Lecture 5

Question 1

Discount strategies

Answer 1

They often attract people who are looking for a discount. Changes are that they are going to leave you soon. No intention of staying loyal.

Question 2

AIDA

Answer 2

Attention - Interest - Desire - Action

Question 3

Antecedents of behavioral loyalty

Answer 3

1. Perceptions of relationship or offerings of supplier
   - commitment/satisfaction
2. Marketing Instruments
   - loyalty programs, advertising
3. Past Behavior
   - bought products, relationship length
4. Customer characteristics
   - Age, income, education

Question 4

Types of commitment

Answer 4

1. Affective loyalty: feeling based
2. Calculative loyalty: switching costs are high, more comfortable, no alternatives
3. Normative loyalty: group pressure “its the norm”

Question 5

CRM-instruments

Answer 5

1. Direct Mail
2. Sponsored magazines
3. Loyalty program -> savings
4. Loyalty program -> discounts
5. Club program

Question 6

Loyalty program

Answer 6

System/program that focuses marketing actions to make customers (members) more loyal.

Question 7

Objectives of loyalty programs

Answer 7

1. Customer development
2. Customer retention
3. Relationship strengthening
4. Give insights into customer behavior

Question 8

Disadvantages of loyalty programs

Answer 8

1. Difficult to stop with
2. Loyal to brand/store or to program??
3. Stock piling

Question 9

Effects of loyalty programs

Answer 9

1. Consumer adjusts behavior (direct effect)

2. Data gathering (indirect effect)

Question 10

Assessing effectiveness of loyalty programs

Answer 10

Sometimes difficult, because of Endogeneity:

1. Already loyal become member
2. In the measurement, effects of already loyal customers are taken into account.

Question 11

Characteristics of a loyalty program:

Answer 11

1. Foster loyalty
2. Structured: customers must become formally members to obtain benefits.
3. Long term
4. Rewarding: towards consumers (e.g. discounts, extra service)
5. Ongoing marketing efforts: providing tailored marketing efforts to fit the members

Question 12

Benefits for consumers for participating in a loyalty program

Answer 12

1. Symbolic -> social status
2. Hedonic -> personalized treatment
3. Utilitarian -> economic benefits

Question 13

Typical behavioral types of a unprofitable consumers

Answer 13

1. Excessive demands for customer service
2. Defaulting on loans or excessively returning products
3. Spend a limited amount of their share of wallet
4. Purchase only a loss-leader product.