The impact of instant reward programs and bonus premiums on consumer purchase behavior

Alec Minnema, Tammo H.A. Bijmolt and Marielle Non

International Journal of Research in Marketing, 2017, vol. 34, issue 1, 194-211

Abstract: This study examines the impact of an instant reward program (IRP) with bonus premiums on consumer purchase behavior. An IRP is a rapidly growing form of short-term program that rewards consumers instantly with small premiums per fixed spending, where these premiums are part of a larger set of collectibles. A supplementary element in many IRPs promotes specific brands with an extra premium, labeled bonus premiums. Bonus premiums are the extra premiums consumers can earn by buying a specific promoted brand, which is a non-price promotion tied to the IRP. Therefore, consumers can earn premiums in two ways: based on total spending and on purchases of promoted brands. To test the effects of these marketing instruments, this study uses Dutch household panel data related to purchases of 23 product categories spanning four supermarket chains. We decompose consumer purchase behavior by modeling the number of shopping trips, category-level purchase incidence, brand choice, and purchase quantity. The results show that an IRP results in incremental shopping trips. Promoting a brand with a bonus premium and price discount compared to just a price discount results in higher choice probabilities for the promoted brand. Finally, the IRP and bonus premium are especially effective for households that collect the premiums, but we also find positive albeit smaller effects for non-collecting households.

Keywords: Instant reward programs; Bonus premiums; Loyalty program designs; Promotions; Grocery retailing; Consumer purchase behavior (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167811616300842
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ijrema:v:34:y:2017:i:1:p:194-211

DOI: 10.1016/j.ijresmar.2016.08.001

Access Statistics for this article

International Journal of Research in Marketing is currently edited by Roland Rust

More articles in International Journal of Research in Marketing from Elsevier
Bibliographic data for series maintained by Catherine Liu ().