Tesco was the first company to really do this right - there's a book called Scoring Points[1] that outlines this in details. By using the detailed profiles of customers, they learned that giving discounts on products customers cared about was much more valuable than just giving discounts based on vendor preference. A fan of Coca-Cola will come in to buy a Coke, but won't buy Pepsi, no matter if it's on sale or not.

[1] http://www.amazon.com/Scoring-Points-Winning-Customer-Loyalt...