Antecedents and consequences of brand loyalty an empirical study

Abstract The authors consider the relationships among characteristics associated with the consumer risk aversion and variety seeking, the brand brand reputation and availability of subst

thus reducing the probability of switch-ing brands.6 Finally, brand loyalty has been identified as a major determinant

of brand equity.7

The concept of brand loyalty has not, however, been uniquely defined and operationalised in the marketing literature For example, brand loyalty has been defined as a repeat purchase,8

preference9 and commitment,10 and as retention and allegiance.11 These diverse definitions of brand loyalty are

in part due to the fact that loyalty is a very complex construct.12 Further-more, there exist various aspects of brand loyalty (such as behavioural and attitudinal brand loyalty) If these aspects were to be integrated, however, then one could come up with a

INTRODUCTION

There is no doubt, among academics and practitioners alike, that the con-cept of brand loyalty is of strategic importance for companies in order

to obtain a sustainable competitive advantage This is due to a num-ber of reasons First, brand-loyal con-sumers are less expensive, since they reduce the marketing costs of doing business.1–3 Secondly, brand extensions are less risky for brands that exhibit high loyalty.4Thirdly, brand loyalty has been shown to be associated with higher rates of return on investment through increases in market share.5

Fourthly, brand-loyal consumers have fewer reasons to engage in an extended information search among alternatives,

Spiros Gounaris

Assistant Professor of Marketing,

Department of Marketing and

Communications,

Athens University of Economics

and Business, Patission 76,

Athens 10434, Greece

Tel: ⫹32 10 8203 445

Fax: ⫹32 10 8211 269

E-mail: sgounar@aueb.gr

Received (in revised form): 5th November, 2003

SPIROS GOUNARIS

has a PhD from Athens University of Economics and Business, and is an assistant professor of marketing at the Department of Marketing and Communication at Athens University of Economics and Business His research interests pivot around consumer behaviour, satisfaction and loyalty, service quality, tourist marketing, business-to-business marketing and market orientation development His work has been published in many journals.

VLASIS STATHAKOPOULOS

has a PhD from the University of Arizona, and is an associate professor of marketing at the Department of Marketing and Communication at Athens University of Economics and Business His work has been published in

a number of journals and been included in various research proceedings His research interests include marketing management and strategy, sales management, services marketing, and consumer satisfaction and loyalty.

Abstract

The authors consider the relationships among characteristics associated with the consumer (risk aversion and variety seeking), the brand (brand reputation and availability of substitute products), the social environment (social group influences and peers’ recommendations), four types of loyalty (premium loyalty, inertia loyalty, covetous loyalty and no loyalty), and four consumer-related behaviour types (word-of-mouth communication, buy alternative brand, go to different store and buy nothing) To test the hypothesised relationships a survey of Greek consumers was conducted The findings provide general support for the postulated linkages among the above variables Implications for marketing practice and directions for future research are discussed.

the different types of brand loyalty After discussing the findings and their managerial implications, this paper concludes with study limitations and directions for future research

TYPES OF LOYALTY

The authors’ review of past literature suggests that brand loyalty has been viewed from three different, albeit complementary, perspectives, namely: the behavioural, the attitudinal and the reasoned action perspectives

More specifically, the behavioural perspective has conceptualised brand loyalty in terms of repeated pur-chases (for example, Cunningham19

and Kahn et al.20) In fact, several models have been proposed in the literature in order to study brand loyalty from the behavioural perspec-tive, the Dirichlet model being one of the most prominent.21–23 These ap-proaches model the consumers’ faithful enactment of a promise to consistently purchase only one brand, although they fail to model the reason(s) behind this behaviour

