Customer Loyalty Schemes in the Retail Sector

Jose B. Alvarez; Aldo  Sesia

Background Note | HBS Case Collection | March 2011

Customer Loyalty Schemes in the Retail Sector

Abstract

Customer loyalty schemes (or programs) are explicit efforts by retailers to gain long-term patronage from customers. Loyalty schemes are developed for a variety of reasons: to reward loyal customers, to generate more robust information about customer behavior, to influence consumer behavior, and as a defensive measure to combat a competing scheme. The purpose of this note is to describe the objectives of these schemes, including their origin and evolution; to highlight key aspects of their implementation; and to suggest approaches to maximize their impact. While this note focuses on the U.S. and U.K. retail sectors, most of its content is applicable to other economies.

Keywords: Customer Relationship Management; Consumer Behavior; Business Strategy; Retail Industry; United Kingdom; United States;

Format: Print

10 pages

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Citation:

Alvarez, Jose B., and Aldo Sesia. "Customer Loyalty Schemes in the Retail Sector." Harvard Business School Background Note 511-077, March 2011.

Agriculture was Ireland’s largest indigenous industry. Its agri-food sector was export driven, with almost 90% of production exported. Bord Bia was the Irish government agency charged with the promotion, trade development, and marketing of the Irish food, drink, and horticulture industry. Bord Bia's CEO, Tara McCarthy, was shaping the government agency's new strategy amid a volatile socio-political environment (with Brexit and other cross-border trade issues) and in light of consumer trends in the macro food and drink industry.

Case | HBS Case Collection | December 2015 (Revised April 2019)

Chicken Republic

Jose Alvarez and Natalie Kindred

Deji Akinyanju, founder of Nigerian fast-food chain Chicken Republic, and Ayo Oduntan, founder of an integrated Nigerian poultry operation (Amo Byng Group), are among a growing cadre of skilled food-industry entrepreneurs for whom the opportunities to serve the Nigerian market—a population of over 170 million, including a large and growing middle class—outweigh the challenges of operating there. And indeed, as embodied by Nigeria's status as a net food importer despite having 80 million hectares of potential agricultural land, the challenges are considerable. Animal feed is excessively expensive, driving up poultry production costs and limiting production volumes; illegal poultry imports threaten food safety while undercutting prices of domestic product; corruption is rampant; debt is exorbitantly expensive; commercial real estate is sparse; and electricity is unreliable. Yet, Nigeria has all the natural blessings to be an agricultural powerhouse competitive on an international scale. And it has the large, ambitious population needed to drive its development, both as workers and consumers. Akinyanju and Oduntan believe many of the issues constraining Nigeria's poultry sector can be alleviated with relatively simple solutions—and that doing so can open tremendous growth opportunities for their businesses and the country as a whole. Set in September 2015, this case provides a detailed look at Nigeria's poultry value chain and the complexities of modernizing a traditional and largely informal industry. It also presents an inspiring story of determined entrepreneurs succeeding against tough odds. Finally, for students whose conception of Nigeria is all too often reduced to simplistic headlines, this case offers a more nuanced look into the complexities, potential, and aspirations of what may be one of this century's most dynamic and important economies.

Keywords: poultry; chicken; value chain; emerging market; Chicken Republic; Amo Byng; Doreo Partners; Babban Gona; reform; MINT; QSR; quick serve restaurant; fast food; corruption; Growth; Leadership; Food; Customer Value and Value Chain; Supply Chain; Infrastructure; Animal-Based Agribusiness; Entrepreneurship; Emerging Markets; Crime and Corruption; Governance; Growth and Development; Agriculture and Agribusiness Industry; Nigeria; Africa;

Citation:

Alvarez, Jose, and Natalie Kindred. "Chicken Republic." Harvard Business School Case 516-052, December 2015. (Revised April 2019.) View Details

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Customer Loyalty Schemes in the Retail Sector

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