|Kudler Fine Foods has experienced significant growth and is now focused on expanding the services, improving the efficiency of its operations and increasing the consumer purchase cycle as a means to increasing the loyalty and profitability of its consumers.
Strategic Objective: Increase Loyalty and Profitability of Consumers
- Expanding Services (Revenue Increase) – Kudler is offering parties in the store to show customers how to prepare specialty foods. The draw for the consumers is to be trained by world-renowned chefs, local celebrities, other food experts, and even Kathy Kudler herself, and to be invited to exclusive, upscale events. The anticipated outcomes will be to increase the customer purchase rate of high margin food and beverage items and to get consumer to make an evening at Kudler Fine Foods part of their social network. This increased time in the store will increase the overall revenue per visit and increase the frequency of visits to the store. Consumers will receive multiple entries in high-ticket item contests by bringing a friend to the parties. While the firm’s preference is to have the events in-store, guests can have Kudler cooking classes at their home for a price premium. Programs such as this encourage consumer loyalty and word-of mouth marketing.
- Frequent Shopper Program (Revenue Increase) – Kudler’s new initiative is tracking purchase behavior at the individual customer level and providing high value incentives through a partnership with a loyalty points program. The customer purchase behavior patters will help Kudler refine its processes and offerings to best satisfy their valued customers. Price is not the primary differentiating factor for Kudler consumers; these consumers are focused on quality and finding specialized items. Therefore, rather than providing everyday discounts to the customers for their purchase frequency like lower end markets, Kudler has partnered with a loyalty points program to provide customers with points which can be redeemed for high end gift items, airline first-class upgrades, or other specialty foods.
- Increased Efficiency (Cost Reduction) – Kudler’s is now in a position to focus on internal (both front line and behind the scenes) processes, and how those can be improved to deliver increased value to the customer. From a service perspective, Kudler is benchmarking Nordstrom department stores. In addition, the firm is developing employee training programs and integrating new software systems to facilitate the effort. Marketing has encouraged the purchasing department to find ways to reduce costs of ordering foods and minimize the amount of food to be stored, while also having a zero stock out policy. In response, purchasing has developed a supplier relations program and has solicited the help of marketing to help roll out the program.
Historical Sales Data and Financials
Historically, Kudler Fine Foods has tracked information such as dollar value and profit margin per transaction, dollar sales and profit levels by day, and dollar sales and profit margins by item. However, in an effort to leverage the information to create a more intimate relationship with their customers, the firm is integrating a system to track customer purchase behavior over time. The firm is in the process of developing this system now.
The marketing budget is primarily comprised of new initiatives, marketing communications, and marketing research.
- Research, development, and rollout of new programs
- Cooking Classes
- Frequent buyer points program
- Supplier relations program
Marketing Communications activities include:
- Radio, Newspaper and Television advertising
- Public relations, events, and sponsorships
Marketing Research expenditures include:
- Market size / opportunity studies
- Food marketing trends studies
- Services benchmarking study
Within the next 12 months, Kudler plans to increase customer loyalty by offering added high-margin services, leveraging the firm’s better understanding of customer purchase patterns, and providing more efficient operations. Profitability will also be increased by cost reductions accomplished through supplier partnering programs. New customers will be acquired through social network marketing and word of mouth.
|Copyright 2004 © by Apollo Group, Inc.
Kudler Fine Foods is a much renowned food store, established at the different locations of California. The main focus of the store is to have ‘profit maximization’ by providing quality products at appropriate prices, in comparison of the competitors. The firm also wants to satisfy its clientele. Through this objective, the store wants to acquire major expansion. It currently wishes to enlarge its services by attaining perfection in the operational activities. In addition, it also desires to increase the loyalty and profitability of its consumers by increasing the ‘consumer purchase cycle’. The company’s latest idea to increase its revenue is to implement a customer rewards program that will track customer purchases and help identify trends that will allow Kudler Fine Foods to tailor its offerings to better satisfy their customers. Prior to implementing the customer rewards program, the company will need to consider development issues while also performing a cost to benefit analysis for implementation of a successful ecommerce website.
