Using Supermarket Loyalty Card Data to Inform Better Promotional Strategies

Abstract

This paper reports the use of loyalty card data from one of the biggest retailers in the world – Tesco - to analyse the impact of promotions. The aim is to demonstrate how such data can bring significant benefits to retailers and manufacturers when deciding promotional strategies, over and above traditional scanner datasets, which the majority of existing research is based around (E.g. Raju, 1992; Macé and Neslin, 2004; and Martínez-Ruiz et al. 2006). Regression analysis is used to compare the effects of different promotional mechanics upon different cuts and tiers of product across the fresh beef category in Tesco; using both scanner data and loyalty card data. The results show that using loyalty card data, which enables us to control for shopper life-stage and region (something which cannot be achieved using scanner data), produces more statistically significant results and provides a more detailed picture of how promotions influence sales.