The impact of gender and age on customer loyalty
A quantitative study of Swedish customers’ experiences of a loyalty program
Authors: Follin, Sara
Marketing Program Fransson, Viktoria Marketing Program
Examiner: Devine, Åsa
Subject: Relationship marketing Level: Bachelor’s thesis
Semester: Spring 2013
ACKNOWLEDGEMENTS
Three years of studies at the Marketing program at Linnaeus University ends with this thesis.
It has been challenging and stimulating and we feel that what we have accomplished and experienced during these years as marketing students will be of value in our future careers.
During the period of writing this thesis we have received help, advices and constructive criticism from people who we would like to take the opportunity to thank. First, we would like to thank the School of Business and Economics at Linnaeus University, Växjö. Further,
we would like to express appreciation to our examiner Åsa Devine, for her guidance and support, and Soniya Billore and Magnus Hultman for teaching us how to write the chapter of
methodology. Additionally, we would like to thank the respondents of the questionnaire for providing us with information essential for this thesis and the opposition groups whose
valuable comments helped us improve this thesis.
Thank you!
Växjö, 16th of August 2013
Sara Follin Viktoria Fransson
Abstract
Title
The impact of gender and age on customer loyalty – a quantitative study of Swedish customers’
experiences of a loyalty program
Authors
Sara Follin & Viktoria Fransson
Background
Building customer relationships could be done by using loyalty programs; programs which
involves activities for enhancing customer loyalty (Ou, Shih, Chen & Wang, 2011). To use loyalty programs as relationship marketing tactics has become popular and it is frequently used in the grocery retailing industry (Noble & Phillips, 2004). Customer loyalty differences might be influenced by customers’ gender and age (Kuruvilla, Joshi & Shah, 2009; Patterson, 2007). It is expected that females tend to be more loyal than males, and that older customers tend to be more loyal than younger generations (Patterson, 2007; Ndubisi, 2007).
Purpose
The purpose of this study is to describe the impact of gender and age on customer loyalty in the grocery retailing industry.
Theory & Concepts
Relationship marketing, Loyalty program, Customer loyalty, Gender differences in customer loyalty, Age differences in customer loyalty
Methodology
This is a descriptive study with a quantitative and deductive research approach. The research strategy was survey, and data was collected from 216 respondents through a questionnaire. Data was collected around the loyalty program Willys+, which formed the sample of this study.
Conclusion
Customers’ gender could be one variable influencing and impacting customer loyalty, however age is not. Gender impacting customer loyalty, could be explained by potential differences in how females and males choose to shop in store as well as by the fact that the majority of the members in the loyalty program were females. Loyalty among customers belonging to different age group did not have any significant differences.
Keywords
Relationship marketing, Loyalty program, Customer loyalty, Gender, Age
Table of content
1. Introduction ... 1
1.1 Background ... 1
1.2 Problem discussion ... 2
1.3 Purpose ... 4
1.4 Outline of thesis ... 4
2. Literature review ... 6
2.1 Relationship marketing ... 6
2.2 Loyalty programs ... 7
2.2.1 The foundation of loyalty programs ... 9
2.2.2 The impact of loyalty programs on customers’ purchase behavior ... 10
2.3 Customer loyalty ... 11
2.3.1 Drivers for loyalty ... 12
2.4 Gender differences in customer loyalty... 13
2.5 Age differences in customer loyalty ... 14
2.6 Research model ... 15
3. Methodology ... 17
3.1 Research approach ... 17
3.1.1 Inductive vs. Deductive Research ... 17
3.1.2 Qualitative vs. Quantitative Research ... 18
3.2 Research design ... 19
3.3 Data sources ... 20
3.4 Research strategy ... 21
3.5 Data collection method ... 22
3.6 Sampling, sampling frame and sample selection ... 23
3.6.1 Sample selection ... 24
3.7 Data collection instrument ... 24
3.7.1 Operationalization and measurement of variables ... 25
3.7.2 Questionnaire design ... 27
3.7.3 Pretesting ... 29
3.8 Data analysis method ... 30
3.8.1 Non-parametric statistics ... 31
3.8.2 Cross-tabulation ... 32
3.8.3 Interpreting output from chi-square tests ... 33
3.8.4 Chi-square test and significance ... 33
3.8.5 Quantitative data analysis using SPSS ... 34
3.9 Quality criteria ... 35
3.9.1 Content validity ... 35
3.9.2 Construct validity ... 35
3.9.3 Criterion validity ... 35
3.9.4 Reliability ... 36
3.10 Methodology summary ... 37
4. Survey results ... 38
4.1 Results from questionnaire ... 38
4.1.1. Cross-tabulations of data collected ... 39
4.2 Chi-square tests ... 57
4.2.1 Using chi-square tests for analyzing data ... 57
4.2.2 Chi-square test results from data collected... 57
5. Discussion and interpretation ... 59
6. Conclusion ... 64
7. Implications and future research ... 65
7.1 Theoretical contributions ... 65
7.2 Managerial implications ... 65
7.3 Limitations ... 65
7.4 Recommendations for future research ... 66
Reference list ... 69
Appendix 1 – Questionnaire in English ... 76
Appendix 2 - Questionnaire in Swedish ... 81
Appendix 3 - Codebook ... 86
Appendix 4 – Empirical data - cross-tabulations ... 91
Appendix 5 – Chi-square tests ... 102
Figures Figure 1.1 Outline of thesis (own) ... 4
Figure 2.1 Research model (own)... 16
Figure 4.1 Gender ... 38
Figure 4.2 Age ... 38
Graphs Graph 4.1 How often do you shop at Willys? ... 40
Graph 4.2 I am satisfied being a Willys-customer ... 43
Graph 4.3 Do you know Willys+? ... 44
Graph 4.4 Are you a member of Willys+? ... 45
Graph 4.5 How often do you use Willys+offers? ... 46
Graph 4.6 I consider that Willys+offers are good ... 47
Graph 4.7 I am more attentive to offers in store as a Willys+member ... 48
Graph 4.8 I shop more often at Willys since I became a member in Willys+ ... 49
Graph 4.9 I feel that I have a more positive attitude towards shopping at Willys since I became a member of Willys+ ... 51
Graph 4.10 I like being a member of loyalty programs within the grocery retailing industry 54 Graph 4.11 I think that a membership in a loyalty program, within the grocery retailing industry, has a positive impact on how often I chose to visit a grocery store ... 56
Tables Table 3.1 Research strategy ... 22
Table 3.2 Operationalization of theoretical concepts ... 26
Table 3.3 Cronbach’s alpha customer loyalty ... 37
Table 3.4 Methodology summary (own) ... 37
Table 4.1 Chi-Square test results on customer loyalty measurement number 1 and gender . 102 Table 4.2 Chi-Square test results on customer loyalty measurement number 1 and age ... 103
Table 4.3 Chi-Square test results on customer loyalty measurement number 2 and gender . 104 Table 4.4 Chi-Square test results on customer loyalty measurement number 2 and age ... 105
1. Introduction
In the chapter of introduction, information regarding the background of the chosen subject will be presented along with a problematisation that ends up in a purpose. The chapter ends with a figure, illustrating the outline of this thesis.
