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Journal of the Academy of Marketing Science

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13.09.2016 | Original Empirical Research

The trajectory of customer loyalty: an empirical test of Dick and Basu’s loyalty framework

verfasst von: Paul Valentin Ngobo

Erschienen in: Journal of the Academy of Marketing Science | Ausgabe 2/2017

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Abstract

The classic model of loyalty proposed by Dick and Basu (1994) assumes that customers can be naturally classified in four loyalty conditions. This model has been tested with cross-sectional data and measures of recalled or retrospective consumer loyalty. Therefore, these studies could not examine whether and why customers move across different loyalty conditions over time, and offer guidance to managers on how to shift customers to the more desirable loyalty conditions. In this paper, we conduct an empirical test of this model and examine the key drivers of shifts in consumers' loyalty conditions over six annual time periods. Based on data from 6,109 households and 23 stores, we find customers can be classified in three loyalty conditions only: (1) the no loyalty, (2) the latent loyalty, and (3) the true loyalty conditions. The spurious loyalty condition is not supported, probably because switching costs are negligible in the grocery retailing industry. However, we find that marketing actions, i.e., private label policy, feature advertising, end-of-aisle product display, and store pricing policy, influence customer transition across loyalty conditions.

Vorheriger Artikel Birds of a feather: intra-industry spillover of the Target customer data breach and the shielding role of IT, marketing, and CSR

Nächster Artikel The effect of green partnerships on firm value

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As of May 18, 2016, a search on Google reveals that the Dick and Basu (1994) paper has been cited in 6369 publications, and the Jones and Sasser (1995) article has been cited 4481 times.

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We estimated an alternative model, which excluded feature advertising, to assess whether the results we obtained for product display are due to multicollinearity. We obtained the same results. That is, product display increases the probability of transiting from the no loyalty condition to the latent (0.077, p < 0.001) or the true (0.131, p < 0.05) loyalty conditions. Product display also causes a transition from the latent loyalty condition to the true loyalty condition (0.201, p < 0.001) not down to the no loyalty condition (−0.167, p < 0.001). However, product display moves customers in the true loyalty condition down to the latent loyalty condition (0.175, p < 0.001). Therefore, our findings are not due to multicollinearity.

We use effect coding. Therefore, coefficients need to be interpreted as follows: a positive (negative) coefficient means that the estimated coefficient is above (below) the average of the coefficients of all M categories.

In the data used here, product display was done more for the National Brand SKUs more than for the private label SKUs. In the year 2004, for example, only 15.10% of purchases made on end-of-aisle displayed products were store brands while 74.90% were national brands.

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Titel: The trajectory of customer loyalty: an empirical test of Dick and Basu’s loyalty framework
verfasst von: Paul Valentin Ngobo
Publikationsdatum: 13.09.2016
Verlag: Springer US
Erschienen in: Journal of the Academy of Marketing Science / Ausgabe 2/2017
Print ISSN: 0092-0703
Elektronische ISSN: 1552-7824
DOI: https://doi.org/10.1007/s11747-016-0493-6

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