Loyalty Programs

SHORT AND LONG TERM İMPACT OF LOYALTY PROGRAMS ON CONSUMER PURCHASE BEHAVIOUR AND LOYALTY

Customer loyalty: It can be said to have occured when a person selects to buy one particular product from one particular store instead of buying from other competitors who produce same or different products.

Loyalty program: It means that programs which were used by companies to gain more loyal customers and also this program allows consumers to accumulate free rewards when they make repeated purchases with a particular company.

ln this world loyality is a big concern for companies. they try to gain more loyal customers, however because of many different shopping alternatives, tendency of customers towards loyalty is diminishing. In order to deal with this concern companies using loyalty programs. These programs increasing switching cost and they provokes customers to be loyal. there short term and long term effects of customer loyalty programs on custumers purchasing behaviour. Short term effects are mentioned point pressure effect, on the other hand longterm effects are mentioned rewarded behaviour effect.

Short Term (Point Pressure) Effect: It has temporary effect in customers purchase level. customers increase their purchase level and buy more products in order to get access to a reward. That kind of action of customers is the same as artificial increase in sales at the time of promotions. when a store makes sales promotion at that period customer are willing to buy more products to gain a reward, however it is not sustainable. Because of consumers perchase acceleration, they get closer to rewards. However after customer get the reward their tendency towards buying products is disappeared. Kivetz, Urminsky, and Zheng (2006). The extinction of positive purchasing behaviour of customer after reward gained is the same as Sales Dip concept in sales promotion. There is another issue for short term effect of loyalty programs which is The point pressure research...