Illusionary Progress in Loyalty Programs: Moderating Role of Perceived Ease of Estimation and Medium’S Magnitude on Consumer Perceptions

Rajesh Bagchi, Virginia Tech, USA
Xingbo Li, Virginia Tech, USA
We demonstrate that the perceived ease of estimating redemption costs influences how a medium’s magnitude and reward-distance impacts loyalty program evaluations (e.g., attractiveness, attainability). When it is harder to estimate costs, consumers use magnitude to make inferences. Distances appear larger in the high (vs. low) magnitude conditions and correspondingly, have a stronger influence on perceptions. When cost estimation is perceived to be easy, participants overweigh the rate of return (i.e., points earned per dollar). The rate is higher in the high (vs. low) magnitude conditions and correspondingly, the effect of distance on perceptions is smaller. We investigate the underlying process and report findings from four studies.
[ to cite ]:
Rajesh Bagchi and Xingbo Li (2010) ,"Illusionary Progress in Loyalty Programs: Moderating Role of Perceived Ease of Estimation and Medium’S Magnitude on Consumer Perceptions", in NA - Advances in Consumer Research Volume 37, eds. Margaret C. Campbell, Jeff Inman, and Rik Pieters, Duluth, MN : Association for Consumer Research, Pages: 637-637 .