Frequent Shopper Program Essay
Frequent Shopper Program
According to Kudler Fine Foods internet site (2013), “Kudler Fine Foods is a local upscale specialty food store located in the San Diego metropolitan area. We have three locations (La Jolla, Del Mar and Encinitas). Each store has approximately 8,000 square feet of retail space located in a fashionable shopping center. We have the very best domestic and imported fare at every location” (Kudler Fine Foods). Kudler is implementing the new Frequent Shopper Program which will help the company to know their customers that frequently purchase and reward them with gifts for their loyalty. Team D will present the needed requirements to make this system benefit the company and the customers in the best way.
Kudler’s new Frequent Shopper Program is a loyalty point program that tracks customer purchases awarding loyalty points to customers by providing valuable incentives that can be redeemed through the rewards program on products or services. Price is not the primary objective for Kudler’s customers, their main focus for shopping at Kudler Fine Foods is the quality and specialized products that are not found at other stores, which is why the new loyalty program does not provide daily discounts. The basis of the loyalty program is to use the rates of each customer who returns to shop at Kudler Fine Foods and how much money is spent at each visit on specific products. Kudler Fine Foods loyalty program points can be saved and redeemed for the high end incentives Kudler’s is providing such as first-class airline upgrades, specialty foods, etc.
The loyalty program is an electronic database that monitors, stores, reports and records purchases made by the customer that pertain to the loyalty program. The ability to track customers frequent purchases will benefit Kudler through the generation of reports showing new or seasonal product trends allowing for a prediction in future purchases throughout the year, which all increase revenue and sales. Objectives for the Frequent Shopper Program are the following:
* Track customer frequent shopping
* Reward frequent buyers
* Keep customers loyalty
* Profitability increase
Determination of Requirements
The projects determination requirements are important to know in the service request for Kudler. The objective of a Service Request is to make new system for Kudler that through a Frequent Shopper Program will track customer purchases therefore allowing the customers to redeem loyalty points. To meet the goal specific analysis methods need to be identified that are used to determine user needs. The basic process of analysis involves three steps: * Business Process Automation – understanding the existing situation * Business Process Improvements – identify the improvements * Business Process Reengineering – define the requirements The First step, Business Process Automation is geared toward knowing the as-is situation of the current system.
First the analyst needs to determine the current situation in Kudler “Problem Analysis”; right now the as-is issue is to increase more sales. How can we make the customer shop more in Kudler? After finding out the problem the next step is to find the nature of the problem “Root Cause Analysis” Root Cause Analysis focuses on the issue of the problem not the solution. The root causes in Kudler as a gourmet store is having perishable foods with a short shelf life. To avoid losing profit Kudler need to sell products that customer wants to buy. If the customers will buy more products it will increase the profit. The Second step, Business Process Improvements is to identify how to improve more sales in Kudler.
Through the implementation of the Frequent Shopper Program should help maximize the profit of Kudler. It will improve profit; customer based, and inventory system. The third step is, Business Process Reengineering. According to SearchCIO (2013), Business process reengineering (BPR) is the analysis and redesign of workflow within and between enterprises (Business Process Reengineering). This will help Kudler rethink how they do their work so they can improve customer service, cut the cost of operations, and become world-class competitors.
System Requirements for Frequent Shopper Program
There are various types of proposed system requirements, which should be taken in consideration by the Kudler Fine Foods. A system requires to be developed in two sides or the areas i.e. hardware and software. Hardware is related to the development of the system; while software is related for the tracking and the information database. The following are the layers or the requirements to establish hardware system for the implementation of the ‘Frequent Shopper Program’
Centralize the data management system hardware
It is the most important requirement of the system to design the ‘Frequent Shopper Program’. The centralize system will help to upload and verify data for all the stores. The centralized management system will also assist to integrate the data of customers. The centralized system will also enable the Management to update the data according to the change in the customer requirements and will also cause the elimination of duplication activity.
