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Radical Development In The Information Technology Marketing Essay

Due to the radical development in the information technology, organisations are continuously trying to expand their methods of gathering information about customers. This information are generated by analysing not only the behavioural dimensions but also using important metrics such as customer life time value, customers’ purchase frequency, customer share of wallet, and customer equity, etc. According to Rust, Zeithaml and Lemon (2000) and Blattberg, Getz and Thomas (2001), the information gathered using difference methods are inevitably important for the organisation to build an everlasting relationship with the customers. It is necessary for the organisation to combine external organisational information on customers with the internal data available with the organisation, in order to get the best results, but organisations often rely on the data readily available with them (Du, Kamakura and Mela 2007). However, many scholars (see Keiningham, Perkins-Munn and Evans 2003; Rust, Zeithaml and Lemon 2002) consider that data which is available (e.g. customer purchase frequency and share of wallet, etc) enough to know about the purchasing patterns of the customers and to maintain a good relationship them. Another, important issue regarding customers’ information is to know how much business a customer does with the competitor or what is the share of competitors in customer’s wallet?. Wyner (2001), kamakura and Wedel (2003), and Kamakura et al. (2003) explain a procedure commonly known as “list augmentation” or “database augmentation”, which overlays data obtained from customer surveys or secondary sources with existing databases, in order to acquire the information on customers’ share of wallet with competitor.

There is an evident shift in the marketing arena from product-centric to customer-centric, where the focus is more on building long term relationship with the customer rather than a single transactional based relationship. As a result of this companies have started exploring that which customer is willing to share a greater piece of his/her wallet (Keiningham, Perkins-Munn and Evans 2003). Share of wallet is defined as the total spending of a customer on a particular product of a company in comparison to that of he/she spend on competitor’s product (Garland 2004). Different industries, for example, hotels (Noone, Kimes and Renaghan 2003) and banks (Jarrar and Neely 2002; Garland 2004; Mittal 2004) have begun to use customer share of wallet to measure their effectiveness, particularly in cross-selling efforts, while firms in the apparel industry are now using share of wallet in such marketing decisions as the development of merchandising tactics and the opening of new stores (Huff 2002).

In the extant literature share of wallet is gaining popularity among the researchers, as it is considered an important indicator of the firm’s performance. Many researchers have tried to find out the antecedents of share of wallet (Magi 2003; Keiningham, Perkins-Munn and Evans 2003). For example, some scholars used customer satisfaction as an antecedent of share of wallet (Bowman and Narayandas 2001; Magi 2003; Keiningham, Perkins-Munn and Evans 2003; Verhoef 2003), some think affective commitment plays a vital role in finding customers contribution to the company (Verhoef 2003), some highlights shopper characteristics (Macintosh and Lockshin 1997; Magi 2003), product and service quality (Odekerken-Schroder, et al. 2001), loyalty programmes (Magi 2003; Verhoef 2003), and some others investigate the role of direct mail on customer share of wallet (Verhoef 2003). However, Dowling (2002), Magi (2003), and Verhoef (2003) call for more research on measuring the customers’ share of wallet because of the weak relationship found between share of wallet and the proposed antecedents.

In general, share of wallet has been measured by either consumer self reports (see Bowman and Narayandas 2001; Odekerken-Schroder, et al. 2003; Garland 2004; Magi 2003), or consumer self reports in combination with a firm’s customer data (see Verhoef 2003). Interestingly, Keiningham, Perkins-Munn and Evans (2003) compared self-reported measures of share of wallet with measures of repurchase intentions and concluded that self reported measures may not be reliable. Due to these loopholes, there is still a great need of research on customer share of wallet because most of the previous researches do not always focus on share of wallet, per se. For example, Rust, Lemon and Zeithaml (2004) present an approach that leverages Markov switching matrices to predict customer lifetime value, a discounted estimate of the customer’s future dollar contributions to a firm. They derive customer equity share, a concept which is not exactly similar to share of wallet but somehow close to that, from customer lifetime value. In a similar manner, Chen and Steckel (2005) use Markov switching matrices to predict share of wallet. They used credit card data from a single provider to estimate customer inter-purchase times that are used to infer the number of purchases that customers had made from competing providers. Unlike other research in the area, Chen and Steckel (2005) define share of wallet based on the number of purchases made by a customer and not his/her expenditures.

