Advertisement

The cross-buying effect in a multi-vendor loyalty program in Korea

  • Seung Min Lee
  • Sang Yong Kim
  • Shijin Yoo
  • Tae Ho SongEmail author
Original Article
  • 7 Downloads

Abstract

This study investigates the factors weakening the relationship between a customer’s cross-buying and firm sales in a multi-vendor loyalty program (MVLP) in Korea. The findings indicate that cross-buying has a positive impact on purchase frequency, transaction size, and further cross-buying in the subsequent periods. However, this impact is attenuated when customers are inclined to deal proneness or spending limit. The findings give academics and managers the opportunity to reconsider the conventional assumptions about cross-buying. Instead of emphasizing cross-selling for random customers, firms must identify customers whose cross-buying behavior affects firm performance positively. This study has managerial implications for MVLP operators for the effective acquisition and retention of participating vendors.

Keywords

Cross-buying Multi-vendor loyalty program Deal proneness Spending limit Brand dispersion index Korea 

Notes

References

  1. Aaker, D. A., & Keller, K. L. (1990). Consumer evaluations of brand extensions. Journal of Marketing, 54(1), 27–51.CrossRefGoogle Scholar
  2. Anand, B., & Shachar, R. (2004). Brands as beacons: A new source of loyalty to multiproduct firms. Journal of Marketing Research, 41(2), 135–150.CrossRefGoogle Scholar
  3. Aurier, P., & N’Goala, G. (2010). The differing and mediating roles of trust and relationship commitment in service relationship maintenance and development. Journal of the Academy of Marketing Science, 38(3), 303–325.CrossRefGoogle Scholar
  4. Baloglu, S., Zhong, Y. Y., & Tanford, S. (2017). Casino loyalty: The influence of loyalty program, switching costs, and trust. Journal of Hospitality & Tourism Research, 41(7), 846–868.CrossRefGoogle Scholar
  5. Bawa, K., & Shoemaker, R. (1987). The coupon-prone consumer: Some findings based on purchase behavior across product classes. Journal of Marketing, 51(4), 99–110.CrossRefGoogle Scholar
  6. Bell, D., Ho, T., & Tang, C. (1998). Determining where to shop: Fixed and variable costs of shopping. Journal of Marketing Research, 35(3), 352–369.CrossRefGoogle Scholar
  7. Bendapudi, N., & Berry, L. (1997). Customers’ motivations for maintaining relationships with service providers. Journal of Retailing, 73(1), 15–37.CrossRefGoogle Scholar
  8. Bijmolt, T., Dorotic, M., & Verhoef, P. (2011). Loyalty programs: Generalizations on their adoption, effectiveness and design. Foundations and Trends in Marketing, 5(4), 197–258.CrossRefGoogle Scholar
  9. Brody, R., & Cunningham, S. (1968). Personality variables and the consumer decision process. Journal of Marketing Research, 5(1), 50–57.CrossRefGoogle Scholar
  10. Bucklin, L. P., & Sengupta, S. (1993). Organizing successful co-marketing alliances. Journal of Marketing, 57(2), 32–46.CrossRefGoogle Scholar
  11. Bunn, M., & Shaw-Ching Liu, B. (1996). Situational risk in organizational buying: A basis for adaptive selling. Industrial Marketing Management, 25(5), 439–452.CrossRefGoogle Scholar
  12. Chiou-Wei, S., & Inman, J. (2008). Do shoppers like electronic coupons? A panel data analysis. Journal of Retailing, 84(3), 297–307.CrossRefGoogle Scholar
  13. Corstjens, M., & Lal, R. (2000). Building store loyalty through store brands. Journal of Marketing Research, 37(3), 281–291.CrossRefGoogle Scholar