Frequent Shopper Program
In regard to the electronic commerce, the Kudler Fine Foods Sales and Marketing Department is initiating a Frequent Shopper Program to track customer purchase patterns and offer shopper incentives through a loyalty point programs. The beginning of this program will assist the Kudler Fine Food in inspiring customer loyalty and react to customer shopping orientations. For the customers of Kudler Fine Foods, speciality items are more vital than the price of the items they are intended to purchase, so in this case rather than offering daily discounts for purchase frequency, the company has united with a loyalty points program to reward customers with redeemable points for high-value gift items, airline advances or other specialty foods.
By using a rewards program, Kudler Fine Foods will be able to track customer purchases and observe trends in those purchases. Customers will use a rewards membership card to identify themselves with the purchases they are making. After a few purchases, customers could be entitled to collect rewards like airline seating upgrades, expensive gift items, or free specialty foods. Currently, the Kudler database system includes a table for customers, but that database contains only demographic information. This database could be expanded by adding a table of transactions; this table can use a member identification number as a foreign key, which could be the primary key in the customer database.
Program Goals and Supporting Measures
The prominent goals of the Kudler Fine Foods Frequent Shopper program is to encourage customer loyalty, to better react to customer’s buying demands and to augment food governing skilfulness. A successful implementation of the program should augment revenue over time by modifying loyalty and meeting customer needs and decrease costs by amending inventory procedures. The initiative should be implemented within specific time period along with the involvement of following stakeholder representatives as with their contribution the program will be implemented successfully:
- Each location of Kudler Fine Food: The program needs to be initiated at each location of the Kudler Fine Food.
- Purchasing Department: The Company’s purchasing department is needed to use the data collected by the new program to forecast food orders.
- Sales and Marketing Department: The representatives of sales and marketing department are needed to include as they will be the elementary customer of the program.
- Information Technology Department: The Company’s IT representatives must be concerned in development of requirements as they will help in ascertaining the feasibility of the requirement.
- Loyalty points program: A representative from the loyalty point’s program must be called for to describe new ideas or the experienced ideas.
Summary of Project Feasibility
Assessing the feasibility of the Frequent Shopper Program enhancement is an important step for Kudler Fine Foods to determine the chance of success for the project. A “feasibility study focuses on helping answer the essential question of should we proceed with the proposed project idea?” (Hofstrand & Holz-Clause, 2009). Three specific types of analysis have been used to determine the project feasibility: operational, technical, and economic feasibility.
Operationally, the Frequent Shopper Program should integrate into the existing workflow without any significant problems to operations. The functionality of the new system will require only a small amount of user training so there is no issue with computer competency. There will also be no loss of control by the staff or management; in fact the change will bring an added level of customer interaction which could enhance customer attitude at the point of sale. This change will also not negate or change any existing workflows that are critical to the mission success of operations.
Though the design of the network infrastructure is aging, the addition of a Frequent Shopper Program will have little to no impact on existing capabilities. As long as all of the risks involved in developing the system are identified, the development team should have no problems in designing a successful program. The program will likely be developed as an enhancement to the current POS system so that it will easily integrate with existing key components. Kudler also utilized a POS server, which would be a good staging ground for the Frequent Shopper database.
The economic feasibility has been determined by performing a cost/benefit analysis. The cost /benefit analysis has helped the project team in determining whether or not the proposed program will be beneficial to the company. The project team identified the total expenses of the project by looking at available resources and estimated development costs. An analysis was also performed to determine the total benefit that the new program would be to the organization. It was determined that if the development and implementation of the program were a success, the organization would bring in at least a 16% return on investment.
|Project Team Salaries
|Increased Customer Loyalty
|Efficiency in Inventory Controls (Reporting)
|Total Benefits and Savings
System Requirements for Frequent Shopper Program
There are various types of proposed system requirements, which should be taken in consideration by the Kudler Fine Foods. A system requires to be developed in two sides or the areas i.e. hardware and software. Hardware is related to the development of the system; while software is related for the tracking and the information database. The following are the layers or the requirements to establish hardware system for the implementation of the ‘Frequent Shopper Program’ –
- Centralize the data management system hardware – It is the most important requirement of the system to design the ‘Frequent Shopper Program’. The centralize system will help to upload and verify data for all the stores. The centralized management system will also assist to integrate the data of customers. The centralized system will also enable the Management to update the data according to the change in the customer requirements and will also cause the elimination of duplication activity.