Finally, Du, Kamakura and Mela (2005) propose a multivariate factor analytic model to predict share of wallet. They used firm’s internal customer data with external data; internal data came from bank, a sample of whose customers were also surveyed about their business in ten different product categories at competing financial service providers. Total outside balances and holdings in each category fulfil the external data requirement. Du, Kamakura and Mela (2005) model customer share of requirement in each of the ten categories, which are used to predict total share of wallet. According to Magi (2003) share of wallet refers to the share of a customer’s business that is obtained by a particular retailer in a category. Cooil et al. (2007) explain that today customers have divided their share of wallet into multiple retailers. For example, most grocery shoppers have a primary or focal store in which they make a large share of their purchase (Kim and Lee 2010). However, the extent to which they use other stores routinely, and consequently the share they devote to the focal store, is known to vary widely (Kim and Lee 2010; Magi, 2003). That is why, Meyer-Waarden (2007) emphasise on the importance and significance of share of wallet because retailers need to know how their customers divide their category purchases across competing stores and how they can increase their share of total category spending and patronage.

Share of wallet has been constantly used by researchers to operationalise loyalty behaviour (see Bowman, Farley and Schmittlein 2000; Bowman and Narayandas 2004). But, Cooil et al. (2007) call the relationship between share of wallet and customer satisfaction a major research issue, because previous research report a positive link between satisfaction and share of wallet, which clearly contradicts the widespread recognition that high levels of customer satisfaction do not necessarily translate into high levels of loyalty behaviour (Chitturi, Raghunathan and Mahajan 2008). For example, Arnold et al. (2005) conclude that 80% of customers who switch retailers and brands classify themselves as satisfied. These arguments from the literature bring some questions in mind, like; why do satisfied customers share a piece of their wallet with another company or brand? Moreover, how can this division of customers’ wallet be prevented? The extant literature explain these questions by emphasising on creating higher level of emotional bonds with the customers in order to sustain an unshakable customer loyalty because due to the awareness and improvement in customers’ knowledge merely customer satisfaction is no longer sufficient and the organisation have to focus on other methods to keep the customers for long time, thus acquiring a major share of their wallets (Barnes 2005; Carroll and Ahuvia 2006; Fournier 1998; Kim and Lee 2010; McEwen 2007; Roberts 2004; Yim, Tse and Chan 2008). However, it is also revealed by the literature that the relationship between share of wallet and its antecedent is moderated by the differing characteristics of customer group (Cooil, et al. 2007). That is why, further research is required to understand customer share of wallet and its impacts.

The worth mentioning research is that of Kim and Lee (2010) who studied the moderating role of different customer characteristics on customers’ share of wallet in retail settings. There results suggest that emotional loyalty is positively related to share of wallet and that some demographic and situational customer characteristics moderate this relationship. Further, education, duration of relationship, and type of product also plays significant moderating roles on share of wallet (Kim and Lee 2010). Interestingly explaining the customer characteristics and their impact on share of wallet, Kim and Lee (2010) found that different level of customer’s education influence the customer’s share of wallet differently, i.e. low-education customers shop and spend more than do high-education customers (Kim and Lee 2010). Similarly, another characteristic with the moderating role they investigated was relationship duration. They confirm the moderating role of the relationship duration of customers on share of wallet hence concluding that the long term customers are more profitable for the organisation by sharing a major portion of their wallet (De Wulf, et al. 2001; Kim and Lee 2010). Finally, they confirm the effects of type of product on overall customer’s share of wallet.

