Determinants of store patronage: The roles of political ideology,consumer and market characteristics

In this study, we investigate the roles of political ideology, demographic characteristics and market environment in determining households' store patronage behavior. We measure two key dimensions of store patronage—store format preference and store loyalty trait—of 23,092 U.S. households using purchase data from Nielsen Homescan panel. We use county-level vote share of the Republican and Democratic parties across three U.S. Presidential elections to measure political ideology. We obtain measures of demographic characteristics and market environment from the Nielsen panel and the U.S. Census Bureau. Using fixed-effect regression models, we find systematic association between political ideology and households’ store patronage. Our findings contribute to the growing literature in marketing on the effects of political ideology on consumer behavior and have important implications for store loyalty programs, cross-selling strategies and store location decisions.     

Patterns of store patronage in urban China

Reported is a formal investigation of store patronage in urban China. Using consumer panel data for sales of packaged goods through store types and named store chains, patterns of sales, loyalty and duplication are examined. Observed patterns are benchmarked against predictions from the NBD-Dirichlet model. Findings are generalized across six product categories in the packaged-goods retailing sector of Shanghai. Crucial aspects of store type/chain patronage are shown to be regular and predictable: patronage levels co-vary with market shares, average frequencies of patronage do not vary as much, few consumers are exclusively loyal, a majority of consumers are divided in their loyalty, and they patronize other store types/chains in line with market shares. Special groupings of store types/chains are not found. All these results occur for the buying of both contemporary and traditional products.     

Self-service technology in supermarkets – Do frontline staff still matter?

This paper uses the concept of psychological distance under construal level theory to explore the differences in the customers’ evaluations of overall store quality, satisfaction and loyalty, based on their experiences with the traditional staff-checkout method and the relatively new self-checkout machines. Two empirical studies, a field survey with retail shoppers in UK (N1 = 313) and an online survey with members of a consumer panel in Australia (N2 = 474), show that the perceived quality of staff-checkout has a stronger positive impact on the overall store quality, satisfaction and loyalty, than the quality of self-checkout. Similarly, satisfaction with staff-checkout has a stronger positive effect on store satisfaction and loyalty, than the satisfaction with self-checkout. Finally, loyalty to staff-checkout also has a stronger positive influence on store loyalty, than the loyalty towards self-checkout. These results show that despite growing use of self-service technology, frontline staff continue to be important for overall store evaluations.     

The Role of Customer Factors in Multiple Store Patronage: A Cost-Benefit Approach

This paper is concerned with the use of multiple stores by supermarket customers. It relates the number of stores patronized to a set of customer factors under a unifying theoretical framework emphasizing cost-benefit analysis. Respective hypotheses are tested in a large random sample. This study is a first attempt to empirically address the structure of multiple store patronage. It is demonstrated that multiple store patronage is affected by variables such as customer income, satisfaction, and expenditure that are suggestive of heterogeneous cost-benefit tradeoffs and opportunity costs of time. It is shown that customers are intrinsically different in the predisposition to being loyal. In this respect, store patronage is a continuum between single store loyalty and use of several different stores, on which customers vary depending on individual preferences. The empirical analysis also suggests that exclusive patronage of the favorite store arises from two observationally equivalent latent segments that differ in their inclination to remain loyal. The results yield valuable insights into the structure of store patronage and lead to important implications for retail managers. Several extensions are considered. A broad set of research questions surrounding store patronage can be considered from a cost-benefit viewpoint in the sense that consumer decisions in this area involve trading off economic resources against assortment, spatial and temporal benefits.     

Store loyalty: its impact on retail revenue. An empirical study of purchasing behaviour in the UK

In this paper, we present some significant empirical findings about store loyalty and consumer spending in the United Kingdom across five retail sectors. Our findings are presented at two levels: Firstly, we compared loyalty levels across retail sectors in the UK and identified that home improvement stores generate the lowest levels of consumer loyalty. Secondly, by disaggregating the data by loyalty types, we found that, while loyal shoppers tend to have smaller monthly budgets than switchers, they spend double the amount in their “first choice” store. All our results highlight the importance of developing a corporate approach to managing customer loyalty in retailing.     

