The effects of purchase orientations on perceivedloyalty programmes’ benefits and loyalty         Abstract         Purpose...
Research limitations/implications – Further testing of rewardtypes, in(ex)trinsic motivation, across multiple contexts is ...
Lars Meyer-Waarden, EM Strasbourg Business School, Humansand     Management     in   Society   Institute    (EA   1347),  ...
Introduction      Many firms use customer relationship management instruments, inwhich     loyalty   or   frequency   rewa...
(Bridson et al., 2008; Mimouni-Chaabane and Volle, 2010; Meyer-Waarden, 2013), even if studies suggest that loyalty progra...
motivation into the discussion about rewards’ benefits, because weposit that intrinsic or extrinsic motivation may be cont...
management        by    recommending        customer      portfolio   segmentationthrough purchase orientations in order t...
evidence of loyalty (purchase frequency or amounts). These rewardsrefer to any abstract (e.g., virtue, pleasure, novelty, ...
they satisfy commodity motivations (e.g., facilitate purchase, reducepurchasing time; Kwong et al, 2011); or informational...
determines whether motivation is intrinsic or extrinsic. Intrinsicmotivation occurs when people engage in an activity beca...
Purchase orientations refer to consumers’ mental predispositionstoward     purchasing   (Stone,   1954;   Moschis,   1976;...
risk. This orientation implies a significant impact of habit and inertia.Finally,    shoppers       with   a    social-rel...
orientations (see Figure 1). Therefore, purchase behaviours depend on specific perceived benefits, which must be coherent ...
if consumers perceive that the benefit delivered by the rewards are   greater than the costs (e.g., joining expenses, swit...
Economical,          Purchase                                                                   Brand/store-              ...
economic (H2b), hedonist (H2c), convenience (H2d) as well asinformational (H2e) benefits are external rewards in exchange ...
1994). Both rewards consequently influence loyalty positively (H4a andH4e). In contrast, economic (H4b), hedonist (H4c), a...
Therefore, we explore and evaluate the value of the general framework(Table 1) that we use to test our research hypotheses...
Measure development       The absence of directly applicable existing scales for eachconstruct required us to adapt or dev...
loyalty programme managers’ categorizations of benefits according the  five dimensions of perceived benefits      Table II...
products or advice. We cannot necessarily classify rewards preciselyinto single perceived benefit categories though, becau...
The purification of the pool of items pertaining to the three multi-  indicator constructs (purchase orientations, perceiv...
I     have       mypreferred brands                   0.832    0.777I choose firstI always use myloyalty card             ...
Table IV CFA: Perceived benefits from the loyalty programmeFactor           The loyalty programme of firm X...            ...
Table 1       Table V : CFA: Loyalty            Thanks to the loyalty program of firm X…..     Grocery     PerfumeryPurcha...
Arnold and Reynolds, 2003; Mimouni-Chaabane and Volle, 2010), inboth the grocery and perfumery sectors. The extracted vari...
values are all greater than 0.7 for the purified scales, and all loadingsapproach or exceed 0.7 with regard to the latent ...
Social-    relational          0.17       0.07         0.31        0.89*    Apathetic           0.05       0.27         0....
Notes: Diagonal elements are the square roots of the AVE of the concernedconstructs or factors.*p = 0.01.                T...
the loyalty programmes’ perceived reward benefits on their loyalty,according to the 5-item scale.   As the final sample ch...
customers purchase twice per month from the grocery chain (60%) but one to six times per year from the perfumery (64%). In...
orientations into account (with a set of equality constraints), fit bysector.      In both sectors and both extended model...
< 0.01 or p < 0.05). However, some rewards that we did not anticipate           would be intrinsic are significant for som...
b = 0.16) and are highly significant (p < 0.01). We thus confirm H1band H1e. However, recognition and social relationships...
H3c are not supported because results show negative effects. Even ifthere is no support for theses hypotheses the results ...
perceived as pleasant and should create hedonist feelings. Theseresults clearly support H5a and H5c. Informational benefit...
(Deci,     1971).   Customers   reportedly   develop    different,   coherentpurchase behaviours (including loyalty progra...
motivations to repurchase probably encourage them to focus narrowlyon the reward and attempt to obtain it as quickly as po...
rewards, segment their customer portfolios, and achieve differentiationthrough nonmonetary benefits. The perceived benefit...
(Powell and DiMaggio, 1982). The differences among retailers’ offersare few, the benefit of rewards is low, programmes are...
Third, our analysis does not include the dynamics and value ofaccumulated    points   or,   more   generally,   dynamic   ...
ReferencesArnold,   M.   J.,   and   Reynolds,   K.E.   (2003),   "Hedonic   shopping  motivations", Journal of Retailing,...
Cedrola, E., and Memmo, S. (2010), "Loyalty marketing and loyaltycards: a study of the Italian market", International Jour...
Dawson, A., Bloch, P.H., and Ridgway, N.M. (1990), "Shopping  motives, emotional states, and retail outcomes", Journal of ...
Dick, A.S. and Basu K. (1994), "Customer loyalty: Toward an  integrated conceptual framework", Journal of the Academy of  ...
Long-term Perspective", Journal of Retailing and Consumer Services,  Vol. 18, No. 1, pp.81-91.Gable, M., Fiorito, S., and ...
Holbrook, M. and Hirschmann, E.C. (1982), "Hedonic consumption:  emerging concepts methods and propositions", Journal of M...
Laaksonen, M. (1993), "Retail patronage dynamics: Learning about  daily shopping behavior in contexts of changing retail s...
Meyer-Waarden, L. (2007), "The effects of loyalty programs on  customer lifetime duration and share-of-wallet", Journal of...
Powell, W.W. and DiMaggio, P.J. (1982), "The iron cage revisited:  Institutional isomorphism and collective rationality in...
Tietje, B.C. (2002), "When do rewards have enhancement effects? An  availability valence approach", Journal of Consumer Ps...
