Socio-demographic and lifestyle determinants of loyalty program participation in the Czech Republic

Tomáš Formánek,Radek Tahal

doi:10.1515/mmcks-2017-0031

Tomáš Formánek, Radek Tahal

Open Access

https://doi.org/10.1515/mmcks-2017-0031

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Abstract

Abstract Loyalty programs are among the most frequently employed marketing tools used to minimize customer attrition rates. In this article, different aspects of consumer participation in loyalty programs for major product categories are analyzed with focus on generational differences. We use the time-proven segmentation of Baby boomers and generations X, Y and Z. Our analyses and findings are based on primary data (2016): the survey is formed by a representative sample of 585 respondents. A wide portfolio of statistical learning methods and tests is used for data analysis. The first segment of our analysis brings forward groups of product categories where consumers tend to use loyalty programs concurrently. This identifies opportunities and boundaries for establishing and managing co-branded loyalty programs. The second part of our quantitative analysis is based on generational, other socio-demographic and lifestyle factors influencing individual participation in loyalty programs. Here, the main focus is on four product categories where loyalty programs are used most often. Generational differences are well pronounced in fashion-related categories. On the other hand, loyalty program usage rates in product categories related to basic household operations show little generational differences.

Highlights

The requirements put on contemporary marketing operations are higher than they used to be in the past
Focusing on the generational aspects of loyalty program (LP) participation, a section of this paper provides an extension of the logistic model (1), where a complete set of Age-Gender interaction terms is introduced
We have identified product category clusters for which consumers tend to participate in loyalty programs concurrently

Summary

Introduction

The requirements put on contemporary marketing operations are higher than they used to be in the past. Marketers are expected to devise advertising and communication campaigns and to participate in strategic and tactical decisions on product development, and to set up and manage channels to strengthen relationship with existing customers. Loyalty marketing is a discipline that is gaining growing importance. This complex discipline requires an ever better and deeper understanding of consumer behavior in an evolving market environment. Loyalty marketing tools are important for product categories where we can expect re-purchases, perhaps frequent. To deliver on the long-term re-purchases sought after, different parameters and features of the LPs are set up and repeatedly adjusted to provide incentives and motivation drivers for customers. Different studies reflect on the effectiveness of investments into relationship marketing tools and the positive impact of LPs on the so-called share of wallet Possible negative effects of dilution by third party LPs should be considered (e.g. Macías and Cerviño, 2017)

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