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“EFFECTIVENESS OF USING LOYALTY CARDS TO ENCOURAGE SALES AND BOOST

CUSTOMER LOYALTY ON A SELECTED RESPONDENT?”

A study presented to the Faculty of BSBA Department

ST. NICOLAS COLLEGE OF BUSINESS AND TECHNOLOGY
CITY OF SAN FERNANDO, PAMPANGA

In Partial Fulfillment of the Requirement for the

Degree of Bachelor of Science in Business Administration
Major in Marketing

By:
Rovelyn De Luna
Renz Ariane C. Sicat
Laarni S. Gotiangco
Jayza Mae C. Deguit
Jazmine Dee N. Abril
Krisel Ibañez
Franchezka Mae S. Manalo
Rocky Miranda
Jomar dela Cruz

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ACKNOWLEDGEMENT

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ABSTRACT OF THE STUDY

Title: “HOW DO LOYALTY CARDS ENCOURAGE SALES AND BOOST

CUSTOMER LOYALTY ON A SELECTED RESPONDENT?”

Researchers: Rovelyn De Luna

Renz Ariane C. Sicat
Laarni S. Gotiangco
Jayza Mae C. Deguit
Jazmine Dee N. Abril
Krisel Ibañez
Franchezka Mae S. Manalo
Rocky Miranda
Jomar dela Cruz

Course: Bachelor of Science in Business Administration

Major in Marketing

Institution: St. Nicolas College of Business and Technology

Adviser: Mr. John Carlo C. Dames

The Problem:

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RESEARCH METHODOLOGY

The study will utilize the descriptive method to assess the effectiveness of loyalty cards
in encouraging sales and boosting customer’s loyalty on selected loyalty card users. This
method aims to accurately describe a phenomenon, situation, and population.

In addition, quantitative methods will also emphasize in the study as the objective
measurements and the statistical, mathematical, or numerical analysis of data collected
through polls, questionnaires, and surveys, or by manipulating pre-existing statistical data
using computational techniques. According to Babbie (2010), Quantitative research
focuses on gathering numerical data and generalizing it across groups of people or to
explain a particular phenomenon. Quantitative methods presume to have an objective
approach to studying research problems, where data is controlled and measured, to
address the accumulation of facts, and to determine the causes of behavior. As a
consequence, the results of quantitative research may be statistically significant but are
often humanly insignificant.

HYPOTHESIS

Ho: There is no significant difference in using loyalty cards to encourage sales and
boost customer’s loyalty on selected loyalty card users.

Ha: There is significant difference in using loyalty cards to encourage sales and boost
customer’s loyalty on selected loyalty card users.

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CONCLUSION

FINDINGS

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Table of Contents

Acknowledgements……………………………………………………………………………………………………….

Abstract of the Study, Research Methodology.........……………………………………….…………….....

Hypothesis, Conclusion, Findings…………………………………………………………………………………….

Table of Contents………………………………………………………………………………………………………….

Chapter 1: The Problem and Its Background…………………………………………………………….

Introduction ………………………………………………………………………………………………………………..

Background of the Study …………………………………………………………………………………………..……

Theoretical Framework ………………………………………………………………………………………………..…

Conceptual Framework …………………………………………………………………………………………………..

Statement of the Problem ………………………………………………………………………………………………

Hypothesis …………………………………………………………………………………………………………………….

Scope and Limitation ………………………………………………………………………………………………………

Significance of the Study………………………………………………………………………………………………..

Definitions of Terms ……………………………………………………………………………………………………….

Chapter 2: Review of Related Literatures and Studies……………………………………………..

Foreign Literature…………………………………………………………………………………………………………..

Local Literature……………………………………………………………………………………………………..……….

Synthesis of Review……………………………………………………………………………………………………….

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Chapter 3: Research Methodology……………………………………………………………………………..

Research Method Used …..……………………………………………………………………………………..…….…

Respondents of the Study…………………………………………………………………………………………..……

Sampling Technique ….…………………………………………………………………………………………..…......

Instrument Used, Validation of Instrument, Data Gathering Procedure...................................

Statistical Treatment of Data………....……………………………………………………………………………….

Research Questions………………………………………………………………………………………..………..…….

Survey Forms………………………………………………………………………………………………………………..

Chapter 4: Presentation, Analysis and Interpretation of Data………………………………..

Tabulation Result……………………………………………………………………………………………………….

Determination of Sample Size…………………………………………………………………………………….

