Instant vs. delayed loyalty programs : are they as effective in the food & beverage industry?

• Main Authors: Lim, Sock Ching., Oan, Wendy Jia Wei, Seng, Pearlyn Swee Jun
• Other Authors: Ng Sok Ling, Sharon
• Format: Final Year Project
• Language: English
• Published: 2013
• Subjects: DRNTU::Business::Marketing::Consumer behavior
• Online Access: http://hdl.handle.net/10356/51544
• Institution: Nanyang Technological University

In today’s technological advanced world, consumer’s perception of a brand can be easily altered through the media. It is crucial for businesses to build long-term relationships with their customers since consumers’ loyalty is extremely important to a business’s bottom line and vis-à-vis Singapore’s Food and Beverage industry, many eateries have initiated the use of loyalty programs, hoping to retain their diners. However, the effectiveness of the different types of loyalty programs in place may vary and could be affected by various factors such as consumers’ preferences and consumption patterns. This study aims to investigate the differences in effectiveness between the two types of loyalty programs, instant and delayed reward programs, in building or enhancing brand loyalty for F&B establishments. 112 respondents aged 21 to 35, and are enrolled in at least one loyalty program, were surveyed. This experiment recorded their perceived attitudes and behaviours towards the restaurant, before and after a simulated scenario of the removal of loyalty program. The results suggested that delayed reward programs are more effective than instant reward programs in enhancing consumers’ loyalty. Specifically, delayed rewards are found to be more effective in enhancing consumers’ intention to purchase, perceived switching costs, word-of mouth recommendations, trust and commitment. The role of usage level was also explored in this research as we expect consumers to react differently to the loyalty programs, based on their existing usage level of the brand. Attitudes and behaviours of consumers with high and low brand usage were compared and our findings suggest that high users are more likely to develop brand loyalty than low users. This difference was mainly observed in the attitudinal loyalty of the respondents and was more evident in delayed reward program users.