group r-loyalty schemes for online retailing by primacy global healthcare 1

8/2/2019 Group R-Loyalty Schemes for Online Retailing by Primacy Global Healthcare 1

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Online scheme for candleretailing in IndiaStrategic insights into the fragrance candle retail market

2/18/2012

The major aim of this document is to analyze and recommend online schemes that can be

incorporated in the online retail operations of Ekam candles and leverage the loyalty programto build a strong consumer base for the candles.

Group R- TAPMI, Manipal, Karnataka India


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Loyalty schemes for online retailing by Primacy global healthcare

Company Brief

Ekam candles are a brand of scented and luxurious candles being manufactured anddistributed abroad and in India by primacy global health care.

Major clients: -Wal-Mart, Pier 1, Candle Artisan, Dollar Store, Bill Blass

Indian operations: - several small and corporate retail stores spread across major cities in

India

Current focus of the company

The Company wants to start its online retail business in India to strengthen its presence in the

domestic market. The company aims to achieve greater awareness of its products among

consumers so that it can operate in a more product pull market as compared to the current

situation of a product push market wherein the major presence of the Ekam products is at

retail stores.

Objectives to be achieved

a) The company is looking to expand awareness amongst consumers about its productthrough online retailing.

b) The loyalty schemes are a method to ensure continued consumer involvement with thecompanys product and ensure development of repurchases intent.

c) The schemes would help supplement sales at the companys vast network of stores(owned and franchised, dealers, and retailers).

d) Loyalty schemes administered by way of loyalty cards and loyalty identificationnumber which can be used online as well as offline.

e) Offline advertising and schemes also can be formulated to supplement the aboveproject objectives.

Constraints

a) The overall project for Ekam entails an MIS project, of which the loyalty scheme isone part. Any recommendations need to be kept in perspective of the larger goal.


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b) The company currently gives out a margin of 20% to retailers and 12 % to

wholesalers on its product. Hence any Loyalty scheme should work within the

financials of the profit margins.

Actionable

a) Formulate a draft strategy documents detailing our key deliverables.b) Chart out key areas and assign responsibility areas.c) Research companys current operations in retailing of the Ekam candles, draw up a

process flow chart and look for areas wherein the loyalty schemes could fit in.

Strategy to be adopted by the group to achieve the objectives

Carry out competitor analysis, market segmentation study and behavioural analysis ofconsumers to find factors for online purchase.

Research on existing loyalty schemes and use it to formulate unique loyalty schemesfor the online website.

Integrate the loyalty scheme to its target segment identified in step 1. Look into uses of ad words for marketing of the loyalty schemes.

Formulate strategy to tie up loyalty schemes which could be redeemed on othergifting/online purchase websites.

Loyalty program

A loyalty programme is meant to attract a customer again and again to a store. It encourages a

customer to spend more to buy more. Many huge retailers offer extraordinary reward

programs for regular shoppers wherein they get discounts on repurchases by way of reward

points which can be redeemed.

Some examples

1) Pantaloons Green card holders get Instant discounts, ComplimentaryParking, Complimentary Home Drop (after alterations), Relaxed Return

Policy (90 days), Complimentary shipping across India, Exclusive Sale

Preview

2) Hyper city Discovery club members get additional discounts as DiscoveryReward Points. Exclusive offers available across all outlets, two year validityon the reward points, lifetime validity of cards etc


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3) Shoppers Stop - A powerful loyalty program offering a multitude of

advantages for consumers.

4) PAYBACK - is Indias largest loyalty program. It presents many advantagesover traditional, stand-alone customer loyalty schemes restricted to one brand

or company only. Using one single card, members earn loyalty points when

they shop at a wide range of different merchants and brands - offline and

online. Importantly, PAYBACK partners are mostly market leaders in

consumer segments covering daily needs, ranging from food to travel and

entertainment. As a result, members are able to accumulate a large number of

points quickly. A coalition of strong partners united on the common

PAYBACK platform also multiplies redemption opportunities.

Major components of the online loyalty scheme identified

A reward point system which generates large number of points with eachpurchase

System should be linked to many other channel partners, which serve a widecategory of products, to enable accumulation of points and redemption.

Reward point system which can be redeemed at Ekam website or at otherchannel partners

Benefits should include discounts on purchases through points earned orthrough coupons and exclusive special offers, special occasion offers.

Tie up with major reward systems which provide a common platform forearning points, such as Pay back

Channel partners should ideally be market leaders into product segmentswhich can attract consumers to buy more online candles. Example buying

Ekam candles could entitle a consumer to earn reward points that can be

redeemed for Pizza Hut vouchers.

Home drop facility for orders above a certain limit Customize option on repeat purchase - Example a consumer can order

customized candles, hand crafted and delivered to his choice of address with

any special message and in a special packaging upon a repeat purchase.


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Consumer Analysis

Carry out consumer research to find factors leading to online purchase. Research for buying behaviour of fragrance candles in India. Identify target group for fragrance candles. Recommend appropriate loyalty scheme for target consumers identified.(Note: The group recommends formulation of a document detailing the uses for different

types of fragrance candles. This can help onlinebuyers find alternate uses of candles while

deciding on their purchases.)

Carry out secondary research and see what ways a loyalty scheme can increase share of

wallet?

Analysis through frameworks

Our project is currently in the stage of Fermentation, as we are conducting requirement

analysis, primary research, and analysis of available resources which can potentially be

utilized for creating a strategy.


