the antecedents of customer loyalty in retail gambling

8/22/2019 The Antecedents of Customer Loyalty in Retail Gambling

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Antecedents of

customer

loyalty in UKretail gambling

April 2012

Vanden Bowen

The study aimed to identify the possible antecedents of customer loyalty in the retail

gambling industry of the UK.

A review of the extant literature was first undertaken to construct a hypothetical conceptual

model, which was then used to guide the collection and analysis of customer perspectivesthrough the use of questionnaires. Preliminary results of the questionnaires were then used

to inform in-depth interviews with practitioners for purposes of confirmation, triangulation

and meaning.

Following the synthesis of existing theories and primary research, the hypothetical

conceptual model was revised to find that a number of antecedents were interrelated;

satisfaction, relationships with employees and service quality were found to be directly

linked to loyalty, whilst other constructs were considered indirectly associated to loyalty

through a mediatory role.

Although the exploratory nature of the study limited the degree to which generalisations

could be made, the provision of competitive offerings and exceptional levels of service were

considered crucial aspects of developing effective loyalty strategies.

Abstract

163801


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Christine Willcox, Emma

Dixon and Stephen Lee

have been instrumental in

the completion of this study.

Thank you.


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3.2 Research Method 16

Literature Review2 7

ContentsChapter Title Page

Introduction1 5

1.1 Retail gambling in the UK 5

1.2 Research Question 6

1.3 Research Objectives 6

2.1 Customer Loyalty 7

2.2 Loyalty in UK retail gambling 8

2.3 Antecedents of Loyalty 8

Research Method3 15

3.1 Research Philosophy 15

3.3 Research Instruments 17

3.4 Pilot 18

3.5 Sampling 19

3.6 Primary research process 19

3.7 Results evaluation 20

3.8 Ethics 20


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Chapter Title Page

Results4 21

4.1 General prescription regarding

loyalty

21

4.2 Results pertinent to each

hypothesis22

Discussion5 34

5.1 General discussion regardingloyalty 34

5.2 Discussion pertinent to each

hypothesis34

Conclusions6 40

6.1 Summary 40

6.2 Managerial Implications 40

6.3 Limitations 41

6.4 Future Research 41

References 42Appendices 46


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This chapter provides a brief introduction to the UK retail gambling industry and highlights the

rationality and purpose of the research project.

1.1 Retail gambling in the UK

Within six months of its legalisation in 1961, the retail gambling industry of the UK saw

significant growth as over 10,000 betting shops opened (Munting, 1996). Although the industry

continues to prosper to this day, with revenues exceeding 10bn generated in 2010 (Gambling

Commission, 2010), the number of betting shops in the industry has fallen from its peak of

around 15,000 to around 8,000 (Walmsley, 2012).

A report by Mintel (King, 2011) attributed the consolidation to a number of factors, including a

decline in horse racing interest, the introduction of new regulations and taxes and the

introduction of new technologies.

Despite these challenges, many bookmakers have prospered, with new technologies bringing

both advantages and disadvantages to operators of licensed betting offices in the UK.

The introduction of new gaming machines helped to compensate for a decline in horse racing

revenues and new channels of delivery have allowed bookmakers to increase the variety of

betting opportunities available to their customers (Walmsley, 2012); but these advantageshave not been without their drawbacks; the introduction and rapid growth of the World Wide

Web has presented retail bookmakers with new issues to contend with.

The internet has allowed many traditional bookmakers the opportunity to give customers easy

access to a wider range of services, but it has also intensified competition from purely online

bookmakers and betting exchanges.

Intensified competition, coupled with the expansion of consideration sets for customers, has

put retail bookmakers under increasing pressure; irrespective of their online presence,

maintaining a profitable retail estate has become a central issue of concern for bookmakers

large and small.

It is now widely accepted that a loyal customer base has the potential to both increase

revenues and reduce costs (Gremler and Brown, 1998), resulting in greater profitability.

Preliminary reviews of the literature identified gaps in customer loyalty discourse surrounding

the context of the UK retail gambling industry. Loyal customer bases yield significant strategic

potential (Gremler and Brown, 1998); consequently, the findings of firms are likely to remain

confidential. The antecedents of customer loyalty are of critical importance as customer loyalty

programmes can be expensive (Rust et al, 1995); for this reason there is a real need to

understand where value is delivered in order to construct a successful loyalty campaign (Roig

et al, 2009).

IntroductionChapter 1


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1.2 Research question

This study aimed to provide operators without the resources to conduct their own research a

starting point for customer loyalty strategies; in order to do this the following research

question was to be answered:

What are the possible antecedents of customer loyalty in the UK retail gambling industry?

1.3 Research objectives

In order to answer the question, the following objectives were completed:

1. Creation of a hypothetical conceptual model for the antecedents of UK retail gambling.

2. Subsequent testing of the hypothetical conceptual model through primary research.

3. Creation of a revised conceptual model for the antecedents of retail gambling in the UK.

In an effort to answer the research question in greater depth, a subordinate objective was

proposed:

4. Where applicable, highlight the managerial implications of any findings.

This chapter has provided both the rationality behind and purpose of the research project,

chapter 2 critically evaluates the extant discourse surrounding loyalty and its antecedents, to

support the production of tentative hypotheses to be used in the creation of a hypothetical

conceptual model. In order to satisfy objective 2 the model is to be tested; chapter 3 explains

how the model was to be tested, and chapter 4 provides the results. Chapter 5 synthesises

previous chapters to produce a revised conceptual model for the antecedents of retailgambling in the UK. The study concludes with a summary of the main findings and their

respective managerial implications, limitations of the study and potential avenues for future

research in chapter 6.


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This chapter summarises the current thinking surrounding the concept of loyalty, and develops

tentative hypotheses to be used in guiding the exploration of the possible antecedents of

customer loyalty in the retail gambling industry.

2.1 Customer loyalty

It is now generally accepted that effective loyalty programs add to the value proposition of an

organisation, providing them with a competitive advantage (Dowling and Uncles, 1997); the

benefits for an organisation are said to include increased revenues and cost savings (Ruyter et

al, 1998) which improve the longevity of a company. In order to obtain these benefits, an

organisation must have a thorough understanding of what drives customer loyalty in their

industry (Lewis and Soureli, 2006); for this purpose, academic discourse has attempted to

demystify the complex construct of customer loyalty, and this has resulted in theories aimed at

an improved understanding of both loyalty and its antecedents.

Defining loyalty

Whilst Oliver (1999: 35) defines ultimately loyal customers as those which fervently desire to

re-buy a product or service and will have no other, Kotler (1972) considers the possibility of

customers who may be loyal to more than one brand, service or firm.

Measuring loyalty

Although the measurement of the construct of loyalty has predominantly been approached

from two perspectives, it is now generally accepted that there are three ways to measure

loyalty (McCain, 2003): these are behavioural, attitudinal and composite methods.

Whilst behavioural measurement methods attempt to identify loyal customers by investigating

the actions of a customer, such as the proportional expenditure a firm receives, willingness to

recommend and willingness to co-operate with a firm (Phillips et al, 2010; Baloglu, 2002), this

approach has been criticised as myopic, as it makes no attempt to understand the underlying

factors driving repeat purchase behaviours (Jacoby and Chestnut, 1978). Attitudinal

perspectives look to compensate for the principal drawback of behavioural measurements by

investigating the feelings a customer has for a product, service or brand (Hallowell, 1996);

Baloglu (2002) posits that levels of trust, commitment and the perceived switching costs are

key indicators of attitudinal loyalty.

Work by Phillips et al (2010) highlight a fundamental flaw of a purely attitudinal approach to the

measurement of loyalty, asserting that irrespective of a persons attitude to loyalty, there will

be no bearing on profitability unless the attitudes are reflected in behaviour.

Literature ReviewChapter 2


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In relation to the aforementioned advantages and limitations, Dick and Basu (1994) and

McCain (2003) advocate the use of composite methods of loyalty measurement, in the belief

that both a favourable attitude and repeat patronage are required for loyalty: as the name

suggests, composite measures look to assess both attitudinal and behavioural dimensions of

loyalty.

