The effect of price and product promotion on customer loyalty in a digital market context

Abstract

This study investigates the effect of price and product promotion on customer loyalty in a digitally mediated market context. While prior research generally reports positive effects of price fairness and promotional activities on loyalty, evidence from specific contexts remains mixed and often embedded within broader models that include service quality and brand image. This study adopts a quantitative, explanatory design with a positivist orientation, using survey data collected from 70 customers who have purchased the company’s products at least twice in the last six months and are aware of its promotional activities. Perceived price, product promotion, and customer loyalty are measured using multi-item Likert scales, and the data are analysed using multiple linear regression. The results show that the overall regression model is not statistically significant at the 5% level, with an R² of 0.071 indicating that price and promotion jointly explain only 7.1% of the variance in customer loyalty. The coefficient for price is positive, while the coefficient for promotion is negative, but neither exerts a significant effect on loyalty. These findings suggest that price and promotion alone are not sufficient to generate strong customer loyalty and that other factors—such as service quality, product value, and brand image—likely play a more dominant role. The study highlights the need for firms to embed price and promotion decisions within a broader relationship-marketing strategy rather than relying on economic incentives alone to sustain customer loyalty