Impact Of Store Environment On Customer Loyalty

4505 words - 18 pages

IMPACT OF STORE ENVIRONMENT ON CUSTOMER LOYALTYSignificance of Store Loyalty for RetailersRetailers like manufacturers need to differentiate their offerings. They want to create differential advantages for their stores, so that their customers no longer see one store as substitutable for any other. The essential purpose of of a differential advantage for retailers, as for manufacturers, is to increase loyalty among customers. Selling oriented retailers often say "compare us to the competition-we offer the best deals." The market-oriented retailer aims to convince them that this particular store satisfies their needs better than competing stores, either because the prices are consistently to be trusted, or in aspects other than price. A successful differential advantage will push up the total perceived cost (actual and emotional) of going to another shop.Retailers, by offering a shopping experience tailored to differentiated customer needs, they could hope to improve margins, without losing too much volume to price competitors. In most FMCG markets the brand leaders are not the least expensive brands.This might encourage retailers to believe that consumers (who are also shoppers) are willing to pay extra for perceived quality.In the face of slow growth and highly competitive markets, a good defence with focusing on the right current customers is critical. A strategy that is effective in acquiring new customers may not be the most effective in retaining current customers. Marketing tools such as coupons and promotions are minimally effective. Recent evidence suggests that profits may be enhanced when strategies focus on retaining current customers. Even small increases in retention rates can dramatically increase profits. They also found that increase in retention rates better explain the increase in profits, than market share, scale, cost position, or any other competitive advantage variables.Increased customer retention has two important effects. (1) A gradual increase in the firm's customer base, which is very important in the low sales growth situation. (2 ) An increase in the profits earned from each individual customer as long as the customer remains loyal to the firm. Existing customers also tend to purchase more than new customers do. In addition, it is found that costs to retain customer are about 80% lower than the costs to acquire new customers.Focusing on one's current customers' results an increase in satisfaction may also generate other benefits, such as the generation of positive word-of-mouth, which results in enhanced loyalty.At a basic level, retailers' lifeblood is the revenue developed through relationships with customers. This revenue can be expanded and developed through cultivating relationships with new customers, encouraging current customers to spend a larger proportion of their dollars with the retailer, and by extending the length of time or duration of teh relationship-seeking customers for life.CONCEPT OF STORE...

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