Service loyalty

The concept of loyalty is often referred to as service loyalty in the context of services (Rundle-

Thiele and Bennett, 2001); Phillips et al (2010) argue that service loyalty requires a separate

silo of study as the unique characteristics of services require a different approach to traditional

research studies, which tend to focus on brand loyalty. Service loyalty variables, such as

levels of intangibility and function and industry specific characteristics have been found to

differ from service to service (Harrison, 2000), consequently, a firm looking to create an

effective customer loyalty strategy would need to consult the relevant academic discourse

surrounding the service industry in which they are competing in.

2.2 Loyalty in UK retail gambling

A review of the extant literature concerning customer loyalty found no readily available studies

attempting to identify the antecedents of customer loyalty within the context of the UK retail

gambling industry.

As previously mentioned, customer loyalty and the subsequent benefits it provides a firm result

in competitive advantage; firms which have conducted their own studies are unlikely to make

this information publicly available, as it would diminish the strategic potential.

Despite this, a wealth of literature concerning the antecedents of customer loyalty in a varietyof other service environments is readily available; as a service providing gambling

opportunities and an area of discretionary spend casino loyalty studies have been of

significant value. The similarities in terms of retail presence and intangibility have meant that

discourse surrounding financial service loyalty is also of high relevance to a study aimed at

identifying the possible antecedents of consumer loyalty in the UK retail gambling industry.

3.3 Antecedents of loyalty

As previously highlighted, the unique characteristics of different industries results in different

sets of variables responsible for influencing customer loyalty (Harrison, 2000); these variablesare said to require different methods of measuring and encouraging loyalty (Rundle-Thiele and

Bennett, 2001). As no literature concerning the antecedents of customer loyalty in the UK retail

gambling industry is readily available, efforts to identify these are justified.

Consultation with practitioners and exploration of the customer loyalty literature have identified

the antecedents most relevant to the study as: satisfaction, service quality, perceived

superiority of offerings, perceived value, brand image, switching costs, relationships with

employees, social bonding, commitment and trust.

The remainder of the literature review is geared toward a discussion of the literatureconcerning these antecedents, with each section proposing tentative hypotheses, used in the

creation of a new conceptual model of the antecedents in the UK retail gambling industry.


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Satisfaction

The degree to which a customer is satisfied is dependent on how well their expectations are

met (Oliver, 1999: 38); general consensus among scholars suggests that satisfaction plays a

key role in customer loyalty, as it is improbable that dissatisfied customers will continue to

frequent a service with which they are unhappy. The exact role is still contested.

Kuusik (2007) has highlighted several studies in a multitude of service environments revealingdirect correlation between satisfaction and loyalty, meaning that improvements in satisfaction

increase loyalty. Seminal work by Reichheld and Sasser (1990) suggests otherwise, finding

that sixty to eighty percent of customers were satisfied before defecting; Oliver (1999) expands

on these studies, by positing the notion that satisfaction is a prerequisite to loyalty, and that

providing satisfaction is present, other variables are able to drive loyalty.

Although debate still surrounds the construct of satisfaction, it is said to play a key role in

determining future patronage of a service provider (Rundle-Thiele and Bennett, 2001): the

contested and contextual nature of satisfaction requires further investigation regarding the

relationship in the context of the UK retail gambling industry, but the general agreementsurrounding satisfaction in service loyalty environments would suggest that:

H1: Satisfaction is positively related to loyalty.

Service quality

Quality service emerges through consistent conformance to customer expectations (Lewis

and Booms, 1983: 100), but the lack of tangible cues available in most services is problematic

for both firms and consumers in delivering and evaluating service quality (Zeithaml, 1981). In

an effort to counteract this impediment, service quality frameworks were created;

Parasuraman et al (1988) introduced the SERVQUAL model in an attempt to standardise the

measurement of service quality, which has since been refined to five dimensions. In terms of

both delivery and evaluation, reliability, assurance, tangibility, empathy and responsiveness

have been posited as the most important dimensions of both the core and augmented aspects

of a service (Parasuraman et al, 1991).

Service quality frameworks such as the aforementioned have been used to assess the impact

that service quality has on loyalty; the results of these studies has been contradictory.

Bei and Chiao (2001) found that service quality in the automobile industry indirectly impacted

loyalty through satisfaction. A more comprehensive investigation in the context of myriad

service environments also found that service quality mediated satisfaction (Cronin et al, 2000).

The findings of Bei and Chiao (2001) and Cronin et al (2000) have been paralleled in the

financial services industry (Lewis and Soureli, 2006), but some casino studies (Low, 2009;

Phillips et al, 2010) are considered to have more direct links. The majority of studies suggest

that service quality plays a mediating role in service loyalty, therefore:

H2: Service quality is positively related to satisfaction.


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Perceived superiority of offerings

Widely accepted economic theory dictates that individuals engaging in economic activity look

to derive the greatest gains through utilisation of their limited resources (Smith, 1776);

following this rationality, the work of Meyers-levy and Malaviya (1999) posit that offerings

which a customer deems to be superior in relation to that of competitors will encourage a

customer to purchase from the provider again, which has previously been identified as an

indicator of behavioural loyalty (Baloglu, 2002).

Oliver (1999) opposes these sentiments, and argues that loyalty directed towards costs and

benefits (as opposed to brand) is not ultimate loyalty, and that these customers are unlikely to

hesitate when defecting to a competitor should their offerings be deemed superior; Dick and

Basu (1994) disagree, arguing that a customer who perceives the offerings of a firm to be

superior has a lower propensity to switch and is more willing to recommend displaying both

attitudinal and behavioural dimensions of loyalty.

McCain (2003) identified three key dimensions which were evaluated by a customer in the

casino industry, these were the facilities, service and products provided; as Dick and Basu(1994) had suggested, the study found that these dimensions were positively related to

customer loyalty the hedonic nature and similarity of offerings of the casino and retail

gambling industries suggest that these findings should be paralleled:

H3: Perceived superiority of offerings is positively related to loyalty.

Perceived value

The perceived value of a service is subject to a judgement by a customer concerning what

was gained in relation to what was given up (Zeithaml, 1988:3); the sacrifices made can have

both monetary and non-monetary dimensions (Anderson et al, 1994) making them highly

subjective.

The subjective nature of the construct has produced controversial findings in different service

industries; Bei and Chiaos (2001) study of the automobile industry found that customers who

perceived a price to be fair were more inclined to display repeat purchase behaviours. Whilst

the results may suggest that successful attempts to improve the perceived value of a service

directly increase loyalty to a firm, Voss et als hotel study (1998) found that higher levels of

perceived value increased satisfaction, which in turn impacted loyalty. These findings are

similar to the ideas of Zeithaml (1988), who stated that perceived value mediated satisfactionbecause the monetary construct of price played a crucial role in setting expectations. As an

almost purely monetary product, one might expect these views to be reflected in the results of

a study in the financial services industry but Lewis and Soureli (2006) found a direct link

between perceived value and customer loyalty.

The contested nature of such a construct requires further investigation specific to the retail

gambling industry, as seminal work suggests that perceived value is a mediator of loyalty

through satisfaction, the following hypothesis is proposed:

H4: Perceived value is positively related to satisfaction, which impacts loyalty.


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Brand image

Although there is no widely accepted theory of brand (Chernatony and Riley, 1998), brand

image is said to be the way in which consumers perceive a brand, and these perceptions can

be manifested through the functional and non-functional benefits a customer expects (Pitcher,

1985).

Academia concerning brand image and customer loyalty tends to focus on the non-functionalbenefits of a brand, as these are said to have greater scope for providing a business with

sustained competitive advantage (Aaker et al, 2004). The non-functional aspects of brand

image include the usage of brands to express oneself (Low, 2009), or to make statements

about identity or status (Ambler, 1997).

Favourable brand images have been shown to encourage repeat purchase behaviour in

casino studies: an examination of customer retention in Las Vegas casinos found that 68% of

the survey population stuck with a brand that they liked (Low, 2009); these findings supported

an earlier study by Lewis and Soureli (2006) in the retail banking industry. After consideration

of previous service loyalty studies, the following hypothesis is formed:

H5: Brand image is positively related to loyalty.

