Loyalty cards in the apparel industry in Germany and Spain: Is the implementation of a global marketing approach reasonable when operating both in a Southern and a Northern European country?

Janotta, Sarah-Mailin

Loyalty cards in the apparel industry in Germany and Spain: Is the implementation of a global marketing approach reasonable when operating both in a Southern and a Northern European country?

by Sarah-Mailin Janotta (Author)

Business economics - Offline Marketing and Online Marketing

53115

Summary

Internationally operating apparel retailers are expanding throughout Europe (Noordhoff et al, 2004; Seock and Lin, 2011). To be able to cope with the fierce competition in the apparel retail industry, many retailers have implemented loyalty cards in order to keep current customers. Several retailers have opted for a global marketing strategy which includes implementing loyalty cards with the same features in several countries (e.g. Hunkemöller, Promod, Esprit). This research is a comparative analysis of young adults, aged between 18 and 30, from a Northern European country (Germany) and a Southern European country (Spain). The objective is to determine if there are significant differences in attitudinal and behavioural patterns, as well as in preferences regarding the features of loyalty cards in the consumers of the two countries, to find potential success factors for retailers.
In the first place, international apparel retailers have to decide which marketing approach they intend to follow. This may be either a standardised, etic marketing approach, which aims to have one overall marketing strategy for all countries, or a non-standardised, emic marketing approach, which aims to adapt the marketing strategy in every country to the local culture (Trommsdorff, 2009; Solomon et al, 2002). Research of consumer behaviour has shown that consumers are influenced by external stimuli (political, economic, social, technological) and consumer characteristics (cultural, social, personal) (Foscht and Swoboda, 2005; Kotler et al, 2009). Marketers have to be aware of these external influences in order to develop marketing strategies that appeal to the target market(s). By making use of the right marketing instruments, customer satisfaction and loyalty and, subsequently, long-term profitability can be established (Seock and Lin, 2011). Loyal customers have been shown to be more profitable to the company than continuously acquired new customers (Reichheld and Teal, 2001). In the literature, the distinction between attitudinal and behavioural loyalty is widely spread, and it will also be upheld in this research. One instrument often used in relationship marketing is the promotional tool of loyalty cards (Aßmann et al, 2008). There are different forms of loyalty cards, which differ in loyalty card type, in loyalty card functions and in target groups (Steffens, 2010). The image and efficacy of loyalty cards are highly controversial in the literature.
Recent research […]

