When and How Does Categorization in Reward Presentation Increase the Likelihood of Joining Frequency Programs?

Abstract

The categorization of time, space, area and objects is a ubiquitous and spontaneous process. People, consciously and unconsciously, have perceived the world in the way of categorization and this way has not only widely influenced perception, judgement, choice, and motivation, but also has been a means of understanding and communicating with the world where they live. While a substantial body of research on categorization that focuses on how quickly people understand the categorized world or how categorization influences motivated behavior has been documented for decades, little research on cognitive information process through visually categorized stimuli has been done so far. Hence, this research will explore the effect of categorization in reward presentation on the likelihood of joining frequency programs. Specifically, the research investigates the factors through which how and under what conditions this occurs. This research proposes that the categorized stamp card (compared with one that is non-categorized) would increase the likelihood of joining frequency programs because the categorization increases the perceived easiness of goal attainment and this perceived easiness would increase the intention to enroll. Moreover, this effect would be moderated depending on the boundary conditions, especially the Need For Achievement. An experiment conducted among 112 participants through Amazon Mechanical Turk examines whether three propositions are supported. The findings from the experiment showed that when participants (experimental group) saw the stamp card that was categorized by different colors, they were more likely to join the frequency program compared with the other participants (control group) who saw the visually non-categorized stamp card. Furthermore, the results revealed that the underlying mechanism of the effect of categorization on the likelihood of joining frequency programs that was perceived as easier goal attainment, was partially supported. Finally, the findings indicated that the main effect was moderated depending on the need for achievement. That is, participants who have a high need for achievement were more likely to join the frequency program when they saw the categorized stamp card than when they saw the non-categorized one. On the contrary, participants who have a low need for achievement showed no difference in the likelihood of joining the frequency program even when they saw a categorized stamp card or not. The current research significantly contributes to the extant literature on loyalty programs by investigating the two different responses of the likelihood of joining frequency programs depending on the low and high need for achievement. Moreover, this study extends the present studies on categorization by illustrating the effect through cognitive information processing. This study also has practical implications because marketers who would like to keep their long-term relationships with loyal or frequent customers are able to design and construct frequency programs more effectively.