A new study by Rajesh Bagchi, assistant professor of marketing in the Pamplin College of Business at Virginia Tech, sheds new light on these programs, used by airlines, credit-card companies, hotels, retailers, and other businesses to promote customer allegiance.
Bagchi and Xingbo Li, a master’s student in marketing who graduated earlier this year, conducted two lab experiments. In one study, 246 participants earned reward points in a grocery-store loyalty program that could be redeemed for a gas card; in the other, 385 participants accrued points in a restaurant loyalty program through dinner purchases that could be redeemed for a free dinner.
The points earned per dollar and the total points needed to redeem the reward comprise the two key elements of rewards programs, Bagchi said. In addition, the programs are structured in different magnitudes — for example, “earn 10 points per dollar spent, get $6 off when you accumulate 1,000 points” vs. “earn 1 point per dollar spent, get $6 off when you accumulate 100 points.”
Their research, Bagchi said, shows that different magnitudes affect consumer responses in very different ways — even when the same sum — in this case, $100 — has to be spent in order to get the $6 discount.
One of their findings, for example, shows that when the points earned per dollar are not a straightforward single rate, but a complicated range of points, consumers will ignore the complexity to focus on the total number of points needed for the reward.
The result? In a higher-magnitude program, the reward distance somehow feels very large to consumers, Bagchi said, so that those close to getting the reward — those with 800 of the 1,000 required points, for example — feel that they have made much more progress than those with only 200 points. The reverse, he said, is the case in a lower-magnitude program.
Their research, to be published in the February 2011 Journal of Consumer Research, also has important implications in other contexts, Bagchi said. These include weight loss and financial savings goals, where perceptions of progress influence the continued pursuit of the goal.
Learn more at www.pamplin.vt.edu/magazine/fall10/loyaltyprograms.html
Sookhan Ho | Newswise Science News
Amputees can learn to control a robotic arm with their minds
28.11.2017 | University of Chicago Medical Center
The importance of biodiversity in forests could increase due to climate change
17.11.2017 | Deutsches Zentrum für integrative Biodiversitätsforschung (iDiv) Halle-Jena-Leipzig
The miniaturization of the current technology of storage media is hindered by fundamental limits of quantum mechanics. A new approach consists in using so-called spin-crossover molecules as the smallest possible storage unit. Similar to normal hard drives, these special molecules can save information via their magnetic state. A research team from Kiel University has now managed to successfully place a new class of spin-crossover molecules onto a surface and to improve the molecule’s storage capacity. The storage density of conventional hard drives could therefore theoretically be increased by more than one hundred fold. The study has been published in the scientific journal Nano Letters.
Over the past few years, the building blocks of storage media have gotten ever smaller. But further miniaturization of the current technology is hindered by...
With innovative experiments, researchers at the Helmholtz-Zentrums Geesthacht and the Technical University Hamburg unravel why tiny metallic structures are extremely strong
Light-weight and simultaneously strong – porous metallic nanomaterials promise interesting applications as, for instance, for future aeroplanes with enhanced...
An interdisciplinary group of researchers interfaced individual bacteria with a computer to build a hybrid bio-digital circuit - Study published in Nature Communications
Scientists at the Institute of Science and Technology Austria (IST Austria) have managed to control the behavior of individual bacteria by connecting them to a...
Physicists in the Laboratory for Attosecond Physics (run jointly by LMU Munich and the Max Planck Institute for Quantum Optics) have developed an attosecond electron microscope that allows them to visualize the dispersion of light in time and space, and observe the motions of electrons in atoms.
The most basic of all physical interactions in nature is that between light and matter. This interaction takes place in attosecond times (i.e. billionths of a...
Transistors based on carbon nanostructures: what sounds like a futuristic dream could be reality in just a few years' time. An international research team working with Empa has now succeeded in producing nanotransistors from graphene ribbons that are only a few atoms wide, as reported in the current issue of the trade journal "Nature Communications."
Graphene ribbons that are only a few atoms wide, so-called graphene nanoribbons, have special electrical properties that make them promising candidates for the...
08.12.2017 | Event News
07.12.2017 | Event News
05.12.2017 | Event News
08.12.2017 | Life Sciences
08.12.2017 | Information Technology
08.12.2017 | Information Technology