Literature Review of Most Beneficial Ways to Build Customer Loyalty in Retail Industry in Oman

        Whenever a customer sees that the company is offering a loyalty program they will first try to compare the cost of it with the expected benefits as finding out by (Leenheer et al., 2007). Customers entirely base their decision of buying loyalty cards on the benefits that it provides hence, it is really important the company carefully plans to give them attractive benefits (Kivetz & Simonson, 2003). A number of studies have figured out that the best way of proving customer benefits is to divide them into 6 categories. The advantages that a customer gets from a loyalty program are indirectly linked to the loyalty to the company and customer loyalty as mentioned by Kang et al. (2015). Moreover, loyalty programs offered to customers generate customer loyalty for the company directly. 

        The Psychological effect is that when customers get some free rewards they feel like they are being valued by the company. Psychologically when the customers become a part of the loyalty programs and get benefits they develop a stronger relationship with the company they are involved with (Dorotic et al., 2012). The Psychological barriers are difficult to mention however they do affect the attitudes and behaviors of customers (Steyn et al. 2010). The Psychological effect of loyalty programs is that the customer gets attracted to doing repeated purchases from the company that further leads to an increase in the level of loyalty of the customer for the company. The final stages where the customer can redeem the benefits psychological and financial effects play a major role. This is where the customer develops such a level of loyalty with that company that wants all their future purchases from there (Liu, 2007).

        The studies were done by Gomez et al. (2006) and Zakaria et al. (2014) concluded that there is an important relationship between the level of satisfaction the customer has and the loyalty programs that they become a part of. Customers that get involved in loyalty programs have a higher level of satisfaction, preference to the company and have a positive attitude. They get a feeling of being a part of the privileged group of the company. This makes consumers develop a more positive attitude whenever a company achieves any goals. The involvement of this sort comes from psychological and hedonic benefits that are considered long-lasting. These increase the commitment of the customer to the company.

        The commitment of customers is really important for the company offering a loyalty program. This is because when customers become loyal and committed to buying from a specific company they become the strength of the company. This happens because committed customer s leas to an increase in positive word of mouth that increases the customer base of the company. In addition to this, the customers too are strongly influenced to purchase again and again from the company and cooperate as much as they can (Melancon et al., 2011).

        If the loyalty program is a good one then customers do get attracted and their commitment towards the company increases. The customers begin to identify themselves with the company that leads to an increase in loyalty. The company can also enhance the long term customer loyalty through an increase in relational bonds. Here according to (Leenheer et al., 2007), we can see that consumer loyalty is what brings together the program loyalty and loyalty to the company. 

   Bojei, Julian, Wel and Ahmed (2013) considered the relationship marketing concept and analyzed tools like loyalty programs and figured out that they do play an important role in the retail sector. Ivanauskiene and Auruskeviciene (2015) did an analysis on the loyalty programs that were offered by the banks, the problem identified was that marketers did not have enough information about what sort of loyalty programs consumers preferred. According to Yi, Jeon and Choi (2012) there is a link between uncertainty and the attraction that customers have towards the loyalty programs, they found out that marketers should take into consideration uncertainty whenever they are coming up with a loyalty program. The relationship between marketing and 3 loyalty programs was studied by Kim, Yang, and Johnson (2011). The three loyalty programs that they studied included perceived complexities and risk advantage.

        Theories and in the real world it has been proven many times that consumers that are satisfied are of great importance to the company and that brings loyalty from the customers. Customer satisfaction can come from the product that they purchase or the services that they received with that product. Another research done by Sivadas and Baker (2000)  found out that customer satisfaction can be figured out form how much the consumer willing to repurchase from the same company. The satisfaction of customers increases when the real benefits or utility that they achieve from buying the products exceeds their perceived one. Moreover, their interaction with the organization also greatly affects their satisfaction level thus loyalty (Cengiz, 2010).

            The satisfaction of customers can be increased by giving them benefits that will encourage them to buy from the company in the future. There will be an increase in the word of mouth. Satisfied customers of a company can increase its profitability as it gives a competitive edge to the company. If the company wants to achieve long term success in the market it is necessary for it to achieve customer satisfaction that can see by what the customers think about the goods and services offered by the business (Cengiz, 2010).

        A study done by Gupta (2012) showed that the important factors that led to customer satisfaction are the timings and accessibility of the retail stores rather than the interior. Moreover, the quality and price value of the products played an important role in consumer satisfaction. This can be proved by the fact that majority customer still prefers kiranas as they are located in many locations, give home delivery service, installments and credit card facility and they create personal type relationship with its customers. Srivastava, (2012) conducted the study to find if there were any differences in consumer behavior in the urban and suburban areas. The results showed that the differences were not that huge as they both were willing to pay a higher price for branded products rather than the unbranded ones. They both preferred buying grocery from their nearest stores but when it comes to apparel they did not mind going to some faraway locations. The role of marketing was significant in the results of this study as the more aware the consumer were of the options they had the pickier they became.

