The Effectiveness of Utilizing “PREMYO CARD” in Increasing the Sales of Independent

Community Pharmacies

Amiril

Amistad

Angcay

Aturdido

Bahan

Bercero

Bureros

Dacuycuy

Estillore

Go

Montibon

Roda

Tumanda

CHAPTER I

INTRODUCTION

In the Philippines, Community Pharmacy is dominated by chain pharmacy operations.

60% of the total business is by a single retail pharmacy, and 40% are from other retail

pharmacies. 30% of the 40% were coming from single branch pharmacies or the independent

pharmacies (Ocampo, 2012). In the retailing sector, consumers typically patronize multiple

outlets, which leave single outlets striving to earn a greater portion of consumers’ expenditures

(Meyer-Waarden, 2008).

Thus, due to the domination of the chain retail pharmacies, independent pharmacies have

decreasing sales. Creating a customer rewards or points program is a powerful way to bring

additional revenue. It also makes up selling easier. Customers are more likely to respond to

upsells when there's an incentive. For example, offer points for buying additional products and

then turn points into free gifts. This will help independent pharmacies move inventory faster and

will guarantee that customers will come back to collect and redeem their points (Benamoz,

2015).

This study seek to establish the effectiveness of “PREMYO CARD”, a loyalty rewards

card in improving the sales of these single-branched retail pharmacies and to recognize the

impact of this rewards card programme on customer purchase behaviour.

Review of Literature

Independent Community Pharmacy

Independent community pharmacy may be a single store with a sole proprietor or may

consist of stores owned by an individual or small group. Store count is often used to differentiate

an independent pharmacy from a chain of pharmacy. (Schommer et.al., 2007). Independent

community pharmacies are stable, reliable businesses that are at the heart and soul of many

communities. Independent community pharmacists are one of most accessible and trusted

sources of health care for many patients across the country. They provides counsel on the

treatment of variety of health related concerns and reduce overall cost by helping to ensure that

patients consistently taking their medication (NCPA, 2013).

According to Schommer et.al., (2007), independent ownership also provides pharmacists

with the opportunity to use their entrepreneurial skills. In addition to clinical and traditional

pharmacy services, independent pharmacists typically get involved to a greater extent in

merchandising, marketing, and other general management functions.

Marketing

Marketing is one of the most important components of a business effecting sales and

productivity. Even though marketing is important, all businesses need customers. Attracting

customers is not as easy, especially when there is tough competition in the market. Marketing’s

main purpose in most businesses is to generate more sales. You have to use marketing strategies

to create product awareness. By marketing you become able to compete with other businesses.

Without competition, big and recognized companies would continue to sell while small or new

companies would stand little chance of ever becoming successful. Marketing helps small

companies to grow and compete.

Loyalty cards

Loyalty cards are used specifically to enhance customer retention and encourage repeat

purchases as well as increasing sales and customer loyalty. The philosophy behind a customer

loyalty program is simple: Repeat customers are rewarded and businesses increase sales. It’s a

basic but powerful strategy.

Members of loyalty programs are the best and most profitable customers for many

businesses, according to Entrepreneur magazine. A good customer-loyalty program is an easy

way for small businesses to show their personal side, increase sales, stand out, develop a stronger

relationship with their customers and remain competitive in spaces dominated by big business

(Williams & Swanciger, 2014).

Rewards Card

A rewards card is the ideal tool to create a top of mind awareness as well as building and

enhancing brand commitment whilst serving as a sales reward for your customers (Williams &

Swanciger, 2014).

Consumers could earn product credits with a minimum order of 50 purchase value. These

product credits earned can be used as cash to purchase products (dōTERRA, 2013). They can

accumulate one (1) point per 50Php worth of purchase which is a good deal for consumers that

could greatly benefit them (Peralejo-Bonifacio, 2014).

