Kudler Fine Foods Frequent Shopper Program

FREQUENT SHOPPER PROGRAM 14

KudlerFine Foods Frequent Shopper Program

GradeCourse

KudlerFine Foods is in need of developing a system that will help intracking customer purchases through a Frequent Shopper Program toaward loyalty points for redeeming by the customer for gift items.The goal of program for the business is to increase revenue, improvecustomer base and make processes efficient and effective. The task ofour team will be to outline the goals and scope of the project,define measures to determine the success of the system, analysis ofthe total feasibility of the system and define requirements for thecompletion of the program.

BusinessObjectives with Supporting Measures of Success for the Project

Thesystem will help the company’s customers to create an account inthe internet in order to keep track of their purchases and alsoenable them to log in and keep track of their points from purchasesand redeem the points for rewards. The accounts will help Kudler toknow about products that are in demand in the market and so willproduce goods and services to meet the demands. The new system willgather information about various customers in the market and thenstore the information. The system should enable customers to haveaccess to their accounts at all times and manage their accounts inorder to redeem the points they have earned from their purchases(Apollo Group, Inc., 2011)

Inaddition, the system is expected to gather information in relation topurchases by customers and providing rewards to customers because oftheir loyalty towards the company’s products. The customers areable to log in, see how many points they have received from theirpurchases, and have a right to redeem those points for rewards.Finally, the system should be in a position to gather informationabout various customers of the business and allow them to managetheir purchases and also enable the firm to get information aboutproducts that are in high demand in the market in order to generatemore revenue due to the competitive advantage gained from the system.

Manybusinesses have developed the frequent shopper programs becausecustomers prefer the system as it enables them to log in to theiraccounts and manage them in order to redeem the points they havereceived from their purchases for rewards. Businesses believe thatthe program will help them succeed in the market because they receiveinformation about the changing customer needs and respond to them asfast as possible. Personal information about customers is gatheredand this helps the business to obtain information about theircustomers and use it to produce goods and services that will beappealing to customers’ needs and expectations.

Theseincentives will help Kudler secure customer loyalty and maintain itsmarket share. Availability of database of loyal customers will addprofitability for Kudler and it is believed that the profitability ofan individual consumer grows constantly as a result of thisrelationship. Customers will be attracted to the firm because thesystem will enable the firm to sell goods at low prices andcommunicate with customers cheaply. This will be a competitiveadvantage for Kudler Fine Foods (Gomez&amp Cillan, 2006).

ADescription of the Current Business Process or System

KathyKudler established Kudler Fine Food in 1998 and since then she runsall aspects of the business such as ordering products and makingsales and budget forecast. With the help of her manager, she is ableto manage her stores and stay within budgets and operating expenses.The manager is in charge of controlling the schedules such as pricestore items, inventory control, and managing of cash. Kathy is incharge of ordering because she still makes purchases in bulk.

Inthe current business process, the Frequent Shopper module is addedinto the existing system that provides some changes to workflow andfunctionality. However, the new model gives an opportunity tocustomers to make a choice by being asked about enrollment in theFrequent Shopper program. A customer has an option to sign up andobtain a card immediately at the point of sale if he/she is notenrolled. If the customer has the card, it is then swiped into thesystem in order to identify the points a customer has earned from thepurchase. At the final stage of the transaction, information aboutthe points earned will be presented in the receipt given to acustomer. Information about the transaction will be saved on the POSserver database, which will then be used to determine the reward thatwill be obtained by a customer incase he/she decides to redeem thepoints earned.

Thefirm needs the development of a new system that will track customerpurchases as a result of frequent shopper program that will thenimprove customer loyalty and help in reducing cost of operations andthe general price levels of goods. The program will also help intracking customer purchases in order to increase productivity ininventory management and ordering.

The three locations of the firm will be included in the program sothat customers can make purchases from anywhere and the transactionstracked from all locations. The business is able to manage itsbranches in other locations and ensure customers receive high qualityservices from all branches. The market share of the firm willincrease because it will receive customer loyalty from a larger area.