Testing the Hypothesis…………………………………………………………………………………………………….

Frequency Distribution of the Survey………………………………………………………………………………..

Chapter 5: Summary, Conclusion and Recommendations…………………………………………

Summary of Findings………………………………………………………………………………………………………

Conclusion……………………………………………………………………………………………………………………..

Recommendations………………………………………………………………………………………………………

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CHAPTER 1

THE PROBLEM AND ITS BACKGROUND

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INTRODUCTION

Companies worldwide generate a powerful tool in emphasizing, creating and maintaining

customer loyalty. Loyalty is a positive belief in the value that a company provides and the
commitment of customer to a particular brand or company, leading to increased purchases over
time. They use a variety of means to encourage loyalty because retention is more important
and more cost-effective than customer development. Customer loyalty is described as the
strength of the relationship between an individual’s relative attitudes and repeat.

Loyalty programs have become one of the most critical means by which companies
manage their customer relationships. Loyalty could be discovered anyplace both nearby and
worldwide market. Organizations had kept contending while at the same time boosting the bit
of leeway or the quality of their tweaked loyalty card. It additionally implies distinctive
execution measures through utilizing the card. The specialist will likely know how loyalty cards
empower deals and lift client connection on business. Loyalty cards are an incredible method to
create additional business and function admirably as a basic advertising instrument to get the
message out about your organization. The possibility of faithfulness cards is basic. At the point
when a client visits your shop and makes a buy, they increase diverse sort of benefits, similar to
limits, complimentary gifts and focuses that is convertible to money. Numerous organizations
find that devotion card plans increment deals through existing clients and pull in new ones too.

Retail chain, market, hypermarket, comfort store, gas station, retail stand, retail
locations, boutiques, and different occupants inside the shopping centers are contending to one
another by the method of pulling and pushing their procedures. Loyalty Card is a helpful
promoting material utilized by the advertisers. Since loyalty card is noticeable to the wallet and
pack of clients alongside different cards like ATM Card and Credit Card, at that point it is
accepted "a lifestyle" for the two purchasers and buyers. In accordance with, the analysts is
looking for the quantitative and subjective outcome that may shake the shrewdness of
promoting the card. Loyalty programs have been given new acknowledgment lately for a few
reasons. To start with, inlight of the fact that client loyalty card has an assortment of

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advantages for organizations, yet in addition since they have become a normal aspect of the
buyer experience. Be that as it may, in the present market, essentially having a customary
loyalty program isn't enough.

The principle goal of the investigation is to decide how do loyalty card empower deals
and lift client loyalty. This study intends to decide the positive impact of loyalty program
participation status to individual referral, individual data sharing, showcasing research uphold,
receptiveness to store advancement, and increment in buy bringing about store support. In this
study, individuals' conduct mirrors the blend of showcasing assets that add to a more
productive and viable advertising undertaking, including individual referrals, sharing individual
data, advertising research exercises; and being more open to store advancements. Store
promotion emerges simply after a relationship has been solidly settled, and in this way fills in as
an important condition for reliable loyalty program part's conduct.

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BACKGROUND OF THE STUDY

Each organization has their own advancement that will put that organization beside the
remainder of their rivals. Subsequently, making the organization one of a kind from the manner
in which they grab the eye of their market and offering them items and administrations that will
suit their necessities and needs likewise. For various business sectors require various
advancements that will grab the eye of the purchasers and will make them attempt your item
with respect to how great it was being advanced in various structures.

One of the four P's in Marketing is advancement. There are a wide range of approaches
to advance items and administrations. Advancement incorporate a few interchanges exercises
that endeavour to give added worth or impetuses to purchasers, wholesalers, retailers, or other
hierarchical clients to animate prompt deals. These endeavours can endeavour to invigorate
item intrigue, preliminary, or buy. Instances of gadgets utilized in deals advancement
incorporate coupons, tests, charges, purpose of-procurement (POP) shows, challenges, refunds
and pool promotions. Advancement is expected to draw in new clients, to hold present clients,
to check rivalry, and to make the most of chances that are uncovered by statistical surveying.

It is comprised of exercises, both outside and inside exercises, to improve organization

deals. Outside deals advancement exercises incorporate publicizing, exposure, advertising
exercises, and unique deals occasions. Inside deals advancement exercises incorporates
window presentations, item and special material showcase and limited time projects, for
example, premium honors and challenges item and administration advancement is the most
well-known type of advertising action. It incorporates publicizing through papers, radio, TV,
magazines, outside signage and sites.

