Evaluating the Effectiveness of Loyalty Programmes in the Fashion Industry: A Case Study of ASOS UK
Journal: Modern Economics & Management Forum DOI: 10.32629/memf.v3i3.860
Abstract
In the fashion industry, consumers normally shop occasionally at a number of different stores and patronise multiple brands. In the wake of Brexit, however, UK consumers' purchasing power has been reduced. In such a competitive market, companies strived to earn a bigger proportion of consumer expenditures by implanting loyalty programmes. The aim of this paper is to evaluate the effectiveness of loyalty programmes in the fashion industry with a case study of ASOS. Questionnaire was used to collect primary data in order to analyse the effectiveness of ASOS' loyalty programme — "A-list" in terms of customers' behaviour and attitude towards the brand and its programme. And secondary data was obtained from ASOS' annual report to analyse the effectiveness in financial aspect. This study showed that long-term satisfaction (low price, wide variety and good after-sales service) with ASOS promote brand loyalty both behaviourally and attitudinally as shoppers expressed the view that they will continue to shop in ASOS and recommend the brand to their friends. However, customers do not develop programme loyalty; low reputation of "A-list" resulting shoppers perceive low engagement with the programme. Therefore, the presented study could be useful for marketing managers to design and implement loyalty programmes more effectively to increase programme loyalty in the future, and maximise customers' satisfaction to increase brand loyalty both behaviourally and attitudinally.
Keywords
fashion industry, brand loyalty, consumers' purchasing power
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[31] Ibis.com. ibis.com reservations: advantages of the Le Club Accor hotels loyalty program. [online] Available at: http://www.ibis.com/gb/leclub/index.shtml [Accessed 17 July 2017] .
[32] Johnson, Michael D. and Claes Fornell (1991), "A Framework for Comparing Customer Satisfaction Across Individuals and Product Categories," Journal of Economic Psychology, 12(2): 267-286.
[33] Jones T. and Taylor Shirley F., (2007) "The conceptual domain of service loyalty: how many dimensions?", Journal of Services Marketing, 21(1): 36-51.
[34] Joop J. Hox & Hennie R. Boeije (2005). Data collection, Primary VS. Secondary.
Encyclopedia of Social Measurement., Volume 1.
[35] Keh, H.T., & Lee, Y.H. (2006), Do Reward Programs Build Loyalty for Services? The Moderating Effect of Satisfaction on Type and Timing or Rewards, Journal of Retailing, 82(2): 127-136.
[36] Keiningham, Timothy L., Terry G. Vavra, Lerzan Aksoy and Henri Wallard (2005). Loyalty Myths. New Jersey: John Wiley & Sons.
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[39] Lewis Michael. (2004). "The influence of loyalty programs and short-term promotions on customer retention." Journal of Marketing Research. 43(3): 281-292.
[40] Mintel (2015). Retailer loyalty programs - US - July 2015. Available at: http://store.mintel.com/retailer-loyalty-programs-us-july-2015 [Assessed 17 July 2017]
[41] Morgan, R., et al. (2015). Handbook on research in relationship marketing.
Nideau M.C., Singer M., (2014). The secret to creating loyalty programs that actually work, Business Insider.
[42] Nor Asiah Omar, Norzalita Abd. Aziz and Muhamad Azrin Nazri (2011). Understanding the relationship of program satisfaction, program loyalty and store loyalty among card holders of loyalty programs. Asian Academy of Management Journal, 16(1): 21-41.
[43] ONS (2015). Internet use in the UK: what are the facts? Available at: http://visual.ons.gov.uk/internet-use/ [Accessed 19 July 2017]
[44] Ons.gov.uk. (2014). Internet Access - Households and Individuals- Office for National Statistics. [online] Available at: https://www.ons.gov.uk/peoplepopulationandcommunity/householdcharac teristics/homeinternetandsocialmediausage/bulletins/internetaccesshouse holdsandindividuals/2014-08-07 [Accessed 19 July 2017] .
[45] Oxford Economics, (2014). The Value of the UK Fashion Industry - Oxford Economics. Available at: www.oxfordeconomics.com/my- oxford/projects/129086 [Assessed 17 July 2017]
[46] Pritchard, Mark. P., Havitz, Mark. E. and Howard, Dennis. R. 1999. "Analyzing the commitment loyalty link in service contexts". Journal of the Academy of Marketing Science, 27(3): 333-48.