1.1 Background
Building customer relationships is especially important in a competitive environment in order for companies to be able to keep existing customers (Ndubisi, 2007). One goal of relationship marketing is to satisfy customers’ needs and wants in order to achieve loyalty among
customers (Wendlandt & Schrader 2007; Ndubisi, 2007; McIlroy & Barnett, 2000). Loyalty can be defined as a commitment to re-buy from the same company in the future without being influenced by other competing companies (Gee, Coates & Nicholson, 2008). Achieving long- term loyalty among customers could be seen as one of the hardest qualities to build in
relationships (Wright & Sparks, 1999), which is one determinant of success for businesses (Zineldin, 2006; Wright & Sparks, 1999).
One way to build relationships with customers could be by implementing loyalty programs;
programs including relationship building activities that in turn are used in order to enhance customer loyalty. The basis of a loyalty program from the companies’ point of view is to maintain market share by increase the number of visits and re-buys at one specific store. (Ou, Shih, Chen & Wang, 2011) Information about the members are therefore collected through the loyalty program (Schoenbachler & Gordon, 2002; Investopedia, 2013), which could be used in order to meet their needs and wants in a more satisfactory way than what competing companies could do (McGoldrick & Andre, 1997). From the customers’ point of view, a membership in a loyalty program most of the time are associated with different offerings (Lacey 2009), where a great part of offerings connected to the loyalty program are about the rewards customers get when using the program (Rowley, 2007).
To use loyalty programs as relationship marketing tactics has become increasingly popular and it is frequently used in the grocery retailing industry (Noble & Phillips, 2004).
In Europe, programs like this were introduced and implemented during the 1990s by many large grocery retailers (Mauri, 2003). It has been discovered that both males and females are motivated to join loyalty programs (Wright & Sparks 1999) however; they tend to be different
when it comes to how to do purchases and act loyally (Kuruvilla, Joshi & Shah, 2009).
Patterson (2007) claims that females tend to value long-term relationships more than males do; therefore it could be expected that females also are considered to be more loyal. Further, Ndubisi (2007) discovered that age is of importance when it comes to doing research within the field of customer loyalty and loyalty behavior among customers. Patterson (2007) for instance emphasize age by saying that senior customers tend to be more loyal than younger customers, this because they are not as willing as younger customers are to switch between companies.
1.2 Problem discussion
The aim of relationship marketing is to keep customers. This by satisfying their needs and wants in a more appropriate way than other companies can. (Leahy, 2011; Zineldin &
Philipson, 2007) McIlroy and Barnett (2000) claims that customer loyalty is a condition in which this creates; and it is when customers feel so strongly that the company is the only one that can meet his or her needs in the most appropriate way. Increased competition and
continuous price pressures together with having satisfied customers are three factors that are of importance for companies to take into consideration when it comes to establishing and maintaining relationships (De Wulf, Odekerken-Schröder, de Cannière & van Oppen, 2003;
McIlroy & Barnett, 2000). This due to the fact that price and discounts seems to be a main reason for why customers choose to shop in one store over another. Along with price and discounts, satisfaction is also argued to be a driver for re-purchases and loyalty. (McIlroy &
Barnett, 2000) This is of importance to consider in the context of the grocery retailing
industry since it is a context with high competition among competing companies, all wanting the same customers (Meyer-Waarden & Benavent, 2009). Loyalty could be shown in many ways; however, Shugan (2005) argues that customers only tend to show loyalty when prices are low, therefore low-prices seem to be an essential part for why customers choose one company over another (McIlroy & Barnett, 2000). Furthermore, Kivetz and Simonson (2003) discusses around loyalty programs as key component when it comes to building customer relationships as well as developing them.
Loyalty programs could be seen as relationship marketing in action but if these programs, from an empirically perspective, actually measure the concept of relationship marketing is under researched (Hart, Smith, Sparks & Tzokas, 1999). Loyalty programs within the grocery retailing industry are claimed to be ineffective, this due to low-prices and low-valued rewards
offered to the customers participating in the programs (Meyer-Waarden & Benavent, 2009).
Grocery shoppers, who are well known for doing purchases in more than one store, could also contribute to the fact that the success of loyalty programs within the grocery retailing industry can be questioned (Lal & Bell, 2003). By having loyalty programs, companies want their customers to exclude purchases from competing companies and instead act loyally towards them, however, this could be hard to achieve, since customers have the opportunity to choose to buy wherever they want (Allaway, Gooner, Berkowitz & Davis, 2006). Customers’
participation in loyalty programs, does not necessarily indicate loyalty, this since customers tend to buy for getting discounts and not for the aim of entering loyalty programs and having long-lasting relationships with that company (McIlroy& Barnett, 2000). Only small changes in purchase behavior among customers have been discovered, after entering a loyalty program (Meyer-Waarden & Benavent, 2009; Mägi, 2003; Sharp & Sharp, 1997). Lal and Bell (2003) though emphasize that loyalty programs are popular to use among companies when trying to establish customer loyalty while Wright and Sparks (1999) suggests that joining loyalty programs are overrated, this because of the fact that convenience factors such as price, quality and location are the critical factors for why customers choose to purchase from once specific company over another. They further argue that there is little data collected regarding
customers’ participation in loyalty programs. But, it has been discovered that both males and females tend to participate in these kinds of programs (Wright & Sparks 1999). However, previous empirical research about loyalty programs within the grocery retailing industry discovered that customers do not act as loyal as companies’ think they are (Mauri, 2003) and it remains unclear if customers’ participation in loyalty programs indicate loyalty (Wright &
Sparks, 1999).
Customer loyalty is a well-researched topic, but the role of gender in customer loyalty has not been investigated enough; there is little known regarding gender differences in customer loyalty (Melnyk, van Osselaer & Bijmolt, 2009). Further, Ndubisi (2006) argues that there is a lack of research within the marketing field when it comes to gender and its impact on
customer loyalty. Likewise, Helgesen and Nesset (2010) argue that marketing research is quite limited, particularly when it comes to the effect of gender in relationship development, even though it was found that females tend to be more loyal than males when it comes to relationships (Helgesen & Nesset, 2010). Customers’ gender and age might have an impact on loyalty and participation in loyalty programs, and in turn, relationship building (Melnyk et al., 2009; Ndubisi, 2006; McGoldrick & Andre, 1997). Further, Kuruvilla et al. (2009) and
Introduction Literature
review Method Survey results Discussion &
interpretation Conclusion
Implications
& future research
Helgesen and Nesset (2010) discovered clear differences in how females and males shop which also could affect relationship building and customer loyalty.
