Status demotion in hierarchical loyalty programs: effects of payment source

Stein, Alisha; Rabbanee, Fazlul K.

doi:10.1080/02642069.2016.1219721

Cited by 12 publications

(19 citation statements)

References 65 publications

(94 reference statements)

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“…The findings of our study contribute to the loyalty program research and relationship marketing literature by confirming and extending past research, which found customer status demotion has a negative impact on customers’ attitudes and loyalty (Wagner et al , 2009; van Berlo et al , 2014; Gao and Zhang, 2015; Ramaseshan et al , 2016). To the best of our knowledge, ours is the first study to: examine the negative effect of demotion on perceived betrayal; and differentiate the effect of demotion between high-status and low-status customers. …”

Section: Discussionsupporting

confidence: 88%

“…We propose that the status level of customers may moderate these relationships. This is likely, as a recent study by Ramaseshan et al (2016) found that the effect of satisfaction and commitment on loyalty intention was weaker for customers who spend their own money to obtain their loyalty status compared to customers who were funded by others, e.g. employer.…”

Section: Status Level and Perceived Betrayalmentioning

confidence: 96%

“…Marketing scholars have only recently begun to explore status demotion. The relationship marketing literature indicates that status demotion has a negative impact on customer loyalty (Wagner et al , 2009; van Berlo et al , 2014; Gao and Zhang, 2015; Ramaseshan et al , 2016), and that loyalty intentions are lower for demoted customers than for customers who have not been awarded preferential status (Wagner et al , 2009; van Berlo et al , 2014). However, the literature is devoid of studies that compare the effects of status demotion on customers from different status levels.…”

Section: Customer Status Demotion Researchmentioning

confidence: 99%

“…Given that status demotions are unavoidable in the management of loyalty programs, there is a need to understand how status demotion impacts on customers. While evidence for the negative effects of demotion on customer attitudes and behavioral loyalty is beginning to emerge (Gao and Zhang, 2015; Hwang and Kwon, 2016; Ramaseshan et al , 2016; Wagner et al , 2009), none of these studies assessed the impact of demotion for consumer groups with different status levels. A recent study of a hotel loyalty promotion program (Wang et al , 2016) suggests that high-status customers are most affected by goal failure (not getting the reward), whereas low-status customers are more affected by goal success (getting the reward).…”

Section: Introductionmentioning

confidence: 99%

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Investigating status demotion in hierarchical loyalty programs

Ouschan

2017

JSM

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Purpose The purpose of this paper is to extend research on customer loyalty status and customer demotion by investigating if the effect of demotion on customer attitudinal and behavioral responses is the same for top-tier and low-tier customers in the context of airlines. Design/methodology/approach A survey was conducted with travelers intercepted at large airport terminals in Australia. Multivariate analyses examined group differences across status change (no change vs demoted) and status level (high status vs low status). Multi-group moderation structural equation modeling (SEM) analysis tested the moderating role of status (high status vs low status) on the effects of demotion on the relationship between customers’ attitudes and loyalty intention, and between loyalty intention and share of wallet. Findings This study shows that the detrimental effects of demotion on the relationship between customer satisfaction/commitment/perceived betrayal on loyalty intentions, and on the relationship between loyalty intentions and share of wallet are stronger for “high status” than “low status” customers. Research limitations/implications A cross-sectional design was employed to investigate customer demotion in the airline industry. Future studies could investigate different types of demotions in other industries by employing a longitudinal design. Practical implications The study provides new insight about the effects of status demotion and highlights that service firms could be jeopardizing the loyalty of numerous valuable customers, especially among the “high status” customer group. Originality/value This study reveals loyalty status moderates the effect of demotion on customer attitudinal responses and loyalty behaviors. It draws on social identity, social comparison, emotion and equity theories to explain the different effects of demotion on customers from different status level groups.

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Section: Discussionsupporting

confidence: 88%

Section: Status Level and Perceived Betrayalmentioning

confidence: 96%

Section: Customer Status Demotion Researchmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Investigating status demotion in hierarchical loyalty programs

Ouschan

2017

JSM

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“…Research on status demotion has grown since Wagner, Hennig-Thurau, and Rudolph’s (2009) seminal work. Recent research has examined various factors such as program involvement (e.g., Hwang and Kwon 2016; Mathies and Gudergan 2012; Shin and Park 2014), magnitude of demotion (e.g., Mutter and Kundisch 2014), cause of demotion (e.g., Hwang and Kwon 2016; Lepthien et al 2017; van Berlo, Bloemer, and Blazevic 2014; Wagner, Hennig-Thurau, and Rudolph 2009), payment source (e.g., Ramaseshan, Stein, and Rabbanee 2016), monetary compensation (e.g., Lepthien et al 2017; Wagner, Hennig-Thurau, and Rudolph 2009), and pre-demotion tier level (e.g., Ramaseshan and Ouschan 2017; Shin and Park 2014; Wang et al 2016).…”

Section: Review Of Literature For Studymentioning

confidence: 99%

Spillover Effects of Status Demotion on Customer Reactions to Loyalty Reward Promotions: The Role of Need for Status and Exclusivity

Hwang

Mattila

2018

Journal of Travel Research

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Prior research demonstrates that status demotion in the loyalty reward program heightens negative emotions, particularly when demotion is due to changes in company policies. In this research, we argue that such negative emotions are likely to spillover to evaluations of post-demotion promotions. We further argue that such spillover effects should be attenuated among individuals high in need for status. Study 1 examines the joint effect of the cause of demotion and customers’ need for status on loyalty. In study 2, we investigate the impact of exclusivity cues in post-demotion promotions and show that exclusive promotions diminish the negative impact of policy-based demotions on post-promotion loyalty among individuals high (vs. low) in need for status. Travel and tourism companies might want to consider using geographical location as a proxy for need for status or priming status-seeking via exclusive promotions (“elevate your travel experience”) to alleviate demoted customers’ negative emotions.

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A review and future avenues for psychological ownership in consumer research

Peck

Luangrath

2022

Consumer Psychology Review

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Research on psychological ownership is prevalent in the consumer domain. This article details the theoretical core of psychological ownership, integrating research in consumer psychology and marketing. The underlying motivations behind psychological ownership are also considered as well as the antecedents and consequences of feeling ownership. This article discusses how consumers signal and infer a sense of ownership, acknowledging that the characteristics of the target of ownership vary greatly to include physical targets as well as those that are intangible. Research is discussed on the lifecycle of ownership considering the formation, perception, and eventual dissolution of psychological ownership. The authors note various avenues for future research in psychological ownership with the aim to spur research in consumer psychology and feelings of ownership.

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Status demotion in hierarchical loyalty programs: effects of payment source

Cited by 12 publications

References 65 publications

Investigating status demotion in hierarchical loyalty programs

Investigating status demotion in hierarchical loyalty programs

Spillover Effects of Status Demotion on Customer Reactions to Loyalty Reward Promotions: The Role of Need for Status and Exclusivity

A review and future avenues for psychological ownership in consumer research

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