Excerpt

Tables of Contents

Index of Tables

Index of Figures

III

Abbreviations V

Introduction 1

1.1. Introduction 1

1.2. Preface 2

1.3. Research aim and objectives

1.4. Research problem

1.5. Research questions

1.6. Hypotheses 8

1.7. Structure of the investigation

Literature Review

2.1. Introduction 11

2.2. Background information

2.2.1. Marketing stimuli: loyalty cards in Germany and Spain

2.2.2. General consumer characteristics in Germany and Spain

2.3. Apparel retail industry in Germany and Spain

2.4. Theory of global marketing

2.4.1. Definition of global marketing

2.4.2. Discussion 19

2.5. Theory of consumer behaviour and external influences

2.5.1. Definition and development of consumer behaviour

2.5.2. Theoretical models of consumer behaviour

2.5.3. Stimuli and characteristics affecting consumer behaviour

2.6. Theory of customer loyalty in marketing management

2.6.1. Consumer loyalty

2.6.2. Loyalty programmes and consumer loyalty management

2.6.3. Loyalty cards

2.7. Research design and research tactics

2.8. Conclusion of the literature review

Research Methodology

3.1. Introduction 53

3.2. Research objectives

3.3. Research design and strategy

3.4. Research tactics: Sources of data

3.5. Questionnaire design

3.5.1. Operationalisation of research variables

3.5.2. Questionnaire development

3.5.3. Pilot study and finalised version of the questionnaire

3.6. Respondents and sampling procedure

3.6.1. Target population

3.6.2. Justification 63

3.7. Data collection

3.8. Problems and limitations

3.9. Conclusion of methodology

Research Findings and Data Analysis

4.1. Introduction 66

4.2. Sample composition

4.3. Research findings and data analysis

4.3.1. General behaviour and attitude towards loyalty cards

4.3.2. Preferences regarding loyalty card features

4.3.3. Store loyalty towards favourite retail store

Research discussions, conclusion and recommendations

5.1. Introduction 89

5.2. Analysis of store loyalty tendencies and success factors

5.2.1. General behaviour and attitudes towards loyalty cards

5.2.2. Preferences regarding loyalty card features

5.2.3. Store loyalty towards favourite retail store

5.3. Review theory used

5.4. Recommendations for apparel retailers

5.5. Recommendations for future research

References/Bibliography 96

6.1. References 96

6.2. Bibliography 105

Appendix I

7.1. Questionnaire I

Index of Tables

Table 1:

Membership card Hunkemöller ...12

Table 2:

Membership card ESPRIT ...13

Table 3:

Membership card Promod ...14

Table 4:

Arguments for and against standardized marketing ...19

Table 5:

Management of cultural diversity in MNCs ...20

Table 6:

Matrix of values and customer roles ...29

Table 7:

The family cycle: an updated view ...30

Table 8:

Complexity of loyalty ...35

Table 9:

Different levels of loyalty ...36

Table 10: Types of consumers and sales promotion goals ...42

Table 11: STP variables ...48

Table 12: Operationalisation of Research Variables ...57

Table 13: Average Annual Gross Income by age (2009) ...62

Table 14: Consumer expenditure on clothing and footwear (2009) ...62

Table 15: Composition sample: country of residence ...66

Table 16: Composition sample: possession of loyalty card ...66

Table 17: Relationship between possession of loyalty card and home country ...68

Table 18: Usage of benefits of loyalty cards ...69

Table 19: Change in consumer behaviour after loyalty card possession ...71

Table 20: Negative characteristics of loyalty cards (Country) ...72

Table 21: Negative characteristics of loyalty cards ...73

Table 22: Positive characteristics of loyalty cards (Country) ...74

Table 23: Preferences of promotional techniques of loyalty cards (Country) ...76

Table 24: Preferences of bonus systems of loyalty cards (Country) ...77

Table 25: Behavioural store loyalty: % expenditure (Country) ...79

Table 26: Behavioural store loyalty: Frequency store visit fav. retail store (Country )

...80

Table 27: Behavioural store loyalty: number store visit compet. retail stores ...

(Country) ...81

Table 28: Behavioural store loyalty: per cent expenditure (Possession of loyalty ...

card) ...82

Table 29: Behavioural store loyalty: Frequency store visit favourite retail store ...

(Possession of loyalty card) ...83

Table 30: Behavioural store loyalty: Number store visit competitive retail stores ...

