Download how customer loyalty programs

HOW CUSTOMER LOYALTY PROGRAMS CAN INFLUENCE RELATIONAL
MARKETING OUTCOMES: USING CUSTOMER-RETAILER IDENTIFICATION
TO BUILD RELATIONSHIPS
DISSERTATION
Presented in Partial Fulfillment of the Requirements for
the Degree Doctor of Philosophy in the Graduate
School of The Ohio State University
By
Sejin Ha
*****
The Ohio State University
2007
Dissertation Committee:
Approved by
Professor Leslie Stoel, Adviser
Professor Sharron J. Lennon
Professor Jay Kandampully
Professor Thomas Nygren
_____________________________
Adviser
College of Education and Human Ecology
Copyright by
Sejin Ha
2007
ABSTRACT
The primary objective of this dissertation was to develop a model of customer
loyalty program success that builds a strong and positive customer-retailer relationship.
Building upon social identity theory and Bhattacharya and Sen’s (2003) consumercompany identification model, this study proposed a model that two socio-psychological
factors in relation to a customer loyalty program (loyalty program distinctiveness and
identity relevance) would influence consumer membership identity and their responses to
the loyalty program. A web-based experiment examined the proposed model across two
parts in an apparel retailing context.
Part 1 demonstrated the significance of distinctiveness and identity relevance
regarding a customer loyalty program in enhancing consumer perception of identity
salience as a member of the customer loyalty program. However, the proposed
moderating role of perceived trustworthiness of customer loyalty programs on the two
contextual factors of the customer loyalty program (loyalty program distinctiveness and
identity relevance) – consumer perception of identity salience links was not shown in the
study.
Part 2 explored the effects of consumer perception of identity salience as a
member of the loyalty program on their evaluative (attitude towards the focal retailer)
and relational (customer-retailer identification and satisfaction) responses. The findings
revealed that consumer perception of identity salience as a member of the loyalty
ii
program evoked by distinctiveness and identity relevance relating to the loyalty program
positively influences consumer attitude toward the retailer, customer-retailer
identification, and satisfaction.
This study will contribute to the literature on social identity theory, customercompany identification model, the functional theory of attitude, and distinctiveness
theory by providing empirical evidence of theoretical explanations within the context of a
customer loyalty program in apparel retailing. The findings of this study will also allow
retail marketers to design and implement customer loyalty programs that build and
cultivate a loyal customer-company relationship.
iii
Dedicated to my parents,
Songja Park and Wonho Ha
iv
ACKNOWLEDGMENTS
First and foremost, it is difficult to overstate my gratitude to my Ph.D. advisor, Dr.
Leslie Stoel. Her guidance, insights, encouragement, enthusiasm, and patience have been
always valuable to me in completing this degree. Throughout my graduate program and
thesis-writing period, she has constantly inspired me to take further steps in each
challenge I faced in teaching and research. She has made my life as a graduate student an
enriching experience.
I am especially indebted to Dr. Sharron J. Lennon who has instilled in me a
dedication to rigor in research. She has provided a tremendous amount of constructive
feedback, insightful comments on every single question that I had and challenging
questions that have inspired me through my graduate program.
I also wish to thank the members of my committee for their guidance. Dr. Jay
Kandampully has provided me intellectual support during my doctoral research endeavor.
His practical and straightforward approach to every issue set an example for me. Dr.
Thomas Nygren and Dr. Richard Cudeck have taught me a great deal about statistics and
guided me through to the unambiguous solutions with their insightful and humorous
perspectives.
I extend my heartfelt gratitude to Dr. Gong-Soog Hong who has constantly
inspired and supported my intellectual and professional development. I also wish to
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thank John Pryba for his patient and utmost assistance in developing experimental
websites for this dissertation.
I wish to thank my many fellow students for providing a stimulating and fun
environment in which to learn and grow. Many thanks to those who preceded me into the
program and guided the way: Young Ha and Minjeong Kim; to those who joined the
journey along the way: Jung-Hwan Kim, Minjung Park, Jessica Strubel, Hye-Ri Park,
Jiyoung Kim, and Jisun Park, with special thanks to Hye-Jeong Kim, Wi-Suk Kwon, and
Hyunjoo Im for their friendship, encouragement, entertainment, and support.
No words can express my debt to my family: my parents, my sisters (Soojin Ha
and Kyoungok Ha) and my brother (Taeyoung Ha), my brother-in-law (Byoungjoo Cha),
and my precious nephew (Steven Kyuhyun Cha) who have always put my interests
before theirs. Thank you all for always being there for me. Whatever I am and whatever
I shall be, I owe it all to them.
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VITA
October 8, 1970 ..............................................Born - Busan, Korea
1994................................................................B.S. Duksung Women’s University
Major: Home Economics
Seoul, Korea
1995 – 1996....................................................Apparel Designer
MORADO Co. Ltd.
Seoul, Korea
1998 – 2001....................................................Retail Buyer
CARREFOUR KOREA Co. Ltd.
Seoul, Korea
2000................................................................M.S. Yonsei University
Major: Communication in Fashion Industry
Seoul, Korea
2003 – present ................................................Graduate Teaching/Research Associate
Department of Consumer Sciences
The Ohio State University
PUBLICATIONS
Research Publication
1.
Ha, S., & Lennon, S. J. (2006). Consumers’ attitude toward fashion counterfeit
products: Ethical ideologies, ethical judgments and perceived risks, Clothing and Textiles
Research Journal, 24(4), 297-315.
2.
Ha, S., & Stoel, L. (2006). The moderating effect of e-shopping motives on
consumer acceptance of e-shopping. In J. R. Evans (Ed.), Retailing 2006: Strategic
challenges in the new millennium, Volume XI 2006, Proceedings of the 8th Triennial
Conference of the Academy of Marketing Sciences & the American Collegiate Retailing
Association (AMS/ACRA) (pp. 82-87). Orlando, FL.
vii
3.
Ha, S., & Stoel, L. (2006). Shopping motives and patronage intentions of online
shopper segments: An apparel context. In D. Burns (Ed.), Proceedings of the American
Collegiate Retailing Association (ACRA) 2006 Annual Meeting, Fayetteville, AK. [CDROM].
4.
Ha, S., & Stoel, L. (2005). E-shopping quality, trust and consumer acceptance:
Differences between online apparel purchasers and non-purchasers, Global Symposium
for Consumer Sciences. Available: http://www.consumersciences.org/abstract.html
5.
Ha, S., & Lennon, S. J. (2005). E-shopping attributes driving consumer attitude
and patronage intention to shop online, Proceedings of the International Textile and
Apparel Association (ITAA) 2005 Annual Conference. Available:
http://www.itaaonline.org.
6.
Ha, S., & Kandampully, J. (2005). The dynamics of service quality, satisfaction,
value and behavioral intention within an apparel online shopping context, 2005
Proceedings of the Seoul International Clothing & Textiles Conference “Asia, Gateway
to the Future,” Seoul, South Korea. [CD-ROM].
7.
Ha, S., & Kandampully, J. (2005). Consumers’ loyalty and its antecedents in
online service dynamics: An application to apparel online shopping, Proceedings of the
12th International EIRASS Conference on Recent Advances in Retailing and Service
Sciences, Orlando, FL.
8.
Ha, S., & Stoel, L. (2005). E-shopping quality, trust and consumer acceptance:
Addition to the Technology Acceptance Model, In D. Burns (Ed.), Proceedings of the
American Collegiate Retailing Association (ACRA) 2005 Annual Meeting, Philadelphia,
PA. [CD-ROM].
9.
Ha, S., & Lennon, S. J. (2004). Apparel impulse buying, self-monitoring and
perceived peers’ clothing involvement, Proceedings of the International Textile and
Apparel Association (ITAA) 2004 Annual Conference. Available:
http://www.itaaonline.org.
FIELD OF STUDY
Major Filed: Human Ecology
Area of Specialization: Textiles and Clothing
Minor Field: Quantitative Psychology
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TABLE OF CONTENTS
Page
Abstract ................................................................................................................................ i
Dedication .......................................................................................................................... iv
Acknowledgment ................................................................................................................v
Vita .................................................................................................................................... vii
List of Tables ................................................................................................................... xiii
List of Figures .................................................................................................................. xvi
Chapters:
1.
Introduction ............................................................................................................1
1.1.
1.2.
1.3.
1.4.
1.5.
2.
Overview.................................................................................................................1
Problem Statement ..................................................................................................5
Purpose of the Study ...............................................................................................7
Significance of the Study ........................................................................................8
Definitions of Terms .............................................................................................11
Literature Review.................................................................................................16
2.1. Overview...............................................................................................................16
2.2. Relationship Marketing ........................................................................................17
2.2.1. Relationship marketing Overview .............................................................17
2.2.2. Benefits of Relationship Marketing ...........................................................19
2.2.3. Drawbacks of Relationship Marketing ......................................................21
2.2.4. Limitations in Relationship Marketing Literature .....................................22
2.3. Customer Loyalty Programs .................................................................................24
2.3.1. Overview of Customer Loyalty Programs .................................................24
2.3.2. Reviews of Customer Loyalty Program Literature ....................................28
2.3.3. Limitations in Customer Loyalty Program Literature ...............................31
2.4. Theoretical Framework .........................................................................................39
2.4.1. Social Identity Theory................................................................................39
2.4.2. Social Identity in Relationship Marketing Literature ................................43
2.4.3. Functional Theory of Attitude ...................................................................46
ix
2.4.4. Trustworthiness of Customer Loyalty Program Marketing ......................48
2.5. The Proposed Customer Loyalty Program Model ................................................49
2.6. Hypotheses Development .....................................................................................53
2.6.1. Part One: Determinants of Customer Membership Identity Salience in a
Customer Loyalty Program Environment .....................................................53
2.6.2. Part Two: Effects of Identity Salience of Loyalty Program Membership in
Consumer Responses .....................................................................................60
3.
Pretests .................................................................................................................64
3.1. Pretest 1: Loyalty Program Reward Stimuli Development ..................................65
3.1.1. Content Analysis ........................................................................................65
3.1.2. Loyalty Program Reward Stimuli Development........................................70
3.2. Pretest 2: Consumer Identity Goal Manipulation .................................................76
3.3. Pretest 3: Identity Distinctiveness Manipulation ..................................................83
3.4. Pilot Test ...............................................................................................................90
3.4.1. Experimental Website Development .........................................................92
3.4.2. Pilot Test ....................................................................................................97
4.
Main Study .........................................................................................................117
4.1. Overview.............................................................................................................117
4.2. Method ................................................................................................................118
4.2.1. Design ......................................................................................................118
4.2.2. Experimental Website Modification ........................................................118
4.2.3. Participants and Procedure .......................................................................121
4.2.4. Measures ..................................................................................................122
5.
Analysis..............................................................................................................130
5.1. Sample Characteristics........................................................................................130
5.2. Preliminary Analysis ..........................................................................................134
5.2.1. Manipulation Check .................................................................................134
5.2.2. Unidimensionality and Reliabilities .........................................................140
5.3. Part 1 Results: Determinants of Customer Membership Identity Salience in a
Customer Loyalty Program Environment ...........................................................142
5.3.1. Design ......................................................................................................142
5.3.2. Results ......................................................................................................144
x
5.4. Part 2 Results: Model of Customer Loyalty Program: Building Customer-Retailer
Relationships.......................................................................................................150
5.4.1. Measurement Model Assessment ............................................................151
5.4.2. Structural Model ......................................................................................162
6.
Discussion and Conclusions ..............................................................................172
6.1. Overview.............................................................................................................172
6.2. Discussion ...........................................................................................................174
6.2.1. Part 1 ........................................................................................................174
6.2.2. Part 2 ........................................................................................................182
6.3. Implications ........................................................................................................186
6.3.1. Theoretical Implications ..........................................................................186
6.3.2. Managerial Implications ..........................................................................190
6.4. Limitations ..........................................................................................................192
6.5. Future Research ..................................................................................................194
References ........................................................................................................................197
Appendices
Appendix A: Pretest 1 – A List of 40 Companies ...................................................217
Appendix B: Pretest 1 – Loyalty Program Reward Stimuli .....................................219
Appendix C: Pretest 1 – Scales of Value-Expressive and Utilitarian Functions .....223
Appendix D: Pretest 1 – Web-base Survey for Reward Stimuli Selection ..............225
Appendix E: Pretest 1 – Selected Loyalty Program Reward Stimuli ......................228
Appendix F: Pretest 2 – Rating Scales for Value-Expressive/Utilitarian Identity Goal
Prime ........................................................................................................................230
Appendix G: Pretest 2 – Example of Cognitive Thought Listing ............................233
Appendix H: Pretest 2 – Procedure ..........................................................................235
Appendix I: Pretest 2 – Cognitive Thoughts Analysis.............................................239
Appendix J: Pilot Test Procedure ............................................................................242
Appendix K: Main Test – Invitation Email .............................................................251
Appendix L: Main Test – Experimental Stimuli......................................................253
Appendix M: Main Test – Procedure.......................................................................261
Appendix N: Main Test Questionnaire ....................................................................287
Appendix O: Results of Non-Response Bias Test ...................................................295
Appendix P: Data Screening for Normality Test .....................................................297
Appendix Q: Human Subject Exemption Approval Forms .....................................299
xi
LIST OF TABLES
Table
Page
2.1. Overview of studies on customer loyalty programs ...................................................34
3.1. Loyalty program rewards of U.S. fashion retailers .....................................................69
3.2. Ratings of loyalty program reward items....................................................................73
3.3. Favorability of reward item stimuli ............................................................................75
3.4. Four experimental conditions of Pretest 2 ..................................................................77
3.5. Value-expressive thoughts as a function of identity goal primed and the function of
rewards .......................................................................................................................81
3.6. Utilitarian thoughts as a function of identity goal primed and the function of rewards81
3.7. Perceived loyalty program distinctiveness by loyalty program distinctiveness
manipulation ..............................................................................................................89
3.8. Perceived loyalty program distinctiveness by gender ................................................90
3.9. Four conditions of identity relevance .........................................................................92
3.10. Comparison of webpage sequences used in Pilot test...............................................96
3.11. Participants in the experimental conditions ............................................................104
3.12. Demographic characteristics of participants ...........................................................106
3.13. Customer loyalty program usage for apparel shopping ..........................................107
xii
3.14. Reliabilities and unidimensionality checks .............................................................109
3.15. ANOVA results for the comparisons between female and male groups ................111
3.16. ANOVA Results for the loyalty program distinctiveness manipulation check ......112
3.17. Univariate analysis of variance results as a function of rewards and identity goal
prime ........................................................................................................................112
3. 18. ANOVA Results for the comparison between ‘identity priming before the
experiment’ group and ‘identity priming during the experiment’ group .................116
4.1. Experimental treatment sets by distinctiveness, identity goals and the functions of
reward items ............................................................................................................120
5.1. Participants in the experimental conditions .............................................................131
5.2. Sample profiles: Demographic characteristics..........................................................133
5.3. Sample profile: Customer loyalty program usage for apparel shopping .................134
5.4. Results of a series of t-tests for the loyalty program distinctiveness manipulation
check ........................................................................................................................136
5.5. T-test results for the identity relevance manipulation check ....................................137
5.6. T-test results for the identity goal prime manipulation check ..................................138
5.7. T-test results for the consumer identity goal manipulation check ............................139
5.8. Reliabilities and unidimensionality checks...............................................................141
5.9. Hypotheses for Part 1 ................................................................................................143
5.10. Analysis of covariance for Part 1 ............................................................................145
xiii
5.11 Means for experimental conditions in Part 1 ...........................................................145
5.12. Tukey Post-hoc comparisons: Mean differences ...................................................148
5.13. Hypotheses for Part 2 ..............................................................................................150
5.14. Final measurement items from the measurement model ........................................155
5.15. Results of the measurement model across the calibration and validation samples.157
5.16. Discriminant validity and convergent validity – AVE ...........................................160
5.17. Discriminant validity – Confidence Interval ..........................................................161
5.18. Unidimensionality and construct reliabilities of the measurement model ..............162
5.19. Results from the SEM for testing Hypothesis 6 – Hypothesis 11...........................168
5.20. Decomposition of direct, indirect, and total effects for the proposed model ..........171
6.1. Summary of results of hypothesis testing ................................................................185
xiv
LIST OF FIGURES
Figure
Page
2.1. Bhattachayra and Sen’s conceptual framework of consumer-company identification44
2.2. A proposed model of a customer loyalty program.....................................................52
2.3. Part 1 of the proposed model: Hypothesis 1 – Hypothesis 5 .....................................59
2.4. Part 2 of the proposed model: Hypothesis 6 – Hypothesis 11 ...................................63
5.1. Final measurement model ........................................................................................158
5.2. A structural equation model for Part 2 .....................................................................164
5.3. Unstandardized parameter estimates of the proposed model ...................................169
5.4. Standardized parameter estimates of the proposed model .......................................170
xv
CHAPTER 1
INTRODUCTION
1.1. Overview
Relationship marketing (RM) has experienced prominent growth both in
businesses and as a focus of academic research (e.g., Gruen, Summers, & Acito, 2000;
Palmatier, Dant, Grewal, & Evans, 2006; Srinivasan & Moorman, 2005). Relationship
marketing refers to “all marketing activities directed towards establishing, developing,
and maintaining successful relational exchanges” (Morgan & Hunt, 1994, p. 22).
Customer relationship marketing builds on the premise that effective marketing
exchanges between the customer and the business are not discrete, ‘transactional’ trades,
but rather are long in duration and reflect a continuing relationship-development process
(Dwyer, Schurr, & Oh, 1987). Customer relationship marketing and related applications
have gained increasing attention in recent years and much research on relationship
marketing has been found, ranging from memberships between marketing channel
members to those between customers and firms.
Customer loyalty program marketing is a customer relationship marketing device
that has drawn significant research attention. A customer loyalty program is defined as a
1
membership-based marketing activity developed by marketers “to enhance the building
of relational attitudes and behaviors among customers toward a particular brand or a
firm” (Lacey, Suh, & Morgain, 2007, p. 243). Customer loyalty programs, also known as
reward programs or frequency programs exist in various types, such as redeemable points
for discounts or prizes, cash rewards, free products/services, or free points from another
firm in a different category.
The growing interest in customer loyalty program marketing is visible in
businesses as well as with consumers. According to Jupiter Research, in 2003, U.S.
companies spent more than $1.2 billion on customer loyalty programs (as cited in
Knowledge@wharton, 2006). Jupiter Research also reported that approximately twothirds of online retailers were expected to operate formal customer loyalty programs by
2007, up from 24 percent of online retailers in 2006 (as cited in About.com, 2000).
Recently, Colloguy reported that the number of U.S. loyalty programs reached 1.3 billion
as of the 4th quarter in 2006, which represents more than four times the U.S. population
(as cited in DMReview.com, 2007). Additionally, about 80% of U.S. households have at
least one loyalty card and about one third of the shopping population possesses two or
more loyalty cards (Jupiter Research cited in Young & Stepanek, 2003).
Marketing research on customer loyalty programs proposes that effective
implementation of customer loyalty programs generates economic benefits as well as
non-economic benefits for both consumers and marketers. For marketers, customer
loyalty programs enable companies to differentiate themselves from and succeed over
competitors by (1) retaining current customers, (2) preserving profit, (3) encouraging
customers to make more purchases, (4) bringing in new customers by referral, (5)
2
increasing potential value and satisfaction of extant customers, and (6) augmenting
customer loyalty toward the company (Dowling & Uncles, 1997; O’Brien & Jones, 1995;
Reichheld, 1993). For consumers, customer loyalty programs can provide such benefits
as risk reduction in product and store choices, and increases in value perception,
satisfaction, commitment, trust, reciprocity, and so on (e.g., Kumar & Shah, 2004).
Being interested in non-economic benefits of loyalty programs in particular, this
dissertation asserts that, in order to succeed, companies need to manage customer loyalty
programs from an identity marketing perspective. By incorporating a consumer’s identity
into the process of promotion, sales, and distribution of a product or service, identity
marketing can transform a retailer’s products or brands from a mere collection of
products into self-embodied lifestyle symbols (Reed & Bolton, 2005). Indeed, identity
marketing allows companies to build stronger and more long-lasting customer
relationships (Reed & Bolton, 2005). Thus, this dissertation proposes that, integrating a
customer’s identity into the loyalty program offering enables a retailer to accomplish its
objectives of building, cultivating and enhancing a loyal customer-retailer relationship.
Of specific focus in this study is identity salience, a social psychological factor
that may serve as a foundation for the relationship-building efforts of a retail loyalty
program. Identity salience is defined as “a state characterized by heightened sensitivity
to identity-relevant stimuli” (Forehand, Deshpandé, & Reed, 2002, p. 1086). Identity
research in the consumer psychology and marketing areas has unanimously shown that,
in exchange situations where (1) one party to the exchange is an individual and (2) the
individual receives substantial social benefits besides economic benefits from the
relational exchange, identity salience plays a pivotal role in relationship development and
3
relationship marketing success (Bhattacharya & Sen, 2003; Arnett, German, & Hunt,
2003; Reed & Forehand, 2007). Arnett, German and Hunt (2003, p.89) argued that “the
importance of particular relationship characteristics in producing relationship marketing
success may be more context specific than heretofore thought.” Hence, this study
investigates how identity salience driven by a customer loyalty program will affect
consumer responses to the customer loyalty program and the retailer.
Two characteristics of a customer loyalty program of significance in this study are
(1) loyalty program distinctiveness and (2) identity relevance. Loyalty program
distinctiveness refers to the uniqueness and inimitability of a customer loyalty program
offered by a retailer. Identity relevance is defined as the congruency between the
functions of rewards offered to the consumer and the consumer’s identity goal (needs) in
the loyalty program context (Reed & Forehand, 2007). Based on social identity theory,
distinctiveness theory, and the functional theory of attitude (Bhattacharya & Sen, 2003;
Reed & Forehand, 2007; Tajfel & Turner, 1985), this study proposes that when a
customer loyalty program is perceived to be unique and distinct relative to others, and
when its rewards align with the consumer’s identity, the consumer’s perception of his/her
identity as a member of the loyalty program will be heightened. Then the evoked
membership identity will lead the consumer to exhibit responses to the customer loyalty
program and the company that are consistent with the goals of the program, building and
cultivating a loyal customer-company relationship.
Additionally, in an effort to reconcile inconsistent views on the effectiveness of
customer loyalty programs, this dissertation addresses perceived trustworthiness of
customer loyalty programs as a factor that may affect customer-retailer relationship
4
development via a loyalty program. Given the pervasiveness of customer loyalty
programs across a wide variety of business sectors, it is possible that consumers do not
believe that companies offer customer loyalty programs to reward customers for their
loyal behaviors. Therefore, consumers with different beliefs about the intent of rewards
provided via customer loyalty programs may evaluate customer loyalty programs
differently. When consumers encounter a marketing strategy in the marketplace, they
tend to identity the motives behind the persuasion and apply those beliefs to their
responses to the persuasion (Friestad & Wright, 1994). Thus, depending on what they
think of the motives of customer loyalty programs, their responses to the loyalty program
may vary. In experimental research investigating the effect of perceived reward-giver
intention on response to rewards, Forehand (2000) showed that consumers who believe
that the promotion option offered by the marketer is to woo purchases exhibited lower
purchase intentions and brand attitudes for promoted products after promotion, whereas
consumers who believe that the marketer uses the promotion option to distribute reward
showed no attitude change. This dissertation, therefore, proposes that a consumer’s
belief (trustworthiness) about the intent of customer loyalty program awards may
moderate the causal effect of the customer loyalty program on his/her response to the
loyalty program and the retailer.
1.2. Problem Statement
Despite the considerable attention given to customer loyalty programs from
practitioners as well as researchers, academic research on loyalty programs is still at the
5
initial stage (Dowling & Uncles, 1997; Yi & Jeon, 2003). Largely, extant research
streams on loyalty programs can be grouped into two areas: (1) analytic modeling studies
that assess the impact of loyalty programs using different analytic structures (e.g., Kim,
Shi, & Srinivasan, 2001; Kivetz, 2003; Zhang, Krishna, & Dhar, 2000) and (2) empirical
marketing research that examines consumers’ evaluations of and/or judgments about
rewards offered from loyalty programs across different retail and packaged-goods
markets (e.g., Keh & Lee, 2006; Kivetz & Simonson, 2002a, 2003; Roehm, Pullins, &
Roehm, 2002; Yi & Jeon, 2003). Recently, customer loyalty program research from a
consumer behavior perspective has begun to examine psychological mechanisms
underlying consumer responses to customer loyalty programs (Dholakia, 2006; Kivetz,
2005; Kivetz & Simonson, 2002b; Kivetz, Urminsky, & Zheng, 2006).
Moreover, the views on the profitability of customer loyalty programs that are
observed in the studies are inconsistent. Some researchers showed positive consequences
of loyalty programs (Bell & Lal, 2003; Mägi, 2003) while others found customer loyalty
programs were not effective (De Wulf, Odekerken-Schröder, & Iacobucci, 2001; Sharp &
Sharp, 1997). These findings may indicate that the effectiveness of customer loyalty
programs differs depending on various issues such as contextual and personal factors.
Although most research and practice assumes that customer loyalty programs are
part of the relationship marketing effort, little research has approached customer loyalty
programs from a relationship-building standpoint. Since a relationship cannot be
imposed unilaterally and implies an enduring process that goes beyond a discrete and
instant exchange, it probably is taken for granted by marketers that customer loyalty
6
programs show consumers that “we recognize and value your patronage” (Kumar & Shah,
2004, p. 328).
However, creating an enduring relationship may not be possible to achieve by
simply returning monetary value to consumers. Rather, because consumers often receive
both economic and non-economic benefits from marketing exchanges, customer loyalty
programs that stimulate consumers’ feelings of belonging and being treated specially may
be more successful in creating an enduring relationship. Yet, to date, a detailed
understanding of such programs is missing: that of socio- and/or psychological factors a
customer loyalty program can use to help a customer to feel a sense of belongingness to
the loyalty program and subsequently build a meaningful relationship with a company.
1.3. Purpose of the Study
The primary objective of this study is to develop a model of customer loyalty
program success that builds a strong and positive customer-retailer relationship. To do so,
this study examines socio-psychological factors that are expected to influence consumer
perceptions of a customer loyalty program and a retailer offering the loyalty program, in
the case where the retailer’s loyalty program aims at boosting the consumer’s sense of
belonging to the loyalty program membership. Focusing on two characteristics of a
customer loyalty program, this study is intended to develop understanding of loyalty
program characteristics that affect consumer membership identity, and thus, their
attitudinal and relational responses to the loyalty program. Two important characteristics
7
in association with a loyalty program include loyalty program distinctiveness and identity
relevance.
Social identity theory and Bhattacharya and Sen’s (2003) consumer-company
identification model are used as basic theoretical/conceptual frameworks in this study.
Based on the literature review and the theoretical underpinnings that will be presented in
Chapter 2, this study aims to investigate:
(1) the effects of two contextual factors of a customer loyalty program (i.e.,
loyalty program distinctiveness and identity relevance) on consumer perception
of identity salience as a member of the customer loyalty program
(2) the effects of consumer perception of identity salience as a member of the
customer loyalty program on their evaluative (attitude towards the loyalty
program and the focal retailer) and relational (customer-retailer identification
and satisfaction) responses
(3) the moderating role of perceived trustworthiness of customer loyalty programs
on the relationship between the two contextual factors of the customer loyalty
program (loyalty program distinctiveness and identity relevance) and consumer
perception of identity salience.
1.4. Significance of the Study
Despite the considerable attention given to customer loyalty programs from
researchers and practitioners and popularity of them among consumers and practitioners,
8
customer loyalty programs have not achieved their desired goals in many companies yet.
For example, according to Jupiter research, U.S. companies spent more than $1.2 billion
on customer loyalty programs in 2003 and their volumes were expected to grow. And,
more than 75 percent of consumers have more than one loyalty card and the number of
consumers with two or more is estimated to be one-third of the shopping population in
the U.S. (as cited in Knowledge@wharton, 2006). Unfortunately, however, Colloquy
reported that only 22 percent of consumers who shopped online indicated the loyalty
program as a factor driving their purchase decision and about 47 percent of consumers
with loyalty program memberships showed no interest in their loyalty programs (as cited
in Oracle, 2006). Also, without an identified company logo, customers were unable to
identify differences between loyalty programs (as cited in Oracle, 2006). Thus, it seems
that researchers and marketers still have a number of unanswered questions as to how to
make customer loyalty programs work effectively. This study will help them understand
loyalty programs better by providing answers to their questions and suggesting an ideal
customer loyalty program model.
Specifically, this study will contribute to the literature on customer loyalty
programs, relational marketing, consumer identity and apparel retailing areas. First,
considering the fluctuating performance of customer loyalty programs, this study
develops and tests a comprehensive model of a customer loyalty program that links
customer identity with program identity to influence success of the customer-company
relationship. In doing so, this study will contribute to the growth of the literature on
customer loyalty program (a.k.a. reward program) marketing and relationship marketing
by proffering the notion of consumer identity salience and consumer-retailer
9
identification as the primary underlying mechanisms for building strong, committed, and
meaningful relationships between retailers and loyal customers. In addition, the
conceptualization of loyalty program marketing in conjunction with consumer
dispositional factors such as consumer identity and perceived trustworthiness will shed
light on the complex and conflicting findings regarding the effectiveness of customer
loyalty programs.
This examination of customer loyalty program marketing in association with
relationship marketing will enrich the literature regarding both customer loyalty programs
and relational marketing. Particularly, the significant changes faced by the retail industry
such as non-store retail channel growth and multi-channel retailing innovation, have
provided customers with more opportunities for easily switching brands or stores.
Building a strong and meaningful relationship with customers seems to be a critical
imperative for retail businesses. To build such relationships, a better understanding of
relationship marketing is needed. In addition, despite the considerable popularity of this
marketing strategy in real apparel retail settings, customer loyalty program marketing has
been largely unexplored in the literature of apparel retailing. This study may contribute
to apparel retailing research by introducing this up-to-date topic.
This study will also present useful insights for retail marketers regarding how they
can tailor customer loyalty programs to influence consumer evaluations of the program
and identification with the retailer offering the program. By identifying conditions in
which a customer loyalty program stimulates consumer identity, this study will
demonstrate the effect that the exclusivity and the incorporation of consumer identity into
10
program offerings will have on determining how consumers willingly partake in building
and cultivating a relationship with the retailer.
Finally, this dissertation will provide retail marketers with an understanding of
how consumers process customer loyalty program offerings in association with their
beliefs about customer loyalty program marketing, namely their perceptions of the
trustworthiness of the program. By delineating an individual factor that may hinder or
support marketers’ efforts to reward their valued customers through customer loyalty
programs, this study will show that retail marketers must be careful in planning and
communicating their true objectives for customer loyalty programs.
1.5. Definitions of Terms
Terms used in this study are defined as follows.
Attitude: an individual’s favorable or unfavorable evaluation of an object, person, issue,
or behavior (Fishbein & Ajzen, 1975).
Accessibility: the degree to which a certain identity relating to a social group is ready to
be activated in one’s self scheme (representation) (Reed & Forehand, 2007)
Commitment: “an enduring desire to maintain a valued relationship” (Moorman, Zaltman,
& Deshpandé, 1992, p.316). In this study, it is defined as the strength of an
individual’s involvement in and emotional attachment to a retail company that
carries a loyalty program (Allen & Meyer, 1996; Bagozzi & Dholakia, 2006;
Mowday, Porter, & Steers, 1982).
11
Customer Relationship Management (CRM): “the strategic process of selecting the
customers a firm can most profitably serve and of shaping the interactions
between a company and these customers with the goal of optimizing the current
and future value of the customers for the company” (Kumar & Reinartz, 2006,
p.6)
Customer loyalty program: “coordinated, membership-based marketing activities
designed to enhance the building of relational attitudes and behaviors among
customers toward a particular brand or a firm” (Lacey et al., 2007, p. 243)
Depersonalization: a process in which an individual embodies his/her identity in the ingroup’s values or identity
Distinctiveness: the extent to which something is unique or unusual
Fit: the congruence between the stored perceptions of a social group’s characteristics and
one’s perceptions of his/her given situation (Reed & Forehand, 2007)
Function: Of significance is the function of an object (a reward item) in this study. The
function of a reward item is defined as the relative purpose of the reward item.
The two functions of interest in this study are utilitarian function and valueexpressive function. A reward item with a value-expressive function allows the
consumer to express his or her self concept, self-image, and/or relationship
with others, while an item with a utilitarian function enables the consumer to
receive maximum benefits while incurring minimum costs or more rewards
than punishments (Shavitt, 1990).
12
Identity: a sense of who one is and what one is (Kleine, Kleine, & Kerman, 1993). This
study defines consumer identity as a mental representation (i.e., a self-image)
that a consumer may hold about his/her self (Reed, Aquino, & Levy, 2007).
Identity goal: the needs or motives that one has relative to defining who or what one is.
This dissertation focuses on two identity goals in association with the
consumer’s utilitarian identity and value-expressive identity.
Identity salience: the extent to which a social identity is an activated component of a
consumer’s self-concept (Reed, 2002). In this study, identity salience is
defined as the extent that a consumer is prompted to categorize himself/herself
as a member of a specific customer loyalty program (identity-oriented criteria).
Identification: “the perception of oneness with or belongingness to a group, involving
direct or vicarious experience of its successes and failures” (Ashforth & Mael,
1989, p.34). Customer-retailer identification in particular refers to the degree
to which the consumer sees his/her own self-image as overlapping with the
retailer’s image (Bagozzi & Dholakia, 2006).
Loyalty: “the relationship between the relative attitude toward an entity
(brand/service/store/vendor) and patronage behavior” (Dick & Basu, 1994,
p.100). Store loyalty is defined as a consequence of the store knowledge a
consumer has stored in his/her memory (Keller, 1993).
Preferential treatment: “the practice of giving selective customers’ elevated social status
recognition and/or additional or enhanced products and services above and
beyond standard firm value propositions and customer service practice” (Lacey
et al., 2007, p. 242-243)
13
Relationship: “one or more exchanges between a consumer and a retailer that are
perceived by the consumer as being interrelated to past and potential future
exchanges with the retailer” (Odekerken-Schröder, De Wulf, & Schumacher,
2003, p.178)
Relationship marketing (RM): all activities that are directed toward attracting,
establishing, developing, and enhancing successful relational exchanges with
customers (Berry, 1993; Berry & Parasuraman, 1991; Morgan & Hunt, 1994)
Relevance: “the degree to which the social identity is congruent with the domain of
interest” (Reed & Forehand, 2007, p.14)
Satisfaction: “the summary psychological state resulting when the emotion surrounding
disconfirmed expectations is coupled with a consumer’s prior feelings about the
consumer experience.” (Oliver, 1997, p.28). In this study, satisfaction is
defined as one’s contentment with respect to his/her experiences with a
customer loyalty program.
Symbolic relevance: the extent to which value-expressive attributes of a marketing tool
matches a consumer’s self-concept (Reed & Forehand, 2007)
Social group: a set of individuals who hold a common social value among members of
the same social category (Tajfel & Turner, 1985)
Social identity: an individual’s knowledge that he or she belongs to a group or category
in society together with the value and emotional significance attached to that
group or category (Hogg & Abrams, 1988; Tajfel, 1981)
Social self-scheme: the sum total of an individual’s social identities (Forehand et al.,
2002)
14
Trust: “a willingness to rely on an exchange partner in whom one has confidence”
(Moorman et al., 1992, p.315); “existing when one party has confidence in the
exchange partner’s reliability and integrity” from evaluative and cognitive
standpoints (Morgan & Hunt, 1994, p.23). In this dissertation, trust is defined
as the belief that a consumer holds with respect to customer loyalty program
marketing.
