Explain why loyalty schemes, used by retail outlets, encourage consumers to purchase goods - Leaving Cert Home Economics - Question 11 - 2015

Loyalty schemes are designed to incentivize consumers to make repeated purchases by offering rewards that can be redeemed for future discounts or benefits. These schemes encourage consumers to develop a habit of returning to a particular retail outlet instead of exploring competitors.

1. Customer Retention: Loyalty schemes create an emotional connection between consumers and the retail brand. By rewarding consistent shopping, consumers feel valued, leading to higher retention rates.

2. Increased Spending: When customers know they can earn points or rewards on their purchases, they may be encouraged to spend more in order to achieve higher rewards, thus boosting overall sales for the retailer.

3. Data Collection: Through loyalty programs, retailers gather valuable data about shopping habits and preferences. This information enables targeted marketing strategies, making promotions more effective and personalized, ultimately driving further purchases.

4. Sense of Community: Loyalty programs can foster a sense of belonging among consumers, as they feel part of an exclusive group that enjoys special privileges or offers, encouraging them to continue shopping at that outlet.

5. Usage Flexibility: Many loyalty schemes allow consumers to exchange points for cash reductions or specific items. This flexibility appeals to consumers, making them more likely to return as they see immediate benefits.

6. Special Promotions: Retailers often run exclusive promotions for loyalty members, which can create urgency for customers to make purchases in order to take advantage of these benefits.