Ndubisi (2006) takes it one step further and argues around what future research within the field of customer loyalty could consider researching in; an argumentation which ends up in a discussion about including more demographic factors. One demographic factor could be age, which could be included when it comes to describe relationship building and customer loyalty depending on customers’ age (Ndubisi, 2006). Along with Ndubisi (2006), McGoldrick and Andre (1997) also argue around the importance of including demographic variables when looking at customer loyalty. Gurau (2012) discovered that younger customers tend to show a less loyal behavior than senior customers. Patterson (2007) agrees by arguing that it is of importance to investigate both gender and age in connection to customer loyalty, and whether or not older customers are more loyal than younger customers and to see if loyalty might vary depending on what gender customers have. This is of importance investigating because customers perceive things differently, and the value offered for being a part of a loyalty program will mean different things for various people (O’Malley, 1998).
1.3 Purpose
The purpose of this study is to describe the impact of gender and age on customer loyalty in the grocery retailing industry.
1.4 Outline of thesis
The thesis consists of seven chapters, which are briefly presented below. Figure 1.1 illustrates the outline of thesis.
Figure 1.1 Outline of thesis (own)
The introduction chapter presents a background and problem discussion around the subject.
The problematisation around the subject ends up in the purpose of the study. The theoretical framework was conducted through a literature review based on previous material published within the field. This review was done in order to create an understanding of the field and its already existing material and literature. The theoretical chapter includes theory and concepts as; relationship marketing, loyalty program, customer loyalty and gender and age differences
in loyalty. The literature review ends with a research model made by the authors of this study;
which illustrates this research.
The methodology chapter aims to show how this study was conducted. A deductive research with primary data was used. A quantitative, descriptive research design was chosen with questionnaire as data collection method. An operationalization with different measures of the theoretical concepts is presented in chapter two. Survey results are presented in chapter four.
Data is presented by texts and graphs, which are based on the cross-tabulations, performed using data collected. This was done in order to facilitate the interpretation process around the impact of gender and age in responses received, as the purpose of this study required. Chi- square analyses are used in order to analyze data collected statistically; showing significant values. Empirical material is connected to theory in chapter five, called discussion and
interpretation. This chapter aims to discuss the impact of gender and age on customer loyalty.
Chapter six includes the conclusion and chapter seven, which is the last chapter of the study;
implications and recommendations for future research are presented.
2. Literature review
In this chapter the theoretical framework is presented. This chapter consists of four main parts; relationship marketing, loyalty programs, customer loyalty and gender and age differences in customer loyalty. The aim of this chapter is to present relevant information in connection to the purpose of the thesis, based on previous research within the field. The research model of the study is presented in the end of this chapter.
2.1 Relationship marketing
Having relationships with others, is a part of a person’s everyday life. Building relationships is one way to relate and communicate with people (Zineldin & Philipson, 2007). Relationship marketing is related to customer contacts and interactions between the customer and the company (Grönroos, 2007). The relationship marketing approach is about obtaining share of customer instead of the share of the market, (Ward & Dagger, 2007) to be able to establish relationships with potential and current customers, maintaining them and finally foster repurchases and customer retention (Ward & Dagger, 2007; Zineldin & Philipson, 2007).
Increased competition and continuous price pressures are two factors that are important to consider in establishing and maintaining relationships (De Wulf et al., 2003). The main focus of this marketing perspective is building customer relationships (Zineldin & Philipson, 2007;
Blois, 1998). Zineldin (2006) emphasize marketing as a way of doing business.
Relationship marketing could be defined as a process that moves from identifying potential customers to establishing a relationship with them, to maintain and enhance the relationship created so that more business could be generated (Grönroos, 2004; McIlroy & Barnett, 2000).
Both Zineldin (2006), Leahy (2011) and Zineldin and Philipson (2007) argue that relationship marketing is about keeping customers with the aim of creating long-term relationships by satisfying customers’ needs and wants. Communication, interaction and value could be seen as key processes of relationship marketing (Grönroos, 2007). McIlroy and Barnett (2000) claim that marketing with a relational focus could be aimed at developing long-term as well as cost-effective links between a company and its customers. The relationship marketing strategy has the potential to make success because of the creation of long-term relationships and companies’ ability to maintain customers who is loyal to that company as well as
strengthening existing relationships over time (Ward & Dagger, 2007; Wright & Sparks, 1999; Zineldin, 2006).
Relationships are more likely to develop in situations where the company and customer have a more frequent contact; it could be in situations where the service is delivered over a specific time period, or where the relationship is of importance (Ward & Dagger, 2007). A
relationship can develop when the customer interact with the company and experience that there is something special and important in the contact with the company; there exist a mutual way of thinking between the parties. The customer also has to feel that they gain more value from the company that they have a relationship with, than from other options available in the market. (Grönroos, 2007)
2.2 Loyalty programs
Loyalty programs have different components, where the elements of customer knowledge, information technology and direct communication with customers are common for all programs (Hart et al., 1999).
Loyalty programs have its roots in customer retention (O’Malley, 1998). The customer retention rate is one important metric of customer relationship management which could be measured through having customer loyalty programs (Meyer-Waarden, 2008). A loyalty program can be seen as a marketing tool which is based on customers’ membership in the program (Lacey & Sneath, 2006). Customer loyalty programs are one of the most popular approaches of relationship marketing (Lacey, 2009). Loyalty programs are used to increase sales by repeated purchase by customers and by this maintaining market share (Ou et al., 2011).
Loyalty programs often have the aim to increase the bond between the customers and the company, (Lacey & Sneath, 2006) and companies therefore invest in these kinds of programs (Sivadas & Baker-Prewitt, 2000; O’Malley, 1998). One aim of using customer loyalty
programs is to build customer loyalty and retention, where loyalty programs must motivate customers to do a next purchase (McIlroy & Barnett, 2000; O’Malley, 1998; Meyer-Waarden, 2008). The concept of customer satisfaction is important to consider in the process of
developing customer loyalty programs (McIlroy & Barnett, 2000). O’Malley (1998) mention that it is the benefits of participation in loyalty programs that gives value to customers which in turn could encourage loyalty. To what extent the offerings of loyalty programs gives value
to customers is different, depending on that people perceive things differently and value will represent different things for various people and in different contexts. (O’Malley, 1998)
Loyalty programs are often used to motivate and encourage customers to have a relationship with a company, by using inducements to encourage repeated purchases at the same company and rewarding them for their support (McIlroy & Barnett, 2000; Noordhoff, Pauwels &
Odekerken-Schröder, 2004; Wright & Sparks, 1999). Rowley (2007) argues that the most important part in the loyalty program is the incentives the customers’ are offered by the program like the different rewards. These programs should try to find customers who are likely prospects and willingly to enter a long-term relationship. (McIlroy & Barnett, 2000) People are often motivated to join loyalty programs since most people like to get something for doing nothing (O’Malley, 1998).