Identificationof the Scope or Boundaries of the Project

Thescope of the project is to develop requirements for the Kudler FineFoods customer Frequent Shopper Program. The project will increasethe firm revenue, customer base and make processes effective andefficient. The program will track customer purchases and providepoints in relation to purchase which are redeemable by a customer andalso helps in creating partnership with other external companies inrelation to products or services obtainable as a result of redeemingof the loyalty points by customers.

Dataflow diagrams and boundaries will be developed after theestablishment of the external entities. The external entities aremodified to facilitate interaction across the boundaries of thesystem and that of the outside world. The boundaries of the systemdefine where the system starts and ends. The boundaries define thesystem’s scope by providing data or receiving information from itsexternal entities. The scope of the project will be to evaluate theold process needs, determine the viability of the new project,determine the rewards from the new project, offer rewards to loyalcustomers and increase profits of the firm.

ProjectConstraints

Finances

Kudler Fine Foods may lack finances to be used in developing thefrequent shopper programs because it may be too expensive for them toafford. If the firm borrows funds for financing the project, thiswill increase the operating costs as a result of interests. This maylead to losses and the firm can be less competitive or may even fail.

Time

Theproject time may be short for our team and the deadline may be hardto meet. Due to dynamic changes in customer demands and technology,the firm may require the system within a specific time period so asto respond to the changes in the environment, but it may be hard forthe team to develop it within that period because system developmentgoes through various stages to make if effective.

Resources

Resourcescan be financial, human or technological. The team may lack humanresources with proper skills that are required in the development ofthe system. For the project to be successfully developed, the teammembers should have the skills and knowledge about the systemdevelopment. In relation to technology, the dynamic changes intechnology make the current technology obsolete thus affecting thewhole system. The team should be able to respond to the changingtechnology as fast as possible.

OrganizationalPolicies or Culture

Thepolicies and culture of the organization should support thedevelopment of the system. For the system to be implemented withoutany resistance, it must be in line with the policies and cultures ofthe organization. For the team to ensure the system is developed andimplemented successfully, it needs to ensure that the projectsupports the cultures and policies of the organization.

BusinessFunctional Requirements

Thesystem gives the business an opportunity to integrate the frequentshopper program as it will gather information about customers andallow them to log in and redeem their points for rewards provided bythe firm. The system will help the firm determine the trainingrequirements of its employees and by the use of information systemthe firm can train the employees on how to use the new system. Withthe help of the system, the business will track each customer’spurchases and accumulate individual customer’s loyalty points. Thebusiness will then award loyalty points earned by customers thiswill be achieved by redeeming the points by customers for rewards.

Thecompany employees will have the task of ensuring the accumulatedpoints are correct on the point of sale terminals. The employees willalso ensure information is correctly entered in the system and thatthe information is complete. The firm will experience some internalchanges as a result of the introduction of the system. Some of thesechanges will be the introduction of new technology, laying off someworkers, and employing skilled workers (OpenSource Matters, 2012).

KudlerFine Foods should directly observe users because users of systems donot usually appreciate the importance of the current system. Thesystem analyst has a task of observing the policies and cultures ofthe firm in order to determine how the business is run. The systemanalyst should analyze the behavior of managers in ensuring thebusiness reaches its objectives and develop a system that will makethe work of a manager easier.

Thebusiness should ensure that the system has access to the network inorder to transfer the points as a result of customer loyalty in orderto be tracked down. The firm can also find information about thecustomers’ needs and expectations on the internet and will producegoods and services that will satisfy those needs and expectations.This will help the company to operate competitively in the market andincrease its profitability.

Finally,the business should ensure it reviews business documents so that theanalyst can gain understanding of how a specific job title functionsand how a system can be developed to make the functions easier. Theteam will also consider the policies and rules within theorganization in order to develop a system that is in line with theserules and policies so as to discourage resistance.

