The use of loyalty-cards databases: Differences in regular price and discount sensitivity in the brand choice decision between card and non-card holders

Abstract

In the retail food sector, databases generated by customer loyalty programs are becoming increasingly important. The information stored in them helps retailers' decisions relating to pricing policies, promotions, inventories and category management in general. This paper analyzes the data on loyalty-card holders for 10 different product categories using multinomial logit models, and finds that the brand choice information may not be applicable to all purchases made in the outlet. Loyalty-card holders exhibit some distinctive behavior. When there are differences, card holders are less sensitive to regular prices, but they are more sensitive for price promotions in certain product categories.