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The effects of purchase orientations on perceived loyalty programmes’ benefits and loyalty

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The effects of purchase orientations on perceived loyalty programmes’ benefits and loyalty

  1. 1. The effects of purchase orientations on perceivedloyalty programmes’ benefits and loyalty Abstract Purpose – This article dwells on theoretical, managerial, andempirical knowledge to improve loyalty programme efficiency. We tryto understand how economic, hedonist, relational, convenience,informational rewards enhance or undermine customers perceivedprogramme benefits as well as subsequently loyalty accordingindividual shopping orientations (economical, hedonist, social-relational, apathetic, brand/loyal). Design/methodology/approach – The research uses self-determination theory (SDT) and purchase orientations to classify typesof rewards in terms of their effect on perceived programme benefitsand loyalty. Scales are developed through exploratory andconfirmatory factor analysis. To validate the hypotheses, surveys intwo retail chains (grocery/perfumery) are used. Structural equationmodelling confirms the research model. Findings –Perceived benefits and loyalty vary according topurchase orientations, in line with the SDT. Intrinsic (extrinsic) rewardsmotivate customers to act to obtain a benefit within (apart from) thetarget of their purchase orientation and influences loyalty positively(have low impact on loyalty). 1
  2. 2. Research limitations/implications – Further testing of rewardtypes, in(ex)trinsic motivation, across multiple contexts is necessaryfor validity enhancement as it remains challenging to categorizepurchase orientations and rewards. It is necessary to precisely definethe degree of the relationship among an intrinsic purchase orientationand perceived loyalty programmes benefits as orientations might bemultidimensional. Practical implications – Differentiation through tailored rewardsis necessary in markets with strong competition to appeal to differentsegments. Differentiation could be achieved through nonmonetarybenefits. The principal role of loyalty programmes should be to identifyand segment customers as a means to improve resource allocations. Originality/value – This is one of the pioneer articles in the useof SDT in marketing research. SDT provides a multi-benefit frameworkwhich identifies the different (non-) monetary rewards customers mayvalue (in)extrinsically when participating in loyalty programmes. Thedevelopment of scales which focus on rewards and the impact ofpurchase orientations on loyalty programmes’ perceived benefits isanother contribution. Keywords Loyalty programmes, rewards, self-determinationtheory, purchase orientations, scale development. Paper type Research Paper 2
  3. 3. Lars Meyer-Waarden, EM Strasbourg Business School, Humansand Management in Society Institute (EA 1347), E-Mail:meyerwaarden@em-strasbourg.eu, is a Professor at the EMStrasbourg Business School (Humans and Management in SocietyInstitute, EA 1347) and the Center of Research in ManagementToulouse (EAC CNRS 5032). His main research interests are CustomerRelationship Management as well as Retailing Management. Christophe Benavent, University Paris X, CEROS Institute. E-Mail:christophe.benavent@gmail.com, is a Professor at the University ParisX. His main research interests are Customer Relationship Managementas well as Social Media Marketing. He has published lots of articlesabout these issues in international journals as Journal of the Academyof Marketing Science and Journal of Marketing Management. Herbert Castéran, Ecole de Management, Strasbourg University,Humans and Management in Society Institute (EA 1347). E-Mail:herbert.casteran@gmail.com, is an Associate-Professor at the EMStrasbourg Business School. His main research interests are Marketingmodels and Customer Lifetime Value modelling. 3
  4. 4. Introduction Many firms use customer relationship management instruments, inwhich loyalty or frequency reward programmes represent keymarketing activities. For example, the French grocery retailer Carrefourdevotes approximately €80 million of its annual marketingexpenditures to managing its loyalty program. Furthermore, thepopularity of these programmes is evident in the number ofparticipants: 55% of the U.S. population, 81% of Canadians, 85% ofU.K. consumers, and 90% of French customers are enrolled in at leastone relational programme (Meyer-Waarden and Benavent, 2009). Yet despite their prominence in the marketing mix and incustomers’ wallets, the benefits of loyalty cards remain uncertain.Many researchers argue that in a competitive market, good loyaltyprogrammes simply get imitated, which means that the marketeventually returns to stasis, but with increased marketing costs—ahighly inefficient situation (Dowling and Uncles, 1997; Sharp andSharp, 1997; Leenheer et al., 2007; Liu, 2007; Meyer-Waarden, 2007;Meyer-Waarden and Benavent, 2009; Cedrola and Memmo, 2010).Furthermore, those researchers argue that the rewards commonlyprovided in association with such programmes might not changeconsumers’ motivations or behavioural patterns effectively. Yet littleresearch investigates customer perceptions on programme rewards 4
  5. 5. (Bridson et al., 2008; Mimouni-Chaabane and Volle, 2010; Meyer-Waarden, 2013), even if studies suggest that loyalty programmeeffectiveness depends on the design of those rewards (Kivetz andSimonson, 2002; Yi and Jeon, 2003; Kivetz, 2005; Kivetz et al. 2006;Demoulin and Zidda, 2008; Smith and Sparks, 2009a; Bagchi and Li,2011; Drèze and Nunes, 2011). This article therefore dwells on theoretical, managerial, andempirical knowledge in order to improve loyalty programme efficiencyand differentiation. We try to understand how economic, hedonist,relational, convenience, informational rewards enhance or underminecustomers perceived programme benefits as well as subsequentlyloyalty according individual shopping orientations (economical,hedonist, social-relational, apathetic, brand/loyal). We first develop atypology describing the relationships between individual shoppingorientations, rewards and the different levels of customers perceivedprogramme benefits as well as loyalty. We provide a multi-benefitconceptual framework, based on the self-determination theory (Deci,1971; Deci and Ryan, 1985), as well as the purchase orientationtheory (Stone, 1954; Moschis, 1976), which identifies the differentmonetary and non-monetary rewards customers may value whenparticipating in loyalty programmes. As one of our main theoreticalcontributions, we introduce the concept of intrinsic and extrinsic 5
  6. 6. motivation into the discussion about rewards’ benefits, because weposit that intrinsic or extrinsic motivation may be contingent oncustomer heterogeneity and individual purchase motivations.Accordingly, we develop conclusions pertaining to how differentiatedrewards, moderated by (ex)intrinsic consumer purchase orientations,affect perceived loyalty programme benefits and loyalty. Intrinsic(extrinsic) rewards motivate customers to act to obtain a benefit within(apart from) the target of their purchase orientation and influencesloyalty positively (have low impact on loyalty). For example foreconomical shoppers who are most motivated (intrinsically) by budgetoptimizing economic rewards influence strongly loyalty intentions.However, recognition and social relationships, hedonist, as well asconvenience rewards are extrinsic and have no impact on loyaltyintentions. The ability to measure the perceived benefits of these rewardsoffers researchers and managers a better capacity to study thebehavioural impacts of loyalty programmes. We secondly demonstratethat the common belief stipulating that intrinsic rewards are notmaterial and extrinsic ones are, does not necessarily hold (Deci andRyan, 2000). For one customer, an intrinsic reward can be material orimmaterial and intrinsically motivating, depending on the purchasingsituation. Finally, our findings contribute to a better loyalty programme 6
