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Abstract

Previous studies of reward programs have generally focused on designing the best programs for consumers and suggested that consumers` perception of the value of reward programs can vary according to the type of reward program (e.g., hedonic vs. utilitarian and direct vs. indirect) and its timing (e.g., immediate vs. delayed). These studies have typically assumed that consumers` preference for reward programs has a positive effect on brand loyalty. However, Dowling and Uncles (1997) pointed out that this preference does not necessarily foster brand loyalty. In this regard, the present study verifies this assumption by examining the effects of consumers` perception of the value of reward programs on their brand loyalty. Although reward programs are widely used by online shopping malls, most studies have examined the conditions under which consumers are most likely to value loyalty programs in the context of offline shopping. In the context of online shopping, however, consumers` preferences may have little effect on their brand loyalty because they have more opportunities for comparing diverse reward programs offered by many online shopping malls. That is, in online shopping, finding attractive reward programs may require little effort on the part of consumers, who are likely to switch to other online shopping malls. Accordingly, this study empirically examines whether consumers` perception of the value of reward programs influences their brand loyalty in the context of online shopping. Meanwhile, consumers seek utilitarian and/or hedonic value from their online shopping activity(Jones et al., 2006; Barbin et al., 1994). They visit online shopping malls to buy something necessary (utilitarian value) and/or enjoy the process of shopping itself (hedonic value). In this sense, reward programs may reinforce utilitarian as well as hedonic value, and their effect may vary according to the type of reward (utilitarian vs. hedonic). According to Chaudhuri and Holbrook (2001), consumers` perception of the value of a brand can influence their brand loyalty through brand trust and affect. Utilitarian value influences brand loyalty through brand trust, whereas hedonic value influences it through brand affect. This indicates that the effect of this perception on brand trust or affect may be moderated by the type of reward program. Specifically, this perception may have a greater effect on brand trust for utilitarian reward programs than for hedonic ones, whereas the opposite may be true for brand affect. Given the above discussion, the present study is conducted with three objectives in order to provide practical implications for online shopping malls to strategically use reward program for establishing profitable relationship with customers. First, the present study examines whether reward programs can be an effective marketing tool for increasing brand loyalty in the context of online shopping. Second, it investigates the paths through which consumers` perception of the value of reward programs influences their brand loyalty. Third, it analyzes the effects of this perception on brand trust and affect by considering the type of reward program as a moderator. This study suggests and empirically analyzes a new research model for examining how consumers`perception of the value of reward programs influences their brand loyalty in the context of online shopping. The model postulates the following 10 hypotheses about the structural relationships between five constructs: (H1) Consumers` perception of the value of reward programs has a positive effect on their program loyalty; (H2) Program loyalty has a positive effect on brand loyalty; (H3) Consumers`perception of the value of reward programs has a positive effect on their brand trust; (H4) Consumers` perception of the value of reward programs has a positive effect on their brand affect; (H5) Brand trust has a positive effect on program loyalty; (H6) Brand affect has a positive effect on program loyalty; (H7) Brand trust has a positive effect on brand loyalty; (H8) Brand affect has a positive effect on brand loyalty; (H9) Consumers` perception of the value of reward programs is more likely to influence their brand trust for utilitarian reward programs than for hedonic ones; and (H10) Consumers` perception of the value of reward programs is more likely to influence their brand affect for hedonic reward programs than for utilitarian ones. To test the hypotheses, we considered a sample of 220 undergraduate students in Korea (male:113). We randomly assigned these participants to one of two groups based on the type of reward program (utilitarian: transportation card, hedonic: movie ticket). We instructed the participants to imagine that they were offered these reward programs while visiting an online shopping mall. We then asked them to answer some questions about their perception of the value of the reward programs, program loyalty, brand loyalty, brand trust, and brand affect, in that order. We also asked some questions about their demographic backgrounds and then debriefed them. We employed the structural equation modeling (SEM) method with AMOS 18.0. The results provide support for some hypotheses (H1, H3, H4, H7, H8, and H9) while providing no support for others (H2, H5, H6, H10) (see Figure 1). Noteworthy is that the path proposed by previous studies, "value perception → program loyalty → brand loyalty," was not significant in the context of online shopping, whereas this study`s proposed path, "value perception → brand trust/brand affect → brand loyalty," was significant. In addition, the results indicate that the type of reward program moderated the relationship between consumers` value perception and brand trust but not the relationship between their value perception and brand affect. These results have some important implications. First, this study is one of the first to examine how consumers` perception of the value of reward programs influences their brand loyalty in the context of online shopping. In particular, the results indicate that the proposed path, "value perception → brand trust/brand affect → brand loyalty," can better explain the effects of reward programs on brand loyalty than existing paths. Furthermore, these results suggest that online shopping malls should place greater emphasis on the type of reward program when devising reward programs. To foster brand loyalty, they should reinforce the type of shopping value that consumers emphasize by providing them with appropriate reward programs. If consumers prefer utilitarian value to hedonic value, then online shopping malls should offer utilitarian reward programs and vice versa.

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