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The strategy we envision for Ekam candles loyalty scheme for online retailing is a

turnaround strategy. If implemented successfully, it taps into a huge untouched market of

consumers who probably would not have purchased or were unaware of Ekam candles,

but are strong proponents of online shopping. If they are converted to loyal customers

and consequently the online purchase opportunity gains popularity and usability, it will

provide an extremely profitable avenue for the business as the other competitor

attempting to revive this channel currently is Dabur Odonil. It does not require major

changes to the Business Operations as a separate channel is being created for sales, but

the strategy is required to be changed when it comes to online retailing. However, even in

the event of the online sales not taking off, it does not significantly affect the current

market value of Ekam candles as the current communication channel for retail stores

remains unaffected.


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The Evolution of the Ekam candles strategy is currently in the Expansion stage, as an

entirely new channel for sales is being created and launched; online retailing is an avenue

that is not attempted in this product category due to its implementation risks, as the

product is not a lifestyle neither a consumer necessity. However, since the ability to

execute and the opportunity size is not very large, the risk is a Quick Win

Factors

The below mentioned are the factors on which the loyalty program will depend.There are

three categories to be considered here --

1) Program related factors

2) Consumer Related Factors

3) Competition Related factors

Program related factors

1) Participation Requirements

a) Convenience of participation

b) Cost of participation

2) Point Structure

a) Point Issuance/ratio


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b) Point thresholds

3) Rewards

a) Cash Value

b) Aspirational Value

c) Variety of options

d) Reward forms

4) Program Management

a) Utilization of Customer Information

b) Organizational Support

Consumer Related Factors

1) Purchase Segmentation

a) Usage level

b) Perceived effort advantage

2) Consumer Traits

a) Demographics

b) Shopping Orientation

c) Future Orientation

d) Variety Seeking

e) Price Sensitivity

Competition Related Factors

1) General Competition

a) Market Share/Position

b) Product Substitutability within category

c) Category Expandability outside category

2) Loyalty program

a) Program Saturation

b) Program Differentiation

c) Order of Entry


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Competitor analysis

Aim

To find out current competitors and their market offerings. To align all loyalty schemes keeping in mind current competition in the market.

www.myaromaworld.com

Competitor www.myaromaworld.com

Varieties offered T-light candles, Pillar candles, Glass candles,

Floating candles, Taper candles, Votive

candles

Varieties of fresheners, body lotions etc.

Brands offered Illuminations, Illuminations Chic, Impulse

Prices offered (Candles) Rs.59 - 750

Promotions Sales & Discounts, Newsletters on

subscription

www.zansaar.com

Competitor www.zansaar.comVarieties offered Candles, candle holders

Huge variety of home furnishings

Brands offered Philips, Ekam, Illumination, Zansaar

Price offered (Candles) Rs.149 to 499

Promotions 250/- Reward on registration, Sales
http://www.myaromaworld.com/http://www.myaromaworld.com/http://www.zansaar.com/http://www.zansaar.com/http://www.zansaar.com/http://www.myaromaworld.com/


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Framework 1.

1) Consumer purchases a candle from a store-2) He is awarded a free loyalty card number on the spot3) These loyalty card numbers have been bracketed based upon purchase price4) Example a purchase of rs 500 and above entitles you to a number which delivers

better schemes as compared to a number having rs 100- Rs 500 scheme

5) The idea is to capture the total wave of consumer spending behaviour starting fromthe lowest price point on the wave till the highest point on which the consumer will

spend money

6) Consumer can log into Ekam website and key in the card detail7) A card bearing the name of the consumer and his details will be displayed and then

dispatched to the consumer

8) The company would create a face book page in which consumers who bought ekamshall be added.

9) The face book page would be used to let consumers know details of any schemestargeted at them

10)The face book page would require customer care executives to be constantly in touchwith fellow online customers and update them on any new schemes available.

11)Schemes such as a gift voucher of Rs. 500 dine in at Pizza Hut would be dispatched.

Purchase of candle fromstore

Allotment of uniqueonline consumer code

Consumer fills loyaltynumber online and is

given a login

Loyalty card dispatchedto consumer

Consumer's facebookaccount added to

facebook account ofcompany

Company monitorsconsumer activity and

regularly updatesconsumers on schemes

available from company

Gift vouchers rangingfrom pizza hut vouchersto discount codes to be

directly given to theconsumers


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Types of schemes

1) Scheme: Pizza Hut vouchersPizza Hut vouchers 200 vouchers costing 250 each

No of customers targeted 1000

Sales value realized( range 100-500) 500000

Cost of 100 vouchers 50000

Assumed margin for the company 50%

Profits 250000

Net profit( after deducting cost of vouchers) 200000

Recommendations for MIS

The software should sort data of the consumers to analyze the mean purchase value offirst 1000 consumers

Analysed data to be sorted to generate a list of consumers having purchase value nearor above the mean

Using a random number generator then choosing a consumer from the data set tochoose a voucher winner

Once gift has been allotted by the system, the consumer name will return back to thepool of all available consumers.

Face book functionality to be built in to the software to keep in touch with consumers.

Framework 2

A person who books candles through


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Framework 3- Building corporate consumer base

a) Introduce a corporate gift buying section on the websiteb) Bulk order buying should be shipped directly from Ekam storesc) Corporate discounts of up to 40% should be given on the stated purchase priced) To build the network of corporate clients approach hotels where corporate meetings

occur

e) Sales team to directly pitch for corporate clientsf) Distribute samples of Ekam during such corporate eventsg) Ensure

Framework 4 for targeting astrologers, interior designers

group r-loyalty schemes for online retailing by primacy global healthcare 1

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