One possible insight could be found in the attitudinal perspective in conceptualising loyalty According to this perspective, brand loyalty con-sists of a strong internal disposition towards a brand leading to repeated purchases.24–26 As such, the attitudinal approach conceives brand loyalty based

on stated preferences, commitment, or purchase intentions One would ex-pect attitudinal and behavioural brand loyalty to be positively correlated, although not perfectly, otherwise there would be little need for different concepts.27 Thus an increase in at-titudinal brand loyalty should lead to an increase in behavioural brand loyalty

more accurate definition and thus operationalisation of brand loyalty

Hence the first objective of this paper

is to conceive a better definition

of brand loyalty and validate its operationalisation

Furthermore, until now there have been few studies that have examined the antecedents of brand loyalty (for example, Dick and Basu,13 Ha14 and Hog et al.15) Hence the second objective of this study is to add to this stream of research by empirically examining the role of context in shaping the development of brand loyalty Finally, a third objective of this manuscript is to empirically examine the effects of brand loyalty on con-sumers’ behaviour For instance there is empirical evidence that demonstrates that loyalty is not necessarily reflected upon the systematic purchase of a single brand.16 In fact, researchers have long questioned whether the systematic purchase of a single brand is the result

of increased levels of loyalty to this brand or whether it is the outcome of loyalty to a store which carries a limited number of brands for a given product category.17 Moreover, empiri-cal research has demonstrated that brand loyalty does not result only in a specific purchase pattern For instance,

it can also bring about positive word-of-mouth communication, which is not necessarily tied with the purchase

of the brand to which the consumer feels loyal.18

The rest of the paper is organised as follows First, the different types of brand loyalty are discussed Next, the authors advance a conceptual model and associated research hypotheses

Then a description is given of an empirical study designed to test the hypotheses and compare the effects of

This then implies that the attitudinal perspective is of limited value in grasp-ing the notion of loyalty If, however, there are changes in the marketplace, as

is often the case (for example, a new or improved product is introduced, and there is increased perceived risk), the consumer is likely to engage in a decision-making process, breaking the cycle of habitual purchases

The cycle of purchases may or may not break, however, if the consumer holds strong positive sentiments and identifies with the brand Including the attitudinal perspective in conceptualis-ing loyalty is useful, since it allows the decision-making process occurring in the consumer’s mind during the pur-chase to be more realistically described

It is the cognitive activities that one describes with this perspective

Similarly, the cycle of purchases may

or may not break because of pres-sures exercised by the consumer’s social environment Thus embodying the reasoned action approach in the proposed conceptualisation recognises the fact that there are some situa-tions where consumers’ behaviour is not fully under their control, but is influenced by the expectations of relevant others

Therefore, one could conceive brand loyalty as comprising three dimensions Each of them determines the type of loyalty a consumer will exhibit towards a brand For instance,

a consumer who is unfavourable to the purchase of a certain brand may still purchase the brand This loyalty behaviour is likely to be converted into

a behaviour of switching the brand when the consumer is no longer forced

to keep purchasing the brand Thus the

following four generic types of brand

loyalty can be identified: ‘no loyalty’,

Another possible explanation can,

however, be derived from the theory

of reasoned action According to this

perspective, the consumer’s behaviour

may be influenced by social pressures,

thus explaining how a consumer’s

brand attitude may be unfavourable,

while the consumer repeats the

pur-chases of the particular brand In such

a case, the consumer’s brand loyalty

would be superficial.28Recognising the

above difficulties in defining and

ex-plaining brand loyalty, Ha29 proposed

the theory of reasoned action to

explain brand loyalty According to the

reasoned action paradigm — based on

the theory of reasoned action,

intro-duced by Fishbein30 — brand loyalty is

conceived as a notion that is dependent

on normative influences (such as

in-fluences deriving from social peers)