15
CHAPTER 2
LITERATURE REVIEW
2.1. Overview
This chapter consists of four substantive sections that build the theoretical and
conceptual foundations for this dissertation. The first section offers a literature review of
relationship marketing, including a discussion of the benefits and drawbacks of
relationship marketing; limitations of the extant literature on relationship marketing are
discussed in this section. In the second section, an extensive overview of customer
loyalty program marketing is presented in regards to practical and theoretical
perspectives. Limitations of existing research on customer loyalty program marketing are
also addressed in this section. The third section discusses social identity theory (Tajfel,
1981) and its applications in marketing and consumer research and explains how social
identity theory is used as a framework for this dissertation. The last section develops
research hypotheses which together form a customer loyalty program model that fosters a
successful relationship between the customer and the retailer in an apparel retailing
environment.
16
2.2. Relationship Marketing
2.2.1. Relationship Marketing Overview
Relationship marketing is defined as all marketing activities that aim for attracting,
establishing, developing, and maintaining successful relational exchanges between
marketing entities (Morgan & Hunt, 1994). Marketing researchers view a relationship as
an exchange where all corresponding parties engage equally in the relationship, and
consumer researchers view a relationship as a psychological link that connects a
consumer with a company, a brand, or an employee of a sales area (Anderson & Narus,
1991). From the consumer-to-business marketing context, relationship marketing is
regarded as an ongoing process in which both the consumer and the company partake in
cooperative and collaborative activities to build and improve a relationship between the
two (e.g., Noble & Philips, 2004; Parvatiyar & Sheth, 2000).
Despite various definitions of relationship marketing by different researchers (e.g.,
Berry, 1993; Berry & Parasuraman, 1991; Morgan & Hunt, 1994; Sheth & Parvatiyar,
1995), much research has agreed that the basic tenet of relationship marketing is to
generate mutual benefits for parties involved in the relationship through the dyadic
exchanges (Anderson & Narus, 1991; Sheth & Parvatiyar, 1995). For example, Sheth
and Parvatiyar (1995) stated that a relationship is achieved and meaningful when both
consumers and the company exhibit cooperative market behaviors continuously. As such,
the basic purpose of relationship marketing lies in the communal relationship benefits
17
derived from an ongoing exchange process between two parties (Dwyer et al., 1987;
Peterson, 1995).
Considerable attention to relationship marketing is evident not only in academic
research but also in industry areas (Bolton, Lemon, & Verhoef, 2004; Gupta & Lehmann,
2003; Hogan, Lemon, & Rust, 2002). In today’s rapidly changing and ever-competitive
market places, abundant marketing strategies for success (e.g., customer equity, customer
asset, Bolton et al., 2004) have been proposed and performed, and of those, relationship
marketing has experienced explosive growth in the past decade (Srinivasan & Moorman,
2005). Integrating existing customers into an interactive value-generating process, which
is the core idea of this new marketing concept, represents today’s marketing philosophy,
namely consumer-centered marketing replacing marketer-centered marketing and longterm relationship marketing supplanting transaction-focused marketing.
Relational exchange is different from transactional exchange. Relationship
marketing focuses on: interdependent buyer-seller connections, enhancing value for
existing customers, exchange as a continuous process, and individualized dialogue in
exchange. On the contrary, transactional marketing focuses on the independence of the
buyer and seller, where the transaction is a discreet and episodic event, and the goal of
the seller is simply an aggregated customer base (Dwyer et al., 1987; Jüttner & Wehrli,
1994). In recent years, marketing research attention has increasingly shifted from how to
attract discrete transactional customers to how to retain intimate customers and develop
long-lasting relationships with them (Johnson & Selnes, 2004) and has also examined the
competitive benefits of relationship marketing.
18
2.2.2. Benefits of Relationship Marketing
Relationship marketing builds on relational exchanges between or among
stakeholders who seek benefits from the exchange. A number of advantages that strong
relational exchanges deliver in relationship marketing have been examined in those
studies focusing on benefits for the business (cf. Payne, Holt, & Frow, 2001; Rosenberg
& Czepiel, 1983; Webster, 1994) and for the customer (cf. Gwinner, Gremler, & Bitner,
1998; Shani & Chalasani, 1992). The benefits can be grouped into three streams.
The first stream of business benefits from strong relationships mainly concerns
attitudinal outcomes such as maintaining highly valuable or loyal customers. By
developing and maintaining strong relationships with customers, the company may easily
retain customers who are loyal or committed to the company. Loyal or committed
customers are those who are likely to be less price-sensitive, more willing to spread
positive words to others (WOM), more resistant to switching, and more committed to
stay in the relationship (Colgate & Danaher, 2000; Dwyer et al., 1987; Fullerton, 2005;
Gruen et al., 2000; Gustafsson, Johnson, & Roos, 2005).
The second stream of business benefits relates to behavioral outcomes from the
relational exchange such as share of wallet, purchase frequency, customer life-time
duration which refers to the length of consumer transactions with the company, and upand cross-sales (De Wulf et al., 2001; Meyer-Waarden, 2007; Ramaseshan, Bejou, Jain,
Mason, & Pancras, 2006; Witz, Mattila, & Lwin, 2007).
Lastly, business can accomplish relational outcomes, namely membership
(citizenship) behaviors. Much research on consumer-business relationship marketing has
19
observed membership behaviors such as participation in the relationship membership,
coproduction, members’ identification with the company, and donations to the
organization (Algesheimer, Dholakia, & Herrman, 2005; Arnett et al., 2003;
Bhattacharya, Rao, & Glynn, 1995; Dholakia, Bagozzi, & Pearo, 2004; Gruen et al.,
2000). Additionally, evidence of social- or relational benefits for the organization from
the exchange between members has been found in various exchange contexts such as
brand communities (European car clubs in Algesheimer et al., 2005, virtual community
clubs such as website bulletin boards, Usenet newsgroups in Dholakia et al., 2004), nonprofit marketing (Alumni-University, Arnett et al., 2003), and art museum membership
(Bhattacharya et al., 1995).
Extant relationship marketing research also has discussed diverse consumer
benefits including economic and non-economic benefits derived from exchange
marketing activities (cf. Gwinner et al., 1998; Hennig-Thurau, Gwinner, & Gremler,
2002; Shani & Chalasani, 1992). First, bearing in mind a store/brand with which s/he has
a strong relationship, a consumer can reduce possible uncertainty of shopping choices
regarding products and/or places. Such efficient economic exchanges, as a result, benefit
consumers of the relationship. Additional non-economic and/or social benefits concern
consumers’ interactive, individualized, and value-added contacts with the company.
Non-economic benefits from a relationship exchange include psychological benefits such
as satisfaction (Arnett et al., 2003; Colgate & Danaher, 2000; Hennig-Thurau et al., 2002)
and self-prestige (Arnett et al., 2003), and social benefits such as recognition (Gruen et al.,
2000), customization (Gwinner et al., 1998) and mutual partnership (Gwinner et al.,
1998; Liljander & Roos, 2002; Shani & Chalasani, 1992). In particular, Gwinner et al.
20
(1998) pointed out that when consumers develop a relationship with a company, they
perceive three heightened relational benefits (confidence, social and special treatment
benefits) by maintaining that relationship. These three benefits have different effects on
loyalty in that confidence and social benefits influence customer loyalty directly as well
as indirectly through satisfaction and commitment, while special treatment benefits only
indirectly influence customer loyalty through commitment (Hennig-Thurau et al., 2002).
2.2.3. Drawbacks of Relationship Marketing
While most research and practice is based on the notion that building strong
relationships yields abundant advantages, and implementing relationship marketing is
inevitable, that seems not always to be true. Indeed, some relationship marketing efforts
were found to be disappointing in their effectiveness (Colgate & Danaher, 2000).
Research has pointed out that relationship marketing may have a negative impact on
performance in certain situations (De Wulf et al., 2001; Hibbard, Brunel, Dant, &
Iacobucci, 2001; Srinivasan & Mooreman, 2005). For example, recent marketers have
questioned the effects of Customer Relationship Management (CRM), a relationship
marketing strategy that aims to generate “the outcome of the continuing evolution and
integration of marketing ideas and newly available data, technologies and organizations
forms” (Boulding, Staelin, Ehret, & Johnston, 2005, p. 156). According to a marketing
report (Gartner Group, 2003), most CRM efforts failed to deliver anticipated return on
investment (ROI).
21
Skeptical thoughts about relationship marketing are found in relationship
marketing research (Colgate & Danaher, 2000; Fournier, Dobscha, & Mick, 1998;
O’Malley & Prothero, 2004). In an empirical study of personal banking services, Colgate
and Danaher (2000) showed that the negative effects of an unsuccessful implementation
of a relationship marketing strategy exceed the positive effects of a strategy successfully
implemented. O’Malley and Prothero (2004) further indicate that, if consumers regard a
relational effort as one encouraging consumer consumption, the effort leads consumers to
be more distrustful of the company.
Taken together, mixed findings about the effectiveness of relationship marketing
efforts imply that effectiveness may vary depending on conditions such as to whom, how
to, what to, and where to apply relationship marketing. Although the prime value of
relationship marketing is to create ‘win-win’ outcomes for stakeholders (Kotler, 1991),
communicating the value of relationship marketing is challenging. As O’Malley and
Prothero (2004, p. 1293) noted, “… delivery on such promises is difficult, particularly in
an environment where shareholder demands and profit maximization drive business.” In
order to accomplish the real value of relationship marketing, further investigation into
relationship marketing appears to be warranted.
2.2.4. Limitations in Relationship Marketing Literature
Vigorous research efforts into relationship marketing have been made across
diverse relationship settings. In its infancy, the primary interest of the research was to
see if relationship marketing really was profitable. At that point, the advent of a range of
22
relationship marketing strategies encouraged researchers to identify which marketing
strategies were more effective in building anticipated relationships. As Colgate and
Danaher (2000) described, the main interests of extant relationship marketing research
fell into two areas: (1) which strategy is appropriate and (2) how the strategy should be
implemented to achieve marketing objectives. However, these views focused only on
marketers’ direct economic-related outcomes and subsequently ignored consumers’ roles
in relational exchanges.
Since relationship marketing builds on mutual exchanges between stakeholders,
consumers’ roles in the exchange process are equally important. However, relatively few
studies examining consumer behaviors in relationship marketing have been found. More
attention to consumer behaviors in consumer relationship marketing is a necessity,
especially for consumer product markets (Sheth & Parvatiyar, 1995).
In particular, a key need in customer relationship marketing is to understand how
the dynamics of relationships and the meanings associated with exchange relationships
influence consumer behaviors. Bagozzi (1995) pointed out that most consumer research
has paid attention to restricted economic or utilitarian exchange specifically and
neglected other basic fundamentals constituting a relationship such as social exchange,
social influence, interpersonal emotions, and reciprocity (Bagozzi, 1995; Sheth &
Parvatiyar, 1995). While the significance of socio-psychological approaches in
comprehending consumer responses to relationship marketing efforts has been commonly
discussed in prior research (Arnett et al., 2003; De Wulf et al., 2001; Wathne, Biong, &
Heide, 2001), very few empirical studies exist at present.
23
In addition, past research on relationship marketing has generally dealt with
limited relationship contexts, including grocery retailing (Meyer-Waarder, 2007;
Srinivasan & Moorman, 2005), financial and telecommunications’ services (Colgate &
Danaher, 2000; Gustafsson, et al., 2005; Wathne et al., 2001). Different tactics and
contexts of relationship marketing have different influences on consumers’ overall
perceptions of loyalty programs/rewards that businesses offer (Odekerken-Schröder et al.,
2003). Clearly more research is required to determine the effectiveness of relationship
marketing strategies in specific business-to-consumer relationship contexts.
In summary, a key need exists for further empirical investigation into the
effectiveness of relationship marketing strategies, especially to examine various exchange
contexts from a customer-centered perspective (Bonnemaizon, Cova, & Louyot, 2007;
Colgate & Danaher, 2000). One key context prevalent in the marketplace today is
customer loyalty programs.
2.3. Customer Loyalty Programs
2.3.1. Overview of Customer Loyalty Programs
A loyalty program is defined as a specific relationship marketing tool of a firm
that is designed to enhance the building of positive, long term relational attitudes and
behaviors among target customers (Lacey et al., 2007, p. 243). The goal is to build
loyalty in both attitude and purchase behavior (e.g., Kumar & Shah, 2004; Roehm et al.,
2002). The first loyalty programs, S&H Green Stamps and Betty Crocker points, were
24
introduced at the end of the 19th century and more recently a vigorous, modern movement
in loyalty program marketing emerged with the advent of American Airlines’
AAdvantage program in 1981 (FairIsacc, 2005). Loyalty program marketing has been
widely used by marketers in almost every business sector including travel (airlines, hotels
and resorts, rental car companies), retail (grocery, department stores, specialty stores),
restaurants, financial services (insurance, banks), entertainment (museum, gaming), the
Internet, and so on.
The popularity of customer loyalty program marketing has been escalating to a
great extent. According to a report by McKinsey (2000), as of 1999, almost half of the
top 10 retailers across seven sectors in the U.S. including grocery, mass merchandisers,
department stores, category killers, drugstores, apparel specialty stores, and gas retailers
were implementing customer loyalty programs. In particular, the department store sector
was the most active leader in loyalty program implementation followed by grocery and
gas retail sectors, which accounted for over 50% of customer loyalty program operation
in each sector. In a very recent marketing report, Colloguy (as cited in DMReview.com,
2007) reported that four business sectors (airlines, financial services, grocery, and
specialty retail) account for 57% of total loyalty program membership. Especially,
financial service loyalty programs, fostered by credit cards with rewards have gained 239
million members and have grown by 164% since 2000. This report also noted that the
number of U.S. loyalty programs reached 1.3 billion as of the 4th quarter of 2006, which
represents more than four times the U.S. population (as cited in DMReview.com, 2007).
Customer Loyalty Programs in Retailing.
The proliferation of loyalty programs is
evident in the retail industry where individual-level marketing is important for business
25
success (Deighton, 2005; Lewis, 1997). In today’s multi-channel retail environments
where consumers have a range of competitive alternatives for shopping, including a
growing number of Internet shopping options, customer loyalty programs have been
widely adopted by online, offline and multi-channel retailers to earn their customers’
loyalty. As of 2004, 494.5 million retail store credit cards were in circulation in the U.S.
(Franzier, Tenser, & Despres, 2006). According to a Jupiter Research study examining
loyalty programs of U.S. online retail businesses, about two-thirds of US online retailers
which had not run a loyalty program did plan to operate customer loyalty programs by
2007, representing 24% growth from 2005 (as cited in Internet research, 2005). Similar
to those provided by offline and multi-channel retailers, features of online retailers’
loyalty programs included regular promotions served by 77% of online retailers, premium
customer service by 60%, exclusive offers and events by 58%, and a toll free contact
number on all site pages by 56%. Some other features of loyalty programs broadly
operated by online retailers include fast shipping capacity, offered by 56%, personalized
offers on the site or via email by 50% and privacy and fraud protection programs by 50%.
(Internet retailer, 2005).
Customer loyalty programs are also popular with customers. In the U.S., about
80% of all households have at least one loyalty card, and about one-third of the shopping
population is estimated to have two or more loyalty cards (Jupiter Research as cited in
Young & Stepanek, 2003). Quadstone reported that the majority of loyalty card users
(66%) believe retailers serve high-quality value to customers through customer loyalty
programs in exchange for sharing customer information (as cited in About.com, 2001).
26
Although only about 15% of customers are loyal to a single retailer, this loyal shopper
segment generates between 55% and 70% of total retailer sales (CRM trends.com, n.d.).
Within the retail sector, customer loyalty programs are most often effective for
specialty retailers targeting high-income consumers (Franzier et al., 2006). Ninety-three
percent of shoppers with household incomes above $100,000 are enrolled in customer
loyalty programs as opposed to 58% of those with incomes below $50,000, according to
research firm WSL Strategic Retail. Taking an example of Passport Program of Chico’s,
an apparel specialty retailer, it was reported that 78% of sales are from loyalty program
members. Loyalty program members make higher average transaction ($110) and more
frequent store visits (6 times a year) than non-members who make one-time transactions
of $74 on average (Howell, 2006).
However, the rewards of a loyalty program do not always bring out the intended
consequence of building and/or strengthening a loyal relationship with valuable
customers. According to research conducted by McKinsey (2000), among shoppers who
are members of grocery loyalty programs, 48% reported they spend more than they
would otherwise, while only 18% of people who are members of apparel retail loyalty
programs reported higher purchases. Moreover, McKinsey’s research (2000) found that
80% of apparel shoppers and 70% of grocery purchasers always seek alternatives to their
current retailers of choice. Since a variety of marketing tools other than loyalty programs
use discounts and other promotional options, many consumers tend to seek the best offers
and are likely skeptical about those without clear value. In addition, consumers take the
benefits of the loyalty program without becoming more loyal. They join multiple loyalty
programs, compare the benefits, and select the stores with the best offers for a given
27
shopping trip. Thus, even when they do join retailer loyalty programs, their shopping
behaviors hardly change. Because consumers are becoming more selective than ever
before and most retailers operate loyalty programs, the implementation of a successful
loyalty program seems to be an ever-present challenge.
2.3.2. Reviews of Customer Loyalty Program Literature
The prime goal of loyalty programs is to build and sustain a loyal relationship
between customers and the company by providing rewards to certain customers for their
business with the company (Bolton, Kannan, & Bramlett, 2000; Lacey et al., 2007).
Loyalty programs have become an increasingly popular tool in customer relationship
marketing efforts, serving a critical role in developing relationships and retaining
customers (Kivetz & Simonson, 2002a, 2002b, 2003; Kumar & Shah, 2004; O’Brien &
Jones, 1995). The successful implementation of a customer loyalty program is necessary
to produce relationship marketing benefits for customers (e.g., economic, psychological,
and social benefits), as well as the focal company (e.g., customer attitudinal and
behavioral loyalty responses, membership behaviors). Therefore, customer loyalty
programs have become a major interest in academia and business. In accordance with
marketers’ great commitments to loyalty program management, researchers have studied
loyalty programs in different industry sectors, such as airlines (Kitvetz & Simonson,
2002a), restaurants (Jang & Mattila, 2005), consumer goods (Roehm et al., 2002),
financial services (Bolton et al., 2000), and retailing (De Wulf et al., 2001; Hart, Smith,
Sparks, & Tzokas, 1999) across different countries such as European (e.g., Gómez,
28
Arranz, & Cillàn, 2006; Meyer-Waarden & Benavernt, 2006), Asian (e.g., Keh & Lee,
2006, Wirtz et al., 2007), and US markets (e.g., Allaway, Gooner, Berkowtz, & Davis,
2006; Lacey et al., 2007). Table 2.1 summarizes extant literature on customer loyalty
programs.
The Effectiveness of Customer Loyalty Programs.
Similar to relationship marketing, empirical research examining customer loyalty
program performance has documented mixed findings. First, supporting the proposition
that loyalty programs generate stronger customer-company relationships, a number of
prior studies have observed the positive performance of customer loyalty programs
(Lacey et al., 2007; Leenheer, van Heerde, Bijmolt, & Smidts, 2007; Lewis, 2004;
Meyer-Waarden, 2007; Meyer-Waarden & Benavernt, 2006; Odekerken-Schröder et al.,
2003; Wirtz et al., 2007, Leenheer et al., 2007).
Previous research finding positive performance of customer loyalty programs can
be categorized with two outcome approaches: (1) economic advantages and (2) noneconomic advantages relating to psychological, sociological and relational outcomes. A
successful loyalty program generates economic return on investment that benefits both
the customer and the company. By taking the extra effort to enroll in a loyalty program,
consumers obtain access to special sales and promotions offered via the loyalty program.
Likewise, consumers’ continuing purchases with their loyalty program retailer assure
profit for the company. Such benefits allow the company to reinvest in their customer
loyalty program and thus strengthen and maintain a relationship with customers. More
specifically, successful loyalty programs provide economic benefits for consumers and
companies such as financial profit (Zhang et al., 2000), purchase frequency (De Wulf et
29
al., 2001) customer share of wallet (SOW) (Leenheer et al., 2007; Lewis, 2004; MeyerWaarden, 2007; Odekerken-Schröder et al., 2003, Wansink, 2003; Wirtz et al., 2007),
value perception (Yi & Jeon, 2003), and share of customer (Lacey et al., 2007).
Successful customer loyalty programs also can create performance exceeding
economic expectations. Prior research has identified a number of non-economic
advantages that customer loyalty programs generate, such as attitudinal loyalty
(Noordhoff, Pauwels, & Odekerken-Schröder, 2004; Wirtz et al., 2007; Yi & Jeon, 2003),
behavioral loyalty (Gómez et al., 2006; Noordhoff et al., 2004; Roehm et al., 2002),
satisfaction (Hennig-Thurau et al., 20002; Noordhoff et al., 2004; Odekerken-Schröder et
al., 2003), lower price sensitivity (Keh & Lee, 2006), lower switching intention (Gómez
et al., 2006), positive word of mouth (WOM) (Hennig-Thurau et al., 2002; Lacey et al.,
2007), and positive customer feedback (Lacey et al., 2007). Moreover, other desirable
outcomes that customer loyalty programs produce in relation to social and/or relational
performance are repatronage intention and decision (Bolton et al., 2000; Hennig-Thurau
et al., 2002), consumers’ perceived relationship quality (De Wulf et al., 2001), customer
lifetime duration (Meyer-Waarden, 2007), consumers’ relational association toward the
company (Peters, 2004), likelihood of joining the membership (Kivetz & Simonson,
2002a, 2002b), trust (Gómez et al., 2006), and commitment (Gómez et al., 2006; HennigThurau et al., 2002; Lacey et al., 2007; Wirtz et al., 2007) (see Table 2.1.).
However, customer loyalty programs do not always create anticipated outcomes.
There is research that shows null or negative performance of customer loyalty programs
(De Wulf et al., 2001; Kim et al., 2001; Lal & Bell, 2003; Mägi, 2003; O’Malley &
Prothero, 2004; Sharp & Sharp, 1997). For example, in a self-reported panel survey
30
study with 745 consumers of six grocery stores in Australia, Sharp and Sharp (1997)
failed to find evidence that loyalty program memberships have a positive impact on
repeat-purchase patterns including market share, repeat purchase and repeat frequency.
In another panel design study which examined frequent shopper programs in a U.S.
grocery store, Lal and Bell (2003) found that frequent shopper programs are not
profitable because the incremental sales caused by frequent shopper programs are
attributed to casual shoppers’ cherry picking. Their suggestion for grocery stores was
that heavy shoppers who are less price-sensitive shoppers and expectedly loyal customers
are attracted by value-added services, while casual shoppers (cherry pickers) are attracted
by promotions. Also in a study modeling the efficiency of reward programs varying by
reward types, reward value, and shopper segments, Kim et al. (2001) analytically
demonstrated that loyalty programs neither generate customer loyalty nor create
customers as an asset in a consumer-company relationship. They argue that current
loyalty programs in which consumers’ future purchases are required for rewards are
“shams” and produce only short-term revenue from customers.
2.3.3. Limitations in Customer Loyalty Program Literature
Although customer loyalty programs have been drawing considerable attention
among researchers, consumers and practitioners (Kumar & Shah, 2004), not much
empirical research on customer loyalty programs has been found. Additionally, while
most prior empirical research on customer loyalty programs has focused on consumers’
behavioral responses to loyalty programs putting emphasis on economic benefits (e.g.,
31
willingness to join the loyalty program, share-of-wallet, shopping frequency, etc) and
potential or actual impact on organizational profits (e.g., sales volume, share of visits,
customer defection rate), relatively less attention has been paid to non-economic
consumer behaviors in loyalty program marketing contexts such as consumers’ attitudinal
and evaluative reactions to them. In research conceptualizing profitable customer loyalty
for the 21st century, Kumar and Shah (2004) underscore the importance of attitudinal
aspects of customer loyalty in developing loyalty behaviors through which both company
and consumers achieve benefits. The researchers assert that, without understanding the
underlying attitudinal aspects of customer behaviors, it is almost impossible to build true
customer loyalty. Yet, up to present, not much research has investigated the impact of
customer loyalty programs with the focus on attitudinal and evaluative aspects of
consumer loyalty responses such as satisfaction, trust, commitment, word of mouth, and
repurchase intention (Gómez et al., 2006; Lacey et al., 2007).
In addition, notwithstanding the objective of a customer loyalty program that is to
cultivate a relationship between a customer and a company, very few studies have
explored consumers’ relational responses to customer loyalty programs (Lacey et al.,
2007; Odekerken-Schröder et al., 2003). The ramifications of consumer relational
response to a customer loyalty program and the focal company may be more substantial
than other marketing strategies. Also individual psychological and social factors have
significant impacts on facilitating and retaining relationships (Jüttner & Wehrli, 1994)
and may exceed the impact of economic factors (Blau, 1968). However, few have
attempted to investigate customer loyalty programs with relational and/or sociopsychological insights.
32
As discussed earlier, mixed findings on loyalty program effectiveness highlight
the need for additional examination. Some studies found positive effects of retail loyalty
programs on purchase behavior (Bell & Lal, 2003; Lewis, 2004; Taylor & Neslin, 2005)
while others provide evidence of loyalty programs that do not generate desired effects
(Magi, 2003; DeWulf et al., 2001; Sharp & Sharp, 1997).
This ambiguity regarding the effectiveness of customer loyalty programs is both
troubling and intriguing. That is, it is troubling because the increasing skepticism among
marketers suggests that extra scrutinization of current loyalty program marketing is
necessary to improve the effectiveness of their programs. On the other hand, the
inconsistency is intriguing for researchers because it implies that there are likely to be a
variety of unidentified factors that can explain the divergent effects of customer loyalty
programs. Therefore, further research on consumer evaluations of customer loyalty
programs, using a variety of theoretical and methodological approaches is needed.
Lastly, the effects of customer loyalty programs on customer loyalty may vary by
type of retail business or retail store (De Wulf et al., 2001; Rosenbaum, Ostrom, &
Kuntze, 2005). Although loyalty programs are prevalent in every industry sector, extant
studies have examined loyalty program marketing mainly in the grocery retail setting.
Furthermore, the inconsistent arguments on loyalty program performance that
relevant literature has illustrated calls researchers’ attention to a fundamental question:
Then, what should a true customer loyalty program be like to fulfill its essential
objectives, building, cultivating and enhancing customer loyalty in terms of behavioral,
attitudinal and relational loyalty?
33
Study
Study Context
Study Design
Dependent Variables
Marketing-centric
Kim et al.
Brand reward
(2002)
program
Analytic
modeling
Brand loyalty
MeyerWaarden
(2004)
GfK scanner
panel data, POS
data (N = 5,476)
Market share, repeat
purchase rate, basket,
frequency, sole buyer,
interpurchase time,
switching behavior
Grocery
retailing, France
Independent
Variables
Mediating
Variables
Moderating
Variables
Reward type
(inefficient vs.
efficient), reward
amount, consumer type
(heavy vs. light)
Customer-centric (Behavioral responses)
34
Sharp & Sharp
(1997)
Bolton et al.
(2000)
Grocery
retailing,
Australia
Grocery
retailing, France
Self-reported
panel survey
(N = 745)
Credit card
usage, selfreported data
(N = 405)
Market share, sole
buyer, repeat purchase
and frequency
Retention, purchase
frequency, purchase
value, dissatisfaction
Loyalty program
membership, multiple
programs possession
Continued
Table 2.1. Overview of studies on customer loyalty programs
34
Table 2.1. Continued
Study
Study Context
Study Design
35
Customer-centric (Behavioral responses)
Kivetz &
Airlines, hotels, Laboratory and
Simonson
rental car
field Experiments
(2001a)
Leenheer et al. Grocery
GfK data
(2003)
retailing, The
Netherlands
Kivetz &
Gas station,
Field experiments
Simonson
department
(2003)
store, grocery
Magi (2003)
Grocery
Self-reported
retailing,
panel survey (N
Sweden
= 643 for
4weeks)
Field experiments
Kivetz (2003)
Grocery store,
hotel, cerealeater program,
Internet music
store
Lewis (2004)
Online grocery
retailing, US
Online purchase
data (N = 1,058)
Dependent Variables
Independent
Variables
Preference, choice,
likelihood of joining the
loyalty program
Share-of-wallet (SOW)
Reward type (luxury
vs. necessity), reward
requirement
Loyalty program
membership
Preference, choice,
likelihood of joining the
loyalty program
Share-of-purchase,
share-of-visits
Program requirement,
idiosyncratic fit
Choice (preference)
Effort requirement,
motivation, reward
interest level
Mediating
Variables
Moderating
Variables
Motivation
(intrinsic vs.
extrinsic)
Basket, customer
purchase incidence rate,
revenues, number of
orders
Continued
35
Table 2.1. Continued
Study
Study Context
Study Design
Customer-centric (Behavioral responses)
Jang & Mattila Fast food and
Self-reported
(2005)
casual dining
customer survey
restaurants, US
(N = 145)
Dependent Variables
Independent
Variables
Willingness to join the
loyalty programs,
expected benefits
Customer loyalty
program
Mediating
Variables
Moderating
Variables
36
Kivetz (2006)
General loyalty
programs,
actual café
(Study 5)
Lab experiments
and field
experiment
(Study 5)
Choice (preference)
Effort congruency
(effort requirement x
effort level)
Intrinsic
motivation
Dholakia
(2006)
Financial
services firm,
US (loyalty
program in
Study 4)
Field experiment
(N = 2,335)
One-year profit, oneyear account balance,
one-year defection rate
Customer selfdetermination,
membership
enrollment
Keh & Lee
(2006)
Bank and
restaurant
Experiment
(customer sample
N = 205)
Customer loyalty
Reward type (direct vs.
indirect) and timing
(immediate vs.
delayed)
Customer
satisfaction
Wirtz et al.
2007)
Credit card
industry,
Singapore
Self-reported
consumer survey
via face-to-face
interviews (N =
283)
Share-of-Wallet
Loyalty program
attractiveness,
switching cost between
options
Commitment
to the
company
Continued
36
Table 2.1. Continued
Study
Study Context
Study Design
Dependent Variables
Independent
Variables
Mediating
Variables
Confidence benefits,
social benefits, special
treatment benefits
Reward cuecompatibility, reward
tangibility
Satisfaction,
commitment
Brand
favorability
Prior
knowledge,
shopping
enjoyment
Reward type (direct vs.
indirect) and timing
(immediate vs.
delayed)
Store satisfaction,
possession of a loyalty
card
Perceived
value
Product
involvement
Moderating
Variables
Customer-centric (Attitudinal responses)
37
HennigThurau et al.
(2002)
Roehm et al.
(2002)
Service
providers
Self-reported
survey (N = 336)
Word-of-Moth,
customer loyalty
Consumer
packaged goods
Experiments
Behavioral and
attitudinal loyalty
Yi & Jeon
(2003)
Cosmetic,
restaurant,
South Korea
Experimental
design (N = 262)
Program loyalty, store
loyalty
Noordhoff et
al. (2004)
Grocery stores,
Singapore vs.
Netherlands
Self-reported
customer survey
(Nsingapore = 150;
Ndutch = 193)
Behavioral store loyalty,
attitudinal store loyalty
Taylor &
Neslin (2005)
Grocery
retailing, U.S.
Self-reported
survey (N =
1,077), Basket
item data for the
survey
participants (for
103 weeks)
Average sales, price
consciousness, planning,
shopping enjoyment,
information seeking,
store loyalty, card
importance
Continued
37
Table 2.1. Continued
Study
Study Context
Study Design
Dependent Variables
Independent
Variables
Mediating
Variables
Moderating
Variables
Customer-centric (Attitudinal responses)
Gómez et al.
Supermarket
chain, Spain
Self-reported
survey (N = 750)
Lacey et al.
(2007)
Upscale
department, US
Self-reported
customer survey
(N = 8,776),
Basket item data
for the survey
participants (for
103 weeks)
38
(2006)
Attitude, trust,
commitment, purchase
behavior, satisfaction,
change in purchasing
behavior
Relationship
commitment, purchases,
share of customer,
WOM, customer
feedback
Customer loyalty
program membership
Membership,
integration/fulfillment
of needs, sense of
community, resistance
to competitor, loyalty
Loyalty program type
(Communal vs. Noncommunal)
Preferential treatment
of the loyalty program
Customer-centric (Relational responses)
Rosenbaum et
al. (2005)
Brand
communities
Focus group
survey (N = 20),
self-reported
survey (N = 153)
38
Age,
income,
education
2.4. Theoretical Framework
This study aims to fill the gap in the literature by examining socio-psychological
aspects of relationships between consumers and retailers built by loyalty program
marketing. Furthermore, from a practical point of view, this study aims to develop a
customer loyalty program model that plays a role in loyal customer-company relationship
development. Social identity theory (Brewer, 1991; Tajfel & Turner, 1979, 1985) and
Bhattacharya and Sen’s (2003) consumer-company identification model provide the
foundations for understanding (1) how a customer loyalty program directs a consumer to
perceive a connection with the loyalty program and (2) how a consumer-retailer
relationship built through a well-designed loyalty program will support the customer’s
attitudinal and relational response to the loyalty program and the retailer.
2.4.1. Social Identity Theory
Social identity theory posits that one is motivated to classify oneself and others
into various groups using criteria such as gender, ethnicity, occupation, sports teams as
well as temporary groups (Tajfel & Turner, 1985). When belonging to a group, an
individual is likely to derive his/her sense of identity in association with the group (i.e.,
social identity) and behave toward the group in a favorable manner. A social identity is
defined as one’s knowledge that he or she belongs to a group together with the value
attached to the group (Hogg & Abrams, 1988; Tajfel, 1981). According to the theory, an
individual develops and owns multiple identities including personal and social identities
39
(Brewer, 1991; Deaux, 1996) and uses a social identity when communicating a sense of
self (Tajfel & Turner, 1985).
There are three fundamental psychological mechanisms underlying social identity
formation (Hogg & Abrams, 1988). The first psychological process is self-categorization
which refers to the process whereby an object, event, and/or individual are grouped into
categories. By doing so, people tend to overstate the similarities of those in the same
group and overstate the differences between those in different groups. Social comparison
is the second psychological process, whereby an individual compares his/her own group
with others. Through self-categorization and social comparison, people are motivated to
use group membership as a way to achieve positive outcomes, such as self-enhancement
and self-esteem, which is the third psychological process.
By the same token, social identity theory also explains that people can bond with
the group even when they do not have interactions with other group members.
Psychology research on minimal groups (a group that has no previous meaning for a
member) has demonstrated that, by merely categorizing people as group members,
favorable evaluations about the group are achieved (Tajfel & Turner, 1986; Turner, Hogg,
Oakes, Reicher, & Wtherell, 1987). This can occur when the individual reifies or credits
the group with a psychological connection which is apart from his/her actual relationships
with its members (Turner, 1984). In sum, once affiliated with a social group (e.g., a
customer loyalty program), people strive to hold the perceptions or values espoused by
the group and develop a bond with the group, a process called identification (Turner,
1984).
40
Antecedents.
Then, among one’s identities in what situations does a particular social
identity become activated? The extent to which an identity is activated is called identity
salience (Oakes, 1987). A salient identity is defined as “one which is functioning
psychologically to increase the influence of one’s membership in that group on
perception and behavior” (Oakes, 1987, p.118).
According to social identity theory, the salience of a social identity is determined
by two factors: accessibility and fit (Oakes, 1987). First, accessibility refers to whether a
social identity associated with a social group is ready to be triggered in one’s self schema.
Stets and Burke (2000, p. 230) explained accessibility as “a function of the person’s
current tasks and goals, and of the likelihood that certain objects or events will occur in
the situation.” Second, fit relates to the congruence between one’s perceived
characteristics about the group and his or her given circumstances. Fit can be both
comparative and normative in that when one perceives in-group differences to be less
than out-group differences, it causes comparable fit and the social identity becomes
activated (Turner et al., 1987). Likewise, when the characteristic of the social group is
understood along with one’s stereotypical or normative aspects (e.g., culture), the social
identity has normative fit and becomes activated.