According to Clark (2004), each item has distinctive customer purchasing propensity and
it can't be viewed as fruitful item on the off chance that it doesn't have the craving qualities.
Item attribute a significant in expanding the buying propensity for the clients. The clients are
looking from the outset of the brand they needed to purchase before buying an item. The
Republic Act No. 7394 known as the Consumers Act of the Philippines was inacted to shield the
interests of the clients from exchange misbehaviours and from standard risky practices. It

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advances additionally the overall government assistance that sets up the guidelines of direct
from business and industry. Article 118, Conduct of Sales Promotion express that a business
advancement which is expected for expansive purchaser interest and uses broad
communications will demonstrate the span, initiation and end and the overseeing rules or
system to be followed in that.

In order to come up with the reliable results, the researchers focused on the use of
loyalty cards. Hence, this research paper aims to determine the effectiveness in using loyalty
cards to encourage sale and boost customer’s loyalty on selected loyalty card users.

THEORETICAL FRAMEWORK

This study is anchored on the equity theory of David M. Messick & Karen S. Cook, 1983.
This theory emphasizes the various parts of society that work together to achieve sustainability,
stability, and functionality. Messick & Cook, 1983 defined that people develop and maintain
relationship in which rewards are distributed in proportion to costs. When share of rewards is
less than what is demanded by equity people are likely to experience dissatisfaction and exit
relationship. These relationship theories indicate the benefits of creating relationships with
customers which leads to building of customer loyalty.

The purpose of building relationships with customers is to retain customers in the

existing company. And by retaining them the loyalty is created and loyalty intern, results in
superior long-term financial performance. Loyalty is the biased behavioral response expressed
over time by customers with respect to one provider out of many providers accompanied by a
favorable attitude. Any insurer should be understandable essence of relationship in order to
build customer loyalty. Relationship will dissolve if mutual benefits can’t secure. Such theories
can be used for better understanding how customers may initiate in the creation of customer
loyalty through relationship.

Despite such a significant effort, the marketing literature has overlooked the role of
equity (Szmigin and Bourne, 1998; Tax, Brown and Chandrashekaran, 1998 cited in Maria et al
2010) in developing customer loyalty. Social exchange theory and social psychology studies
(Homans, 1961; Blau, 1964; Austin, McGinn and Susmilch, 1980 cited in Maria et al 2010) have
shown that equity perception derives from the proportionality between the “outputs

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(benefits)/inputs (costs)” ratios experienced by a part (e.g., the customer) and a counterpart
(e.g., the firm). Moreover, according to social identity theory, people tend to classify themselves
into different social categories. That leads to evaluation of objectives and values in various
groups and organizations in comparison with the customer’s own values and objectives. They
prefer partners who share similar objectives and values, (Ashforth et al. 2001).

Sussmann and Vechio (1982) offered Identity-related dispositions as an antecedent of

behavioral intentions which relate in turn to overt behavior. Such dispositions include social
attachment to the organization, such attachment being akin to organizational commitment.
Insurers can draw lessons from social identity theory to inspire customers in the realm of
creating and maintaining relationships, because relationships is seen as mediated by such and
other factors.

CONCEPTUAL FRAMEWORK

The conceptual framework exhibits the various procedures carried out by the researcher
in order to gather the relevant data needed to answer the research questions and to prove the
effectiveness of using loyalty cards to encourage sales and boost customer’s loyalty on selected
loyalty card users.
.

Effectiveness of Programs
Loyalty Cards in being
Encouraging Sales implemented
and Boosting
Demographic Profile Customer’s Loyalty

1.1 Age
Strategic
1.2 Civil Status
2.1LoyaltyofCustomer plan
1.3 Gender
1.4 Income 2.2Increase Sales
2.3Save Money
2.4New Customer Problems
encountered

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Paradigm of the Study

The researcher has selected respondents in the study who are using any loyalty cards. It
assessed the demographic profile of the respondents in terms of age, civil status, gender, and
income. Moreover, it also aims to determine the effectiveness of using loyalty cards. Clients
purchase items in type of products or administrations. When they purchase the item, they can
benefit for the loyalty card of an organization. The loyalty card has endless advantages and
preferences that will picked up energy for clients and friends. The loyalty card is important for a
maintenance system Encouragement to differing line of organizations could be conceivable.
Private organizations and government office are subject for the speculation of the card. The
card could make an achievement results for an organization. In an organization, client
relationship the executives – will create client information base, client arrangement information,
client needs/needs and desires. The stock administration will reinforce the historical backdrop of
procurement, measure of procurement, normal buy, grouping of thing development, and
amount requesting. Firm rivalry in the market, with the guide of the loyalty card; showcasing
the executives will strengthen research as essential information, deals the board, limited time
tie up, beneath the line advertising procedure, rehash buy, recurrence of visit, client lifetime
worth, and market infiltration.