These influences, in turn, are reflected

in the behavioural consequences of

loyalty.31,32 According to this view, one

may hold a favourable attitude towards

a brand but still not purchase it because

of not being able to afford it, a partner

disliking the brand, or for many other

reasons.33,34 Such an individual,

al-though having never actually

pur-chased the brand, promotes it in public,

recommends it, and compels others to

buy it This situation is similar to the

theoretical discussion by Oliver35of the

loyalty phases, and particularly the

cognitive phase, where loyalty is based

merely on ‘brand belief’ and not on

brand experience

For the purposes of this research, a

conceptualisation of loyalty is adopted

that attempts to combine all three

approaches to brand loyalty in

ex-plaining purchasing behaviour Thus,

incorporating the behaviour paradigm

suggests that repeat purchases are often

the outcome of habitual behaviour

self-perception and personality The consumer trusts it and is willing to recommend it to peers, friends

or relatives, although, for reasons beyond the consumer’s control, the purchase itself may never occur In such cases, the consumer is strongly discouraged to be loyal to a certain brand by social influences For instance, a young, newly appointed lecturer in a business school might covet a Mercedes, but not purchase

it because he cannot afford it or because he might not wish to publicise his economic status The lecturer may, however, still recom-mend the brand

— Inertia loyalty: An individual, al-though purchasing the brand, does

so out of habit, convenience or for some other reason, but not as a consequence of emotional attach-ment to the brand or a real social motive Inertia loyalty is characterised by a habitual

attach-‘inertia loyalty’, ‘premium loyalty’ and

‘covetous loyalty’ (see Figure 1)

The four types of brand loyalty are characterised as follows:

— No loyalty: No purchase at all, and

a complete lack of attachment to the brand Also no social influences

to be even cognitively loyal to a brand

— Covetous loyalty: No purchase but,

unlike the case of ‘no loyalty’, the

individual exhibits a very high level

of relative attachment to the brand

as well as a strong positive predis-position towards the brand, which is developed from the social en-vironment This condition arises from perceived human characteris-tics which a consumer identifies in

a specific brand.36 The individual comes to like the brand and thus emotional attachment with the brand increases The brand becomes

an extension of the consumer’s own

High

Low High

Low

High COVETOUS

INERTIA NO

LOYALTY

PREMIUM

Purchasing behaviour

Social influences

Figure 1 A conceptualisation of loyalty based on purchasing behaviour, emotional attachment and social influences

vinced that the selected brand is in some way the best brand to buy.43 This conviction arises from both personal and social motives Varia-tions in the price of their favourite brand may affect the quantity of the brand they purchase, but not the brand they choose to buy, since these consumers are committed to the brand

CONCEPTUAL MODEL AND RESEARCH HYPOTHESES

Figure 2 presents the conceptual model

of brand loyalty that guides this research The model shows potential drivers of brand loyalty These drivers are classified in three basic categories: consumer drivers, brand drivers and social drivers By focusing on potential drivers, it may be possible to manage brand loyalty better In addition, the model used in this study focuses on consumers’ behavioural responses to brand loyalty — word-of-mouth com-munication, buying alternative brand, going to different point of sale (store) and buying nothing

Consumer drivers

Both normative and empirical studies have substantiated the importance of the individual’s characteristics in decid-ing to purchase a specific brand.44Two such characteristics are examined in this study: risk aversion and variety seeking Although many characteristics

of consumers may have an impact on the decision to purchase a specific brand, this study chooses to focus on these two specific attributes, which both relate to how consumers handle risks Loyalty has been described as a means of handling the risk associated

ment that is to a large

ex-tent unemotional and convenience

driven The consumer may

sys-tematically choose the specific

brand over other brands, but this

choice involves little emotional

involvement, little personal

invest-ment, and no brand commitment.37

Hence this is a very fragile

relationship that may be easily

terminated by a rival product

capable of breaking the

con-sumer’s habitual behavioural

pat-tern Oliver38 terms this type of

loyalty ‘phantom loyalty’, while

Day39 and Dick and Basu40 call it

‘spurious loyalty’.