(Possession of loyalty card) ...84

Table 31: Attitudinal store loyalty (Country) ...86

Table 32: Attitudinal store loyalty (Possession of loyalty card) ...87

Table 33: Preferences regarding promotional techniques and bonus systems ...91

Table 34: Attitudinal store loyalty (Country) ...92

Table 35: Attitudinal store loyalty (Possession of loyalty card) ...93

III

Index of Figures

Figure 1: Research question ... 7

Figure 2: Hofstede's cultural dimensions: Germany vs. Spain ...15

Figure 3: General consumer purchase attitudes ...16

Figure 4: Europe apparel retail value: $ billion 2005-2009 ...18

Figure 5: Top retailers in Western Europe (2010) ...18

Figure 6: Extended model of consumer behaviour by Engle et al (1995) ...22

Figure 7: Extended model of consumer behaviour by Howard and Sheet (1969) .23

Figure 8: SR model...23

Figure 9: SR model adapted by Kotler ...25

Figure 10: Shell model of consumer characteristics ...25

Figure 11: Environment differentiation - hierarchy of social groups ...26

Figure 12: Purchase behaviour... 27

Figure 13: Self-concept ...28

Figure 14: From customer satisfaction to customer loyalty ...33

Figure 15: First contact to economic success ...34

Figure 16 Monetary benefit from long-term ...35

Figure 17: Relationship NPV retention rate ...35

Figure 19: Relationship between loyal attitude and loyal behaviour ...37

Figure 20: Measurement of customer loyalty ...39

Figure 21: Classification of loyalty cards ...43

Figure 22: Objectives of the instrument loyalty card ...46

Figure 23: Objectives of loyalty card programmes ...46

Figure 24: Segmentation of target groups ...48

Figure 25: Research designs ...49

Figure 26: Comparison: quantitative and qualitative data ...50

Figure 27: Adapted SR model ...51

Figure 28: Adapted SR model ...56

Figure 29: Waterfall illustration of budget ...67

Figure 30: Number of loyalty cards possessed (author's illustration) ...69

Figure 31: Usage of benefits of loyalty cards (author's illustration) ...70

Figure 32: Change in consumer behaviour since loyalty card possession ...71

Figure 33: Preferences of promotional techniques of loyalty cards (Country) ...76

Figure 34: Preferences of bonus systems of loyalty cards (Country) ...78

Figure 35: Behavioural store loyalty: Per cent expenditure (Country) ...79

Figure 36: Behavioural store loyalty: Frequency store visit favourite retail store

(Country) ...80

Figure 37: Behavioural store loyalty: Number store visit competitive retail stores ...

Country) ...81

Figure 38: Behavioural store loyalty: % expenditure (Possession of loyalty card) ..83

Figure 39: Behavioural store loyalty: Frequency store visit favourite retail store ...

(Possession of loyalty card) ...83

Figure 40: Behavioural store loyalty: Number store visit competitive retail stores

(Possession of loyalty card) ...84

Figure 41: Attitudinal store loyalty (Country) ...86

Figure 42: Attitudinal store loyalty (Possession of loyalty card) ...88

Figure 43: Attitudinal store loyalty (Possession of loyalty card) ...93

Abbreviations

ANOVA

Analysis of variance

B2B

Business to business

B2C

Business to customer

CAGR

Compound annual growth rate

e.g.

For example (exempli gratia)

EPRG-model

Model developed by Perlmutter

differentiating between different strategic

approaches of MNCs, namely

Ethnocentric, Polycentric, Regiocentric,

Geocentric

IDV

Individualism versus Collectivism

MAS Masculinity

versus

Femininity

MNC Multinational

company

PDI Power

Distance

PEST

Political, Economic, Social,

Technological

SPSS

Statistical Package for Social Science

SR-model Stimulus

response

model

STP

Segmentation, targeting positioning

UAI Uncertainty

avoidance

WOM

Word of mouth

Introduction

1.1. Introduction

The research with the title `Loyalty Cards in the Apparel Retail Industry: A

comparative analysis to detect store loyalty tendencies and the success factors of

loyalty cards in Germany and Spain examines the efficacy and the success factors

of loyalty cards as an instrument of loyalty programmes in global marketing and

researches the levels of store loyalty in two countries, Germany and Spain. This

paper seeks to gather customer data by means of a questionnaire and to compare

domestic differences across the countries in the apparel retail industry.

The first chapter of the investigation firstly introduces the context of the research,

leading to the research aim and objectives. In the next step, the research problem is

defined, followed by the research questions and hypotheses. Then, the structure of

the investigation is provided, explaining the outline of each chapter of the research.

