Final answer:
Businesses use loyalty programs to build awareness and establish a loyal customer base.
Step-by-step explanation:
Businesses use loyalty programs to build awareness because they want to establish a good reputation and encourage repeat customers. Repeat customers are more likely to recommend the business to others, which helps with word-of-mouth marketing. By offering rewards and incentives through loyalty programs, businesses can incentivize customers to continue shopping with them.
For example, a well-established grocery store with a good reputation can charge a higher price than a temporary stand at a local farmer's market because buyers trust the grocery store's commitment to quality and customer satisfaction.
In conclusion, loyalty programs are an effective way for businesses to build awareness and establish a loyal customer base, resulting in increased sales and positive word-of-mouth marketing.