Similarly but more specifically, Ashforth and Mael (1989) illustrated factors
increasing the salience of a social identity: (1) distinctiveness of the in-group’s values
and practices (Oakes & Turner, 1986), (2) prestige of the in-group, and (3) awareness of
the out-group(s) (Turner, 1981). First, distinctive values and practices of the in-group
enhance the uniqueness of that group by helping differentiate the group from others.
Second, the likelihood that the social group portrays prestigious aspects (e.g., status)
41
influences the members’ identification with the group and further their self-esteem.
Lastly, the more one knows about other groups, the better he/she perceives his or her own
group. Therefore, how much one is aware of other groups influences one’s likelihood to
identify with his/her group. In an empirical study with the alumni of an all-male religious
college, Mael and Ashforth (1992) found that an alumni’s identification with his/her alma
mater was positively related to his/her perceptions of distinctiveness and prestige of the
school and negatively related to intraorganizational competition.
Consequences.
Social identity theory states that the activation of a social identity
causes depersonalization rather than individualization (Turner et al., 1987).
Depersonalization can be understood as a process of embodying one’s identity in his/her
group’s values or identity, causing the person to behave in accordance with the values or
practices of the social group (Terry & Hogg, 1996).
Two important outcomes of depersonalization are one’s identification with the
group and one’s behaviors in favor of the group. Ashforth and Mael (1989, p. 34)
defined identification as “the perception of oneness with or belongingness to a group,
involving direct or vicarious experience of its successes or failures,” and Dutton,
Dukerich and Harquail (1994, p. 242) considered it as the “cognitive connection between
the definition of an organization and the definition a person applies to him- or herself” in
favor of the organization.
It is believed that depersonalization driven by self-categorization and social
comparison can help people see themselves as interchangeable representatives of the
social group which, after all, will impact their affective, evaluative, and behavioral
42
responses to their social group. Social identity theory research has operationalized these
favorable responses in various ways such as one’s support for and commitment to the
group, intragroup cohesion, cooperation, altruism and positive evaluations of the group,
conformity to group norms, group prestige and loyalty, competition with out-groups, and
so on (Mael & Ashforth, 1992; Turner, 1984, 1985; Turner et al., 1989).
2.4.2. Social Identity in Relationship Marketing Literature
The constructive application of social identity theory has been found in various
marketing research contexts. A considerable body of organizational behavior research
has adopted social identity theory in understanding the dynamics of and relationships
among organizational entities such as employees, employers, and companies (e.g.,
Bergami & Bagozzi, 2000; Dutton, Dukerich, & Harquail, 1994; Mael & Ashforth, 1992).
Recently, consumer researchers have been adopting social identity theory
paradigms to explain relationship formation between consumers and company (e.g.,
Arnett et al., 2003; Bhattacharya & Sen, 2003; Reed & Forehand, 2007). Among them,
Bhattacharya and Sen (2003) developed a conceptual model of consumer-company
identification where consumer’ identification with a company plays a key role in
determining a strong and meaningful relationship between the consumer and the
company. The model posits that when a company satisfies a customer’s one or more key
needs (e.g., self- esteem, self-continuity, and self-enhancement) for social identity
formation, the customer finds the company’s identity attractive and identifies him/herself
43
with the company. Self-esteem is defined as one’s desire to appraise oneself as worthy
and/or efficacious (Coopersmith, 1967). Self-continuity is defined as one’s desire to
maintain one’s self-concept over time and across situations, and self-enhancement refers
to a desire to maintain a favorable self-concept (Steele, 1988). This consumer-company
identification is a type of social identification in which the customer defines his/her self
within a particular context as a member of the corresponding social exchange (see Figure
2.1) and results in customer loyalty, promotion of the company to others, and recruitment
of others to the company.
Identity
Trustworthiness
Customer
Loyalty
Identity
Similarity
Identity
Distinctiveness
Identity
Attractiveness
C-C
Identification*
Customer
Recruitment
Identity
Prestige
Note.
Company
Promotion
*C-C identification denotes Customer-Company identification
This figure is excerpted from the authors’ original model
44
Figure 2.1. Bhattacharya and Sen’s Conceptual Framework of Consumer-Company
Identification (2003, p. 79).
According to this model, consumer-company identification is determined by
identity attractiveness which is dependent on consumer perceptions of that identity.
Identity attractiveness is defined as one’s perceived importance of the identity (for
example, membership in a loyalty program) in association with consumer-company
identity associations. As implied by their definitions, identity attractiveness is the same
as identity salience and identity salience is the focus in this dissertation. This model
specifies three antecedents to attractiveness (identity salience), elicited by a marketing
entity (e.g., brand, product, service, etc). They are perceptions of identity similarity,
identity distinctiveness, and identity prestige. Identity similarity can be defined as one’s
perception that a marketing entity shares some properties with one’s self. Identity
distinctiveness is one’s perception that the marketing entity stands out relative to others
in the marketing environment, and identity prestige is one’s perception of the extent to
which the marketing entity is regarded as high-class. These determinants of identity
salience (identity attractiveness in this model) are aligned with key factors for social
identity salience proposed by psychology research on social identity theory such as
distinctiveness, prestige, and awareness of a social group (Ashforth & Mael, 1989).
According to organizational research on social identity, one’s self-definitional
needs are key drivers that people use to choose organizations to identity with as they
intend to construct viable, cognitively consistent social identities (Heider, 1958; Pratt,
1998). That is to say, consumers are likely to find customer loyalty program membership
more important or attractive when the loyalty program matches their sense of who they
45
are. Within the consumer marketing context, consumers’ perceived identity similarity
may affect identity salience because it helps consumers maintain who they are (selfcontinuity). Perceived identity distinctiveness may cause identity salience because it
helps consumers increase self-esteem by differentiating themselves from others (selfesteem). Perceived identity prestige may affect identity salience by helping consumers
fulfill their desires of self-continuity and self-enhancement in a social environment. Of
those, identity similarity and identity distinctiveness are of interest in this dissertation.
Specifically, this study was interested in the degree of identity salience generated
by different contexts of identity similarity. This knowledge will explain how different
functions of both loyalty program rewards and consumer identity interact. For better
understanding of that, we can turn to the functional theory of attitude.
2.4.3. Functional Theory of Attitude
Identity relevance concerns the balance of functions that both the loyalty program
and a consumer share together. The effects of identity relevance on identity salience can
be also understood by the functional theory of attitude (Katz, 1960; Shavitt, 1989).
According to the theory, attitudes exist because they serve one or some combination of
four functions for the person: the knowledge, utilitarian, value-expressive and egodefensive functions (Katz, 1960). Utilitarian attitudes function to maximize the rewards
obtained from the environment, whereas value-expressive attitudes function to express
central values and the self-concept. The ego-defensive attitudes function to protect the
46
self from internal conflict. The knowledge attitudes function to understand the
occurrences and environments in which one is involved. Differing from these three
functions, the knowledge functions are broader ones that exist in all attitudes (Katz,
1960). Two functions, utilitarian and value-expressive functions are commonly used in
the consumer behavior literature to examine different attitude functions (Lee & Shavitt,
2006; Schlosser, 1998; Shavitt, 1990; Shavitt, Lowrey, & Han, 1992; Shavitt, Swan,
Lowrey, & Wänke, 1994). An attitude function is defined as the psychological needs that
attitudes fulfill (Katz, 1960; Smith, Bruner, & White, 1956).
Research on the functional theory of attitude has proposed that a marketing object
(e.g., brand, product, situation) can trigger certain motivational functions in a consumer’s
schema (Shavitt, 1990; Schlosser, 1998) and when the object addresses the motives
underlying the attitude and the behavior (i.e., congruent function condition), the degree to
which it evokes the consumer’s motive increases (Shavitt, 1989, 1990; Schlosser, 1998).
Objects which possess utilitarian function effectively appeal to consumers who hold
utilitarian functions for their consumption (i.e., maximizing intrinsic rewards or
minimizing punishments delivered by the object), while objects engaging the valueexpressive function effectively appeal to consumers who hold value-expressive motives
for consumption (i.e., expressing one’s central values and the self). Incongruent function
conditions, where the function of a marketing object is inconsistent with customer motive
did not attract a consumer, however, congruent conditions where the functions between a
consumer and an object are aligned showed more positive and favorable influence on
such various consumer behaviors as product judgments (Schlosser, 1998; Shavitt & Fazio,
47
1991), attractiveness of and attitude towards advertising (Johar & Sirgy, 1991; Shavitt et
al., 1994), and retail patronage (Sirgy, Grewal, & Mangleburg, 2000).
2.4.4. Trustworthiness of Customer Loyalty Program Marketing
Bhattacharya and Sen’s model (2003) proposed that a consumer belief
(trustworthiness) about the company may moderate the relationships between perceptions
of program identity characteristics and identity attractiveness. From a behavioral
standpoint, trust is defined as “a willingness to rely on an exchange partner in whom one
has confidence” (Moorman et al., 1992, p.315). From the evaluative and cognitive
standpoints, it is defined as “existing when one party has confidence in the exchange
partner’s reliability and integrity” (Morgan & Hunt, 1994, p.23).
Extant literature on trust provides conceptual and empirical evidence to suggest
the moderating role of consumer perceptions of company trustworthiness in such various
exchange contexts as advertising (Priester & Petty, 2003), bargaining (Schurr & Ozanne,
1985), brand loyalty (Chaudhuri & Holbrook, 2001), and consumer-company
identification (Bhattacharya & Sen, 2003). Among them, Schurr and Ozanne (1985)
empirically showed that consumers’ preconceptions about a marketer’s trustworthiness
moderate their reactions to bargaining environments. That is, when a consumer perceives
the marketer as untrustworthy, the consumer-marketer interaction becomes least
favorable and interferes with the effectiveness of bargaining, whereas under the
trustworthy consumer-marketer situation, a consumer becomes conducive to the marketer
in terms of concession-making behavior. Additionally, empirical advertising research
48
demonstrated that consumer perception of endorser trustworthiness influences the
likelihood that consumers engage in advertising message-based elaboration, which
consequently affects the links between advertising message and attitude toward and
effectiveness of advertising (Priester & Petty, 2003). In conceptualizing the customercompany identification model for successful relationship marketing, Bhattacharya and
Sen (2003) postulated that the connections between judgments of an identity’s
distinctiveness, prestige, and similarity and its attractiveness may depend on the degree to
which consumers trust the identity of a marketing object (e.g., brand, company, sales).
Despite the significance of consumer social identity and identity salience in
consumer relationship marketing research and practice, only a few empirical studies have
been found (Ahearne et al., 2005; Arnett et al., 2003; Bhattacharya, 1998; Bhattacharya et
al., 1995; Lau, 1989; Marin & Ruiz, 2007; Swanson & Davis, 2006) that employed these
concepts. Nevertheless, the few existing studies have demonstrated that social identity
approaches can be useful in creating successful relationship marketing efforts, producing
desired outcomes such as community identification (Bagozzi & Dholakia, 2006;
Bhattacharya, 1998; Bhattacharya et al., 1995), supportive brand behaviors (Algesheimer
et al., 2005), customer extra role behaviors (Ahearne, Bhattacharya, & Gruen, 2005), and
satisfaction and commitment (Swanson & Davis, 2006). However, to date, no attempts
examining consumer-company identification in a customer loyalty program marketing
context have been found.
2.5. The Proposed Customer Loyalty Program Model
49
This dissertation starts with the assumption that a consumer’s membership in a
customer loyalty program may be a basis for defining consumer identity and proposes a
model of a customer loyalty program for consumer-retailer relationship marketing. A
successful loyalty program is expected to evoke the importance of consumer membership
in the loyalty program relative to his/her self schema by satisfying the consumer’s selfdefinitional needs (e.g., self-continuity, self-esteem, and self-enhancement) with two
characteristics of a customer loyalty program, distinctiveness and identity relevance.
When a consumer becomes a member of a loyalty program which is offered only to
selected customers it is perceived to be a distinctive program and the consumer may
believe himself/herself to be a special customer to the retailer. The perceived uniqueness
of membership for exclusive loyal customers will help the consumer feel the self as
valuable. When loyalty program rewards sharing the same or similar functions with the
consumers’ identity (utilitarian or value expressive) are received, membership in the
loyalty program becomes relevant to the consumer’s identity schema because the
membership helps the consumer maintain a stable and consistent sense of who he/she is.
This study postulates that a membership identity (i.e., identity salience) evoked by
the congruence and the distinctiveness of the loyalty program is an underlying process
that drives consumers to respond positively to the retailer and consequently creates a
successful loyalty program. Social identity theories can explain consumer response to a
loyalty program, especially in developing a consumer-retailer relationship. As a
consumer learns that his/her membership in a customer loyalty program is relevant to
his/her shopping schema, the salience of the membership identity is triggered and
50
subsequently attitudinal and relational evaluation will determine the level of response to
the retailer.
The proposed model is comprised of two parts. In Part 1, this study anticipates
different identity-related information processing and identity salience depending on
loyalty program design and proposes that the following two contextual factors may
influence consumer reactions by evoking different levels of identity salience: (1) the
distinctiveness of the customer loyalty program and (2) the identity relevance between
reward options (e.g., goods or services) from the loyalty program and the self. The more
distinctive and the more congruent the loyalty program offers are to a consumer, the more
likely that the consumer’s appreciation of his/her membership is aroused by the loyalty
program. This study further suggests a moderating role for consumer trustworthiness of
loyalty program marketing on the salience of loyalty program membership identity.
When receiving rewards from a loyalty program, consumers may use different identityassociated information processing based on their belief about the loyalty program
(trustworthiness). Part 2 proposes that the salience of a consumer’s membership will
have a positive effect on consumer reactions to the loyalty program and the retailer that
implements the loyalty program.
Detailed development of the model (see Figure 2.2) along with the developed
hypotheses follows.
51
Contextual Cues
Process
Consequences
Attitude towards
LP/retailer
LP
Distinctiveness
Identity
salience
Identity
Relevance
C-R
identification
Satisfaction
Part2
LP
Trustworthiness
Part 1
Figure 2.2. A proposed model of a customer loyalty program
52
2.6. Hypotheses Development
2.6.1. Part 1: Determinants of Consumer Membership Identity Salience in a Customer
Loyalty Program Environment
Part 1 of the model suggests contextual and individual factors that may affect a
consumer’s perception that his/her loyalty program membership is relevant to the self.
First, two contextual factors of interest relating to a customer loyalty program are: (1) the
distinctiveness of the customer loyalty program and (2) the identity relevance of the
rewards offered from the loyalty program to the self. Second, this study posits that the
effects of the contextual factors on identity salience may vary depending on consumer
perceptions of the trustworthiness of the customer loyalty program marketing.
Consumers who consider the loyalty program marketing as reward-focused will favorably
respond to the message via the loyalty program, while those who are skeptical of the true
intention of the loyalty program marketing will be less likely to draw their attention to the
rewards and/or benefits of the loyalty program.
Loyalty program distinctiveness.
Distinctiveness refers to the extent to which a
consumer’s social identity or the identity of a membership group (i.e. loyalty program) is
perceived as unique or unusual. According to social identity theory, an individual wants
to distinguish him/herself from others in a given environment by employing the selfcategorization and social comparison processes. In doing so, when the individual finds
his/her group more unique and unusual than others in meaningful ways, he/she will view
53
the group more favorably and feel closer links with the group. Therefore, the magnitude
of the distinctiveness of the membership group influences the relative importance
(salience) of group membership in his/her identity schema (McGuire, McGuire, Child, &
Fujioka, 1978).
Extant research utilizing distinctiveness theory has supported the effect of
distinctiveness on identity salience in various consumer behavior contexts including
consumer-company relationships, ethnicity and target market advertising (Aaker,
Brumbaugh, & Grier, 2000; Bhattacharya & Sen, 2003; Forehand et al., 2002; Grier &
Deshpandé, 2001). For example, in a research study examining the ethnic distinctiveness
of targeted advertising Forehand and Deshpandé (2001) found that exposure to an Asian
ethnic prime increases the ethnic identity salience of Asian respondents and leads them to
react more favorably to same-ethnicity spokespeople and advertising that targets their
ethnicity. However, those with non-distinctive ethnic identity (Caucasians) did not
recognize their ethnic identity to be important when same-ethnicity target advertising is
given. Similarly, Grier and Brumbaugh (2002) found that consumers who belong to a
distinctive or numerically rare group are more likely to be aware of the characteristics of
the group and incorporate that group identity into their self-concept.
In a customer loyalty program context, loyalty program distinctiveness can be
defined as the degree to which a customer loyalty program is unique and distinctive
relative to other common loyalty programs. Regarding the distinctiveness of a loyalty
program, this study predicts that when a customer loyalty program is apparently
distinctive and unique, consumers who are a member of the loyalty program will be more
sensitive to their loyalty program membership than others. The activated membership
54
identity will heighten the likelihood that the loyalty program membership will become an
important part of consumer identity schema. Therefore, the effect of the distinctiveness
of a customer loyalty program on the salience of consumer identity in association with
the program membership is hypothesized as follows:
Hypothesis 1. Loyalty program distinctiveness will be positively related to identity
salience of membership in a customer loyalty program.
Identity relevance.
Identity relevance is defined as a cognitive match, or congruency
between the function of rewards from a loyalty program and consumer identity goal. As
discussed previously in the sections on social identity theory and the functional theory of
attitude, the magnitude of identity salience is primarily determined by the fit between a
marketing object’s attributes and a consumer identity (Dutton et al., 1994; Reed, 2004).
For instance, Dutton et al. (1994) argued that the consistency between the self and the
perceived organizational identity enhances one’s self-continuity needs and this continuity,
thus, strengthens a member’s identification with the organization by making the
organizational identity more attractive (salient). Thus, for an individual whose goal
(motive) for shopping concerns the value-expressive function, loyalty reward products or
services addressing value-expressive functions will heighten the salience of his/her
membership identity with the company that offers the rewards. Likewise, an individual
who holds high utilitarian shopping motives will perceive his/her membership identity
more important when his/her loyalty program offers rewards with utilitarian functions
than with value-expressive functions.
55
Empirical research further demonstrated that, between the two congruent
conditions (i.e., value-expressive congruency and utilitarian congruency), valueexpressive congruency has a greater effect on consumer responses than utilitarian
congruency does (e.g., Lee & Shavitt, 2006). Recently, Reed (2004) studied the impact
of symbolic relevance, similar to value-expressive relevance on consumer judgments of
product quality. This study found that consumers who valued symbolic (valueexpressive) social identity exhibited greater identity salience effects on judgments when
they received information addressing symbolic (value-expressive) identity aspects rather
than information emphasizing utilitarian benefits.
Taking into account both real reward options offered by loyalty programs and the
functional theory of attitude, this study focuses on two different functions (valueexpressive versus utilitarian functions) that characterize both rewards and consumer
identity goals, and the balance between them.
This dissertation hypothesizes that the identity salience of membership in a
customer loyalty program will be greater when the function of reward options offered via
the loyalty program matches the consumer’s identity goal. The greater the relevance
between the self and the loyalty program, the greater the interest in his/her identity as a
member of the customer loyalty program. Additionally, this study postulates that valueexpressive identity relevance will induce stronger identity salience than utilitarian
identity relevance.
Hypothesis 2. Compared to those who receive loyalty program rewards
incongruent with identity relevance, consumers who receive loyalty program
56
rewards congruent with identity relevance will exhibit heightened identity
salience in association with their loyalty program membership.
Hypothesis 3. Between the two congruent identity relevance conditions, identity
salience will be greater for consumers exposed to the value-expressive identity
relevance condition as compared to those exposed to the utilitarian identity
relevance condition.
Loyalty program distinctiveness and identity relevance. This study further hypothesizes
that the interaction between the two contextual factors of a loyalty program heightens the
salience of membership identity. According to consumer social identity research, the
interplay between distinctiveness and identity relevance may improve identity salience by
(1) temporarily changing the hierarchical ordering of multiple identities in one’s selfschema (Reed & Forehand, 2007) and/or (2) directing prioritized attention toward the
activated component of one’s self-schema (Dephandé & Stayman, 1994; Forehand &
Dephandé, 2001; Markus & Herzog, 1995).
Hypothesis 4. Loyalty program distinctiveness and identity relevance will interact
to heighten consumers’ identity salience in association with their membership in
the customer loyalty program. More specifically, consumers whose membership
of a customer loyalty program is distinctive and unique will exhibit greater
identity salience than consumers whose membership of a loyalty program is
mundane.
57
The moderating effect of trustworthiness of customer loyalty program marketing. This
study assumes that, when experiencing rewards with a customer loyalty program,
consumers may try to infer the motives that a retailer intends to achieve through the
loyalty program implementation (Boush, Friestad, & Rose, 1994; Cambell & Kirmani,
2000; Friestad & Wright, 1994). To understand the motives underlying a marketing
tactic, a customer loyalty program in this case, consumers may utilize their preexisting
beliefs, and their perception of the trustworthiness of the loyalty program will affect their
reactions to it (Chow & Holden, 1997; Palmatier et al., 2006).
Hypothesis 5. Consumers’ perceptions of the trustworthiness of loyalty programs
will moderate the effects of contextual cues of the loyalty program (distinctiveness
and identity relevance) on identity salience.
58
Contextual Cues
Process
LP
Distinctiveness
H1
Identity
salience
H4
H2 & H3
Identity
Relevance
H5
LP
Trustworthiness
Part 1
Figure 2.3. Part 1 of the proposed model: Hypothesis 1 through Hypothesis 5
59
2.6.2. Part 2: Effects of Identity Salience of Loyalty Program Membership on Consumer
Responses
Given that multiple identities are simultaneously and hierarchically structured to
construct the self, identity theory states that some of a consumer’s identities are more self
relevant and salient. Thus, identities that are placed high in the hierarchy provide more
meaning for the self and, as a result, are more likely to evoke identity-related attitudes
and behaviors (Arnett et al., 2003; Stet & Burke, 2000; Stryker, 1968). In addition, social
identity theory states that people tend to develop social identities going beyond personal
identities in quest of their self formation. By identifying and categorizing oneself as a
member of different social groups, people seek to accomplish self-needs fulfillment. It is
therefore predicted that a social identity that is salient and self-relevant in a consumer’s
mind will affect his/her attitudes and behaviors in a manner consistent with the social
identity.
Positive outcomes of a salient identity have been found in previous research on
social identity. For example, socio- and organizational psychology literature has
demonstrated that when positive biases toward the same-identity (an objective or a source
that shares a common identity with a receiver) occur, people perceive the same-identity
source to be more interesting (Linville, Fischer, & Salovey, 1989), more persuasive
(Berscheid, 1966), more committed by (Bergami & Bagozzi, 2000), more identified by
(Dutton et al., 1994), and more likable to the in-group members than members of the outgroups (Neimeyer & Mitchell, 1988). Within a consumer marketing context, researchers
have discussed the significant impact of identity salience on product evaluations (Lee &
60
Shavitt, 2006), attitudinal and behavioral intentions toward marketing stimuli (e.g.,
product, advertising, and company) (Forehand et al., 2002; Reed, 2004), consumer-brand
identification (Bhattacharya & Sen, 2003), and behavioral loyalty (Arnett et al., 2003)
Examining customer loyalty programs from a relationship marketing standpoint,
this study is interested in two domains of consumer response to a customer loyalty
program: consumers’ attitudinal and relational responses. First, attitude refers to an
individual’s favorable or unfavorable evaluation of an object, person, issues, or behavior
(Fishbein & Ajzen, 1975). When encountering an object, one forms an attitude toward
the object by experiencing the object or through available information about the object.
In addition, one’s attitude provides guidelines of behavior with respect to the attitude
object. As discussed previously, those who experience heightened identity salience
exhibit positive attitudes toward the identity-informant. When a consumer perceives that
his/her membership in a customer loyalty program is self-relevant and salient in a given
situation, more favorable attitudes toward the customer loyalty program, and the focal
retailer will occur.
Hypothesis 6. Identity salience of membership in a customer loyalty program will
be positively related to attitudes toward (a) the customer loyalty program and (b)
the retailer offering the customer loyalty program.
Second, regarding consumer relational responses to customer loyalty program
marketing, this dissertation focuses on customer-retailer identification and satisfaction.
These two constructs are considered crucial for building and cultivating a meaningful and
61
strong relationship between parties (e.g., Jayachandran, Sharma, Kaufman, & Raman,
2005; Swanson & Davis, 2006; Verhoef, 2003) and loyalty (Anderson & Srinivasan,
2003; Chandrashekaran, Rotte, Tax, & Grewal, 2007; Gustafsson, et al., 2005).
Customer-retailer identification is defined as the degree to which the consumer sees
his/her own self-image as overlapping with the retailer’s image, representing cognitive
commitment (Bagozzi & Dholakia, 2006; Bergami & Bagozzi, 2000). Satisfaction
represents the contentment of a consumer with respect to his or her experiences with a
given customer loyalty program (Oliver, 1997). Accordingly, it is hypothesized that the
stronger the membership identity a consumer feels, the more favorable his/her responses
to consumer-retailer relationship building efforts. Furthermore, given that attitudinal
responses are predictive of behavioral and/or relational responses (e.g., Ajzen, Timko, &
White, 1982), consumer attitude towards the loyalty program and the retailer will
influence customer-retailer identification and satisfaction in a positive pattern.
Hypothesis 7. Identity salience of membership in a customer loyalty program will
be positively related to customer-retailer identification.
Hypothesis 8. Identity salience of membership in a customer loyalty program will
be positively related to satisfaction.
Hypothesis 9. Consumer attitudes toward (a) the customer loyalty program and
(b) the retailer will be positively related to customer-retailer identification.
62
Hypothesis 10. Customer-retailer identification will be positively related to
satisfaction.
Hypothesis 11. Consumer attitudes toward (a) the customer loyalty program and
(b) the retailer will be positively related to satisfaction.
Process
Consequences
Attitudes towards
LP/retailer
H6 (+)
H9 (+)
Identity
salience
H7 (+)
C-R
identification
H11
(+)
H12 (+)
H8 (+)
Satisfaction
Part2
Figure 2.4. Part 2 of the proposed model: Hypothesis 6 through Hypothesis 11
63
CHAPTER 3
PRETESTS
This chapter presents the pretests and a pilot test that were performed to develop
the stimuli, manipulations, and measurements for the Main Test. Three pretests were
performed to select appropriate stimuli (a customer loyalty program’s reward options)
and develop manipulations for the Web-based experiments which would be used in the
Main Test. The purpose of the first pretest was to select appropriate loyalty program
reward stimuli for the two different functions (value-expressive vs. utilitarian reward
items). To do so, a content analysis of reward options available from commercial
customer loyalty programs was conducted prior to Pretest 1. The second pretest tested
manipulation of the target identity relevance conditions (i.e., congruent vs. incongruent)
based on congruity of the function of the loyalty program reward items (value-expressive
vs. utilitarian) relative to the consumer identity goals (value-expressive vs. utilitarian).
The third pretest was conducted to assess manipulations developed for the two levels of
loyalty program distinctiveness (high versus low). Prior to the Main test, a Pilot Test was
conducted to check the readiness and validity of the Web-based experiment and the
questionnaire for Main Test.
64
3.1. Pretest 1: Loyalty Program Reward Stimuli Development
The first pretest was conducted to select appropriate loyalty program reward
stimuli consistent with the two different functions (value-expressive vs. utilitarian reward
items). Prior to the selection, a content analysis was necessary to develop a list of reward
stimuli to include in the pretest. The content analysis and the first pretest are described
below.
3.1.1. Content Analysis
Method
Prior to the selection of loyalty program reward items, a content analysis of extant
loyalty programs and reward options was carried out in order to understand the range of
loyalty program rewards. An examination of fashion product retail companies which
were listed in the top 400 online retailers (“Top 400 guide,” 2005; “Top 500 guide,”
2006), top 100 U.S.-based retail stores (Schulz, 2006), and the 2006 edition of Fortune
500 (Fortune 500 2006, n.d.) resulted in 89 fashion retail companies (companies selling
fashion-related products including women’s, men’s, children’s, baby’s clothing, home
furnishings, shoes, and accessories). After 13 companies identified as manufacturers,
marketing firms, and out of business were excluded, 76 retail companies (companies that
sell fashion products at their own stores) remained. A further selection process singled
out 40 companies (55.27%) which implement one or more customer membership
65
programs (e.g., credit card program and customer loyalty program) for the use in the
content analysis. The 40 companies are listed in Appendix A.
Coding Scheme Development
A coding sheet was developed through an analysis of four selected companies’
websites (i.e., American Eagle, Chico’s, Neiman Marcus, and Saks Fifth Avenue). These
four were selected because of their successful management of customer loyalty programs
(c.f., Howell, 2006; O’Brien & Jones, 1995). From the assessment of successful loyalty
programs, a list of basic reward items commonly available in every customer loyalty
program was compiled, as well as a list of unique rewards that allow a program/retailer to
be differentiated from others.
All reward items available on these four retailer’s websites were independently
coded by two raters including the researcher and a graduate student who was blinded to
the conditions and the hypotheses but understood the definition of both. A total of 27
reward components were collected and the two raters coded each reward component as
either ‘value-expressive reward’ or ‘utilitarian reward.’ Inter-rater reliability was
measured using Cohen’s kappa (κ) coefficient (1960). Kappa coefficient, a common
reliability index used in social science research, is considered to be a more robust
measurement than a simple proportion agreement measurement because it takes into
consideration the agreement which happens by chance (Bakeman, 2000; Dewey, 1983).
The Kappa coefficient value of .83 suggested outstanding reliability (c.f., Landis & Koch,
1977: κ > 0.80: outstanding; 0.60 < κ < 0.79: substantial; 0.4 < κ < 0.59: moderate interrater reliability). Two items that raters coded differently were ‘exclusive shopping day’
66
and ‘free monogramming.’ The raters discussed and agreed to code them as items
serving both functions. Table 3.1 presents a list of loyalty program rewards by their
functional category.
Next, the reward options of the 40 retail companies were coded by two raters
including the researcher and a graduate student. While the researcher analyzed all 40
retailers, the second rater coded rewards of 20 retailers’ loyalty programs based on the
coding frame developed previously. Both raters worked independently for the entire
coding process. Upon logging onto each retailer’s website, raters investigated reward
options offered via the customer loyalty program and coded them based on the coding
frame. A reward option that was being offered by a retailer was coded as ‘present’ (1).
Cohen’s kappa (κ) coefficient showed substantial inter-rater reliability (κ = .75).
Results.
Table 3.1 presents an overview of 27 loyalty program reward items classified into
utilitarian or value-expressive loyalty program reward group and the frequency of the
reward items provided by the 40 retailers. Not surprisingly, a number of retailers relied
heavily on utilitarian reward services relative to value-expressive reward options. Also a
larger variety of utilitarian rewards were used by retailers than were value-expressive
rewards. The most common utilitarian reward options provided through customer loyalty
programs were ‘easy payment using store credit card (f = 25)’ and ‘discount offer (f =
23),’ followed by ‘rebate/reward certificate (f = 16),’ ‘double points/additional sales
shopping events (f = 14),’ ‘special offers on birthday (f = 13)’ and advanced notice of
sales (f = 13).’
67
Value-expressive rewards were provided by only a limited number of retailers.
The most popular value-expressive reward option was ‘exclusive event invitation’ which
was available at eight retailers among the 40. Additional value-expressive reward
options were ‘preview of the new collection (f = 7)’and ‘exclusive merchandise (f = 6).’
‘Travel experiences (f = 4)’ was also provided at mainly upscale department stores, such
as Neiman Marcus and Saks Fifth avenue.
68
Retailers (N = 40)
Coding items
F
Loyalty program rewards: Utilitarian Function
Easy payment using store credit card
Discount offer
Rebate/reward certificate
Double points/additional sales shopping events
Special offers (e.g., gift card, discount) on birthday
Advance notice of sales
Free shipping
Free gifts
Point redemption for next purchases
Sales catalog subscription
Free gift packaging
Free alteration service
Financing service
Exclusive sales offer
Shopping sweepstakes
Free return
25
23
16
14
13
13
12
6
5
3
3
2
1
1
1
1
62.50
57.50
40.00
35.00
32.50
32.50
30.00
15.00
12.50
7.50
7.50
5.00
2.50
2.50
2.50
2.50
Loyalty program rewards: Value-Expressive Function
Exclusive event invitations (e.g., fashion shows, tee
times)
Preview of the newest collection
Exclusive merchandise (e.g., limited edition)
Travel offer
Personal fashion consultant
Personal customer service line offer
Exclusive magazine/fashion book subscription
Entertainment offer (e.g., concert, spa)
Wardrobe contests
8
7
6
4
3
3
3
2
1
20.00
17.50
15.00
10.00
7.50
7.50
7.50
5.00
2.50
Loyalty program rewards: Both Functions
Exclusive shopping days
Free monogramming
15
1
35.71
2.38
Table 3.1. Loyalty program rewards of U.S. fashion retailers
69
Percent
3.1.2. Loyalty Program Reward Stimuli Development
Pretest 1 was performed to select appropriate loyalty program reward stimuli for
the two different functions (value-expressive vs. utilitarian reward items). In doing so,
two criteria were used: (1) reward stimuli need to be familiar to and favored by research
subjects to the same degree because both familiarity and favorability may influence
subjects’ responses (e.g., membership identity salience, attitude toward the loyalty
program, satisfaction) and (2) selected reward stimuli represent one function relative to
another function. Although value-expressive and utilitarian functions are unique (Maio
& Olson, 1994, 1995), they are not mutually exclusive and a product or a service is likely
to possess both functions. Thus, both functions of each of the reward stimuli were
considered and an item that shows a comparatively high value-expressive function and
low utilitarian function was selected as a value-expressive reward item. Likewise, an
item which shows high utilitarian function and low value-expressive function was
selected as a utilitarian reward item.
Method
To develop the reward stimuli, pictures of 20 reward items were obtained from
existing commercial websites. The 20 rewards were selected based on the rewards
observed in the content analysis, the frequencies used by retailers, and the familiarities
with college-age consumers, research subjects for this study. The consistency of pictures
in terms of background, resolution, angle, brightness, and contrast was controlled and
70
achieved using Adobe Photoshop. The resolution of pictures was maintained to be 250 x
350 pixels for vertical pictures and 350 x 250 pixels for horizontal pictures.
A Web-based survey was used in Pretest 1. Two sets of survey websites were
created: One survey measured value-expressive functions of reward items and another
measured utilitarian function of the items. The name and a color picture of each reward
item were presented to enhance accessibility and external validity (see Appendix B for
reward items). In attempting to minimize response variance due to respondent fatigue, 10
reward items were evaluated in each survey set instead of all 20 items. That is, 20 items
were divided into two groups and each group of 10 items was assessed across 10 surveys
(5 surveys with value-expressiveness measures and 5 surveys with utilitarian measures).
For two sets, a total of 20 surveys were created and the presentation of the reward items
was counterbalanced in a Latin-square design.
Ninety two female undergraduate students recruited from two textile and clothing
classes participated in the pretest. Extra course credit was offered as an incentive. Half
of the students were randomly assigned to surveys where they were asked to evaluate
value-expressive functions of rewards while the rest of the students were assigned to
evaluate utilitarian functions of the reward items. The first page of the survey provided
information about the survey (e.g., the purpose of the study, description of the procedure,
the time expected). On the second page, the students were asked to rate eight reward
items in terms of either value-expressive functions or utilitarian functions based on a 7point scale ranging from 1(strongly disagree) and 7(strongly agree). Both valueexpressiveness (six items) and utilitarianism (five items) items were adopted from
previous research (Grewal, Mehta, & Kardes, 2004) and modified accordingly (see
71
Appendix C for the value-expressive function and utilitarian function scales).
Additionally, they were asked to assess the favorability of each reward item on a 7-point
scale ranging from 1(highly unfavorable) to 7 (highly favorable). The item was adopted
from previous research (Smith, 1993). Appendix D shows the online survey procedure
used in this pretest.