Descriptionof the New Business Process or System – Use the Process ObjectivesModel and the System Objectives Model.

KudlerFine Food wants to develop Frequent Shopper program for ElectronicCommerce. The system will track various customers shopping behaviorsand help the firm satisfy their customers’ needs well and build onloyalty. The objectives of the firm are to expand services, togenerate more revenue and to increase efficiency, which will lead toreduced costs of operations. The system will track purchases bycustomers and the firm will be able to reward the loyalty of itscustomers. The customers will then have a right to redeem the pointsfor anything that they want. The main objective of the system is toincrease the revenues of the company and show appreciation tocustomers for their loyalty. The other objective of the system is totrack purchases by customers and ensure enough of the products boughtmost frequently are available at all times.

Thenew system will enable the company to secure their data. Most ofinformation captured by the system is about customers and they needto be kept confidential in order to protect customer’s privacy.Customers are always concerned about security of their privacy andwill prefer a company that is concerned with ensuring their personalinformation is protected. The system also offers security from cyberterrorism. The new system is protected on its website in order tolimit access by the invalid people.

FrequentShopper program will help the firm to attract more customers andincrease its revenue. This is achieved through gathering informationabout various customers in the market and their needs andexpectations. The information will then be used to produce goods andservices that will meet those needs and wants. In addition, customerswill be attracted by the low price goods as a result of reducedoperation costs brought about by the new system. The system acts as acompetitive advantage for the business in that the operation costs ofthe business is reduced thus the business can sell its goods at lowprices unlike their competitors in the market. The company alsoobtains more information about customers than their competitors hencecan satisfy its customers more than the competitors and obtain alarger market share increasing the profitability of the business.

DesignRequirements, Including Input or Output Design, Interface Design,Data Model, and Network Model

Designingrequirements is an integral part in developing a system for KudlerFine Food’s Frequent Shopper program. The firm should ensure thatthe IT department is actively involved because it is the one thatdecides on the design specifications such as hardware, software,network, and architecture. The team has to follow some guidelines todetermine the problem and solve it. The steps followed in thisprocess are demonstrated below.

Step1: Team

  • Find out what the issue is

  • Conduct research on solution to the issue

  • The team has to discuss research and find the correct solution that helps in solving problems.

Step2: Team Manager

  • Reviews the team findings and provides feedback to the team about the solutions that have been proposed

  • Provides to management with status report, showing solution, cost of project and additional information concerning the project

Step3: Stakeholders

  • Review management report

  • Makes decisions based on given report towards project

  • Approves or denies project go-head

DesignTrade-Off Approach

Overthe years, Kudler Fine Foods has continued growing and it is nowfocusing on expanding services, increasing consumer purchase cycleand increasing efficiency of operations. All these will help thebusiness increase its profitability and in increasing customerloyalty. The system will help the company to track purchase behaviorsof consumers and provide rewards to them in relation to theirpurchase behavior through the loyalty points earned. The factors thatone should consider when using this method in choosing the hardwareand software products are cost of the project, response time, vendorlogistics and support, documentation, testing of installed system,ease of installation, flexibility of the system, emergency plan forissues arising and finalize system operations.

DetailedDesign Process and Specifications

KudlerFine Foods needs a good human computer interface that will provide auniform structure for finding, invoking and viewing the differentcomponents that make up the system. The hardware, software, andnetwork support elements will be incorporated into the system inorder to create a well balanced environment for its customers.

Hardware

Thehardware required for the system is the new server and the clientworkstation, which is composed of the sales register and the cardreaders. The functions of the hardware will be to receive andtransmit information. It will communicate to the database and salessoftware. A card reader in each point of the workstation helps intransmitting debit/credit information to the sales software in eachworkstation. The card reader will help in transmitting data from theissued customer purchase card. With consistent changes in hardware,these hardware components may need to be changed in future. Theprocess of replacing and installing the hardware may be a complex onefor the company because it is always hard to find a hardware thatmeets the requirements and needs of the company. For the system tofunction effectively adding new hardware or upgrading the currentones should be done most frequently.

