Spatial diffusion of a new loyalty program through a retail market

Modeling spatio-temporal diffusion of carsharing membership in Québec City

“…He found that communication within the local farming community was a more powerful agent of diffusion than public announcements which disseminated information in a dispersed pattern across rural space. Hägerstrand's innovation diffusion model has since been re-examined, most notably in the retail sector (Allaway et al, 2003), multi-agent simulations (Daudé, 2004), political geography (Erlingsson, 2008), and the diffusion of sustainable farming innovations to produce non-market goods and ecosystem services (van der Horst, 2011).…”

Loyalty Programs: Generalizations on Their Adoption, Effectiveness and Design

“…To minimize the monetary and non-monetary costs of membership (De Wulf et al, 2003;Leenheer et al, 2007), before they enroll, customers assess the transportation and convenience costs of LP participation, which depend primarily on distance from the store and purchase frequency (Allaway et al, 2003;Ashley et al, 2011;Meyer-Waarden, 2007;Hunneman et al, 2008). In addition, privacy concerns are a strong impediment to LP enrollment (Ashley et al, 2011;Demoulin and Zidda, 2009;Noble and Phillips, 2004;van Doorn et al, 2007).…”

“…Typical early LP adopters are heavy users in a category, who already exhibit relatively high loyalty to the provider, and live close to the store (Allaway et al, 2003;Daams et al, 2008;Demoulin and Zidda, 2009;Leenheer et al, 2007;Meyer-Waarden and Benavent, 2009). Heavy buyers, particularly those with high levels of attitudinal commitment, have the strongest motivation to enroll in an LP because they can reap the most benefits from the program without having to change their purchase behavior or substantially increase their effort (Demoulin and Zidda, 2009;Dholakia, 2006;Kivetz and Simonson, 2003;Mauri, 2003;Stauss et al, 2005;Wright and Sparks, 1999).…”

“…Heavy buyers, particularly those with high levels of attitudinal commitment, have the strongest motivation to enroll in an LP because they can reap the most benefits from the program without having to change their purchase behavior or substantially increase their effort (Demoulin and Zidda, 2009;Dholakia, 2006;Kivetz and Simonson, 2003;Mauri, 2003;Stauss et al, 2005;Wright and Sparks, 1999). Although the percentage of such members among all consumers is low (6%-12%), they exert a strong influence on new member enrollment through social interaction, such as word-of-mouth recommendations (Allaway et al, 2003(Allaway et al, , 2006. Recognizing the LP member's ability to attract new customers, US online skin-care retailer Cleopatra's Choice launched their Referral and Loyalty Program which rewards members for each new customer they bring, in addition to the usual LP rewarding based on spending.…”

“…Income levels suggest some interesting effects. Higher-income households are more likely to be early adopters of LPs (Allaway et al, 2003), but they also tend to engage in multiple LPs (van , exhibit greater concern about the use of their personal data (Graeff and Harmon, 2002), and be more selective (Leenheer et al, 2007). In other words, higher-income households appear to be more open to new LP memberships but are also pickier about which LPs to join.…”