  14. Cossío-Silva, F. J., Revilla-Camacho, M. Á., Vega-Vázquez, M., & Palacios-Florencio, B. (2016). Value co-creation and customer loyalty. Journal of Business Research, 69(5), 1621–1625.CrossRefGoogle Scholar
  15. Cox, D., & Rich, S. (1964). Perceived risk and consumer decision-making: The case of telephone shopping. Journal of Marketing Research, 1(4), 32–39.Google Scholar
  16. Dahana, W., Morisada, M., & Miwa, Y. (2019). Cross-selling across stores or within a store? Impacts of cross-buying behavior in online shopping malls. Journal of Marketing Channels, 25, 1–26.Google Scholar
  17. Dickinson, S., & Heath, T. (2006). A comparison of qualitative and quantitative results concerning evaluations of co-branded offerings. Journal of Brand Management, 13(6), 393–406.CrossRefGoogle Scholar
  18. Dorotic, M., Fok, D., Verhoef, P., & Bijmolt, T. (2011). Do vendors benefit from promotions in a multi-vendor loyalty program? Marketing Letters, 22(4), 341–356.CrossRefGoogle Scholar
  19. Du, R., Kamakura, W., & Mela, C. (2007). Size and share of customer wallet. Journal of Marketing, 71(2), 94–113.CrossRefGoogle Scholar
  20. Ehrenberg, A. S., & Goodhardt, G. J. (1968). A comparison of American and British repeat-buying habits. Journal of Marketing Research, 5(1), 29–33.CrossRefGoogle Scholar
  21. Engel, J., & Blackwell, R. (1982). Consumer behavior. New York: The Dryden Press.Google Scholar
  22. Erdem, T. (1998). An empirical analysis of umbrella branding. Journal of Marketing Research, 35(3), 339–351.CrossRefGoogle Scholar
  23. Fader, P., Hardie, B., & Lee, K. (2005). RFM and CLV: Using iso-value curves for customer base analysis. Journal of Marketing Research, 42(4), 415–430.CrossRefGoogle Scholar
  24. Godes, D., & Mayzlin, D. (2004). Using online conversations to study word-of-mouth communication. Marketing Science, 23(4), 545–560.CrossRefGoogle Scholar
  25. Guo, W., Feng, J., McKenna, B., & Zhang, P. (2017). Inter-organizational governance and trilateral trust building: A case study of crowdsourcing-based open innovation in China. Asian Business & Management, 16(3), 187–207.CrossRefGoogle Scholar
  26. Ha, H. (2010). Alternative explanations of business-to-business relationships: The relational case between web-based companies and traditional channel partners in South Korea. Asian Business & Management, 9(1), 149–171.CrossRefGoogle Scholar
  27. Henthorne, T., LaTour, M., & Williams, A. (1993). How organizational buyers reduce risk. Industrial Marketing Management, 22(1), 41–48.CrossRefGoogle Scholar
  28. Hitt, L., & Frei, F. (2002). Do better customers utilize electronic distribution channels? The case of PC banking. Management Science, 48(6), 732–748.CrossRefGoogle Scholar
  29. Hoch, S., Bradlow, E., & Wansink, B. (1999). The variety of an assortment. Marketing Science, 18(4), 527–546.CrossRefGoogle Scholar
  30. Hödl, M., & Puck, J. (2013). Asset specificity, IJV performance and the moderating effect of trust: Evidence from China. Asian Business & Management, 13(1), 65–88.CrossRefGoogle Scholar
  31. Hoffmann, N. (2013). Loyalty schemes in retailing: a comparison of stand-alone and multi-partner programs. Frankfurt a. M.: Peter Lang International Academic Publishers.  https://doi.org/10.3726/978-3-653-03515-5.CrossRefGoogle Scholar
  32. Hwang, E., Baloglu, S., & Tanford, S. (2019). Building loyalty through reward programs: The influence of perceptions of fairness and brand attachment. International Journal of Hospitality Management, 76, 19–28.CrossRefGoogle Scholar
