Nectar Case

Marketing 530 - Team 3

1. Is there any evidence that the program pays out for Sainsbury? Elaborate.

* Nectar collected information on customers that helped Sainsbury’s to determine what stock to carry in which stores and to do more targeted marketing to customers.

* Sainsbury’s had been losing market share, but after using Nectar’s rewards coalition their customers were spending more money than when they were using Sainsbury’s stand-alone points program. In fact, weekly spending was 40% greater at Sainsbury’s among people collecting points from the store and two other sponsors in the program. In addition, with each new added sponsor the amount spent at Sainsbury’s increased. For customers that earned points from 5 sponsors, their spending at the grocery store increased by 100%.

* The benefit of using Nectar was to get customers to spend more per transaction and more frequently at the store, acquire customers that were customers of other Nectar partners, retain current customers, and up-sell customers higher margin products through incentives from the program.

* The rewards program increased the competition for selling gas between Sainsbury’s and BP, but at the same time helped both companies take market share from retailers that did not offer Nectar points.

* Conversely, though the majority of point were earned at Sansbury’s, there was a steady decrease in its importance throughout the year. Originally four out of five users redeemed at Sansbury’s, but throughout the year that dropped to 30%.

* The program was more effective as a coalition. Weekly spending at Sansbury’s was 40% greater when people collected from multiple sponsors rather Sansbury’s alone. Additionally, they were less likely to defect.

2. Should Sainsbury stay with Nectar or implement a solo program? Defend your answer.
I believe that