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

Sainsbury’s had been losing market share until partnering with Nectar and then became U.K.’s second largest supermarket chain after the first year of using the program. They also discovered weekly spending was 40% greater among people collecting points from several sponsors than only from Sainsbury’s.
A study suggested that Sainsbury’s gained market share from non-Nectar retailers through gasoline sales due to the competition between BP and Sainsbury’s with Nectar. Sainsbury’s benefited from the Nectar program by:
· Increasing the frequency of customer’s visits and spending more per transaction
· Acquiring new customers
· Retaining current customers
· Up-selling to customers to buy higher margin products While Sainsbury’s was the dominant sponsor, there had been a steady decrease in its importance. In the launch month, four out of five collectors earned points from Sainsbury’s alone. Within six months, half had earned points from a second sponsor and at the anniversary 30% earned from one, 60% from two and 10% from three sponsors. Spending at Sainsbury’s was greater among collectors earning points from multiple sources than from Sainsbury’s alone. Weekly spending at Sainsbury’s was 40% greater when people collected from them and two other sponsors than from Sainsbury’s alone. It also became apparent that collectors who earned points from multiple sponsors were less likely to defect than single-sponsor collectors.

2. Should Sainsbury stay with Nectar or implement a solo program? Defend your answer. Nectar advantages:

Advantage ● Large amount of Data collected - consumer insights
● Continuing program
● Increase in buyers due to large network
● Manages customer retention
● 59% rated