Theoretical/Conceptual Framework

Incentive Theory of Motivation

A theory that focuses on motivation and behaviour, the Incentive Theory of Motivation

involves the concepts of conditioning, homeostasis and positive reinforcement. The theory is one

of the motivation theories that are promoted by behaviourists. Skinner and other radical

behaviourists believe that a person will more likely to do an action that is positively received,

while he will more likely avoid an action that is negatively received. It views the stimulus as

something that attracts a person towards it, rather than something that prompts a person to reduce

it or totally eradicate it. Incentive theory states that your actions are directed toward gaining

rewards (Sincero, 2012).

The Customer Loyalty Theory

The theory attempts to define what drives loyalty in customers and can represent an

effective tool for gaining and retaining your hard-won patrons. Business owners who witness

repeat customers know on an intuitive level that customer loyalty is an invaluable commodity

(Reynolds, 1993). The use of rewards, gifts, points, cash back or special offers to entice

consumers to buy the product or service and, ideally, become repeat customers. Members of

loyalty programs are the best and most profitable customers for many businesses, according to

Entrepreneur magazine. Loyalty marketing is a long-term strategy designed to keep customers

coming back (Lane, 1997).

Independent Variable Dependent Variable

Figure 1. Conceptual Model: utilization of “Premyo Card” and the extent of its effect.

Small businesses like the independent community pharmacies are striving to earn more

profit since consumers typically go to chain stores thus resulting to their decreasing sales. Hence,

the utilization of rewards card or loyalty card in these independent pharmacies may help attract

customers and generate more income since it encourages repeat purchases and customer loyalty.

This study considers the relationship of “Premyo Card” in increasing the sales of independent

pharmacies as well as customer loyalty.

Statement of the problem

The study aims to determine the effectiveness of utilizing “Premyo Card” in increasing

the sales of independent pharmacies.

Specifically, it aims to answer the following questions:

“Premyo Card”

Effect on:

Sales Customer’s loyalty

1) Is there a significant increase in customer loyalty upon the implementation of the

“Premyo card”?

2) If the response is positive from problem # 1, is there a significant increase in store visits

and sales of independent pharmacies utilizing the tool?

3) Does the increase of the store visits and sales come from the customers with the loyalty

rewards card?

4) Does the loyalty reward program has an effect on customer purchase behaviour?

Hypotheses

The hypotheses of this study are:

Ha1 There is a significant increase in customer loyalty upon the implementation of the tool

which leads to the increase of sales of independent community pharmacies utilizing the

“Premyo Card”.

Ho1 There is no significant increase in customer loyalty upon the implementation of the tool

which leads to no increase on the sales of independent community pharmacies utilizing

the “Premyo Card”.

Ha2 The increase of sales comes from the customers with loyalty rewards card and the tool

affects their purchase behaviour.

Ho2 The increase of sales does not come from the customers with loyalty rewards card and the

tool does not affect their purchase behaviour.

Significance of the study

The study will be a significant endeavor in increasing the sales of independent

community pharmacies through the utilization of "Premyo Card". It will be beneficial to the

establishment because it attracts more customers and promotes loyalty which helps in generating

more sales. Not only will it increase the sales for the given period of time of the study but also

for the long run. This will give them an idea on how to not only attract more customers but more

importantly, how to keep them.

It is also beneficial to the future owners of pharmacy establishments since they can

engage in this kind of strategy. It would be a good start for their business in order to generate

high profits.

CHAPTER II

METHOD

This chapter deals with a systemic procedure on how the data will be collected from the

respondents. This chapter is composed of the following: Design, Setting, Participants, Measures,

Procedure, Data Analysis and Limitations of the Study.

Design

This is a Quasi-Experimental Study, a type of evaluation which aims to determine

whether a program or intervention has the intended effect on the behavior of the research

subjects. In this case, the researchers chose a specific location in which there are some

independent community pharmacies present. The researchers aim to determine whether the

intervention tool, “PREMYO CARD”, is effective in increasing sales and customer loyalty to a

specific independent pharmacy. The researchers intend to conduct a pre and post survey

pertaining to the monthly sales of the participating independent community pharmacy. By

choosing a positive and negative control group, the researchers will then count the participants’

visits in the said Pharmacies to assess the effectiveness of the tool in promoting loyalty. The

researchers will provide a “PREMYO CARD” which will serve as a tool to each customer; each

visit with a minimum purchase of 50Php is equal to 1 sticker stamp. The counting of visit is

through counting the stamp they have gained in their “PREMYO Card”.