— Premium loyalty: An individual

exhibits a high degree of relative

attachment to the brand, a high

instance of repeat purchases, and

appears to be highly influenced by

social pressure Premium loyalty is

characterised by the greatest degree

of consumer attachment to the

brand, and in this case the

con-sumer purposefully seeks to

pur-chase the particular brand, while

attempting to overcome obstacles

This is similar to the

descrip-tion by Oliver41 of ‘action loyalty’

— ‘commitment to the action

of re-buying’ Premium loyalty

propels individuals to suffer various

sacrifices in order to acquire their

favoured brand Football fans are a

good, although extreme, example of

people showing this type of loyalty

They may see their team losing one

game after the other, and yet be

willing to travel with the team or

watch its games on television

Consumers who exhibit ‘premium

loyalty’ have been won over by the

brand alternative through the value

it provides to them42 or are

con-of rational market behaviour — in order to reduce perceived risk The risk element may be either a functional risk or a social acceptance risk In fact the perceived risk can be so intense that individuals become reluctant to proceed with the action Instead, they procrastinate until they have reduced the perceived complexity or the uncer-tainty associated with the situation.53,54

Hence the consumer’s need to control the risk will be a significant positive factor in the formation of brand loyalty

On these grounds, this paper inves-tigates the following hypothesis:

H 1 : Risk aversion will relate to the type of brand loyalty the individual develops towards a specific brand.

Variety seeking

On the other hand, uncertainty of the outcome of a purchase and the risk associated with a certain decision provides stimulation to the consumer.55

If the stimulation obtained is within the bounds of the optimal stimulation

with the decision to purchase a specific brand.45

Risk aversion

Individuals are often confronted with situations that differ in the degree of uncertainty or complexity they present

to them.46Typically, decisions linked to highly valued goals47 such as the purchase of a new car and/or deci-sions on high-involvement product categories48 encompass greater risk for the individual buyer Such decisions may evoke negative emotions that the buyer attempts to deal with.49 Emo-tions accentuate the risk associated with the purchase of a specific brand, leading to a greater search,50 which, in turn, may lead to lower levels of brand loyalty On the other hand, emo-tions may lead consumers to ex-hibit avoidance behaviour51 and/or greater dependence on previously held choices, which result in higher levels of brand loyalty Furthermore, Sheth and Parvatiyar52 argued that consumers become brand loyal — a manifestation

CONSUMER DRIVERS Risk aversion

Variety seeking

BRAND DRIVERS Brand reputation Availability of substitute brands

SOCIAL DRIVERS Social group influences Peers’ recommendation

Type of brand loyalty

Buy nothing

Buy alternative brand

Word-of-mouth communication

Visit other store

Figure 2 Conceptual model

of the transaction and the cost if he decides to acquire the product Hence

to understand how product characteris-tics contribute to brand loyalty, it is necessary to comprehend what creates and determines the value individuals derive from a brand The following two brand characteristics are examined

in this study: brand reputation and availability of substitute brands

Brand reputation

Although not part of the physical product itself, the reputation of a brand’s name has been described as an extrinsic cue, that is, an attribute related to the product.61 A reputable brand name conveys a strong indica-tion of the product’s quality and equity that is not necessarily related to detailed knowledge of the intrinsic — technical

— specification of the product.62 Therefore, the choice between alterna-tive brands within a single product class

is facilitated, since brands are differen-tiated easily by their consumers As Oliver63 suggests, loyalty is not merely about product superiority and satisfying customers Loyalty is about having customers who can become deter-mined defenders of the brand If the firm cannot develop, support and maintain brand uniqueness and perceived brand equity, then it is not possible to expect loyalty to develop.64

Thus having a brand with a strong reputation will be a significant positive factor in the formation of brand loyalty, since the brand’s reputation strengthens its perceived equity.65,66 Moreover, the reputation of the brand strengthens the habitual behaviour of consumers by rewarding their choice and making the brand more desirable and alluring.67As