Customer share of wallet has been associated with customer loyalty by many researchers (Ajzen and Fishbein 1980; Sheppard, Hartwick and Warshaw 1998). According to an expansion of the theory of reason action (Ajzen 2001, 2002; Bentler and Speckart 1979; Eagly and Chaiken 1993), a person’s former behaviour can explain his/her actual behaviour, which means that customer will prefer to buy at the same retailer they bought from on pervious purchase occasions, even though they might perceive other retailers as providing the same benefits (Vogel, Evanshitzky and Ramaseshan 2008). Kim and Lee (2010) explain that customers buying from the same retailer because of the following reasons: a) the store is close to their homes b) the location of the store is convenient c) there is a 24-hour access d) it has a large parking area, and e) there are short lines at the checkouts or payment counters. Customers preferring the same retailer or the same brand means, they prefer to share their wallet with that particular retailer or brand, confirming the impact of behaviour on share of wallet. Corstjens and Lal (2000) further explain that this phenomenon is due to the psychological commitment to prior choices and customers’ desire to minimise their cost of thinking. Vogel, Evanshitzky and Ramaseshan (2008) name this psychological commitment as inertia effect. They illuminate that this inertia effect is rational because it helps customers achieve satisfactory outcomes by simplifying the decision-making process and saving the costs of making decisions, hence making them share a piece of their wallet automatically and without conscious thought (Vogel, Evanshitzky and Ramaseshan 2008). Some other scholars (Anderson and Srinivasan 2003; Beatty and Smith 1987; Gounaris and Stathakopoulos 2004; Huang and Yu 1999; Rust, Lemon and Zeithaml 2004) call this sharing of wallet with a particular retailer (organisation) a habitual behaviour. Research shows that 40% to 60% of customers buy at the same retailer (share the wallet) because of habit (Beatty and Smith 1987).

Jones and Sasser (1995) argue that share of wallet is a key indicator of customer value, and hence a critical component of loyalty (Baumann, Burton and Elliott 2005). Keiningham, Perkins-Munn and Evans (2003) recommend further research on customer’s share of wallet. Baumann, Burton and Elliott’s (2005) result reveal that satisfaction is the key predictor of share of wallet. Customer feels comfortable in sharing their wallet when they discover that a particular brand or company fits their self construed character, because brands have a deep cultural meaning developed by the consumption and the use of the brand (Holt 2003). In this case, the customer’s switching costs are high as both the cultural fit and personality fit are lost on switching brands. Therefore, customers prefer to stay with the company (share their wallet) and commit in a continual relationship (Johnson, Herrmann and Huber 2006).

Interestingly, Hsu and Chang (2003) identify the impact of advertising on customer’s inclination to switch brands or in other words, a preference to share a piece of wallet. In a similar manner, Deighton, Henderson and Neslin (1994) examined brand switching and repeat purchasing behaviour (sharing of wallet) which are affected by advertising. They conclude that share of wallet (customer willingness to stay with a brand or switch) is strongly influenced by advertising. Further, Morgan and Dev (1994) mention that a customer willingness to stay with a brand/organisation or switch (share the wallet or not) is influenced by three categories of variables: a) context variables; changes in usage context or situation, b) control variables; marketing mix variables which are directly controlled by the firm, and c) customer variables; customer background variables.

Customer equity as explained by scholars (see Bayon, Gutsche and Bauer 2002) is the sum of the discounted cash surpluses generated by customers during their stay with the company. The role of share of wallet is very clearly visible in the definition of customer equity, approving its impact on each other. Extant literature also witness the impact of customer equity on customer satisfaction (see Rust, Zeithaml and Lemon 2000; Rust, Lemon and Zeithaml 2001; Bush, Underwood and Sherrell 2007; Wu and Batmunkh 2010). And at the same time the effects of customer satisfaction on customer share of wallet (see Perkins-Munn, et al. 2005; Keiningham, et al. 2005; Bowman and Narayandas 2004; Silvestro and Cross 2000). Hence, confirming the influence of customer equity on customer satisfaction and customer satisfaction on customer share of wallet.

Similarly, customer equity is said to influence customer loyalty (see Bush, Underwood and Sherrell 2007; Vogel, Evanshitzky and Ramaseshan 2008). Oliver (1997) calls it an unbreakable commitment of customers with the company to purchase its products repeatedly and to recommend it to others. Holehonnur et al. (2009) argue that customer loyalty and its dimensions impact customer share of wallet one way or another. Other scholars (Brady, Bourdeau and Heskel 2005) also agree that in order to make the customer share a greater piece of their wallet, organisation need to sustain a durable relationship with them and focus on making them loyal to the company. These extracts from the literature clearly verify the influence of customer equity on customer loyalty and customer loyalty on share of wallet.