1.2. Preface

In these times of globalisation and with the popularity of open trade, European

retailers are increasingly exploring foreign markets (Noordhoff et al, 2004; Seock

and Lin, 2011). This is also true for the apparel retail industry, which has

experienced an expansion of apparel retail chains disputing the market share of

local and smaller retail stores (Euromonitor, 2009; Euromonitor, 2011b;

Datamonitor, 2010a). The ambition and effort to reach new customers beyond

national borders implies the need for more complex marketing strategies. Marketers

have to be aware of the differences in local values and consumer behaviour across

different countries and cultures, and should decide whether they intend to choose a

more standardised marketing approach or adapt the strategy to the local

environment (Yoo and Zarb, 2009). In fact, culture is regarded as a cause for

inconsistency in consumer behaviour and as having a crucial influence on global

marketing plans (Seock and Lin, 2011). According to Kawabata and Rabolt (1999),

and Lam (2007), the awareness that cultures, and the way customers behave, differ

across the different target markets, and the subsequent implementation of adequate

strategies factoring in these differences, leads to global success (cited in Seock

and Lin, 2011 p. 95).

The retail industry is characterised by strong tendencies toward convergence,

homogenisation of the retail outlets and cutthroat competition (Mohme, 1993 pp. 3

f.). Additionally, there are no switching costs for consumers, making it easy for them

to change their retail store (Datamonitor, 2010a). Facing these facts, retailers need

to distinguish themselves from the competition so that retail outlets are not regarded

as interchangeable in the consumer's mind. An important instrument to survive and

to cope with the competition in the long run is the creation of consumer loyalty. The

retail sector especially suffers from the threat of losing consumers to the

competition, and therefore durable consumer loyalty is of vital importance (Müller-

Hagedorn, 2001 p. 15). Consequently, internationally operating retailers have

modified their strategic marketing focus from satisfaction-seeking to one that seeks

to create long-term customer loyalty (Noordhoff et al, 2004 citing Oliver 1999).

Consumer loyalty to stores in the retail industry remains a topical theme and

continues to be explored in various empirical research projects (e.g. García Gómez

et al, 2006; Gastrock, 2011; Noordhoff et al, 2004; Seock and Lin, 2011; Steyn and

Pitt et al, 2010).

The creation of store loyalty has even experienced a rise in strategic importance and

has become the prevailing objective of retailers to ensure profits and prosperity

(Noordhoff et al, 2004; Seock and Lin, 2011; Steyn et al, 2010). Loyalty affects both

tangible and intangible benefits, as it is composed of the consumer behaviour, but

also of the attitude of the consumer towards the company (Martínez García and

Martínez Caro, 2009). Behavioural store loyalty reflects the purchasing behaviour

and the frequency of store visits, but also the purchasing behaviour towards the

competition (Noordhoff et al, 2004; García Gómez et al, 2006). This loyalty is

objectively observable, in contrast to attitudinal store loyalty which deals with

subjective attitudes of the consumer towards a store or retailer (Noordhoff et al,

2004; García Gómez et al, 2006).

Consumer retention and consumer loyalty programmes are spread widely within the

apparel retail industry. Nowadays, nearly 80 per cent of buyers throughout Europe

are members of minimum one loyalty programme (Loyalty Cards, 2011).

Researchers argue that meticulously planned and implemented loyalty programmes

enable marketers to have an impact on consumer purchasing behaviour (Ponzoa

Casado and Reinares Lara, 2010). According to Wirtz et al (2007), they are a great

method for consumer retention. With improvements in technology, loyalty

programmes not only become payable to companies, and also offer a more

profound basis for strategic relationships and retention marketing (Noordhoff et al,

2004).

Loyalty cards are nowadays an established and oft used instrument of loyalty

programmes, especially in mature retail markets (Aßmann and Werk, 2008;

Noordhoff et al, 2004). However, the effectiveness of loyalty cards in creating

consumer loyalty and retention is often questioned in the literature (e.g. Dowling

and Uncles, 1997; Wendlandt, 2009; Noordhoff et al, 2004). Furthermore, there are

differences in the development and adoption of loyalty card schemes across

countries; this makes it difficult to compare the effectiveness of loyalty cards on an

international scale. Various researchers (e.g. Jin and Kim, 2003; Straughan and

Albers-Miller, 2001) reveal that the attitude to a store and the corresponding loyalty

may not be the same in different countries (cited in Seock and Lin, 2011).