Drivers of the synergy between price cuts and store flyer advertising at supermarkets and discounters

Despite retailers’ intense use of both price cuts and store flyer advertising, it is still unclear whether and when it is beneficial for retailers to combine the two promotion tools at the same time as opposed to using them separately. We systematically investigate synergies between price cuts and store flyers for a broad set of 488 brands from 44 consumer packaged goods categories across six leading German retailers. We find that a clear majority of the brands benefit from positive synergies and hence, combining price cuts and store flyer advertising is recommended, especially at supermarkets. This synergy can be strong. For instance, a 15 % price cut without store flyer support at a supermarket, on average, increases sales by 11 %, and medium spending on store flyers for the brand at its regular (non-promoted) price results in a sales lift of 8 %. The combined use of both tools, however, increases sales by 52 %, much more than the sum of their separate effects (11 % + 8 % = 19 %). Yet, there is also substantial variance in the synergy, which we explain with retailer format (supermarkets versus discounters) as well as various brand and category characteristics. Our findings have important implications for the coordination of promotion activities by retailers.     

Understanding the impact of store flyers on purchase behaviour: An empirical analysis in the context of Spanish households

The purpose of this paper is to analyse how Spanish consumers are really influenced by store flyers. The present study examines decisions of households regarding: (i) incidence (using a binary logit model); (ii) brand choice (using a multinomial logit model); and (iii) quantity (using a Poisson model). The models described above are applied to scanner choice datasets of the purchases made by Spanish households in two product categories (olive oil and coffee) over 53 weeks. The study finds that the main effect of such flyers is brand switching, rather than acceleration or stockpiling. However, consumers are not homogeneous in these responses to store flyers. Price sensitivity is found to be a more important driver of flyer-proneness than brand loyalty; moreover, the study finds a strong relationship between price-sensitive, flyer-prone consumers and decisions on incidence, choice, and purchase quantities. In contrast, the influence of the presence of brands in store flyers on incidence of purchases is not more prevalent among brand-loyal consumers than among non-brand-loyal consumer; however, such flyers are able to induce loyal users to stock up on their preferred brand. The managerial implications underline that manufacturers and retailers should be aware that the inclusion of a brand in store flyers (without necessarily offering a price discount) can simultaneously cut promotional costs and increase sales profits. In addition, managers should use other types of promotions (such as in-store displays) to encourage consumers to stock up on the brand.     

Consumer service and loyalty in Spanish grocery store retailing: an empirical study

The purpose of this paper is to investigate the effects of consumer service on loyalty in retail establishments. Based on a theoretical discussion regarding the relationship between waiting time, product quality, store atmosphere and loyalty, an empirical research was conducted to test the proposed relationships. Multiple‐item indicators from previous studies were used to measure the constructs. Results from the study provide empirical support, suggesting that consumer service through three dimensions influences loyalty. Research results suggest that consumer service in retail establishments can be viewed as a threshold factor in order to maintain satisfied and loyal customers. Additionally, managers should consider that loyalty depends on waiting time, product quality and store atmosphere. The present study provides useful information on the relationship between consumer service and loyalty in retailing.     

Factors that influence manufacturer and store brand behavioral loyalty

This study examines the factors that are linked to consumer goods brands having unusually high or low behavioral loyalty, after controlling for the association between brand size and loyalty that occurs due to the ‘double jeopardy’ effect. Behavioral, or repeat-purchase loyalty is measured as the brand's average share of category requirements (in volume) among its buyers over a 12-month period. We examine a range of factors that theory or past evidence suggests are associated with higher or lower behavioral loyalty, including brand type (store brand/manufacturer brand), price level, promotion intensity, as well as average brand volume per occasion and pack size. Using extensive US panel purchasing data, we find that store brands exhibit relatively higher behavioral loyalty than manufacturer brands. We explain the theory behind this result. We also find that the brand's average pack size and volume bought per occasion has a markedly positive association with behavioral loyalty. Finally, we find that the effect of low price on excess loyalty is moderated via a positive association with average volume purchase per occasion. These findings add to the body of knowledge relating to patterns in behavioral brand loyalty for both manufacturer and store brands, as well as the marketing-mix factors that influence it.     

