Spatial diffusion of a new loyalty program through a retail market

Abstract

Abstract Retailers who wish to launch new innovations into their markets can be much more effective if they understand the geographic forces which affect consumer adoption of those innovations. A research field which studies this process is spatial diffusion. This paper explores and models the processes and driving forces of spatial diffusion across a market area following the launch of a new loyalty card program by a national retailer. Event history modeling is used to estimate the effects of distance, the impact of the firm’s marketing efforts, and the role of previous adopters in influencing the speed and spatial pattern of the adoption process. The results, in addition to yielding new insights into the processes involved in spatial diffusion, support previous findings on the importance of targeting the Innovator adopter group in a new product launch.