The fact that retail chains increasingly operate on a global scale makes it essential

to explore behavioural and attitudinal store loyalty. By investigation, marketers are

able to detect local behaviour and preferences in order to adequately serve

customers in the respective country or culture (Noordhoff et al, 2004; Seock and Lin,

2011).

Apparel retailers such as ESPRIT, Hunkemöller or Promod run loyalty cards in

several countries including the two countries of interest to this paper, Germany and

Spain. Mostly, the features are identical in the various countries or differ only slightly

(e.g., ESPRIT offers an additional card in Germany which is not offered in Spain

(ESPRIT, 2011)). Consequently, an adaptation of the features to the domestic

customers, who may behave differently, does not take place at first view (maybe

there are differences with regard to frequency or design mailings, events or similar

actions which are not obvious when comparing the features and benefits). However,

there is the possibility that loyalty cards which work perfectly in one country do not

achieve the same success in another country (Steyn et al, 2010). Steyn et al (2010)

even argue that there might be a need for adaption across countries or cultures due

to local differences in values or preferences.

1.3. Research aim and objectives

Research aim

The aim of this work is to compare German and Spanish consumers regarding their

general behaviour and attitudes towards loyalty cards, the different levels of both

behavioural and attitudinal store loyalty, and their preferences regarding loyalty card

features (promotional techniques and bonus systems). The analysis undertaken in

this research should help answer the question if standardised loyalty cards are

reasonable in the two countries or if there is a need for local adaptation. If the

analysis shows a need for local adaptations, success factors shall be developed.

Research objectives

· Generate research question, and research aim and objectives for the present

work. Develop hypotheses that will be analysed throughout the paper (Chapter

1: Introduction).

· Undertake research by using journals, reports and governmental publications to

gather background information on the external influences of consumer

behaviour (external stimuli, marketing stimuli and consumer characteristics of

consumers) in the apparel retail industry in Germany and Spain (Chapter 2:

Literature Review).

· Critically review the theory of global marketing, consumer behaviour, and

loyalty. Determine basic theoretical principles and relevant contemporary

approaches and models. Create, on the basis of the reviewed literature, one

basic conceptual model for the present research (Chapter 2: Literature Review).

· Develop a research plan which contains research design, research tactics,

research type and approach (Chapter 3: Methodology).

· Create on the basis of the survey objectives a professional questionnaire which

provides a solid basis to analyse the hypotheses (Chapter 3: Methodology).

· Analyse the information gathered from the questionnaire statistically by means

of Statistical Package for Social Science (SPSS) and find out if the hypotheses

can be supported or not (Chapter 4: Research Findings and Data Analysis).

· Discuss the findings of the questionnaire critically (Chapter 5: Research

discussions, conclusion and recommendations).

· Summarise the findings and draw a conclusion. Formulate recommendations for

companies running loyalty card programmes in the two countries and for future

research (Chapter 5: Research discussions, conclusion and recommendations).

1.4. Research problem

With globalisation arises the need for complex marketing strategies for companies

operating in different countries. Companies have to find the right balance between

acting globally and adapting locally. Consumer behaviour is influenced by external

stimuli (PEST

) and also by consumer characteristics based on cultural, social and

personal determinants. Being aware of these influences on domestic consumer

behaviour lets marketers find the right methods to implement marketing stimuli that

attract the consumers in their domestic market places.

German and Spanish consumers may show different attitudes and behaviours, but

also different preferences regarding loyalty card features or levels of store loyalty.

Despite these differences, several companies offer loyalty cards with the same

features in both countries, which may lead to inefficient and ineffective usage of

marketing stimuli, because they are not adapted to the local consumer. The features

of loyalty cards may appeal to the consumers of one country but not necessarily, or

not as much, to those from another. This situation needs investigation to examine

the degree of store loyalty and the success factors of loyalty cards among the two

countries, in order to determine whether or not it is justified to adapt loyalty card

features locally to the customers in Germany and Spain.

