Operational Aspects of a Loyalty Card Scheme, Launched by Easy Jet Company - Case Study Example

Business plan Introduction: This business Plan has been developed for consideration of operational aspects of a Loyalty Card Scheme, launched by Easy Jet Company which facilitates and awards points to customers who purchase their goods and services. Upon accumulation of specified points, the customers become entitled to specified rewards-like discount coupons, free vacation air passage, gifts, etc. depending upon accumulated number of points. However detractors view lowered prices as "bribes to manipulate customer loyalty." (Welcome to Loyalty Card. 2008). However, the significant aspects relating to the effective operations and benefit value to the company and customers of Loyalty Card Scheme are as follows: Supply Chain: The product to be considered in this business plan (operations) is with respect to delivery systems of Loyalty Cards. It is necessary that the operational business plan needs to consider the following aspects before considering the various ramifications of the product line and how it could genuinely benefit the manufacturers, sellers and buying consumers or users. The supply chain needs to consider the following steps in terms of ensuring not only complete customer satisfaction but also building of loyalty and wider growing acceptability, among the customers who make up the clientele base of this product/service to consumers. Step 1: Defining the broad organisational operating strategies, including the designing and operational aspects of framework for its implementation. Step 2: Considering the modus operandi of the scheme in terms of availability of the literature and the schemes under this scheme to the valued customers. Step 3: Launching of scheme in consonance with corporate policies and objectives considering the aspects of 4 V's- volume, variety, variation and visibility of this loyalty card. Significance of 4V's in this Business Scheme: The different aspects of the 4V's of business that is, volume, variety, variation and visibility form the core of any business enterprise. (Operations Management Study Guide. 2008). It is seen that in the case of loyalty cards, the range of products/services that could be benefited by loyalty cards would be high since booksellers, DVD stores, supermarkets, etc., and almost all consumer products shopping centres in malls, or local stores could benefit from the use of loyalty cards. Next, in terms of variety, it could cater to wider coverage in terms of a wide range of product lines as "Smart cards enhance the productivity of transactions and nourish increased purchasing." (Benefits of Smart Card-based Customer Loyalty Solutions. 2008). The variation with respect to loyalty cards would depend upon the demand generated for each variety of cards, depending upon customer preferences for them. . Again, the visibility aspect would also be need to be build since high visibility is a must in order to attract and retain customers to collect percentage points, or get discounts. The company must develop the ability to manage the results of the customers' perception, about the benefits achieved from continuous usage of loyalty cards and the virtues of holding and utilising this card must be extolled to the customers. V's Type High Low 1st V Volume 2st V Variety 3rd V Variation 4th V Visibility (Operations Management Study Guide. 2008). Manufacturing the product or outsourcing it This is an important question from point of view of the marketing of loyalty cards since the use of this card would significantly reduce the profits margins between 5% to 20%, by most conservative estimates. However, it is estimated that there would be definitely be enhanced turnover, due to use of cards over a period of time that could yield higher profits due to induction of new customers through loyalty cards scheme. It has been found that this scheme is more attractive to new customer than to existing ones . Therefore, it is necessary to keep the manufacturing aspects of this card at the lowest in order that maximum profits are achieved. In order to consider which would be more profitable for loyalty card- either manufacturing or outsourcing, a comparative cost benefit analysis has to be made along with estimated increase in turnover/profit margins over a period of 2-3 years. A comparative cost and profitability study would definitely help in arriving at a consensus about the manufacturing or outsourcing of this facility. However, consider the present trends, it would be more profitable to initially, begin outsourcing the production of the cards, and after markets have been established and captured, manufacturing activities could be taken up. The main reason for this is that the loyalty card is a new product and its market acceptability is based more on hypothesis rather than actual facts and figures. Until and unless, its market acceptability and customer preferences are established without doubt for this competitive product, it would not be judicious to invest huge funds in manufacturing processes and thus tie up funds which could be better utilised in more profitable and productive ventures. What Inventory levels to hold and where to be stored: The raw materials used for the manufacturing of cards are made of ultra-sensitive substances, whose performance could be grossly undermined due to exposure to heat, dust and lowered standards of storage facilities. This could render the cards inoperable and cause losses to the company. Therefore, it is necessary that only the minimum quantity needs to be ordered, depending upon market demands and immediately sent to the various shops and booking centres for distribution to the customers. It is also necessary that a good internal control systems for accounting of card stocks need to be maintained to avoid pilferages, damages and losses due to exposures to excessive heat, humidity and careless handling. The inventory actually needed from time to time based on requisitions from the marketing departments, should