World Applied Sciences Journal 19 (3): 314-323, 2012 ISSN 1818-4952; © IDOSI Publications, 2012 DOI: 10.5829/idosi.wasj.2012.19.03.1518 Corresponding Author: Nor Asiah Omar, Faculty of Economics and Management, National University of Malaysia. 314 Examining the Moderating Effects of Programme Membership Duration in the Retail Loyalty Programme: A Multi Groups Causal Analysis Approach Nor Asiah Omar, Rosidah Musa, Che Aniza Che Wel and Norzalita Abd Aziz 1 2 1 3 Faculty of Economics and Management, National University of Malaysia 1 Faculty of Business Management, Universiti Teknologi Mara, Malaysia 2 Graduate School of Business, National University of Malaysia 3 Abstract: Investigations to ascertain the contingent effects of membership duration in a loyalty programme are critical for advancing marketing knowledge and management practice. In line with this thinking, a baseline model was developed to assess the role of loyalty programme’s benefits offered by one of the leading superstore in 1 Malaysia on its members’ satisfaction and ultimately loyalty towards the store. What is more, the key constructs of relationship quality such as satisfaction, trust and commitment are integrated in the model. Subsequently, a multi group’s causal analysis was executed in order to detect any significant difference (beta coefficients) among the paths postulated in the models. The research framework was empirically tested on 167 loyalty cardholders. The results delineate two key findings; Firstly, Programme Benefit holds a pre- eminent role in the formation of Programme Satisfaction and ultimately Store Loyalty; thus, Programme Benefit–Programme Satisfaction–Store Loyalty chain is confirmed. Secondly, Programme benefit has a significant impact on Store Loyalty via Programme Loyalty; hence, Programme Benefit–Programme Loyalty–Store Loyalty chain is established. In essence, the relationship between programme loyalty and store loyalty is contingent on the moderating effect of membership duration. The findings reveal important implications for marketing theory, management practice and fertile future research direction is suggested. Key words: Loyalty programme membership duration Satisfaction Trust Commitment and loyalty INTRODUCTION retaining customers. Indeed, Liebermann [8] observes that Given the current managerial and academic interest in within the relationship marketing framework. Loyalty maintaining and enhancing firm-customer relationship, programme is defined as the business process of not surprising customer loyalty as a research focus identifying, maintaining and increasing the yield from best has been extensively and intensively investigated [1-3]. customers through interactive, value-added relationships The rationale behind this emergent stream of research is [9]. Fundamentally, the loyalty programmes are structured based on the presumption that companies which achieved marketing efforts, which reward and encourage loyal higher level of customer loyalty will be more successful in behaviour of their members [10]. The use of the loyalty the marketplace [4]. In response to current era of intense programme grew exponentially in the United States of competition and demanding customers, a new customer America, United Kingdom and all around the world [11]. relationship management (CRM) instrument has been Recently, it was reported that the loyalty card programme developed, which is the loyalty programme [5]. Some business in Malaysia is currently worth RM 2.4 billion and scholars [6, 7] assert that loyalty programme has become is projected to grow to MYR3.5 billion by 2010 [12]. an important strategy and mechanism for retailers to In the retail scene, loyalty programmes involved a increase revenue growth and has become a key concentrated effort by retailer to build store traffic, component of CRM. It plays a vital role in developing increase basket size and increase frequency, which relationships, stimulating product and service usage and creating deeper relationship ties with its customer base loyalty card programmes are proven to be an effective tool