The main of study is to evaluate the effectiveness of loyalty program in the building and development of customer loyalty and the industry/sector selected for this study is grocery retailing. The research has adopted quantitative research design due to nature of study and data collection method for this study is primary method as well as secondary method.
The sample size for study is 200 respondents from grocery stores and sampling technique is judgemental sampling and data collected from respondents is analysed using appropriate statistical tools which include Microsoft Excel and SPSS through which correlation and regression techniques are applied to attain aim of study.
The results showed that independent variable including corporate image commitment trust and customer satisfaction are strongly correlated with dependent variable of customer loyalty. Furthermore all of the above mentioned independent variables have a significant impact on customer loyalty.
Keywords: Customer Loyalty Loyalty Programmes Commitment Trust Corporate Image and Customer Satisfaction
Many of the retailing sectors nowadays are incorporating loyalty programmes to augment the loyalty of customers (Dorotic Bijmolt and Verhoef 2012: 217). It is expected that these loyalty programmes significantly affect the purchase intentions of the customers. Numerous studies have been carried out which mentioned that most of the retailing industries have incorporated these programs but inadequate information regarding the influence of loyalty programmes on consumer behaviour lead the researcher to conduct a research based on different types of customer loyalty programmes and their influence to the customer purchase intention (Andreu Sánchez and Mele 2010: 241). Therefore the core aim of this study was to conduct a research which identifies the extent how these programmes assists in the elevation of customer loyalty.
According to Mandhachitara and Poolthong (2011:122) the topics of customer loyalty and the customer loyalty programmes have received significant consideration from the past decade. The researcher has determined the relationship between customer loyalty and loyalty programmes which is profitable for grocery retail sector. This chapter comprises of a number sections which aim to provide a detailed introduction of the research topic. This chapter encompasses research problem contextual background significance rationale aims and objectives and research questions of the study. Furthermore the chapter is then concluded by presenting the structure of the research.
In United kingdom certain trends are obvious among the retail industry including; E-commerce will be seen as an emerging trend in 2017 the experience through the retail stores will continue to rise and evolve conversational commerce that is speak to buy will be more obvious trend in the consumer market cost pressures will be reduced by the use of technology agile at scale will be the new normal with innovation responsiveness quality and diversification as the key drivers of the retail industry (Pantano 2014 :344).
Figure 1: Disruptive Impact of Technology
(Source: Deloitte Analysis 2016)
Figure 2: Real Estate Reality Check
(Source: Deloitte Analysis 2016)
In this globalized world retail sector and grocery stores are playing a significant role in order to enhance service quality and product assortment (Varley 2014). A rise in customer demand is noticeable nowadays and the need to improve customer satisfaction is essential along with the product diversity and quality. It can be said that retail industry has a significant role in enhancing the growth of service sector. It is crucial for the retailers to understand the needs and wants of the customers so that their loyalty and satisfaction may be achieved. When the customers become loyal and satisfied a long term relationship is developed between the sellers and buyers. It involves increase in their loyalty through behavior and attitude involving repeat purchases.
According to Kim Holland & Han (2013: 313) customer loyalty and satisfaction is highly affected by two variables including service and product quality. These two variables appear successful for any marketing strategy. According to the Global industry classification standard (GICS) retailers are classified as organizations responsible in procurement enlargement ownership management and operation of shopping malls outlet malls and vicinity shopping centers. The retailers may be classified into different groups in relation to the involvement of consumers during the purchasing phase. For instance the grocery and apparel involves low involvement of the consumers while the furniture and electronics involves high involvement from consumers during the purchasing phase. The retailing industry is highly competitive now days and market research may be helpful in understanding the trends in the existing market related to variety seeking switching supplier and consumer needs and wants.
Product and services plays a significant role in increasing customer loyalty and satisfaction (Picon Castro & Roldan 2014:746). Organizations consider if they improve their services customer satisfaction and loyalty may increase with high profit margins. On the contrary business environments are observing change in technological trends with new innovative products and designs and organizations need to cope with the environment by introducing innovative products to their businesses. Also pricing strategies are considered an essential part of retail industry in order to sell their products and gain profit margins. Organizations use effective strategies to sustain and survive within the existing markets.
Loyalty programs has their standing and used as an influential tool of relationship marketing to gain customer loyalty (Brashear-Alejandro Kang & Groza 2016:1190). Loyalty programs add benefits to both the organization and customers. Retaining old customers is cost effective than acquiring new ones. Maintaining customer loyalty is essential for the organization and it will help businesses gain profit margins.
According to an estimate 25% of the customers are lost each year for the retail businesses and a slight increase in customer satisfaction leads to 25% increase in profits gains. Organizations develop strategies to retain customers as when customers are retained it becomes easier to develop long term relationships with them (Matzler et al. 2015: 117). When long term relationships are developed customer become loyal to a specific brand and will not switch to other brand and may forget any provided offers. Loyal customers do not switch their brands as the existing brands increases their efficiency in decision making provides them with higher consistency in decisions mitigates the perceived risks associated to future decisions and decrease the information processing phase for searching a new product/brand (Reibe et al. 2014 :990).
According to Kumar (2010) in order to elevate the customer loyalty retailing sector has been introducing new loyalty programs for augmenting the purchase will of the customers. These loyalty programs include integrated techniques of marketing which strengthen the communication grounds with the customers resulting in higher customer loyalty. In the context of customer loyalty and loyalty programs several researches have been carried out and resulted in many conflicts within the researchers. Hence this is an on-going debate how significantly the loyalty programmes result in higher customer loyalty.
The chief aim of this research is to highlight the challenges and difficulties faced by the grocery retailing companies in order to increase the customer loyalty towards their businesses. However erstwhile conducted studies have also discussed this topic in detail but the researchers failed to mention all the challenges experienced by the retailing sector (Omar and Fraser 2010:211). This particular research in envisioned to present all the difficulties faced by the grocery retail industries in order to increase the loyalty of the customers.
Another core problem which is the basis of this research to be carried out was to enlist necessary loyalty programmes for building customer loyalty. Several researches have been conducted in the past which have laid upon the focus on the significance of loyalty programmes with respect to customer loyalty (Blocker Flint Myers and Slater 2011:216). However this research is aimed to provide significance of customer loyalty programmes and their effective role in building customer loyalty of grocery retailing industry of UK.
With this into consideration the objectives surrounding the study are as follows;
The research questions for the enclosed study include the following;
Consumers built loyalty based on their attitude and behaviour and give preference of one brand on the other. The customer loyalty is developed due to multiple factors including; satisfaction with a product/service its performance or easy availability or cosiness and familiarity with the brand. Customer loyalty is a complex process with a number of variables affecting it. Commitment trust and satisfaction are the variables that help in maintaining relationship with the customer and may positively influence repeat purchasing. Previous literature shows the work on customer loyalty but its relation between the antecedents that creates loyalty across the retail industry is lacking. Also less work has shown that quality satisfaction trust and commitment has a significant impact on customer loyalty across the retail segments. Therefore the study has focused on identifying the factors affecting customer loyalty among the retail settings. Customer loyalty programs may be helpful in developing long term relationships with the customer and used by organizations to develop loyal customer and gain profits. But the application of customer loyalty programs in retail sector is scarce and thus this study wants to identify the impact of loyalty programs in building customer relationships.
According to Al-Rousan and Mohamed (2010: 886) loyal customers are considered as the success factor of a particular business. Loyalty programmes and practices are key enhancers which augments the customer loyalty towards a particular product or service. This research is expected to play a significant role in building the understandings of customer loyalty and loyalty programmes. Furthermore this researcher also plays a vital role in developing the understanding of factors which influence customer loyalty. In present years in order to emerge in this competitive business environment retailing industries are incorporating different strategies to increase the purchase intentions of the customers (Sorescu et al. 2011:S3). In this regard this particular study can also be beneficial for the retail business managers to incorporate different offerings and products to obtain a significant position in this competitive environment.
This study also plays a significant role in order to provide an insight of the marketing strategies of different grocery and retailing companies. Furthermore the researcher has also expected this study to be beneficial for future researchers in this particular area by providing necessary data and information regarding customer loyalty and how customer loyalty is affected with the help of loyalty programmes. The researcher has also mentioned the key reasons of adopting customer loyalty programmes by grocery retailing sector which is also expected to assist future research works. Moreover this research aims to provide a better understanding of the customer motivation and encouragement factors influenced by customer loyalty. In the words of Jahanshahi et al. (2011:253) loyalty programmes increase the motivation factors of the customers to refer the products and services used by them and are satisfied with their services. Hence this research is also valuable to understand customer preferences and expectations from retailing services.