Political, Economic, Social, Technological

1.5. Research questions

The research question that shall be answered in the present paper is whether or not

there should be adaptations to the features of loyalty cards in the two countries,

Germany and Spain. In order to answer this question, two previous stages have to

be explored. Firstly, the external influences have to be determined. In the next step,

the actual behavioural and attitudinal patterns and preferences of customers as well

as their store loyalty tendencies will be analysed. The exact stages and respective

questions gathered from figure 1.

Figure 1: Research question (author's illustration)

The secondary questions according to the corresponding research chapters are

listed here:

· What are the research questions, and research aim and objectives for the

present paper? Which hypotheses can be derived? (Chapter 1: Introduction).

· What are the external influences that impact consumers in their behaviour and

attitudes in the two countries, Germany and Spain? (Chapter 2: Literature

Review).

· What is the relevant literature in this context, and are the models and theories

applicable to the present research? Can one basic conceptual model be

developed for this work? (Chapter 2: Literature Review)

· Which research design, tactics, type and approach are appropriate for this

investigation? (Chapter 3: Methodology).

· How shall the survey be developed? (Chapter 3: Methodology).

· What are the findings of the research? Can the hypotheses be supported?

(Chapter 4: Research Findings and Data Analysis).

· On the basis of reviewed literature and previous studies on this subject matter,

what information does the present analysis provide? (Chapter 5: Research

discussions, conclusion and recommendations).

· What is the final conclusion, and does the research provide any

recommendations for the apparel retailers? (Chapter 5: Research discussions,

conclusion and recommendations).

1.6. Hypotheses

In accordance with the research aim, the behavioural and attitudinal impact of

loyalty cards will be analysed in this paper and the preferences regarding

promotional techniques and bonus systems will be reviewed. In addition,

behavioural and attitudinal store loyalty will be analysed and compared between

loyalty card holders and non-holders in the two countries, referring to the favourite

retail store of the respondents.

The hypothesis may be divided into three different research objective sections. The

first section deals with the general behaviour and attitude towards loyalty cards.

According to the information from background information (chapter 2.2.), which will

provide general information about the external influences, Spanish consumers

purchase more price-consciously since the economic downturn and the associated

slump in income levels. Therefore, Spanish consumers are expected to make

greater use of loyalty cards and their benefits. The second part deals with personal

preferences and the third with the behavioural and attitudinal store loyalty of

respondents regarding their favourite retail store.

General behaviour and attitude towards loyalty cards

1.1. General consumer behaviour regarding loyalty cards

Spanish consumers tend to have more loyalty cards than German

consumers

Spanish consumers make significantly greater use of the benefits

offered by loyalty cards.

Loyalty cards endorse a positive change in consumer behaviour in

both countries.

1.2. General attitude towards loyalty cards

a. The overall attitude towards negative characteristics of loyalty

cards differ in the two countries and between loyalty card holders

and non-holders.

b. The overall attitudes towards positive characteristics of loyalty

cards differ amongst loyalty card holders in the two countries.

Preferences regarding promotional techniques and bonus systems

2.1. The preferences regarding promotional techniques differ in the two

countries.

2.2. The preferences regarding bonus systems differ in the two countries.

Store loyalty towards favourite retail store

3.1. Behavioural store loyalty

Spanish and German consumers show significantly different levels

of behavioural store loyalty.

b. In both countries, the possession of loyalty cards is positively

related to behavioural store loyalty.

3.2. Attitudinal store loyalty

Spanish and German consumers show significantly different levels

of attitudinal store loyalty.

b. In both countries, the possession of loyalty cards is positively

related to attitudinal store loyalty.

1.7. Structure of the investigation

This investigation is composed of seven chapters. The first chapter is the

introduction, presenting the subject matter of the research and the problem

emerging from the current situation. In addition, research aim and objectives as well

as research questions are developed in this section. Designing research hypotheses

in order to provide a guideline for the primary research is also part of this chapter.