Share of wallet, the total spending of customer on a particular product (Garland 2004), impact customer equity and its actionable drivers, namely, value equity, brand equity, and relationship equity. Value equity as defined by Rust, Lemon and Narayandas (2004) is the objective assessment of the utility of a brand perceived by a customer in comparison of what is given up for what is received. It has actionable sub-drivers, that is, Convenience, price, and quality (Rust, Lemon and Zeithaml 2001). Convenience is very important for the customers to stay with the company for long time and build an everlasting relationship (Rohm and Swaminathan 2004; Swaminathan, Lepkowska-White and Rao 1999). Berry, Seider and Grewal (2002) and Zeithaml (1988) include different resources, like time, opportunity, and energy in the category of convenience, which the customer invests when initiating a transaction. Holehonnur et al. (2009) emphasis on convenience, an actionable sub-driver of value equity, because of its role in enhancing the satisfaction levels of customers and ultimately their loyalty. Value equity with its dimension, price, is of considerable importance when intending to grab a higher share of customers wallet and a facet contributing positively to improve customer’s perception of product quality (Dodds, Monroe, and Grewal 1991; Grewal, Monroe, and Krishnan 1998; Zeithaml 1988). Zeithaml (1988, p. 10) defined price as “what is given up or sacrificed to obtain a product”. What is given up (share of wallet) is said to stimulate the behaviour of customers in milieu of product and organisation (Dodds 1991; Han, Gupta and Lehmann 2001). The last sub-driver of value equity, service quality, is of prime importance and a critical measure of organisational efficiency (Jensen and Markland 1996). McDougall, Kotler and Armstrong (1992) consider it a method through which one company differentiate its product in the minds of customers from that of the competitors. This sub-driver of value equity is reported to positively influence customer share of wallet and ultimately result in long term profitability (Ghobadian, Speller and Jones 1994). For organisations where satisfaction and loyalty are the main objectives, service quality plays a vital role (Bloemer, Ruyter and Peeters 1998). Similarly, to reap the benefits in cross-selling, up-selling, and to make the customers use positive word of mouth along with the willingness to share a greater piece of their wallet, service quality need to be considered seriously (Anderson, Fornell and Lehman 1994; Rust, Zahorik and Keiningham 1995; Zeithaml, Berry and Parasuraman 1996).

Share of wallet with its impact on value equity has been a topic of research for many scholars (Bermejo and Monroy 2010; Stahl, Matzler and Hinterhuber 2003). In 1987, Jain, Pinson and Malhotra investigated the impacts of share of wallet and recently Bermejo and Monroy (2010) call it the most commonly used measure of value equity. Many scholars (see Zeithaml, Barry and Parasuraman 1996) consider share of wallet, a behavioural dimension of loyalty, to strongly effect value equity, more specifically service quality (an actionable sub-driver of value equity). In a similar manner, all these dimensions (convenience, price, service quality) are reported to have an influence on share of wallet and vice verse. For example, Duncan and Elliott (2002) show the impact of share of wallet on value equity (service quality), Ma et al. (2010) highlight that the price (value equity) of a product impact customer’s willingness to share their wallet. Finally, Lemon, Rust and Zeithaml (2001) emphasis that customers are interested to share a piece of their wallet with companies who are successful in reducing the customers’ time costs associated with search and efforts (convenience), hence confirming that share of wallet is influenced by value equity.

Share of wallet also impact another important driver of customer equity, namely, brand equity. Rust, Zeithaml and Lemon (2000) call it the intangible assessment of the brand, above and beyond its objectively perceived value. The strength, uniqueness, and desirability dimensions are also included in brand equity (Verhoef, Langerak and Donkers 2007) and is considered extremely important for building a strong relationship between the customer and company and its brands (de Chernatony 1999). There is lack of consensus among researchers on deciding about the actionable sub-drivers of brand equity. Some scholars think it has five sub-drivers (see Aaker 1991), some think it is influenced by four factors (see Yoo and Donthu 2001), some other agree to three sub-drivers (see Lemon, Rust and Zeithaml 2001; Rust, Zeithaml and Lemon 2000), whereas, some have shrink it to two dimensions (see Berry 2000; Keller 1998). However, accumulatively it includes, brand awareness, brand loyalty, brand image, attitude toward the brand, and corporate ethics. All these actionable sub-drivers of brand equity, as emerged from the literature, impact share of wallet one way or another.