- Content servers in hardware – The centralized data management system hardware should be used several servers for database. The content server will help to store the information. It will also be used for the ‘backup’ purpose. It will help to save the information in case of the failure of hardware or any other incident.
- Front end web server- There is also a need of the front end web server, as it will help the customers to redeem their earned points. It will enhance the effectiveness of the point system (Reynolds, 2004).
- Store server – The points of the customer can be added on the basis of the transactions information. The store server will help to transfer the data and will also help to download the customer’s information to the stores, when they need.
- Loyalty card – Loyalty card with a bar code will help each of the teller in tracking the customer purchases and points.
The company also necessitates some software to increase the effectiveness of the program. The software such as tracking software, data storage software can be used to heighten the efficaciousness of the program. The management of Kudler Fine Foods can also use the ‘Customer Relationship Management’ (CRM) software for its frequent shopper program because the main objective of the program is to increase the sales and the profit of the company.
The CRM software will help to reduce the cost of direct marketing and will increase the revenue for Kudler Fine Foods. With the help of this software, the customers can be identified easily, which will cause an increase in the profits of the company. It will also help to increase customer retention. The security software will help to protect the firm from the hacking of information, of the clientele (Tipton & Krause, 2006).
In this way, Kudler Fine Foods can implement its frequent shopper program in a more effective and efficient way.
In order to connect with the organizations customer base, Kudler Fine Foods has recognized the need to integrate a frequent shopper program to increase loyalty. With returning customers, Kudler will be able to develop long-term relationships that will both benefit the company and the customers who will receive perks and pricing advantages. The organization is also read to take on the task of designing and developing the system, the project team has completed the initial task of determining the requirements and feasibility, and will begin to come together to move the project forward. With a little bit of careful planning and a good management team, the new frequent shopper program will be a great success.
Tipton, H.F. & Krause, M. (2006). Information Security Management Handbook. CRC Press.
Hofstrand, D. & Holz-Clause, M. (2009, October). What is a Feasibility Study? Retrieved January 17, 2009, from http://www.extension.iastate.edu/agdm/wholefarm/html/c5-65.html
Reynolds, J. (2004). The complete E-Commerce Book: Design, Build & Maintain a Successful Web-Based Business (2nd Ed.). Focal Press.
Kudler Fine Foods Frequent Shopper Program
Kudler Fine Foods is a very popular food store located at different parts of California. The main objective of the store is to have profit maximization by providing quality products at appropriate prices in comparison to the other competitors. Through this objective, the store wants to have significant growth. The company now wants to expand its services by improving the efficiency of its operations. It also wants to increase the loyalty and profitability of its consumers by increasing the consumer purchase cycle. Now Kudler Fine Foods wants to expand its business through the utilization of a Frequent Shopper Program. The Frequent Shopper program is currently in design with a working high-level model up for proposal.
Proposed System Requirements List
- The system shall have three tiers of users: Customers, Users, and Managers.
- Users in the “Customers” tier represent customers of Kudler Fine Foods and account holders. Their visibility into the system will consist of viewing the Frequent Shopper Points balance on their account and redeeming Frequent Shopper Points for rewards.
- Users in the “Users” tier represent employees of Kudler Fine Foods. Their visibility into the system will consist of viewing the Frequent Shopper Points balance on an account, processing credits to an account at the time of sale, and processing debits to an account at the time of a return.
- Users in the “Managers” tier represent employees of Kudler Fine Foods with a managerial job title. Their visibility into the system will consist of viewing the Frequent Shopper Points balance on an account, processing credits to an account at the time of sale, processing debits to an account at the time of a return, and processing adjustments to an account as defined by Kudler’s business process.
- Each customer shall be assigned one and only one unique account number in the Kudler Fine Foods Frequent Shopper program.
- At the time a purchase is made at a Kudler Fine Foods location, Frequent Shopper Points will be credited to the account.
- The number of Frequent Shopper Points credited to the account will be equal to the dollar amount of the purchase, before tax, rounded down to the nearest dollar. For example, a purchase of $10.00 would yield 10 points. A purchase of $10.01 would yield 10 points. A purchase of $9.99 would yield 9 points.
