Abstract
A loyalty programme (LP) is a subjective and multidimensional construct, offering a wide range of benefits including financial (e.g., discounts), social (e.g., human contact), and psychological (self-image). Yet, the application of LPs in the marketplace usually follows a standard format, i.e., a multi-tier structure based on point accumulation. Such formats are particularly common among tourism and hospitality LP programmes, which is more an outcome of sectoral traditions rather than a customer-driven strategy to achieve a competitive advantage. This has resulted in the performance of LPs not being as effective as expected. When all firms provide customers with similar LP benefits, LPs no longer give any differentiation advantage to the provider but only drive costs upwards. This suggests that the current LP design in the tourism and hospitality sectors is insufficient to explain the whole picture of potential LP utility.
Thus, this thesis seeks to better identify and satisfy consumers’ demands for LPs through two main objectives: 1) Identifying types of LP designs according to the conceptualisation of agency, communion, and their interaction with the key construct of self-construal. 2) Investigating the extent to which various consumer factors (i.e., value perceptions of LPs, personality, cultural orientations, demographics, and travelling characteristics) affect consumers’ choice of LPs using multinomial logit analysis. Under the guidance of these two research objectives, this study utilised structured questionnaires, which were designed to collect a representative sample of airline and hotel LP members. The established questionnaire was distributed via the third-party panel provider Qualtrics. The final sample includes 485 completed responses in total. Descriptive analysis, the Chi-square test of independence, and one-way ANOVA were used to profile characteristics of LP members according to their membership. Multinomial logit procedure subsequently was employed to reveal what key factors of LP members may affect their various choices and preferences for LPs across airline and hotel sectors. The empirical results found that: 1) Self-expression LPs are the most desired consumer choice, in contrast to social-comparison LPs (i.e., LPs with multi-tier, point accumulation structures) which are the current dominant LP structure; 2) Consumers have different value perceptions of airline and hotel LPs; and 3) The factors influencing consumers’ choice of LPs in these two sectors are different in nature. Demographics (i.e., household annual income and religion), cultural orientations (i.e., gender equality and prudence), and individual travelling characteristics (i.e., business trip percentage and membership tier) were the main factors predicting consumer choice of frequent flyer programmes, while variances in consumers’ selection of hotel frequent guest programmes are more attributed to factors of consumers’ personality (i.e., communion and agency), value perceptions of LPs (i.e., self-expression and quality value) and their ethnicity.
Developing strong customer loyalty in contemporary markets is a real challenge, as consumers are bombarded with thousands of options available for each product category. By investigating the role that psychological constructs, i.e., agency, communion, and self-construal, play in LP rewards categorisation, this study expands our theoretical knowledge of LP effectiveness from a psychological lens. This study also extends our knowledge by proposing a practical way of diversifying LP design using symbolic features for a better fit between LP products and different consumer needs. Through the identification of predictors influencing customers’ LP choice in airline and hotel scenarios, this study also demonstrates the necessity of taking into account the industry context as a factor in studies of LP effectiveness.