Loyalty programs can serve different goals for both companies and customers. Companies can through loyalty programs manipulate consumer behavior (O’Malley, 1998), get insight into customers’ behavior and habits through data collection and also win increased purchases from the customers. (Solomon, Bamossy, Askegaard & Hogg, 2010) The information that the company get through the loyalty program can be seen as a tool to make more personal offerings to the customers (Lacey & Sneath, 2006). According to Uncles, Dowling and Hammond (2003) there are two aims of customer loyalty programs; where the first is to increase sales revenues through raising customer purchases and the second, building bonds between current customers and the brand in order to maintain the customers the company already got. To learn continuously about the customers’ needs is important, as well as being aware of unpredictable changes in customer expectations. This in order to keep customers satisfied as well as keeping them away from looking at similar offers from competing firms.
(McIlroy & Barnett, 2000)
According to Wright and Sparks (1999), loyalty programs could be found everywhere these days. Loyalty enhancing strategies as retail loyalty programs give customers who purchase frequently, immediate cost savings and members-only deals and discounts. By having these loyalty programs, companies want their customers to act loyally towards a company by exclude purchases from competing companies. (Allaway et al., 2006) Most companies think that loyalty could be bought through discounts as inducements. Customers want to get discounts and by being members in loyalty programs they could get that, but their
participation will not make them loyal since customers tend to buy for just getting the
discount and not for entering loyalty programs and having long-lasting relationships. (McIlroy
& Barnett, 2000)
Cedrola and Memmo (2010) found that loyalty program participation and the amount of expenditures in a company could be related. Price affects the loyalty function of a loyalty program (Cedrola & Memmo, 2010). Allaway et al. (2006) and Patterson (2007) emphasize that customers that are more concerned about prices tend to be less loyal towards companies and often shop for the best price and deals. Wright and Sparks (1999) agree on this, they argue that it has been suggested that joining loyalty programs are overrated, due to the fact that it is still convenience factors as price, quality and location that drives customers to choose to purchase from specific companies and not others.
Allaway et al. (2006) therefore claims that a customer joining a loyalty program does not imply that the customer is going to act loyally towards the company. But not to forget, there exists customers who act loyally towards companies, but a lot of these customers also belong to competing loyalty programs (Allaway et al., 2006).
2.2.1 The foundation of loyalty programs
The foundation of loyalty programs is information about the customers who are participating in the program. The aim of getting information about a customer and purchase pattern is to get to know the customer better, in order to know how to serve their needs in a better way.
Customer information could be seen as the main importance and foundation of successful loyalty program databases. The influence of trust, which is a mechanism for relationship building, is important to consider when wanting customers’ personal information, which could lower the risks the customers feel when choosing to share information and be a part of a loyalty program. (Schoenbachler & Gordon, 2002)
Customers’ most of the time associate loyalty programs with benefits and rewards (Rowley, 2007). Companies communicate and offer personalized benefits to customers with the aim of generate information about them (Lacey 2009). Therefore, customers of a loyalty program could be seen assets of a company (Shugan, 2005). If customers perceive that it is worth being a member of a loyalty program they will be. In that case, companies must have offerings that appeals customers. (Mauri, 2003)
2.2.2 The impact of loyalty programs on customers’ purchase behavior
A membership in a loyalty program does not have to be equal to being a loyal customer and show loyal behavior in all situations. However, members in loyalty programs do have a higher purchase and visit frequency than non-members. (García Gómez, Gutiérrez Arranz &
Gutiérrez Cillán, 2006) The success of loyalty programs within the grocery retailing industry remains unclear (Lal & Bell, 2003).
Customers’ participation in loyalty programs along with the rewards offered from that program often influence customers’ in-store behavior (Meyer-Waarden & Benavent, 2009).
Meyer-Waarden and Benavent (2009) emphasize that the grocery retailing industry is a context with high competition among retailers, wanting the same customers, despite that, they claim that the various loyalty programs used within this sector are ineffective, because
grocery retailers often provides customers with a low-value rewards for their participation in loyalty programs due to their low margins. Which also brings up an importance in what customers the loyalty program should consists of. The customers’ purchase behaviors should increase if the loyalty program provides value or satisfaction in levels of utilities and lower costs for participants. Both satisfactions with purchases made and customers’ habits in doing grocery shopping often explain customers’ intentions in buying at that store again. Customers’
repeat purchase behavior in grocery stores will remain if a loyalty program rewards repeat purchases and loyalty; a “rewarded behavior”. This could result in having customers’ with higher store purchase frequency. (Sharp & Sharp, 1997; García Gómez et al., 2006)
Many researchers have found very small changes in customers’ purchase behavior after their participation in loyalty programs (Meyer-Waarden & Benavent, 2009; Mägi, 2003; Sharp &
Sharp, 1997). Customers could easily become members of many loyalty programs since it is rarely that stores charge for membership. Therefore customers have no reasons for being more loyal towards one store in particular. (Meyer-Waarden & Benavent, 2009) Meyer-Waarden and Benavent (2009) say that it is not the values offered by loyalty programs that will have an impact on customers’ willingness to be a part of loyalty programs. The effectiveness of these programs could be questioned (Liu, 2007). The effectiveness therefore depends on the design of the program instead of the values offered (Meyer-Waarden & Benavent, 2009). Nearly all grocery shoppers have a store in which they make a larger share of purchases; their primary store. By having this in mind, one goal for companies who use loyalty programs could be to
increase the share of primary customers’ total expenditures when it comes to groceries as well as keeping them satisfied. (Mägi, 2003)
2.3 Customer loyalty
Customer loyalty arises from relationships (Wang & Wu, 2012). Melnyk et al. (2009), claims that it could be seen as the heart of customer relationship management. The possibility of having loyal customers increase by having satisfied customers since they often creates a relationship with the company they are satisfied in (Storbacka, Strandvik, & Grönroos, 1994).
As Ou et al. (2011) claim that customer loyalty develops through mutually beneficial
relationship between a customer and a firm. Customer loyalty must be present first in order to be able to develop relationships between customers and companies (McIlroy & Barnett, 2000).
