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ABSTRACT
The primary aim of this study is to evaluate the effectiveness of loyalty programs in the building and development of customer loyalty and the industry/sector selected for this study is grocery retailing. The research has adopted a quantitative research design due to the nature of the study and the data collection method for this study is a primary method as well as a secondary method.
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The sample size for the study is 200 respondents from grocery stores and the 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 the aim of the study.
The results showed that independent variables including corporate image commitment trust and customer satisfaction are strongly correlated with the dependent variable of customer loyalty. Furthermore, all of the above mentioned independent variables have a significant impact on customer loyalty.
CHAPTER 1: INTRODUCTION
1.1 Introduction
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 research based on different types of customer loyalty programmes and their influence on the customer purchase intention (Andreu Sánchez and Mele 2010: 241).
Therefore the core aim of this study was to conduct research that identifies the extent how which these programmes assist in the elevation of customer loyalty.
According to Mandhachitara and Poolthong (2011:122), the topics of customer loyalty and 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 the grocery retail sector.
This chapter comprises several sections that aim to provide a detailed introduction to the research topic. This chapter encompasses the 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.
1.2 Contextual Background
In the 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 speaks to buy will be a 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 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 product diversity and quality.
It can be said that the retail industry has a significant role in enhancing the growth of the 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 an increase in their loyalty through behaviour 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 for procurement enlargement ownership management and operation of shopping malls outlet malls and vicinity shopping centres. The retailers may be classified into different groups in relation to the involvement of consumers during the purchasing phase.
For instance, grocery and apparel involve low involvement of the consumers while the furniture and electronics involve high involvement from consumers during the purchasing phase. The retailing industry is highly competitive nowadays and market research may help understand the trends in the existing market related to variety-seeking switching suppliers and consumer needs and wants.
Product and services play 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 changes 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 the 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 have their standing and are 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 more 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 a 25% increase in profits gains. Organizations develop strategies to retain customers as to 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 customers become loyal to a specific brand and will not switch to other brands and may forget any provided offers. Loyal customers do not switch their brands as the existing brands increase their efficiency in decision making provide them with higher consistency in decisions mitigates the perceived risks associated with future decisions and decreases the information processing phase for searching for a new product/brand (Reibe et al. 2014:990).
1.3 Research Problem
According to Kumar (2010) in order to elevate 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 types of research have been carried out and resulted in many conflicts within the researchers. Hence this is an ongoing debate on 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 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 is envisioned to present all the difficulties faced by the grocery retail industries in order to increase the loyalty of the customers.
Another core problem that is the basis of this research to be carried out was to enlist necessary loyalty programmes for building customer loyalty. Several types of research 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 the significance of customer loyalty programmes and their effective role in building customer loyalty in the grocery retailing industry of the UK.
1.4 Aims and Objectives
With this into consideration the objectives surrounding the study are as follows;
- To investigate the concept of customer loyalty in the grocery retailing setting
- To understand the prevalence of loyalty programs in building customer loyalty in grocery retailing in the United Kingdom
- To evaluate the effectiveness of loyalty programs undertaken by grocery retailers with respect to customer loyalty
- To propose recommendations based on the findings of the research study to further enhance customer loyalty through loyalty programs
1.5 Research Questions
The research questions for the enclosed study include the following;
- What is the concept of customer loyalty in the grocery retailing setting?
- What is the prevalence of loyalty programs in building customer loyalty in United Kingdom retail stores?
- What is the effectiveness of loyalty programs as undertaken by grocery retailers in the context of customer loyalty?
- What are the possible recommendations to enhance customer loyalty through loyalty programs?
1.5 Rationale of the study
Consumers built loyalty based on their attitude and behaviour and give preference of one brand on the other. 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 the 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.
Moreover, 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 customers and gain profits. But the application of customer loyalty programs in the retail sector is scarce and thus this study wants to identify the impact of loyalty programs in building customer relationships.
1.6 Significance of Study
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 that augment customer loyalty towards a particular product or service. This research is expected to play a significant role in building the understanding of customer loyalty and loyalty programmes.
Furthermore, this researcher also plays a vital role in developing the understanding of factors that 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 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 into 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 for adopting customer loyalty programmes in the 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 to 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.
