Abstract
Studies based on the analysis of a new design of loyalty program, item-based loyalty programs (IBLPs), indicate that customers are more interested in item-based reward points than in traditional price discounts. However, we are still unaware of customer responses to the different point settings on IBLP items. This study investigates an analysis with Tobit II to explore IBLPs’ short-term (4 months) impact on customers’ purchase behaviors using data from two newly opened Japanese supermarket chains that have implemented this new IBLP program from the beginning. The results showed that different types of customers are differently affected by IBLPs, and that heavy customers are more inclined to purchase more items with more spending money than others. The results also indicated that customers’ purchase behaviors are affected by IBLPs’ different point levels. Moreover, to an IBLP with different points, the responses from different types of customers are different. The findings of this study have important guiding significance in IBLP design and marketing management.
Highlights
To attract and retain more customers, as part of customer relationship management strategy, various industries use loyalty programs to make more profits
This study focuses on the item-based loyalty programs (IBLPs)-based design that assigns different points to different products, based on the data from two newly opened Japanese supermarket chains (Oasis) that have used this new IBLP program since the beginning
The analysis results showed that all different types of customers are differently affected by the IBLP
Summary
To attract and retain more customers, as part of customer relationship management strategy, various industries use loyalty programs (e.g., issue points) to make more profits. The difference between an IBLP and a conventional loyalty program is that the price discounts for each item are replaced by reward points in the former, which means that customers can earn extra points when purchasing specific items. As some researchers suggest that comparing the behavior of members with non-members cannot conclusively establish the causal relationship [3], it is important to further indicate the different responses to the IBLP from other types of member classification. In this study, we focus on a new IBLP-based design that assigns different points to different products, and try to explore this IBLP’s short-term (4 months) impact on customers’ purchase behaviors using Tobit II. To identify the effects of the new IBLP on customers’ purchase behaviors, the research findings and conclusion of this study have important guiding significance in IBLP design and marketing management.
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