Abstract
This paper explores the effects of market structure on the effectiveness of loyalty programmes. A literature review led to the proposition that effectiveness is dependent upon firms' existing customer information deficit and their ability to segment markets with differentiated products. A case study examines two sectors with differing market characteristics: civil aviation and car ferries. Loyalty programmes appeared to be less successful in the latter, where information about customers was more readily available than for airlines. Opportunities for segmentation were less. Although questions are raised about how the effectiveness of a loyalty programme can be measured, the proposition that market characteristics can influence the effectiveness of a loyalty programme is accepted.
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