Using Rewards to Insulate Consumers From the Competition: the Case of Segregated Versus Integrated Frequency Program Rewards
ABSTRACT - Marketers often use frequency programs (FPs) to reward loyal consumers and/or insulate them from competitive offers. Using the framework of mental accounting, we argue that consumers can either mentally segregate the FP reward from the product being sold or integrate the two together. We report two experiments where student participants imagine that they are enrolled in a credit card frequency reward program and have a choice of switching to a competitor. The results show that an FP reward that is apparently easier to mentally segregate from the credit card (free air tickets upon accumulating sufficient points) can better insulate consumers from the competition compared to an integrated reward (e.g., cash back check at the end of the year). Implications of the results in the choice of reward currency are discussed.
Citation:
Subimal Chatterjee and Timothy B. Heath (2003) ,"Using Rewards to Insulate Consumers From the Competition: the Case of Segregated Versus Integrated Frequency Program Rewards", in E - European Advances in Consumer Research Volume 6, eds. Darach Turley and Stephen Brown, Provo, UT : Association for Consumer Research, Pages: 374.
Marketers often use frequency programs (FPs) to reward loyal consumers and/or insulate them from competitive offers. Using the framework of mental accounting, we argue that consumers can either mentally segregate the FP reward from the product being sold or integrate the two together. We report two experiments where student participants imagine that they are enrolled in a credit card frequency reward program and have a choice of switching to a competitor. The results show that an FP reward that is apparently easier to mentally segregate from the credit card (free air tickets upon accumulating sufficient points) can better insulate consumers from the competition compared to an integrated reward (e.g., cash back check at the end of the year). Implications of the results in the choice of reward currency are discussed. ----------------------------------------
Authors
Subimal Chatterjee, Binghamton University, USA
Timothy B. Heath, Miami University of Ohio, USA
Volume
E - European Advances in Consumer Research Volume 6 | 2003
Share Proceeding
Featured papers
See MoreFeatured
Easy To Be Selfish: Comparing the Influence of a Social Norm and an Individual Example
Zheshuai Yang, National University of Singapore, Singapore
Yan Zhang, National University of Singapore, Singapore
Featured
Beyond Subjectivity: Competing Governance Regimes and the Socio-Material Construction of Rational Consumer Action
Lena Pellandini-Simanyi, Università della Svizzera Italiana
Featured
F4. Social Support First, Money Later: Perceived Economic Mobility Increases Happiness When Perceived Social Support Opens the Door
Yong Ju Kwon, Seoul National University, USA
Sara Kim, University of Hong Kong
Youjae Yi, Seoul National University