[47] RetailPro.com, (2015). Quality service and products more important than price, studies find. RetailPro.com. Available at: http://www.retailpro.com/News/blog/index.php/2014/03/12/quality-service- and-products-more-important-than-price-studies-find/ [Accessed 8 AUG 2017]
[48] Rhian James, (2013). Student Feature Male and Female Attitudes to Online Shopping. Women in Society. Volume 6, Autumn 2013. ISSN 20427239
[49] Russell-Bennett, Rebekah, Worthington, Steve and Hartel, Charmine., (2009). "One size doesn't fit all. Exploring marketing strategies for influencing three dimensions of brand loyalty". In: Proceedings of the Academy of Marketing Conference 2009, 6-9 July 2009, Leeds Metropolitan University.
[50] SAS, (2014). Keeping customers: Successful Loyalty Through Analytics. International Institute for Analytics. Available at: https://www.sas.com/content/dam/SAS/en_us/doc/research2/iia-keeping- customers-107145.pdf [Accessed 19 July 2017]
[51] Sachdev, S. B., & Verma, H. V. (2004). Relative importance of service quality dimensions: A multisetoral study. Journal of Services Research, Volume 4, by Institute for International Management and Technology.
[52] Sastry, N. (2014). Can Loyalty Programs Really Increase Sales?. [online] Apparel.edgl.com. Available at: http://apparel.edgl.com/news/can-loyalty- programs-really-increase-sales-91630 [Accessed 18 July 2017] .
[53] Sharp, B. and Sharp, A. (1997), Loyalty Programs and Their Impact on Repeat- Purchase Loyalty Patterns, International Journal of Research in Marketing, 14(5): 473-486.
[54] Sima G. Magatef & Elham F. Tomalieh (2015). The Impact of Customer Loyalty Programs on Customer Retention. International Journal of Business and Social Science. 6(1).
[55] Statista, (2017). Value of the online fashion market in the United Kingdom (UK) from 2007 to 2017 (in billion GBP). Available at: https://www.statista.com/statistics/317542/forecast-value-of-the-online- fashion-market-in-the-united-kingdom-uk/ [Assessed 17 July 2017]
[56] Steyn, P., Pitt, L., Strasheim, A., Boshoff, C. and Abratt, R. (2010), "A cross‐ cultural study of the perceived benefits of a retailer loyalty scheme in Asia", Journal of Retailing and Consumer Services, 17(5): 355-373.
[57] Uncles, Mark D., Dowling, Grahame R. and Hammond, Kathy. (2003). "Customer loyalty and customer loyalty programs". Journal of Consumer Marketing, 20(4): 294-316.
[58] Vizard, S. (2014). Asos trials first loyalty scheme - Marketing Week. [online] Marketing Week. Available at: https://www.marketingweek.com/2014/03/18/asos-trials-first-loyalty- scheme/ [Accessed 19 Jul. 2017] .
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[60] Yi, Youjae and Hoseong Jeon (2003). Effects of loyalty programs on value perception, program loyalty, and brand loyalty. Journal of the Academy of Marketing Science, 31: 229.
[61] Zakaria, I., Rahman, B., Othman, A., Yunus, N., Dzulkipli, M. and Osman., M. (2014). The Relationship between Loyalty Program, Customer Satisfaction and Customer Loyalty in Retail Industry: A Case Study. Procedia - Social and Behavioral Sciences, 129: 23-30.
[2] Anastasia Stathopoulou and George Balabanis, (2016). The effects of loyalty programs on customer satisfaction, trust, and loyalty toward high- and low- end fashion retailers. Journal of Business Research, 2016, 69(12).
[3] Anoop Kumar (2009). 27600792 Impact of loyalty programs on consumer behaviour. [Online] Available at: https://zh.scribd.com/document/59867431/27600792-Impact-of-Loyalty- Programs-on-Consumer-Behaviour [Accessed 23 June 2017]
[4] Anton Dell, (2016). How could Britain exiting the EU affect the fashion industry? Available at: https://www.linkedin.com/pulse/how-could-britain-exiting-eu- affect-fashion-industry-anton-dell [Assessed 17 July 2017]
[5] Asosplc.com (2016). ASOS Annual reports and accounts. Available at: https://www.asosplc.com/~/media/Files/A/Asos-V2/2016-in- review/financial-review/28-10-2016-ar.pdf [Assessed 23 June 2017]
[6] Baran, R. J., Strunk, D. P., & Galka, R. J. (2008). Principles of Customer Relationship Management. Ohio: Thomson South-Western.