Switching costs

Switching costs are the costs involved in changing from one service provider to another

(Porter, 1980), these can be both physical and emotional, and involve an assessment by the

customer concerning the costs of abandoning an existing service for a new one; such costs

include the loss of a loyalty bonus, sacrificing existing relationships with employees and costs

involved in procuring a new service supplier (Ruyter et al (1998).

Gremler and Brown (1998) argue that switching costs for services are higher than goods,

whereas Ruyter et al (1998) consider the concept to be contextual, and dependent on the type

of service, intensity of competition and the acquisition and retention efforts of firms. The

notions of Ruyter et al (1998) were of greater applicability in Baloglus (2002) casino study, the

costs of switching were found to be positively related to loyalty, but the participants perceived

switching costs to be low. Low switching costs are said to be problematic for those looking to

create a loyal customer base, as it increases a persons propensity to look for alternatives

(Ruyter et al, 1998). Although the results of previous casino studies may suggest the

perceived costs of switching will be low, a relationship between switching costs and loyalty isexpected:

H6: Switching costs are positively related to loyalty


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Relationships with employees

Firms endeavouring to create strong relationships with customers are said to engage in

relationship marketing strategies (Berry, 1995); these strategies are proposed as cost-effective

ways to retain customers and increase revenues (Reichheld and Sasser, 1990) by reducing a

customers propensity to look for alternatives (Bowen and Shoemaker, 2003), increase

positive word of mouth (Phillips et al, 2010) and make customers more forgiving of mistakes

made by the firm (Ruyter et al, 1998).

The apparent benefits have caused academics to investigate the topic further, Phillips et al

(2010) investigated the correlation between relationship strength and loyalty in the casino

industry, many customers considered their feelings of friendship and affiliation with staff as the

primary driver for their continued patronage. The importance of relationships appears to be

contextual, as a similar study by Lewis and Soureli (2006) in retail banking found no such

associations. As Harrison (2000) predicted, the construct appears to depend on industry

specific variables, and requires further investigation in the retail gambling context. As both the

casino and retail gambling industries are of a hedonic nature, relationships with employees

may be of similar importance:

H7: Relationships with employees is positively related to loyalty

Social bonding

Schouten and McAlexander (1995) conducted an ethnographic study into the subcultures of

consumption, although the study was based on a product (Harley Davidson motorcycles) as

opposed to a service, the conclusions were of wider relevance; they found that consumption

activities served as the basis for interaction and social cohesion between individuals with

similar sets of values. The findings of Schouten and McAlexander (1995) have been paralleledamongst gamblers, with Phillips et al (2010) and McCain (2003) promoting the idea that social

bonding and community play integral roles in encouraging customer loyalty. After

consideration of the literature, the following hypothesis has been formed:

H8: Social bonding is positively related to loyalty


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Commitment

Committed customers are characterised by the expression of a stable preference and a

resistance to change (Kiesler and Sakumura, 1966), which results in a display of both

attitudinal and behavioural loyalty responses to a firm.

Numerous studies have investigated the relationships between commitment and other loyalty

constructs, Morgan and Hunt (1994) found a relationship between commitment and brandimage, which was posited to have emerged as a result of a persons desire to appear

consistent in their behaviour, which extended to their consumption habits. Morgan and Hunt

(1994) also elaborate, by providing managerial suggestions concerning commitment;

recommending that a party looking to encourage commitment in another party should display it

first. This rationality would suggest that a firm looking to encourage commitment would have to

do so first, which could entail vulnerability (Morgan and Hunt, 1994).

The casino study of Baloglu (2002) used commitment and trust as indicators of attitudinal

loyalty, the results of the study provided evidence to suggest that high levels of trust and

commitment positively related to higher costs of switching, which has been theorised as bothan indicator and an antecedent of loyalty. Available discourse suggests that:

H9: Commitment is positively related to loyalty

Trust

Rotter (1980: 2) defines trust as a generalised expectancy held by an individual that the word,

promise, or statement of another individual can be relied upon. Trust is closely associated

with loyalty as it is an integral part of relationship formation (Bowen and Shoemaker, 2003), an

antecedent of commitment (Morgan and Hunt, 1994) and an aid in resolving difficulties (Rotter,

1980).

In a study within the context of luxury hotels, Bowen and Shoemaker (2003) concluded that

trust was an aid in forming stronger relationships as trust suppressed natural opportunistic

behaviour, reducing the likelihood of one party taking advantage of the other party; this helps

to strengthen a relationship as it reduces levels of uncertainty for both parties. The intimate

relationship between trust and commitment which Morgan and Hunt (1994) emphasised is a

result of a virtuous circle; as levels of trust increase, the incentives for doing business again

increase, this encourages commitment, which has previously been defined as a stable

preference and a resistance to change (Kiesler and Sakumura, 1966).

As committed customers are more likely to increase revenues for a firm, effort has been

devoted to understanding the construct in greater detail. The contexts of greatest relevance to

the study, casinos (Baloglu, 2002) and financial services (Lewis and Soureli, 2006), have

found that trust plays a crucial role within the context of loyalty. Academic consensus

surrounding the construct of trust suggests that:

H10: Trust is positively related to loyalty


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Social

Bonding

Relationshipwith

Employees

Satisfaction

Brand Image

Perceived

Superiority

of Offerings

Perceived

Value

Service

QualityH4 H2

H1

H5

H3H8

H7

Loyalty

H6

Attitudinal

Loyalty

Behavioural

Loyalty

Switching Costs

Commitment

Trust

H9

H10

Proportionate

spend

Willingness

to co-operate

Willingness to

recommend

A Lack of existing conceptual frameworks concerning the antecedents of customer loyalty in the

UK retail gambling industry has led to the production of a new model. The possible antecedents

and their respective hypotheses have been combined to form a conceptual framework which is

useful in assisting in the development, refinement and discussion of ideas surrounding exploratoryconce ts Robson, 2002 .

Tentative Conceptual ModelModel 1


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The previous chapter reviewed the available academic discourse and produced tentative

hypotheses which were used to create a hypothetical conceptual model. This chapter aims to

outline the way in which primary research was undertaken in an effort to test the conceptual

model.

3.1 Research philosophy

The creation and subsequent testing of a hypothetical conceptual framework is typical of a

deductive research methodology (Saunders et al, 2007), but the exploratory nature of the

study required an openness to emergent ideas when evaluating the results a key

characteristic of an inductive approach (Saunders et al, 2007).

Multiple methodological approaches were utilised in the study, identified by Saunders et al(2007) as a feature of a pragmatic research philosophy; the principal argument of which is that

the most important determinant of the research philosophy is not the way in which it is

approached, but the use of appropriate mechanisms in relation to the research question

(Robson, 2002).

Types of data

Adoption of a pragmatic research philosophy extended to data collection: deductive

approaches tend to rely on the collection and analysis of quantitative data (Robson, 2002),

which was crucial for the clarification of the research question as it enables the testing ofhypotheses, exploration of relationships and identification of trends (Saunders et al, 2007).

The purely numerical nature of quantitative data (Saunders et al, 2007) can sometimes

overlook certain parts of human behaviour (Robson, 2002) because these can be difficult to

quantify (Dey, 2003). As the study investigated consumer buying behaviour, qualitative data

was also collected; non-numerical data is useful for gaining rich information (Saunders et al,

2007), but the complex nature of such an endeavour can be time consuming (Saunders et al,

2007).

Subject to these considerations, mixed methods research was adopted so that both methods

of data collection could be used complimentarily.

Research MethodChapter 3


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3.2 Research method

Mixed methods research

The use of mixed methods research is becoming increasingly advocated in business and

management research (Curran and Blackburn, 2001) as it provides the researcher with better

opportunities to answer and evaluate the research question (Tashakkori and Teddlie, 2003)

whilst increasing the reliability of the findings through triangulation (Saunders et al, 2007). Onemajor disadvantage of using multiple methods is that it requires more resources, for this

reason Robson (2002) argues that it is most effective in small-scale projects when one method

is central and the other supplementary.

