Bma262 | Consumer Behaviour | Assessment Answers
Answer:
Introduction:
The aim of this report is to discuss the impact of loyalty programs in the purchasing behaviour of the customers in the current business context. This report will conduct a literature review to understand the definition of loyalty programs and Strategies used for designing loyalty programs in the business context.
Loyalty programs
Loyalty programs are rewards programs which the customers who frequently make purchases, get from the companies. According to McCalland McMahon (2016), loyalty programs have proliferated in different types of industries including the hospitality industry where the customers expect rewards in exchange of their patronage. This is the reason why the managers modify their reward programs to become more profitable and competitive. As stated by Bowen and Chen (2015), the business today builds loyalty models perfectly fitted with the behaviour of their customers so that they can attain them regularly and gain competitive advantage in this highly competitive industry settings. The paper has made three propositions to explain the loyalty of the customers to the business. Finally, according to Melnyk and Bijmolt (2015) the companies need to investigate the effects of loyalty programs accounting for the simultaneous effects on the loyalty program designs, competition effects as well as cross-customer effects. To these authors, despite the fact that the business spread a lot in their loyalty programs, it is not always clear that these are enhancing the loyalty of the customers. therefore, the businesses these days need to judge the effectiveness of their loyalty programs though finding out the results in its absence.
Strategies used for designing loyalty programs
According to García,Gutiérrez and Gutiérrez (2006), loyalty program aims to encourage in gaining behavioural loyalty to their products. However, according to the surveys, buying behaviour of the customers is consistent in spite of indulging in the loyalty programs organized by the brands. Strategic approach of the brands enhances the initiatives to improve the public relation with the customers. Jang and Mattila (2005), in their article have aimed to investigate the customer preferences towards the loyalty reward programs in restaurant industry. The vast majority of study respondents showed necessary, immediate and monetary gratification. In this industry, the customers had preferred both tangible and intangible benefits which motivate both the customers as well as the businesses. Meyer-Waarden (2015), has pointed out the preferred loyalty programs of the customers in perfumery and grocery retailing with different degrees of personal involvement. This author has analysed full profile conjoint analysis through important attributes like rewards timings, compatibility of the customers with the image of store and tangibility. The main focus of the research is to highlight the effects of the rewards on the buying behaviour and loyalty of the customers towards the stores. The author is of the view that level of involvement helps in determining the loyalty of the customers towards the brand. Along with this, the author also opines that this level of involvement helps in planning loyalty programs for adding value to the investment of the customers. This involvement, further, enhances the brand image of the store (Meyer-Waarden 2015).
References:
Bowen, J.T. and Chen McCain, S.L., 2015. Transitioning loyalty programs: a commentary on “the relationship between customer loyalty and customer satisfaction”. International Journal of Contemporary Hospitality Management, 27(3), pp.415-430.
García Gómez, B., Gutiérrez Arranz, A. and Gutiérrez Cillán, J., 2006. The role of loyalty programs in behavioral and affective loyalty. Journal of Consumer Marketing, 23(7), pp.387-396.
Jang, D. and Mattila, A.S., 2005. An examination of restaurant loyalty programs: what kinds of rewards do customers prefer?. International Journal of Contemporary Hospitality Management, 17(5), pp.402-408.
McCall, M. and McMahon, D., 2016. Customer loyalty program management: what matters to the customer. Cornell Hospitality Quarterly, 57(1), pp.111-115.
Melnyk, V. and Bijmolt, T., 2015. The effects of introducing and terminating loyalty programs. European Journal of Marketing, 49(3/4), pp.398-419.
Meyer-Waarden, L, 2015. Effects of loyalty program rewards on store loyalty. Journal of Retailing and Consumer Services, 24, 22-32.
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