  7. 7. management by recommending customer portfolio segmentationthrough purchase orientations in order to target diverse (non)-monetary rewards more accurately. In this article we first present our conceptual framework andhypotheses. Then the methodology and empirical investigation inFrench grocery and perfumery chains are explained. We then presentthe results, and finally, we discuss the theory developmentimplications, weaknesses and some further research directions.Conceptual framework We require a better understanding of how rewards influenceperceived benefits, and then affect loyalty. Therefore, we define theconcepts clearly and turn to theories pertaining to self-determination,as well as purchase orientations to suggest some theoreticalpossibilities for improving extant loyalty programmes.Loyalty programmes, rewards and perceived benefits Loyalty programmes comprise integrated systems of marketingactions and communications that aim to increase loyalty, repeatbuying, and switching costs by providing economical, hedonist,informational, functional, and sociological or relational rewards(Gwinner et al., 1998; Gable et al., 2008). They are thought of asactivities that offer incentives (rewards) to customers based on 7
  8. 8. evidence of loyalty (purchase frequency or amounts). These rewardsrefer to any abstract (e.g., virtue, pleasure, novelty, self-esteem) orconcrete (e.g., miles, points, discounts) stimuli granted by the loyaltyprogramme that launch consumers’ internal cognitive efforts andthereby help (1) create perceived benefits, (2) improve economicdecision-making and motivation outcomes, and (3) strengthen theintensity of approved purchase behaviours, such as loyalty (Tietje,2002; Drèze and Nunes, 2006; Demoulin and Zidda, 2009; Drèze andNunes, 2011; Kwong, Soman and Ho, 2011). The perceived benefit created by loyalty programme rewards is therelationship between the consumers perceived benefits in relation tothe perceived costs of receiving these benefits, and represents apositive emotional response (e.g. such as subjective feelings ofpleasure or hedonic enjoyment) and a source of satisfaction andmotivation, because the rewards fulfill a desire or a goal (Zeithaml,1988; Holbrook, 1996; Bagchi and Li, 2011). By categorizing thedifferent types of rewards that induce customer perceived benefit, wecan derive specific motivations that induce loyalty programme usage.For example, utilitarian rewards tend to encompass three fields (Frisouand Yildiz, 2011): economical rewards and monetary savings, whichcorrespond to an economic purchase motivation (e.g., price reductions,purchase vouchers; Gable et al., 2008); convenience, in which case 8
  9. 9. they satisfy commodity motivations (e.g., facilitate purchase, reducepurchasing time; Kwong et al, 2011); or informational rewards, whichare similar to exploration (Babin et al., 1994; Chitturi, et al., 2008;Drèze and Nunes, 2011). In contrast, hedonistic rewards have moreemotional benefits (Holbrook and Hirschmann, 1982; Holbrook, 1996;Arnold and Reynolds, 2003; Chitturi et al. 2008; Dagger and OBrien,2010) and correspond to motivations associated with giving orreceiving pleasure and entertainment (e.g., games, sweepstakes;Mimouni-Chaabane and Volle; 2010). Recognition and social–relationalrewards enable people to gain status, be identified with a privilegedgroup, or establish a firm relationship, which makes their interactionsmore interpersonal and helps the firm satisfy their needs better(Gwinner et al., 1998; Hennig-Thurau et al., 2002; Lacey et al., 2007;Drèze and Nunes, 2009; Lacey, 2009; Zhang and Wedel, 2009;Morrisson and Huppertz, 2010).Self-determination theory and purchase orientations Motivation refers to the desire to engage in a goal-orientedbehaviour such as loyalty. Different theories about motivation exist.Self-determination theory (SDT) is one of these particularly adaptedtheories to study human behaviour (Deci, 1971). It suggests thatvarious rewards and contexts have differential effects on motivation.Furthermore, the SDT indicates that the nature of the reward itself 9
  10. 10. determines whether motivation is intrinsic or extrinsic. Intrinsicmotivation occurs when people engage in an activity because itprovides an internal reward, that is, for its own sake. These rewardsincrease the internal gratification associated with a behaviour and thusthe internal reasons for maintaining it. In contrast, extrinsic motivationresults from the offer of external rewards in exchange for the desiredbehaviour. Therefore, people engage in the desired behaviour for areward other than their interest in the activity and feel pressure toobtain the offered reward. Economic benefits are the most commonlycited external reward in psychology research (Deci et al., 1999). (Ex)Intrinsic motivations have varying impacts on behaviour. Bothmotivation and behaviour (de)increase in the long term in response toan intrinsic (extrinsic) reward. Empirical evidence also shows thatextrinsic rewards can undermine motivation and behaviours, butintrinsic benefits tend to have a positive effect. Applied to loyalty programmes, intrinsic rewards motivate people toact to obtain a benefit that matches their individual purchase goals;extrinsic incentives motivate them to act to obtain a benefit separatefrom their purchase target. Heterogeneous intrinsic or extrinsicmotivations probably depend on customers’ individual characteristicsand purchase orientations, such that purchasers are not intrinsicallymotivated by the same rewards (Deci and Ryan, 2000). 10
  11. 11. Purchase orientations refer to consumers’ mental predispositionstoward purchasing (Stone, 1954; Moschis, 1976; Kahn andSchmittlein, 1989). They are based on people’s experiences andpersonal value systems. Because such orientations are goal oriented,they may explain various motivations, preferences, and behaviours(e.g., search for information, purchase behaviour, loyalty). Many orientations exist in the form of shopping goals, but mosttypologies simplify this consideration by citing five main orientations(Darden and Reynolds, 1971; Williams et al., 1978; Laaksonen, 1993;Childers et al., 2001). The economic, budget-optimizing orientationattempts to realize price economies (Babin et al., 1994; Gable et al.,2008); a hedonist one aims to find pleasure through the potentialentertainment value and enjoyment of the fun and play arising fromthe shopping experience (Hirschman and Holbrook, 1982; Arnold andReynolds, 2003; Chitturi et al. 2008; Dagger and OBrien, 2010). Anapathetic or uninterested orientation implies efforts to decrease thedemands associated with purchasing (Mägi, 2003; Kwong et al, 2011);these buyers dislike shopping and hope to purchase in an efficient,timely manner to achieve their goals with minimal irritation (Babin etal., 1994). The brand/store-loyal orientation (Dawson et al., 1990)corresponds to a motive to remain loyal to favourite brands/stores andgain reassurance about purchase choices to minimize uncertainty and 11