level, then it is desirable and the

consumer actively seeks to attain it

However, if the optimal stimulation

level is exceeded, it becomes too

intensive, leading consumers to try to

reduce the complexities that are

as-sociated with such a condition and, as

pointed out earlier, they attempt to

routinise the decision-making process

and its outcomes In fact, Sheth and

Parvatiyar56 pointed out that

routinisa-tion and variety-seeking behaviour

become cyclical over time, but the

cycles are asymmetrical in favour of the

longer duration of routinised

be-haviour

Routinisation, although initially

helpful, may, however, lead an

individual to feelings of monotony and

boredom, which may lead to

ex-perimentation with new brands.57

Moreover, it appears that the level of

variety-seeking behaviour depends on

the intrinsic need of consumers to seek

variety (personal differences) and

on the product category level of

involvement.58 It is within this

framework that studies report a break

in the link between satisfaction and

loyalty.59 Indeed, as Homburg and

Giering60 have demonstrated, variety

seeking is one of the key consumer

characteristics which moderates the

relationship between perceived quality

and satisfaction with the loyalty to a

specific brand Within this framework,

this paper hypothesises that:

H 2 : Variety-seeking behaviour will relate to

the type of brand loyalty an individual

develops towards a specific brand.

Brand drivers

An individual’s intention to purchase a

product reflects a search for value out

do so in the absence of any attractive alternative — as is the case when

no substitute brands are available73

— the relationship tends to last only for as long as there is no alternative.74 Research suggests that customers in such constrained situa-tions attempt to restore their freedom

to choose.75 According to resource-dependence theory,76 consumers may attempt to break free from constrained relationships by identifying acceptable substitutes Hence the perception of similar substitutes may be expected to influence negatively the creation of relational ties to the brand within the specific category, and it might therefore

be considered as a deterrent to the formation of brand loyalty On these grounds the following hypothesis is investigated:

H 4 : The availability of substitute products will influence the type of brand loyalty

an individual develops towards a spec-ific brand.

Social drivers

Finally, when studying the antecedents

of loyalty, one should not neglect the social norms which may influence con-sumers’ behaviour patterns Consumers

do not take decisions isolated from social influences Rather, they are sub-jected to heavy social control over the attitudes they have and the behaviour they develop.77

Social group influences

One strong type of such social in-fluence is that derived from reference groups — the social groups that have

a direct or indirect influence on the person’s attitude or behaviour.78 In the

a result, reputable brands enjoy higher loyalty due to their higher market share.68 This higher market share is attributed to the fact that higher-share brands are not only bought by more consumers, but they are also bought more frequently In other words, high-share brands benefit both from greater market penetration and higher pur-chase frequency This is the well-known double-jeopardy phenomenon,

an ‘empirical law’ that researchers have observed and modelled for nearly 30 years.69 On these grounds, the follow-ing hypothesis is investigated:

H 3 : Brand reputation will relate to the brand loyalty type an individual develops towards a specific brand.

Availability of substitute brands

Brand reputation is subjected to the shopper’s perception of both the range

of competing products and brands

as well as the class of substitute products

When a product class comprises several brands which are perceived by consumers to be similar to each other, discriminating among them is hard Consequently, individuals have

no reason to show loyalty towards one

or another In fact, the more alike the brands are perceived to be, the less likely loyalty is to emerge.70 Rather, consumers are prone to make their purchases from a predetermined set of alternative products without showing a particular preference to any specific brand from this set.71,72 Thus the availability of substitute products is expected to affect brand loyalty sig-nificantly

Moreover, when customers stay in a relationship because they are forced to

loyalty, since the desire for the brand may be affected by group preference.87

On these grounds, this paper inves-tigates the following hypothesis:

H 5 : Social group influences will relate to the type of brand loyalty an individual develops towards a specific brand.

Peers’ recommendation

Another strong source of social influence is the recommendations and suggestions made by the individual’s peers Hite and Hite88 found that a party’s reputation could lead to posi-tive expectations about the party which, in turn, leads other parties to develop reciprocity and loyalty for the reputable party When it comes to brand names, their reputation reflects the opinion of others that a specific brand possesses or does not possess certain characteristics.89 While adver-tising and/or public relations help brands to demonstrate their qualities, peers are among the most influential sources of information used by con-sumers in shaping their opinion concerning a brand’s qualities.90 Peers exercise both normative (conformist) and identificational influences on con-sumers Informative influences help to guide consumers in product, brand and store searches,91 whereas norma-tive influences direct and control evaluations, choices and loyalties.92 Thus peers’ recommendations are expected to significantly affect brand loyalty.93