- Any purchase totaling less than $1.00, before tax, will yield 0 points.
- If an item is returned for which Frequent Shopper Points were originally credited to an account, a reversal will occur equal to the dollar amount of the returned item, before tax, rounded up to the nearest dollar unless this reversal would result in the account having a balance of less than 0 points. In this case, a debit transaction will occur equal to the total number of points on the account. For example: If an account has 10 points, and a customer returns an item worth $6.00 for which points were originally credited, a debit of 6 points will occur, leaving a balance of 4 points. If an account has 10 points, and a customer returns an item worth $6.01 for which points were originally credit, a debit of 7 points will occur, leaving a balance of 3 points. If an account has 10 points, and a customer returns an item worth $11.00 for which points were originally credited, a debit of 10 points will occur (as a debit of 11 points would result in a negative balance).
- When Frequent Shopper Points are redeemed, Frequent Shopper Points will be debited from the account.
- The number of points on an account can never total less than 0.
- If a customer attempts to claim a reward worth more points than are currently available on the account balance, the system will display a message indicating that there are insufficient points to process the transaction. No debit will occur.
- When a reward is claimed, a debit to the Frequent Shopper Point balance will occur that is equal to the point value of the reward. For example, if an account has a balance of 10 points, and a reward worth 3 points is claimed, a debit of 3 points occurs leaving a balance of 7 points.
- The system must provide the ability for users to query an account on demand.
- When querying an account, the user may specify the customer’s first and last name as search criteria, the customer’s phone number as search criteria, or the account number as search criteria.
- When an account number is used as search criteria, one and only one result will be returned to the user.
- When First and Last name are used as search criteria, all records that match both criteria shall be returned to the user. The user may then select the appropriate account record to view.
- When Phone Number is used as search criteria, all records that match both criteria shall be returned to the user. The user may then select the appropriate account record to view.
- The current Frequent Shopper Point balance will be displayed to the user once an account record has been selected.
- The system must provide the ability for users to apply adjustments to Frequent Shopper Point balances.
- Only users in the “Managers” tier shall have access to processing adjustments.
- An adjustment may be a credit or a debit to an account balance.
- At the time an adjustment is processed the following input must be provided from the user:
- Number of Points
- Reason for adjustment
- The reasons for adjustment shall be a set of predetermined values that the user must select from. These values are:
- Customer Retention Award
- Reversal of Incorrect Transaction
- Over-charged for Purchase
- Under-charged for Purchase
- In the event a debit adjustment is applied, the resulting point balance may not be less than zero.
- If a user attempts to process a debit adjustment that would result in the point balance being less than zero, a message must be displayed, “This adjustment would result in a negative point balance.” No transactions occur.
Legal Considerations of Frequent Shopper Program
Doing the business through Electronic Commerce, Kudler Fine Foods has to consider several legal considerations in the development of its Frequent Shopper Program. Electronic contracts for online business transaction are legally bound all over the world. There are several Legal Considerations in the E-commerce which are as follow:
- According to the Privacy and Electronic Communication Regulations, an opt-in consent procedure is required for making commercial emails and e-commerce (Develop an e-marketing Plan).
- According to the Information Principle, the business organizations are required to verify specific information about their business which it wants to provide to the recipient on the online service to the E-Commerce Regulations.
- The business organizations have to make their advertising and promotion strategies according to the guidelines of the E-Commerce Regulations.
- For the approval of an online order, the business organizations are required to have physical signatures.
- For the E-Commerce the business organizations have to consider the taxation laws of the Native Country.
- All the customers who want to make business contracts online should be provided the facility of printing and storing a copy of all the terms and conditions.
- To copy the business processes and the intellectual properties of the business organizations is also important legal consideration of the E-Commerce (Develop an e-marketing Plan).
The mentioned Legal Considerations are required to be considered under the Frequent Shopper Program of Kudler Fine Foods Store.
Ethical Considerations of Frequent Shopper Program
In addition to the legal considerations, the business organizations have to implement several ethical considerations in their frequent shopper. Some of the important ethical considerations are as follow:
- The customer privacy is the most important ethical consideration in the electronic commerce (Merryweather, 2000).
