--- Dwayne Monroe <dwayne.monroe at gmail.com> wrote:
>
> Show of hands between thee and me - between the two
> of us, who has
> actually built one of these systems, watched it
> work, tracked its
> progress and thought through the implications?
>
[WS:] I do not mean to question your work experience, Dwayne, but rationalizing is a well know feature of organizational behavior. That is to say, organziatinal actors tend to justfy their actions in terms of the dominant organizational ideology i.e. beneficial effects for the mythical bottom line, even though the real effects are either unknown or less than stellar. In oher words, corporate execs & thier consultants may say or even believe that loyalty cards improve their bottom line, because improving the bottom line is epxected of them, but that does not necessarily mean that it is actually the case.
Obviously, connecting demographic info gathered through loyalty cards to sales may offer some marketing advantage in the beginning - no dispute here. However, form the eaxmple you quote the main advantage would be to the manufacturer of the product rather than the retailer, who has the choice between diffrent manufacturers and thus dump those who do no sell. Yet, it is the retailer not the manufacturer who issues the loyalty cards - and that itself begs a question why?
But more importantly, even if the data gathered through loyatly cards offered a subtantial advantage to the retailer (or the manufacturer), as you claim - it is also clear that such an advantage would disappear if all retailers used the same data collection method. That is to say, when all retailers collect similar information, no one has a competitve advantage, and their relative position against each other remain more or less the same. BTW, the same applies to the stock market, I'd imagine. Yet dropping out of that rat race would create a competive disadvantage to one who drops, so everyone is forced to run the gauntlet without gaining much out of it.
Thus, my main point stands. Whether they are are mere marketing gimmicks to keep customer loyalty, marketing data collection tools, or both - loyalty cards impose addtional cost on the market players without offering much competitive benefits anyomore - which is the fundamental irrationality of the market system.
Wojtek
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