Impacts of retail brand personality and self-congruity on store loyalty: The moderating role of gender

The present study was an effort to investigate the impacts of both retail brand personality and self-congruity, using them together in the same study, on store loyalty. Subsequently, this study explored the moderating role of gender in these relationships of retail brand personality and self-congruity with store loyalty. Questionnaire was used to collect data (n=355) using systematic sampling from department store shoppers of age 18 years and above in Kolkata, a metropolitan city of India. Multivariate data analysis techniques like exploratory factor analysis, structural equation modeling were used to analyse the data. Results revealed that both retail brand personality and self-congruity constructs have positive impacts on store loyalty and gender significantly moderates these impacts. Arguably, this paper is the first to examine the three constructs namely, retail brand personality, self-congruity and store loyalty using them together in the same model. Academic and managerial implications are further discussed.     

Reciprocal Effects of the Corporate Reputation and Store Equity of Retailers

Retailers aim to strengthen their ability to influence consumer behavior by building corporate reputation and store equity: for instance, by making promotional investments. However, little is known about the directionality of consumers’ corporate and store associations, that is, how reciprocal relationships between consumers’ perceptions of corporate reputation and store equity affect store loyalty. To illuminate this issue, we draw upon a study with a cross-sectional design and two studies with longitudinal designs. We find that retail store equity interacts with corporate reputation and is a more important driver of increased loyalty than corporate reputation. We conclude that retailers should pay attention to reciprocal effects, especially in determining the relative allocation of investments across corporate and store levels.     

Correlates of first‐brand loyalty

A mail survey of British supermarket customers shows that the factor most strongly associated with claimed brand loyalty is household income Brand loyal customers also claim to spend more, are more concerned about quality and less about price, are slightly more store loyal and make more use of large out‐of‐town stores Brand loyalty is also related to age; those aged under 25 years and 65 + years are less loyal

There is little difference between those who are primarily loyal to store brands and those who are primarily loyal to manufacturer brands, and there is little evidence that store patronage is raised by loyalty to store brands     

Assessing the relationship between loyalty program attributes, store satisfaction and store loyalty

After a decade of research there is still much to understand about the relationship between loyalty programs and whether they deliver on their promise of building customer loyalty towards a store and understanding the mediating role of store satisfaction. Our results suggest that loyalty program as a summary construct, explains a significant proportion of the variance in store satisfaction and store loyalty. However, disaggregation of the construct into hard versus soft attributes, promotes greater specificity, precision and accuracy in uncovering the differential impact on store satisfaction and store loyalty.     

How category characteristics affect the number of store brands offered by the retailer: a model and empirical analysis

Our research examines why retailers offer, not one, but multiple store brands in some product categories. More specifically, we are interested in how certain product category characteristics affect the number of store brands. We model a product category consisting of two incumbent national brands that may differ in strength. The retailer may introduce one or two store brands depending on which maximizes category profits. Our analysis suggests that the retailer is likely to carry two store brands in categories where (i) the national brands are similar in strength; and (ii) the price sensitivity between the national brands is low. Interestingly, the conditions that support the introduction of more than one store brand are quite different than the conditions that would facilitate the introduction of additional national brands. We provide empirical evidence that support our model-based predictions.     

The effects of loyalty programs on customer lifetime duration and share of wallet

In the retailing sector, consumers typically patronize multiple outlets, which confronts these outlets with an important issue: determining how to gain a greater part of consumer expenditures. One potential avenue is to increase consumer lifetime duration and repeat purchases through loyalty cards. This research, using BehaviorScan single-source panel data, examines the impact of loyalty programs on customer lifetime duration in grocery stores. The findings suggest that loyalty schemes have positive effects on customer lifetimes and share of consumer expenditures. However, multiple loyalty card memberships of geographically close retailers reduce lifetime duration. Furthermore, the higher the share of consumer expenditures in a store, the longer the lifetime duration will be.     