  12. 12. risk. This orientation implies a significant impact of habit and inertia.Finally, shoppers with a social-relational orientation desirepersonalized, privileged, interpersonal relationships with a brand or astore (Lacey et al., 2007; Smith and Sparks, 2009b; Drèze and Nunes,2009; Lacey, 2009; Morrisson and Huppertz, 2010; Zhang and Wedel,2009). Depending on these orientations, heterogeneous consumers aredifferently motivated and develop coherent shopping strategies, suchas writing down a shopping list, making impulsive purchases,comparing products and brochures, using loyalty cards, relying onpurchase vouchers, buying branded products, or searching for contactswith sales staff (Darden and Reynolds, 1971; Babin et al., 1994;Arnold and Reynolds, 2003).Hypotheses These ideas have significant implications for loyalty programmes,because they suggest that extrinsic rewards might undermine someconsumers’ motivation and brand loyalty. In line with SDT, the intrinsicmotivation for loyalty programme usage and subsequently loyaltyshould be largely goal oriented (i.e., to receive a particular reward)and thus depend on the desired rewards that induce perceived benefits(Daryanto et al., 2010; Drèze and Nunes, 2011), assuming they areintrinsic and accord with the individual customers’ purchase 12
  13. 13. orientations (see Figure 1). Therefore, purchase behaviours depend on specific perceived benefits, which must be coherent with individual and heterogeneous customers’ motivations (McQuail, 1994). Figure 1. Conceptual framework: How a loyalty programme works (Ex)Intrinsic motivation for loyalty programme usage according to customer purchase orientation - Economical, budget-optimizing - Hedonist - Apathetic - Brand/store-loyal - Social-relationalPerceived benefits of loyalty Loyalty:programmes’ rewards- Economy (Re)purchase- Hedonism behaviour intensity- Convenience (PI)- Information Resistance to counter--Recognition & social persuasion (RCP)relationship Input Output (Efficiency) Individual disparities in loyalty likely result from interpersonal heterogeneity; customers have different purchase orientations and should be differentially intrinsically motivated by various rewards that induce different perceived benefits. Therefore, buyers devote unequal effort to obtaining a given reward, according to the benefit they assign to it in comparison with the associated expenses. Loyalty changes only 13
  14. 14. if consumers perceive that the benefit delivered by the rewards are greater than the costs (e.g., joining expenses, switching costs) to gain them (Vesel and Zabkar, 2009). The effect of loyalty programmes’ rewards on customer perceived benefits, as well as their loyalty, should be moderated by individual customers’ purchase orientations and thus their (intrinsic/extrinsic) motivation for various rewards. In turn, if the reward corresponds to a customer’s purchase orientation, which motivates him or her intrinsically to use the loyalty programme it should relate positively to his or her perceived benefit and then should have a persistent, positive impact on loyalty. In contrast, if the reward does not correspond with a customer’s purchase orientation, it should not motivate him or her extrinsically to use the loyalty program, and it should not relate positively to his or her perceived benefit and then should not have a persistent, positive impact on loyalty. We thus test the moderating effect of purchase orientations on the link between perceived benefits of rewards and loyalty. This general hypothesis leads us to detail the testable sub hypotheses we summarize in Table 1. Table I : Hypotheses about the impact of loyalty programmes benefits on loyalty, according to purchase orientations Economical,Purchase Brand/store- Budget- Social-Relational Apathetic HedonistOrientation loyal Optimizing 14
  15. 15. Economical, Purchase Brand/store- Budget- Social-Relational Apathetic Hedonist Orientation loyal Optimizing Recog. & H1a 0 H2a + H3a 0 H4a + H5a + Rel. Economy H1b + H2b 0 H3b 0 H4b 0 H5b 0 Hedonism H1c 0 H2c 0 H3c 0 H4c 0 H5c +Benefit Convenience H1d 0 H2d 0 H3d + H4d 0 H5d 0 Information H1e + H2e 0 H3e 0 H4e + H5e 0 “+”positive effect on loyalty, “0” no effect on loyalty Among customers with an economical purchase orientation, economic rewards that grant monetary savings and informational benefits about good deals (e.g. flyers, brochures, e-mails about good deals and monetary savings) should create intrinsic motivation as they engage in an activity for its own sake (e.g. budget optimization). They therefore positively influence loyalty (H1b). In contrast, relational benefits c, such as recognition, status and relationships, hedonist gratifications (H1c), such as entertainment or games, convenience benefits (H1d) that reduce the time and effort associated with shopping and informational benefits (H1e), are external rewards in exchange for the desired behaviour, create extrinsic motivation and do not influence loyalty. Among customers with a social-relational purchase orientation, relational benefits (H2a) that grant recognition, status and relationships with a specific store, brand, and its sales staff should create intrinsic motivation as they engage in an activity for its own sake. They therefore positively influence loyalty (H2a). In contrast, 15
  16. 16. economic (H2b), hedonist (H2c), convenience (H2d) as well asinformational (H2e) benefits are external rewards in exchange for thedesired behaviour, create extrinsic motivation and do not influenceloyalty. Among customers with an apathetic purchase orientation,convenience benefits that reduce the time and efforts associated withshopping should create intrinsic motivation as they engage in anactivity for its own sake. They therefore positively influence loyalty(H3d). In contrast, relational (H3a), economic (H3b) as well ashedonist benefits (H3c), and informational gratifications (H3e), areexternal rewards in exchange for the desired behaviour, createextrinsic motivation and do not influence loyalty. Among customers with brand/store-loyal purchase orientation,informational benefits (e.g. flyers, brochures, e-mails about gooddeals, monetary savings and general information about the store or thebrand) about their favourite brands or stores probably create intrinsicmotivation. These benefits make them feel more comfortable andminimize uncertainty as they signal that customers chose the rightbrands or stores. Recognition and social relationships should alsocreate intrinsic motivation, because a stronger relationship with thebrand or the store increases their sense of trust and commitment,which may offer a means to reduce risk perceptions (Morgan and Hunt, 16
  17. 17. 1994). Both rewards consequently influence loyalty positively (H4a andH4e). In contrast, economic (H4b), hedonist (H4c), and conveniencebenefits (H4d), are external rewards in exchange for the desiredbehaviour, create extrinsic motivation and do not influence loyalty. Among customers with a hedonist purchase orientation, hedonistand relational benefits that give pleasure and relationships with aspecific store, brand, and its sales staff, should create intrinsicmotivation as they engage in an activity for its own sake. Indeed,relationships are probably perceived as pleasant and should createhedonist feelings. These type of rewards therefore positively influenceloyalty (H5a and H5c).In contrast, economic gratifications (H5b),convenience (H5d) and informational benefits (H5e), are externalrewards in exchange for the desired behaviour, create extrinsicmotivation and do not influence loyalty. At this stage though, we cannot establish precise predictions forthese effects, because it is not easy to define the degree of correlationbetween a single shopping orientation and a single purchase goal.These variables probably are multidimensional, because consumersrarely pursue just one purchase target. To our knowledge, noinvestigations have considered the relationship among loyaltyprogramme rewards, purchase orientations as well as intrinsicmotivation, and customer perceived benefits, as well as loyalty. 17
