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Building customer loyalty in retailing: not all levers are created equal

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Abstract:

This research examines the determinants in building and maintaining customer loyalty in grocery retailing. The first part introduces a distinction between traditional, ‘mass’ levers such as range and price, and relational, ‘targeted’ levers based on individual customer information. The second part focuses on the role ofthese two sets of levers for differentiation, that is, to what extent they are perceived by customers as distinctive to a retailer. For the first time, parallel analysis of retailers and consumers is used to obtain a dual perspective on loyalty drivers. Most supermarket chains in Italy today are found to invest marketing resources in the ‘mass’ levers of range and price. They are also starting to use other levers for differentiation, although effectiveness of their attempts varies a great deal and the perception of diversity by customers varies a lot from one banner to another. We also find that relational levers cannot be separated from traditional levers to sustain loyalty, but they clearly play a secondary role. Investment in targeted marketing is no substitute for that in traditional mass loyalty tools such as range and price.

Keywords: Italy; differentiation; grocery retailing; loyalty; targeted marketing

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/09593969.2011.619666

Affiliations: Marketing Area – Department of Economics,University of Parma, Via Kennedy 6Parma43100, Italy

Publication date: December 1, 2011

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