DYNAMIC PRICING AND SEGMENTATION OPPORTUNITIES THROUGH LOYALTY PROGRAMS
Brands often use loyalty programs to offer customers points, miles, credits, etc... as incentives to create loyalty and drive retention. While loyalty programs are an established marketing research area - pricing, inventory and revenue man- agement questions around the use of loyalty programs remain. Pricing and inventory decisions related to loyalty programs faced by franchisees are of par- ticular interest as brand based loyalty programs are ’funded’ by the franchisee and owner profitability and brand loyalty may not always be fully aligned. In this thesis, we build a model which examines dynamic pricing and segmenta- tion opportunities created through the use of loyalty programs. We first analyze improvements in customer segmentation created through the use of loyalty pro- grams and the ability of customers to purchase goods/services with both cash and/or through the use of points/miles. Further, we investigate the role of selling through intermediaries where consumers may not earn loyalty benefits (points) from their inter-mediated purchase. Lastly, we look at the role of dy- namic pricing (of both cash and points purchases) as the franchisee looks to meet occupancy thresholds in an effort to increase the value paid to the owner by the brand for product purchases made though redeemed points/miles.
Loyalty Program; Points Redemption; Pricing
Anderson, Christopher K.
M.S., Hotel Administration
Master of Science
dissertation or thesis