THE EFFECTIVENESS OF USING LOYALTY CARDS TO ENCOURAGE

SALES AND BOOST CUSTOMER LOYALTY OF INDIVIDUALS IN SAN JUAN

BATANGAS

Chapter l
THE PROBLEM
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 programs are often

considered value-sharing instruments and can enhance consumers’

perceptions of what a firm has to offer. This value enhancement function is

important because the ability to provide superior value is instrumental to

customer initiation and retention. The prime objective of loyalty programs is

achieving customer loyalty. A loyal customer can mean a consistent source of

revenue with a variety of other factors. However, loyalty is not a straightforward

construct and retailers and academics are still searching for the most suitable

approach. 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, in light of the fact that

client loyalty card has an assortment of 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.

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 endeavor to give added worth or impetuses to

purchasers, wholesalers, retailers, or other hierarchical clients to animate prompt

deals. These can endeavor 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 enacted to shield the

interests of the clients from exchange misbehaviors and from standard risky

practices. It 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.

Statement of the Problem

This study aims to determine the effectiveness of using loyalty cards to

encourage sales and boost customer's loyalty on 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 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?

Theoretical Framework

Henderson et al. (2011) state that the theoretical underpinnings of many

research concerning loyalty programs is based on three specific aspects: status,

habits and relationships. Loyalty programs change consumer behavior; the sale
of a product and/or service applies a certain status to customers in comparison

with others. Habits, customers build a certain memory to what have been

purchased before and retailers benefit from this. The development of

relationships with consumers may enlarge the chance of becoming the

consumers’ favorite (Henderson et al., 2011). Ou, Shih, Chen & Wang (2011)

found a significant positive impact of ‘relationship commitment’ on ‘consumer

loyalty’ in their empirical study about relationships. This means “that the higher

the relationship commitment, the higher the loyalty” (Ou et al., 2011, p. 202). The

study of Ou et al. (2011) is conducted in Taiwan and included a survey of 480

observations from department store customers.

This study includes theory and empirical part. In the theory part this study

concentrates on describing the customer loyalty management, customer

commitment, and clarifies the meaning of customer loyalty programs. Many

researchers (Arantola 2000; Berman 2006; Gable et al. 2008; Frow & Payne

2009; Lahtinen 2012; Lehtonen 2012) have already studied these topics from

different viewpoints, but this study will concentrate on the fundamental ideas of

these topics.

At a very general level, loyalty is something that consumers may exhibit to

brands, services, stores, product categories , and activities. Here we use the term

customer loyalty as opposed to brand loyalty; this is to emphasize that loyalty is a feature

of people, rather than something inherent in brands. Unfortunately there is no

universally agreed definition (Jacoby and Chestnut 1978; Dick and Basu 1994; Oliver

1999). Instead, there are three popular conceptualizations: loyalty as primarily an

attitude that sometimes leads to a relationship with the brand; loyalty mainly expressed

in terms of revealed behavior (i.e., the pattern of past purchases); and buying moderated

by the individual’s characteristics, circumstances, and/or the purchase situation.

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 (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 of loyalty card users.

 The researcher has 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.

Hypothesis of the Study

The following hypotheses will be tested in the study:

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 Limitations of the Study

This section discussed the coverage of the study, the subjects,the research

instruments. This section also discussed the research issues and concerns, the
duration of the study and constraints that have direct bearing on the results of

the study.

The study will be focusing on the effectiveness of using loyalty cards to

encourage sales and boost customer's loyalty. The researchers has respondents

in the study who are using any loyalty cards. It will be conducted during the year

2021- 2022.

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 of respondents. Moreover, the

study is expected to be beneficial to the following:

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.

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.

Customer. a person or organization that buys goods or services from a

store or business.

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

Respondent. a person who replies to something, especially one supplying

information for a survey or questionnaire or responding to an advertisement.

Sales. the exchange of a commodity for money; the action of selling

something.
 Customer Loyalty. is a proportion of a client's likeliness to do rehash

business with an organization or brand.

Empower.

Encourage. give support, confidence, or hope

Membership. the reality of being an individual from a gathering

Significance. the nature of being deserving of consideration; significance

Privileges. - an exceptional right, preferred position, or resistance allowed

or accessible just to a specific individual or gathering

Effectiveness. - the degree to which something is successful in producing a

desired result; success

Advancement. - the process of promoting a cause or plan.

 Chapter ll
REVIEW OF LITERATURE

This chapter presents conceptual literature, research literature and

synthesis, which include relevant information that would facilitate the

improvement of the study. The information presented serves as supports and

gives direction to the development of the study.