  33. Hwang, J., Chung, J., Kim, J., Lee, D., & Yoo, W. (2016). Antecedents to loyalty point redemption: Implications for customer equity management. Journal of Business Research, 69(9), 3731–3739.CrossRefGoogle Scholar
  34. Kahn, B., Kalwani, M., & Morrison, D. (1986). Measuring variety-seeking and reinforcement behaviors using panel data. Journal of Marketing Research, 23(2), 89–100.CrossRefGoogle Scholar
  35. Kamakura, W., Ramaswami, S., & Srivastava, R. (1991). Applying latent trait analysis in the evaluation of prospects for cross-selling of financial services. International Journal of Research in Marketing, 8(4), 329–349.CrossRefGoogle Scholar
  36. Kamakura, W., Wedel, M., de Rosa, F., & Mazzon, J. (2003). Cross-selling through database marketing: A mixed data factor analyzer for data augmentation and prediction. International Journal of Research in Marketing, 20(1), 45–65.CrossRefGoogle Scholar
  37. Kamran-Disfani, O., Mantrala, M., Izquierdo-Yusta, A., & Martínez-Ruiz, M. (2017). The impact of retail store format on the satisfaction-loyalty link: An empirical investigation. Journal of Business Research, 77, 14–22.CrossRefGoogle Scholar
  38. Klie, L. (2011). Global coalition loyalty program membership to top 1 billion in 2011. CRM Magazine, 15(4), 14.Google Scholar
  39. Kumar, V., Bohling, T., & Ladda, R. (2003). Antecedents and consequences of relationship intention: Implications for transaction and relationship marketing. Industrial Marketing Management, 32(8), 667–676.CrossRefGoogle Scholar
  40. Kumar, V., George, M., & Pancras, J. (2008). Cross-buying in retailing: Drivers and consequences. Journal of Retailing, 84(1), 15–27.CrossRefGoogle Scholar
  41. Kumar, V., & Shah, D. (2004). Building and sustaining profitable customer loyalty for the 21st century. Journal of Retailing, 80(4), 317–330.CrossRefGoogle Scholar
  42. Kumar, V., & Venkatesan, R. (2005). Who are the multichannel shoppers and how do they perform? Correlates of multichannel shopping behavior. Journal of Interactive Marketing, 19(2), 44–62.CrossRefGoogle Scholar
  43. Kutlu, G. (2015). Spillover effects of brand alliance and service experience on host brands in loyalty program partnerships.Google Scholar
  44. Lemon, K., & Wangenheim, F. (2008). The reinforcing effects of loyalty program partnerships and core service usage: A longitudinal analysis. Journal of Service Research, 11(4), 357–370.CrossRefGoogle Scholar
  45. Li, J., & Shi, V. (2019). The benefit of horizontal decentralization in durable good procurement. Omega, 82, 13–23.CrossRefGoogle Scholar
  46. Liang, C., Chen, H., & Wang, W. (2008). Does online relationship marketing enhance customer retention and cross-buying? The Service Industries Journal, 28(6), 769–787.CrossRefGoogle Scholar
  47. Lichtenstein, D., Netemeyer, R., & Burton, S. (1995). Assessing the domain specificity of deal proneness: A field study. Journal of Consumer Research, 22(3), 314–326.CrossRefGoogle Scholar
  48. Liu, Y., & Yang, R. (2009). Competing loyalty programs: Impact of market saturation, market share, and category expandability. Journal of Marketing, 73(1), 93–108.CrossRefGoogle Scholar
  49. Liu-Thompkins, Y., & Tam, L. (2013). Not all repeat customers are the same: Designing effective cross-selling promotion on the basis of attitudinal loyalty and habit. Journal of Marketing, 77(5), 21–36.CrossRefGoogle Scholar
  50. Marchette, S., Bakker, A., & Shelton, A. (2011). Cognitive mappers to creatures of habit: Differential engagement of place and response learning mechanisms predicts human navigational behavior. Journal of Neuroscience, 31(43), 15264–15268.CrossRefGoogle Scholar
