Challenge of the Classic Loyalty

Matilde Westi Kruse & Mette Wauder Eriksen

Student thesis: Master thesis

Abstract

This study examines the concept of loyalty. The literatures of loyalty and dictionaries have presented several definitions of and approaches to loyalty, why it is a complex concept. Loyalty is often described as the creation of a mutual relationship between a company and a customer in which they create value for each other. The value for the companies is expressed by profit, whereas the customers’ value is ambiguous. Therefore the purpose of this study is to challenge the classic understanding of loyalty by studying whether a mutual loyal relationship can exist. The study will contribute to the existing literature with a conceptual model explaining loyalty on the Danish market of offline consumer goods, which will be the foundation for further research of loyalty in more specific contexts.
An examination of the literature of loyalty and a presented framework will be the foundation of the analyses, which will result in a conceptual model. The classic understanding and drivers of loyalty is tested through qualitative in-depth interviews and quantitative analyses, which indicate that sincere loyalty rarely exists. The last revised model is tested through PLS, which conclude that ‘Experience/Satisfaction’ is the most significant driver of loyalty, but that it is also affected by other drivers; e.g. ‘Switching costs’, ‘Barriers of acquisition’ and ‘Social influence’. Thereby, the analyses conclude that there are different levels of loyalty and 100 percent sincere loyalty rarely exists.
The results of the study lead to further criticism and challenge of the concept of loyalty. Loyal customers are important, but whether they are loyal or just satisfied is an interesting question. Further it can be argued that a loyal relationship is based on selfish actions and needs. The study concludes that loyalty is based on having a preferred brand which the customers often buy, but they also buy or try alternatives, which can confirm their choice of preferred brand. This can increase their level of loyalty. However, loyalty continuously changes and varies for different companies and industries. Therefore it is important continuously to examine and adapt loyalty individually in order to understand the concept of loyalty

EducationsMSc in Economics and Marketing, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2019
Number of pages250