Setting

The study will be conducted in Barangay Agdao Proper 2nd District Davao City. Based

on survey, Agdao District yielded the highest number of independent pharmacies that are open

for this research study. Thus, the researchers will choose Agdao District as the research setting. It

is approximately 2.69 km (Agdao Proper) away from the City Hall. It is an urban barangay

which is 70% residential and 30% commercial zone. It has 11 barangays and has an estimated

population of 10,737 as of 2014 according to Secretary Armando F. Violata of Barangay Agdao

Hall.

Participants

There are four independent community pharmacies located at the Agdao Public Market

parameter that will participate in this study: Botica Hanoi, One Family Pharmacy, Bueviem

Pharmacy, and the EUZERL Pharmacy. Two of them will be the positive group and the other

two will be the negative control group. Designation of group will be by random.

The individuals that will be part of the study are the customers of these participating

independent pharmacies that are residing in Agdao District, Davao City. There will be a total of

60 participants regardless of gender within the 18-64 adult age group, 30 for positive group and

30 for negative control group by random selection that will be divided equally into the number of

participating pharmacies. They should be literate individuals who are able to read and write.

Measures

This refers to the researcher’s intervention in increasing the sales of independent

community pharmacies.

The intervention tool that will be used in this study is named as “PREMYO Card” by the

researchers. It is a rewards card in which the participants will get one sticker stamp per visit with

a minimum purchase of 50Php in a particular independent pharmacies participating in this study.

There are 30 allotted slots in which the participants are able to fill up with sticker stamps. In

every 10 stamps collected, the participant will be given a certain award. This will only be

applicable to the participants under the positive group.

Another type of card will be given to the negative control group in order to count their

visits at a certain independent pharmacies participating in this study. There will be also 30

allotted slots in which the participants are able to fill up with sticker stamps to be given per visit

with a minimum purchase of 50Php. The only difference would be that the participants having

this type of card will not be given rewards from their collected stamps. This card will be named

as “CARDmittment”.

To test the increase in their monthly sales, the researchers will directly compare the

monthly sales report of each of the participating independent community pharmacies before and

after the implementation time. The researchers will then cross compare the collected data among

all these pharmacies, positive to negative control group, in order to determine whether there is a

significant increase of sales to the independent pharmacies utilizing the tool.

To test the extent of customers’ loyalty, the researchers will simply count the sticker

stamps collected by the participants which will be found in their cards, find the mean separately

for the positive group and negative control group and compare the data using the appropriate

statistical tool.

Study Workflow

Figure 2. Study Work Flow

Procedure

Approval from SPC ethics committee

Phase 1Pre survey

Selection of study location

Phase 2Implementation of the research

Gathering of Data Participants Voluntary Informed Consent of

the Participants Random Selection of Positive

and Negative Control

Phase 3Post-Survey

Phase 4 Data Collection Data Analysis

NEGATIVE CONTROL GROUP

POSITIVE CONTROLGROUP GROUPGROUP+

This research study will be divided into 4 phases. After seeking the approval of the San

Pedro College ethics committee which is a significant way for the researchers to conduct the

study with an ethical approach, the researchers will then start with the Phase 1.

The Phase 1 of this study is conducting a pre-survey, in which the researchers will select

the study location that can fit to our study. To get the appropriate location for the study, the

researchers went to different places in which they can find several independent community

pharmacy and the researchers will only choose one place.

The Phase 2 of this study is the implementation. The researchers will gather the

participants randomly. The participants that agreed to be a part of this study will be given both

the voluntary informed consent and memorandum of agreement. The researchers will ask for a

copy of monthly sales from each of the chosen independent community pharmacies. The

researchers will randomly divide the participants into two groups; the negative control, which do

not have the “PREMYO CARD”, and the positive group, which has been given the “PREMYO

CARD”. Both the positive and negative groups will be given the same fliers consisting additional

information about customer loyalty topics.