  18. 18. Therefore, we explore and evaluate the value of the general framework(Table 1) that we use to test our research hypotheses. The empiricalfindings cannot provide a test of a well-established priori theory;rather, they represent a step toward building a theory.Methodology and empirical investigation We first developed our measure instruments and pretested them inorder to purify them by a measurement model analysis. We thenapplied the scales to two sectors and investigated a sample loyaltyprogramme members of a grocery retailing hypermarket as well as aperfumery chain, both located in Toulouse (a major south-westernFrench city). These sectors are completely opposite in terms of productinvolvement (high involvement for the perfumery, low involvement forthe grocery retailing hypermarket) in order to see if our results hold inthese different consumption domains. 18
  19. 19. Measure development The absence of directly applicable existing scales for eachconstruct required us to adapt or develop multi-item Likert scalesfor this study. For perceived rewards’ benefits of the loyaltyprogramme, we adapted items from Arnold and Reynolds (2003),and Hennig-Thurau et al. (2002); the purchase orientation itemswere adapted from Laaksonen (1993). For our scale development,we employ concept mapping and expert reviews to ensure thescales apply to the specific contexts of the two loyalty programmes.Furthermore, our scale development process follows the proceduresadvocated by prior literature (Churchill, 1979). Our qualitative study of 30 French loyalty programme managersfrom different retailing sectors (e.g., grocery, perfumery, and otherspecialized retailers) provided further insights into the rewards thatcustomers perceive when they participate in loyalty programmes, aswell as their common purchase orientations. Together, the literaturereview and qualitative study suggested 20 items for measuringperceived rewards’ benefit (Mimouni-Chaabane and Volle, 2010) and25 items for purchase orientations. In Table 2, we summarize the principal reward types offered by thevarious programmes to members, which we classify according to 19
  20. 20. loyalty programme managers’ categorizations of benefits according the five dimensions of perceived benefits Table II : Typology of rewards offered by loyalty programmes to membersProgram Hedonism Recognition & Economy Convenience Information social relationship Games, Personalization Purchase Priority check- Newsletter sweepstakes, at check-out, vouchers, out, home with general exchange mailing reductions at delivery information points against birthday check-out about the spa &special events (value reward/ store,Grocery spent amount: personalized 3% mailings according to most bought products and good deals Games, Mailing birthday Purchase Beauty services Newsletter sweepstakes, & special vouchers, with general exchange events reductions at information points against check-out about the cosmetics, (value reward/ store, mailingsPerfumery beauty services spent amount: of news and 3%) personalized beauty advice as well as good deals Hedonist rewards pertain to all benefits that give pleasure, such as games or sweepstakes. Recognition and social rewards include personalization, privileges, status, or special events; the economic benefits offer monetary savings, purchase vouchers or price reductions. Convenience rewards attempt to decrease purchase time, such as by offering priority check-out, and informational rewards entail personalized mailings that provide information about the most bought 20
  21. 21. products or advice. We cannot necessarily classify rewards preciselyinto single perceived benefit categories though, because in practice,they may be multidimensional and satisfy several purchase targets(e.g., priority checkout could deliver relational and functional benefits). Loyalty consists of one behavioural dimension and one attitudedimension (Dick and Basu, 1994). True loyalty entails purchaseintensity, accompanied by an underlying positive attitude andresistance to counter-persuasion from competitors. We thereforeemploy a five-item scale (Bruner et al., 2005) to measure purchaseintensity (PI) and resistance to counter-persuasion (RCP). To test the research instrument and purify the measurementinstrument to optimize the data collection procedure for a much largersample, we pretested each scale with a random sample of loyaltyprogramme holders from the grocery retailer (N = 210) and theperfumery (N = 120) in Toulouse (these respondents were not includedin the final study). All items used five-point Likert scales (1 = “stronglydisagree” to 5 = “strongly agree”), such that respondents indicatedtheir degree of agreement with a series of statements about thestimulus object. We built our measurement model using exploratory(EFA) and confirmatory factor analysis (CFA) with three scales(Gerbing and Anderson, 1988). Measurement model analysis 21
  22. 22. The purification of the pool of items pertaining to the three multi- indicator constructs (purchase orientations, perceived reward benefits, and loyalty) relied on using item-to-total correlations and EFA (principal axis factor analysis with oblique rotation) in an iterative process. Values with loadings close to or greater than 0.60 and factors with eigenvalues greater than 1 are acceptable (Sharma, 1996). On the basis of the EFA results, we performed three CFA with a new sample of respondents, recruited in both retailing outlets (grocery N = 199, perfumery N = 101). We employed AMOS 5.0 for the three multi- indicator constructs and confirm the EFA factor structures. Finally, our measure purification results in 20 items for purchase orientations, 15 items for perceived loyalty programmes benefits, and 5 items for loyalty, as we show in Tables 3–5, respectively. Table III : CFA: Purchase orientations Loadings “When doing Budget- Brand/store- Hedonist Social-Relational Apatheticpurchasing Optimizing loyal(grocery,cosmetics)”....Items Gro- Perfu- Gro- Perfu- Gro- Perfu- Gro- Perfu- Grocery cery mery cery mery cery mery cery meryI often purchaseproducts on 0.811 0.889promotion.I do not payattention tobrands 0.714 0.778reputationI try to minimizepurchase 0.721 0.760amountsI alwaysresearch good 0.649 0.721deals 22
  23. 23. I have mypreferred brands 0.832 0.777I choose firstI always use myloyalty card 0.672 0.772I always choosethe same store 0.641 0.761Product/on-board quality is 0.692 0.862importantPurchasecoupons give me 0.887 0.616pleasureI like to try newproducts/destina 0.814 0.821tionsIt is a pleasureto discover new 0.763 0.605productsI look atmagazines to 0.624 0.710get informedI appreciate thecontact with 0.814 0.750sales staffI appreciate tobe close to thestore & have a 0.732 0.848goodrelationshipI appreciate tobe recognized asa privileged 0.764 0.791customerI appreciate thestore’s payingmore attention 0.714 0.740to me thanothers 0.89It is a choreI buy in an 0.79impulsive wayI know perfectly 0.74in advance whatbuyI look to ads 0.63beforepurchasingVariance 18% 22% 16% 20% 15% 18% 11% 11% 10%extractedCronbach’s 0.73 0.90 0.78 0.85 0.77 0.75 0.82 0.71 0.83alpha 2Fit indices /sig RMSEA GFI AGFI CFIGrocery 30.75/0.00 0.042 0.994 0.961 0.996Perfumery 3.78/0.00 0.044 0.97 0.96 0.95 Notes: Complete EFA results available on request. 23
  24. 24. Table IV CFA: Perceived benefits from the loyalty programmeFactor The loyalty programme of firm X... Grocery Perfumery gives me pleasure me as I participate in games 0.974 0.981Hedonism gives me pleasure when I exchange points (miles) 0.963 0.924 creates pleasant distractions & surprises 0.929 0.922 Variance extracted by the factor 19% 23% Cronbach’s alpha 0.96 0.76 makes me feel as if the store’s paying more 0.889 0.930Recognition & attention to me than otherssocial makes me adhere to a group of privileged customers 0.771 0.734relationship makes the store (airline) treating me as a privileged 0.768 0.900 customer Variance extracted by the factor 16% 17% Cronbach’s alpha 0.83 0.89 is the best means to reduce the purchase amount 0.844 0.932Economy gives monetary advantages 0.702 0.913 allows me to make substantial economies 0.605 0.899 Variance extracted by the factor 13% 12% Cronbach’s alpha 0.71 0.90 allows me to find more easily usual bought products 0.871 0.975Convenience grants additional services 0.784 0.975 makes purchases easier and more practical 0.611 0.791 Variance extracted by the factor 12% 11% Cronbach’s alpha 0.71 0.77 makes me choose new products 0.785 0.859 makes me discover good bargains& new ideas 0.660 0.827Information allows me to be well informed about news & general 0.615 0.746 information Variance extracted by the factor 11% 10% Cronbach’s alpha 0.77 0.82 2/sig 2.58/0.2 2.88/0.5 RMSEA< 0.05 0.04 0.04 GFI/ AGFI/ CFI  0.90 0.98/0.97 0.96/0.95 Notes: Complete EFA results available on request. 24