Store brand and national brand promotion attitudes antecedents

Retailers compete against national manufacturers by launching store brands. National manufactures regularly use brand promotions to fight store brands back. The purpose of this article is to find out whether attitudes toward national brand promotions and store brands have similar or different conceptual antecedents. The study presents and tests a model of the effects of shoppers´ characteristics (price and non-price-related) on attitudes toward store brand and national brand promotions. The results support that constructs relating to price impact both store brand attitude and national brand promotion attitude, but the strength of some of these relationships differ. Other shopper characteristics like brand loyalty and store loyalty, have similar negative and positive effects, respectively. These slight differences suggest that promotions of national brands might be a good tool for fighting back store brands, but manufacturers need to design and target these promotions carefully in order to avoid head-to-head competition.     

Accounting for heterogeneity and dynamics in the loyalty-price sensitivity relationship

Marketers have been interested in the relationship between brand loyalty and price sensitivity for many years and have examined whether loyalty reduces consumer price sensitivity. The results, to date, indicate that loyalty does indeed raise the price that consumers are willing to pay for a brand. Other than this broad finding, however, there has been little research in the literature regarding whether and how this relationship varies across consumers and product categories and, within consumers, over time. This is the issue that we investigate in this paper. Specifically, we examine whether the price sensitivity-loyalty relationship is heterogeneous and dynamic. We propose an approach wherein the price sensitivity parameter of a brand choice model is specified as a function of loyalty with three parameters. The first parameter of this function represents the maximum possible reduction in price sensitivity due to loyalty. The second parameter affects the type and shape of the relationship between price sensitivity and loyalty. In particular, depending on the value of this parameter, the relationship could be non-existent, follow a concave shape, indicating decreasing response to increases in loyalty, or be S-shaped to capture the case of increasing response initially followed by decreasing response subsequently. Finally, the third parameter captures the rate at which price sensitivity falls as loyalty increases.We use the proposed approach to investigate the relationship in four frequently purchased categories. In each category, we select a sample of households and calibrate the model on the choices of all the households in the sample. We next employ an Empirical Bayes approach to obtain household-level estimates of all the parameters. These parameters are then used to assign each household in each category to a no response or concave or S-shaped response groups. Within each of these three groups, we assign each household to one of four different response level and rate segments, that is, high response-high rate, high response-low rate, low response-high rate, and low response-low rate. Each of these segments differs in the response level, that is, the maximum reduction in price sensitivity as loyalty reaches a maximum—and the response rate, that is, how quickly price sensitivity falls with increases in loyalty.Following the assignment of each household to a segment in each category, we pool the households across all four categories and calibrate a membership function. This function explains households’ membership in different segments in terms of product category characteristics, household demographics, the household’s responses to price, display, and feature promotions and the evolution of loyalty of the household.Our findings suggest that the nature of the loyalty-price sensitivity relationship does vary across consumers as well as over time. Specifically, the concave response is more likely than the S-shaped response or the absence of a response. We find that the S-shaped response is not related to responsiveness to in-store promotions. It is, however, associated with a slower growth in loyalty to a brand as it is purchased. The concave response, on the other hand, is associated with responsiveness to feature promotions but is unrelated to how loyalty to brands evolves with their purchases.We also find that demographic characteristics are related to the behavior of the concave and S-shaped responses. Specifically, for the S-shaped response, household demographics are related to both the maximum level of the curve as well as its rate of growth. In particular, the curve grows faster with age and its maximum increases with the weekly working hours of the household. In the case of the concave response, high income and more working hours raise the maximum level that the curve achieves. Its rate of growth, however, is unaffected by demographics.We also provide several managerial implications for loyalty and promotional programs based on our findings. Specifically, our first finding—that the loyalty-price sensitivity relationship is dynamic—suggests that, rather than having promotional programs, where the value of the price promotion is fixed and some consumers are targeted with the promotion while others are not, managers should have an entire schedule of price promotions with each level of promotions targeting consumers at a different loyalty level.Our second finding that the nature of the loyalty-price sensitivity relationship is heterogeneous across consumers suggests that designing loyalty programs on the basis of crude classifications such as loyals and non-loyals is not appropriate. Instead, households that are identified as loyal, need to be further divided based on how the loyalty affects their price sensitivity. Promotional programs should then be based on the specific type of relationship that a household exhibits.The third finding that the reductions in price sensitivity to loyalty can exhibit an S-shaped or a concave pattern also has an interesting managerial implication. Specifically, given the differences between the two patterns in how long it might take a consumer to reach a point where s(he) is willing to purchase a brand due to loyalty rather than due to a price promotion, and hence be a profitable customer, it may be preferable for managers to invest more in consumers who exhibit a concave rather than an S-shaped response.Finally, our result that different categories may exhibit different patterns of the relationship between price sensitivity and loyalty implies that each category needs to be analyzed by itself for what the nature of the loyalty-price sensitivity relationship is likely to be so that the most appropriate program for that category can be developed.     