Following the reasoned-action paradigm, Bearden and Etzel94 suggest, however, that the recommendations of peers may not necessarily convert into actions (ie purchase) Under certain circumstances, they could merely

context of the present work, two types

of social influence are considered:

so-cial group influences and peers’

recom-mendations

A group becomes a reference one

when an individual identifies with it so

much that he takes on many of the

values, attitudes and/or behaviour of its

members.79The power of the influence

of a reference group is dependent on

the individual’s susceptibility to this

influence, the strength of his

involve-ment with the group and the degree

of product conspicuousness.80 Powerful

reference groups may easily change the

behaviour of their members, or their

aspirant members, and align it more

with the norms and standards that the

group considers to be acceptable.81

Hence the individual’s loyalty

towards a product is also dependent on

the acceptance of his preference for a

certain product by the social group the

individual refers to, particularly when

the conditions under which individuals

feel coerced to give in to the group’s

norms are met By adapting their

attitudes and behaviour, consumers

fulfil their aspirations and at the same

time reduce the perceived risk of

making a decision.82 Besides, recent

empirical studies have attested to the

impact of social stimuli (or normative

information) on loyalty.83,84

For instance, Mascarenhas and

Higby,85 in their study of how

youngsters choose a brand, indicated

that parents’ consistent choice of a

particular brand influences children to

perceive the brand as ‘good’, and thus

become loyal to it Furthermore, Hog

et al.86 found that families and peer

groups led young consumers to form a

more positive image of a brand Hence

group social influences are expected to

have a strong positive impact on brand

On these grounds this paper inves-tigates the following hypothesis:

H 7 : The type of brand loyalty will depend

on the occurrence or not of word-of-mouth communication between con-sumers.

Buy alternative brand

An interesting situation arises when

a consumer is loyal to a specific brand, but the brand is unavailable when required at a particular store.98

How likely is it that the individual will betray the brand and purchase another?

Oliver99 has shown that consumers, when faced with uncertainty about how to handle a decision and about its outcomes (concerning, for example, specifying relative uncertainties, what information to seek, or how to assess consequences), tend to delay the actual decision This is in line with the empirical findings of Greenleaf and Lehmann,100 demonstrating that such procedural uncertainty causes con-sumers to delay a decision Hence, for instance, when consumers are deprived

of the brand towards which they have developed a feeling of loyalty, they may delay their purchase until either

‘their’ brand is available again or they have managed to handle the new situation

On the other hand, some con-sumers might find delaying the pur-chase too ‘costly’ and thus decide

to switch brands Many consumers adapt their brand preferences accord-ing to the time when they prefer

to shop.101 Therefore they would rather stay in one store and switch brands Such behaviour is in line with the consequences of developing the

influence the consumer’s emotional attachment to the brand Consider, for instance, a young teenager who develops a high attachment to Sony’s Playstation II after it was recommended by a friend, but still feels reluctant to purchase it because he perceives that his parents would disapprove Nonetheless, following the conceptualisation of loyalty outlined, the teenager in question is (covetously) loyal to the brand On these grounds, this paper investigates the following hypothesis:

H 6 : Peers’ recommendation will relate to the type of brand loyalty an individual develops towards a specific brand.

Consequences of loyalty

Scholars studying the notion of brand loyalty have discussed a number of behavioural consequences In the context of the present work, four alternative consequences of loyalty are examined, namely: word-of-mouth communication, buy alternative brand,

go to different point of sale (store) and buy nothing

Word-of-mouth communication

Perhaps the single most expected be-havioural outcome of loyalty is brand recommendation Consumers become loyal as a result of the satisfaction they experience with their purchase.95

Satisfied consumers who share their experiences with other individuals are the best advocators of any company or its products.96 In fact, as Oliver97 sug-gests, in certain cases it is the sharing of the experience regarding the brand that ultimately provides the satisfaction and not the brand itself