For customers who regularly purchase products organizations develop a loyalty program to reward their valuable customers (Steinhoff & Palmatier 2016:88).
Consumers built loyalty based on their attitude and behaviour and give preference of one brand on the other. The customer loyalty is developed due to multiple factors including; satisfaction with a product/service its performance or easy availability or cosiness and familiarity with the brand (Chen 2015:107).
By corporate image one refers to the reputation of an organization. The image is what people perceive about a brand when an organization is mentioned (Johnson & Zinkhan 2015 :346).
Customer satisfaction refers to how the organization’s products or services fulfil needs demands or expectations of the brands (Sengupta Balaji & Krishnan 2015:665).
Commitment refers to the dedication and enthusiasm towards a specific cause or activity. Employee commitment refers to the dedication towards the work processes (Nasir Abbas & Zafar 2014:183)
Within the service and manufacturing organizations quality is considered an important element to increase firm competitiveness. Product and service together constitutes to the quality of organizations. Quality may merge both the tangible and intangible elements to develop loyal and satisfied customers. Quality increases competitive edge for organizations and is used as an essential tool to increase customer loyalty (Mitra 2016). Researchers are developing a focus to identify factors affecting quality of products and services.
This research study is composed of five chief chapters. Each of the proceeding chapter is interlinked with the previous chapters focusing on different themes and aims of the research to be catered in each chapter.
The first chapter is the introduction in which the researcher has mentioned a brief introduction of the research. This chapter includes a detailed outline of the research which is to be followed throughout the research. This chapter includes a brief introduction of the research background of the study aims and objectives research questions problem statement significance and rationale of the study. Furthermore the researcher has also mentioned the definitions of important key terms and the outline of the study which is been followed throughout the dissertation.
Second chapter is the literature review of the study. In this chapter the researcher has provided the key concepts of customer loyalty and loyalty programmes. In this chapter the researcher has mentioned the factors which significantly affect the customer loyalty in retail grocery settings. Additionally several types of customer loyalty programmes were also discussed by the researcher. Later in this chapter the researcher has linked both the concepts of loyalty programs and customer loyalty. This chapter is then concluded by presenting the conceptual framework of the study.
Third chapter is the research methodology in which the research has presented the methods of collecting data and from the samples. This chapter plays a significant role in achieving the research aims. The outline of this chapter includes several sections such as research approach and strategy research design research philosophy methods of sampling and data collection research hypotheses and data analysis plan. This chapter is concluded by
highlighting the ethical considerations and limitations of the study.
Chapter four is the critical analysis of the data obtained from the respondents. The researcher has applied SPSS tool for quantitative analysis of the data in order to address the research questions formulated in the first chapter.
The construct of loyalty has remained the centre of attention for over decades and have been studied in a variety of contexts including service loyalty (Caruana 2002 : 812; Butcher et al. 2001 : 312; and Gremler and Brown 1996 : 179) store loyalty (Reynolds and Arnold 2003 : 79; Czepiel 1990 : 15; and Beatty et al. 1996 : 226) brand loyalty (Jacoby amd Chestnut 1978; Massy et al. 1970; and Sheth 1968 : 397) and e-loyalty (Srinivasan et al. 2002 : 49). Considering the prevalence of the concept of customer loyalty a variety of researches have been conducted worldwide to investigate the extent of relationship between customer loyalty and financial results (Fredericks et al. 2001 : 26) customer satisfaction (Oliver 1999; and Hallowell 1996) customer value (De Ruyter and Bloemer 1999 : 326) and service quality (Kandampully 1998) loyalty programmes (Bolton 2000 : 97) trust (Singh and Sirdeshmukhm 2000 : 156) and commitment (Pritchard et al. 1999 : 339) in a variety of industries and sectors ranging from telecommunications to automobiles.
Even though the concept of customer loyalty has been studies for over decades no consensus has been reached amongst the scholars and experts about the understanding of customer loyalty (Reinartz and Kumar 2002: 89). For instance it has been indicated that there is no universally accepted definition of customer loyalty which has eventually led to poor operationalization of the concept. In particular the concept of brand loyalty and its underlying factors has been transposed into loyalty to the brand which is quite often found in the case of customer loyalty as well. However the academia has argued that the concept of customer loyalty is actually the inverse of this transposition.
On the other hand a variety of journal articles have used the concept of loyalty capriciously and interchangeable. For instance the study conducted by Schultz and Bailey (2000) was concerned with the investigation and evaluation of customer/brand loyalty in the intensely competitive business environment (p 49). It is worth noticing that the sources of loyalty are used interchangeably which is contradictory in accordance with the literature. Lastly McMullan and Gilmore (2003) has suggested that the behavioural measures of loyalty have been under study for several years and have continued playing an influential role in operationalization of customer loyalty as well as loyalty (p 239).
Considering the diversity of opinions with respect to the definition of customer loyalty it has been revealed that customer loyalty can only be defined with some level of abstractions; otherwise customer loyalty as a concept can only be predicted and interpreted. In this regards McMullan and Gilmore (2003) has argued that a consensus should be reached with respect to the definition and models of customer loyalty for its improvement modification and diagnosis. With this into consideration they further indicated that several scales of validity and reliability with respect to customer loyalty have now been understood and evaluated to ensure that the concept is not misinterpreted or understood in the business environment.
Under the light of the literature it has been suggested that the concept of customer loyalty revolves around the attitude and behaviour of the customers to prefer specific brand in the contemporary business environment over the offering of the competitors (Orel and Kara 2014: 119). Customer loyalty over the years has been argued to play an influential role in encouraging and motivating the customers to consistently purchase the goods and services offered by the retailer. In this regards Peiguss (2012) has defined the concept of customer loyalty as the willingness of the customers to purchase the offered products and services in the marketplace against the offerings of the competitors. Moreover Kumar and Reinartz (2016) has indicated that companies have continually worked towards the development of customer loyalty by offering them unmatched experience and superior quality products and services which has eventually influenced them to return for the similar experience rather than switching to other companies. Considering this it has been argued that once customers are influenced and motivated to use the products and services offered by the company they would take significant interest in the company’s offering though they may not have best quality service or price (Srinivasan et al. 2002: 49).
On the contrary Zikmund et al. (2002) argued that loyalty is not about the repetition of behaviour over and over again but it is far more. In this regards Zikmund et al. (2002) indicated that customers can be loyal to the brand the price the quality or other customers; however the concept of customer satisfaction is significantly important for the companies as it has influenced the customers to repeat their purchase based on the unique and unmatched services offered by the company. In this regards Srinivasan et al. (2002: 49) indicated that customer loyalty is continually affected by emotional bonding habit purchase history customer satisfaction trust and the history with the company. Therefore Peiguss (2012) argued that the satisfaction of the customers with respect to the products and services offered by the company should be considered as its success and competitive advantage.
Under the findings of Kumar and Shah (2004) it has been suggested that building and maintaining outstanding loyalty amongst the customers has become a rising concern for the companies. Since companies are offering almost identical products and services they have relied upon the concept of customer loyalty to ensure that customers would prefer their offered products and services rather than switching to other offerings in the intensely competitive business environment. Considering this Markin (2001) argued that customer loyalty has played an influential role in the success and growth of companies; therefore companies have relied extensively on keeping the customers loyal rather than replacing them with potential customers. Furthermore Kumar and Shah (2004) highlighted the most prominent advantages associated with customer loyalty which includes;
Some of the other benefits associated with customer loyalty in the contemporary business environment are as follows;
In the contemporary business environment the foremost objective of both local and international organisations is to maximise the profitability while ensuring that the stakeholders of the company are satisfied with the financial performance productivity and operational efficacy. With this into consideration Ahmad and Buttle (2001) indicated that customer loyalty has provided the companies with an opportunity to transform their customers into clients which eventually results in enhanced customer base (p. 31). Since loyal customers are more inclined to remain with the company for long-term they tend to overlook other companies offering identical products and services which eventually enhance the likelihood of the company to retain its loyal customers easily and conveniently (Liu 2007 : 31). The retention of loyal customers offers economic benefits to the company which includes;
On the other hand it has been indicated that loyal customers are interested in offering feedbacks and opinions about the products and services which eventually provides the company with an opportunity to improve its quality delivery time service and product features to ensure that customers are offered with additional value (Ahmad and Buttle 2001).