Loyalty is something that customers may show to brands, services and stores for example (Uncles, Dowling & Hammond, 2003; Zineldin, 2006; Melnyk et al., 2009). Wang and Wu (2012) argue that the longer a relationship is, the stronger it will be. One way of establishing customer loyalty is when customers make a commitment to a company and come back
(Parahoo, 2012). Therefore loyalty could be seen as purchase behavior which is repeated over some time (García Gómez et al., 2006). This is connected to the feeling of satisfaction, where this could be interpreted as it is hard to achieve loyalty without having satisfaction, but that it is possible to have satisfaction without loyalty (McIlroy & Barnett, 2000).
McIlroy and Barnett (2000) claims that customer loyalty is a condition that occurs when customers feel so strongly that the company are the one that can meet his or her needs in the most appropriate way. When competition is excluded from the customers consideration phase in doing a purchase, but also that the customer buys almost exclusively from your company.
One reason for why customers stay loyal could be because they perceive and receive a higher value from that company than from competing ones. (Parahoo, 2012; Wang & Wu, 2012;
Hallowell, 1996) Customers have to be loyal in order to be an asset for companies (Shugan, 2005).
Both McIlroy and Barnett (2000) and Ou et al. (2011) argue that loyalty could be seen as a measure of how likely a customer is to do another purchase in the future as well as be a part of relationship activities. Further, Ou et al. (2011) argues that customers who are loyal often have higher re-purchase intentions.
Customer loyalty consists of two dimensions; attitudinal and behavioral. The attitudinal dimension could be described as the feelings towards a specific product or service, created by an individual. The behavioral dimension could be connected to frequent re-purchases from one store or supplier. (Hallowell, 1996; Wang & Wu, 2012; Wu & Wang, 2012; Leverin &
Liljander, 2006; Ndubisi, 2007; Gee et al., 2008; Torres-Moraga, Vásquez-Parraga &
Zamora-González, 2008) The behavioral loyalty exists when customers are satisfied and have trust and commitment in a company (Parahoo, 2012). Loyalty could result in various
behaviors by customers; as relationship continuance and higher level of relationship, which is an outcome that indicates that the value received, was greater than the value from competing companies (Hallowell, 1996).
To keep the existing customers is especially important in today’s business environment which is characterized by intensified competition among companies (Gee et al., 2008). Wang and Wu (2012) explain the importance of keeping customers as a valuable source and competitive advantage for a company, since loyal customers tend to do purchases more often than non- loyal customers do (Wright & Sparks, 1999). The concept of loyalty is vulnerable, since loyal customers of a company could believe that they could found higher value elsewhere, even if they are satisfied (McIlroy & Barnett, 2000). Foscht, Schloffer, Maloles and Chia (2009) claim that past customer loyalty towards a supplier, does not necessarily mean that customers are going to be loyal in the future. O’Malley (1998) emphasizes this by saying that there are only a few customers that are 100 percent loyal to one single company; customers buy the best deal instead, not being loyal to any company. That customers have a repertoire of two or three companies within any product category from which they buy frequently is more likely (O’Malley, 1998). Loyalty is not a straightforward concept that all customers want. Instead of being a loyal customer, customers are attracted by free benefits as getting something for doing nothing. (Wright & Sparks, 1999) Shugan (2005) explains this by saying that loyalty only appears when companies lowering the prices.
2.3.1 Drivers for loyalty
Previous researches within the area of relationships and store loyalty have various perspectives. Satisfaction could be one thing that drives loyalty. Demographics and its connection to being a driver of loyalty have also been examined as important to consider in studies within customer loyalty. (McGoldrick & Andre, 1997) Torres-Moraga et al. (2008) along with Leverin and Liljander (2006) and Gee et al. (2008) agree upon that customer
satisfaction and customer loyalty could be seen as strongly connected because of the fact that customer loyalty could be increased by having customer satisfaction. Customer satisfaction can be described as how good the performance of the service or product matches the customers’ expectations. It can be seen as the overall judgment of the service or product.
(Gye-Soo, 2007) However, having satisfied customers is not the same as having loyal customers. Satisfaction does not mean loyalty in all situations, even if it exist situations in where it does. (Bennett & Rundle-Thiele, 2004) Through having customer relationships, important information regarding customers’ needs and wants could be gained, and by this companies could improve and provide even more satisfactory offerings than competitors can (Ndubisi, 2006). Torres-Moraga et al. (2008) along with García Gómez et al. (2006) and Payne (1994) say that satisfied customers tend to be loyal, and that satisfaction is a
fundamental precursor of customer loyalty. McIlroy and Barnett (2000) explain that customer satisfaction does not necessarily mean loyalty even tough satisfaction is needed in order to create loyalty. Long-term loyalty is one thing that could result from having satisfied
customers (Zineldin, 2006), since satisfaction often affects buying intentions positively (Mägi, 2003; O’Malley, 1998). Mägi (2003) emphasize that there could be a difference in satisfaction depending on gender and age.
2.4 Gender differences in customer loyalty
Human societies usually consist of both males and females in nearly equal numbers (Hofstede, Hofstede & Minkov, 2010). Previous research indicates that there exists a clear difference between how males and females shop (Kuruvilla et al., 2009; Helgesen and Nesset, 2010). In marketing, it is often assumed that females are more loyal customers than males.
However, this is not accurate in all situations; it depends on the object of customer loyalty.
Though has previous research show that there is little known about gender differences in customer loyalty. Female and male loyalties could differ. That there is a lack of research within this subject is surprising since if loyalties between genders differ, they might have different levels of customer satisfaction and value, but also the way of responding towards loyalty programs and other customer loyalty enhancing activities could differ. (Melnyk et al., 2009) Females value long-term relationships with personal contact (Patterson, 2007).
Therefore, females tend to rely on personal relationships, rather than on the company as a whole (Melnyk et al., 2009).
Helgesen and Nesset (2010) argue that female customers are supposed to be more loyal than male customers and those females are more relationship-oriented and socially minded than males, while Melnyk et al. (2009) emphasize that female customers do not always show stronger customer loyalty towards a company than male customers do. When it comes to female and male joining loyalty program, Wright and Sparks (1999) emphasize that both females and males participate in programs in the grocery sector but the majority of the members are females.
