| Summary: | 碩士 === 國立臺灣大學 === 商學研究所 === 95 === This paper analyzes the limited loyalty program (i.e., membership program), membership fee decisions, and the associated price dealing behavior of two symmetric firms. Assume consumers differ in their use frequency and in their reservation prices: Heavy users are uncertain about their reservation prices while light users are uncertain about their demand incidence when facing loyalty programs requiring membership fees. Both firms sell homogenous goods and have the option to introduce membership program or not. Then customers need to decide whether to apply as members or not under uncertainties. After that, all uncertainties removed before the shopping day. We derive the following results:
(i)There may exist an equilibrium where one firm offers the loyalty program that requires an up-front fee and serves only its members while the other firm chooses not to and access all consumers.
(ii)By exclusively offering loyalty program and prevents nonmembers from shopping, a firm mitigates the price competition with its rival and increases its profits and its rival''s.
(iii)The firm that exclusively offers loyalty program promotes more frequently than its rival. Furthermore, the dealing frequency increases with the size of its members, and the likelihood of high demands (i.e., the reservation price or the demand incidence being high). As a result, the average price paid by members (of one firm) decreases with the size of its members. Unlike Kim and Choi (2007), this paper suggests it is possible that the lower average price paid by members is partly related to the higher dealing frequency of the firm with exclusive membership policy.
(iv)Under some conditions, heavy users, rationally expecting the firm that exclusively offers loyalty program will charge a low price to have their needs fulfilled, choose to join its loyalty program while light users choose not to and thus pay a higher price than heavy users.
(v)In our model there exists multiple equilibria and the outcome of equilibrium is highly related with customer beliefs; thus the firm which wants to introduce loyalty programs may execute some advertisements to affect customer beliefs and thus lead to a non-Bertrand equilibrium.
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