In the intensely competitive business environment it has become significantly important for the companies to develop outstanding relationship with the customers. In this regards Marzo et al. (2005) argued that the concept of loyalty has played an influential role in helping the companies in the development of relationship with the customers while ensuring that the promises and expectations of the customers are met in effective manner. As a result of customer loyalty companies have expanded their relationship with the existing customers while ensuring that new promises with the potential customers are kept in optimal manner (Gustafsson et al. 2005: 216). Under the light of the academia it has been indicated that maintaining a stable relationship with the customers has eventually increased their confidence in the offerings of the company and have significantly reduced the risk of switching to other companies. Furthermore the other advantages associated with relationship with the customers include the achievement of economies of scale and operational excellence (Rauyruen and Miller 2007: 27).
The benefits associated with developing and maintaining outstanding relationship with the customers can be broadly categorised into social and functional benefits. At one end social benefits are more concerned with the confortable and pleasant relationship with the customers. Moreover Marzo et al. (2005) indicated that the development of stable relationship with the customers eventually results in the reduction of problems associated with the purchase; thus the company can improve its overall efficacy with respect to the decision making. On the other hand the functional benefits associated with customer loyalty include; convenience time saving and purchasing decisions (Rauyruen and Miller 2007: 27).
With respect to the relational benefits for the company it has been indicated that companies have the opportunity to retain its existing customers rather than working towards the attraction of potential customers (Palmatier et al. 2007: 197). In this regards it has been indicated that customer loyalty has played an influential role in improving the overall growth and success of the business by engaging the customers with the offered products and services. Furthermore the loyalty amongst the customers also helps the company in establishing and strengthening the communicate route with the customers which eventually prevents the competitors to set higher prices for the offered products and services (Palmatier et al. 2007 : 197).
In light of the literature it has been indicated that loyal customers of the company are more inclined towards the purchase of offered products and services. In particular they tend to spend 67% more than the potential or new customers of the company (Singh 2006: 197). Considering the statistics it has been revealed that companies have focused on building extensive relationship with the customers to ensure that they are satisfied with the offered products and services which eventually results in the loyalty of the customers (Bell et al. 2005: 171). Furthermore it has been indicated that acquiring new customers in the intensely competitive business environment is quite problematic for the company considering the costs associated with it. In this regards companies have focused on retaining the customers on the basis of satisfaction and loyalty and only 5% of the company’s loyal customers can increase the profitability of the company by 85% (Zineldin 2006 : 437). With this into consideration companies have focused extensively upon the retention strategy to ensure that it is provided with an opportunity to increase its profit margin while reducing the additional costs associated with the business.
The concept of Customer Lifetime value has been argued as the net profitability of the company which has frequently been attributed to the extensive relationship with the customers (Kim et al. 2006: 106). In simpler words the concept focuses on investigating and measuring the worth and value of the customers in present years followed by the projected value of the customers in the forthcoming years. In this regards it has been found that companies have increased the lifetime value of the customers through the inclusion of customer loyalty concept into its operations where the foremost goal is to ensure that the customers are satisfied and committed towards the organisation as well as its offerings (Meyer-Waarden 2007 : 233).
Furthermore it has been indicated that retailers have introduced and implemented the concept of loyalty and reward programmes which have eventually offered the companies with behavioural data of its customers and their buying habits (Malthouse and Blattberg 2005 : 7). Since customers have frequently purchased goods and services based on their emotions companies have considered this data in offering the customers with information related to the benefits associated with the usage of the brand (Malthouse and Blattberg 2005 : 7). This eventually creates an interest amongst the customers which ultimately leads to the purchase of offered products and services.
Furthermore the definition of customer loyalty revolves around both attitudinal and behavioural aspects. Considering this it has been highlighted by Allaway et al. (2011) that customers tend to spend approximately 78% at retail stores’ meanwhile the percentage of loyal customers was found to be 32% greater than the other customers in the marketplace (: 199). Considering this companies have changed their opinions and perspective about customer loyalty and have ultimately acknowledged them as beneficiary to the company (Li and Green 2011: 1). Since loyal customers bring continuous cash flows into the business companies have frequently offered its customer base with a variety of products and differentiated services to ensure that they would remain loyal to the company and its offerings which is similar to the concept of additional selling and cross-selling. In particular companies have continually worked towards the enhancement of familiarity of the customers with the offered products and services which eventually offer the company with an opportunity to create cost-advantages (Li and Green 2011 : 1).
On the other hand it has also been indicated that loyal customers tend to spread positive word of mouth marketing which significantly reduces the company’s costs associated with marketing and advertisement (Rowley 2004 : 127). Furthermore the literature has indicated that loyal customers are more interested in helping the company in terms of improving the features and characteristics of their brands through feedbacks and complaints. Similarly Johnson et al. (2006) has indicated in the research study that loyal customers have continually ignored the marketing communication and advertisements of competitors which implies that loyal customers have frequently resisted the offers of competing firms (p. 129).
According to Ball et al. (2004) there are several antecedents and factors affecting the loyalty of the customers in both business-to-consumers and business-to-business. They further categorised the antecedents into 4 groups which are as follows;
Figure 3: Antecedents of Customer Loyalty
Source: Ball et al. (2004)
Following are some of the most commonly accepted antecedents of customer loyalty in the contemporary business environment;
The term service quality according to Fogli (2006) can be described as the attitude and behaviour of the customers with respect to the offered service which eventually results in the overall impression of the customer with respect to the service’s inferiority and/or superiority in the business environment. Furthermore Fogli (2006) indicated that service quality as an antecedent of customer loyalty is the cognitive judgement of the customers with respect to the offered product and service.
Considering the importance of quality it has been indicated that companies should focus extensively upon the quality of services offered to the customers; meanwhile Stafford et al. (1998) argued that companies operating in intensely competitive business environment have increased their emphasis on the quality of service as well as customer satisfaction (p. 429). Moreover the literature has indicated that service quality has been found to have positive correlation with word-of-mouth marketing (Sivadas and Baker-Prewitt 2000: 77). This implies that satisfied customers are more willing to promote the offered products and services based on the quality to their friends and family members.
Similarly the literature has also shown that loyal customers are willing to pay higher prices for the goods and services based on superior quality (Huang and Huddleston 2009: 979). In this regards a study was conducted by Wong and Sohal (2003) with an aim to evaluate the impact of service quality on the loyalty of the customers at two distinct levels of store (i.e. person to firm) and interpersonal (i.e. person to person).The study found that a the strength of relationship was significantly higher between customer loyalty and service quality. Additionally the study highlighted that the strength of relationship between company and the customers was relatively stronger in comparison to interpersonal level where the important predictors of loyalty at store level was the tangible beings and empathy at the interpersonal level (Wong and Sohal 2003 : 499).
Customer satisfaction as explained by literature is the result of customer’s weightage of their perception related to the actual performance of the brand against their expectations (Deng et al. 2010: 297). Considering the definition it has been indicated that the satisfaction of the customers is their fulfilment response where customer judges the characteristics and features of the products and services in terms of offering them with pleasurable fulfilment rate (Akbar and Parvez 2009). Over the years a variety of researches have been conducted to examine the role and influence of customer satisfaction in increasing the level of loyalty amongst the consumers. In this regards it has been revealed that satisfaction has stimulated and motivated the consumers to prefer the specific brand over others available in the marketplace while ensuring that the customer would frequently purchase the goods and services offered by the company (Chang et al. 2009 : 441).
Trust in the contemporary business environment has been argued as an important element that has helped consumers and customers in developing a relationship with the brand (Martinez and Del Bosque 2013: 91). The concept of trust under the light of the academia has been defined as the willingness of the customers to be vulnerable to another party’s actions based on their expectations. In this regards it has been suggested that trust amongst the customers is developed based on the integrity and honesty in the business communication (Luarn and Lin 2003: 159).
Likewise Chaudhuri and Halbrook (2001) highlighted the importance of trust and credibility with respect to customer loyalty (: 88). In particular they argued that loyalty amongst the customers is directly affected by the trust; meanwhile Singh and Sirdeshmukh (2000) argued benevolence as an important factor affecting and explaining the concept of loyalty. Likewise Ball et al. (2004) highlighted that trust is an important factor for companies operating in intensely competitive business environment while indicating that lack of trust always results in the obstruction of the loyalty formation.
