Brief Description of Third Option

Discuss about the Marketing and Customer Engagement for Case Study on Fly Buys.

Loyalty New Zealand was established in the year 1996 by the Bank of New Zealand, IAG New Zealand Limited, Greenstone Energy Ltd and Foodstuffs Venture Limited in order to develop a coalition loyalty program. This program recognizes and rewards the consumers of New Zealand and provides the businesses with unparallel and vital information regarding the customers. The flagship loyalty program of Loyalty New Zealand is called Fly Buys, which has over 2.5 million card holders and 1.3 million active households who swipe their Fly Buys cards at over 50 partner businesses and redeem more than 2000 rewards daily. Chris Lamers was appointed as the Head of Customer Engagement in the year 2007 with the aim to re-launch the Fly Buys brand for continuous growth of the organization. As per the case study, Chris Lamers has selected one out of three options but in this assignment, an alternative option has been selected, compared and analyzed for the same.

The third option that was selected by Chris Lamers was “Fly Buys should focus on stretching the brand”. Chris knew that he could data mine the extensive databases of Fly Buys with the aim to analyze the usage patterns of members and also to compare these with the external and corporate database. Therefore, it can be said that this particular option will help Chris Lamers and his team members to identify the gaps in the present market place (Pride & Ferrell, 2012). On the basis of the outcome of this analysis, Fly Buys would add more partner companies and this provide the consumers of New Zealand with more options for earning points of Fly Buys. The particular option also aimed to add new products to the existing offerings of Fly Buys. Thus, it can be said that the particular third option has two objectives – to add more partner companies and to add new products, both of which need a creative thinking skill.   

As per the case study, there are two more options, one of which can be selected for the continuous growth of the organization and also for re-launching the Fly Buys brand. These options include – firstly, Fly Buys might launch a new brand and secondly, Fly Buys might put focus on the market penetration. Chris Lamers along with his team wondered if Fly Buys has reached the maximum penetration and whether the time was right for launching a new brand. Chris Lamers by keeping the first option in mind decided to launch a Youth Card branded loyalty program for the younger customers and a Senior Card branded loyalty program for senior customers. The reason behind this is that as per the statistics New Zealand trend data, the proportion of New Zealand consumers over the age of 65 years was expected to increase with the passage of time. However, with this particular option, Chris Lamers found that he might face trouble and high risk regarding the launching of any new brand in the present market as launching of new brand might take a lot of time and also the resources of Loyalty New Zealand.

Alternate Option Recommended

Thus, it can be recommended that Chris Lamers and his team should opt for the second option that is “Fly Buys should focus on market penetration”. It has been found that Fly Buys was extremely popular among the consumers of New Zealand. Therefore, Chris Lamers by keeping the second option in mind, he could focus on getting the existing customers or members to swipe their Fly Buys cards more often at the partner companies of Fly Buys. This particular method would help Fly Buys to increase its customers. As per the record of the extensive database of Fly Buys, it has been found that the consumers of New Zealand swipe their Fly Buys cards 300000 times per day or it can also be said that they redeem their Fly Buys Points for rewards (2000). These facts and figures imply that the present market of Fly Buys is already enriched but for continuous growth of the firm, Chris Lamers and his team should implement this second option. For this, Chris Lamers might introduce new strategies and can provide various offers and discounts in order to attract more customers and to increase the number of swiping times of the Fly Buys cards per day (Kotler & Keller, 2012).

It can be said that the recommended option i.e. “to focus on the market penetration” is better than the third option i.e. “focus on stretching the brand”. The reason behind this is that the stretching of brand is the process of utilizing the established brand names in launching products in a different and unrelated category of product. However, it has been found that the potential growth of the stretching of brand depends on the method by which the core product has been positioned in the minds of the customers (Hood, 2013). It can also be said that the new service or product has to fit the core brand or the resulting inappropriateness might demoralize the core brand. Generally, it has been found that the new product raises the equity of brand and also the profits of the firm (Kotler & Armstrong, 2012). However, the primary disadvantage of implementing this particular strategy is that the stretching of a brand too far might develop the original brand distraction (Grewal & Levy, 2012). In addition to this, brand stretching in any unrelated markets might lead to loss of reliability. Thus, Fly Buys should research about the product categories before implementing the particular strategy. Moreover, a risk is associated with this brand stretching strategy that is a new product might develop implications which might damage the image and reputation of core brand (Shani & Chalasani, 2013). Therefore, it can be said that the implementation of brand stretching strategy might also affect the reputation of the company and this would lead the firm to run under loss as the customer base of the organization would also decrease. Additionally, it might happen that due to less awareness and trial, the management might not provide sufficient investment for the introduction of new services and products as they could assume the spin-off effects might compensate the original brand name (Elliott, Rundle-Thiele, & Waller, 2012). It has been found that if the brand stretching does not has any advantage over the competitive brands in the newly introduced categories of products and services, then it might fail. Therefore, it can be said that the third option “focus on stretching the brand” is associated with several high risks. Thus, the second option “to focus on the market penetration” is comparatively better than third option “focus on stretching the brand”. Moreover, market penetration has various tactics that help to reduce the production cost of the company and also helps to increase the profitability of the firm (Burns & Bush, 2014).

Comparative Analysis

The second option is considered as the recommended one for the particular circumstances of Fly Buys. The second option is that the Fly Buys should put focus on the market penetration. Therefore, it can be said that if this option of focusing on market penetration is implicated within the Fly Buys, then it will earn various advantages. These include – firstly, the market penetration might cause quick adoption and diffusion of the product and services in the present market (Bosik, 2011). Secondly, this might also create goodwill among those consumers and this might also develop customer referrals (Czinkota & Ronkainen, 2013). Thirdly, by focusing on the market penetration, the efficiency of Fly Buys might be encouraged due to thinner profit margins. This occurs due to aggressive pricing and the efficiency is required for maintaining profitability (Aaker, 2013). Fourthly, the competitors feel dispirited to enter the market, thus it can be said that the market penetration strategy can resist the entry of the new entrants to the market. In addition to these, the market penetration strategy takes the advantage of lower pricing in order to raise the demand of product and also to raise the share of the market (Armstrong & Kotler, 2013). On the other hand, it can also be said that with the increase in the demand, the organization Fly Buys can save money on the cost of production as the volume of production increases. Therefore, the second option is also suitable for the operation and regulation of Fly Buys in the present circumstances.

Conclusion

Therefore, it can be concluded that for any organization, continuous growth of the business is an essential factor for running the business successfully. It has been found that there are various options for the particular organization Fly Buys to grow continuously. Hoever, some of the options are associated with higher risks and challenges. Thus, in order to lower the risk, the management should analyze each of the options in detail such that the associated risk can be studied well. Depending on the amount of risks, the management should select the accurate option and should implement it in order to run the business effectively. Here, Chris Lamers has selected the third option i.e. “to focus on stretching the brand” but he might also opt for the second option i.e. “to focus on market penetration” as the later one is associated with relatively lower risks.

References

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Armstrong, G. & Kotler, P. (2013). Marketing. Boston: Prentice Hall.

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Burns, A. & Bush, R. (2014). Marketing research. Boston: Pearson.

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Shani, D., & Chalasani, S. (2013). Exploiting niches using relationship marketing. Journal of Services Marketing.