Results.
Principal component analysis (PCA) of the six items for value-expressive function and
the five items for utilitarian function were tested respectively. The unidimensionality of
each product function scale was confirmed. Due to the low communality (< .30), one
item from the value-expressiveness was excluded. Reliabilities of the five items for
value-expressiveness and the five items for utilitarianism were calculated for each reward
item and found to be reliable (all Cronhach’s αs > .88) (see Table 3.2).
72
Value-expressiveness
Reward item stimuli
Cronbach's
alpha
0.96
0.93
0.96
0.93
0.94
0.97
0.98
0.96
0.95
0.96
Mean
S.D.
Min.
Utilitarianism
Max.
Cronbach's
alpha
0.88
0.95
0.95
0.90
0.91
0.96
0.98
0.97
0.92
0.95
Mean
73
20.52
6.65
10
35
23.7
Shopping discount a
Store gift card on your birthday
20.90
7.18
5
35
23
b
26.00
6.91
10
35
20.05
Luxury spa experience for two
16.26
6.27
5
30
21.38
Airline mileage plus a
Lunch experience at a luxury restaurant
22.35
6.79
10
35
18.33
24.17
8.01
5
35
20.76
Luxury resort stay for two b
Golf putter
14.10
7.85
5
30
15.25
Tailoring service
20.72
8.21
5
35
21.54
Appreciation dividends
15.39
5.86
5
35
19
Access to limited merchandise
21.59
6.93
5
30
21.05
Invitations to exclusive events (e.g.,
0.97 20.85
8.44
5
35
0.97
18.4
fashion show)
Advanced notice of sales a
0.96 20.52
7.61
10
35
0.91
22.05
Personal fashion consultant
0.96 22.73
7.48
5
35
0.94
21.05
Hair/make-up service at a luxury
0.91 19.90
6.32
5
35
0.90
3.71
beauty shop
Men's & women's pens
0.96 12.72
5.56
5
35
0.95
2.24
Digital camera
0.93 24.01
5.40
10
35
0.91
4.17
Your choice at favorite jewelry
0.96 25.24
5.53
5
35
0.89
4.21
brands b
Diamond cuff links
0.98 13.58
6.62
5
35
0.94
2.56
Cosmetic case with products
0.92 19.18
5.90
5
35
0.90
18.12
Fox-and-Chiffon Bolero
0.98 18.08
7.00
5
35
0.93
3.05
Note. a Items selected as utilitarian reward items, b Items selected as value-expressive reward items for the main study
Table 3.2. Ratings of loyalty program reward
items
73
S.D.
Min.
Max.
6.05
8.28
8.57
5.67
6.99
8.73
7.04
7.81
6.35
7.22
20
20
15
20
15
15
15
20
15
15
25
25
25
25
25
25
25
25
20
20
9.22
15
20
6.78
7.96
20
20
30
25
5.44
5
35
6.43
6.55
5
5
30
35
5.49
5
35
5.53
5.48
5.81
5
5
5
30
35
35
The six item scores for the value-expressive function scale were averaged and
used as a single indicator of how much value-expressive function participants perceived
for each item. The higher the score, the higher the value-expressive function an item
conveys. Likewise, scores for the five items measuring utilitarian function for each
reward item were averaged and used as a single indicator of how much utilitarian
function participants perceived from each item. The higher the score, the higher the
utilitarian function an item conveys. Based on (1) the mean comparison between valueexpressive function and utilitarian function and (2) the favorability score for each reward
item, three value-expressive reward items and three utilitarian reward items were selected.
Only items which showed moderate to high favorability (mean > 4.70; median > 5) were
considered. Three reward items which showed fairly high value-expressive function
scores but low utilitarian function scores were chosen as value-expressive reward items
(e.g., luxury spa experience for two, luxury resort stay for two, and your choice at
favorite jewelry brands). Similarly, three reward items which showed fairly high
utilitarian function scores but low value-expressive function scores were selected as
utilitarian reward items (e.g., shopping discount, airline mileage plus, and advanced
notice of sales) (see Appendix E for the picture and verbal information of the six items).
All six items were rated favorably by participants (see Table 3.3).
74
Reward item stimuli
Mean Median
Shopping discounta
Store gift card on your birthday
Luxury spa experience for twob
Airline mileage plusa
Lunch experience at a luxury restaurant
Luxury resort stay for twob
Electronic devices
Golf putter
Tailoring service
Appreciation dividends
Access to limited merchandise
Invitations to exclusive events
(e.g., fashion show)
Advanced notice of salesa
Personal fashion consultant
Hair/make-up service at luxury beauty
shops
Men's & women's pens
Digital camera
Your choice at favorite jewelryb
Diamond cuff links
Fox-and-Chiffon Bolero
S.D.
Min.
Max.
5.29
5.53
5.32
4.83
4.72
5.32
4.54
3.02
4.78
4.13
4.36
5.5
6
5.5
5
5
5.5
5
3
5
4
4
1.22
1.49
1.61
1.31
1.45
1.55
1.15
1.55
1.67
1.34
1.63
3
1
1
1
1
1
1
1
1
1
1
7
7
7
7
7
7
7
6
7
7
7
4.98
5
1.69
1
7
4.95
4.64
5
5
1.43
1.67
1
1
7
7
5.17
5.5
1.48
1
7
3.12
3
1.81
1
7
6.24
6
0.90
4
7
5.85
6
1.41
1
7
3.35
3.5
2.03
1
7
4
4
2.21
1
7
a
b
Note. Items selected as utilitarian reward items, Items selected as value-expressive reward items for
the main study
Table 3.3. Favorability of reward item stimuli
75
3.2. Pretest 2: Consumer Identity Goal Manipulation
The purpose of Pretest 2 was to develop two levels of identity relevance (i.e.,
congruent vs. incongruent) by utilizing two contextual cues, which are the function of
loyalty program reward items (value-expressive vs. utilitarian) and consumer identity
goals (value-expressive vs. utilitarian). Having reward stimuli selected from Pretest 1,
this second pretest aimed to test the success of distinguishing consumer identity goal
manipulations (value-expressive vs. utilitarian) using an identity goal prime questionnaire.
To manipulate consumer identity goal, this study adopted a contextual priming
task developed by Shavitt (1985, 1990) that uses the stimuli input – the messages that are
given to subjects. That is, when subjects complete an initial priming questionnaire
designed to prime a certain function, the salience of the targeted function is temporarily
heightened in the subjects’ identity schema. This contextual manipulation method has
been commonly used in consumer behavior studies (e.g., Lee & Shavitt, 2006; Shavitt &
Fazio, 1991) and following the same procedure, this test utilized an initial questionnaire
intended to prime either value-expressive or utilitarian identity goal of subjects.
To test the effectiveness of this priming manipulation method, cognitive
responses toward the target reward item were assessed. This cognitive response approach
has been widely used in previous research examining the effects of the priming task
(Maio & Olsen, 1994; Shavitt et al., 1994). It was predicted that a value-expressive
priming questionnaire would elicit more value-expressive thoughts than utilitarian
thoughts whereas a utilitarian priming questionnaire would elicit more utilitarian thoughts
than value-expressive thoughts when the functions of reward items were controlled.
76
Method
This pretest was designed as a 2 (identity goal: value-expressive vs. utilitarian) x
2 (reward item: value-expressive vs. utilitarian) between-subject factorial study. Thus,
four web-based experiments were developed (see Table 3.4). Four experimental
conditions included 1) one with value-expressive reward items and a questionnaire
priming value-expressive identity, 2) one with value-expressive reward items and a
questionnaire priming utilitarian identity, 3) one with utilitarian reward items and a
questionnaire priming value-expressive identity, and 4) one with utilitarian reward items
and a questionnaire priming utilitarian identity. The six reward items selected from the
first pretest were used as the product stimuli and each subject was assigned to rate one
reward item where six items were counterbalanced across experimental conditions.
Experiment 1
Experiment 2
Experiment 3
Experiment 4
Function of reward items
Value-expressive
Value-expressive
Utilitarian
Utilitarian
Table 3.4. Four experimental conditions of Pretest 2
77
Identity goal primed
Value-expressive
Utilitarian
Value-expressive
Utilitarian
Procedure
Eighty-three undergraduate students were recruited from an introductory textiles
and clothing course and received extra credit for their participation in this study.
Subjects were randomly assigned to one condition and received an email containing a
URL link which directed them to the assigned survey website.
First, participants were informed that they were participating in a study about
consumer opinion of market products and services and would evaluate a loyalty program
reward item. They were also instructed not to consider the possible price of an item in
making their responses. The second page performed the identity goal prime task using a
questionnaire intended to prime a target identity goal. In the value-expressive identity
goal condition, subjects were instructed to engage in 20 impression-relevant behaviors
(e.g., buying a convertible sports car) (Appendix F). For each statement, they were asked
to imagine themselves performing the behavior, and to assess the extent to which doing
each behavior would make a positive impression on themselves and others such as
friends and classmates. Each statement was rated on a single 5-point scale ranging from
1 (won’t make a good impression at all) to 5 (will make a very good impression). In the
utilitarian identity goal condition, subjects evaluated the importance of 20 product
features (e.g., the durability of running shoes) (see Appendix F). For each statement,
they were asked to imagine themselves considering purchasing the item, and to rate the
extent to which each product feature is important to them. Each item was rated on a
single 5-point scale ranging from 1 (not at all important to me) to 5 (very much important
to me).
78
On the third page, subjects were directed to view one loyalty program reward item
and rate their favorability of the item on a 7-point scale ranging from 1(very unfavorable)
to 7 (very favorable). Then, they were given a thought-listing instruction and were
guided to list their thoughts and/or feelings toward their favorability evaluation. The
instruction was as follows: “We are now interested in what you were thinking and feeling
about the reward item you just evaluated and why you feel the way you do. In the boxes
below, please write down all of your thoughts and feelings that are relevant to your
evaluation, and try to describe the reasons for your thoughts and feelings.” Each of their
cognitive responses was typed in six separate and empty thought-listing boxes (see
Appendix G for a cognitive thought list example). Appendix H presents the procedure of
Pretest 2.
Analysis
Two subjects’ data were deleted from all analyses due to errors in their responses;
they listed thoughts about objects of the priming task questionnaire but not the given
reward item. Further data screening procedure resulted in 75 final data after eliminating
the responses of six subjects who indicated their lack of experience or knowledge about
customer loyalty programs.
To analyze cognitive thoughts collected, a content coding scheme was adopted
from Shavitt’s research (1985, 1989) and modified accordingly. Subjects’ thoughts were
coded into four categories based on whether they reflected a value-expressive function, a
utilitarian function, both functions, or neither function. Utilitarian thoughts express a
concern for protecting positive personal outcomes and preventing negative outcomes,
79
whereas value-expressive thoughts express a concern for maintaining values, principles
and beliefs regarding the self and/or significant others (e.g., friends).
Two graduate students majoring in consumer sciences were recruited as raters.
Both were blinded to the conditions and the research hypotheses. After having extensive
discussions of the coding rules, both raters independently coded subjects’ thoughts. A
statement or a set of statements listed in a box was considered one thought, and was
assigned one classification by each rater. Appendix I provides the criteria used in the
subjects’ thoughts classifications and examples of thoughts classified as either valueexpressive or utilitarian thoughts. Both raters agreed on 87.5% of their total ratings,
indicating a reasonable inter-rater reliability. The ratings which showed discrepancy
between the two were reclassified by the researcher.
Results
Tables 3.5 and 3.6 show the frequencies of either value-expressive thoughts listed
or utilitarian thoughts listed as a function of an identity goal prime and the function of
reward items. Examinations of the frequencies across the four experimental conditions
showed that value-expressive identity goal priming generated more thoughts on valueexpressive functions of reward items than utilitarian identity goal priming did. Likewise,
the utilitarian identity goal prime was found to be effective in generating more utilitarian
thoughts from those with the utilitarian reward items than with those assigned to the
value expressive identity goal prime task.
This pretest was exempted by the Institutional Review Board at the Ohio State
University (IRB protocol No. 2006E0699, see Appendix Q).
80
Identity Goal
Loyalty program
reward Items
Value-Expressive
Utilitarian
Value-expressive
Mean (SD)
1.82 (1.22)
1.18 (1.47)
N
22
22
Utilitarian
Mean (SD)
0.79 (0.77)
0.50 (0.80)
N
19
12
Table 3.5. Value-expressive thoughts as a function of identity goal primed and the
function of rewards
Identity Goal
Loyalty program
reward Items
Value-Expressive
Utilitarian
Value-expressive
Mean (SD)
0.81 (1.01)
0.91 (0.81)
N
22
22
Utilitarian
Mean (SD)
1.58 (1.12)
1.33 (0.89)
N
19
12
Table 3.6. Utilitarian thoughts as a function of identity goal primed and the function of
rewards
81
Then, a multivariate analysis of covariance was conducted. Two dependent
variables were the frequency of value-expressive thoughts and utilitarian thoughts. The
independent variable was the identity goal priming condition (value-expressive priming
and utilitarian priming), and the function of the reward item was controlled as a covariate.
The significance level of for all tests was set a priori at .05.
The analysis revealed a significant multivariate main effect for identity goal
priming on the dependent variables of value-expressive thoughts and utilitarian thoughts,
Wilks’ Lambda = 0.61, F (2, 70) = 22.48, p < .001. Given that the multivariate test was
significant, univariate analyses of variances were conducted to determine the degree to
which each dependent variable was affected by the independent variable.
First univariate analysis of variance with value-expressive thoughts as the
dependent variable revealed that identity goal priming had a significant effect on valueexpressive thoughts, F (3, 71) = 4.44, p < .01. Participants listed more value-expressive
thoughts under the value-expressive priming condition (M = 1.50, SD = 1.37) than the
utilitarian priming condition (M = 0.68, SD = 0.75, F (1, 73) = 9.18, p < .01) (see Table
3.5). Second, analysis with the frequency of utilitarian thoughts as the dependent
variable showed a significant effect of goal priming on utilitarian thoughts, F (3, 71) =
2.69, p = .05. Respondents generated more utilitarian thoughts when facing the utilitarian
priming condition (M = 1.48, SD = 1.03) than when encountering the value-expressive
priming condition (M = 0.86, SD = 0.90, F (1, 73) -= 7.63, p < .01) (see Table 3.6).
These findings suggest that the identity goal priming task using a priming questionnaire
was effective in manipulating the consumer identity goal of interest (value-expressive vs.
utilitarian).
82
3.3. Pretest 3: Identity Distinctiveness Manipulation
The purpose of Pretest 3 was to design and test the manipulation of loyalty
program distinctiveness. To manipulate high and low distinctiveness, this study adopted
the method used in target marketing research which built on distinctiveness theory (Aaker
et al., 2000; Dimofte, Forehand, & Deshpandé, 2003/2004; Grier & Brumbauch, 2002).
One approach that previous target marketing studies have used to examine different
degrees of distinctiveness relates to the numerical rarity or numerical minority of a
particular group of individuals. In a similar vein, this study manipulated two levels of
identity distinctiveness (high vs. low) using two cues relating to a customer loyalty
program; (1) the numerical rarity of customers eligible for the customer loyalty program
membership and (2) the presence of a unique name of a customer loyalty program
designating the loyalty program membership.
Prior to Pretest 3, two experiment stimuli were developed. First, a fictitious store
name (“Fashion Ally”) was created. Designing a fictitious retail store name was intended
to avoid possible perceptual and inferential effects of existing commercial retailer names
on participants’ responses. Next, in parallel with the retailer’s name, two names for the
retailer’s customer loyalty program were designed. It was important to create two names
that were distinctive in terms of the identity of the loyalty program’s membership. Two
names developed by the researcher were “AllyX Platinum Club” reflecting high
distinctiveness and “Fashion Ally Reward Program” reflecting low distinctiveness.
83
Method
Two versions of a website were developed for the high and low identity
distinctiveness conditions, respectively. To create the two levels of identity
distinctiveness, two attributes in association with the customer loyalty program were
controlled: (1) the proportion of customers who would be qualified for loyalty program
membership (‘top 5% of valued customers’ for high distinctiveness vs. ‘every customer’
for low distinctiveness) and (2) the presence of a unique name for the customer loyalty
program (“AllyX Platinum Club” for high distinctiveness vs. “Fashion Ally Reward
Program” for low distinctiveness). Thus, a loyalty program of high distinctiveness offers
its membership only to selected valuable customers (top 5% of customers) under its
unique membership name (Ally X PLATINUM CLUB) while a loyalty program of low
distinctiveness issues its membership to every customer with no particular name (Fashion
Ally Program). It was expected that a loyalty program that designates its membership
with a special name and selects customers based on exclusive criteria to enroll in the
program would be perceived as highly distinctive while a loyalty program with no special
name to designate its membership and that is eligible to anyone who wishes to join would
not be perceived as distinctive.
Procedure
One hundred twenty-seven undergraduate students were recruited from a
consumer perspective course and received extra credit for their participation in this study.
They were randomly assigned to one of the two experimental conditions. An invitation
84
email containing research information, survey directions, and the corresponding URL
link of the survey was sent to each student.
The survey consisted of four parts: (1) welcome message and directions for the
survey, (2) the scenario explaining the hypothetical relationship between the respondent
and the retailer, (3) general information about the retailer’s customer loyalty program and
its membership, and (4) perceived distinctiveness measures. Upon arriving at the survey
website, participants were informed that they were participating in consumer research on
customer loyalty programs. Next, participants read a brief description illustrating
hypothetical relationships between respondents and the retailer as follows.
First, imagine that you are a loyal customer of a retail store, FASHION ALLY
which carries a variety of clothing and fashion items. You have been shopping
with FASHION ALLY for the last 5 years.
You have shopped for apparel and fashion items with FASHION ALLY quite
extensively and have been very much satisfied with the quality of their products
and services.
Now, FASHION ALLY is planning to launch a customer loyalty program aiming
to reward their valuable customers such as yourself for shopping with FASHION
ALLY and is asking for your evaluation of their customer loyalty program. Let's
imagine you're invited to join the customer loyalty program from your favorite
store, FASHION ALLY.
On the following pages, you'll explore FASHION ALLY’s new customer loyalty
program and be asked to evaluate the customer loyalty program.
The following two pages provided information about the retailer’s customer
loyalty program membership. Of those, the first page offered general information about
the customer loyalty program and the target customers which the retailer would serve
85
with their loyalty program. The scenario descriptions on this page for high and low
identity distinctive conditions are as follows:
High identity distinctiveness condition:
Imagine. Explore. Experience Rewards.
Only with Ally X Platinum Club membership can you experience our exclusive
customer-recognition program.
Because this membership is exclusive, which is offered to only the TOP 5% of
our customers, we treat you as such. You will receive the individualized
attention you deserve as an Ally X Platinum Club member.
Your AllyX Platinum Club membership grants you an exclusive rewards
program. That includes privileged service and V. I. P. treatment every time you
shop at FASHION ALLY.
Ally X PLATINUM CLUB MEMBERSHIP
Every time you make a purchase using your Ally X Platinum Club membership
at FASHION ALLY, you'll earn one reward point for every dollar you spend on
FASHION ALLY merchandise, gift cards, or e-gift certificates. If you shop on
a double-point day, you'll earn two points for every dollar spent on your
card. Designed for our high-value customers - only 5% of our customers are
eligible, Ally X Platinum Club will reward you with dozens of once-in-alifetime privileges you deserve as our most valuable customer.
Low identity distinctiveness condition:
FASHION ALLY Reward Program welcomes all of our customers.
Sign up today to get a FASHION ALLY CARD and take advantage of all its
benefits.
FASHION ALLY Card MEMBERSHIP
86
Every time you make a purchase using your FASHION ALLY Card at
FASHION ALLY, you'll earn one reward point for every dollar you spend on
FASHION ALLY merchandise, gift cards, or e-gift certificates. Your
FASHION ALLY Card is the most rewarding way to shop.
The next page contained information about the terms of the retailer’s customer
loyalty program membership and asked the respondents to imagine that they were about
to get the loyalty program membership as follows:
High identity distinctiveness condition:
Now, imagine that, after analyzing customer shopping lists from point-of-sale
purchase data, FASHION ALLY has identified you among the TOP 5% of
their loyal customers.
Thank you very much for your contribution to the success of FASHION
ALLY! We're launching our Ally X Platinum Club program to reward our
special customers for their valuable shopping with us and are very pleased to
serve you with Ally X Platinum Club membership!
Low identity distinctiveness condition:
Now, imagine that FASHION ALLY has opened your account for your
FASHION ALLY CARD.
Thank you very much for your shopping at FASHION ALLY! We're
launching our FASHION ALLY Reward Program to reward all of our
customers for their shopping with us and are very pleased to serve you with
FASHION ALLY CARD!
87
After investigating loyalty program information given, participants were asked to
evaluate the distinctiveness of the customer loyalty program. Participants’ perceptions of
the distinctiveness of the customer loyalty program were measured by three items using a
7-point Likert scale (Dimofte et al., 2003). Subjects were asked to rate how they felt
about the customer loyalty program served by Fashion Ally in terms of ‘novelty,’
‘typicality,’ and ‘unusualness’. The scales were anchored by ‘strongly agree (7)’ and
‘strongly disagree (1)’in which typicality was coded to be reversed. After removing the
item of ‘novelty’ due to its detrimental effect on the reliability, the remaining two items
were averaged and used as an indicator of overall distinctiveness (Cronbach’s α = .72).
The higher score, the more distinctive the customer loyalty program is perceived to be.
Results
A univariate analysis of variance was performed. The independent variable was
identity distinctiveness with two levels (low, high) and the dependent variable was
perceived distinctiveness of the loyalty program. The analysis revealed a significant
difference between the two conditions, F (1, 125) = 4.37, p < .05. That is, people who
were exposed to the high identity distinctiveness condition (M = 4.11, SD = 1.35)
perceived the retailer’s customer loyalty program to be more distinctive than people who
were exposed to the low identity distinctiveness condition (M = 3.59, SD = 1.39) (see
Table 3.7). Therefore, the results confirmed the effectiveness of the loyalty program
distinctiveness manipulation.
88
Measure
Perceived
Distinctiveness
Low LP
Distinctiveness
M (SD)
n
3.59 (1.39)
55
High LP
Distinctiveness
M (SD)
n
4.11 (1.35)
72
F
p
4.37
.039
Table 3.7. Perceived loyalty program distinctiveness by loyalty program distinctiveness
manipulation
An additional univariate analysis of variance was performed to test whether or not
gender affected perception of identity distinctiveness. The analysis, where the
independent variable was gender and the dependent variable was perceived
distinctiveness revealed that perceived loyalty program distinctiveness was significantly
greater for women than men, F (1, 125) = 4.11, p < .05 (see Table 3.8). These results
suggested that further tests need to focus on a single gender group; female consumers
were selected for this study because loyalty program members are more likely to be
female than male and young consumers (“Loyalty programs,” 2006; Maritz, 2003) and
some participants indicated that rewards stimuli used in this study were more familiar to
female than male consumers.
89
Measure
Perceived
Distinctiveness
Male
M (SD)
3.60 (1.07)
Female
M (SD)
n
48
4.01 (1.30)
n
F
p
79
4.11
.034
Table 3.8. Perceived loyalty program distinctiveness by gender
3.4. Pilot Test
A pilot test using a Web experiment method was conducted in order to
accomplish two overall goals. First, the primary objective of the pilot test was to verify
the feasibility of the main test by simulating a Web-based experiment in preparation for
the main test. In doing so, three tasks meant to be completed were as follows: (1)
developing survey websites, (2) ensuring the accessibility of the experimental procedure
and the clarity and readability of the survey instrument, and (3) determining the order of
web pages composing the survey experiment. The selection of the order of web pages
was thought to be important because of the identity goal priming manipulation. Since the
priming manipulation causes one identity goal (value-expressive or utilitarian identity
goal) to be temporarily salient, the effects of this priming task on one’s responses may
90
vary depending on when the priming task is given. The pilot test helped to determine the
sequence of web pages for the main test.
Second, this pilot test was expected to help understand the effects of identity
relevance on consumer identity salience. By its definition, relevance (congruence) is
formed by the relationship between an identity goal and the function of a reward item.
The identity goal manipulation using the priming questionnaire was tested in Pretest 2
and the reward items representing value-expressive or utilitarian function of the reward
items were selected in Pretest 1. With two levels for each of the two established
experimental cues, four identity relevance conditions existed wherein two were congruent
and two were incongruent (see Table 3.9). From the theoretical perspective, the
congruent identity relevance conditions were proposed to be more effective in increasing
the salience of consumer membership identity than the incongruent identity relevance
conditions. This pilot test, which included both cues, examined the effects of identity
relevance on identity salience prior to the Main test.
This pretest was exempted by the Institutional Review Board at the Ohio State
University (IRB protocol No. 2006E0699, see Appendix Q).
91
Consumer identity goal
Value-expressive
Utilitarian
Congruent
Incongruent
Incongruent
Congruent
Function of reward items
Value-expressive
Utilitarian
Table 3.9. Four conditions of identity relevance
3.4.1. Experimental Website Development
Experimental websites used in the pilot test consisted of 10 mock websites for a
fictitious department store. Of those, eight websites reflected the eight experimental
conditions of importance for the main test and two were employed to determine the order
of web pages for the survey experiment. The website of this fictitious department store
was created by modifying existing apparel websites from the U.K. and Australia. Two
factors taken into consideration in developing the websites of the department store were
as follows: First, to avoid possible inference associated with participants’ familiarity with
the retailer, websites from non-U.S. apparel stores were utilized to develop the base of
the department store websites. Second, a fictitious department store name “Fashion Ally”
92
was created in order to avoid respondents’ inferential effects of prior experiences with
and knowledge of the retail brand and the retailer. The ten experimental websites
maintained the same base websites so that they reflected consistent levels of visual
atmospheric and functional performance.
Pictures of 11 reward items from previous pretests were used and one reward
item’s (a store gift card) pictorial image (‘Fashion Ally gift card’) was created using
Adobe Photoshop. Of those 12 items selected in Pretest 1, each group of four reward
items represented value-expressive function, utilitarian function, and no particular
function, respectively. The consistency of pictures in terms of background, resolution,
angle, brightness, and contrast was controlled and achieved using Adobe Photoshop. The
resolution of pictures was maintained to be 190 X 240 pixels across all pictures.
Experimental Webpages were developed using Microsoft FrontPage. Each
website is composed of nine pages in the following sequence: (1) an intro page
containing a welcome message and directions for the experiment, (2) a scenario
instruction page explaining the hypothetical relationship between the subject and the
retailer, (3) a survey page for the identity goal prime task, (4) a store opening page, (5) a
page regarding loyalty program membership for the identity distinctiveness manipulation,
(6) a page informing subjects of their membership with the loyalty program, (7) a page
presenting all reward items available via the customer loyalty program, (8) a survey page
listing three reward items recommended to the customer and variable measurement scales,
and (9) a thank-you page.
93
The intro page (webpage 1) provided the welcome message and general
information about this research study such as the purpose of the study, guarantees of
confidentiality, expected time to complete the survey, and a link directing the participants
to the next page, the survey direction page. The survey direction page (webpage 2)
provided the scenario which guided respondents to imagine themselves as loyal
customers of the store (i.e., Fashion Ally) while they took the survey. The webpage for
identity goal priming (webpage 3) contained a set of survey questions to prime
participants’ identity goal to be either value-expressive or utilitarian identity (Lee &
Shavitt, 2006). The store opening page (webpage 4) which was the front page of the
store contained two hyperlinks leading the participants to the next page by clicking either
of the hyperlinks. The next page (webpage 5) provided information about membership in
the loyalty program where loyalty program distinctiveness was manipulated to be either
high or low. The next page (webpage 6) provided information that the participant
became a member of the loyalty program. The next page (webpage 7) presented all
reward items available to members via the customer loyalty program. From the item
selection step in pretest 2, 12 reward items including four utilitarian items, four valueexpressive items and four items that reflect both functions moderately were chosen and
used. In attempting to make the process on the next page more effective (three
recommended rewards were presented to the participant), more rewards (four items) were
provided on this page. The 12 rewards items were presented on this page along with their
verbal description and pictures (see page 7 in Appendix J). The following survey page
(webpage 8) included mainly three parts: (1) the presentation of three reward items
recommended to the participant, (2) the questionnaire, and (3) demographic information
94
questions and a textbox that participants could use to provide their email addresses to
receive extra course credit. Value-expressive rewards were ‘luxury spa experience,’
‘luxury resort stay for two,’ and ‘favorite choice of jewelry,’ and utilitarian rewards
included ‘shopping discount,’ ‘gift card,’ and ‘extra airline mileage.’ The final thank-you
page (webpage 9) appeared to thank subjects for their participation in and completion of
the survey. Each page contained a hyperlink of “NEXT” and participants would move to
the next page by clicking on it. Appendix J shows the procedure of the pilot test.
Besides the eight experimental websites aforementioned, two websites were
added for the purpose of determining the appropriate order of webpages. For these
websites, the order of one page, the survey page for the identity goal priming task differs
from others in that the identity goal priming task was performed after the guidance for the
experiment survey was provided, that is, before respondents would enter the store (see
Table 3.10 for the comparison of two websites’ sequences).
95
Identity priming before the experimenta
Identity priming during the experimentb
Step 1
Read directions for the experiment
Read directions for the experiment
Step 2
Complete a questionnaire to prime
consumer identity goal (either valueexpressive or utilitarian identity goal)
Enter the front-page of Fashion Ally
Enter the front-page of Fashion Ally
Step 3
Step 4
Investigate customer loyalty program
information in terms of membership
terms and the presence of its unique
name (either distinctive LP or nondistinctive LP)
View all reward options available to
members of the customer loyalty
program of Fashion Ally
View three reward options suggested to
the subject with the customer loyalty
program of Fashion Ally (either valueexpressive or utilitarian reward function)
Select one reward that the subject would
like to have
Complete measurement
Step 5
Step 6
Step 7
Step 8
Note.
Investigate customer loyalty program
information in terms of membership terms
and the presence of its unique name
(either distinctive LP or non-distinctive
LP)
Complete a questionnaire to prime
consumer identity goal (either valueexpressive or utilitarian identity goal)
View all reward options available to
members of the customer loyalty program
of Fashion Ally
View three reward options suggested to
the subject with the customer loyalty
program of Fashion Ally (either valueexpressive or utilitarian reward function)
Select one reward that the subject would
like to have
Complete measurement
a
Eight experimental websites for Pilot-test were organized following the sequence in the
identity priming before the experiment condition.
b
Two additional experimental websites used for webpage order decision followed the
sequence in the identity priming during the experiment.
Table 3.10. Comparison of webpage sequences used in Pilot test
96
3.4.2. Pilot Test
Design
A 2 (loyalty program distinctiveness: high vs. low) x 2 (reward item function:
value-expressive vs. utilitarian) x 2 (consumer identity goal: value-expressive vs.
utilitarian) between-subject factorial design was employed in this pilot test. Consistent
with the manipulation methods in Pretest 3, loyalty program distinctiveness was
operationalized by differentiating the numerical rarity of customers who were eligible for
loyalty program membership (High: top 5% of customers vs. Low: every customer) and
by assigning a unique and exclusive name to the loyalty program as opposed to a
common name which has no unique or special meaning (High: AllyX Platinum Club vs.
Low: Fashion Ally Reward Program). As in Pretests 2 and 3, identity relevance was
manipulated by utilizing a questionnaire to prime respondents’ temporal identity goal
(value-expressive goal or utilitarian goal) to be either the same as or different than the
function of the rewards (value-expressive goal or utilitarian goal) (Lee & Shavitt, 2006).
Procedure
The experiment consisted of seven steps. Upon arrival on an experimental
website, subjects were led to (1) read a welcome message and directions for the survey,
(2) read a scenario explaining the imaginary relationship between the subject and the
retailer, (3) complete a survey for identity goal priming, (4) read detailed information
about the retailer’s customer loyalty program and its membership qualifications, (5) be
informed that the subject becomes a member of the loyalty program, (6) view all reward
97
items available with the loyalty program, and (7) view rewards offered to the subject in
return for his/her prior fictitious shopping and complete the questionnaire. Upon arriving
on the survey website, the subjects were informed that they were participating in a study
about consumer evaluations of different types of a customer loyalty program that a retail
loyalty program offers. With the description used in Pretest 3, they were instructed to
imagine themselves being a loyal customer of a retail store, Fashion Ally, and asked to
evaluate the customer loyalty program after they had gone through the hypothetical
shopping experiences at the store.
Prior to entering the store website, subjects completed a questionnaire to
manipulate the salience of their identity goal, either value-expressive or utilitarian
identity. As in Pretest 2, for the value-expressive identity goal condition, subjects were
asked to think of 20 impression-relevant behaviors (e.g., buying a convertible sports car,
gaining weight), imagine themselves performing each behavior, and rate whether it
would make a good impression on themselves and others such as their friends and
classmates (see Appendix F). Each statement was evaluated on a 5-point scale ranging
from 1 (won’t make a good impression at all) to 5 (will make a very good impression).
In the utilitarian identity goal condition, subjects evaluated the importance of 20 product
features (e.g., the durability of running shoes), imagined themselves considering
purchasing the item, and rated how important each product feature would be to them (see
Appendix F). Each item was rated along a 5-point scale ranging from 1 (not at all
important to me) to 5 (very much important to me).
After completing the priming questionnaire, subjects were directed to investigate
the website of Fashion Ally and their customer loyalty program. Customer loyalty
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program information was presented on three webpages wherein the first page shows
general requirements for enrolling in the loyalty program. The description of terms
regarding the loyalty program enrollment was different in terms of high and low
distinctiveness. The second page explained that either 1) the subject was invited to
become a member of the loyalty program because they were among the top 5 % of
customers (high distinctiveness) or 2) that every customer can join the loyalty program
(low distinctiveness). Then, all reward options available from the loyalty program were
presented on the third page. On the following page, three reward items were
recommended to the subjects using the description below:
Your points on your FASHION ALLY CARD tell us that you're eligible to
redeem them. Based on your shopping interests and prior purchases, Fashion
ALLY recommends the following 3 gifts that you may like to get. Please do not
consider the possible price of each item and choose one that you want to get by
clicking the button of your choice.
Given the suggested rewards, subjects selected one item that they would like to
have the most. Thereafter, they completed measures for the research variables including
identity salience, attitude towards the loyalty program and the store, identification, and
satisfaction. Items for manipulation checks on loyalty program distinctiveness and
identity relevance, and demographic information were also collected. Upon completion
of the survey, they were thanked and guided to report their email address to receive
course credit.
99
A separate exemption for the Pilot Test was approved by Institutional Review
Board at the Ohio State University (IRB protocol No. 2006E0700, see Appendix Q).
Measures
Variables of significance in this study were identity salience, attitude towards the
loyalty program and the store which offers the customer loyalty program, consumerretailer identification, and satisfaction. Structured questionnaires measuring all variables
were adopted from previous research.
Identity salience is defined as a temporary state that a consumer’s particular
identity is activated at a given time (Forehand et al., 2002). By its definition, identity
salience differs from identification or identity importance in that identity salience
concerns a momentary activation of a certain identity while the others relate to relatively
enduring associations between a consumer and an object (Reed, 2004). The degree to
which subjects perceive their membership identity important in their shopping schema at
a given moment was measured using six items adopted from previous studies (α = .85,
Reed, 2004). The items asked subjects to indicate the degree to which they “feel
favorable – unfavorable toward the loyalty program membership,” and “feel interested –
uninterested toward the customer loyalty program,” These item were measured on a 7point semantic differential scale. Four additional items asked subjects to indicate the
degree to which they “think their membership of the customer loyalty program is relevant
to them,” “characterize themselves as a member of the customer loyalty program,”
“admire themselves as a member of the customer loyalty program,” and “identify
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themselves with the customer loyalty program membership.” These items used a 7-point
Likert scale with endpoints ranging from strongly disagree (1) to strongly agree (7).