“One-deal-fits-all?” On Category Sales Promotion Effectiveness in Smaller versus Larger Supermarkets

Even within a store chain and format, supermarket outlets often exhibit substantial differences in selling surface. For chain managers, this raises the issue of correctly anticipating the promotion lift, and of profitably managing promotion activities, across these outlets. In this paper, we conceptualize why and how store size influences the category sales effectiveness of four promotional indicators (depth of the promotional discount, display support, feature support, and whether the promotion is quantity-based). We then estimate the net moderating effect on four product categories for 103 store outlets belonging to four chains. For each of the promotion instruments, we find the percentage sales increases to be lower in large stores. For instance, whereas a 10% point increase in feature activity enhances category sales by about 1.64% in a 700 m² store, this figure drops to only 1.03% in a 1300 m² store – a 59% reduction. This moderating effect is especially pronounced for discount depth, the relative sales lift from a typical price cut being about 78% lower in the larger-sized outlet. However, since large outlets also have larger base sales, the picture changes when we consider absolute sales effects. The net outcome is that deeper discounts or quantity-based promotions do not systematically generate larger or smaller absolute sales bumps in large stores, whereas for in-store displays and features, we obtain a clear positive (be it less than proportional) link between store size and absolute category sales lift. When it comes to margin implications, we show that large stores gain higher profit from price cuts than small outlets only as long as the retailer keeps part of the manufacturer discount to himself. Managers can use these insights to improve their promotional forecasts across outlets, as well as to tailor their mix of instruments to store selling surface.     

Bargain effectiveness in differentiated store environments: The role of store affect,processing fluency,and store familiarity

Two main types of value have been established in the retail literature: merchandise value based on the quality and price of a store's offerings and differentiation value based on the extent of atmospheric cues in the environment. However, it is not clear what happens when a store offers both types of value to a high degree. We investigate how offering a bargain (or price cut) affects consumer responses for high and low differentiation store environments. In two studies, using a simulated store environment in a behavioural laboratory, we find that the presence of bargains in a highly differentiated store environment negatively influences store affect and, in turn, approach behaviour. This effect, however, only holds true for low familiarity stores and can be explained by processing fluency theory. Consequently, retailers focusing on store environment differentiation should reconsider their use of bargains.     

Evaluating store location and department composition based on spatial heterogeneity in sales potential

In this paper, we extend a retail location evaluation model with the possibility to include the effect of department size adaptation at the store level. We relate department-level store sales to a store's competitive and demographic environment, thereby providing richer insights into the drivers of department sales than a model of just aggregate sales. Further, we accommodate heterogeneity in consumer characteristics over space by using zip code level data and unobserved spatial effects in department sales by including spatially autocorrelated error terms.Using spatial panel data for 30 clothing stores belonging to one Dutch retail chain, we demonstrate how to use the modeling approach to analyze and predict sales performance of new and existing stores. We show that the predictive performance of our model is superior to that of a benchmark model that does not include spatial autocorrelation.