Conceptual Literature

To substantiate this research, the following topics were discussed: loyalty

card, types of cards, types of rewards, customer loyalty, customer information,

loyalty card for tracking purchases, and loyalty card in increasing sales.

Kooser, A. C. (2020). About the Ethical & Practical Aspects of Using Customer

Loyalty Cards. https://smallbusiness.chron.com/build-effective-loyalty-program-

10343.html

Loyalty cards are one tool in the small business marketing arsenal. These cards

are designed to encourage repeat business by offering rewards for customers

who return again and again. Loyalty cards are also used by some businesses to

track customer purchases to better understand buying patterns and target

marketing. Loyalty cards can work for many different types of businesses, but
they make sense especially for restaurants and retail stores.

Types of Cards

Loyalty cards can come in many different flavors. A simple example is a paper

card at a coffee shop that is punched with each drink purchased. When you get

to 10, you get a free drink. Newer versions of the loyalty card can look a lot like a

credit or debit card. The card is scanned, and information about the purchase is

captured into a database that tracks information on what has been bought and

what rewards are available to the customer. With so many businesses offering

loyalty cards, it can be easy for cards to get lost in the shuffle. Customers can

connect their card to their email or phone number and then give that information

to identify themselves at the register. This can be one advantage of going with a

more advanced database system compared to a paper punch card.

Types of Rewards

Rewards can be as simple as a free side at a restaurant, a meal upgrade

or a percent discount on the next purchase. Choosing the types of rewards to

offer will depend on your business and what motivates your customers.

Experiment with different kinds of rewards and check in with customers about

what they think of your loyalty card program. At the same time," "avoid getting

too complex with the rewards. Keep the offers straightforward so customers

known exactly what they have to do to reach the next reward.

Customer Loyalty

The ultimate purpose of loyalty cards is to get customers to spend more money.

Businesses can achieve this by encouraging repeat business, offering incentives

for larger purchases and reserving special offers just for loyalty program

members. Remember you are likely in competition with other businesses that

also offer loyalty programs. Check in periodically to see what the competition is

doing. Loyalty cards are an ongoing process. Analyze any data you collect and

adjust the rewards to generate greater customer loyalty over time.

Customer Information

When it comes to the ethical aspects of loyalty cards, the collection of customer

information is a hot topic. Many loyalty card programs require a customer to sign

up by providing personal information such as name, address, birth date, phone

number and email. Surveys asking about age, income, preferences and

shopping habits may also accompany the loyalty card sign-up process. It is a

business's responsibility to safeguard this personal information. Implement a

privacy policy and take steps to secure your customer data. Don't sell or share

your customers' information without their express permission.

Loyalty Card for Tracking Purchases

Loyalty cards can be used for tracking purchases on a customer-by-customer

basis. This can lead to a greater understanding of shopping habits and enable

businesses to track the success of marketing initiatives. As with personal

information, it is important for businesses to keep tracking data secure. Many

consumers are willing to give up a certain amount of privacy in exchange for

loyalty program deals and rewards. Use the data to make adjustments in the

way you stock your store and to help with the design of future promotions.
Loyalty Card in Increasing Sales

According to Hackworth (2018), Loyalty cards motivate customers to come back

as often as they can to take advantage of the special offers. This means there

will be a regular stream of sales that a business would not normally account for.

This is a win-win situation for both the business and the customers.

In accordance to research done by Meyer-Waarden (2008), loyalty programs

can reduce the price sensitivity and buyers are willing to pay more than usual.

Further, loyalty programs can always increase the number of purchases and

sales.

Research Literature

This section of the study presents the gathered related studies by the

researcher. Moreover, this part of the study will provide the readers with the

background information about the research conducted and likewise will

substantiate the analysis and interpretation chapter of this study.

Magatef, S. G., & Tomalieh, E. F. (2015, August). The Impact of Customer

Loyalty Programs on Customer Retention.

"Singh & Khan (2012) highlighted how short-term actions with few

modifications with the profit will turn into long term customer loyalty and hence

long-term benefit. The authors were focusing on understanding the customer

retention and customer loyalty and their importance to the business. The authors

also understand the approach of how to increase customer retention and

customer loyalty towards the business. With the understanding of the behavior of
the customers and satisfying them provides the benefit to the business in the

long term. Establishing good relationship with the customers by providing better

services will create customer loyalty and more visits over time. This will bring

more profit to the business in long-term and will reduce the competition. The

study also identified the strategies which attract the customers to the retailer and

also understood the considerations to be done while implementing them. With

this, it will help the business to gain customer retention and loyalty towards their

business if they implement them diligently. (Singh & Khan 2012)

Agchi & Xingbo (2011) identified a moderator, step-size ambiguity, and

address that when ambiguity is high, only reward distance affects loyalty

programs. When ambiguity is lower, consumers integrate step size with reward

distance. The physical and psychological distance estimation contexts (e.g.,

weight loss, savings) where distances and step sizes can vary (e.g., as a

function of units: kilograms vs. pounds), but especially in loyalty rewards

contexts.

