The authors investigate how reward schemes of a loyalty program influence perceived value of the program and how value perception of the loyalty program affects customer loyalty. The results show that involvement moderates the effects of loyalty programs on customer loyalty. In high-involvement situations, direct rewards are preferable to indirect rewards. In low-involvement situations, immediate rewards are more effective in building a program's value than delayed rewards. Under high-involvement conditions, value perception of the loyalty program influences brand loyalty both directly and indirectly through program loyalty. Under low-involvement conditions, there is no direct effect of value perception on brand loyalty.
This is a preview of subscription content, access via your institution.
Buy single article
Instant access to the full article PDF.
Price excludes VAT (USA)
Tax calculation will be finalised during checkout.
Bagozzi, Richard P. and Youjae Yi. 1988. “On the Evaluation of Structural Equation Models.”Journal of the Academy of Marketing Science 16: 74–94.
— and —. 1991. “Multitrait-Multimethod Matrices in Consumer Research.”Journal of Consumer Research 17 (March): 426–439.
—,—, and K. W. Phillips. 1991. “Assessing Construct Validity in Organizational Research.”Administrative Science Quarterly 36 (September): 421–458.
Beatty, S. E., Lynn Kahle, and S. E. Homer. 1988. “The Involvement-Commitment Model: Theory and Implication.”Journal of Business Research 16 (2): 149.
Bem, D. J. 1967. “Self-Perception: An Alternative Interpretation of Cognitive Dissonance Phenomena.”Psychological Review 74: 182–200.
Biong, Harald. 1993. “Satisfaction and Loyalty to Suppliers Within the Grocery Trade.”European Journal of Marketing 27 (7): 21.
Bloemer, J. M. and H. D. Kasper. 1995. “The Complex Relationship Between Consumer Satisfaction and Brand Loyalty.”Journal of Economic Psychology 16: 311–329.
Bolton, Ruth N. 1998. “A Dynamic Model of the Duration of the Customer's Relationship With a Continuous Service Provider: The Role of Satisfaction.”Marketing Science 17 (1): 45–65.
—, P. K. Kannan, and M. D. Bramlett. 2000. “Implications of Loyalty Program Membership and Service Experiences for Customer Retention and Value.”Journal of the Academy of Marketing Science 28 (1): 95–108.
— and Katherine N. Lemon. 1999. “A Dynamic Model of Customers' Usage of Service: Usage as an Antecedent and Consequence of Satisfaction.”Journal of Marketing Research 30 (February): 7–27.
Bowman, Douglas and Shilpa Lele-Pingle. 1997. “Buyer Behavior in Business-to-Business Services: The Case of Foreign Exchange.”International Journal of Research in Marketing 14 (5): 499–508.
— and Das Narayandas. 2001. “Managing Customer-Initiated Contacts With Manufacturers: The Impact on Share of Category Requirements and Word-of-Mouth Behavior.”Journal of Marketing Research 38 (August): 281–297.
Brody, R. P. and S. M. Cunningham. 1968. “Personality Variables and the Consumer Decision Process.”Journal of Marketing Research 10: 50–57.
Burton, S. and R. G. Netemeyer. 1992. “The Effect of Enduring, Situation, and Response Involvement on Preference Stability in the Context of Voting Behavior.”Psychology & Marketing 9: 143–156.
Caminal, R. and C. Matutes. 1990. “Endogenous Switching Cost in a Duopoly Model.”International Journal of Industrial Organization 8: 353–373.
Celsi, R. L. and J. C. Olson. 1988. “The Role of Involvement in Attention and Comprehension Processes.”Journal of Consumer Research 15: 210–224.
Dick, Alan S. and Kunal Basu. 1994. “Customer Loyalty: Toward an Integrated Conceptual Framework.”Journal of the Academy Marketing Science 22 (Spring): 99–113.
Dowling, Grahame R. and Mark Uncles. 1997. “Do Customer Loyalty Programs Really Work?.”Sloan Management Review 38 (Summer): 71–82.
DuWors, Richard E. and George H. Haines. 1990. “Event History Analysis Measures of Brand Loyalty.”Journal of Marketing Research 27 (November): 485–493.
Ehrenberg, A. S. C. 1988.Repeat-Buying: Facts, Theory, and Applications. 2d ed. London: Charles Griffin.
Farley, J. U. 1964. “Why Does Brand Loyalty Vary Over Products?”Journal of Marketing Research 1: 9–14.
Flynn, L. R. and R. E. Goldsmith. 1993. “Application of the Personal Involvement Inventory In Marketing.”Psychology & Marketing 10: 357–366.
Gerbing, D. W. and J. C. Anderson. 1988. “An Updated Paradigm for Scale Development Incorporating Unidimensionality and Its Assessment.”Journal of Marketing Research 25: 186–192.
Gotlieb, J. B., John L. Schlacter, and Robert D. St. Louis. 1992. “Consumer Decision Making: A Model of the Effects of Involvement, Source Credibility, and Location on the Size of the Price Difference Required to Induce Consumers to Change Suppliers.”Psychology & Marketing 9 (May/June): 191.