- The protection of the sensitive and personal data of the corporate as well as the individuals is also an important ethical consideration of the e-commerce.
- Creative activities related to pornography on the name of e-commerce are not allowed according to the ethical considerations of the business.
- Breaches of any kind of contract on e-commerce are also an important ethical consideration.
- Unwelcome intrusion is also considered unethical in the field of electronic commerce.
- Under bricks and mortar model, the business organizations which use electronic commerce consider the privacy protection of channel of distributions and information about the customer major ethical considerations.
- The information provided on the websites of the business organizations should be reliable and authentic for the customers.
Thus, these are the major ethical considerations which Kudler Fine Food Store should include in the development of its frequent shopper program under electronic commerce.
Security Considerations of Frequent Shopper Program
In addition to the Legal and Ethical Considerations, Kudler Fine Foods Stores is required to implement the most important aspect of E-Commerce in its Frequent Shopper Program which is a security consideration. These considerations are a requirement to the project. The main Security Considerations are as follows:
- The business organizations operating E-Commerce have to secure their data. The customers, who do transactions, ask the organizations to secure and save all the electronically sent information about them, especially related to financial risks.
- Protection from the Cyber terrorism is also an important security consideration in E-Commerce (IP Infringements on the Internet – Some Legal Considerations, 2007).
- The technologies used by the different organizations should be protected on their Websites to be accessed by the invalid people.
- The business organizations are required to make registrations legally particularly in different physical locations on the Internet.
- Different unrelated owner can use identical trademarks legitimately in different locations due to the presence of territoriality of trademark rights. This is a major security consideration in e-commerce, as on Internet, the trademarks are potentially visible from anywhere in the world.
- The efficient imposition of the intellectual property rights in the business transactions on E-Commerce is also an important matter under security considerations.
Thus, the given Security Considerations are very important for Kudler Fine Foods Store for the development of its Frequent Shopper Program.
For the development of the Frequent Shopper Program, the store will have to make expenditures in different fields. The main expenditure fields will be related to marketing. Under this, the expenditure on advertising and market research will be major fields of expenditure. The store would have to make some expenditure on the online registration and website development. Some other expenditure would be the fulfillment of legal formalities.
The justification of all these expenditures can be done by the financial analysis of all the expenditures. The Financial Analysis of the expenditure can be done by making the budget of all the expenditures and revenues of the store. By the analysis of this budget, the store would be able to know that either the expenditures would increase the revenue of the store by comparing the revenues of the last years. If the revenues will be higher than the past year, the expenditures will be favorable for the store. The revenues can also be compared with the sales plan of the store.
Thus, with this Financial Analysis Kudler Fine Foods Store would be able to justify to all its expenditures for the development of Frequent Shopper Program.
Current Business Process Summary
Logical Model of the System
The inclusion of the Frequent Shopper module into the existing system will provide a few changes to functionality and workflow. In the new model, the transaction is initiated with the customer being asked about enrollment in the Frequent Shopper program. If the customer is not enrolled, they have the option to sign up and obtain a card immediately at the point of sale. If present, the card is swiped into the system to retrieve any existing Frequent Shopper points that the customer is able to utilize if they choose. At the end of the transaction, updates to the customers Frequent Shopper points will be printed on the receipt. The transaction information will eventually be trickled up to the POS server database which will have new canned reports used to help determine new rewards based upon customer purchasing habits.
Based upon the requirements, the logical flow of the system has been designed to provide the most minimal impact to the workflow. The new system will slightly increase the time that the customer spends at the check-out register, but the majority of this delay will occur only on the customer’s initial enrollment into the program. The delay to the workflow will eventually even out as more customers are enrolled in the program and the store staff becomes familiar with the process. The design will also give a few new reporting tools to management and they will be able to identify trends and adjust the program around the data collected to maximize the programs efficiency.
Here is the comments from the instructor about our week 2 assignment:
The paper includes very good sections on goal/scope as well as
project feasibility. I do not see the section on measures of success, and the
last section needed to identify how you will go about identifying the
requirements. The paper did not have to specify what the requirements are
(that is for week 3) but instead you need to explain the process and method you
will use – you will need to re-write this section and add the missing section.
Need your help getting week 2 week 3 revision and complete week 4 please APA style and provide