In light of the literature commitment is amongst the important factors affecting the loyalty amongst consumers and customers (Dimitriades 2006: 787). In this regards it has been indicated that commitment has influenced the customers to continue their association and relationship with the company. With this into consideration it has further been indicated that relationship between the consumers and companies are based on the mutual commitment (Mattila 2004: 137).
On the other hand Moorman et al. (1992) defined the concept of commitment as the enduring desired and attitude of the individual towards the specific brand which implies that commitment influences the individuals to become emotionally connected to the products and services offered by the company while sustaining the desired for ever-lasting relationship (: 314). Furthermore the study conducted by Jones et al. (2010) was focused on evaluating and investigating the dimensions of commitment as a construct; therefore they study was primarily concerned with the importance of consumer loyalty in terms of willingness to pay higher prices for acquiring the offered products and services followed by repurchase intentions altruism and advocacy. In light of the literature commitment has played an important role in reducing the switching intention of the consumers and customers considering the variety of identical and similar products and services in the marketplace (Fullerton 2005: 1373).
The concept of corporate image has been argued to have a significant impact on the consumer loyalty and their satisfaction level. With this into consideration a research conducted by Minkiewics et al. (2011) indicated that corporate image can be defined as the beliefs feelings and attitudes of the stakeholders towards the organisation and its offered products and services (: 193). The study also agreed and acknowledged the findings of Bosch et al. (2006) where it was revealed that corporate image has significantly increased the likelihood of shaping the response of the customers based on their perceptions and feelings (p. 879).
Loyalty programmes have remained the foremost priority of the companies operating across the globe (Meyer-Waarden and Benavent 2006: 69). In particular it has been indicated that loyalty programmes are part of the structured marketing efforts where the purpose is to ensure that the customers are frequently rewarded for their outstanding association with the company (Dorotic et al. 2012: 219). Moreover it has been indicated that loyalty programmes have played an influential role in encouraging the customers to develop positive buying behaviour which ultimately is beneficial for the company.
On the other hand it has been indicated that companies have embraced and integrated the concept of loyalty program into the business strategy for optimal level of growth and survival followed by outstanding level of customer loyalty (Lin and Bennett 2014 : 931). In this regards it has been revealed that companies have offered rewards programmes a part of loyalty programme to customers that have frequently purchased the goods and services offered in the intensely competitive business environment. Likewise Peiguss (2012) argued that loyalty programmes have worked as an incentive offered to the customers where they are provided with a variety of benefits considering their cumulative purchasing and association with the company over time (Sharma and Bhardwaj 2016).
In the intensely competitive business environment companies have offered their customers with loyalty programmes which has further encouraged and motivated them to shift from one-time purchase to multiple-period purchases. In this regards Lewis (2004) has revealed that loyalty and reward programmes have played an influential role in encouraging the customers to frequently purchase the offered goods and services while ensuring that they would with the company based on the incentives offered to them for being loyal to the company (Asiah et al. 2013 : 37).
The concept of loyalty programme was initiated in Germany but was implemented by American Airlines to ensure that customers would frequently use the services offered by the company (Zhang et al. 2014 : 291). Considering the positive impact of loyalty programmes on the purchase intention of the customers the concept was frequently used by hotels credit card organisations retailers and car rental companies. Organisations have frequently used reward systems a part of loyalty programme to ensure that their frequent and best customers are retained by the company in most effective manner (Palmer et al. 2016 : 481). Furthermore companies have used the loyalty programmes not only to increase the loyalty amongst customers but have also used as an opportunity to gain relevant and valuable information about the customer’s preferences and purchase habits which eventually helps the organisation to customise the offered products and services to them (Srivastava and Rai 2015 : 89). In the case of retail industry retailers have continually acknowledged the importance of acquiring the information regarding customers without which the retailers would not be able to identify the rewards that would be most suitable for the customers.
According to Peter (2010) it is important for a loyalty programme to consider a variety of rules which are briefly highlighted below;
In the globalised era companies have relied on the use of loyalty programmes to ensure that the loyal customers are rewarded based on their frequency of purchase through either enhanced services or price discounts (Noble et al. 2014 : 363). In this regards it has been indicated that both product and service sector have implemented the concept of loyalty programmes to ensure optimal level of satisfaction amongst the customers. With this into consideration Singh and Khan (2012) have indicated that companies have continually used a variety of loyalty programmes in the retail sector which are as follows;
Points system is amongst the most commonly used loyalty programme across the globe. In this loyalty programme the frequent consumers are offered with an opportunity to earn points based on their purchase which is then translated into the rewards offered by the company that may either be gifts special treatment discounts etc. (Leva and Ziliani 2014). Furthermore Peiguss (2012) has indicated that hospitality and transportation companies have continually incorporated the concept of reward programmes which has been argued as the most appropriate and feasible programme for companies that encourages short-term achievement of goals rather than emphasising for sustainability.
In this type of loyalty programme companies tend to offer small rewards to their customers to ensure that they would become part of the overall programme of the company while encouraging the customers to increase the overall value of the reward by frequently purchasing the goods and services offered by the company (Colliander et al. 2016 : 169). An increase in the frequency of purchase helps the customers to move up the loyalty ladder.
This type of loyalty system is quite different from point system as it focuses on extracting long-term value rather than short-term value. According to Peiguss (2012) this type of loyalty programmes are quite important as they work towards higher level of commitment from the customers while ensuring an increasing in the willingness of the customers in higher price-point companies like hospitality airlines financial service institutions etc.
In this loyalty programme type companies charge their customers one-time fee to initiate the collection of points based on their total dollar spent. Considering the nature of this system it has been used by businesses that encourage customers to frequently purchase the goods and services (Stathopoulou and Balabanis 2016 : 5807). Likewise Peiguss (2012) has indicated that this loyalty type has significantly reduced the inconvenience of the customers with respect to paying a fee on monthly bases.
Non-monetary programmes are quite opposite to monetary programmes. Instead of offering the customers with monetary benefits companies tend to offer them a non-monetary thank you. In particular companies tend to offer them free products and vacation packages to appreciate the commitment and level of loyalty of the customers. In the non-monetary loyalty programmes companies are more inclined to offer customers with additional values rather than offering them dollar rewards or price discounts (Melnyk et al. 2015 : 414). In particular this type of loyalty programme has been used across the globe as customers are more interested in additional value rather than the monetary rewards.
In this loyalty programme type companies tend to develop partnership with other companies to develop an understanding of their purchasing process and lifestyles to ensure that customers are offered with appropriate rewards that may help in influencing them to frequently purchase from the company (Melnyk et al. 2015 : 414).
This type of loyalty programme focuses on gathering relevant information about the customers and their interests. With the information into consideration organisations offer their customers with coupons product discounts and free merchandise or other rewards to ensure that customers would voluntarily participate in the programme (Kang et al. 2015 : 470). Moreover it has been indicated that loyalty cards are used by companies to ensure that customers would frequently purchase the goods and services if they are offered something in return for their participation.
The last type of loyalty programme focuses on offering the customers with gift card or certificates to develop an association between the customers and the retailers. In this regards it has been found that retailers have continually offered their frequent customers with gift vouchers with specific amount which can be redeemed by spending the amount within the specific retail store (Kang et al. 2015 : 470). Furthermore offering gift cards has been found to increase the willingness of the customers to spend more of their money which ultimately increases the number of items sold.
Loyalty programmes have been argued to be significantly important for companies operating in the intensely competitive business environment (Bowen and Chen 2015 : 419). In this regards it has been revealed that companies have relied upon loyalty programmes to ensure their survival and growth (Breugelmans et al. 2015 :131). Following are some of the benefits and importance associated with the usage of loyalty programmes in the contemporary business environment.
Over the past decades a variety of researches has been conducted with respect to the importance of loyalty programmes and has revealed that each type of loyalty programme has offered the businesses with different results irrespective of their nature and scope of operations (Steinhoff and Palmatier 2016 : 91). Furthermore a research conducted by marketing gurus revealed that the inclusion of loyalty programmes within the operations of the business can enhance the profitability and growth of the company while offering the businesses with an opportunity to expand the business easily (Steinhoff and Palmatier 2016 : 91). In this regard the most prominent findings indicated that companies can develop exceptional loyalty amongst its customer-base by offering them a variety of loyalty programmes.