1.7 Defining Key Terms
1.7.1 Loyalty Program
For customers who regularly purchase products organizations develop a loyalty program to reward their valuable customers (Steinhoff & Palmatier 2016:88).
1.7.2 Customer Loyalty
Consumers built loyalty based on their attitude and behaviour and give preference of one brand on the other. 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).
1.7.3 Corporate Image
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).
1.7.4 Customer Satisfaction
Customer satisfaction refers to how the organization’s products or services fulfil the needs demands or expectations of the brands (Sengupta Balaji & Krishnan 2015:665).
1.7.5 Commitment
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)
1.7.6 Quality in Retail
Within the service and manufacturing organizations quality is considered an important element to increase firm competitiveness. Product and service together constitute the quality of organizations. Quality may merge both the tangible and intangible elements to develop loyal and satisfied customers. Quality increases the 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 the quality of products and services.
1.8. Structure of Study
This research study is composed of five chief chapters. Each of the proceeding chapters 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.
The 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 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.
The third chapter is the research methodology in which the research has presented the methods of collecting data 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 the SPSS tool for quantitative analysis of the data in order to address the research questions formulated in the first chapter.
The last chapter is the conclusion and discussion. In this chapter, the researcher has provided an overall summary of the research. Several recommendations were also provided at the end of this chapter.
CHAPTER 2: LITERATURE REVIEW
2.1. Customer Loyalty
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 and 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 the 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 studied 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, 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) have suggested that the behavioural measures of loyalty have been under study for several years and have continued playing an influential role in the 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) have 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.
In 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 brands 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 regard, 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) have 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 a 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 the 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 regard 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 purchases 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.
2.1.1. Importance and Benefits of Customer Loyalty
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;
- Price-sensitivity decreases in loyal customers
- Loyal customers are more inclined to spend quality time with the company rather than seeking other companies that could satisfy their demands
- Loyal customers tend to share their outstanding experience and association with the brand which eventually encourages others to purchase the goods and services offered by the company (p. 319).
Some of the other benefits associated with customer loyalty in the contemporary business environment are as follows;
2.1.1.1. Economic and Non-economic Benefits
In the contemporary business environment, the foremost objective of both local and international organisations is to maximise 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 an enhanced customer base (p. 31). Since loyal customers are more inclined to remain with the company for the long term they tend to overlook other companies offering identical products and services which eventually enhance the likelihood of the company retaining its loyal customers easily and conveniently (Liu 2007: 31). The retention of loyal customers offers economic benefits to the company which includes;
- Customer loyalty reduces the costs associated with the acquisition and/or replacement of the existing customers
- The retention of customers based on loyalty increases the performance and productivity of the company
- The operating costs significantly reduce as loyal customers are more inclined to share their experiences with others in the society and community which eventually increases the likelihood of gaining new customers with minimal advertisement and promotional campaign costs.
- Loyal customers are more willing to pay premium prices for the superior quality goods and services offered by the company rather than waiting for promotional offers
On the other hand, it has been indicated that loyal customers are interested in offering feedback 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 additional value (Ahmad and Buttle 2001).
2.1.1.2. Relational Benefits for Consumers and Company
In the intensely competitive business environment, it has become significantly important for companies to develop outstanding relationships with customers. In this regard, Marzo et al. (2005) argued that the concept of loyalty has played an influential role in helping companies in the development of relationships with the customers while ensuring that the promises and expectations of the customers are met in an effective manner.
As a result of the customer, loyalty companies have expanded their relationship with the existing customers while ensuring that new promises with the potential customers are kept in an optimal manner (Gustafsson et al. 2005: 216). In the light of 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 relationships 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 relationships with the customers can be broadly categorised into social and functional benefits. At one end social benefits are more concerned with the comfortable and pleasant relationship with the customers. Moreover, Marzo et al. (2005) indicated that the development of a 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 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 their existing customers rather than working towards the attraction of potential customers (Palmatier et al. 2007: 197). In this regard, 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 communication route with the customers which eventually prevents the competitors to set higher prices for the offered products and services (Palmatier et al. 2007: 197).
2.1.1.3. Retention of Customers
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 relationships 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.