Following Robsons (2002) advice, quantitative research was made the central method, whilst

qualitative supplementary; the decision was rationalised after consideration of the critical

importance of quantitative data in testing hypotheses which was contributory to answering the

research question. The fact that qualitative data collection can be time consuming reduced the

methods feasibility on a larger scale, as completion of the study was subject to time

constraints. Quantitative data collection was carried out through the use of questionnaires, and

qualitative the use of interviews.

Questionnaire

The method chosen as central to primary research was the use of questionnaires to obtain

quantitative data; they were deemed most appropriate as they make it possible to deal with a

large sample with relatively few resources (Robson, 2002).

Questionnaires are a valuable tool for investigating the expectations, perspectives and

preferences of a population (Robson, 2002); however, it can be difficult to assess thetruthfulness or seriousness of participants when completing the questionnaire (Saunders et al,

2007). Researcher-administered questionnaires were chosen in an effort to counteract the

aforementioned limitation, but participants were encouraged to complete and submit

questionnaires anonymously in an effort to reduce the impact of the researcher on responses

(Robson, 2002).

Robson (2007) posits that questionnaires can be time consuming and require significant skill in

order to obtain effective results; the specificity required for a successful questionnaire meant

that, where possible, questionnaires made use of instruments that had been used successfully

in previous studies which assessed loyalty in service environments.

Interviews

Semi-structured interviews produced qualitative data and were used to supplement

questionnaires, providing richer information of greater depth (Saunders et al, 2007) in an effort

to add meaning to the results of the quantitative data (Robson, 2002). More specifically, many

scholars in marketing theory development had suggested the use of interviews in service

loyalty assessment (Parasuraman et al, 1985; Peter and Olson, 1983; Zaltman et al, 1982).

Robson (2007) advises that researchers of limited experience should use semi-structured

interviews over alternatives as they allow the overall focus of the interview to be determined

before hand, whilst providing enough flexibility for interviewer discretion when guiding the

conversation.


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3.3 Research instruments

Efforts to maximise the usefulness of the study involved deliberation concerning the

instruments used in conducting primary research; the next paragraphs discuss the main

considerations made.

Sources of questionnaire instruments

As previously mentioned, questionnaire instruments were adapted from previous successful

studies concerning service loyalty assessment in an effort to obtain effective results. The four

key themes highlighted in the literature were attitudinal and behavioural loyalty, composite

loyalty and their possible antecedents.

Attitudinal loyalty

The literature review highlighted the work of Morgan and Hunt (1994) and Oliver (1999) who

considered trust, commitment and the costs of switching to be key indicators of attitudinal

loyalty. Lewis and Soureli (2006) measured these constructs within the context of retail

banking, and these questions were then reconceptualised to fit the retail gambling context.

Behavioural loyalty

Baloglu (2002) used proportionate expenditure, willingness to recommend and willingness to

co-operate as behavioural loyalty assessment instruments in casinos; these questions were

then adapted for retail gambling.

Composite loyalty

The study used the responses from attitudinal and behavioural loyalty questions to create acomposite loyalty score.

Possible antecedents

Questions that assessed the core and augmented dimensions of service quality were adapted

from the RATER framework of Parasuraman et al (1991), perceived superiority of offerings

and perceived value constructs were adapted from Lewis and Soureli (2006), whilst questions

regarding relationships with employees were adapted from the work of Phillips et al (2010).

Other instruments were created independently.

Appendix 1 shows the resultant questionnaire, items were measured using a 5-point likertscale ranging from strongly agree (5) to strongly disagree (1) these measures paralleled

those of Lewis and Soureli (2006), for purposes of comparison and reliability.

Sources of interview instruments

Interviewees were provided with the preliminary results of the questionnaire and were asked to

discuss them; this resulted in the synthesis of key themes identified in the literature review with

quantitative data, producing a practitioner perspective of the possible antecedents of customer

loyalty in the UK retail gambling industry.


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3.4 Pilot

Two pilots each involving the distribution and completion of 5 test questionnaires were

undertaken in an effort to reduce the likelihood of complications when conducting the main

data collection exercise (Robson, 2002); these were conducted in a separate betting shop to

avoid the possibility of contaminating the main study (Robson, 2007).

Respondents to the first pilot expressed concerns surrounding the completion time andsimilarity of some instruments. Although participants were unaware that some questions were

purposefully similar (constructs were measured using multiple items so that their internal

consistency could be measured); their concerns resulted in the removal of 18 items, all of

which were multiple items.

Completion times of the second pilot were noticeably shorter, with feedback resulting in minor

cosmetic changes before the questionnaire design was finalised.


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3.5 Sampling

Questionnaire sampling technique

Time and resource constraints makes sampling a necessity (Saunders et al, 2007), and such

constraints meant that convenience sampling was adopted over alternatives. As convenience

sampling has a low likelihood of being a representative sample (Henry, 1990), alternatives

such as stratified random sampling may have been more useful in terms of generalisability ofthe results (Saunders et al, 2007); the exploratory nature of the study meant that the greater

resource consumption involved in undertaking stratified random sampling may have been

wasteful should no results be found. Henry (1990) asserts that convenience sampling is

beneficial in conducting exploratory research, but the use of a convenience sample coupled

with the small scale of the sample made it difficult to make any statements that can be

generalised for the whole UK retail gambling population (Malhotra, 1999). Considering the

aforementioned limitations, any comments which appear to be generalisations should be

deemed tentative hypotheses, should a similar study be carried out using a generalisable

sample.

Questionnaire sample frame

The use of convenience sampling meant that only one qualifier was used to screen

participants; they had to be patrons of at least one betting shop. Patrons of the chosen betting

shop in Bath were able to participate in the study, everyone was indiscriminately asked to

participate.

Interview sampling technique

Two betting shop managers in Bath were chosen to provide a practitioner perspective, andonce again convenience sampling was adopted by using known associates (Robson, 2007).

Interview sample frame

Christine had managed a bookmaker in Bath for almost four years; the betting shop she

managed was owned by one of the largest bookmaking companies in the UK. Emma had been

working in the retail gambling industry for over a decade, and had been employed as a

manager of an independent bookmaker in Bath for almost six years. She was winner of 2011

Racing Post regional betting shop manager of the year for the south west region.

3.6 Primary research process

For the duration of one week, commencing 2ndApril 2012, 70 questionnaires were researcher-

administered in Christines betting shop in Bath.

Interviews took place in the respective staff rooms of each of the managers to be interviewed.

These took place week commencing 16thApril 2012, and followed the distribution of

preliminary questionnaire results.


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3.7 Results evaluation

Quantitative Data Evaluation

Following the distribution and return of questionnaires, the following process was used to

evaluate results:

1. Initial confirmatory analysiswas used to check questionnaires for missing data.

Incomplete questionnaires were to be discarded.

2. Responses were coded:

a. Strongly Agree = 5

b. Agree = 4

c. Neither agree nor disagree = 3

d. Disagree = 2

e. Strongly Disagree = 1

3. Microsoft Excelwas used to create a data matrix and for basic descriptive analysis.

4. The data matrix was loaded in SPSS.

5. The internal consistency of multiple items was subject to Cronbachs Alpha tests, which

was used to assess the reliability of research instruments (Kirkpatrick and Feeney,

2009).

6. Various relationships were then measured using correlation coefficient analysis, which

enabled the quantification of a relationship between variables (Saunders et al, 2007).

Following the advice of Saunders et al (2007), Kendall Tau-B was used as the data to

be analysed was not normally distributed. Unless specified, relationships were

significant at the 0.05 level a level which implies that the results were unlikely to

happen by chance (Saunders et al, 2007).

Interview Data Evaluation

The supplementary nature of the interviews resulted in less sophisticated evaluation methods,

the data was reduced and key themes and verbatim quotes were extracted for purposes of

confirmation, triangulation and meaning (Robson, 2007).