Content servers in hardware
The centralized data management system hardware should be used several servers for database. The content server will help to store the information. It will also be used for the ‘backup’ purpose. It will help to save the information in case of the failure of hardware or any other incident. Front end web server
There is also a need of the front end web server, as it will help the customers to redeem their earned points. It will enhance the effectiveness of the point system (Reynolds, 2004). Store server
The points of the customer can be added on the basis of the transactions information. The store server will help to transfer the data and will also help to download the customer’s information to the stores, when they need.
Loyalty card with a bar code will help each of the tellers in tracking the customer purchases and points. The company also necessitates some software to increase the effectiveness of the program. The software such as tracking software, data storage software can be used to heighten the efficaciousness of the program. The management of Kudler Fine Foods can also use the ‘Customer Relationship Management’ (CRM) software for its frequent shopper program because the main objective of the program is to increase the sales and the profit of the company.
The CRM software will help to reduce the cost of direct marketing and will increase the revenue for Kudler Fine Foods. With the help of this software, the customers can be identified easily, which will cause an increase in the profits of the company. It will also help to increase customer retention. The security software will help to protect the firm from the hacking of information, of the clientele (Tipton & Krause, 2006).
The system shall have three tiers of users: Customers, Users, and Managers. Users in the “Customers” tier represent customers of Kudler Fine Foods and account holders. Their visibility into the system will consist of viewing the Frequent Shopper Points balance on their account and redeeming Frequent Shopper Points for rewards. Users in the “Users” tier represent employees of Kudler Fine Foods. Their visibility into the system will consist of viewing the Frequent Shopper Points balance on an account, processing credits to an account at the time of sale, and processing debits to an account at the time of a return. Users in the “Managers” tier represent employees of Kudler Fine Foods with a managerial job title. Their visibility into the system will consist of viewing the Frequent Shopper Points balance on an account, processing credits to an account at the time of sale, processing debits to an account at the time of a return, and processing adjustments to an account as defined by Kudler’s business process.
Each customer shall be assigned one and only one unique account number in the Kudler Fine Foods Frequent Shopper program. At the time a purchase is made at a Kudler Fine Foods location, Frequent Shopper Points will be credited to the account. The number of Frequent Shopper Points credited to the account will be equal to the dollar amount of the purchase, before tax, rounded down to the nearest dollar. For example, a purchase of $10.00 would yield 10 points. A purchase of $10.01 would yield 10 points. A purchase of $9.99 would yield 9 points. Any purchase totaling less than $1.00, before tax, will yield 0 points. If an item is returned for which Frequent Shopper Points were originally credited to an account, a reversal will occur equal to the dollar amount of the returned item, before tax, rounded up to the nearest dollar unless this reversal would result in the account having a balance of less than 0 points.
In this case, a debit transaction will occur equal to the total number of points on the account. For example: If an account has 10 points, and a customer returns an item worth $6.00 for which points were originally credited, a debit of 6 points will occur, leaving a balance of 4 points. If an account has 10 points, and a customer returns an item worth $6.01 for which points were originally credit, a debit of 7 points will occur, leaving a balance of 3 points. If an account has 10 points, and a customer returns an item worth $11.00 for which points were originally credited, a debit of 10 points will occur (as a debit of 11 points would result in a negative balance). When Frequent Shopper Points are redeemed, Frequent Shopper Points will be debited from the account. The number of points on an account can never total less than 0. If a customer attempts to claim a reward worth more points than are currently available on the account balance, the system will display a message indicating that there are insufficient points to process the transaction. No debit will occur.
When a reward is claimed, a debit to the Frequent Shopper Point balance will occur that is equal to the point value of the reward. For example, if an account has a balance of 10 points, and a reward worth 3 points is claimed, a debit of 3 points occurs leaving a balance of 7 points. The system must provide the ability for users to query an account on demand. When querying an account, the user may specify the customer’s first and last name as search criteria, the customer’s phone number as search criteria, or the account number as search criteria. When an account number is used as search criteria, one and only one result will be returned to the user. When First and Last name are used as search criteria, all records that match both criteria shall be returned to the user.