The second chapter provides an overview of background information and the

apparel retail industry as well as a review of relevant literature. The background

information are about general external influences on domestic customers of

Germany and Spain such as loyalty cards (marketing stimuli), and general

consumer characteristics. Moreover, the critical review of literature deals with global

marketing, consumer behaviour and loyalty. The relevant literature for this work is

combined into one model which will display the theoretical framework of the paper.

The third chapter `Methodology' shows how and what research will be undertaken in

the present paper. On the basis of the research aim, suitable research strategy and

tactics will be explained in greater detail throughout this chapter. Besides, the

creation description of the questionnaire will be part of this chapter as well as the

respondents and sampling procedure. In the end of this chapter, potential research

problems and limitations will be mentioned. The actual results of the research will

make up chapter four. The discussion in chapter five evaluates the findings in light

of previous research, reviewed literature and chosen approaches. This chapter

concludes the investigation and will develop recommendations for apparel retailers

arising from the present research. References and bibliography will make up the

sixth chapter of this work. Eventually, the last chapter `Appendices' is composed by

the questionnaire.

2. Literature Review

2.1. Introduction

The literature review provides a general overview of all relevant background

information and theoretical concepts. Hereby, prevailing theoretical concepts are

explained, presented and critically analysed. In this chapter, developments and

models will be defined and explained. Moreover, objectives and boundaries will be

discussed. Background information is composed by marketing stimuli and general

consumer characteristics which affect the domestic consumer in the two countries of

interest for this investigation.

The chapter is divided into seven subchapters. The first subchapter provides

background information and the second one presents relevant parameter of the

apparel retail industry. Subchapter three until five deal with relevant theory. The

fourth subchapter hereby deals with global marketing and the difficulty of

multinational companies (MNCs) to develop global marketing strategies which are

successful in all countries. Different perspectives and models will be presented and

critically reviewed in this part. The fifth subchapter reviews the literature about

consumer behaviour. Models and theories regarding consumer behaviour will be

explained, as well as determinants that influence consumer behaviour. The sixth

subchapter addresses loyalty, loyalty programmes and loyalty cards. Commonly

used models and theories will be reviewed from both the business' and the

consumer's point of view. The overall concept of loyalty, loyalty programmes and

loyalty cards will be analysed critically in terms of the objectives, the advantages

and the disadvantages for the different parties involved. In the seventh chapter, one

conceptual model for the present work is generated on the basis of the previously

reviewed theoretical concepts.

2.2. Background information

This and the following subchapter provide an overview of the external influences

that impact individual consumer behaviour shopping in apparel retailers in Germany

and Spain.

2.2.1. Marketing stimuli: loyalty cards in Germany and Spain

Loyalty cards are an instrument of loyalty management and are used as marketing

stimuli to influence the consumer in behaviour and attitude. The adoption of loyalty

cards was faster in Spain than in Germany. In 1998, about 25 per cent of the

Spanish population already participated in a loyalty programme whereas the

participation in Germany was only at 3 per cent (Glusac, 2005). Today however,

loyalty cards are widely spread in both countries.

Examples of loyalty cards in Spain and in Germany

This section presents three loyalty cards from the internationally operating apparel

retail chains Hunkemöller, ESPRIT and Promod. Research has shown that in both

countries of interest, the benefits and features of the loyalty cards are almost

identical. An overview of the benefits will be provided.

Hunkemöller

Hunkemöller/Bodique offers a loyalty `Club card' in both Germany and Spain which

can be acquired for 1 Euro. It offers a range of monetary benefits such as discounts

and vouchers, as well as non-monetary benefits like additional information and

access to events. In general, the benefits do not differ between the two countries.

