Final answer:
The spreader effect from loyalty programs is a form of bandwagon effect that encourages new customers to join by offering rewards for loyalty, aligning with expressive values such as belonging, and incentivizing customer retention.
Step-by-step explanation:
The spreader effect created by loyalty programs is a phenomenon where the rewards and incentives provided to customers for being loyal to a brand or company create an ancillary impact that encourages new customers to join the program as well. This is akin to a bandwagon effect, where individuals perceive a product or service as desirable because 'everyone' seems to be using it. Moreover, loyalty programs increase customer retention by making the costs of defection (switching to another brand) higher in comparison to the rewards of staying faithful to the brand, as customers accumulate points or receive discounts for subsequent purchases.
In essence, such programs capitalize on not only instrumental reasons, like savings, but also on expressive values such as belonging and recognition, aligning closely with notions of solidarity, loyalty, and even patriotism when it comes to domestic brands. Furthermore, the ethical dimensions of these programs can be called into question, especially when considering paid ambassadors and their required disclosures in both online and in-person scenarios. The spreader effect can be further reinforced by the homogenization of messages across various media outlets, contributing to the visibility and perceived ubiquity of a brand, thus further encouraging new customers to join the loyalty program.