3.8 Ethics

Although for most people gambling is an enjoyable experience, it is an industry which must

contend with addiction. The sensitivity surrounding behavioural loyalty in the context of

gambling meant that only very limited information was asked for in terms of betting

expenditure, and participants were made aware their partaking was discretionary.

Primary research was only conducted after clearance, after which point ethical codes of

conduct were considered at all times.


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In order to address the issue of loyalty in the UK retail gambling industry, a structured

questionnaire was developed and introduced over a period of one week in a betting shop in

Bath; the items aimed to measure key antecedents identified in the literature review.

Distribution of 70 questionnaires resulted in 62 being returned, after initial confirmatory

analysis 6 were discarded as unusable, leaving 54 usable responses; this equated to a usable

response ratio of 77%.

Initial descriptive analysis of the data indicated that the respondents were predominantly male

(94%). Respondents were most likely to be over 50 (50%), whilst 35% were aged 30 49, and

15% were aged 18 29. 92% of respondents bet at least once a week.

This is broadly indicative of what one might expect from the betting shop population (King,

2011).

4.1 General prescription from the data regarding loyalty

Item 1 of the questionnaire asked respondents to state the betting shops that they felt they

were a loyal patron of, the majority (51%) of respondents considered themselves a loyal

patron of more than one bookmaker, whilst 48% claimed they were loyal to a single

bookmaker. Only one respondent (1%) declared that they were loyal to no bookmakers.

Respondents were then asked to choose the bookmaker they considered themselves to be

most loyal to, this became their main bookmaker.

As discussed in the methodology section of the report, a composite measure of loyalty was

used in an effort to gauge the levels of loyalty displayed by a respondent; this involved the

measurement of both attitudinal and behavioural dimensions that had previously been

highlighted as associated with loyalty in the academic discourse.

As per the coding schedule identified in the methodology section, scores of 5 would indicate

strong agreement, 3 neither agreement nor disagreement and 1 strong disagreement. This

scale applies to all scores except the composite score; as it is composed of two items 10

would indicate strong loyalty, 5 no loyalty and 1 strong disloyalty.

Attitudinal loyalty

In an effort to avoid repetition, the dimensions of switching costs (H6), commitment (H9) and

trust (H10), which formed the attitudinal loyalty score, are addressed in their corresponding

sections. Following the collection and analysis of this data, the survey sample as a whole had

a mean score of 3.3 in regards to their attitudinal loyalty.

ResultsChapter 4


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Behavioural loyalty

The behavioural dimensions associated with loyalty were measured, participants were asked

to estimate the proportion of betting expenditure that their main bookmaker received, and to

answer questions aimed at measuring their willingness to both recommend and co-operate

with their main bookmaker. As a whole, respondents had a behavioural loyalty mean score of

3.4, denoting a presence of behavioural loyalty in the survey population.

Composite loyalty

The aforementioned scores imply a positive but weak level of loyalty, both in attitudinal and

behavioural terms; each respondents attitudinal and behavioural loyalty scores were added

together to create a personal composite loyalty score. Respondents were then ranked by

loyalty score, with the lowest quintile (disloyal) and the highest quintile (loyal) subject to their

own analysis. This rank and analysis allowed for a comparison of extreme cases for analytical

purposes.

4.2 Results pertinent to each hypothesisThe remainder of the results section addresses the results relevant to each of the hypotheses

which contribute to answering the research question what are the possible antecedents of

customer loyalty in the UK retail gambling industry?

Descriptive data most relevant to the aforementioned research question is presented in this

section, and correlation coefficient analysis is available in their respective tables the full data

matrix is available in appendix 2.

H1: Satisfaction is positively related to loyalty

Item 14 asked participants whether they were satisfied with their main bookmaker; this was the

case, with 96% of respondents in agreement, producing a mean score of 4.2.A comparison of

the disloyal and loyal quintiles found high levels of satisfaction, but they were subject to

some deviation from the norm: 70% of the disloyal quintile agreed that they were satisfied,

whilst the loyal quintile was in unanimous agreement, and 80% in strong agreement. The

previous comments are also demonstrated in the mean scores, with the disloyal lower than

the sample (3.7) and the loyal higher (4.8).

To test the hypothesis and confirm the above, statistical analysis was used. The results of

Kendall Tau-B tests confirmed a relationship, with weak levels of positive correlation (.387)

being identified between satisfaction and loyalty.

The exploratory nature of the study meant that the satisfaction construct was subject to further

analysis with other constructs which were measured; relationships with employees (.402) was

another relationship identified as significant.


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Compo

siteLoyaltyC

orrelationCoe

fficients

Table1

Key

:

DarkBlue:

HypothesisTest(DeductiveResults)

Lig

htBlue:

Significantfindingproducedthroughexploration(

InductiveResults)

Grey:

Nosignificantrelationship/Duplicate

23


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Key

:

DarkBlue:

HypothesisTest(DeductiveResults)

Lig

htBlue:

Significantfindingproducedthroughexploration(InductiveResults)

Gre

y:

Nosignificantrelationship/Duplicate

AntecedentCorrelationCoefficients

Table

2

24


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3.5

4.2

4.9

3.9

4.3

4.9

3.3

4.2

4.85

0

1

2

3

4

5

Disloyal Sample Loyal

MeanScore

Overall Core Augmented

H2: Service quality is positively related to loyaltyThe multi-dimensional nature of service quality was highlighted in previous chapters of this

report; this resulted in the construction of five questions that were required to measure both

the core and augmented aspects of service quality. As multiple items were used to measure a

single construct, the items were subject to Cronbachs Alpha tests; the score (.936) indicatedthat the service quality questions were of excellent internal consistency.

Figure 1 shows that, in a fashion not dissimilar from the satisfaction construct, the quality of

service that respondents felt they received was an area of general agreement, with both the

mean (4.2) and the mode (5) of the sample indicative of this.

Fig. 1:Items 15 19: Service Quality Dimensions

The construct of service quality was then deconstructed, and subject to further descriptive

analysis. Research instruments specifically aimed at assessing the core benefits of the serviceprovided by the respondents main bookmaker received a similar response from the disloyal

segment when compared to the survey sample, with the mean (3.9) displaying this. The loyal

quintile was found to be more agreeable, with the core attributes provided by their main

bookmaker receiving a mean score of 4.9.

There was, however, greater disparity between the augmented aspects of service delivery;

whilst 87% of the survey population agreed that employees were kind, only 50% of those

segmented as disloyal agreed.

The provision of individual attention, (the second of the two items measuring the augmentedaspects of service quality) found similar results; just 40% of disloyal customers were in

agreement, which is less than half compared to the survey population (83%). The loyal


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2.5 2.7

3.22.9 2.9

3.5

2.9

3.6

4.3

0

1

2

3

4

5


MeanScore

Facilities Products Services

quintile was found to be the most agreeable in relation to augmented service elements, with a

mean score of 4.85.

Statistical analysis which employed Kendall Tau-B tests confirmed a relationship of medium

strength (.411) between service quality and satisfaction, but a stronger link between service

quality and loyalty (.499) was discovered through exploratory analysis.

When scrutinising the results in greater depth, service quality was also found to have links withbrand image (.344) and social bonding (.404), and a particularly strong link with relationships

with employees (.658).

H3: Perceived superiority of offerings is positively related to loyalty

Those participating in the survey were asked multiple questions in an effort to determine

whether they perceived their main bookmakers offerings to be superior in relation to their

competitors, once again the internal consistency of the questions were tested using

Cronbachs Alpha; the resultant rating of .750 denoted good reliability.

The relevant data was then aggregated, resulting in a mean score of 3.1 for the surveysample. Figure 2 disassembles the construct, whilst comparing the results to the extreme

quintiles:

Fig. 2:Items 20 22: Perceived superiority of offerings

The means denote high degrees of impartiality in many cases: with the loyal quintile more

likely to agree with statements surrounding perceived superiority, except for facilities, as

characterised by a mean score of 3.2.

In order to test the hypothesis, Kendall Tau-B tests were used: the resultant score (.218)

denoted a relationship of little significance. Further exploration found stronger links betweenperceived superiority and perceived value (.634) and brand image (.525).


