Loyalty

Question 1

What is the definition of true loyalty?

Answer 1

Engel and Blackwell (1982) defined ‘true’ loyalty as the preferential attitudinal and behavioral response toward one or more brands in a product category expressed over a period of time

Question 2

What does Dick and Basus typology show?

Answer 2

They bring both attitudinal and behavioural loyalty together to produce a typology of loyal behaviour

Question 3

What are the four types of loyalty in Dick and Basus typology?

Answer 3

1) True Loyalty
2) Spurious Loyalty
3) Latent Loyalty
4) No loyalty

Question 4

Whats the characteristics of true loyalty?

Answer 4

This is when repeat purchase and relative attitude is high

- Most preferred category for organisations as the consumers doesn’t even consider another brand

Question 5

Whats the characteristics of Spurious loyalty?

Answer 5

High repeat behaviour yet low attitude towards the brand

• May have repeat purchase due to situational cues such as familiarity or deals
• Does consider other brands
• Is possibly due to norms or situational effects

Question 6

Whats the characteristics of Latent loyalty?

Answer 6

• Low repeat behaviour, high relative attitude
• So for example a customer may want to shop somewhere but finds it difficult due to situational cues such as the location and as a result goes to other competitors

Question 7

Whats the characteristics of no loyalty?

Answer 7

• Low repeat behaviour and low attitude

- Low attitudinal behaviour may be as a result of a recent introduction to the brand

Question 8

What are those people with positive attitudes and high repeat purchase behaviour less likely to do?

Answer 8

• They are less likely to search for alternatives etc

- Individuals holding strong commitments have demonstrated enhanced resistance to persuasion attempts (Dick and Basu)

Question 9

What makes up Rowleys model of loyalty?

Answer 9

1)Captive
Purchases continue as they are likely to have no choice, neutral to branding terms of attitude
2)Convenience
Routine/low involvement purchases, no attitude
3)Contented
Evaluate products on their own merits, more positive attitude
4)Committed
Hardly ever consider alternatives, offers word of mouth recommendations

Question 10

What strategies are tier one rewards directed towards meeting?

Answer 10

• Provide a simple, explicit and fair baseline reward mechanism to reward all customers for their present and past purchases irrespective of their attitude or purchase pattern.
• Tier 1 rewards would serve as an incentive for all customers to record their transactions with the company at every purchase instance.
• Ensure scalability of the loyalty program by rewarding customers in proportion to their spending. That is, the more a customer spends with the firm, the more he/she earns rewards.

Question 11

What are the characteristics of tier two rewards?

Answer 11

Tier 2 rewards are forward looking and aimed at influencing customer behavior or attitude in future given the past performance of the customer.

• Invisable to competition
• Tier 2 rewards would be special rewards given to select customers to cultivate attitudinal loyalty or enhance behavioral loyalty or both (should be aimed at specific customers)

Question 12

What is the customer selection process within tier two rewards?

Answer 12

The Customer Selection Process is essentially a process of measuring CLV for each customer.
- The high and medium CLV customers are then extracted as they represent high value customers.

Question 13

To determine the type of tier 2 reward, what 4 things are customers queried on?

Answer 13

1) Attitude Analyses
2) Behavior Analyses
3) Customer Profile Information
4) CLV Measure
- The outcome of Attitude and Behavior Analyses of a customer can help determine the specific objective to be fulfilled by Tier 2 reward for a given customer

Question 14

What is customer profile information?

Answer 14

Customer Profile Information provides data specific to a customer for designing a customized reward that is relevant to the customer.

Question 15

How does the CLV help determine the reward?

Answer 15

CLV measure in a way helps set the ceiling on the dollar value of Tier 2 reward that may be given to the customer. Otherwise, the value of Tier 2 reward may become highly subjective and susceptible to human judgment. Worse, it may lead to unprofitable transaction.

Question 16

What can tier 1 and tier 2 rewards achieve?

Answer 16

Tier 1 and Tier 2 operating concurrently can give immense flexibility to any loyalty program.

• Most importantly, they can help achieve attitudinal loyalty, behavioral loyalty and profitability simultaneously
• By adopting a customer-centric rewards strategy, companies can offer their customers more value and options to their customers, thereby fulfilling more needs and goals of the customers over and above what is met by the company’s products and services.

Question 17

What to Kumar and shah state is needed to achieve true loyalty?

Answer 17

‘to achieve ‘true’ loyalty, firms should concurrently focus on building both behavioural and attitudinal loyalty.

Question 18

Which stage of Kumar and Shas framework and the tiers introduced

Answer 18

Stage Two - Tier one awards - building loyalty among all customers
Stage 3 - Customer selection process, sees tier two rewards
Stage 4 - Sustaining loyalty for selected customers, firms select which customers to target, tier one and tier 2 rewards in action to sustain the customers loyalty

Question 19

What should organisations have in place for customer retention?

Answer 19

• ‘Strategic customer retention management policies

Question 20

What is technical quality?

Answer 20

Measurable objectively (e.g. time spent waiting)

Question 21

What is functional quality?

Answer 21

How the technical quality is subjectively perceived (e.g. perceived fairness in handling a queue)

Question 22

What does satisfaction result from?

Answer 22

-from an emotional state
Causes vary widely between individuals
Expectations influence satisfaction
The higher the customer’s expectations, the harder to satisfy them

Question 23

When are customers satisfied?

Answer 23

• Customers are satisfied when consumption experience meets their expectations
• Delighted when they exceed them!
• Customer expectations are rising

Question 24

What does Chistophers loyalty ladder show?

Answer 24

Christopher et al. (1991), propose that the objective of relationship marketing is to turn new customers into regularly purchasing clients, and then to progressively move them through to being strong supporters of the company and its product, and finally to being active and vocal advocates for the company

Question 25

What are the stages of the loyalty ladder?

Answer 25

Prospect
Customer
Client
Supporter 
Advocate

Question 26

How realistic is the pursuit of loyalty for some organisations?

Answer 26

1) Dependent on the organisation - it has been found that although consumers may have a favourite supermarket, more often than not convenience and location win out. Due to the amount of options avalible in todays food market many shop out of convenience rather than being loyal to a supermarket, they want the experience to be easy.
- There is also the threat of these supermarkets offering discounts for switching

2) Unrealistic for many online organisations such as airline companies, more realistic for offline companies such as hairdressers where they can’t just search and switch easily
3) More realistic for a brand that is unique and cant be copied e.g Apple, Harley Davidson = makes people feel apart of a community
4) Dependent on the resources the company has e.g if not receving good quality, somone wth spurious loyalty or captive loyalty may switch, needs to have the high quality resources to meet todays high demand

Question 27

How does Day view Loyalty?

Answer 27

consisting of repeated purchases promoted by a strong internal disposition

Question 28

What does Tier 1 rewards help contribute to?

Answer 28

Behavioural loyalty

Question 29

What does Tier 2 rewards help contribute to?

Answer 29

cultivating both attitudinal and behavioural Loyalty

Question 30

What does Mellens et al 1996 say?

Answer 30

over the years brand loyalty has been defined and measured in either behavioural or attitudinal terms