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St. Petersburg University

Graduate School of Management
Master in Management Program

Analysis of the Gamification Influence on Consumer Perception of Loyalty Programs in Retail Industry


Master’s Thesis by the 2nd year student.

Concentration — General Track.

Alexander Sumenkov

Research advisor: Sergey A. Starov, Professor

St. Petersburg

2018

Table of Contents


Introduction 3

1.Loyalty Programs and Efficiency. Brand Loyalty 6

1.1. Two dimensions of Brand Loyalty and How to Use It 6

1.2. Efficiency Indicators of Loyalty Programs 9

2.Gamification. Theoretical Framework and Business Application 16

2.1. Gamification. Main Elements and Levels of Game Design Elements. 16

2.2. Non-Scientific Development of Gamification 21

2.3. Gamification in Practice. How to Detect Gamification? 25

3.Survey Design and Results 27

3.1. First Test Run of Survey and Changes Made 27

3.2. Second Run of Survey 31

3.3. Limitations and Research Perspective 34

3.5. Discussion and Findings 36

Conclusion 37

References 40

Appendices 44

Appendix 1. Questions table with justification for the second survey run 44

Appendix 2. Questionnaire about low gamified loyalty program (test run) 46

Appendix 3. Questionnaire about gamified loyalty program (test run) 48

Appendix 4. Raw survey data (2nd run). “Gamified” sample. 50

Appendix 5. Raw survey data (2nd run). “Low gamified” sample 53

Appendix 6. Raw loyalty programs comparison of retail companies in Russia. 56




Introduction


Gamification is a very topical and frequently mentioned subject due to the several reasons. First of all, gamification may provide additional motivation for customers to be involved in firm’s activities which subsequently lead to increasing company performance results. Secondly, the gamification market is one of the fastest growing markets. There is a research gap in the intersection between loyalty programs and gamification – influence of loyalty program perception was not studied before in foreign and Russian scientific community. To start with, author takes an survey to see possible implications of gamification on potential increase of loyalty program efficiency. Practical problem lies in the fact there is no proof that gamification has positive or negative effect on loyalty program efficiency, or even on the most of management techniques. Gamification itself is rapidly developing since 2010

http://4.bp.blogspot.com/-6jcgmtrbsuw/uzqyo9p4upi/aaaaaaaab-i/oyy22pyix8g/s1600/captura+de+ecra%cc%83+2014-03-27,+a%cc%80s+12.24.29.png

Fig. 1. Gamification market forecast (Source: Games Industry.biz)

According to M2 research1, gamification market reached 3$ billion milestone in 2016, and may reach 5$ billion in 2018, which will make average yearly growth rate at approximately 65%. These forecasts were also supported by “Research and Markets”2 agency in last year. They provided a forecast of growth continuation with same 50-60% rate until 2020, which will enlarge market volume to more than 10 billion dollars. These brief figures definitely show that gamification is a hot topic nowadays and is quite promising in terms of practical application in management. Also, loyalty programs in retail industry are considered as ineffective, and gamification can possibly can breathe the life into them.

Just several surveyal studies were conducted in recent years towards the influence of gamification on a perception of a customers and none of them was affecting actual or hypothetical loyalty programs. There is a short compilation of outcomes for recent studies in practical use of gamification in the table below. Author had discovered about half hundred articles with actual studies for last five years, mainly concentrated on fields of education and healthcare. Most of them have positive results – gamification actually helps to certain extent, but some has mixed or negative results which supports the point: gamification must be studied further in different situations and fields due to its complexity and possible reflection of user’s personal traits.

Table 1. Literature review, mixed effects of gamification for last five years.

Cite

Field of management. Where gamification tested

Brief conclusion

Gasland (2011)

Education, Learning Support

Gamification has no proven impact on enhancing users’ experience

Downes-Le Guin et al. (2012)

Marketing, Online Surveys

Gamification slightly increases satisfaction, but has no significant effects on customer engagement

Dominguez et al. (2013)

Education, Motivation and Engagement

Gamification has positive effect on initial motivation and score, but significant negative on written exercises and class participation

Bruggeman (2015)

Marketing, Branded Apps

Gamification has no significant influence on customer perception of branded application and overall brand

Alahäivälä, Oinas-Kukkonen (2016)

Healthcare, Marketing and Operations

Gamification has positive influence on persuasion and makes behavioral change of customer

Thus, as it is seen, gamification is not the obvious “Grail” for the managers to easier reach their various KPI’s and under different circumstances game added to the process can decrease its efficiency and disregard previous company results. Also, there is from little to no connection between loyalty programs and gamification use in retail sector – and indicator of research gap of current topic development.

Research aim was to explore how gamification influences perception of loyalty program in terms of its efficiency and prove the significance of such influence. Research objectives are as follows:

  • Explore contemporary approaches to the loyalty programs and their efficiency;

  • Define gamification and distinguish gamified objects from not or low gamified;

  • Combine current cutting edge theoretical and practical frameworks of gamification;

  • Compare application of loyalty programs and gamification in an international and Russian practice;

  • Conduct a survey to collect primary data on topic of loyalty program perception;

  • Analyze and process the data, gathered from survey;

  • Formalize conclusions and possible recommendations for practice in management.

Research object of a paper is use of gamification in loyalty programs for retail industry. Research subject is the actual influence of gamification on loyalty programs efficiency through consumer perception.

Theoretical base of this research rely on works of Y.Chou, D. Aaker, M. Hoffman, C. Voorhees, M. McCall, P. Volle, A. O’Cass, K. Werbach and other specialists’ researches on marketing, psychology and branding.

Practical side of the research is based on survey, collected with snow-ball technique. Questions methodology is based on O’Cass, Bridson, Mimouni-Chaabane, and further adjusted by the author, considering the topic of retail sector and gamified entities.

First chapter consist of literature review on issues of brand loyalty and loyalty programs. Existing frameworks adjusted and efficiency measures classified. Recent development on topic of loyalty program efficiency discovered and explained. Connections between efficiency and customer perception supported.

Second chapter is concerning recent development on a gamification topic. Due to the two ways of development: scientific and practical, author takes an attempt to combine both into a conceptual gamification framework for both purposes of theoretical and practical topic development. Both views are descripted and explained. Examples of gamified loyalty programs discussed and generalized.

Third chapter is devoted to the actual survey conducted by author. Several test runs were taken to verify methodology and prove actual gamification influence on customer’s perception. Connection between research design and practical application embodied into, recently gathered results analyzed and preliminary recommendations formalized.

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