Loyalty programs dissuade firms from pricing products competitively

If you think that frequent flier programs and other tactics that reward customers for their loyalty to a particular company ensure good deals for consumers, think again. According to Yuk-fai Fong (Assistant Professor of Management and Strategy at the Kellogg School of Management) and Qihong Liu (Assistant Professor of Economics at the University of Oklahoma), consumers may not benefit from programs that reward customer loyalty as much as they would if good old-fashioned competition determined prices.

via Membership Has Its Punishments – Loyalty programs dissuade firms from pricing products competitively.

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