Abstract
This study investigates the effects of individual traits and products characteristics on customer evaluation of sweepstakes promoted by retail firms. We assume that customer’s preference toward sweepstakes is determined by four primary attributes: implementation term, entry condition, prize size, and winning odds. The importance customers attach to these attributes are proposed to be influenced by the extent of rationality, regret, and store loyalty. Further, we explore how the evaluations are moderated by the type of product category (goods vs. service) and product involvement (low vs. high). The results from a conjoint analysis and a multivariate regression analysis applied to ordered-preference data show that rationality and behavioral loyalty have significant effects on the importance attached to implementation term, prize size, and winning odds. Further, the results also reveal that attitudinal loyalty play a significant role in the evaluation of low involvement products, while rationality and behavioral loyalty appear to be influential for high involvement products. These results provide new insights into the interplays among sweepstakes attributes, individual traits, and products characteristics as well as managerial implications for retailers developing a loyalty program strategy.
Highlights
Many firms have realized that nurturing and maintaining customer relationship are critical to increase long-term profitability (Kumar & Reinartz, 2012)
For sweepstakes associated with goods or low involvement product, a longer implementation term resulted in more favorable evaluation
While we found that the effects of individual traits were not significant for sweepstakes held by the firms selling goods, it is shown that rationality and behavioral loyalty were significant for sweepstakes held by service providers
Summary
Many firms have realized that nurturing and maintaining customer relationship are critical to increase long-term profitability (Kumar & Reinartz, 2012). Studies have shown that customer loyalty can be strengthened through the implementation of customer loyalty programs (Uncles, Dowling, & Hammond, 2003; Lewis, 2004; Kumar & Shah, 2004). According to Blattberg, Kim, & Neslin (2008), effective loyalty programs can induce customers to purchase more frequently and prevent them from churning; and increase customer lifetime value. For this reason, how firms should design loyalty programs to attract many customers to participate and eventually enhance their purchasing behavior has been a central issue in the research field (Dowling & Uncles, 1997; Sharp & Sharp, 1997; Roehm, Pullins, & Roehm, 2002)
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