  25. 25. Table 1 Table V : CFA: Loyalty Thanks to the loyalty program of firm X….. Grocery PerfumeryPurchase I increase me purchase frequency 0.91 0.85Intensity I buy a larger variety of products in this 0.68 0.73(PI) company Variance extracted by the factor 42% 40% Cronbach’s alpha 0.81 0.77Resistan I return to the same shop 0.92 0.83ce to I shop (book) less often in competitors’ 0.80 0.79counter companies.persuasi I recommend this company to my family and 0.61 0.70on (RCP) friends. Variance extracted 38% 35% Cronbach’s alpha 0.79 0.75 2 /sig 5.65/0.1 6.11/0.04 RMSEA < 0.05 0.03 0.03 GFI/ AGFI/  0.90 0.97/0.9 0.91/0.92 6 Notes: Complete EFA results available on request. Regarding purchase orientations, we identify five grocery retailingfactors, consistent with prior literature (Laaksonen, 1993): (1)economic, budget-optimizing, 2) brand/store-loyal, (3) hedonist, (4)social-relational, and (5) apathetic or uninterested. Because theperfumery domain should be more involving and hedonistic thangrocery retailing, it seems logical that we find no apathetic orientationfor it but instead identify only four dimensions. The extracted varianceis 70% and 74% in the grocery and perfumery sectors, respectively. Regarding perceived loyalty programmes benefits, we againidentify five dimensions (economy, hedonist, convenience, information,recognition and social relationships; Hennig-Thurau et al., 2002; 25
  26. 26. Arnold and Reynolds, 2003; Mimouni-Chaabane and Volle, 2010), inboth the grocery and perfumery sectors. The extracted variance is 71%and 72%, respectively. Finally, for the loyalty scale, we uncover two factors, purchaseintensity (PI) and resistance against counter-persuasion (RCP), forboth sectors. The extracted variance is, respectively, 80% and 81%. To assess the overall fit of the model, we investigated several fitindices, as recommended (Fornell, and Larcker, 1981; Byrne, 2001).The goodness-of-fit indexes (GFI) are greater than 0.9 for the multi- 2 2indicator constructs (1 – for the nullmodel]); the GFI measures adjusted for degrees of freedom (AGFI),which uses mean squares instead of total sums of squares in thenumerator and a denominator of (1 – GFI), are greater than .8.Furthermore, the root mean square error of approximation (RMSEA), orthe mean of the squared residuals comparing the observed and 2predicted covariance matrices, is less than 0 2 would indicate a lackof satisfactory model fit. These indicators provide evidence of goodmodel fit for the three multi-indicator constructs. To assess the adequacy of the measures, we also evaluate thereliability of the individual items and the discriminant validity of allconstructs. Our measure of item reliability uses Cronbachs alpha; the 26
  27. 27. values are all greater than 0.7 for the purified scales, and all loadingsapproach or exceed 0.7 with regard to the latent variable, whichindicates that more than 50 percent of the variance in the observedvariable can be explained by the corresponding construct. Thus, wehave evidence of good reliability and internal consistency. Each itemloaded significantly on its intended latent variable, which suggests allitems are adequate. We confirm the convergent validity of all scalesand sectors. To assess the discriminant validity of the constructs, we firstexamine the cross-loadings and find that the latent variables sharemore variance with their respective items than with other latentvariables. All values representing the square root of the averagevariance extracted (AVE) from each construct also are substantiallygreater than all other correlations of the factor with other constructs.The AVE for all constructs is greater than the generally accepted valueof 0.50. Thus, we confirm discriminant validity for all constructs andunidimensionality for all purified measurement scales (see Tables 6–10). Table VI Discriminant and convergent validity: Purchase orientations (Grocery) Economical Brand/ Hedonist Social- Apathetic store-loyal Relational Economical 0.83* Brand/store- loyal 0.02 0.94* Hedonist 0.33 0.16 0.79* 27
  28. 28. Social- relational 0.17 0.07 0.31 0.89* Apathetic 0.05 0.27 0.27 0.20 0.90* Notes: Diagonal elements are the square roots of the AVE of the concerned constructs or factor, * p = 0.01. Table VII Discriminant and convergent validity: Purchase orientations (Perfumery) Economical Brand/ Hedonist Social- store-loyal Relational Economical 0.90* Brand/store-loyal 0.06 0.86* Hedonist 0.22 0.16 0.80* Social-relational 0.09 0.06 0.28 0.79* Notes: Diagonal elements are the square roots of the AVE of the concerned constructs or factor, * p = 0.01. Table VIII Discriminant and convergent validity: Perceived benefits loyalty programme (Grocery) Hedonism Recog. & Economy Conven. Inform. Relationsh.Hedonism 0.94*Recognition& 0.24 0.95*RelationshipEconomy 0.12 0.14 0.93*Convenience 0.23 0.04 0.18 0.91*Information 0.11 0.15 0.19 0.19 0.94* Notes: Diagonal elements are the square roots of the AVE of the concerned constructs or factors. *p = 0.01. Table IX Discriminant and convergent validity: Perceived benefits loyalty programme (Perfumery) Hedonism Recogn. & Economy Conven. Inform. Relationsh.Hedonism 0.94*Recognition& 0.29 0.92*RelationshipEconomy 0.02 0.04 0.97*Convenience 0.03 0.04 0.06 0.92*Information 0.1 0.17 0.12 0.13 0.94* 28
  29. 29. Notes: Diagonal elements are the square roots of the AVE of the concernedconstructs or factors.*p = 0.01. Table X Discriminant and convergent validity: Loyalty PI RCP Grocery Perfumery Grocery PerfumeryPurchase intensity (PI) 0.94* 0.92*Resistance to counter- 0.19 0.13 0.98* 0.97*persuasion (RCP) Notes: Diagonal elements are the square roots of the AVE of the concernedconstructs or factors. * p = 0.01.Data collection For the final survey, we gathered two samples of loyalty cardmembers of the grocery hypermarket (N = 2,001) and the perfumerychain (N = 1,925). Respondents were randomly invited (in 2007) tocomplete the questionnaire about a single loyalty programme at eachof the retailers during shopping trips, surveyed Monday–Saturday toachieve greater representativeness. As a token of appreciation forparticipating, respondents were offered chocolate from the groceryretailer and perfume samples from the perfumery. After agreeing toparticipate, respondents indicated their purchase orientations on the20-item scale, then their perceived reward benefits from the loyaltyprogrammes on the 15-item scale. Finally, they revealed the impact of 29
  30. 30. the loyalty programmes’ perceived reward benefits on their loyalty,according to the 5-item scale. As the final sample characteristics in Table 11 show, more shopperswere women for both the hypermarket (59%) and the perfumery(70%). Almost half of the sample was between the ages of 25 and 44years, and a wide range of professions was represented. Table XI Sample characteristics Level Grocery Perfumery Female 59% 70% Gender Male 41% 30% 18-24 years 10% 8% 25-34 years 23% 20% Age 35-44 years 24% 26% 45-64 years 28% 28% 65 years & more 15% 18% Single 39% 36% Marital Married/Couple 60% 63% Status Other 1% 1% Inactive 22% 22% Worker 21% 7% Liberal profession 7% 11% Profession Employee 23% 20% Merchant 6% 11% Executive 21% 29% Purchase 1-50 € 8% 12% expenditure 51-120 € 66% 49% per purch. > 120 € 26% 39% act 1-6 times/year 4% 64% Purchase 1 times/month 14% 25% frequency 2 times/month 60% 10% >2 times/month 22% 1% Card 1-2 years 18% 20% membership > 2 years 82% 80%In terms of purchase behaviour, most respondents spent between 51€and 120€ per trip to the grocer (66%) and the perfumery (49%). Most 30