Loyalty programmes over the years have played an influential role in making the existing customers feel that they are continually valued by the company (Brashear et al. 2016 : 1195). Furthermore it has been suggested that loyalty programmes have also influenced the potential customers to frequently purchase the goods and services offered by the company. This implies that loyalty programmes have served dual function in the contemporary business environment (Brashear et al. 2016 : 1195). Instituting loyalty programme within the business strategy has not only resulted in the appreciation from the customers but also have increased the likelihood of the company in terms of sharing the joy with stakeholders that are close to the company (Brashear et al. 2016 : 1195). Once the customers develop a feeling that they are appreciated by the company they tend to support the operations of the business by referring friends and family members to use the products and services offered by the company rather than looking for products and services offered by other brands.
In the contemporary business environment marketers and professionals have considered the concept of loyalty programmes significantly important as they tend to improve the company’s ability in terms of retaining the customers (Cao and Li 2015 : 215). Since loyalty programmes are appreciated by the customers they tend to purchase the goods and services offered by the companies to ensure that they are rewarded appropriately for the total dollar spent. Considering the attitude and behaviour of the customers companies have embraced the concept of loyalty programmes to access larger share of the wallets of the customers (Cao and Li 2015 : 215).
Offering the customers with loyalty programmes is more likely to provide the company with valuable information regarding the customer’s preferences their buying habits and the products that attract them the most (Hutchinson et al. 2015 : 481). With all this information companies can formulate the most appropriate marketing and reward strategies to assure the growth of the business. The use of the valuable information can also help the retail stores in attracting diversity of the customers (Hutchinson et al. 2015 : 481).
In the globalised environment companies have invested hundreds and millions of dollars in loyalty programmes to ensure optimal level of loyalty (Zakaria et al. 2014 : 27). Under the light of the academia it has been suggested that loyalty programmes have played an influential role in developing positive association and loyalty amongst the customers which eventually results in the success and growth of the companies in the intensely competitive business environment (Zakaria et al. 2014 : 27). Following are some of the most reasons that companies have adopted the concept of loyalty programmes to boost the customer loyalty across the globe.
In the grocery retailing sector it has been found that customers are more likely to turn to competitor if they feel that they are not being valued by the company (Babin et al. 2015 : 270). In this regards it has been suggested that companies can strengthen their position in the grocery retailing industry by showing the customers that they are valued by the company which is done through the use of loyalty programmes (Babin et al. 2015 : 270). The psychology behind offering the customers with loyalty programmes is to ensure that they continually purchase the goods and services offered by the company for getting extra money from purchasing. Since the relationship is developed between the customers and the company customers tend to return the favour by motivating other shoppers to purchase grocery from a specific retail store rather than purchasing it from competitors (Babin et al. 2015 : 270). This implies that the strengthening positive customer experience eventually give rise to customer loyalty.
Loyalty programmes have played an important role in making the customers realise that they are quite valuable for the company (Garnefeld et al. 2013 : 19). Since they are offered with loyalty programmes customers are more likely to encourage and motivate their friends family members peers and colleagues to frequently purchase the goods and services offered by grocery retailers. Even though the products and services offered by grocery retailers are almost identical customers tend to prefer only those grocery retailers that have valued them on a continuous basis (Garnefeld et al. 2013 : 19). Over the years it has been revealed that loyal customers are more interested in referring their friends and family members to use the products and services offered by the specific company rather than for searching the products and services from other retailers.
The conceptual framework for the study is as follows;
Figure 4: Conceptual Framework
According to Mackey & Gass (2015) research methodology is one of the major approaches that encompass the hypothetical and analytical details that are required by the researcher for the research to be conducted and to achieve the aim and objectives of the study. Particularly in this study the researcher is determined to evaluate the effectiveness of Loyalty Program in the development of customer loyalty within the context of Grocery Retailing industry.
Specifically this chapter includes the methods and techniques that have been used by the research in order to gather or retrieve the data that are necessary for the research to be completed. In addition to it in this chapter the researcher also discusses the research design research approach research strategy research philosophy data collection method sampling method and technique sample size ethical consideration and research limitations that have been used by the researcher in order achieve the research aim and objectives.
Research philosophy is a belief or conception related to the way in which the data or information about the phenomenon of the research must be collected used and analysed (Creswell 2012). Research philosophy is an approach to understand the nature source and development of knowledge. In essence discussing the research philosophy in this research includes being aware and framing the assumptions and concepts. Research philosophy is also known as research paradigm that organises the framework of the study and supports the theoretical framework of the study. Moreover research philosophy also structures the research methods and techniques that have been used by the researcher.
As per the study conducted by Collis & Hussey (2013) research philosophy can be classified into three types including realism positivism and interpretivism. Realism research philosophy is an assumption that works on the some facets of reality and independent to the perceptions conceptual schemes beliefs and linguistic practices of an individual. In other words according to Robson & McCartan (2016) realism research philosophy works on the principles of real world and in which a situation is experienced and practiced by the researcher. Realism may be spoken of pertaining to the past future other conceptions mathematical entities universals material world moral categories and thought. Researchers who profess realism frequently claim that reality involves in a relationship between reality and cognitive representation.
On the contrary interpretivism is an approach to the social science that conflicts the positivism of natural science. Principally interpretivism is the collection of thought in philosophy of law and the contemporary jurisprudence. This philosophy works on the understanding of an individual regarding different concepts and ideas that arises from the opinions and findings of individuals. In the last Blaxter (2010) demonstrated about positivism that it is an approach that uses the interpretations and observations taken from the personal practice and experience in the research design in order to achieve the research aim and objectives. This type of research philosophy usually used in the quantitative research design as it uses statistical analysis and mathematical entities for the research to be conducted.
Furthermore according to Bryman & Bell (2015) positivism refers to the scientific and analytical methods that could be used by the researcher in order to achieve the research findings of the study. According to nature of the study researcher has undertaken the positivism research philosophy as the study is founded on the quantitative research design that applies the statistical analysis in order to prove or disapprove the research hypothesis.
According to Maxwell (2012) research approaches are classified into two types of approaches including inductive and deductive approach that can be used by the researcher to perform the research study. Inductive approach is another research approach that can be used by the researcher in the research study to be completed. According to the study conducted by Hausman et al (2010) inductive approach is also known as inductive reasoning that begins with the theories and observations generated towards the end of the whole research as an outcome of observations.
Inductive approach involves the search pattern and strategy from interpretations and development of reasons or theories for that pattern on the basis of hypotheses. Inductive approach transforms the general interpretations to the specific. On the contrary Deductive approach usually adapted to construct the research hypothesis on the basis of existing research theories and hypothesis and then constructs the research design in order to test the constructed hypothesis (Bryman & Bell 2015). Deductive approach is founded on the laws and rules that are approved and pursued on the whole.
It has been articulated by Vogel et al (2011) deductive approach refers to the reasoning from the specific to the general. It builds the causal link between particular and general view and opinions. As nature of the study that is quantitative research design the researcher has taken the deductive research approach in order to generate the research hypothesis by examining the existing theories and observations.
Research design is one of the essential approaches that refer to the whole strategy that the researcher uses to different components into the study in the most appropriate and logical manner which eventually provides the researcher with an opportunity to address the research questions in most effective and efficient manner. In addition research design is an important aspect that involves suitable research design when commencing any research study.
Research design is the foundation of research study that underpins the designs and ideas generated on how to collect or retrieve the data in a particular way that could be useful for the researching for addressing the research problem. In the words of Yin (2013) research design can be used in the form of qualitative quantitative and mixed method research design. Qualitative research design is related to the understanding the phenomenon exploring issues and addressing the research questions by making sense of and examining the unstructured data. This type of research design examines the responses of the participants that have been studied in the research study. Particularly qualitative research design examines the individual’s experience perception and feelings.
On the other hand quantitative research design is a more date-led and logical approach which support the research findings by measuring of what people perceive from a numerical and statistical point of view. As per stated by Lewis (2015) quantitative research design involves the statistical and numerical techniques that can be used to evaluate the result and research findings according to the gathered data through participants. Finally the mixed method research design is also an essential research design that can be used by the research in order to address the research question. Mixed method approach is a mixture of both research designs. In this study the researcher is determined to study the effectiveness of loyalty programme in the building of customer loyalty. Considering the nature of the study researcher has taken the quantitative research design for addressing the research problem within the context of grocery retailing industry.