[7] Blackmore, N. (2015). The £6bn catch in loyalty points: the schemes sitting on your rewards. [online] Telegraph.co.uk. Available at: http://www.telegraph.co.uk/finance/personalfinance/money-saving-tips/11912823/Shoppers-waste-6bn-of-loyalty-reward-points.html [Accessed 18 June 2017] .
[8] Bolton Ruth, Kannan, P. K., & Bramlett Matthew. (2000). Implications of loyalty program membership and service experiences for customer retention and value. Journal of Academy of Marketing Science, 28(Winter): 95-108.
[9] Bryman A. and Bell E. (2007). Business Research Methods. Oxford University Press.
[10] Business Insider Intelligence, (2015). The E-commerce demographics report: The biggest shifts of the past year in who shops online and on mobile. Business Insider. Available at: http://www.businessinsider.com/women- are-driving-growth-in-mobile-commerce-heres-how-2015-9 [Assessed 17 July 2017]
[11] Cawley, K (2014). How a Loyalty Program can Boost Revenue. [online] BrainSINS - Smart ECommerce. Available at: https://www.brainsins.com/en/blog/how-a-loyalty-program-can-boost- revenue/3460 [Accessed 11 July 2017] .
[12] Chiou, J.S. and Droge, C. (2006), "Service quality, trust, specific asset investment, and expertise: direct and indirect effects in a satisfaction‐ loyalty framework", Journal of the Academy of Marketing Science, 34(4): 613-627.
[13] Colloquy (2013). Bulking up: The 2013 COLLOQUY Loyalty Census — Growth and trends in U.S. loyalty program activity, 1-13. Available at: https://colloquy.com/reports [Accessed 16 June 2017]
[14] Colloquy (2015). The 2015 COLLOQUY Loyalty Census: Big numbers, big hurdles. COLLOQUY report (pp. 1-21). Available at: https://colloquy.com/reports [Accessed 16 June 2017]
[15] COLLOQUY. (2015). Hard Lesson From New Research: Stop Chasing Members — You Have Enough Already!. [online] Available at: https://www.colloquy.com/latest-news/tough-lesson-from-our-new- research-report [Accessed 19 July 2017] .
[16] Cox, J. (2016). Top 10 loyalty cards to help save you money brought to you by The Coupon Kid. [online] mirror. Available at: http://www.mirror.co.uk/lifestyle/family/top-10-loyalty-cards-help-4020713 [Accessed 17 July 2017] .
[17] Cronin J. J., and Taylor S. A (1992). Measuring Service Quality: A Reexamination and Extension. Journal of Marketing. 56(3): 55-68.
[18] Dealjoy.com. How Many People Shop Online. Available at: http://www.dealjoy.com/how-many-people-shop-online--shopping/ [Assessed 19 July 2017]
[19] Demoulin, N. T. M., & Zidda, P. (2008). On the impact of loyalty cards on store loyalty: Does the customers' satisfaction with the reward scheme matters? Journal of Retailing and Consumer Services, 15(5): 386-398.
[20] Dick, A.S. & Basu, K. JAMS (1994). Customer loyalty: Toward an integrated conceptual framework. Journal of the Academy of Marketing Science. March 1994, 22(2): 99-113.
[21] Dowling Grahame R. and Uncles Mark (1997). Do customer loyalty programs really work?, Sloan management review, Summer 1997, 38, 4, ABI/INFORM Global. Available at: http://www2.fiu.edu/~ereserve/010019216-1.pdf [Accessed 20 June 2017] .
[22] eNotes (2014). "What is primary data and secondary data in Statistics and research methods?" eNotes, Available at: https://www.enotes.com/homework-help/what-primary-data-secondary- data-472774. [Accessed 21 July 2017]
[23] FashionUnited.uk., (2015). UK fashion industry statistics. Available at: https://fashionunited.uk/uk-fashion-industry-statistics [Assessed 17 July 2017]
[24] Frech, S. (2014). Hey Brand Managers: Your 'Community' Doesn't Love You Like Mom Does. [online] Adage.com. Available at: http://adage.com/article/digitalnext/time-marketers-back- communities/293074/ [Accessed 19 Jul. 2017] .
