Recent years have witnessed a steep increase in company investments in customer relationship management (CRM) strategies. This is reflective of the corporate need to identify potentially profitable customers, acquire and retain them, and, in the long run, continuously increase their lifetime value to the company. While numerous types of CRM programs are being deployed by companies, loyalty (or VIP) programs, which are marketing programs that provide "special" treatment to loyal (VIP) customers, have been among the most frequently used forms of CRM efforts in many industries. Despite such interest in CRM from the field however, recent research results on the effects of VIP programs have been somewhat mixed. Some studies have found a positive influence on consumer behavior (Berry, 1995;De Wulf & Odekerken-Schröder, 2003), whereas others report no significant impact (De Wulf, Odekerken-Schröder, & Iacobucci, 2001;Sharp & Sharp, 1997).The motivation of this research is to provide a possible explanation for such contradictory evidence in the literature. Specifically, the paper points out that most studies to date have overlooked the possibility that the impact of VIP programs can be moderated by important variables such as the loyalty traits of their customers. The purpose here is to fill this gap. Additionally, while most past research has studied the impact of mileage or reward programs that are offered to all customers, this study looks at the impact of loyalty programs that focus only on loyal or VIP customers. At a time when companies are attempting to concentrate more on their loyal customers while de-marketing their marginal ones, identifying the factors that must be considered in more clearly delineating the effects of loyalty programs will have both academic and managerial significance.This paper is organized as follows. The next section presents the theoretical background and the hypotheses; the following section describes the model and the data used to test those hypotheses. We then present the results of the analysis and derive the net effect of the VIP program. The final section provides some discussion and conclusions from the results, followed by a brief discussion on issues for future research. THEORETICAL BACKGROUND AND HYPOTHESESThe fact that VIP programs offered to a select group of valuable customers will generally exert a positive influence on those customers' buying behaviors can be explained from at least two perspectives. The first is basic economic utility theory (Lancaster, 1971;Dodson, Tybout, & Sternthal, 1978;Blattberg & Neslin, 1990;DelVecchio, 2005;Graham, 1994). VIP programs provide rewards such as lower prices, gifts, and mileage points that enhance the value and utility of a product or service. This in turn increases the likelihood of current and future purchases.A second explanation can be drawn from equity theory (Huppertz, Arenson, & Evans, 1978). Customers compare their purchase input (e.g., price paid, time, effort, opportunity cost, and so on) with the transaction output...

Unlike past findings on cross-cultural advertising, culture seems to have little effect on visual forms in ads. In study 1, we tested whether the culture-congruent visual forms would still be prevalent, in spite of all the recent cultural convergence between Eastern and Western cultures. Interestingly, content analyses of visuals in 632 advertisements in a wide range of magazines from Korea (high context) and US (low context) revealed that ads with direct visual forms were more prevalent in both cultures. In study 2, we extended our study to test the effects of culturally matching the visual forms on consumers' attitude towards the ads and the brand advertised. Consistent with the findings in study 1, study 2 showed that direct visuals have stronger effects on consumers across the board. Unlike the assumptions made in previous studies, ads with indirect visual forms were not always preferred by Korean consumers. The product type and the brand familiarity moderated the effects; when brand familiarity was low, direct visual forms were preferred regardless of culture. This has an important implication for global brands entering markets such as Korea that are deemed to be an indirect culture; clear and direct visuals, rather than subtle and indirect visuals, will be preferred.

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