Kmart Issues Plastic to Gain Loyal Shoppers
Topic Customer Relationship Management
Key Words Relationship marketing, frequency marketing, database marketing
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News Story 

Kmart Holding Corp recently launched a loyalty credit card program aimed at getting customers to buy more products and visit its stores more often. The new card program offers Kmart shoppers various gift certificate incentives and zero-interest plans on big-ticket items.

The Kmart Rewards card offers a $10 gift certificate with the first purchase of $50 or more, and an additional $10 gift certificate with each $250 spent at Kmart. In order to boost sign-ups, Kmart is offering no interest and no payments for 90 days on purchases over $100.

The new Kmart credit card is part of a popular marketing trend known as relationship marketing. Whereas previous marketing strategies tended to focus on short-term, one-time sales exchanges, relationship marketing is the development and maintenance of ongoing relationships with customers and other partners for long-term mutual benefit.

Kmart plans to promote the no-fee card through in-store and out-of-store campaigns, including promotions in Sunday circulars, online at kmart.com, and through greeters at about half of the stores in the chain.

Questions
1.

How does Kmart expect to improve business by launching its new credit card rewards program?

2. How does Kmart's $100 million lawsuit against former marketing partner Capital One illustrate the potential problems that can arise with rewards programs?
Source Alice Z. Cuneo, "Kmart rolls out loyalty credit card," Advertising Age, Nov 8, 2004 v75 i45 p3.
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