Editing Consumer behaviour (section)

=== Customer loyalty ===
{{See also|Loyalty marketing|customer retention|brand loyalty|loyalty program|customer loyalty program}}

[[Loyalty business model|Customer loyalty]], defined as "the relationship between an individual's relative attitude and repeat patronage" (Dick and Basu, 1994: p.&nbsp;99). Thus, by definition, loyalty has both an attitudinal component and a behavioural component. Dick and Basu proposed four types of loyalty based on relative attitude and patronage behaviour:<ref>Dick, A.S. and Basu, K. "Customer Loyalty: Toward an Integrated Conceptual Framework", ''Journal of the Academy of Marketing Science'', Vol. 22, no. 2, 1994, pp 99-113</ref>

[[File:Dick and basus loyalty matrix.jpg|thumb|left|Dick and Basu's Loyalty Matrix]]

;No Loyalty: Characterised by low relative attitude and low repeat patronage behaviour. May occur when competing brands are seen as similar or in the case of new brands (or categories) where insufficient time has elapsed for loyalty to become established.
;Spurious Loyalty: Characterised by low relative attitude and high repeat patronage. Spurious loyalty occurs when the consumer undertakes repeat purchasing due to situational factors such as access, convenience. or shelf placement. Spurious loyalty can also occur when there are no genuine alternatives or the consumer is 'locked-in' to purchasing a given brand due to some quasi-contractual arrangement or membership status which creates difficulties for switching. In other words, where switching costs are relatively high, high patronage behaviour may be observed despite the absence of a favourable attitude towards the brand. An example would be a consumer who always purchases petrol from the same outlet on the way to work because there are no other outlets in the vicinity.
;Latent Loyalty: Characterised by high relative attitude and low repeat patronage. Latent loyalty occurs when situational factors over-ride strong favourable attitudes. For example, a person may have a preferred restaurant but may not patronise it due to the preferences of dining companions.
;Loyalty: (i.e. true loyalty)  Characterised by favourable attitude and favourable patronage behaviour. For marketers, true loyalty is the ideal situation.

[[File:Customerloyalitycards.JPG|thumb|Frequent flyer schemes are among the most well known of the reward programs.]]

[[Loyalty marketing]] programs are built on the insight that it costs 5-20 times more to acquire a new customer than to retain an existing customer.<ref>Gallo, A., "The Value of Keeping the Right Customers, ''Harvard Business Review'' Online, https://hbr.org/2014/10/the-value-of-keeping-the-right-customers</ref> Marketers use a variety of loyalty programs to strengthen customer attitudes towards the brand (or service provider/retailer) in order to retain customers, minimise customer defections, and strengthen loyalty bonds with existing customers. Broadly there are two types of program: reward and recognition programs.  In a '''Reward Program''', the customer accumulates points for each purchase, and the points can subsequently be exchanged for goods or services.<ref>Wirtz, J., Mattila, A.S. and Lwin, M.O., "How Effective Are Loyalty Reward Programs in Driving Share of Wallet?" ''Journal of Service Research'', Volume 9, No. 4, 2007, pp 327-334 DOI: 10.1177/1094670506295853</ref> '''Recognition Programs''' operate on a quasi-membership basis where the consumer is issued with a card that upon presentation leads to various entitlements such as free upgrades, special privileges, or access to products/services that are not normally available to non- members, and that acknowledge the loyal customer's "VIP" status.<ref>Rust, R.T., Zeithaml, V.A. and Lemon, K.N., ''Driving Customer Equity: How Customer Lifetime Value is Reshaping Corporate Strategy'', The Free Press, N.Y., 2000, p. 111</ref> For example, a hotel might recognise loyal patrons by providing a complimentary fruit bowl and bottle of champagne in the room on arrival. Whereas reward programs are motivated by the consumer's desire for material possessions, recognition programs are motivated by the consumer's need for esteem, recognition, and status. Many commercial loyalty programs are hybrid schemes, combining elements of both reward and recognition. In addition, not all reward programs are designed to encourage loyalty. Certain reward programs are designed to encourage other types of positive customer behaviour such as the provision of referrals or providing positive word-of-mouth (WOM) recommendations.<ref>Ryu, G. and Feick, L., "A Penny for Your Thoughts: Referral Reward Programs and Referral Likelihood", ''Journal of Marketing'', Vol. 71, January 2007, pp 84–94</ref>

Loyalty marketing can involve the use of databases and sophisticated software to analyse and profile customer loyalty segments with a view to identifying the most desirable segments, setting goals for each segment, and ultimately attempting to increase the size of the loyal customer base.