2.1.1.4. Customer Lifetime Value
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 regard, it has been found that companies have increased the lifetime value of the customers through the inclusion of the customer loyalty concept into their 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 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 information related to the benefits associated with the usage of the brand (Malthouse and Blattberg 2005: 7). This eventually creates 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 beneficiaries to the company (Li and Green 2011: 1). Since loyal customers bring continuous cash flows into the business companies have frequently offered their customer base 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 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 feedback 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).
2.1.2. Factors affecting Customer Loyalty
According to Ball et al. (2004), there are several antecedents and factors affecting the loyalty of the customers in both business-to-consumer 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 the 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 a 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 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 the store (i.e. the person to the firm) and interpersonal (i.e. person to person).
The study found that the strength of the relationship was significantly higher between customer loyalty and service quality. Additionally, the study highlighted that the strength of the relationship between the company and the customers was relatively stronger in comparison to an interpersonal level where the important predictors of loyalty at the store level was the tangible beings and empathy at the interpersonal level (Wong and Sohal 2003: 499).
2.1.2.2. Customer Satisfaction
Customer satisfaction as explained by literature is the result of customers’ 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 consumers. In this regard, 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).
2.1.2.3. Trust
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 academia has been defined as the willingness of the customers to be vulnerable to another party’s actions based on their expectations. In this regard, it has been suggested that trust amongst the customers is developed based on integrity and honesty in 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 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 environments while indicating that lack of trust always results in the obstruction of loyalty formation.
2.1.2.4. Commitment
In light of the literature, commitment is amongst the important factors affecting loyalty amongst consumers and customers (Dimitriades 2006: 787). In this regard, 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 relationships between the consumers and companies are based on 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 forever-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 the 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).
2.1.2.5. Corporate Image
The concept of corporate image has been argued to have a significant impact on consumer loyalty and satisfaction level. With this into consideration 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).
2.2. Loyalty Programmes
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 the outstanding level of customer loyalty (Lin and Bennett 2014: 931). In this regard, it has been revealed that companies have offered rewards programmes as a part of loyalty programmes 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 loyalty programmes which have further encouraged and motivated them to shift from a 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 a 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 as part of loyalty programmes to ensure that their frequent and best customers are retained by the company in the 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 the retail industry, retailers have continually acknowledged the importance of acquiring 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;
- Acquiring the customers that are more willing to repurchase the goods and services offered to them
- Recognising the customers with a lower level of interest with respect to repurchasing the goods and services while ensuring that the budget allocated for marketing for the specific segment is reduced accordingly
- Focusing extensively on the customers that have exhibited similar profiles of existing customers but have not purchased the offered goods and services for the second time.
2.2.1. Types of Loyalty Programmes
In the globalised era, companies have relied on the use of loyalty programmes to ensure that loyal customers are rewarded based on their frequency of purchase through either enhanced services or price discounts (Noble et al. 2014: 363). In this regard, it has been indicated that both product and service sectors have implemented the concept of loyalty programmes to ensure an 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;
2.2.1.1. Points System
The points system is amongst the most commonly used loyalty programme across the globe. In this loyalty programme, the frequent consumers are offered an opportunity to earn points based on their purchase which is then translated into the rewards offered by the company that may either gift 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 the short-term achievement of goals rather than emphasising sustainability.
2.2.1.2. Tier System
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 the point system as it focuses on extracting long-term value rather than short-term value. According to Peiguss (2012), this type of loyalty programme are quite important as they work towards a higher level of commitment from the customers while ensuring an increase in the willingness of the customers in higher price-point companies like hospitality airlines financial service institutions etc.
2.2.1.3. VIP Benefits
In this loyalty programme type companies charge their customers a 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 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 basis.
2.2.1.4. Non-Monetary Programmes
Non-monetary programmes are quite opposite of monetary programmes. Instead of offering the customers 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 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 adding value rather than monetary rewards.
2.2.1.5. All-Inclusive Offers
In this loyalty programme type companies tend to develop partnerships with other companies to develop an understanding of their purchasing process and lifestyles to ensure that customers are offered appropriate rewards that may help in influencing them to frequently purchase from the company (Melnyk et al. 2015: 414).
2.2.1.6. Loyalty Cards
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 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.
