Loyalty program, which is to encourage frequent purchasing and to maintain customer long-term relationships, has become a key marketing tool in various industries. The framework of the program is to provide reward incentives based on the cumulative purchases for certain products or services. Researches show that the cost of customer retention is approximately six times lower than that of customer acquisition. Although the importance of such program rises, few researches are made related to the topic. Thus, this study is aimed at exploring the relationships between loyalty effort requirement and reward incentives in order to provide better and more efficient loyalty programs for enterprises.
The effects of effort requirement on consumer preferences towards loyalty program rewards are evaluated. In addition, monetary cost acts as moderator is added in to examine the moderating effect. A 2x2 between-subject experimental design with approximately 259 sampling subjects is adopted in the study and the results are analyzed by One-Way ANOVA aided by SPSS software. The results of this study are as follows:
(1) Increasing the effort requirement of loyalty programs will increase consumer preference for hedonic rewards rather than utilitarian rewards. The reason for this is that long streams of effort required for loyalty programs may serve as reasons to justify and reduce the guilt for hedonic rewards selections and consumptions.
(2) When monetary costs are added to loyalty programs, no matter at low or high effort requirements, consumer preferences for hedonic rewards will decrease and in contract, preferences for utilitarian rewards will increase.
(3) When monetary costs are added to loyalty programs, increasing the effort requirement of loyalty programs will not increase consumer preference for hedonic rewards. This may due to the strong monetary costs effect on the sampling subjects that ends up easing the effect of result one.
Four marketing implementations for this study could be drawn. First, utilitarian rewards are more appropriate as loyalty program incentives than hedonic rewards. Marketers could provide more utilitarian rewards in loyalty programs as incentives to attract more participants. Second, as loyalty program effort requirement increases, hedonic rewards could be added in the reward mix to attract consumers. Third, loyalty program, which provide rewards by accumulative effort rather than money expenditure, may serve as a justification for hedonic rewards consumption. Thus, hedonic rewards could serve as promotion tool for high effort requirement loyalty programs. Finally, when monetary costs are added to loyalty programs, marketers could weight more utilitarian rewards in reward mix regardless effort requirement levels.
| Identifer | oai:union.ndltd.org:NSYSU/oai:NSYSU:etd-0727106-002258 |
| Date | 27 July 2006 |
| Creators | Chen, Chia-Hsin |
| Contributors | Jun-ying Huang, Iuan-yuan Lu, Huei-mei Liang, Pei Chai |
| Publisher | NSYSU |
| Source Sets | NSYSU Electronic Thesis and Dissertation Archive |
| Language | English |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://etd.lib.nsysu.edu.tw/ETD-db/ETD-search/view_etd?URN=etd-0727106-002258 |
| Rights | not_available, Copyright information available at source archive |
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