The Phase 3 of this study is the post-survey. After a given time in conducting the

intervention, the researchers will perform post-survey to assess if there is a change in the sales of

the subject pharmacies and if it promotes customer loyalty.

Phase 4 is the data collection and data analysis. The researchers will gather the

information from the post-survey. The researchers will then analyze the data. Through this, the

researchers will be able to identify the effectiveness of the PREMYO CARD in increasing the

sales standing of the specific independent community pharmacies and if it does promote

customer’s loyalty.

Data Analysis

The following statistical tools will be used in the study:

Mean – To measure the central descriptive tendencies

Dependent/Paired T-test – To compare data from the pre and post survey on the monthly

sales of independent community pharmacies.

Independent T-test – To compare data from the positive and the negative control group

both for monthly sales and the number of sticker stamps.

Limitations

The limitations of the study includes, but not limited to:

The research study is only limited to helping independent community pharmacies

The tool, “Premyo Card”, and the auxiliary card, “CARDmittment”, will only be valid for

one month

Participants may only get one (1) sticker stamp per visit with a minimum purchase of

50Php

The maximum amount of stamps to be accumulated is limited only up to thirty (30), as

equivalent to the number of days in a month

The tool could be lost and never be found

CHAPTER IIIDATA TREATMENT & ANALYSIS

Respondents Profile

Gender

Age profile

Historical store visits

GroupPre-

Experiment

Post Experimen

tPremyoCard 11.6 18.8Cardmittment 13.5 15.8

Average 12.5 17.3

PharmacyPre-

Experiment

Post Experimen

tBeuviem 18.7 22.1Botica Hanoi 8.3 9.4

Gender Count %Female 41.0 68%

Male 19.0 32%Total 60.0 100%

Age Group Count %18-27 23.0 38%28-37 17.0 28%38-47 4.0 7%48-57 7.0 12%58-68 9.0 15%Total 60.0 100%

Euzrel 12.1 19.9One Family 11.1 17.7

Historical purchases

GroupPre-

ExperimentPost

ExperimentPremyoCard 791.2 1,385.50 Cardmittment 983.4 1,017.40

Average 887.3 1,201.45

PharmacyPre-

ExperimentPost

ExperimentBeuviem 1,313.33 1,372.33 Botica Hanoi 653.47 662.47 Euzrel 849.02 1,503.93 One Family 733.37 1,267.07

Graphical analysis of the impact of loyalty reward program on visits

Testing the significance of the impact of loyalty reward program to store visits

Analysis of Variance (Anova): Two-Factor With Replication

Source of VariationSum of Square

Degrees of Freedom

Mean Square

F P-value F crit

Groups (Treatment - Control) 10.21 1 10.21 0.16 0.69 3.92 Change (Pre-Post) 686.41 1 686.41 10.79 0.00 3.92 Interaction 185.01 1 185.01 2.91 0.09 3.92 Within 7,378.37 116 63.61

Total 8,259.99 119

Graphical analysis of the impact of loyalty program on purchases

Testing the significance of the impact of loyalty reward program to purchases

Analysis of Variance (Anova): Two-Factor With Replication

Source of Variation Sum of SquareDegrees of Freedom

Mean Square F P-value F crit

Groups (Treatment - Control) 232,043.42 1 232,043.42 0.727 0.396 3.923Change (Pre-Post) 2,960,751.88 1 2,960,751.88 9.274 0.003 3.923Interaction 2,354,560.98 1 2,354,560.98 7.375 0.008 3.923Within 37,032,533.32 116 319,245.98

Total 42,579,889.60 119

Chapter IVConclusions and Recommendations

1) Is there a significant increase in customer loyalty upon the implementation of the

“Premyo card”?

2) If the response is positive from problem # 1, is there a significant increase in store visits

and sales of independent pharmacies utilizing the tool?

3) Does the increase of the store visits and sales come from the customers with the loyalty

rewards card?

4) Does the loyalty reward program has an effect on customer purchase behaviour?