be stored in ambient temperatures with operation of total stock control system. The use of a robust inventory control system to record receipts, distribution and stock levels of the loyalty cards should be strongly enforced. It also needs to be checked whether the physical quantitative units of cards in inventory, commensurate with the figures displayed in the computer records. A minimum level of card stock in storage along with a good inventory control system would ensure that optimum utilisation could be ensured at all times. Analysis of Four V's: The functional implications of operational management of various companies differ in a variety of ways. It is proposed to take them up in the context of Easy Jet Company. Volume: In the context of Easy Jet Company, the volume would be in its utulity value, which could determine its volume offtake. In the context of loyalty cards, it is seen that scope or volume of this benefit to consumers could be immense, in terms of quantitative discounts and free gifts for purchases. Moreover, the concept of loyalty cards could be used for almost any type of consumer goods and services like airlines, train services, hotel and supermarket purchases, etc. Since the quantitative distribution of loyalty cards is linked with volume of purchase, it is very useful and beneficial for large variety of goods and services. Customers need to be impressed upon that larger volume purchases would fetch them bigger rewards in terms of quantity discounts, attractive gifts, free holidays to exotic places, etc. Variety: Loyalty Cards could positively impact a large number of organisations. If one were to consider their operational aspects, the benefits to both business enterprises who are sponsors of loyalty cards and their ultimate users, the conusmers are both benefitted. What are significant in this context is the demand variations that loyalty cards could impact upon the variety of goods, services and utitlities, in creating and sustaining demands on a long time basis. Variation: Variation in demand levels is a significant aspect for any business and could also apply to loyaalty cards, since it is, to a large extent, dependent upon demand for goods. Only when consumers purchase consumer goods, etc, does the question of loyalty cards arise. It is seen that in the case of loyalty cards, the demand of products, services and utilities would receive a boost,if properly applied with marketing strategies and high-end promotional activities. Easy Jet Company needs to consider the aspects of variation in potential demand while creating marketing plans and strategies for the future. Visibility: It could be seen that in the business planning for loyalty cards, it is necessary to create and maintain a high degree of visibility in order that customers are retained over long periods of time. It is often seen that in outlets where loyalty cards are used, sellers tend to concentrate on high value purchasing clientele, thereby creating scope for low value purchasers to change over to economical and better serving sellers. Another aspect that needs to be improved is that the positive aspects of enhanced visibility creation needs to be serviced efficiently, so that the real benefits of visibility are achieved and existing customers are truly rewarded for the value of their loyalty. " In response, companies must be seen to share the benefits gained from loyalty in direct proportion to the value the customer's loyalty creates for the company." (Manchester United life assurance - the next big thing 2008). It would be useful if the Central Administrative Department of the Company could also involve in various aspects connected with launching and sustaining the marketing efforts of card promotion. The CAD could render services in the areas of Handling the inflow and distribution of loyalty cards Drafting the rules and regulations that underlie the usage of cards Discuss, and if possible, implement procedural changes in the adminstrative aspects relating to cards and its usage Attending to complaints and their solution to satisfaction of clients and Easy Jet Company Attending to legal matters that may arise in connection with card business Providing solutions to any other matter that may arise in connection with card business. Distribution Strategy: A clear cut and well defined distribution strategy could be chalked out after studying the totality of the marketing conditions and the strategies employed by the competitors and business rivals. Sometimes it may be necessary to have a combination of distribution strategies for greater effect and efficacy on the market and to displace competitive elements. Conclusion: It may be said that the business plans seeks to provide a platform for the operational implementation of the strategy for launching of the Loyalty card. To a very large extent, the success of the scheme would depend upon the efforts made by the Marketing team and the ground support received from the market in terms of product acceptance, usability and enhanced popularity and indulgence by loyal and new customers. While loyalty cards by itself cannot assure increased saleability and enhance turnover for goods and services, it could served as one of the many inducements that could serve to woo the customer and promote sales. Bibliography Benefits of Smart Card-based Customer Loyalty Solutions. (2008). [online]. Card Werk. Last accessed 23 February 2008 at: http://www.cardwerk.com/smart-card-solutions/loyalty-card/ Manchester United life assurance - the next big thing (2008). [online]. FINANCE. magazine.com. Last accessed 23 February 2008 at:http://www.finance-magazine.com/display_article.phpi=4062&pi=165 Operations Management Study Guide. (2008). How are operations different from each other. [online]. Pearson Education. Last accessed 23 February 2008 at: http://wps.pearsoned.co.uk/ema_uk_he_slack_opsman_4/17/4471/1144822.cw/index.html Welcome to Loyalty Card. (2008). [online]. Water & Stone. Last accessed 23 February 2008 at: http://www.loyaltycard.in/ Read More