Although this research is also occupied with customer loyalty programs it examines a new customer loyalty model which tests the influence of reward systems on the value perception of a loyalty program. Thus, the thesis introduces an empirical research on a two part model, whereas one part differentiates between direct and indirect premiums (type of reward) and the second part investigates the differences between delayed and proactive reward programs (timing of reward). The study aims at finding differences between the type and the timing of reward on the value perception of a loyalty program, which is new in academic research. In addition, this study grounds on the automobile industry, i.e. a high involvement setting, in contrast to prior academic science which focused on the low involvement setting.
The inclusion of moderating factors that contain information on customer’s relationship maintenance motivation and relational benefits shall also help to shed light on differences in value perception according to the level of dedication or constraint based relationships. In addition, the degree of social, confidence and special treatment benefits is also assumed to manipulate the value perception of loyalty programs as moderating factors. Lastly, the study discovers relationships between the type and the timing of reward.
The study results clearly reveal that there is no difference between direct and indirect rewards, whereas the proactive system demonstrates to have an obviously higher value perception than delayed rewards. Furthermore, the moderating factors partly prove to influence value perception. Hence, dedication based relationships favour direct rewards over indirect rewards and the proactive system over the delayed system. The same holds true for confidence benefits whereas constraint based relationships, social and special treatment benefits have no influence in favour of direct / indirect and delayed / proactive rewards.
In addition, in a proactive reward program the value perception is higher for direct premiums. Furthermore, in the delayed reward program, people also prefer the direct rewards over the indirect rewards. Consequently, this research proves that there is a connection between the type and the timing of reward, which is also new in academic literature.
Table of Contents
Chapter 1 – Introduction
1.1 The context of the study
1.2 Research Motivation: What is missing in the previous research
1.3 Overall Problem Statement
1.3.1 Sub-questions
1.3.1.1 Theoretical part
1.3.1.2 Practical part
1.4 Managerial Motivation
1.5 Academic Motivation
1.6 Conceptual Model
1.7 Structure of the thesis
Chapter 2 - The customer loyalty concept
2.1 Introduction
2.2 The concept of customer loyalty
2.3 A different view on customer loyalty
2.4 Other definitions of customer loyalty, attitude vs. behaviour
2.5 Situational and normative factors influencing customer loyalty
2.5.1 Social and situational factors according to Dick and Basu and Oliver
2.5.2 Additional normative (social) drivers influencing loyalty
2.5.3 Additional situational factors influencing loyalty
2.5.4 Other influencing factors on loyalty
2.6 Conclusion
Chapter 3 – Customer loyalty programs
3.1 Introduction
3.2 Definition of customer loyalty programs
3.3 The difference between customer loyalty programs and promotion activities
3.3.1 Sales Promotion in form of coupons, stamps or vouchers
3.3.2 Affinity campaign
3.3.3 Customer card programs
3.3.4 Club programs
3.3.5 Integrated loyalty program
3.3.6 Proactive loyalty reward program
3.4 The effects of customer loyalty programs
3.5 Critical remark on customer loyalty programs
3.6 Conclusion
Chapter 4 – Consumer buying decision process
4.1 Introduction
4.2 The different problem solving processes
4.2.1 Routinized choice behaviour
4.2.2 Limited decision making
4.2.3 Extensive decision making
4.3 High involvement purchase decision making process
4.3.1 Problem recognition
4.3.2 Information search
4.3.3 Evaluation of alternatives
4.3.4 Purchase
4.3.5 Post-purchase evaluation
4.4 Critical assessment of customer decision making and the role of loyalty
4.4.1 Pre-decisional constraints
4.4.2 Mood
4.4.3 Differences in gender
4.4.4 High involvement vs. low involvement problem solving
4.4.5 Control of information flow
4.4.6 The influence of e-commerce
4.4.7 Prior decision making
4.4.8 The role of regret
4.5 Conclusion
Chapter 5 - Hypotheses Development
5.1 Introduction
5.2 Problem statement and sub-questions
5.3 Hypotheses development
5.3.1 Type and timing of reward
5.3.2 The role of moderating factors
5.3.3 Influence between type and timing of reward
5.4 Conclusion
Chapter 6 – Research and questionnaire design
6.1 Introduction
6.2 Research environment and sample choice
6.3 Research design
6.4 Questionnaire design
6.5 Conclusion
Chapter 7 - Data analysis
7.1 Introduction
7.2 Descriptives
7.3 Factor analysis
7.4 Hypotheses testing
7.4.1 The type of reward
7.4.2 The timing of reward
7.4.3 The dedication based relationship
7.4.4 The constraint based relationship
7.4.5 The relational benefit relationship
7.4.6 The interrelation between the type of reward and timing of reward
7.5 Discussion of hypotheses results
7.5.1 Discussion of the type and timing results
7.5.2 Discussion of dedication and constraint based relationship influence
7.5.3 The influence of timing on type of rewards
7.6 Additional findings
7.6.1 Benefits knowledge influence on value perception
7.6.2 Car dealer / garage usage influence on value perception
7.6.3 Age influence on value perception
7.6.4 Gender influence on value perception of loyalty programs
7.6.5 Household differences on value perception
7.6.6 The relationship between value perception and loyalty
7.7 Discussion of additional findings
7.8 Conclusion
Chapter 8 – Conclusion
8.1 Introduction
8.2 The theoretical findings
8.2.1 The concept of loyalty
8.2.2 Sorts and effects of loyalty programs
8.2.3 The decision making process
8.3 The practical implications
8.3.1 Influence of type and timing on value perception
8.3.2 The role of moderating factors
8.3.3 The interaction of type and timing of rewards
8.4 Theoretical implications
8.5 Managerial implications
8.6 Limitations and suggestions for further research
Research Objectives and Themes
This thesis investigates the impact of reward types (direct vs. indirect) and timing (delayed vs. proactive) on the value perception of customer loyalty programs within a high-involvement setting, specifically the automobile industry, while incorporating moderating factors such as relational benefits and relationship maintenance motivations.
