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ABSTRACT. Although the concept of a loyalty program has been widely adopted in business practice and researched by academics for decades, its efficacy is still disputable. Some researchers argue that studies on loyalty programs do not account for cross-customer effects and the simultaneous interplay of multiple psychological mechanisms with program delivery.
Thus, the main aim of the study is to examine the meaning of marketing actions which form a "loyalty program" in an intercultural context. The authors argue that customers' understanding of the meaning of marketing actions plays a crucial role in the effective planning of marketing activities. The study draws from Wittgenstein's linguistic theory and investigates which marketing actions customers perceive as building their loyalty towards a company. The data was collected from over 300 customers in Poland, Serbia and Kuwait and analysed in a conjoint design.
The study finds that intercultural differences do bring varying understanding of the same marketing activities which needs to be taken into account both in future studies and in business practice. This study provides guidelines for adaptation of marketing loyalty programs to specifics of culture which may go beyond country borders.
JEL Classification: D02, O17, P31
Keywords: loyalty programs; international marketing; cultural adaptation
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Introduction
Loyalty programs have long become part of marketing landscape since first introduced at the beginning of the 1980s. A recent census published by Colloquy found that 80% of the adult US population participate in marketing programs of various types (Colloquy, 2015). Yet, despite the fact of loyalty programs being so widespread, there is an ongoing debate on how and to what extent they can influence relationships with customers. Literature on loyalty programs' effects presents mixed results, both positive and negative (e.g., Lacey, 2009; Leenheer etal., 2007; Liu and Yang, 2009).
Intercultural differences in perceptions of loyalty program components provide an important implication for international marketing. Of note, intercultural context was found to impact the perception of various marketing techniques used within a loyalty program framework (Noordhoff et al., 2004). A recent study carried out by Nielsen on 30,000 customers in 63 countries underlines country-based differences for loyalty programs in the retail setting (Nielsen, 2016).
This study adds to the discussion by analysing consumers' understanding of the underlying term....