Measure conflicting values of loyalty cards at fast-moving consumer goods (FMCG) stores in Mahikeng

Abstract

The contribution of fast-moving consumer goods (FMCG) to the South African economy is substantial. FMCG generate revenue accounting for over 50% of retail sales. Moreover, FMCG has contributed to increasing employment opportunities, capital savings and poverty alleviation. Many scholars have argued that FMCG retailers are challenged by a competitive business environment, where marketers and retailers are striving to retain customers through various methods. Loyalty programs (LPs) have become a fundamental strategy to secure a greater part of consumer expenditure. The primary goal of this study was to investigate the relationship between value of LPs and its benefits to customers of FMCG retailers in Mahikeng in the North West province of South Africa. A cross-sectional survey design was used in this study, by means of the purposive sampling method. This study specifically focussed on independent customers with loyalty cards of FMCG retailers in Mahikeng, North West, South Africa. The FMCG stores targeted included: OK Foods, Pick ‘n Pay and Woolworths. The scales used measured loyalty program impact (LPI), value of loyalty card (VLC) and customer loyalty (CL). After the preliminary data analysis, 380 questionnaires were deemed viable for analysis. The analyses conducted on the collected data were: reliability and validity analysis, descriptive analysis, exploratory factor analysis, correlation analysis and regression analysis. This study found a relationship between values of loyalty cards and benefits to customers. Customers preferred to patronise a loyalty program that provided good value as well as offering benefits. Loyalty programs were found to increase customer loyalty and stimulate relationships between retailers and customers. Furthermore, loyalty programs such as reward programs, point systems, discount program, and coupons contributed towards motivating customers’ purchasing behaviour. Findings also showed that different forms of loyalty programs played a role in providing customers with sense of belonging and assisting in enticing potential customers. Lastly, a significant positive relationship was found to exist between loyalty programs and customer loyalty. The findings suggest that an increase in the services of a loyalty program could lead to increases in customer loyalty. Limited research exists on the value of loyalty programs in Mafikeng, South Africa. The findings of this study have painted LPs as a marketing strategy that could enhance sales and generate sales growth for better growth of FMCG industries in the North West Province. Thus, the findings contribute to existing literature on FMCG retailers and loyalty programs. These findings will assist all stakeholders, while retailers and government will be motivated to invest in LPs, customers will be drawn towards patronising the programs, especially because of their benefits.