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loyalty scheme

Businesses in the retail sector (manufacturers and retailers) are currently interested in developing loyalty schemes to motivate consumers to buy more of their goods.


Consumers are the customers of a retailer or manufacturer and the target of the loyalty scheme.

product promotion

Retailers and manufacturers use product promotions to persuade consumers in general to purchase particular products (and services).


A product promotion is organised by a promoter, who may be a manufacturer, or a retailer, or a bureau acting on their behalf.


The promoter may provide inducements for consumers to purchase products. For instance, in one scheme the inducements might be adverts, and in another scheme they might be coupons. Both adverts and coupons might be sent through the post.


The promoter provides rewards to consumers for having made a purchase. For instance, in one scheme the rewards might be points on a loyalty card allocated at a retail checkout, and in another scheme they might be discounts on purchase prices given in return for coupons.


The consumer may redeem a reward by converting it into some gift. For instance, the redemption might be a product (such as air miles) received from another retailer in return for coupons.

consumer targeting

Consumer targeting is the mechanism by which product promotions are focused on and tailored to the needs of individual consumers or groups of consumers. Consumer targeting decides who should benefit from promotions.


Consumer targeting is organised by a targeter, who is normally a retailer, or a bureau acting on its behalf, but could conceivably be a manufacturer. The targeter monitors, remembers and analyses the purchases made by consumers and uses the information it obtains to influence the way product promotions treat individual consumers.


The consumer targeting scheme provides some means for consumers to enrol in the scheme. This might be done by entering the consumer's name in a database, or by giving the consumer a loyalty card.


Purchases are made at a retail checkout. Rewards may be given to the consumer at the time of purchase. Purchases may be monitored, remembered and analysed by the targeter of the consumer targeting scheme.

last revision: 21st June 1997