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

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  • Minnema, Alec
  • Bijmolt, Tammo H.A.
  • Non, Mariёlle C.

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.

Suggested Citation

  • Minnema, Alec & Bijmolt, Tammo H.A. & Non, Mariёlle C., 2017. "The impact of instant reward programs and bonus premiums on consumer purchase behavior," International Journal of Research in Marketing, Elsevier, vol. 34(1), pages 194-211.
    • Handle: RePEc:eee:ijrema:v:34:y:2017:i:1:p:194-211
    DOI: 10.1016/j.ijresmar.2016.08.001
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    Cited by:

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    2. Alina Nastasoiu & Neil T. Bendle & Charan K. Bagga & Mark Vandenbosch & Salvador Navarro, 2021. "Separating customer heterogeneity, points pressure and rewarded behavior to assess a retail loyalty program," Journal of the Academy of Marketing Science, Springer, vol. 49(6), pages 1132-1150, November.
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    4. Gabel, Sebastian & Guhl, Daniel, 2022. "Comparing the effectiveness of rewards and individually targeted coupons in loyalty programs," Journal of Retailing, Elsevier, vol. 98(3), pages 395-411.
    5. Bombaij, Nick, 2021. "Effectiveness of loyalty programs," Other publications TiSEM 095c506d-5b5c-4ea3-9b41-a, Tilburg University, School of Economics and Management.
    6. Zou, Fei & Yang, Mei & Zhou, Yanju & Deng, Yaling & Xie, Baiwei, 2024. "Goal-gradient point rewards can increase consumers' willingness to purchase poverty-alleviating products," Socio-Economic Planning Sciences, Elsevier, vol. 92(C).
    7. Guyt, Jonne & Gijsbrechts, Els, 2018. "On consumer choice patterns and the net impact of feature promotions," International Journal of Research in Marketing, Elsevier, vol. 35(3), pages 490-508.
    8. Bombaij, Nick J.F. & Dekimpe, Marnik G., 2020. "When do loyalty programs work? The moderating role of design, retailer-strategy, and country characteristics," International Journal of Research in Marketing, Elsevier, vol. 37(1), pages 175-195.
    9. Alex Belli & Anne-Maree O’Rourke & François A. Carrillat & Ljubomir Pupovac & Valentyna Melnyk & Ekaterina Napolova, 2022. "40 years of loyalty programs: how effective are they? Generalizations from a meta-analysis," Journal of the Academy of Marketing Science, Springer, vol. 50(1), pages 147-173, January.
    10. Bies, Suzanne M.T.A. & Bronnenberg, Bart J. & Gijsbrechts, Els, 2021. "How push messaging impacts consumer spending and reward redemption in store-loyalty programs," International Journal of Research in Marketing, Elsevier, vol. 38(4), pages 877-899.
    11. Lu, Huidi & van der Lans, Ralf & Helsen, Kristiaan & Gauri, Dinesh K., 2023. "DEPART: Decomposing prices using atheoretical regression trees," International Journal of Research in Marketing, Elsevier, vol. 40(4), pages 781-800.
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