Marketing Research Assignment -
1. Case study - read the case and answer the questions which follow:
Case - Your Supermarket Is Spying on You
Tesco, one of the biggest supermarket retailers in the United Kingdom, has a well-developed customer loyalty card-Club- card. Customers can accumulate one point for every pound that they spend; effectively it is a 1% discount. However, these deals are sent to customers in the form of personalized offers based on their previous purchases. Periodically, Tesco offers extra points if customers buy certain brands or product categories. The cards are also used to attract infrequent customers back to the stores.
The value of the card for the supermarket goes far beyond rewarding customers. Each time a card is swiped or scanned, it helps the supermarket to collect information about the shop- ping habits of the customer. How do supermarkets analyze transactional behavior and use it to drive sales? The answer is RFV (recency, frequency, and value) analysis. This approach is used to group customers according to scores that are given to each of them on the basis of how often they shop, how many individual items they purchase each time, and how much they spend. This approach to market segmentation provides a framework that helps the supermarket to analyze consumer behavior.
While the reward side of the equation benefits the customer, the other side is all about RFV analysis and using that information to direct marketing efforts towards certain customers at personalized levels. Customers are segmented by age, gender, and other criteria and can be identified by their relationship with certain clusters or types of products that they buy on a regular basis. This way, someone who buys pasta will be given offers on pasta sauce and, someone who buys a cat litter box will be given offers on cat food.
Shopping preferences are also tracked. The store identifies customers who pick almost the same basket of goods each time they shop. Some customers might only be attracted to special offers and would buy discounted products in bulk. Another group might only buy luxury brands and never purchase own- label products. Tesco uses this understanding to provide personalized offers and "tempts" each group with relevant mixes of coupons and bonus point deals.
If a customer does not have a loyalty card, the supermarket can still track him or her when a card payment is made. Super- markets, in any case, supplement their own data collection with government data and credit reports. By using this broad range of data, supermarkets are able to make informed decisions and devise workable operational and marketing strategies. The data is used to better understand consumer needs and assist super- markets in deciding store locations, placement of advertisements, which brands to offer, and how much to stock.
Tesco is one of a number of marketers who are refining their ability to micro-market, targeting each consumer with pro- motional materials customized for them specifically. Ostensibly, this could make the customer's shopping experience better, but are these practices of collecting data about customers without their consent ethical?
Q1) How Tesco and other retail companies are able to provide personalized offers to their customers?
Q2) Do you use any loyalty cards for any retailers/banks/etc. Explain how it works?
Q3) Have you ever felt that if you are searching for a product online, after that you will start seeing 'pop-ups'/advertisements for similar products ? How does that happen?
Q4) What is segmentation? What are different basis of segmenting customers, used by retailers?
Q5) Do you think these practices of collecting data about customers without their consent ethical? Support your answer with reasons/examples.
2. Write an essay (min 300 words) on latest techniques, methods or innovative ways used by marketers to collect information about customers.