Paper About Nectar

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Allyson Mecca Nectar Case Study: Making Loyalty Pay SITUATION ANALYSIS Nectar is Britain’s largest rewards program: (over 54%) ● Justin King took over as Sainsbury group chief executive ○ Nectar provides Sainsbury with valuable information about their customers that helps keep Sainsbury thriving (target marketing, shelf stocking, etc.) ○ Sainsbury is losing dominance ■ Once the dominant sponsor - collectors started earning points from other sponsors ○ Sainsbury’s CRM might not be as strong as if they had their own loyalty program ○ Over half of Sainsbury’s marketing budget was going to Nectar - could money be better allocated? Competitive landscape: Nectar faces tough competition, one of them being Tesco, who has their own loyalty program and 26% market share... ● Mark & Spencer: Highest Quality, Highest Price ● Sainsbury’s: High Quality, High Price ● ASDA: Low Price, Low Quality ● TESCO: Lowest Price, Low Quality Companies involved in Nectar program: ● BP, Sainsbury’s, Debanhams, AdamKids, Ford, Threshers, Vodafone, Barclaycard Current reward process (how collectors earned and redeemed points): Shoppers belonging to Nectar carry a plastic card and display it whenever they make a purchase. They are credited with program points that they can redeem one of two ways: ● Majority of points gained while checking out at Sainsbury supermarkets (2 points per pound spent) ● Redeem directly from Nectar either by calling the call center or by visiting website in response to offers enclosed in PUMs that Nectar sends out 4x per year to active collectors 1. WHAT SHOULD JUSTIN KING DO WITH LOYALTY PROGRAM? The options: 1. Continue with Nectar program 2. Start a separate loyalty program 3. Adopt strategy followed by ASDA 4. Other OUR GROUP CHOOSES OPTION 1: CONTINUE WITH NECTAR PROGRAM Pros: ● Nectar provides Sainsbury with valuable information about their customers that helps keep

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