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H4: Perceived value is positively related to satisfaction, which impacts loyalty.

Two questions were asked in order to determine whether perceived value mediated

satisfaction within the context of the UK retail gambling industry; the internal consistency of

these questions were subject to Cronbachs Alpha tests, to which they were given a good

(.808) rating of internal consistency.

Perceived value was responded to in a similar way to the construct of perceived superiority,with both the whole survey sample (mean: 3.2) and disloyal segment (mean: 3.0) expressing

no real opinion as to whether they received greater value from their main bookmaker. On the

other hand, loyal respondents were more inclined to agree, demonstrated by a mean score of

3.7.

The findings of descriptive analysis were reaffirmed when subject to statistical analysis, with a

weak positive (.362) relationship found between the constructs of perceived value and

satisfaction. Further exploration exposed a relationship of similar strength (.358) with brand

image.

H5: Brand image is positively related to loyalty

Cronbachs Alpha reliability tests returned a score (.715) that validated the reliability of the

multiple items used to assess brand image, after which the results were subject to further

analysis.

Mean scores derived from descriptive analysis suggested that high levels of impartiality were

evident amongst weaker levels of loyalty, with the mean score for the survey sample (3.3) and

disloyal (3.1) demonstrating this. Loyal respondents were in greater agreement, with a mean

score of 3.8.

Item 26 asked respondents whether their main bookmaker had a good reputation, 81%

indicated agreement. When asked to compare this to competitors (Item 25) the results were of

lesser clarity, with only 40% in agreement and 50% expressing impartiality.

Kendall Tau-B was used to test the hypothesis; it showed a relationship (.217) of little

significance. Brand image and other constructs appeared to have stronger relationships: with

both relationships with employees (.363) and social bonding (.402) indicative of a significant

relationship.


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1.6

2.9

3.8

1.6

2.7

3.7

1.6

3

3.8

0

1

2

3

4

5


MeanScore

Overall Physical Emotional

H6: Switching costs are positively related to loyalty.

Multiple items attempted to measure both the physical and emotional costs of switching;

before beginning the analysis of the results, Cronbachs Alpha tests were employed. The

result of the test (.530) indicated poor internal consistency; an important consideration when

assessing the reliability of any of the findings associated with switching costs.

A high standard deviation (0.9) exposed disparity which the mean score for the survey sample(2.9) hides; the disloyal and loyal differed on the perceived costs of switching, with mean

scores of 1.6 and 3.8 respectively.

Figure 3 shows this:

Fig. 3:Items 10 & 11: Switching Costs

As switching costs were a component of the attitudinal loyalty construct, the relationship with

behavioural loyalty was assessed (using Kendall Tau-B), to which a score of .410 was derived,

indicating a positive relationship of medium strength.


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60%

40%

Loyal

21%

46%

22%

11%

Sample10%

10%

50%

30%

Disloyal


The survey employed multiple items in an effort to better understand the role of relationships

with employees within the context of retail gambling, and was therefore subject to internal

consistency tests. Having derived an acceptable (.575) score from Cronbachs Alpha tests, the

results were subject to analysis.

Descriptive analysis of the results pertinent to relationships with employees found that thesurvey sample were in general agreement (mean: 3.9), with the disloyal quintile more likely to

respond with impartiality or disagreement, and the loyal the opposite. The results from Item

30 (Fig. 4) demonstrate this:

Fig. 4Item 30: The staff at my main bookmaker are more like friends to me

Statistical analysis confirmed hypothesis 7, with a relationship of medium strength (.575) being

identified through Kendall Tau-B tests. To re-iterate the results of exploratory investigation,

relationships with employees was found to be related to other constructs, including satisfaction

(.402), service quality (.658), brand image (.363) and social bonding (.370).


A review of the extant literature concerning loyalty found that consumption habits may be

driven by social factors, and primary research had been conducted accordingly. Participants

were asked if they frequented their main bookmaker because their friends also frequented it although the mean score (3.3) suggests that the question was answered with high degrees of

impartiality this was not the case. Only 30% of respondents answered with impartiality, with

similar percentages agreeing or disagreeing with the statement.

As the dynamic of the previous results would suggest, disloyal respondents were more likely

to respond with disagreement, whereas loyal the opposite.

Kendall Tau-B tests found a relationship between social bonding and loyalty, insignificant

levels of correlation (.240) were found; whilst stronger links with social bonding (.404), brand

image (.402) and relationships with employees (.370) emerged.


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30

20%

50%

10%

10%

10%Loyal

11%

31%

17%

28%

13%Sample

10%

10%

50%

30%

Disloyal


Cronbachs Alpha tested the internal consistency of commitment items to find they were

acceptable (.628).

As with the results of the previous hypothesis, the construct of commitment provoked a strong

response that the mean score (3.0) hides; this is evident when comparing the most extreme

quartiles, with the disloyal displaying very low levels of commitment and the loyal theopposite, resulting in mean scores of 2.0 and 4.2 respectively.

The above sentiments are demonstrated in figure 5, a question concerning emotional

commitment:

Fig. 5Item 7: I feel emotionally attached to my main bookmaker

As commitment was a component of the attitudinal loyalty construct, the relationship with

behavioural loyalty was assessed; the results of Kendall Tau-B tests (.484) confirmed a

relationship between the two. Exploratory investigation also found a link of medium strength

between the trust construct (.450) and a strong link between switching costs (.610).


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Two survey items were used to measure trust that respondents had for their main bookmaker,

and for this reason they were subject to internal consistency tests; the Cronbachs Alpha score

(.709) was deemed an acceptable result and confirmed the reliability of the questions asked.

Even the disloyal quintile was in general agreement that their main bookmaker was

trustworthy, with a resultant mean score of 3.5. The survey sample as a whole were instronger agreement, with a mean score of 4.1, and the loyal quintile displaying even greater

levels of trust, with a mean score of 4.8.

Statistical analysis (Kendall Tau-B) confirmed a link between the construct of trust and

behaviour: this was denoted by a weak positive score of .378.

Results of practitioner interviews

The preceding parts of chapter presented the results of the questionnaire; a draft version of

the chapter was then sent to practitioners and interviews ensued. As explained in the

methodology section (chapter 3), the supplementary nature of the interviews resulted in

evaluation of lesser sophistication. Following a reduction of the qualitative data, the resultant

key themes and verbatim quotes have been tabulated:

Did Christineagree with the

results?

ChristineResult / Hypothesis Emma

Did Emmaagree withthe results?

N/A

All customers are differentYou have to work on morethan one thing to keep peoplecoming backQuestion 25 shows thatcustomers showed loyalty toother competitors, too

General statementsregarding customer

loyalty in the UK retailgambling industry

It [loyalty] all boils down tocustomer serviceThey [customers] have to feelcomfortable in your shop...which is down to staffYou can be loyal to more thanone bookmaker

N/A

Yes The core functions [ofservice] create satisfaction

Satisfaction Satisfaction isnt enough, youneed to provide an experience

Yes

Practitioner Interview ResultsTable 3


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Yes

I put it [service] at the top ofthe listPoor service detracts morethan good service addsConsistent service isimportant as it links to ourreputation[Service quality frameworks]are being put in our training...