Kuruvilla et al. (2009) mean that males and females shop differently and one explanation to that could be because of the different roles males and females had back in the history. They mean that females were expected to be at home and take care of the children while the males were at work. One part of female’s duty was then to shopping food and clothes to the entire family. They further argue that despite of the fact that female today are employed outside the home, they tend to be the one that still are most involved in the shopping activities. They believe that both males and females associate shopping as a feminine activity or that it is a typical “female-typed task”. (Kuruvilla et al., 2009)
2.5 Age differences in customer loyalty
According to Patterson (2007), senior customers are more conservative than younger and they are less willing to try new brands and therefore these customers may be more likely to show a loyal behavior. Ndubisi (2007) agree by saying that female customers are more loyal than male customers, but he also emphasizes the importance of age; by saying that younger groups of customers are not as loyal as senior groups. Through attracting young customers at an early age, relationships could become deeper, with increased opportunities for retention (Foscht et al., 2009).
Young customers in today’s markets belong to the generation Y; people born in the late 70’s until the middle of 90’s (Lazarevic, 2012; Kinley, Josiam & Lockett, 2010). Generation Y, is a group of people often characterized by their ability to use and handle modern technologies like the Internet (Solomon et al., 2010; Foscht et al., 2009).
Generation Y is characterized by self-centered individuals who is environmentally-conscious when it comes to doing purchases. Previous research has shown that individuals who belong to this group of customers spend more money compared to previous generations as generation
X (Lazarevic 2012) born in the beginning of the 60’s until the middle of the 70’s (Littrell, Ma
& Halepete, 2005). However, generation Y purchases are not done at the same company; this group of customers shows low levels of loyalty and brand loyalty (Gurau, 2012). Lazarevic (2012) agrees by saying that customers’ belonging to generation Y seems to not be as loyal as earlier generations. It can be hard to maintain re-buys from these customers which contribute to lack in loyally behavior. On the other hand, generation Y was growing up in a time where marketing and a lot of brands existed on the market compared to previous generations and therefore they are more comfortable with different brands. (Lazarevic, 2012) Gurau (2012) emphasizes that the features of products along with the price are of importance for these customers.
Generation Y, generation X and baby boomers which have an age over 55 years (Lu & Seock, 2008) have different values, characteristics and behavior. It is said that generation X in
general are more skeptical and less loyal compared to the senior customer group. Customers may show different loyalty behavior to items as services or products of different price categories, where generation Y demonstrate loyalty to items with high prices and a lower level of loyal behavior towards low-priced commodity goods. (Gurau, 2012) Senior customers prefer to pay more attention to sales people and get assistance in the store than younger
customers do (Lu & Seock, 2008). Often it is argued that senior customers value low prices most due to the fact that they have low incomes but senior customers however have most of the time no children at home and therefore they have more money to spend on their own interest compared to families with children and can therefore be seen as having a great income. (Oates, Shufeldt & Vaught, 1996) According to Oates et al. (1996) senior customers instead want value-for-money and prices which match the quality of the product or service and not necessarily the lowest price offered. Though emphasize Oates et al. (1996) that much of the research within the area of senior customers shopping behavior is quite limited.
2.6 Research model
The research model presented in figure 2.1, gives an overview of this study. The first three boxes, relationship marketing, loyalty program and customer loyalty show the main concepts of the theoretical chapter. The arrows going down from relationship marketing to loyalty program to customer loyalty indicate that relationship marketing could be established by the use of a loyalty program, which in turn could result in customer loyalty. Gender and age with its different subcategories with arrows coming from below on to customer loyalty, illustrates
that gender and age could have an impact on customer loyalty. Gender consists of female and male while age consists of three categories. The age categories are divided into three groups, young, middle age and senior which all represent the age category of generation Y, generation X and baby boomers, presented in the theoretical chapter. The age categories have been redesigned to young, middle age and senior due to simplicity and clarity when empirical data is presented in chapter four. The empirical material, illustrated by the last box, includes the impact of gender and age on customer loyalty and customers’ experiences of a loyalty program.
Figure 2.1 Research model (own)
3. Methodology
In this chapter the methodological framework is presented with the aim of collecting data for the research in order to solve the research problem. The grocery retailing store Willys and the loyalty program Willys+ represents the sample of this study which empirical data was collected around. First, different steps within methodology are described and at the end of every headline the authors connects the concepts of methodology which have been presented to what actually have been done in this study; which involves argumentations for why and explanations on how it was performed in order to complete this research.
3.1 Research approach
Research approach is the approach in solving the problem of a thesis. A high-quality research consists of two concepts; relevance and rigorous. Relevance means that the research shall be managerially and theoretically interesting, practicable, timely, understandable and easy to relate to. Rigorous refers to the fact that other researchers shall be able to perform the study again and also that the researcher has used the most appropriate method in the research.
(Bryman & Bell, 2011) It is of importance select a research approach that will give reliable and valid data from a sample of the population, within a reasonable period of time with low costs (Burns, 2000). Inductive and deductive research along with qualitative and quantitative research is two approaches of performing a research (Bryman & Bell, 2011).
3.1.1 Inductive vs. Deductive Research
The most common view of the relationship between research and theory are represented by the deductive approach of doing a research. When doing a deductive research the researcher first gain knowledge and gather information about the subject through existing theory. The researcher then gathers empirical data and compares it to the existing theory in order to either accept or reject the result (Bryman and Bell, 2011).
An inductive research begins with observations or other empirical materials of the subject studied with the aim of generate new theory (Brewerton & Millward, 2001). The inductive approach includes gathering data to find and discover a meaning and a pattern (Gray, 2009) Bryman and Bell (2011) mean that the deductive method is clearer and more logical than the approach of an inductive study. A deductive study can also be seen as more linear than an inductive study. A deductive method is connected to a quantitative data collection while an
inductive method most of the time is connected to a qualitative data collection approach.
(Bryman & Bell, 2011)
This study is based on a deductive approach because the starting point was to search and gain knowledge regarding the topic through already existing theory, which became the literature review and theoretical chapter of this thesis.
3.1.2 Qualitative vs. Quantitative Research
Qualitative and quantitative research is most of the time seen as contrasts to each other (Bryman & Bell, 2011). Qualitative research could be seen as more useful when the
researches want to acquire deeper knowledge in a specific area (Clayton, 2010). This research approach is appropriate to use in areas that have not been researched much in but also in complicated situations and when the researchers want a more total understanding of the problem studied. The conclusions drawn by a qualitative research method are based on beliefs and attitudes and therefore it cannot be any general conclusions. Qualitative research is less formalized than quantitative research, therefore this type of research is hard to replicate. A problem that also can occur when doing a qualitative research is that the respondent might answer what he or she thinks that the researcher wants to hear, called social desirability bias.