Customer-retailer identification refers to the degree to which the consumer sees
his/her own self-image as overlapping with the retailer’s image (Bagozzi & Dholakia,
2006). Customer-retailer identification was assessed with the eight-item self-brand
connection scale developed by Escalas and Bettman (2003). Responses were recorded on
7-point, strongly disagree (1) to strongly agree (7) measures. Given the verbal
description, “We sometimes strongly identify with a retail store. This occurs when we
perceive a great amount of overlap between our ideas about who we are as a person and
what we stand for (i.e., our self-image) and of who this store is and what it stands for (i.e.,
the company's product/service image). Now we're interested in your perceptions of or
feelings about how you would identify yourself as a member of Ally X Platinum Club
program (Fashion Ally card in low distinctive experimental conditions) when you shop at
FASHION ALLY with your Ally X Platinum Club membership (Fashion Ally
card). Please answer the following questions based on your experience with FASHION
ALLY today.” Respondents reported their perception of the overlap between their own
identity and the identity of the retailer. The measures include:
-
The Ally X Platinum Club program would reflect who I am;
-
I can identify myself with the Ally X Platinum Club program;
-
I feel a personal connection to this Ally X Platinum Club program;
-
I would use this Ally X Platinum Club program (Fashion Ally card) to
communicate who I am to other people;
-
I think Ally X Platinum Club program (Fashion Ally card) helps me
become the type of person I want to be;
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-
I consider Ally X Platinum Club program (Fashion Ally card) to be "me"
(it reflects who I consider myself to be or the way that I want to present
myself to others);
-
Ally X Platinum Club program (Fashion Ally card) suits me well;
-
Ally X Platinum Club program (Fashion Ally card) shares my values.
The reliability of the scale was established in previous studies (α = .93, Escalas &
Bettman, 2005).
Attitude toward the Customer Loyalty Program and the Retail Store
Attitude is defined as an individual’s favorable or unfavorable evaluation of an
object, person, issue, or behavior (Fishbein & Ajzen, 1975). The attitudes toward the
loyalty program/retail store were assessed using five separate 7-point semantic
differential items. These items were anchored with bad – good, dislike – like, useless –
useful, uninformative – informative, and unpleasant – pleasant. Using these measures,
prior research found them highly reliable (α > .90, Dimofte et al., 2003/2004; Forehand,
2000).
Satisfaction
Satisfaction is defined as one’s contentment with respect to his/her experiences
with a customer loyalty program. To measure satisfaction with customer loyalty program
shopping, three items from De Wulf et al. (2001) were administered. These items used a
7-point Likert-type scale ranging from strongly disagree (1) to strongly agree (7). The
acceptable reliability of the items was reported in previous research (α > .70, De Wulf et
102
al., 2001). The measures included “I would be satisfied with reward experiences with
Ally X Platinum Club program,” “I would be satisfied with the manner in which
FASHION ALLY treats me as a loyal customer (treats their customers like me),” and
“Overall, I am satisfied with the Ally X Platinum Club program of FASHION ALLY.”
Method
Three hundred thirty four undergraduate students were recruited from two
introductory courses in the Department of Consumer Sciences and they received extra
credit for their participation in this study. Subjects were randomly assigned to one
condition among the 10 experimental websites and received an email containing a URL
link which directed them to the assigned survey website. Table 3.11 shows the number
of participants for each experimental condition. Subsequent discussion focuses on the
eight main conditions, condition 1 through condition 8.
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Condition
LP
Distinctiveness
1a
High
2
3
4b
High
High
High
5
Low
6
7
8
Low
Low
Low
9a
10 b
High
High
Identity goal
Valueexpressive
Valueexpressive
Utilitarian
Utilitarian
Valueexpressive
Valueexpressive
Utilitarian
Utilitarian
Valueexpressive
Utilitarian
Function of
rewards
N
(Total=334)
Value-expressive
37
11.08
Utilitarian
Value-expressive
Utilitarian
28
30
34
8.38
8.98
10.18
Value-expressive
38
11.38
Utilitarian
Value-expressive
Utilitarian
32
39
34
9.58
11.68
10.18
Value-expressive
Utilitarian
35
27
10.48
8.08
Percent
Note. a b Conditions 9 and 10 were a modified version of conditions 1 and 4, respectively.
Table 3.11. Participants in the experimental conditions
Results
The main objectives of this pilot test were to (1) ensure the readiness of web
surveys before conducting the main test, (2) check the manipulation of two experimental
factors (distinctiveness and identity relevance), (3) determine the order of the web pages
for the survey experiment and (4) compare consumer responses across different subconditions of each identity relevance condition (i.e., congruent vs. incongruent). The
104
analysis results to achieve these objectives are reported. Thus, the research hypotheses
for the main study were not tested in this Pilot test.
Participants All 334 responses were usable for data analysis. As shown in Table
3.12, the mean age was 22 with ages ranging from 18 to 36. Three hundred one of the
total 334 respondents (90.4%) ranged in age from 20 to 25 years. The majority was
Caucasian (75.7%) and about 45 percent of the respondents were enrolled in at least one
customer loyalty program for apparel shopping. About 27 percent of the respondents
were using one or two loyalty programs for their apparel shopping (see Table 3.13). One
hundred eight respondents (32.3%) were male; 226 (67.7%) were female (see Table
4.3).Because Pretest 2 showed gender differences, this sample was also checked for
gender differences (see below).
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Demographics
Mean (SD)
Gender
Female
Male
Age (N = 333)
Under 20
20-24
25-30
Over 30
Frequency
(N = 334)
Percent
108
226
32.3
67.7
7
288
35
3
2.1
86.5
10.5
0.9
32
253
7
29
7
6
9.6
75.7
2.1
8.7
2.1
1.8
22.41 (2.24)
Ethnic background
African American
Caucasian American
Hispanic
Asian/pacific islander
Multi-cultural
Others
Table 3.12. Demographic characteristics of participants
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Frequency
(N = 334)
Customer loyalty program usage
Enrolled in customer loyalty program(s)
for apparel shopping (missing N = 1)
Yes
No
How many customer loyalty programs do you have
for apparel shopping (missing N = 181)
0
1
2
3
4
5
6
Percent
150
183
45.0
55.0
32
43
51
31
14
7
3
9.6
12.9
14.3
9.3
4.2
2.1
0.9
Table 3.13. Customer loyalty program usage for apparel shopping
Questionnaire Assessment
Unidimensionality and internal reliability were assessed to check the adequacy of
scales for the research variables. Exploratory factor analysis with maximum likelihood
extraction method was performed to check unidimensionality of each variable. A
minimum eigenvalue of 1.0 was used as a criterion to extract the number of factors. Only
items loading greater than .40 on a single construct and with a minimum difference of .20
on the other constructs were included. An exploratory factor analysis with the eight
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identification items yielded one item (ID2) to be excluded from the factor. All other
scale items loaded appropriately on their factor. As shown in Table 3.14, reliabilities, the
item-total correlations within each component, and the proportion of the total variance
extracted were all high and constant, which indicate unidimensionality of each construct.
Thus, measurement of the research variables was found to be sound.
108
Factor loading
Identity Salience
IS1
IS2
IS3
IS4
IS5
IS6
Store attitude
AS1
AS2
AS3
AS4
AS5
AS6
Loyalty program attitude
LA1
LA2
LA3
LA4
LA5
LA6
Identification
ID1
ID3
ID4
ID5
ID6
ID7
ID8
Satisfaction
SA1
SA2
SA3
Item-total
correlation
% variance
explained
.74
.80
.88
.91
.84
.88
.74
.80
.85
.86
.80
.83
.94
.95
.97
.92
.89
.60
.89
.88
.90
.88
.82
.61
.94
.90
.95
.91
.83
.54
.88
.87
.89
.88
.83
54
.82
.88
.85
.83
.88
.79
.85
.80
.86
.82
.79
.85
.77
.83
.80
.88
.91
.78
.85
.87
Table 3.14. Reliabilities and unidimensionality checks
109
Cronbach’s
Alpha
71.35
.94
74.92
.94
73.34
.94
62.34
.95
75.97
.91
One-way Analysis of Variance (ANOVA) was conducted to examine if there was
a significant different between female and male subjects in terms of the research
variables: identity salience, attitude toward the store, identification, and satisfaction.
Because Pretest 3 found that gender affects consumers’ perception of identity
distinctiveness toward a customer loyalty program, it was necessary to examine whether
or not there was a significant difference between males and females. ANOVA which
employed gender as the independent variable and the four research variables as the
dependent variables was performed.
The analysis revealed a significant difference between the female and male
groups in identity salience, attitude towards the store, and satisfaction. F (3, 71) = 21.33,
p < .001. Female subjects showed greater identity salience, more positive attitude
towards store, and greater satisfaction than male subjects did. However no significant
difference was found between female and male subjects in identification. Table 3.15
shows the results of the ANOVA test. The results again suggest that analysis should
focus on a single gender group, females, for remaining analyses. Consequently, the 176
responses collected from female subjects in the eight experimental conditions (conditions
1 though 8 in Table 3.11) were used for data analysis.
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Identity salience
Store attitude
Identification
Satisfaction
Female (N = 226)
M (SD)
4.82 (1.34)
5.71 (1.14)
3.86 (1.39)
5.23 (1.33)
Male (N = 108)
M (SD)
4.20 (1.37)
5.20 (1.20)
3.68 (1.35)
4.59 (145)
F (1, 314)
12.403
10.89
1.04
12.41
p
.001
.001
.308
.001
Table 3.15. ANOVA results for the comparisons between female and male groups
A series of analyses of variance were performed to check the success of the
manipulation procedure. Parallel to Pretest 3, to gauge distinctiveness respondents were
asked to indicate how much they agreed with three statements about Fashion Ally’s
customer loyalty program on a 7-point Likert scale: ‘novelty,’ ‘typicality,’ and
‘unusualness’ (Dimofte et al., 2003). A scale reliability analysis indicated that the set of
three perceived distinctiveness items exhibited a reliability of 0.61. Eliminating the item
of ‘novelty’ from the scale resulted in an increase in scale reliability (Cronbach’s α = .71).
Hence, a reduced two-item scale was averaged to form a distinctiveness measure.
Additionally, a self-reported measure was included to check perceptions of
distinctiveness. Given a blank box, respondents were asked to indicate the proportion of
customers who could join Fashion Ally’s loyalty program based on the information given.
The analysis of variance for the two-item scale revealed that there was a significant
difference in perceived distinctiveness between the high and the low loyalty program
111
distinctiveness conditions, F (1, 174) = 9.71, p < .01. That is, the customer loyalty
program that restricts its membership to 5% top customers with a unique name
designating the membership (high distinctiveness: M = 4.27, SD = 1.27) was perceived to
be more distinctive than the one offered to every customer with a common name (low
distinctiveness: M = 3.66, SD = 1.33). An additional ANOVA test also confirmed the
distinctiveness manipulation. Respondents in the high distinctiveness group reported that
the loyalty program would serve 18.56 percent of total customers while those in the low
distinctiveness group estimated that the loyalty program would be available to 57.5% of
total customers, F (1, 174) = 83.12, p < .001. Thus, the distinctiveness manipulation
appeared to be successful (see Table 3.16 for statistics).
Measures
Perceived
distinctiveness
A self-report
(percent of
customers who can
enroll the LP)
High Distinctive LP
group (N = 84)
M (SD)
Low distinctive LP
group (N = 92)
M (SD)
F (1, 174)
p
4.27 (1.27)
3.66 (1.33)
9.71
.002
18.59 (25.49)
57.41 (29.54)
83.12
.000
Table 3.16. ANOVA Results for the loyalty program distinctiveness manipulation check
112
The identity relevance manipulation was assessed with a structured scale adopted
from previous research. Instead of the cognitive thought listing method used in Pretest 2,
respondents were asked to indicate the degree to which their experience with the Fashion
Ally loyalty program reflected their self-image at a given moment (Does not reflect at all
= 1; reflects very much = 7); their sense that the Fashion Ally loyalty program matches
their sense of what they are at a given moment (Does not match at all = 1; match very
much = 7) and the rewards of the Fashion Ally loyalty program seem relevant to their
sense of being a member of the customer loyalty program (Not relevant at all = 1; very
relevant = 7). A scale reliability analysis revealed that the identity relevance measure
was reliable (Cronbach’s α = .86).
For the identity relevance manipulation, an ANOVA test was performed with two
groups (High group including 2 congruent utilitarian and 2 congruent value-expressive
groups vs. Low group encompassing the 4 incongruent conditions). The analysis
resulted in an insignificant difference between the two groups, F (1, 174) = 0.057, p > .05.
Then, a univariate analysis of variance was conducted to examine if there was a
significant difference in the identity relevance perception across the four conditions. The
dependent variable was the identity relevance measure and the independent variables
were the identity goal prime condition and the reward function condition. The results
revealed that there were no significant differences across groups, F (3, 172) = 0.502, p
> .05. None of the main effects of the manipulations of reward function and identity goal
priming were found. However, examinations of the mean values across the four groups
showed that the mean values in the high congruence conditions were higher than the
mean values in the low congruence conditions (see Table 3.17). Moreover, between the
113
two congruent conditions, the value-expressive congruence group exhibited higher
perceptions of identity relevance than others.
In order to further strengthen the priming manipulation in the main test, additional
tasks were added to the experimental conditions. In the value-expressive prime condition,
an instruction asking subjects to list products that one may use to express oneself to
others was added. In the utilitarian prime condition, subjects would have an additional
task to assess the features of the awarded rewards. Detailed explanations of the priming
manipulation are listed in the next chapter.
Identity goal priming
value-expressive
utilitarian
M (SD)
N
M (SD)
N
Reward function
value4.68 (1.20)
expressive
utilitarian
4.35 (1.39)
47
4.59 (1.48)
46
39
4.63 (1.20)
44
F (3, 172)
p
Partial η2
0.501
.682
.009
Table 3.17. Univariate analysis of variance results as a function of rewards and identity
goal prime
114
The pilot test also needed to determine the sequence of webpages, in particular,
the point of time when the identity goal priming should be performed. Two identity
relevance conditions (Condition 1 for the value-expressive relevance and Condition 4 for
the utilitarian relevance in Table 4.2) were selected and used as the base for the two
sequence determining-websites (compared to Condition 9 for value-expressive relevance
and Condition 10 for utilitarian relevance in Table 3.11). To illustrate, in the Conditions
9 and 10, the identity goal priming task was performed after the guidance for the
experiment survey was provided, that is, before respondents would enter the store, while
the identity goal priming task was performed before respondents began the experiment in
Conditions 1 and 4 (see Table 3.10 for the comparison of two websites’ sequences).
ANOVA was performed with goal relevance as the dependent variable and the
experiment group as the independent variable. First, an ANOVA test with two groups
(condition 1 vs. condition 9) showed that there was no significant difference between the
two groups in perceived relevance. Another ANOVA test which compared two groups,
condition 4 and condition 10 revealed that there was no significant difference between
them in relevance perception. Therefore, it was concluded that the two versions of
webpage sequences did not affect subjects’ perception of relevance in the same
experimental conditions (see Table 3.18). Then, a comparison of mean values between
the two corresponding conditions showed that ‘identity priming before the experiment’
(conditions 1 and 4) consistently showed higher relevance than the ‘identity priming
during the experiment’ (conditions 9 and 10) across the two comparison tests. Thus, it
was determined to maintain the webpage sequence adopting ‘identity priming before the
experiment’ for the main test.
115
Relevance
Relevance
Condition 1
(N = 36)
M (SD)
Condition 9
(N = 35)
M (SD)
F (1, 70)
p
4.24 (1.7)
4.14 (1.03)
0.93
>.05
Condition 4
(N = 34)
M (SD)
Condition 10
(N = 27)
M (SD)
F (1, 60)
p
4.49 (1.42)
4.42 (1.15)
0.043
>.05
Table 3.18. ANOVA Results for the comparison between ‘identity priming before the
experiment’ group and ‘identity priming during the experiment’ group
116
CHAPTER 4
MAIN STUDY
4.1. Overview
The objective of the main test was three-fold: (1) to understand the effects of
distinctiveness and identity relevance of a customer loyalty program on consumer
identity salience for a member of the customer loyalty program, (2) to examine the
relationships between consumer identity salience and consumer responses, and (3) to
understand the moderating role of consumer perceptions of the trustworthiness of a
customer loyalty program on the connections between two characteristics of a loyalty
program (i.e., loyalty program distinctiveness and identity relevance) and consumer
responses to the loyalty program and the retailer which offers the loyalty program. This
main study consists of two parts: Part 1 examines the effects of the loyalty program
contextual cues (objective 1) and the moderating effect of trustworthiness (objective 3)
on identity salience and Part 2 discusses the structural effects of identity salience on
consumer attitudinal and relational responses (Objective 2).
This main study was exempted by Institutional Review Board at the Ohio State
University (IRB protocol No. 2007E0360, see Appendix Q).
117
4.2. Method
4.2.1. Design
The main test was designed as a 2 (distinctiveness: high vs. low) x 4 (identity
relevance: two congruent vs. two incongruent conditions) x 2 (trustworthiness: high vs.
low) between-subject factorial design study. Distinctiveness and identity relevance were
manipulated using experimental design. Trustworthiness was measured using a selfreport scale and high and low trust groups were established by means of a median-split
method. Hence, the number of experimental conditions created online was eight in this
study.
4.2.2. Experiment Website Modification
The eight experimental websites developed in the pilot test were used as basic
frames for the main test with some modifications based on the results of the pilot test.
First, the one page that presented all 12 reward items offered to the loyalty program
membership was excluded from the experimental webpages for all conditions in the main
test. This page was eliminated because the information on the page may have led
respondents to compare the target reward items with all available reward items and
consequently may have affected their evaluations of the main reward options in the pilot
test. Such comparison could reinforce or prohibit participants’ reactions to the reward
118
items assigned to them. This modification was made in an attempt to boost the
effectiveness of the experimental manipulation for the function of the reward items.
Second, to further strengthen the identity goal priming manipulation in the main
experiment, instructions directing respondents to focus more on the primed dimension
were added to the priming task page (Shavitt et al., 1994). After subjects completed the
priming questionnaire, they were informed that, after they finished the experiment, they
would be asked to evaluate products. In the value-expressive prime condition, they
would be asked to list three items they generally use to express or communicate who they
are to others (e.g., classmates, friends). Thus, subjects under the value-expressive prime
task were expected to be thinking of their self identity or self image during the
experiment. In the utilitarian prime condition, they would be asked to assess features of
products that they would view during the experiment.
In addition, minor modifications were made to clarify and streamline
experimental manipulations and procedures. For instance, ‘Fashion Ally Reward
Program’ which was an experimental treatment for the low distinctiveness condition in
the Pilot study was changed to ‘Fashion Ally Card’ to enhance the effectiveness of the
distinctiveness manipulation. Table 4.1 summarizes the eight experimental conditions by
the three experimental treatments: loyalty program distinctiveness (high vs. low),
consumer identity goals (value-expressive vs. utilitarian), and function of reward items
(value-expressive vs. utilitarian).
119
Experimental
condition
Condition 1
LP distinctiveness
High
Name: AllyX
PLATINUM CLUB
Qualification: Top 5%
customers
Condition 2
Identity goal prime
Value-expressive identity relevance
Value-expressive identity goal
Low
Name: Fashion Ally
Card
Qualification: all
customers
Condition 6
Value-expressive identity goal
Value-expressive rewards
Spa, Resort stay, and
Jewelry selection
Incongruent identity relevance I
Low
Utilitarian rewards
Discount, Airline mileage
bonus, and a Gift card
Incongruent identity relevance II
Low
Utilitarian identity goal
Condition 8
Utilitarian rewards
Discount, Airline mileage
bonus, and a Gift card
Value-expressive identity relevance
Value-expressive identity goal
Condition 7
Value-expressive rewards
Spa, Resort stay, and
Jewelry selection
Utilitarian identity relevance
High
Utilitarian identity goal
Condition 5
Utilitarian rewards
Discount, Airline mileage
bonus, and a Gift card
Incongruent identity relevance II
High
Utilitarian identity goal
Condition 4
Value-expressive rewards
Spa, Resort stay, and
Jewelry selection
Incongruent identity relevance I
High
Value-expressive identity goal
Condition 3
Function of reward
items
Value-expressive rewards
Spa, Resort stay, and
Jewelry selection
Utilitarian identity relevance
Low
Utilitarian identity goal
Utilitarian rewards
Discount, Airline mileage
bonus, and a Gift card
Table 4.1. Experimental treatment sets by distinctiveness, identity goals and the functions
of reward items
120
4.2.3. Participants and Procedure
A Web-based experiment method was employed for the main study. A list of
email addresses of 9,300 female students who were randomly selected from those
enrolled at The Ohio State University was obtained from the Office of the Registrar. The
9,300 students were randomly assigned to one of the eight experimental conditions, and
invitation emails soliciting participation were sent to each of them. The invitation email
explained the purpose of the study, the time required to complete the experimental survey,
a statement of confidentiality assurance, information about an opportunity to win an
incentive for participants of the study, and a URL that would direct the recipient to the
online experimental website that had been assigned to her. A follow-up reminder email
was sent to each of the students five days after the first invitation email was sent (see
Appendix K).
The main test used the same experimental context as the Pilot test, where subjects
are loyal customers of a hypothetical apparel retailer, Fashion Ally which is planning to
implement a new customer loyalty program for their valuable customers and the retailer
wants to study consumer opinions of it. The experiment was composed of ten pages in
sequence as follows: (1) an intro page stating the welcome message and directions for the
experiment, (2) a scenario instruction explaining the hypothetical relationship between
the subject and the retailer, (3) a survey page for the identity goal priming task, (4) a store
opening page, (5) a loyalty program membership information page including the identity
distinctiveness manipulation, (6) a page informing subjects of their membership with the
loyalty program, (7) a page presenting three reward items offered to the subject with her
121
loyalty program membership, (8) a survey page with measures, and (9) a page to provide
their email address for the prize lottery, and (10) a thank-you page. Identical procedures
were used as in Pilot test where subjects were guided to engage in the identity goal
priming task, learn about Fashion Ally’s customer loyalty program and the reward items
she would receive with her loyalty program membership in return for prior shopping at
Fashion Ally, and answer the questionnaire measuring the research variables. The
finalized experimental websites used in the main test and the experimental procedure are
provided in Appendices L and M.
4.2.4. Measures
This study included two independent variables (i.e., loyalty program contextual
cues: distinctiveness and identity relevance) and five dependent variables, namely
identity salience, customer-retailer identification, attitude toward the loyalty program and
the retail store, and satisfaction. The measures used in Pilot Test were also used in Main
Test and additional measures (trustworthiness of customer loyalty program marketing,
self-monitoring, identity congruence) were included. In Part 1 of this study, one
dependent variable (i.e., identity salience) and a moderating variable (i.e.,
trustworthiness) were employed to examine if (1) identity salience is affected by loyalty
program contextual cues of distinctiveness and identity relevance and (2) trustworthiness
moderates the relationships between the loyalty program’s contextual cues and identity
salience. In Part 2, the four dependent variables were utilized as latent variables to
understand the proposed structural model of customer loyalty program.
122
In addition to these research variables, self-monitoring and items designed to
check the distinctiveness and identity relevance manipulations were assessed. Prior
research on distinctiveness addressed a significant effect of a subject’s individual trait
(e.g., Shavitt & Fazio, 1991), self-monitoring on the interplay between the loyalty
program cues and identity salience. Thus, a subject’s self-monitoring was assessed and
treated as a covariate in the analysis of Part 1. All measures used in this dissertation are
listed in Appendix N.
Identity Salience
Identity salience is defined as a temporary state that a consumer’s particular
identity is activated at a given time (Forehand et al., 2002). It is operationalized as the
degree to which subjects perceive their membership identity important in their shopping
schema at a given moment in this study. Six items were used to measure identity salience
(Reed, 2004). The items asked subjects to indicate the degree to which they “feel
favorable – unfavorable toward the loyalty program membership,” and “feel interested –
uninterested toward the customer loyalty program.” These items were measured on a 7point semantic differential scale. Four additional items asked subjects to indicate the
degree to which they “think their membership of the customer loyalty program is relevant
to them,” “characterize themselves as a member of the customer loyalty program,”
“admire themselves as a member of the customer loyalty program,” and “identify
themselves with the customer loyalty program membership.” These items used a 7-point
Likert scale ranging from strongly disagree (1) to strongly agree (7).
123
Customer-Retailer Identification
Customer-retailer identification refers to the degree to which the consumer sees
his/her own self-image as overlapping with the retailer’s image (Bagozzi & Dholakia,
2006). Customer-retailer identification was assessed with the eight-item self-brand
connection scale developed by Escalas and Bettman (2003). Responses were recorded on
7-point, strongly disagree (1) to strongly agree (7) measures. Given the verbal
description, “We sometimes strongly identify with a retail store. This occurs when we
perceive a great amount of overlap between our ideas about who we are as a person and
what we stand for (i.e., our self-image) and of who this store is and what it stands for (i.e.,
the company's product/service image). Now we're interested in your perceptions of or
feelings about how you would identify yourself as a member of Ally X Platinum Club
program (Fashion Ally card in low distinctive experimental conditions) when you shop at
FASHION ALLY with your Ally X Platinum Club membership (Fashion Ally
card). Please answer the following questions based on your experience with FASHION
ALLY today.” Respondents reported their perception of the overlap between their own
identity and the identity of the retailer. The measures include:
-
The Ally X Platinum Club program (Fashion Ally card) would reflect who I
am,
-
I can identify myself with the Ally X Platinum Club program (Fashion Ally
card)
-
I feel a personal connection to this Ally X Platinum Club program (Fashion
Ally card)
-
I would use this Ally X Platinum Club program (Fashion Ally card) to
communicate who I am to other people
124
-
I think Ally X Platinum Club program (Fashion Ally card) helps me become
the type of person I want to be
-
I consider Ally X Platinum Club program (Fashion Ally card) to be "me" (it
reflects who I consider myself to be or the way that I want to present myself to
others)
-
“Ally X Platinum Club program (Fashion Ally card) suits me well
-
Ally X Platinum Club program (Fashion Ally card) shares my values.
The reliability of the scale was established in previous studies (α = .93, Escalas &
Bettman, 2005).
Attitude toward the Customer Loyalty Program and the Retail Store
Attitude is defined as an individual’s favorable or unfavorable evaluation of an
object, person, issue, or behavior (Fishbein & Ajzen, 1975). The attitudes toward the
loyalty program/retail store were assessed using five separate 7-point semantic
differential items. These items were anchored with bad – good, dislike – like, useless –
useful, uninformative – informative, and unpleasant – pleasant. Using these measures,
prior research found them highly reliable (α > .90, Dimofte et al., 2003/2004; Forehand,
2000).
Satisfaction
Satisfaction is defined as one’s contentment with respect to his/her experiences
with a customer loyalty program. To measure satisfaction with customer loyalty program
shopping, three items from De Wulf et al. (2001) were administered. These items used a
7-point Likert-type scale ranging from strongly disagree (1) to strongly agree (7). The
125
acceptable reliability of the items was reported in previous research (α > .70, De Wulf et
al., 2001). The measures included “I would be satisfied with reward experiences with
Ally X Platinum Club program,” “I would be satisfied with the manner in which
FASHION ALLY treats me as a loyal customer (treats their customers like me),” and
“Overall, I am satisfied with the Ally X Platinum Club program of FASHION ALLY.”
Trustworthiness
Trustworthiness is defined as to one’s belief that one’s needs will be fulfilled in
the future by customer loyalty programs undertaken by retailers (Anderson & Weitz,
1989; Morgan & Hunt, 1994). Consumer trust of the loyalty program marketing was
measured using bipolar 7-point rating scales adopted from Trifts and Haübl (2003).
Subjects were asked to express their opinions about apparel retailers’ customer loyalty
programs on five items: undependable – dependable, dishonest – honest, unreliable –
reliable, insincere – sincere, and untrustworthy – trustworthy. The reliability of the scale
was established in previous research (α = .94, Trifts & Haübl, 2003).
Control Variable: Self-monitoring
Self-monitoring refers to one’s tendency towards self-observation and self-control
guided by situational cues to social appropriateness (Snyder, 1974). Due to their concern
for social appropriateness and the desire to change their public appearance, high selfmonitors are particularly sensitive to the behavior and self-presentation of others in social
situations, and monitor their self-presentation based on these cues. On the other hand,
low self-monitors are less concerned with social cues and more concerned with their
126
internal feelings and preferences (Snyder, 1974). In this vein, high self-monitors tend to
be highly persuaded by value-expressive, social adjustive, and image-based functions
while low self-monitors are likely to find appeal with utilitarian and quality-based
functions (Shavitt et al., 1992; Snyder & DeBono, 1985).
Subjects’ self-monitoring, a personal trait was measured with the 18-item selfmonitoring scale (Snyder & Gangestad, 1986). Among the 18 items, a response of
“True” for eight items reflects high self-monitoring and a response of “False” for the
remaining 10 items reflects high self-monitoring. Scores obtained across all items on the
scale were summed to obtain each subject’s self-monitoring score and entered as a
covariate in the analysis. Higher scores indicate higher self-monitoring.
Measures for Manipulation Check
In order to check if respondents’ perceptions of loyalty program distinctiveness
and identity relevance were in line with the manipulations, scales for each
operationalization were included in the survey.
The distinctiveness manipulations were measured with the two indexes used in
the Pilot study. First, a three item distinctiveness scale was adopted from previous
research (Bhattacharya & Sen, 2003; Dimofte et al., 2003/2004). The distinctiveness
questions included “I would say that Fashion Ally's customer loyalty program
membership is distinctive,” “I would say that Fashion Ally's customer loyalty program
membership is unusual,” and “I would say Fashion Ally’s Customer loyalty program
stands out from other customer loyalty programs.” These items were evaluated on a 7point Likert-type scale ranging from strongly disagree (1) to strongly agree (7). As a
127
second index to check the distinctiveness manipulation, subjects were asked to estimate
the proportion of customers who were eligible for the customer loyalty program based on
the loyalty program information they had experienced. This self-estimation method has
been commonly used in distinctiveness research (e.g., Aaker et al., 2000).
Because the manipulation of identity relevance involves two stimuli (identity goal
prime and reward function), whether or not the subjects perceived the loyalty program
rewards to be congruent in function with the subject’s identity goal was tested using these
three scales: identity congruence scale, value-expressive attitude function scale, and
utilitarian attitude functional scale (Grewal et al., 2004; Martin, Stewart, & Matta, 2005).
First, to measure identity congruence (the degree to which the awarded rewards match
their identity goal primed), two items were adopted from Martin et al. (2005) and revised
accordingly as follows: “how similar is the goal that you associated with your shopping
and the goal that you associate with the Fashion Ally’s customer loyalty program?,” and
“how similar is the reward service from the Fashion Ally’s customer loyalty program and
the reason for your shopping?” These items were rated on a 7-point Likert-type scale
ranging from not at all similar (1) to very similar (7).
Next, to check if the given identity goal prime task was effective, the valueexpressive attitude functional scale and the utilitarian attitude functional scale were
administered (Grewal et al., 2004). The three items of the value-expressive attitude
functional scale asked subjects to indicate the degree to which their evaluation of the
loyalty program rewards is based on (1) “how the rewards offered would reflect the kind
of person you see yourself to be,” (2) “how the rewards offered to you would help you
feel good about yourself,” and (3) “how the rewards offered to you would help your self128
expression.” The two measures of the utilitarian attitude functional scale asked them to
rate the degree to which their evaluation of the loyalty program rewards is based on (1)
“the reward items’ functions and performance,” and (2) “how the rewards offered to you
would help you maximize your shopping rewards.” Items were anchored at strongly
disagree (1) and strongly agree (7).
The analyses for the Main Test are explained in the following chapter.
129
CHAPTER 5
ANALYSIS
5.1. Sample Characteristics
Among the 9300 invitation emails sent to each potential experiment participant,
46 emails were returned undelivered due to problems with the recipient email servers or
email accounts and 1148 responses were collected, representing a response rate of 12.34
percent. After eliminating seven non-usable responses due to significant missing data
and 19 responses representing those who had either participated in one of the pretests or
the Pilot test or taken the experiment more than once, 1122 final responses were usable
for data analysis. Table 5.1 shows the frequencies of responses in each of the eight
experimental conditions.
130
Experimental Manipulation
Experimental
LP
Function of
Identity Goal
Condition
Distinctiveness
Rewards
Valueexpressive
Valueexpressive
1
High
2
High
3
4
High
High
5
Low
6
Low
Utilitarian
Utilitarian
Valueexpressive
Valueexpressive
7
8
Low
Low
Utilitarian
Utilitarian
Valueexpressive
Utilitarian
Valueexpressive
Utilitarian
Valueexpressive
Utilitarian
Valueexpressive
Utilitarian
N
(Total = 1122)
Percent
180
16.0
120
10.7
164
133
14.6
11.9
135
12.0
144
12.8
108
138
9.6
12.3
Table 5.1. Participants in the experimental conditions
Nonresponse bias was assessed to determine if respondents are any different than
those in the sample who did not respond. The nonresponse bias test is based on the idea
that late respondents are more similar to non-respondents than the early respondents
(Armstrong & Overton, 1977). For the analysis, early respondents (first 10% of the
sample to respond) were compared with late respondents (last 10% of the sample to
respond) on a demographic variable (age) and key research variables. The averaged
scores from multiple items measuring each of the research variables were compared
between the two groups. No significant differences in any of the variables were found,
131
providing no evidence of nonresponse bias (see Appendix O). Hence, the sample was
deemed to represent the accessible population.
Table 5.2 summarizes demographic information of the respondents. The mean
age was 22 with ages ranging from 18 to 59. Approximately 90 percent of the
respondents were between 18 and 25 years of age. The majority of the respondents were
Caucasian (77.0%), followed by Asian American/Pacific Islanders (8.8%) and African
American (6.7%). The academic standing of the respondents was diversely distributed
and seniors accounted for 40 percent of the respondents, followed by sophomores
(27.2%), juniors (23.8%), graduate students (4.3%), and freshmen (3.4%). The majors of
the respondents were widely spread out. Among them, Business (11.4%), Social and
Behavioral Sciences (9.9%), Arts and Sciences (9.8%), Human Ecology (9.0%) and
Biological Sciences (9.0%) shared the highest portions of respondents’ majors.
Similar to the Pilot test (45%), 46.1 percent of respondents were enrolled in at
least one customer loyalty program for apparel shopping. Approximately 30 percent of
the respondents were members of one or two loyalty programs (see Table 5.3).
132
Demographic
Frequency
(N = 1122)
322
497
148
85
38
28
Categories
Percent
Age
Mean = 22.85
SD = 5.37
(missing n = 4)
18-19
20-21
22-23
24-30
31-40
Over 41
Academic standing
(missing n = 4)
Freshman
Sophomore
Junior
Senior
Others
38
267
305
460
28
3.4
23.8
27.2
41.0
4.3
Ethnic background
(missing n = 7)
African American
Caucasian American
Hispanic/Hispanic American
Native American
Asian American/Pacific Islander
Multicultural
Other
75
864
20
5
99
27
25
6.7
77.0
1.8
0.4
8.8
2.4
2.2
Major
(missing n = 12)
Allied medical professions
Architecture
Arts
Arts and Sciences
Biological Sciences
Business
Communication
Continuing Education
Dentistry
Education
Human Ecology
Engineering
Environment and Natural Resources
Food, Agricultural, & Environmental Sciences
Humanities
International Studies
Public Affairs
Law
Mathematical and Physical Sciences
Medicine/Public
health/Nursing/Optometry/Pharmacy
Social and Behavioral Sciences
Social Work
Veterinary Medicine
68
13
50
110
101
128
50
7
9
54
101
36
13
29
56
28
4
9
17
6.1
1.2
4.5
9.8
9.0
11.4
4.5
0.6
0.8
4.9
9.0
3.2
1.2
2.6
5.0
2.5
0.4
0.8
1.5
92
111
19
5
8.2
9.9
1.7
0.4
Table 5.2. Sample profiles: Demographic Characteristics
133
28.7
44.3
13.2
7.6
3.4
2.5
Frequency
(N = 1122)
Customer loyalty program usage
Percent
Enrolled in (a) customer loyalty program(s)
for apparel shopping (missing N = 4)
Yes
No
601
517
53.8
46.2
How many customer loyalty programs do you have
for apparel shopping (missing N = 531)
0
1
2
3
4
5-6
7-10
Over 10
85
152
178
114
28
26
6
2
7.6
13.5
15.9
10.2
2.5
2.3
0.6
0.2
Table 5.3. Sample profile: Customer loyalty program usage for apparel shopping
5.2. Preliminary Analyses
5.2.1. Manipulation Check
A series of t-tests were performed to check the adequacy of the manipulations for
loyalty program distinctiveness and identity relevance. The distinctiveness manipulations
were measured using two indexes as in the Pilot study: (1) the perceived distinctiveness
134
scale with three items and (2) a self-estimate of the proportion of customers eligible for
the customer loyalty program.
