Customer loyalty programs

The use of loyalty-cards databases: Differences in regular price and discount sensitivity in the brand choice decision between card and non-card holders

In the retail food sector, databases generated by customer loyalty programs are becoming increasingly important. The information stored in them helps retailers' decisions relating to pricing policies, promotions, inventories and category management in general. This paper analyzes the data on loyalty-card holders for 10 different product categories using multinomial logit models, and finds that the brand choice information may not be applicable to all purchases made in the outlet. Loyalty-card holders exhibit some distinctive behavior. When there are differences, card holders are less sensitive to regular prices, but they are more sensitive for price promotions in certain product categories.

The demand for and the supply of distribution services: A basis for the analysis of customer satisfaction in retailing

This paper brings together two bodies of literature. One of them is a literature on the special role of the consumer in retailing. The other one is the literature on customer satisfaction. This joining of literatures is accomplished by identifying distribution services as outputs of retail firms and fixed inputs into the production functions of consumers and relaxing the standard assumption that the demand for these services is always equal to the supply of these services. The result is a new conceptual framework for the analysis of customer satisfaction in retailing. This framework extends the basic ideas on customer satisfaction developed for manufacturing in a homogeneous single product setting to the heterogeneous multi-product setting relevant for many retailers. The paper illustrates one approach to the implementation of this framework with data for a set of supermarkets in Pamplona, Spain, that measure distribution services by asking consumers questions explicitly identifying these services. The five main categories of distribution services identified by the conceptual framework and measured in the data are economically important and statistically robust determinants of customer satisfaction with supermarkets. These results are obtained controlling for other variables typical of the customer satisfaction literature and measuring customer satisfaction in a manner consistent with that literature. The results are robust to corrections for sample selection and alternative estimation methods. Perhaps our most interesting novel result is that the effect of the determinants of customer satisfaction on future purchase intentions in the supermarket case is different when measured directly in a one stage process than when measured indirectly in a two stage process through the attributes/satisfaction/ purchase intentions chain.