These are efforts to retaincustomersService Quality

Good customer service keepscustomers[Augmented aspects ofservice quality] are mostimportant, staff have to beattentive toward them[customers] as a personIf staff feel driven, this willreflect in their behaviour toward

customersIf you have good customerservice and good prices, itdraws them backThe core of it [service quality]is when someone walks up tothe counter and puts a betthrough. That makes nodifference to anybodyToo many big bookmakersemploy people solely as a bumon a seat... it negativelyimpacts loyalty

Yes

Yes

We were doing a 25% bonuson our football coupons, then[a competing bookmaker] did33%... It is a very competitiveindustryEven though somebookmakers have goodfacilities and we dont, peoplecome here. It cant be thatimportant... They dont care aslong as the basics are there

Perceived Superiority ofOfferings

What makes a shop [superior]is the staffPeople dont even notice[facilities]... my shop had arefit... two weeks later no onenoticed anymore... you cantcreate loyalty through facilities

Yes

Yes

Some people are inclined toshop around for the best dealI wish I had more control[over pricing], but we work fora big company... Therelationship with customerswould be a lot betterPeople ask [for competitorprices], but I cant do anythingabout it, if I could I would

Perceived Value

In my shop we can laydifferent prices and things,anyway. So that works to ouradvantage, and brings peopleback to usYou have to entice throughprices, and retain throughserviceIf one bookmaker offers treblethe odds, then the othersfollow: it costs them all moneyPrice only effects price

sensitive people... theyre notthe ones you want to be loyal

Yes

Yes

Sometimes the moreinfrequent gamblers bring inbetting slips from otherbookmakers... which suggeststhat they dont differentiate ourbrand from competitors Brand Image

It doesnt matter how manyposters youve got up, orwhatever you have on ascreen, people dont readthemSome people still seebookmakers are dark, dingyand smoky placesSometimes the owner works inthe shop... that makes it [brandimage] more personal

Yes


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Yes

Those who visit multiplebookmakers are more awareof the low switching costs

Switching CostsN/A

Yes

Yes

It cant beforced...relationships taketime.The new hosting initiative isaimed at building relationships

with customers: making themstay in the shop, and that isloyalty, isnt it? ... We havententirely implemented it though,its too much... customers saywhat are you doing out here!?Get back behind the counter![New initiatives] are all downto the manager of the shopand the staff [to make work]...they cant make us... there aretoo many [initiatives] and weare expected to bombardcustomers

Relationships withemployees

Relationships go both ways,they like coming in because ofthe staff, and the staff likethemYou have to befriend them

before they try and befriendyou

Yes

Yes

If their friends are there, theyare going to go thereI agree with the results, weare sociable beings... it can bea social thing, but some[customers] want to gamble ontheir own... other things[constructs] can affect thatquestion

Social Bonding

Creating a good atmosphereand experience is critical [forsocial bonding]... it [loyalty]goes back to staff againYou need to build acommunity in your shop whereeverybody knows each otherSome people just go therebecause their friends go thereThey [some customers] dontsee themselves as being likethat [sociable] in the shop...

No

Yes

You can encouragecommitment by providing them[customers] with things[incentives] they want to comeback forCommitment is not to thebookmaker, but the staff theysee as their friends

Commitment

The people that are loyal to acertain bookmaker is becausethey are emotionally attachedto that bookmaker and theexperience they haveThey think theyre not,personally I think they are a lotmore emotionally attachedthan they like to thinkEmotional attachment is adriver of loyalty

No

Yes

Without trust you arent goingto go there, so theres got tobe trust there... if trust breaksdown you can lose acustomer

Trust

If you dont feel that you cantrust the bookmaker, youwouldnt go to them, wouldyou?

Yes

N/A

Needed more demographicdata because customers aredifferent, and customercharacteristics could impactloyalty variables.

Limitations of the study

The way in which thequestionnaire was distributedmeant that customers stayingwere more likely to fill it out.

N/A


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34

Chapter 4 provided the results of customer-questionnaires and practitioner-interviews, this

chapter looks to synthesise these findings with existing theories so that the appropriate

amendments can be made to the conceptual model.

5.1 General discussion regarding loyalty

Loyalty definitions

The sample population only displayed slight indications of attitudinal and behavioural loyalty,

and the majority also identified themselves as a loyal patron of more than a single bookmaker;

these findings suggest Olivers (1999: 35) definition of a loyal customer as one which fervently

desires to re-buy a product or service and will have no other is incompatible within the retail

gambling context, promoting the ideas of both practitioners and Kotler (1972) who believe thatcustomers could be loyal to more than one firm.

Loyalty in UK Retail Gambling

Rationality for the study came from a lack of readily available discourse concerning loyalty

within the context of the UK retail gambling industry, making contextual comparisons

impossible. For this reason, the remainder of the discussion section synthesises the available

literature with the results of mixed methods research to discuss the hypotheses that

contributed to the creation of a hypothetical conceptual model.

5.2 Discussion pertinent to each hypothesis

H1: Satisfaction is positively related to loyalty

Quantitative data analysis confirmed a direct link between satisfaction and loyalty, but high

levels of satisfaction were not exclusive to those with high loyalty scores. Practitioners also

provided further evidence to support the thesis of Oliver (1999), who considered satisfaction to

be a prerequisite of loyalty.

Although it is evident that further investigation is required to fully understand the relationship

between satisfaction and loyalty, the findings of the study concur with those of Rundle-Thiele

and Bennett (2001), as satisfaction clearly played a key role in loyalty formation.

Practitioners made similar suggestions to that of Reichheld and Sasser (1990); as high

percentages of customers are satisfied irrespective of their loyalty, attempts to gain the loyalty

of customers through improvements of satisfaction may be subject to diminishing returns, and

resources may be better utilised elsewhere. Although this was not the case in the study,

managers of betting shops (who are confident of the generalisability of the study) with high

levels of dissatisfaction would be well advised to improve the situation if they wish to gain a

loyal customer base.

DiscussionChapter 5


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H2: Service quality is positively related to satisfaction, which impacts loyalty

Service quality appears to have a greater impact on customer loyalty in the context of retail

gambling than expected; it was found to be a direct antecedent of loyalty and a mediator of

satisfaction. Practitioners asserted that the core benefits of the retail gambling service were

unlikely to create loyalty and therefore yield little strategic potential; they also felt that theaugmented aspects were of paramount importance.

Although exploratory in nature, these findings help to contextualise similar findings in casino

industries (Low, 2009; Phillips et al, 2010), whilst contrasting those in financial services (Lewis

and Soureli, 2006).

As Harrison (2000) asserts, these discrepancies may be due to the unique characteristics of

the services; different variables such as the frequency of use or functionality of services may

play a role in determining the importance of service quality. To re-contextualise such findings,

future studies might investigate the relationship between frequency of participation and loyalty

in betting shops, or the perceived utility derived in relation to the importance of service quality.

Such studies will further understandings of loyalty in the retail gambling context.

Practitioners agreed that employees were responsible for delivering augmented aspects of

service quality, and this delivery reflected on the firm. These statements provide an

explanation of the results of statistical analysis, which found relationships with employees and

brand image to be linked to service quality.

H3: Perceived superiority of offerings is positively related to loyalty

The results from the study simultaneously disconfirmed predictions surrounding the role ofperceived superiority of offerings and contrasted the findings of McCain (2003) on which the

prediction was based.

Practitioners were in agreement with the results and felt that the ease with which products can

be copied by competitors made it difficult to gain an advantage, the facilities were of low

importance to customers and that services remained a key factor. Results from both methods

of primary research have interesting implications concerning the legitimacy of seminal service

loyalty work; Zeithamls (1981) work suggests that the intangibility of services makes it difficult

for customers to evaluate them however this was a question which provoked the fewest

impartial responses, which implied they had an opinion.

Offerings were still found to be linked to perceived value and brand, which were identified as

important factors in mediating loyalty; consequently, firms must ensure that they deliver

competitive offerings for customers to not defect, which is an obvious requirement for

encouraging loyalty.


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H4: Perceived value is positively related to satisfaction, which impacts loyalty

The results of both descriptive and statistical analysis confirmed the hypothesis, which

correlated with much of the literature. Within the context of the study, the construct of

perceived value was similar to that of Voss et al (1998), as higher levels of perceived value

correlated with greater levels of satisfaction. Counter to this, Bei and Chiao (2001) found that

perceived value was directly linked to purchase behaviours in the context of the automobile

industry; the disparities might be explained by the type or size of purchase. By this rationality,those placing larger bets might have greater price sensitivity.

These findings also concur with the views of Zeithaml (1988), who asserted that the construct

of price plays a crucial role in perceived value; however, interviewees felt that perceived value

yielded little strategic potential in encouraging loyalty, as the homogeneity of offerings limited

the scope for price competition.

Similarly to perceived superiority, bookmakers must meet minimum value perceptions of

customers if they are to refrain from defecting.