(Bryman & Bell, 2011)
The quantitative research approach is about numbers and statistics, while data collected in a qualitative study not aims to be presented in graphs or in a mathematical way (Clayton, 2010;
Hartman, 2004; Bryman & Bell, 2011). A quantitative research measure most of the time
“how often” and “how much” (Amaratunga, Baldry, Sarshar & Newton, 2002; Hartman, 2004) This research method is more formalized, structured and controlled than the qualitative one; it is measurable and presentable, with the aim of doing generalizations based on results of the investigation performed (Bryman & Bell, 2011). In quantitative research all questions are numeric, which means the items that are investigated should be measureable in some way (Hartman, 2004). Hartman (2004) explain that quantitative research is characterized by the investigation of the numeric relation between two or more measureable items.
This research is also easier to repeat due to the structure and that it is not based on someone’s beliefs and values. Quantitative research methods often have many respondents and few variables, and the qualitative method have few respondents and many variables. (Bryman &
Bell, 2011) Quantitative research is about testing theory by examining variables and its
relationships, variables which are measured so that data collected could be analyzed using statistical procedures (Creswell, 2009).
The quantitative research process contains of three phases; planning-, collection- and analysis phase, which all is done in order to accomplish the requirements for being scientific research.
The design and plan phase involves the actual investigation and this step is valuable in order to achieve a result. (Hartman, 2004) Here, an operationalization should be included (Hartman, 2004), which is a process of translating a theoretical concept into measurable items (Bryman
& Bell, 2011).
The authors of this thesis have identified a problem and a gap in research by reading previous material published within the area of relationship marketing, loyalty programs, customer loyalty and gender and age differences in customer loyalty. This study has a quantitative approach, a choice that was made based on the fact that the authors wanted to collect data from a large amount of customers from the population, from which the sample was drawn.
And with a large amount of data collected through respondents, it is more suitable to present the results in number and statistics (Bryman & Bell, 2011), therefore did a quantitative approach seem more suitable.
3.2 Research design
Creswell (2009) refers research design, as the plan or proposal to conduct research, while Churchill and Iacobucci (2005) describe it quite similar; the plan or the framework of a study.
Research design can be seen as a guide to collect and analyze the data (Churchill & Iacobucci, 2005). Yin (2009) emphasize research design as the plan from getting here to there, where here could be seen as questions to be answered and conclusions on these questions as there.
Yin (2009) further argues research design as a logical model of proof, where the data
collected allows researchers to notice causal relations between variables of a study. The guide also aims to be a help in answering the research goal and objectives (Bryman & Bell, 2011).
Research design concerns at least four problems, where the first problem is what problems to study along with knowing what data are relevant for the study. Problems concerning data collection and how to analyze research results could also appear (Yin, 2009). The framework of the research design is often divided into three basic classifications consisting of;
exploratory research, descriptive research and causal research (Bryman & Bell, 2011).
The exploratory research design can be described as a way to discover new ideas or to acquire new insights (Churchill & Iacobucci, 2005). This research design can be seen as a preliminary study and it is used when the researcher has no or little knowledge about the unknown
problem (Krishnaswami & Satyaprasad, 2010). It is therefore helpful when a problem has occurred and the researcher wants to investigate in why that problem has occurred (Churchill
& Iacobucci, 2005).
A descriptive research refers to the relationship between two variables or the frequency of how often something occurs. This type of study can be used when the aim is to describe the characteristics of people or groups and to get answers to who, what, when where and why someone behave in a certain way. (Churchill & Iacobucci, 2005) Most of the time a descriptive study focuses on a specific part of the problem studied (Krishnaswami &
Satyaprasad, 2010). The researchers also need much pre-knowledge about the phenomenon before conducting the study, in order to be able to perform it in a good way (Churchill &
Iacobucci, 2005). Surveys are often used in descriptive research. A survey collects data from one particular point in time. (Burns, 2000) The last one of the research designs is the causal research design which refers to experiments and cause-and-effect relationships (Churchill &
Iacobucci, 2005).
This study had a descriptive research design; this research design was used because the study aims to describe the impact of gender and age on customer loyalty. By measuring impact, frequencies are one way to look at it, in order to see how many times something occurs (Churchill & Iacobucci, 2005), which was performed in this study in order to be able to say if gender and age impact customer loyalty. Pre-knowledge around the studied subject was gained by reading previous material as scientific articles within the subject, in order to build a foundation for the research.
3.3 Data sources
Primary and secondary data are two types of data sources that can be collected for a research.
Primary data are collected for a specific reason and purpose. This kind of data is collected for answering a specific question and in turn it is often time consuming and expensive. Secondary data, in the other hand, have been collected for someone else reasons and purpose but can be good to use as a starting point of a study. Secondary data are often classified into external and internal data. Internal data are collected inside from a company and can for instance be
information about sales and revenues while external data are collected from outside sources.
This type of data can for example be collected from the Internet, libraries and statistics.
Secondary data are most of the time easy to find which contributes to economic benefits due to time savings but it might not always fit the research problem or question. Sometimes the data can be obsolete and due to that not useful. (Bryman & Bell, 2011)
Secondary data was collected as a starting point of the study. This was done in order to be able to build a foundation in mind for what was of importance investigating further. This included search for useful background information around relationship marketing, loyalty programs, customer loyalty and differences in customer loyalty depending on gender and age.
Information around the grocery store Willys and the loyalty program Willys+ was gained through the company’s official website willys.se. Primary data was collected through a questionnaire including customers of the grocery company Willys, from which the sample was drawn. Primary data was collected for the aim of solving the research problem as well to be able to fulfill the purpose of the study
3.4 Research strategy
As shown in table 3.1, there are five different research strategies. Experiment, Survey,
Archival analysis, History and Case study are various strategies for doing research; all can be implemented and used for collecting data to the research. What strategy to choose, depends on the formulation of the research question. The second column in table 3.1, show what research questions are the one most suitable for each research strategy. The research questions are categorized depending on what they focus on, for example, if the question focuses on “why”
there are three possible strategies to use; Experiment, History or Case study. The third column gives the answer to if the strategy requires control over behavioral events while the fourth column gives answer to if the strategy focus on contemporary events. (Yin, 2009)
The research strategy used in this thesis was survey. According to Bryman and Bell (2011) survey as a research strategy are suitable to use when the aim of the research is to present the data with number and statistics. Survey as strategy for the research do not require control over behavioral events; however it focuses on contemporary events and it makes the outcome of the research strategy up to date (Yin, 2009).