Research strategy is an approach which provides assistance to the research in order to address the research problem. As per stated by Verschuren et al (2010) strategy that has been taken for the research to be completed is a general research plan that supports the researcher in addressing the research questions in a methodical way. In other words research strategy could be measured as a research plan or strategy that provides easiness and accessibility in terms of conducting the entire research study. In order to address the research problem a constant research flow is needed to continue the constant research flow.
As per the nature of existing study that is purely quantitative research; questionnaires as a research instrument has been used by the researcher for addressing the research question and 200 questionnaires have been filled by the customers of grocery retail stores. The results and analyses attained from these questionnaires have been demonstrated in the appendix section. In order to convert the numeric of Likert’s scale into words statistical tool termed as SPSS has been used by the research. The technique that has been taken in the statistical analysis is the correlation technique as it analyse the effectiveness of loyalty programme in the building customer loyalty.
On the basis of SPSS results the researcher will approve or disapprove the research hypothesis. Upon approval researcher could be able to conclude the research findings on the basis of experimental evidence that loyalty has a significant effect in building the customer loyalty. Although upon rejection of the hypothesis the researcher will able to conclude the research findings that loyalty programme has no significant effect in building the customer loyalty.
According to Palinkas et al (2015) data collection can be argued as the systematic process to collect and measure the knowledge and information with respect to the variables being studies where the foremost aim of the researcher is to address the research questions and evaluate the research outcomes. Data collection method helps the researcher to collect the essential and relevant points as collected information. In addition to it data collection method is one of the major aspects of research design and essential part of the research.
Data collection refers to what information and data makes the research effective and successful in order to address the research questions and problem. According to Meeker & Escobar (2014) there are two types of data collection methods that can be used by research to perform the research study. These types include primary and secondary data collection. Primary data collection method includes the new and first-hand data that can be gathered by means of interviews closed-ended questionnaires and personal experience of the researcher or respondents.
On the other hand secondary data collection is the collection of data from prior researches literatures of past conducted studies in accordance with the selected topic of the research. In this particular study both types of data collection have been taken into consideration by the researcher. Primary data has been collected by using the questionnaires as an instrument tool. Alternatively the secondary data has been collected by using the past conducted researches and available literatures through internet journals article review articles and magazines.
Sampling method is an approach that refers to the way of observations which are taken from the population to be in the sample size of the research. The sampling methods and techniques provide direction to the researcher to gather data consistent with how to collect the data or retrieved. In addition data that has been collected from the sampling technique is liable to examine the research findings and results in order to signify the overall sample size or population. This makes the sampling method and technique as a significant part of the study that involves the researcher’s interpretations and understandings. According to Csikszentmihalyi & Larson (2014) sampling method are categorised into two types including as probability and non-probability sampling method.
As per Palinkas et al (2015) probability sampling method is a technique that works on the principle of random selection. According to the probability sampling all respondents are equally allowed to participate in the research study. Probability sampling technique has further been categorised into cluster sampling systematic random sampling and simple random sampling technique. In contrast non-probability sampling technique is another technique of sampling method. Non-probability sampling includes judgemental sampling convenience sampling and snowball sampling and quota sampling (Uprichard 2013). Quota sampling technique is a sampling technique refers to the integration of essential traits of respondents in the research project to be accomplished (Im & Chee 2011).
Convenience sampling technique refers to the availability and convenience of the researcher. The convenience sampling method is determined by the convenience and availability of the respondents as that of an investigator (Farrokhi & Mahmoudi-Hamidabad 2012). Moreover snowball sampling is a method that holds the respondents’ referrals that have formerly been elected for the participation in the research. This approach typically concludes with the inclination as the respondents refer the individuals that commonly have same opinions and are usually from the similar social circle. Lastly judgemental sampling method can be used by the researcher when the he or she chooses the individuals on the basis of personal judgements and observations.
According to the quantitative research design the researcher has chosen the non-probability sampling technique in order to select the population relevant or essential for this research. Among the types of non-probability sampling methods the researcher has selected the judgemental sampling technique to be incorporate in the research design for addressing the research problem and question. The reason for using the judgemental sampling technique is that the researcher wants to address the particular research problems which cannot be attained by including the irrelevant individuals or population. With this into consideration the researcher only considered those individuals that frequently purchased the goods offered by the company rather than considering individuals that rarely purchase from the specific retail outlet.
The generation of hypothesis is a very significant approach in the research as approval or disapproval of the generated hypothesis illustrates the significance of the existing study. According to the literature review as mentioned above following hypothesis could be essential for addressing the research problem:
H0: Loyalty programme has no significant impact on building of customer loyalty
H1: Loyalty programme has significant impact on the building of customer loyalty
In this particular study the researcher is determined to evaluate the effectiveness of loyalty programme that is independent variable in the building of customer loyalty that is dependent variable of the study. The supporting hypotheses for the research study are as follows;
H20: Trust has no significant impact on building of customer loyalty
H2: Trust has significant impact on the building of customer loyalty
H30: Commitment has no significant impact on building of customer loyalty
H3: Commitment has significant impact on the building of customer loyalty
H40: Corporate Image has no significant impact on building of customer loyalty
H4: Corporate Image has significant impact on the building of customer loyalty
H50: Customer Satisfaction has no significant impact on building of customer loyalty
H5: Customer Satisfaction has significant impact on the building of customer loyalty
According to the selected topic of the research researcher has used 200 questionnaires a sample size of the study and has been elected by the process of judgemental sampling technique.
In this research the researcher has collected the data by means of questionnair
questionnaires that shows the data in the numeric term and scale of 1-5. This scale is named as Likert’s scale and need to be evaluated in the form of explanations. For this purposes SPSS statistical tool has been used by the researcher in order to address research questions and problem. The reason for selecting this tool is that it analyses the numeric data and convert it into the interpretations and results.
Ethical concerns are essential to be taken into account as respondents that have been selected into the research supposed that the data collected for the declared determinations and not to be manipulated. Ethical concerns on the subject of this study include preference of retailing industry information and the research maintains confidentiality and privacy of the respondents.
Last of all when concerning about the collection of secondary data ethical considerations have been subjected for in a certain way that no plagiarised work has been used by the researcher and embraces references and citations to endorse the researchers whose researches have been integrated in the study in order to support the research findings. In this regard optimal care has been taken into consideration during the data collection methods in order to get the reliable and valid research outcomes.
Within the current study there are several limitations and obstructions that have been handled by the researcher in order to address the research questions and problem. One of the major obstructions is the timeframe restriction which made the study restricted and bounded by the conciseness. The selection of targeted population was also a major limitation that has been faced by the researcher. The aforementioned limitations have some consequences. For instance the researcher might not collect the relevant and specific information as intended due to the limited time frame and resources which might have affected the overall validity and reliability to some extent of the research study.
The following chapter is related to analysis of results and its discussion for this particular study. The aim of this study is to evaluate the effectiveness of loyalty program in the building and development of customer loyalty and the industry/sector selected for this study is grocery retailing. The independent variable of loyalty program has been divided into four sub variables that are trust commitment corporate image and customer satisfaction while the dependent variable of study is customer loyalty. The study aims to analyse the impact of loyalty programs based on these four variables on customer loyalty overall in the grocery retailing industry. The results are discussed as under.
The above chart illustrates the distribution of males and females among all respondents in study. The total number of respondents in this study was 200 where 119 males participated in the study and 81 were females that took part in study.
The second chart in demographics section illustrates the age distribution of 200 respondents that participated in the study. Study showed that most of respondents were from age 31 to 36 years while second most were more than 43 years of age. 38 35 and 27 respondents lay in age group 37 to 43 years 24 to 30 years and 18 to 23 years respectively. This shows that most people shopping in grocery stores are aged between 31 to 36 years.
The third chart illustrates income of respondents. Most of respondents that took part in study were in income group of £5501 to £6500 while second most were in age group £2500 to £3500. This shows that mostly people in income group of £5501 to £6500 are shopping in grocery stores to fulfil their grocery needs.
The responses were collected with the support of survey questionnaires which have been analysed with the descriptive test on SPSS are mentioned as follows: gathered with the help of survey questionnaires have been analyses with the descriptive analysis which are as follows.
Table 1: Customers purchases based on trust
According to survey results of the table mentioned above 85 of the total respondents agreed to the statement that customers purchase goods and services offered by the company because trust is considered as the significant element that has helped consumers in purchasing goods and services. On the other hand 16 respondents negate with the statement while 52 remained neutral to the statement. The outcome of this study is similar to the study conducted by Luarn and Lin (2003: 159) trust amongst the customers is developed based on the integrity and honesty in the business communication and can urge them to purchase the goods and services based on the trust.