  31. 31. customers purchase twice per month from the grocery chain (60%) but one to six times per year from the perfumery (64%). In both sectors, more than 80% had been programme members for more than two years, which implies they should be highly familiar with the functioning and reward structure of the related loyalty schemes. Results We developed structural equation models (SEM) to test our research hypotheses. To test how individual purchase orientations moderate the relationship among loyalty programmes’ perceived benefits, and loyalty (PI and RCP), we used multigroup SEM (AMOS 5.0). Furthermore, we compared the relaxed model against a constrained model in which the parameters remain equal across the cluster, using a likelihood test. We performed a multiple-group analysis by splitting the samples by sector (Byrne, 2001). Table XII Samples by sectorValidation/ Social- Brand/store-hold-out Economical Apathetic Hedonist Relational loyalsampleGrocery 721 321 212 400 347Perfumery 770 385 0 423 347 We first estimated a base model (without purchase orientations or restrictions), then extended it by taking the different purchase 31
  32. 32. orientations into account (with a set of equality constraints), fit bysector. In both sectors and both extended models, the indexes ofadjustment are better than those for the base model (see Table 13). Table XIII Indexes of fit Grocery Perfumery Extended Extended Base Base Model Model 2 CMIN  8500 6665 6665 897 p 0.8 0.7 0.48 0.41 df 1772 1732 1732 191 CMIN/df 4.79 3.85 3.8 4.7 RMSEA 0.06 0.048/ 0.04 0.04 GFI 0.5 0.90 0.7 0.92 AGFI 0.6 0.92 0.6 0.93 The GFI and AGFI are all greater than 0.9, and the RMSEA is less 2than .05. Furthermore, the (CMIN) decreases from the base modelto the extended models, indicating a better fit of the more complexmodels that include purchase orientations. Imposing restrictions in theextended models across the two samples does not result in astatistically significant worsening of the overall model fit. Therefore,the model appears to apply across groups.After selecting the final model that best fits the data, we interpret theoverall parameter estimates (standardized path coefficients to validatethe results across the two different product categories). Allhypothesized relationships (rewards  perceived benefits according tointrinsic purchase orientation  PI/RCP) are statistically significant (p 32
  33. 33. < 0.01 or p < 0.05). However, some rewards that we did not anticipate would be intrinsic are significant for some shopper types (see Tables 14 and 15). Table XIV Grocery retailing: Impact of perceived benefits on loyalty (standardized path coefficients) Shopper Economical Social-Relational Apathetic Brand/store-loyal HedonistPerc. benefit PI RCP PI RCP PI RCP PI RCP PI RCP -Recog. & Rel. -0.074ns 0.72** 0.63** -0.17* -0.15* 0.097* 0.054* 0.22* 0.26* 0.097nsEconomy 0.74** 0.62** -0.089ns -0.057ns 0.087ns 0.083ns 0.027ns 0.049ns 0.089ns 0.025nsHedonism 0.017ns 0.013ns 0.043ns 0.047ns -0.022* -0.023* 0.022ns 0.086ns 0.83** 0.85nsConven. 0.047ns 0.032ns 0.025ns 0.088ns 0.95** 0.88** 0.037ns 0.055ns -0.32* -0.31*Inform. 0.27** 0.32** 0.15ns 0.19ns 0.093ns 0.022ns 0.94** 0.91** 0.044* 0.015* ** p < 0.01,* p < 0.05, ns: not significant impact on dependant variables. Table XV Perfumery: Impact of perceived benefits on loyalty (standardized path coefficients) Shopper Economical Social-Relational Brand/store-loyal Hedonist Perceived PI RCP PI RCP PI RCP PI RCP benefit Recog. & Relation -0.06ns 0.07ns 0.38** 0.18** 0.22* 0.17* 0.21* 0.17* Economy 0.66** 0.17** 0.02ns 0.21ns -0.25ns -0.12ns -0.20ns 0.19ns Hedonist 0.85ns 0.38ns 0.044ns 0.029ns -0.88ns -0.19ns -0.90** 0.25** Convenience -00.01ns 0.34ns -0.55ns 0.25ns 0.05ns 0.83ns -0.29ns 0.27ns Informational 0.41** 0.16** 0.42ns 0.28ns 0.11** 0.05** 0.07* 0.25* ** p < 0.01, * p < 0.05, ns: not significant. Economical, budget-optimizing shoppers are most motivated (intrinsically) by economic rewards in terms of both PI and RCP (grocery retailing b = 0.74, b = 0.62; perfumery: b = 0.66, b = 0.17; p < 0.01). Informational rewards about good deals also increase their PI and RCP (grocery retailing b = 0.27, b = 0.32; perfumery b = 0.41, 33
  34. 34. b = 0.16) and are highly significant (p < 0.01). We thus confirm H1band H1e. However, recognition and social relationships, hedonist, aswell as convenience rewards are extrinsic (p >0.1), as expected and insupport of H1a, H1c, and H1d, respectively. For social-relational shoppers, who are intrinsically motivated bytheir social relationships with sales staff and recognition as a privilegedcustomer, relational rewards influence PI and RCP strongly, asexpected in H2a (grocery: b = 0.72, b = 0.63; perfumery: b = 0.38, b= 0.18; p < 0.01). Extrinsic economic, hedonist, convenience, andinformational rewards have no impact though (p > 0.1), so we confirmH2b–e. These shoppers are indifferent to convenience devices thatshorten the shopping trip, because they are incompatible with theirintrinsic purchasing target. Apathetic buyers appear only in the grocery retailing context;because they perceive shopping as drudgery, their intrinsic motivationis to make shopping effective and quick. Convenience rewards increasetheir PI and RCP (b = 0.95, b = 0.88; p < 0.01), in support of H3d.Economic (b = -0.087, b = -0.083; p > 0.1) and informational (b =0.093, b = 0.022; p > 0.1) benefits are extrinsic and have no impact;we thus find support for H3b and H3e. Recognition and socialrelationships (b = -0.17, b = -0.15) as well as hedonist rewards (b = -0.022, b = -0.023) even have a negative impact (p < 0.05). H3a and 34
  35. 35. H3c are not supported because results show negative effects. Even ifthere is no support for theses hypotheses the results are remarkable asthey show that some rewards might eventually erode intrinsic interestsand undermine feelings of control, which can interfere with consumers’motivations and loyalty (Deci and Ryan, 1985). Brand/store-loyal shoppers hope to gain reassurance aboutpurchases, generally by gaining more information. Informationalrewards (e.g. information about good deals and general informationabout the store or the brand; grocery: b = 0.94, b = 0.91; perfumery:b = 0.11, b = 0.05; p < 0.01) as well as relational rewards (e.g. astronger relationship with the store or the brand increases trust, whichmay offer a means to reduce risk perceptions; grocery: b = 0.097, b =0.054; perfumery: b = 0.22, b = 0.17; p < 0.01) have a stronginfluence on PI and RCP, in support of H4a and H4e. Finally, in supportof H4b, H4c and H4d, economic, hedonist, and convenience benefitsare not significant in either sectors (p > 0.1); that is, they areextrinsic. For hedonist customers, who are intrinsically motivated byshopping pleasure, the hedonist rewards (grocery: b = 0.83, b = 0.85;perfumery: b = 0.90, b = 0.25; p < 0.01) and social relationships(grocery: b = 0.22, b = 0.26; perfumery: b = 0.21, b = 0.17; p <0.05) have strong influences on PI and RCP. Relationships are probably 35