H5: Brand image is positively related to loyalty

Results relevant to brand image contrasted a previous study by Low (2009) as the construct

was not found to be directly linked to loyalty, but a mediator of others.

In line with Pitcher (1985), the brand construct was found to be linked with both functional

(perceived superiority of offerings) and non functional aspects (relationships with employees

and social bonding) of retail gambling.

Those with industry experience were interviewed, and their comments were similar to those of

Aaker et al (2004). The results of the study suggest that the non functional aspects havegreater scope for differentiation, which allows for competitive advantage; for instance, Emma

highlighted that the owner would sometimes work at the betting shop, and this gave the brand

a personal image which the bigger bookmakers could not replicate.

Whilst the establishment of a relationship between brand image and loyalty might promote the

use of campaigns aimed at promoting a brand image, both practitioners expressed concerns

that customers had a blas attitude toward gambling brands. Should the statements of

practitioners be confirmed, it could be deduced that the synergistic efforts of the mediating

constructs were actually responsible for the higher brand scores which the loyal quintile

displayed. In an effort to prove such statements, further investigation of the causal relationship

of brand in relation to loyalty is required.


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H6: Switching costs are positively related to loyalty

Practitioners agreed with the results of descriptive and statistical analysis, which found that

higher perceived costs of switching were reflected in the behaviour of respondents. The

quantitative results were of similarity to those of Baloglus (2002) casino study, as the

perceived costs of switching in the sample were low. Practitioners felt that this was a result of

the intensity of competition in the area and the similarity of offerings, sentiments comparable to

those of Ruyter et al (1998).

High perceived costs of switching displayed by loyal customers appear to be a result of

emotional attachment which has emerged through meaningful relationships with employees

and social bonding; whilst operators have little power concerning the low physical costs of

switching, these findings reiterate earlier thinking, with staff being of paramount importance in

building relationships with customers and creating an atmosphere which facilitates social

cohesion reducing a customers propensity to switch.

The preceding paragraphs help to explain the low Cronbachs Alpha score: it appears that the

items adapted from Lewis and Soureli (2006) which measured the physical and emotionalcosts of switching were completely different questions in the context of the retail gambling

industry. It may be beneficial for future studies to measure the respective costs separately.


Results pertinent to relationships with employees concur with the work of Phillips et al (2010)

who found that relationships with employees were a primary driver of continued patronage in

the context of casinos; these findings contrast those of Lewis and Soureli (2006), who found

no associations in retail banking. These results imply that the characteristics shared by

casinos and betting shops which increase the importance of relationships with employees inencouraging loyalty are not found in retail banking; factors worth investigating might be contact

time, stay duration or whether the service is discretionary.

Following consultations, it was made evident that the importance of relationships had not gone

unnoticed; one practitioner (Christine) highlighted attempts by their employer to improve

relationships with customers, the introduction of new frameworks had been consciously noted

by customers, and they had questioned their genuineness. Primary research suggested that

relationships with employees should be considered a priority in driving loyalty, but had also

emphasised the difficulty in artificial attempts to exploit the construct for purposes of loyalty.

The previous sentiments highlight the importance in hiring employees both willing and capableof forming meaningful relationships with their customers.

Bookmakers encouraging retail customers to use their online services should carefully

consider such implications; the firm may lose their greatest form of differentiation by removing

their staff from the bookmaking service.


The role of social bonding in the context of retail gambling loyalty appears to be a controversial

one, whilst descriptive and statistical analysis found that social bonding had a weaker

relationship than expected, there was disagreement between practitioners surrounding why,

with both proposing explanations of equal plausibility. Emma felt that social bonding had

subliminal elements which failed to be reflected in the responses of some participants,


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whereas Christine felt that the results were an accurate reflection as some customers consider

gambling an individual activity.

Although there was disagreement surrounding the results, practitioners agreed that the social

elements were an integral part of loyalty formation in at least some instances, and creation of

a friendly and welcoming atmosphere would aid in social cohesion.

The findings appeared to contrast the extant literature surrounding customer loyalty in otherareas of discretionary spend (Phillips et al, 2010; McCain, 2003; Schouten and McAlexander,

1995), which furthers the notions of Harrison (2000) who insists that loyalty variables differ

from service to service.


Commitment was found to be positively related to behavioural loyalty and closely correlated

with both trust and switching costs, contributing to the confirmation of the hypothesis and

providing validation for Morgan and Hunts (1994) trust-commitment model within the context

of the study.

Practitioners asserted that commitment in retail gambling was driven by positive experiences

and interactions with staff. Christine highlighted that the rigidity of company policy allowed for

little discretion and hindered the degree to which she could provide such experiences. Emma

emphasised the importance of the freedom that her employer gave her in catering to the

individual needs of customers, and considered it an important factor in encouraging their

return. Morgan and Hunt (1994) suggested that fostering commitment required vulnerability,

operators of bookmakers must allow for such to reap the benefits of a committed customer

base.


Respondents readily displayed feelings of trust toward their main bookmaker, and this was

found to be reflected in terms of both attitude and behaviour providing confirmation of the

hypothesis and concurring with the views of Bowen and Shoemaker (2003).

The presence of high levels of trust were found irrespective of loyalty score, and a practitioner

(Christine) picked up on such, and suggested that within the context of retail gambling, trust

may be a prerequisite, as opposed to an antecedent in itself. A principal argument of Bowen

and Shoemaker (2003) was that trust was required to suppress the opportunistic nature of a

party involved in a transaction, making them more inclined to do business again; the retail

gambling market is highly regulated, and numerous laws and regulations protect consumers.

The aforementioned factors might instil trust in all patrons of the retail gambling industry of the

UK, which would diminish both the importance and strategic potential of trust in the context of

customer loyalty.

Should further research confirm the statements of Christine, then the reduction of mistrust in

customers would be more useful than heightening existing trust in others. Should it confirm

otherwise, firms must decide whether the pursuit of higher levels of trust is a worthwhile

endeavour, as it may entail vulnerability (Morgan and Hunt, 1994).


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The collection and analysis of quantitative data

was used to inform practitioner interviews.

The findings of the practitioner interviews weresynthesised with the questionnaire results and

existing academic discourse to revise the

conceptual model of the possible

antecedents of customer loyalty

in the UK retail

gambling

industry.

Revised Conceptual ModelModel 2

Satisfaction Brand Image

Perceived

Superiority

of Offerings

Perceived

Value

Loyalty

Social

Bonding

Relationship

with

Employees

Service

Quality

Switching Costs

Proportionate

spend

Willingness

to co-operate

Willingness to

recommend

Behavioural

Loyalty

Attitudinal

Loyalty

Commitment

Trust


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6.1 Summary

Whilst the hypothetical model expected loyalty to be a more linear concept, since the revision

of the model it is evident that the antecedents of customer loyalty are interrelated and difficult

to separate. Although the findings present issues for loyalty strategists, the evidence from the

study identified three direct relationships that were of critical importance to effective customer

loyalty strategies:

1. Satisfaction appears to be a prerequisite to loyalty; the presence of satisfaction is

essential for loyalty formulation, but subsequent improvements may be subject to

diminishing returns.

2. In line with similar casino studies (McCain 2003; Phillips et al, 2010), the relationships

customers have with employees had been identified as the primary reason for their

continued patronage.

3. Evidence suggests that the third direct relationship (service quality) shares intimate

links with the preceding two; the core aspects of the service (efficient bet processing)

contribute to satisfaction, whilst the augmented (individual attention and kindness of

staff) elements appear to be both an antecedent of loyalty and mechanism for improved

relationships between staff and customers.

This study explored the possible antecedents of customer loyalty in retail gambling in the UK;

although the results are subject to confirmation in a generalisable sample, the resultantconceptual model (model 2) provides a framework for practitioners to conduct their own small

scale research and foundations for further contextual study.

6.2 Managerial implications

Although the managerial implications of the findings have been discussed throughout, the two

most important considerations for loyalty strategists are considered to be:

Satisfaction is a prerequisite to loyalty, and reductions in levels of dissatisfaction should

be a priority. Providing adequate levels of satisfaction is the result of percei

the antecedents of customer loyalty in retail gambling

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