Brand awareness is the ability of the customer to recognise a particular brand (Aaker 1991). Lemon, Rust and Zeithaml (2001) call it an important factor for marketing communication. In a similar manner, Davis, Golicic and Marquardt (2008) emphasis on brand awareness as an important driving factor for brand equity, which ultimately make the customers recognise and recall a particular brand out of the bunch of brands (Aaker 1991) and show positive intentions to share their wallet with that brand’s company. Another sub-driver of brand equity is brand loyalty which according to Aaker (1991, p. 39) is “the attachment that a customer has to a brand”. Oliver (1997, 1999) considers it important in context of share of wallet because customer gives priority to a brand if they are brand loyal, which means they will have positive intentions of sharing the wallet. This idea is also supported by Yoo and Donthu (2001) by stating that customer will have a primary choice of buying a particular brand if they are brand loyal, hence showing the willingness to share their wallet. Scholars (Lemon, Rust and Zeithaml 2001) include attitude toward the brand as another important sub-driver of brand equity. It is considered as “the extent to which the firm is able to create close connections or emotional ties with the consumers” (Lemon, Rust and Zeithaml 2001, p. 22). Attitude toward a brand is considered somehow similar to brand loyalty, based on the extensive research of many scholars in the field of consumer behaviour (Oliver 1980, 1981; Sheppard, Hartwick and Warshaw 1998). It is, therefore, evident that it will have an impact on customer share of wallet and profitability because of the relevance with brand loyalty. Finally, the actions taken by the company (corporate ethics) is another sub-driver of brand equity (Lemon, Rust and Zeithaml 2001; Rust, Zeithaml and Lemon 2000). Corporate ethics alter the customers’ perception toward the company and the brands by participating in constructive activities like sponsorship and charity, because customers attach it with the brand during the evaluation process (Lagace, Dahlstrom and Gassenheimer 1991; Robertson and Anderson 1993), resulting in positive or negative attitude of the customers toward the brand, which ultimately result in forcing the customer to stay with the company (share their wallet) or switch the company.

The research on the link between share of wallet and brand equity is limited, however, the extant literature confirms their impacts on one another (see Abdullah, Al-Nasser and Husain 2000; Cooil, et al. 2007; Keiningham, et al. 2005, 2005a). Those customers who have a high value of a particular brand in their mind usually share a greater piece of their wallet with that brand or company (Abdullah, Al-Nasser and Husain 2000). In a similar manner, Keiningham et al. (2005, 2005a) explicate that customers are willing to spend more (share their wallet) on that brand which is their preferred brand. However, if a brand is a customer’s preferred brand and a customer is satisfied from it as well, share of wallet will be doubled (Keiningham, et al. 2005). Thus, confirming the impact of share of wallet on brand equity.