2.2.1.7. Gift Card
The last type of loyalty programme focuses on offering the customers a 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 gift vouchers with a 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.
2.2.2. Importance of Loyalty Programmes
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 regard, 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.
2.2.2.1. Boosting Growth
Over the past decades, a variety of research has been conducted with respect to the importance of loyalty programmes and has revealed that each type of loyalty programme has offered the businesses different results irrespective of their nature and scope of operations (Steinhoff and Palmatier 2016: 91). Furthermore, 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 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 their customer base by offering them a variety of loyalty programmes.
2.2.2.2. Enhanced Reputation
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 a dual function in the contemporary business environment (Brashear et al. 2016: 1195).
Instituting a loyalty programme within the business strategy has not only resulted in 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.
2.2.2.3. Increase in the Level of Sales
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 customer's companies have embraced the concept of loyalty programmes to access a larger share of the wallets of the customers (Cao and Li 2015: 215).
2.2.2.4. Vital Market Research
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 valuable information can also help the retail stores in attracting a diversity of customers (Hutchinson et al. 2015: 481).
2.3. Loyalty Programmes and Customer Loyalty
In the globalised environment, companies have invested hundreds and millions of dollars in loyalty programmes to ensure an optimal level of loyalty (Zakaria et al. 2014: 27). In the light of 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 customer loyalty across the globe.
2.3.1. Strengthening Positive Experience
In the grocery retailing sector it has been found that customers are more likely to turn to competitors if they feel that they are not being valued by the company (Babin et al. 2015: 270). In this regard, 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 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 groceries 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 gives rise to customer loyalty.
2.3.2. Encouraging Referrals
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 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.
2.4. Conceptual Framework
The conceptual framework for the study is as follows;
Figure 4: Conceptual Framework
Source: Author
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CHAPTER 3: RESEARCH METHODOLOGY
3.1 Introduction
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 the Loyalty Program in the development of customer loyalty within the context of the 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.
3.2 Research Philosophy
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 understanding the natural 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 a 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 some facets of reality and is independent of 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 practised 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 a relationship between reality and cognitive representation.
On the contrary, an interpretivism is an approach to social science that conflicts with the positivism of natural science. Principally interpretivism is the collection of thought in the philosophy of law and contemporary jurisprudence. This philosophy works on the understanding of an individual regarding different concepts and ideas that arise from the opinions and findings of individuals.
In the last Blaxter (2010) demonstrated 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 is 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 the nature of the study, the 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.
3.3 Research Approach
According to Maxwell (2012), research approaches are classified into two types of approaches including inductive and deductive approaches that can be used by the researcher to perform the research study. The 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 begins with the theories and observations generated towards the end of the whole research as an outcome of observations.
The inductive approach involves the search pattern and strategy from interpretations and development of reasons or theories for that pattern on the basis of hypotheses. The inductive approach transforms the general interpretations to the specific. On the contrary Deductive approach is usually adapted to construct the research hypothesis on the basis of existing research theories and hypotheses and then constructs the research design in order to test the constructed hypothesis (Bryman & Bell 2015). A 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 views and opinions. As the nature of the study 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.
3.4 Research Design
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 the most effective and efficient manner. In addition, the 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 research 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 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, the quantitative research design is a more date-led and logical approach that support the research findings by measuring what people perceive from a numerical and statistical point of view. As 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. The mixed-method approach is a mixture of both research designs.
In this study, the researcher is determined to study the effectiveness of loyalty programmes 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 the grocery retailing industry.
3.5 Research Strategy
Research strategy is an approach that provides assistance to the research in order to address the research problem. As 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 the existing study that is purely quantitative research; questionnaires as a research instrument have 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 SPSS has been used by the research. The technique that has been taken in the statistical analysis is the correlation technique as it analyses the effectiveness of loyalty programmes in building customer loyalty.
On the basis of SPSS results, the researcher will approve or disapprove the research hypothesis. Upon approval, the researcher could be able to conclude the research findings on the basis of experimental evidence that loyalty has a significant effect on building customer loyalty. Although upon rejection of the hypothesis the researcher will be able to conclude the research findings that a loyalty programme has no significant effect in building customer loyalty.
3.6 Data Collection Method
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 studied where the foremost aim of the researcher is to address the research questions and evaluate the research outcomes. The 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 an essential part of the research.
