The Green Hills Market Loyalty Programe Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Green Hills Market Loyalty Program

Introduction

The CEO at Green Hills Market was planning and looking forward to the competitive and reasonable 2007 holiday season. The Green Hills market is a grocery store based in New York. The management of the company was looking for a brand awareness and promotional activity to keep their customers happy and that in turn will increase customer retention rate. The plan of the CEO was to keep his customers coming and enjoying their holidays by purchasing meals from Green Hills Market. Despite that, the management of the company knows that their competitors like Wal-Mart and Chopper will take measures to attract the consumers through offering large discounts on bulk buying. These competitors are huge in size and thus would be able to acquire raw materials and products in a bulk with low prices.

Now, the company was looking for a strategy to take advantage of the company’s competitive advantage that is on exclusive management systems that is based on identifying shopping inclinations and buying patterns of shoppers. The company has devised a strategy and launched a program based on earning points on every shopping and those points can be cashed into Arzberg Porcelain products. Now the management and the CEO himself wants to make a decision about whether the company should go for this strategy or not. Along with that, the CEO along with his management needs to establish goals and objectives according to the upcoming holiday season in New York.

Do you think a customer intimacy strategy is appropriate for Green Hills? Why or why not?

Customer intimacy can be defined as a strategy through which companies make efforts to get close to their loyal and regular customers. Customers, in turn, increase frequency of shopping. One of the greatest advantages of customer intimacy is enhanced problem solving competencies for the company and improved adaptation of products with respect to the needs of customers. Yes, customer intimacy strategy is appropriate for the Green Hills Market because it has motivated the loyal customers of the company. In addition to that, it helps Green Hills to cut their costs and increase efficiency in its overall operations and supply chain. The strategy was appropriate because the company was able to incorporate customer based metrics into management and financial reporting. The company has done a controlled study in which shoppers were divided as label A and label B. Label B customers received a coupon for an item that they had bought over the past thirteen weeks. Group B showed higher redemption rates, shopper frequency and margins than group A.

Along with that, the company has abandoned high-low pricing and introduced EDLP just to bring closeness to the customers. The company adopted a hybrid merchandising approach by pairing SmartShop with EDLP. The results from the efforts were different as the shoppers know that they have been treated exceptionally and getting the best prices for the products. Furthermore, customers were more aware of high-low pricing strategy than EDLP, thus it was unique to them. The company has successfully moved the supplier trade funds away from the more traditional ad placements and into the loyalty program. Along with that, marketing return on investment has also been increased.

Figure 1: customer intimacy

Was the Arzberg program a success? How can you tell? Did the Arzberg program have a differential impact on SmartShop customers?

Yes, Arzberg Program initiated by the company was a huge success. The program has run for eighteen weeks and during this time, membership in SmartShop program has been increased by more than 15% that is an addition of 900 new members approximately. Before the introduction of Arzberg program, the enrollment rate was limited to 100 new members for SmartShop on a monthly basis. Furthermore, the success of the program was evident by the sales increase of 4.7% over the comparable eighteen week period. Along with that, total number of transactions executed under SmartShop program was increased by 4.9%.

In addition to that, Green Hills initiated a broad advertising campaign via weekly flyers, window signs, special in store displays, in store signage and brochures describing the program. In order to create excitement, the store added a number of ways shoppers could ‘kick-start’ their point totals. For instance, SmartShop members would be offered 1,000 points at the start date. In addition to that, employees were given 2,500 points to ensure their enthusiastic involvement. Green Hill's management had found that frontline employee excitement and participation had been often the key to overall program success.

The company has done all the promotion and endorsements in holiday season that seemed to be competitive and the peak time for shopping. To promote awareness of the program, consumers who joined as SmartShop members throughout the promotional period would be given an additional benefit of 500 points. SmartShop members would also earn a supplementary 250 points........................

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