[25] Gemma Tetlow, (2016). The UK economy in numbers in 2016. Financial Times. Available at: https://www.ft.com/content/8083ded6-c6a1-11e6-8f29- 9445cac8966f [Assessed 17 July 2017]
[26] Gilon Miller, (2012). 8 Reasons Consumers Like To Shop Online - Cater To Them For Online Retail Success. Upstream Commerce. Available at: http://upstreamcommerce.com/blog/2012/02/14/8-reasons-consumer- likes-shop-online [Accessed 16 July 2017]
[27] Graham Ruddick, (2016). Britain's high streets under strain as 15 shops close every day. The Guardian. Available at: https://www.theguardian.com/business/2016/oct/25/britains-high-streets- under-strain-as-15-shops-close-every-day [Assessed 17 July 2017]
[28] Harvard Business Review. (2014). The Value of Keeping the Right Customers. [online] Available at: https://hbr.org/2014/10/the-value-of-keeping-the- right-customers [Accessed 18 July 2017] .
[29] Hawkes, S. (2008). Asos is not content to be second in line in internet sales race. [online] Thetimes.co.uk. Available at: https://www.thetimes.co.uk/article/asos-is-not-content-to-be-second-in-line-in-internet-sales-race-d535zj0678t [Accessed 19 July 2017] .
[30] Hofstede, G. (2015). National cultural dimensions. Available at: http://geerthofstede.nl/dimensions-of-national-cultures [Assessed 17 July 2017]
[31] Ibis.com. ibis.com reservations: advantages of the Le Club Accor hotels loyalty program. [online] Available at: http://www.ibis.com/gb/leclub/index.shtml [Accessed 17 July 2017] .
[32] Johnson, Michael D. and Claes Fornell (1991), "A Framework for Comparing Customer Satisfaction Across Individuals and Product Categories," Journal of Economic Psychology, 12(2): 267-286.
[33] Jones T. and Taylor Shirley F., (2007) "The conceptual domain of service loyalty: how many dimensions?", Journal of Services Marketing, 21(1): 36-51.
[34] Joop J. Hox & Hennie R. Boeije (2005). Data collection, Primary VS. Secondary.
Encyclopedia of Social Measurement., Volume 1.
[35] Keh, H.T., & Lee, Y.H. (2006), Do Reward Programs Build Loyalty for Services? The Moderating Effect of Satisfaction on Type and Timing or Rewards, Journal of Retailing, 82(2): 127-136.
[36] Keiningham, Timothy L., Terry G. Vavra, Lerzan Aksoy and Henri Wallard (2005). Loyalty Myths. New Jersey: John Wiley & Sons.
[37] Kotler P., (2003), Marketing Insights From A to Z: 80 Concepts Every Manager Needs to Know, John Wiley and Sons, Inc, New Jersey.
[38] Leenheer, Jorna, Tammo H.A. Bijmolt, H. J. van Heerde, and A. Smidts. (2007). "Do loyalty programs enhance behavioral loyalty ? A market-wide analysis accounting forendogeneity". International Journal of Research in Marketing, 24(1): 31-47.
[39] Lewis Michael. (2004). "The influence of loyalty programs and short-term promotions on customer retention." Journal of Marketing Research. 43(3): 281-292.
[40] Mintel (2015). Retailer loyalty programs - US - July 2015. Available at: http://store.mintel.com/retailer-loyalty-programs-us-july-2015 [Assessed 17 July 2017]
[41] Morgan, R., et al. (2015). Handbook on research in relationship marketing.
Nideau M.C., Singer M., (2014). The secret to creating loyalty programs that actually work, Business Insider.
[42] Nor Asiah Omar, Norzalita Abd. Aziz and Muhamad Azrin Nazri (2011). Understanding the relationship of program satisfaction, program loyalty and store loyalty among card holders of loyalty programs. Asian Academy of Management Journal, 16(1): 21-41.
[43] ONS (2015). Internet use in the UK: what are the facts? Available at: http://visual.ons.gov.uk/internet-use/ [Accessed 19 July 2017]
[44] Ons.gov.uk. (2014). Internet Access - Households and Individuals- Office for National Statistics. [online] Available at: https://www.ons.gov.uk/peoplepopulationandcommunity/householdcharac teristics/homeinternetandsocialmediausage/bulletins/internetaccesshouse holdsandindividuals/2014-08-07 [Accessed 19 July 2017] .