The user may then select the appropriate account record to view. When Phone Number is used as search criteria, all records that match both criteria shall be returned to the user. The user may then select the appropriate account record to view. The current Frequent Shopper Point balance will be displayed to the user once an account record has been selected. The system must provide the ability for users to apply adjustments to Frequent Shopper Point balances. Only users in the “Managers” tier shall have access to processing adjustments. An adjustment may be a credit or a debit to an account balance. At the time an adjustment is processed the following input must be provided from the user:
* Number of Points
* Reason for adjustment
The reasons for adjustment shall be a set of predetermined values that the user must select from. These values are:
* Customer Retention Award
* Reversal of Incorrect Transaction
* Over-charged for Purchase
* Under-charged for Purchase
In the event a debit adjustment is applied, the resulting point balance may not be less than zero. If a user attempts to process a debit adjustment that would result in the point balance being less than zero, a message must be displayed, “This adjustment would result in a negative point balance.” No transactions occur.
Legal Considerations of Frequent Shopper Program
Doing the business through Electronic Commerce, Kudler Fine Foods has to consider several legal considerations in the development of its Frequent Shopper Program. Electronic contracts for online business transaction are legally bound all over the world. There are several Legal Considerations in the E-commerce which are as follow: * According to the Privacy and Electronic Communication Regulations, an opt-in consent procedure is required for making commercial emails and e-commerce (Develop an e-marketing Plan). * According to the Information Principle, the business organizations are required to verify specific information about their business which it wants to provide to the recipient on the online service to the E-Commerce Regulations.
* The business organizations have to make their advertising and promotion strategies according to the guidelines of the E-Commerce Regulations. * For the approval of an online order, the business organizations are required to have physical signatures. * For the E-Commerce the business organizations have to consider the taxation laws of the Native Country. * All the customers who want to make business contracts online should be provided the facility of printing and storing a copy of all the terms and conditions. * To copy the business processes and the intellectual properties of the business organizations is also important legal consideration of the E-Commerce (Develop an e-marketing Plan). * The mentioned Legal Considerations are required to be considered under the Frequent Shopper Program of Kudler Fine Foods Store. * Ethical Considerations of Frequent Shopper Program
* In addition to the legal considerations, the business organizations have to implement several ethical considerations in their frequent shopper. Some of the important ethical considerations are as follow: * The customer privacy is the most important ethical consideration in the electronic commerce (Merryweather, 2000). * The protection of the sensitive and personal data of the corporate as well as the individuals is also an important ethical consideration of the e-commerce. * Creative activities related to pornography on the name of e-commerce are not allowed * According to the ethical considerations of the business. * Breaches of any kind of contract on e-commerce are also an important ethical consideration.
* Unwelcome intrusion is also considered unethical in the field of electronic commerce. * Under bricks and mortar model, the business organizations which use electronic commerce consider the privacy protection of channel of distributions and information about the customer major ethical considerations. * The information provided on the websites of the business organizations should be reliable and authentic for the customers. Thus, these are the major ethical considerations which Kudler Fine Food Store should include in the development of its frequent shopper program under electronic commerce. Security Considerations of Frequent Shopper Program
In addition to the Legal and Ethical Considerations, Kudler Fine Foods Stores is required to implement the most important aspect of E-Commerce in its Frequent Shopper Program which is a security consideration. These considerations are a requirement to the project. The main Security Considerations are as follows: The business organizations operating E-Commerce have to secure their data. The customers, who do transactions, ask the organizations to secure and save all the electronically sent information about them, especially related to financial risks. * Protection from the Cyber terrorism is also an important security consideration in E-Commerce (IP Infringements on the Internet – Some Legal Considerations, 2007). * The technologies used by the different organizations should be protected on their Websites to be accessed by the invalid people.
