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Marketing

The Loyalty Effect of Gift Purchases

Professor Andreas Eggert, University of Paderborn, Germany

13th Oct 2017  02:00 pm - 03:30 pm Rm 5040, Level 5, Abercrombie Building (H70)

Research Question
Gift giving is a universal consumer behavior that serves as a vehicle to maintain social ties. Extant research acknowledges the relevance of gift giving for our daily life and for strengthening relationships between the gift giver and the gift receiver. To date, however, prior research has largely overlooked how gift purchases might affect gift givers’ relationships with the focal company where they purchased the gift. The aim of our research is to answer the following research questions: (1) Can gift purchases increase customer loyalty? (2) If yes, what are the key determinants driving the loyalty effect of gift purchases?

Method & Data
In Study 1, we conduct a field study with an international beauty retailer. Employing propensity score matching and difference-in-differences estimation, we compare the sales levels of customers who purchased a gift at the company (i.e., treatment group) and customers who never purchased a gift at the company (i.e., control group). In Study 2, an experimental study, we extend our findings with a consumer sample. The study uses a posttest only control group design in which the two groups vary in terms of the type of purchase, i.e. a gift purchase versus a purchase for personal use. We apply partial least squares analyses to test the mediating role of customers’ situational involvement and affective commitment in the gift purchase–customer loyalty link. To enhance the generalizability of our results, we conduct the study in two different industry contexts (i.e., hedonic and utilitarian).

Summary of Findings
First, we find gift purchases to successfully strengthen customer-company relationships in a real business setting. The results of our field study indicate that customers purchasing a gift product subsequently spend significantly more than comparable customers purchasing products for personal use. Second, we demonstrate that the loyalty effect of gift purchases occurs because gift purchasers exhibit more situational involvement than non-gift purchasers do. This leads to an increase in affective commitment that finally translates into higher customer loyalty. Third, our results show that the loyalty effect of gift purchases holds in both hedonic and utilitarian industry contexts.

Key Contributions
This research analyzes the relationship between the gift giver and the gift company. With this approach, we contribute to marketing research and practice in three ways. First, we offer a new perspective on the relationship-building potential of gift purchases. We show that beyond increasing companies’ overall sales, gift purchases deepen the relationship between the gift giver, i.e. the customer who purchases the gift, and the company who provides the gift. Second, we detect the relevant psychological mechanisms spurred by gift purchases. This allows us to explain why and how the loyalty effect emerges. Thereby, our research enlarges existing relationship marketing research investigating how relationships between customers and companies develop and grow stronger. Third, our field data enables us to quantify the financial impact of gift purchases, denoting a 52 % increase in customers’ subsequent sales. Overall, our research identifies gift purchases as a new effective relationship marketing instrument to increase customer loyalty across different industry contexts.

Bio
Professor Andreas Eggert is chaired Professor of Marketing at the University of Paderborn in Germany. He is also on the International Advisory Board of the Copenhagen Business School (CBS) Marketing Department. From 2013 to 2015, he held an additional position as Strategic Research Advisor at Newcastle University Business School in the UK and he has been a Visiting Professor at several European Universities such as the University of Toulouse in France and the University of Ljubljana in Slovenia.

Professor Eggert’s research interests focus on strategies for the creation and appropriation of value in business relationships. His work has appeared in Journal of Marketing, Journal of the Academy of Marketing Science, International Journal of Research in Marketing, Journal of Service Research, Journal of Service Management, Journal of Supply Chain Management, Journal of Business Research, European Journal of Marketing, Industrial Marketing Management, Journal of Business-to-Business Marketing, and Journal of Business and Industrial Marketing among others. His research has won several best paper awards and his articles are among the most often cited publications in their domain.

Professor Eggert is on the editorial board of the Journal of Business-to-Business Marketing, Industrial Marketing Management, and Journal of Business Market Management. He is a member of the American Marketing Association, the European Marketing Academy, and the Association Française du Marketing. Professor Eggert has consulted and trained large and mid-sized companies such as Siemens, IBM, Hilti, Air Liquide, Wöhler, Hora and Rittal. He has taught academic courses at the PhD, Master, and Bachelor level in Germany, France, Finland, and Slovenia.

Date: Friday 13 October 2017
Time: 2:00pm – 3:30pm
Location: Rm 5040, Level 5, Abercrombie Building (H70)
The University of Sydney Business School

RSVP
T: +61 2 9036 9688
E: business.mmktg@sydney.edu.au