Kopalle and Neslin Strategy

Kopalle and Neslin (2003) conclude that loyalty programs are more appealing in expandable markets because they can help the offering firms draw demand from outside the category. a highly expandable market opens up the boundary of competition, and as a result, prevalent resources within the narrow market can still lead to competitive advantage if the resources are scarce in other parts of the wider market.

Data analysis
A Survey was conducted to check loyality of customers for air lines. The respondents reported their frequency of flying with each of these airlines in the past year and their membership in the airlines loyalty programs. It measured the consumers attitudinal loyalty using Chauduri and Holbrooks (2001) twoitem scale.

loyalty program effects

the frequency lift as a result of membershipin a loyalty program was 4.24%. The size of the frequency lift varied across airlines, from a negligible 03% for Frontier Airlines (the smallest in the group) to 11.57% for Southwest Airlines.