3.5 Data collection method
Questionnaire is one way of doing quantitative research, when having survey as research strategy. A questionnaire shows a quantitative or numeric description of a sample, used in order to represent a whole population’s attitudes and opinions against something. (Creswell, 2009) Bryman and Bell (2011) give the advice that a majority of the question asked has to be closed, due to the fact that it is easier for the respondents to answer closed questions than open. One explanation could be that most of the respondents are not interested in writing down long answers by themselves. The design of the questionnaire has to be easy to follow so the respondents do not miss any questions. The researchers also need to take into
consideration that there is no opportunity to orally explain or develop the questions when doing a questionnaire. (Bryman & Bell, 2011) Therefore, the researcher has to ensure that the instructions and explanations are very clear so the respondents do not misunderstand the questions, this could be done by having short explanations of concepts in order to ensure that respondent and researcher are on the right track (Bryman & Bell, 2011).
Research strategy Research question
Requires control over behavioral events
Focuses on
contemporary events
Experiment How, why? Yes Yes
Survey
Who, what, where, how many, how much?
No Yes
Archival analysis
Who, what, where, how many, how much?
No Yes/No
History How, why? No No
Case study How, why? No Yes
Table 3.1 Research strategy adopted from Yin (2009) p. 8
Bryman and Bell (2011) argues this further, by explaining that the layout of the questionnaire has an impact on if people will answer or not. If the questionnaire seems to be professional and worked through, the respondents might be more likely to answer the questions. It can also be of value to use some kind of incitement or reward to make the respondent more likely to answer. (Bryman & Bell, 2011)
As mentioned before; this study has a quantitative approach; with survey as research strategy along questionnaire as a data collection method. To select a research approach that will give reliable and valid data from a sample of the population is the aim of a questionnaire, within a reasonable period of time with low costs (Burns, 2000). The reason for why questionnaire was chosen as data collection method was because the fact that quantitative researches approach could facilitate the handling of responses from a large amount of respondents, since it is more suitable to present a large amount of data in number and statistics (Bryman & Bell, 2011).
Using a quantitative approach was therefore done due to its appropriateness and opportunity to present the data in a numeric way.
In order to collect empirical information the authors therefore conducted a questionnaire.
Questionnaire, one Swedish and one English version are shown in appendix 1 and 2. Bryman and Bell (2011) refer to this as “self-completion questionnaire” where the respondents read the questions and fill in the answers by themselves. A questionnaire like this could for instance be sent by e-mail, spread through social media or given by hand to respondents (Bryman & Bell, 2011).
3.6 Sampling, sampling frame and sample selection
There are three steps to follow with the aim of defining a sample. The first step is to define the population, the second to identify the sampling frame. (Bryman & Bell, 2011) The sampling frame can be described as a list of the population from where the sample will be drawn (Churchill & Iacobucci, 2005). The third and last step is to decide the sample size (Bryman & Bell, 2011). Deciding the sample size means to take into consideration how many people who must answer the questionnaire to get reliable answers (Churchill & Iacobucci, 2005). A sample survey is performed when less than 100 percent of the population is sampled; a census survey is done when all, a 100 percent is sampled (Burns, 2000).
3.6.1 Sample selection
Empirical data was collected from customers of one grocery retailer; Willys and its loyalty program Willys+, in order to make the study clearer and more specific. Data was collected from Willy’s customers in various ages and genders, in order to investigate in potential differences in loyalty behavior among customers and their participation in the loyalty program. The reason behind why Willys+ was chosen was due to the fact that it is the first loyalty program within the low-price grocery sector in Sweden as well as it was recently launched and therefore seemed interesting and up-to-date. (Axfood, 2013)
Willys is a leader in the low-price grocery market with 175 stores located in Sweden. Willys started the business for over 30 years ago and their aim is to offer their customers a broad range of products with beneficial prices. (Willys 1, 2013) In February 2013, Willys launched the loyalty program “Willys+”. This program is the first loyalty program in the low-price food sector in Sweden, and it aims to strengthen the relation with its customers and also to create personalized offerings. This loyalty program is connected to customers’ payment card or ID- card, where discounts and rewards will be done automatically, when customers use the payment card or ID-card attached or connected to the loyalty program data base. It is free to be a member of Willys+. The loyalty program is based on digital media only and Willys keep in touch with “Willys+customers” by e-mail and mobile applications for example, but
information about offers could be found in direct marketing and stores as well. The vision of the loyalty program is that 1 000 000 customers shall be a part of the program and that 70 percent of the sales shall be made within the program, in three years. (Willys 2, 2013)
In this study the authors has chosen to use a sample survey rather than a census survey due to the time frame and resource constraints of the study. The population of this study is Swedish customers doing grocery shopping at the grocery retailing store Willys. The sampling frame however, is more specific; customers’ with experience of shopping at Willy’s and the use of their loyalty program Willys+. The sample size is chosen due to previous researches which had a sample size among 150-200 people when investigating in customer loyalty and loyalty program experiences (Kim, 2007; Wright & Sparks, 1999).
3.7 Data collection instrument
The online questionnaire was created in Google Docs. Google Docs is produced by Google, and it is a tool for creating and sharing online questionnaires (Google, 2013). The authors
found this tool for creating the online questionnaire useful and reliable for this research due to previous experience in working with it. Together with the fact that it is free to use and that it is possible to collect answers from more than hundred respondents, which this study did require.
3.7.1 Operationalization and measurement of variables
In this section the operationalization process is described and presented. An operationalization is a way to take the theory into the reality; a process which translate theories and concept into measureable items or questions. (Bryman & Bell, 2011) Hartman (2004) defines an
operationalization as a process in which the researchers use a method to be able to measure a certain phenomenon by using scales. An operationalization is necessary in order to assure that the data collection is done in a rigorous way (Bryman & Bell, 2011). An operationalization needs to be done in order to ensure credibility in the results of the study (Hartman, 2004).
Hartman (2004) emphasizes four things which are of importance when conducting an operationalization. Validity - in order to do an operationalization that is correct, in terms of that the measureable item chosen is an actual measure of what is supposed to be measured in the study (Hartman 2004; Hair, 2005) Reliability is the second thing, which is characterized by the fact that the study should be replicable; use the same measures and receive the same results. Hair (2005) refers to reliability as in what way the measurement shall be measured.
Usability is the third thing which reflects the practical aspect; that it should be do-able. The last thing is clarity, which is connected to the fact that the measures should be clear and exact.
(Hartman, 2004)
Step one is to get a theoretical insight of concepts used and the second step is to do a
conceptual definition by looking at definitions from previous research within the area. To do an operational definition, is the third step in the operationalization process (Hartman, 2004;
Bryman & Bell, 2011), and the list of potential measures is the fourth step and next a pre-test is done where only the most accurate measures will remain, the final step is to design the instrument for data collection. (Bryman & Bell, 2011) An operationalization also indicates on what type of scales the measures will be measured (Hartman, 2004). Choosing what measures and scales to use could be hard, however, to find the most appropriate ones for a specific purpose of a study could be even harder (Pallant, 2010).
