Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Marketing Researcher Sheds New Light on Rewards Programs

25.10.2010
Loyalty or rewards programs have become very popular, but little is known about how they affect consumer perceptions after they sign up.

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
Further information:
http://www.vt.edu

More articles from Studies and Analyses:

nachricht The Great Unknown: Risk-Taking Behavior in Adolescents
19.01.2017 | Max-Planck-Institut für Bildungsforschung

nachricht A sudden drop in outdoor temperature increases the risk of respiratory infections
11.01.2017 | University of Gothenburg

All articles from Studies and Analyses >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Traffic jam in empty space

New success for Konstanz physicists in studying the quantum vacuum

An important step towards a completely new experimental access to quantum physics has been made at University of Konstanz. The team of scientists headed by...

Im Focus: How gut bacteria can make us ill

HZI researchers decipher infection mechanisms of Yersinia and immune responses of the host

Yersiniae cause severe intestinal infections. Studies using Yersinia pseudotuberculosis as a model organism aim to elucidate the infection mechanisms of these...

Im Focus: Interfacial Superconductivity: Magnetic and superconducting order revealed simultaneously

Researchers from the University of Hamburg in Germany, in collaboration with colleagues from the University of Aarhus in Denmark, have synthesized a new superconducting material by growing a few layers of an antiferromagnetic transition-metal chalcogenide on a bismuth-based topological insulator, both being non-superconducting materials.

While superconductivity and magnetism are generally believed to be mutually exclusive, surprisingly, in this new material, superconducting correlations...

Im Focus: Studying fundamental particles in materials

Laser-driving of semimetals allows creating novel quasiparticle states within condensed matter systems and switching between different states on ultrafast time scales

Studying properties of fundamental particles in condensed matter systems is a promising approach to quantum field theory. Quasiparticles offer the opportunity...

Im Focus: Designing Architecture with Solar Building Envelopes

Among the general public, solar thermal energy is currently associated with dark blue, rectangular collectors on building roofs. Technologies are needed for aesthetically high quality architecture which offer the architect more room for manoeuvre when it comes to low- and plus-energy buildings. With the “ArKol” project, researchers at Fraunhofer ISE together with partners are currently developing two façade collectors for solar thermal energy generation, which permit a high degree of design flexibility: a strip collector for opaque façade sections and a solar thermal blind for transparent sections. The current state of the two developments will be presented at the BAU 2017 trade fair.

As part of the “ArKol – development of architecturally highly integrated façade collectors with heat pipes” project, Fraunhofer ISE together with its partners...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

Sustainable Water use in Agriculture in Eastern Europe and Central Asia

19.01.2017 | Event News

12V, 48V, high-voltage – trends in E/E automotive architecture

10.01.2017 | Event News

2nd Conference on Non-Textual Information on 10 and 11 May 2017 in Hannover

09.01.2017 | Event News

 
Latest News

Helmholtz International Fellow Award for Sarah Amalia Teichmann

20.01.2017 | Awards Funding

An innovative high-performance material: biofibers made from green lacewing silk

20.01.2017 | Materials Sciences

Ion treatments for cardiac arrhythmia — Non-invasive alternative to catheter-based surgery

20.01.2017 | Life Sciences

VideoLinks
B2B-VideoLinks
More VideoLinks >>>