Abstract
PurposeThis study investigates how reward type (single vs. plural), reward characteristic (utilitarian vs. hedonic) and product involvement (high vs. low) affect the design of reward programs.Design/methodology/approachA 2 ✕ 2 ✕ 2 fractional factorial experimental design is constructed to explore the main factors influencing the effectiveness of reward programs on a sample of 436 Chinese customers.FindingsThe results indicate that reward type is an important determinant of customers' preference toward reward programs. Plural rewards are preferable to a single reward when the alternatives provide the same benefits, particularly in the low level of product involvement. In the high level of product involvement, reward characteristic has a significant effect on customers' preference. Hedonic rewards are more effective in building a program's value than utilitarian rewards. Moreover, reward characteristic interacts with reward type, positively impacting customers' preference toward reward programs.Originality/valueThis study suggests that managers should consider the effects of reward type, reward characteristic and product involvement to formulate attractive reward programs for sustainable business in China.