- Influences of reward type and timing on value perception.
- Role of relational benefits as moderating factors.
- Impact of dedication-based vs. constraint-based relationships.
- Application in a high-involvement industry (automobile sector).
- Interactions between different reward strategies.
Excerpt from the Book
1.1 The context of the study
As past research has shown, many authors already devoted extensive research to customer loyalty and customer loyalty programs. On the one hand there are studies that deal with the definition of customer loyalty and different sorts of loyalty (Dick and Basu, 1994). Several other studies examine influencing factors or antecedents of customer loyalty such as Blackwell et al. (1999) or Olsen (2002).
However, not only the loyalty concept itself has received a high level of attention, but also the concept and the effects of customer loyalty programs on customer loyalty are empirically investigated. Wansink and Seed (2000) for example examined the influence of reward programs on different sorts of product users. Dowling and Uncles (1997) emphasise that the effect of a loyalty program will be higher for high involvement than for low involvement products. Thus, there are many different factors that already have been examined to find out the relationship between the concept of customer loyalty and customer reward programs.
Nevertheless, there are still many gaps that are to be examined and thus, this study will also be based in the context of customer loyalty and the effect of customer reward programs.
Summary of Chapters
Chapter 1 – Introduction: This chapter establishes the context of the study, outlines the research motivation, defines the problem statement, and provides the conceptual framework for examining loyalty programs in a high-involvement setting.
Chapter 2 - The customer loyalty concept: This chapter reviews academic literature on customer loyalty, specifically focusing on the definitions and models provided by Dick and Basu (1994) and Oliver (1999).
Chapter 3 – Customer loyalty programs: This chapter categorizes various loyalty programs and promotion activities, defines the concept of loyalty programs, and discusses their effectiveness and potential drawbacks.
Chapter 4 – Consumer buying decision process: This chapter explores consumer decision-making processes, particularly high-involvement purchase scenarios, and examines external influences such as pre-decisional constraints, mood, and gender.
Chapter 5 - Hypotheses Development: This chapter translates the research sub-questions into testable hypotheses regarding the influence of reward types and timing, moderated by relational and relationship maintenance factors.
Chapter 6 – Research and questionnaire design: This chapter details the research methodology, including the selection of the automobile sector as the study environment, the questionnaire design, and the sampling techniques.
Chapter 7 - Data analysis: This chapter presents the statistical results from the empirical survey, including descriptives, factor analysis, and the testing of the established hypotheses.
Chapter 8 – Conclusion: This chapter synthesizes the theoretical and practical findings, discusses implications for academics and managers, and acknowledges limitations while suggesting future research directions.
Keywords
Customer loyalty, Loyalty programs, Value perception, Reward type, Reward timing, High-involvement, Relational benefits, Dedication-based relationship, Constraint-based relationship, Proactive rewards, Delayed rewards, Consumer buying decision, Automobile industry, Customer retention, Relationship marketing.
Frequently Asked Questions
What is the core focus of this thesis?
The thesis examines the influence of reward type (direct vs. indirect) and reward timing (delayed vs. proactive) on customer value perception in loyalty programs, specifically within a high-involvement context like the automobile industry.
What are the primary themes addressed in this work?
The main themes include customer loyalty concepts, the effectiveness of various loyalty program structures, consumer decision-making processes in high-involvement situations, and the moderating effects of relational benefits and relationship maintenance factors.
What is the primary research goal?
The primary research objective is to empirically investigate how different reward strategies affect customer value perception and to close academic gaps regarding the effectiveness of proactive reward systems in high-involvement industries.
Which scientific methods were applied?
The study utilizes a conclusive, descriptive, and cross-sectional research design, employing an online questionnaire analyzed through quantitative statistical methods, including factor analysis, ANOVA, and regression models.
What does the main body of the work address?
The main body provides an extensive literature review on loyalty and decision-making, develops formal hypotheses based on current theory, designs an empirical study within the German automobile sector, and analyzes the collected data to validate or reject the proposed relationships.
Which keywords characterize this research?
Key terms include customer loyalty, proactive rewards, value perception, high-involvement products, relational benefits, and loyalty program management.
Why is the proactive reward system considered superior?
The proactive reward system is perceived more favorably as it offers customized, non-standardized premiums based on specific customer data, which creates a stronger sense of appreciation and is harder for competitors to replicate than mass-market delayed rewards.
How do dedication-based relationships influence loyalty program value?
In dedication-based relationships, customers show higher value perception for direct and proactive rewards because these rewards signify genuine firm investment and cooperation, aligning with the customer's goal of maintaining a positive, long-term relationship.
- Quote paper
- Master of Science Ulrich Pohl (Author), 2006, Type and timing of rewards as influencing factors on the value perception of a customer loyalty program, Munich, GRIN Verlag, https://www.grin.com/document/74616