Omar et al. (2009), pointed out that the introduction of customer relationship

marketing instruments by retailers has been strongly increased in recent years

both in theory and practice. Loyalty programs have become a popular choice of

marketing strategy by retailers who believe that loyalty programs are an

important strategy and mechanism for retailers to build store traffic, increase

basket size and increase frequency by creating deeper relationship with their

customer. However, some members in the marketing industry have begun to

question the effectiveness of loyalty programs in obtaining customers’ support

and loyalty. The authors reported on the results of a preliminary study of the

literature which has been conducted in an attempt to understand the issue and

role of service quality in retail loyalty programs as well as factors that are

important in loyalty program service quality.

East et al. (2005), defined Consumer loyalty as a singular concept, usually as

an attitude toward the loyalty object or as repeat patronage behavior. The

definition may combine attitude and behavior in either an additive or an

interactive expression. The authors argue that" "definitions of loyalty are useful if

they predict phenomena such as recommendation, search and retention (loyalty

outcomes). The findings of the study addressed that in three consumer fields,

the combination measures of customer loyalty often perform poorly as predictors

of loyalty outcomes compared with singular measures since recommendation is

predicted by attitude but not by repeat patronage. Retention and search

behavior are predicted better by repeat patronage than by attitude. The

prediction of loyalty outcomes is not improved by the inclusion of an interaction

term in the model. The combination concepts of loyalty are of limited value. And

there is no form of loyalty that consistently predicts all the different loyalty

outcomes and, so they abandon the idea of a general concept of loyalty.

Lewis (2004) developed a model for customers’ response to a loyalty

program under the assumption that purchases represent the choices of

customers who are solving a dynamic optimization problem. This theoretical

model is using a discrete-choice dynamic programming formulation. The author

relies on specific loyalty program with data from an online merchant that
specializes in grocery and drugstore items. The results suggest that the loyalty

program under study is successful in increasing annual purchasing for a

substantial proportion of customers. Loyalty programs have an important effect

on customer relationship management for firms in travel related industries such

as airlines, hotels, and rental cars. (Lewis, 2004)

Kopalle and Neslin (2003) have proposed analytical models to study the

impact of loyalty programs in categories with different structures.

Deighton (2000) addressed that information technology enables firms to

practice individual-level marketing which help the wide spread of loyalty

programs into several industries such as: gaming, financial services, and

retailing.

In order to investigate the conditions under which a loyalty rewards program

will have a positive effect on customer evaluations, behavior, and repeat

purchase intentions, Kannan & Bramlett (2000) used cross-sectional, time-

series data from a worldwide financial services company that offers a loyalty

rewards program. The results show that members in the loyalty rewards program

discount negative evaluations of the company in comparison with the

competitors. One possible reason could be that members of the loyalty rewards

program admit that they are getting better quality and service for their price or, in

other words, “good value.” The authors also estimated a model of the influence

of a loyalty rewards program on customers’ decisions to repurchase a service

and their decisions about how much to use the" "service. The model focused on
the multiple direct and indirect effects of loyalty programs on these two

dependent variables. Using the model will help in estimating the effectiveness of

a loyalty program in customer retention. (Kannan & Bramlett, 2000).

Khadka, K., & Maharjan, S. (2017, November). Customer Satisfaction and

Customer Loyalty.

Thomas and Tobe (2013) emphasize that “loyalty is more profitable.” The

expenses to gain a new customer is much more than retaining existing one.

Loyal customers will encourage others to buy from you and think more than

twice before changing their mind to buy other services. Customer loyalty is not

gained by an accident, they are constructed through the sourcing and design

decisions. Designing for customer loyalty requires customer-centered

approaches that recognize the want and interest of service receiver. Customer

loyalty is built over time across multiple transactions.

Kohlmeyer, M. H. (2016, September). Customer Loyalty Program as a Tool

of Customer Retention: Literature Review.