Hallowell, Roger. 1996. “Southwest Airlines: A Case Study Linking Employee Needs Satisfaction and Organizational Capabilities to Competitive Advantage.”Human Resource Management 35 (Winter): 513.
Halstead, D. and T. R. Page Jr. 1992. “The Effects of Satisfaction and Complaining Behavior on Consumer Repurchase Intentions.”Journal of Consumer Satisfaction, Dissatisfaction, and Complaining Behavior 5: 1–10.
Jacoby, Jan B. and Robert W. Chestnut. 1978.Brand Loyalty. New York: John Wiley.
Johnson, Kurt. 1999. “Loyalty Marketing: Keeping in Contact With the Right Customers.”Direct Marketing 62 (September): 36–42.
Jones, O. Thomas and W. Earl Sasser Jr. 1995. “Why Satisfied Customers Defect.”Harvard Business Review 73 (6): 89–99.
Kapferer, J. N. and Gille Laurent. 1993. “Further Evidence on the Consumer Involvement Profile: Five Antecedents of Involvement.”Psychology & Marketing 10 (July/August) 349.
Kim, B., M. Shi, and K. Srinivasan. 1997. “Colluding Through Capacity Reduction: A Rationale for Frequent Flyer Program.” Working Paper. Carnegie Mellon University, Pittsburgh, PA.
—,—, and —. 2001. “Reward Programs and Tacit Price Collusion.”Marketing Science 20 (Spring): 99–120.
Kivetz, Ran and Itamar Simonson. 2002. “Earning the Right to Indulge: Effort as Determinant of Customer Preferences Toward Frequency Program Reward.”Journal of Marketing Research 39 (May): 155–170.
Klemperer, P. 1987. “The Competitiveness of Markets With Switching Costs.”RAND Journal of Economics 18 (1): 138–150.
O'Brien, Louise and Charles Jones. 1995. “Do Rewards Really Create Loyalty?”Harvard Business Review 73 (May/June): 75–82.
Oliver, L. Richard. 1997.Satisfaction: A Behavioral Perspective on the Consumer. New York: McGraw-Hill.
Partch, K. 1994. “Electronic Marketing: Promises to Keep.”Supermarket Business 49 (10): 25–32.
Pritchard, M. P., D. A. Howard, and M. E. Havitz. 1992. “Loyalty Measurement: A Critical Examination and Theoretical Extension.”Management Science 38: 155–164.
Rothschild, M. L. and W. C. Gaidis. 1981. “Behavioral Learning Theory: Its Relevance to Marketing and Promotion.”Journal of Marketing 45 (Spring): 70–78.
Scott, C.A. 1976. “The Effects of Trial and Incentives on Repeat Purchase Behavior.”Journal of Marketing Research 13 (August): 263–269.
Taylor, S. A. and T. L. Baker. 1994. “An Assessment of the Relationship Between Service Quality and Customer Satisfaction in the Formation of Consumer Purchase Intention.”Journal of Retailing 70: 163–178.
Uncles, Mark and Gilles Laurent. 1997. “Editorial, Special Issue on Loyalty.”International Journal of Research in Marketing 14: 399–404.
Woodside, A. G., L. L. Frey, and R. T. Daly. 1989. “Linking Service Quality, Customer Satisfaction, and Behavioral Intention.”Journal of Health Care Marketing 9: 5–17.
Yi, Youjae. 1990. “A Critical Review of Consumer Satisfaction.” InReview of Marketing. Valerie A. Zeithaml. Chicago: American Marketing Association, 68–123.
Yim, Chi Kin and P. K. Kannan. 1999. “Cunsumer Behavioral Loyalty: A Segmentation Model and Analysis.”Journal of Business Research 44: 75–92.
Zaichkowsky, Judith L. 1985. “Measuring the Involvement Construct.”Journal of Consumer Research 12 (December): 350.
Youjae Yi (firstname.lastname@example.org) (Ph.D., Stanford University, 1987) is a professor of marketing in the College of Business Administration at Seoul National University. He was at the University of Michigan as an assistant professor, Sanford Robertson Assistant Professor, and tenured associate professor. His work has appeared in theJournal of Marketing Research, theJournal of Consumer Research, theJournal of Applied Psychology, theJournal of the Academy of Marketing Science, theJournal of Consumer Psychology, theJournal of Advertising, and theJournal of Econometrics. He is currently an editor of theKorean Journal of Consumer Studies and was an editor of theSeoul Journal of Business.
Hoseong Jeon (email@example.com) is a doctoral candidate in the College of Business Administration at Seoul National University. He received his M.A. in advertising from Michigan Sate University. His current research interests include customer relationship management, advertising effects on consumer attitudes, and determinants of customer loyalty.
About this article
Cite this article
Yi, Y., Jeon, H. Effects of loyalty programs on value perception, program loyalty, and brand loyalty. JAMS 31, 229–240 (2003). https://doi.org/10.1177/0092070303031003002