Table 2: Trust Increases Credibility
According to survey results mentioned in the above table 40 of the total respondents agreed to the statement that trust increases credibility of the company with respect to its products and services. However 20 respondents negates to the statement while 51 respondents remained neutral throughout the research. This result is similar to the study of Chaudhuri and Halbrook (2001) which have highlighted the importance of trust and credibility with respect to customer loyalty as credibility is an essential factor which can make the business efficacious
Table 3: Trust increases willingness of the Customers towards Company
In the table mentioned above when considering a total of agree and strongly agree it represents that a total of 140 respondents out of 200 were in the favour that trust increases the willingness of the customers towards the company and their offerings. Moreover only 14 respondents negate with the statement while 46 respondents remained neutral to this question. The results can be confirmed by the study of Ball et al. (2004) who have focused on the notion that trust is one of the most important elements for the companies operating in a highly competitive business environment. Hence it increases the willingness of the customers to purchase the products from trust-worthy organisations.
Table 4: Commitment influences the Customers
The table illustrated above explains that around 130 of the respondents out of 200 agree with the statement that commitment has influenced the customers to continue their association with the company. On the contrary side only 16 respondents out of 200 disagrees with the statement while 48 respondents remained neutral for this question. The results of the statement are similar to the study of Dimitriades (2006: 787) commitment is amongst the important factors affecting the loyalty amongst consumers and it can strongly enhance the relationship between the company and the customers.
Table 5: Mutual Commitment can enhance customer relationship
The table mentioned above represents that around 143 respondents out of 200 were in the favour that relationship between the consumers and companies are based on the mutual commitment. On the other side 14 respondents were not in the favour of this statement and 46 still remained neutral to this statement. The results are similar to the study of Mattila (2004: 137) which stated that a mutual commitment made by the organisation can enhance the relationship amid the customers and the company.
Table 6: Commitment can reduce switching intention
The table demonstrated above explains that around 120 respondents out of 200 were in the favour that commitment has played an important role in reducing the switching intention of the consumers. On the other hand 21 of the respondents were not in the favour of the statement where 59 remained neutral for this statement. The results are similar with the study of Jones et al. (2010) which stated that the switching behaviour of the customers can be eliminated through presenting an effective commitment for the customers.
Table 7: Corporate Image has increased the likelihood of shaping the response
The table presented above portrays that around 125 of the respondents out of 200 agree with the statement that corporate image has significantly increased the likelihood of shaping the response of the customers. Moreover 56 remained neutral to this statement while 19 respondents were against the statement stated above. The results are relatable to the study of Minkiewics et al. (2011) which stated that corporate image has been argued to have a significant impact on the consumer loyalty and their satisfaction level.
Table 8: Corporate Image can shape trust and satisfaction level
The table presented above highlights that around 133 of the respondents were in the favour of the question statement that corporate image has the ability to shape the trust and satisfaction level between the customers. However only 15 respondents negated the statement believing that corporate image shapes the trust and satisfaction. Moreover 52 respondents were neutral to this statement which signifies that either they were not aware of the question statement or were reluctant to give the answer.
Table 9: Corporate Image has influenced the customers to mould their attitude and behaviour
The table mentioned above represents that around 140 of the respondents were in the favour of the statement that corporate image has the significant influence on the customers to mould their attitude and behaviour towards the respect of the company. Moreover 13 respondents were not in the favour of question statement while 57 respondents remained neutral to the question statement.
Table 10: Customer Satisfaction has stimulated the consumers for specific brands
The table mentioned above represents that 139 respondents remained positive towards the statement that customer satisfaction has stimulated and motivated the consumers to prefer the specific brand over others available in the marketplace. Moreover 11 respondents disagree with the statement while 50 respondents remained neutral to the question statement incorporated in the questionnaire. The results are relatable to the study of Noble et al. (2014: 363) which stated that customer satisfaction can be stimulated for specific brands in the marketplace.
Table 11: Satisfaction has influenced the Customers to purchase the goods and services
The table mentioned above represents that 127 of the respondents remained positive towards the statement that satisfaction has influenced the customer to frequently purchase the goods and services offered by the company. Moreover 16 respondents disagree with the statement while 57 respondents remained neutral to the question statement incorporated in the questionnaire.
Table 12: Satisfaction Amongst customers increases their loyalty
The table mentioned above represents that 133 of the respondents agreed with the question statement that satisfaction amongst the customers increases the likelihood of the customers to be engaged in the loyalty programs. On the other hand 23 respondents disagree to the statement while 44 respondents remained neutral to the question statement.
Table 13: Building and Maintaining Outstanding Loyalty
The table mentioned above represents that 128 of the respondents remained positive towards the statement that building and maintaining outstanding loyalty amongst the customers has become the rising concern for the companies. In addition to the above statement around 11 respondents disagree with the question statement while 60 remained neutral towards the statement.
Table 14: Customer Loyalty Plays influential role
The table mentioned above represents that 127 of the respondents remained positive towards the statement that customer loyalty has played an influential role in the success and growth of the companies. However around 19 of the respondents out of 200 disagree with the statement while 55 remained neutral to the question.
Table 15: Customer Loyalty increases the attraction and retention of the customers
The table mentioned above represents that 132 of the respondents remained positive towards the statement that customer loyalty increases the attraction and retention of the customers. However around 14 respondents out of 200 disagree with the statement while 55 remained neutral to the question.
The correlation analysis shows the interdependence of two or more variables upon each other. According to Kinnear and Gray (2006) correlation analysis is a statistical technique that is used to evaluate the relationship between variables of study. In this study the relationship between trust commitment corporate image customer satisfaction and customer loyalty is investigated through correlation analysis from SPSS. The results are shown as follows.
Table 1 Correlation Analysis （标号错误）
The correlation analysis shows the relationship among all variables of study. Apart from relationship between all the independent variables with the dependent variable the relationship between all independent variables itself is also depicted in the above table. However the study has only interpreted the results for relationship between the dependent variable of customer loyalty and other independent variables falling under the umbrella of loyalty program that are trust commitment corporate image and customer satisfaction. The total number of responses in the study was 200. The results showed that relationship between trust and customer loyalty is significant as well as strong having 71.9% relationships. The second relationship was analysed for commitment and customer loyalty. The results showed that relation was significant and moderate having value of 68.5%. Similarly relationship of corporate image and customer satisfaction with customer loyalty was strong and significant having values of 75% and 84.2% respectively. The findings have been fortified by study conducted by Zakaria et al. (2014: 27) stating that loyalty programmes and customer loyalty are strong correlated.
Overall results from correlation analysis show that relationship of customer loyalty with trust commitment corporate image and customer satisfaction is strong and significant. The relationship is also direct or positive in nature.
Table 2 Model Summary
The above table is the model summary table from regression analysis that has been applied in order to evaluate impact of trust customer satisfaction corporate image and commitment on customer loyalty. The ‘R’ value in this table shows the relationship among all variables of study and it indicates that all variables are correlated at 74.9%. The ‘R Square’ value shows that how much cumulatively all independent variables predict the dependent variable. The results show that all independent variable are able to predict customer loyalty by 67.8%.
Table 3 ANOVA Table
The analysis of variance shortened to ANOVA is an analysis to determine the model fitness of model used in the study. The ANOVA test results are analysed through two values that are ‘F’ value and sig value. Both the values of ‘F’ and significance show that model used for the study is appropriate and significant to use.
The coefficients table fulfils the main aim of study of identifying the impact of independent variables which include trust commitment corporate image and customer satisfaction on customer loyalty. The results from coefficients table show that the impact of all independent variables that are trust commitment corporate image and customer satisfaction is significant on customer loyalty because the significance value for all the variables is lesser than alpha value of 0.05 indicating a significant impact. Moreover beta values from unstandardized coefficients shows that how much change in one unit of dependent variable brings in independent variable. This is depicted through regression equation.
The results from regression analysis showed that impact of loyalty programmes on customer loyalty is significant and it has also been identified in the study conducted by Zakaria et al. (2014 : 27) stating that companies are investing hefty amounts into loyalty programmes to build customer loyalty in grocery retail market.