  51. Martin, F., & Tao-Peng, F. (2017). Morality matters? Consumer identification with celebrity endorsers in China. Asian Business & Management, 16(4–5), 272–289.CrossRefGoogle Scholar
  52. Morisada, M., Miwa, Y., & Dahana, W. (2019). Identifying valuable customer segments in online fashion markets: An implication for customer tier programs. Electronic Commerce Research and Applications, 33, 100822.CrossRefGoogle Scholar
  53. Muraven, M., & Baumeister, R. (2000). Self-regulation and depletion of limited resources: Does self-control resemble a muscle? Psychological Bulletin, 126(2), 247.CrossRefGoogle Scholar
  54. Ngobo, P.-V. (2004). Drivers of customers’ cross-buying intentions. European Journal of Marketing, 38(9/10), 1129–1157.CrossRefGoogle Scholar
  55. Ngobo, P.-V. (2005). Drivers of upward and downward migration: An empirical investigation among theatregoers. International Journal of Research in Marketing, 22(2), 183–201.CrossRefGoogle Scholar
  56. Odin, Y., Odin, N., & Valette-Florence, P. (2001). Conceptual and operational aspects of brand loyalty: An empirical investigation. Journal of Business Research, 53(2), 75–84.CrossRefGoogle Scholar
  57. Oliver, R., & Winer, R. (1987). A framework for the formation and structure of consumer expectations: Review and propositions. Journal of Economic Psychology, 8(4), 469–499.CrossRefGoogle Scholar
  58. Plunkett, D., Fulthorp, K., & Paris, C. (2019). Examining the relationship between place attachment and behavioral loyalty in an urban park setting. Journal of Outdoor Recreation and Tourism, 25, 36–44.CrossRefGoogle Scholar
  59. Rapp, W., & Islam, M. (2006). Japanese mini-banks: Retail banking services through convenience stores. Asian Business & Management, 5(2), 187–206.CrossRefGoogle Scholar
  60. Reibstein, D., & Traver, P. (1982). Factors affecting coupon redemption rates. Journal of Marketing, 46(4), 102–113.CrossRefGoogle Scholar
  61. Reichheld, F., & Sasser, W. (1990). Zero defections: Quality comes to services. Harvard Business Review, 68(5), 105–111.Google Scholar
  62. Reinartz, W., & Kumar, V. (1999). Store-, market-, and consumer-characteristics: The drivers of store performance. Marketing Letters, 10(1), 5–23.CrossRefGoogle Scholar
  63. Reinartz, W., & Kumar, V. (2002). The mismanagement of customer loyalty. Harvard business review, 80(7), 86–95.Google Scholar
  64. Reinartz, W. J., & Kumar, V. (2003). The impact of customer relationship characteristics on profitable lifetime duration. Journal of Marketing, 67(1), 77–99.CrossRefGoogle Scholar
  65. Reinartz, W., Thomas, J., & Bascoul, G. (2008). Investigating cross-buying and customer loyalty. Journal of Interactive Marketing, 22(1), 5–20.CrossRefGoogle Scholar
  66. Rese, M., Hundertmark, A., Schimmelpfennig, H., & Schons, L. M. (2013). Loyalty program types as drivers of customer retention: a comparison of stand-alone programs and multi-vendor loyalty programs through the lens of transaction cost economics. The International Review of Retail, Distribution and Consumer Research, 23(3), 305–323.CrossRefGoogle Scholar
  67. Schirmer, N., Ringle, C. M., Gudergan, S. P., & Feistel, M. S. (2018). The link between customer satisfaction and loyalty: The moderating role of customer characteristics. Journal of Strategic Marketing, 26(4), 298–317.CrossRefGoogle Scholar
  68. Schmitz, C., Lee, Y., & Lilien, G. (2014). Cross-selling performance in complex selling contexts: an examination of supervisory-and compensation-based controls. Journal of Marketing, 78(3), 1–19.CrossRefGoogle Scholar