According to Tabaku and Zerellari (2015), there are two approaches on

customer loyalty: behavioral and attitudinal. The behavioral approach on

customer loyalty refers to the""customer consistently and continuously buying

from the same provider. Whereas, attitudinal loyalty is a result of a psychological

connection with the product or service, involving a preference and components

like a positive attitude and commitment.

 Ludin & Cheng (2014) describe customer loyalty as a continuous

relationship between the customer and the brand. It can be seen as resistance

to switch brands inspite of any situation or problem encountered during the

business process. Additionally, they describe customer loyalty as repeated

purchases of a product from the same brand.

Loyalty behaviors show an increase in number of purchases, an increase in

number of customers and lower price sensitivity (Varela-Neira, Vazquez-

Casielles & Iglesias, 2010).

Palma, N. M., & Dimaculangan, E. D. (2017, August). Impact of Loyalty

Card on Philippine Retail Industry

The Philippine Retail Industry is a diversified conglomerate of different

product lines of businesses. It said to be notable or remarkable in terms of

business formations, enterprising skills, innovation and creative thinking, and

continuing development. Nowadays, several retail businesses have captured the

percentage of contributing to the growth of the economy and industry share of

business.

One of the trends in the Philippine Market is the fusion of Loyalty Card in the

retail word. Loyalty could be found anywhere both local and global market. Big

companies in the Philippines had continued competing while maximizing the

advantage or the strength of their customized loyalty card. It also signifies

different performance measures through using the card.

 The researcher’s intention is to know and expose the benefits and impacts

of the loyalty card in the Philippines. The deliverables of the probable results of

the research will might affect the decisions of the business sectors regardless of

any business size (small, medium, and large) enterprise. However, the

researchers wanted to find the deep understanding of using the card to the

following retail companies like SM, Petron, National Book Store, Mercury Drug

Store, and Philippine Airlines. The investigator would also like to expand its

horizon by also tapping other retail companies both local and global.

It’s been famous to the Philippine consumer that the well-known retailers

have been consistently pushing to avail the loyalty card and enjoy the perks of

having it. SM Retail company had coined there card as SM Advantage Card

(SMAC). Petron is well known for Petron Value Card. National Book Store is

legendary for maximizing the Laking National while Mercury Drugstore is for Suki

Card.

The research has provided different inputs about the rationale in purchasing

a product, availing loyalty card, and impact to the company. The research also

studied about the implications of the card to the customers. Such as goals like,

defining the factors and impact of the retail loyalty card. Quantifying the possible

results, and locating the domino-effect of the card to the entire organization and

external stakeholders. Moreover, the study also emphasize on how to create

loyal customers.

Synthesis
 The literature that was presented in this chapter was found to be relevant to

this study. Several sources were used to arrive in a more comprehensive

discussion. The researcher chose the above mention studies because there are

ideas that are similar to the present study.

Kooser, A. C. (2020). About the Ethical & Practical Aspects of Using

Customer Loyalty Cards. This study is similar in the present study because it

also deals in using loyatly card to increase sales and to boost customer loyalty

However, the study differed in terms of identifying the customer information,

types of cards and rewards and tracking purchases.

Magatef, S. G., & Tomalieh, E. F. (2015, August). The Impact of Customer

Loyalty Programs on Customer Retention. "Singh & Khan (2012), Agchi &

Xingbo (2011), Omar et al. (2009), East et al. (2005), Lewis (2004), Kopalle and

Neslin (2003), Deighton (2000), Kannan & Bramlett (2000). This study is similar

to the present study when it comes to having loyalty programs in which in the

present study, the researchers aim to know the effectiveness of using loyalty

card to boost customer loyalty. The study about "The Impact of Customer

Loyalty Programs on Customer Retention", may differ in the present study

because this study is focusing on understanding the customer retention and the

importance of it to the business. The authors in this study understands the

approach of how to increase customer retention towards the business. While in

the present study, the researchers understands on how loyalty cards encourage

sales and boost customer loyalty.

 Khadka, K., & Maharjan, S. (2017, November). Customer Satisfaction

and Customer Loyalty. Thomas and Tobe (2013), this study is similar to the

present study because it also emphasized the importance of customer loyalty.

Kohlmeyer, M. H. (2016, September). Customer Loyalty Program as a Tool

of Customer Retention: Literature Review. Tabaku and Zerellari (2015), Ludin &

Cheng (2014), (Varela-Neira, Vazquez-Casielles & Iglesias, 2010), this study is

the same with the present study because it also aim to determine the importance

of loyalty programs to customer. While it differs in terms of identifying those

approaches of customer loyalty and retention.

