Loyalty Program Analysis

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2.13.1 Loyalty Program Loyalty programs are designed to improve customer’s satisfaction and commitment Broekhuizen & Peelen, (1997). The effectiveness and the relevancy of loyalty program are measured through the achievement of certain levels of customer’s satisfaction threshold (Keh & Lee, 2006). Loyalty programs give away benefits or the perceived value to the members as a token of appreciation for their loyalty to the organization. In addition, Bolton, Kannan, and Bramlett (2000) stated that when customers involve in the loyalty programs, the perceived benefits they receive will lead to their loyalty. For that reason, the benefits of customer loyalty program can be divided into two; hard and soft…show more content…
However, they have become common in certain industries, e.g., airlines, hotels, in which such advantages have been lessened, or even lost. A recent airline market research study found wide disparity for available frequent flyer award seats – 99 percent for Southwest to 11 percent for US Airways (Perkins, 2010). Hence, the value of participating in one loyalty program, e.g., southwest, is greater than another, e.g., US Airways, to maintain an advantage in a highly competitive industry. In the hospitality industry, hotels can increase the required points for a free room that deceases the value of a loyalty program, as Hilton has recently done (Elliott, 2010). As a result, Hilton now has a less competitive advantage for its customer loyalty program. Harley-Davidson has developed a highly successful loyalty program that has led to a unique culture – Harley Owners Group (HOG). However, General Motors (GM) Saturn car was established with similar cult-like following objectives as a “no- haggle price, focus on customer service and outreach with driver reunions and email newsletters (that) sparked strong brand loyalty” (Hemlock, 2009, p. 1D). GM made a decision to discontinue the brand due to lack of market share. The company has been unable to retain most Saturn owners to purchase another GM brand. Former Saturn owners have turned to…show more content…
In this study, the focus is on customer loyalty, and the antecedents of perceived value, and the marketing mix that creates the value. This relationship is supported in the theoretical literature (McCarthy, 1971; Oliver, 1997; Zeithaml, 1988), and has been tested in various empirical studies (Bloemer & Odekerken-Schröder, 2002; Cronin, Brady, & Hult, 2000; Yoo, Donthu, & Lee, 2000). However, studies have not been inclusive of all variables that better describes and explains the marketing strategy, perceived value, and customer loyalty relationship, as determined by, and proposed in this

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