* The business organizations are required to make registrations legally particularly in different physical locations on the Internet. * Different unrelated owner can use identical trademarks legitimately in different locations due to the presence of territoriality of trademark rights. This is a major security consideration in e-commerce, as on Internet, the trademarks are potentially visible from anywhere in the world. * The efficient imposition of the intellectual property rights in the business transactions on E-Commerce is also an important matter under security considerations. Thus, the given Security Considerations are very important for Kudler Fine Foods Store for the development of its Frequent Shopper Program.
For the development of the Frequent Shopper Program, the store will have to make expenditures in different fields. The main expenditure fields will be related to marketing. Under this, the expenditure on advertising and market research will be major fields of expenditure. The store would have to make some expenditure on the online registration and website development. Some other expenditure would be the fulfillment of legal formalities. The justification of all these expenditures can be done by the financial analysis of all the expenditures.
The Financial Analysis of the expenditure can be done by making the budget of all the expenditures and revenues of the store. By the analysis of this budget, the store would be able to know that either the expenditures would increase the revenue of the store by comparing the revenues of the last years. If the revenues will be higher than the past year, the expenditures will be favorable for the store. The revenues can also be compared with the sales plan of the store. Thus, with this Financial Analysis Kudler Fine Foods Store would be able to justify to all its expenditures for the development of Frequent Shopper Program.
Logical Model of the System
The inclusion of the Frequent Shopper module into the existing system will provide a few changes to functionality and workflow. In the new model, the transaction is initiated with the customer being asked about enrollment in the Frequent Shopper program. If the customer is not enrolled, they have the option to sign up and obtain a card immediately at the point of sale. If present, the card is swiped into the system to retrieve any existing Frequent Shopper points that the customer is able to utilize if they choose. At the end of the transaction, updates to the customers Frequent Shopper points will be printed on the receipt. The transaction information will eventually be trickled up to the POS server database which will have new canned reports used to help determine new rewards based upon customer purchasing habits.
Preliminary Design Model
The diagram above captures the quintessence the Kudler Fine Foods preliminary design model. It provides detailed information on how the staff should prepare for the changes that will reshape the structure of Kudler Fine Foods. The store hopes this approach helps form a bond between Kudler Fine Foods and the customers. The preliminary design model describes the process taken to lure customers through data collection. The point-of-sales (POS) system is a major contributor in this process to ensure Kudler Fine Foods achieve its defined goal. Although POS has many functions, it predominantly helps track the customers’ buying behavior to facilitate Kudler Fine Foods’ reward program (Frequent Shopper Program). Data collection gives the store very good idea on a particular customer’s purchasing habit. Kudler Fine Foods uses the collected information as a marketing strategy better to accommodate its customers.
Design Trade-off Approach
There is a give and take in everything people do. This includes big corporations and small businesses in their daily operations. The give and take comes in different forms such as cost, schedule, and performance; one has to compensate for his or her deficiency in business. Individuals and organizations must strike a delicate balance for the shortcomings associated with the project and what they are trying to accomplish. In a service request such as Kudler Fine Foods, design trade-off is the appropriate term for describing this approach. For example, the project team at Kudler Fine Foods may invest more money in the project to expedite the process of attracting more customers; this will give Kudler Fine Foods a return on investment (ROI) in due course. Completing the project on schedule requires the store to reallocate its personnel from their regular duty to assist with the project. Poor performance on an employee’s behalf can jeopardize the customer base of Kudler Fine Foods therefore requires special attention to bring in more customers.
To meet the original requirements, Kudler Fine Foods always has to keep the customers in perspective because the project is about luring customers to the store. As in any project, managers have to conduct cost-benefit analysis for feasibility. These benefits do not always come in monetary value; they may improve a company’s customer relationship or establish a good rapport. A satisfied customer will spread the word “about the business just like a disgruntle customer can ruin a business by spreading negative reviews about the business.” The detailed design process provides better explanation for topics not reflected on the data flow diagrams (DFD). It gives extensive characteristics of the requirements, which are sometimes unclear to individuals (Dennis, Wixon, & Roth, 2012). Design specifications ensure every requirement meets the intent of the major players in the project.
