to the loyalty plan of its competitors by promotional impacting actions.

Thus, promotion and loyalty wouldn’t they be linked and not opposed? Promotion isn’t a lever to satisfying loyalty? In order to answer thosequestions we shall start by explaining the notions of Promotion and Loyalty, and then we shall study the respective goals according to the profitability objectives and durability of the brand.

The challenge of building a relationship
A new approach of the customer
Manufactures cannot impose their brands since the objective conditions of the offer have changed: the offer is excessive, theclassical alternative which consists in increasing the quantity of articles bought by the customer is questioned and the market is saturated.
Moreover, the consumer wants to be in the middle of the buying process: active, he gives himself the means to compare and judge the offer that he is made in order to control its consummation values. He starts to flit from one thing to another and becomesdisloyal to the brands and signs.
This disloyalty was built around three factors which have been little by little legitimated to the consumers’ eyes: arbitration, reclamation and blackmail.
- Arbitrage: informed and with a good awareness, the consumer wants to make intelligent purchases.
- Complaining: has become a legitimate act. A costumer that complains without having any answers from thebrand is one customer less in 50% of the cases. Moreover, he becomes a true proponent opposed to the brand, claiming the bad services and therefore assuring the bad reputation of the brand, by duty or pleasure.
- Blackmail or boycott: collective approach that becomes a civic act. The Danone example during the year 2001 is a good example of it. Indeed, at the end of March 2001, Danone revealed...