[45] Oxford Economics, (2014). The Value of the UK Fashion Industry - Oxford Economics. Available at: www.oxfordeconomics.com/my- oxford/projects/129086 [Assessed 17 July 2017]
[46] Pritchard, Mark. P., Havitz, Mark. E. and Howard, Dennis. R. 1999. "Analyzing the commitment loyalty link in service contexts". Journal of the Academy of Marketing Science, 27(3): 333-48.
[47] RetailPro.com, (2015). Quality service and products more important than price, studies find. RetailPro.com. Available at: http://www.retailpro.com/News/blog/index.php/2014/03/12/quality-service- and-products-more-important-than-price-studies-find/ [Accessed 8 AUG 2017]
[48] Rhian James, (2013). Student Feature Male and Female Attitudes to Online Shopping. Women in Society. Volume 6, Autumn 2013. ISSN 20427239
[49] Russell-Bennett, Rebekah, Worthington, Steve and Hartel, Charmine., (2009). "One size doesn't fit all. Exploring marketing strategies for influencing three dimensions of brand loyalty". In: Proceedings of the Academy of Marketing Conference 2009, 6-9 July 2009, Leeds Metropolitan University.
[50] SAS, (2014). Keeping customers: Successful Loyalty Through Analytics. International Institute for Analytics. Available at: https://www.sas.com/content/dam/SAS/en_us/doc/research2/iia-keeping- customers-107145.pdf [Accessed 19 July 2017]
[51] Sachdev, S. B., & Verma, H. V. (2004). Relative importance of service quality dimensions: A multisetoral study. Journal of Services Research, Volume 4, by Institute for International Management and Technology.
[52] Sastry, N. (2014). Can Loyalty Programs Really Increase Sales?. [online] Apparel.edgl.com. Available at: http://apparel.edgl.com/news/can-loyalty- programs-really-increase-sales-91630 [Accessed 18 July 2017] .
[53] Sharp, B. and Sharp, A. (1997), Loyalty Programs and Their Impact on Repeat- Purchase Loyalty Patterns, International Journal of Research in Marketing, 14(5): 473-486.
[54] Sima G. Magatef & Elham F. Tomalieh (2015). The Impact of Customer Loyalty Programs on Customer Retention. International Journal of Business and Social Science. 6(1).
[55] Statista, (2017). Value of the online fashion market in the United Kingdom (UK) from 2007 to 2017 (in billion GBP). Available at: https://www.statista.com/statistics/317542/forecast-value-of-the-online- fashion-market-in-the-united-kingdom-uk/ [Assessed 17 July 2017]
[56] Steyn, P., Pitt, L., Strasheim, A., Boshoff, C. and Abratt, R. (2010), "A cross‐ cultural study of the perceived benefits of a retailer loyalty scheme in Asia", Journal of Retailing and Consumer Services, 17(5): 355-373.
[57] Uncles, Mark D., Dowling, Grahame R. and Hammond, Kathy. (2003). "Customer loyalty and customer loyalty programs". Journal of Consumer Marketing, 20(4): 294-316.
[58] Vizard, S. (2014). Asos trials first loyalty scheme - Marketing Week. [online] Marketing Week. Available at: https://www.marketingweek.com/2014/03/18/asos-trials-first-loyalty- scheme/ [Accessed 19 Jul. 2017] .
[59] WordStream. (2015). Word of Mouth Marketing: What Is WOM & How Does it Work? | WordStream. [online] Wordstream.com. Available at: http://www.wordstream.com/blog/ws/2014/06/26/word-of-mouth-marketing [Accessed 19 July 2017] .
[60] Yi, Youjae and Hoseong Jeon (2003). Effects of loyalty programs on value perception, program loyalty, and brand loyalty. Journal of the Academy of Marketing Science, 31: 229.
[61] Zakaria, I., Rahman, B., Othman, A., Yunus, N., Dzulkipli, M. and Osman., M. (2014). The Relationship between Loyalty Program, Customer Satisfaction and Customer Loyalty in Retail Industry: A Case Study. Procedia - Social and Behavioral Sciences, 129: 23-30.
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