  36. 36. perceived as pleasant and should create hedonist feelings. Theseresults clearly support H5a and H5c. Informational benefits (grocery: b= 0.044, b = 0.015; perfumery: b = 0.07, b = 0.25; p < 0.05),contrary to our expectations, have a positive influence as well, perhapsbecause they offer a means to gain information about hedonistdevices, events as well as to discover new ideas and products.Regardless of the explanation, we must reject H5e. Conveniencerewards have either a negative significant impact on PI and RCP in thegrocery retailing context (b = -0.32, b = -0.31; p < 0.05) or areinsignificant in the perfumery (b = -0.29, b = 0.27; p > 0.1). Thenegative signs for these rewards show again that there might be anerosion of consumers’ motivations and loyalty. We thus reject H5d.Economic rewards are insignificant (p > 0.1) and extrinsic in withsupport H5b.Discussion, academic and managerial implications To improve knowledge about the effectiveness of loyaltyprogrammes, we have investigated how purchase orientationsmoderate the relationship between perceived loyalty programmesbenefits, motivation, and loyalty. Accordingly, we note the following:Customers’ different intrinsic or extrinsic purchasing motivations ororientations determine the perceived benefits from the loyaltyprogramme’s rewards and reinforce unique motivations and behaviours 36
  37. 37. (Deci, 1971). Customers reportedly develop different, coherentpurchase behaviours (including loyalty programme usage), becausethey are not intrinsically motivated by the same targets. Intrinsicrewards motivate them to act to obtain a benefit that falls within thetarget of their purchase orientation and thus creates interest orpleasure in the task. They also correspond positively to intrinsicreinforcements and have a positive, long-term impact on purchasebehaviour and loyalty. Economic and informational rewards areintrinsically most motivating for economical, budget-optimizingshoppers and have the strongest impact on their loyalty. Social-relational shoppers are intrinsically motivated by social relationshipswhich influence loyalty positively. For apathetic buyers conveniencerewards increase loyalty. Brand/store-loyal shoppers are intrinsicallymotivated by informational as well as relational rewards which increaseloyalty. In contrast, extrinsic rewards motivate customers to act to obtain abenefit that is separate from the target of their purchase orientationand do not influence their loyalty (Deci et al., 1999; Kivetz, 2005). Our results challenge the widespread behaviourist belief aboutconditioned behaviour (Skinner, 1976), applied in the development ofmost loyalty programmes that rely on money and sales promotions tomotivate people. Extrinsic rewards that “buy” customers’ intrinsic 37
  38. 38. motivations to repurchase probably encourage them to focus narrowlyon the reward and attempt to obtain it as quickly as possible.Therefore, it eventually might erode intrinsic interests and underminefeelings of control, which can interfere with consumers’ motivations(Deci and Ryan, 1985). From an academic point of view, this study contributes to existingknowledge about relationship marketing. First, we provide a multi-benefit framework that identifies the different rewards benefitscustomers may perceive when participating in loyalty programmes. Inaddition to monetary aspects, members experience a range ofnonmonetary benefits, related to exploring the firms products,entertainment, or relational aspects. The ability to measure theseperceived rewards’ benefits offers researchers and managers a bettercapacity to study the behavioural impacts of loyalty programmes. Second, we demonstrate that the intrinsic or extrinsic nature ofrewards appears contingent on individual purchase motivations (Deciand Ryan, 2000). For one customer, an intrinsic reward can bematerial or immaterial and intrinsically motivating, depending on thepurchasing situation. Yet the same reward could be extrinsicallymotivating for another customer or in another situation. In turn, our findings have important implications for loyaltyprogramme managers. In particular, they should promote diverse 38
  39. 39. rewards, segment their customer portfolios, and achieve differentiationthrough nonmonetary benefits. The perceived benefits associated withloyalty programmes are diverse and relate to multiple consumermotivations and purchase orientations. The absence of segmentation inexisting loyalty schemes therefore causes inefficiency, because strongcustomer heterogeneity can result in programme failure. The principalrole of loyalty programmes should be to identify and segmentcustomers as a means to improve resource allocations. For example,loyalty scheme managers might segment the target market accordingto consumers’ purchase orientations and associated rewardpreferences. A more thorough analysis of loyalty schemes’ effects anddetriments at the individual level thus is necessary, because consumercharacteristics influence the strength and direction of the impacts onrepurchase behaviour. With such information, firms can adopt tailoredstrategies, using both monetary and nonmonetary incentives andintegrating functional and hedonistic features into loyalty programmesto appeal to different segments and enhance their use. For example,Tesco’s loyalty scheme demonstrates how success can be a function ofprogramme efficiency and data-driven customer behaviour and needsknowledge (Humby et al., 2004). Differentiation through intangible, nonmonetary benefits also ispossible in markets marked by strong competition and isomorphism 39
  40. 40. (Powell and DiMaggio, 1982). The differences among retailers’ offersare few, the benefit of rewards is low, programmes are easilyexchangeable, and switching costs are minimal (Meyer-Waarden,2007). Therefore, retailers, such as Tesco, that invest in rewards suchas personalized services or functional value-added information canattain a difficult-to-imitate advantage.Conclusions and future research directions Our research suffers several limitations that further research shouldconsider. First, we find that for some purchase orientations, certainrewards are intrinsic and affect behaviour, in contrast with our a prioriexpectations; it remains challenging to define the degree of therelationship among an intrinsic purchase orientation and perceivedloyalty programmes benefits. Because purchase orientations aremultidimensional, segment overlaps likely exist (e.g., hedonist–relational). Second, our results confirm just how difficult it is to classifyrewards exactly and uniquely to one category, because they can satisfyseveral purchase targets at the same time. Our research shows thatintrinsic or an extrinsic motivation depend on the individual but it isprobable that is also varies within an individual, depending on moodand circumstances (Smith and Sparks, 2009b). Additional researchshould try to categorize purchase orientations and rewards moreprecisely and to test motivation according to mood and circumstances. 40
  41. 41. Third, our analysis does not include the dynamics and value ofaccumulated points or, more generally, dynamic rewards. Alongitudinal approach could offer a strong extension for furtherresearch. Although previous experimental investigations indicate that loyaltyscheme effectiveness depends on the program’s design (Kivetz andSimonson, 2002; Yi and Jeon, 2003; Kivetz, 2005), few supportingfield data are available. More research and replications are necessaryto determine the psychological aspects of customer loyalty rewardschemes and individualized reward systems. Another critical concerninvolves the applicability of self-determination theory (Deci, 1971) inmarketing. The SDT emerged from research in domains such as schooleducation for children or motivation of athletes; does it also hold inpurchasing contexts such as grocery retailing? Enhancement effectsaccrue when people receive rewards for performing uninterestingtasks, such as purchasing (Hitt et al., 1992). Perhaps intrinsic interestin a task also declines when firms grant extrinsic rewards. Moreexperimental approaches that analyze how rewards influence purchasebehaviour are recommended, because different theoretical points ofview could help clarify this question. 41
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