CHAPTER 1PROBLEM AND ITS SETTINGINTRODUCTIONCustomer loyalty is a behavioral state, reflecting value, trust and commitment between supplier-customer relationships (Buttler, 2002). Therefore, developing a strategy that can maintain and increase customer loyalty has become the goal of most companies today (Duffy, 2003). Many see it primarily as an attitude-based phenomenon; therefore, the provision of customer relationship management initiatives, such as customer loyalty programs, can be significantly affected (Uncles, 2003). Loyalty programs have gained significant “practical and academic attention in the context of loyalty and customer relationship management” during the last decade (Sharp and Sharp, 1997). It has been explained that the simple goal of any loyalty program is to reward loyal customers with special services or discounts and, at the same time, gain an economic benefit from long-term business relationships with customers. promoting these loyalty programs. These programs were initially hailed as an imaginative way to inspire and maintain customer loyalty, but over the years, more and more doubt has been cast on loyalty programs that seek to tie customers to a company or its products and services. by offering an additional incentive they had posed an interesting dilemma (Dowling, 1997). It seems that in addition to the refusal of some certain customers to depend on a company, factors such as the sense of privacy and discrimination or unequal treatment increase customers. reaction and concerns (Evans, 1999; Hansen, 2000). As explained by Uncles et. al. (2003), although the general characteristic of all loyalty programs is to reward customers with benefits, with...... half of the card ......ct of a customer loyalty program and other elements of the marketing mix on customer purchasing behavior, such as adapting a loyalty card that provides a reward for members and much greater incentives for members who frequently purchase large volumes. As purchases are made, there will be an increase in the customer's investment in the program and the customer's likelihood of earning a reward. Customer loyalty program, especially the reward program, can motivate and encourage customers to base their purchasing decisions. Likewise, an effective loyalty program can encourage customers to make decisions that can maximize customers' expected utility to the company. The customer loyalty program, being evaluated, is still successful in changing customer behavior and motivating customers to increase purchases leading to increased customer loyalty.