  69. Shah, D., & Kumar, V. (2012). The dark side of cross-selling. Harvard Business Review, 90(12), 21–23.Google Scholar
  70. Shah, D., Kumar, V., & Kim, K. (2014). Managing customer profits: The power of habits. Journal of Marketing Research, 51(6), 726–741.CrossRefGoogle Scholar
  71. Shah, D., Kumar, V., Qu, Y., & Chen, S. (2012). Unprofitable cross-buying: Evidence from consumer and business markets. Journal of Marketing, 76(3), 78–95.CrossRefGoogle Scholar
  72. Simonin, B., & Ruth, J. (1998). Is a company known by the company it keeps? Assessing the spillover effects of brand alliances on consumer brand attitudes. Journal of Marketing Research, 35(1), 30–42.CrossRefGoogle Scholar
  73. Srivastava, M., & Kaul, D. (2016). Exploring the link between customer experience–loyalty–consumer spend. Journal of Retailing and Consumer Services, 31, 277–286.CrossRefGoogle Scholar
  74. Valentine, L. (2004). Looking for Ms./Mr. Right American Bankers Association. ABA Banking Journal, 96(6), 64–67.Google Scholar
  75. Venkatesan, R., & Kumar, V. (2004). A customer lifetime value framework for customer selection and resource allocation strategy. Journal of Marketing, 68(4), 106–125.CrossRefGoogle Scholar
  76. Verhoef, P. (2003). Understanding the effect of customer relationship management efforts on customer retention and customer share development. Journal of Marketing, 67(4), 30–45.CrossRefGoogle Scholar
  77. Villacé-Molinero, T., Reinares-Lara, P., & Reinares-Lara, E. (2016). Multi-vendor loyalty programs: Influencing customer behavioral loyalty? Frontiers in Psychology, 7, 204.CrossRefGoogle Scholar
  78. Wang, Z., Zhu, C., Tian, S., & Li, P. (2019). Differentiation and pricing power of online retailers. Frontiers of Business Research in China, 13(1), 5.CrossRefGoogle Scholar
  79. Wells Fargo. (2007). Wells Fargo & Company Annual report 2007. Retrieved from www.wellsfargohistory.com/download/annualreports/2007annualreport_wf.pdf.
  80. Wiedmann, K. P., Labenz, F., Haase, J., & Hennigs, N. (2018). The power of experiential marketing: Exploring the causal relationships among multisensory marketing, brand experience, customer perceived value and brand strength. Journal of Brand Management, 25(2), 101–118.CrossRefGoogle Scholar
  81. White, H. (1980). A heteroskedasticity-consistent covariance matrix estimator and a direct test for heteroscedasticity. Econometrica, 48(4), 817–838.CrossRefGoogle Scholar
  82. Zbar, J. (2003). when it’s time to fire the customer. South Florida Sun-Sentinel. Retrieved from https://www.sun-sentinel.com/news/fl-xpm-2003-09-15-0309120602-story.html.
  83. Zeithaml, V. (1988). Consumer perceptions of price, quality, and value: A means-end model and synthesis of evidence. Journal of Marketing, 52(3), 2–22.CrossRefGoogle Scholar
  84. Zellner, A. (1962). An efficient method of estimating seemingly unrelated regressions and tests for aggregation bias. Journal of the American Statistical Association, 57(298), 348–368.CrossRefGoogle Scholar

Copyright information

© Springer Nature Limited 2019

Authors and Affiliations

  • Seung Min Lee
    • 1
  • Sang Yong Kim
    • 2
  • Shijin Yoo
    • 3
  • Tae Ho Song
    • 4
    Email author
  1. 1.Institute for Business Research and Education, Korea UniversitySeoulRepublic of Korea
  2. 2.Korea University Business SchoolSeoulRepublic of Korea
  3. 3.Korea University Business SchoolSeoulRepublic of Korea
  4. 4.School of BusinessPusan National UniversityBusanRepublic of Korea

Personalised recommendations