The last driver of customer equity is relationship equity; the ability of an organisation to keep the customer for long time irrespective the customer’s objective and subjective assessments (Rust, Lemon and Zeithaml 2001). This driver of customer equity has to go along with other drivers because a strong brand can no wonder attract customers, it is not enough to keep them forever (Lemon, Rust and Zeithaml 2001). Prior research also confirm that customer satisfaction is not merely enough to keep the customer or make him/her return to the company (see Gale 1994; Reicheld 1996; Bolton, Kannan and Bramlett 2000) but for customer to repurchase relationship equity is required (Lemon, Rust and Zeithaml 2001; Rust, Lemon and Zeithaml 2001). There are many actionable sub-drivers of relationship equity, namely, loyalty programmes, affinity and emotional connections programmes, community building programmes, special recognition and treatment programmes, and knowledge building programmes (Lemon, Rust and Zeithaml 2001; Rust, Zeithaml and Lemon 2000; Rust, Lemon and Zeithaml 2001), all influencing customer to share a piece of their wallet with the respective company or brand. For example, loyalty programmes give a company competitive advantage over other companies (Bolton, Kannan and Bramlett 2000), making that particular company enjoy a higher share of customer’s wallet compared to the competitors. Similarly, affinity programmes, knowledge building programmes and community building programmes groom and strengthen buyer-seller relationship (Mcwilliam 2000; Peppers and Rogers 1999), making the customer come back to the company repeatedly for spending on their preferred brands. MacChiette and Roy (1992) call these programmes as “unique exchange programme”, which is encouraging nonmonetary commitment of buyer-sellers in order for both to reap the benefits of strong relationship (Rust, Zeithaml and Lemon 2000), ensuing the customer to acquire a reliable product and the company, a greater share of customer’s wallet.

Many scholars (Bermejo and Monroy 2010; Reinartz and Kumar 2003) conclude the positive impact of share of wallet on the relationship equity. Wirtz, Mattila and Lwin (2007) argue that loyalty and reward programmes (actionable sub-driver of relationship equity) are the major sources with a company to obtain a higher share of customers’ wallet. Similarly, those customers prefer to spend more who have a good and long-term relationship with a particular company (Bermejo and Monroy 2010; Reinartz, Thomas and Kumar 2005; Zeithaml 2000). Finally, research shows that those customers who defect do not harm the company that much compared to those customers who decrease the share of their wallet (see Coyles and Gokey 2002). Therefore, it is important for the companies to search for any defect in the relationship with the customers, as it impacts share of wallet dramatically (Malthouse and Wang 1998; Bermejo and Monroy 2010).

The review of extant literature confirms the link between share of wallet and customer satisfaction (Baumann, Burton, and Elliott 2005; Bowman and Narayandas 2004; Keiningham, et al. 2005; Keiningham, Perkins-Munn, and Evans 2003; Perkins-Munn, et al. 2005; Silvestro and Cross 2000). Cooil et al. (2007) shows a visible variation in the share of customer’s wallet and the level of satisfaction. It means that a customer will spend more on a particular brand with a particular company, if he/she is satisfied from the brand or the company. However, researches investigating the link between share of wallet and customer satisfaction have completely ignored the temporal effects, relying only on cross sectional data (Cooil, et al. 2007). Further, it is also noticed in the literature that company’s profitability increases almost ten times when they focus on the links between customer satisfaction, retention and share of wallet (Coyles and Gokey 2002). However, Keiningham, Perkins-Munn and Evans (2003) emphasis on thorough empirical research to understand the relationship between share of wallet and customer satisfaction. The recommendations by scholars for further empirical research to investigate the link is because of the reason that there is a lack of research where actual share of wallet data is used, rather than self-reported measures of share of wallet (De Wulf, Odekerken-Schroder, and Iacobucci 2001). Finally, a positive link between share of wallet and customer satisfaction has emerged from the extant literature, in various industries (see Bowman and Narayandas 2004; Keiningham, et al. 2005; Perkins-Munn, et al. 2005; Silvestro and Cross 2000).

Researchers (Bolton, Kannan and Bramlett 2000; kamakura et al. 2002; Nacif 2003; Smith and Wright 2004) confirm a positive link between share of wallet and customer loyalty. Loyal customer tend to purchase from the company repeatedly and recommend it to the others, increasing the company’s market share and ultimately impacting pricing (Chaudhuri and Holbrook 2001), which in return make the customer pay more out of their wallets. Huber, Herrmann and Wricke (2001) agree that those customers who are loyal do not mind to share a greater piece of their wallet, confirming the influence. Further, it is also noticed in the prior research that customer loyalty leads to increased sales of company, which means more customers are willing to purchase the product, thus sharing a greater piece of their wallets (Smith and Wright 2004). Finally, Holehonnur et al. (2009) emphasis that customers are willing to share their wallet with those companies where they evaluate the benefits received from a particular brand, subjectively and objectively. These evidences from the literature confirm that share of wallet impact customer loyalty.


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