Palma, N. M., & Dimaculangan, E. D. (2017, August). Impact of Loyalty

Card on Philippine Retail Industry, this study is similar in the present study in

terms of the researcher’s intention which is to know and expose the benefits

and impacts of the loyalty card to encourage sales and customer loyalty. It

differs in the present study because it focuses on retail industry.

Thus, despite of the similarities and differences of the present study to that

of the above researches, the present study is not a duplication of any studies

cited. Moreover, variables used in this study differed from the studies stated

above.
 Chapter lll
RESEARCH METHODOLOGY

This chapter presents and explains in detail the procedure followed in conducting the

study. This includes deliberations of the research design, subject of the study, data

gathering instrument, data gathering procedure, and statistical treatment of data.

Research Design

The study will utilize the descriptive method to assess if how loyalty cards

encourage sales and boost customer loyalty among the selected respondents. 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.

Respondents of the Study

The researchers will be gathering data among respondents who are currently residing

in San Juan, Batangas. The researchers has respondents in the study who are

using any loyalty cards. Once the total population is identified, the sample size will

be computed using Raosoft.com, an online, free, sample size calculator with 95%

confidence level and 5% margin of error. The data gathered from the respondents have

been tabulated and interpreted.The researchers used the marginal error of 5% as the

basis and sample size calculator (https://bit.ly/3fUt74q).

Data Gathering Instrument

A researcher-made survey questionnaire will be used to gather the data needed in this

study. The questionnaire is divided into three parts. The first part was designed to

determine the profile of the respondents in terms of age, civil status, gender, and

income. The second part was used to know the level of effectiveness of using loyalty

cards in encouraging sales and boosting customer’s loyalty. Meanwhile, the last part is

about the assessment of problems encountered by the selected respondents and

companies using loyalty cards.

The research instrument will be presented first to the research adviser. Adjustments on

the content of the questionnaires will be made based on the recommendation of the
research adviser and/or research expert. To test the internal consistency of the items

used in the instrument (reliability), a sample of 50 respondents will be part of the pilot

test. Cronbach’s alpha will be used to test the reliability of the instrument. Cronbach’s

alpha is a coefficient of reliability (consistency) of the items of a questionnaire. In

assessing the Cronbach’s Alpha, the value must be equal to or higher than 0.7 to

magnify good reliability (Bonett & Wright, 2015). Once the instrument obtained good

reliability, that would be the time that the questionnaires will be floated to research

participants.

Data Gathering Procedure

Once the items in the research instrument are approved by the research adviser or

research expert, a pilot test will be executed. The purpose of pilot testing is to test the

reliability of the items in the instrument. The researchers has respondents in the

study who are using any loyalty cards. Once the Cronbach alpha is equal to or

higher than .7, that would be the time that the questionnaires will be floated to

research computed sample size (participants). All answered questionnaires will be

collected, assessed, and analyzed by the researcher. The results of the study will be

presented in the succeeding chapter including relevant and pertinent discussions to

show the relevant findings and results of the study.

Statistical Treatment of Data

The data collected in this study were organized and classified base on the research

design and the problems formulated. The data were encoded, tallied and tabulated to

facilitate the presentation and interpretation of results using the following.

1. Frequency and Percentage

The percentage and frequency distribution were used to classify the respondent’s

personal background variables such as age, gender, academic status and estimated

family income. Descriptive statistics like frequency was used to determine the number

of respondents who belong in each category of the profile variables; also this was used

in knowing the common range of their daily allowance and what percentage is spent for

food, transportation, academic purposes and personal needs.

On the other hand, the percentage of that item is computed by dividing it with the

sample total number of respondents who participated in the survey. The formula used

in the application of this technique is.

% = (f/n) x 100

Where % = percentage

f = frequency

n = number of cases or total sample

2. Ranking
This is a descriptive measure to describe numerical data in addition to percentage.

Ranking was used in the study for comparative purpose and for sharing the importance

of items and analyzed.

3. Chi – square

It was used to determine the significant differences between the perceptions of the

respondents. The values of chi-square for a given distributions is computed by:

a. Finding the difference in between each observed value and the corresponding

expected value;

b. Expressing the square of the differences as a fraction of the expected value; and

c. SummingThus, the formula used for computing the chi-square values is presents

below;

=∑

Where ; chi – square value

fo = observed frequency

fe= expected frequency

Computation from degree of freedom is necessary in order to obtain the critical value

(P), the formula is;

df = (r-1) (k-1)
Where; r = number of rows

k = number of columns

df = degree of freedom