The identity goal prime manipulation was measured in a two-step process using
measures of identity relevance, value-expressive function of attitudes, and utilitarian
function of attitudes. First, the congruent identity relevance conditions (value-expressive
congruence condition and utilitarian congruence conditions) were expected to show
greater identity relevance than the incongruent identity relevance conditions. Then,
between the two congruent identity relevance conditions, the value-expressive identity
relevance condition was expected to show higher scores on the measure for the valueexpressive function of attitudes (referred to as value-expressive relevance hereafter) than
the utilitarian identity relevance condition. On the other hand, the utilitarian identity
relevance condition was expected to show higher scores on the measure for the utilitarian
function of attitudes (referred to as utilitarian relevance hereafter) than the valueexpressive identity relevance condition. Utilizing these steps allowed the researcher to
test the success of the manipulations of identity relevance (a cognitive match between the
self and the function of rewards) in the direction of a desired identity goal prime (valueexpressive identity goal or utilitarian identity goal).
Prior to the manipulation check, the tests for the unidimensionality of each scale
were measured and confirmed. From the scale reliability analyses, the variables
exhibited Cronbach’s alphas greater than .70 (distinctiveness = .87; identity relevance
= .70, value-expressive relevance = .77; utilitarian relevance = .70), indicating an
acceptable internal reliability level of each variable scale. Thus, the items for each
135
variable were averaged and treated as an indicator of each variable for the manipulation
checks.
To test the distinctiveness manipulation, a series of t-tests were performed with
the distinctiveness factor as the independent variable and the self-reported perceived
distinctiveness variable as the dependent variable in the first test and the self-estimated
proportion in the second test. The test showed a significant difference in perceived
distinctiveness between the two distinctiveness groups. With respect to the measure
where respondents estimated the proportion of customers who were eligible for the
loyalty program, the test also showed that there is a significant difference in the estimates
between the two distinctiveness groups. Thus, the effectiveness of the distinctiveness
manipulation was confirmed (see Table 5.4).
High Distinctive LP
group
M (SD)
n
Low distinctive LP
group
M (SD)
n
Perceived
distinctiveness
4.77 (1.44)
525
4.50 (1.55)
A self-estimate
(percent of
customers who
can enroll the
LP)
11.90 (30.12)
517
93.98
(209.88)
Measures
T
df
p
597
3.35
1120
.001
563
8.81
1078
.000
Table 5.4. Results of a series of t-tests for the loyalty program distinctiveness
manipulation check
136
To test the identity relevance manipulation, first, a t-test for the identity goal
prime manipulation was performed with the identity relevance scale. It was expected that
the mean of identity relevance would be greater in the identity congruence condition than
in the incongruence condition. As expected, respondents in the identity congruence
condition perceived higher relevance than those in the incongruence conditions (see
Table 5.5).
Measure
Congruence group
M (SD)
n
Identity
4.71 (1.22)
Relevance
579
Incongruence group
M (SD)
n
4.57 (1.21)
543
t
df
p
1.97
1120
.049
Table 5.5. T-test results for the identity relevance manipulation check
Next, manipulation tests for the identity goal priming task (value-expressive or
utilitarian) were conducted with the value-expressive relevance and utilitarian relevance
scales. The results of t-tests revealed that respondents in the value-expressive
congruence conditions perceived a higher value-expressive function for reward items
than those in the utilitarian congruence identity conditions. On the other hand,
137
respondents in the utilitarian congruence conditions perceived higher utilitarian function
for the rewards than those in the value-expressive congruence conditions (see Table 5.6).
In sum, effective manipulation of identity goal prime and identity relevance were
accomplished.
Measure
Value-expressive
congruence identity
goal group
M (SD)
n
Utilitarian congruence
identity goal group
M (SD)
n
t
df
p
VE
4.92 (1.19)
Relevance
315
4.34 (1.17)
271
5.92
584
.000
UT
5.14 (1.26)
Relevance
315
5.59 (1.09)
271
4.51
584
.000
Table 5.6. T-test results for the identity goal prime manipulation check
A further examination of whether or not there is a significant difference in
perceived identity relevance between the two congruent conditions (value-expressive
congruent vs. utilitarian congruent group) was conducted. A t-test revealed a significant
difference between the two congruence conditions, which was consistent with the
preliminary findings in the Pilot test. Identity relevance was significantly greater in the
value-expressive congruence conditions than in the utilitarian congruence conditions (see
138
Table 5.7). This result implied that the two congruent conditions have different effects
on the dependent variables. Thus, grouping the two congruence conditions together as a
single identity congruence condition was not appropriate. Therefore, it was determined
to examine four separate identity relevance conditions in further analyses. This
modification required the revision of Hypothesis 2 as follows.
Hypothesis 2 (original): Compared to those who receive loyalty program rewards
incongruent with identity relevance, consumers who receive loyalty program
rewards congruent with identity relevance will exhibit heightened identity
salience in association with their loyalty program membership.
Hypothesis 2 (revised): The salience of membership identity with a customer
loyalty program will differ depending on the rewards’ function (value-expressive
or utilitarian function) and identity goal (value-expressive or utilitarian function).
Measure
Perceived
relevance
Value-expressive
Congruence group
M (SD)
n
4.89 (1.22)
329
Utilitarian
Congruence group
M (SD)
n
4.34 (1.21)
271
T
df
p
5.60
596
.000
Table 5.7. T-test results for the consumer identity goal manipulation check
139
Hypothesis 5 proposed the moderating role of trustworthiness on the relationships
between the contextual cues of the loyalty program and the salience of membership
identity. A median-split of the summated score was used to create two trustworthiness
groups: a high trustworthiness group (N = 463) and a low trustworthiness group (N =
560). A t-test confirmed a significant difference in respondents’ perceived trust toward
the loyalty program marketing between high trustworthiness group (N = 463, M = 5.99,
SD = .57) and low trustworthiness group (N = 560, M = 3.79, SD = .98), t = 47.75, df =
1021, p = .000.
5.2.2. Unidimensionality and Reliabilities
Unidimensionality of each remaining variable was measured using an exploratory
factor analysis with maximum likelihood extraction method. The direct oblimin rotation
in SPSS 15.0 was applied. An exploratory factor analysis is conducted to demonstrate
that multiple items underlying a single construct measure the same dimension. Due to its
low communality (< .30), one item (ID2) from the identification variable was excluded.
As provided in Table 5.8, reliabilities (Cronbach’s αs > .70), the item-total correlations
within each component (> .50), and the proportion of the total variance extracted by the
items (.> .50) were all high and stable (Bearden & Netemeyer, 1998; Churchill, 1979;
Nunnally, 1978). Thus, the unidimensionality and the internal consistency of each
variable were confirmed (see Table 5.8)
140
Factor loading
Identity Salience
IS1
IS2
IS3
IS4
IS5
IS6
Store Attitude
TA1
TA2
TA3
TA4
TA5
Item-total
correlation
.88
.85
.82
.82
.72
.63
% variance
explained
62.83
Cronbach’s α
.91
82.36
.96
67.82
.94
69.51
.92
.64
.73
.70
.82
.75
.79
.94
.95
.94
.91
.79
.91
.92
.91
.89
.78
Identification
ID1
ID3
ID4
ID5
ID6
ID7
ID8
.80
.80
.90
.88
.91
.68
.78
.75
.75
.81
.78
.83
.66
.75
Satisfaction
SA1
SA2
SA3
.83
.84
.81
.78
.79
.88
Continued
Table 5.8. Reliabilities and unidimensionality checks
141
Table 5.8. continued
LP Attitude
PA1
PA2
PA3
PA4
PA5
Trustworthiness
TR1
TR2
TR3
TR4
TR5
.943
.85
.93
.91
.79
.87
.91
.94
.86
.92
.84
.89
.91
.83
.90
82.36
.94
80.74
.95
5.3. Part 1 Results: Determinants of Membership Identity Salience
in a Customer Loyalty Program Environment
5.3.1. Design
Five hypotheses, Hypothesis 1 through Hypothesis 5, were tested in Part 1 (Table
5.9). To test Part 1, a 2 (loyalty program distinctiveness) x 4 (identity relevance) x 2
(trustworthiness) between-subject factorial design was employed. Two independent
variables included the loyalty program distinctiveness with two levels (high vs. low) and
identity relevance with four levels (‘value-expressive identity goal – value-expressive
rewards’ vs. ‘value-expressive identity goal – utilitarian rewards’ vs. ‘utilitarian identity
142
goal – value-expressive rewards’ vs. ‘utilitarian identity goal – utilitarian rewards’) and
the dependent variable was perceived salience of membership identity.
The moderating variable was trustworthiness and subjects’ self-monitoring was
entered into the analysis as a covariate.
Hypotheses
H1. Loyalty program distinctiveness will be positively related to identity salience of
membership in a customer loyalty program.
H2(revised). The salience of membership identity with a customer loyalty program will
differ depending on the rewards’ function (value-expressive or utilitarian function)
and identity goal (value-expressive or utilitarian function).
H3. Between the two congruent identity relevance conditions, identity salience will
be greater for consumers exposed to the value-expressive identity relevance
condition as compared to those exposed to the utilitarian identity relevance
condition.
H4. Loyalty program distinctiveness and identity relevance will interact to heighten
consumers’ identity salience in association with their membership in the
customer loyalty program. More specifically, consumers whose membership of a
customer loyalty program is distinctive and unique will exhibit greater identity
salience than consumers whose membership of a loyalty program is mundane.
H5. Consumers’ perceptions of the trustworthiness of a loyalty program will
moderate the effects of contextual cues of the loyalty program (distinctiveness
and identity relevance) on identity salience.
Table 5.9. Hypotheses for Part 1
143
5.3.2. Results
Items for identity salience were averaged and used as an index for the dependent
variable. Prior to the analysis of variance, the homogeneity of variance assumption was
checked. The result of Levene’s test of equality of error variance showed that the groupby-group variances are significantly different, indicating violation of the assumption (F =
1.90, p = .020). However, analysis of variance is robust to violations of its assumption
when there are equal or close to equal sample sizes across experimental conditions
(Linquist, 1953). Thus, further analyses were continued because very similar sample
sizes across experimental conditions were observed (see Table 5.1).
Hypotheses 1 through 5 were tested in an analysis of covariance including main
effects of loyalty program distinctiveness, identity relevance, trustworthiness and all
possible two- and three-way interactions of loyalty program distinctiveness, identity
relevance and trustworthiness on identity salience. The analysis revealed only significant
main effects for the two contextual factors, loyalty program distinctiveness and identity
relevance, supporting hypotheses 1 and 2. The three-way interaction and all two-way
interactions among the variables (loyalty program distinctiveness, identity relevance, and
trustworthiness) were not significant for identity salience. Thus, hypotheses 4 and 5 were
not supported. The controlled variable, self-monitoring had a significant effect on
identity salience. Table 5.10 reports the results of the analysis and Table 5.11 shows the
means of identity salience across the eight experimental conditions.
144
Mean
square
9.18
35.18
156.30
3.16
5.22
0.51
8.25
0.48
Source
Distinctiveness (D)
Identity relevance (I)
Trustworthiness (T)
DxI
IxT
DxT
DxIxT
Self-monitoring
df
F
5.88
7.56
100.84
0.68
1.74
0.33
1.77
5.46
1
3
1
3
3
1
3
1
p
.02
.00
.00
.56
.34
.57
.15
.02
Partial η2
.006
.022
.091
.005
.003
.000
.005
.005
ω2
.0003
.001
.006
.001
.000
.000
.0001
.0001
Table 5.10. Analysis of Covariance for Part 1
Identity Relevance
VE identity
-VE rewards
Distinctive
Nondistinctive
VE identity
-UT rewards
UT identity
-VE rewards
UT identity
-UT rewards
M
SD
n
M
SD
n
M
SD
n
M
SD
n
4.65
1.24
121
4.66
1.42
105
5.11
1.21
166
4.93
1.28
151
4.44
1.39
123
4.66
1.34
130
4.91
1.35
130
4.57
1.34
97
Table 5.11. Means for experimental conditions in Part 1
145
Hypothesis 1. Loyalty program distinctiveness will be positively related to identity
salience of membership in a customer loyalty program.
Hypothesis 1 suggested a significant difference in identity salience between the
low and high distinctiveness groups. A follow-up analysis of variance revealed a
significant main effect of loyalty program distinctiveness on identity salience, F (1, 1121)
=5.99, p = .02. Subjects in the high distinctiveness group (N = 597, M = 4.87, SD =
1.28) were found to perceive their loyalty program membership to be more salient
(important) than those in the low distinctiveness groups (N = 525, M = 4.66, SD = 1.34).
Thus, hypothesis 1 was supported.
Hypothesis 2(revised). The salience of membership identity with a customer loyalty
program will differ depending on the rewards’ function (value-expressive or
utilitarian function) and identity goal (value-expressive or utilitarian function).
Hypothesis 2 postulated a significant difference in identity salience in terms of
identity relevance. Having four levels of identity relevance, an analysis of variance
revealed a significant main effect of identity relevance on identity salience, F (3, 1121) =
6.56, p = .00. Hypothesis 2(revised) thus was supported. The follow-up analysis is
discussed in Hypothesis 3 testing.
146
Hypothesis 3. Between the two congruent identity relevance conditions, identity
salience will be greater for consumers exposed to the value-expressive identity
relevance condition as compared to those exposed to the utilitarian identity
relevance condition.
Given the significant main effect of identity relevance on identity salience,
subsequent post-hoc comparisons among the four relevance conditions were conducted to
explore the effects of different combinations of reward function and consumer identity
goals on the salience of membership identity. Tukey’s test was employed for the post
hoc comparisons and the results showed a significant difference in salience identity
between two pairs of experimental conditions; (1) subjects in the ‘value-expressive
identity prime – value-expressive rewards’ condition (M = 5.02, SD = 1.28) versus
subjects in the ‘utilitarian identity prime – utilitarian rewards’ condition (M = 4.54, SD =
1.31), p < .001 and (2) subjects in the ‘value-expressive identity prime – value-expressive
rewards’ condition (M = 5.02, SD = 1.28) versus subjects in the ‘value-expressive
identity prime – utilitarian rewards’ condition (M = 4.66, SD = .1.38), p < .01, supporting
hypothesis 3. The ‘value-expressive identity prime – value-expressive rewards’
condition showed higher identity salience than the ‘utilitarian identity prime – utilitarian
rewards’ condition, and the ‘value-expressive identity prime – value-expressive rewards’
condition showed higher identity salience than the ‘value-expressive identity prime –
utilitarian rewards’ condition. The results indicated that the significant effect of identity
relevance on identity salience is largely due to the value-expressive identity relevance
147
condition. No significant differences were found for the other combinations (see Table
5.12).
VE identity VE rewards
VE identity UT rewards
UT identity VE rewards
Mean (SD)
VE identity
- VE rewardsa b
(N = 315)
5.02 (1.28)
0.367**
0.24
VE identity
- UT rewards
(N = 264)
4.66 (1.38)
0.13
UT identity
- VE rewards
(N = 272)
4.79 (1.31)
UT identity
- UT rewards
(N = 271)
4.54 (1.32)
Note. ** p < .01, ***p < .001
a
VE denotes value-expressive; UT denotes utilitarian.
b
Identity denotes identity goal; Rewards denote rewards’ function
UT identity UT rewards
0.48***
0.11
0.24
-
Table 5.12. Tukey Post-hoc comparisons: Mean differences
Hypothesis 4. Loyalty program distinctiveness and identity relevance will interact
to heighten consumers’ identity salience in association with their membership in
the customer loyalty program. More specifically, consumers whose membership
of a customer loyalty program is distinctive and unique will exhibit greater
148
identity salience than consumers whose membership of a loyalty program is
mundane.
Hypothesis 4 suggested an interaction between loyalty program distinctiveness
and identity relevance to influence identity salience. The results revealed no significant
interaction effect of distinctiveness by identity relevance, F (1, 1022) = 0.33, p = .57.
Thus, hypothesis 4 was not supported.
Hypothesis 5. Consumers’ perceptions of the trustworthiness of a loyalty program
will moderate the effects of contextual cues of the loyalty program (distinctiveness
and identity relevance) on identity salience.
Hypothesis 5 postulated that perceptions of trustworthiness of the loyalty program
would moderate the effects of distinctiveness and identity relevance on identity salience.
The analysis revealed that among all of the possible two- and three-way interactions
involving trustworthiness, none were significant (see Table 5.10). Only a main effect of
trustworthiness on identity salience was found (M high trustworthiness = 5.22, M low trustworthiness
= 4.39; F (1, 1021) =109.24, p =.00). Thus, Hypothesis 5 was not supported.
149
5.4. Part 2 Results: Model of Customer Loyalty Program:
Building Customer - Retailer Relationships
Part 2 explores the effects of identity salience on consumer attitude toward the
loyalty program and the retailer, consumer-retailer identification, and satisfaction. Part 2
includes four dependent variables, which are the latent constructs in the proposed model.
The relationships among the variables were hypothesized as follows (see Table 5.13).
Hypotheses
H6. Identity salience of membership in a customer loyalty program will be
positively related to attitudes toward (a) the customer loyalty program and (b)
the retailer offering the customer loyalty program.
H7. Identity salience of membership in a customer loyalty program will be
positively related to customer-retailer identification.
H8. Identity salience of membership in a customer loyalty program will be
positively related to satisfaction.
H9. Consumer attitudes toward (a) the customer loyalty program and (b) the
retailer will be positively related to customer-retailer identification.
H10. Customer-retailer identification will be positively related to satisfaction.
H11. Consumer attitudes toward (a) the customer loyalty program and (b) the
retailer will be positively related to satisfaction.
Table 5.13. Hypotheses for Part 2
150
5.4.1. Measurement Model Assessment
General structural equation models (SEM) are comprised of two interrelated
components, a measurement model and a structural model. The measurement model
specifies relationships between observed variables (manifest variables) and latent
variables (Medsker, Williams, & Holahan, 1994), while the structural model explains the
relationships among latent variables. Anderson and Gerbing (1982, 1988) advocated a
two-step approach starting with the measurement model. The measurement model builds
on a priori theoretical foundation to describe or explain the relationship between the
underlying latent factors and the empirical measures. Confirmatory factor analysis
(CFA) is used to evaluate the measurement model with respect to the degree to which the
data are consistent with the proposed model. Thus, testing whether the observed
variables represent the latent variables well and the overall fit of the measurement model
needs to be done prior to testing the proposed structural model (Anderson & Gerbing,
1988; Bollen, 1989).
It is very common to consider the respecification of a baseline measurement
model when the initial model fails to fit the data adequately. Respecification of the
model, however, is controversial in that a respecified model with an improved fit to the
data may not be the best-fitting model in the sense that it capitalizes on chance
covariation in the sample data and thus, compromises the generalizability of the model
(MacCallum, Roznowski, & Necowitz, 1992). To avoid this problem, a robust approach
to model generation is a cross-validation method, which cross-validates the model results
151
with two independent sample sets. That is, having two sub-samples randomly split,
where one sub-sample (calibration sample) is used to assess the model and the other subsample (validation sample) is employed to determine the predictive effectiveness of that
model (Browne & Cudeck, 1989; Cudeck & Browne, 1983). The likelihood that the
model capitalized on chance is reduced considerably with cross-validation.
A number of fit statistics are applied to assess the goodness-of-fit of the model.
Measures of fit include the goodness-of-fit index (GFI), the adjusted goodness-of-fit
(AGFI), the comparative fit index (CFI), the normed fit index (NFI), the Tucker-Lewis
coefficient (TLI) which is also called the the Bentler-Bonett non-normed fit index (NNFI),
and the root mean square of approximation (RMSEA). Values over 0.9 on the four
indexes GFI, AGFI, TLI, and NFI indicate reasonable fit (Jöreskog & Sörbom, 1996).
The CFI is the least affected by sample size (Hu & Bentler, 1995, 1999) and values of
CFI over 0.9 indicate a reasonable fit and values over 0.95 represent a good fit (HolmesSmith, 2001). RMSEA represents the discrepancy per degree of freedom, which is
measured in terms of the population, not only in the sample used for estimation (Hair,
Anderson, Tatham, & Black, 1998). RMSEA is relatively robust to sample size (Browne
& Cudeck, 1993) and values between .00 and .05 indicate a close fit, values between .05
and .08 indicate reasonable fit, and RMSEA greater than 0.08 reflects a poor fit (Browne,
1993; Browne & Cudeck, 1989).
One basic assumption of general structural models relates to multivariate normal
distribution of variables. The multivariate normal distribution of the measurement model
can be assessed by the univariate skewness and kurtosis of each latent variable contained
in the model. Critical values that are close to zero are considered normally distributed
152
(Curran, West, & Finch, 1996) and absolute values of the variables between 2 and 7 are
considered to be moderately nonnormal. Kurtosis and skewness values for every latent
factor were fairly close to zero, indicating that the latent variables do not violate the
normality assumption.
A confirmatory factor analysis with a comprehensive measurement model of all
observed variables was conducted. The CFA was performed using Maximum Likelihood
estimation and missing values were imputed using the Expectation-Maximization (EM)
algorithm imputation method with SPSS 15.0. The EM method finds maximum
likelihood estimates in parametric model for incomplete data and is considered to be a
better approach than other missing value handling methods including listwise, pairwise,
and mean substitution (Roth, 1994).
The sample of 1122 responses was randomly divided into two subsamples and the
first half of the split sample (calibration sample: N = 555) was used in assessing the
measurement model. The baseline model did not show an adequate fit which yielded the
need for respecifying the measurement scales to achieve a more accurate model, χ2 (344)
= 6862.58, p = .00, NFI = .803, IFI = .811, TLI = .793, RMSEA = .130 [90% RMSEA CI
= .127; .133].
With the first subsample (N = 555), modifications of the initial model were
conducted. According to Anderson and Gerbing (1988), respecifications of a
measurement model can be conducted by (1) making a problematic item be related to a
different factor, (2) removing the item from the model, (3) connecting the item to
multiple variables, or (4) correlating the error terms of two items. The measurement
model was modified by deleting problematic items based on theoretical considerations as
153
well as empirical examinations of the path coefficients, the standardized residual
covariance matrix, and the modification indices.
For instance, all five indicators of attitude toward the loyalty program were
deleted because they were related to indicators belonging to another latent variable,
namely attitude toward the retail store. Also modification indices suggested their error
variances be correlated to improve the model. This makes sense from a theoretical
perspective that these two latent constructs (attitude toward the loyalty program and
attitude toward the retail store) could be understood as very similar constructs to one
another, however the discriminant validity of each construct could be problematic. Taken
together, all observed variables of attitude toward the loyalty program were deleted from
the measurement model and the one attitudinal factor (i.e., attitude toward the retail store)
remained in the measurement model to represent the attitudinal variable for further
analysis.
In addition, regarding the six indicators underlying the identity salience factor,
IS1 and IS 2 were excluded due to their low squared multiple correlation estimates (SMC
< .40) (Bagozzi & Yi, 1988). Also, the modification indices recommended that their
error variances be correlated to each other. Thus, the two items were deleted from the
model. The respecification process left the final measurement model with 11 observed
variables for the four latent constructs (see Table 5.14). The modified measurement
model was examined and showed a good fit, χ2 (38) = 118.14, p = .00, NFI = .978, IFI
= .985, TLI = .978, RMSEA = .062, [90% RMSEA CI = .049; .074].
154
Latent variable
/ Indicator
Measurement Item
Identity salience
IS3
Please indicate the degree to which you feel your membership of the
Fashion Ally's customer loyalty program is relevant to you.
IS4
Please indicate the degree to which you characterize yourself as a
member of Fashion Ally's customer loyalty program.
Customer-retailer identification
ID1
ID3
ID4
The Ally X Platinum Club program would reflect who I am.
I feel a personal connection to this Ally X Platinum Club program.
I would use this Ally X Platinum Club program to communicate
who I am to other people.
Attitude toward the retail store
AT1
AT3
AT4
Satisfaction
SA1
SA2
SA3
Bad - Good
Unfavorable - Favorable
Disliked - Liked
I would be satisfied with reward experiences with Ally X Platinum
Club program.
I would be satisfied with the manner in which FASHION ALLY
treats me as a loyal customer (treats their customers like me).
Overall, I am satisfied with the Ally X Platinum Club program of
FASHION ALLY.
Table 5.14. Final measurement items from the measurement model
155
As a cross-validation method, the measurement model modified with the first subsample (calibration sample) was tested with an independent sample, the second subsample (validation sample, N = 565). The fit indices of the model fell within acceptable
ranges, χ2 (38) = 141.81, p = .00, NFI = .973, IFI = .980, TLI = .971, RMSEA = .069,
[90% RMSEA CI = .057; .082]. The standardized coefficients and the correlations
among the latent variables were very similar to those of the initial validation sample.
Thus, it was concluded that the proposed measurement model predicts the overall data
well (see Table 5.15). Figure 5.1 displays the final CFA model and parameter estimates
and fit statistics of the model are summarized in Table 5.15.
156
Calibration sample (N = 550)
Est.
SE
0.85
0.88
.05
na
λ32
λ42
λ52
0.90
0.90
0.82
λ63
λ73
λ83
Path coefficients
λ11
λ21
λ94
λ10,4
λ11,4
Factor covariances
φ21
φ31
φ41
φ23
φ24
φ43
t
Validation sample (N = 565)
Est.
SE
t
20.85***
naa
0.90
0.88
.04
na
23.86***
na
na
.04
.04
na
29.40***
26.29***
0.85
0.89
0.86
na
.44
0.44
na
24.40***
20.96***
0.83
0.82
0.92
.03
.03
na
27.00***
26.27***
na
0.84
0.86
0.92
.04
.03
na
27.47***
28.66***
na
0.92
0.95
0.92
na
.03
.03
na
42.05***
38.09***
0.93
0.94
0.92
na
.03
.03
na
42.01***
38.91***
1.21
1.10
0.9
0.82
0.58
1.00
.12
.10
.08
.09
.08
.07
10.49***
11.36***
10.90***
9.12***
7.69***
13.54***
1.28
0.93
1.19
0.93
0.93
0.96
.12
.09
.10
.09
.09
.07
10.53***
10.07***
11.48***
10.07***
10.01***
13.04***
Error covariances/variances
θδ1
0.69
.08
8.94***
0.52
.07
7.12***
θδ2
0.60
.08
7.61***
0.69
.08
8.68***
θδ3
0.48
.05
9.36***
0.75
.07
10.88***
θδ4
0.59
.06
9.89***
0.61
.07
8.66***
θδ5
0.88
.07
13.00***
1.11
.08
13.66***
θδ6
0.54
.04
13.31***
0.57
.04
13.24***
θδ7
0.55
.04
13.61***
0.48
.04
12.55***
θδ8
0.24
.03
8.15***
0.27
.03
8.70***
θδ9
0.20
.02
12.18***
0.18
.02
11.32***
θδ10
0.12
.01
8.72***
0.16
.02
9.89***
θδ11
0.19
.02
12.06***
0.21
.02
12.13***
Model Fit
Chi-square
118.14 (df = 38)
141.81 (df = 38)
p-value
.000
.000
RMSEA
.062 90% CI (.049; .074)
.069 90% CI (.057; .082)
NFI
.978
.973
TLI
.978
.971
CFI
.985
0.98
IFI
.985
0.98
Note. a Unavailable values because the path coefficients were fixed to be 1 for the identification purposes;
**p < .001
Table 5.15. Results of the measurement model across the calibration and validation
samples
157
δ1
δ2
δ6
δ7
1
1
1
1
IS3
IS4
SA1
λ21
λ11
δ8
1
SA2
λ63
SA3
λ73
λ83
φ31
Identity
Salience (ξ1)
Satisfaction
(ξ3)
φ21
1
φ43
1
φ41
φ23
1
1
Store Attitude
(ξ4)
Identification
(ξ2)
φ24
λ94
λ10,4
AT1
AT3
1
1
δ9
δ10
λ32
λ11,4
AT4
ID3
ID4
1
1
1
δ3
Figure 5.1. Final measurement model
158
λ52
ID1
1
δ11
λ42
δ4
δ5
From the CFA, additional measurement properties including convergent validity,
discriminant validity, and composite reliabilities were assessed. Unidimensionality of
measurements were also checked using an exploratory factor analysis (EFA).
Convergent validity refers to the degree to which the observed variables that are
designed to assess the same latent variable are correlated with each other (Bagozzi, 1981).
High correlations between the observed variables for a specific latent variable are
evidence of the convergent validity. Two approaches to evaluate construct validity are (1)
by examining whether each observed variable’s (indicator) estimated loading on its
corresponding latent factor is high and significant (Anderson & Gerbing, 1988) and (2)
by examining the average variance extracted (AVE). When AVE is greater than .50,
meaning when variance explained by the latent variable is greater than measurement error,
convergent validity of the latent variable is achieved (Fornell & Larcker, 1981).
As shown in Table 5.15, all path coefficients were significantly loaded to the
proposed latent variables, ps < .001. Also as presented in Table 5.18, AVE of each latent
variable is greater than .50. Thus, convergent validity of the measurement model was
confirmed.
Discriminant validity refers to the extent to which measures of one latent variable
differ from those of other latent constructs (Bagozzi & Phillips, 1991) and can be
measured in two ways. First, discriminant validity is considered to be satisfied when a
latent variable shares more variance with its measures than it shares with other factors in
a given measurement model. According to Fornell and Larcker (1981), if AVE is greater
than the squared correlation coefficient between factors, discriminant validity is
confirmed. This criterion for all pairs of the latent variables of the measurement model
159
was satisfactory (Table 5.16). Second, discriminant validity is achieved when the
confidence interval (C.I.) of the correlation estimates does not contain 1.0 (Anderson &
Gerbing, 1988). None of the confidence intervals (C.I.) of all pairs of the constructs
includes the value of 1.0, thus discriminant validity was obtained (see Table 5.17).
Identity salience
Store attitude
Identity salience
Store attitude
.75a (.79) c
.37 (.44)
.35 (.37)
.43 (.43)
.87 (.87)
.14 (.25)
.64 (.55)
.77 (70)
.22 (.30)
b
Identification
Identification
Satisfaction
Note.
Satisfaction
.74 (.76)
a
The numbers in diagonal line are the average variance extracted (AVE) by each construct.
The numbers above the diagonal are the squared correlation coefficients between the constructs.
c
The numbers in parentheses are the estimates from the validation group, while those not in the
parentheses are estimates from the calibration group.
b
Table 5.16. Discriminant validity and convergent validity – AVE
160
Confidence Interval (C.I.)
Correlation
coefficient
.38 (.50)
SE
.08 (.08)
Low bound
.22 (.34)
Identification
↔
Store attitude
Identification
↔
Satisfaction
.47 (.55)
.09 (.09)
.29 (.37)
High bound
a
.54 (.66)
.65 (.73)
Store attitude
↔
Satisfaction
.80 (.74)
.07 (.07)
.66 (.60)
.94 (.88)
Identity salience
↔
Satisfaction
.66 (.66)
.10 (.10)
.46 (.46)
.86 (.86)
Identity salience
↔
Identification
.60 (.61)
.12 (.12)
.36 (.37)
.84 (.85)
Identity salience ↔ Store attitude
.61 (.67)
.08 (.09)
.45 (.49)
.77 (.85)
a
Note. The numbers in parentheses are the estimates from the validation group, while those not in the
parentheses are estimates from the calibration group.
Table 5.17. Discriminant validity – Confidence Interval
An exploratory factor analysis was performed to examine the unidimensionality
of each latent variable; unidimensionality represents the existence of only one latent
variable underlying a set of observed variables (Anderson, Gerbing, & Hunter, 1987). As
shown in Table 5.18, indicators of each latent construct yielded only one factor solution,
the factor loadings are high and the Cronbach’s αs are acceptable, which support the
unidimensionality of each latent factor. In addition, the estimate of construct reliability
of each factor from the CFA ( > .70) supported acceptable internal reliability of each
latent factor.
161
Construct/Item
Identity salience
IS3
IS4
Store attitude
AT1
AT3
AT4
Identification
ID1
ID3
ID4
Satisfaction
SA1
SA2
SA3
Factor
loading
% of variance
extracted
Cronbach’s α
Construct
reliabilities
.85 (.88)
.75 (.79) a
86.93 (86.71)
.95 (.95)
.86 (.87)
77.27 (70.53)
.91 (.88)
.77 (.70)
74.24 (76.50)
.90 (.91)
.73 (.76)
b
-
-
a
.91 (.93)
.97 (.95)
.92 (.92)
.91 (.84)
.89 (.89)
.84 (.79)
.85 (.87)
.84 (.88)
.90 (.88)
Note. a The numbers in parentheses are the estimates from the validation group, while those not in the
parentheses are estimates from the calibration group.
b
Not available due to two items underlying one factor
Table 5.18. Unidimensionality and construct reliabilities of the measurement model
5.4.2. Structural Model
Part 2 of this research proposed the structural relationships between identity
salience and consumer attitudinal and relational responses within the context of a
162
customer loyalty program marketing. Part 1 revealed that identity salience, the
magnitude that a consumer perceives his/her loyalty program membership important to
his/her shopping schema is affected by the distinctiveness of the customer loyalty
program and the congruence between the function of the rewards from the loyalty
program and the function of his/her identity goal. Thus, Part 2 examined how the
importance of a consumer’s membership identity affects attitudes, satisfaction and
identification with the retailer. Figure 5.2 illustrates the structural model for Part 2.
The six hypotheses for Part 2 were tested using structural equation modeling
(SEM). The data from respondents in all eight of the experimental conditions were
aggregated altogether and a structural equation model was performed with a single group.
Since different levels of identity salience generated by the loyalty program’s contextual
cues were found in Part 1, pooling the data allowed investigation of the proposed
structural relationship due to the presence of various levels of identity salience.
The proposed structural model was analyzed using AMOS 7.0 with the Maximum
Likelihood function (Arbuckle, 2006). The model included four latent variables with 11
observed variables wherein identity salience was the only exogenous latent variable and
consumer attitude towards the retailer, customer-retailer identification, and satisfaction
were the three endogenous latent variables. The chi-square statistic was 179.96 (df = 38,
p < .0001). The point estimate of RMSEA was .058, with the RMSEA 90% confidence
interval between .049 and .066. The NFI, TLI, CFI, and IFI were .983, .980, .986,
and .986 respectively. The chi-square test statistic is subject to the sample size; a
significant chi-square fit measure is quite common with a large sample size. All other fit
163
indices indicate a good fit of the proposed structural equation model to the data. All path
coefficients were significant (see Table 5.19).