Operational, performance, security, cultural, and political requirements (Dennis, Wixom, & Roth, 2012, p. 302) along with their sub-requirements form the architecture design to make a project relevant. Design specifications require definite components to function properly as a unit. Software design, hardware, and networks are essential components of the process. The project team has to have the right combination for the success of Kudler Fine Foods’ requirements. The process should include three characteristics for software application: operational, transition, and revision (I Answer 4 U., n.d., p. 2) with more emphasis put on revision as seen below: * Maintainability: The software is simple to comprehend and work with. * Flexibility: Customization of the software is easy.
* Extensibility: Project team can increase the software performance functions.
* Scalability: The software is upgradable.
* Testability: The software is measurable through testing for comparison.
* Modularity: Makes it easier to work with dividing systems into chunks. Hardware Design
Hardware comprise of the physical components of a computer system from a mouse, a keyboard, modem, router, etc (EC., 2013). Some requirements for suitable hardware at Kudler Fine Foods are dependability, durability, and performance. Any investment on hardware must produce the three elements just aforementioned. Organizations expect some benefits from installing new systems or hardware therefore; the hardware must perform what the stakeholders require it to do. The recommendation is that Kudler Fine Foods use the types of hardware in all three stores for easy interface. The human-computer interaction (HCI) is the best way to bring the employees up to snuff. The stores will use computer-based training (CBT) to accomplish that task as briefly stated by Brenda Wagner in her memo to Yvonne Reynolds (UOPX, 2013).
Network Design Kudler Fine Foods use the 100 T Base Ethernet network connections to provide constant communication throughout the stores. It is imperative the connections remain secure for protecting customers’ information and the Kudler Fine Foods’ trade secrets. The stores need to establish business-to-business (B2B) to facilitate its major suppliers through the supply chain management (SCM). The use of business-to-customer (B2C) is another decisive factor Kudler Fine Foods must consider to have customers enrolled in the Frequent Shopper Program. The employees at the stores must take precautionary measure to ensure sensitive information remain protected. This requires the project team to set up firewalls and other measures to secure the network.
Physical Model of the System
The physical model of the system gives extensive details of Kudler Fine Foods’ requirements. It shows the process, which the stores must take to achieve the Frequent Shopper Program. The information architecture diagram depicts how the customers are in every sense the focal point of the project. The physical model differentiates the process between the customers and the remaining process (Dennis, Wixom, & Roth, 2012). Information architecture allows functionality organization in the physical model of the system. It creates files accessible and understood by the users.
Testing Process Summary
Testing occurs at every stage of the project before moving on to the next stage. This ensures compatibility within the system as it progresses. Testing’s ultimate goal is to validate the system meets the requirements of the stakeholders (Valacich, George, & Hoffer, 2012). It is a deliverable with its own plan and what managers are trying to accomplish. According to Rehman Zafar (2013) testing process falls in the following types: “unit testing, integration tests, functional testing, system testing, stress testing, performance testing, usability testing, acceptance testing, regression testing, and beta test” (Para. 5). Testing also consist of hardware components to make sure they can interface. The testing phase of the project is somewhat similar to the documentation phase; the project team must register every test results and make necessary adjustment as the team proceeds.
Based upon the requirements, the logical flow of the system has been designed to provide the most minimal impact to the workflow. The new system will slightly increase the time that the customer spends at the check-out register, but the majority of this delay will occur only on the customer’s initial enrollment into the program. The delay to the workflow will eventually even out as more customers are enrolled in the program and the store staff becomes familiar with the process. The design will also give a few new reporting tools to management and they will be able to identify trends and adjust the program around the data collected to maximize the programs efficiency.
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