Data collection refers to what information and data make 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. The 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 literature 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 research and available literature through internet journals article review articles and magazines.
3.7 Sampling Method and Technique
A sampling method is an approach that refers to the way of observations that 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 it. 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 a significant part of the study that involves the researcher’s interpretations and understandings. According to Csikszentmihalyi & Larson (2014) sampling methods are categorised into two types including probability and non-probability sampling methods.
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. The probability sampling technique has further been categorised into cluster sampling systematic random sampling and simple random sampling technique. In contrast, the non-probability sampling technique is another technique of sampling method. A non-probability sampling includes judgemental sampling convenience sampling snowball sampling and quota sampling (Uprichard 2013). Quota sampling technique is sampling technique refers to the integration of essential traits of respondents in the research project to be accomplished (Im & Chee 2011).
The 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 participation in the research. This approach typically concludes with the inclination as the respondents refer to the individuals that commonly have the same opinions and are usually from a similar social circle. Lastly, the judgemental sampling method can be used by the researcher when 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 incorporated 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.
3.8 Research Hypothesis and Variable
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 the following hypothesis could be essential for addressing the research problem:
H0: Loyalty programme has no significant impact on the building of customer loyalty
H1: Loyalty programme has a significant impact on the building of customer loyalty
In this particular study, the researcher is determined to evaluate the effectiveness of a loyalty programme that is the independent variable in the building of customer loyalty that is the dependent variable of the study. The supporting hypotheses for the research study are as follows;
H20: Trust has no significant impact on the building customer loyalty
H2: Trust has a significant impact on the building of customer loyalty
H30: Commitment has no significant impact on the building of customer loyalty
H3: Commitment has a significant impact on the building of customer loyalty
H40: Corporate Image has no significant impact on the building customer loyalty
H4: Corporate Image has a significant impact on the building of customer loyalty
H50: Customer Satisfaction has no significant impact on the building of customer loyalty
H5: Customer Satisfaction has a significant impact on the building of customer loyalty
3.9 Sample Size
According to the selected topic of the research, the researcher has used 200 questionnaires a sample size of the study and has been elected by the process of judgemental sampling technique.
3.10 Data Analysis Technique
In this research, the researcher has collected the data by means of questionnaires that show the data in the numeric term and scale of 1-5. This scale is named Likert’s scale and needs to be evaluated in the form of explanations. For this purpose, SPSS statistical tool has been used by the researcher in order to address research questions and problems. The reason for selecting this tool is that it analyses the numeric data and convert it into interpretations and results.
3.11 Ethical Issues
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 the collection of secondary data ethical considerations have been subjected to in a certain way that no plagiarised work has been used by the researcher and embraces references and citations to endorse the researchers whose research 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 reliable and valid research outcomes.
3.12 Research Limitations
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 in the timeframe restriction which made the study restricted and bounded by the conciseness. The selection of the 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.
CHAPTER 4: RESULTS AND DISCUSSION
The following chapter is related to the analysis of results and its discussion for this particular study. The aim of this study is to evaluate the effectiveness of loyalty programs in the building and development of customer loyalty and the industry/sector selected for this study is grocery retailing. The independent variable of the loyalty program has been divided into four sub-variables that trust commitment corporate image and customer satisfaction while the dependent variable of the 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 the 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 the study.
The second chart in the demographics section illustrates the age distribution of 200 respondents that participated in the study. The study showed that most of the respondents were from age 31 to 36 years while the second most were more than 43 years of age. 38 35 and 27 respondents lay in the 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 the income of respondents. Most of the respondents that took part in the study were in the income group of £5501 to £6500 while second most were in the age group £2500 to £3500. This shows that most people in the 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 the 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 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 the credibility of the company with respect to its products and services. However, 20 respondents negate 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 that can make the business efficacious.
Table 3: Trust increases the 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 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 trustworthy 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 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 favour that the relationship between the consumers and companies are based on 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 between 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 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 whereas 59 remained neutral for this statement. The results are similar to 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 consumer loyalty and 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 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 a 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 the 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 being engaged in the loyalty programs. On the other hand, 23 respondents disagree with 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 a 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 an 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.
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