Y = α + β1X1+…… βnXn
Here Y represents the dependent variable that is customer loyalty. Alpha is the constant value while B is the coefficient of independent variable and X is the independent variable. Thus Customer Loyalty = 2.942 + .752 (trust) + .664 (commitment) + .593 (corporate image) + .881 (customer satisfaction).
Objective 1: To investigate the concept of customer loyalty in grocery retailing setting
The objectives of the study were apparent to the researcher as they were focused towards the customer loyalty in the grocery retailing setting. Consequently the first objective of the study is focused towards the investigation of the concept of customer loyalty in grocery retailing setting. This objective was theoretical nature which the researcher achieved reviewing several theoretical concepts and literature in order to fulfil the objective successfully. However the objective was successfully achieved by the researcher by reviewing several theories and concepts previously postulated by the practitioners and scholars.
The researcher by reviewing some theories and concepts found out that customer loyalty is essential for the organisation particularly for the grocery retail setting. It is highlighted by Akbar and Parvez (2009) in the grocery retailing sector customer loyalty is more important because the switching behaviour of the customers is highly relatable in this case. If the customers do not get valued by their grocery retail stores then they are likely to have a switching behaviour. It was also found by Ball Simões and Machás (2004) that customer loyalty has played an influential role in the success and growth of companies; therefore grocery stores setting have relied extensively on keeping the customers loyal rather than replacing them with potential customers. Therefore the concept of customer loyalty in the grocery retailing setting is significantly important for the organisations in order to remain competitive in the industry.
Objective 2: To understand the prevalence of loyalty programs in the building customer loyalty in grocery retailing in United Kingdom
The second objective of the study was apparent to the readers as it was aimed towards understanding the prevalence of loyalty programs in the building of customer loyalty in grocery retailing in the UK. The objective of the research was successfully achieved by the researcher by viewing some relevant theories and concepts as the objective proposed by the researcher was theoretical in nature. After reviewing several literatures it was found out by the researcher that loyalty programmes are one of the most essential parts of the structured marketing efforts.
The ultimate purpose of loyalty programmes is to ensure that the customers are frequently rewarded for their outstanding association with the company (Dorotic et al. 2012: 219). Moreover the results were also in the favour of the statement that loyalty programs designed for the customers helps in building strong loyalty particularly in the grocery stores. However the grocery stores in the United Kingdom have designed certain loyalty programmes which have played an influential role in encouraging the customers to develop positive buying behaviour. Therefore it is made evident in the study that the prevalence of loyalty programs in building customer loyalty in grocery retailing in the United Kingdom.
Objective 3: To evaluate the effectiveness of loyalty programs undertaken by grocery retailers with respect to customer loyalty
The third objective proposed by the researcher was statistical in nature which was achieved by the researcher through statistical testing. Moreover the objective was successfully achieved by the researcher as the loyalty programs were found to be highly effective for the grocery retailers in the context of customer loyalty. It was also found from the results that loyalty programmes have played an important role in making the customers realise that they are a valuable asset for the company. Moreover it was also revealed from the study that loyal customers are likely to have less switching behaviour while adopting strategies through which they can retain within the organisation. Therefore it is made evident throughout the study about the effectiveness of loyalty programs which should be undertaken by the grocery retailers with respect to customer loyalty.
The objective was also successfully achieved as it provides the final results pertaining to the research hypotheses. The research hypotheses confirms that there is a significant impact of loyalty programs on customer loyalty. The test also confirms that the sub variables of the indepdent variable i.e. customer loyalty programs and its sub variables such as trust commitment corporate image and customer satisfaction also have a significant impact on loyalty of the customers. Therefore it is evident that the grocery retailers in the UK can take advantage of Loyalty programmes in order to enhance the loyalty of the customers.
This chapter has presented the summary of the entire dissertation and have presented the findings along with the discussion with respect to the impact of loyalty programmes on the loyalty of customers in the grocery retailing environment. Moreover this chapter presents the summarised findings from the previous chapter in addition to recommendations for enhancing customer loyalty through loyalty programs in grocery retail stores. In the end the chapter summary and conclusion is presented in order to sum up the whole study and present an essence of the entire study. The main aim of study was to evaluate the effectiveness of loyalty programs for building customer loyalty in grocery retail setting.
The findings were analysed through descriptive statistics from SPSS and showed relevant results to findings from primary data and fostered through use of secondary data. The respondents opined that trust is an important factor considered by customers when making purchases. Moreover the element of trust increases the credibility of product and service for the company and customer increases trust if the product or services are credible enough. Furthermore trust is an element that increases the customer’s willingness to buy or use a product or service of company. Overall it has been opined that trust is an important element that contributes to customer loyalty. The second variable in independent umbrella is commitment and customer responded that commitment is a key element that influences customer in order to increase their association with the company. Moreover customers opined that consumer and companies have mutual commitment upon which their relationship is based and is prosperous. The switching intention of customers was also analysed using commitment and respondents stated that commitment has played a crucial role in reducing their intention to switch to other brands. The third independent variable of study was corporate image. The respondents were asked regarding their views on corporate image and how it influences customer loyalty in grocery retail setting. Customers opined that corporate image of an organisation has significantly increased the likelihood of shaping consumer’s response towards a product or service offered by company.
The next statement sought consumer response regarding the fact that corporate image has assisted consumer in shaping their attitude and behaviour in association to company and most of respondents agreed to this statement opining that their behaviour and attitude towards a particular brand or a company is shaped through the company’s corporate image that it has built over its customers. The last variable affecting customer loyalty was customer satisfaction. Respondents opined that if the customers are satisfied from a particular brand or a specific company’s product they are likely to prefer that product over other brands available in the market place thus customer satisfaction derives customer loyalty. Moreover customer satisfaction on overall terms influence the customer’s purchasing intention towards a product and persuades customer to purchase goods and services from a particular company frequently or repetitively. Furthermore it was opined by customers that customer satisfaction is an important element that encourages customer to be participative in company’s loyalty programs.
The dependent variable for the study was customer loyalty and statements regarding customer loyalty were asked from customers and their opinions were sought based on which the results for study have been analysed and interpreted. The customers agreed that building and maintaining customer loyalty among the customer has become an important consideration for companies and it is also a rising concern for corporations. The customers also opined that use of customer loyalty programmes and engaging with customers effectively to increase customer loyalty has been a significant reason for that has contributed to success and growth of companies. Moreover it was also opined by customers that customer loyalty has been an important tool not to only retain existing customers but attracting potential customers as well.
The correlation analysis showed that trust commitment corporate image and customer satisfaction have a significant strong and positive relationship with customer loyalty. Similarly the regression analysis showed that all the four factors of loyalty programmes have a significant impact on customer loyalty both cumulatively and individually. This showed that main aim of study has been achieved due to the fact that loyalty programmes have a significant impact on customer loyalty and are likely to contribute to success of company. The findings are parallel to the study conducted by Zakaria et al. (2014 : 27) stating that loyalty programmes have a significant impact on customer loyalty and are likely to contribute to success of companies.
For building and enhancing the customer loyalty through loyalty programmes in grocery retail stores in UK the author has provided some recommendations that contribute to building and enhancement of customer loyalty crucial for companies in order to retain existing customers and build potential new ones in order to achieve success for the company. Specific recommendations are provided below.
The study’s aim was to evaluate the effectiveness of loyalty programmes on customer loyalty in grocery retailing setting. From the analysis conducted for the study it has been found that trust commitment corporate image and customer satisfaction are four important factors that contribute to customer loyalty and are recommended to be given important considerations for building and enhancing customer loyalty for a company.
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Customers purchase goods and services offered by company based on trust
Trust increases the willingness of the customers towards company and its offerings
Trust increases the credibility of the company and its products and services
Commitment has influenced the customers to continue their association with the company
Relationship between the consumers and companies are based on the mutual commitment
Commitment has played an important role in reducing the switching intention of the consumers
Corporate image has significantly increased the likelihood of shaping the response of the customers
corporate image has influences the customers to mould their attitude and behavior with respect to the company
Corporate image shapes trust and satisfaction level amongst the customers
Customer satisfaction has stimulated and motivated the consumers to prefer the specific brand over others available in the marketplace
Satisfaction has influenced the customer to frequently purchase the goods and services offered by the company
Satisfaction amongst the customers increases the likelihood of the customers to be engaged in loyalty programs
Building and maintaining outstanding loyalty amongst the customers has become a rising concern for the companies
Customer loyalty has played an influential role in the success and growth of companies
Customer loyalty increases the possibility of attracting and retaining existing and potential customers