δ3
1
δ4
1
δ5
1
ID1
ID3
ID4
λ32 = 1
λ42
λ52
C-R
identification
(η2)
1
δ1
δ2
1
1
IS3
λ11
IS4
λ21 =1
γ2
1
Identity
Salience (ξ1)
ζ1
1
β1
Attitude
toward the
retailer (η1)
γ1
β3
γ3
β2
λ94 = 1
λ10,4
AT3
AT4
1
1
1
δ9
δ10
δ11
λ63
164
λ73
SA2
SA3
1
1
1
δ7
ζ3
λ83 = 1
SA1
δ6
Figure 5.2. A structural equation model for Part 2
1
Satisfaction
(η3)
λ11,4
AT1
ζ2
δ8
Hypotheses Testing
Hypothesis 6. Identity salience of membership in a customer loyalty program will
be positively related to attitudes toward (a) the customer loyalty program and (b)
the retailer offering the customer loyalty program.
Hypothesis 6 postulated that identity salience, consumers’ perceptions of the
importance of loyalty program membership is positively related to their attitude toward
the retailer which offers the loyalty program. The results showed a significant positive
relationship between identity salience and attitude toward the retailer (γ1 = .64, t = 21.52,
p < .0001), supporting hypothesis 6.
Hypothesis 7. Identity salience of membership in a customer loyalty program will
be positively related to customer-retailer identification.
Hypothesis 7 posited that consumers’ perceptions of the importance of loyalty
program membership are positively related to their identification with the retailer which
offers the loyalty program. The results showed a significant positive effect of the
salience of loyalty program membership identity on customer-retailer identification (γ2
= .54, t = 12.98, p < .0001). Thus, hypothesis 7 was supported.
165
Hypothesis 8. Identity salience of membership in a customer loyalty program will
be positively related to satisfaction.
Hypothesis 8 predicted that consumers’ perceptions of the importance of loyalty
program membership are positively related to their satisfaction. The results showed a
significant positive effect of identity salience on satisfaction (γ3 = .21, t = 5.88, p < .0001).
Thus, hypothesis 8 was supported.
Hypothesis 9. Consumer attitudes toward the retailer will be positively related to
customer-retailer identification.
Hypothesis 9 suggested that consumer attitude toward a retailer implementing a
customer loyalty program will positively influence their identification with the retailer.
The results showed a significant positive relationship between consumer attitude and
customer-retailer identification (β1 =.09, t = 2.36, p = .018), supporting hypothesis 9.
Hypothesis 10. Customer-retailer identification will be positively related to
satisfaction.
Hypothesis 10 predicted a positive relationship between customer-retailer
identification and satisfaction. The results demonstrated a significant positive effect of
customer-retailer identification on customer satisfaction (β2 =.13, t = 4.47, p < .0001),
explaining that the greater a consumer identifies himself/herself with the retailer through
166
his/her loyalty program membership, the greater the likelihood of satisfaction with the
retailer. Thus, hypothesis 10 was supported.
Hypothesis 11. Consumer attitudes toward the retailer will be positively related to
satisfaction.
Hypothesis 11 predicted a positive relationship between consumer attitude toward
a retail store which offers a loyalty program and satisfaction. The results showed a
significant positive influence of attitude toward a retail store and satisfaction (β3 =.58, t =
19.07, p < .0001), supporting hypothesis 11.
Additionally, an examination of the squared multiple correlations for each latent
variable indicated that 42% of the variance in attitude toward the retail store, 37% of the
variance in customer-retailer identification, and 65% of the variance in satisfaction were
explained by the proposed structural model.
Further, to better understand the results, the decomposition of effect was
performed. Table 5.20 shows the summary of total, indirect, and direct effects for the
model. The results showed that, in addition to its direct effect, identity salience
influenced customer-retailer identification and satisfaction indirectly through consumer
attitude toward the retailer. Additionally, consumer attitude toward the retailer was found
to have an indirect effect on satisfaction through customer-retailer identification.
Figures 5.3 and 5.4 present the unstandardized and standardized coefficients
obtained from the structural equation modeling, respectively.
167
ML
estimate
Std.
estimate
Structural path
H6. Identity salience (ξ1) → Attitude toward a store (η1)
γ1
γ2
H7. Identity salience (ξ1) →C-R identification (η2)
H8. Identity salience (ξ1) → Satisfaction (η3)
γ3
H9. Attitude toward a store (η1) → C-R identification (η2) β1
H10. C-R identification (η1) → Satisfaction (η3)
β2
β3
H11. Attitude toward a store (η1) → Satisfaction (η3)
0.43
0.54
0.18
0.12
0.11
0.66
.64
.54
.21
.09
.13
.58
.02
.04
.03
.05
.02
.03
21.52***
12.98***
5.88***
2.36*
4.47***
19.07***
Measurement model
Identity salience (ξ1) → IS3
Identity salience (ξ1) → IS4
C-R identification (η2) → ID1
C-R identification (η2) → ID3
C-R identification (η2) → ID4
Satisfaction (η3) → SA1
Satisfaction (η3) → SA2
Satisfaction (η3) → SA3
Attitude toward a store (η1) → AT1
Attitude toward a store (η1) → AT3
Attitude toward a store (η1) → AT4
0.98
1.00a
1.00a
1.07
0.95
0.93
0.91
1.00a
1.00a
1.06
1.00
.88
.87
.88
.89
.81
.83
.84
.92
.93
.95
.92
.03
nab
nab
.03
.03
.02
.02
nab
nab
.02
.02
31.61***
nab
nab
37.63***
32.91***
38.34***
38.88***
nab
nab
59.28***
54.28***
Par.
λ11
λ21
λ32
λ42
λ52
λ63
λ73
λ83
λ94
λ10,4
λ11,4
Std.
error
t
Model fit
179.96 (df = 38)
Chi-square
.058
RMSEA 90% CI (.049; .066)
RMSEA
.983
NFI
.98
TLI
.986
IFI
.986
CIF
, b
Note. Unavailable values because the path coefficients(denoted with a ) were fixed to be 1 for the
identification purposes; * p < .05, ** p < .001, ***p < .0001
Table 5.19. Results from the SEM for testing Hypothesis 6 – Hypothesis 11
168
ID1
ID3
1
1.07
ID4
.95
C-R
identification
(η2)
1
IS3
IS4
.98
.54
Identity
Salience (ξ1)
1
ζ1
Attitude
toward the
retailer (η1)
.47
1
.18
1
.12
.11
.66
1
AT1
1.06
AT3
Satisfaction
(η3)
1
AT4
.91
SA1
Note. All path coefficients are significant.
Figure 5.3. Unstandardized parameter estimates of the proposed model
169
ζ2
1
SA2
1
.93
SA3
ζ3
ID1
ID3
.88
.89
ID4
.80
C-R
identification
(η2)
1
IS3
IS4
.88
.54
Identity
Salience (ξ1)
1
ζ1
Attitude
toward the
retailer (η1)
.64
.87
.21
1
.09
.13
.58
.93
AT1
.95
AT3
Satisfaction
(η3)
.92
AT4
.84
SA1
Note. All path coefficients are significant.
Figure 5.4. Standardized parameter estimates of the proposed model
170
ζ2
.92
SA2
1
.83
SA3
ζ3
Predictor
variables
Dependent
variables
Identity salience
Attitude
Attitude
a
b
Total effects
.644
.644 a
.058
(0.013; 0.105)
.544
.602
Satisfaction
.451
(0.326; 0.427)
.211
.662
.090
.090
.479
.590
.129
.129
C-R identification
C-R identification
Direct effects
C-R identification
Satisfaction
Note.
Indirect effects
(90% C. I.)b
.111
(0.003; 0.026)
Satisfaction
standardized path coefficients
p <.05
Table 5.20. Decomposition of direct, indirect, and total effects for the proposed model
171
CHAPTER 6
DISCUSSION AND CONCLUSIONS
6.1. Overview
This dissertation developed and tested a customer loyalty program model that
builds a strong and positive customer-retailer relationship by treating the customer
loyalty program as an identity marketing effort. The primary goal of customer loyalty
program marketing is to enhance true loyalty of loyal customers “who feel so strongly
that you (the company) can best meet his or her relevant needs that your (the company’s)
competition is virtually excluded from the consideration set” (Shoemaker & Lewis, 1999,
p. 349). Thus, a customer loyalty program is not likely to be successful if its developers
do not consider the attitudinal aspects of the customer that drive them to participate in
marketing efforts offered to build and sustain a relationship with the company. While the
number of customer loyalty programs launched in the marketplace has increased rapidly
in recent years and an increasing variety of rewards are offered with loyalty programs,
marketers hold little understanding of how consumers process customer loyalty programs.
Hence, this study developed a customer loyalty program model for creating successful
172
customer-company relationships by using consumers’ identity needs as key influencers
on their reactions to a customer loyalty program.
In pursuing the purpose of the research, this study consisted of two parts. In Part
1, this research investigated: (1) how two contextual cues (loyalty program
distinctiveness and identity relevance) of a customer loyalty program evoke the salience
of a customer’s loyalty program membership identity in his/her identity schema
(objective 1) and (2) how the influence of the two loyalty program contextual cues on the
importance of a customer’s customer loyalty program membership identity differ by
customer perceptions of the trustworthiness of the customer loyalty program marketing
(objective 3). Part 2 of this study examined how the identity salience of a loyalty
program membership, activated by the contextual characteristics of the loyalty program
influences the customer’s attitudinal and relational responses to the customer loyalty
program (Objective 2).
This chapter summarizes the findings from this dissertation and discusses
implications in terms of theoretical and managerial viewpoints. Finally, limitations of the
study and suggestions for future research are discussed. Table 6.1 summaries the results
of all the hypotheses tested across the two parts in this dissertation.
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6.2. Discussion
6.2.1. Part 1
The Effects of Loyalty Program Distinctiveness on Identity Salience
The literature on social identity theory and distinctiveness theory has documented
that, compared to non-distinctive or less distinctive groups, members in a distinctive
group perceive their group membership to be more important to the self (McGuire, 1984;
Tajfel, 1981; Tajfel & Turner, 1985). When belonging to a group, people tend to derive a
sense of identity in association with the group, compare the group with others, and form
their behaviors toward the group in a favorable manner. Moreover, when the group is
perceived to be distinctive relative to others, people are more likely to be cognizant of the
group and categorize themselves as a member of the group. Through these selfcategorization and comparison processes, people try to satisfy their self-definitional
needs, such as self-enhancement, self-continuity and self-esteem (Tajfel & Turner, 1986;
Turner et al., 1987).
Part 1 of this study suggested that consumers can form a social identity through
their membership in a customer loyalty program offered by a retailer and the social
identity associated with the loyalty program membership can help them fulfill their needs.
Also such membership identity is perceived to be important because it is distinctive and
unique relative to others in the marketplaces. Part 1 revealed a significant impact of
loyalty program distinctiveness on salience of the membership identity (Hypothesis 1).
That is, when a consumer knows his/her membership in a customer loyalty program is
174
exclusive, the consumer strongly activates his/her membership in his/her identity schema.
The more distinctive a customer loyalty program, the more distinctive a member of the
loyalty program may feel his/her membership and his/her self. The findings are
congruent with previous research on social identity theory which described a positive
association between the salience of a social identity and the distinctiveness of the group
which creates the social identity (Ashforth & Mael, 1989; Reed & Forehand, 2007). This
also supports distinctiveness theory stating that the distinctive traits of marketing stimuli
(a loyalty program in this study) can strengthen the self-concept of consumers who
consume the marketing stimuli (Aaker et al., 2000; Grier & Brumbaugh, 2004).
Furthermore, the results imply that, by belonging to a customer loyalty program
for which not every customer is eligible, consumers may feel good about themselves.
When receiving rewards from a distinctive loyalty program, consumers’ feelings that they
are recognized and valued by the retailer as high value customers may help them
accomplish one or more important self-definitional needs, such as self-esteem, selfcontinuity, and self-enhancement. Then, their membership in the customer loyalty
program becomes more important in their schema for shopping than membership in
nondistinctive loyalty programs.
The Effects of Identity Relevance on Identity Salience
The literature on social identity theory and the functional theory of attitude
propose that identity salience is determined by fit which concerns the congruence
between one’s perceptions of characteristics of the group and his or her characteristics.
Akin to this account of fit, other researchers have discussed identity similarity
175
(Bhattacharya & Sen, 2003) and congruency ability (Reed & Forehand, 2007), suggesting
that the degree to which a social identity (e.g., consumer’s identity) is congruent with the
domain of evaluation (loyalty program reward offerings) influences the strength of one’s
identity perception. Accordingly, marketing appeals are most effective when they
address the motives underlying consumer intention and attitudes toward them (Shavitt,
1989, 1990; Schlosser, 1998).
Research on social identity theory further emphasizes the greater role of valueexpressive (symbolic) identity in consumer social identity formation than that of
utilitarian identity (Reed & Forehand, 2007). The more that a consumer is concerned
with projecting his/her values, self-images and self-identities to others, the more attention
that consumer pays to the value-expressive function of objectives. Thus, when the valueexpressive function which a marketing stimuli (e.g., a customer loyalty program) delivers
is perceived to be important for a consumer, the consumer’s evaluation of the marketing
effort reflects the value-expressive self-concept to a great extent. However, the
magnitude that the utilitarian function of a marketing object appeals to utilitarian identity
goal is less likely to activate a consumer to form a social identity in association with the
marketing objective (e.g., Shavitt, 1989).
The findings from Part 1 confirm the literature on social identity theory and
functional theory of attitude that consumers are more likely to value their membership in
a customer loyalty program when its rewards are congruent with or relevant to the
customer (Hypothesis 2). Identity relevance is defined as the fit between rewards offered
by a loyalty program and a consumer’s identity needs (goals) in this study. When the
176
loyalty program rewards support what consumers want to be or to do (congruent identity
relevance), their perception of membership identity becomes more important.
In particular, between the two congruent identity relevance conditions, this study
found that value-expressive congruent identity relevance had a greater impact on identity
salience than utilitarian congruent identity relevance (Hypothesis 3). That is, valueexpressive rewards that appeal to one’s value-expressive needs were more persuasive
than utilitarian rewards appealing to consumers who hold utilitarian needs for shopping.
This finding is congruent with previous research which emphasized the role of valueexpressive (symbolic, prestige) congruence (similarity) on a member’s perceived group
identity in a given situation (Arnett et al., 2003; Bhattacharya & Sen, 2003; Reed &
Forehand, 2007). Since the value-expressive function of rewards assist a member to
express central needs and the self (Katz, 1960), symbolic function strongly affects the
member’s membership perception.
The research further found that the utilitarian congruence produced positive
identity salience but did not significantly differ from incongruent identity relevance
conditions in terms of identity salience generated. Inconsistent with previous studies
which indicated the strong effect of congruent identity relevance on consumer social
identity formation (Shavitt, 1989, 1990; Johar & Sirgy, 1991), this study showed that
utilitarian congruence does not produce optimal identity salience. Yet, it shares the same
views with prior research that the utilitarian congruence has less effect on consumer
responses (e.g., perceived product quality and purchase intention) than the valueexpressive congruence (Schlosser, 1998).
177
The overjustification effect proposed in self-perception theory (Bem, 1967, 1972)
may be applied to understand the weak effect of utilitarian goal congruency on identity
salience. According to the overjustification effect, one will be more likely to perceive
oneself to be extrinsically motivated if one is provided with a salient reward for engaging
in an activity. Then, one attributes his/her evaluation to the extrinsic reward and
consequently shows decreased interest in the activity. Furthermore, such a weak effect is
more evident when a salient, task-contingent reward is given than when a non-salient
reward is given (Ross, 1975). This overjustification account is applicable to consumer
attitudes and behaviors toward sales promotion marketing (e.g., price discount, Forehand,
2000). Considering that utilitarian rewards of loyalty programs are more likely to serve
consumers’ utilitarian goals (e.g., maximizing benefits and minimizing losses) and that
they have formats similar to existing promotional marketing strategies, the
overjustification effect seems applicable to explain the utilitarian congruence in this study.
That is, when receiving utilitarian rewards under the utilitarian identity goal circumstance,
consumers may view their perception of the awards as being motivated by the rewards
rather than by their internal interests in awards via the loyalty program, and then they
may evaluate the rewards in weak or negative ways. If this occurs, the consumer’s
formation of loyalty program membership identity will be less likely. Further
investigations on the congruence identity relevance will be interesting.
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The Effects of Loyalty Program Distinctiveness and Identity Relevance on Identity
Salience
Based on the literature (Deshpandé & Stayman, 1994; Forehand & Deshpandé,
2001; Reed & Forehand, 2007), an interaction effect between loyalty program
distinctiveness and identity relevance on identity salience was proposed with Hypothesis
4. This study predicted that the interaction between distinctiveness and identity relevance
increases identity salience because the primed identity (1) momentarily becomes
prioritized along the hierarchical ordering of one’s multiple identities and (2) gains
temporal attention toward the activated source of one’s self-schema (Markus & Herzog,
1995). However, inconsistent with previous research, the results in Part 1 revealed no
significant interaction between the two contextual effects. Rather, each characteristic of a
loyalty program independently evokes identity salience.
One possible explanation may be that loyalty program distinctiveness and identity
salience influence identity salience at different stages. In research conceptualizing
consumer social identity formation, Reed and Forehand (2007) described social identity
formation as two stages: “the processes by which a consumer’s social identity becomes
activated” in one’s mind (accessibility) and by which this activated concept then
influences attitude, judgment formation and purchase behavior (diagnosticity). The
accessibility of a social identity is influenced by social situational factors
(distinctiveness), contextual factors (environmental identity cues), and dispositional
factors (individual strength of identification), while the diagnosticity of a social identity
is dependent on symbolic relevance, goal relevance (self-efficacy), action relevance, and
discrimination ability (group-related norms).
179
Although the researchers noted that accessibility does not necessarily precede
diagnosticity, the findings from this study may suggest that, in forming a customer’s
customer loyalty program membership identity, loyalty program distinctiveness plays a
role at the accessibility stages and then identity relevance plays a role at the diagnosticity
stage independently. Accordingly, once a consumer becomes a member of a customer
loyalty program, the distinctiveness of the loyalty program membership may no longer
heighten or weaken the consumer’s membership perception. Apart from distinctiveness
of a loyalty program, the consumer engages in information processing in order to
understand the rewards of the loyalty program in association with his/her identity
regardless of the extent that his/her membership is distinctive. Further investigations on
the function between distinctiveness and identity relevance in social identity formation
are needed with such issues as (1) how a consumer’s social identity is formed, (2) how
distinctiveness and identity relevance help increase the salience of a consumer’s social
identity at different stages, and (3) whether or not the effect of distinctiveness lasts over
long period.
The Moderating Effect of Trustworthiness of Customer Loyalty Program on Identity
Salience
Hypothesis 5 proposed that consumer beliefs about loyalty program marketing
would moderate the effects of loyalty program distinctiveness and identity relevance on
identity salience. That is, when loyalty program marketing is believed to be trustworthy,
consumers may favorably engage in interaction with the loyalty program (Schurr &
Ozanne, 1985) and process message-based elaboration in terms of rewards of the loyalty
180
program (Priester & Petty, 2003). On the contrary, when a loyalty program is believed to
be untrustworthy, such untrustworthiness may deflate the magnitude of the relationship
between the two contextual cues of a loyalty program and identity salience.
However, results revealed that trustworthiness had no moderating effect with
either loyalty program distinctiveness or identity relevance on identity salience. The
analyses of the moderating effect of the three-way interaction and the two-way
interactions among trustworthiness, loyalty program distinctiveness, and identity
relevance were not significant. This finding is inconsistent with previous research
indicating the moderating effect of trustworthiness on consumer evaluations of marketing
communications and loyalty (e.g., Chuen & Kao, 2004; Simeon & Reed, 1997)
Indeed, trustworthiness was found to have a main effect on identity salience. That
is, the greater one trusts the purpose of loyalty program marketing (reward-focused
marketing), the stronger the membership identity one forms in his/her shopping schema.
That trustworthiness directly influences consumer marketing behaviors has been
discussed in previous research examining the relationships between trust and satisfaction,
relationship commitment and loyalty (e.g., Delgado-Ballester & Munuera-Aleman, 2005;
Gournaris, 2005; Hess & Story, 2005; Sirdeshmukh, Singh, & Sabol, 2002). Within the
context of a customer loyalty program, this study showed that consumers’ perceptions of
the trustworthiness of customer loyalty program marketing influence their identityassociated perceptions of the loyalty program, namely customer loyalty program
membership identity.
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6.2.2. Part 2
The Relationships among Identity Salience, Attitude toward the Retail Store, CustomerRetailer Identification and Satisfaction
The literature in social identity theory and consumer identity describes that when
one perceives a certain identity to be heightened in his/her self schema, the one tends to
exhibit responses to the identity-related source in a manner that is consistent with the
source (Arnett et al., 2003; Bergami & Bagozzi, 2000; Bhattacharya & Sen, 2003; Dutton
et al., 1994; Forehand et al., 2006; Reed, 2004). This discussion has been empirically
demonstrated by research in such various consumer behavior contexts as product
evaluations (Lee & Shavitt, 2006), attitudinal and behavioral intentions toward marketing
stimuli (e.g., product, advertising, and company) (Forehand et al., 2006; Reed, 2004),
consumer-brand identification (Bhattacharya & Sen, 2003), and behavioral loyalty
(Arnett et al., 2003).
Part 2 of this dissertation examined the structural relationships among consumer
perceptions of identity salience, attitude toward the retail store, customer-retailer
identification, and satisfaction. It was proposed that identity salience heightened by
loyalty program distinctiveness and identity relevance would have a positive influence on
consumers’ attitudinal responses (attitude toward the store and satisfaction as an index of
attitudinal loyalty) and relational response (customer-retailer identification). The results
from structural equation modeling (SEM) where the four perceptual factors were
included as latent variables revealed that all proposed paths were significant, congruent
with the previous research.
182
First, results showed that identity salience positively influences attitude toward
the retail store which serves the loyalty program. This supports Hypothesis 6 and is
congruent with previous research which suggests the positive association between
identity salience and consumer attitude toward marketing stimuli (e.g., Forehand et al.,
2006; Reed, 2004). As a customer’s perception of the importance of his/her customer
loyalty program membership increases due to rewards provided with a customer loyalty
program, the customer’s attitude toward the retail store which offers the loyalty program
becomes more favorable. The stronger perception that a consumer feels about his/her
loyalty program membership identity in his/her mind, evoked by the loyalty program’s
characteristics (loyalty program distinctiveness and identity relevance), the more
favorable evaluations the consumer has of the retail store.
Second, Hypothesis 7 proposed a positive relationship between identity salience
and customer-retailer identification. As hypothesized, the results revealed that identity
salience positively influences customer-retailer identification. The results support
previous research, addressing the significant impact of identity salience on consumers’
identification with marketing stimuli (e.g., brand) (Bhattacharya & Sen, 2003). The
stronger a consumer perceives of his/her loyalty program membership identity in his/her
mind by his/her loyalty program’s characteristics (loyalty program distinctiveness and
identity relevance), the more likely the consumer identifies himself/herself with the retail
store. That is, as one’s loyalty program membership identity becomes more salient with
his/her loyalty program rewards, his/her perception of belonging to the loyalty program
increases and he/she is more likely to see his/her own self-image to be overlapped with
the retailer’s identity.
183
Third, a positive relationship between identity salience and satisfaction was
proposed with Hypothesis 8. The findings from Part 2 showed that identity salience
positively influences satisfaction, consistent with previous research (Arnett et al., 2003).
The stronger a consumer perceives of his/her loyalty program membership identity in
his/her mind due to the loyalty program’s characteristics (loyalty program distinctiveness
and identity relevance), the more satisfied the customer is with the loyalty program at the
retail store.
Fourth, Hypothesis 9 proposed that attitude toward the retail store positively
influences customer-retailer identification. The results in Part 2 provide the support for
this hypothesis and are consistent with previous research which discusses the significant
association between consumer attitude and relational behavior (Maldonado, Tansuhaj, &
Muehling, 2003). As a consumer’s evaluation of a retail store becomes more favorable
due to the retail store’s customer loyalty program rewards, he/she is more likely to see
his/her own self-image to be overlapped with the retailer’s identity and his/her perception
of belonging to the loyalty program increases.
Next, a positive relationship between customer-retailer identification and
satisfaction was proposed with Hypothesis 10. As expected, the results showed that
customer-retailer identification has a positive effect on satisfaction. This is consistent
with previous research which discussed the significant association between identification
and consumer responses such as satisfaction and loyalty behavior (e.g., Arnett et al.,
2003; Bhattacharya, 1998; Bhattacharya & Sen, 2003). As a consumer’s perception of
belonging to the loyalty program increases and he/she sees his/her own self-image to be
184
overlapped with the retailer’s identity via the loyalty program, the consumer becomes
more satisfied with his/her shopping and his/her loyalty program at the retail store.
Last, Hypothesis 11 proposed a significant relationship between attitude toward
the retail store and satisfaction. The findings in Part 2 provide support for this hypothesis
and are consistent with previous research which discusses the significant association
between attitude and satisfaction (e.g., Westbrook & Oliver, 1991). As a consumer’s
evaluation of a retail store becomes more favorable as a function of the retail store’s
customer loyalty program rewards, the consumer becomes more satisfied with his/her
shopping at the retail store using his/her loyalty program.
Hypotheses
Results
Part 1
H1: loyalty program distinctiveness → identity salience
Supported
H2: Identity relevance → identity salience
Supported
H3: value-expressive identity relevance → identity salience
Supported
H4: loyalty program distinctiveness x identity relevance → identity salience
Not supported
H5: loyalty program distinctiveness x trustworthiness → identity salience
Not supported
identity relevance x trustworthiness → identity salience
Not supported
Part 2
H6: identity salience → attitude toward a store
Supported
H7: identity salience → customer-retailer identification
Supported
H8: identity salience → satisfaction
Supported
H9: attitude toward a store → customer-retailer identification
Supported
H10: customer-retailer identification → satisfaction
Supported
H11: attitude toward a store → satisfaction
Supported
Table 6.1. Summary of results of hypothesis testing
185
6.3. Implications
6.3.1. Theoretical Implications
The proliferation of loyalty programs is evident among today’s retailers where
individual-level marketing is pivotal for business success (Deighton, 2005; Lewis, 1997).
Especially, in multi-channel retail environments where consumers have a range of
competitive alternatives for shopping, customer loyalty programs have been widely
adopted by online, offline and multi-channel retailers to earn their target customers’
loyalty. However, despite the apparent attention to the loyalty program marketing from
customers, retail marketers and researchers, research on customer loyalty programs is still
in its infancy. This dissertation contributes to the research literature on consumer social
identity, distinctiveness theory, the functional theory of attitude, customer loyalty
program marketing, and relationship marketing by exploring the customer loyalty
program phenomenon using essential components from each area.
First of all, one major theoretical contribution of this dissertation is to
demonstrate how a customer loyalty program’s properties (loyalty program
distinctiveness and identity relevance) influence consumers’ attitudinal and relational
responses in forming a relationship between the consumer and the retailer. Built on
social identity theory and relationship marketing literature, this dissertation proposed and
empirically tested a customer loyalty program model for the success of a loyal customerretailer relationship in which identity salience functions as a critical mechanism that can
186
transfer consumer evaluations of a customer loyalty program’s properties to a loyal
customer-retailer relationship. To illustrate, the findings showed that, first, the degree to
which a consumer perceives his/her loyalty program membership identity to be important
for his/her identity is determined by two properties of a customer loyalty program. These
two characteristics are 1) loyalty program distinctiveness and 2) identity relevance arising
from the congruence between a consumer’s identity needs and the function of the rewards
the consumer receives from a loyalty program. Second, the identity salience evoked by
the loyalty program influences consumers’ favorable responses to the retailer such as
attitude toward the store, satisfaction with the store, and customer-retailer identification.
Third, consumer attitudinal and relational responses influence each other in that: (1)
attitude toward the store influences customer-retailer identification and satisfaction and
(2) customer-retailer identification influences satisfaction. An understanding of these
dynamics, where identity salience and identification were incorporated into loyalty
program offerings proved to play critical roles in developing a relationship between
consumers and retailers and inform consumer-centered studies on relationship marketing
and loyalty program marketing.
Second, this study contributes to the literature on consumer social identity. By
positing that consumers can express themselves vicariously through their membership in
a loyalty program and their identification with a selected retailer, this study adds to the
notion of the multifaceted-self including multiple social identities. Agreeing with
previous research on consumer social identity which describes the multi-dimensional and
dynamic structure of a consumer identity (Brewer, 1991; Deaux, 1996; Kleine, Kleine, &
Kerman, 1993; Markus & Wurf, 1987), this study suggests that consumers’ membership
187
in customer loyalty programs and identification with retailers can also contribute to
consumers’ self formation which fulfills self-definitional needs.
Third, this research complements the literature on functional theory of attitude
and loyalty program marketing by identifying different functions of loyalty rewards
(value-expressive and utilitarian) and examining their associations with consumer
identity goals (value-expressive and utilitarian). The two functions of rewards were
selected because they were representative of popular rewards offered with current
customer loyalty programs. This study proposed that the congruency between consumers
identity goals and rewards’ function (identity relevance) would be a key driver of identity
salience which would direct attitudes, identification and satisfaction. As predicted,
results showed that congruence conditions, especially value-expressive congruence
between one’s own identity and that of a loyalty program can enhance feelings of
belonging to the loyalty program. As such, the meaning of value-expressive rewards
needs to be considered. Accordingly, a contribution of this research is to highlight the
role of non-economic (value-expressive) aspects of rewards that a retailer provides via
their loyalty program in building the consumer-retailer bond.
More importantly, by delineating and investigating different functions of rewards,
this dissertation provides evidence that helps solve the mixed findings on the
effectiveness of customer loyalty program marketing discussed in previous research. As
found in this study, utilitarian rewards were less effective than value-expressive rewards
in identity salience formation. Besides, even when utilitarian rewards do satisfy a
consumer’s utilitarian identity goal, the consumer’s perception of the strength of his/her
loyalty program membership was less than when receiving value-expressive rewards
188
regardless of one’s identity goals. By clarifying the conditions in which identity salience
and identification are likely and unlikely to occur, this study provides potential reasons
for the inconsistent findings of previous loyalty program research regarding the
effectiveness of loyalty program marketing.
Fourth, this dissertation extends the work on distinctiveness theory-based target
marketing by showing that loyalty program distinctiveness affects consumers’ processing
of and reaction to a target marketing effort (a customer loyalty program) among target
customers (selected value customers) (Forehand & Deshpandé, 2001; Grier &
Brumbaugh, 2004). As demonstrated in this study, target marketing which builds on the
distinctiveness of the marketing efforts applies to the context of customer loyalty
program marketing.
Fifth, the empirical results from this dissertation provide partial evidence for the
consumer-company identification framework developed by Bhattacharya and Sen (2003).
As proposed in the model, this study confirms that identity distinctiveness (i.e., loyalty
program distinctiveness in this study) and identity similarity (i.e., identity relevance in
this study) have a positive influence on the degree to which one pays attention to the
identity-related source (identity salience) which in turns causes customer-company
identification. However, their proposition that identity trustworthiness would moderate
the influences of identity-inducing factors including identity distinctiveness and identity
similarity on perceived identity attractiveness (identity salience) was not supported in this
study.
189
6.3.2. Managerial Implications
In addition to the theoretical contributions, this dissertation has direct practical
implications for retailers faced with the loyalty program management dilemma of how to
build long-term relationships with their customers using their customer loyalty program.
This dissertation suggests two key loyalty program properties that retail marketers need
to incorporate in their loyalty program marketing efforts: the ability to distinguish the
loyalty program from others in a meaningful way and the ability to design loyalty
program rewards that are relevant to the individual customer.
First, a customer loyalty program that is distinctive relative to other programs
appears to lead the member to produce more favorable responses to the loyalty program
and the retailer. As discussed in social identity theory, people attempt to associate
themselves with a group and shape an identity relative to the group (Tajfel & Turner,
1985). Furthermore, when the success and/or distinctiveness of the group is apparent,
people are more likely to associate themselves with the group as a means to distinguish
themselves from others and bolster their self-esteem in social contexts. The findings of
this study support the notion that a distinctive customer loyalty program can make the
members of the program value their loyalty program membership more than other less
distinctive programs. Beliefs that a consumer is recognized and valued as a retailer’s best
customer can help stimulate that customer’s feelings of belonging to the loyalty program
and being treated as special by the retailer. Such feelings would in turn lead the customer
to appreciate the retailer who provides value and/or treats the customer well.
190
Second, the results suggest that because favorable loyalty program effects are
produced when the offerings of a customer loyalty program (rewards) meet the needs of a
customer, retailers which court certain customer segments may consider paying particular
attention to the selection of rewards of the customer loyalty program, to ensure they have
the best impact on the intended target segment. To do so, retailers first need to profile
customer information beyond the customers’ purchase history including psychographic
and demographic information. Then, based on the customer information, the retailers
should be able to offer individualized rewards that are relevant to the customer. This
study demonstrated that the design of a customer loyalty program which coincides with
consumer value-expressive identity is more effective in inducing consumers to willingly
engage in building and cultivating a relationship with the retailer.
However, when comparing the two functions of rewards (value-expressive vs.
utilitarian rewards) utilitarian rewards appear to play a less pivotal role in identity
salience formation for overall customers, which consequently influence consumer-retailer
relationship development. Therefore, retailers may need to be more mindful of the
utilitarian reward services they choose to offer through the loyalty program. These
results also point out a potential downside of current customer loyalty programs. As
reviewed in the content analysis, a majority of customer loyalty programs in the real
marketplace appear to rely on utilitarian reward offerings. Yet, as found in this study, the
reward management of a loyalty program that merely focuses on utilitarian rewards may
not engender the promising outcomes that retailers desire to achieve through their
customer loyalty program marketing. Therefore, even for retailers whose target
191
customers are utilitarian-conscious in shopping activities, designing loyalty programs
which only focus on the utilitarian function of rewards needs to reconsidered.
This study also provides retail markers with an understanding of how consumers
process the identity and rewards of a customer loyalty program in association with their
identity needs. One proposed way by which this process can be connected to outcomes is
identity salience, the extent that a consumer perceives his/her membership identity to be
important to his/her self. Understanding how identity salience can be heightened and
which marketing factors can evoke identity salience is important information enabling
retail marketers to generate optimal results from loyalty program marketing efforts. This
research also emphasizes the significance of identity marketing approaches for the
success of loyalty program efforts (Reed & Bolton, 2005). By empirically testing the
proposed loyalty program model where consumer identity is integrated as a key
component, this study claims that a loyalty program which fundamentally considers a
consumer’s identity will be effective for the success of loyalty program management.
6.4. Limitations
While offering new insights into understanding how consumers respond to
properties of a customer loyalty program and the retailer, this dissertation has some
limitations. First, the current dissertation employed a web-based experiment using a
mock website. Although careful efforts were made to encourage research subjects to
focus on the experiment, confounding factors that hinder subjects from following the
experimental procedure may be possible, such as the uncontrolled environment and
192
technical variances. Especially, the success of the key manipulations in this dissertation
(i.e., goal prime task and loyalty program distinctiveness) depends on how subjects
followed the guidelines of the experiment as if they were engaged in a real situation.
Although the analyses confirmed the success of the manipulations, the disadvantages of
web-based experiments need to be noted as factors that may impede the validation of the
findings.
Second, the lack of support for two of the proposed hypotheses is a key limitation.
Particularly, this study failed to observe (1) the moderating effects of trustworthiness on
the connection between two loyalty program characteristics (distinctiveness and identity
relevance) and consumer reaction to the loyalty program and (2) the interaction between
loyalty program distinctiveness and identity relevance on identity salience. First,
consumers’ perceived trustworthiness of loyalty program marketing was found to directly
influence identity salience rather than to moderate the relationships between loyalty
program distinctiveness and identity relevance and identity salience. Perceived
trustworthiness appears to play a central role in consumer marketing evaluations and
behaviors (Delgado-Ballester & Munuera-Aleman, 2005; Hess & Story, 2005). Second,
this study failed to demonstrate the interaction effect between loyalty program
distinctiveness and identity relevance on identity salience. The absence of the interaction
effect between the two loyalty program characteristics may be explained by the
independent role of each characteristic that activates and then stimulates the processes of
consumer identity formation (Reed & Forehand, 2007). While speculative explanations
were discussed for the lack of these findings, future research is called to reexamine these
propositions.