Table 1: Membership card Hunkemöller/Bodique, 2011; Hunkemöller, 2011)

ESPRIT

ESPRIT offers its customers three different types of loyalty cards, namely the Red

Card, the Platinum Card and ESPRIT Visa Card. The latter is an ordinary credit card

which can be acquired for an annual fee; it is not offered in Spain. Upgrading from

the red to the platinum card takes place automatically when a certain amount of `e-

points' in a certain period of time is gathered. An upgrade brings additional benefits

to the customer. The benefits do not differ between the two countries under study.

They are both monetary and non-monetary in nature. The whole loyalty card

programme seems rather complex and may be even confusing to the consumer.

Table 2: Membership card ESPRIT (ESPRIT, 2011)

Promod

Promod offers a loyalty card called `Ma Carte' in both Germany and Spain. The

design differs between the countries. As table 3 shows, the benefits offered are not

many and absolutely identical across the two countries.

Table 3: Membership card Promod

(Promod, 2011a, Promod, 2011b)

2.2.2. General consumer characteristics in Germany and Spain

Consumption preferences, attitudes and customs differ across countries and

cultures and shape consumer behaviour and lifestyles. Reasons for the differences

include the domestic climate and the availability of resources. This leads to different

consumption patterns and preferences (e.g. food, entertainment) (Solomon et al,

2002). This section provides a general overview of consumer characteristics

affecting the consumers in the two countries, Germany and Spain. A more concise

analysis of the characteristics of the target population will take place in chapter

`Methodology'.

Cultural differences

Hofstede (2003) developed cultural dimensions to compare different cultures. A

more profound review of Hofstede's approach will follow in chapter 2.5.3.

Figure 2: Hofstede's cultural dimensions: Germany vs. Spain

(Hofstede, 2003)

Germany ranks higher than Spain in individualism and masculinity. Spanish

inhabitants are regarded as being more collectivistic. This is recognisable by close

relationships to family and friends. German consumers on the contrary are more

self-oriented. Therefore, the social environment might have a greater influence on

Spanish consumers. Spain scores higher in power distance and uncertainty

avoidance than Germany. A high score in uncertainty avoidance might imply an

unwillingness to adopt unknown things, like a new loyalty card, without

recommendation.

Trends and developments in consumer behaviour

Current world-wide trends impact the consumer behaviour. Consumers increasingly

demand for integrated installation of more marketing channels (e.g. online) and for

corporate-responsible images of companies. They spend a considerable time

reserved for shopping making online researches and comparing products. In

addition, emotional shopping is becoming more and more important when going

shopping (Interbrand report, 2011).

Germany is an affluent country with a total GDP of 2,397 billion (Euromonitor,

2011b). "Its citizens enjoy a high standard of living and sizeable disposable

incomes, providing most with financial security and comfortable lifestyle"

(Euromonitor, 2011b). The overall purchasing climate continues to be good in

Germany (Euromonitor, 2009). German consumers generally refuse to place `blind'

trust in brand quality and increasingly purchase at mid-priced apparel chains such

as H&M or C&A (Euromonitor, 2009). In addition, discounters (e.g. Takko) have

experienced an increase in popularity, and online purchasing is also increasingly

popular (Euromonitor, 2009).

Spanish consumers are suffering from the financial crisis and the high

unemployment rate which resulted in a decrease of income levels. This obviously

has had an impact on the purchasing behaviour in the apparel retail industry.

"Between 2008 and 2009, real annual per capita disposable income fell by 5,8 per

cent, but the effects of this decline were still apparent in apparel in 2010"

(Euromonitor, 2011b). As a result of the economic slump, consumers changed their

purchasing behaviour. They reduced their shopping quantity, and are also expected

to spend more of their disposable income on savings in the future, even if the

economic situation improves (Euromonitor international, 2011b).

Consumer purchasing attitudes

According to market research carried out for the Deutsche Post Global Mail GmbH,

the general purchase attitudes in Germany and Spain show differences. Spanish

consumers are for instance more price-conscious (Krafft et al, 2005 pp. 254, 344).

Figure 3: General consumer purchase attitudes (Kraft et al, 2005 pp. 254, 344)