         Solagaard & Hansen, (2003) analyzed the importance of the attributes present in the store that contribute to consumer satisfaction. Some of the attributes identified were personnel, assortments merchandise, and the quality of merchandise, accessibility, store layout, atmosphere, and hygiene.  Zeenat Ismail et al (2012) made a comparison between global brands and local brands in order to study the purchasing behavior. They figured out that mostly the decision to buy a product or not is based on the information that the consumer has about the product. The factors given the most importance by the consumers are the quality and the price of the product or service. When it comes to the grocery store the cleanliness of the stores, the way products are displayed and the services by the personnel are important as well. The retailers have to make the important decisions of their store location, the products that they are going to sell and how the products are going to be displayed. A study done by Moschis et al, (2004) came to the conclusion that mostly elder people are concerned with the price of the product. They also with a higher level of experience have more information about the ongoing prices in the market. Moreover, they like to be assisted with helpful customer service, for instance, refund policies, delivery services, carry-out assistance, and liberal product return.

            Berman (2006) in his research created 4 loyalty programs for customers. The first one was that frequent customers will be given discounts. The second one is that when the customers will exceed a specific number of purchases then they will be given rewards. The third one was that customers will be given coupons that they can redeem and make use of. The last one was that the company will create a relationship with its customers through emails; texts e.t.c. Berman recognized that there are different levels of loyalty depending on the features of the product customer are buying.  There are products that have "No loyalty" attached to them such as basic products that are not differentiated so that consumer is ok with buying them from anywhere they find easy. The major thing that affects their purchase decision is the price of the good. The consumers to whom price is the main factor and so they look for a shop that offers the most reasonable product price are known as "cherry pickers"  Because of this reason it is considered better if the company focuses on creating relationships with those customers that are going to take them in a positive way. The second level of loyalty is known as the "inertia loyalty" this is with the case of the low involvement products that are frequently purchased. Rowley (2005) called this "convenience seeker loyalty" since consumers just prefer one brand over another because of their own convenience and habit. Companies that want to capture such consumers need to work on product differentiation so that they can create a different image in the minds of the consumers in order to attract them. The third level is the "latent loyalty" where the chances of a consumer buying the same product again are low but there are chances that the consumers will visit the stores again. Griffin (2002) in the study proved that marketers can make use of this type of loyalty by analyzing the situations that affect consumer behavior. Another type of loyalty is known as "Premium loyalty" this is where consumers are highly loyal to one brand and only prefer it. According to Rowley (2005), this is the level of loyalty where consumers spread a positive word of mouth about the brand. `

             Hoffmam and Bateson, (2011) talk about customer retention.  This is where the focus of the business is to concentrate on its existing customers and make efforts to retain the relationship.  This can be called as the strategy to "catch and keep" the customers. Studies have found the old customers are less affected in case of an increase in price level. They are involved in a greater spread of word of mouth. Moreover, it is less costly for businesses to retain customers than attracting new ones. As it is found that attracting new customers costs around 10-15% more. Consumer’s retention policies are those that are better for the company as well as the customers.

            Some businesses offer cards to customers that they use whenever they make purchases from that company. The advantage of these cards is that there is a record that is maintained about the amount and quantity of products purchased by the customer that then leads to discounts and purchase points. Moreover, with the help of these cards, it is easier to study the buying behavior of customers. Many cards now days have been linked with banks and large supermarkets that together give numerous benefits to the customers. These cards enable the seers to keep record about the products purchased, the date of purchased and the quantity purchased (Worthington and Fear, 2009).

        Discount Programs are one type of loyalty programs however their effect is considered to be weak and they are of little use. Berman (2006) said that discount programs should not be used as for creating loyalty rather they are just a promotion tool. Discounts are frequently used in the retail sector. These discounts can either be one-off undertakings or may be accumulative. For instance, the consumers can either take advantage of the discount at one time or they can wait to the points to accumulate.  These accumulated points can be redeemed in cash or they can be used only to make further purchases.  Majority of firms in the retail industry especially restaurants owners provide such discounts like the “buy one and get another for free” (Robinson, 2011). Even though these types of discounts increase the purchases made by the customers and attract them to buy from the company offering such discounts. These are not considered really effective because the idea can easily be copied by other competitors in the market.

            The concept of Customer loyalty program was started back in 1896. At that time buyers were provided with green post stamps that could be redeemed for the purchase of other goods and services (Hanover Research, 2011). Over the years the stamping methods were replaced by more advanced ones. According to Berman (2006), the concept of consumer loyalty was created by an American airline. Oman et al. (2007) identify that consumer loyalty is where the company identifies its existing customers and then works towards retaining them by keeping them satisfied. Consumer loyalty programs are a part of the tactical marketing strategy. The main goal of loyalty programs is to create a long term relationship with consumers on the basis of trust and commitment.