193
Third, the selection of subjects of this study, college female students may limit the
generalization of the results. The purposive sampling process using subjects from a
limited age range and educational background and single gender impedes the
generalization to other consumer segments. While examination of a theory-based model
using subjects from a convenience sampling process should not be argued as a sacrifice
of external validity (Calder & Tybout, 1999), this limitation cannot be ignored due to the
considerable empirical contribution this model is desired to make. Further research could
test the proposed model using a sample from a more heterogeneous consumer population.
6.5. Future Research
The current research is restricted to instances where the consumer is exposed to a
single customer loyalty program and makes judgments based on this single
communication. In reality, a number of retailers woo consumers to register for various
types of loyalty programs and consumers are exposed to multiple sources of information
about customer loyalty programs (e. g., multiple loyalty programs). It would be useful to
study how consumers selectively respond to loyalty programs and are willing to build a
relationship with a retailer in a situation where they have a number of customer loyalty
program options.
While this study considers the structural relationships between characteristics of a
loyalty program and consumer responses at a given time, it would be important to
articulate the longitudinal effects that are likely to occur with this proposed model. That
is, the mechanisms underlying identity salience and consumer-retailer identification will
194
be likely to be iterative, and over time, the dependent variables may affect some of the
independent variables. For instance, existing customer-retailer identification may
influence consumer perceptions of identity relevance and loyalty program distinctiveness,
as well as the identity salience elicited by the loyalty program. Likewise, overall
satisfaction representing one’s attitudinal loyalty toward the store over a period of time
may also affect one’s perception of his/her loyalty program characteristics and intensify
their identification with the store over time.
While this study posited and tested a moderator, consumer trustworthiness of
customer loyalty program marketing on the link between the loyalty program and
consumer reactions to the loyalty program, other moderating candidates that previous
research suggested are worthy of investigation with the proposed model. Some possible
moderating constructs are consumer knowledge, consumer involvement and previous
experiences with loyalty programs, and self-monitoring (e.g., Bhattacharya & Sen, 2003).
The proposed relationships may vary depending on how much the consumer knows about
and becomes involved with, and has experiences with loyalty programs. In particular,
preliminary evidence observed in this study suggests that the degree to which one is
sensitive to how good one looks to others (i.e., self-monitoring) affects identity salience.
Future research studying moderators that influence the way consumers respond to loyalty
programs is needed.
Only female subjects were recruited to examine the customer loyalty program
model proposed in this study because significant differences in perceptions of research
variables (e.g., loyalty program distinctiveness, identity salience, identification, attitude
toward a store, and satisfaction) were found between female and male subjects in Pretest
195
3 and the Pilot test. Given the significance of male consumers for retail businesses,
additional research on male consumers’ responses to a customer loyalty program is
warranted. Additionally, how different female and male consumers are in creating and
developing relationships with retailers would be an interesting area to investigate.
Finally, a number of factors that were suggested in the literature on relationship
marketing and loyalty program marketing should be examined to advance the proposed
model. These constructs include shared values and norms (Heide & John, 1992), social
bonds (Wilson, 1995), mutual goals (Morgan & Hunt, 1994), reciprocity (Bagozzi, 1995),
embeddedness (Scott & Lane, 2000), relationship quality and perceived relationship
investment (Hennig-Thurau, et al., 2002), and prestige (external image) (Ahearne et al.,
2005; Bergami & Bagozzi, 2000). Similarly, what other factors account for increasing
identity salience and decreasing it? What is the impact that these factors have on the
formation and development of consumer-retailer relationships? These will be important
issues for further research.
196
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216
APPENDIX A
PRETEST 1: A LIST OF 40 COMPANIES
217
Company
Abercrombie & Fitch
Alloy Inc.
American Eagle Outfitters
Ann Taylor
Bebe
Blair Corp.
Charming Shoppes
Chico’s FAS Inc.
Crosstown Traders Inc.
Dillard’s
Ebags.com
Federated Dept. Stores (Macy’s)
Fingerhut Direct Marketing
Finish Line
Foot Locker
Gap Inc.
Hanover Direct Inc.
HSN
J.Crew Group Inc.
JCPenny
Jjill
L.L. Bean
Limited Brands
Men’s Wearhouse
Mervyn’s
Neiman Marcus Group Inc.
Nordstrom
Pacific Sunwear of California Inc.
QVC
Redcats USA
Retail Ventures
(DSW, Filene’s Basement)
Saks Fifth Avenue
Sierra Trading Post Inc.
Spiegel
Newport News
The children’s place
The Gymboree
The Orvis Co. Inc.
The Talbots Inc.
Victoria Secret
Source
Top 100 store (Schulz, 2006); Internet Retailer (2006)
Internet Retailer (2005)
Internet Retailer (2006)
Internet Retailer (2006)
Internet Retailer (2006); Internet Retailer (2005)
Internet Retailer (2006)
Top 100 store (Schulz, 2006)
Internet Retailer (2006)
Internet Retailer (2006)
Top 100 store (Schulz, 2006)
Internet Retailer (2005)
Top 100 store (Schulz, 2006)
Internet Retailer (2005)
Internet Retailer (2005)
Internet Retailer (2005)
Internet Retailer (2006)
Internet Retailer (2006)
Top 100 store (Schulz, 2006)
Internet Retailer (2006)
Top 100 store (Schulz, 2006)
Top 100 store (Schulz, 2006)
Top 100 store (Schulz, 2006); Internet Retailer (2006)
Top 100 store (Schulz, 2006)
Top 100 store (Schulz, 2006)
Top 100 store (Schulz, 2006)
Internet Retailer (2006)
Internet Retailer (2006)
Internet Retailer (2006)
Top 100 store (Schulz, 2006)
Internet Retailer (2006)
Top 100 store (Schulz, 2006)
Top 100 store (Schulz, 2006)
Internet Retailer (2005)
Top 100 store (Schulz, 2006)
Internet Retailer (2006)
Top 100 store (Schulz, 2006)
Internet Retailer (2005)
Internet Retailer (2006)
Internet Retailer (2006)
Internet Retailer (2005)
218
APPENDIX B
PRETEST 1: LOYALTY PROGRAM REWARD STIMULI
219
Advanced Notice of Sales
Your Choice at Favorite
Jewelry Brands
Shopping Discount
Luxury Spa Experience
for Two
Fox-and-Chiffon Bolero
Airline Mileage Plus
Luxury resort stay for two
Store Gift Card on Your
Birthday a
220
Men's & Women's Pens
Invitations to Exclusive Events
Access to limited
merchandise
Diamond Cuff Links
Digital Camera
Appreciation Dividends
Lunch experience
at a luxury restaurant
221
Golf Putter
Hair/make-up service at a
luxury beauty shop
Personal Fashion
Consultant
Access
Tailoring Service
to Limited Merchandise
Cosmetic case with
products
222
APPENDIX C
PRETEST 1: SCALES OF VALUE-EXPRESSIVE FUNCTION AND UTILITARIAN
FUNCTION OF REWARD ITEMS
(EXAMPLES FOR LUXURY SPA EXPERIENCE FOR TWO)
223
Nowadays, apparel retailing companies provide a variety of incentives via Customer
Loyalty Programs in order to reward their loyal customers.
We would like to know your thoughts or feelings about specific incentives offered by
Loyalty Programs. Please evaluate each item below by clicking the number that best
reflects your thoughts or feelings.
Item example. Luxury Spa Experience for Two
Value-expressive function measurement
1. This luxury spa experience reflects the kind of person ABC Company shoppers
see themselves to be.
2. This spa experience helps ascertain my self-identity.
3. This spa experience makes me feel good about myself.
4. This spa experience is an instrument of my self-expression.
5. This spa experience plays a critical role in defining my self-concept.
6. This spa experience helps me to establish the kind of person I see myself to be.
Utilitarian function measurement
1.
2.
3.
4.
5.
A luxury spa experience makes it possible for me to maximize shopping rewards.
This spa experience offer instills confidence in my shopping ability.
Whenever I redeem this spa experience, I will be at ease with my shopping.
I become more confident knowing that I earned this spa experience.
With this spa experience, my shopping worries vanish.
224
APPENDIX D
PRETEST 1: WEB-BASED SURVEY FOR REWARD STIMULI SELECTION
225
Introduction
226
Website to measure value-expressive function of a reward
Website to measure utilitarian function of a reward
227
APPENDIX E
PRETEST1: SELECTED LOYALTY PROGRAM REWARD STIMULI
228
Reward Items Selected to Represent Value-Expressive Function
Your Choice at Favorite
Jewelry Brands
Luxury Spa Experience
for Two
Luxury resort stay for two
Reward Items Selected to Represent Utilitarian Function
Shopping Discount
Airline Mileage Plus
229
Advanced Notice of Sales
APPENDIX F
PRETEST2: RATING SCALES FOR VALUE-EXPRESSIVE/UTILITARIAN
IDENTITY GOAL PRIME
230
Rating Questionnaire for Value-Expressive Identity Goal Priming
First, we would like you to assess your responses to product features. Please rate the
following product features for how important you think they are. That is, imagine
yourself purchasing each of the following things. Then, rate each product feature
for how important it would be to you. Please, do not rate how likely you are to
purchase them.
will make a
very good
impression
Won't make a
good impression
at all
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Buying a convertible sports car
Gaining weight
Smoking cigarettes in public
Getting a raise
Wearing a Rolex watch
Using a Visa Gold card
Wearing Levi’s jeans
Serving imported beer
Serving gourmet food
Sending a postcard from
Bermuda
Driving a station wagon
Reading Rolling Stone
i
Having a date
Serving Black Label beer
Losing your job
Displaying an American flag
Taking a friend to a concert
Wearing bell-bottom jeans
Going on a cruise
Having a party
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
231
Rating Questionnaire for Utilitarian Identity Goal Priming
First, we would like you to imagine yourself being each of the following situations, and
the reactions of you, your friends and classmates to each behavior. That is, visualize in
your mind that you are actually doing them. Then, rate the extent to which your
doing each thing would make a good impression on yourself and others. Please, do
not rate how likely you are to do these things.
Not at all
important
to me
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
The durability of a running shoes
The accuracy of a thermometer
A pair of sunglasses’ UV
protection
Simple programming in a VCR
A turntable in a microwave
The flavor of a soft drink
The comfort of a pair of blue jeans
An air bag in a car
The redial button on a phone
The sturdiness of a bookshelf
A laundry soap’s cleaning power
Duracell batteries’ longevity
The speed of a computer
The effectiveness of a pain killer
A Kleenex’s softness
The strength of a garbage bag
“Tartar control” in a toothpaste
The scent of Suave shampoo
The loudness of an alarm clock
A camera’s ability to zoom
232
Very much
important to
me
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
APPENDIX G
EXAMPLE OF COGNITIVE THOUGHT LISTING
233
We are now interested in what you were thinking and feeling about the reward item you
just evaluated and why you feel the way you do.
In the boxes below, please write down all of your thoughts and feelings that are relevant
to your evaluation, and try to describe the reasons for your thoughts and feelings. You
might have had ideas all favorable to the product, all opposed, all irrelevant to the
product, or a mixture of the three. Any case is fine; simply write down the first idea you
had in the first box, the second idea in the second box, etc. Please state your thoughts
and ideas as concisely as possible; a phrase is sufficient and don't worry if you don't fill
every space.
Please put only one idea or thought in a box and IGNORE SPELLING, GRAMMAR,
AND PUNCTUATION.
Your thought or feeling & its reason 1.
Your thought or feeling & its reason 2.
Your thought or feeling & its reason 3.
Your thought or feeling & its reason 4.
Your thought or feeling & its reason 5.
Your thought or feeling & its reason 6.
234
APPENDIX H
PRETEST 2 PROCEDURE
235
Introduction
236
Identity goal prime task & a reward item
237
Listing cognitive thoughts about the reward item
Demographic information
238
APPENDIX I
COGNITIVE THOUGHTS ANALYSIS
239
Coding Scheme for Cognitive Thoughts Analysis by Identity Goal Priming
(Value-expressive identity goal vs. Utilitarian identity goal)
Value-Expressive Thoughts: a function that allows the individual to express his or her
self concept.
1. prescribe and proscribe that have nothing to do with any immediate material or
hedonic rewards for the subject
2. Discuss on the object’s image
3. Refer to her own values or value system
4. Concern with consistency with important attitudes or values of significant others
(e.g., classmates, friends, family, etc)
5. Use of value-relevant label other than attitude object
6. Refer to own identity: Expression of own identity through attitude
7. Focus on symbolic/abstract concepts or values represented by the object
8. Express empathy
Utilitarian Thoughts: a function that provides 1) the maximum benefits and the minimum
costs to the individual and 2) more rewards than punishments.
1. Focus on features or attributes of attribute object
2. Refer to past experiences that involve rewards or punishments with the object
3. Refer to rewards or punishments associated with the object
4. Focus on relevance of object to a need or goal
5. Discuss (an) appropriate behavior(s) toward the object as a way to satisfy needs
fulfilled by the object
6. Focus on future behavior toward the object as a way to satisfy needs fulfilled by
the object
Note. Adopted and modified from Maio & Olson (1994) and Shavitt (1990)
240
Thought Statement Examples by Identity Goal Priming
Value-expressive Thoughts
Subject 14-2. It reminds me of being in a vacation.
Subject 15-4. I would love to go to a spa like that because it is what girls like to do.
Subject 19-3. Paradise: When I think of getting this reward item I think of a place like
Hawaii or some exotic island.
Subject 50-2. It would be a unique experience that not all people are able to do.
Subject 52-2. I would feel very upper class.
Subject 76-6. I would be favorable of the store gift card because I would think I was
special to receive it from the store.
Utilitarian Thoughts
Subject 6-1.
It must be a tasty lunch.
Subject 16-1. I would love to receive massages… it feels so relieving.
Subject 18-3. I thought if the massage was really that relaxing because I have never
done it before.
Subject 31-2. I like it. Because the more credits you earn, the more you get off your
purchase at the same rate.
Subject 33-4. I like stuff to last a long time yet look fancy.
Subject 37-2. The company is trying to get the consumer to buy more merchandise so
they will save money on their next purchase.
241
APPENDIX J
PILOT TEST PROCECURE
242
PAGE 1: INTRODUCTION
PAGE 2: DIRECTION
243
PAGE 3: IDENTITY PRIME TASK (VALUE-EXPRESSIVE IDENTITY PRIME)
PAGE 3: IDENTITY PRIME TASK (UTILITARIAN IDENTITY PRIME)
244
PAGE 4: STORE INTRO
245
PAGE 5:
LOYALTY PROGRAM MEMBERSHIP INFORMATION
(HIGH LOYALTY PROGRAM DISTINCTIVENESS)
PAGE 5:
LOYALTY PROGRAM MEMBERSHIP INFORMATION
(LOW LOYALTY PROGRAM DISTINCTIVENESS)
246
PAGE 6
SUBJECT’S MEMBERSHIP
(HIGH LOYALTY PROGRAM DISTINCTIVENESS)
PAGE 6:
SUBJECT’S MEMBERSHIP
(LOW LOYALTY PROGRAM DISTINCTIVENESS)
247
PAGE 7: ALL REWARDS FROM THE CUSTOMER LOYALTY PROGRAM
248
PAGE 8:
PAGE 8:
REWARDS FOR THE SUBJECT AND MEASUREMENT
(LOW DISTINCTIVENESS X VALUE-EXPRESSIVE REWARDS)
QUESTIONNAIRE
249
PAGE 9:
THANK YOU
250
APPENDIX K
MAIN TEST: INVITATION EMAIL
251
TITLE: Volunteers needed for OSU research – Win a $50 gift certificate!
Dear OSU students
Hello! I hope you’re having a great summer! My name is Sejin Ha, a PhD candidate in the
Department of Consumer Sciences, at the Ohio State University. I am writing this email to
ask for your help with my dissertation research.
I am conducting research to examine consumers’ opinions about customer service programs
in association with apparel shopping and need female volunteers for this study. This study is
done as a Web experiment which simulates an apparel specialty store and its customer loyalty
program. Given several scenarios to follow, participants will learn about the customer
loyalty program and then be asked to complete the survey measuring their opinions.
It will take about 20 minutes to complete the survey, and I would appreciate your giving the
time if you’re interested in participating in this study. By completing this survey, you will
have a chance to win one of 18 $50 gift certificates!!
If you’re willing you participate in this study, here is your link to the survey:
http://hec.ohio-state.edu/forms/fashionally/store8/
Please complete your participation by (to be determined). If this link doesn’t work, please
copy and paste the URL link to your web browser. The very last question invites you to enter
your email address to be one of 18 students to have the incentive. The winners will be
notified via email on (to be determined).
Please be assured that this is a research project and every response will be held in strictest
confidence. Responses will be retained separate from e-mail addresses and be dealt only in
the aggregate.
I apologize for sending you this email without your permission, but appreciate your time and
consideration. If you have any questions about this research study, either Sejin Ha
([email protected]) or Dr. Leslie Stoel ([email protected]) will be happy to respond to your
questions. I very much look forward to your participation! Have a wonderful weekend~!
Thanking you in advance for your help.
Sejin Ha, PhD candidate
Dept. of Consumer Sciences
265 Campbell Hall, 1787 Neil Avenue
The Ohio State University
Columbus, OH 43210-1295
Tel) 614.226.0709
Email) [email protected]
Dr. Leslie Stoel, Associate Professor
Dept. of Consumer Sciences
265 Campbell Hall, 1787 Neil Avenue
The Ohio State University
Columbus, OH 43210-1295
Tel) 614. 688. 8594
Email) [email protected]
252
APPENDIX L
MAIN TEST: EXPERIMENTAL STIMLI
253
Scenario Instruction Explaining Hypothetical Subject-Retailer Relationship
Store Opening Page
254
Value-Expressive Identity Goal Prime Task with Additional Direction to Strengthen the
Prime
Utilitarian Identity Goal Prime Task with Additional Direction to Strengthen the Prime
255
High Loyalty Program Distinctiveness
256
Low Loyalty Program Distinctiveness
257
Rewards of Value-expressive Function
Rewards of Utilitarian Function
258
Value-expressive Rewards x High Loyalty Program Distinctiveness
Value-expressive Rewards x Low Loyalty Program Distinctiveness
259
Utilitarian Rewards x High Loyalty Program Distinctiveness
Utilitarian Rewards x Low Loyalty Program Distinctiveness
260
APPENDIX M
MAIN TEST PROCEDURE
261
CONDITION 1: HIGH DISTINCTIVENESS X VALUE-EXPRESSIVE
CONGRUENCE IDENTITY RELEVANCE
PAGE 1: Intro
PAGE 2: Direction
PAGE 3: Identity Goal
Prime Task (ValueExpressive Identity)
262
PAGE 3: Identity Goal
Prime Task (ValueExpressive Identity)
PAGE 4: Store Intro
PAGE 5: Loyalty
Program Information
(High Distinctiveness)
263
PAGE 6: Loyalty
Program Membership
(High Distinctiveness)
PAGE 7: Rewards
(Value-expressive
Function)
PAGE 8: Questionnaire
264
PAGE 8: Closing
PAGE 9: Email for
Awards
PAGE 10: Thank you
Note. All conditions hold the same web pages 8 through 10
265
CONDITION 2: HIGH DISTINCTIVENESS x INCONGRUENCE IDENTITY
RELEVANCE (VE IDENTITY GOAL x UT REWARDS)
PAGE 1: Intro
PAGE 2: Direction
PAGE 3: Identity Goal
Prime Task (ValueExpressive Identity)
266
PAGE 3: Identity Goal
Prime Task (ValueExpressive Identity)
PAGE 4: Store Intro
PAGE 5: Loyalty Program
Information (High
Distinctiveness)
267
PAGE 6: Loyalty Program
Membership (High
Distinctiveness)
PAGE 7: Rewards
(Utilitarian Function)
PAGE 8: Questionnaire
Note. See Condition 1 for web pages 8 through 10
268
CONDITION 3: HIGH DISTINCTIVENESS x INCONGRUENCE IDENTITY
RELEVANCE (UT Identity x VE Rewards)
PAGE 1: Intro
PAGE 2: Direction
PAGE 3: Identity Goal
Prime Task (Utilitarian
Identity)
269
PAGE 3: Identity Goal
Prime Task (Utilitarian
Identity)
PAGE 4: Store Intro
PAGE 5: Loyalty Program
Information (High
Distinctiveness)
270
PAGE 6: Loyalty Program
Membership (High
Distinctiveness)
PAGE 7: Rewards (ValueExpressive Function)
PAGE 8: Questionnaire
Note. See Condition 1 for web pages 8 through 10
271
CONDITION 4: HIGH DISTINCTIVENESS x UTILITARIAN CONGRUENCE
IDENTITY RELEVANCE
PAGE 1: Intro
PAGE 2: Direction
PAGE 3: Identity Goal
Prime Task (Utilitarian
Identity)
272
PAGE 3: Identity Goal
Prime Task (ValueExpressive Identity)
PAGE 4: Store Intro
PAGE 5: Loyalty Program
Information (High
Distinctiveness)
273
PAGE 6: Loyalty Program
Membership (High
Distinctiveness)
PAGE 7: Rewards
(Utilitarian Function)
PAGE 8: Questionnaire
Note. See Condition 1 for web pages 8 through 10
274
CONDITION 5: LOW DISTINCTIVENESS x VALUE-EXPRESSIVE
CONGRUENCE IDENTITY RELEVANCE
PAGE 1: Intro
PAGE 2: Direction
PAGE 3: Identity Goal
Prime Task (ValueExpressive Identity)
275
PAGE 3: Identity Goal
Prime Task (ValueExpressive Identity)
PAGE 4: Store Intro
PAGE 5: Loyalty Program
Information (Low
Distinctiveness)
276
PAGE 6: Loyalty Program
Membership (Low
Distinctiveness)
PAGE 7: Rewards (ValueExpressive Function)
PAGE 8: Questionnaire
Note. See Condition 1 for web pages 8 through 10
277
CONDITION 6: LOW DISTINCTIVENESS x INCONGRUENCE IDENTITY
RELEVANCE (VE Identity x UT Rewards)
PAGE 1: Intro
PAGE 2: Direction
PAGE 3: Identity Goal
Prime Task (ValueExpressive Identity)
278
PAGE 3: Identity Goal
Prime Task (ValueExpressive Identity)
PAGE 4: Store Intro
PAGE 5: Loyalty Program
Information (Low
Distinctiveness)
279
PAGE 6: Loyalty Program
Membership (Low
Distinctiveness)
PAGE 7: Rewards
(Utilitarian Function)
PAGE 8: Questionnaire
Note. See Condition 1 for web pages 8 through 10
280
CONDITION 7: LOW DISTINCTIVENESS x INCONGRUENCE IDENTITY
RELEVANCE (UT Identity x VE Rewards)
PAGE 1: Intro
PAGE 2: Direction
PAGE 3: Identity Goal
Prime Task (Utilitarian
Identity)
281
PAGE 3: Identity Goal
Prime Task (Utilitarian
Identity)
PAGE 4: Store Intro
PAGE 5: Loyalty Program
Information (Low
Distinctiveness)
282
PAGE 6: Loyalty Program
Membership (Low
Distinctiveness)
PAGE 7: Rewards (ValueExpressive Function)
PAGE 8: Questionnaire
Note. See Condition 1 for web pages 8 through 10
283
CONDITION 8: LOW DISTINCTIVENESS x UTILITARIAN CONGRUENCE
IDENTITY RELEVANCE
PAGE 1: Intro
PAGE 2: Direction
PAGE 3: Identity Goal
Prime Task (Utilitarian
Identity)
284
PAGE 3: Identity Goal
Prime Task (Utilitarian
Identity)
PAGE 4: Store Intro
PAGE 5: Loyalty Program
Information (Low
Distinctiveness)
285
PAGE 6: Loyalty Program
Membership (Low
Distinctiveness)
PAGE 7: Rewards
(Utilitarian Function)
PAGE 8: Questionnaire
Note. See Condition 1 for web pages 8 through 10
286
APPENDIX N
MAIN TEST QUESTIONNAIRE
287
PART I. Now, we would like to learn how you feel or think about the store,
FASHION ALLY and their customer loyalty program, Fashion Ally Card (AllyX
Platinum Membership).
Based on your experience with FASHION ALLY, answer the following questions.
Section 1. Please indicate the number that best indicates the degree to which you agree or
disagree with each of the following statements.
Strongly
disagree
Strongly
agree
Neutral
1
I would say that Fashion Ally's customer
loyalty program membership is distinctive.
1
2
3
4
5
6
7
2
I would say that Fashion Ally's customer
loyalty program membership is unusual.
1
2
3
4
5
6
7
1
2
3
4
5
6
7
I would say Fashion Ally’s Customer
3 loyalty program stands out from other
customer loyalty programs.
Section 2.
Strongly
disagree
1
2
3
1
2
Please rate the degree to which your
evaluation of the reward gifts is based on how
the rewards offered to you would reflect the
kind of person you see yourself to be.
Please rate the degree to which your
evaluation of the reward gifts is based on how
the rewards offered to you would help you feel
good about yourself.
Please rate the degree to which your
evaluation of the reward gifts is based on how
the rewards offered to you would help your
self-expression.
Please rate the degree to which your
evaluation of the reward gifts is based on the
reward items’ functions and performance.
Please rate the degree to which your
evaluation of the reward gifts is based on how
the rewards offered to you would help you
maximize your shopping rewards.
288
Strongly
agree
Neutral
1
2
3
4
5
6
7
1
2
3
4
5
6
7
1
2
3
4
5
6
7
1
2
3
4
5
6
7
1
2
3
4
5
6
7
How similar is the goal that you associated with your shopping and the goal that you associate
with the Fashion Ally’s customer loyalty program?
Not at all
1
2
3
4
5
6
7
Very similar
similar
How similar is the reward service from the Fashion Ally’s customer loyalty program and the
reason for your shopping?
Not at all
1
2
3
4
5
6
7
Very similar
similar
Section 3.
Please indicate the degree to which you feel favorable or unfavorable toward the Fashion Ally's
customer loyalty program.
Unfavorable
1
2
3
4
5
6
7
Favorable
Please indicate the degree to which you feel interested or uninterested toward the Fashion Ally's
customer loyalty program.
Uninterested
1
2
3
4
5
6
7
Interested
Please indicate the degree to which you feel your membership of the Fashion Ally's customer
loyalty program is relevant to you.
Not relevant
1
2
3
4
5
6
7
Relevant
Please indicate the degree to which you characterize yourself as a member of Fashion Ally's
customer loyalty program.
Do not
Characterize
characterize 1
2
3
4
5
6
7
very well
at all
Please indicate the degree to which you admire yourself as a member of Fashion Ally's customer
loyalty program.
Do not
Admire very
1
2
3
4
5
6
7
admire at all
much
Please indicate the degree to which you identify yourself with Fashion Ally's customer loyalty
program membership.
Do not
1
identify at all
2
3
4
5
289
6
7
Identify very
well
Section 4.
Based on my experience with FASHION ALLY, I would say Fashion Ally's customer loyalty
program is:
1
Bad
1
2
3
4
5
6
7
Good
2
Unpleasant
1
2
3
4
5
6
7
Pleasant
3
Unfavorable
1
2
3
4
5
6
7
Favorable
4
Disliked
1
2
3
4
5
6
7
Liked
5
Useless
1
2
3
4
5
6
7
Useful
Section 5. We sometimes strongly identify with a retail store. This occurs when we
perceive a great amount of overlap between our ideas about who we are as a person and
what we stand for (i.e., our self-image) and of who this store is and what it stands for (i.e.,
the company's product/service image).
Now we're interested in your perceptions of or feelings about how you would identify
yourself as a member of Fashion Ally's loyalty program when you shop at FASHION
ALLY with your Fashion Ally Card. Please answer the following questions based on
your experience with FASHION ALLY today.
Please indicate the number that best indicates the degree to which you agree or disagree with each
of the following statements.
Strongly
disagree
Fashion Ally's customer loyalty program
1
would reflect who I am.
2
I can identify myself with the Fashion Ally's
customer loyalty program.
I feel a personal connection to this Fashion
Ally's customer loyalty program.
I would use this Fashion Ally's customer
4 loyalty program to communicate who I am
to other people.
I think Fashion Ally's customer loyalty
5 program helps me become the type of person
I want to be.
3
Strongly
agree
Neutral
1
2
3
4
5
6
7
1
2
3
4
5
6
7
1
2
3
4
5
6
7
1
2
3
4
5
6
7
1
2
3
4
5
6
7
290
I consider Fashion Ally's customer loyalty
program to be "me" (it reflects who I
6
consider myself to be or the way that I want
to present myself to others.)
Fashion Ally's customer loyalty program
7
suits me well.
Fashion Ally's customer loyalty program
8
shares my values.
1
2
3
4
5
6
7
1
2
3
4
5
6
7
1
2
3
4
5
6
7
Section 6. We're now interested in learning how you feel or think about the store, FASHION
ALLY. Please answer the following questions below.
Strongly
disagree
Strongly
agree
Neutral
I would be satisfied with reward experiences
with Fashion Ally.
1
2
3
4
5
6
7
I would be satisfied with the manner in which
2 FASHION ALLY treats me as a loyal
customer (treats their customers like me).
1
2
3
4
5
6
7
1
2
3
4
5
6
7
1
3
Overall, I am satisfied with the customer
loyalty program of FASHION ALLY.
Section 7. Based on my perceptions of FASHION ALLY, I would say FASHION ALLY is:
1
Bad
1
2
3
4
5
6
7
Good
2
Unpleasant
1
2
3
4
5
6
7
Pleasant
3
Unfavorable
1
2
3
4
5
6
7
Favorable
4
Disliked
1
2
3
4
5
6
7
Liked
5
Useless
1
2
3
4
5
6
7
Useful
Section 8. According to the information given, FASHION ALLY offers the customer
% of total customers.
loyalty program to approximately
291
PART II. The following set of statements asks some general questions about
you. Please check or write down your appropriate responses.
Section 1.
1. What is your age?
(Type your age in the textbox.)
_________ years old
2. What is your academic standing?
Freshman
Sophomore
Junior
Senior
3. Choose one ethnic background that best describes you.
African America
Caucasian American
Hispanic/Hispanic American
Native American
Asian/Asian American
Multicultural
Others
4. What is your major?
(If multiple majors, choose one that is most representative of you.)
Allied medical professions
Architecture
Arts
Arts and Sciences
Biological Sciences
Business
Communication
Continuing Education
Dentistry
Education
Human Ecology
Engineering
Environment and Natural Resources
Food, Agricultural, and Environmental Sciences
Humanities Humanities
Public Affairs Law
Mathematical and Physical Sciences
Medicine/Public health/Nursing/Optometry/Pharmacy
Social and Behavioral Sciences
Social Work
Veterinary Medicine
292
Other
Section 2. We would like to know about your real experiences on customer loyalty
programs. Please answer the following questions based on your everyday shopping
experiences.
1. Are you enrolled any customer loyalty programs for apparel shopping?
Yes
No
2. If yes, how many customer loyalty programs are you enrolled for apparel
shopping? (Type the number in the textbox).
programs
Section 3. Please tell us about your opinions about apparel retailers' customer loyalty
programs by indicating your response.
I think existing loyal customer programs are:
Undependable
1
2
3
4
5
6
7
Dependable
Dishonest
Unreliable
Insincere
Untrustworthy
1
1
1
1
2
2
2
2
3
3
3
3
4
4
4
4
5
5
5
5
6
6
6
6
7
7
7
7
Honest
Reliable
Sincere
Trustworthy
Section 4. We would like to know more about you. In the following list, if a statement is
true or mostly true as it applies to you, click the True. If a statement is false or not
usually true as it applies to you, click the False. Please answer as frankly and honestly as
you can. There is no right or wrong answer.
1
I find it hard to imitate the behavior of other people.
TRUE
FALSE
2
At parties and social gatherings, I do not attempt to do or
say things that others will like.
TRUE
FALSE
3
I can only argue for ideas which I already believe.
TRUE
FALSE
4
I can make impromptu speeches even on topics about
which I have almost no information.
TRUE
FALSE
5
I guess I put on a show to impress or entertain others.
TRUE
FALSE
6
I would probably make a good actor.
TRUE
FALSE
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7
In a group of people I am rarely the center of attention.
TRUE
FALSE
8
In different situations and with different people, I often
act like very different persons.
TRUE
FALSE
9
I am not particularly good at making other people like me.
TRUE
FALSE
TRUE
FALSE
TRUE
FALSE
TRUE
FALSE
TRUE
FALSE
TRUE
FALSE
TRUE
FALSE
TRUE
FALSE
TRUE
FALSE
TRUE
FALSE
10 I am not always the person I appear to be.
11
I would not change my opinions (or the way I do things)
in order to please someone or win their favor.
12 I have considered being an entertainer.
I have never been good at games like charades or
improvisational acting.
I have trouble changing my behavior to suit different
14
people and different situations.
13
15 At a party I let others keep the jokes and stories going.
I feel a bit awkward in company and do not show up quite
as well as I should.
I can look anyone in the eye and tell a lie with a straight
17
face (if for a right end).
I may deceive people by being friendly when I really
18
dislike them.
16
294
APPENDIX O
RESULTS OF NON-RESPONSE BIAS TEST
295
Early respondents
(N = 112)
Late respondents
(N = 112)
Mean (SD)
Mean (SD)
F
p
Age
Number of LP
possessed
21.49 (5.26)
21.77 (5.14)
0.164
0.687
1.94 (1.32)
1.71 (1.74)
0.693
0.401
Trustworthiness
4.82 (1.20)
4.71 (1.08)
0.563
0.454
Store attitude
5.89 (1.01)
5.72 (1.01)
1.667
0.198
Identity salience
5.05 (1.28)
4.73 (1.24)
3.446
0.065
Identification
Affective
commitment
3.49 (1.35)
3.70 (1.35)
2.434
1.198
5.48 (0.95)
5.36 (1.10)
0.765
0.383
296
APPENDIX P
DATA SCREENING FOR NORMALITY TEST
297
Skewness
Measure
IS3
IS4
AT1
AT3
AT4
ID1
ID3
ID4
SA1
SA2
SA3
Mean
4.88
(5.00)
4.60
(4.59)
5.77
(5.81)
5.81
(5.77)
5.84
(5.83)
3.48
(3.62)
3.62
(3.68)
3.01
(3.10)
5.35
(5.40)
5.26
(5.29)
5.32
(5.31)
SD
1.58
(1.65)
1.60
(1.71)
1.14
(1.16)
1.16
(1.22)
1.15
(1.16)
1.62
(1.65)
1.73
(1.70)
1.71
(1.67)
1.32
(1.38)
1.29
(1.34)
1.29
(1.32)
Kurtosis
Calibration
sample
(N = 550)
Validation
sample
(N = 565)
Calibration
sample
(N = 550)
Validation
sample
(N = 565)
-0.49
-0.64
-0.49
-0.42
-0.38
-0.45
-0.57
-0.69
-0.82
-1.03
0.24
0.91
-0.92
-1.27
0.56
1.95
-0.92
-1.22
0.47
1.81
0.43
-0.09
-0.84
-0.10
0.03
-0.00
-1.00
-0.90
0.38
0.36
-0.94
-0.80
-0.82
-1.02
0.43
0.97
-0.75
-0.88
0.47
0.58
-0.72
-0.94
0.35
51.55
(119.63)
1.06
35.91
(84.22)
Multivariate
298
APPENDIX Q
HUMAN SUBJECT EXEMPTION APPROVAL FORMS
299
300
301
302