Software

Thesoftware required for the system are Microsoft windows 2003 server,windows XP, Oracle database and point of sale software. The Microsoftwindows 2003 server is the main software gateway to all workstations.The Oracle database software will store information involvingcustomer details such as sales and the awarded points from purchases.Information about inventory levels will also be stored in the Oracledatabase. Kudler Fine Foods should add a network operating system,which will establish both internal and external users for easylocating and communication. The network operating system will alsoallow individuals to share information or use the organizationalresources. IT help desk software will be important for the companybecause it will help in tracking customer purchase behavior.

Networks

FrequentShopper program will depend on network in order to operateeffectively. The company will then ensure that it has awell-structured and safe network system. Introducing cloud computingwith Virtual Private Network will allow information retrieval overthe public network but will only grant specific users. This helps thebusiness to have an effective communication with its stakeholders andobtain information that will help in making decisions on theoperations of the business.

ACost–Benefit Analysis

Manyfactors determine the success of the Frequent Shopper Program.Operational, technical, and economic analyses are used in determiningthe cost-benefit analysis. From the operational point of view, therewill be minimal user training requirements and the new system willadd new customer integration, which will be analyzed at checkpoint.The annual operating cost of the new system will also be consideredand they include ongoing training for new and current employees,maintenance of the equipment and software and routine supplies.

Fromtechnological standpoint, Kudler still utilizes a POS system. Thechanges in technology may require the implementation of a flexibledatabase such as Oracle. The new system will need new servers,database software and a user interface. This will then increase theoperating costs for the organization that from the economic viewpoint will identify the benefits and then compare with the costs. Ifthe benefits are more than the costs then the project should beundertaken. However, if the benefits are less than the costs then theproject should not be undertaken because it can lead to loss for thecompany in the long run. The total cost and benefits of the projectwas determined below.

Benefits

Increasedefficiency in inventory management $70,000

Increasedearnings based on customer satisfaction $100,000

Increasedefficiency in records management $150,000

Othersavings $120,000

Totalannual benefits $440,000

Expenses

Projectteam salaries $150,000

Training $20,000

Implementation $100,000

Support $20,000

Utilities $30,000

Licenses $15,000

Travelling,Misc$120,000

Totalcost $445,000

Thetotal cost for the program for Kudler higher than the benefits fromimplementing the program. The difference is small, so the businessshould not reject the project because more benefits will be generatedin future as the company continues using the system. With time, thebenefits will outweigh the costs.

Conclusion

KudlerFine Foods should develop the frequent shopper programs because itwill help in tracking customer purchases through a Frequent ShopperProgram to award loyalty points for redeeming by the customer forgift items. The program will help the business to increase revenue,improve customer base and make processes efficient and effective. Theprogram acts as a competitive advantage for the company because itsoperating costs are reduced due to the efficiency and effectivenessof the system. Reduced costs are an opportunity for the company tosell its goods at low prices hence making it more competitive.

Ourteam ensures that the system supports the cultures and policies ofthe organization in order to receive full support from all areas ofthe organization and avoid resistance. The system needs to beintegrated with other activities of the organization in order toensure it is working effectively in all parts of the company.Finally, the company should conduct a cost-benefit analysis in orderto determine whether to accept or reject the project.

References

ApolloGroup, Inc. (2011). KudlerFine Foods accounting system overview.Retrieved fromhttps://ecampus.phoenix.edu/secure/aapd/cist/vop/Business/Kudler2/intranet/accounting

Gomez,B. G., &amp Cillan, J. G. (2006). The role of loyalty programs inbehavioral and affective loyalty. Journalof Consumer Marketing,23(7), 387-396.

OpenSource Matters, Inc. (2012).Technicalrequirements for Joomla.Retrieved from

http://www.joomla.org/technical-requirements.html