Lastly, the researcher also evaluates the programs being implemented and problems
encountered to align and incorporate plans to the strategic plan. Customer satisfaction has
been recognized as the additional element in assessing the effectiveness of using loyalty cards.

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STATEMENT OF THE PROBLEM

This study aims to determine the effectiveness of using loyalty cards to encourage sales
and boost customer’s loyalty on selected loyalty card users.

Specifically, this study sought to answer the following questions:

1. What is the profile of the respondents in terms of the following:

1.1. Age

1.2. Civil Status

1.3. Gender

1.4. Income

2. What is the level of effectiveness of using loyalty cards in encouraging sales and boosting
customer’s loyalty on selected respondents?

2.1 Loyalty of Customer

2.2 Increase Sales

2.3 Save Money

2.4 New Customer

3. Is there a significant difference in the assessment of the effectiveness of using loyalty

cards in encouraging sales and boosting customer’s loyalty on selected respondents when
profile is considered?

4. What are the problems encountered by the respondents using loyalty cards?

5. What are the problems encountered by the companies using loyalty cards to encourage
sales and boost customer’s loyalty.

6. What are the programs being implemented by the companies to encourage sales and boost
customer’s loyalty using loyalty cards?

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OBJECTIVES:

1. To study the use of loyalty card to encourage sales and boost customer’s loyalty.

2. To study the effectiveness of use of loyalty card on selected loyalty card users.

HYPOTHESIS

Ho: There is no significant difference in using loyalty cards to encourage sales and
boost customer’s loyalty on selected loyalty card users.

Ha: There is a significant difference in using loyalty cards to encourage sales and boost
customer’s loyalty on selected loyalty card users.

SCOPE AND LIMITATION

The study will be focusing on the effectiveness of using loyalty cards to encourage sales
and boost customer’s on selected loyalty card users. It will be conducted during the year 2020-
2021.

The variables involved are the profile of the respondents in terms of age, civil status,
gender, and income. Moreover, it was also included the level of effectiveness in using loyalty
cards, problems encountered by the company and students in using loyalty cards and programs
being implemented by the company.

SIGNIFICANCE OF THE STUDY

The study aims to assess the effectiveness of using loyalty cards to encourage sales and
boost customer’s loyalty on selected respondents.
To the Loyalty Card Users, this study will provide them a concrete avenue which will inform
them about the effectiveness of using loyalty cards where they can identify preferred company
and can save money.

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To the Company, this will serve as a reference on aligning programs regarding customer’s
satisfaction.
To the Researcher, the results of the study will help the researcher in assessing the
effectiveness of loyalty cards to encourage sales and boost customer’s loyalty, where it can
serve as a basis in the workplace of the researcher.
To the Future Researcher, this will serve as a reference on determining the effectiveness of
using loyalty cards to encourage sales and boost customer’s loyalty. Moreover, this may serve
as a basis for further study regarding this topic.

DEFINITION OF TERMS

The following are the terms that will be used conceptually and operationally from the study.
These terms will be the guide to better understand and ease of reference for the undertaking.

1. Customer - a person or organization that buys goods or services from a store or business.
2. Loyalty card – a plastic or paper card given to a client by a store or organization, used to record
data about what the client purchases and to remunerate them for purchasing merchandise or
administrations from the store or organization
3. Respondent - a person who replies to something, especially one supplying information for a
survey or questionnaire or responding to an advertisement.
4. Sales – the exchange of a commodity for money; the action of selling something.
5. Customer Loyalty - is a proportion of a client's likeliness to do rehash business with an organization
or brand.
6. Boost - help or empower
7. Encourage - give support, confidence, or hope
8. Membership-the reality of being an individual from a gathering
9. Significance - the nature of being deserving of consideration; significance
10. Privileges - an exceptional right, preferred position, or resistance allowed or accessible just to a
specific individual or gathering
11. Effectiveness - the degree to which something is successful in producing a desired result;
success
12. Advancement - the process of promoting a cause or plan.

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