Effect of Customer Loyalty Programs on Customers Buying Behavior in Supermarkets in Nairobi City County, Kenya

Abstract

This study examined the effect of customer loyalty programs on customer buying behavior in supermarkets in Nairobi City County, Kenya. Specifically, the study sought to establish the effect of reward programs, point accumulation programs and reward frequency programs on customer buying behavior. The theory of reasoning action, relationship marketing theory and resource based view theory formed the theoretical framework for the study. A sample of 384 respondents was selected from a target population of 985,016 using non-probabilistic purposive sampling method. Descriptive research design was employed, questionnaires and interview guides were used to collect data. Validity and reliability of the data collection instruments was ascertained through pretesting using ten respondents drawn from a Cleanshelf supermarket in Nairobi City County Kenya. The collected data was analyzed using descriptive statistics in the form of frequencies and percentages. Further, inferential statistics such as correlation and linear regression was used to test for the relationship between independent and the dependent variables in each of the study objectives. Findings indicate that consumer’s level of preference to the particular supermarket loyalty programs was high in specific supermarkets. It was also found that points’ redemption rate differed among the supermarkets. Majority of the supermarkets allowed customers to redeem their points at any time and customers preferred benefits connected to frequent visits and fast points reimbursement based on the reward method used. The study concluded that point cumulative program and reward method program positively and significantly affects consumer buying behavior but reward frequency negatively and significantly affected customer buying behavior. The study recommended that the point accumulation program should be made easier for customers by the marketing departments in the supermarkets.