How Engagement and Attitudes towards Loyalty Programs impact Brand Loyalty in Millennials and Generation Z consumers

Abstract

Understanding the consumer behavior of the new generations is now more crucial than ever. Companies must effectively target Millennials and Generation Z consumers to cultivate brand loyalty, just as they have with previous generations. Within the Portuguese Supermarket Chain Industry context, this dissertation investigates the new generation's attitudes toward loyalty programs and how their engagement with them influences brand loyalty. An online questionnaire was distributed to the target population (n= 252), comprising members of Portuguese supermarkets' loyalty programs born between 1981 and 2005. Through inquiries regarding their loyalty to supermarket chains, attitudes towards loyalty programs, and engagement types, the study assessed that positive attitudes towards loyalty programs and overall engagement levels translate into brand loyalty. Notably, the research found a direct link between the behavior of redeeming points and higher levels of loyalty, while other loyalty program behaviors showed no significant correlation with brand loyalty. These findings offer valuable insights into loyalty program design and singles out the potential for customizable programs tailored to the preferences of the new generations. This study contributes to the existing literature by explicitly studying the impact of the behaviors of loyalty program engagement on the brand loyalty of generations that have not been sufficiently studied before. From a managerial perspective, significant insights are added to the Portuguese grocery retail industry, characterized by fierce competition and a strategic imperative to retain customers. By shedding light on the factors influencing brand loyalty among Millennials and Generation Z, this research helps companies with actionable knowledge to refine their marketing strategies and enhance customer retention efforts in a rapidly evolving market landscape.